Mar 8, 2011
Investing the Templeton Way
Sir John Templeton died a few years ago, at the ripe old age of 95. He was the founder of Franklin Templeton Investments, which is one of the world's biggest players in the mutual funds industry.
Investing the Templeton Way was written by Sir John Templeton's nephew, and is partly a biography, and partly a guide on investing money. The book contains many interesting personal anecdotes about Sir John Templeton, starting with his childhood, to his impoverished teenage days during the Great Depression, and ultimately to his billionaire investment decisions in the late 1990s.
(I think Sir John Templeton then retired around that time, and spent the rest of his life focusing on philanthropic activities).
The book makes the recurring point that Sir John Templeton liked to buy shares at the "point of maximum pessimism". The best time to buy is when no one else wants to. The book contains many examples of Templeton made his millions (and ultimately, his billions) through this approach. Templeton was a bargain hunter, in an extreme sense of the word.
Conceptually, the strategy is easy to understand. In practice, many investors will not have the guts and the clarity of mind to consistently execute the strategy, even if they intellectually understand its merits.
Take a look at the Middle East now. Due to the recent turmoil in Egypt; the political unrest in Bahrain, Oman etc, and most of all, the ongoing civil war in Libya, stocks in the Middle East markets have dived sharply in the past month.
To most investors, this is bad news. To Franklin Templeton, this would have been a time to rub your hands in glee. Or at least to sit up, pay close attention and monitor, looking for the chance to dash in and buy good stocks at ridiculously cheap prices.
Because you really don't get wars every day! They are rare, excellent buying opportunities.