Time Value of Money
Kinds of Interest Rates
Future Value of an Uneven Cash flow
Probability Distribution
Standard Deviation
Security Market Line
Bond Valuation
Stock Valuation
Cost of Capital
The Balance Sheet
Capital Budgeting
Hall of Fame
Credit Report
Financial Terms
Financial Charts
Fuel Mileage
Energy Efficiency

James Slater

James D. Slater was born in 1929 in the U.K. He started working as a chartered accountant before taking up corporate managerial roles in several different manufacturing firms in the U.K, including Leyland Motor Corporation. He held these positions from 1953 until 1963. In 1964, Slater joined with Peter Walker to create a new investment company called Slater Walker Securities. Working with this firm gave Slater the reputation as a major player in the field of corporate takeovers in the U.K. The firm grew in strength and, in 1969, became an investment bank.

Unfortunately, Slater Walker Securities collapsed during the U.K. recession of 1973 and 1974 and this put an end to Slater’s investment banking career. It also left him bankrupt for a time. He used private investing and a new career in financial writing to become personally solvent again.

He now writes a very popular investment column called “The Capitalist” (published in the London Sunday Telegraph) and runs an advisory service called “Company REFS”. This service provides "really essential financial statistics" on each of the companies that are publicly traded in the U.K. Slater is regularly referred to as an investment guru and is famous for being one of the most successful investors in the U.K.

Slater’s investment strategy, known as the “Zulu Principle” is described in detail in his “Capitalist” columns. He favors investing in small growth companies at times when they are undervalued. He is primarily focused on searching for small growth stocks before they become successful. He emphasized the value in looking for small stocks by saying: "Most leading brokers cannot spare the time and money to research smaller stocks. You are therefore more likely to find a bargain in this relatively under-exploited area of the stock market." Slater also highlighted the great potential for profiting from the growth of small companies when he said, "I once compared a very large company with an elephant by making the comment that elephants don't gallop."

To find these stocks Slater invented the price-earnings to growth ratio (also known as PEG) which has since become a very popular tool for combining value and growth investing methods. The use of this formula is based on a comparison between the price-earnings (P/E) ratio and the expected/estimated share growth rate of the company.

The P/E ratio of a company doesn’t equate to an expensive stock if there is a high growth in earnings. For example, a company has stock with a P/E of 20 and it is estimated that its earnings will increase at a rate of 20%. Applying Slater’s formula means that the company has a PEG of 1 and would be a good investment choice. The PEG ratio was pioneered by Slater and is still a widely used tool in investment analysis. PEG was popularized in the United States through Slater’s 1992 book “The Zulu Principle”. Slater believed in the value of researching companies and is quoted as saying, "You get out of an investment what you put into it, so the first decision you have to make is how much time you are prepared to devote to the initial task of acquiring a basic knowledge of investment.”

Slater was one of the first investors to make his strategies publicly available in the U.K. He has taken on roles in investment education as well as authoring children’s books and in 2007, remained a very active investor in several companies.

James Slater’s publications include:

Investment Made Easy: How to Make More of Your Money

Beyond the Zulu Principle: Extraordinary Profits from Growth Shares

How to Become a Millionaire: It Really Could Be You

About the author

Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".

Copyright © 1997 - 2009 by
Mark McCracken , All Rights Reserved