Features

The world’s greatest investors: Geraldine Weiss

Geraldine Weiss was a value investor, but believed that people should focus on dividends, rather than earnings.

Born in San Francisco in 1926, Geraldine Weiss (born Schmulowitz) graduated from University of California, Berkeley, in 1945. She became interested in investing in the early 1960s, doing night courses and famously reading every book she could find on the subject in the San Diego library. Unable to find work as a broker, she set up Investment Quarterly Trends, a newsletter, in 1966. She handed over editorial duties in 2002, though she is still involved with IQT's overall strategy.

What was her strategy?

Weiss was a value investor, but believed that people should focus on dividends, rather than earnings, because it is too easy to manipulate profit figures in the accounts. She looked for high yields and "blue chip" companies that had a strong balance sheet, which would make it easy for them to keep paying their dividends, and to grow those dividends. She constructed charts of historic dividend yields, buying when the yield reached historically high levels and selling when it reached lows. Weiss also advocated a relatively concentrated portfolio, suggesting that an investor should hold no more than 10-20 stocks.

Did this work?

For the last 30 years, the IQT's top recommendations have returned 11.2% a year, compared with 9.8% for the overall market. It has consistently been rated one of the best-performing newsletters by services that monitor the performance of tipsheets. IQT's tips collectively exhibit around 15% less volatility than the market, so the outperformance is even higher than the raw stats would suggest.

What were her biggest successes?

One of Weiss's most successful tips was Coca-Cola. Between 1982 and 1992 (when the yield fell too low for her to keep recommending it), the price rose by 1,285%. Adding in dividends, the stock returned an average of 34.6% a year, compared with 18.6% for the stockmarket as a whole.

What lessons are there for investors?

Weiss felt that a stock should meet most (or ideally all) of seven key criteria before investors should consider buying it. They are: 1. Must be yielding more than its historical average dividend yield. 2. Must have raised dividends at a rate of at least 10% a year over the past 12 years. 3. Trading for less than double the value of net assets. 4. Trading at less than 20 times earnings. 5. Earnings are at least double dividends. 6. Debt is less than 50% of total market cap. 7. Financially stable and with a long enough track record to be considered a "blue chip".

Recommended

Latest issue
Investments

Latest issue

Latest issue of MoneyWeek magazine
13 May 2021
I wish I knew what hyperinflation was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what hyperinflation was, but I’m too embarrassed to ask

Mention hyperinflation and many of us will think of wheelbarrows full of cash in Weimar Germany. Or, more recently, Zimbabwe or Venezuela. But what ex…
11 May 2021
The return to the old nine-to-five is a matter for business, not government
UK Economy

The return to the old nine-to-five is a matter for business, not government

Should we stay working from home or go back to the office? Whatever we decide, let’s keep Whitehall out of the question, says Matthew Lynn.
9 May 2021
Uncertain times, strong performance
Advertisement Feature

Uncertain times, strong performance

Alex Crooke, Fund Manager of The Bankers Investment Trust, looks back at the previous 12 months and casts his eye to the year ahead.
6 May 2021

Most Popular

How will Joe Biden’s capital gains tax rise affect crypto prices?
Bitcoin & crypto

How will Joe Biden’s capital gains tax rise affect crypto prices?

The US president wants to increase capital gains tax – and that’s going to hit a lot of American cryptocurrency speculators. Saloni Sardana looks at h…
14 May 2021
Inheritance tax planning: the rules around gifting
Inheritance tax

Inheritance tax planning: the rules around gifting

There are plenty of legal ways to minimise an inheritance tax bill. Perhaps the simplest is to give away assets to reduce the size of your estate. Dav…
11 May 2021
Are we nearing the end of the negative bond yield era?
Government bonds

Are we nearing the end of the negative bond yield era?

As inflation gets going, the era of the negative bond yield – that investors have to pay governments for the privilege of lending them money – might b…
14 May 2021