John Templeton
Founder of Templeton Funds, pioneer of global contrarian investing with the principle of 'buy at the point of maximum pessimism'
Sir John Templeton (1912-2008) was one of the 20th century's greatest global value investors and founder of Templeton Funds. He became famous for the maxim 'Buy at the point of maximum pessimism,' perfectly exemplified in his classic moves: buying 104 US stocks (including 37 bankrupt companies) with borrowed money before WWII, heavily investing in severely undervalued post-war Japan, positioning in Asia during peak Vietnam War pessimism, and other legendary trades. Templeton Funds generated outstanding long-term returns under his management; he sold the fund to Franklin Resources in 1992. In later years, he established the Templeton Prize to fund significant discoveries in science and religion, leaving a legacy far beyond investing.
Methodologies
- Maximum Pessimism Search Checklist - Systematically scan for the world's 'most despised' assets; confirm whether market sentiment has reached extreme pessimism and whether intrinsic value far exceeds current price.
- Global Cross-Market Valuation Comparison Framework - Simultaneously track core valuation metrics (P/E, P/B, etc.) across major global markets; identify countries and sectors that are extremely low relative to historical averages and other markets.
Key decisions and timeline
- 1934 Graduated Valedictorian from Yale University with Economics Degree - Growing up in extreme economic environments builds the most authentic intuitive understanding of market cycles and human fear responses.
- 1939 At WWII Outbreak, Borrowed Money to Buy 104 U.S. Stocks Including 37 Bankrupt Companies - Buying at 'the worst moment' requires immense psychological courage, but history repeatedly proves it is one of the most reliable sources of superior returns.
- 1954 Founded Templeton Growth Fund - Opening investment strategy to the public and maintaining it consistently for decades is the only path to building genuine investment reputation and wealth.
Beliefs and mental models
- Buy at Maximum Pessimism: Greatest Fear Creates Greatest Opportunity - Templeton's most famous investment credo: when a market, industry, or country faces despair that everyone believes 'cannot possibly improve,' that is precisely the best time to buy. Because all sellers have already exited, prices contain the worst-case expectations, and any improvement will drive prices higher.
- Global Perspective Is the Prerequisite for Finding the Cheapest Stocks - From the 1950s, Templeton argued investors should not limit their vision to domestic markets. Different countries' valuation cycles are asynchronous; searching for value pockets globally allows finding assets extremely undervalued relative to other markets at any given time.
- Long-Term Returns from Stocks Are Highest Among All Asset Classes - Templeton firmly believed that stocks bought at reasonable prices, held long enough (5+ years), will almost certainly outperform bonds and other assets. Short-term volatility is noise; long-term growth is the trend.
- Maximum Pessimism Search Method - Actively scan the countries, industries, and companies most despised by markets; seek opportunities where prices are extremely below intrinsic value in assets that 'nobody wants.'
- Global Value Pocket Scanning Framework - Simultaneously compare valuation levels across major global markets; identify markets with valuations extremely low relative to other countries and treat cross-national valuation gaps as investment opportunities.
- Global Bargain Stock Hunter Framework - Systematically search global markets for stocks with the lowest P/E ratios and largest asset discounts; buy regardless of which country they're in, as long as the price is cheap enough.
Sources
- The Templeton Touch, William Proctor, 1983 (Doubleday)
- Investing the Templeton Way, Lauren Templeton & Scott Phillips, 2008 (McGraw-Hill)
- John Templeton's Maxims, Templeton Foundation (various editions)