Templeton's 10 Investment Principles

1. INVEST FOR REAL RETURNS
   The main objective for any long term investor is to maximise total real returns after taxes and inflation. One of the biggest mistake people make is to put too much money into fixed interest investments. If inflation averages 4% per annum, it will reduce the buying power of a US$10,000 portfolio of shares to US$6,800 in just ten years. To put it another way, the same portfolio will have to grow by 47% to US$14,700 simply to preserve its value over 10 years.



2. KEEP AN OPEN MIND
   Never adopt permanently any type of asset or any selection method. Try to stay flexible, open-minded and sceptical. Long term top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.



3. NEVER FOLLOW THE CROWD
   If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce a superior performance unless you do something different from the majority. To buy when others are despondently selling, and to sell when others are greedily buying requires the greatest fortitude, but it also pays the greatest rewards.



4. EVERYTHING CHANGES
   Bear markets have always been temporary. And so have bull markets. Share prices usually turn upward from one to 12 months before the bottom of the business cycle and vice versa. If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and, when lost, may not return for many years.



5. AVOID THE POPULAR
   When any method for selecting stocks becomes popular, switch to unpopular methods. Too many investors can spoil any share selection method or any market timing formula.



6. LEARN FROM YOUR MISTAKES
   The only way to avoid mistakes is not to invest, but that's the biggest mistake of all. Determine what went wrong and how you can avoid making the same mistake in the future. "This time is different" are among the most costly four words in market history.



7. BUY DURING TIMES OF PESSIMISM
   Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.



8. HUNT FOR VALUE AND BARGAINS
   To many investors focus on outlook and trend. Therefore, more profit is made by focusing on value. In the stock market the only way to get a bargain is to buy what most investors are selling.



9. SEARCH WORLDWIDE
   To avoid having all your eggs in the wrong basket at the wrong time, every investor should diversify. If you search worldwide, you will find more bargains and better bargains than by studying only one country. You also gain the safety of diversification.



10. NO ONE KNOWS EVERYTHING
    An investor who has all the answers doesn't even understand the questions.

Sir John Templeton's 16 rules for investment success
(From the interview with Mark Mobius)

1. If you begin with a prayer, you can think more clearly and make fewer mistakes.

2. Outperforming the market is a difficult task.

3. Invest - don't trade or speculate.

4. Buy value, not market trends or the economic outlook.

5. When buying stocks search for quality stocks.

6. Buy low. So simple in concept, so difficult in execution.

7. There’s no free lunch. Never invest solely on a tip.

8. Do your homework, or hire wise experts to help you.

9. Diversify - by company, by industry.

10. Invest for maximum total real return.

11. Learn from your mistakes.

12. Aggressively monitor your investments. Remember, no investment is forever.

13. An investor who has all the answers doesn’t understand the questions.

14. Remain flexible and open-minded about the types of investment.

15. Don't panic.

16. Do not be fearful or negative too often.