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James D. Slater
James Derrick Slater (13 March 1929 – 18 November 2015) was a British accountant, investor, and business writer. James D. Slater was an investment role model for the investing public in the U.K., a country born in 1929. He started his career as an accountant, but it didn’t take long to change his career to a corporate managerial position. In only ten years, from 1953 to 1963, he worked for three U.K. manufacturing companies, the famous Leyland Motor Corporation.
In 1964, he and Peter Walker became business partners and started their own investment company, Slater Walker Securities. The company made it big thanks to Slater’s skills, shown in some corporate takeovers. In only five years period, Slater Walker became a great industrial and financial conglomerate. In 1969, their investment company was transformed into an investment bank.
However, Slater’s business luck didn’t last very long. Soon after becoming an investment bank, Slater Walker Securities was shaken and finally collapsed during the U.K. recession in 1973-74. The recession had enormous consequences on Slater, leaving him bankrupt.
After bankruptcy, Slater began the next chapter by changing his career again. This time, along with some private investment that helped him stand, he started a career as a financial writer. His column “The Capitalist” was viral among U.K. investors and the general public. He used the column to share his investment methodologies with the public. He also founded an Investment advisory service, which gathered statistics about all publicly traded U.K. companies. “Company REFS,” the name of his advisory service and famous column in the Sunday Telegraph, made him the best professional investor in the country.
Early Life and Education
- Date of Birth: March 13, 1929.
- Nationality: British.
Professional Career
- Accountancy: He started his career as an accountant.
- Transition to Investment: Slater moved from accountancy to investment and business.
Investment and Business Career
- Investment Strategy: Slater was known for his astute investment strategies, particularly in the stock market.
- Business Ventures: Engaged in various successful business ventures throughout his career.
Writing Career
- Business Writer: Authored several books and articles on investment and business strategies.
- Influential Works: His writings were widely read and respected in the business community. They provided insights into effective investment practices and business management.
Key Contributions
- Investment Philosophy: Slater was celebrated for his unique and practical approach to investment, which influenced many in the field.
- Mentorship and Influence: He mentored and influenced a generation of investors and business professionals.
Personal Life
- Family: Details of his family life, including marital status and children, if any.
- Interests and Hobbies: Engagements outside of his professional life.
Death
- Date of Passing: November 18, 2015.
- Legacy: Slater left a legacy as a skilled investor and an insightful business writer.
Impact and Legacy
- Influence in Investment Community: His methods and philosophies in investment continued to be referenced and followed.
- Contribution to Business Literature: His books and writings remain a valuable resource for investors and business professionals.
James Derrick Slater’s life was characterized by a successful transition from accountancy to investment, marked by significant contributions to business strategy and literature. His insights and strategies in investment have left a lasting impact on the field.
Jim Slater’s trading style
In his book “The Zulu Principle,” published in 1992, he created the price-earnings to the earnings-growth ratio (PEG). The PEG is an equation that compares an investment’s growth and value, and it is widely used in investment analysis. It shows the long-term cost-effectiveness of the investment. The stock wasn’t expensive for Slater as long as it grew in earnings.
When investing, Slater usually picked companies with small growth and undervalued market prices. In other words, his investing style was finding small, growing companies that were promising before they would start growing.
Slater wasn’t satisfied with only being a successful investor, columnist, and investment guru, as the public called him. He also had a parallel career as an author of books for children. Even in his late years, he remained active in the investment business by investing in different small growth companies.
Jim Slater Quotes :
“Most leading brokers cannot spare the time and money to research smaller stocks. You are therefore more likely to find a bargain in this relatively under-exploited area of the stock market.”
Focus on Growth Stocks
- Earnings Growth: Slater prioritized companies that showed consistent and significant earnings growth. He believed that earnings growth was a primary driver of stock prices.
- PEG Ratio: An essential element of Slater’s strategy was using the Price/Earnings to Growth (PEG) ratio. This metric is calculated by taking the Price/Earnings (P/E) ratio and dividing it by the earnings growth rate. Slater sought stocks with a PEG ratio of less than 1, indicating that the stock was undervalued relative to its earnings growth.
Fundamental Analysis
- Strong Balance Sheets: He looked for companies with solid balance sheets, particularly those with a high ratio of current assets to current liabilities, indicating good short-term financial health.
- Return on Capital Employed (ROCE): High ROCE was another criterion, suggesting a company efficiently used its capital.
Market Capitalization
- Small to Medium Cap Focus: Slater often focused on smaller companies (small to medium market capitalization), believing they had more growth potential than large-cap stocks.
Sector and Market Considerations
- Sector Agnostic: While he was open to investing in any sector, he often looked for markets or sectors with potential for significant growth.
- Market Trends and Cycles: Slater paid attention to overall market trends and cycles, adapting his strategy to align with broader market movements.
Risk Management
- Diversification: Despite focusing on growth stocks, he believed in diversification to manage risk.
- Cutting Losses: He was a proponent of cutting losses early to preserve capital.
Psychological Aspects
- Contrarian Bets: Slater was not afraid to make contrarian bets, investing in unpopular stocks among most investors if he believed in their potential based on his analysis.
- Patience and Discipline: He emphasized the importance of patience and discipline in investing, adhering strictly to his criteria and not being swayed by market sentiment.
Continuous Learning and Adaptation
- Adaptability: Slater’s approach was not rigid; he believed in continuously learning and adapting his strategies based on new information and market changes.
Long-term Orientation
- Long-term Investment: Although he understood the market’s short-term fluctuations, his strategy was fundamentally oriented towards long-term investment and capital growth.
In summary, James Derrick Slater’s trading strategy was a well-rounded approach that combined a focus on undervalued growth stocks (using the PEG ratio) with a fundamental solid analysis. His method was disciplined yet adaptable, emphasizing risk management and a long-term investment horizon. Slater’s strategies and principles remain relevant for investors looking for growth opportunities in the stock market.
Books :
A. Mazing Monsters
How to Become a Millionaire: Make Money While You Sleep ISBN 978-1-58799-152-3
Beyond the Zulu Principle: Extraordinary Profits from Growth Shares ISBN 978-1-58799-094-6
The Zulu Principle: Making Extraordinary Profits from Ordinary Shares ISBN 978-1-58799-095-3
The Armchair Investor: A Do-it-yourself Guide for Amateur Investors ISBN 978-0-7528-0775-1
Reference:
http://en.wikipedia.org/wiki/Jim_Slater_%28accountant%29
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