Pinning down the origin of the saying, “don’t put all your eggs in one basket” is surprisingly difficult. Some say it’s an ancient Chinese proverb. Some attribute it to American author Mark Twain, or Spanish writer Miguel de Cervantes. It’s a simple saying, one you might expect to find cross-stitched onto a pillow, but don’t let its ubiquity fool you: there’s wisdom in those words.
The late Sir John Templeton was certainly a champion of diversifying one’s “basket” of investments. And so is Tucker Scott, portfolio manager for Templeton Global Equity Group. Diversification is at the core of his investment strategy. A summary of his recent remarks:
- We try to find stocks that we believe are undervalued, then build a portfolio that’s well-diversified by industry and by country
- We try to limit position sizes in an attempt to help limit potential stock-specific risk
- We don’t look to an index as a guide to desired weightings; we rely primarily on internal research
- The primary area where we’ve been purchasing stocks in Europe is the financial sector
- The core European countries appear to be in a healthy state; we think the European “project” should continue Read more…
Every now and again we get the opportunity for a more a personal chat with one of the portfolio managers here. The opportunity recently arose again, this time with Bill Lippman: a Bronx native, tennis fanatic, and, by the way, CIO for the US Value, Franklin Equity Group. With 60-odd years in the business the always charismatic Mr. Lippman certainly can share some memorable stories. Read on…
On How He Got Into Asset Management
As a young man out of college, I was running a sales organization. It had nothing to do with the financial services industry, although I did graduate with an MBA that focused on finance. These were tough times back then, and one of our best salesman made an incredible commission that year – this was amazing – $30,000. Can you imagine such a huge amount!
He quit that year, and I called him back in and I said: “I’m just curious. You made $30,000 here this year, which was outstanding. Everyone else made $15,000 if they were lucky. Where are you going?” He said, “I’m going to work for a mutual fund organization.” I said, “You really think you’re going to make more money there than here?” He said, “Yes!”
We’re not even a month in, but it looks like the global economy, Europe and earnings may be the big attention getters in 2012. The equity markets have been off to what could be called a mild rally during the first half of January, but they’re still reacting to eurozone worries like a baby with a jack-in-the-box; they know something big is coming, but they’re not sure when, and when it does, they jump. It’s a fair enough reaction. Last year’s rough and tumble volatility wasn’t exactly a cake walk.
That wild ride doesn’t appear to be over, though, as hopeful outlooks for smooth sailing were noticeably absent from the slate of 2012 market predictions. But if you can’t wrap yourself up in a warm blanket of false promises, at least you can pull up a chair to the grown-ups’ table and take a practical survey of the landscape. Doing just that, Franklin growth manager Grant Bowers suggests heading into 2012 with realistic expectations:
For many U.S. investors, the new year doesn’t appear all that new. Home prices in the U.S. remain anemic, job growth feels inadequate and the market is about as turbulent as ever. But there’s a flip side to every coin and there’s often potential opportunity hidden in what looks like just plain old trouble.
Ed Perks, senior VP and director of Core/Hybrid Portfolio Management for the Franklin Equity Group and regular contributor to these pages, ruminates on what he sees as a continuing theme of disconnection between perception and reality and how it will shape the investment landscape in the year ahead:
Forget the Kentucky Derby with its mint juleps and heartstring-tugging back stories. If you’re looking for a truly dramatic horserace, look no further than this year’s run-up to the U.S. presidential election as we count down to November.
For Americans it means choosing a leader to guide the country for the next four years. But what does it all mean to investors? Once you get past the mudslinging and the emotional policy pleas, how can you expect all of this political theater to impact the markets?