John Templeton ranks with Warren Buffett and Benjamin Graham as one of the best investors ever. I am a big fan of John Templeton and am disappointed he did not write more books on his investment philosophy.$10,000 investing with Templeton in 1954 would be worth $1.2 million in 1990. His flagship Templeton Growth Fund posted a 13.8% annualized average return from 1954 to 2004, well ahead of the Standard & Poor’s 11.1%. Quite a remarkable feat to significantly outperform the market for fifty years! One of Templeton’s best quotes which reveal his understanding and investor psychology is “Invest at the point of maximum pessimism.”
The interview was taken in 1990, over twenty years ago. Templeton talks about his current investments and his predictions for the future. Templeton is 77 at the time and states he has no intention of retiring any time soon.
Templeton talks about the collapse of the Iron current, and the prosperity it will bring to East Europe. He thinks it will be positive for stock prices. Templeton states that there is no way to invest directly in those countries, rather the way to gain exposure is to invest in companies that do business in Eastern Europe.
Mr. Templeton believes it is too later to buy into the German market which had already risen 50% in the past year. Templeton talks about his selling of Japanese equities and how the market is at least 50% over valued. Templeton is baffled by the extreme valuations in Japanese real estate and states that they will eventually have to decrease. (What great predictions by Templeton, Japanese stocks are nowhere near their peak reached in late 80- early 90s, over twenty years later!). Templeton thinks the crash will be gradual because the Japanese government will try to prevent this crash.
Templeton states the best bargains are when people are selling. He thinks New Zealand and Hong Kong offer great opportunities for investors (another great prediction).
Templeton predicts the Dow will reach above 6,000 in 1990s. That was great prediction because even though the Dow reached over double that number, most of that was due to a massive stock market bubble and was not based on fundamentals. Based on fundamentals the Dow should have been trading closer to 6000.
Templeton does not base on his investment choices based on country growth prospects. His decisions to allocate money are dependent on where he can find the lowest valuations. He thinks there are many opportunities in the United States.
Templeton favors the mutual fund management stocks that are trading at favorable values.
Templeton believes there are opportunities in junk bonds but it is too soon. The best time to invest in distressed debt is during recessions and not before a recession occurs.
Below is the full Video: The quality is not great, but the important aspect is Templeton’s words of wisdom, and not the video quality.