Sunday, July 20, 2008

The Investment Zoo: Chapter 1: A life Fully Vested

The author, Stephen Jarislowsky, explains who he is and why people might be interested in reading a book authored by him. He wrote this first book at the age of 79 after 50 years of investing experience. He explains some key family traits of a “horror of waste” and a desire to be involved in and control all expenditures.

The author explains some of his childhood, living in the Netherlands, France and the USA. He took an early interest in collecting art books which is explained to be a lifelong passion. He was well travelled, well trained in the classics and proficient in several languages before starting University.

At the age of 16, Stephen enrolled in mechanical engineering at Cornell University in Ithaca, New York. He graduated from Cornell at 19 years of age and applied to the Harvard Business School at 22 years old. The author explains a desire to study issues systematically and in depth and was somewhat disappointed with the case study discussions at business school. The author graduated from Harvard with an MBA (distinction in Finance) in 1949.

As part of the US Counter Intelligence Corps, the author explains his new found interest and intrigue in learning about the East Asian cultures. The experience of studying Oriental culture led Stephen to devoting his life to being an example to others. He explains how he learned about the importance of “precedent” from the Japanese culture and the importance of “leadership” from the Western culture and his idea to bring these two concepts together in the way he lives his life.

Stephen explains a definite difficulty in spending money and still lives in the same house for the past 32 years (sounds a lot like Warren Buffett to me).

After a brief stint as a young rising executive he explained how he grew tiresome of company politics and decided to try starting various enterprises with friends. Eventually he started a statistical service that delivered data on various companies and sold it to brokers and investment dealers. This was the genesis of Jarislowsky-Fraser. Even with 200 subscriptions sold he and his partner saw the need to develop something else in order to make enough money. From their investing industry relationships and their skills in research, the author explains the natural transition to managing pension funds.

The author explains that it took almost 10 years to start earning a decent income. He explains that it is a very slow process if you start from nothing, no clients, no experience and the need to build this up. He and his partner just picked a direction that they believed in and kept moving in that direction. They were never in a hurry, they just kept building piece upon piece in their business. He explains how they have founded their business upon conservative time-proven investing principles and that now their business is one of the five largest private fund management companies in Canada.

Stephen speaks about how their mission and Jarislowsky-Fraser has never been only about business. They have been very strong proponents of good Canadian corporate governance and have fought numerously for what is right for investors, not for self-serving interests. Stephen discusses how over 40 as the chief research analyst in his company how he has covered pretty much every industry and knows a lot about judging a business and appraising the management team. He is a believer in not using exclusively quantitative models but rather to do a thorough analysis of all aspects of a company’s business.

Stephen expresses displeasure in how many clients get taken advantage of in the investment industry for example through high fees. He seems to express some pride in having the lowest fees in the industry purportedly done in the best interests of his clients. He shows disdain for organizations and people that rip off clients and works hard to expose these actions. He dislikes the greed factor present in the investment industry.

He explains how his work has been like his hobby since he loves it so much and asks the question what he should do in retirement since most people look to their hobbies and he is already doing that.

1 comment:

Geraldine said...

I take this book definitely on my reading list. Unlike many others this seems to be very down to earth.