This is the third installment in our Investing Strategies for Beginning Investors.  The first two explored Philip A. Fisher. This week we turn to the much respected John Templeton. Sir John, if you are into that kind of thing. When you look at Templeton you are veering into contrarian territory with an important dose of Deep value investment principles. Goodie.

Why should you care about him? During his active phase from the mid fifties to the internet bubble, his flagship Templeton Growth fund averaged gains of about 15% per year.

The following principles are from Templeton Maxims: 10 Principles for Investment Success. For you regular readers see if any of these sound familiar to you.

1. Invest for real returns- I stole this idea from Templeton. Who cares about relative success if you are down.  If you are up, good, if you are down less than the other guy, you are still down. And don’t forget the hidden demon: taxes.
2. Keep an open mind – Be skeptical, but stay open enough that you can change your investing style to go against the flow. Be prepared to switch from the popular to the unpopular.
3. Never Follow the Crowd- “If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce a superior performance unless you do something different from the majority. To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude and pays the greatest reward.”
4. Everything changes- everything is temporary from bear markets, to bull markets to fads in investing.
5. Avoid the Popular- When an investing style becomes popular switch to an unpopular one.
6. Learn from your mistakes- “This time is different are among the most costly four words in market history.” Recent market history hi fives that concept.
7. Buy during times of pessimism- When everyone else is optimistic, be pessimistic, when the masses are pessimistic, be optimistic. Don’t you just love how contrarian Templeton was.
8. Hunt for value and bargains- Don’t focus on perceived outlook and trend. That is where everyone else is. Focus on Value. The only way to find a bargain is to buy what everyone else is selling.
9. Search worldwide-  Avoid having all your eggs in one basket, including one country. Look for bargains internationally.
10. No-one knows everything- “An investor who has all the answers doesn’t even understand the questions.” Amen, brother.

We will have part two soon.

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