Templeton's Advice: Buy For Long Haul
IF it seems like almost every day that some new global mutual fund is announced, that may not be far from the truth. Even John Templeton - whose name is synonymous with global investing - finds it increasingly difficult to locate potentially lucrative overseas stock bargains because of the increasingly crowded playing field. And yet, says Mr. Templeton, perhaps never before have there been so many interesting types of equities abroad as now, as more and more overseas companies issue securities.
Templeton, interviewed in a suite at the United Nations Plaza Hotel, is absolutely committed to global investing. He has done it well over the years. The Templeton Growth Fund, for instance, ``has a 35-year record for profitability and consistency that few funds can match,'' the publication Mutual Fund Values says.
Templeton is the founder of the family of some three-dozen mutual funds that bear his name. Templeton funds have 450 technicians and investment counselors in eight nations, examining 6,000 stocks a year. That roster is eventually narrowed down to 600 stocks, chosen for intrinsic value - shares that sell at a low price in relation to their true worth. All told, he and his associates manage some $18 billion in mutual funds and private and institutional accounts.
Large numbers of United States publicly held stocks are disappearing as the companies are taken private, Templeton notes. ``About one-fifth of all US stocks don't even exist today compared to just six years ago. But there is no less world stock, because overseas companies keep issuing them.'' By his reckoning, some ``two-thirds of the total assets of all securities are now found outside the United States.''
Templeton is convinced that world stock markets, reflecting economic activity, will continue to grow, although that doesn't necessarily preclude a recession along the way. In fact, he says, it can be assumed that there will be at least two every 10 years.
Global growth will be spurred on in part by the enormous changes occurring in Europe, as that continent moves towards economic union in 1992, as well as the modernization taking place in Eastern Europe. That said, Templeton is currently looking elsewhere than just Europe for his main investments. Anyone going into Western Europe today is late, he says, noting that his main interest there occurred several years back, before Europe was ``discovered'' by most global funds.
Templeton currently likes New Zealand, England, the Netherlands, Hong Kong, Canada, and the US. Japanese stocks, he says, are overvalued. Yet, 20 years ago he had 50 percent of his assets in Japan, ``because that's where the bargains were.''
Templeton is a great believer in diversification. And individuals, he says, should adopt two basic rules.
1. Avoid debt, to be able to take advantage of good buys.
2. Don't be upset by the day-to-day gyrations of the larger global economy. The investing focus must be on the long-haul.
Templeton was in New York to announce the winners of The Templeton Prize for Progress in Religion, the largest cash prize in the world ($575,000 this year). Templeton, who is an active Presbyterian layman, founded the award in 1972 to recognize innovative ideas, insights and accomplishments in religion. Previous winners have included Mother Teresa, Alexander Solzhenitsyn, and the Rev. Billy Graham. This year's prizes were given to Prof. Charles Birch of Australia, for work on social justice and the environment, and Baba Murlidhar Amte, of India, who has pioneered development of a 450-acre community to help persons afflicted with leprosy.
Templeton sees more than just ``a linkage'' between the spiritual side of one's life and economic well-being. ``The spiritual aspect,'' he says, ``is the totality of one's life. One of the results of that spiritual attitude is that you want to work hard. You're able to be wiser and make fewer mistakes.'' The good that comes to such a person, he says, in whatever form that good may appear, is not the purpose of spirituality, ``but its consequence.''