4 Everlasting Lessons for Investing Success

The late Walter Schloss may not be a well-known investor.

But, his investment results may be worth a second look – quite simply, his returns are stunning. Schloss’s investing firm, the WSJ Partnership, had generated annualized returns of 21.3% per year from 1956 up till the first quarter of 1984. For perspective, a $1,000 investment that compounds at 21.3% annually for 28¼ years would become more than $233,000.

Given his accomplishments, there may be investing lessons we can pick up from Schloss. This is where a 1985 interview of him with Barron’s can help. The interview is more than three decades old, but some of Schloss’s comments are applicable till this day.

Here are four takeaways I have from the interview:

1. The value of patience click here

2. Staying focused click here

3. Play your own game

“You don’t try to play the other guy’s game. You play the things you do, that you feel comfortable with, and Edwin [Schloss’s son] and I are comfortable with this kind of thing.”

Warren Buffett once referred to Schloss as a superinvestor. But their investing approach couldn’t be more different. For instance, Buffett prefers a focused portfolio with companies that have great businesses. Schloss, though, felt more at home with a diversified approach that often saw his portfolio contain companies with mediocre or low-quality businesses.

The kicker is this – both Schloss and Buffett have been able to generate enviable returns, despite the stark difference in their investing approaches.

4. Mistakes are part of investing

“And it turned out that we miscalculated. Sometimes you get a little too smart. But this is the law of averages; some deals don’t work out.”

Mistakes are part and parcel of investing. Accepting our own mistakes would be a good first step. Learning from our own mistakes may be the most important thing we do to improve ourselves as investors.

A simple way to learn from our mistakes is to write down your investing thesis for a company which you would like to buy. The Motley Fool has a Tug-of-Fools series with Shares Investment which covers both the bull and the bear thesis of a company.

Here’re a few examples:

Checking back later on your thesis may help you figure out what you got right, where you went wrong, and areas in which you can improve on.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.