Discovering the Laws of Life
Friday, July 18, 2008
In 1985, I began working with an international money management firm in Winter Park, Fla.
Although I was young and wet behind the ears, I soon discovered I had "the Midas touch." When it came to investing, everything I touched turned into a muffler.
I fooled around with options and futures. Got burned with micro-caps and junior gold-mining companies. Tried all sorts of dubious trading strategies with equally dubious results.
My more-experienced colleagues had plenty of investment opinions they were eager to share with me. Most, I learned, were worth about what I paid for them.
Things might never have turned around for me had I not become a devotee of investment legend John Templeton.
Templeton died last week at the age of 95. Today the world is a lesser place.
Few American success stories can rival this one...
Templeton was born in Winchester, Tennessee in 1912 and was the first from his small farming town to attend college: Yale University.
However, with his family squeezed by the Depression, it appeared his tuition and board could not be paid. Yet, always a little sharper than his contemporaries, Templeton made up the shortfall with his dormitory poker winnings.
He graduated from Yale in 1934, winning a Rhodes Scholarship to Oxford University where he received a masters degree in law.
When war broke out in Europe in 1939, the stock market tanked. Templeton borrowed $10,000 and bought 100 shares each in 104 companies whose shares were trading at $1 or less. Four of them became worthless. He locked in dramatic gains in the others.
The following year he bought a small investment firm that became the foundation of his investment empire. In the years that followed, he launched and managed some of the world's largest and most successful international mutual funds. Almost single-handedly, he pioneered the art of global investing, avidly seeking out the world's most promising investment opportunities wherever they resided.
In the 1950s, for example, he poured shareholders' money into the Tokyo stock market, buying then-obscure companies like Hitachi and Fuji. With the wounds of WWII still fresh, investing in Japan was about as popular with Americans then as the idea of funding the Taliban today. But as this battered economy was rebuilt, he earned outsized returns for his investors.
This is rarer than you might imagine. Each year, more than three-quarters of all equity fund managers fail to beat the market. Templeton did it regularly - and he did it for decades.
$10,000 invested in the S&P 500 fifty-four years ago, with dividends reinvested, would have turned into $2.8 million. Not bad. But the same amount invested in his flagship Templeton Growth Fund would have grown to $10.7 million.
During his long career, Templeton earned a reputation as one of the world's undisputed money masters. Forbes magazine once described him as "one of the handful of true investment greats in a field crowded with mediocrity and bloated reputations."
In 1999, Money magazine referred to him as "arguably the greatest global stock picker of the century."
He sold his Templeton funds to the Franklin Group for $440 million in 1992. But he remained an active investor well into his nineties.
At the height of the Internet bubble, for instance, Templeton sold short dozens of young technology companies just before their shares came out of "lock-up," the six-month cooling off period following an IPO. He made over $80 million in a matter of weeks. Years later he still referred to it as "the easiest money I ever made."
what it meant to be a true contrarian. "To buy when others are
despondently selling and to sell when others are avidly buying requires the
greatest fortitude," he said, "and pays the greatest reward."
Templeton was a great believer that true wealth doesn't come from accumulating money or things, but from fulfilling a purpose outside ourselves, whether that's exercising our talents, raising our kids to be happy, productive adults, or contributing to our communities in some meaningful way.
As Templeton was fond of saying, "Happiness pursued eludes, happiness given returns."
He wrote or edited 10 books on spiritual development. He endowed a business and management school, Templeton College, at Oxford. In 1987, Queen Elizabeth II knighted him for his philanthropy.
Twenty-one years ago, he established The John Templeton Foundation - with a current endowment of $1.5 billion - and created the world's richest annual award, the $1.6 million Templeton Prize for new discoveries in the realm of the human spirit.
For Templeton, it was not enough to dominate the worlds of investing and philanthropy. He wanted to make an impact on the world of ideas. And his overriding goal was to reconcile the diverse and often conflicting worlds of science, philosophy and religion.
Today the Templeton Foundation gives out more than $70 million annually for academic research in such diverse fields as theoretical physics, cosmology, evolutionary biology, and cognitive science.
"No human has yet grasped 1% of what can be known about spiritual realities," insisted Templeton. His foundation exists to promote character development, ethical living, and greater spiritual understanding.
As he told BusinessWeek in 2005, "I grew up Presbyterian. Presbyterians thought the Methodists were wrong. Catholics thought all Protestants were wrong. The Jews thought the Christians were wrong. So, what I'm financing is humility. I want people to realize that you shouldn't think you know it all."
In his 1994 book "Discovering the Laws of Life," Templeton argued that the laws of human behavior operate nearly as predictable as the laws of science. The exercise of truthfulness, reliability, perseverance, forgiveness, gratitude, tolerance, reverence, humility and compassion will almost certainly attract good things in your life, just as surely as their opposites bring trouble and misery.
wanted us to know this. He made it his mission. "I'm only going to be on
this planet once, and for a short time," he said. "What can I do with
my life that will lead to permanent benefits?"
"No man can tell whether he is rich or poor by turning to his ledger. It is the heart that makes a man rich. He is rich according to what he is, not according to what he has."
Sadly, John Templeton is dead. Long live John Templeton.
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Alexander Green is the Investment Director of The Oxford Club and Chairman of Investment U, a free, internet-based research service with over 300,000 readers. (The Oxford Club's Communique, whose portfolio he directs, is ranked third in the nation for risk-adjusted returns over the past five years by the independent Hulbert Financial Digest.) Alex has been featured on "The O'Reilly Factor," and has been profiled by Forbes, Kiplinger's Personal Finance, CNBC, and Marketwatch.com, among others. He lives in central Florida with his wife Karen and their children Hannah and David.
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