Sunday, May 4, 2008

Walter Schloss speech

Combined notes from a speech by Walter Schloss at the Ben Graham center for value investing and a Forbes profile of the man in Feb of this year

SEARCH STRATEGY
If there is an industry having a problem look at it and you will likely find a good buy there.
Do the companies pay dividends if the dividends are under threat then wait till the cut, see how much the price drops as they may become attractive.

Schloss likes to buy stocks hitting new lows.
Look for companies without much debt - this is important when company stumbles (and takes the stock price down with it).
With these companies it pays to focus on assets.
Has the book value been rising over the past few years? (e.g. five)

Stks below book value with long track history and inside ownership are good.
Look at annual reports and proxies how much stock directors own, company's history and who owns stock
Schloss doesn't like talking to management as they can sway your judgement, look at the figures instead.
Pay special attention to footnotes.

SELLING & ASSET ALLOCATION
Having target buy price is good move
As you scale your buys in so you should scale your buys out
If you really confident 20% should be max allocation

2 comments:

Alisa said...

I have just started my investment journey recently:

http://www.ourstockmarketjourney.blogspot.com/

I think one of the starting points for identifying solid businesses at bargain prices is to look within the industries that tend to hold such businesses. Serious value investors should know these industries inside and out. Thereby being more easily able to identify weaknesses and strengths in key ratios that should be evaluated for each business. I would think that the acceptability of a key ratio would not only depend on the business itself but on the industry in which it resides.

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