Rational Advisor

One of histories greatest investors has been Sir John Templeton. He stopped investing a while back, but his philosophy still works.

One of my favorite quotes from him is simply

“Invest at the point of maximum pessimism”

Investors become afraid to invest aexactly when they should invest. Their instinct is to shy away from an investment that has done poorly even though they know it is sound. Instead they are excited by what is going up, not realizing thatthey are purchasing at a highe risk.

Stock market declines do offer historic buying opportunities. The problem is, you need a bit of a backbone to buy stocks when other investors are fleeing the market. Or you need the long-term perspective that you get from having been a successful money manager. That’s the story of Templeton, a North American mutual-fund pioneer who sold his company 15 years ago and turned his attention to a charitable foundation focused on spiritual matters.

Everyone knows about buying low (and, of course, selling high). What Templeton did was add an extra level of instruction. Buy not just when stock prices are low, but when they’re plunging. So, what you have to look at is, what is the media focusing on thatis terrible right now, what crisis is happening that the public is shy of investing into. Investing pros do it all the time.

Rational

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