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Templeton's Way with Money: Strategies and Philosophy of a Legendary Investor Hardcover – March 6, 2012
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All investors should read this book the tips, as well as the story of how he made his billions, are well worth the book s price. (Money Week, 20th April 2012)
From the Inside Flap
Sir John Templeton is universally acknowledged as one of the most successful money managers of the twentieth century, best known for his trailblazing approach as a global equity investor, fearlessly hunting for stock market bargains in places where few professionals had ventured before. While much has been written about this giant of the investment world, Templeton's Way with Money: Strategies and Philosophy of a Legendary Investor offers a fresh and independent analysis of the man and his methods, exploring his personal history and explaining in layman's language why his insights are still so relevant today.
An inspiration for thousands of investors, Templeton is a member of a small professional elite, money managers who attain the ultimate goal of stock market investmentconsistently above average returns with below average risk. Drawing from an extensive selection of sources (many of them published here for the first time), investment experts Jonathan Davis and Alasdair Nairn take a new and unbiased look at the long career of a true master of the game, one who excelled both as investment counsel and manager of a mutual fund that broke all records for its sustained and consistent market outperformance over a period of nearly four decades. This timely book sifts through some of the myths surrounding Templeton's career to demonstrate, using personal interviews and original analytical research, why Templeton's methods worked, why they are so often misunderstood, and what investors must do to take advantage of his key ideas and insights.
Part biography, part investment advice, Templeton's Way with Money skillfully dissects Templeton's life, career, investment philosophy, and the track record of his first mutual fund, and sketches out the opportunities open to investors for following in his footsteps. The authors conclude by using Templeton's methods to offer a compelling analysis of the threats and opportunities facing investors as they seek to make more informed investment decisions in today's troubled financial environment.
Top Customer Reviews
In my studies of successful investors and their investment approaches one common theme shines through. The theme is that they follow their own path and it's evident from the book that Mr. Templeton also refused to follow conventional investment wisdom. He preached against excess diversification, he went in search of bargain securities around the world (an approach not common at the time) and he refused to categorize himself as a growth or a value investor. He believed that growth is just a component that needs to accounted for in the valuation equation.
Why should you buy this book? It contains valuable information such as his investment principles, extracts from his letters to shareholders. The authors, one of whom worked for Mr. Templeton, help the reader develop a deeper understanding of the material by providing comments and insights as appropriate.
Besides his refusing to blindly accept conventional investment wisdom one of the other most valuable insights that an individual investor can learn from this book, in my opinion, is his policy concerning investment allocation. He understood that one of the great difficulties in investing is being able to buy when the market is declining so he developed a system that automatically invested more in stocks as they declined in market downturns (and did reverse when the market was rising) which helped make sure his clients were able to take advantage of stocks when they were cheap.
I strongly recommend reading this book multiple times.
Templeton was a value investor in the true sense. He bought stocks if the stock price was lower than the estimated intrinsic value. He was indifferent to whether the margin of safety originated from low pricing compared to current fundamentals or from growth during the coming five years. Fueled by curiosity and the urge to find the best bargains he was one of the first US fund managers investing in global stocks. The insight that a more sizable selection of stocks to choose from gives you a larger chance of finding a really good bargain might sound trivial, but few US fund managers searched outside the US prior to Templeton.
The authors describe a Templeton who's self-reliance, belief in humanity's ability to create value, unrelenting work ethic and ability to reduce complex issues to practical rules of thumbs resulted in magnificent results. He acted on logic and numbers rather than on emotions and other investor's opinions. However, nothing spectacular really happened before he moved to the Bahamas.
Templeton had a dual asset management career. During the first part he managed funds and in parallel built his asset management firm. After selling the firm (apart from the Templeton Growth Fund), he moved to the Bahamas and focused on managing his remaining fund. Templeton's Growth Fund outperformed the market by 3,7 percent per year over 38 years, with all outperformance during poor stock markets. However, before "half time", Templeton actually narrowly lagged the market. After moving to the Bahamas he outperformed by 6 percent a year. The truth is that whether proximity to markets and companies are your friend or your foe very much depends on the investment process you have. Templeton's process benefited from being relocated to a beach in the West Indies, far away from noise, consensus opinions, administrative work and fund sales. He was once asked what made the greatest difference to the quality of his investments. He replied "Every mile I moved away from New York."
The authors have had access to new material in the form of Templeton's internal investment memos This means they have discovered some new sides of Templeton. Apparently he used a combination of what we today would call Shiller-PE, Tobins q and DY to estimate the risk level of the market and allocate between equity, bonds and cash. I'm the first to advocate the merits of valuation based allocation and of keeping dry powder to be able to invest in distressed situations, but I also think the authors pay this top down process too much attention in the book.
The areas where Templeton had exceptional talents was in bottom-up stock picking, so in my opinion the focus could have been shifted somewhat towards corporate analysis. As Templeton made projections five years into the future, the book could have benefitted from a deeper discussion of the difficulty of making forward predictions and how he overcame those (Templeton's "rule five" in chapter 4 will give you a hint.) This book aims to write a handbook for those who want to invest like Templeton. At the same time this is as much a biography, which in my opinion somewhat crowds out the space available for the handbook.
Templeton was an important investor. "Invest for Maximum Real Total Return" was his simple but brilliant first rule. Why not learn how to, by reading this book?
This is a review by investingbythebooks.com
The book can be divided in Templeton's biography, investment and work philosophy, investment methods and advice, and finally the Memos, which I think are an invaluable piece.
I really liked that the authors wrote about Templeton's methods and the variables to which he gave more weight.
As a first reading choice about Templeton's life and work, it was certainly a good one.