Are the Superinvestors of Graham and Doddsville still beating the S&P 500 --???>
A reader writes:
> In one of your articles I read the following comments about The
> Superinvestors of Graham and Doddsville: "A partial list of
> Index-beating, Value-oriented superinvestors would include Irving Kahn,
> John Neff, Walter Schloss, Tweedy, Browne Inc., Sequoia Fund,
> Perlmeter Investments, FMC Pension Fund, Michael Price, and William Miller."
> Of these high performers, I know of Tweedy Browne, and the Sequoia Fund.
> Are the others that are referenced still active? If so are they still
> successful?
That list was compiled by Warren Buffett in a 1984 speech he gave to the Society of
Securities Analysts to mark the 50th anniversary of Graham and Dodd's monumental
work, Security Analysis. Buffett entitled his speech, "The Superinvestors
of Graham and Doddsville", an edited version of which appears in the Appendix to
the last edition of The Intelligent Investor. (This is the derivation of
both the title to the GADR thread and the GADR newsletter.) Buffett offered these
examples of Index-beating followers of Graham to show that Graham's methods were
subsequently replicable by others -- not merely luck, or anomalies of Graham's era.
Thus, you are asking a very pertinent question: 14 years later, are they still
beating the S&P 500?
Irving Kahn, Graham's teaching assistant at Columbia for some 30 years, is still
active, and, last I checked, 92 years of age. I don't know how his track record
has held up over the years.
John Neff, who headed Windsor Fund for the Vanguard Group, retired a couple of
years ago. Vanguard founder John Bogle, Sr., champions the cause of Indexing.
But, not long before Neff's retirement, I noticed that Windsor was one of the top 4
mutual funds in Lipper's rankings, going back 20 years (so was Sequoia, at that
time).
Schloss Associates is still in business. I don't know if Walter Schloss himself is
active.
I am unfamiliar with the subsequent histories of Perlmeter Investments, FMC Pension
Fund, and William Miller.
Michael Price of Franklin funds retired in the past year, with a reputation as one
of the all-time greats. Though I am not familiar with the details, I am told that
his performance in recent years was not as sparkling as in years past.
Needless to say, during a span of 16 years of chasing growth-at-any-price, Mr.
Market has not favored the asset plays that Graham's name is most often associated
with.
And in the past few years, the surge of popularity in Indexing, and "shadow
Indexing", has created a self-fulfilling prophecy, causing the Index to pull ahead
of the long-term track records of all but a handful of active fund managers,
regardless of strategy. Rest assured, though, that as a buy-high, sell-low
strategy (i.e., the higher its price, the bigger the portion of the Index a stock
represents), this is one investment fad all but guaranteed to cool off in the next
few years.
Thus, Index-beating Value-based managers will be coming forth in greater numbers
over the coming decades. But, all of the foregoing notwithstanding, I still think
very few investors will actually outperform an all-Index, all-the-time strategy,
primarily because of cost-inefficient diversification, as well as the vagaries of
investor psychology.
Does anyone else have information to add about how these Superinvestors now stack
up? |
