How to Make a Million – Slowly

John Lee is one of the UK’s most successful private investors and wrote the My Portfolio column in the Financial Times for 14 years. Beginning with an investment pot of £125,000 in the early 1980s, by 2003 he had turned this into a thriving portfolio of over £1 million, and it has significantly increased in value since then. Using efficient investment methods, as well as pursuing a winning ‘buy and hold’ strategy, he was the UK’s first ISA millionaire.

In  How to Make a Million – Slowly: My guiding principles from a lifetime of successful investing (Financial Times Series), John Lee offers invaluable lessons that will help you make the right decisions about your investments. Explaining why an unhurried portfolio is a best and most sustainable strategy for growth, you will learn how to spot opportunities, research and monitor the market, work with management and above all, make money.

The answer How to Make a Million is through the patient application of what he calls a DVD investment strategy.  DVD stands for Defensive Value plus Dividends, which explains itself quite nicely.

The book is full of ideas on how to find good companies and how to value them.  There is some very small amount of theory, but the bulk of the book is from John’s actual experience, with many detailed accounts of how he found, analysed, visited, bought, held and occasionally sold many companies over many decades.

According to John, The 12 guiding principles How to Make a Million are:

1. Endeavour to buy shares on modest valuations
2. Ignore the overall level of the stock market
3. Be prepared to hold for a minimum of 5 years
4. Have a broad understanding of the PLC’s main business activity
5. Ignore minor share price movements
6. Seek established companies with a record of profitability and dividend payments
7. Look for moderately optimistic recent comments
8. Focus on preferably conservative, cash-rich companies or those with low levels of debt
9. Ensure the directors have meaningful shareholdings themselves and ‘clean’ reputations
10. Look for a stable board
11. Face up to poor decisions
12. Let profitable holdings run

Of course, like all really successful investors, John makes it all look easy, but he also had the education, the long experience, and no doubt the intelligence to learn from his failures and his successes. He started his career as an accountant and then worked for a leading stockbroker. In addition, he actually started investing at the age of 15 in the nineteen-fifties, and his first stock market investment was a disaster when the single ship the company owned sank. But he persevered.

This is perhaps the best lesson to be learned from this book. Namely that investment is an art rather than a science and the more experience and education you can gain, the better investor you will be. Persistence is also what counts in stock market investment because the short-term returns can be volatile, but the long-term returns, particularly if dividends and capital growth are combined tax-free in an ISA, are what really matter.

In summary, a book that is an easy read and highly recommended. It has been added to the ShareSoc “Recommended Reading List” for private investors for that reason.

https://junior-broker.com/life/careers/further-reading/how-to-make-a-million-slowly/

Follow