Contrarian is a documentary about John Templeton, the legendary value investor, iconoclast, seeker of God and spirituality, and philanthropist.
The approximately hour-long film, directed by award-winning filmmaker Mary Mazzio, chronicles Templeton’s life, achievements and philosophy, relying upon personal insights provided by the people whose lives he touched.
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John Templeton’s introduction
Born in 1912 to Harvey and Bella Templeton the town of Winchester, Tennessee, John Templeton was raised to be independent and entrepreneurial – to see the world in terms of ‘what was possible instead of what was not.’
The story goes that his father, a serial entrepreneurial, offered him a bale of cotton every time his school report card contained all ‘A’s. Since a bale of cotton was worth the enormous amount of $200, it’s no surprise that the boy’s reports had straight ‘A’s through his school days. Realizing that his friends faced a shortage of fireworks, John procured three large boxes from upcountry suppliers and resold the lot at thrice the amount he paid. By seventeen, John had rebuilt a car and started a wine-making business.
Known for his single-mindedness, John prevailed upon his high school principal to offer a math course required for admission to Yale College. The deal: John had to get five more students and teach them so they all passed the course. The boys were all successful and John got the certification he needed for Yale!
Importance of Poker for Templeton
John’s father lost his fortune to speculation in futures and could no longer support the boy’s tuition after his first year at college. Undaunted, John took on three additional jobs to support himself. Moreover, he used his understanding of mathematics and the science of probability to make money playing poker with wealthier kids. “Poker taught him the importance of taking measured, educated risks,” says William Proctor, Author – ‘The Templeton Touch.’
Despite these activities, John did well enough at Yale to win a Rhodes Scholarship to Oxford, where he studied law. He kept up his poker and financed his travel to the Olympics, even a trip around the world that included the Far East.
John Templeton’s investments in penny stocks
Returning to the US he found work on Wall Street at the investment firm of Fenner and Beane, the predecessors to Merrill Lynch. There he invested $10,000 in penny stocks that he believed would benefit if war broke out, just before World War II. By 1944, that investment was worth $44,000. Meanwhile, he also purchased a small investment firm called Templeton that advised just five families.
Very soon this business began to prosper and soon saw the launch of the famed Templeton Growth Fund, which pioneered global investing. Not parochial about the United States, John sought out bargain investments in emerging markets, sometimes not knowing even how the trades would be eventually settled.
John Templeton soon sold the investment firm but kept the Templeton Growth Fund and relocated to the Bahamas “to get away from the herd mentality of Wall Street.”
John Galbraith joined the Fund in 1974 and took over its marketing, vowing to turn its $13M in assets to over $100M in ten years. Combined with John’s reputation for stock-picking and thrift, money under management at the fund soon shot through the roof. John was soon being featured on publications such as Forbes.
His favorite investment timing was at the point of maximum pessimism. He saw opportunity in a market meltdown such as the 1987 crash which he used as a major investment opportunity. His average holding period of a stock was around five years, and even at that point, he would only switch to another stock if it presented even better value.
John Templeton’s fortune came from tech stocks
He is also fabled for his famous short on technology stocks, even doubling down in the face of mounting paper losses. Of course the tech bubble burst eventually, and John Templeton made a fortune on his shorts. He is also renowned for anticipating the housing bubble and the financial crisis.
John Templeton was extremely thrifty and maintained a very simple and economical lifestyle. The investing principles he laid down were not to follow the crowd, to buy low (particularly at the point of maximum pessimism) and sell high, and to always search for bargains.
John Templeton died on July 8, 2008, in the Bahamas.