John Templeton and the Recession of 1937

The Great Recession lasted from 2007 to 2009. It was the most significant economic downturn since the Great Depression. Since 2009, the economy has continued to expand. Unless governments and central banks have cured the world of up-and-down cycles, a fresh recession should not be too far away. It’s time to get ready.

In preparation, take some time and learn about John Templeton. During the Recession of 1937—also known as the Roosevelt Recession and often considered part of the Great Depression—Templeton got rich.

In the 1920s, more and more people were buying stocks and making a lot of money. It was the Roaring Twenties, a time of flappers, The Great Gatsby, and Babe Ruth. Average investors saw their friends making fortunes while speculating on the next big thing, and they wanted a piece of the action. Investor after investor purchased stocks on margin. By the time of the crash, those who held onto their stocks were financially ruined; they lost everything.

When the Roosevelt Recession arrived, many citizens did not trust the stock market. It had only been eight years since the world had been brought to its knees, and the economy had still not recovered (so much for the New Deal). John Templeton had no fear though. Contrary to his contemporaries, in 1939, Templeton purchased $100 worth of every stock that was trading below $1 per share on the New York and American stock exchanges. Four years later he would sell those shares for four times the price he paid for them.

John Templeton and the Roosevelt Recession
John Templeton buys $100 worth of every stock that was trading below $1 per share on the New York and American stock exchanges just two years after the beginning of the Recession of 1937.

After earning his fortune, Templeton would go on to be one of the greatest investors of all time. He became known as a contrarian investor because he looked for stocks that were on sale. When others felt a company was on the verge of collapsing, he would buy shares of the company because they were cheap.

With the next recession or depression coming soon, it would be wise to learn from Templeton. While you might not want to buy every stock on one of the major exchanges, it would be prudent to have a list of stocks you want to buy when the prices do drop. And, of course, in order to buy the cheap stocks, you will need money. Therefore, be sure you pay off any unnecessary debt you might have and build up a pile of cash. When the crash comes, be patient. Let the fear build up, and when everybody is talking about the end of the world, fill your cart with cheap stocks. Then, wait. You can wait for four or five years like Templeton and take profits, or hold onto your stocks for the long run.

This is a great way to get rich.

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