Learning objectives
By the end of the week you can:
- State each school's core tenets, master text, and edge-window for Fisher (growth + scuttlebutt), Lynch (GARP), Greenblatt (special situations + the Magic Formula), Klarman (absolute value), Marks (cycles + risk), Pabrai (Dhandho asymmetry), and the quality-compounders (Akre, Smith, Sleep), in two or three sentences each, and name when the school works and when it fails.
- Run Fisher's scuttlebutt method: turn the fifteen points into a concrete qualitative-research plan (whom to call, what to read, what to listen for) on a real company, and connect it to the Phase 8 deep dive's Day 3.
- Classify any company into Lynch's six categories (slow grower, stalwart, fast grower, cyclical, turnaround, asset play) and derive the category-specific question that decides the thesis. Compute and interpret a PEG (and the dividend-adjusted PEG), knowing exactly what PEG can and cannot see.
- Execute the Magic Formula end-to-end: define earnings yield (EBIT/EV) and return on capital (EBIT/tangible capital), rank a universe, combine the ranks, and state the honest evidence on the strategy: why it worked, why it lags for years at a time, and how much is just value × quality.
- Distinguish absolute-value from relative-value investing (Klarman), explain why holding cash can be the disciplined output of a bottom-up process rather than a market call, and say what "margin of safety" adds beyond a cheap multiple.
- Apply Marks's second-level thinking, his definition of risk as permanent loss, and the pendulum/cycle model to a real market episode, and locate today's market on the cycle without pretending to forecast it (the bridge into Phase 7).
- Build a Dhandho ("heads I win, tails I don't lose much") asymmetric bet: lay out the outcome tree, compute the expected value, verify the downside is survivable, and connect the sizing logic to Kelly and to Phase 9.
- Argue the concentration-versus-diversification question from both sides, Munger/Pabrai/Sleep versus Graham/Schloss, using Kelly, hidden correlation, and ruin-avoidance, and state the specific factors that set the right answer for a given investor.
Prerequisites & connections
Builds on. M6.01: everything here is "Schools II," so the vocabulary of intrinsic value, Mr. Market, margin of safety, owner earnings, and the four filters is assumed; Fisher and the quality-compounders are the growth half of the synthesis Buffett made ("85% Graham, 15% Fisher"), and the missing 15% and its descendants arrive this week. M4.04–M4.05: the moat lenses and the ROIC-persistence test. The quality-compounder school (§4.8) is moat analysis worn as a portfolio philosophy, and Sleep's "scale economies shared" is a specific flywheel you already met in M4. M2.03: ROIC/ROCE built by hand and the ~12% (INR) / ~8–9% (USD) hurdle (as of mid-2026, verify against your own WACC builds). The Magic Formula's "return on capital" leg and Akre's "compounding machine" are that number, systematized. M3.05–M3.06: reverse DCF, the multiples and their driver algebra, and the India premium-multiple discipline. PEG (§4.3), the Magic Formula's earnings yield (§4.4), and "don't overpay" (§4.8) all live inside that machinery. M3.10: special situations and the SOTP/holdco discount. Greenblatt's spin-offs (§4.4) are where those discounts are born and closed.
Feeds forward. M6.03, mental models and decision science: Pabrai's Dhandho (§4.7) and the concentration debate (§4.9) hand directly to Kelly, fractional Kelly, expected value, and ergodicity/ruin, which M6.03 makes rigorous. M6.04, behavioral finance: Marks's pendulum and three-stages model (§4.6) is the sentiment cycle M6.04 explains bias-by-bias, and every school here is, at bottom, a pre-commitment device against a specific bias. M6.05, the checklist capstone: the schools you resonate with become lines in your personal checklist. M8.04: the deep dive's Day 3 is Fisher's scuttlebutt (§4.2) run under a workbook, and the fifteen points are the skeleton of that day. Phase 7: Marks's cycles are the investor's-eye view of the macro machine Phase 7 builds mechanically. M9.01–M9.02: risk as permanent loss (Marks, Klarman), position sizing (Pabrai/Kelly), hidden correlation, and the concentration policy you'll commit to in writing are §4.6–4.9 turned into a portfolio process. Competency C9 in the master map ("an investor's temperament and process") begins here, and the schools are where temperament gets its vocabulary.