John Templeton Trading Strategy

If we list by surname the legendary personalities of that era who were able to create huge fortunes, we can include John Templeton.
It was this man who believed in the market at a time when all traders were only short-sellers, for which he was rewarded with his first million.

The most interesting thing is that John Templeton cannot be called a trader in the classical sense of the word, because the principles of his trading and decision-making are more similar to the behavior of a classic investor.

In this article you will get acquainted with the key rules and strategies that became the basis for the future state.

John Templeton's Investment Strategies and Principles

1) Diversification of risk in all possible variations

John Templeton, unlike many traders and investors, masterfully manages his risks through diversification.
For example, few people know that he made his initial capital by purchasing 100 different shares for a sum of 10 thousand dollars, and the cost of the shares at that time did not even exceed one dollar.

Thus, having created a wide portfolio of stocks that were practically at the bottom, he did not observe their further decline, and if some companies even went bankrupt, then due to the growth of the rest he was able to earn a decent amount of money.

Also be sure to pay attention to the fact that John Templeton has invested in various segments, ranging from the military industry to insurance companies.

2) Act despite the panic

Almost all stock exchange literature, and especially based on technical analysis, teaches us how to correctly find trends, identify the crowd and, with the help of auxiliary indicators and patterns, adapt to its actions.

John is precisely the representative of traders who always acts against the crowd and against the trend.

His key strategy is based on buying assets en masse during panics and sudden drops of shares by the crowd, and selling assets at the peak of their growth and development, without waiting for negative news.

3) Don’t get carried away with day trading

As John Templeton grew in his professional career, he developed one key rule for himself - never day trade.


It is worth noting that John's average investment in a stock lasts from three to seven years, moreover, he completely disregards Technical Analysis. The basic basis for his decisions was fundamental analysis, or more precisely, he studied financial statements for several years.
 
4) Reinvestment

Many investors and traders, having received their first profit or success, always want to say goodbye to it immediately. If we talk about John, then everything dividends and profits from asset growth were constantly directed to reinvestment, and money was never idle.

If you even look at the personal life of this trader, you would find out that he is extremely ascetic, which allowed him to always participate in various investment projects.

5) Undervalued shares

Many people think that John was able to achieve success because he invested in stocks at the right time and at the right moment.

In fact, this is far from true, because if you look at investment portfolio this trader, it turns out that he always bought undervalued shares, whose value was an order of magnitude lower than the market value.

Moreover, I have always worked with emerging markets and never focused solely on the economy of the United States or Europe.

6) Minimizing taxation and fighting Socialism

John Templeton has always recommended that traders use those instruments in trading that imply the presence of benefits, as well as tax minimization, if it is possible to work with offshore zones.

In fact, all major businessmen in the world adhere to a similar scheme.

It is also worth noting that Templeton never invested in shares countries where socialism is highly developed.

Unfortunately, the influence of the state on business in such countries is so great that traders and investors can easily lose their funds at any time to please voters.