(Ed Note: the 8 Rules are below)
Fund manager Stephen Jarislowsky is something of a conservative investor. So much so that the octogenarian is known in the markets as a Canadian Warren Buffett.
Still, while his strategy may look unadventurous – he’s still got shares tucked away that he bought as a student in the 1940s – few can quibble with his results: he has more than C$52bn (£25bn) under his management, is comfortably a billionaire in his own right and, within Canada, is a legend.
His book Investment Zoo– a mish-mash of autobiography, advice, and some frankly eccentric views on international policy – recently knocked The Da Vinci Code off the bestseller lists.
“Smart as Hell”
Together with partner Scott Fraser, he founded Montreal-based Jarislowsky Fraser. It didn’t take long for the firm to establish itself as “a Canadian investing legend”, says the National Post, with Jarislowsky soon renowned for being “aggressive and smart as hell” with his characteristic value-seeking style. That description stands today, says the Montreal Gazatte. But now it also comes with “feisty”, “irascible” and “caricature of a wealthy curmudgeon”.
Playing a long game
“If my kids hang on to the portfolio, and it doubles every seven, eight years, there’ll be more money than Warren Buffett has.
Stephen Jarislowsky’s eight rules of investing
1. Your best bet for building wealth over the long term is to build a portfolio of high-quality large-company stocks that have great management and a track record of doubling earnings every five to seven years – preferably in non-cyclical businesses.
2. Choose stocks over alternatives such as property (cyclical) and bonds (lower returns over the long haul) and be wary of alternative investments, such as gold and art.
3. Start as early as you can and select and hold these companies for the long term. Do not trade unless you have clearly made a mistake. Trading only adds dealing costs and possibly triggers a tax charge too. Be a long-term investor, not a gambler, and keep costs to a minimum.
4. Shares produce an average real return of 5% to 6% a year (after inflation). The earlier that you can start, the more miraculous will be the effects of compounding over a working life.
5. Put your plan in place and do not waver in the face of short-term market fluctuations. You do not own the market, only those companies in which you are invested.
6. Look at market bubbles as an occasional opportunity to take profits and market slumps as an opportunity to top up your holdings with cheap purchases.
7. Do not be swayed from your plan by smooth-talking financial advisers or stock brokers. Beware mutual funds (or their UK equivalent, unit trusts and Oeics) because of their high charges and often pedestrian performance.
8. Keep yourself informed on the companies in which you invest. Make a point of reading your companies’ reports and accounts.