The Greatest Investors: John Templeton

Born: 1912 (Winchester, Tennessee)

Died: 2008

Key Positions: Fenner & Beane

Templeton, Dobbrow & Vance, Inc.

Templeton Growth, Ltd.

Personal History:
John Templeton’s name will forever be associated with globally diversified mutual funds. Born into a poor Tennessee family on the eve of the First World War, Templeton went on to attend Yale University and graduate at the top of his class in 1934 with a degree in Economics. He continued on to Oxford as a Rhodes Scholar, earning a master of arts in law in 1936. Upon his return to the United States, Templeton settled in New York City, where he worked as a trainee for Fenner & Beane, a predecessor firm of Merrill Lynch.

In 1937, while the Great Depression was still hitting the nation hard, Templeton co-founded an investment firm that later became Templeton, Dobbrow & Vance. Under Templeton’s leadership, the firm was highly successful, accumulating some $300 million in assets and expanding to include eight mutual funds. The fund based its strategy on Templeton’s own experience: in 1939, he purchased $100 worth of every stock which was trading below $1 per share on the New York and American stock exchanges. This totaled about 104 different companies, a whopping 34 of which were bankrupt, and Templeton’s initial investment was $10,400. After four years, he managed to sell those shares for nearly four times the money he had initially invested.

In 1954, Templeton founded the Templeton Growth Fund, based in Nassau, Bahamas. The previous fund eventually became Templeton Damroth, and Templeton would go on to sell his stake in the firm in 1962.

Over the next 25 years, Templeton had a hand in creating a number of highly successful international investment funds. In 1992, at age 80, Templeton sold off his funds to the Franklin Group. In 1999, Money Magazine called him "arguably the greatest global stock picker of the century." As a naturalized British citizen living in the Bahamas, Templeton was knighted by Queen Elizabeth II for his many accomplishments.

Upon his retirement from the investment business, Templeton became an active philanthropist worldwide through his John Templeton Foundation, which focuses its donations on spiritual and scientific research.

Investment Philosophy:
Templeton is known as one of the industry’s top contrarian investors. Generally, he searched for value investments in a process he referred to as “bargain hunting.” He would typically look for these targets in a variety of countries at once, following the mantra to “search for companies around the world that offered low prices and an excellent long-term outlook.”

Being a value-contrarian investor, Templeton’s principles pushed him toward stocks that had been entirely neglected. Part of Templeton’s success in his ventures was his location. He was based throughout much of his career in Lyford Cay in the Bahamas, which was the site of the Lyford Key Club and a hub for business leaders from all over the globe. Templeton excelled at networking and exchanging ideas in the relaxed atmosphere, which he vastly preferred to Wall street.

Noteworthy Publications:

• "Spiritual Investments: Wall Street Wisdom From The Career Of Sir John Templeton" by Gary D. Moore (1998)
• "Golden Nuggets From Sir John Templeton" by John Templeton (1997)
• "21 Steps To Personal Success And Real Happiness" by John Marks Templeton and James Ellison (1992)

Quotes:

"Rejecting technical analysis as a method for investing, Templeton says, "You must be a fundamentalist to be really successful in the market."

"Invest at the point of maximum pessimism."

"If you want to have a better performance than the crowd, you must do things differently from the crowd."

"When asked about living and working in the Bahamas during his management of the Templeton Group, Templeton replied, "I've found my results for investment clients were far better here than when I had my office in 30 Rockefeller Plaza. When you're in Manhattan, it's much more difficult to go opposite the crowd."