The argument
By the 1980s, academic finance held that markets were efficient: prices already reflect everything known, so anyone who beats the market is just lucky. Buffett granted the point about luck. Line up 225 million orangutans flipping coins, and a few will call 20 flips in a row. But, he asked, what if those winning orangutans all came from the same zoo? That would suggest they share something besides luck.
His "zoo" was Graham-and-Doddsville: investors who had studied under or worked for Benjamin Graham. They bought different stocks and rarely overlapped. They shared only the framework: buy businesses for less than they're worth.
Some of the records
| Investor | Period | Annual return | Market |
|---|---|---|---|
| Walter Schloss — WJS Partnership | 1956–1984 | 21.3% (16.1% to partners) | 8.4% S&P |
| Tom Knapp, Ed Anderson — Tweedy, Browne (TBK) | 1968–1983 | 20.0% (16.0% to partners) | 7.0% Dow |
The essay also covers Buffett's own partnership, Bill Ruane's Sequoia Fund, Charlie Munger's partnership, Rick Guerin's Pacific Partners, and pension funds run on the same principles. Buffett also pointed out that the value investors typically took less risk while earning more — the opposite of what efficient-market theory predicted.
Why it still matters
Schloss is the most useful model for individual investors. He had no special access, rarely met management, worked from a tiny office with public filings, and owned around 100 cheap stocks at a time. His method was mostly arithmetic and patience — the same work our screener automates.
Read the full essay at Columbia Business School →
Educational content, not investment advice. Past performance — of people, papers, or backtests — doesn't guarantee future results. Do your own homework before buying anything.