Sir John Templeton, founder of the Templeton organization, is regarded as one of the world's wisest and most respected investors.
Sir John Templeton passed away on 8 July 2008. Templeton fund managers, however, still follow the investment principles he laid down. These principles are among those that Sir John considers to be of enduring value to investors.
1. Invest For Real Returns
The true objective for any long-term investor is maximum total real return after taxes.
2. Keep An Open Mind
Never adopt permanently any type of asset or any selection method.
Try to stay flexible, open minded and skeptical. Long term top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.
3. Never Follow The Crowd
If you buy the same securities as other people, you will have the same results as other people.
It is impossible to produce a superior performance unless you do something different from the majority. To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude and pays the greatest reward.
4. Everything Changes
Bear markets have always been temporary. And so have bull markets.
Share prices usually turn upward from one to twelve months before the bottom of the business cycle and vice versa. If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and, when lost, may not return for many years.
5. Avoid The Popular
When any method for selecting stocks becomes popular, then switch to unpopular methods. Too many investors can spoil any share selection method or any market timing formula.
6. Learn From Your Mistakes
This time is different are among the most costly four words in market history.
7. Buy During Times Of Pessimism
Bull markets are born on pessimism, grow on scepticism, 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.
8. Hunt For Value And Bargains
Too many investors focus on outlook and trend. Therefore, more profit is made by focusing on value.
In the stock market the only way to get a bargain is to buy what most investors are selling.
9. Search Worldwide
To avoid having all your eggs in the wrong basket at the wrong time, every investor should diversify.
If you search world-wide, you will find more bargains and better bargains than by studying only one nation. You also gain the safety of diversification.
10. No-one Knows Everything
An investor who has all the answers doesn't even understand the questions.
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