The World's Most Important Investor

Billionaire investor and philanthropist Sir John Templeton passed away this morning after a long illness. He was 95.

You can read all about his incredible life here. And while many today will choose (rightfully) to celebrate his philanthropy, faith, and intellectual curiosity, we celebrate his Foolishness -- a philosophy on life and investing that he practiced long before we ever put a name to it. Quite simply, Sir John's genius was in never accepting that the way things are is, in fact, the best way.

Origins of greatness
Templeton is arguably the world's most important investor. In a time when conventional wisdom demanded that investment houses set up on Wall Street, in Boston, or in London, Templeton instead fled to the peace and quiet of the Bahamas. A few years later a man named Buffett followed his lead, forsaking the urban canyons of Wall Street for Omaha, Neb. Both have spoken positively of the benefits of being physically isolated from the investing crowds.

Sir John showed the way when it came to investing abroad and was a model for discipline and patience when it came to confronting gut-wrenching volatility. He famously started building his fortune when he purchased shares of 104 companies in 1939 amid World War II-induced market panic -- all of which were trading for less than $1 per share and some of which were in bankruptcy. But because he diversified, focused on their future earnings power and not on market pessimism, and was willing to hold for the next five-plus years, Templeton's bets paid off big. He was one of the first foreign investors to focus on Japan, and he tread early into Russia.

This story and Templeton's life's work have influenced generations of international investors, including all of us at Motley Fool Global Gains, and the book Investing the Templeton Way is recommended reading for every stripe of investor.

The secret to his success
Even better, his lessons are simple ones to follow. His success was not the result of a proprietary trading scheme, inside information, massive amounts of leverage, or complicated derivatives. Rather, Sir John succeeded because of sound, fundamental research, the patience and discipline to hold stocks for years, a commitment to diversification, and a willingness to look where other investors would not.

Back in 1954 when he began the Templeton Growth Fund, that meant he essentially had the territory outside the borders of the United States to himself. It's easy to forget, in a day when a thousand foreign stocks trade on the U.S. exchanges, that buying foreign stocks was once quite a challenge. In many ways, Sir John's enthusiasm for foreign equities helped usher in the acceptance of cross-border holdings.

And while Sir John had long since stopped running his namesake fund, that tack continues in the portfolio today with international names such as Vodafone (NYSE: VOD  ) , Total (NYSE: TOT  ) , and France Telecom (NYSE: FTE  ) standing side by side with Microsoft (Nasdaq: MSFT  ) , General Electric (NYSE: GE  ) , and UPS (NYSE: UPS  ) .

Taking measure of Sir John's advice
Sir John's philosophies have become widely adopted today -- because they work, and because people realize that in a global economy it no longer makes sense to be provincial about investing. But many individual investors continue to try to time the markets, play trends, and trade with a short-term time horizon. So if you remember nothing else about Sir John, remember these two timeless pieces of advice:

  1. "The best time to invest is when you have money. This is because history suggests it is not timing the markets that matters, it is time."
  2. "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."

In other words, it's the courage to be contrary -- even at the most emotional peaks and troughs -- that pays off over the long run. That's a lesson investors should remember every day, and it's particularly worth noting today as we celebrate the life of Sir John Templeton.

Bill Mann and Tim Hanson write for Motley Fool Hidden Gems. UPS, France Telecom, and Total are Income Investor recommendations, while Microsoft is an Inside Value recommendation. The Motley Fool has a disclosure policy.


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