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Tags: ruddy | templeton | investing

Sir John Templeton R.I.P.

Tuesday, 19 August 2008 02:21 AM

The world lost a truly great man this past July when Sir John Templeton passed away at the age of 95.

Templeton is most widely known for his investment savvy, having founded the Templeton Funds. His business acumen is well deserved. Many of the “great” stock gurus — I won’t name names here — have never even beaten the S&P Index over the long term. Wash away the hype about these folks, and you could do as well investing with just a bit of common sense.

It has been reported that just $100,000 invested with Templeton in 1954 would have grown to over $20 million by 1992. During this period, Templeton returned 14.5 percent annual gains to investors. Money magazine dubbed him, “The greatest global stock picker of the century.”

I had the honor of visiting Sir John at his Lyford Cay, Bahamas, enclave twice in his later years. My last visit with him was just over two years ago. He was 92 at that time, and while his body was beginning to show some frailties, his mind was remarkably sharp.

He clearly enjoyed talking about investments and the world economy, but he was most animated when talking about spirituality and religion. He had put the bulk of his John Templeton Foundation — now with over $1.5 billion in assets — behind his efforts to help mankind understand spiritual forces as well as we now understand the physical world. Always the businessman, Sir John made a deal with me each time I met him. He would talk to me about the financial world for our readers — but I had to detail in my reports his views on the importance of a spiritual life. It was a done deal.

It is interesting that a man so identified with Mammon would also be so closely involved with God. In reflection, these associations are not opposites. Sir John understood that our free society and free enterprise system are underpinned by great moral foundations. Our system of contracts works because contracts are honored by honest people. People honor contracts because of their faith and accountability to a higher power.

On this score, Sir John’s legacy of supporting, advocating, and promoting the ideas of a morality-based society will no doubt be continued by his most able son, Dr. Jack Templeton, who now heads the John Templeton Foundation.

As for his legacy in the investment world, Sir John has left an enduring mark there as well. If one word could sum up his investment philosophy, it is “contrarian.” Many of us talk about being contrarian, but most people find it difficult to break from convention. Templeton lived his life as a contrarian. Even as a young man, Templeton was a pioneer contrarian.

He told me how after graduating from Yale he began investing in foreign stocks. Such an idea seems quite acceptable today but, as Sir John recalled, many Americans viewed it simply as a betrayal of the country to invest abroad. But Sir John didn’t see why in a free enterprise society an individual should limit one’s self to one country’s equities when so many opportunities existed elsewhere. Because of this lack of interest among many Americans in foreign stocks, he told me, he was able to find tremendous bargains around the world. He lamented that now, foreign investing had become so in vogue with the American public that finding such opportunities was difficult. How the world changes!

For Sir John, one of the cornerstones of his investment philosophy was to ignore conventional wisdom. When he moved full time to the Bahamas in the 1980s, he brought his offices with him from Rockefeller Center. Yet, he revealed, he was quite worried about his future investment performance. Away from the center of things, could he invest wisely?

“I actually performed better here than in New York,” he said with a smile. His explanation was that, in the Bahamas, he saw things more clearly, once he was away from the influence of the New York investment world.

Sir John summed up his investment approach this way: “Buy when others are despondently selling, and to sell when others are greedily buying.” He had a great ability to sense the moment of “maximum pessimism.”

Back in 2005, for instance, he plainly saw the housing bubble for what it was. He predicted to me then that he had little doubt the market for houses would collapse in the United States. He said home prices would fall as much as 50 percent in some markets. His prediction about the housing market was uncanny.

Though he was a contrarian, he was never a pessimist. He was a realist. He predicted the Dow would tank as a result of the housing crisis, but it would not be in a permanent trough. He predicted the Dow hitting 20,000 in the next decade or so.

At 92, when I visited him last, he was full of life. I asked him his secret for longevity and good health. He looked at me and said just two words, “Never retire.” He said he wanted to write a book on the subject. He was apparently too busy to accomplish that.

Another secret was exercise, which he took quite seriously. He liked golf, but it took way too much time, he said. He did some calculations and figured out that if he went into the Atlantic Ocean and walked against the current for 45 minutes he would burn as many calories as walking on the golf course for four hours. He soon took up the practice of walking in the sea and continued it into his 90s.

It was the story of his life, always walking against the current.

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The world lost a truly great man this past July when Sir John Templeton passed away at the age of 95.Templeton is most widely known for his investment savvy, having founded the Templeton Funds. His business acumen is well deserved. Many of the “great” stock gurus — I won’t...
Tuesday, 19 August 2008 02:21 AM
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