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.
A spook in Japan
Born in Berlin in 1925, the son of an industrialist, he moved to France as a teenager when his mother remarried a French bureaucrat, and subsequently to America. Being uprooted every few years led to “a sense of self-reliance”, he told the Canadian Financial Post.
After taking an engineering degree at Cornell, he joined the US army in 1944 and was eventually recruited to its intelligence unit in Japan. Here he had “his first brush with governance”: Jarislowsky’s unit caught wind of a rumour that General Douglas MacArthur’s wife was influencing the choice of contractors in post-war reconstruction. When he began asking questions, the unit was shut down, possibly influencing his subsequent decision to eschew a diplomatic career in favour of an MBA at Harvard.
“Smart as hell”
In 1949, Jarislowsky moved to Canada and after a short spell at packaging firm Alcan gave himself up to what was to be his lifelong calling, making money.
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”.
Still, he has put these characteristics to good use. Over the years, he has emerged as Canada’s one-man corporate governance lobby – in the thick of any “corporate rumble” or legal battle on behalf of shareholders. He speaks up for the little guy, denouncing the “outrageous conduct” of executives whose “obscene” stock-option plans amount to little more than “legal theft”.
In 1978 when Consolidated-Bathurst Inc. tried to buy out minority shareholders of subsidiary Domglas Ltd for $20 a share, Jarislowsky went to court, arguing shareholders were being short-changed. He eventually forced the price up to $36 per share. Jarislowsky and his firm owned only 5,285 shares, but the victory meant more than money. “It put a new type of precedent on the books,” he says.
Playing a long game
The only real blip in a 50-year career came in the early 1990s when investors fled on false rumours that Jarislowsky was planning retirement. He wasn’t. He is still going strong at 80 and hasn’t lost his knack for controversy.
Having long advocated Canadian unification with the US, he has recently been vigorous in denouncing America’s loose monetary policy and its foreign policy. However, he has found one comforting constant: the long-term nature of the investing 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.