Category: Quarterly Newsletters

[…] The frustration of other investors and the strength of non-US dollar assets we believe will be our comparative advantage.

[…] We at Smead Capital Management believe the stock market wants to cause stock market failure by being extremely difficult in 2023. Most investors were fooled in 2022 by expecting circumstances similar to the prior ten years. […]

[…] In our opinion, finding asset-rich businesses that are self-funding with low-cost capital structures (cheap debt) is the most interesting investment to make. You get the cover of macroeconomic fears as your discount tool to be the buyer. However, as the cost of capital rises and economic fears dissipate over the next few years, you are likely to have fewer competitors as operating costs and funding pressure keep new entrants out. We believe that this profile of stocks trading in international equity markets is “gonna be a star.” […]

[…] At this moment we are doubling down on our eight criteria for common stock selection and the bull market in commodities/land which broke out during the pandemic. What this means is that we are doing what we always try to do and that means that we expect to perform well going forward. […]

Corona’s 1995 classic “The Rhythm of the Night” rings in our ears as we stare at the circumstances that are likely to expose the darkness of the 2020’s. We saw the light in the 2010’s and will see the night in the 2020’s. Our aim for this letter is to give an understanding to investors of the rhythm of what we are likely to see in the road ahead. […]

As we’ve hit the halftime mark for the investment year 2022, we are faced with a daunting two-headed monster. One head is the first full year of unwinding what Charlie Munger called, “the biggest financial euphoria episode in his career, because of the totality of it.” The second head is what we call “wolverine inflation,” which is mean and leaves a stench. This combination is powerful and, in many ways, unprecedented. How do we navigate a stock market which is dealing with a two-headed monster? […]

Depending on your age, the bull market in stocks started in 1982, with stocks trading at six-times earnings and the U.S. Treasury Bonds paying 15% interest, or in 2009 at the bottom of the financial crisis. Either way, the combination of the Federal Reserve Board’s liquidity and the popularity/stock market domination of technology stocks have entered us into what we will call “The Twilight Zone.” […]

Moving forward beyond the pandemic of 2020, the theme the world woke up to is that people want more…more home, more land, more entertainment, more goods. We learned that more is a scarce good today. The best phrase for capturing the mind of consumers today is what a partner of ours mentioned to us: The Race For Space. […]

There are three pillars of investing for us at Smead Capital Management. First, we must know the history of the stock market. Second, we must understand the mathematics of the stock market. Third, we must understand the psychology of the stock market. As we enter the year 2022, we believe the S&P 500 Index and the oil/gas Industry are at polar extremes on all three pillars. […]

Halfway through the year 2021, we must be reminded to “not confuse brains with a bull market.” These are the words we were taught back in the 1980’s. When all boats float, don’t think you are a genius because your boat floated. Investors in the S&P 500 Index, mega-cap tech stocks, momentum disruption stocks and a wide variety of success stories the last five years floated. The former kings of the stock market (active stock pickers) were pronounced dead. Goodbye Warren Buffett, John Templeton, Peter Lynch and all the others who were declared kings of stock picking.