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The world according to Stephen Jarislowsky

When Stephen Jarislowsky was interviewed recently about being a value investor, the 84-year-old Canadian billionaire had a lot to say about the economy and regulators. A few of his quotes:

On clients being nervous during the recent market meltdown:

Oh yes, they were very nervous. Let me tell you, I was very nervous myself. There was a real chance of a total meltdown of the world's financial system. I wasn't sure the [U.S.]government was going to do all the right things.

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I think they recognized that you had to bring down interest rates and that you had to support all of the depositors' money in the banks. Because if you hadn't done that, bank after bank would have gone bankrupt. And not only bankrupt, but an enormous amount of depositors' money would have been lost.

I think that it was straight human failure on the greed point of view, and because of the lobby of the financial business in Washington and other places in the world who have been basically buying the legislators to do their bidding for years. And we still don't have really good regulation at this point. Nothing really has happened in the last two years.

On Canadian regulators:

Our regulation in this country is probably as loose or looser than it was in the United States. Our securities commissions, what have they done? White-collar crime in this country, it's a pretty good bet -- it's almost as good as the house in Las Vegas.

On individual investors going it alone

I don't think the average investor is in a position to go it alone, other than to pick some of the very, very finest companies and even there he may be wrong. I'm not even denying that people like myself are wrong from time to time.

On being old-fashioned, avoiding hedge funds and derivatives

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I'm from the same school as Mr. [Warren]Buffett - that I don't believe in gambling if I don't have to. In my life, I really have never consciously gambled and when I took a flyer I knew what I was doing. In other words, I knew that I might be very stupid. I didn't do it for others, I only did it for myself.

On shorting stocks

I don't have any particular objection to it as long as it is not done on a downtick. For instance, during the debacle in 2008-2009, you could short without ever having to borrow stock, and you could do it without an uptick. Therefore you could destroy a company by just piling some shorts on it and getting rid of everyone who bid. And you were assured that the stock was going to fall and then you'd profit because everyone was panicking. Now that shouldn't have been allowed. And I believe there are periods when short-selling should not be allowed. Like in a panic.

But again the regulators really didn't step up to the plate, except on a temporary basis and only in respect to a small number of stocks.

On how to invest overseas

Invest in countries in which there's a modicum of law. But not necessarily in countries where there is no law. In Russia at the present time, I would say there is no law. In China, I would say it's very questionable whether a Canadian would get justice in a Chinese court.

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