”Keys to Investment Success” - from John Templeton
This audio book sounds like it was recorded in the 1980s. A one-on-one interview, very “rough around the edges” - perhaps conducted over the phone. I bought it for $3.99 and have listened to the first half so far. About an hour long. Templeton was my first fund manager when I was just starting to contribute to my workplace plan in the 70s. The fund was TEMWX. He was also founder and head of Templeton World Funds.
- He’s big on Union Carbide
- U.S. Steel has fallen in price, but is still too expensive for his taste
- “Do-it-yourself” small investors don’t have a chance compared to a good mutual fund with its depth of research and analytical capabilities.
- He thinks no-load funds should not be allowed. His reasoning is that without the assistance of “dedicated professionals” (salespersons) retail investors would make poor decisions in buying funds that don’t meet their individual needs. And also, having not paid a load would entice investors to jump from fund to fund and forsake the rewards of long term investing.
- He thinks 5 years is the reasonable time frame to expect to profit from a good equity fund. He says it would be extremely rare not to make a profit in one of his firm’s investment portfolios over a 5 year period, based on historical averages.
- His style sounds deep value. The best investments are those whose price has been trashed and which have long been out of favor / shunned “by everyone else.” However, he’s more than willing to grab off a quick profit and sell a recent acquisition if the price rises quickly.
- He doesn’t like bonds / bond funds for long term investment, being quite adamant that equities will outperform over longer periods.
- He and the investment committee move from investing style to investing style in an attempt to stay ahead of the crowd. Once everyone adapts a successful style of investing, it ceases to be effective. He refused the interviewer’s request to detail any one new style under consideration, saying that if he revealed it, it would be less effective as others moved to mimic it.
- He prays frequently for guidance in making correct investment decisions and leads off staff meetings with prayer.
- According to the intro, Sir John resides (resided) in the Bahamian Islands while running Templeton Funds.
An interesting look back in time. Some of Templeton’s views may provoke ridicule or ire among today’s investors. For his time, Templeton was a giant in the mutual fund world. Templeton Funds were later acquired by Franklin. ISTM that’s also about when their earlier years stellar performance ceased.
Amazon Link”Money magazine in 1999 called him "arguably the greatest global stock picker of the century". Templeton attributed much of his success to his ability to maintain an elevated mood, avoid anxiety and stay disciplined.” Wikipedia
Comments
- “Do-it-yourself” small investors don’t have a chance compared to a good mutual fund with its depth of research and analytical capabilities. (this is perhaps the only time I'll invoke Vanguard's popularizing indexing as a good thing)
- He thinks no-load funds should not be allowed. His reasoning is that without the assistance of “dedicated professionals” (salespersons) retail investors would make poor decisions in buying funds that don’t meet their individual needs. And also, having not paid a load would entice investors to jump from fund to fund and forsake the rewards of long term investing." (one hears that second point about ETFs encouraging trading and short-termerism, so I guess he's kind of right on that one.)
If this was happening at any fund I owned, I'd bail from it. Keep religion out of my investments!
He prays frequently for guidance in making correct investment decisions and leads off staff meetings with prayer."
Yeah - The prayer was a turn-off. I’ll say I can’t remember his mentioning that connection with investing very often back then.
I was revulsed at his comment about loads. But understand his larger point about people moving in and out of different funds often.
It would have been fun hearing him spar with John Boggle. Their views on many things appear at odds,
I suggest Mr. Templeton and other similar investment houses weren't happy about the 'loss' cash flows from advisors and high loads on funds.
I imagine with what is in place today, that the percentage of 'advisors' who fared much better than the self directed retail investor in the recent melts of 2008, 2020 or 2022 is very large. 2022 surely had a lot of phone calls from investors using advisors as to 'why didn't you do better with my money'. What am I paying you for ???
I'd like to think that this was recorded before 1984, before Union Carbide caused the immediate deaths of over 3,800 people (total death toll over 15,000) in Bhopal. "Investigations later established that substandard operating and safety procedures at the understaffed plant had led to the catastrophe." (Encyclopaedia Britannica). Yet even to this day, as a subsidiary of Dow Chemical, Union Carbide clings to its story that this worst industrial disaster in history was an act of sabotage.
If Templeton recorded this after 1984, I'm saddened by the idea that he could square his faith with his enthusiasm for Union Carbide. By 2001, "UCC [had] shrunk to one sixth of its size since the Bhopal disaster in an effort to restructure and divest itself. By doing so, the company avoided a hostile takeover, placed a significant portion of UCC's assets out of legal reach of the victims and gave its shareholder and top executives bountiful profits."
https://ehjournal.biomedcentral.com/articles/10.1186/1476-069X-4-6
Regarding loads: I wonder what he would say about DFA's model - no load, but (until recently) sold only through advisers. Same advice, same handholding as with load funds, but without the fund company skimming part of the load.
(Per 1995 F-T fund prospectus, F-T kept approx 0.75% of the load on Class I shares.)
Here’s an interesting Article on Templeton
Here’s the complete recording for free on UTube. (And, I paid $4.99 for an inferior Audible recording.) I highly recommend listening to this.
After listening to the recording again, it turns out Templeton was not only aware of the 1984 Union Carbide incident in Bhopal India, but had been loading up on the stock as its price plunged due to all the ongoing litigation. Make what you will of it. Calls it “a terrible accident” and refers to “all the lawyers” going after the company. So @msf was on to something … (as usual)
Posted in the interest of accuracy.
from Wikopedia
"The Templeton Prize is an annual award granted to a living person, in the estimation of the judges, "whose exemplary achievements advance Sir John Templeton's philanthropic vision: harnessing the power of the sciences to explore the deepest questions of the universe and humankind's place and purpose within it."
Among the giants that appeared often on Rukeyser’s show in the ‘70s & ‘80s were Templeton, Peter Lynch and Henry Kaufman. What Templeton lent was a belief / message that over long periods individual investors would be rewarded for saving and investing for the future. In the long run the country and mankind worldwide would prosper and investments in equities were a road to participation in that wealth - a way to raise the living standards of the masses. Of course, it hasn’t turned out that way for various sundry reasons. But that was the message, and I think he really believed it.
Geez - Have another book about Templeton loaded into my Audible library. Generally fall asleep nights absorbing either finance or astro-physics, both of which I find intriguing. Have listened to Howard Marks a lot and to a nice biography on Buffett. I try to glean what wisdom I can from any source, even though I might loath some aspects of their lives.
PS - Thanks for commenting.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” Upton Sinclair
"It is useless to argue with a man whose opinion is based upon a personal or pecuniary interest;" William Jennings Bryan