INVESTING FOR GROWTH (BY TERRY SMITH)
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- Опубліковано 5 чер 2024
- "Buy once, cry once" is the preferred strategy of the British fund manager Terry Smith, who has returned more than 500% in the stock markets since the inception of his "Fundsmith" back in 2010.
Terry Smith, a British fund manager, has, since the inception of his Fundsmith T Class, kept on buying only the equivalent of quality cars in the stock market. This video will explore his methods for buying quality without overpaying. Fundsmith has been a 6-bagger in a little over a decade, so his investment strategy has served his investors well.
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My main tool for fundamental screening and analysis of stocks: app.tikr.com/register?ref=tsi
(If you sign up I earn a small commission)
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Timestamps for growth:
00:00 Intro
01:45 Great Car? Great Choice!
04:30 Don't Pay Extra for Unnecessary Gadgets
07:28 Wait for the Discount
10:57 Don't let the Paint Job Fool You
13:03 No Car is a True All-Rounder
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Many thanks to my friend Richard Dykes who helped me in making this video possible.
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My goal with this channel is to help you make more money and improve your personal finances. How to become a millionaire? There are many ways to get there - investing in the stock market, becoming a stock trader, doing real estate investing, or why not becoming an entrepreneur? But whether you are interested in how to invest in stocks or investing strategies for creating passive income with rental properties - I hope to be able to provide you with a solution (or at least an idea) here. Warren Buffett - the greatest investor of our time - says that you should fill your mind with competing ideas and then see what makes sense to you. This channel is about filling your mind with those ideas. And in the process - upgrading your money-making toolbox.
It is a great book. I read “The Psychology Of Money” just to learn that investing in spy or voo index was the main idea. “ The millionaire Real Estate investor” was amazing too. “The richest man in Babylon” is also a must read.
Mr. Swedish investor I can’t tell you how much me and my friends love your videos, they are each and every time so so good. The quality, the intelligence, the humor, and the consistency of gr8 videos are unbelievable, and above all the best advice that can be found on this whole platform in such a fun and enjoyable way. we would like to thank you so much for your great work. You’ve really inspired us to be doing value and long term investments. Thanks you so much for your beautiful work. And please keep it up with more 👍✌️❤️👏👌
T̲h̲a̲n̲k̲s̲~̲~̲f̲o̲r̲ ̲w̲a̲t̲c̲h̲i̲n̲g̲!̲!̲!̲
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Let's talk, I've got something big to introduce ☝️....
FYI, I bought a Saab 9000 six years ago for A$100 (yes, that's about US$70), and have driven it regularly since then (about 8000kms per annum) with the only repairs being things that normally wear out on cars (filters, brake pads etc).
Incidentally, my family's share portfolio has gone from $800k when I started managing it in 2005 to $9.5m today whilst paying out a six figure annual pension to my parents and taking in much much less in new capital. Those returns are overwhelmingly from buying the sharemarket equivalents of my trusty Saab.
During this period, what are the stocks purchased in your parent’s portfolio?
@@lambo650ER our biggest holding right now is Silex Systems.
The quality of your videos is of the highest level.
Thank You very much :)
Always waiting your videos.
I like to enjoy the intrinsic compounding and dividend compounding during the long term growth period at the time.
Muy instructivo!, muchas gracias
I always enjoy watching your videos; they make me reflect. I am not sure what to do in this particular market when one has a small portfolio. If you think about a ten-year horizon, then a DCA strategy on companies you believe in might be good. And if you are an investor and hold a big portfolio with diversified assets right now, I am also unsure what to do. I have sold all the companies where I cannot be confident about their future cashflows. Rather hold cash than being a victim of an illiquid market, affecting certain company's financing. There is a reason Berkshire holds a lot of cash; they face the same uncertainties as we do, and next to that, it is more difficult for them to find adequate investments.
P.s. Good luck with the bots; this comment section also seems swamped.
My fave investor!
Fantastic book fantastic fund
I used this method to buy NFLX a year ago. NIce video bro!
I don’t agree with Buffett not paying dividends. I would rather have the option of some dividends because I reinvest them anyways , but having the option gives me flexibility.
dividends get double taxed though, so if berkshire decides to give out dividend, you will get less than what berkshire paid. And the returns of the share price will be lower (theoretically)
You always have the 'option' of selling part of your stocks, and this will (in the US, in a non-IRA account, assuming you have a normal level w2 job) give you a lower tax level than receiving a dividend, because they are taxed differently. Its just an unfortunate reality that the tax system makes dividends not so great an option, when they used to be the default option to receive income from stocks...
I Mr. Swedish! First, thank you for all your videos. They are very instructive and useful. I want to know what's a good or bad result from the FCF Yield per share ratio at 12:45 ?
Thank you very much!
Thanks! I assume that FCF can also be calculated by (Cash from operations - Capital expenditure) (for last period)/ MCAP (running)? This will make it easier to track from i.e. TIKR.
Edit: I see that inverse ratio: "Forward Market Cap / Free Cash Flow" and "Trailing Market Cap / Levered Free Cash Flow" are available in the global screener and valuation in TIKR now.
Do you have some ballpark FCF numbers that would be a good buy?
For asset light business model, with high return on invested capital and growth, the company is able to grow vertically or horizontally and at the same time has enough cash for dividend distribution.
You u uploaded so late i was waiting for videos 😍
love you, man!
I am waiting for this
Lucid explanation. ..good
Thanks for your video!!!!! Always waiting for your next one. I have recommended you to some people gravitating around investment...thanks, take care...
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Let's talk, I've got something big to introduce ☝️....
It’s useful , thanks for sharing !
Very very nice video sir 👌...
I love your video. ❤️
Incredible😍😍
I am currently reading this book and it has been interesting to hear your take on it!
My first book I read. Terry is a amazing manger if you take his returns from his pension fund in Which he managed from 2003-2013 he got a return of 13%. Almost double compared to the msci all world index
If you have read the book could you give me an example of the FCF per share calculation? Thanks
The risks segment of the annual report can work as a reasonable replacement for the "silver bullet" approach, most companies are going to mention one or two competitors they believe are a threat.
Thank you for this video !
My favorite is take away # 4 because it shows how companies could manipulate their accounting.
Could you make a video about the various ways that companies manipulate their accounting to bait unsophisticated investors?
I believe it will give very great value to all of us who follow your videos :) Because just imagine:
We spend hours looking at annual reports, only to miss something that the company has manipulated in their financial statements..and we could never figure those manipulated numbers if we have no idea what to look for or how to look..
So PLEASE Swedish Investor, please make a video on how companies manipulate their numbers!
Finally seeing this on your channel. Dont know if you remember this, but I wrote you an email one and a half year ago recommending this book. Thanks for your work and dedication to us investors here.
great stuff
What is you top 2-3 favorite books on personal Finance?
I love this channel.📈
I feel bwtter thank you
In my humble opinion, the most important step in personal finance is to read the book "Millionaire Next Door". It's a real eye opener.
I’ve read almost all “top” or recommend books in personal finance and investing but Millionaire Next Door it is always my number 1. It is simple, objective and it can links to all points in our everyday life.
It’s a crap book . Not spending your money is a joke
@johnstewart1814 Conspicuous consumption is the real joke. Living beyond one's means, just to impress others, is the real joke. Don't buy things you don't need with money you don't have to impress people you don't like.
@@brainstormer2520 read fooled by randomness. That book proves that book is a scam . 50 mil and live frugal . You might as donate it all . Nasin taleb exposed that stupid author !
Thats a great Video!
Really helpful to get through volatile times in the stock market🙏
However, please correct me if I am wrong, but if I listen to that, I cant help but think about the stock of Meta Plattforms.
They used to deliver high growth rates and now suffer from short term issues this year.
Wouldnt it be a great stock to own for the long term, since the company still seems to be high quality?😅
Thank you...
APPRECIATE YOUR EFFORTS 👍❤️
KEEP UPLOADING
Cool video, but have you ever done a long trip on a Tesla? Or just judging on what you've heard?
Does anyone know where I can find such a chart like the microsoft one in takeaway 3, with the closing price and the down from the all time high?
I just made a script in tradingview to do it (it's in seperate window though):
indicator("Down from all time high (%)")
ATH(dataSeries = high) =>
var ATH = dataSeries
if dataSeries > nz(ATH, -1e10)
ATH := dataSeries
ATH
plot(((close-ATH())/ATH())*100)
Do you have a video about jim rogers book Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market
They took our jobs!! Excellent video as usual!
Excellent video (as always!).
I've been reading a lot on this style of investing and it just makes sense to me. Other good books on this are "Only the best will do" and "Quality Investing" (also Phil Fisher's!).
The big question for me here is what price is a sensible price. The authors suggest waiting for a "glitch" (which might never come), or using the 10y bond rate , so you'd assume that anything now going for 3% FCF yield would be acceptable.
Ultimately I don't think there's a right answer on valuation - it all depends on how much longer the FCF growth will persist, and your long-term view of it. When the growth stops, multiples will contract. Otherwise you can assume them to keep a similar valuation as at the moment of buying, changed by the movement of interest rates.
So a 3% FCF yield on a company growing it at 12% per year will roughly return that 12+3%. But if it stops the growth in two years and the multiple halves, you will get a poor result. If that growth maintains for 20 years, you will have a hell of a result.
I think Charlie Munger summed it up when he said "buy wonderful businesses at a fair price instead of buying fair businesses at a wonderful price."
which brokerage u think good in in swedish,i am new to investing but i want start now
Can you please make a playlist that includes all of your videos so I can more easily binge watch them as I take notes?
ua-cam.com/users/TheSwedishInvestorvideos
@The Swedish Investor, there's a FCF data row if you scroll down further in TIKR's Cash Flow Statement ;)
Swedish investors do you prefer trading sometimes also ?
Hi Erik, brilliant video as per usual =D.
Are there any guides on what would be a high or low FCF Yield per Share?
I'm guessing FCF Yield per Share is the inverse of Price/FCF.
Hey RMCRUZO - Rui Oliveira! Great question. Something that I've heard Terry Smith do is to compare the FCF yield to something like a 10y US Treasury. If the FCF Yield is higher than the bond yield, while simultaneously, the FCF yield will probably grow over time as the growth company is expanding, you will probably make a good investment.
‘If we can buy them with a higher free cash flow yield than the bond yield, then we have probably created value,’ says Smith.
When you are comparing stocks with each other it's just a comparison of opportunity costs. The higher the FCF yield, the better (everything else equal).
You are correct about the inverse by the way.
@@TheSwedishInvestor Hey Erik, understood and thanks for the feedback, I really appreciate it!
I have been noticing in many books, that the 10y US Treasury (Risk Free Rate) is always used as a baseline of expect return when choosing stocks.
I'm assuming that we should look at the FCF yield, specially together with the ability of the company to allocate the capital appropriately. Just not sure about the correct metric to measure that. Perhaps ROA might be a good indication.
Looking forwards to your next video!
Hey, I am trading with Clara Greens and it makes so much more sense now! Every day I learn more, things coming together now.
Amazing,do you have tutorials and models for evaluation the fair price?
Hey hardsystem9522! I have some takeaways here and there about valuing companies, for instance in The Intelligent Investor there's a model discussing it, in The Dhandho Investor there's another one, and in The Margin of Safety, I think a couple of them are disucssed briefly. But no video dedicated to that primarily, which would probably be a good idea! Cheers!
Do you actually read all this books before you create your videos? Because those are great and seem very good researched. ( :
Hey Leandro Dörrenhaus! Cheers for the support. Yes, I've read about 90% of the books presented on this channel and a friend of mine has read the remaining 10%. If he reads then we co-create the video afterwards. He read this one for example :)
“Theoretically, this *wise-ass* is correct…”
Lol.
Can you please do Evan blekers net net stock strategy?
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@Swedish investor. How is waiting for discount different from market timing. What if we miss the most important days in the market waiting for a discount
Hey man! Cheers for the quesiton. Not sure what is specifically said in this video, but the general Warren Buffett-advice is to look at it from a bottom-up perspective rather than top-down. Bottom-up would be trying to find individual companies (stocks) that are priced cheap, and if there are none available, you wait. That would be some sort of market timing, but it's very different from a top-down approach. Top-down would be looking at the S&P 500 and after seeing that the average P/E is current 25, you just conclude "okay, I'm not going to invest, because the market is much more expensive than it usually is". The problem with the top-down approach is that there may still be some gems out there that you are missing. The bottom-up approach for timing the market is just fine. When there are cheap companies, buy them. When they are no cheap companies, sit on cash and wait.
So waiting for an opportunity to buy a darling cheaply isn't a contradiction to "Don't time the market"?
It also means that you have unproductive cash lying around. Isn't it?
Agreed. Also, the kind of companies you really want to own rarely sell below intrinsic value. You might have to wait years, by which time the price you actually pay, below a much higher intrinsic value, could be twice or three times as high as if you just bought it when you finished your research and decided it was a company you wanted to own. Insisting on a price that was $25 million lower almost caused Warren Buffett to miss out on See's Candy, which returned billions in profits. He got lucky but it was very close to penny wise and pound foolish. I'm not even in the same universe as Buffett, but I have missed good moves by entering a limit order that didn't get filled rather than a market order that would have. "Saving" a half point easily can cost you 20 points in missed opportunity.
Hey
I did invested with her , i made huge profits
Thanks for recommending
Unable to make payment - I am in india and I want to buy the monthly subscription however despite multiple payments attempts by me through Credit or debit cards were in vain. Kindly arrange more options for the payment or recheck at your end what is going wrong here. I appreciate your such Gold Plated content.
so what's a good FCF Yield? is $90 per share a good Yield? I did the calculations according to 12:40
You should not do any buying and selling of shares until you understand the fundamentals! It's scary that you can mention "$90 per share" *_without any mention of the share price...._*
9:24 They terk err jerbs:)
I like your Amazon easter egg with depreciation 🤣
A Tesla is great at road tripping! I wouldn't road trip in a gas car 😂
But P/E is price/stock divided with earnings/stock… so the number of stocks doesnt matter? Doesnt it just cancel out just like dollar/gallon divided with miles/gallon is just dollar/miles
It does cancel out (from my POV). If a company issues more stock (splits) it divides not only the price of each share but also the earnings per share by that same value. The P/E should (in theory) stay the same. If there is a split and people (for whatever reason) start buying in big volume, the Price (which is dependent on volume of buyers vs volume of sellers) goes up while the Earnings (company performance dependent) stays the same. That drives a higher P/E ratio with this type of Shares Outstanding increase.
The problem is when a company has a lot of convertible products (convertible preferred stock, bonds or options) and the owners of those exercise them by converting them to common stock. That will increase the amount of shares outstanding and dilute the earnings per share.
Not sure if I answered your question or I just went on a tangent hahaha. This is my take on it. (I'm fairly new to investing etc. I'd welcome anyone that wants to argue in a different manner/direction)
Stock market cap: 100mil
Stock earning 5mil
P/e = 20
@@filip9564 yes we know that, the question is how you can manipulate it by changing the amount of stocks according to this video (from what I understand) since the number of stocks cancel each other out in the numerator and denominator... I dont get how you can manipulate the P/E as this video says
What is a "darling" ? You slipped that in there and I missed the explanation
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Could you PLEASE do a analyze the stock SOFI?
Measure the number of times a company mentions other companies in its SEC filings.
This is a good idea Alexandros Taderera, cheers for sharing it!
@@TheSwedishInvestor I've got the code that does this, if you want.
Thanks! This is one of the best books about investments
Swedish investor makes brilliantly informative videos!
Cheers St Louis IX! Glad you enjoy them! Hope to be able to bring some more informative stuff moving forward :)
Isn't Terry Smith using roic and not roa?
He uses ROCE. He states that in the book.
Hmm may be there are no used Toyota cars in Sweden
How do you make book summaries?
T̲h̲a̲n̲k̲s̲~̲~̲f̲o̲r̲ ̲w̲a̲t̲c̲h̲i̲n̲g̲!̲!̲!̲
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Great videos, but BAD example with Tesla.
Tesla is the best long distance car bar none, thanks to the Supercharger network.
Tell it where you want to go and it plans for you the entire trip, including charging.
By the time the car has to charge I also have to use the rest rooms, grab a coffee or a snack and by the time I am ready to go the car is also charged.
Hi,
I am an aspiring investor .
Just wanted to say Thanks for this great videos . They help a lot in the learning process .
this makes me want to buy more tesla as it drops lower 😤
Congratulations to me on acquiring a new house due to the investment I made on stock, 2022 is the best year for me
$afrm
The best price to pay is $3X
Swedish investor has net worth of?
It worked well due to the environment.
Stop double taxing divvies and see what happens
Actually, it is extremely dangerous to go fishing when there is a storm. Unlucky comparison.
With Tesla superchargers ramping up, travelling cross country on a more than 10hrs road trip has never been easier! Check out some of the Tesla owners road trips across Europe!! Educate yourself!!
No doubt buddy, I am also benefiting greatly with her daily signals and a full time trader now. its been amazing and profitable
I've never heard you talk about investing in S&P500. Do you think it's a valid option for a newbie?
it's a passive investing method, if you're a newbie, it's perfect for you because it only requires temperament and 0 brain
the best method is to just DCA in the s&p 500 every month
@@randombanana640 how effective is it? is it safe? is it better than investing as an average investor?
@@leonardorenzi2861 it’s a terrible idea atm imo. The S & P 500 has performed well for the past 30-40 years due to high asset price inflation and falling interest rates. Moreover, the S & P 500 is expensive atm (a much higher P/E ratio than usual). A reversion to the mean looks firmly on the cards. What you need to invest in atm (in Buffett’s words, not mine) is yourself. Watch all the book summaries on this channel repeatedly and read some full investing books (Intelligent Investor and One Up On Wall Street are great places to start) until you know what you’re doing. Do what I’ve said, and I think you’ll make 20%+ per year, on average, comfortably. Better knowledge than the average investor (not hard to achieve) = better results than the average investor. Don’t be lazy
@@leonardorenzi2861 Buying the S&P 500 is basically like betting for the USA. And most active investors don't even outperform the S&P 500
@@leonardorenzi2861 It’s literally average performance. Assuming you believe in the long term growth of the US economy, you buy a fixed amount month by month not guessing macro trends and trying to time it. You’re going to have read The Little Book of Common Sense Investing if you literally have no idea what you’re buying into, additional reading into Modern Portfolio Theory and factor investing being optional. You’re not going to have better luck buying individual stocks in the long run at your current knowledge level.
A lot has changed and that's on everything but the truth is that i don't even care much about bullish or bearish market because Clara Strategy got me covered, I am comfortably earning monthly.
Investing in a over decade bull market not that impressed.
Well, now I know why I buy cheap stocks, I have a $1400 20 year old Volkswagen for my daily driver😂
Dude is fraud, his track record underperforms sp500 a lot with his fees…! Please educate if I’m wrong…
I was really hopeful of my investments this year, but have lost my sense of time, I have been studying the market crashes and I was startled at how some investors made millions from the recent 2008 recession and I was wondering if such success rate could be achieved in this present market?
As a rookie you need to be skeptical about the market, don't let fear drive your investment decisions. When there's a crash there's relative fear among investors, these are the time to go against the streams and choose investments whose potentials are overlooked. It's not always easy to do what is not popular but that's where your money is
The markets have been interestingly crazy I cleared a $350,000 mortgage in 5 months literally from my stocks portfolio. But it's sad that whenever something big goes wrong, a lot of people panic and hold on to money that should be working for them. Having monitored my portfolio performance return huge six figures from the last 2 quarters, I have learned why the market will remain a money den for those who know where to look.
@@donaldbrain5996 After I got screwed in the Tech bubble years ago I've been solely investing in real estate. But with the recent hyper home pricing I've liquidated a few things and have $1M in cash laying around idle. Would love to get your recommendations, I'm in search of something lucrative in the current crazy markets.
@@stricklandpilman2123 I have my funds well diversified by using trade signals from my investment advisor Jennifer Elizabeth Boland a US registered CFA who you might have heard about or seen in the CNBC news and tbh it's been a huge relief. Highly diversified>>portfolio, mind blowing earnings and little to no engagement at all on my part.
@@donaldbrain5996 Interesting.. I'd love to start moderate and maybe advance to aggressive. Do you just give her your money or copy manually? I have a full time job. And what does Jennifer Elizabeth Boland charge for her services?
Eh, you have no idea if that high quality car will work as expected. Just like a “quality” stock. Dumb CEO’s are everywhere.
ATAI is going to be the biggest psychedelic company in the world
This didn’t age well lol
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Let's talk, I've got something big to introduce ☝️....
Highly disappointed with the video
Hello blogger, I'm Catalina, the planning manager of BitBank, can we talk?
T̲h̲a̲n̲k̲s̲~̲~̲f̲o̲r̲ ̲w̲a̲t̲c̲h̲i̲n̲g̲!̲!̲!̲
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Let's talk, I've got something big to introduce ☝️....