Tuesday, 5 August 2014

Lessons learned from Sir John Templeton

Lessons from Sir John Templeton

“A MAJOR CAUSE OF HIGHER PRICES is higher prices; but when the trend is reversed, then lower prices lead to still lower prices. To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude and pays the greatest ultimate rewards.”
Sir John Templeton

“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.”
Sir John Templeton

15 Personal Attributes
Self Reliance
Reasonable Risk Taking
Sense of Stewardship
A Drive towards Diversity
Bargain Hunting Mentality
Broad Social and Political Awareness
Devote Large Amounts of Time to Study
  •   An Ability to Retreat from Daily Pressures
  •   Develop an Extensive Friendship Network
  •   Patience
  •   Thought Control
  •   Positive Thinking
  •   Simplicity
  •   Great Intuitive Powers

    “If you want to have a better performance than the crowd, you must do things differently from the crowd.”
    Sir John Templeton

    Where were the buyers on March 9, 2009?
    The truth is that it is very hard to buy at the point of maximum pessimism.
    Humans are not wired to do so.

    Stock Prices are 14x More Volatile than Actual Fundamentals This Creates Opportunities for those who are Prepared

    Methods Sir John Used to Take Advantage of these Events
    Preparation, Preparation, Preparation
    Always stored some funds in reserves, one basis for his thrift...sought out crises
    Maintained a wish list, had already researched and prepared a list of companies he wanted to own at a bargain price
    •   Maintained good-to-cancel limit orders in the market 20% below the current price
    •   An optimist, held a fundamental belief in the continued innovation, ambitions and ingenuity of others

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