What would Sir John Templeton do in this situation?
First and foremost, I’d want to offer a quotation from John Templeton…
After that, I’d want to tell you about how John Templeton was able to create a fortune during the Great Depression, which lasted from 1929 until the late 1930s when the stock market performed as follows:
During the Great Recession, the front cover of newspapers was crammed with doomsday headlines such as…
Despite the fact that John Templeton missed the bottom of the stock market during the Great Depression, he asked his broker to buy him $100 worth of each and every individual stock selling for little or no more than $1 a share on both the Dow Jones Industrial Average and the New York Stock Exchange on a single day during the tail end of the Great Depression in 1939, according to the New York Times.
To sum it up… Templeton had purchased 104 firms in around $100 lots, and he had ended up investing almost $10,000 in each of these enterprises.
In only four years (which, when you think about it, is quite a long time), he more than quadrupled his original investment, bringing it to $40,000, which will be worth almost $644,000 in 2021.
What was Templeton’s plan of action?
Purchase what is despised, what is being thrown away, and firms that no one wants—basically, deals. In reality, around one-third of the 104 firms in which he had invested were in danger of going bankrupt.
While this sounds fantastic, it’s important to remember that Templeton’s timescale is important to consider… He had to wait four years before he could payout.
I’ve also gone thru something equivalent with my portfolio in the past, and I can assure you that the waiting is by far the most difficult part of the process…
What’s more, when there is a widespread decline in the stock market, look at it as an opportunity to accumulate additional stock in the firms you care about. After that, all you have to do is sit on your buttocks and wait. And then there’s waiting. And then some more waiting.