Templetons Way With Money

Lessons from a great investor

Jonathan DavisNovember 7th 2012 , CFA Society of the UK

2Sir John Templeton (1912 2008)

3An abiding interest

Books and research on successful investors

Templetons Way with Money(with Dr Sandy Nain)

Money Makers (new edition 2012)Profiles of eight professional investors

Investing with Anthony BoltonAnalysis of Fidelity managers career

Warren Buffetts Investment MethodsMIT Sloan School thesis 1991

4Two influential voices

(1) Paul Samuelson

Nobel Laureate in Economics

(2) Charley Ellis

Consultant, author of TheLosers Game

5Discuss..

Although a professional investor can sometimes strike itrich with a big coup, theres no luck in professionalportfolio investing, any more than in master chess. Its askilled craft, involving many decisions a week. The year inyear out manager of a large portfolio can no more pileup a superlative record by luck or by accident than onecan win a chess tournament by luck or accident.

John Train, Money Masters of Our Time

6An abiding interest

Books and research on successful investors

Templetons Way with Money(with Dr Sandy Nain)

Money Makers (new edition 2012)Profiles of eight professional investors

Investing with Anthony BoltonAnalysis of Fidelity managers career

Warren Buffetts Investment MethodsMIT Sloan School thesis 1991

7Templeton in summary

Brief resume of a 70 plus year career

Started own investment advisory firm aged 26 Became wealthy through unit trusts First global equity fund for US investors 1954 Retired and moved to Lyford Cay in late 1960s Sold Templeton fund business for $440m 1992 Noted philanthropist and evangelist

8From nowhere to a fortune

Templeton Growth Fund: key statistics

9Asset allocation 1950s style

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Asset allocation 1950s style

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Asset allocation

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How much in equities?

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Company analysis

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Wall Street after the war

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How it all began

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Templeton Growth Fund: image.

The simplest ofmarketing messages

Size of fund only tookoff after 20 years

Still a remarkable longterm record

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and reality

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The Bahamas effect

Note: Index in early years based on author calculations: MSCI World onlyfor later years.

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Performance

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Templetons performance

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Surviving the 1970s

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Relative performance

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TGF: risk revisited

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Keeping the investors happy

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Why it works (1)

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Why it works (2)

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Why it works (3)

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Savings and loans crisis

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Pharma in the Clinton era

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How the records compare

Performance against chosen benchmark Warren Buffett 22.7% +8.9% 40 years Anthony Bolton 19.7% +7.3% 28 years John Templeton 15.9% +3.6% 42 yearsNote(1) length of outperformance(2) consistency over medium to longer term(3) risk and style analysis cannot explain it(4) time and period specific factors

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Market and investor cycle

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Conclusions

Image and reality Daring to be different Look forward, not back Risk and volatility Character, integrity and chance Business and investment risk Applying Occams razor

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Jonathan Davis: personal links

Personal website: www.independent-investor.com Blog: www.iidaily.wordpress.com Brazilian farmland: www.genagro.net Prime London property: www.dgim.com Newspaper columns:

www.independent-investor.com/ft-articles Independent Investor bookshop:

http://books.global-investor.com/pages/home.htm

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Directorships Smith & Williamson Investment Management(wealth management); Jupiter Primadona GrowthTrust (investment trust); Genagro Services Ltd(Brazilian farmland)Media work Columnist, Financial Times 2007-now, The Spectator2007-now; The Independent 1995-2007; Founder,Independent Investor (independent-investor.com)Career Journalist on The Economist, Sunday Telegraph,Times and Independent. Enterprise Oil 1988-90;Degrees from Cambridge and MIT Sloan School:PCIAM (Level Six CISI qualification)

Professional history

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Ten good reads

Winning The Losers Game; Charles D. Ellis When Genius Failed; Roger Lowenstein Hedge Hogging; Barton Biggs Capital Ideas; Peter Bernstein Simple, Not Easy; Richard Oldfield Common Sense on Mutual Funds: Jack Bogle Money Masters of Our Time: John Train The Money Game: Adam Smith Devil Take The Hindmost: Edward Chancellor More Money Than God: Sebastian Mallaby

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US and Japan (1970-2000)