Posted on 03/27/2010 8:22:38 AM PDT by Born Conservative
Sir John Templeton, founder of Templeton funds is widely acknowledged as one of the greatest investing minds ever. He died in 2008 at the age of 95. His son recently released a memo found among his belongings that was written in 2005.
Apparently, Templeton predicted the coming economic challenges and it seems Greenspan was wrong – it isn’t impossible to predict financial bubbles!
John M. Templeton Lyford Cay, Nassau, Bahamas
June 15, 2005
MEMORANDUM
Financial Chaos – probably in many nations in the next five years. The word chaos is chosen to express likelihood of reduced profit margin at the same time as acceleration in cost of living.
Increasingly often, people ask my opinion on what is likely to happen financially. I am now thinking that the dangers are more numerous and larger than ever before in my lifetime. Quite likely, in the early months of 2005, the peak of prosperity is behind us.
In the past century, protection could be obtained by keeping your net worth in cash or government bonds. Now, the surplus capacities are so great that most currencies and bonds are likely to continue losing their purchasing power.
Mortgages and other forms of debts are over tenfold greater now than ever before 1970, which can cause manifold increases in bankruptcy auctions.
(Excerpt) Read more at livingoffdividends.com ...
Templeton was one of the best inevstors ever. Much better than Soros pal Buffett. His mutual funds were okay andwere not run by him. His personal investing and insight were incredible.
I wonder where Templeton would invest today if he were still around. Freedom and competition are still alive in some hemispheres.
Templeton and others predicted the economic bust based on poor practices compared to historically sound practices. Those who stood by their convictions -- that is put their money where their mouthes were -- profited.
It is not the job of the Federal Reserve to predict and correct bubbles. Those that believe this are stoking the fires for more government interference in our economy. Couple the MSM's propaganda with some dems that want to tighten the relationship between the US Treasury and the Fed Reserve, and you have a scenario where the POTUS could effectively set Federal Reserve Policy.
Templeton personally shorted $100 million of tech stocks during the bubble at the end of the century. The majority of everyone else where falling all over themselves trying to justify and extend the insane overvaluation.
I would agree with your comments on the Fed in the main, but they have done a terrible job in their responsibilities. It is not the job of the Fed to eliminate healthy recessions. This seems to have been their objective by mispricing the cost of money, which leads to asset price bubbles. As well, as regulator of banks, they stood by as banks levered up to insane levels. Little has been done to correct their gross errors.
Be wary of “lost memos” that show how brilliant a deceased writer was...
As bank regulators, I agree with your comment on the Fed Reserve. I am not convinced that the banks should be regulated, however. But, given that they are, I agree with you.
My bigger concern is that the Fiscal Policy that sowed the seeds of the housing crisis are not being addressed, or even being acknowledged as problems by the current administration. Had the Fiscal Policy (and specifically I name the CRA, but there were others) not been in place, the housing crisis would either have been much less, or not occurred at all.
It is hard to catch the horse once it leaves the barn. 'Tis better to ensure that the barn door is not opened.
Meanwhile we see the Dems rapidly trying to push the socialist agenda which will penalize the top innovators and capable in the name of ‘social justice’ and redistribution of wealth.
They are elitists who haven’t a clue about how the real world works.
Thanks for posting this voice from the grave.
Wonder if anyone can run this memo through that software that compares the word combinations in two works to see if it is the same author.
Good point.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.