Sir John Templeton was a remarkable man, outstanding investor and mutual fund pioneer and he left a great heritage when he passed away in July 2008 at the age of 95.
In this article I want to share John’s valuable 16 rules of investing, but before I do that some background information.
Good at poker
John Marks Templeton was born in the USA in 1912. He attended Yale University where he financed a part of his tuition by playing poker, a game he was very good at. He graduated in 1934 near the top of his class and went on the Oxford University in the UK as a Rhodes Scholar and earned an M.A. in law.
Upon his return to the USA he went to work as a trainee for Fenner & Beane in New York. One of the predecessor firms of Merrill Lynch.
In the depths of the Depression in 1937 Templeton co-founded an investment firm that would become Templeton, Dobbrow & Vance.
John is famous for his controversial investment in 1939 which is also the hallmark of his contrarian investment style.
Bought in depth of Wold War II
In 1939, in the depths of the Second World War, he bought $100 of every stock trading below $1 on the New York and American stock exchanges. He invested around $10,400 in 104 companies. In spite of 34 companies going bankrupt four years later he sold the portfolio for more than $40,000
Templeton, Dobbrow & Vance eventually changed its name to Templeton Damroth, and in 1962 John sold his stake in the firm.
During the next 25 years, he created some of the world’s largest and most successful international investment funds.
In 1987 as a naturalized British citizen living in the Bahamas, John was knighted by Queen Elizabeth II for his many accomplishments. Also in 1987 he founded the John Templeton Foundation which was to focus on donations for spiritual and scientific research.
In 1992 he sold his company Templeton Growth Funds to the Franklin Group.
Upon his retirement from the investment business, Templeton became an active philanthropist through his John Templeton Foundation,
Now for John’s 16 rules for investing
1. Invest for maximum total real return (Real return after tax I would like to add)
2. Invest, don’t trade or speculate
3. Remain flexible and open-minded about types of investment
4. Buy low
5. When buying stocks, search for bargains among quality stocks
6. Buy value, not market trends or the economic outlook
7. Diversify. In stocks and bonds, as in much else, there is safety in numbers
8. Do your homework or hire wise experts to help you
9. Aggressively monitor your investments
10. Don?t panic
11. Learn from your mistakes
12. Begin with a prayer
13. Outperforming the market is a difficult task
14. An investor who has all the answers doesn?t even understand all the questions
15. There’s no free lunch
16. Do not be fearful or negative too often