Although John Templeton (1912–2008) simply considered himself a bargain hunter, those in the know on Wall Street considered him one of the greatest stock pickers of the twentieth century. Anyone prudent enough to have invested $10,000 in his Templeton Growth Fund when it was first established in 1954 would today have over $7 million to their name if they left those funds alone. Few mutual funds can match that kind of spectacular and consistent performance.
 

How did he do it? What kind of principles guided his decisions through bull and bear markets? What was the secret to his success? Fortunately, generosity was one of Templeton’s defining characteristics, and he freely shared his investing wisdom with the world in The Templeton Touch. This edition, which has been greatly expanded and revised from the original 1983 publication, gives the reader an inside look at the mindset that made Templeton a Wall Street legend. His global focus, his relentless curiosity, his future-mindedness, his personal touch with clients, his willingness to take reasonable risks, his reliance on deep research and fundamental analysis— everything that set him apart from the crowd is covered here in great detail by authorized biographer William Proctor. This updated edition also contains a new section comprised of twenty-two interviews with those who knew and worked with Templeton, conducted by Scott Phillips. Among those interviewed are business luminaries like Jim Rogers, Julian Robertson, Steve Forbes, Prem Watsa, Mason Hawkins, and Michael Price.
 

The Templeton Touch should be required reading for any investor, from the absolute novice to the most experienced. Not only could Templeton’s practical advice help guide investors through tricky market conditions, but the many insights into his character and his philosophies could help anyone live a more successful life.

CHAPTER 1

What Is the Templeton Touch?

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EVERY AGE produces individuals who possess an extraordinary capacity for acquiring wealth. They seem to have a special gift or "touch" that enables them to accumulate material goods at a rapid rate.

Less successful people—including those who may have great aspirations to "make it big" but have not yet reached real wealth—often wonder: "Do I really have what it takes to reach the top ... to formulate a personal investment strategy that could secure my family's financial future ... or even to move beyond mere security and make a fortune?"

A major purpose of this book is to explore, through the life of John Marks Templeton—who may justifiably be called one of "the world's greatest investors"—the question of what it takes to succeed as an investor. Templeton was born into a small-town Tennessee family of limited means, and he and his folks were severely pinched by the Great Depression. Yet this relatively poor southern boy had the seeds of success in his personality, and he nurtured those seeds into full bloom in his adult life as an investment sage.

How did Templeton do it? What is the secret of his success as a "super investor"?

Part of Templeton's formula for material success is very practical: It's been a matter of implementing specific investment techniques that can be learned and applied by almost anyone who possesses a fair amount of desire and persistence. In the ensuing pages we'll see how John Templeton's upbringing was crucial in implanting in him the basic inner drive and personal values necessary to reach the peak of performance as an investor. And we'll also examine in detail—through Templeton's own words and advice—how anyone with adequate motivation can learn his key investment techniques, like bargain-hunting and developing good judgment in selecting stocks.

But there is also another important side to the highest levels of happiness and success in investing—a side that encompasses far broader considerations than just the "nuts and bolts" techniques of accumulating wealth. As we'll see, it's essential to understand and affirm this broader dimension of making big money if you want to be truly successful and live happily with your wealth once you acquire it. Too often a person may forge ahead and do quite well in building up personal assets. But then the unexpected pressures and temptations of newfound wealth present so many problems that "success" turns out to be not a success at all, but rather a curse in disguise.

But Templeton has learned how to be comfortable with his riches. He's a self-made man who didn't have the benefit of a family tradition of "old money" and philanthropy, but he has avoided the danger of being "blown away" by his wealth, because he has learned the secret of "successful living with success." Indeed, John Templeton provides one of the best living examples of how a person's wealth can become a satisfying extension of his or her inner drives and values.

Many of the key ingredients in successful investing are present in the life of John Templeton. He has developed a special "touch" with money that few others even approach. It's a touch that has enabled him to build one of the most successful stock-market investing vehicles in history, the Templeton Growth Fund. And it's also a touch that has inspired him to use the rewards from his investments to promote the moral and spiritual progress of mankind.

But what exactly does this "Templeton Touch" consist of—and how can you make it a part of your own life?

The essential qualities that enable a person like John Templeton or any other successful individual to do exceptionally well in business are undoubtedly dependent to some extent on good genes—or inherited brain power and other natural bodily endowments. But sometimes success seems to have little to do with innate abilities, as when a person stumbles upon good fortune and then has the ambition and desire to make the best use of that opportunity. In other words, in any great success story there are strong elements of "being at the right place at the right time," and being prepared to act decisively when you find yourself there.

History abounds with tales of various people who were chosen for special tasks and material rewards by God, by the gods, or maybe just by good fortune. But perhaps the most famous story about a special power to create great wealth is the legend of King Midas, the ruler of Phrygia, a large district of Asia Minor in ancient times. There were a number of kings with the name "Midas" who governed Phrygia in the eighth century BC. But the Midas of ancient mythology probably came from an earlier era—possibly the second millennium BC, when the Phrygians migrated from Thrace or Macedonia.

According to ancient mythology, on one occasion the legendary Midas encountered the forest god Silenus, who was a close companion and mentor of Dionysus, the Greek god of wine, fertility, and revelry. Silenus wandered drunkenly into Midas's royal gardens, got lost, and finally was rescued by the king. Dionysus was so happy when Midas returned his friend that he promised Midas he would grant him anything he wanted. And Midas, a materialistic man, asked for the power to turn everything he touched into gold.

Dionysus agreed and bestowed this gift upon him. But the problem with the "Midas Touch" was that everything that the king touched, without exception, turned to gold—including his food and drink. In other words, the touch, valuable as it was, also proved to be fatal.

But Midas was lucky. He went back to Dionysus and asked the god to take away the touch, and Dionysus agreed. He told the king to bathe in a certain stream, and the golden touch disappeared—though the stream continued to be a great source of gold!

A number of interpretations of this story might be offered. But the lesson that seems most appropriate for our present discussion is that even though the king had great powers to create wealth, he almost killed himself because he got caught up in total materialism: He became consumed by an unbridled desire to build up a store of vast riches without considering the consequences.

Wealth, if it is to be accompanied by true satisfaction and meaning, must have a purpose that goes beyond mere accumulation. Otherwise,...