"If you want to buy the same thing that is popular with your friends or popular with the investment analysts, you can't get a bargain. If you buy the same thing they buy you will get the same performance they get. If you are going to have superior performance, you've got to buy what the other people are not buying or even what those are selling." These words from Sir John are as true today as they were in 1979, when this quote became popular, and for that matter were likely true 100 years prior. The reality to investment returns is that seeking safety or strong performance in what is popular can very well lead to results that are quite opposite. At our firm, we accept the observable premise that share prices are considerably more volatile than company fundamentals and the intrinsic value of the firm they are meant to represent. We believe this was the seminal observation from Ben Graham, and one that all of his students (Sir John included) have capitalized upon ever since. This is mostly owed to human nature, and is therefore in our opinion a timeless facet to the financial markets. Once this perspective is cemented, and reinforced over time through direct experience it becomes an unshakable conviction, and leads to the natural conclusion that "trouble is opportunity." In practice, individual security selection designed to profit from this phenomenon leads the investor towards shares that are out of favor, or simply neglected by the broader market. Similarly, market panics, disruptions, and sell-offs take the form of events that are sought after rather than feared. These beliefs permeate our investment approach. They not only apply to the individual securities that we hold on behalf of our clients in our separately managed accounts and private fund portfolios, but also in the portfolios of third party managers that we advise upon on behalf of our clients.
We have been extraordinarily blessed as a firm to have managed money on behalf of, and learned from Sir John Templeton. His lessons on investment guide our firm in many ways, but what is sometimes overlooked by the investment community was his influence on us and many others as human beings. In this regard, we offer the following quote that captures this influence in a far broader sense.
"People focus too little on the opportunities that problems present/ We are blessed by the most remarkable achievement--we have ten blessings for every problem. The next 50 years offer great hope and glorious promise--maybe a new golden age of opportunity."
Templeton & Phillips Capital Management, LLC is not affiliated with Franklin Templeton Investments or any of its affiliated companies, including the Templeton Funds.