To obtain specific advice we can follow, we can turn to Sir John Templeton, the great investor who advises us to "invest at the point of maximum pessimism."
Templeton was a noted value investor who began his career in 1936 with Fenner & Beane, one of the firms that would eventually become part of Merrill Lynch. Stocks were not popular investments in 1936, a time when the world was finally showing signs of recovering from the Great Depression. But Templeton was confident the market would recover and left Fenner & Beane to establish his own firm in 1937.
His confidence in the markets came from his time studying at Yale as an undergrad. Templeton had grown up poor, but many of his peers at the Ivy League school often came from wealthy families. Looking back at that time late in life, Templeton attributed his success in the markets to his observation that stock market investments funded the lifestyles of the wealthy students he met. He also thought of a way to outperform his peers:
"In Tennessee I didn't meet anybody who owned a share of anything. At Yale there were hundreds of boys from wealthy families, but not a single one who was investing outside one nation. I thought that was just not sensible. Surely they'd get better results if they searched everywhere rather than limiting their search to one country."
Templeton delivered large returns by applying his global investment strategy to international markets. As his firm grew in size, he turned his attention to mutual funds which offer economies of scale to investment managers. It can be less expensive to manage a mutual fund than it is to maintain thousands of individual accounts. His oldest fund, the Templeton Growth Fund, recorded an average annual gain of 13.8% while Sir John was involved in the operation from 1954 to 2004. The S&P 500 delivered an average annual return of 11.1% over that same time.
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