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Templeton's Way with Money: Strategies and Philosophy of a Legendary Investor by Alasdair Nairn, Jonathan Davis

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Chapter 4

Philosophy in Action

The philosophy that Sir John Templeton developed and refined over the course of his long investment career was faithfully reflected in the way that he managed money—both his own and that of others, whether they were clients of his investment counsel firm or investors in his funds. The essence of that approach was: to act on logic rather than emotion; to rely on quantitative rather than subjective analysis; to think for himself and ignore what other investors were saying and doing; and to approach the business of investment in a systematic way that reflected his own deep understanding of how the financial markets actually work. His greatest advantage as a professional investor was that his investment philosophy was both thorough and consistent, and entirely attuned to his own knowledge, personality, and temperament. The qualities that any investor with an investment philosophy such as Templeton’s requires the ability to be patient, calm, dispassionate, bold—were all ones that he possessed to a marked degree. “Sir John,” says fund manager Ken Fisher, “had ice in his veins and really lived the idea: Don’t follow the herd.”

To help popularize his approach, throughout his life John Templeton sought to capture the essence of his approach in a series of maxims about the requirements for investment success. Phrases such as “The best time to invest is at the point of maximum pessimism” and “This time it’s different—the four most dangerous words in investment” ...

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