We continue highlighting points John Templeton made in an interview with Forbes magazine in 1995. The article concludes with Templeton’s perspective on how investing has and will change:
“Progress is going to speed up, not slow down,” Templeton adds, “so in the long run people who invest in common stocks of well-managed companies will be better off than people who put their money in other forms of investment.”
But don’t rush out to mortgage the homestead. Prices will continue to fluctuate as optimism and pessimism alternate with the headlines and with people’s moods. Rising markets will continue to be interrupted by falling markets. . . says Templeton. “Bear markets might not get as bad as in the past. But there’s an offsetting factor, namely, the speed of communications. People can now act more like a herd because they’re more in touch with each other. The herd instinct is increasing. I think you saw that last year in China, where the speculators were all in instant touch with each other, and the market went down 70% in seven months. Yet the growth outlook in China is marvelous and will, I think, continue to be.
The moral is: Never, ever, buy stocks with borrowed money or with money that you may need tomorrow. Templeton says he has never even had a home mortgage: “I want to be able to hold on to the stocks I buy–forever if necessary.”