<< In a 1995 Forbes interview, he described the principle this way: "You are trying to buy a share at the lowest possible price in relation to what the corporation is worth. And there's only one reason a share goes to a bargain price: because other people are selling. There is no other reason. To get a bargain price, you've got to look where the public is most frightened and pessimistic.
"The time to buy is when everyone else is scared and you're a bit scared yourself."
Templeton offers an important caveat: It's not enough for a market or a stock to be way down. There must be good reasons for it to go up. Some of today's tech stocks are down 90 percent but still trade at more than 30 times earnings. At the time of the Forbes interview in 1995, Japanese stocks were down 50 percent but still were trading at a P/E ratio of 90: far too pricey for Templeton. Today, Japanese stocks are down another 50 percent.
Templeton's approach is so counterintuitive that few of us have what it takes to be a great investor like him.
The best thing about mutual funds is you don't have to be a great investor.
Successful investing can come from being able to recognize great investors and placing your money in their care.
So put your money with some of the great money managers that are actively managing mutual funds today. Names such as Bill Miller, Mason Hawkins, Bill Nygren, Glen Bickerstaff, Sig Segalas and many others.
Templeton's 1995 assessment of the future still sounds accurate to me: "Progress is going to speed up, not slow down. In the long run, people who invest in common stocks of well-managed companies will be better off than people who put their money in other forms of investment. You want to be an owner, not a lender." >> Just read this.. |
