In 1940 John Templeton bought for $5,000 an investment counselling firm with only eight clients owned by George Towne, an elderly man. With a name change to Towne, Templeton and Dobbrow and the purchase of second-hand typewriters and a second-hand library of research material and books (thrift at all times!), Templeton had arrived as an independent investment counsellor, aged 28. He could not afford to pay himself a salary for two years, and had to rely on savings to see him through.
He was a conscientious manager, seeing his role as that of someone who could, through sound investment, allow his clients to retire comfortably or send children to college.  His clients received an investment programme individualised for their specific needs.
He decided how to split a client’s money between bonds, equities and property. He also helped with estate and financial planning, offering a service to reduce income and estate taxes. He always regarded serving people as a pleasure – a greater pleasure than spending thousands of dollars.
One of his personal mottoes: ‘OPM is sacred’. OPM is other people’s money.
While cutting unnecessary cost he did not skimp on hiring the best talent.  He believed that you get a better bargain in the marketplace for executives and employees if you pay about 20% more than the salaries available elsewhere.  An excellent employee is worth more than two mediocre employees.
There is a major difficulty in scaling-up an investment-counselling business.  Each account has a unique set of objectives and circumstances relating to risk tolerance, taxes and timing.  Clients are on the telephone regularly and have a claim on the manager’s time.
It became increasingly apparent that a more rational, time-effective approach to managing money for other people was to set up mutual funds. He saw in this type of business a way of helping families of different income levels save money and accumulate wealth and security.
Templeton Growth Fund
Templeton, with a few colleagues, set u
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s a first-year Yale student John Templeton became interested in investment and began to read books on the subject in addition to his normal studies. He eventually bought his first shares with some money he had made from working his way through college.
He purchased seven dollars of preferred stock of Standard Gas and Electric Company which was selling at only 12% of par due to the Great Depression.
Most of his classmates came from wealthy families who owned a range of stocks, but Templeton observed a strange common phenomenon: they did not own any shares outside of one nation. To this 20-year-old student it seemed that you could find better value if you looked elsewhere.
He made up his mind to become an investment counsellor based on three reasons.

• His earlier experiences had convinced him that his strongest talent was that of judgment. He felt he could weigh a variety of factors impacting a decision better than most people. He could assess the relative strengths and weaknesses of businesses and then show courage and self-confidence to act on the decision made.
• He thought he could make more money in this field than in others.
• He could help people acquire wealth and security – a noble calling, aligned with his Christian faith.

There was also a fall-back rationale: in training as an investment counsellor, he could learn about many different businesses, so if his path was blocked in investment counselling, he could apply that knowledge to another line of work.
Oxford’s distain for business
On winning a Rhodes Scholarship he was keen on studying a business-related subject. When he explained this to the Oxford professors the expression on their faces was of disgust. Templeton said that it was as if he had told them he wanted to study garbage.
They just could not understand why an Oxford ‘gentleman’ would be interested in studying business. He opted for law instead but kept hold of his investment career ambitions. Knowledge of the law was of some use in the investment counselling business, but more importantly, the size of the Rhodes Scholarship meant he did not have to work.
Travel broadens investment horizons
Instead, he travelled and cultivated friendships that were to prove valuable in later life.   He made several short trips to Europe on a shoestring budget, but his big exploration was made when, following graduation in 1936, he visited dozens of countries travelling through Europe and Asia to return to the USA.
For the eight months this would take he had a mere £100 in cash, refusing to take money from his brokerage account. He often told his friends that if you put aside money for capital, you should not start to spend it.
The travelling had a higher purpose. He wanted to understand, from the ground up, the way societies work in a wide variety of countries.  By examining the social, political, and economic systems from the grassroots he might gain some insights that would allow him to gain high returns for potential future clients and himself.
He went through 35 countries and at each place he tried to learn as much as he could that would give him greater understanding of companies around the world so that he could value them.
Principle: A curious mind is an essential tool for investors.
He was convinced that you can only figure the true value of a company by studying more than one nation because products from one company in a single country are in competition with other companies worldwide. So, to calculate earnings power in the future you need to know the competitive features of the whole industry across the globe.
Principle: Understanding business and political environments worldwide gives investors greater insight. Read, read, read.
A fortune made in 1939
When he eventually arrived in………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

Sir John Templeton became a very wealthy investor.  He carried throughout his life sound principles formed in childhood and early adulthood
Buying when others are ignoring the asset
Around the Winchester, Tennessee (pop. 2,000), where John Templeton was born in 1912 and his father was a lawyer and entrepreneur, farms would occasionally fail, become subject to foreclosure, and auctioned off. They were auctioned on the town square where Templeton’s father had a second- floor office.
From his window Harvey Templeton could follow the auctions, and if a farm did not attract a bid he would walk to the square, make an offer, and buy farms for a few cents on the dollar.
Just as with farm auctions, when it comes to the pricing of shares, we sometimes witness low prices and lack of buyer interest, generating even more disinterest, until there are few or no buyers.
On the other hand, shares that have already been bid up attract increasing interest from buyers – making them even more expensive.
Templeton’s childhood lesson that farms could be bought cheap simply because of the absence of other buyers and not because of an absence of sound value can easily be transferred to the financial markets.
Over-excitement in markets
The converse lesson – assets can become over-priced due to the over-excitement of the crowd – is illustrated by another anecdote from his childhood.  One summer evening he raced down the street to join a crowd gathered outside the front porch of a house.
Finally, the owner flicked a switch and the whole house was lit up.  The crowd that had gathered yelled and clapped with joy.  Electricity had arrived and there was much excitement about it.  However, Templeton was smart enough to realise that exciting technology does not equal exciting shares.  He figured the electricity companies were already over-hyped.  I'm sure you can think of a lot of over-hyped companies in 2021.
Cognitive and emotional error
Valuable lessons w 
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We can all learn a great deal from the principles and the experiences of people who turned out to be terrific investors. The gems of insight they offer us can make the difference between our investment choices being mediocre or being exceptional.  John Templeton was one of the best, outperforming over a seven-decade career. His ideas are well worth revisiting.
From the foundation of the Templeton Growth Fund in 1954 until he withdrew from active management of that particular fund in 1992 he turned a typical $10,000 placed in it at the start into $2,000,000, an average annual return of 14.5%.  If the same sum of money had been invested in US domestic shares over that period it would have grown to just over $550,000, an annual average of 10.85%.
You can learn a great deal from Templeton, including:

• The importance of understanding securities markets beyond the confines of one nation. There may be years, even decades when your domestic market is over-valued and it makes sense to find undervalued shares amongst the other 90%-plus companies listed abroad.
• How to take the long view on your holdings
• To be smarter than other analysts and to be prepared to go against the crowd
• The importance of social, economic, and political awareness
• Guiding principles for work and life

Sir John (he was knighted in 1987) was a man of q………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

I’ve sold my shares in Covent Garden owner, Capital and Counties (LSE:CAPC), at £1.743, after a 69% rise in just ten months. They were bought in the pit of the winter wave of Covid-19 in the belief that life would return to normal eventually in central London, tourists would return and offices would fill up again. They were also bought because the pessimism of Mr Market had shoved the shares down to less than half their net current asset value.
“Fear is the foe the faddist; but the friend of the fundamentalist” (Warren Buffett)
Now that Mr Market is breathing a sigh of relief that Armageddon did not occur Capco’s shares have risen in anticipation of a bright future. I have other bargains to buy so, even though I might be leaving some money on the table for the next guy, I’ll move on to invest in companies selling for half price these days.
(Earlier Newsletters on Capital and Counties: 9th - 13th November 2020)
A recap on why I bought in the first place
I paid 103.2p for shares in the owner of 81 buildings in and around Covent Garden after the accounts to June had declared a net asset value per share of 241p – and these were drawn up after knocking 17% off the value of the 1.2m sq ft of lettable space the company owns in London’s West End.
Applying conservative safety margin principles I ended up adjusting downwards the value per share a long way from 241p, but still comfortably above the price I paid.  Market capitalisation was 855m shares x 103p = £881m.
The share price history shows that CapCo had been thoroughly rejected by Mr Market. It was 470p in 2015. After the Brexit vote it dropped to £3 due to fears over the vitally of London. Then the lacklustre London commercial property market, particularly retail, as well as Capco’s loss of half the money it put into Earl’s Court, pushed it down to £2.50. Then Covid-19.
Net Current Asset Value, NCV
Benjamin Graham advised that we calculate NCAV by totalling a company’s current assets then deducting all the liabilities. We then subtract one-third of inventories and one-fifth of receivables. At the same time, we consider the vital qualitative elements of (1) business prospects, (2) managerial ability/integrity, and (3) business stability
It is my belief that this approach suits most companies, but there are some that, because of the way their balance sheets are designed, allocate the vast majority of the core tradeable assets, especially property assets – their stock-in-trade if you will – to the non-current part of the balance sheet.
In these cases, and where the assets have market values that can be estimated with a reasonable degree of accuracy, I believe we can add them to the conventional NCAV. This is what I did for Capco.
Property (investment, development & trading)
While there is always some degree of speculation concerning the valuation of development properties, and therefore cause for scepticism at a time of falling rents and property values, this need not worry us too much because most of the Covent Garden estate is already developed and in a steady state.
After a 17% decrease in the valuation over the first six months of 2020 Covent Garden was valued in the 30th June accounts at £2,165 million. The main contributors to the devaluations are:

• A 12 per cent (like-for-like) decline in Estimated Rental Value to £95.5 million
• Valuers reckon the yield investors in West End Commercial property demand went up by 0.17% to 3.82% in 2020.
• Valuers assume that rent will be lost in the near term due to retailers, restauranteurs, etc., not paying, amounting to £31m

The valuers made educated guesses about income flow from the properties and a……………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1