The Secret Behind John Templeton’s Success

February 12, 2019, By fierceinvestor,

Sir John Templeton was never considered a typical money manager.

His Templeton Growth Fund grew at a rate of nearly 16% a year between 1954 and 1992, making it the top performing growth fund of the second half of the 20thcentury.

Every $100,000 invested in 1954 was worth well over $55 million just 45 years later.

But like I said, he wasn’t your typical money manager.

Instead of relying on some brilliant forecasting model, he’d rely on extreme fear among investors that feared the very worst…

Templeton would simply wait for points at which pessimism reached its max, buy and hold for up to seven years…  and cash out with brilliant returns.

What made him different was his approach to finding bargains under fair value on temporary setbacks, such as war, the Great Depression, and other troubling events.

It’s why he was among the first to invest in a post-war Japan.

As Japan grew to become the second largest economy, Templeton’s trades would make a small fortune.

As war broke out in Europe in 1939, Templeton found another point of extreme pessimism in the NYSE, buying 100 shares of 104 companies that were trading at a dollar or less.  He knew World War II would pull the U.S. out of the Great Depression and that these stocks trading well under value would recover because of it.

And he was right.  And again, he made a fortune.

Why it Pays to Invest in Extreme Pessimism

Historically, betting on stocks damaged on extreme pessimism has been proven to be a smart move, as value stocks have outpaced faster-growth companies 60% of the time since 1928, according to Money magazine.

It’s the “buy low, sell high” mentality.

And logically, it’s the only way an investor will make real money in the market.

To invest like Templeton, buy low and sell high; and pay attention to stocks others may be foolishly ignoring.

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