Pioneering investor Sir John Templeton, Winchester native, dies at 95

[McDuck]

Patience still key in bear markets

* Nils Pratley
* The Guardian,
* Wednesday July 9, 2008

Buy when there is blood on the streets, advised Sir John Templeton, the celebrated investor and philanthropist whose death at the age of 95 was announced yesterday. It is excellent advice, as Templeton proved time and again, and a few market shrewdies are asking whether current conditions are sufficiently bloody to be tempting.

Bad news arrives daily. Choose your own lowlight: the Marks & Spencer profits warning; the frantic attempts to refinance Bradford & Bingley; the desperate plight of the housebuilders, now cutting jobs by the thousand; the collapse in advertising revenues reported by Trinity Mirror; and the warning yesterday from Savills that the credit squeeze is now hitting property markets in continental Europe and Asia.

The bigger picture is equally gloomy. Business confidence, house prices and retail sales are falling. Even the UK manufacturing sector - the last bright spark in the economy - has turned downwards. And now the US Federal Reserve tells us that emergency lending facilities for Wall Street investment banks will remain open until 2009. A few might regard the Fed's action as good news (Wall Street was undecided yesterday), but the real message is surely that the financial emergency isn't over.

Those looking for light at the end of the tunnel have to squint very hard indeed. Their best idea is that the commodities boom may be about to end. You can see it in the miners' share prices: Rio Tinto, for example, was down 5.6% yesterday and is now 23% below its peak. Bad news for Rio, but maybe better news for everybody else if the implication is that the price of raw materials is set to fall.

That might relieve inflationary pressures, and so allow central banks to deliver the cuts in interest rates that the UK economy, in particular, would seem to need to avoid recession.

The problem with this call is that it feels terribly early. The price of oil may have fallen in the past few days but, at $138 (£70) a barrel, it is still blowing inflation through the global economy. A return to $100 seems a reasonable punt - after all, the price is now affecting demand - but it hasn't happened yet. Even if it does, it will take time to feed into the inflation numbers.

In the meantime, a lot can happen. It is too easy to imagine another round of write-downs and bad debts at the banks. Where are the credit card defaults? Hardly anybody has mentioned them, but they must be coming. The decline in property prices looks only to have begun. Will it be 10% in the UK or 20%, or even 30%?

It's encouraging that market analysts at Morgan Stanley can publish a piece called "the big snapback may not be far away". Closer inspection, however, reveals they are talking about rotation between sectors, not the market itself. Their model on market timing - which has had a splendid record over the past year - is not yet signalling a buying opportunity. Patience, as they say, remains key in bear markets.

1913 thesis

Could today's annual meeting of the London Stock Exchange be the last one at which the chief executive, Dame Clara Furse, can boast a market share of more than 50% of the shares traded in London?

A look at the LSE's own share price suggests a few people think the answer is "yes". From almost £20 at the turn of the year, the LSE stands at 671p. Bear markets are terrible for stock exchanges - flotations dry up and the value of the shares being traded falls - but a decline in value of two-thirds in six months suggests a serious loss of confidence.

This is strange in one sense. There has been plenty of time to assess the LSE's chances of retaining its current slice of the pie - about 70%. The arrival of competition has hardly been a secret. The fact that Turquoise, the venture backed by the big investment banks, is within a month or two of its launch should not have induced panic. The rival Chi-X platform is up and running and the LSE's volumes haven't gone into freefall.

Yet the revolutionaries will talk. At a presentation yesterday, Simon Brickles of Plus Markets, who has been sniping away at the LSE for years in small and mid-sized stocks, compared Europe's incumbent stock exchanges with Europe's royal families in 1913. They thought their privileged world would never change, and then it did.

The next year will reveal whether the 1913 thesis is correct. For Furse, the stakes could not be higher. Her critics say she should have sold the LSE when she could; that strategic partnerships overseas should have been struck; that the merger with Borsa Italiana was a sideshow. But the coming scrap in her backyard is the big one. The share price looks wrong - but which way?

You want a guess? Don't write off Clara yet. The revolution will take time.

This article appeared in the Guardian on Wednesday July 09 2008 on p25 of the Financial section. It was last updated at 00:05 on July 09 2008.

 

[McDuck]

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[FONT=arial, helvetica]In 1956 Templeton joined with marketing consultant William Damroth to launch Nucleonics, Chemistry and Electronics Fund, a specialty fund that reflected Templeton's lifelong interest in science and technology. With investor interest in specialty funds rising in the late 1950s, Templeton Damroth's new fund grew dramatically. Hoping to raise capital to finance more growth, Templeton then made a bold move to accelerate his company's growth.

In this era, mutual fund management companies rarely became public corporations. As a result, they were denied access to the public markets to raise capital to grow. A series of court decisions during the late 1950s, however, had clarified the provisions of the Investment Company Act of 1940 and upheld the right of fund management companies to "go public”. With five funds under management and total net investments of over $66 million in 1959, John Templeton seized the opportunity to raise capital, and Templeton Damroth joined a sudden surge of fund firms that went public at this time.

Templeton sold his stake in Templeton Damroth in 1962 and over the next three decades created some of the world’s largest and most successful international investment funds. Each $10,000 invested in the Templeton Growth Fund Class A in 1954, with dividends reinvested, would have grown to $2 million by 1992 when Sir John sold the Templeton Growth Fund. This translates into an annualized return of 14.5% since inception.

During a career that included directorships on banks, businesses, and insurance companies, Templeton maintained a long association with the Presbyterian Church (U.S.A.). He was a trustee on the board of Princeton Theological Seminary, the largest Presbyterian seminary, for 42 years and served as its chair for 12 years. He also lent his business acumen to the Presbyterians' ministerial pension fund for more than three decades until 1993.

Templeton was known for starting his mutual fund’s annual meetings with a prayer. He explained that the devotional words were not pleas for financial gain in the mundane world, but rather meditations to calm and clear the minds of managers and stockholders. Templeton often told interviewers that "competitive business," in his view, matched in many ways the compassionate aims of religious bodies. "For one thing, it enriches the poor more than any other system humanity ever has had," he once told Insight magazine. "Competitive business has reduced costs, has increased variety, has improved quality." And if a business is not ethical, he added, "it will fail, perhaps not right away, but eventually."

Although he was a Presbyterian elder active in his denomination and served on the board of the American Bible Society, Templeton espoused what he called a "humble approach" to theology. Declaring that relatively little is known about God through scripture and present-day theology, he once predicted that "scientific revelations may be a gold mine for revitalizing religion in the 21st century." :suspicious:

Templeton took a broad view of spirituality and ethics. He was influenced by the Unity School of Christianity, a movement that espouses a non-literal view of heaven and hell and a shared divinity between God and humanity. :blink: As he wrote, "We realize that our own divinity arises from something more than merely being 'God's children' or being 'made in his image.'" Templeton did not claim to be a theologian, but he was determined to support the work of those who might deepen our "knowledge and love of God."

The annual Templeton Prize grew out of the philanthropist's belief that an honor equivalent to a Nobel Prize should be bestowed on living innovators in spiritual action and thought. Mother Teresa of Calcutta was the first Templeton Prize Laureate in 1973, followed later that decade by the evangelist Billy Graham and the writer Aleksandr Solzhenitsyn. In recent years, the Prize has been awarded primarily to physicists, cosmologists, and philosophers, including Freeman Dyson, Paul Davies, Ian Barbour, John Polkinghorne, George Ellis, Charles Townes, John Barrow, Charles Taylor, and Michael Heller. Representatives of all of the world’s major religions have been on the panel of nine judges throughout the prize’s history, and recipients have included Christians, Jews, Muslims, Buddhists, and Hindus.

John M. Templeton was born Nov. 29, 1912, in the small town of Winchester, Tennessee. Though forced to support himself while studying at Yale University during the Depression, he graduated in 1934 near the top of his class. He was named a Rhodes Scholar to Balliol College at Oxford, from which he graduated with an M.A. degree in law. He married the former Judith Folk in 1937, and the couple had three children – John, Anne and Christopher. She died in February 1951. He married Irene Reynolds Butler seven years later on New Year's Eve 1958. She passed away in 1993 after 35 years of marriage.

John Templeton is survived by his son John M. Templeton, Jr., known as Jack, who retired as a pediatric surgeon in 1995 to become president of the John Templeton Foundation, his son Christopher, stepdaughter Wendy Brooks, three grandchildren and three great-grandchildren. His daughter, Anne Templeton Zimmerman, died in 2005 and his stepson, Malcolm Butler, died in 1995.[/FONT]

 

[McDuck]

http://www.tennessean.com/apps/pbcs.dll/article?AID=/20080708/NEWS01/80708010/1006

[FONT=arial, helvetica][FONT=verdana,arial]July 8, 2008
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[/FONT][FONT=arial, helvetica][FONT=Times New Roman, serif]Pioneering investor Sir John Templeton, Winchester native, dies at 95[/FONT]
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By JENNIFER PEEBLES
Staff Writer [/FONT] [/FONT]

[FONT=arial, helvetica]John Templeton, the Winchester, Tenn., native who became one of the world’s most notable investors and a pioneer of the modern mutual fund, has died. He was 95.[/FONT]
[FONT=arial, helvetica]Templeton died of pneumonia early this morning in Nassau, Bahamas, according to a statement from the John Templeton Foundation, the nonprofit he founded.[/FONT]
[FONT=arial, helvetica]Several years ago, Templeton underwrote the creation of library in Franklin County, Tenn., near the campus of the University of the South, for the scientific study of the existence of God.

Aside from his work in the world's stock markets, Templeton was deeply interested in religion, and in the intersection of science and faith.

"I just use common sense whether it's investing other people's money or trying to understand the spiritual principles of the universe," Templeton told The Tennessean in a 1996 interview. The financier was passing through Nashville en route to the Sewanee area, where he had relatives and was making arrangements for the creation of the library.

"The book of the Bible is very helpful, but God also created the Book of Nature," Templeton said in the same interview, "and we should look there, too, for spiritual laws.

"I don't disagree with anything in the Bible, but it needs to be supplemented by what science can tell us about God. But that means being open to new ideas. And in the field of the spirit, anyone who proposes new ideas is considered a heretic."

In 1972, he endowed the annual Templeton Prize, worth about $2 million, given to a person who “has made an exceptional contribution to affirming life's spiritual dimension, whether through insight, discovery, or practical works,” according to its Web site.

Templeton became a British subject in 1963, and later was knighted by Queen Elizabeth II after making a donation to Oxford University.

The following is the complete text of a statement released Tuesday morning from the John Templeton Foundation.

SIR JOHN TEMPLETON, PIONEER INVESTOR AND PHILANTHROPIST

John Marks Templeton, the pioneer global investor who founded the Templeton Mutual Funds and for the past three decades devoted his fortune to his Foundation’s work on the “Big Questions” of science, religion, and human purpose, passed away at 12:20 AM, July 8, 2008, at Doctors Hospital in Nassau, Bahamas. The cause of death was pneumonia. He was 95.

As a pioneer in both financial investments and philanthropy, John Templeton spent a lifetime encouraging open-mindedness. If he hadn't sought new paths, he once said, "he would have been unable to attain so many goals." The motto that Templeton created for his Foundation, “How little we know, how eager to learn,” exemplified his philosophy in the financial markets and his groundbreaking methods of philanthropy.

Templeton started his Wall Street career in 1937 and went on to create some of the world's largest and most successful international investment funds. Called by Money magazine "arguably the greatest global stock picker of the century" (January 1999), he sold the Templeton Funds in 1992 to the Franklin Group for $440 million.

A naturalized British citizen who lived in Nassau, the Bahamas, Templeton was created a Knight Bachelor by Queen Elizabeth II in 1987 for his many philanthropic accomplishments, including his endowment of the former Oxford Centre for Management Studies as a full college, Templeton College, at the University of Oxford in 1984.

In 1972, he established the world's largest annual award given to an individual, the £1,000,000 Templeton Prize, which is announced in New York and presented in London. The Prize is intended to recognize exemplary achievement in work related to life’s spiritual dimension. Its monetary value always exceeds that of the Nobel Prizes—Templeton’s way of underscoring his belief that advances in the spiritual domain are no less important than those in other areas of human endeavor.

Templeton contributed a sizable amount of his fortune to the John Templeton Foundation, established in 1987 and based in West Conshohocken, Pennsylvania. The Foundation currently has an endowment of approximately $1.5 billion and gives out some $70 million in annual grants. The Foundation’s mission is to serve as a philanthropic catalyst for research on what scientists and philosophers call the “Big Questions.” This vision is derived from Templeton’s belief that rigorous research and cutting-edge science are at the heart of human progress.

Most of the Foundation’s grant-making supports scientific research at top universities, in such fields as theoretical physics, cosmology, evolutionary biology, cognitive science, and social science relating to love, forgiveness, creativity, purpose, and the nature and origin of religious belief. The Foundation also encourages and supports informed, open-minded dialogue between scientists and theologians as they work on the “Big Questions” in their distinctive fields of inquiry.

Templeton’s progressive ideas on finance, faith, and spirituality made him a distinctive figure in both fields, but the soft-spoken Southerner never worried about being an iconoclast. "Rarely does a conservative become a hero of history," he observed in his 1981 book, The Humble Approach, one of more than a dozen books he wrote or edited.

Taking a less-traveled route in investing, Templeton provided advice on how to invest worldwide when Americans rarely considered foreign investment. While standard stock-buying advice is "buy low, sell high," Templeton took the strategy to an extreme, picking nations, industries, and companies hitting rock-bottom, what he called "points of maximum pessimism." When war began in Europe in 1939, he borrowed money to buy 100 shares each in 104 companies selling at one dollar per share or less, including 34 companies that were in bankruptcy. Only four turned out to be worthless, and he turned large profits on the others after holding each for an average of four years.

After beginning his career on Wall Street in 1937, Templeton bought a small investment advisory concern in 1940 that became Templeton, Dobbrow and Vance, Inc. He entered the mutual fund industry in 1954 when he established the Templeton Growth Fund, which had two unusual features. It was incorporated in Canada as a way to reduce the tax liability of its shareholders, since Canada then lacked a capital gains tax. It was also one of the earliest global funds that focused on investing in the securities of companies deriving income from outside the United States.

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