John Templeton

A global, contrarian approach grounded in buying at the point of maximum pessimism.

Who He Is

Sir John Templeton was a pioneering global investor who founded the Templeton Growth Fund in 1954. He was among the first to invest internationally at a time when most American investors focused exclusively on domestic markets. His fund achieved exceptional returns over five decades.

Templeton was known for his contrarian mindset and his willingness to invest in countries and markets that others avoided. He famously bought shares in every company trading below one dollar on the New York Stock Exchange in 1939, just as World War II began. Most investors were fleeing; Templeton was buying.

Beyond investing, Templeton was deeply spiritual and philanthropic. He believed humility was essential to good investing. Recognizing the limits of human knowledge protected against overconfidence.

Core Investment Philosophy

Templeton's approach centered on finding value wherever it existed globally. He was not attached to any particular country or market. He went where opportunities were greatest, even if that meant investing in places others considered too risky or obscure.

He practiced maximum pessimism investing. The best time to buy was when others were most fearful. When everyone was selling and sentiment was at its worst, prices often fell below intrinsic value.

Patience defined his holding period. He typically held positions for five years or longer, allowing time for value to be recognized. Short-term volatility was noise; long-term value was observation.

He maintained strict valuation discipline. No matter how exciting an interpretation or how strong a trend, Templeton refused to overpay. Price determines returns. Paying too much guarantees disappointment.

Patterns He Focuses On

• Global Diversification — Templeton spread investments across countries to reduce risk and capture opportunities. When one market was expensive, another might be cheap. Geography provided margin of safety.
• Contrarian Indicators — He paid attention to sentiment extremes. Magazine covers, universal pessimism, and mass selling often marked turning points. When everyone agreed on a conclusion, the opposite frequently proved correct.
• Valuation Discipline — Low price-to-earnings ratios, price-to-book values, and dividend yields attracted his attention. He wanted to buy assets for less than they were worth.
• Economic Recovery Potential — Templeton looked for countries or sectors experiencing temporary problems with structural foundations that remained intact. Structural strengths obscured by cyclical weakness created opportunity.
• Currency Considerations — Investing internationally meant thinking about currency movements. Undervalued currencies could enhance returns when they eventually normalized.
• Long-Term Demographic Trends — Population growth, urbanization, and rising living standards in developing countries created lasting investment themes that played out over decades.

Example Companies

Japanese Stocks in the 1960s — Templeton invested heavily in Japan when most Western investors ignored it. The Japanese economic miracle that followed delivered exceptional returns to early believers.

European Stocks Post-WWII — He recognized that war-devastated European economies would recover and that stocks trading at depression levels offered substantial upside.

South Korean Stocks in the 1980s — When South Korea was considered a risky emerging market, Templeton saw a disciplined, educated workforce and export-oriented economy building long-term value.

Limitations and Criticisms

Global investing introduces complexities that domestic investing avoids. Currency risk, political instability, different accounting standards, and information gaps create challenges that require specialized knowledge.

Contrarian investing requires exceptional patience and conviction. Being early looks identical to being wrong until the thesis plays out. Markets can stay irrational longer than investors can stay solvent.

Some countries that appeared cheap based on fundamentals experienced permanent capital impairment due to expropriation, hyperinflation, or political collapse. Not every beaten-down market recovers.

Templeton's success came partly from an era of less integrated global markets. Today, capital flows faster and inefficiencies may be smaller. Global diversification is more accessible, reducing the edge it once provided.

What Modern Investors Can Learn

• Think globally — Opportunity exists beyond your home market. Limiting yourself to familiar territory means missing potential value elsewhere.
• Buy at maximum pessimism — The best prices come when fear is highest. Emotional discipline allows buying when others panic.
• Maintain valuation discipline — No interpretation justifies any price. What you pay determines what you earn.
• Practice humility — Recognizing what you do not know protects against overconfidence. Stay humble and stay curious.
• Hold for the long term — Value realization takes time. Patience is the partner of conviction.