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The Contrarian Bargain-Buying Strategy buys at the point of greatest pessimism and sells as optimism spreads. The key is picking, among stocks everyone has abandoned after a big fall, the companies whose finances can hold up. It turns John Templeton's principles into rules.
Born in 1912 in Tennessee. He studied economics at Yale and, as a Rhodes Scholar, law at Oxford.
In 1939, as World War II began and everyone was selling, he borrowed money to buy $100 of each of the 104 stocks trading below $1 on the New York exchanges. Thirty-four of them were already in bankruptcy, yet four years later the investment was worth about four times what he paid.
He founded the Templeton Growth Fund in 1954 and beat the market for many years, and invested early in Japanese stocks in the 1960s when few others did. He sold his fund company to Franklin in 1992, and profited by shorting technology stocks in the 2000 dot-com bubble.
He gave up his US citizenship, moved to the Bahamas and became a British citizen, and was knighted in 1987. The same year he set up the John Templeton Foundation and gave away much of his wealth. He died in the Bahamas in 2008.
His principle was that the moment of greatest pessimism is the best time to buy. If everyone has already sold, nobody is left to sell, and the worst case is already in the price. Then even less-bad news lifts it.
What he bought was not pessimism itself, but prices that had fallen below value because people sold.
Look at stocks, markets and countries that have fallen far from their highs. Unlike trend following, the score here rises the further the price has fallen.
Even in 1939, spreading the money across every listed company was the safety net. For individual stocks he always checked profits and whether the debt was manageable. A low price only matters if the company survives.
No longer making new lows is one sign that pessimism is ending. If the stock is still setting new lows, there is no hurry.
Pessimism reaches different countries at different times. Watching one market misses most of the chances.
Contrarian thinking applies to selling as much as to buying.
This strategy model was independently built by Confluence Zone to quantify the investment philosophy in the works above. It is not an official model created, endorsed or reviewed by John Templeton or any related institution. Last reviewed: 2026-09-29
Related terms: PER · PBR · Dividend Yield
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