In his last article for the Financial Times, John Lee bade farewell to his loyal readers and left them with some choice nuggets of wisdom that he has collected over fifty years in the business. Over the course of his career, Lee has built a reputation for his astute management of small-cap stocks, which do not enjoy a lot of media coverage.
As well as writing for the Financial Times, Lee used his position as a former MP and serving House of Lords peer to campaign for regulatory changes, most significantly campaigning for an amendment to the law to allow for AIM shares to be held in ISAs.
John Lee: The search for the elusive Holy Grail
In his 2013 book entitled How to Make a Million – Slowly, Lee attempts to set out all that he has learned as an active investor. According to “The Investor” on the Monevator blog, the book is a “very agreeable summary of the principles of investing in small caps.”
The most salient point set out by John Lee is a warning to investors that the proverbial Holy Grail simply does not exist, but he does conclude that “companies with a significant cash holding, or at least a very low level of debt, are generally safer and better havens for one’s funds”. Lee favors long term holdings of at least five years, in established companies, and decries short-term casino style trading.
Patience, trust and honesty
As a value investor, John Lee understandably ignores minor share price movements in order to take a more long-term view. He also advises looking for companies in which the directors have a significant personal stake and a clean record,as well as stability of the directors board.
In the same vein, John Lee calls for self-awareness from the investor, proposing a 20% “stop-loss”, after which you should sell your positions and move on. For disciples of the Lee school of thought, slow profits over a long period of term trump headline-grabbing short term bonanzas, and that is the overarching theme of both his book and farewell article in the Financial Times.