One and done

The 'retired' barber on the danger of data, the one deal he would do over and the reason he's never written another book

Globe Investor Magazine, Nov. 21, 2007

DAVID CHILTON self-published his First, and so far only, investment book more than 15 years ago. The Wealthy Barber remains one of the BESTSELLING and most loved Finance books in Canadian history, but he's moved on to other things such as home schooling his children and, more recently, helping a pair of entrepreneurial sisters hawk their healthy cookbooks. He's recently made it back onto the lecture circuit, but he talks more about believing in yourself than tucking money away into an RRSP. Investing his own money is still a priority, however, and he spends a great deal of time reading books about the PSYCHOLOGY OF INVESTING, in a bid to understand how the human mind processes financial information. - STEVE LADURANTAYE

GLOBE INVESTOR: Are you sick of being "The Wealthy Barber Guy"?
DAVID: I really left it quite a while ago, more or less at the peak of its popularity. When I wrote the book, I didn't anticipate it getting as big as it did, and I certainly never expected the longevity. It's good, because I'm not that smart a guy. But I'll always be known as "The Wealthy Barber"-it is what it is and it's funny.

Did you miss an empire-building opportunity when you stopped writing after one book?
There was still a lot of opportunity. The United States has so many companies that have 401Ks and they are looking to educate their employees on why they should be capitalizing on those opportunities. They bring in accountants, and the impact isn't there. I could have spoken every single day to companies on 401K. But do you want to travel to Des Moines, then over to San Diego, then back to Maine and home, week after week? It's not a great lifestyle.

When did you get into investing?
As much as a geek as this makes me sound-and I was not a geek-I read every single financial book when I was young. I was almost a little strange.

That does make you a little strange.
Now that my son is in that age group and I'm watching him with his friends, I wonder what got me on that path. I was still very involved in sports, but I was fascinated by the world of investing.

Are you sitting on a mountain of money?
Unfortunately, I made a huge error in judgment early in my career. After the first six months, The Wealthy Barber had done very well and I was getting very busy filling orders and speaking so I sold it to Stoddart Publishing. After having the smarts to self-publish, I made the stupid move of selling.

How much did you get?
Not much. I think it was $22,000. I did get the rights back a few years ago, though, when Stoddart went under [in 2002]. Regardless, I've led a charmed life. I'm probably the luckiest guy I know.

So you've done pretty well. How do you invest?
The only difference between my own investing approach and what's in The Wealthy Barber is that I tend to use stocks more than mutual funds. For most people, I don't think that's a very good way to go.

Is that because you are good at reading the market?
Nobody is. Guessing short-term moves in the market is impossible. I try to find good companies and hold them patiently -an old-fashioned approach.

How do you decide what to hold?
I've put a lot of my emphasis on asset plays, on what I would call "special situations" where you try to find assets in a company that are undervalued. I've also worked a very niche part of the market that emphasizes spinoffs.

Why do people still make bad decisions with their money?
When I look at the last 10 to 15 years, probably the most damaging thing that has happened to Canadians has been the ease of gaining access to lines of credit. They just can't discipline themselves; it's like a giant credit card.

Do people overestimate their investing knowledge?
People think information is going to take them over the top. But it's not information that helps them; it's wisdom. It's the ability to measure the information, to give it the proper weighting and to think through the big picture. I think you can really see that people need to learn more about themselves. That constant availability of information, if anything, all of that can be more damaging.

How can more information be bad?
People who get so close to their investing tend not to do very well. You show me someone who looks at their mutual fund every day and I'll show you someone headed toward trouble.

If you were to tack another chapter onto The Wealthy Barber, what would it be about?
One of the reasons I haven't written another finance book is that you still have a huge percentage of people not even making RRSP contributions. If I wrote another book, it would just say "read the first book, read the first book, read the first book."

There must be something.
I would probably talk more about the psychology of money and why so many people make the same mistakes over and over again. How we are almost from a DNA perspective destined not to handle money well. In fact, our whole investment decision-making process is flawed. The more we can understand that, the better off we'll be.