Templeton s Way With Money

Transcription

1 Templeton s Way With Money Lessons from a great investor Jonathan Davis November 7th 2012, CFA Society of the UK

2 Sir John Templeton ( ) 2

3 An abiding interest Books and research on successful investors Templeton s Way with Money (with Dr Sandy Nain) Money Makers (new edition 2012) Profiles of eight professional investors Investing with Anthony Bolton Analysis of Fidelity manager s career Warren Buffett s Investment Methods MIT Sloan School thesis

4 Two influential voices (1) Paul Samuelson Nobel Laureate in Economics (2) Charley Ellis Consultant, author of The Loser s Game 4

5 Discuss.. Although a professional investor can sometimes strike it rich with a big coup, there s no luck in professional portfolio investing, any more than in master chess. It s a skilled craft, involving many decisions a week. The year in year out manager of a large portfolio can no more pile up a superlative record by luck or by accident than one can win a chess tournament by luck or accident. John Train, Money Masters of Our Time 5

6 An abiding interest Books and research on successful investors Templeton s Way with Money (with Dr Sandy Nain) Money Makers (new edition 2012) Profiles of eight professional investors Investing with Anthony Bolton Analysis of Fidelity manager s career Warren Buffett s Investment Methods MIT Sloan School thesis

7 Templeton 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 7

8 From nowhere to a fortune Templeton Growth Fund: key statistics 8

9 Asset allocation 1950s style 9

10 Asset allocation 1950s style 10

11 Asset allocation 11

12 How much in equities? 12

13 Company analysis 13

14 Wall Street after the war 14

15 How it all began 15

16 Templeton Growth Fund: image. The simplest of marketing messages Size of fund only took off after 20 years Still a remarkable long term record 16

17 and reality 17

18 The Bahamas effect Note: Index in early years based on author calculations: MSCI World only for later years. 18

19 Performance 19

20 Templeton s performance 20

21 Surviving the 1970s 21

22 Relative performance 22

23 TGF: risk revisited 23

24 Keeping the investors happy 24

25 Why it works (1) 25

26 Why it works (2) 26

27 Why it works (3) 27

28 Savings and loans crisis 28

29 Pharma in the Clinton era 29

30 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 years Note (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 30

31 Market and investor cycle 31

32 Conclusions Image and reality Daring to be different Look forward, not back Risk and volatility Character, integrity and chance Business and investment risk Applying Occam s razor 32

33 Jonathan Davis: personal links Personal website: Blog: Brazilian farmland: Prime London property: Newspaper columns: Independent Investor bookshop: 33

34 Professional history Directorships Smith & Williamson Investment Management (wealth management); Jupiter Primadona Growth Trust (investment trust); Genagro Services Ltd (Brazilian farmland) Media work Columnist, Financial Times 2007-now, The Spectator 2007-now; The Independent ; Founder, Independent Investor (independent-investor.com) Career Journalist on The Economist, Sunday Telegraph, Times and Independent. Enterprise Oil ; Degrees from Cambridge and MIT Sloan School: PCIAM (Level Six CISI qualification) 34

35 Ten good reads Winning The Loser s 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 35

36 US and Japan ( ) 36