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Sir John Templeton
J Shortly afterwards, he launched his own investment advisory firm. At the age of 56, he sold this and started again with a single fund - Templeton Growth - based in Nassau in the Bahamas. This became the top performer among all US funds over the following twenty years. High on the list of reasons for its success was Templeton's ability to spot opportunities abroad before the crowd, e.g. Japan in the early Sixties, Canadian property in the Seventies. Now retired, Templeton continues to live in Nassau and take an active interest in investment. As a committed Christian, he believes his financial success and philanthropic achievements have been closely linked to his own spiritual development. Long-term returns From 1954-2000, the Templeton Growth Fund averaged gains of around 15% a year. Biggest success Since Templeton's value-based methods have led him to buy large numbers of stocks, individual successes have been less important than overall averages. Perhaps his most remarkable move was to invest heavily in Japan in 1962. It went on to become the world's most dynamic market in the years up to 1990. Method and guidelines Templeton has distilled his principles of investment success into ten maxims, which still act as the basis of his old firm's culture and share selection process: Invest for real returns The true objective for any long-term investor is maximum total real return after taxes. Keep an open mind Never adopt permanently any type of asset or any selection method. Try to stay flexible, open-minded and sceptical... Why follow the crowd? If you buy the same securities as other people, you will have the same results as other people... To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude and pays the greatest reward. Everything changes Bear markets have always been temporary. And so have bull markets... Consider avoiding the popular ...Too many investors can spoil any share selection method or any market timing formula. Learn from your mistakes This time is different are among the most costly four words in market history. Buy during times of market pessimism ...The time of maximum pessimism can be the best time to buy, and the time of maximum optimism can be the best time to sell. Hunt for value and bargains ...In the stock market, the only way to get a bargain is to buy considering what most investors are selling. Search worldwide ...If you search worldwide, you will find more bargains and better bargains than by studying only one nation... No-one knows everything An investor who has all the answers doesn't even understand the questions. Source: Templeton Maxims, published by Templeton Investment Management Limited The four key factors to consider in fundamental analysis of any company are: The P/E ratio in relation to other comparable companies Operating profit margins, particularly if they are rising Liquidating value, i.e. the price the firm would fetch if sold off The average growth rate of earnings, and especially the consistency of growth. In general, avoid buying companies whose earnings slip two years in a row. Also steer clear of those growing at an unsustainable pace. When deciding which countries to invest in, Avoid those plagued by socialist policies and/or inflation Favour those with high long-term growth rates Especially favour those showing a trend towards economic liberalisation, e.g. privatisation, anti-union legislation, greater openness and transparency in stock market dealings. Key sayings "History shows that time, not timing, is the key to investment success. Therefore, the best time to buy stocks is when you have money." "I never made money for clients by buying anything expensive."
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