MONEY Master the Game: 7 Simple Steps to Financial Freedom (80 page)

TR:

[
Laughs.
] Hopefully I can!

CS:

You know, I believe in leaving something. Making sure the kids are educated, but not sizeable sums of money. Don’t take away their sense of their own opportunity, their own ego development. Their own kinds of things that will fulfill them. You have to be a really curious person. Make sure every one of your kids is really curious. And it’s not necessarily about making money.

Having come from a background of no money and no wealth, I clearly know the difference. And of course, in the last 20 years, I’ve had the benefit of success, which allows me incredible choices. For my wife and me, we take a vacation without worrying about the cost of it. Having a good time. I enjoy my sports. I love my golf. And it goes on and on and on. And so we want to perpetuate this success. We want our next generations to have what we had, and then some.

TR:

You’ve dealt with so many successful people. You’ve studied successful companies and the individuals who drive their growth. What do you think is the single most important factor?

CS:

You know, maybe it’s 99% necessity. But lots of people out there in the world really do need more resources. But they don’t have the education. Somehow they didn’t have the motivation. Maybe they don’t sense opportunity in front of them. How to perceive the opportunity that is right there? You look around at these other guys who have been successful, and you think, “I can do that too.” How do you sense that? I don’t know.

TR:

You’re 76 now, and you didn’t find out you were dyslexic until you were in your 40s, right?

CS:

Right.

TR:

A lot of people think of that as a limit on their life. How come it was never a limit to you?

CS:

Maybe, thank God, that I didn’t know when I was a kid! But my son was just starting school when we took him for testing [and found out he was dyslexic]. I said, “Oh my God. All the things that I had to deal with at age seven, eight, and nine, he’s dealing with now!” And it was very clear that I was also dyslexic, so that solved a lot of my issues when I thought back about my early schooling. The alphabet was impossible for me. My reading—even to this day, I don’t read novels. I read nothing but nonfiction.

TR:

Wow. So what allowed you to succeed in the financial business, then?

CS:

Well, I was pretty good at math. And I was pretty good with people. I wasn’t a great writer, but I had people around me who were great writers. So you learn very quickly:
you can’t do it all yourself.
You need to have people around you who are better than you are at most other things. But you have to be able to inspire the people around you to work together for whatever your common purpose is. And that’s what I’ve been able to do all these years.

TR:

What’s your passion?

CS:

I’m totally passionate about the necessity for people to earn and save and grow because of the responsibility we all have for our own retirements. And goodness gracious, we’re gonna live, you know. I’m in my seventies. But the probability now is living to 90, 95. It’s a
long time
to be in retirement. And so you’ve got to put aside a lot of assets, I think, in order to live comfortably.

TR:

People I talked to who knew you 20 years ago say your passion is as great or greater than it ever was.

CS:

Probably greater. [
Laughs.
]

TR:

Wow. Why is that? How have you maintained that? How has that continued to expand?

CS:

Well, I have seen, for instance, what you can do with philanthropy. And how you can really help people. By being successful. Well, I couldn’t do it if I was
not successful.
I wouldn’t have the resources to do it with. But I can make things happen in different ways. Whether it’s issues around dyslexia. I can help kids. Or in charter schools, we can help kids. Or if it’s in museums, help build better and bigger places for people to come and see and view art.

I think one of the great fulfillments of achieving great success is being able to, in your lifetime, give back to things; that it really enhances many, many times, you know, what people can really enjoy, and yourself.

TR:

If someone was starting out brand new, what would be the advantage you would try to give them, looking to start a business? How do you go from the vision of a young man that you were, who said, “I want to really help people look out for the customer,” to building a multitrillion-dollar business? What would you tell people they should really focus on?

CS:

Well, getting all the education and the practical experience. And then having the patience to do it day in and day out. Day in and day out. It’s not easy, let me tell you that. It’s like the restaurateur serving great food every meal. It’s not easy. But that’s how you make a great restaurant. That’s how you make a great car dealership. Service every day. You can’t miss the ball. You’ve gotta hit the ball out of the park every day. With service. And the same with technology. In our lifetime, we’ve seen many companies go in the tank because they weren’t able to innovate. Or actually, they didn’t figure out a product or service that really served the customer well. They lost their customers.
Never lose a customer.
Figure that one out.

TR:

Last question. I’m sure it will be 20 or 30 years from now, because you’re taking care of yourself and your health, and you’re so passionate, but how do you want to be remembered? What’s your legacy for you and what you’ve built over this lifetime?

CS:

Well, I [have] a variety of them, of course. For my family and so forth. In terms of the professional side,
I feel really proud about the fact that I really made a huge change to the practice of Wall Street.
This is an institution that’s been around for a couple hundred years. And we, this little company on the West Coast, took them on in different ways. And really made a change in the character of how they treat clients. And they’re doing a much better job. Not as good as we are! [
Laughs.
] But they’re doing a much better job and are much more thoughtful about how they treat their clients.

TR:

You led by example.

CS:

Thanks very much.

TR:

Blessings to you. Thank you for your time.

TR:

Sir John, most people seem to be either money oriented or spiritually oriented—they have to be one or the other—but you seem to have found a way to integrate these two in a truly natural and real way in your life. Can people integrate both in their lives?

JT:

Definitely! There is no disparity. Would you want to deal with a businessman you could not trust? No! If a man has a reputation for not being trustworthy, people will run away from him. His business will fail. But if another man has high ethical principles, high spiritual principles, he will try to give to his customers and his employees more than they expect. If so, he will be popular. He will have more customers. He will make more profit. He will do more good in the world, and thereby he will prosper himself and have more friends and be more respected.

So always start out to give more than is expected from you, to treat the other person more than fairly, and that is the secret of success. Never try to take advantage of anyone or to hold anyone back in their own progress.
The more you help others, the more prosperous you will be personally.

TR:

What was your first investment? What drew you to it, and how did it turn out?

JT:

I was just getting started when it was the beginning of the Second World War in September 1939. We had just finished the world’s greatest depression and there were many bankrupt companies. But a war causes a demand for almost every product, so during a war almost every company will prosper again. So I gave a stockbroker an order to buy $100 worth of every stock on both exchanges selling for $1 or less, and there were 104 of them. And out of those, I made a profit on 100 and lost money on only four.

So three years later, when my wife and I had an opportunity to take over this small practice of a retiring investment counselor, we had the savings needed to do that! We began with no clients in Radio City in New York and worked there for 25 years,
continuing to save 50 cents out of every dollar so that we could build up our assets for our retirement and for charity.

TR:

Wow! And you got quite a bit of a return saving 50 cents out of every dollar, Sir John. Most people today would say “That’s impossible! I can’t save fifty percent of my money and invest it.” But that’s how you built from nothing, and you did this during the Depression! I’ve also read that
if someone invested $100,000 dollars with you [in 1940], never put another dime in, and forgot about the money, by 1999, that would have been worth $55 million! Is that the accurate number?

JT:

Yes, provided they reinvested their distributions.

TR:

Let me ask about your investing philosophy: in the past, you’ve said to me, “Not only do you buy at maximum pessimism, but you want to sell at the peak of optimism.” Is that correct?

JT:

That’s correct. There’s a good saying there, Tony.
“Bear markets start on the time of pessimism. They rise on the time of skepticism. They mature on the time of optimism, and they end on the time of euphoria!”
That always happens in every bull market, and it helps you determine where you are. If you just talk with enough investors to find their psychology, you can tell whether the market is still safe at a low level or high at a dangerous level.

TR:

What do you think is the single biggest mistake investors make?

JT:

The great majority of people do not build up any wealth because they do not practice the self-discipline of saving some of their income every month. But beyond that, once you’ve saved that money, then you have to invest it wisely in good bargains, and it’s not easy. It’s very rare for any one person, particularly any one person working in just their spare time, to select the right investments.
Any more than you would want to be your own medical doctor or your own lawyer, it’s not wise to try to be your own investment manager.
It’s better to find the best professionals; the wisest security analyst to help you.

TR:

When I was talking to some of your associates down in the Bahamas, I was asking them, “What does he invest in?” and they said, “Anything! He’ll buy a tree if he thinks he can get a good deal on it.” Then I said, “How long will he hang on to it?” and they said, “Forever! Basically until it’s worth more!” Sir John, how long do you hang on to an investment before you know to let it go? How do you know if you’ve made a mistake? How do you know when it’s time to actually liquidate?

JT:

That is one of the most important questions! Many people will say, “I know when to buy, but I don’t know when to sell.” But over these 54 years that I’ve been helping investors, I think I have the answer, and that is: you sell an asset only when you think you have found a different asset that’s a 50% better bargain. You search all the time for a bargain, and then you look at what you now own. If there’s something in your present list that is a 50% less good bargain than the one you found, you sell the old one and buy the new one. But even then, you’re not right all the time.

TR:

Sir John, why should Americans feel good about investing outside their own country?

JT:

Think about this: if our job is to find the best opportunities, surely we will find more opportunities if we do not limit ourselves to just any one nation. Likewise, perhaps we will find better opportunities if we are able to look everywhere rather than just one nation. But most important is that it does reduce your risk because every nation has bear markets.
Usually twice every 12 years, there’s a severe bear market in a major nation, but they do not occur at the same time.
So if you are diversified, having your assets in many nations, you do not have to suffer through the bear market in one nation as a person who had all of his eggs in one basket would.

We have always advised our investors to be diversified—not only diversified into more than one corporation and diversified into more than one industry, but also diversified into more than one nation in order that they will get greater safety and greater potential profit.

TR:

What do you think it is that has separated you from all the other investors out there? What’s made you one of the greatest investors of all time?

JT:

Thank you. I do not regard myself as that. We’ve not always been right. No one is, but we have tried to be a little better than the other competitors and to give more than is expected from us and always to try to improve our methods, to use new methods in order to stay ahead of the competition. If there’s any secret in it at all it is this:
do not try to be a go-getter. Try to be a go-giver!

TR:

Sir John, there’s so much fear out there today on so many levels of society. How do we deal with fear?

JT:

To overcome fear, the best thing is to be overwhelmingly grateful. If you wake up each morning and think of five new things for which you’re overwhelmingly grateful, you’re not likely to be fearful, you’re likely to radiate your optimism, your attitude of gratitude, you’re likely to do things in a better way, draw more people to you.
So I would think an attitude of gratitude will prevent a life of fear.

TR:

I would love to hear through your own perception: Who is Sir John Templeton? What is your life really about? In the end, how do you want to be remembered?

JT:

I am a student, always trying to learn. I am a sinner. All of us are. I’ve tried to be better day by day, and particularly I try to keep asking myself, “What are the purposes of God? Why did God create the universe? What does God expect of his children here?” And the closest you can come in just a few words is:
He expects us to grow spiritually.
He gives us trials and tribulations just like you have examinations in school, because it may help you to grow into a greater soul than you would have otherwise. So life is a challenge. Life is an adventure. It’s a marvelous, exciting adventure. All of us should do the very best we can as long as the Lord allows us to be on this planet.