A bull market is born of pessimism, grows of skepticism, grows of optimism, and dies of fanaticism. The most pessimistic time in the market is the best time for you to buy, and the most optimistic time in the market is the best time for you to sell. "- John Templeton This is a sentence from "Reverse Investment: Templeton's Long Win Investment Method" that I have been reading recently. 01) Templeton: Father of Global Investment+Master of Reverse Investment Templeton (1912-2008) is known as the "father of global investment" and the "first person in reverse investment". Along with Buffett, Peter Lynch, Graham, and others, he was named one of the "Top 10 Global Fund Managers of the 20th Century". In 1939, with the outbreak of World War II and the lingering shadow of the Great Depression, the US stock market plummeted by nearly 50%. 27 year old Templeton borrowed $10000 from his former boss and bought a total of 104 stocks on the New York Stock Exchange with stock prices below $1. Four years later, 10000 US dollars became 40000. In 1954, he founded the Templeton Growth Fund and achieved an annualized return of approximately 14.5% over 38 years (1954-1992), outperforming the market by 3.7% annually. Thinking: When others are in a panic, he borrows money to enter the market; He didn't buy 'the best prospects', but 104' no one wants'. He admitted that he didn't know which one would win, so he bought a "basket of excessively punished cheap goods" and believed that "the overall average will eventually return". 02) Core Investment Philosophy: Investing in Extremely Pessimistic Points The 'extremely pessimistic view' is the most core principle of Templeton's over 70 year investment career, which is to 'buy at the point of greatest pessimism'. He said, "The right time to buy is when pessimism is at its worst, and then most problems can be solved The underlying logic is that when the market panic reaches its peak, investors no longer consider value and sell desperately, resulting in a systematic undervaluation of stock prices - this is the best buying opportunity. Templeton emphasized, "People always ask me where the best prospects are, but in fact, this question is wrong. You should ask: Where is the most pessimistic prospect Reflection: This is an extremely inhumane investment philosophy. Reverse investment emphasizes the existence of opportunities in times of market pessimism, while Templeton directly seeks out the most pessimistic aspects, a form of extreme reverse investment. We are naturally willing to focus on the track with the best prospects, and few people ask: Have those who have fallen into neglected corners been excessively punished by pessimism? But 'pessimism' does not mean 'cheap', let alone 'worth buying' - this leads to the most crucial ability in the next section. 03) Ability to estimate the severity of problems The most important thing in extremely pessimistic investing is not to find the company that has fallen the hardest or has the lowest valuation, but to have the ability to assess the severity of the company's problems - is it temporary or permanent? If the problem is temporary and the holder sells due to short-term disappointment, it is the best buying point. Just like Jordan's occasional poor touch in a few games, you shouldn't kick him out of the Bulls because of that. It is important to recognize that a company is a physical unit that will continue to operate as long as it can sustain itself and create profits for its owners that exceed the cost of capital. If you hold this view and have confidence in the long-term prospects of the company, then buying stocks that are sold out solely due to poor quarterly returns becomes very simple. So, when investing in extreme pessimism, the most important thing is to have the ability to distinguish which problems are short-term and which ones are long-term. Reflection: In our opinion, this section is the most easily overlooked yet crucial part. Buying in pessimism "is just a ticket, distinguishing whether pessimism is temporary or permanent is the real skill. Many people learn to buy in pessimism, but end up stuck in it for a long time - because they mistake "permanent value destruction" for "temporary emotional killing". Did Jordan have poor hand feel today or did he break his bone? This relies on fundamental research, not the phrase 'others fear me, I am greedy'. 04) Traps to avoid: Reverse ≠ Flying Knife Templeton himself admits that he has bought many "cheap but mediocre" stocks and has been underperforming for a long time. His true moat is extremely dispersed and has an extremely long holding period. 'Extremely pessimistic' cannot be confirmed in real time - after a 50% drop, there may be another 80% drop, so it is necessary to buy in batches, diversify investments, and combine fundamentals: buy the value that can still survive and recover at a low price, rather than the 'cheap' itself. He reminded, "The only person who should not diversify their investments is the one who always sees things right. Reflection: In the market, it is only said that he is "greedy when others are afraid", but it is rarely mentioned that his true safety net is dispersion and long-term holding. Dispersion is the magic weapon for the vast majority of people to survive. In addition, the other half of reverse investment is never courage, but homework.