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Character Traits Of The Great Investor Sir John Templeton

Character Traits Of The Great Investor Sir John Templeton by Kendall J. Anderson, CFA, Anderson Riggs Investments

There is a great advantage in living with a psychologist. When the world seems to be acting irrationally, or when a fear of loss takes hold of my mind, the psychologist couch, which in my case is conveniently located in my living room, serves a purpose well beyond the Sunday afternoon nap.

It is where I can hear soothing words such as: “You have been through this time and time again.” “You have prepared for this, and you have explained to all of your clients that this can happen.” “This too will pass.” “You are a value investor, isn’t this what you have been waiting for?” “Haven’t your portfolios always recovered?” “It has never been as bad as you think.” And of course I always answer, “Yes, you are right.”

It may bother some of you to think that your portfolio manager also worries during the difficult times. However, I too am human, and also experience the fear that this time is different, and that the recent decline in market prices is more than just an irrational market. A brief reminder from my favorite psychologist of similar past situations renews my strength in combating these fears, and reminds me that I can rely on my experience and training in order to make difficult decisions. If you find yourself worried, please feel free to call us. Although we can’t provide you with the same level of comfort that a professional psychologist can, we just might be able to ease your mind a little regarding your portfolio, and let you know why we are not concerned with the recent decline.

Other than relying on my experience and help from the home front, I also find it useful to reconnect with one or two of my mentors. I consider Sir John Templeton a mentor even though we never met in person. He gave me a few words of encouragement many years ago when I took the step to leave the safety of the brokerage industry and pursue investment management. My “training” came from the many interviews he gave over the years, including one with William Proctor, the author of The Templeton Touch. We will share Proctor’s list of traits that he believed made Sir John great in a moment, but first I’d like to discuss the recent market decline a bit further.

A Month of Declines

During August, the Dow Jones Industrial Average declined more in a single month than it has in years. That it took just one week to decline more than 10% was a shock. Most declines of 10% or more take much longer. I remember reading somewhere that there have been over 90 times where the market has fallen 10% or more since the great depression of the thirties. Even if this memory is far from fact, it has been enough times in my years as a professional that it surely feels true. I received a little help from Morningstar, Inc. (NASDAQ:MORN) in...