Templeton talks: Part 2
- Mary Naber
- 1999 25 Oct
Sir John Templeton is regarded by most financial experts as the top mutual fund manager of the century and the father of global investing. He founded the Templeton Growth Fund in 1954, and averaged 15.2% a year during its 45-year history, exceeding all other mutual funds in the world over this time period.
Sir John is ranked #1 in a Morningstar book on the All Time Best Fund Managers, but many investors might be surprised to find that he achieved this financial success while avoiding companies profiting from alcohol, tobacco, and gambling. His wide-ranging accomplishments were recognized by Queen Elizabeth II in 1987 when she knighted him Sir John. Integrating ethics and long-term profitability has always been second nature to Sir John, who discovered his inspiration in Jesus.
In 1972, Sir John established the Templeton Prize for the Progress in Religion, which awards the largest monetary prize in the world (over $1 million) to a living individual advancing humanitys understanding of God. Past recipients have included Mother Theresa, Billy Graham, Bill Bright, Chuck Colson, and even non-believers such as Paul Davies, a famous physicist who has articulated conclusive reasoning for intelligent design in the universe.
In Part 1 of our interview with Sir John Templeton, he talked about some of his earliest learnings about finances, money, and Gods ways. In Part 2, he discusses a range of topics, including integrating your ministry into your business and some of the challenging issues facing investors of faith.
When did you come to know about God?
As a young child, I would ask myself, "Why was I born?" "Why is there such a thing as humanity?" "Why is there such a thing as a planet?" And then in thinking about it, trying to read, trying to ask questions, and talking to people and so forth -- I felt great enthusiasm to try to discover more about God. Im always trying to learn more.
What experiences did you have in the Presbyterian Church where you grew up?
My mother and her sister were taking odd jobs in order to keep the church alive. When I was 15, they decided that it would be good for me if I was the Sunday School Superintendent. Standing in front of the other people in Sunday School made me think, "Im not worthy of this, I dont know what Im doing... How could I be the leader here?" So it was a real education.
What do you think about the integration of religious ethics in business?
There is a widespread misunderstanding that if you are a Christian you cant operate a business. The two are different, but I maintain that if you are going to operate a useful business you have to be a Christian, you have to be spiritual, you have to try and give more than you get. If you start out a business in order to get, people will run away from you. If you start to run a business that serves -- service before self -- then people come to you.
How have these views on God affected your perspectives on investing?
Many religions teach that in order to be spiritual, you had to retreat and become a monk at the top of the mountain. But the evidence to me is quite the opposite. If you want to be spiritual you have to be productive and beneficial... All useful careers are a ministry.
Why does our pace of life increase despite our bountiful economic harvest?
First, all of us have enormous blessings that we dont always understand or appreciate. We live in a century that has made amazing speed in progress. Every one of us should wake up each morning and say, Im just overwhelmingly blessed.
Now, humans have been given a thing called purpose, and our purpose leads us to be creative ourselves. Progress is accelerating, but there are a huge number of problems. For example, I saw some figures recently that among teenagers, the number of people committing suicide is seven times what it was 70 years ago. I dont know a full answer to that. But in America, we have not been allowed to teach spiritual principles to teenagers. And so my foundation has numerous programs to try to do that, (the John Templeton Foundation awards $30 million a year in grants and prizes) . One enormously successful program gives small cash prizes to teenagers who write on the spiritual principles that they plan to use in their future life. Were starting a program offering small cash prizes to college students who write about their noble purpose in life. A person who has a noble purpose in life is usually not going to commit suicide, because theyve got purpose. He is usually joyful, enthusiastic, and hardworking because hes got a purpose. But so many young people have not thought about what their purpose is.
What are some challenging issues facing investors of faith today?
All the world economies indicate that progress is speeding up. Therefore, if you are patient enough in the long run, youll do very well by owning businesses. At present, we are enjoying unusually rapid prosperity. The New York Stock Exchange has not seen a world bear market for 17 years, and the level of share prices is eleven times anything that has ever been seen before. But there will be reversals. There will be bear markets. I dont know when it will begin. When it begins, it may mean that over the next ten years youll have zero appreciation. Youll only be making up for what you previously anticipated.
To clarify, there was an enormous bubble of the same type in Japan up until 1992. The Index in Japan went up to 39,000 because of this over-enthusiasm. But then it started down. It went down to 13,000in other words 1/3 of where it had been. Seven years later, its only recovered slightly from the bottom. Now that can happen in America. I dont know that its going to be that bad. I also dont know when its going to happen. Its only if you take a long range view of at least ten years that you can assure your church investors, or anybody else, that theyre going to have a profit. In every major share market, you should plan on at least two corrections every ten years, as large as 40% down from the top.
What perspectives should Christians have in investing?
Obviously, what Ive tried to do in the range of my career is buy at the point of maximum pessimism, because you get such good values, and to sell at the point of maximum optimism because you make the most profit. To make it into a joke, what youre doing is spiritual. Were just trying to accommodate people! When we find everybody just desperately trying to sell, we accommodate them and buy. When we find everybody desperately trying to buy, we accommodate them and sell.
Click here to read Part 1 of our interview with Sir John Templeton.
Check back next week, when Mary Naber interviews Foster Friess, a man of God who manages the Brandywine Mutual Funds.