6 Lesson's From An Investor Who Beat The Market 38 Years In A Row
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In today’s issue, I want to highlight a famous investor by the name of John Templeton. He was an American-born British investor who created the Templeton Growth Fund and managed to achieve a 15% annualized return over a period of 38 years.
For context, the S&P 500 has returned around 10% per year since 1929.
So Mr. John Templeton managed to do what every investor dreams of doing year after year - beating the market.
What you can expect in this issue of The Profit Zone:
6 important lessons from a man who continuously beat the market and what you can learn from each one
Before we begin, I want to give credit to my friend Financially Savvy (@FiSavvy) on Twitter. He recently posted a thread about John Templeton and it gave me the inspiration to share these important lessons with you and help you become a better investor. Go check him out on Twitter!
Lesson #1
“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria”
What does this mean exactly?
It means trying to time the market is downright impossible. Nobody knows what will happen. Everyone thinks they know, but we can only predict. And history never repeats itself, it just rhymes. Therefore, we can use what happened in the past to make an informed guess about what will happen in the future but the truth is, nobody knows when or by how much.
At the end of the day, you’re better off dollar-cost averaging (DCA) into your positions. This means investing a chunk of money every week/month/year on a specific day no matter what the market is doing.
Lesson #2
"The four most expensive words in the English language are ‘This time it’s different’
Gamblers love these 4 words.
Insanity is doing the same thing over and over again but expecting a different result.
If it’s not working, switch it up.
Lesson #3
"If you want to become really wealthy, you must have your money work for you”
You can’t save your way to wealth nor can you work 24 hours a day, 7 days a week. The average income earner will make around $1.7 million over the course of their lifetimes. When you take into account taxes and expenses, you’re not left with very much money to survive.
You have to find another way and that other way is making your money work for you.
This means buying income-generating assets like real estate and dividend stocks. This means buying index funds. This means staking crypto and earning interest. Whatever you need to do to make money in the background without actively trading your time for it.
Lesson #4
"Defer pleasure until the job is done”
Chasing pleasure is a wealth killer. You’ve probably heard of delayed gratification and that’s because it’s so effective. If you can develop the self-control to tell yourself “we’re going to enjoy A once I finish B” then you’ll touch so much wealth.
For example, I don’t go out for dinner until I’ve invested a specific amount of money for the week. I’m not doing it to punish myself. I’m doing it because I value my financial future more than I value a night out.
The pleasure will come, but make sure you’re doing the job first.
Lesson #5
"Focus on value because most investors focus on outlooks and trends”
Unfortunately, we live in a time where fundamentals mean nothing but memes mean everything.
But in the long run, this won’t last. A company increases in value based on its fundamentals. The business model, management, the moat, cash flows, assets, and everything in between.
You’ll make more money long-term buying value than you will trying to predict trends. So get rid of the swing trading and start buying quality companies at great prices. In 20 years you’ll be glad you did.
Lesson #6
"The best time to invest is when you have money"
I love this quote because it just makes sense. First, figure out your expenses - what you need to survive. Once you have that number you’ll know exactly how much extra money you’ll have left.
Every time you get paid, make sure your living expenses are covered and invest the rest. How much you keep as “fun money” is up to you, but the less you invest now (especially if you’re in your 20’s or 30’s) the higher the opportunity cost because of compound interest. Take advantage of it while you still have time. That’s why I go broke investing every single week.
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Money Mastermind - the “Money Bible”. Myself and 29 other expert creators teamed up to create the most all-inclusive 280-page finance book on the market. Over 100 topics about money including real estate, crypto, budgeting, dividend stocks, online business, and more.
The Complete Investors Accelerator Pack - everything you need to build a dividend portfolio that grows on itself. Learn more about dividend investing, how to analyze dividend stocks, what to do with your dividends and how to build a stream of passive income through the stock market.
The Molina Letter - the only product that’s helped me grow my Twitter account to 30,000 followers. Fill in the blank templates you can copy to help you create viral content with minimal effort. A big following gives you the key to creating products and making money online. There’s a reason why 500 people are subscribed to this letter.
TweetHunter - let the software do the tweeting for you. The only scheduler you’ll ever need. This tool makes me money in my sleep. Give it a try for free.
Hipster Budget Guide - having trouble saving money? Learning how to budget is your solution. This book will show you ways to save money you never even thought of. Worth every penny.
My 2 Cents - my other newsletter where I voice my personal opinions on life, money, and people. Beware: I have zero filter. But it might give you a good laugh.
