Financially Speaking Podcast

Leave It To Beaver

Published on July 3, 2012

Sir John Templeton was a pioneer in global investing.  He started his first mutual fund in 1954 – many decades before foreign stocks and before investors were comfortable with the idea.  It would take forty years for Modern Portfolio Theory, which argued for diversification across global financial markets, to be adopted by the mainstream financial community.

For hours I have listened to Mr. Templeton.  Years ago, his mutual fund company would regularly send out cassette tapes of his talks and speeches.  One of the pillars of his philosophy is the drive to improve one’s standard of living.  He explained that since the beginning of civilization, we have strived for a better life.  Moreover, the drive and desire for a better life is a very powerful, invisible force. 

Years later, these points were driven home to me by some consulting work I did in East Africa in the 1990s.  I visited several countries in Africa and Europe where, of course, the differences in the standard of living varied significantly from country to country. 

I remember watching a laundry detergent commercial on television in Nairobi, Kenya.  The husband came home from work wearing a suit and his wife wore a dress.  The house was sparkling clean, with a stove, refrigerator and clothes washer.  I tell you, it could have been a commercial straight from Leave It  to Beaver. But I was in Kenya, a country where most people had no running water or electricity, a country considered to be one of the poorest in the world.  This was a country filled with people who strive for a better life, a better standard of living.  That is what Sir John was talking about!

More than any other country, the United States has more toilets, two-car garages, air conditioners, washing machines, smart phones, WIFI -- more of everything that defines the best standard living.  What we take for granted what others strive for.  In order for other countries to rise to our current standard of living, a phenomenal economic growth is required on their part.  Imagine what it takes for Tanzania to live this well. Imagine the highways, hydro electric dams, sewer and water systems that must be built in order to live as well as us.   Despite cultural differences, all of us want the best standard of living.

I can’t fathom the economic activity that will be created by these countries in pursuit of improving their standard of living.  And they shall improve, as they are compelled to do so.  All this translates into phenomenal growth for decades, which translates into phenomenal global investment returns.

I think about these things when I listen to the financial pornography in the media.  I think about Sir John when these reporters and “experts” are predicting doom and gloom for the financial markets.  I think about the hope that striving for a better standard of living brings. 

From those cassette tapes, I can still hear Sir John’s voice-calm, confident and convincing:  “People are always asking me where is the outlook good?  But that’s the wrong question…. The right question is: Where is the outlook the most miserable?”

Tags: investments; foreign stock investing; financial media

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