Templetons Way With Money

Lessons from a great investor

Jonathan Davis

November 7th 2012 , CFA Society of the UK

Sir John Templeton (1912 2008)

An abiding interest
Books and research on successful investors
Templetons Way with Money
(with Dr Sandy Nain)
Money Makers (new edition 2012)
Profiles of eight professional investors
Investing with Anthony Bolton
Analysis of Fidelity managers career
Warren Buffetts Investment Methods
MIT Sloan School thesis 1991
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Two influential voices

(1) Paul Samuelson
Nobel Laureate in Economics
(2) Charley Ellis
Consultant, author of The
Losers Game

Discuss..
Although a professional investor can sometimes strike it
rich with a big coup, theres no luck in professional
portfolio investing, any more than in master chess. Its a
skilled craft, involving many decisions a week. The year in
year out manager of a large portfolio can no more pile
up a superlative record by luck or by accident than one
can win a chess tournament by luck or accident.
John Train, Money Masters of Our Time

An abiding interest
Books and research on successful investors
Templetons Way with Money
(with Dr Sandy Nain)
Money Makers (new edition 2012)
Profiles of eight professional investors
Investing with Anthony Bolton
Analysis of Fidelity managers career
Warren Buffetts Investment Methods
MIT Sloan School thesis 1991
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Templeton in summary
Brief resume of a 70 plus year career

Started own investment advisory firm aged 26

Became wealthy through unit trusts
First global equity fund for US investors 1954
Retired and moved to Lyford Cay in late 1960s
Sold Templeton fund business for $440m 1992
Noted philanthropist and evangelist

From nowhere to a fortune

Templeton Growth Fund: key statistics

Asset allocation 1950s style

Asset allocation 1950s style

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Asset allocation

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How much in equities?

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Company analysis

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Wall Street after the war

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How it all began

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Templeton Growth Fund: image.

The simplest of
marketing messages
Size of fund only took
off after 20 years
Still a remarkable long
term record

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and reality

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The Bahamas effect

Note: Index in early years based on author calculations: MSCI World only
for later years.
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Performance

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Templetons performance

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Surviving the 1970s

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Relative performance

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TGF: risk revisited

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Keeping the investors happy

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Why it works (1)

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Why it works (2)

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Why it works (3)

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Savings and loans crisis

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Pharma in the Clinton era

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How the records compare

Performance against chosen benchmark
Warren Buffett
22.7% +8.9% 40 years
Anthony Bolton
19.7% +7.3% 28 years
John Templeton
15.9% +3.6% 42 years
Note
(1) length of outperformance
(2) consistency over medium to longer term
(3) risk and style analysis cannot explain it
(4) time and period specific factors
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Market and investor cycle

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Conclusions

Image and reality

Daring to be different
Look forward, not back
Risk and volatility
Character, integrity and chance
Business and investment risk
Applying Occams razor

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Jonathan Davis: personal links

Personal website: www.independent-investor.com

Blog: www.iidaily.wordpress.com
Brazilian farmland: www.genagro.net
Prime London property: www.dgim.com
Newspaper columns:
www.independent-investor.com/ft-articles
Independent Investor bookshop:
http://books.global-investor.com/pages/home.htm
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Professional history
Directorships
Smith & Williamson Investment Management
(wealth management); Jupiter Primadona Growth
Trust (investment trust); Genagro Services Ltd
(Brazilian farmland)
Media work
Columnist, Financial Times 2007-now, The Spectator
2007-now; The Independent 1995-2007; Founder,
Independent Investor (independent-investor.com)
Career
Journalist on The Economist, Sunday Telegraph,
Times and Independent. Enterprise Oil 1988-90;
Degrees from Cambridge and MIT Sloan School:
PCIAM (Level Six CISI qualification)
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Ten good reads

Winning The Losers Game; Charles D. Ellis

When Genius Failed; Roger Lowenstein
Hedge Hogging; Barton Biggs
Capital Ideas; Peter Bernstein
Simple, Not Easy; Richard Oldfield
Common Sense on Mutual Funds: Jack Bogle
Money Masters of Our Time: John Train
The Money Game: Adam Smith
Devil Take The Hindmost: Edward Chancellor
More Money Than God: Sebastian Mallaby
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US and Japan (1970-2000)

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