Franklin Templeton Investing Maxims
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Templeton Maxims 10 PRINCIPLES FOR INVESTMENT SUCCESS
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Templeton Maxims
Invest for Real Returns Keep an Open Mind Never Follow the Crowd Everything Changes Avoid the Popular Learn from your Mistakes Buy During Times of Pessimism Hunt for Value and Bargains Search Worldwide No-one Knows Everything
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Franklin Templeton Investments Sir John Templeton - founder of the Templeton organisation is regarded as one of the world's wisest and most respected investors. Forbes magazine has described him as "the dean of global investing," and "one of the most successful money managers in history". These principles are among those that Sir John considers to be of enduring value to investors.
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Maxim Number 1
“Invest for Real Returns“
The true objective for any long-term investor is maximum total real return after taxes.
5
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Maxim Number 2
“Keep an Open Mind“ Never adopt permanently any type of asset or any selection method. Try to stay flexible, open minded and sceptical. Longterm top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.
7
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Maxim Number 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.
9
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Maxim Number 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.
11
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Maxim Number 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.
13
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Maxim Number 6
“Learn from your Mistakes“ “This time is different” are among the most costly four words in market history.
15
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Maxim Number 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.
17
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Maxim Number 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.
19
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Maxim Number 9
“Search Worldwide“ To avoid having all your eggs in the wrong basket at the wrong time, every investor should diversify. If you search worldwide, you will find more bargains and better bargains than by studying only one nation. You also gain the safety of diversification.
21
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Maxim Number 10
“No-one Knows Everything“ An investor who has all the answers doesn't even understand the questions.
23
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Sir John Templeton has retired and is no longer involved in the investment decisions made by the organisation he founded. Templeton fund managers, however, still follow the investment principles he laid down. Today, Templeton is part of Franklin Templeton Investments, a worldwide investment group with over $484 billion* under management, offering a unique breadth of products and styles of investment - from pure growth to deep value - all under one roof.
*Source: Franklin Templeton Investments, all data as at 31.01.06, unless otherwise stated. This document is issued by Franklin Templeton Investment Management Limited authorised and regulated in the UK by the Financial Services Authority, in South Africa by the Financial Services Board and is authorised to conduct investment business in Sweden by the Finansinspektionen, in Norway with Kredittilsynet, and in Finland with Rahoitustarkastuksen. It should not be construed as an invitation or offer to invest in any funds offered by Franklin Templeton Investments. Investments may only be made on the basis of a current brochure and prospectus. With any investment, past performance is not necessarily a guide to future return. Values may fall as well as rise and investors may not get back the full amount invested.
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UK Office:
Nordic Office:
Franklin Templeton Investments The Adelphi 1-11 John Adam Street London WC2N 6HT
Franklin Templeton Investments Stureplan 4C S-114 35 Stockholm Tel: +46 (0)8 545 01230 [email protected] www.franklintempletonnordic.com
Client Dealer Services: UK Freefone: 0800 305 306 Tel: +44 (0)20 7073 8690 Fax: +44 (0)20 7073 8701 [email protected] www.franklintempleton.co.uk
South Africa Office: Templeton Asset Management Ltd Harrow Court II, Isle of Houghton Boundary Road, Parktown 2193 P.O. Box 87587, Houghton 2041, South Africa Tel: 27.11.645 6500 Fax: 27.11.484 3311 www.franklintempleton.co.za FTI MAXIMS BGB 01/06
15/2/06
4:33 pm
Page 1
Templeton Maxims 10 PRINCIPLES FOR INVESTMENT SUCCESS
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 2
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 3
Templeton Maxims
Invest for Real Returns Keep an Open Mind Never Follow the Crowd Everything Changes Avoid the Popular Learn from your Mistakes Buy During Times of Pessimism Hunt for Value and Bargains Search Worldwide No-one Knows Everything
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 4
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 3
Franklin Templeton Investments Sir John Templeton - founder of the Templeton organisation is regarded as one of the world's wisest and most respected investors. Forbes magazine has described him as "the dean of global investing," and "one of the most successful money managers in history". These principles are among those that Sir John considers to be of enduring value to investors.
3
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 4
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 5
Maxim Number 1
“Invest for Real Returns“
The true objective for any long-term investor is maximum total real return after taxes.
5
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 6
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 7
Maxim Number 2
“Keep an Open Mind“ Never adopt permanently any type of asset or any selection method. Try to stay flexible, open minded and sceptical. Longterm top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.
7
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 8
MAXIM_UK.QXD
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Page 9
Maxim Number 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.
9
MAXIM_UK.QXD
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4:34 pm
Page 10
MAXIM_UK.QXD
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Page 11
Maxim Number 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.
11
MAXIM_UK.QXD
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4:34 pm
Page 12
MAXIM_UK.QXD
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Page 13
Maxim Number 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.
13
MAXIM_UK.QXD
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Page 14
MAXIM_UK.QXD
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Maxim Number 6
“Learn from your Mistakes“ “This time is different” are among the most costly four words in market history.
15
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MAXIM_UK.QXD
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Page 17
Maxim Number 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.
17
MAXIM_UK.QXD
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4:34 pm
Page 18
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 19
Maxim Number 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.
19
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 20
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 21
Maxim Number 9
“Search Worldwide“ To avoid having all your eggs in the wrong basket at the wrong time, every investor should diversify. If you search worldwide, you will find more bargains and better bargains than by studying only one nation. You also gain the safety of diversification.
21
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 22
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 23
Maxim Number 10
“No-one Knows Everything“ An investor who has all the answers doesn't even understand the questions.
23
MAXIM_UK.QXD
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4:34 pm
Page 24
MAXIM_UK.QXD
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4:34 pm
Page 25
Sir John Templeton has retired and is no longer involved in the investment decisions made by the organisation he founded. Templeton fund managers, however, still follow the investment principles he laid down. Today, Templeton is part of Franklin Templeton Investments, a worldwide investment group with over $484 billion* under management, offering a unique breadth of products and styles of investment - from pure growth to deep value - all under one roof.
*Source: Franklin Templeton Investments, all data as at 31.01.06, unless otherwise stated. This document is issued by Franklin Templeton Investment Management Limited authorised and regulated in the UK by the Financial Services Authority, in South Africa by the Financial Services Board and is authorised to conduct investment business in Sweden by the Finansinspektionen, in Norway with Kredittilsynet, and in Finland with Rahoitustarkastuksen. It should not be construed as an invitation or offer to invest in any funds offered by Franklin Templeton Investments. Investments may only be made on the basis of a current brochure and prospectus. With any investment, past performance is not necessarily a guide to future return. Values may fall as well as rise and investors may not get back the full amount invested.
MAXIM_UK.QXD
15/2/06
4:34 pm
Page 26
UK Office:
Nordic Office:
Franklin Templeton Investments The Adelphi 1-11 John Adam Street London WC2N 6HT
Franklin Templeton Investments Stureplan 4C S-114 35 Stockholm Tel: +46 (0)8 545 01230 [email protected] www.franklintempletonnordic.com
Client Dealer Services: UK Freefone: 0800 305 306 Tel: +44 (0)20 7073 8690 Fax: +44 (0)20 7073 8701 [email protected] www.franklintempleton.co.uk
South Africa Office: Templeton Asset Management Ltd Harrow Court II, Isle of Houghton Boundary Road, Parktown 2193 P.O. Box 87587, Houghton 2041, South Africa Tel: 27.11.645 6500 Fax: 27.11.484 3311 www.franklintempleton.co.za FTI MAXIMS BGB 01/06
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