Photo: Walter Mario Stein. Source: Unsplash
The Chinese have a saying about humility: the taller bamboo grows, the deeper it bows. I thought about this recently when I read the news of the latest Templeton Prize. John Templeton was a great investor and a pioneer of the mutual fund industry. He grew up on a hardscrabble farm during the Depression in Tennessee and worked his way through college, later attending Oxford as a Rhodes Scholar.
He had a talent for finding value and going against the herd. At the start of World War II, he famously borrowed some money and bought every company he could find that was trading for less than $1 per share. When US industry picked back up, his fortune was made.
But Templeton was humble, attributing much of his investment success to maintaining an elevated mood, avoiding anxiety, and staying disciplined. A devout Christian, he started his business meetings with prayer. Toward the end of his life, he used some of his personal wealth to endow the Templeton Prize, an award designed to honor, in his words, “entrepreneurs of the Spirit”: individuals who have devoted their lives to expanding our vision of our ultimate purpose in life. It’s not limited to any one faith, and has been given to scientists, theologians, writers, and leaders from Christianity, Judaism, Islam, Hinduism, and even skeptics. Past laureates include Mother Theresa, the Dalai Lama, Chuck Colson, Aleksandr Solzhenitsyn, and other impressive individuals.
Recently, the award has often gone to thinkers who have explored the relationship of science and religion, scientists who used rigorous thinking and methods to explore spriritual themes and ideas. That’s the case this year, when the Prize was awarded to Dartmouth Professor (and my next-door neighbor!) Marcelo Geiser. Dr. Gleiser is a theoretical physicist who has proposed that science, philosophy, and spirituality are complementary expressions of our need to embrace mystery and the unknown.
Photo: Marcelo Gleiser. Source: Wikimedia
Embracing mystery is not something investors do particularly well. We analyze income statements and balance sheets because we want to know what businesses are doing. We look at social trends and technological advances because we try to project where the next big thing is coming. We focus on plans and projections, not prayers.
In many ways, however, working with unknowns and uncertainty is at the heart of what good investing is all about. The future is indeterminate; news can take things in any direction, or no direction. While markets generally move from lower left to upper right, that’s not a law of nature but an artifact of human competition and cooperation. Movements from day-to-day or year-to-year are impossible to predict. That’s why we diversify: life is uncertain, and we don’t know the future. Diversification is the only rational response. We use our insights, projections, and probabilities to structure portfolios that incorporate uncertainty but are still likely to meet our financial goals.
The mystery of the universe. Photo: Hubble Telescope. Source: ESA/NASA
Dr. Gleiser recently quoted the 16th-century Danish astronomy Tycho Brahe, who described himself as a “blind watcher of the skies.” Our maps are imperfect, he says, because we’re imperfect. They same can be said of investing. We can strive to incorporate truths about economics, finance, and human psychology into our investment process, but ultimately the future – like the cosmos – is a mystery.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”