This is one of those books I wish I had read 10 years ago. It tells of the story of one of the world’s greatest investors, Sir John Templeton, and is one of the first investment books I have read that looks at value investing on a global basis.
Sir John Templeton’s investment approach is very much in the style of people like Jim Rogers and Mason Hawkins of Southeastern Asset Management who scour the globe for the best investments.
In his foreword, Sir John describes his approach to investing. That is to “identify points of maximum pessimism in a stock, an industry or a country” and to invest at those points.
Templeton’s approach is often to identify a theme or idea first and develop his investment strategy accordingly. For example, Chapter 2 discusses how in 1939 Sir John came to the conclusion that the war in Europe would stimulate a surge in demand for industrial materials creating an economic boom in the United States that would benefit all businesses including the weakest or below average companies. He bought 104 of the most undervalued companies he could find and was extremely successful, for as the war boom played out, his stocks increased in value fourfold.
Templeton’s approach is to look globally for emerging economies and Chapter 4 looks at Sir John’s foray into Japan . Sir John Templeton along with Shelby Davis and others was one of the first foreign investors to see the enormous potential in Japan in the 1950s & 1960s. Japan was a country characterized by high GDP growth. It was developing from simply being a low-cost producer of textiles into producing higher value added industrial goods. Japan ’s people were savers and worked hard. Finally, the government was slowly loosening the rules on foreign ownership and opening up the economy.
Japan was ignored by most investors who still saw it as a producer of cheap and inferior goods and a country that lacked the economic might of the United States . As a result stocks were very cheap. Templeton rode the Japan stock market juggernaut over the period of 1959 into the 1980s. From 1959 to 1989 the Japanese index rose 36x from its original value (see graph p 93 “Investing the Templeton Way ”).
In this book there is further discussion of how Sir John Templeton drew on the Japanese experience to identify and exploit similar investment opportunities in South Korea (Chapter 8 & more recently China (Chapter 10).
Sir John Templeton also used short selling techniques to make money. In Chapter 6 of the book we learn about how Sir John correctly identified the peak of Nasdaq bubble and shorted numerous technology stocks. Sir John drew on his historical knowledge of the euphoria associated with the railway boom in the United States and the South Sea bubble fiasco in the United Kingdom to see through the irrational exuberance of the 1990s dot-com boom.
To conclude this is a great book & I highly recommend it. I also gave some thought, after finishing this book, to which country Sir John would be looking for the next economic boom after China . One country that crossed my mind as a possibility was Vietnam. Coincidently I read recently that Franklin Templeton have made a significant investment in a Vietnam based mutual fund management business. Vietnam is still opening itself up as an economy but boasts a GDP growth rate in excess of 8 % and is on the fast track toward industrialization. Vietnam is much smaller than China but is an interesting country I plan to do more research on.
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Source: Insurance Stock Investor
Sir John Templeton’s investment approach is very much in the style of people like Jim Rogers and Mason Hawkins of Southeastern Asset Management who scour the globe for the best investments.
In his foreword, Sir John describes his approach to investing. That is to “identify points of maximum pessimism in a stock, an industry or a country” and to invest at those points.
Templeton’s approach is often to identify a theme or idea first and develop his investment strategy accordingly. For example, Chapter 2 discusses how in 1939 Sir John came to the conclusion that the war in Europe would stimulate a surge in demand for industrial materials creating an economic boom in the United States that would benefit all businesses including the weakest or below average companies. He bought 104 of the most undervalued companies he could find and was extremely successful, for as the war boom played out, his stocks increased in value fourfold.
Templeton’s approach is to look globally for emerging economies and Chapter 4 looks at Sir John’s foray into Japan . Sir John Templeton along with Shelby Davis and others was one of the first foreign investors to see the enormous potential in Japan in the 1950s & 1960s. Japan was a country characterized by high GDP growth. It was developing from simply being a low-cost producer of textiles into producing higher value added industrial goods. Japan ’s people were savers and worked hard. Finally, the government was slowly loosening the rules on foreign ownership and opening up the economy.
Japan was ignored by most investors who still saw it as a producer of cheap and inferior goods and a country that lacked the economic might of the United States . As a result stocks were very cheap. Templeton rode the Japan stock market juggernaut over the period of 1959 into the 1980s. From 1959 to 1989 the Japanese index rose 36x from its original value (see graph p 93 “Investing the Templeton Way ”).
In this book there is further discussion of how Sir John Templeton drew on the Japanese experience to identify and exploit similar investment opportunities in South Korea (Chapter 8 & more recently China (Chapter 10).
Sir John Templeton also used short selling techniques to make money. In Chapter 6 of the book we learn about how Sir John correctly identified the peak of Nasdaq bubble and shorted numerous technology stocks. Sir John drew on his historical knowledge of the euphoria associated with the railway boom in the United States and the South Sea bubble fiasco in the United Kingdom to see through the irrational exuberance of the 1990s dot-com boom.
To conclude this is a great book & I highly recommend it. I also gave some thought, after finishing this book, to which country Sir John would be looking for the next economic boom after China . One country that crossed my mind as a possibility was Vietnam. Coincidently I read recently that Franklin Templeton have made a significant investment in a Vietnam based mutual fund management business. Vietnam is still opening itself up as an economy but boasts a GDP growth rate in excess of 8 % and is on the fast track toward industrialization. Vietnam is much smaller than China but is an interesting country I plan to do more research on.
________
Source: Insurance Stock Investor
