Author: Smead Capital Management

We were fortunate to watch a recent interview Charlie Munger did with Caltech as a distinguished alum. We consider him to be one of the most successful contrarian investment thinkers on the planet. At 96 years of age, he has no fear of being politically incorrect. We contrast this with the mountain of writing, media and rhetoric associated with the topic of climate change.

[…] The publicly-traded home builders, whose market share and moat grow by the minute, make up only a scant 0.23% of the S&P 500. At Smead Capital Management, we are practicing what Warren Buffett describes as the Mae West Theory, “too much of a good thing can be wonderful.” We currently own around 14% of our portfolio in home builders. As they prosper the next ten years and interest rates rise as a result of Millennial household formation, this could be one of the few industry groups which won’t suffer from valuation contraction. […]

[…] Heed this advice for the current stock market activities: Fear stock market failure! Wall Street is pumping out IPOs, SPACs and all kinds of neat, shiny ornaments. They are selling what is in season. To name a few of these themes: WFH (work from home), TAM (total addressable market), food delivery, eGaming, remote learning and technology dependence. These are wonderful slogans for selling ornaments to willing buyers. […]

[…] Barbra Streisand sang it best; academic studies prove that people who get normal human interaction have much better mental health. Despite this fact, investors have been scrambling to capitalize companies which benefit from people voluntarily imprisoning themselves in their own homes. Work from home, exercise from home, cook from home, movies from home, sports from home and just about everything else from home is all the rage. Every newbie tech company attached to this phenomenon is capitalized at an enormous price-to-sales ratio and a huge price-to-earnings ratio, if they have one. […]

While the designs and lifestyles around us are changing, the human experience is constant. We are born, we age, we meet many people (including for most our spouse(s)), we procreate, and we die. This chain has not been broken for 10,000 years! While this seems so simple on its face, many confuse their experience for something more unique. In academia, some may term this ‘chronological snobbery’. In the investment business, we call it financial euphoria. The number one cause of stock market failure!