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Jim Slater, The Capitalist Who Created the PEG Ratio

You may have heard of the Price-Earnings to Earnings Growth (PEG) ratio in the investment world. It turns out, this formula was created by a successful investor named Jim Slater, also known as The Capitalist. Jim Slater is a renowned figure in the investment world, both in the United Kingdom and the United States. He is known for his contributions in the investment column of The Sunday Telegraph, where he regularly shared his investment methods and strategies with readers. One of his famous works is the best-selling book "The Zulu Principle," published in 1992.

From Accountant to Aggressive Investor

Jim Slater was born in the United Kingdom in 1929. He began his career as an accountant before eventually serving as a manager in three major companies in the UK. His most memorable experience was when he joined Leyland Motor Corporation. In 1964, he and Peter Walker founded an investment company called Slater Walker Securities. Through this company, Jim Slater became known as an aggressive buyer in the UK. With swift and accurate investment strategies, he became a formidable opponent to his competitors.
However, in 1974, a recession hit the UK, causing the collapse of Slater Walker Securities. Although Jim Slater personally went bankrupt, his spirit in the investment world remained unbroken. He believed that the failure was just a temporary setback, and his conviction in investments remained strong. "My mistake was not paying attention to small companies that could survive and thrive. As a busy broker, I didn't have time to study and do research. I focused only on big companies. That was a mistake. And I will never repeat it," he said.

Rising with the PEG Ratio

After this downfall, Jim Slater began to rise again by investing privately and cautiously. He preferred to invest in smaller, lesser-known companies in the market. By applying the PEG ratio formula he created, he managed to find stocks of companies with low prices but high earnings growth. He explained this formula in detail in his book "The Zulu Principle." The success of this method made many people seek his advice before making investments. Essentially, the PEG Ratio seeks out small-cap stocks with growth potential to become significant in the future.

Consistent in Sharing Investment Lessons

In addition to providing consultancy and education in the investment field, Jim Slater also actively wrote books and columns in various renowned investment media. He also launched an investment consultancy service called "Company REFS," which provided information about all public companies in the UK. Other books he wrote include "Investment Made Easy" (1995) and "How To Become A Millionaire" (2000). We can learn a lot from Jim Slater's career journey, how he rose from failure, and developed the idea of the PEG Ratio in the investment world.

Investing in stocks of companies with low prices has indeed become a strategy used by some of the world's top investors. Besides Jim Slater, there is also Irving Kahn who agrees with this approach, but in practice, he uses the intrinsic value principle.


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