John Templeton

IF, ON any day over the past few decades, you had chanced to be strolling in the early morning at Lyford Cay in the Bahamas, you might have seen a wiry, determined figure power-walking in the sea. Keen as a whippet, his thin arms pumping, he headed into the prevailing swell. In his 80s, he would do an hour of this. In his 90s, he still managed 25 minutes.

Sir John Templeton spent his life going against the flow. In September 1939, when the war-spooked world was selling, he borrowed $10,000 to buy 100 shares in everything that was trading for less than a dollar a share on the New York Stock Exchange. All but four eventually turned profits. In early 2000, conversely, he sold all his dotcom and Nasdaq tech stocks just before the market crashed. His iron principle of investing was “to buy when others are despondently selling and to sell when others are greedily buying”. At the point of “maximum pessimism” he would enter, and clean up.

It took fortitude, he would say, to do the opposite of what the crowd was doing. At the very beginning, a southern boy on Wall Street against the east-coast preppies, living in a sixth-floor walk-up filled with $25-worth of furniture, it was almost foolhardy. But he learnt to look at shares distinct from the flow and emotion of the market, and his contrarian habits brought him huge success. A sum of $10,000 invested in his Class A portfolio in 1954, when he set up the Templeton Growth Fund, would have grown to $2m by 1992, when he sold his stake. That represented an annualised average return of 14.5%.

Sir John knew what he liked. Common stocks, like Dow Jones industrials, were unglamorous but usually dependable. Government bonds were steady, if you picked a country with no trade or fiscal deficits and a high savings rate. He disliked speculation, and any instrument over-geared to make money. But he was open-minded. Some moments were good for Treasuries, some for equities, some for blue-chip stocks. Late in life, he favoured market-neutral hedge funds. Diversity was important, in countries as well as instruments. A journey in 1936 round Europe and the Middle East, sleeping on open decks and chewing dry bread to save money, taught him that investment opportunities lay everywhere he looked.

But most of all Sir John went long on God. As a lifelong Presbyterian with a devout and curious mind, he reckoned that the market price of the creator of the universe was probably 1% of its actual value. The crowd might have lost interest in this underrated stock, so dully and unerringly recommended by theologians and priests down the centuries, but Sir John bought it up on the firm expectation of stellar future earnings. Indeed the divine, he once said, if approached in a humble spirit of inquiry, might turn out to be 3,000 times more than people imagined it was.

Love and money

The Templeton Foundation, set up in 1987 and now endowed with $1.5 billion, was another sort of growth fund, monitoring God's performance in various religions and seeking proofs of divine agency in every branch of science, from chemistry to astrophysics. Scholars helped by Sir John's money investigated whether prayer and health were connected, whether water was fine-tuned to promote life, whether purpose guided the universe. (Intelligent Design was embraced, then abandoned.) The Templeton prize, a neat $1m, was awarded for individual achievement in “life's spiritual dimension”. Sir John made sure it surpassed the Nobel prizes, in which spirituality was ignored. His asset might be infinite, but he meant to build it up, doing whatever he could to “help in the acceleration of divine creativity”.

Sir John revered thrift and had a horror of debt. His parents had taught him that in small-town Tennessee, instilling it so well that in his white-columned house in the Bahamas, overlooking the golf course, he still cut up computer paper to make notebooks. But he made an exception for love, which needed spending. You could give away too much land and too much money, said Sir John, but never enough love, and the real return was immediate: more love. The Institute for Unlimited Love, founded with his money, was set up to study this dynamic of the spiritual marketplace. His own charity, though, was harder-edged. On earth a free capitalist system was the only way to enrich the poor. No safeguards were needed: an unethical enterprise would fail, “if not at first, then eventually.”

Critics of Sir John considered him a God-obsessed right-winger. It was noted that, for all his selflessness, he fled to the Bahamas and took British citizenship in 1968 to avoid American taxes. Yet Sir John gave his money to individuals, not governments. And, with his restless, buoyant curiosity, he resisted pigeonholing. Interviewers found that they were peppered with questions and keenly listened to, and to the end the analysis was sharp: in 2003 Sir John foresaw the housing crash, and pronounced the stockmarket “broken”.

From his sofa decorated with butterflies (“None of us know what's going to happen after we die, any more than that caterpillar knows”), he continued to yearn for the reconciliation of science and religion. And in the mornings he took to the sea again, striding against the flow.