While listening to Rob Arnott on a recent Morningstar podcast, I became enamored with something that Arnott was emphatic about. He pointed out that the structural advantage of being a contrarian isn’t being smarter. Every winning purchase in the stock market comes as an opportunity cost to the seller. In aggregate, the non-passive portion of the market will look like the respective index. Arnott asked the question, “Who are you trading against?” In other words, who is on the other side of your transactions in the stock market?09/01/20 by Smead Capital Management
The investment marketplace suffers from information overload. Smead Capital Management seeks to cut through the cacophony of other media resources to focus on what is important to long-term common stock ownership. This comes through our missives, quarterly newsletters and appearances in the media to provide thought leadership for our potential and current investors.
In a recent interview with CNBC, a reporter asked us why Berkshire Hathaway (BRK) was buying Barrick Gold common stock shares. As a high school and college student in the 1970s, my education was formed during a time of explosive inflation and included the economic problems which came with consistently rising prices. Although that was long ago, after the interview, I decided to look up the definition of inflation to remind myself. […]08/25/20 by Smead Capital Management
Due to the pandemic, there is a sense of permanence on Wall Street to what has transpired. This permanence focuses on the changes that we have seen in the recent five months in our daily lives. These changes include shopping online versus shopping in-person, getting takeout versus sitting in a restaurant and working from home instead of talking sports around the water cooler with our colleagues. The question at hand for this argument of permanence is whether it is truly permanent or if it is temporary. The definition of permanent is, “lasting or intended to last or remain unchanged indefinitely.” So, to us this begs the simple question: will our lives remained changed indefinitely?08/18/20 by Smead Capital Management
In the time since COVID-19 hit the economy and stock market, there has been three phases. First, the question was ‘when’ will the economy return to pre-COVID normal? Next came ‘sooner or later’? Recently, we have moved to ‘will the economy ever come back’? For long-duration investors like us, what are the investment implications in where we are now in a U.S. stock market with many securities priced for ‘never’?08/04/20 by Smead Capital Management
When you are in a financial euphoria episode, like the one we are in currently, it is hard to visualize the impact it has when it breaks. Historically, it is the leading cause of stock market failure. We thought it would be helpful to discuss the secondary impact of the euphoria on common stocks. What do companies not in the center of the euphoria do when the fever breaks? How much portfolio adjustment do you need to do to protect yourself? What are the investment implications of owning common stocks whose prices have been inflated by mania, but are not in the center of the storm?07/28/20 by Smead Capital Management