The Superinvestors

“The Superinvestors” is a name given by Warren Buffett to Benjamin Graham and his protégés. Buffett was one of Graham’s students at Columbia University and he was an analyst in the Graham-Newman Corporation, Benjamin Graham’s investment firm which managed Graham’s hedge fund (yes, Graham ran a hedge fund before the term existed).

Although Buffett’s father, Howard, owned a securities brokerage in Omaha, Warren did not have his eureka moment until reading Graham’s book, The Intelligent Investor. It caused Buffett to apply to Columbia University’s Graduate School of Business to seek Graham as his teacher. To this day, Warren credits the book for changing his professional life and Warren believes that most of what anyone needs to know about investing can be found in two chapters of the book: the chapter on Mr. Market, which outlines behavioral finance concepts before that term existed, and the chapter on investing with a Margin of Safety.

Buffett gave a speech at Columbia University in 1984 in which he detailed the performance of money managers who had once studied under or worked for Graham, Buffett, or Charlie Munger, Buffett’s partner at Berkshire Hathaway. The title of the speech was “The Superinvestors of Graham-and-Doddsville.” The speech title referred to a seminal work in investing–Security Analysis–written by Benjamin Graham and David L. Dodd and published in 1934.

Buffett showed that the portfolio managers who adopted the Graham and Dodd approach to investing had all beaten the market by significant margins over long periods. Buffett indicated that he did not cherry pick the results of the best performing managers; he showed the results of every ”Graham and Dodd” manager who had created their own investment firm. This outperformance was earned despite there being very little overlap in investments among the managers. About the only thing they had in common was a value-investing philosophy because of their affinity to Graham, Buffett, or Munger. In addition, Buffett showed that almost every manager had a significant stretch of poor performance, but that investors who stayed with these managers were handsomely rewarded in every case.

Buffett’s purpose for the speech, besides celebrating the 50th anniversary of the publication of Security Analysis, was to identify and debunk a popular theory from academia, which by the time of the speech had almost completely transformed the investment management industry. That theory was the Efficient Market Hypothesis (EMH), which essentially stated that no investment manager possessed the skill required to consistently beat the market.

This blog will aggregate as much information as possible about the Superinvestors and their firms under the tag “Superinvestors.” Some of the original Superinvestors still work as portfolio managers today.


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