Author: Smead Capital Management

[…] A classical education and the texts that form its base have lasted because there is truth that has been tested time and time again. The reason value has lasted is because it has truth that has been tested time and time again. We may not quote stocks in eighths or quarters like John Maynard Keynes or Benjamin Graham did, but we think in congruent terms. Our work is “done to last forever.” Our clients benefit from the permanence of this. The public will be a victim In Sententia Tempore. We applaud our investors for having the gumption to stick to dead, but timeless thinking. They fear stock market failure and the opinion of the times.

Lina Khan is being appointed to the Federal Trade Commission by President Biden’s administration. There are rumblings of resistance from Republican Senators like Mike Lee from Utah. This missive is devoted to helping our investors understand these matters and the impact this could have on stock market returns over the next ten years. Remember, the key to success in common stock ownership is avoiding stock market failure.

[…] A classical education and the texts that form its base have lasted because there is truth that has been tested time and time again. The reason value has lasted is because it has truth that has been tested time and time again. We may not quote stocks in eighths or quarters like John Maynard Keynes or Benjamin Graham did, but we think in congruent terms. Our work is “done to last forever.” Our clients benefit from the permanence of this. The public will be a victim In Sententia Tempore. We applaud our investors for having the gumption to stick to dead, but timeless thinking. They fear stock market failure and the opinion of the times.

[….] We are asking you to use your “head” and “forget” owning stocks at enormous price-to-sales ratios or ones which are massively over-owned by indexes and other passive vehicles. We know your “heart is sayin’, don’t let go!” Most investors in financial euphoria episodes “intend” to “hold on to the end” and suffer the consequences. We call the consequences stock market failure.

Warren Buffett’s annual letter was great in all the easy ways and disappointing in the ways that matter the most to his shareholder partners. Last week, Charlie Munger reiterated the idea that successful investing is “an unusual combination of patience and aggression.” The communication of the May 1, 2020 Annual Meeting and this letter tell us that the aggression was absent in the spring and appears to be in hiding in January of 2021.