John Templeton, considered as one of the best investors, started his Wall Street career in 1937. 

He used to buy at a time of extreme pessimism, when most people would instinctively avoid the stock market and hold on to them for several years to make huge profits. He also sought out undervalued companies, but sold the shares when their prices had recovered, exemplifying his principle that investors should “expect and react to change – there are no stocks that you can buy and forget”.

He was the first western fund manager to invest in Japan when it was still an emerging market. In the late 1980’s   he moved out of Tokyo market when it was fully priced and was right on dot to catch the bottom of the bull market fever in US. He gives a simple advice to the investors on how to avoid mistakes in investing. Here is the solution:   “The only way to avoid mistakes is not to invest.”

Interestingly that seems to have emerged from the famous quote of Theodore Roosevelt who was an American politician, author, naturalist, explorer, and historian who served as the 26th President of the United States.  Roosevelt’s  famous quote was “The only man who makes no mistakes is the man who never does anything.”

We will have to encourage ourselves to make more mistakes so that we can learn from our own mistakes.   However we should not make the same mistake again and again. Only fools make the same mistake twice. The common mistake of the investors is to pump in more money when the market is in the Bull Run and shy away from it when it offers value.

It is time to learn this concept in today’s bull market. More and more investors (?) are driven by the market gyration to pump in more money now.  It is time to learn the lesson from John Templeton to selectively shop for the undervalued companies/undervalued market and profit from it. Let us check how to do it in our tomorrow’s newsletter!