Investing the Templeton Way ( On Our Bookshelf )

For many the stock market is a mystery. With its current volatility what is the best strategy? How can anyone predict it or make money? How can you reduce risk? Can you handicap the market as you would a horse? Just as there are race track scholars, so, too, you have your students of the market. These are the successful investors. And each has a philosophy that guides them. One of the market's most successful investors, John Templeton, died Tuesday, July 8 in his adopted country, The Bahamas, at the age of 95. Among investment circles John Templeton was as well known as Warren Buffett of Berkshire Hathaway, and his secrets have been sought by those who would emulate his success.

In her book, Investing the Templeton Way: the Market Beating Strategies of Value Investing's Legendary Bargain Hunter, Lauren C. Templeton dispenses the wisdom and experience of her great-uncle. His basic philosophy was to "buy low and sell high"; not an unusual idea for investors. However his approach was distinctly contrarian, not going according to the crowd or market panic.

Templeton's approach is Value not Price. When the price of a quality good is discounted, purchase it at a price you determine is beneficial to you. Never pay full price for the good. Weigh the value of the good over time. He developed the idea of "Maximum pessimism". A crash is a good time to buy ( good value stocks available cheaply due to mass downward turns ) . Conversely when there is mass euphoria with stock prices going up and up, Templeton argues that is the best time to sell your stock; that is take advantage of overvalue.

A recent article in Forbes magazine, reflecting on Templeton's death, said the rampant pessimism in today's stock market, was Templeton's kind of market. He would be seeking bargains and buying.

To be the success he was Templeton had to have other tools in his toolbag. He formed the Templeton Funds in the 1950s and was investing globally when no one else was. He invested in Japan in the 1960s. He developed the concept of a diversified portfolio. A cardinal investing sin would be to put "all your eggs in the same basket". His funds were so successful over a 40 year span, that when he sold his fund in 1992 it was for 440 million dollars.

During his lifetime Templeton gave freely of his advice. Another recent Forbes artice provides 8 essential lessons for the investor from him. And on the Franklin Templeton fund website there is a lengthy article by Templeton, 16 Rules for Investment Success. In all Templeton offers a strategic, disciplined approach to market success. His great-niece's book offers vivid testimony to the continuing value of Templeton's approach.

Lauren C. Templeton's book is available at the Berkshire Athenaeum, where you will also find a wide selection of books on personal finance and investing.