Author: Smead Capital Management

In preparation for a talk, I began to review Sir John Templeton’s track record with the Templeton Growth Fund (TEPLX), which he managed from 1954 to 1991. At the age of 34, with a father that broke into the investment business in 1980, I was very aware of Templeton’s success in his career, but unaware of how the results came to his clients. What you walk away with after reviewing his track record is the knowledge that very few people in our industry (particularly academics) are conscious of what it took to produce that success. After Templeton, we also reviewed Sequoia Fund (SEQUX) from inception to date. We walked away thinking that the ride that the investors had with these vehicles wasn’t the most important part of the experience, it was the results. Academia says otherwise. We will unpack this.

Our long-time readers are aware that we analyze the U.S. stock market through the prism of what we call “well-known facts.” A well-known fact is a body of economic information which is pretty much known to all market participants and has been acted on by almost everyone with available capital. Former Intel CEO Andy Grove use to say, “when everyone knows something is so, nobody’s knows nothin’.” Today there are several well-known facts which we believe are leading investors down a destructive path.