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2 Important Investing Lessons You Can Learn From the Legendary Sir John Templeton

The late Sir John Templeton might not be as well-known as Warren Buffett, but Templeton is actually an investing legend whom I look up to. In 1999, the U.S.-based Money magazine called him “arguably the greatest global stock picker of the century.”

Templeton started his career in investing and finance in 1937 in the U.S. and subsequently bought a small investment advisory firm 3 years later that was known as Templeton, Dobbrow and Vance, Inc. Then, in 1954, he entered the mutual fund (known as unit trusts here in Singapore) industry with the establishment of the Templeton Growth Fund.

Franklin Resources bought over Templeton’s fund management business, the Templeton Funds (now known as Franklin Templeton), in 1992. Over that nearly four decade period, Templeton had helped his investors earn a compounded annualised return of some 14.5%; every $10,000 invested with Templeton in 1954 would have become a princely $2 million by 1992.

Along the way, Templeton was also widely known for pioneering the art of global investing, long before U.S. investors had dared to venture out of the American financial market.

With such a storied history of investing success, there’s much we can learn from Templeton. Here are two such lessons.

1. Be a contrarian by going against prevailing market trends

More often than not, retail investors (or even professional money managers) exhibit less than desirable behaviour when it comes to investing: They are greedy when they see a roaring bull market and fearful when it comes to a gloomy bear market.

Templeton though, was someone who had the courage to do the opposite of what the crowd was doing.  In fact, his contrarian strategy of buying stocks at the point of maximum pessimism has played a major role in his investing success.

As he once said, “The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” We’d do well to remember such wise words.

2. The world’s your oyster

Before most American investors had even dreamed of investing in Japan, Templeton was already diving into the Japanese stock market in the Sixties, eventually making a killing there.

He once quipped, “If you search worldwide, you will find more bargains and better bargains than by studying only one nation.”

As a guideline on the search for potential investment opportunities globally, Templeton likes to sift through countries that have low taxes, a high savings rate, high research budgets, and unions that are not quarrelsome (this also fits Singapore pretty well, incidentally!).

Foolish Summary

To conclude, Sir John Templeton had left behind a lifetime of investing wisdom when he passed away on July 2008. We can still honour his memory by passing the torch on to other investors through the sharing of knowledge.

I would like to end off here by sharing an inspiring quote from him:

“If we become increasingly humble about how little we know, we may be more eager to search.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.