Beedie hosts leading Canadian financier Stephen JarislowskyJul 31, 2015
Humans must fight the inherent animal emotions within them and train themselves to think carefully in order to make successful investments. Capitulating to fear and greed will only result in investments failing, much like the recent crash in the Chinese stock market.
This insightful piece of investment advice was just one of several gems delivered by Stephen Jarislowsky, one of Canada’s preeminent financiers, as he captivated and enthralled an audience of students, staff and faculty at a special presentation held at the Segal Graduate School on 29 July.
After graduating from the MBA program at Harvard, Jarislowsky founded his company Jarislowsky Fraser on June 6, 1955. By his own admission, the company did not fare particularly well in its initial five to six years of existence, but after that became enormously successful. By that stage, Jarislowsky had bought out his partner, who had wanted to concentrate on investing in small businesses – a decision that Jarislowsky said must have been the biggest mistake of his life.
Despite approaching 90 years of age, Jarislowsky is still actively involved in the company on a day-to-day basis as Chairman of the Board – much to the chagrin of his President, Jarislowsky admitted. Indeed, he credits his good health to carrying on working late in life, keeping the mind active.
In detailing the key to his company’s success, Jarislowsky revealed that he offered an investment counseling service, whereby he would visit Canadian corporations and get to know the management and the industries. Interviewing around 200 companies per year, he eventually got to know the industries better than the people who were actually running the companies themselves.
It was through this position of strength that he was able to recommend strategies and mergers to the companies. His reputation did not go unnoticed, and before long he was asked to manage the pension funds of the companies he was interviewing, ultimately leading to the success of the company.
“We knew how to interrogate these people and cut through the sort of info their PR people thought should be given to investment analysts,” he said. “Since we became very friendly with management it was easy to have conversations where you didn’t make too many mistakes afterwards. That is the basic key to buying companies.”
Despite being a Harvard graduate, Jarislowsky is adamant that the only thing that is truly necessary to learn at school is how to think and suppress human emotions. In doing so, it is possible to take advantage of the best opportunities to invest in the markets.
“When everyone wants to get out and no one wants to get in, then obviously that is the market to buy in – panics don’t last forever,” he said. “It is clear that when you buy in a really panicky market like we had in 2009, then you will do very well. When you talk about five year results, it is obvious that if you were in the stock market from 2009 to 2014 then you did well. The question is are you going to do as well from here on?”
In closing, Jarislowsky offered a set of rules for investors that he has always followed:
- Don’t pay high management fees
- Only deal with highly ethical people
- Don’t buy on tips or emotions
- Don’t buy second quality
- Don’t buy securities in countries where there is no strict law to protect you, such as Russia or China.
Prior to Jarislowky’s riveting speech, the audience was treated to an update on the Beedie Student Investment Advisory Service (SIAS) fund. Chief Investment Officer Peter Grypma, Chief Risk Officer Juliette Tang, and Head of Performance Steven Sun provided an overview of the program’s investment strategy, their compliance performance strategy, and the challenges they face moving forward.
They also detailed some of their successes over the past year, which included a gold medal at the prestigious ENGAGE International Investment Education Symposium, the world’s largest student investment conference. The first place finish marked the fourth consecutive victory for Beedie MSc Finance students, having taken home gold at the RISE (Redefining Investment Strategy Education) competition in the previous three years.
For more information on SIAS, visit beedie.sfu.ca/sias/