Written by By THEODORE ROOSEVELT MALLOCH published in “The spectator“
In 2005, Sir John Templeton, who died last year at 95, foresaw the economic and financial disaster we are now living through.
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As “annus horribilis” 2008 recedes into the background it might be timely to look back a few years and ask: Who really saw all of this coming? Was such an economic and financial disaster foreseeable? What kind of financial sage would have predicted it three or four years ago, in the middle of the “go-go” years? Well, it turns out there was such a prescient, counterintuitive person, keen of mind and generous of soul. That person himself passed away at age 95 in mid-2008. He was, Sir John Templeton, stock picker of the century, innovator, renowned philanthropist, and always a step or more ahead of the pack…far ahead.
I had the benefit of knowing Sir John and visiting him often where he lived, at Lyford Cay, the Bahamas. I also served on his board of advisors of the John Templeton Foundation. So more recently, in the throes of deepening recession, massive foreclosures, government bailouts, a global stock sell-off, indeed, near financial collapse and all around general — doom and gloom, I found myself repeatedly wondering out loud the same question: “What Would Sir John Say?” Then I remembered. I happened upon this urgent and wise “Memo” from him, written in June 2005. If only we had all taken it to heart and acted upon it then, how much better off we would be now. Read on:
He was, you have to admit, amazingly spot on. But what would Sir John say today in the midst of the greatest recession since the thirties, a global credit crunch of unparalleled proportions and unprecedented market turmoil?
I was with him less than two years ago at the famous Morgan Stanley equity conference at Lyford Cay and he was weak and frail from plain old age. He attended as much as he could because his mind was still sharp, even if his body was in decline. In the final session all the giants of financial services, the hedgies, asset managers, and top fund gurus told a bit about their plans for the future year or so. When Sir John spoke the room fell deafeningly silent, like in those old EF Hutton commercials, you could actually hear a pin drop. When he said he would “short” the financials, autos, airlines, housing, the QQQ, and Wal-Mart it was like a bomb had gone off and people (in this case the largest hedge funds and asset managers in the world) gasped for air. You see, Sir John was not known to normally — go short. One person who runs the world’s largest private equity fund asked sheepishly, “Is there nothing you would buy?” Sir John’s quiet but sure answer I will always remember. He said, “No, because nothing is cheap yet, but they will be shortly.”
Over his long lifetime Sir John while constantly urging for free markets, competition, spiritual knowledge and moral character would also be searching the world over and buying cheap stocks, and then holding them to sell when they had fully appreciated. He would see this moment, this next year, 2009, I think, as the buying opportunity of a lifetime, not only in the U.S. but also, as was his predilection, in markets around the world. Mark his words and check back in five, ten, or twenty years. And when in doubt always ask, “What Would Sir John Say?”