Walter Schloss was one of Benjamin Graham’s most successful students. From 1955 through 2002, Schloss returned 16% per annum, according to his own figures, successfully using Benjamin Graham’s net-nets strategy to outperform the market for five decades.
Walter Schloss didn’t give many interviews over his career, but he did write a number of memos and letters to various publications over the years.
Walter Schloss: Intrinsic Value
Below is an example of one such letter. This letter was a rebuttal to another analysts suggestion that “Security analysis is the discipline of comparative selection.”:
“…Since stocks are only under – or overpriced with respect to each other, the process of comparison is going to identify over – and under-priced stocks with roughly the same frequency in good markets and bad.”
Walter Schloss believed this to be a foolish way of analyzing stocks:
“I believe that stocks should be evaluated based on their intrinsic worth. NOT on whether they are over-or under-priced in relationship with each other…if one were to recommend the purchase of Company A because it was COMPARATIVELY cheaper than Company B, he may find that he will sustain a tremendous loss.”
Below is the letter in full.
Walter Schloss
The post From The Archives: Walter Schloss On Intrinsic Value appeared first on ValueWalk.
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