“I’m not very good at judging people. So I found that it was much better to look at the figures rather than people. I didn’t go to many meetings unless they were relatively nearby. I like the idea of company-paid dividends, because I think it makes management a little more aware of stockholders, but we didn’t really talk about it, because we were small. I think if you were big, if you were a Fidelity, you wanted to go out and talk to management. They’d listen to you. I think it’s really easier to use numbers when you’re small.” -- Walter Schloss
In
Part 1 of this series, I talked in generalities about laying the groundwork for becoming a successful investor. I discussed some good literature to get you started down the right path and suggested familiarizing yourself with economic cycles. Finally, you should choose whether you identify yourself as a speculator, a trader, or an investor and then to get your feet wet by putting a minimal amount of funds into a discount brokerage to get a "feel" for the market.
I have spent years researching different methods of equity investing and learned some expensive, but valuable lessons along the way. My ego has led me to believe I could trade stocks and beat the market; convincing me that somehow I had the gift to outdo the money managers who live and breath this stuff all day, every day. I have since moved on from the guessing game and built an investment strategy around the techniques of Graham, Buffett, and my favorite, Walter Schloss.
If you have any doubts about the effectiveness of a long-term value-investing approach, I highly encourage you to read "
The Superinvestors of Graham-and-Doddsville", a speech by Buffett to a class at Columbia. Buffett does a fantastic job articulating the school of thought that these "Superinvestors" adhere to while dispelling the argument that randomness is solely responsible for an investor's success.
