Taming the Beast: Wall Street's Imperfect Answers to Making Money

Summary

• John Templeton introduced ordinary Americans to the opportunities of investing in foreign stocks. Debuting his Templeton Growth Fund after World War II, he showed perfect timing. Because of the war and increasing U.S. global influence, the first major cracks appeared in Americans’ traditional insularity. A subset of his countrymen was willing to listen to him.
• The United States once dominated world trade, especially after it filled the vacuum World War II had left. But the nations ruined in the war eventually rose up and became humming export machines. Overseas stocks kept pace: The United States claimed 90 percent of global equity capitalization in 1945, two thirds in 1970, and less than half in 2010.
• Riding the overseas expansion, Templeton Growth scored some of the best returns of any fund ever. Templeton did extensive research, looking not just for value stocks but for value countries. He was alert for what he called “points of maximum pessimism,” where good bargains abound. He cleaned up in the 1997 Asian economic crisis, for instance.
• Templeton had exquisite timing. He got into Japanese stocks early, in the 1950s, and exited in the 1980s, sensing that they were overpriced and a fall was coming. His next favorite was China, whose speedy growth made it an investor’s darling. But there are ample arguments for why China may have weaknesses similar to Japan’s.
• Chinese stocks can be bought on U.S. exchanges, although they are volatile. Buying on the Mainland is hard for foreigners; ...