Sir John Templeton, Jonathan Smith, and William H. Barnhardt
Douglas Airport, Charlotte, NC sometime in August 1987
Photographer: J. David Barnhardt
During the 1980’s, I had the unalloyed privilege of managing some money for the late Sir John Templeton. Every now and again, I pause to consider that one of the world’s wisest investors mentored me, with his money and on his dime, and I am profoundly grateful.
His wisdom was vast, his insights were unconventional, and his generosity knew no bounds. Sir John was always a learner and never a knower. Learners keep flexible and open-minded; knowers are brittle. When naysayers challenged his view that life continually offered wonderful opportunities, he countered that opportunities were not all gone, what was missing was preparation. Wisdom like this takes years to sink in. Some do not ever get it.
This summer, a Chattanooga friend who knows Lauren Templeton, the founder of the investment firm bearing her name, told her that years ago I managed some money for Sir John. Lauren is the wife of Scott Phillips, a principal and portfolio manager at Lauren Templeton Capital Management, LLC and the great-niece of Sir John Templeton. We three connected and talked for over an hour, a joy that reminded me of many conversations with John Templeton himself. This week, I shared my recollection of Sir John’s views on opportunity and preparation with Scott. He reminded me that Sir John once said that the very reason he went to the trouble to save half of his income was so he would have the necessary funds ready to take advantage of future opportunities, since opportunities often appear when least expected. This Scott knows, as is evidenced throughout his latest book, Buying at the Point of Maximum Pessimism, Six Value Trends From China to Oil to Agriculture.
At Jonathan Smith & Co., Investment Counsel, we recognize volatility in financial markets is high and is likely to remain high. Our experience is that volatility can be unbearably unsettling to investors, leading them to sell good companies for wrong reasons. Volatility can also paralyze investors, preventing them from taking steps that historically, over the long haul, have been in their best interests: buying quality investments whose margins of safety are high. Investors are not the only ones who must manage volatility successfully if they want to survive; read how hard pilots have it when their outlooks are horribly pessimistic:
"There's an exercise that some pilots go through late in their flight training. The student pilot gets the plane airborne, at cruising altitude. Then the instructor places a loose-fitting, thick-woven sack over the student's head, so the student can see nothing. The instructor takes the controls and starts stunt-piloting. He loops the loop. He pushes the plane, Turkish-headache-style, skyward, then flips belly-up and swoops earthward. He rollicks and spirals, careens and nosedives, tailspins and wing-tilts. He gets the student utter discombobulated. Then he puts the plane in a suicide dive, plucks the bag off the student's head, and hands him the controls. His job: to get the plane back under control." (Mark Buchanan, The Rest of God, Restoring your Soul by Restoring Sabbath, page 37)
Getting investors’ “financial planes” back under control is the JSCO Way, yet so many investors are still utterly discombobulated, their planes in suicide dives. If the instructor has plucked the bag off your head, handed you the controls, and if it feels like you are approaching earth at 17,333 feet per second, give us a call, we can put your nosedive on hold for as long as it takes to have a conversation about getting your financial plane back under control. And if you do not want to, we will hand you back the controls while our parachutes still have time to open.
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And even though Christopher Cox checks his Blackberry® for new messages every time he hears us say it, “past performance is no guarantee of future results.”