Progress requires change.
—John Marks Templeton

Articles: Sir John Templeton

The Devout Donor
By Jessi Hempel
Business Week, November 28, 2005

John Templeton's $550 million gift doubles his funding of research aimed at showing that science and religion needn't be at odds

Sir John Marks Templeton has been a contrarian from the start. In 1939, when he still lived in a grungy Manhattan walkup with mismatched furniture, Templeton borrowed $10,000 and used it to buy $100 worth of every stock valued at less than a dollar on the New York exchange. The timing hardly seemed opportune: Hitler had just invaded Poland. But Templeton believed that the impending world war would drive up the market -- and he was right. He went on to become one of Wall Street's most successful celebrity stockpickers and then to pioneer the first global-investing mutual funds, ultimately selling his Templeton family of funds to Franklin Resources for $913 million in 1992. His stake: about $440 million.

Now 92 and comfortably ensconced at a Bahamas estate, Templeton has recently made what may be his boldest move yet. Last December he donated $550 million to his already existing private foundation, propelling himself to No. 11 on this year's list of BusinessWeek's 50 Most Generous Philanthropists. His was no ordinary gift. While the vast majority of America's philanthropic heavyweights choose to address traditional and tangible social needs -- feeding the hungry, curing the sick, subsidizing the arts -- Templeton has something else in mind. He wants to make an impact on the world of ideas.

Templeton's controversial goal: to reconcile the worlds of science and religion. A devout man, Templeton began each morning at his mutual fund group with a companywide prayer. Yet he is also a creature of Wall Street -- analytical, numbers-driven, and skeptical. When he hears scientists quarrel with believers, he thinks both sides are missing the broader point. "What I'm trying to do is say: 'Don't try to argue -- maybe you're both right,"' says the energetic billionaire, who still drives his tan, four-door Kia Opirus two miles to his office five days a week.

What projects are being subsidized with the $60 million the John Templeton Foundation now hands out every year? It's a unique mix of science and faith, traditional research and provocative speculation. One beneficiary is a Duke University professor who is investigating the impact that regular church attendance has on blood pressure. Another is the Christian liberal arts institution Calvin College, which puts on Templeton-sponsored seminars with titles such as "Evolutionary Psychology and Scripture Scholarship: More Similar Than You Might Have Thought." The $1.5 million Templeton Prize for Progress Toward Research or Discoveries about Spiritual Realities has been given to everyone from Mother Teresa to physicist Freeman J. Dyson to Watergate-felon-turned-evangelist Charles W. Colson to evangelist Billy Graham.

Seeking A Dialogue

Templeton's venture is the most quixotic mission being undertaken by any major American philanthropist. He is, of course, far from the only person in the country interested in reevaluating the relationship between religion and science. Social conservatives are challenging orthodoxies such as Darwinism and the Big Bang while fighting for their right to control what is taught to schoolchildren. Templeton has done much to cheer their hearts. The Association of American Medical Colleges, for example, credits his foundation for the course in spirituality and medicine that has become a standard part of the curriculum in more than two-thirds of the country's medical schools over the past decade.

But it would be a mistake to pigeonhole Templeton as a member of the Religious Right. While the foundation in the 1990s backed supporters of the theory of intelligent design, the notion that God had a hand in creation, it has since distanced itself from the idea. Foundation Vice-President Charles L. Harper says the group is the largest funder of projects challenging intelligent design and notes that it has invited scientific critics such as Harvard chemist George M. Whitesides to speak at conferences. "We're not trying to encourage people to jump on one side of the fence and throw mudballs at the other," says Harper. "We're in favor of dialogue."

The Templeton Foundation is clearly walking a fine line, but it's one that feels comfortable to its founder. Templeton's own faith stems from a Winchester (Tenn.) childhood in which his parents pushed Christian values of thrift and compassion. "I grew up as a Presbyterian," he says. "Presbyterians thought the Methodists were wrong. The Catholics thought all Protestants were wrong. The Jews thought the Christians were wrong. So what I'm financing is humility. I want people to realize that you shouldn't think you know it all."

A visit to Templeton's boxlike home in the well-heeled Bahamian neighborhood of Lyford Cay makes it clear he is focused on more than material things. Paint flakes off the antebellum pillars outside the Plantation-style residence. Inside, many of the kitchen's original 1969 appliances grace formica countertops. French doors open from the living room onto a brick veranda, offering views of a posh seaside golf club.

Templeton doesn't get to the nearby beach too much anymore. But he still has perfect posture, an affable grin, and the hint of a gentleman's Southern drawl. A naturalized British citizen, he was knighted by the Queen of England in 1987 for his charity. Yet at the tiny third-floor office of his foundation, he does his own photocopying and sometimes answers his own phone. From the comfort of an office recliner upholstered in a print of butterflies, he reviews foundation proposals, flagging promising philanthropic investments in faxes he sends daily to foundation headquarters in Conshohocken, Pa. On a recent Monday he sent six.

Handing Over the Reins

The person on the receiving end of those faxes is usually Templeton's son, foundation President John Templeton Jr., a former trauma surgeon and a born-again Christian. He has been on a hiring tear. In the wake of his father's enormous gift, he must quickly figure out how to more than double the number of grants the foundation makes.

To see how the foundation operates, consider how it moved spirituality onto medical school curricula. In 1992, when Dr. Christina Puchalski taught her first course on spirituality and healing at George Washington University, she knew of three other medical schools offering such courses. In 1995 the Templeton Foundation began offering prizes (now $50,000 for medical schools) to the programs that best integrate issues of spirituality and medicine into their offerings. A few years later the foundation sponsored a conference where professors agreed on a standardized curriculum for a course that teaches medical students about the role of clergy and helps them understand their patients' religious backgrounds.

The funding, paired with an official curriculum, has led about 90 of 125 medical schools to adopt similar programs. "When educators can say I've got money, I've got this outside institution backing me up, they're much more likely to be met with support," says Brownell Anderson, senior associate vice-president for medical education at the AAMC, who credits the Templeton Foundation for the spike.

Simplistic vs. Sophisticated

Templeton has also lent credibility to research on the topic of forgiveness. The National Institutes of Health didn't fund any projects related to the subject until 1999, when it backed Virginia Commonwealth University psychology professor Everett L. Worthington Jr.'s study Forgiveness, Humility, and Gratitude Among Recently Married Couples, which measured how an education program on forgiveness and reconciliation affects newlywed couples. Worthington's project was also funded by the Templeton Foundation. This year the NIH funded five projects relating to forgiveness. Worthington says that before 1997, when the Templeton Foundation first began funding research on the subject, he could find only 50 studies even remotely related to forgiveness. At last count the number of scientific-paper citations had climbed to nearly 4,500.

By increasing references to religious concepts in scientific journals and by moving religion into public discussion at universities, Templeton has made it easier for closeted believers within the elite halls of the Ivy League to form communities. Martin A. Nowak directs the Program for Evolutionary Dynamics at Harvard University, where he spends his time trying to figure out why people have evolved to help each other if evolution simultaneously fosters competition. Nowak is also a practicing Roman Catholic, a fact he has kept quiet at Harvard until recently. He says the climate is changing on his campus. "As a scientist who believes, you feel you are completely in the minority and you should never talk about it," says Nowak, who recently became an adviser to the Templeton Foundation. "It's nice to meet people with whom you can talk about a more complete perspective of the world."

Critics worry that Templeton is buying the support of scientists who are desperate to win research dollars. Sean Carroll is an assistant professor of physics at the University of Chicago. An outspoken atheist, he recently declined an invitation to present at a Templeton conference at the University of California at Berkeley. He says that because funding for quantum mechanics is hard to get, some of his colleagues are willing to take Templeton's research grants even if they don't support his beliefs. The Templeton folks make it tempting, he says, because unlike other academic conferences, Templeton's confabs pay presenters. Carroll says he would have received $2,000 to speak at the conference, a similar sum if he published his talk in their anthology, and a chance at a $10,000 prize for scientists under 40. For an impoverished academic trying to scrape by, that's alluring. Says Carroll: "That's money I could have used to, say, buy a car!"

Other atheists take a more neutral stance. In 2003, Harvard chemist Whitesides agreed to help the Templeton Foundation organize a cosmology conference called "Biochemistry and Fine-Tuning." Whitesides says he was surprised by the extent to which spirituality was downplayed at the conference. Says Whitesides: "There are simplistic views and then there are more sophisticated views, and I think the Templeton Foundation embraces a sophisticated view."

The foundation will have new leadership soon, though. At the time he made his gift, Templeton announced that he'll step down in January, leaving his son, a conservative philanthropist whose religious views are more traditional than his father's, to chair the board. Templeton has designed a process to keep his grantmaking on track: Every five years independent analysts will evaluate whether officers are making grants that match his intent. If they find his son is giving 9% of the grants to other causes, John Jr. has one year to correct the problem. If not, he'll be fired along with his two top people. That's not very forgiving, but it's one way to ensure that Templeton's unique vision lives on.

Refresh Button: Philanthropy Outside the Box
Robert Johnson
NY Times, July 31, 2005

At 92, Sir John Marks Templeton may seem an unlikely dispenser of the maxim that life is short.

But he is not talking about the number of years that one has to draw breath. What he sees in short supply is the time that most people allot to accomplishing something worthwhile. “We should try to waste very little time on fiction, or entertainment, or television,” he said.

He has wasted little time in his life. He started his career on Wall Street in 1937, when he was in his early 20’s, and went on to create the Templeton family of mutual funds. Sir John sold the fund business, Templeton, Galbraith & Hansberger, to the Franklin Group, now known as Franklin Resources, in 1992 for $913 million and is now a full-time philanthropist.

Sir John, a Tennessee native who graduated from Yale and was a Rhodes Scholar, has remained an innovator. His philanthropies include the $1 million Templeton Prize, which recognizes “progress toward research or discoveries about spiritual realities.” It has been presented annually in London since 1973; the first recipient was Mother Teresa of Calcutta. (Sir John became a naturalized British citizen in 1968 and was knighted by Queen Elizabeth II in 1987.)

The prize is one of more than a dozen programs run by the John Templeton Foundation. Some encourage research into the benefits of cooperation between science and religion. Others focus on the nature of altruism or freedom. Among the research topics the foundation has supported, for example, is the salutary effect of forgiveness on offenders and victims alike. The foundation gives away about $40 million a year.

Sir John says he continues to work enthusiastically with seven colleagues in his office in Nassau, the Bahamas, and he still helps to manage the foundation, which is based in West Conshohocken, Pa. “Such enthusiasm derives from humility to think that humans have not researched or discovered even 1 percent about what can be discovered about aspects of spiritual realities.”

Why not concentrate his philanthropy on urgent problems like starvation and poverty?

“Always, humans have wanted to donate toward alleviation of suffering,” he said, “but probably, such donations can be over 10 times more cost effective if focused on ways to prevent suffering.”

Twice a widower, with 12 grandchildren and nine great-grandchildren, Sir John is well aware that his philanthropy is unusual and may not yield many tangible results in his lifetime. But, he said, “it is the far-reaching thinker who breaks out of the traditional mold.”

The World's Greatest Investors Sir John Templeton
By Eleanor Laise
Abacus Consulting Services, July 1, 2005

BORN ON THE EVE OF World War I, Sir John Templeton was a Yale undergraduate during the Depression and a Wall Street rookie in the runup to World War II. He's seen his share of tough times. That's why, when he told SmartMoney last year that "there are fewer opportunities than I've ever seen in 91 years," we sat up and took notice.

Templeton never had much trouble spotting opportunity. He hunted down global bargains long before jet travel got off the ground and invested in U.S. companies at the start of World War II. The most important lesson we can learn from Templeton is to go against the grain. An über-contrarian, he didn't just bet against the crowd — he liked to invest at "the point of maximum pessimism." The results don't say much for the crowd. An investor who put $10,000 in his flagship Templeton Growth fund at its launch in 1954 would have nearly $7 million today.

His outlook remains negative. "Prices of almost all publicly traded stocks are now too high in relation to probable long-term earnings per share, especially in the U.S.A.," he recently wrote in response to our questions. He advises investors to keep no more than half of their portfolio in stocks. "Bond prices also continue to be too high," he says, "especially the prices of lower-quality bonds."

That doesn't mean he's out of ideas. He's a fan of market-neutral funds, which keep a roughly equal weighting in long and short positions and let investors profit from the wisdom of the manager. And as always, he sees value overseas. Investors should "invest in a well-managed mutual fund focusing on nations and industries where share prices are not so high," he says. He likes the Matthews Asia-Pacific fund, which invests more broadly across Asia than most of the funds that focus on the region. Templeton's tip for bond investors: Focus on countries that have both trade and budget surpluses. Russia and Canada fit the bill.

Though Templeton has been putting his own money in hedge funds, their explosive growth gives him qualms. He argues that "very few hedge funds will be able to cover their very high operating costs. Because many hedge funds work with borrowed money, it is quite possible that many will become bankrupt within the next year or two and the liquidation of those bankrupt funds will depress share prices."

Depressed share prices? That will mean it's time to load up on stocks. As Templeton put it shortly before the turn of the millennium, "In this century or the next, it's still buy low, sell high." Hedge funds and overheated markets aren't the only issues troubling Templeton. When asked about his view on the Social Security debate, he points out that Medicare's excess obligations are a more pressing problem. Even so, "evidence is increasing that eventually, the age at which Social Security will begin to pay pensions will need to be advanced at least as rapidly as the average annual increase in life expectancy," Templeton says. "Competition," he adds, "is always a strong force for better results and therefore assets of pension funds are likely to prosper more if not controlled by governments but are invested in 10 or more privately managed custody accounts approved by a board selected by the government."

Templeton, of course, doesn't watch the mailbox for pension checks. His foundation, which focuses on spiritual and scientific research, gives away about $40 million a year. Given his interest in values and theology, we wondered if Templeton would weigh in on socially responsible and faith-based investments. "It seems wise to search for bargains among shares of companies whose activities are rapidly growing because they are beneficial," Templeton says, "more than trying to decide which are 'socially responsible' or 'faith based.'"

Interview with Sir John Templeton
by Eleanor Laise
SmartMoney, April 1, 2004

Sir John Speaks --- He bought low during the Depression, sold high during the Internet boom and made more than a few good calls in between; Sir John Templeton, dean of contrarians, tells us where to invest now

Spend five minutes in Sir John Templeton's offices and you'll learn a lot about the legendary value investor. It's not the imposing portrait, the honorary degrees or even the certificate of knighthood. It's the books. Crisis Investing shares shelf space with Eat Right for Your Type. The Hand of God sits near Invest for Retirement and Natural Capitalism. Several thick volumes occupy substantial real estate on the top shelf. An investing bible? No -- it's the 1991 edition of the London Central Yellow Pages.

A 1934 Yale graduate and Rhodes scholar, Templeton has a voracious appetite for information. The small-town Tennessee native became known as the Marco Polo of his Oxford class, thanks to a round-the-world postgraduation jaunt. In his late 20s he opened his own money-management firm and began to put international investing on the map. His flagship Templeton Growth fund has posted a 13.8 percent annualized return over 50 years, well ahead of the Standard & Poor's 500's 11.1 percent.

Templeton's track record is full of prescient moves. In 1978, when Ford was near bankruptcy, he was a buyer. When everyone else piled into tech in 2000, he was a seller.

Though he now lives in Lyford Cay, a decidedly well-heeled corner of the Bahamas, Templeton maintains a surprisingly modest lifestyle. He tools around at the wheel of a Lincoln Town Car. Orchids and bougainvillea upstage his whitewashed home. It's the ideal setting for a quiet retirement, but that's not Templeton's cup of tea. Since Franklin Resources bought his funds in 1992 for $440 million, he has devoted most of his time to philanthropy. The John Templeton Foundation gives $40 million a year to projects that explore the intersection of science and religion. Templeton's longtime philanthropic efforts earned the naturalized British citizen a knighthood in 1987. In his spare time, he hunts for global bargains, and at 91, he's clearly as curious as ever. As SmartMoney sat down in his cluttered conference room, it was Templeton who fired off the first question: "Have you written any books I can read?" Well, no. But enough about us.

SmartMoney: How did a kid from rural Tennessee become a pioneer of global value investing?

John Templeton: In Tennessee I didn't meet anybody who owned a share of anything. At Yale there were hundreds of boys from wealthy families, but not a single one who was investing outside one nation. I thought that was just not sensible. Surely they'd get better results if they searched everywhere rather than limiting their search to one country. Then I investigated the investment counsel profession and couldn't find any investment counselor who specialized in helping people invest outside America. So I saw a wide-open opportunity.

Q: In 1939 you bought $100 worth of every New York Stock Exchange listed stock that was trading under $1 per share. There were 104 names, and 37 were already in bankruptcy. Why did you do it?

John Templeton: I was sitting in my office at 30 Rockefeller Plaza in Manhattan when the news came out that Hitler had invaded Poland. It was obvious within a few days that it was going to lead to the Second World War. During war, everything that was in surplus, and therefore unprofitable, becomes scarce and profitable. Three years later I had a profit on 100 out of the 104.

Q: What signs helped you see that the U.S. technology bubble was about to burst back in 2000?

John Templeton: If you want to have a better performance than the crowd, you must do things differently from the crowd. Four years ago the crowd was piling into tech stocks. The prices went sky-high. I sold my clients' technology stocks, and sold a lot of them short. I have put these philosophies into a simple statement: Help people. When people are desperately trying to sell, help them and buy. When people are enthusiastically trying to buy, help them and sell.

Q: That's a good way to look at it.

John Templeton: That's mainly a joke.

Q: In 1992 you predicted that "the next 10 years will be the happiest period, and the most progressive," with "rapidly increasing prosperity for both Europe and America." Are you as optimistic about the next decade?

John Templeton: Very few people realize how fortunate we are to live in the most glorious period in world history. There has been more progress in prosperity than in any previous century. The Dow Jones Industrial Average never went above 100 until a century ago. Now it's up to 10700, a hundredfold increase in one century. Probably in the next century, the increase will be equally great, if not greater. But I have to say that we are starting from an unusually high price for shares, not just in one industry, but in practically all industries and all nations.

Q: What is your view of current U.S. stock valuations?

John Templeton: Over the next five years, the chances are about 50/50 that the stock market will be lower. There is a risk that stock indexes will go down by over 30 percent or they'll go up 30 percent. Share prices are remarkably high right now. The Nasdaq Composite index is trading at 36 times next year's earnings and 95 times last year's earnings. That's high. For most of my lifetime I found bargains one place or another below 12 times earnings.

Q: How does this environment compare with the market of 1972, when the Dow regained its late '60s highs of around 1000 but didn't break through that level again until 1982?

John Templeton: That was a period of stock market optimism, which goes in cycles. There are at least five of these cycles every century. The one in those years you mentioned was a normal cycle. This one seems to be more exaggerated. Prices in those years never went as high as they are now.

Q: Are there any sectors in the U.S. that look cheap?

John Templeton: No. I wish there were, but I can't find them. The answer is to play safe. And playing safe means diversifying among nations, industries and types of securities. At present I don't think anybody should have over half their assets in common stock.

Q: And you believe that no one should have more than 50 percent of his or her portfolio in a single country?

John Templeton: Yes. And no more than 25 percent in one industry.

Q: Do you think there is a real estate bubble in the U.S.?

John Templeton: Yes. Real estate is very different from the stock market because it's so local and separate in terms of type. But in many locations and many types of real estate, prices are dangerously high right now. And in real estate it's easier to say what's dangerously high. You just look at what it costs to rebuild. Right here in the Bahamas, I have recently seen people pay four or five times for a house what it would cost to rebuild.

Q: Do U.S. bonds look more attractive than equities?

John Templeton: Compared to the cost of living [measured by inflation], you can still buy American bonds. But at present there are bonds of other nations that seem safer. It's wise to invest in nations that do not have an unfavorable balance of trade or a government deficit.

Q: Which countries seem the safest?

John Templeton: There are not many. There are almost 200 nations on earth and about 150 different currencies, and most of them have problems even greater than America's. But Singapore, Hong Kong, South Korea, New Zealand, Australia and Russia don't have big problems.

Q: A few years ago you were buying STRIPs, or Treasury bonds with the coupons cut off. Do you still like them?

John Templeton: I bought STRIPs because the yield to maturity was about 10 percent better than what you could get on Treasury bonds. But I found I did better by changing from U.S. Treasury STRIPs to STRIPs of nations with stronger currencies, like the ones we just talked about.

Q: Where do you think the U.S. dollar will go from here?

John Templeton: The chances of the U.S. dollar going down in relation to the euro are no more than 50/50. The euro has already gone up 47 percent in the last two years. But the yen is up only 25 percent. Japan has put hundreds of billions of dollars into buying American money. The quantities are so great that that can't continue much longer. Japanese money is likely to go up in the future.

Q: Are you concerned about inflation?

John Templeton: Long term, because we have more and more democracies in the world, we're going to have more and more inflation. Politicians who are willing to spend too much are the ones who get reelected. Look back at history. Inflation has averaged about 2 percent a year. Probably, it will average somewhat more than that in the next century. But from a short-range standpoint, there does not yet seem to be a shortage of almost any product. Until there's a shortage, you're not likely to see higher prices.

Q: What do you see as the biggest threat to economic recovery in the U.S.?

John Templeton: We don't need an economic recovery because we're already operating at a very high level. The greatest threat to maintaining this level of economic activity is debt. There's never been a time when people worldwide, and especially in America, had such a high proportion of debt. I think 20 percent of people who have mortgages on their homes are likely to lose them in foreclosures. When a home goes into bankruptcy, it's sold at auction. That pushes the price down and affects the prices of other homes.

Q: Does the U.S. government's debt level worry you?

John Templeton: Oh, yes. There has never been any government anywhere in the world that has such a big deficit in the federal budget. And there's never been a nation in history that had such an adverse balance of trade. However, if you look at those debts and balance of trade as a percentage of gross national product, they're bad, but not unprecedented.

Q: What does that mean for investors?

John Templeton: It's one more reason why this is a dangerous time to own stocks.

Q: Even foreign equities?

John Templeton: Yes. In my long history I could always find some nation where people were desperately trying to sell. Now I can't find a place where people are trying desperately to get out of equities.

Q: So what do you think about the rush to invest in China?

John Templeton: The cycles will be much wider and more frequent in China because of the lack of information. Having said that, if you're investing, you should put a fairly large part of your total assets in China because within as short a period as 30 years, China is likely to have the largest gross national product any nation has ever had.

Q: Is India as great an opportunity as China?

John Templeton: Yes. You could say almost the same thing about India, except in terms of speed. The improvement in India is wonderful but not as fast. But the Indian market is up more than 80 percent in 12 months. That's a danger signal. It means you're going to take a lot of risk that you wouldn't have taken a year before.

Q: What's the world's best stock market now?

John Templeton: The best answer is none. There are so many securities analysts working on that question that the prices in different markets are less out of line than normal.

Q: So an influx of information has made life difficult for global value investors?

John Templeton: When I became an investment counselor, there were only 17 security analysts on earth. Now, in America alone, there are more than 32,000, and they do have an effect on prices by doing research on where to find bargains.

Q: If you were starting out in the investing world today, what would you do?

John Templeton: Play safe. If you don't have your money in equities, it's very difficult to find a place to put it. Gold has already gone up. . . . People also tend to think it's safe to put your money in the bank. When I was studying in the U.K., people swore that it was safe to put your money in pounds sterling. But within a few years, sterling went down from $5 a pound to $1.50 a pound because of the war. If gold and bank accounts are no longer safe, where can you put it? Diversify. Don't put too much in any one thing.

Q: What have you been buying lately?

John Templeton: I believe there are fewer opportunities than I've ever seen in 91 years. In the last year I've been using market-neutral hedge funds, whose policy is to have always the same quantity of longs and shorts. I have invested lately in two funds that are managed by people who worked for me when I was in the investment business: Jane Siebels-Kilnes' Siebels Multi-Fund and Mark Holowesko's Holowesko Global fund. They aren't registered with the SEC, however, so American stockbrokers can't sell them.

Q: After the corporate scandals of recent years, how can we restore trust in the markets?

John Templeton: The answer is comparison. When you're worried about those scandals, stop and think, what nation would you feel safer in? At what time in world history could you feel safer? I don't think you'll find any time when the degree of information, the degree of honesty, is higher than it is today.

Q: You don't think there's anything the government should do to restore trust?

John Templeton: Yes. Keep their hands off. It has been proven over and over that the best regulation is free competition. Those that are not doing a good job for the public get squeezed out. I can't think of any nation where the quantity of regulation is already not too high.

Q: A couple of days ago, Franklin Resources, the firm that bought your funds, was accused of participating in market-timing arrangements. What's your take on the fund scandal?

John Templeton: Everything I've just said applies double to that. Can you think of any industry or any nation where there are fewer questionable practices than there are in American mutual funds? I can't. If all the claims in the news were added up, what would it cost a mutual fund owner? One cent.

Q: You've lived here in the Bahamas for 31 years . . .

John Templeton: Yes. I've found my results for investment clients were far better here than when I had my office in 30 Rockefeller Plaza. When you're in Manhattan, it's much more difficult to go opposite to the crowd.

The Greatest Investors - John Templeton
Investopedia.com

Born: Winchester, Tennessee in 1912

Employer: Founder of the Templeton Group

Most Famous For: Created some of the world's largest and most successful global investment funds using his independent investment strategy.

Less Celebrated For: More recently, his funds have failed to provide the astounding gains his followers were used to, partly due to the recent Asian recession.

Quote: "The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell."

Background: Templeton is a true pioneer of the global mutual fund industry. He has led the charge for teaching investors to explore the world for great investments. Investing overseas was virtually unheard of until investors caught on to Templeton's strategy. Today, the Templeton Group's combined assets exceed $25 billion.

Besides pioneering global investing, a great example of his independent investment strategy occurred in 1939. With the outbreak of war looming, a twentysomething Templeton bought every stock selling for under $1 per share on the major exchanges. Within four years, he had quadrupled his money.

Templeton is one of the strongest proponents of diversification. He once stated that "the only investors who shouldn't diversify are those who are right 100% of the time."

Another one of Templeton's success stories is a man by the name of Leroy Paslay. He was one of Templeton's earliest investors, giving him $65,500 to invest in 1954. 40 years later, Paslay was worth over $37 million.

After making billions through his innovative approach to investing, he has now become one of the world's greatest philanthropists. In 1987, he founded the $1/4 billion John Templeton Foundation.

Sir John Templeton Reveals the Future of the Stock Market, Real Estate and Life
Financial Intelligence Report

Recently, NewsMax and Financial Intelligence Report publisher Christopher Ruddy visited with Sir John Templeton in Lyford Cay in the Bahamas - the place Sir John has called home for the past 32 years. His interview with Sir John follows:

At 92 years of age, Sir John Templeton is one of the world's most successful investors, a legend in his own time. Money magazine calls him "arguably the greatest global stock picker of the century."

Templeton's pioneering concept was to take the old adage "buy low, sell high"and apply it to global investing.

Templeton sought out the best opportunities anywhere in the world he could find them. When he began investing globally in the 1930s, Templeton was truly a pioneer. Many Americans thought it unwise to invest outside the United States and therefore forfeited a world of opportunities. John Templeton's results, however, are the stuff of legend.

When he sold his Templeton Funds in the early 1990s, they were worth an incredible $800 million. Templeton personally walked away with over $900 million.

Sir John's all-consuming goal was to never just make money for himself, but to earn for others. As he told Philanthropy magazine:

" At Yale I was investigating what talents God gave me, and where I thought I could be most beneficial to people was to help them make fewer stupid mistakes in selecting their investments."

"At age 27, I formed my own investment firm, working with just five wealthy people. Eventually, when I sold out, we were helping over a million people with some part of their investments. And I felt that was a ministry, that I was doing a useful job, that I was not wasting the life God gave me. But all during that time, over 50 years, I felt that my benefit to people was not as great as if I were trying to help them get spiritual wealth."

Sir John now works full-time as a philanthropist. His John Templeton Foundation in Radnor, Pa., and his two offshore trusts have a total of $800 million dedicated to philanthropy.

The foundation - run by his son Dr. John Templeton, a retired medical doctor - is one of the few dedicated to discovering how religion can influence the physical world. Though he spends most of his time on his philanthropy, Sir John remains dedicated to his first vocation: the study of investments.

He cannot even utter the "R" word…retirement. In fact, he has thought of writing a book called "Never Retire."

"I have observed in 92 years that the people who are most diligent in working do live many years longer than those who are lazy," Sir John says.

A few years back, he told me he was exercising by walking against the ocean current every day for almost an hour. Today he has cut back his exercise, he says, to just 25 minutes a day.

He is not only physically active, but his mental examinations of the market are sharp.

And his timing has been impeccable. He sold short the dot-com and NASDAQ tech stocks at the very height of the '90s boom, making another small fortune.

During the past few years, Sir John has been very concerned about the lack of quality investments available in the market, and he has repeatedly warned of the possibility of a major collapse in housing prices - and even a '30s-style run on the stock markets.

Here are some of Sir John Templeton's current insights:

Do the Opposite of the Crowd

My job was being paid by wealthy families to help them choose stocks and bonds. And my results were much better when I was working from here than from Manhattan, Radio City and Rockefeller Center. I had good results in New York. But when I came here, I had better results. The secret, I think, is that in order to buy stocks at a bargain price, you have to do the opposite of the crowd. When you're going to the same meetings with the other people in Manhattan, it's hard to be different.

Finding a Spiritual Way

About 12 years ago, I sold out. I had been helping a few thousand wealthy families and I did a lot of thinking that if I could tell you the rest of my life, I might help a few thousand wealthy families to become somewhat wealthier. But by selling out to my strongest competitor [Franklin Resources], I can now devote 100% of my time to trying to help people grow in a spiritual way. And that's a wide-open field - very few people who have any substantial amount of money contribute to helping people grow spiritually.

The Study of Religion

We are tying to persuade people that no human has yet grasped 1% of what can be known about spiritual realities. So we are encouraging people to start using the same methods of science that have been so productive in other areas, in order to discover spiritual realities.

For example, to clarify, my grandfather was a medical doctor. But he had never heard of a germ. That was only 140 years ago. The medical doctors began to use that as a science, and now we know a thousand times as much about your body as my grandfather new as a medical doctor.

Or take the field of communications. As recently as when Abraham Lincoln was assassinated only 140 years ago, nobody in Europe heard about it for 17 days, because communications was so inadequate. Now we have this enormous communication system around us all the time. There's 1,000 times as much communication as there was 140 years ago.

Again, this is due to applying methods of science to discover new modes of communication. So what my foundation is focused on more than anything else is to encourage people to donate to scientific research to help discover aspects of spiritual reality.

Managing My Own Money

I've spent 45 years inviting wealthy families to pay me a fee to help them pick the right investments. We didn't have any salesmen, so it was a slow process to grow.

But we got up to the stage where we were helping with about $23 billion worth of other people's money. Twelve years ago, I sold that entire operation - including this building - to a strong competitor in California called Franklin Resources, which was on the NYSE. Now they're helping with $88 billion in assets.

I don't have any connection with that forever. So my main activity now is just managing my own money. Because I think I'm going to do more good by using my wealth to encourage others to use scientific methods to find the answers to spiritual questions.

Finding Stock Bargains Never More Difficult

I do think it's interesting that in all my 92 years, I've never seen a time when it was so hard to find a bargain. I aided wealthy families by helping them find stocks that were selling at a small fraction of what the company was worth. But now, it's very difficult to find companies where you can buy the stock at a fraction of its value.

In all my experience, I don't remember a time when you had to search so diligently to find anything that was a bargain.

Bargain Stock Pick: KIA Is a Future GM

You always find some bargains, but just less than usual.

The last one I bought for myself is a company called Kia Motors. I bought one of their automobiles and it gives me better value than any other car I have ever owned.

They are now growing better than any other major automobile company, selling a great majority of cars outside South Korea in America and Europe and so forth, but they manufacture them in India, China and South Korea.

And yet I bought that stock recently at less than five times earnings. I think there's a chance - maybe not a probability, but a chance - that KIA Motors will be larger than General Motors 30 years from now.

Assess the Risks

In judging the value of the company, you have to consider: What is the risk that somebody might do something stupid? I think there's less risk in South Korea than there would be in China. There are some stocks selling at bargain prices - but the risk is greater.

Are Any American Stocks Undervalued?

I haven't bought any recently. I'd like to. I just buy where the bargains are.

Another Bargain in China

I guess the second one I would suggest is something that I invested in a few months ago. It's called Value Partners and is managed by a Chinese man in Hong Kong. It's a large organization - I have about $100 million in it. It's about five times that big all together.

They specialize in finding ways to buy stocks that are not well known in China and the region, and they invest in about 100 different companies in that area. They invest mainly in things I've never heard of.

Problems with China

It's difficult. The best Chinese companies don't have a public market and are not listed in America. Those that are listed in America are no longer cheap.

All that's true. But still, the rate of growth is so strong in China that I recently guessed that within a short period of 20 years, the gross national product of China will be larger than America's.

With four times the U.S. population, that is definitely achievable within 20 years.

The Dot-Com Crash and the Crash of '29

In 1929, the Dow Jones Industrial went down to 1/9 of where it had been. In this recent decline, it only went down 30%. The NASDAQ went down by 50%.

I am worried about exuberance. Like you just said - you'd like to have a house at Lyford Cay, but you have to pay four times what it costs to build. It's not the values - the prices are high.

Will There Be Another Crash?

Yes, but I've never been able to tell you when. If you find a way, let me know.

Well, I wouldn't use the word "crash." There will be cycles. I do think economics has developed a lot since 1932, so you shouldn't ever expect American prices to go down almost 90%, but I do believe there will be cycles where American prices go down 50%.

Factors Undermining the Market: American Debt Is Highest Ever

American debt is the highest the nation's ever had. The federal deficit, the federal debt are the largest in history. But that's just the beginning.

Also, the unfavorable trade balance is the largest the nation's ever had.

And the national deficit - the shortage of taxes collected over what's spent - is the largest in the nation's history.

Americans were famous 30 years ago for being so thrifty. They were saving over 20 cents out of every dollar they earned. Last year, Americans saved less than 2 cents on every dollar.

All those things add up to the fact that there is almost sure to be a period of pessimism - a bear market. Not a crash, but a bear market.

The old rule of thumb for brokers was: The bear is about half as long as the bull. If I had to say when this bull market started, I would say 1990. So it's 14 years old.

The immediate future is that there are more dangers than I've ever known before. It's just more dangerous.

More Factors: The Weakening Dollar and What Are Good Currencies?

Let's not use the word "good." Let's say "less risky" currency. The less risky currencies are probably South Korea, Singapore, India and New Zealand.

A couple of years ago, I bought Canadian strip bonds.

I haven't sold them yet, but I've stopped buying them, because they are up 25% from when I first got them.

And just within the last week, I made what is called a "straddle" - I sold short $25 million worth of Japanese money and bought long $25 million worth of South Korean money.

Why Currencies Are In Danger

The psychology all over the world is that people will not re-elect leaders who want them to be thrifty. The voters will elect the government that spends more money. And consequently, all money is risky. So I'm just taking the currency I think is especially risky and putting it into one that's less of a gamble.

In the United States, President Bush was the better of the two choices. Offhand, I can't say that there's a single nation where you can depend on the voters to want to be thrifty.

There is tremendous risk in Russia. But inflation is not a problem in Russia so much as it is elsewhere.

One emerging country is Singapore, which doesn't have a real democracy. So the government can afford to have a balanced budget.

The nation of Brazil has share prices that are quite low in relation to earnings. So I wouldn't rule out investing in Brazil. Although there's a lot of risk that goes with it, it always pays to buy bargains. Brazil is at bargain prices.

Bearish on Gold

Gold is too popular, and prices have already gone up. I remember when a British pound would buy an ounce of gold.

There's been a tremendous inflation in gold prices.

On Warren Buffett

I'm a great admirer of Warren Buffett. But he has been focused primarily on U.S investments. That is strange. To that extent, I think he's short-sighted - or small-sighted. Small-sighted, I think. If he had spent more time in foreign nations, he would be better off.

Housing Prices

Now the U.S. has this extraordinary thing - I think in some places we see 50% to 100% gains on the housing market. Other places across the country might be up 25% to 30% in just a matter of three to four years. Incredible gains.

When you invest in stocks, you get the same value all over. The same stock sells at the same value, no matter what nation you're in. But that's impossible in real estate. Real estate value depends on locality. If you're going to be a real estate investor, focus on location, location, location.

So when you're trying to invest in real estate, you have to do a lot of serious research on whether this location is likely to be popular in the long run.

That's why I wound up believing beachfront property is a good investment. I don't think there's ever going to be any more beachfront than there is now. Now people are getting bigger and the amount of money is getting bigger. So beachfront is pretty sure to go up in value.

Owning a home on the ocean is better than owning one that's not on the water.

But there are large tracts of oceanfront property still available in South and Central America in countries where there is a rule of law. You used to be able to buy land at very low prices. But still there are some good deals.

A 50% drop off in prices is quite possible.

I've never, never ever had a mortgage on any house. I learned that long before you were born. When I was a child in Tennessee, I watched so many people lose their farms because they had tiny mortgages, but they got to the end of their years, when it was impossible to earn a profit on the farm. They couldn't meet their payments and their mortgage was sold at auction in the courthouse.

I don't rule out borrowing money. But I think it's risky.

Positive Mental Attitude

Positive mental attitude helps in every way. It helps you physically, mentally, financially - in every way. In fact, I think you ought to focus on that, write articles on it.

As I said - when Abraham Lincoln was assassinated, nobody in Europe heard about it for 17 days. So there were more bad things happening 140 years ago than there are now. But today, communication is so enormous that we're flooded with news and there's a fault in human nature, even with you. If you're passing a newsstand and a stack of newspapers, one of which says 100,000 airplanes landed safely today and one that says one airplane crashed, you'll buy the newspaper that says the one airplane crashed.

Terrorism warps your thinking. It makes people think that there are a lot more troubles than there are. But there are less troubles than ever, and we don't realize, because we read about all the problems.

Pharmaceutical Stocks

I think they will continue to grow, but they're not cheap. They're one of the highest groups of stock.

Baby Boomers Retiring

This is enormous. But the adjustment is so easy. You just don't start pensions until 10 years later. That solves it all. It will happen. Nation after nation - not only America, but other countries - will just have to declare that pensions are going to start 10 years later.

I think it's inevitable. I don't know when, but within the next 20 years, almost every nation will have to change the law to say you can't get your pension as soon as you retire.

The Coming Health Crisis

I don't have answers to everything. I have thought about your big question here. And I think the answer is to say that no health insurance should cover the total cost of insurance. Health insurance should cover maybe 2/3, but not all. That would give people an incentive not to use health insurance excessively.

John Templeton
From Wikipedia, the free encyclopedia

John Marks Templeton was born on 29 November 1912, in the town of Winchester, Tennessee. He became a naturalized British citizen and lives in Nassau, Bahamas.

Business

Sir John Marks Templeton is a highly successful pioneer of globally diversified mutual funds, becoming a billionaire. He established:

• Templeton Growth, Ltd. (investment fund) in 1954;
• the John Templeton Foundation;
• the Templeton Prize for Progress Toward Research or Discoveries about Spiritual Realities in 1972.
• the Templeton Library in Sewanee, Tennessee.

Personal

He attended Yale University and pledged the Zeta Psi Fraternity, graduating in 1934 as a top scholar in his class.

He was a Rhodes Scholar to Balliol College, University of Oxford from which he graduated with a M.A. degree in law.

He is a lifelong member of the Presbyterian Church.

He was a trustee on the board of Princeton Theological Seminary, the largest Presbyterian seminary, for 42 years and served as its chair for 12 years.

He married the former Judith Folk in 1937 and the couple had three children — John, Anne and Christopher. She died in February, 1951.

He married Irene Reynolds Butler in 1958. She passed away in 1993.

He was knighted by Queen Elizabeth II in 1987 for his philanthropic efforts.

God's Venture Capitalist
The strange quest of Sir John Templeton.
By David Plotz
Slate, Sunday, June 8, 1997

Andrew Carnegie's libraries embodied the democratic confidence of the Gilded Age. John D. Rockefeller's universities enshrined the scientific meliorism of the Progressive Era. But the defining philanthropist of our time is not a university builder or an art collector or a chair endower. It is Sir John Marks Templeton, religious philanthropist, investment wizard, amateur philosopher, and full-bore crank.

A do-gooder for the end of the millennium, Templeton pays professors to promote conservative values, universities to build character, and researchers to investigate the connections between faith and science. He believes he can reconcile the irreconcilable contradictions of contemporary society: Christian conservatism and New Age loopiness, capitalist greed and sweet charity, old-time religion and modern technology.

Before he started giving away his fortune, Templeton was one of the world's greatest moneymakers. A Yale graduate and Rhodes scholar, he began investing in the early '40s and soon proved a natural. He established the Templeton mutual fund in 1954. He was the first great global investor, buying international equities long before other American stock pickers noticed them. The Templeton Fund grew an astonishing 15 percent a year between 1954 and Templeton's 1992 retirement--a $10,000 stake in 1954 would have grown to more than $3 million by 1992. Templeton developed a cult following: Fund shareholders thronged to the annual meetings in Toronto and obeyed his every pronouncement. Even today, five years after retiring,