Lauren Templeton, coauthor of Investing the Templeton Way, principal of Lauren Templeton Capital Management, LLC, and great niece of John Templeton, shares an anecdote from 1982 when John Templeton saw optimism despite growing pessimism surrounding the economy:
In 1982, Uncle John made an appearance on the popular investing television show hosted by Louis Rukeyser called Wall Street Week. On the show, in the middle of all of the pessimism surrounding the U.S. economy and its stock market because of inflation, unemployment, high interest rates, and recession, Uncle John took the consensus view and dashed some cold water in its face. At the time, there were still prevalent views that high inflation and interest rates in the middle to high teens would depress stock P/E ratios permanently at their levels in the low to middle single digits. Uncle John, however, saw the glass half full and knew from his bargain hunter perspective that stock prices had fallen far too low relative to the value of the businesses they represented. Applying his arsenal of value measuring yardsticks, he had a strong conviction that the stock market was not dying. On the contrary, he saw a market about to be reborn. Uncle John said that investors were standing on the verge of a great bull market in which the DOW would reach 3,000 over the coming ten years.
Given the optimistic pessmism now surrounding the economy, does John Templeton’s view in 1982 relate to today’s economic outlook?