Superinvestors of Graham and Doddsville: An In-Depth Analysis for Serious Investors
The superinvestors of Graham and Doddsville represent the most compelling real-world evidence that disciplined value investing produces market-beating returns. Named after Warren Buffett's 1984 speech at Columbia University, this group of independent investors all studied under Benjamin Graham and all crushed the S&P 500 across different decades, different markets, and different portfolios. Their combined track record spans over 200 investor-years of outperformance. This article goes beyond the surface narrative to analyze what their actual returns looked like, what strategies drove those returns, and how you can build a modern portfolio using the same fundamental principles.
Key Takeaways
- The superinvestors of Graham and Doddsville collectively generated an average annual return exceeding 20%, roughly double the S&P 500
- Their portfolios shared almost no overlapping positions, eliminating the argument that they all rode the same lucky stock
- Walter Schloss and Warren Buffett represent two poles of the framework: broad diversification versus extreme concentration, both working
- Risk-adjusted returns (Sharpe ratios above 1.0 for most) prove the outperformance was not simply a result of taking on more risk
- Modern 13F tracking tools let you build a portfolio inspired by today's Graham-and-Doddsville descendants
- The principles translate directly to screening criteria you can apply on any stock exchange
Deconstructing the Returns: What the Numbers Actually Show
Most discussions of the superinvestors of Graham and Doddsville cite their annual returns and move on. A deeper look at the data reveals patterns that are even more impressive than the headline numbers suggest.
Consider Walter Schloss. His 21.3% annual return from 1956 to 1984 sounds strong but does not capture the full picture. Schloss achieved this return with a maximum drawdown roughly 30% smaller than the S&P 500 during the same bear markets. His 1973-1974 drawdown was approximately 25%, compared to the market's 48%.
This matters because risk-adjusted returns are the true measure of skill. Generating 21% returns while taking on S&P 500-level risk is one thing. Generating 21% returns with substantially less downside risk is extraordinary.
| Superinvestor | Annual Return | Est. Max Drawdown | Est. Sharpe Ratio | Holding Period |
|---|---|---|---|---|
| Walter Schloss | 21.3% | ~25% | ~1.1 | 4+ years |
| Warren Buffett (Partnership) | 29.5% | ~15% | ~1.4 | 5+ years |
| Charlie Munger | 19.8% | ~35% | ~0.9 | 5+ years |
| Rick Guerin | 32.9% | ~40% | ~1.0 | 3+ years |
| Bill Ruane | 18.2% | ~28% | ~1.0 | 5+ years |
Rick Guerin's 32.9% return came with higher volatility than the others, a direct consequence of his extreme concentration. Guerin's portfolio sometimes held fewer than 5 positions. Munger operated similarly, though with slightly more conservative position sizing.
The point is that the superinvestors of Graham and Doddsville did not achieve their returns through reckless risk-taking. They achieved them through superior stock selection, a distinction that supports the value investing framework rather than undermining it.
The Two Schools Within Graham-and-Doddsville
Though all the superinvestors shared Graham's core principles, they evolved into two distinct camps.
The Quantitative School (Schloss, Knapp, early Buffett): These investors followed Graham's original approach almost to the letter. They screened for statistically cheap stocks: companies trading below net current asset value, below book value, or at single-digit P/E ratios. They diversified broadly, holding 50-150 positions, and let the law of large numbers do the work. If 60% of their cheap stocks went up and 40% went nowhere or declined, the portfolio still produced strong returns.
The Qualitative School (Munger, Ruane, later Buffett): Influenced partly by Philip Fisher, these investors focused on business quality. They would pay a P/E of 15 for a company with a 30% ROIC and durable competitive advantages, while Schloss would have passed on anything above a P/E of 8. Their portfolios held 5-20 high-conviction positions.
Buffett himself transitioned between schools. His early partnership years (1957-1969) followed pure Graham: cigar-butt investing in deeply undervalued, often mediocre businesses. After Munger's influence, Buffett shifted toward quality: Coca-Cola (P/E 23.7, ROIC 12.8%), Apple (P/E 28.3, ROIC 45.1%), and American Express.
Both schools worked because they shared the non-negotiable principle: paying less than intrinsic value.
The Margin of Safety in Practice
Benjamin Graham's concept of margin of safety is the single idea that unites every superinvestor. In practice, it meant different things to different investors.
For Schloss, margin of safety was buying stocks at 60-70% of tangible book value. If a company had $10 per share in net assets and the stock traded at $6.50, Schloss saw a $3.50 buffer against being wrong about the company's prospects.
For Buffett, margin of safety evolved into paying a fair price for an exceptional business rather than a cheap price for a mediocre one. His reasoning: a company growing intrinsic value at 15% annually creates its own expanding margin of safety, even if the initial discount is small.
For Munger, margin of safety included qualitative factors: management integrity, brand strength, and switching costs. A company with a Piotroski F-Score of 8 (like Microsoft at P/E 32.1, ROIC 35.2%) has a margin of safety embedded in its financial health, even if its P/E ratio looks expensive on the surface.
The ValueMarkers glossary breaks down the Graham Number calculation, which offers a quick way to estimate whether a stock trades below its Graham-derived intrinsic value. Stocks trading at 70% or less of their Graham Number represent the clearest margin of safety opportunities.
How the Superinvestors Handled Bear Markets
Bear markets are where superinvestor strategies prove themselves. The historical data tells a consistent story.
During the 1973-1974 bear market, when the S&P 500 fell 48%:
- Schloss declined approximately 25%
- Buffett's partnership (by then dissolved, but using BRK) outperformed significantly
- Most superinvestors used the decline to increase positions in cheap stocks
During the 1987 crash, when the S&P 500 fell 33% in a matter of weeks:
- Bill Ruane's Sequoia Fund declined less than 20%
- The superinvestors who held cash reserves deployed them into bargains created by the panic
The pattern repeats in every cycle. Superinvestors underperform slightly in euphoric bull markets (because they refuse to overpay) and dramatically outperform in bear markets (because their margin of safety limits downside).
This asymmetry compounds powerfully over time. Losing 25% instead of 48% means you need a 33% gain to recover, not a 92% gain. That mathematical reality is why the superinvestors of Graham and Doddsville compounded so effectively across full market cycles.
Building a Modern Graham-and-Doddsville Portfolio
The stocks and exchanges have multiplied since 1984, but the screening criteria remain the same. Here is how to construct a portfolio using superinvestor principles across global markets.
Quantitative screen (Schloss-style):
- P/B ratio below 1.0
- Positive earnings for 5+ consecutive years
- Debt-to-equity below 0.5
- Market cap above $100M (for liquidity)
- Altman Z-Score above 3.0 (financial safety)
Running this on the ValueMarkers screener across 73 exchanges surfaces opportunities in markets that U.S.-focused investors often miss. Japanese stocks, in particular, have consistently offered some of the deepest value globally, with many companies trading below net cash.
Qualitative screen (Munger-style):
- ROIC above 15% for 5+ consecutive years
- Piotroski F-Score of 7+
- Gross margin above 40% (pricing power indicator)
- Free cash flow yield above 5%
- P/E ratio below sector median
JPMorgan (P/E 11.2, P/B 1.8, ROIC 14.1%) is an example of a stock that appears in qualitative screens: strong returns on capital, reasonable valuation, and a dominant market position in banking.
The Legacy Continues: From 1984 to Today
The original superinvestors of Graham and Doddsville have mostly retired or passed away. But their intellectual descendants continue to produce market-beating returns.
Seth Klarman at Baupost Group has compounded at approximately 16% annually since 1982. His book "Margin of Safety" is among the most sought-after investment texts ever published.
Mohnish Pabrai explicitly models his approach on the Graham-and-Doddsville framework, focusing on high-certainty, low-downside bets with asymmetric upside potential.
Li Lu, Charlie Munger's chosen money manager, runs a concentrated portfolio with a particular focus on Asian markets where value opportunities remain abundant.
The ValueMarkers guru tracker aggregates 13F filing data from these modern superinvestors, letting you see not just what they own today but how their positions have changed quarter over quarter.
Further reading: SEC EDGAR · Investopedia
Why Graham Dodd investing strategy Matters
This section anchors the discussion on Graham Dodd investing strategy. The detailed treatment, formula, and worked examples appear in the body of this article above. The points below summarize the most important takeaways for value investors who want to apply Graham Dodd investing strategy in real portfolio decisions. ValueMarkers exposes the underlying data on every covered ticker via the screener and stock profile pages, so the concepts in this article translate directly into actionable filters.
Key inputs for Graham Dodd investing strategy
See the main discussion of Graham Dodd investing strategy in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using Graham Dodd investing strategy alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Sector benchmarks for Graham Dodd investing strategy
See the main discussion of Graham Dodd investing strategy in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using Graham Dodd investing strategy alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Related ValueMarkers Resources
- Margin of Safety — Margin of Safety expresses how cheaply a stock trades relative to its fundamentals
- Graham Number — Graham Number captures how cheaply a stock trades relative to its fundamentals
- Piotroski F-Score — Piotroski F-Score captures the reliability of reported earnings versus underlying cash flow
- Superinvestor — related ValueMarkers analysis
- The Superinvestors Of Graham And Doddsville — related ValueMarkers analysis
- Capital Expenditures Capex What Investors Need To Know — related ValueMarkers analysis
Frequently Asked Questions
what percentage of united health group is owned by vanguard
Vanguard Group holds approximately 8-9% of UnitedHealth Group (UNH) shares through its various index and actively managed funds. This makes Vanguard the largest institutional shareholder. You can track institutional ownership changes through quarterly 13F filings, which all managers with $100M+ in assets must file with the SEC within 45 days of each quarter end.
how to read stock market charts and graphs
Stock market charts display price and volume data over time. The x-axis shows time, the y-axis shows price, and bar charts at the bottom show daily trading volume. For value investors in the Graham-and-Doddsville tradition, charts are secondary to fundamental data. Focus instead on financial statements and metrics like P/E ratio, ROIC, and the Piotroski F-Score to evaluate whether a stock is undervalued.
how to calculate intrinsic value of share
Intrinsic value is most commonly calculated using a discounted cash flow (DCF) model: project future free cash flows for 10 years, apply a discount rate (typically 10-12%), and add a terminal value. For example, if a company generates $5 per share in free cash flow, growing at 7% annually with a 10% discount rate, the intrinsic value is approximately $167 per share. The ValueMarkers DCF calculator automates this for thousands of stocks across 73 exchanges.
how many shares warren buffett own of coca cola
Berkshire Hathaway holds 400 million shares of Coca-Cola (KO), a position Buffett established in 1988 at an average cost of about $3.25 per split-adjusted share. With KO trading around $60+ per share, the position is worth over $24 billion, making it one of Berkshire's largest and longest-held investments. Coca-Cola currently has a P/E of 23.7, ROIC of 12.8%, and a dividend yield of 3.0%.
how to find the intrinsic value of a stock
Finding intrinsic value requires combining multiple valuation methods for a more reliable estimate. Start with a DCF model using projected free cash flows, then cross-check against the Graham Number (square root of 22.5 x EPS x book value per share), earnings power value, and comparable company multiples. Use a screener like ValueMarkers to pull the underlying financial data, then apply a 25-30% margin of safety to your average estimate before buying.
what is the current value of the s&p 500
The S&P 500's real-time value changes throughout each trading day and can be checked on any financial news platform. For context, the index's forward P/E ratio as of early 2026 hovers around 20-22x earnings, above its 25-year average of approximately 16.5x. From a Graham-and-Doddsville perspective, this elevated valuation means fewer value opportunities exist within the index, pushing disciplined investors toward international markets and small caps.
Written by Javier Sanz, Founder of ValueMarkers. Last updated April 2026.
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Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.