📖John Templeton
Avoid Popular Stocks
Avoid popular stocks; seek forgotten ones.
The stock that everyone is talking about is usually the most overpriced. The best values are found in the forgotten corners of the market.
🏠 Everyday Analogy
📖 Core Interpretation
In Avoid Popular Stocks, John Templeton focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Popularity drives overpricing; neglect creates opportunity.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Tech Bubble Trim (1999)
Templeton reduced exposure to overvalued U.S. tech stocks as valuations became extreme in the late 1990s, selling into market euphoria.
✨ Outcome：Missed final phase of gains but preserved capital when the bubble burst, enabling later purchases at bargain prices.
2
Pre‑Crash Profit Taking (1987)
Ahead of the October 1987 crash, Templeton sold selected U.S. and developed‑market equities that had doubled or more, following his valuation and discipline rules.
✨ Outcome：Losses were limited during the crash, and cash raised was redeployed into high‑quality stocks at distressed prices.
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