Wall of Money

Global Investing: The Templeton Way was written at the time when the
wall of funds now flooding emerging markets was just a trickle.
Global Investing explains how Templeton originated a way to help the
capital-starved developing economies dip into the global pool of
capital to help all of the world's populations prosper.

The book was a series of interviews with Sir John at his home in the
islands.  The interviewers go through extensive teaching just to get
the reader to the place where we can understand the question.  This
gives a broad comprehensive understanding of what Templeton is trying
to teach us in that moment of time when just about everyone invested
at home.

The root of global investing opportunity lies in understanding the
course of world events.  It is the existence of market inefficiencies
that can lead to abnormal returns.  The U.S. had the most efficient
markets, Emerging economies the least.

This book is about global investing as practiced by John Templeton, at
a time that international investing was yielding to and even broader,
more flexible holistic world view that includes the undeveloped
countries.

"We are bargain hunters and we only buy if we calculate that something
is undervalued."

"It makes sense that you will find better investment opportunities
when you search everywhere in the world instead of just at home."
"Replacement book values can be purchased cheaper outside of developed
countries.. Earnings fluctuate around these values.   In the long run,
the stock market indexes fluctuate around the long term upward trends
of earnings per share."

Look at the share price relative to sustainable future earnings.

Risk is measured by the variance variability of return, not gain or
loss on original capital.

" If you hold a large number of different funds, you may earn only the
average return earned by the mutual fund industry. "


--o0o---
Warren Buffett
Another interesting thing, there is a comparison between John
Templeton and Warren Buffett.  Both investors are students of Benjamin
Graham's value investing techniques.  In selecting stocks investors
need to focus on values.  Part of the trick was determining value in
so many different places.  A low p/e is one yardstick of a bargain
because in the long run, the stock market indexes fluctuate around the
long term upward trend of earnings per share.

Both Sir John and Warren are long-term investors who want to own
securities that produce the greatest consistent gain over the longest
periods of time.  In Sir John's capacity as a fiduciary, he has looked
all over the world to find undervalued securities, in undervalued
markets for his clients.  Warren buffett on the other hand who
invested primarily for his own account was satisfied until recently
investing only in the US?

Now twenty years later we see Buffett's closed end fund, investing in
emerging markets with "PetroChina," precious metals like "silver
bullion," as well as trading in currency futures.  Warren says
investing should be looked at as though you "own a piece of the
business."  He goes on to say that when you purchase a security "it
should not bother you if the market was closed for five years."
 ---o0o---

Templeton empathizes the "importance of price."
 "Purchase only when you can pay less than it is worth today, and only
if you believe that it will be worth more tomorrow."

"The time to sell is when you have found a much better bargain to
replace it.

 Risk is measured by the variance variability of return, not gain or
loss on original capital.

 If you are going to invest in stocks, buy a bunch of different issues
and be sure they are not stocks that rise and fall in unison. Global
investing can reduce portfolio shrinkage in asset values.