William Smead
Chief Executive Officer
Chief Investment Officer

Subscribe to the Missives Podcast
Click here to listen to this Missive

Dear Fellow Investors:

We’ve experienced a sharp pull back in the “Greatest Bull Market Nobody Loved”. While this market takes an intermission, we at Smead Capital Management would like to remind everyone where we’ve come from and what history might tell us about what comes next.

In the fall of 2008, the U.S. Treasury and Federal Reserve Board took massive actions designed to avert a total meltdown of our economy. At the time, bearish investors argued that the best these government actions could hope for was to keep us out of a depression. They then argued for a three to four-year recession.

By early 2009, it was obvious that the worst aspects of the Credit Crisis (huge spreads between Treasury interest rates and high grade corporate rates/frozen money markets) were healing. Bearish investors argued that this would only affect the depth of the “Great Recession” and said that increasing unemployment and continued housing foreclosure would prevent economic growth. They said this would cause stocks to decline to prices comparable to 1982 price-to-earnings ratios, even though interest rates were high back then.

By late spring and early summer, obvious signs of economic improvement (green shoots) in California housing and multiple economic statistics were evident. Bearish investors argued that unemployment was rising and the existing debt load was going to cripple consumer spending. In their eyes, the stock market’s rally from March to July would evaporate in a retest of the March lows.

Now we know that GDP grew well over 3 percent in the 3rd quarter of 2009. Bearish investors, who argued that the market couldn’t go up in the first place, now argue that it has gone up too far and too fast. They believe that without the government’s help there would be no economic improvement and a return to economic contraction is possible because of stubbornly high unemployment and continued foreclosure. Are you seeing a pattern?

As we came out of the 1981-82 recession and the stock market soared, bearish investors said the same thing and the Bull Market lasted five years. As we came out of the Savings and Loan/Credit Crisis in 1990, the bearish investors argued that a “jobless recovery” would stop a Bull Market and it lasted for three years.

The willingness of long-term investors to listen to these “broken records” and the unwillingness of equity mutual fund investors to add to their holdings is psychological proof that it is not different this time. Trust ownership of quality common stocks and don’t be surprised if this Bull Market lasts three years and breaks a number of records on the upside. We like our portfolios and the results our companies are producing.

When the people who have been wrong stop using the same argument about unemployment and existing debt levels, we are all going to have to find something new to worry about.

Best Wishes,

William Smead

The information contained in this missive represents SCM’s opinions, and should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results. The securities identified and described in this missive do not represent all of the securities purchased or recommended for our clients. It should not be assumed that investing in these securities was or will be profitable. A list of all recommendations made by Smead Capital Management with in the past twelve month period is available upon request.

We Advise Investors

Sign up to get our advice sent straight to your inbox.

Recent Missives

Stock Market Psychology

December 5, 2023

As bottom-up stop pickers and long-term investors, sentiment indicators don't rank very high on our list of important considerations. However, there are times when extremes of sentiment occur and can have an impact...

⟶ Keep Reading

Fox Business: Bill Smead on Bank Stocks and the Magnificent 7

December 2, 2023

  Bank stocks are cheap compared to the S&P 500: Bill Smead   Hosted by Charles Payne Stocks mentioned: OVV, APA, DVN For more information go to Bank stocks are … Fox Business:...

⟶ Keep Reading

Bloomberg: Cole Smead, CFA on the Loss of Charlie Munger

November 30, 2023

Charlie Munger, Who Helped Buffett Build Berkshire, Dies at 99 By Noah Buhayar For more information go to www.bloomberg.com. Stocks mentioned: BRK The information contained in this article represents SCM’s … Bloomberg: Cole...

⟶ Keep Reading

Yahoo Finance: Bill Smead on Munger’s Instilled Investment Principles

November 30, 2023

  Charlie Munger was ‘the punk rocker of Wall Street’: Analyst By Seana Smith and Luke Carberry Mogan For more information go to finance.yahoo.com. Stocks mentioned: BRK The information contained in … Yahoo Finance:...

⟶ Keep Reading

CNBC ‘The Exchange’: Bill Smead on Charlie Munger’s Legacy

November 30, 2023

Watch CNBC’s full interview with Bill Stone and Bill Smead For more information go to www.cnbc.com. Stocks mentioned: BRK The information contained in this tv appearance represents SCM’s opinions, and … CNBC ‘The...

⟶ Keep Reading

Reuters: Bill Smead on Berkshire Succession

November 29, 2023

  After Munger’s death, Berkshire succession comes into focus By Jonathan Stempel For more information go to reuters.com. Stocks mentioned: BRK The information contained in this tv appearance represents SCM’s … Reuters: Bill...

⟶ Keep Reading

We Advise Investors

Sign up to get our advice sent straight to your inbox.

US INVESTORS

Individual Investors

OR

Financial Advisors, Family Offices,
and Institutional Investors

OR

NON-US INVESTORS

Individual Investors

OR

Financial Advisors, Family Offices,
and Institutional Investors

OR

Scroll to Top