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TIP526: Quality Investing: Lessons from Terry Smith

Feb 21, 2023

55:55

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Podcast summary created with Snipd AI

Quick takeaways

Focus on buying good companies with high returns on capital for market outperformance.

Avoid overpayment and prioritize quality over cheap valuations when investing in businesses.

Hold onto quality companies for long-term wealth creation, emphasizing fundamental financial performance over short-term market trends.

Deep dives

Terry Smith's Investment Philosophy and Success

Terry Smith, the founder and CEO of Fundsmith, has achieved impressive market outperformance by following a three-point strategy. He focuses on buying good companies with high returns on capital, avoiding overpayment, and maintaining a 'do nothing' approach. Smith's clear-sighted investment style emphasizes quality over cheap valuations, leading to the success of his portfolio.

The 10 Golden Rules of Investment

01:41

The Key Factors for a Quality Investment in a Company

00:45

Investing for Growth by Terry Smith

05:10

Terry Smith's Stocks Performance Over the Past 10 Years

01:44

Introduction

2min

Investing in the Fundsmith Equity Fund

4min

Terry Smith's Investment Strategy

3min

How to Overcome Volatility in the Financial System

6min

Stock-Based Compensation - The Third Leg of Terry Smith's Strategy

2min

Payroll Tax Refund - Get Your Hands on This Payroll Refund

6min

Investing for Growth by Terry Smith

5min

The Secret of Quality Companies

4min

How to Determine a Fee Structure in a Hedge Fund

5min

10.

The Investors Podcast - Millennial Investing

3min

11.

The Efficient Market Hypothesis

3min

12.

Investing in Value - What Terry Smith Says

5min

13.

The Lessons of Investing in a Good Company

2min

14.

The Mistake of Selling Domino's Pizza

6min

15.

Terry Smith's Stocks Performance Over the Past 10 Years

2min

16.

Terry Smith's Investment Philosophy - Episode 501

4min

On today’s episode, Clay Finck discusses the investment philosophies and framework of Terry Smith, who is the founder and CEO of Fundsmith and also known as the Warren Buffett of Great Britain.

Smith started Fundsmith in 2010, and ever since has returned 478% to his investors versus his benchmark returning 256%. He did this using the simple framework of buying good companies, not overpaying, and holding them for the long-term.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

02:12 - Why Terry Smith only seeks to own high-quality companies.

04:52 - How investors can go about determining the quality of a business.

08:01 - How Terry Smith compares the valuation of his portfolio against that of the S&P 500.

15:15 - Why investors must be cognizant of stock-based compensation when valuing a company.

29:28 - Why macroeconomic views and opinions are irrelevant for investors in quality businesses.

46:39 Why stocks are the best long-term investment relative to other asset classes.

53:51 - What Terry Smith’s top US equity holdings are today.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
Terry Smith’s Shareholder Letters.
Rebecca’s Article on Mean Reversion.
Don’t miss our review of Four Wide Moat Stocks for 2023.
Check out our takeaways from Warren Buffett's Shareholder Letters.
Follow Clay on Twitter.

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We Study Billionaires - The Investor’s Podcast Network

TIP526: Quality Investing: Lessons from Terry Smith

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Terry Smith's Investment Philosophy and Success

Investing in Strong Companies with Sustainable Returns

Challenges of Value Investing and Consistency in Approach

Strategic Portfolio Concentration and Recent Investment Moves

Terry Smith's Insights on Investment Lessons and Business Quality

The 10 Golden Rules of Investment

The Key Factors for a Quality Investment in a Company

Investing for Growth by Terry Smith

Terry Smith's Stocks Performance Over the Past 10 Years

Get the Snipd
podcast app

AI-powered
podcast player

Discover
highlights

Save any
moment

Share
& Export

AI-powered
podcast player

Discover
highlights

We Study Billionaires - The Investor’s Podcast Network

TIP526: Quality Investing: Lessons from Terry Smith

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Terry Smith's Investment Philosophy and Success

Investing in Strong Companies with Sustainable Returns

Challenges of Value Investing and Consistency in Approach

Strategic Portfolio Concentration and Recent Investment Moves

Terry Smith's Insights on Investment Lessons and Business Quality

The 10 Golden Rules of Investment

The Key Factors for a Quality Investment in a Company

Investing for Growth by Terry Smith

Terry Smith's Stocks Performance Over the Past 10 Years

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