John Lee > Quotes

“I believe that everyone should keep a reserve of liquidity outside their portfolio to meet family emergencies. While a portfolio can be part liquidated relatively quickly, there have been times, such as the secondary banking crisis of the early 1970s or the 2008 subprime/banking crash, when markets have plunged and stocks have become almost unsaleable.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Endeavour to buy shares on modest valuations - hopefully with an attractive yield and single-figure price earnings ratio and/or discount to net asset value/real worth.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Look for stable Board - infrequent directorate changes. Similarly with professional advisers.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“The key to building an appreciating portfolio is to avoid the losses - don't take unnecessary risks or buy at inflated levels.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Currently, I am very focused on dividends - accepting that few shares are likely to show capital growth in the short term. From my higher-yielding stocks, I am hoping for maintenance of dividends - a dividend increase is a bonus; a "passing" or slashing of the payment is bad news. These board decisions reflect not only the profitability/debt levels of the company, but also its attitude to shareholder dividends, so past dividend history is an important consideration - as is the size of directors' holdings.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“The success, growth and integrity of the company (and thus your investment) is tied inextricably to the personality, abilities and ambitions of the chairman and/or chief executive. If he owns a flashy BMW with personalised number plates, drips with gold jewellery and has ambitions to own the local football club - bad news. But a conservative car, gentleman's shoes, love for cricket, faded regimental tie and membership of the local school board spell good news. I exclude from all this the 30-year old, multi-millionaire, whiz-kid creators of IT companies on price/earnings ratio of 50-plus. These live on a different planet from me, anyway, so normal judgements and personality tests do not apply.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Here I am drawing readers' attention to the way stock market movements are often exaggerated both ways - sometimes too bullish, sometimes too bearish.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“If you paid €7,000 every year into an equity Isa for the next 17 years, you would need a return of 21.09 percent on your investments to make a million.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Usually, I focused on lowly-geared plcs at a significant discount to assets - often finding this combination in family-dominated businesses.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“There is a saying that 'small cap' stocks are valued correctly only twice - an original flotation when they first went public, and when they are ultimately taken over.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“As the legendary Warren Buffett famously said: 'Lethargy bordering on sloth remains the cornerstone of our investment style.' Definitely an attitude to be encouraged.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“I now turn to the many individual shares where I have lost money. These failures provide real lessons for the investor because if I had followed my own rules, many losses could and should have been avoided. These can be divided into four main categories: (1) Companies brought down by management/market failure where I had obviously over-rated the ability of individuals. (2) Companies where I failed to heed the warning signs. (3) Companies that were clearly drifting down and where I stayed ahead too long. (4) Companies where I just lost patience or tried to be too clever by buying as they were falling.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Have a broad understanding of the PLC's main business activity - one which makes sense to you.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“I now come to what in many ways is the raison d'être for this personal story and the main message that I wish to convey: that a substantial portfolio can be built, brick by brick, by applying common sense and basic investment principles. But it does take time! Hence 'how to make a million - slowly'.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“However, most growing companies will experience a pause in profits growth. Be patient, stay abroad, don't lose faith. Only if a holding becomes too 'toppy' - too over-priced - should you sell. Or, of course, if you believe that the company's future is either really uncertain or has worsened dramatically.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“A single-figure PER indicates that, rightly or wrongly, a company is modestly rated - that there is a limited expectation or uncertainty about further profits growth. Initially, investing on a lowish PER - something I try to do - is 'safer' than buying into a share on a PER of, say, 20+. In the case of the latter, the high PER means that the expectation of profits growth is already built into the share price. Fine, if it does deliver, but if it fails to do so then its rating could 'fall'. Thus if a PER rating on a particular PLC falls from 20 to 10, the shares will have halves - bad news!”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“In family PLCs, takeovers tend to happen when there is a lack of family succession or there is a desire to realise wealth. In non-controlled PLCs, i.e. where there are no controlling or dominant shareholders who could dismiss a takeover approach out of hand, takeovers usually involve a larger company taking over a smaller one. These latter takeovers are usually driven by the pressures of globalisation, a larger PLC seeking to 'take out' a troublesome competitor or to acquire a new revenue stream through diversification, perhaps a shortcut rather than developing itself through organic growth.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“My core investment philosophy is that 'value', i.e. real worth, always comes through in the end, but you must be patient. Here I focus on leisure industry services/stocktaker Christie Group - its share price graph (see figure overleaf) demonstrates wild gyrations over the years. My belief is that any price below £1 represents a bargain; it was 'floated' at 145p in 1988 when the business was much smaller than it is today.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Let profitable holdings run. Don't try to be too clever, i.e. selling and hoping the market will fall to 'buy back' at a lower price.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“It is crucial to ensure that holdings you have great confidence in are of sufficient value to make a real difference to your overall results.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“I do not bother with oversea holdings, nor am I concerned about asset or sector allocation - I am focused on particular stocks. Let me explain my reasons. If you're a manager of large institutional funds you'll usually aim for X% in the USA, Y% in South East Asia, Z% in Europe, etc., and similarly a certain percentage in banks and financial stocks, another in media, and yet another in healthcare, etc., and this is the right approach. But I believe that the private investor should forget about all this for their more modestly sized portfolios. I like UK-headquartered and quoted businesses which operate internationally anyway as they seek world markets for their products or services.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Essentially, it publishes books of an enduring interest: "not looking for the next big thing, but the next lasting thing". Quarto's top five sellers in 2010 give a flavour: Complete Guide to Writing, 1001 Movies you must see before you die and Art: The Whole Story.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Look for moderately optimistic or better chairman's/CEO's most recent comments.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“What we want is a company that increases profits (and hopefully dividends) each year and where the rating (PE ratio) that the stock market/investors place on the company's shares increases significantly. This is the 'double whammy' any investor should be seeking.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Proprietorial PLCs - companies that are controlled or dominated by one family - have always fascinated me. I hold shares. I like the alignment of board and shareholder interests, the focus on conservative growth and "stewarding" a business through generations, their generally low borrowings and usually progressive dividend policy.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“These days company annual reports can be huge documents, full of detailed information, much of which is of limited interest to the average investor. However, do focus on directors' shareholdings - any changes compared with last year, the level of borrowings and particularly the comments of the chairman and the CEO on future prospects. A comment such as 'We are now well placed to benefit from any improvement in the world economy' usually means don't expect much improvement in the short term. However, comments like 'current order intake and profitability are running well ahead of last year' are much more encouraging.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Ensure the directors have meaningful shareholdings themselves in the PLC and 'clean' reputations.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Be prepared to hold for a minimum of five years.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“Seek established companies with a record of profitability and dividend payments - avoid start-ups and biotech or exploration stocks.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing

“For me, no small cap can be too small - indeed, approximately 25% of my current portfolio is made up of companies with a market capitalisation of less than £50 million and others were below that figure when I first bought into them. Frequently these are what I term 'family' or 'proprietorial' companies, with control passing through the generations where the emphasis is on 'stewardship', one of my favourite investment words. By this I mean that we usually have family Board members, conscious of the efforts of earlier generations who created and developed the business, and conscious also of their responsibility to add worth and value during their tenure in a conservative way. So ideally, organic growth with perhaps an acquisition from time to time, but no excessive risk taking or 'betting the shop' on a large, over-reaching deal.”
― John Lee, How to Make a Million – Slowly: Guiding Principles from a Lifetime of Investing