John Templeton
Referenced as the canonical contrarian investor — 'Maximum pessimism is the best time to buy'
Biography
Sir John Templeton (1912–2008) was an American-born British investor and philanthropist who built one of the greatest long-term investment records of the 20th century through disciplined global contrarianism. He founded the Templeton Growth Fund in 1954 and ran it until 1992, generating returns of approximately 14.5% annually — consistently above the market over nearly four decades.
Templeton was born in Winchester, Tennessee, attended Yale (graduating near the top of his class), studied at Oxford as a Rhodes Scholar, and built his early investment career at a New York brokerage. He became famous in 1939 for buying 100 shares of every company on the New York Stock Exchange trading below $1 — 104 companies, most of them in bankruptcy — and profiting from almost all of them as the wartime economy recovered.
He later pioneered global diversification at a time when American institutional investors rarely considered foreign markets, building positions in Japan (before it was fashionable), Europe (before it recovered), and emerging markets (before they were an asset class). He sold his mutual fund business to Franklin Resources in 1992 and spent his remaining years on philanthropy, endowing the Templeton Prize for progress in science and religion.
Templeton appears in 9 Oaktree memos with 23 total mentions. His famous maxim — The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell — is the single most frequently cited non-Marks quote in the corpus at crisis junctures.
Marks' engagement with Templeton is unusual in that it runs almost entirely through a single piece of writing: an October 11, 1987 article in The New York Times by Anise C. Wallace, in which Templeton identified "this time it's different" as the four most dangerous words in investing. The article ran just eight days before Black Monday, the worst day in stock market history, and it made, as Marks later recalled, a big impression on him. He has returned to it in memos spanning from 1996 to 2025 — a 29-year thread in which Templeton serves as both warning and counterweight.
Key Stories
The 1939 Trade — In September 1939, as war broke out in Europe and markets collapsed in panic, Templeton borrowed $10,000 and bought 100 shares of every company on the NYSE trading under $1 per share. Of the 104 companies he bought, 34 were in bankruptcy. He made money on all but four. This single trade defined his career and his philosophy: buy when pessimism is maximum, because maximum pessimism creates maximum mispricing.
The Japan Trade — In the 1960s, long before Western institutional investors considered Japan a credible investment market, Templeton built substantial positions in Japanese equities. He held them through 25 years of Japan's post-war economic transformation. By the time Japanese stocks became the hottest investment globally in the late 1980s, Templeton had sold most of his position. He bought at maximum pessimism and sold at maximum optimism — the full expression of his maxim.
The Maxim That Marks Quotes — Templeton's most famous observation — The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell — appears in Marks' memos at the most consequential moments: October 2008 as the financial system appeared to be collapsing, March 2020 as COVID closed the global economy, and repeatedly during the peak credit optimism of 2006-2007. The maxim is not just a slogan for Marks — it is an operational instruction for cycle-based portfolio management.
The Spiritual Investor — Templeton was deeply religious (he was knighted for his philanthropy to science and religion) and believed his investment philosophy was connected to his spiritual practice: humility in the face of uncertainty, patience as a virtue, and long-term perspective over short-term reward. Marks occasionally references this broader context — the observation that great investing requires qualities that are fundamentally character-based rather than purely analytical.
The Four Most Dangerous Words — The Templeton idea Marks cites most is not the maximum-pessimism maxim but a warning about its inverse. In the 1987 Wallace article, Templeton — then 74 — named "this time it's different" as the four most dangerous words in investing: at market tops and bottoms, investors use them to rationalize emotion-driven decisions and valuations that look high relative to history. Marks first retold the article in "Will it Be Different This Time" (1996) and has returned to it in at least seven later memos — "This Time Its Different" (2019), written deep into a decade-long bull run, and "Is it a Bubble" (2025), written about AI, among them. The warning recurs in the memos because the behavior recurs in the market.
Impact on Marks' Work
The Contrarian Archetype: Templeton is Marks' primary historical archetype for successful contrarianism at scale. His record demonstrates that buying at maximum pessimism — in markets, geographies, and sectors that the consensus considers uninvestable — can produce extraordinary long-term returns.
The Pendulum in Practice: Templeton's career is the best long-run demonstration of the pendulum framework: systematically buying at one extreme and selling at the other, across multiple geographies and asset classes, over nearly 50 years.
The Operational Definition of Courage: Marks uses Templeton's actual trades — the 1939 bankruptcy purchases, the pre-everyone Japan trade — to illustrate what contrarian courage looks like in practice. It is not theoretical willingness to buy at lows; it is the demonstrated capacity to do so when the consensus is overwhelmingly against you.
The 20% Caveat: Templeton's most distinctive contribution to Marks' thinking may be the qualifier he attached to his own warning: about 20% of the time, things really are different. Marks treats this caveat as seriously as the warning itself. He has written that, given the pace of technology, he would bet the percentage is higher today — and in "Sea Change" (2022) and "Further Thoughts on Sea Change" (2023) he built his most important recent argument on exactly that possibility: that the investment environment had genuinely changed, not merely cycled. Templeton thus functions in the memos as both the guardian of cyclical thinking and its authorized exception.
Key Passages From Marks' Memos
"The four most dangerous words in investing are 'this time it's different,' according to John Templeton, the highly regarded 74-year-old mutual fund manager."
— This Time Its Different (2019)
"As Sir John Templeton put it, 'To buy when others are despondently selling and to sell when others are euphorically buying takes the greatest courage but provides the greatest profit.'"
— The Most Important Thing (2007)
"According to an article in The New York Times by Anise C. Wallace, Sir John Templeton had warned that when investors say times are different, it's usually in an effort to rationalize valuations that appear high relative to history – and it's usually done to investors' ultimate detriment."
— Further Thoughts on Sea Change (2023)
"Importantly, however, Templeton allowed that things might really be different 20% of the time. On rare occasions, something fundamental does change, with significant implications for investing. Given the pace of developments these days – especially in technology – I imagine things might genuinely be different more often than they were in Templeton's day."
— Further Thoughts on Sea Change (2023)
"The article pointed out that some of the arguments did have some truth to them, but it also cited John Templeton's assessment that people who say things will be different are right only one time out of five. The hard part is knowing which times those are."
— Will it Be Different This Time (1996)
Referenced In
Source: Howard Marks Knowledge Base — Oaktree Capital Management memos 1990–2025