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Sir John Templeton
Best Quote: “The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell”
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Sir John Templeton started his investment career during the World War – II. Convinced that a war generally creates an increase in demand & business activity Sir John Templeton called his broker and placed a bid to buy 100 shares of each company that was selling at less then $1.Four years later he sold his original investment of US $ 10,000 at US $ 40,000. In his initial years Templeton used to churn his portfolio quite often and switched between cash and stocks with remarkable ease and timing. He was comfortable searching for countries to invest in and was among the early investors to have recognized the potential in the Japanese stock markets. He was among the firsts to have taken a position there in the early sixties. At that time companies were available at low single digit PE's with high dividend yields. The Japanese Index went up 40 times from 1965 to 1989. Being a value investor Templeton scaled down his investments well into and before the peak. He used to read brokers report only to obtain first hand information about the company rather then use their recommendation to buy and sell stocks. He professed the theory that for those properly prepared in advance, a bear market in stocks is not a calamity but an opportunity. He is bullish on China and predicts that the Dow will hit the 1,000,000 mark by the turn of this century. The only investors he thinks that should not diversify are the ones who are right 100% of the time.
Templeton was always excited to generate first hand information from company visits. A few questions he liked interviewing the management was about their long-range plans, the growth about the company and whether there was any chance for this growth rate to accelerate, their views on the competitors etc.
What to look for before buying?
- Invest at the time of maximum pessimism with country and stocks specific diversification
- Invest into low PE Companies.
- Higher EBIDTA or Operating margins
- The intrinsic value of the business
- Sustainable growth rate
- His basic call was based upon looking at the broad macro picture of either a country.
In 2000 he profited from the crash at the Nasdaq. Clients and associates were advised to switch from stocks into Treasury bills. He is bearish on the US dollar and expects substantial gains in the South East Asian currencies. He has founded the Franklin Templeton Mutual fund business that manages over (Rs 18,00,052 crores) US $ 412 billion from 240 open-ended schemes across the globe.
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