Past, Present, and Future
One reason for including so many examples of John Templeton’s letters to his clients in this book is to enable readers to see for themselves how he thought about the business of making investment decisions. Although market conditions are very different today than they were in the 1940s and 1950s, the process of thought required to make sense of today’s world is, in essence, still much the same as it was then, just as the analytical process needed to pick individual stocks successfully remains similar to that which John Templeton first put into practice 60 years ago. His success was not so much a matter of analytical technique as a function of the simplicity, power, and consistency of his investment philosophy. This can best be appreciated by immersion in his way of thinking, for which the original source material of his own writing remains the best guide.
The memos reproduced in the text and the Appendix lay bare both the clarity of his thinking and the essence of his investment philosophy, which, as we have seen, while it was refined in detail, changed remarkably little throughout his long career as an investment professional. In a letter to clients dated August 12, 1958, for example, he pointed out that the firm had first printed a comment about the rewards of contrarian investing in its original brochure 20 years earlier. The same thought (“To buy when others are despondently selling and to sell when others are avidly buying requires the ...