Whilst Warren Buffett may be Benjamin Graham’s most famous student, he may not be his greatest. Indeed, When compared to Warren Buffet, Sir John Templeton is quite remarkable!
Both men are among the world’s greatest investors, but both in very different ways. Where Buffett is calculating, John Templeton was contrarian, often being the “odd one out” in the investment world.
Before Templeton Growth Fund
Sir John Templeton was born in Winchester, Tennessee on November 29 1912 to British parents. This gave him both American and British citizenship from birth.
In 1931, Templeton applied, and was admitted into Yale, financing much of his tuition by playing poker. Whilst at Yale, Templeton became the business manager of the Yale Record, Yale’s campus humor magazine.
As a result, he was chosen to join the elite Elihu Society at Yale. Upon graduating at the top of his class in 1934, Templeton was offered, and accepted a Rhodes Scholarship, and attended Balliol College at Oxford, earning an M.A in law.
Following this, Templeton became a Certified Financial Analyst (CFA). This would go on to help him later on, when he established the Templeton Growth Fund. In 1937, Templeton married Judith Folk.
In 1929, the Wall Street crash caused almost every major stock market to collapse. At a time when many were losing their homes and livelihoods, Templeton was just beginning to make his.
Following the crash, a young Templeton bought 100 shares in every company listed on the NYSE that was trading at less than $1, buying 100 shares in 104 companies. At the time, 34 of these companies were in bankruptcy.
When the US joined WWII in 1941, all of these companies recovered and made Templeton a lot of money when he sold them. This subsequently gave him ideas…
Templeton Growth Fund
In 1940, Templeton took what he had learned and established Templeton, Dubbrow and Vance in Canada, in order to circumvent American capital gains taxes.
In the 1950’s, a now 30 year old Templeton heard and subsequently learned about mutual funds, reminding him of the money he had made following WWII, which he was still doing for himself.
This caused him to wonder if he could do this on behalf of clients, as well as investing himself. This later resulted in him establishing the Templeton Growth Fund in 1954.
Essentially, the Templeton Growth Fund did for his clients, what Templeton himself had been doing for years. By the mid-to-late 1950’s, Templeton began to create new funds that focused on a specific industry.
In 1959, Templeton took his company public, through an IPO. At the time of the IPO, Templeton Growth Fund had $66 million under management (equivalent to $590 million today!)
The IPO of Templeton Growth Fund made him a billionaire. Following this, Templeton Growth Fund was one of the first American financial companies to invest in post-war Japan, becoming very profitable in the process.
Today
In 1987, in response to his philanthropic ventures and services to the economy, Queen Elizabeth II made John Templeton a knight bachelor. From then, he has been known as Sir John Templeton.
In 1992, Franklin Resources, one of Templeton’s largest competitors, bought out Templeton Galbraith & Hansberger Ltd, merging it into their business, becoming known as Franklin Templeton. This company is still going today.
Due to American tax law, despite Sir John not actually residing in the US, he would still have to pay US income tax on the sale of his business. As such, he renounced his citizenship in favor of his British one.
Each year, The Sunday Times publishes a “rich list” of the richest British citizens. In the 2006 edition, Templeton was joint 129th, as well as inspiring the future list known as the “giving list”.
In July 2008, a 95 year old John Templeton was admitted to Doctors Hospital in Nassau, Bahamas with breathing difficulties, later found to be pneumonia. On July 8 2008, Sir John Templeton died from the illness.
Following his death, his eldest son, John Jr. (nicknamed “Jack”) took the mantle as head of the businesses and philanthropic foundations. He ran them until his own death in 2015, running them similarly to his father.
Templeton Foundation
In 1987, a now 75 year old Templeton began establishing his legacy. This was done through the John Templeton Foundation, a foundation who’s goal is to bring the worlds of science and religion closer together.
The foundation donates money to a series of scientific and religious research programs. Much of the scientific programs focus on biology, physics and psychology, where the religious ones focus on scripture.
On top of this, Templeton also specifically mandated that the foundation fund research on promoting and developing moral character, intelligence, and creativity in people, as well as free markets.
To do this, Templeton donated $100 million (that he would’ve paid in income tax to the IRS) to the foundation. This $100 million was invested with Franklin Templeton, in order to safely grow over time.
Between 1987 and 2008, the foundation was headed by Templeton himself. Following his death in 2008, his eldest son, John Jr. headed the foundation until his own death in 2015. Since then, it has been headed by Heather Templeton Dill.
Upon John Templeton Sr.’s death in 2008, he left the foundation $500 million, a lot of which has subsequently been granted out to other people in order to fund their research.
Templeton Prize
In 1972, Templeton established the Templeton Prize, an award for someone who best embodies his key principles, both in terms of science and in terms of religion.
With the establishment of the John Templeton Foundation in 1987, Templeton consolidated all of his philanthropic ventures into the Templeton Foundation, including the Templeton Prize.
Since 1987, the Prize, alongside all of Templeton’s other philanthropic ventures, have been done through the Templeton Foundation. The prize is often awarded by the Duke of Edinburgh (the Queen’s husband).
In many ways, the Templeton Prize is very similar to the Nobel prize. However, the Templeton Prize has a much higher monetary value, at $1.1 million rather than $986,000.
Despite Templeton’s own Christianity, the Templeton Prize’s judge panel is made up of a series of Christians, Jews, Muslims, Buddhists, Hindus, Sikhs. Often, the recipient isn’t even Christian!
As of today, the Templeton Prize is overseen by Heather Templeton Dill, the current head of the Templeton Foundation. Her brother and father both oversaw the prize before their respective deaths.
However, since then, the prize has seen a lot of criticism, as it isn’t seen as promoting science and religion, but rather just religion, by claiming science is religion.
Can I Replicate What Sir John Templeton Did?
Short answer: No. Because, if you could, I wouldn’t be writing about John Templeton, I’d be writing about you. Templeton made his money because he innovated and took an outdated an ineffective system and made it work.
And, even if you could reinvent the mutual fund, they are becoming less and less popular each year. In particular, this is due to their low returns and comparatively high fees.
Long answer: Yes. Despite what I may have just said, you could in theory replicate what Templeton did. In theory, you could reinvent the mutual fund, one with lower fees and higher returns.
It won’t be easy, and I am by no means saying it is or it isn’t a good idea. But then again, nothing worth it in life is ever easy…
If investing or the finance industry as a whole is where you want to make you money, you learn from Templeton, as well as other successful investors and bankers.
Many of the most successful bankers and investors, think Benjaming Graham, Warren Buffett, Irving Kahn, J P Morgan and Andrew Mellon, all have biographies and even autobiographies!
By reading these, you learn what in particular makes them so successful. You can then adapt them to yourself and implement them. Perhaps one day I’ll be talking about you!
What Can You Learn From Sir John Templeton?
The story of Sir John Templeton is quite inspiring. On top of this, Templeton’s life can teach you a lot, not only about investing, but also life in general!
Live Below Your Means
We often have this perception about “rich people“. This is that they are big spenders- flashy cars, private jets, big houses etc. Whilst this may have some truth for some people, it is generally not the case.
The is especially so for self-made millionaires and billionaires, including John Templeton. Templeton was renowned for his frugality, preferring to drive an old, beat up car, when he could’ve bought a brand new one.
On top of this, Templeton was quite famous for never flying on a private jet, or even in first class, instead preferring to fly in economy class! Instead of living in the UK or US, Templeton lived in The Bahamas.
This was cleverly done. The Bahamas is in the same time zone as the Eastern US, allowing him to keep his eye on the market. At the same time, The Bahamas has higher costs of living, but has no tax, making it cheaper to live there!
Innovation
Templeton is sometimes quoted as having invented the mutual fund. Technically, this is not true, with Abraham (or Adriaan) van Ketwich inventing it in 1772 in the Netherlands.
Instead, Templeton took the original mutual fund and completely reinvented it. Templeton removed many of the costs and issues with the original mutual funds, created a streamlined system that worked.
Templeton was also one of the first American investors to look abroad for new opportunities. Eventually, this became the Asian and Eastern European markets, with Templeton investing heavily in post-war Japan.
By doing this, Templeton inadvertently popularized the idea of investing internationally. Today, this idea is quite common among many investors, who are looking elsewhere for better returns than in the US.
Learn From The Best
Benjmain Graham has taught literally millions of people how to invest, including people like Phil Town, Warren Buffett and indeed, a young Sir John Templeton.
A young John read Securities Analysis by David Dodd and Benjamin Graham and was inspired to become a stock picker. In 1949, when Graham released The Intelligent Investor, Templeton read it too.
However, instead of taking what Graham had written down in The Intelligent Investor literally, he combined it with his own knowledge. This created an unstoppable combo, seldom remembered today!
With that being said, Templeton did take some things in The Intelligent Investor literally. Where Graham said to not get emotional and/or follow the crowd, Templeton did both, rarely even reading the financial section of the newspaper!
Never Stop Learning
When Sir John Templeton was first staring out, he bought 100 shares in every NYSE-traded company valued at under one dollar. A few of these companies did subsequently go under.
However, the vast majority of these stocks increased exponentially in value in the 1940’s, when the US joined WWII. Templeton soon learned that there were certain companies that were destined to fail.
Whilst Templeton never did too much technical analysis, he often did avoid certain industries. Over time, new industries were added to this “list” while others were removed as their industries became more volatile or stable.
On top of this, Templeton was also an avid reader, reading practically anything he could get his hands on. This even included newspapers, where Templeton learned of his impending $100 million tax bill from his American citizenship.
Use Your Surroundings
Templeton was an incredibly religious man. In his later life, Templeton served in several positions with several different Christian evangelical institutions, mostly in the United States.
When he moved to The Bahamas later in his life, Templeton became an integral member of the local Christian community, taking up several positions there. Not to mention establishing his Templeton Religion Trust there!
As an investor, Templeton used his religion to ground him. During times when the market seemed as though it was going crazy, or when it was incredibly low, Templeton would turn to God for help.
Templeton would pray on the issue, believing that God would help him solve his issue. This would also remove him from the market’s herd mentality and would allow him to make calculated decisions.
Has the story of Sir John Templeton inspired you? Tell me in the comments!
