Managing Your Portfolio 167Fifty years after its original publication, the Columbia Business
School sponsored a seminar marking the anniversary of this seminal text.
Warren Buffett, one of the school’s best-known alumni and the most fa-
mous modern-day proponent of Graham’s value approach, addressed the
gathering. He titled his speech “The Superinvestors of Graham-and-
Doddsville,” and in its own way, it has become as much a classic as the
book it honored.^14
He began by recapping the central argument of modern portfolio
theory—that the stock market is efficient, all stocks are priced correctly,
and therefore anyone who beats the market year after year is simply
lucky. Maybe so, he said, but I know some folks who have done it, and
their success can’t be explained away as simply random chance.
And he proceeded to lay out the evidence. The examples he pre-
sented that day were all people who had managed to beat the market
consistently over time, not because of luck, but because they followed
principles learned from the same source: Ben Graham. They all reside,
he said, in the “intellectual village” of Graham-and-Doddsville.
Nearly two decades later, I thought it might be interesting to take
an updated look at a few people who exemplify the approach def ined
by Graham and who also share Buffett’s belief in the value of a focused
portfolio with a small number of stocks. I think of them as the Super-
investors of Buffettville: Charlie Munger, Bill Ruane, Lou Simpson,
and of course Buffett. From their performance records, there is much
we can learn.
Charlie Munger
Although Berkshire Hathaway’s investment performance is usually tied
to its chairman, we should never forget that vice chairman Charlie
Munger is an outstanding investor. Shareholders who have attended
Berkshire’s annual meeting or read Charlie’s thoughts in Outstanding
Investor Digestrealize what a f ine intellect he has.
“I ran into him in about 1960,” said Buffett, “and I told him law was
f ine as a hobby but he could better.”^15 As you may recall, Munger at the
time had a thriving law practice in Los Angeles, but gradually shifted his
energies to a new investment partnership bearing his name. The results
of his talents can be found in Table 10.1.