The world’s greatest investors: Geraldine Weiss

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”.