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49-485: Sir John Marks Templeton (29 November 1912 – 8 July 2008) was an American-born British investor , banker, fund manager , and philanthropist. In 1954, he entered the mutual fund market and created the Templeton Growth Fund , which averaged growth over 15% per year for 38 years. A pioneer of emerging market investing in the 1960s, Money magazine named him "arguably the greatest global stock picker of

98-691: A double-taxation treaty with the US, accepted by the Internal Revenue Service (IRS). Non-qualified dividends paid by other foreign companies or entities; for example, those receiving income derived from interest on bonds held by a mutual fund, are taxed at the regular and generally higher rate of income tax. When applied to 2013, this is on a sliding scale up to 39.6%, with an additional 3.8% surtax for high-income taxpayers ($ 200,000 for singles, $ 250,000 for married couples). A financier ( / f ɪ n ə n ˈ s ɪər , f ə -, - ˈ n æ n -/ )

147-428: A large cap growth fund . Contrarians are attempting to exploit some of the principles of behavioral finance , and there is significant overlap between these fields. For example, studies in behavioral finance have demonstrated that investors as a group tend to overweight recent trends when predicting the future; a poorly performing stock will remain bad, and a strong performer will remain strong. This lends credence to

196-421: A permanent bear market view, while the majority of investors bet on the market going up. However, a contrarian does not necessarily have a negative view of the overall stock market, nor do they have to believe that it is always overvalued, or that the conventional wisdom is always wrong. Rather, a contrarian seeks opportunities to buy or sell specific investments when the majority of investors appear to be doing

245-610: A prevailing optimistic or confident investor outlook for the future, while a high number indicates a pessimistic outlook. By comparing the VIX to the major stock-indexes over longer periods of time, it is evident that peaks in this index generally present good buying opportunities. Another example of a simple contrarian strategy is Dogs of the Dow . When purchasing the stocks in the Dow Jones Industrial Average that have

294-503: A strategy similar to, but developed independently of, the value investing paradigm of Benjamin Graham and Charles Dodd . Commonly used contrarian indicators for investor sentiment are Volatility Indexes (informally also referred to as "Fear indexes"), like VIX , which by tracking the prices of financial options , gives a numeric measure of how pessimistic or optimistic market actors at large are. A low number in this index indicates

343-496: Is risk attitude . Investor protection through government involves regulations and enforcement by government agencies to ensure that market is fair and fraudulent activities are eliminated. An example of a government agency that protects investors is the U.S. Securities and Exchange Commission (SEC), which works to protect reasonable investors in the United States . Similar protections exist in other countries, including

392-451: Is a person whose primary occupation is either facilitating or directly providing investments to up-and-coming or established companies and businesses , typically involving large sums of money and usually involving private equity and venture capital , mergers and acquisitions , leveraged buyouts , corporate finance , investment banking , or large-scale asset management . A financier makes money through this process when their investment

441-483: Is a such thing as a "contrarian", seeing it as essentially synonymous with value investing. One possible distinction is that a value stock, in finance theory, can be identified by financial metrics such as the book value or P/E ratio . A contrarian investor may look at those metrics, but is also interested in measures of "sentiment" regarding the stock among other investors, such as sell-side analyst coverage and earnings forecasts, trading volume, and media commentary about

490-453: Is more likely to exist when a stock has fallen a great deal, and that type of drop is usually accompanied by negative news and general pessimism. Along with this, although more dangerous, is shorting overvalued stocks. This requires 'deep pockets' in that an overvalued security may continue to rise, due to over-optimism, for quite some time. Eventually, the short-seller believes, the stock will 'crash and burn'. Economist John Maynard Keynes

539-403: Is paid back with interest, from part of the company's equity awarded to them as specified by the business deal, or a financier can generate income through commission , performance, and management fees. A financier can also promote the success of a financed business by allowing the business to take advantage of the financier's reputation. The more experienced and capable the financier is, the more

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588-673: The Shiller P/E , rebalancing and Tobin's q . Despite the name of his flagship fund, Templeton Growth Fund , he was more a practitioner of value investing rather than growth investing . However, his stock-selection strategies could be eclectic and often defied easy categorization other than avoiding stocks he considered expensive, defined as an estimated five-year forward price to earnings ratio higher than about 12-14. Templeton focused on buying stocks he calculated were substantially undervalued, holding them until selling when their price rose to fair market value. His average holding period

637-654: The United Kingdom where individual investors have certain protections via the Financial Services Compensation Scheme (FSCS). Company dividends are paid from net income , which has the tax already deducted. Therefore, shareholders are given some respite with a preferential tax rate of 15% on " qualified dividends " in the event of the company being domiciled in the United States. Alternatively, in another country having

686-464: The 1970s and turned to US stocks when they were at historic lows. Templeton's flagship fund outperformed a global stock index by an average of three percent a year for his entire career, and by over six percent a year for the period after his relocation to the Bahamas. Typical of value-oriented investors, Templeton often had disappointing results during bull markets due to his avoidance of hot stocks of

735-679: The John Templeton Foundation and the Templeton World Charity Foundation. While all three organizations have similar aims, they operate as separate charitable entities. As a member of the Presbyterian Church, Templeton was dedicated to his faith. However, Templeton eschewed dogma and declared relatively little was known about the divine through scripture, espousing what he called a "humble approach" to theology and remaining open to

784-400: The John Templeton Foundation. As a philanthropist, Templeton established: Templeton College is closely associated with Oxford's Saïd Business School . In 2007, Templeton College transferred its executive education program to Saïd Business School. In 2008, Templeton College merged with Green College to form Green Templeton College . This is one of the exceptional mergers in recent history of

833-747: The United States, stating he intended to live out his life in the Bahamas and felt obligated. He held dual naturalised Bahamian and British citizenship and lived in the Bahamas full-time from 1968. His neighbors included Joe Lewis , Sean Connery , Arthur Hailey , and Fahad Al Sabah . Uninterested in consumerism, Templeton lived relatively frugally and never flew first-class. A friend jokingly described Templeton as Calvinist in his approach to wealth: "He believes it's okay to make money so long as you don't enjoy it." On 8 July 2008, Templeton died at Doctors Hospital in Nassau, Bahamas , of pneumonia at 12:20. He

882-772: The University of Oxford. He was created a Knight Bachelor in 1987 for his philanthropic efforts. Templeton was inducted into the Junior Achievement US Business Hall of Fame in 1996, and in 2003 awarded the William E. Simon Prize for Philanthropic Leadership . Templeton Religion Trust (TRT) is a global charitable trust chartered by Sir John Templeton in 1984, with headquarters in Nassau, The Bahamas, where Sir John lived until his death in 2008. TRT has been active since 2012 and supports projects and

931-570: The answers to such questions through "explorations into the laws of nature and the universe, to questions on the nature of love, gratitude, forgiveness, and creativity." In an interview published in the Financial Intelligence Report in 2005, Templeton asserts that the purpose of the John Templeton Foundation is as follows: "We are trying to persuade people that no human has yet grasped 1% of what can be known about spiritual realities. So we are encouraging people to start using

980-576: The benefits and values of other faiths. Commenting on his commitment to what he called spiritual progress, "But why shouldn't I try to learn more? Why shouldn't I go to Hindu services? Why shouldn't I go to Muslim services? If you are not egotistical, you will welcome the opportunity to learn more." Similarly, one of the major goals of the John Templeton Foundation is to proliferate the monetary support of spiritual discoveries. The John Templeton Foundation encourages research into "big questions" by awarding philanthropic aid to institutions and people who pursue

1029-460: The century" in 1999. John Marks Templeton was born in the town of Winchester, Tennessee , and attended Yale University , where he was an assistant business manager for campus humor magazine Yale Record and was selected for membership in the Elihu society. He financed his tuition with a scholarship, odd jobs and winnings from playing poker , a game at which he excelled. He graduated in 1934 near

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1078-425: The company and its business prospects. In the example of a stock that has dropped because of excessive pessimism, one can see similarities to the "margin of safety" that value investor Benjamin Graham sought when purchasing stocks—essentially, being able to buy shares at a discount to their intrinsic value with an additional margin to adjust for possible errors in one's calculations. Arguably, that margin of safety

1127-497: The company recovers, can lead to above-average gains. Conversely, widespread optimism can result in unjustifiably high valuations that will eventually lead to drops, when those high expectations do not pan out. Avoiding (or short-selling) investments in over-hyped investments reduces the risk of such drops. These general principles can apply whether the investment in question is an individual stock, an industry sector, or an entire market or any other asset class . Some contrarians have

1176-625: The couple had three children: John , Anne, and Christopher. Judith Templeton died in February 1951 in a motorbike accident. He remarried, to Irene Reynolds Butler in 1958; she died in 1993. A Christian, he was a lifelong member of the Presbyterian Church . He served as an elder of the First Presbyterian Church of Englewood (Englewood, New Jersey). He was a trustee on the board of Princeton Theological Seminary ,

1225-456: The criteria, the "Dogs" investor is systematically buying the least-loved of the Dow 30, and selling them when they become loved again eventually. When the Dot com bubble started to deflate, an investor would have profited by avoiding the technology stocks that were the subject of most investors' attention. Asset classes such as value stocks and real estate investment trusts were largely ignored by

1274-408: The dissemination of results from projects seeking to enrich the conversation about religion via three broad initiatives: TRT's aim is to improve the well-being of individuals and societies through spiritual growth and an ever-improving understanding of spiritual realities and spiritual information. TRT is the first of three charitable entities established by Sir John Templeton. The other entities are

1323-427: The financial press at the time, despite their historically low valuations, and many mutual funds in those categories lost assets. These investments experienced strong gains amidst the large drops in the overall US stock market when the bubble unwound. The Fidelity Contrafund was founded in 1967 "to take a contrarian view, investing in out-of-favor stocks or sectors", but over time has abandoned this strategy to become

1372-519: The financier as "a man who can make two dollars grow for himself where one grew for someone else before". Contrarian investing A contrarian believes that certain crowd behavior among investors can lead to exploitable mispricings in securities markets. For example, widespread pessimism about a stock can drive a price so low that it overstates the company's risks, and understates its prospects for returning to profitability. Identifying and purchasing such distressed stocks, and selling them after

1421-481: The financier will be able to contribute to the success of the financed entity, and the greater reward the financier will reap. The term, financier, is French , and derives from finance or payment . Financier is someone who handles money. Certain financier avenues require degrees and licenses including venture capitalists , hedge fund managers, trust fund managers, accountants , stockbrokers , financial advisors , or even public treasurers . Personal investing on

1470-411: The financiers bring to bear in their decisions gives a wide range of entrepreneurial ideas a chance for insightful evaluation. And, importantly, the financier and the entrepreneur do not need the state's or social partners' approval. Nor are they accountable later on to such social bodies if the project goes badly, not even to the financier's investors. So projects that would be too opaque and uncertain for

1519-529: The greatest global stock picker of the century". Templeton attributed much of his success to his ability to maintain an elevated mood, avoid anxiety and stay disciplined. He rejected technical analysis for stock trading, preferring instead to use fundamental analysis . Thus he did not attempt to predict future stock movements, but paid close attention to valuation . From the late 1930s Templeton and his colleagues developed sophisticated quantitative finance methods that anticipated by decades common features such as

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1568-406: The highest relative dividend yield , an investor is often buying many of the "distressed" companies among those 30 stocks. These "Dogs" have high yields not because dividends were raised, but rather because their share prices fell. The company is experiencing difficulties, or simply is at a low point in their business cycle . By repeatedly buying such stocks, and selling them when they no longer meet

1617-555: The investors in the primary and secondary markets . That is, someone who provides a business with capital and someone who buys a stock are both investors. An investor who owns stock is a shareholder . There are two types of investors: retail investors and institutional investors . A retail investor is also known as an individual investor . There are several sub-types of institutional investor: Investors might also be classified according to their profiles . In this respect, an important distinctive investor psychology trait

1666-472: The largest Presbyterian seminary, for 42 years and served as its chair for 12 years. In 1964, Templeton renounced his US citizenship , which some sources claim was a strategy to minimize taxes (the United States taxes citizens globally regardless of residency under FATCA ). However, in a 1997 interview with Charlie Rose , Templeton asserted the Bahamas had a higher tax rate than the United States and denied he renounced his citizenship to avoid paying taxes to

1715-401: The market. In "The Art of Contrary Thinking" (1954) by Humphrey B. Neill; considered influential by some in contrarian thinking, he notes it is easy to find something to go contrary to, but difficult to discover when everybody believes it. He concludes "when everybody thinks alike, everybody is likely to be wrong." Some well-known value investors such as John Neff have questioned whether there

1764-442: The moment. His outperformance typically came during crashes and bear markets when his fund suffered smaller losses than average, or had modest gains relative to the broad market. In 2005, he wrote a brief memorandum predicting that within five years there would be financial chaos in the world, anticipating a collapse of the housing market and decline in yields on government-issued bonds to near zero. Templeton also predicted within

1813-403: The money back when US industry picked up as a result of World War II . According to Templeton, he called his broker the day World War II began and instructed him to make the purchases. This stratagem helped make him a wealthy man. Templeton became a billionaire by pioneering the use of globally diversified mutual funds . His Templeton Growth Fund , Ltd. ( investment fund ), established in 1954,

1862-424: The next few decades a major decrease in traditional schooling due to internet-based learning options. Initially privately circulated to family and a small number of Franklin-Templeton management, the memo was eventually made public in 2010. Templeton was a Chartered Financial Analyst (CFA) charter-holder. He received AIMR's first award for professional excellence in 1991. Templeton married Judith Folk in 1937, and

1911-438: The opposite, to the point where that investment has become mispriced. While more "buy" candidates are likely to be identified during market declines (and vice versa), these opportunities can occur during periods when the overall market is generally rising or falling. Contrarian investing is related to value investing in that the contrarian is also looking for mispriced investments and buying those that appear to be undervalued by

1960-483: The other hand, has no requirements and is open to all using the stock market or by word-of-mouth requests for money. A financier "will be a specialized financial intermediary in the sense that it has experience in liquidating the type of firm it is lending to". Economist Edmund Phelps has argued that the financier plays a role in directing capital to investments that governments and social organizations are constrained from playing: [T]he pluralism of experience that

2009-694: The same methods of science that have been so productive in other areas, in order to discover spiritual realities." In 2004, Templeton donated an additional $ 550 million to the foundation. Investor An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital the investor usually purchases some species of property. Types of investments include equity , debt , securities , real estate , infrastructure , currency , commodity , token , derivatives such as put and call options , futures , forwards , etc. This definition makes no distinction between

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2058-430: The state or social partners to endorse can be undertaken. The concept of the financier has been distinguished from that of a mere capitalist based on the asserted higher level of judgment required of the financier. However, financiers have also been mocked for their perceived tendency to generate wealth at the expense of others, and without engaging in tangible labor. For example, humorist George Helgesen Fitch described

2107-547: The top of his class. He attended Balliol College, Oxford , as a Rhodes Scholar and earned an M.A. in law. He was a CFA charterholder and was a student of the "father of value investing ", Benjamin Graham . In 1939, Templeton, during the Depression of the 1930s, had his broker purchase 100 shares of each NYSE -listed company which was then selling for less than $ 1 a share (equivalent to $ 22 in 2,023) (104 companies, 34 in bankruptcy, in 1939), later making many times

2156-574: Was 95, and was survived by his children, Anne, Christopher and John. John Templeton Jr. has since died, in 2015, of brain cancer. Templeton was one of the most generous philanthropists in history, giving away over $ 1 billion to charitable causes. In 2007, Templeton was named to the Time 100 list as one of the world's 100 Most Influential People by Time under the category of "Power Givers". Time cited his "pursuit of spiritual understanding, often through scientific research" through his establishment of

2205-411: Was about four years. He believed holding assets priced above fair market value in hopes they would further increase in price was speculation, not investing. However, Templeton did not buy stocks merely because they were undervalued but also took care investing in companies he determined were profitable, well-managed and with good long-term potential. By emphasizing overlooked or unpopular stocks Templeton

2254-538: Was among the first American firms to invest in Japan starting in the mid-1960s. Templeton also created funds specifically in certain industries such as nuclear energy, chemicals, and electronics. By 1959, Templeton's company made their initial public offering , with five funds and more than 66 million dollars under management. In 2006 he was listed in a seven-way tie for 129th place on The Sunday Times ' s " Rich List ". Money magazine in 1999 called him "arguably

2303-421: Was an early contrarian investor when he managed the endowment for King's College, Cambridge from the 1920s to '40s. While most university endowments of the time invested almost exclusively in land and fixed income assets, Keynes was perhaps the first institutional investor to invest heavily in common stocks and international stocks. On average, Keynes's investments out-performed the U.K. market by more than 6% with

2352-470: Was in many ways a contrarian and became known for his "avoiding the herd" and "buy when there's blood in the streets" philosophy to take advantage of market turmoil. He also was known for taking profits when values and expectations were high. His time at Oxford started an interest in global investing, which was uncommon in the United States but more popular in the UK due to the widespread British Empire . Templeton

2401-495: Was one of the earliest American investors to devote substantial focus to investment opportunities in then-overlooked foreign markets such as Asia and Eastern Europe. He was such early investor in Japan during the 1950s that he had difficulty finding bi-lingual stockbrokers in either Japan or the United States to handle his firm's trades. Always on the lookout for bargain-priced stocks and hoping to avoid expensive stocks, he rotated out of Japanese stocks as they became more fashionable in

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