Author Archives: Templeton Editor

How Strong Personal Character Defines Investment Decisions

It seems likely that many readers, except perhaps for those that knew Sir John, would have been surprised to see only occasional mention of financial analysis, models, investment rules, or so on, but instead a list of well-defined and reasoned character traits.

by Lauren Templeton, principal and portfolio manager of Lauren Templeton Capital Management, LLC, and Scott Phillips, portfolio manager and contributor to The Templeton Touch

The re-release of The Templeton Touch provided us with an obvious occasion to reflect upon another of the great blessings in our lives which was having the privilege to work for a number of years with our mentor, Sir John Templeton. Perhaps what is lesser known about his influence among investors (including ourselves), was that it extended far beyond any passion for investment or security analysis and instead into the realm of one’s set of values and perspective on life. Within the special section that Scott added to this revision, this was a constant theme that naturally took hold—if not dominated—these interview discussions with investment luminaries.

Although Sir John will always be recalled for the specific illustrations he provided for successful investing, such as pioneering global investing, his contrarian-minded purchases, etc., it was his character and example as a human being that left the strongest impressions among the acquaintances that contributed to the book.

Likewise, through the explorative dialogue of these interviews a consensus was reached that Sir John often took an interest in individuals who possessed a certain passion for learning, the joy of life, and upholding a standard of high integrity above all else.

When William Proctor first sat down with Sir John in the early 1980s to write the original version of The Templeton Touch, there was clearly a great effort put forth to reveal the underlying factors to Sir John’s success as an investor. It seems likely that many readers, except perhaps for those that knew Sir John, would have been surprised to see only occasional mention of financial analysis, models, investment rules, or so on, but instead a list of well-defined and reasoned character traits. Admittedly, some of these traits people are born with to some degree, and some others need to be cultivated from the ground up. No matter what the starting position however, the below excerpt from Chapter 1 of The Templeton Touch represents to us a basic template for success, and in this case success can be defined in the field of investment, but also more broadly in “the game of life” so to speak.

For that matter, these are the same ideals that we practice, strive for, and measure ourselves against for progress. In sum, we believe that the standards we maintain in these areas will ultimately define our level of success as investors, which is most appropriately measured by us, you, and other observers as an ability to safely compound returns in the market above what is commonly available through the market indices. Hopefully, you too will find the excerpt below helpful in your own self-examinations as an investor, or otherwise.

We now refer you to the central determinants of the “Templeton Touch” which are listed below from Chapter 1 of the book. Continue reading

Find a Need and Fill It

What do Sir John Templeton, Henry Ford, Sam Walton, and Steve Jobs have in common? A desire to improve the lives of others.

by Lauren Templeton, principal of Lauren Templeton Capital Management, LLC

Here is a simple question: what if the large majority of people engaged in commerce, business, and investment are taking the wrong approach right out of the gate?  We can all recognize that many people are motivated to act on the basis of “getting” something.  That something people try to “get” can range from the material to the emotive, i.e., from a new car to the admiration of peers. Ludwig Von Mises explained it well in his book Human Action, in our opinion, when he stated that the cause of human action is owed to a feeling of unease. 

Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory. His mind imagines conditions which suit him better, and his action aims at bringing about this desired state. The incentive that impels a man to act is always some uneasiness.

Therefore, this relative unease in a person may help explain, why they do, what they do, i.e., the means and the ends. The specific why’s and what’s depend on the individual and what they assign the highest values to in their life. With that said, most people toil in the hopes of getting that one thing, or even the several things that will calm their own personal state of unease. Some are successful, some are not, and many who are driven solely to get money may discover the irony that it eludes them the most. The reason for this is simple. The individuals who are most successful in the free-market system are those who best address and calm the unease in their fellow man, not themselves.

In sum, the individual focused on giving rather than getting is the one most likely to create value for others. For this individual it is seeing the value they create for others that represents the reward, although great material wealth often coincides with success in addressing the needs of others in the market economy.

Taken in this light, entrepreneurs and innovative businesses are expressions of generosity. Entrepreneurs give the full breadth of their minds, skills, hours, and talents to the market in the hopes of delivering a good or service that is better than the present experience of their customer. Entrepreneurs pool all the resources they can discover in themselves and coordinate the talent they see in partners to address the needs of someone they probably do not know or have even met.

This discussion is easily surmised by a piece of advice a young John Templeton received from his parents when discussing how to start a business, “find a need, and fill it.”  This later prompted him to deliver wealth to the masses as a pioneer in both global investing and the mutual fund industry. Here are some other examples:

  • Henry Ford set out to manufacture an automobile that every man could afford, and was not only successful in meeting this need, but also forever changed manufacturing processes.
  • Sam Walton’s goal was to lower the cost of living for Americans, and thereby increase their standard of living.
  • Steve Jobs connected humanity through personal computing that was easy, intuitive, and broadly universal. 

Even a brief review of these entrepreneurs (and many others) and their biographical information quickly reveals a pattern of pouring all of their talents, or giving themselves over to a singular goal of improving the lives of others.

We feel that one of the most important observations we can share is that each of the entrepreneurs described above (and countless others) introduced a new idea, product, or service that improved the lives of their end user.  In each instance the entrepreneur takes a group of people and leaves them better off than they found them, often raising their productivity.  This is the basis of progress for human beings.  When we find large collections of people engaged in this behavior, an entire society will likely progress.  Conversely, when not enough people are engaged in this behavior, progress may stagnate.  This is, in our view, the simplest explanation for the dramatic increase in the standard of living experienced across the United States during the twentieth century.

This originally appeared as an investment letter written in early 2013.

New Video Links for Sir John Templeton on the 1987 Market Crash

In October of 1987, the stock market took a tumble that left investors shell-shocked. In the wake of that meltdown, John Templeton appeared on a panel of experts on the television show Wall Street Week to share his insights on recent events. There are valuable lessons to be gleaned from this footage, so we’re very thankful to our friends at Maryland Public Television for allowing us to repost excerpts here.

Continue reading

Article from the Wilson College Bulletin on John Templeton

We recently unearthed this profile of John Templeton from the February 1960 edition of the Wilson College Bulletin.

Investment Counselor: Like Doctor, Lawyer

John M. Templeton, M.A. (law) Balliol College, Oxford, has been president of Templeton, Dobbrow & Vance, Inc. for twenty years.

The firm’s three founders, Templeton, Dobbrow and Vance, were not law partners, however, as the name might suggest, but rather investment counselors.

Forty-five minutes from Times Square via express subway and a commuter bus to the suburban community of Englewood, N.J. — across the Hudson from Spuyten Duyvil — is the headquarters office and research center of the firm.

Here, again, there is much that resembles a law office, for in the large house converted to offices there are some 20 rooms where men are hard at work preparing analyses of companies not unlike the way in which lawyers might go about preparing briefs. There is a large reference library to the right of the entrance as well as smaller collections of reference materials in the respective offices. One clue to the research center’s connection with matters financial is the “banker’s green” carpeting in office, reception room and library.

The semblance between investment counseling and the practice of law was affirmed by Mr. Templeton himself. “Our role as investment counsel in not unlike that of a doctor or a lawyer—except that there are no midnight emergencies,” he added with a twinkle in his eye. Continue reading

Two Principles of Success, Part 5

More today on this concept of orderliness that Templeton touches upon in Step 9 of The Templeton Plan, “Utilizing Two Principles of Success.” Here are two exercises that can boost your business acumen instantly if you can put them into practice.

Pretend you are sending a cable; that is one of the best methods for learning economy of speech. Cables are charged for by the word. Soon you will eliminate extraneous clauses, unnecessary words, and other forms of fuzzy thinking. You’ll begin to drive your points home with a force you never realized was within your power.

The persevering person will learn that in speaking and writing it is important to keep an outline in Continue reading

Two Principles of Success, Part 4

Though Step 9 of The Templeton Plan is called“Utilizing Two Principles of Success” it could perhaps more accurately be called “Utilizing Three Principles of Success” because it links perseverance with another quality that was important to Templeton: orderliness.

Perseverance in all your daily activities leads to the formation of an orderly mind instead of one that is full of loose ends. It leads to a mind that is purposeful and capable of planning ahead. It leads ultimately to success in life, because the habit of sticking to a given task, having now taken an interior form, helps you to convey facts more accurately and quickly.

If your thoughts are organized, you can explain more clearly to a customer the advantage of purchasing a particular stock. If you have an orderly mind, you can marshal your facts, present them with forceful logic, and persuade your client that one market position is superior to another… Continue reading

Two Principles of Success, part 3

In today’s post we continue our look at The Templeton Plan with an examination of Step 9, “Utilizing Two Principles of Success.” This chapter has a great story about one of Templeton’s earliest business endeavors—one he undertook before entering the world of Wall Street and even before he went off to college: the always challenging door-to-door sales business.

Young Templeton’s ability to guide his own life was put to a severe test on his very first paid job away from his hometown. For a shy young man, selling magazine subscriptions door-to-door was agonizing work. He felt totally unsuited and wanted to quit. But it was the summer before he was to enter Yale; he was seventeen and in real need of money.

Few people in 1930 had money to buy anything, let alone “extras” such as magazines. For that reason, selling magazines required more than just a hard sell; it required all the skills of persuasion and all the perseverance and patience one possessed. The sales supervisors even told the salesmen to run from house to house so they would seem breathless with excitement when they approached a prospect—just to make the sales impact greater. Continue reading

Two Principles of Success, part 2

Today we continue our look at The Templeton Plan with an examination of Step 9, “Utilizing Two Principles of Success.” In this step, we find two of Templeton’s favorite quotes on the principle of perseverance.

Quote 1:
“The difficult we do immediately. The impossible may take a little longer.”

Quote 2:
“He who floats with the current, who does not guide himself according to higher principles, who has no ideal, no convictions—a thing moved, instead of a living and moving being—an echo, not a voice.”—Swiss philosopher Henri Frédéric Amiel

Two Principles of Success, part 1

Today we continue our look at The Templeton Plan with an examination of Step 9, “Utilizing Two Principles of Success.”

If there is a leading clue to Templeton’s outstanding success, it is that he always finishes what he begins. He perseveres. Unfortunately, the world is full of people who start a project and then, as it presents difficulties, either postpone it or abandon it entirely. Thus they have gained nothing from the work they did.

Some people will even go so far as to finish 90 percent of a project and then, distracted, move on to something else. Try to train yourself not to commit to a project lightly; then, once committed, finish it! Excellent results and a solid reputation come from the follow-through.