Author: Smead Capital Management

Reuters: CIO, Bill Smead offers thoughts on Berkshire

Berkshire third-quarter profit up 29 percent; operating results miss By Jonathan Stempel and Luciana Lopez For more information go to www.reuters.com. The information contained in this article represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no

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The Thermometer of the Stock Market

As long-duration owners of common stock, we believe it is the wealth created by the businesses which causes the owners to prosper. We have also been participants in the US stock market since 1980 and are very aware of big swings in enthusiasm for owning common stocks. So we thought it would be helpful to share our opinion on the current temperature of the market. To take the temperature of the market we need to examine the thermometer readings.

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3Q13: Confidence in the Future

The US stock market gained 452 points from 1229 at the start of 1999 to now. This gain of slightly more than 39% is less than a 3% annualized average gain and combined with dividend payments gave investors an average annual return of 4.09%. The stock market in the US has historically returned closer to 10% with dividends reinvested and for this reason, we contend, these recent returns have been very unattractive to both institutional and individual investors. What have we learned in these last 15 years which can help us to succeed going forward?

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