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…
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?
At a time when some believe that government bond yields are hitting the proverbial rock bottom and stock market volatility is more than many can stomach, where can an income-oriented investor turn? In a word: dividends.
In a low growth climate, high-quality dividend-paying stocks offer distinct attributes that make them a compelling antidote for wary investors. Alan Muschott, portfolio manager with Franklin Templeton’s equity group, explains how these attributes can help dividend-paying stocks outperform in grueling markets and what he looks for when picking companies:
“Nobody says they invest in low-quality stocks, right? Everybody says they invest in high-quality stocks. So what we really want to do is elaborate on what that means to us. The strength of what we do is in our research team and what most of their time is spent doing is really determining the quality of the company by looking at it from three different points of view.”
As global markets are roiled by some serious concerns, we at Beyond Bulls & Bears feel it’s a valuable time to take a deep breath and reflect on the sources of potential. After all, the late, great Sir John Templeton believed that for the astute and patient investor, times of maximum pessimism could yield great values. We caught up recently with Research Analyst and Portfolio Manager with Franklin Equity Group, Par Rostom, to discuss the strategies he’s employing to find value.
Beyond Bulls & Bears: You and your team focus on non-US, mid- to large-cap companies with long-term growth potential. What kind of growth potential are you seeing in that segment of the market today?
Par Rostom: We are seeing some pretty good potential in companies earlier in their life-cycle of growth. These companies have focused business models with generally one or two business lines. Our strategy reflects a barbell approach of investing in higher and medium growth companies. The higher-growth companies on one end of the barbell may have more volatile growth from year to year, and the medium-growth companies on the other end of the barbell usually have a steadier growth outlook. Read more…