How Little We Know, How Eager to Learn—Life Lessons from Sir John Marks Templeton.

The underlying goal of my writing is to find people, places and things that are fabulous and share them through a very personal lens with my readers.

I look for “take home value”…concepts, ideas or products that you can put to use immediately.  Fabulous things and places are abundant.  Discovering legitimately fabulous and inspiring people is like finding a needle in a haystack.   I often resort to the history archives to find worthy role models.  One unblemished exception, and possibly one of the greatest influences in my life has been Sir John Marks Templeton who holds a special place in contemporary history as one of the most prolific investors and stock pickers in the history of investing.  I discovered him through a little book he wrote called “Worldwide Laws of Life:  200 Eternal Spiritual Principles”.  It ranks high on my list of life changing books.

I bought it on a whim over a decade ago and it sat, ignored, on my bookshelf until I began homeschooling and needed a tool to help teach my kids about leadership principles.  His ideas transcend and embody the positive aspects of most mainstream religions and promote the universal laws for living a life of purpose and contribution.  The lessons are simple, applicable, and inspiring.

Photo Credit: Jerusalem by Giufa

While a devout Presbyterian, he was open to all religious philosophies.  He once told an interviewer, “I grew up as a Presbyterian. Presbyterians thought the Methodists were wrong. 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.”

Sir John built his fortune by living within his means—a concept that many of us could benefit from embracing wholeheartedly.  He and his first wife, Judith Folk, saved 50% of everything they earned to use for investing and building their retirement assets.  For 25 years, they adhered to those principles and soon, he had created a fortune for himself and others.

In Wall Street circles he is legendary, even now.   His stats read like some of our most beloved sports heroes.  In fact, if you had invested $10,000 with his Templeton Growth Fund, Class A from inception and reinvested the dividends along the way, your investment would be worth over $2.2 million by the 1980’s.   Serious returns, by any standards.  He is beloved by investing rookies and experienced industry professionals alike, and there is still much to be learned by modeling his life strategies.

Photo Credit: www.templeton.org

What I cherish about his personal story is that he came from very humble beginnings.  He valued education, hard work and lived according to unyielding principles.  His standard for wealth creation was very simple.  Buy low and sell high.   Not original, of course, but he applied the principle to extremes.

He was equally disciplined in his spiritual life and became a significant philanthropist, forming The John Templeton Foundation.  He worked relentlessly to foster understanding in what he called “new spiritual information,” or the blending of science and religion. The motto of his foundation is “How little we know, how eager to learn”. From this statement, it is easy to see that he valued humility, optimism and open-mindedness as the most important tools for reaching greater understanding and achieving goals.   His foundation continues to support causes that further his goal of advancing human progress through breakthrough discoveries.

Photo Credit: Open Minded by JMC Photo

My sense after researching his life and reading his work, is that he garnered more pride and fulfillment from the spiritual side of his life than from his investing success, and that he viewed the wealth he created simply as a means to fulfill a larger mission as a philanthropist.  In his later years, a condition of granting personal interviews was often that the interviewer agree to share his ideas about spirituality as well as his ideas about investing. He believed that true wealth was much more than a reflection of a balance sheet.

Much has been written about him, so I won’t spend a lot of time here recapping those details.  But, I do want to share a letter he wrote in 2005.  It was an epic warning of the financial global crisis that we have entered and a testament to how “in tune” he was to macro events that affect the human condition on all levels, spiritual and financial.  I first read the letter in 2009, shortly after he died, and because of that letter, started reallocating my own investments.

His predictions seemed “over the top” at the time.  Two short years later, it provides a chillingly accurate view of our current state of affairs and I am thankful I followed his advice.

Very little press was given to this letter, probably because the mainstream media is stubbornly stuck in economic cheerleading and Polyanna reporting of the global economy.   I suppose for some, sweeping the truth under the rug is more palatable than facing reality.  Personally, I would rather confront cold hard facts and adjust accordingly, than be caught in the title wave of denial.

If you haven’t already read this letter, please enjoy and share it with others.  I highly recommend that you add any of his books to your permanent collection. You will not be disappointed.   And if you would like to learn more about Sir John Templeton, here is a link to a great interview by Tony Robbins.

John M. Templeton

Lyford Cay, Nassau, Bahamas

June 15, 2005

MEMORANDUM

Financial Chaos – probably in many nations in the next five years. The word chaos is chosen to express likelihood of reduced profit margin at the same time as acceleration in cost of living.

Increasingly often, people ask my opinion on what is likely to happen financially. I am now thinking that the dangers are more numerous and larger than ever before in my lifetime. Quite likely, in the early months of 2005, the peak of prosperity is behind us.

In the past century, protection could be obtained by keeping your net worth in cash or government bonds. Now, the surplus capacities are so great that most currencies and bonds are likely to continue losing their purchasing power.

Mortgages and other forms of debts are over tenfold greater now than ever before 1970, which can cause manifold increases in bankruptcy auctions.

Surplus capacity, which leads to intense competition, has already shown devastating effects on companies who operate airlines and is now beginning to show in companies in ocean shipping and other activities. Also, the present surpluses of cash and liquid assets have pushed yields on bonds and mortgages almost to zero when adjusted for higher cost of living. Clearly, major corrections are likely in the next few years.

Most of the methods of universities and other schools which require residence have become hopelessly obsolete. Probably over half of the universities in the world will disappear quickly over the next thirty years.

Obsolescence is likely to have a devastating effect in a wide variety of human activities, especially in those where advancement is hindered by labor unions or other bureaucracies or by government regulations.

Increasing freedom of competition is likely to cause most established institutions to disappear with the next fifty years, especially in nations where there are limits on free competition.

Accelerating competition is likely to cause profit margins to continue to decrease and even become negative in various industries. Over tenfold more persons hopelessly indebted leads to multiplying bankruptcies not only for them but for many businesses that extend credit without collateral. Voters are likely to enact rescue subsidies, which transfer the debts to governments, such as Fannie May and Freddie Mac.

Research and discoveries and efficiency are likely to continue to accelerate. Probably, as quickly as fifty years, as much as ninety percent of education will be done by electronics.

Now, with almost one hundred independent nations on earth and rapid advancements in communication, the top one percent of people are likely to progress more rapidly than the others. Such top one percent may consist of those who are multi-millionaires and also, those who are innovators and also, those with top intellectual abilities.Comparisons show that prosperity flows toward those nations having most freedom of competition.

Especially, electronic computers are likely to become helpful in all human activities including even persons who have not yet learned to read.

Hopefully, many of you can help us to find published journals and websites and electronic search engines to help us benefit from accelerating research and discoveries.

Not yet have I found any better method to prosper during the future financial chaos, which is likely to last many years, than to keep your net worth in shares of those corporations that have proven to have the widest profit margins and the most rapidly increasing profits. Earning power is likely to continue to be valuable, especially if diversified among many nations.

…end…

Sir John wanted this memo widely published, but unfortunately, it sat in a file drawer until after his death.  His predictions, in my mind, are uncanny.  Each point, from the impending obsolescence of institutional learning, to the problem of excess capacity in our markets resulting from the ramp up of production during times of unlimited consumer credit and spending, to his prediction that capitalism will ultimately prevail, is playing out in some form right now on a global basis.

As the world becomes more chaotic and unpredictable, we will need more Sir John’s on the planet to provide vision and guidance.  Introduce a young person to one of his books. My children were 9 and 10 when I began introducing them to his books.  Apply some of his principles in your own life.  Share the opportunities provided by his foundation with someone you know who is working to promote progress through spirituality and science.

As our society becomes increasingly morally and financially bankrupt, true heroes are difficult to find.  Have you found one?  Please spread the word, starting here.