In recent weeks, the stock market has been more volatile than in previous months, due to a feared European debt crisis, mixed job reports, and other factors.

Though the trend of stock-market losses can send many investors into a tailspin, John Templeton’s September 21, 1948, letter describes a silver lining in a down market.

The stock market went down yesterday. My friends in Wall Street are sad. I can understand their emotions; but it only illustrates again the fact that more and more investors should adopt and adhere to the long-range nonforecastingĀ programs used by the clients of Templeton, Dobbrow & Vance, Inc. These programs are designed to profit from stock market cycles without the need for predicting such cycles.

For an investor following a program of this nature, as we have said before, the best thing which could happen is to have the stock market go down from today’s level of 177 to 128 before the next long bull market begins. An investor following an “average program” has 70% in common stocks today which will participate in the capital gains during the next bull market. However, if the market declines to 128 before the bull market begins, such an investor will have 100% in stocks with which to participate in future capital gains. In other words, if a bull market begins now the investor will make a large profit; but if the market first declines to 128 before the bull market begins he will make an extra $19,000 approximately on each $100,000 involved in the program.