The Best Investor In Britain? How Terry Smith Beats The Market With Quality Stocks

Mar 20, 2024

Explore how Terry Smith beats the market with quality stocks, his 10 investing rules, portfolio management insights, performance fees analysis, and the criteria for good companies. Dive into Fundsmith's standout features, businesses resilient to change, and the replicability of outperformance.

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ADVICE

Buy Right, Sit Tight

Buy good companies and hold them long-term.
Be opportunistic with existing holdings and add to them when prices are favorable.

ADVICE

Don't Over Diversify

Avoid over-diversification to prevent stress and index-hugging.
Concentrate your portfolio in a smaller number of high-conviction stocks.

ANECDOTE

Terry Smith's Background

Terry Smith, born in 1953, studied history, not finance.
He worked at Barclays, became a top banking analyst, but avoids bank stocks.

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On this episode of Chit Chat Stocks, Ryan and Brett analyze the British investment fund called Fundsmith and its founder Terry Smith. We go through:

(00:00) Introduction and Background

(02:19) Buy Right and Sit Tight

(03:18) Don't Over Diversify

(04:16) About Terry Smith

(08:55) Margin of Safety

(16:14) Fundsmith Performance

(26:09) Criteria for Good Companies

(32:57) Businesses Resilient to Change

(39:55) Do Performance Fees Work?

(41:36) Fee Structures and Performance Fees

(44:50) 10 Rules for Investors

(49:43) FundSmith Holdings

(54:20) Portfolio Management and Strategy

(01:00:45) Fundsmith's Standout Features

(01:03:16) Replicability and Outperformance

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Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation.