Do not be fearful or negative too often. There will, of course, be corrections, perhaps even crashes. But over time studies indicate, stocks go upâ€¦and upâ€¦and up. In this century or the next, itâ€™s still â€œBuy low, sell highâ€. The Templeton approach, although clear and simple, requires skill, dedication, and astute judgment. For, it is never easy to deliver consistently superior performance by investing differently from the crowd. Templetonâ€™s time-tested strategy is â€œbuying bargains where they exist.â€ The key ingredient is the search for those few investment opportunities that offer outstanding long-term value.
Sort out all listed U.S. stocks in descending order based on the return on invested capital (ROIC) they earn. If there are 3000 stocks in this universe, stocks like Google are ranked near the top (and hence get a very low number) and stocks of some state-owned steel companies are ranked at the bottom of the list (and hence get a high number).
Â ort out stocks on the basis of the ascending order of price-earnings (P/E) ratio. The lowest P/E stock is ranked as 1 and the highest P/E stock is ranked 3000. Google which has a very high P/E will rank close to 3000.