Achieving Alpha is a Lonely Pursuit | Top Post
High reader engagement free article from the QVI archive | The inspiring story of American superinvestor Shelby Cullom Davis
Contributing editor’s note: This revised Quality Value Investing (QVI) post, initially published in September 2024, was a top-performing article in terms of reader engagement according to Substack’s algorithm. Enjoy the unlocked repost, courtesy of QVI. Should you find value in the read, consider a free or premium subscription to Quality Value Investing. ~David
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The Story of Superinvestor Shelby Davis
American superinvestor Shelby Cullom Davis (1909-1994) invested his wife, Kathryn Wasserman Davis’s, $100,000 inheritance using a quality-driven value investing approach and grew the portfolio to over $900 million during his lifetime.
Upon Shelby’s retirement, his son, Shelby M. C. Davis, took over the management of the portfolio and noticed that his father had published an ongoing newsletter sharing his investment principles and strategies with the public. Curiously, there were relatively few subscribers.
When his son inquired about the lack of public interest in his portfolio-building secrets, the senior Shelby explained that he was an introvert who earned money slowly. In contrast, he had discovered throughout his career that the public was more interested in following extroverts who promised fast money.
The moral of Shelby Cullom Davis’s story is that most financial advisors and newsletter editors underperform their market benchmark. Nevertheless, many earn six or seven figures in advisory or subscription fees. They achieve alpha by selling a dream of wealth based on unreliable yet uplifting predictive analysis, rather than the more noble accomplishment of compounding capital gains and dividends that outperform the market.
Regardless of the professional discipline and delivery method, entertainment often prevails, while valuable information lags. In contrast, quality-driven value investors strive to be informed, rational, disciplined, and patient to combat unproductive and unprofitable crowd thinking, reserving entertainment value for activities pursued solely for amusement.
Whether you're using a money manager, newsletter editor, self-managing, or a combination of these, remember that portfolio results matter when investing.
Achieving portfolio alpha with lower fees and reduced risk should be the prevailing rules of engagement for quality-driven investors.
Remember, outside of fees collected from the crowd it serves, the financial services industry, on the whole, almost always falls short of achieving portfolio alpha over the long term.
Like introverted superinvestor Shelby Davis, learn and practice to become your portfolio’s independent investor guru.
Biography of Shelby Cullom Davis
Shelby Cullom Davis was born in Peoria, Illinois. After completing his secondary education at Lawrenceville School in New Jersey, he graduated from Princeton University, obtained a master’s degree from Columbia University, and earned his doctorate from the International Institute of Graduate Studies in Geneva. Davis also served as the US Ambassador to Switzerland. His was a life well-lived.
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About the Writer
David J. Waldron is the contributing editor of Quality Value Investing and the author of the international-selling book Build Wealth with Common Stocks: Market-Beating Strategies for the Individual Investor and his upcoming fifth book, Quality Value Investing: How to Pick the Winning Stocks of Enduring Enterprises.
David is a private investor and a former expert advisor to Wall Street hedge funds, mutual funds, private equity firms, and investment banks.
His mission is to inspire his readers to achieve their financial goals and dreams. David’s work has been featured in Substack Finance, Seeking Alpha, MSN Money, TalkMarkets, ValueWalk, Yahoo Finance, QAV—Australia’s #1 Value Investing Podcast, Money Life with Chuck Jaffe, LifeBlood with George Grombacher, The Acquirer’s Multiple, Capital Employed, and on platforms like Amazon, Barnes & Noble, Apple Books, The BookLife Prize, and Publisher’s Weekly.
He previously enjoyed a 25-year career as an executive in postsecondary education services. David earned a Bachelor of Science in Business Studies as a Garden State Scholar at Stockton University and completed The Practice of Management Program at Brown University. Learn more at davidjwaldron.substack.com.