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 amassed his initial capital by purchasing 100 different shares for a total of 10 thousand dollars, although the value of a share at that time did not even exceed one dollar.

Thus, by creating a vast portfolio of stocks that were practically at rock bottom, he did not observe their further decline, and even if some companies went bankrupt, he was able to earn a decent amount of money due to the growth of others.

Also, be sure to note that John Templeton invested in a variety of sectors, from the military industry to insurance companies.

2) Act despite panic

Almost all stock market literature, especially that based on technical analysis, teaches us how to intelligently identify trends, identify the crowd, and adapt to its actions using auxiliary indicators and patterns.

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 panic and a sharp sell-off 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 intraday trading

As John Templeton progressed in his professional career, he developed one key rule: never day trade.


It's worth noting that John's average stock investment lasts between three and seven years. Furthermore, he completely disdains technical analysis. Fundamental analysis served as the foundation for his decisions, or more precisely, he studied several years of financial statements.
 
4) Reinvestment

Many investors and traders, having achieved their first profit or success, always want to say goodbye to it immediately. Speaking of John, everyone dividends and profits from asset growth were constantly directed towards reinvestment, and the money was never idle.

Even if you look at this trader's personal life, you would find that he is extremely ascetic, which allowed him to always participate in various investment projects.

5) Undervalued stocks

Many people think that John was successful 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 If we look at 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 have never focused solely on the economies of the United States or Europe.

6) Minimization of taxation and the fight against socialism

John Templeton always recommended that traders use instruments that offer benefits and tax minimization, if possible, when working with offshore zones.

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

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

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