THINKERS
GOD’S WORK “The four most dangerous words in investing are ‘This time it’s different.’” Sir John Marks Templeton Born November 1912 in Winchester, Tennessee. Died July 2008 in Nassau, Bahamas Emerging markets pioneer Unquestionably the boldest proponent of emerging market investment, Templeton’s biggest success in the 196os was in turning a suspicious mainstream America into an enthusiastic backer of emerging equities. Templeton’s own Growth Fund, started in 1954, was the first to take an emerging post-war Japan seriously, and he rode the Tokyo market until the late 1980s, when he sold out in the nick of time. Before long Templeton had branched out into other Asian markets, also with phenomenal success. It’s been calculated that $10,000 invested in the Templeton fund in 1954 would have grown to $5.5 million by 1999, assuming that all distributions were reinvested. In 1992, meanwhile, he had sold the Templeton to the Franklin Group for a reputed $440 million. And the secret? 50% Ben Graham and 50% something else, you might say. Like Graham, Templeton looked for solid value plays which he would always aim to run for at least five years at a time. Unlike Graham, however, Templeton attached fierce importance to fundamental analysis, and he possessed a profound sense of cyclical patterns which enabled him to ride every upward escalator until shortly before it stopped. He had little but contempt for technical analysis. A fighter from the start Well, he had to be. Templeton had hardly started his studies at Yale Business School when his father’s heavy business losses almost forced him to quit his studies and earn a living. But the young student survived by scraping together a number of bursaries, while also starting a college newspaper to fund his education. He left Yale as top scholar. A master of timing The arrival of war in 1939 prompted an instinct that the impending conflict might kick America out of the 1930s manufacturing depression. Deciding
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to buy $100 worth of every US stock priced at less than $1 a share, including all the bankrupt ones, he quadrupled his money in four years. He later went on to found his own famous series of funds. Religious conviction Templeton once said that he thought of his investments activities as a “ministry”, and that he saw the workings of the money market as part of God’s plan. But his Presbyterian convictions were only the launch-pad for his religious endeavours. Templeton became convinced that most religious institutions were stuck in a theoretical rut, and in 1973 he founded a Templeton Prize for Progress in Religion, which was intended to stimulate a sort of scientific inquiry among religious theorists – a sort of Nobel Prize for thinkers. The subsequent winners included Buddhists, Muslims, Jews and Hindus. And so to the beach... In 1963, aged only 51, Templeton moved to Nassau, where he acquired British citizenship and continued to run his funds until 1992 – after which he settled down to devote the remainder of his life to philanthropic works. The John Templeton Foundation, originally created in 1987, is now worth some $1.5 billion and disburses around $70 million in grants every year. Too late the prophet But his opinion still mattered. By the late 1990s Templeton was warning volubly about the dotcom crash that he saw coming in 2000. And in 2005 he wrote despairingly about the reckless property market surge which he said would soon send America into a recession that would last many years. His words were timely, but sadly they remained unread until it was too late. Written in a private letter to family and friends, they remained tragically undiscovered until after his death. By which time Lehman was gone and the whole sorry mess was upon us. November 2012
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