Professional Investor Rules

Top investors reveal the secrets of their success

Jonathan Davis

• Publisher: Harriman House
• Year: 2012
• Print ISBN: 9780857192363
• eBook ISBN: 9780857192783
• Edition: 1
• Topic: Business
• Subtopic: Stocks
• Index: Business

They are the world's best - the professional investors at the head of global investment funds and the mavericks operating from behind nothing more than a laptop and a point of view; some with millions of pounds at their disposal and the fate of companies and customers' savings hanging on their decisions, others with nothing more (or less) than their reputation and their own fortune on the line.What sets them apart from the thousands of other investors out there is their track record. The professional investors who have contributed to this book include multiple award winners, fund managers who have managed to double or triple investment returns every two years, as well as the heads and founders of firms with billions - occasionally trillions - under management and half a century of profits to which they can point.There are no better investors to learn from when making your own way in the markets, and this book is the indispensable collection of the secrets behind their success, straight from the investors themselves.Featuring the investing rules of award-winning experts in Asian, Latin American and Western markets, contrarian specialists, mutual fund managers and more, Professional Investor Rules is a compelling snapshot of some of today's best investing minds. No investor can afford to be without it.

APPENDICES

Books by the Professional Investors

Available discounted at books.global-investor.com

William Bernstein

The Ages of the Investor: A Critical Look at Life-cycle Investing, (Efficient Frontier Publications, 2012)

The Four Pillars of Investing, (McGraw-Hill, 2002 & 2010)

The Investor’s Manifesto, (John Wiley & Sons, 2009)

A Splendid Exchange: How Trade Shaped the World, (Grove Press, 2009)

The Birth of Plenty: How the Prosperity of the Modern World Was Created, (McGraw-Hill Education, 2004)

The Intelligent Asset Allocator, (McGraw-Hill, 2000)

John C. Bogle

The Clash of the Cultures: Investment vs. Speculation, (John Wiley & Sons, 2012)

Don’t Count On It! Reflections on Investment Illusions, Capitalism, “Mutual” Funds, Indexing Entrepreneurship, Idealism, and Heroes, (John Wiley & Sons, 2011)

Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition, (John Wiley & Sons, 2010)

Enough. True Measure of Money, Business, and Life, (John Wiley & Sons, 2008)

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns, (John Wiley & Sons, 2007)

The Battle for the Soul of Capitalism, (Yale University Press, 2005)

Character Counts: The Creation and Building of The Vanguard Group, (McGraw-Hill, 2002)

John Bogle on Investing: The First 50 Years, (McGraw-Hill, 2001)

Common Sense Mutual Funds: New Imperatives for the Intelligent Investor, (John Wiley & Sons, 1999)

Bogle on Mutual Funds: New Perspectives for the Intelligent Investor, (Dow-Jones Irwin, 1994)

John Chatfeild-Roberts

Fundology: The Secrets of Successful Fund Investing, (Harriman House, 2006)

Marc Faber

Tomorrow’s Gold: Asia’s Age of Discovery, (Clsa Ltd, 2005)

Niall Ferguson

The Great Degeneration: How Institutions Decay and Economies Die, (Allen Lane, 2012)

Civilization: The Six Killer Apps of Western Power, (Allen Lane, 2011)

The Ascent of Money: A Financial History of the World, (Allen Lane, 2008)

The War of the World: History’s Age of Hatred, (Allen Lane, 2006)

Colossus: The Rise and Fall of the American Empire, (Allen Lane, 2004)

Empire: How Britain Made the Modern World, (Basic Bks., 2003)

The Cash Nexus: Money and Politics in Modern History, 1700–2000, (Allen Lane, 2001)

The House of Rothschild: Money’s Prophets 1798–1848, (Penguin, 1999)

The Pity of War, (Allen Lane, 1998)

Bill Gross

Bill Gross on Investing, (John Wiley & Sons, 1997)

Everything You’ve Heard About Investing Is Wrong!, (Times Books, 1997)

Yale Hirsch

Stock Trader’s Almanac 2013 (and previous), (John Wiley & Sons), 2012

The Capitalist Spirit: How Each and Every One of Us Can Make a Giant Difference in Our Fast-changing World, (John Wiley & Sons), 2010

Victor Niederhoffer

The Education of a Speculator, (John Wiley & Sons, 1998)

Practical Speculation, with Laurel Kenner, (John Wiley & Sons, 2005)

Jim Slater

The Zulu Principle: Making Extraordinary Profits from Ordinary Shares, (Harriman House, 2008)

Beyond the Zulu Principle: Extraordinary Profits from Growth Shares, (Harriman House, 2011)

Nigel Lawson’s Investing Rules

I AM DELIGHTED THAT my colleague “Capitalist” is doing so well with his portfolio of shares. His careful system of selection is plainly a very sound one. But I can’t help feeling that – like most accountants – he is obsessed with figures, with the purely statistical facts.

Earnings growth rates and dividend yields are all very well in their way. But the shrewd investor will want to look beyond mere figures, just as the trained psychoanalyst looks beyond the patient’s words to discover truths deep in his subconscious.

Happily, I am not alone in this view. So great an authority as the well-known investment trust expert, Mr. George Touche, remarked in the midst of a learned, 25-page address on investment to the Institute of Chartered Accountants at Oxford last summer that “general impressions may be obtained from many sources, apart from the conclusions to be drawn from financial results. The cult of a chairman’s personality, combined with constant repetition of his photograph, rarely inspires confidence in the management of a company.”

Sole Contribution

So we have investment rule number one:

1. Avoid companies whose chairman’s photograph is published more than four times a year.

Unfortunately this was Mr. Touche’s only contribution to the important science of nonstatistical investment analysis. But I strongly recommend the following as rule number two:

2. Avoid companies that publish their balance sheet in front of their profit and loss account in the annual report.

The Companies Act stipulates that both these be published, but it does not lay down the order in which they should appear. So companies invariably put first the document of which they are proudest (or least ashamed).

Obviously a company that is prouder of its assets than its profits is one to be avoided at all costs. This is the very hallmark of an unprogressive company earning an inadequate rate of return (if any) on its capital employed.

How many fortunes might have been saved, for example, had investors noticed that Pressed Steel publishes the parent company’s balance sheet in front of the consolidated profit and loss account. You would not catch a growth stock like Elliott-Automation doing that. Again, the Lancashire Cotton Corporation, short of profits but long on assets publishes its balance sheet first; whereas expansionist ICI . . . but I needn’t elaborate . . .

But perhaps at this stage I ought to warn investors that this particular rule, although in my experience invaluable, is not an infallible guide. Take the two cement companies, for example. Associated Portland Cement puts its profit and loss account first, Rugby Portland Cement its balance sheet. And yet it is Rugby that has by far the better growth record. The explanation of this superficially startling phenomenon brings us to rule number three:

3. Invest in companies whose chairman is less than 5’8” tall.

What you ...

Table of contents

• Cover
• Publishing details
• Preface
• Introduction by Jonathan Davis
• Robin Angus, Sebastian Lyon & Ian Rushbrook
• William Bernstein
• John C. Bogle
• John Chatfeild-Roberts
• Anthony Cross & Julian Fosh
• Marc Faber
• Bill Gross
• Yale Hirsch
• Paul Jourdan
• Ajay Kapur
• Max King
• Will Landers
• Paul Mumford
• Dean Newman
• Victor Niederhoffer & Laurel Kenner
• Robin Parbrook & Lee King Fuei
• Richard Penny
• Jacob Rees-Mogg
• The Rothschilds by Niall Ferguson
• Jim Slater
• First State Stewart
• Catherine Tan
• Hugh Young
• Tim Youngman
• APPENDICES