Long Term Optimists from a Time Not Unlike This One

I found this gem on Youtube. The image quality isn’t spectacular, but it’s definitely worth your time. I especially enjoyed the analogies and thoughts from Sir John Templeton. Templeton died last year. If you don’t know who he is, take a minute and read his wikipedia page. He was known for being not only a great investor, but a great philanthropist. In the interview, he seemed to be a little more fun than Lynch. He seemed sort of folksy, kind of like this guy.

Peter Lynch is one of the most successful mutual fund managers of all time (He took Magellan from about $14 million in assets to $18 billion over the course of 22 years). He’s also well known for writing the books One Up on Wall Street and Beating the Street, both excellent books that I’ve read and recommend. Lynch is famous for his maxim to “buy what you know.” Don’t buy companies if you don’t understand what they make or do and don’t buy a company if you don’t understand how they can be successful going forward. He’s had some big winners in retail, for instance, and he talks in his books about how he would go to the mall just to see where people were going. If something seemed like a hot spot, he would investigate how cheap or expensive the stock was and go from there. When I first started investing, Lynch’s books were actually two of the books that really spoke to me and appealed to me.

The advice they give in the video applies to any era. Both of their approaches were somewhat different, but both were grounded in common sense and relied on patience and the right temperament. A couple of highlights:

Earnings are the key. A company will rise if their earnings rise. Markets aren’t efficient all the time, but if a stock is undervalued, eventually that value will be realized by the market. Sir John Templeton states in the video that he tends to hold stocks for 5 years or more, because it often takes that long to realize that value. You or I may not have the same convictions in our stock picks as Sir Templeton;)

Anyway, if you’re at work and can’t watch the video, I hope you’ll come back to it when you get a chance. Thanks for reading.