"Had You Invested £100 With Sir John Templeton You Would Have Made £20,000 In Just 4 Decades"

Introduction

Sir John Templeton was born in 912 in a small town in Tennessee.  His father was a lawyer and land-owner.

In 1930 he was admitted to Yale to study economics.  He paid his own way through college and learned how to be frugal.

After Yale, he won a scholarship to study at Oxford.  By 1937 he secured a job with a Wall Street company which later became part of Merrill Lynch.

He was soon spotted by a Texas based oil company and became finance director. 

He returned to Wall Street in 1939 and bought into a small fund management company. It was here that he operated his Fund and within two years the Fund had risen four-fold. 

That Fund went on to have over $20 Billion under management with over one million individual account holders.

Templeton moved to the Bahamas in 1963 where he died in 2008.  In between, he became a naturalised British citizen, and knighted (1987) for the work he did for charity.

"Common Characteristics That Agree With
Value Investing Criteria"

Sir John Templeton was a strict disciplinarian of Value Investing. 

If you have read any pages of this web site prior to landing here, you will understand that the principle of Value Investing is to buy a share when it is selling for less than its intrinsic value in the knowledge that the market will, eventually, price that share at, or above its intrinsic value.

Common characteristics used by John Templeton to find suitable stocks which fit the criteria for value investing are:

  • A low, normally single figures, Earnings Multiple and an above average Dividend Yield

  • A good historic record

  • Surplus cash flow

  • High Book Asset Value

  • Under researched

  • Manageable company debt

  • Quality management

Sir John Templeton used these criteria, and others, for over 50 years.  In 1960 he spotted that many stocks in the Japanese market were selling on three and four times earnings.  He even had the foresight to get out in the 1980s, but only after he had made a fortune.

Templeton had a flair for investing in global markets.

Had you invested £100 in his Growth Fund at the beginning (1954) that investment would have grown to over £20,000 four decades later, and that is allowing for eight Bear Markets en route.

"Sir John Templeton Was Bullish About
Emerging Markets But Also Knew When To Sell"

Sir John Templeton founded his optimism on investing in emerging markets with his interpretation of human nature.  He reckoned that governments would never allow an early 1930s recession to happen again. 

He also bet that Eastern bloc countries would become a new economic force.

He had other theories as well.  Western nation demographics were experiencing ageing populations.

Moreover, developing countries could produce products for a far less cost than their Western counterparts.  Countries like Indonesia, Korea, India and China in particular, were seen as big opportunities for investing. 

What we now see is what John Templeton saw decades ago. 

Templeton made up a list of some 70 viable emerging economies out of which he probably delved into 20 or so. 

He discovered that the value stocks in each emerging market generally came from the same industry - typically natural resources, agriculture, telecoms, and others.

The Templeton Group liked Hong Kong as it represented a route into China.  He has since been proved right. 

Templeton admitted that buying stocks was only half of his success.  He also knew when to bail out.  None more so than his getting out of the Japanese market after the Bear Market of the late 1980s.

His philosophy was to sell a stock if another comparable stock could be bought for 50% cheaper. 

"Books By Sir John Templeton"

Sir John Templeton was a prolific writer.  Several of his books turned out to be best sellers. 

Here's a selection of some of his works:

Investing The Templeton Way by Lauren Templeton

Click on the link below to get a copy of this book:

Investing the Templeton Way: The Market-Beating Strategies of Value Investing's Legendary Bargain Hunter

The Templeton Plan by Sir John Templeton

Click on the link below and get yourself a copy of this book:

The Templeton Plan: 21 Steps to Success and Happiness

The Templeton Touch by William Proctor

Grab a copy of this book by clicking the link below:

The Templeton Touch

Rules For Investment Success by Sir John Templeton

This is a book for anyones' bookshelf, get your copy by clicking the link below:

How to Make Money in Stocks: Rules for Investment Success

Conclusion

Was Sir John Templeton a genius?  Or did he just adhere to the Ben Graham formula for selecting Value Stocks? 

For his time, the 1950s through to 1990s he was exceptional.  At one point his Templeton US Funds were all in the top ten performers. 

* Four decades of out-performing is staggering * 

His foresight in getting into Emerging Markets was ahead of its time. 

When it came to the subject of Value Investing, he surely followed Benjamin Graham's philosophy but must have been at odds with Warren Buffett when it came to the selling of stock. 

Warren Buffett just does not sell (except in extremely special instances).  Did Sir John Templeton leave a lot of money on the table by getting out of stock too soon (like Ben Graham did)? 

We'll let you be the judge of that!

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