Good reads from around the Web.
I was sad to learn this week that Jim Slater has died, aged 86.
Slater was a fixture of the UK’s investing landscape for more than five decades. That landscape is the poorer without him.
Unlike the US where the likes of Peter Lynch
The very successful contrarian investor Antony Bolton did publish a book
I guess Neil Woodford is more chatty nowadays, via his newish company’s blog.
But income investing’s Billion Pound Man will have to live to 300 to outdo Slater’s output at his current word rate.
Most of our top active investors are unknown hedge fund billionaires who barely leave the City except to helicopter to their estates in the Home Counties or to attend society weddings in the South of France.
I don’t get the impression they’re interested in sharing with the rest of us.
Investing made accessible
In contrast, Jim Slater was unique, and to me uniquely inspiring.
Slater was a self-made man back when The City was still dominated by old school ties, and he was systematic about his stockpicking when the culture was still to buy on tips from those supposedly ‘in the know’.
He began sharing his investing thoughts way back in the 1960s.
But most UK private investors today know him from his famous bible for picking growth stocks, The Zulu Principle
In the periods when its kind of companies are in fashion, Slater’s Zulu method works almost like magic. It’s therefore created a fair few vocal disciples who’ve done well in those good times – not least his own son, Mark, who runs a fund based on its principles.
I’m not ashamed to say however that my introduction to Jim Slater’s thinking – and pretty much to investing – was his much less sexy Investment Made Easy
I still have my battered old copy, which I dusted down for a photoshoot:
A book that changed my life.
For me Investment Made Easy was a sort of Hitchhiker’s Guide to an amazing new world.
Slater explained everything from inflation and bank accounts to funds, shares, investing ratios, and even the pros and cons of home ownership.
I even re-read the book 20 years later for inspiration when I began my own short series on investing for beginners.
I’ve also referred more than once to his thoughts on spotting bull market tops and bear market bottoms, which to me as an active investor are much more insightful than any number of data-mined numerical indicators.
If only I’d followed Slater’s stern advice given in the mid-1990s that nobody can afford to ignore the huge tax advantages of owning their own home in the UK!
Slater convinced me, but events and a decade later poor judgement intervened.
But the point is: How many stockpicking gurus have you read that tell you to first go buy a house?
Slater was practical, and he had the common touch, despite his extraordinary career.
Fluctuat nec mergitur1
Incidentally, I was surprised to read that popular investing blogger Paul Scott had no idea of Slater’s boom-to-bust business career of the ’60s and ’70s.
Like me, Scott was a denizen of the Motley Fool bulletin boards a decade ago when they were in full health, and there was a time when you couldn’t mention Slater on there without someone harping on about his past – invariably in an unflattering light.
Slater was one of the original corporate restructurers – the sort that would later be disparaged (by some) as asset strippers.
In the 1970s he was as famous as any City figure is today for that, not for his stock picking prowess.
The business ultimately blew-up – as so many of that ilk do – on the back of excessive debt. There was also a suggestion of scandal that was thrown out, but which some of those old hands on the Fool boards still remembered.
By the way, Slater didn’t seem to lose his appetite for risky borrowing. Investment Made Easy was later reworked
I remember thinking at the time it seemed ultra-risky. But that time was 2001 or 2002, and I daresay his strategy minted a few millionaires among its readership.
Passionate even at 80
I met Slater – well, to shake his hand and say I enjoyed his books – a few years ago.
It was at a conference for private investors. They loved him, and he seemed at one with them.
At the Q&A at the end of his session people shouted out small cap names to ask for his opinion, and the bright 80-something knew them all. (Another inspiring old super-successful investor!)
Slater was getting into gold miners at the time. I hope he got out again.
I’ve also met his son, Mark, the aforementioned fund manager, and enjoyed a more substantial conversation. The physical resemblance is uncanny, and Mark also follows the Zulu principles.
I found him a different sort of personality to his father, but I’d certainly be very interested in a book, were Mark to take on his mantle.
My condolences to him and to the rest of the Slater family.
From the blogs
Making good use of the things that we find…
Passive investing
- UK investors are decades behind US [Video] – T.E.B.I.
- ETFs explained – The Escape Artist
- 5 things Smart Beta won’t do for you – The Reformed Broker
- ‘Fading affect bias’ and bear markets – Bason Asset Manangement
Active investing
- Making predictions is easy. Managing money is hard – AWOCS
- What the $*@£ is wrong with Rolls-Royce? – Richard Beddard
- Dying unicorns – Investing Caffeine
- Strive to be good if you want to be great – The Reformed Broker
- Is your smartphone killing your returns? – Abnormal Returns
- Imperial Tobacco’s debt-fueled dividend growth – UK Value Investor
Other articles
- Understanding bond duration and risk – Vanguard
- Focus, festivity, and flow – Mr Money Mustache
- How to deal with Christmas expenses – Simple Living in Suffolk
- Cutting the cords and saving… a bundle! – SexHealthMoneyDeath
- Cute observation on market noise [Tweet] – Morgan Housel
Product of the week: The Telegraph has surveyed the landscape and put Secure Trust Bank back at the top of the Best Buys for savings, with its new 120-day notice account paying 1.91%.
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.2
Passive investing
- Where Vanguard goes, fees fall – MarketWatch
- Why stockpickers tend to underperform: Maths edition – Bloomberg
- Swedroe: Putting valuation metrics in perspective – ETF.com
Active investing
- Three lessons from Yale’s endowment portfolio – Morningstar
- Has the share buyback boom undermined long-term growth? – Reuters
- …especially in the face of asset-light giants like Facebook? – Telegraph
- Why Nike should buy Lululemon Athletica – Bloomberg
- Meet a one-man venture capital band – TechCrunch
- 10 high conviction ideas from top US stock pickers – Morningstar
- Could supermarkets be the next big dividend payers? – ThisIsMoney
Other stuff worth reading
- Fund costs and charges are designed to confuse [Search result] – FT
- Will George Osborne raise CGT next week? – ThisIsMoney
- The first study of crowdfunding’s winners and losers – Telegraph
- Why the booze cruise to Calais is back on – Guardian
- Tory think tank agrees foreign flat buying needs curbing – Guardian
- An interview with Ben Bernanke [Podcast] – Wall Street Week
Book of the week: Good news for Martin Ford, bad news for humans – the author’s Rise of the Robots
Like these links? Subscribe to get them every week!
- ‘Tossed but not sunk’ – the motto of the indestructibly beautiful city of Paris. [↩]
- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]
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If You are interested in Jim Slater. http://www.jimslater.org.uk/biography/
“Investment made easy” was the first finacial book I ever bought. It was in the mid to late ’90’s. I had just started my first job after university, and was too broke to “invest” at the time. Like you, I still have my copy.
RIP Jim Slater.
That battered copy looks mint to me – you’re one of those guys that opens the book just enough to read it I guess 😉
I read the Zulu Principle – in the runup to the dot-com boom. Oops. That result’s not Slater’s fault, it was the combination of ‘it’s all different now’ and reading what I wanted to read. It didn’t end well, though the learning was cheap at the price in retrospect…
@ermine — My wardrobe is even worse, in terms of looking better than average after all these years. (My fastidiousness does help with the money saving lark, but not so good in the staying in fashion stakes…;) )
I’m kind of amazed reading this and no one is mentioning Slater Walker
https://en.wikipedia.org/wiki/Slater_Walker
In the 70s this was kind of like Lehmans
Slater was convincted on 15 charges related to insider trading
Not my kind of hero
@ Neverland.
I know nothing of Jim Slater the man, and I doubt I will go out of my way to find out.
However, as I stated in my previous post, “Investment made Easy” was the first financial book I bought. Partially from the advice given in the book, my long-time Girlfriend and myself bought our first house in 1997. We took out a 95% mortgage, and I borrowed the 5% deposit from my bank (I guess we were what is now called “Sub Prime Borrowers). As I recall, not long after the Government stopped Mortgage Interest Tax Relief.
The Girlfriend and I then got married in 2000, just before the Government scrapped Married Mans Tax Allowance.
We sold the house in 2003 for twice the purchase price that we “paid” 6 years earlier.
Also the book introduced me to the idea of investing for Dividend Income, which I am most grateful.
Although its been a long time since I have read the book, I do remember he heavily plugged his “company REFS”, and I was quite taken with his PEG factor metric.
I therefore have a soft spot for “Investment made Easy”, and thank Jim Slater for it.
@Neverland — Did you read the article? I mentioned it.
Reading about Jim Slater his newspaper columns often get mentioned in terms of stock-picking portfolios that boomed up massively by some ludicrous amount, e.g. 70% in a few years v 3% for FTSE All-Share. Just wondering how much of that was due to people buying what he talked about, self-fulfilling prophecy and all that. Slater’s ideas were based around small-caps and they are very susceptible to huge surges due to recommendations.
Mark Slater’s fund’s biggest holding is China Meditech (7.78%), an AIM-listed stock with a P/E of 2,290 according to Charles Stanley:
https://www.charles-stanley-direct.co.uk/ViewShare?Sedol=B11Y2X4
It has a market value of £1.4 billion and has grown nearly 100 times since early 2009. To me it looks like a classic small-cap pump story. The stock often gets a boost from Motley Fool and others. Naturally I’m skeptical about small-cap growth stories since they so often end in misery.
@ investor
“Suggestion” of a scandal….
Slater Walker required a Bank of England bailout on the scale of northern rock
A la HBOS there was a much delayed government enquiry to avoid any political fallout
The walker in slater walker was peter walker a prominent minister in the first two thatcher administrations
Plus ca change plus cest la meme chose
@Neverland — Right, so as I was saying I mentioned all that in the article. There’s more for anyone who followed the first link I gave to the Telegraph obit, too. (There’s something happened to Wordpress currently where I can’t anymore label where a link goes with pop-up text. Not sure why but it’s hugely annoying. If anyone reading happens to know…)
Anyway, I said “the business blew up” and cited the debt. As for the scandal element, you’re exactly like the old boys who used to pop-up and carp on back on the Fool that I mentioned. Would Walker have become a prominent minister if the dealings were *that* bad? I doubt it very much (though from memory he had left before the end, to begin his political career…)
Personally I suspect from the reading I did back in the day / my take on these sorts of things is that Slater Walker sailed close to the edge, like lots of these aggressive business do in the good times. So something like a prominent US hedge fund today or perhaps a Valeant Pharmaceuticals (time will tell on that one), definitely not an Enron let alone a Madoff. Yet the latter is generally the tone (to be fair you’ve been milder than the ranting I used to hear, again with virtually no evidence presented).
Basically I think if something blows up there’s plenty of blame to go around, and ‘scandal’ is uncovered, and if things sail along then the person gets a knighthood. I think that’s as true of many prominent entrepreneurs/investors today as 40 years ago.
On that I think we probably agree, if not on the history of Slater.
@david — If you can discern the value and prospects of a stock by a cursory glance at its high P/E and its prior growth rate then do go and get a job in the City, where you will be welcomed with open arms as a prophet. 🙂
I have shied away from China Meditech due to valuation, too, but it has cost me for several years and the story is not without merit.
Mark Slater gets some shares wrong, like all stockpickers do, but he’s run a broad portfolio with great results for several years now (at least once being the top fund in the UK, out of all funds.)
When I started work & was as naive as could be at my first employer – let’s call them Souless Inc., they handed out share options like sweeties to small kids, to incentivise us to work harder without offering real money.
Noticing a grizzled veteran of the Firm not looking overly ecstatic I asked if it was because they were a bluff – not real …..& he said ”You never know until the end, so I’ll only get excited when it converts to the cash which I actually can feel in my hand.”
That was my indirect introduction to shares & I was already very curious, knowing only that mostly the wealthy tended to deal with it back then, so I figured it must be a good thing otherwise they’d leave it exclusively to us, like they do with all the real work.
Mr veteran’s pithy advice was on the lines of ”Son, there are only 3 ways to make money off shares & their ilk – get given real ones by your employer, make money in some way via a company that gets a guaranteed commission for trading them, whether the punters win or lose …..or, best of all, be connected enough to get a tip-off from those in the know.” [Insider trading]
When that particular company was sold on in the charade of today’s asset-stripping, vulture-culture, version of capitalism, all our share options were cancelled [so worth sh*t] except for the top 2 directors funnily enough, who quickly wished us all well before high-tailing it to their next gig – Faceless Inc. – to repeat the magic trick.
It’s funny, when people point at developing countries & say how corrupt they are ….is it any less corrupt to just legalise the rampant injustice?
That taught me 2 things, never choose between jobs using share options as a variable in your calculations & if you are in the old boys network, you don’t need LinkedIn …..it’s already set up on your birth certificate.
“Passive Investing”
“Why stockpickers tend to underperform: Maths edition – Bloomberg”
@TI – albeit it only serves to further confirm the “passive investing is normally better” message, am I alone in nevertheless finding the QED content of that link persuasively interesting and worthy of a full Monevator article?
Not wanting to speak ill of the dead, I would instead direct people to episode 2 of Adam Curtis’ “The Mayfair Set” documentaries, which analysed asset stripping in the 80s. It’s on youtube.
Whilst I don’t think much of what he did at Slater Walker, he was certainly an interesting man, and his stockpicking articles almost always a good read.
*not the 80s, the 60s and 70s.
@the taxman cometh
the mayfair set was an excellent documentary series on an era which looks crazily like our own
i didnt know it was on youtube….now that i know its on there i might rewatch it
Thanks for the links this week, TI.
I do admire TEA’s posts, and am a huge fan of ETFs so my confirmation bias was almost happy to lets slide his conflation of the wrapper with the underlying asset. The fact is that ETFs vs OEIC vs ITs are not as simple or obvious as passive vs active.
The FT article is a step-up in the assault on the excessive charges of the City — it’s one step away from suggesting malpractice. I think that’s the guy who was recently fired by the Investment industry guild for telling them they needed to clean house? It appears that he is now outside the tent but still taking a leak…
@Mathmo – I agree on the TEA bit, I think he’s at his best when waxing lyrical on popular psychology stuff. When he gets technical he lacks the precision of the equivalent Monevator articles, which makes me think you may as well just read the Monevavor articles and save yourself any confusion. Theres too much stuff all jumbled up in that ETF article, i.e. actual stuff about ETFs but mixed up with bits on value investing, CAPE index valuations, how brokers weigh in with their charges etc. etc.
I still have my copy of Investment Made Easy (as well as The Zulu Principle). He’ll be missed.
Re. your point on houses, if I remember right I think the other stocks guy who told you to buy a house as well was Peter Lynch.