Is it Time to do a Templeton?

March 8th, 2009 by Mebane Faber

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From Investopedia:

"In 1939, with Hitler’s Germany ravaging Europe, John Templeton bought $100 of every stock trading below $1 on the New York and American stock exchanges. Templeton’s trade got him a junk pile of some 104 companies, 34 of which were bankrupt, for a total investment of roughly $10,400. Four years later he sold these stocks for more than $40,000!"

If you ran that screen today it returns about 300 stocks from a list of 2500.

If you then sort the stocks by # of insider buys it returns the following symbols:

ADK

CFW

DRJ

END

ETM

FOH

GLA

GMO

GSB

GTF

GTN

IHR

NTN

OMN

OPK

ROX

RPI

TCX

XFN

Some truly nauseating charts in there! Strong caution – a lot of these funds are teeny microcaps with little volume. . .values ranging from $150 million to $5 million.

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Some of the big boys not adding a lot of value. Data from SGAM.

petestrand

IF BOUGHT THE LIST IN MARCH, WHAT WOULD BE GAIN/LOSS NOW?

j'adoube

On today's rocketship move (+6.37% on the S&P), the above list underperformed.

Meanwhile, Berkshire B was up 19%.

So maybe you buy only the stocks above $1,000 per share . . . .

guru

I had the same though back in November and wrote about it (I called them "perpetual call options") in my blog http://tinyurl.com/stockchartist-20081115

j'adoube

Two consecutive posts featuring the words "puking" and "nauseating".

A bear market rally cannot be too far off.

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The opinions expressed on this site are those solely of Mebane Faber and do not necessarily represent those of Cambria Investment Management, Inc. (“CIMI”). This website is made available for educational and entertainment purposes only. Mr. Faber is an Investment Adviser Representative of CIMI, an investment adviser registered with the states of California and Utah. This website is for informational purposes only and does not constitute a complete description of the investment services or performance of CIMI. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. A copy of CIMI’s Part II of Form ADV and privacy policy is available upon request. This website is in no way a solicitation or an offer to sell securities or investment advisory services. Mr. Faber and CIMI disclaim responsibility for updating information. In addition, Mr. Faber and CIMI disclaim responsibility for third-party content, including information accessed through hyperlinks. Faber receives affiliate commissions through Amazon and AlphaClone.

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