Sir John Templeton is one of the greatest ever investors not many people know about. Templeton was born in 1914 into a working class family in Tennessee. A young, bright student, he received a scholarship to attend Yale University, graduating in 1934 with a degree in economics. Two years he studied for a masters degree in law at Oxford University, England. When he returned to the United States, he worked in New York City for a brokerage firm, Fenner & Beane, which later became known as Merrill Lynch.
In March 1939, Hitler invaded Czechoslovakia, causing the outbreak of World War II. During the war, Templeton borrowed $10,400 to setup his portfolio. Borrowing money to invest wasn’t the most prudent approach to investing but paid off handsomely in the long run. Templeton used the loan to purchase hundred shares of in 104 companies trading under $1 per share on the NYSE. By the end of the war, his portfolio was up 400%, despite 34 of the companies going bankrupt. This capital acted as a catalyst that later helped him become a billionaire!
During the Great Depression he co-founded an investment firm, Templeton, Dobbrow & Vance. The firm was incredibly successful and grew to $300 million in assets with eight mutual funds under management. In 1954, Templton moved to the Bahamas and started the Templeton Growth Fund as a hobby. He multiplied its value by twenty fold in as many years using a contrarian approach, he was one of the first individuals to invest in Japan in the mid 1960s.
Back then if you invested $100,000 into his fund, it would have been worth $55 million in 1999. From 1954 to 1992, the fund had an impressive annual return of 14.5%. In 1962, he sold his stake in the Templeton, Dobbrow & Vance firm and retired.
Over the next 25 years, Templeton created some of the most successful international investment funds. In 1999 Money Magazine named him one of the “greatest stock pickers of all time.” In 2007, he was listed in Time’s Magazine 100 most influential people due to his generosity. During his retirement he setup the “John Templeton Foundation” and gave significant donations to scientific and spiritual research.
10 Investment Rules he Followed
Be an eternal optimist.
Be a global investor – he made a fortune investing in undervalued Japanese stocks.
Crisis investing – Templeton’s timing was always perfect, investing at the start of the second World War was a strange tactic that led to him being labelled as the “penny stock billionaire.”
Invest like a contrarian – Templeton was the ultimate contrarian and took advantage of crises to purchase shares at bargain prices.
Understand how to find bargains – be greedy when others are fearful and fearful when others are greedy!
Be patient, invest for the long term – there will be cycles of bull and bear markets but Templeton believed common stocks would perform well in the long-run, despite temporary downturns.
Recession is a happy hunting ground.
The four most dangerous words in investing is “this time its different.”