INVESTING FOR GROWTH (BY TERRY SMITH)

"Buy once, cry once" is the preferred strategy of the British fund manager Terry Smith, who has returned more than 500% in the stock markets since the inception of his "Fundsmith" back in 2010.

Terry Smith, a British fund manager, has, since the inception of his Fundsmith T Class, kept on buying only the equivalent of quality cars in the stock market. This video will explore his methods for buying quality without overpaying. Fundsmith has been a 6-bagger in a little over a decade, so his investment strategy has served his investors well.

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(If you sign up I earn a small commission)

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Timestamps for growth:
00:00 Intro
01:45 Great Car? Great Choice!
04:30 Don't Pay Extra for Unnecessary Gadgets
07:28 Wait for the Discount
10:57 Don't let the Paint Job Fool You
13:03 No Car is a True All-Rounder

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Many thanks to my friend Richard Dykes who helped me in making this video possible.

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My goal with this channel is to help you make more money and improve your personal finances. How to become a millionaire? There are many ways to get there – investing in the stock market, becoming a stock trader, doing real estate investing, or why not becoming an entrepreneur? But whether you are interested in how to invest in stocks or investing strategies for creating passive income with rental properties – I hope to be able to provide you with a solution (or at least an idea) here. Warren Buffett - the greatest investor of our time - says that you should fill your mind with competing ideas and then see what makes sense to you. This channel is about filling your mind with those ideas. And in the process – upgrading your money-making toolbox.

[dkny]

It is a great book. I read “The Psychology Of Money” just to learn that investing in spy or voo index was the main idea. “ The millionaire Real Estate investor” was amazing too. “The richest man in Babylon” is also a must read.

[ms-hiqy]

Mr. Swedish investor I can’t tell you how much me and my friends love your videos, they are each and every time so so good. The quality, the intelligence, the humor, and the consistency of gr8 videos are unbelievable, and above all the best advice that can be found on this whole platform in such a fun and enjoyable way. we would like to thank you so much for your great work. You’ve really inspired us to be doing value and long term investments. Thanks you so much for your beautiful work. And please keep it up with more 👍✌️❤️👏👌

[timoverdijk]

The quality of your videos is of the highest level.

[maxschoon]

I always enjoy watching your videos; they make me reflect. I am not sure what to do in this particular market when one has a small portfolio. If you think about a ten-year horizon, then a DCA strategy on companies you believe in might be good. And if you are an investor and hold a big portfolio with diversified assets right now, I am also unsure what to do. I have sold all the companies where I cannot be confident about their future cashflows. Rather hold cash than being a victim of an illiquid market, affecting certain company's financing. There is a reason Berkshire holds a lot of cash; they face the same uncertainties as we do, and next to that, it is more difficult for them to find adequate investments.

P.s. Good luck with the bots; this comment section also seems swamped.

[poonamkumar]

FYI, I bought a Saab 9000 six years ago for A$100 (yes, that's about US$70), and have driven it regularly since then (about 8000kms per annum) with the only repairs being things that normally wear out on cars (filters, brake pads etc).

Incidentally, my family's share portfolio has gone from $800k when I started managing it in 2005 to $9.5m today whilst paying out a six figure annual pension to my parents and taking in much much less in new capital. Those returns are overwhelmingly from buying the sharemarket equivalents of my trusty Saab.

[philt]

I Mr. Swedish! First, thank you for all your videos. They are very instructive and useful. I want to know what's a good or bad result from the FCF Yield per share ratio at 12:45 ?
Thank you very much!

[edal]

Thanks for your Always waiting for your next one. I have recommended you to some people gravitating around investment...thanks, take care...

[anhgiap]

Finally seeing this on your channel. Dont know if you remember this, but I wrote you an email one and a half year ago recommending this book. Thanks for your work and dedication to us investors here.

[aspasricha]

They took our jobs!! Excellent video as usual!

[simaopedro]

I used this method to buy NFLX a year ago. NIce video bro!

[vidya]

I like to enjoy the intrinsic compounding and dividend compounding during the long term growth period at the time.

[vidya]

For asset light business model, with high return on invested capital and growth, the company is able to grow vertically or horizontally and at the same time has enough cash for dividend distribution.

[brainstormer]

In my humble opinion, the most important step in personal finance is to read the book "Millionaire Next Door". It's a real eye opener.

[RoyalBlackandwhite]

My first book I read. Terry is a amazing manger if you take his returns from his pension fund in Which he managed from 2003-2013 he got a return of 13%. Almost double compared to the msci all world index

[leverage]

Thank you for this video !
My favorite is take away # 4 because it shows how companies could manipulate their accounting.

Could you make a video about the various ways that companies manipulate their accounting to bait unsophisticated investors?

I believe it will give very great value to all of us who follow your videos :) Because just imagine:

We spend hours looking at annual reports, only to miss something that the company has manipulated in their financial statements..and we could never figure those manipulated numbers if we have no idea what to look for or how to look..

So PLEASE Swedish Investor, please make a video on how companies manipulate their numbers!

[eventhatsme]

Thanks! I assume that FCF can also be calculated by (Cash from operations - Capital expenditure) (for last period)/ MCAP (running)? This will make it easier to track from i.e. TIKR.

Edit: I see that inverse ratio: "Forward Market Cap / Free Cash Flow" and "Trailing Market Cap / Levered Free Cash Flow" are available in the global screener and valuation in TIKR now.

Do you have some ballpark FCF numbers that would be a good buy?

[gerard]

Excellent video (as always!).
I've been reading a lot on this style of investing and it just makes sense to me. Other good books on this are "Only the best will do" and "Quality Investing" (also Phil Fisher's!).
The big question for me here is what price is a sensible price. The authors suggest waiting for a "glitch" (which might never come), or using the 10y bond rate, so you'd assume that anything now going for 3% FCF yield would be acceptable.
Ultimately I don't think there's a right answer on valuation - it all depends on how much longer the FCF growth will persist, and your long-term view of it. When the growth stops, multiples will contract. Otherwise you can assume them to keep a similar valuation as at the moment of buying, changed by the movement of interest rates.
So a 3% FCF yield on a company growing it at 12% per year will roughly return that 12+3%. But if it stops the growth in two years and the multiple halves, you will get a poor result. If that growth maintains for 20 years, you will have a hell of a result.

[realestalex]

The risks segment of the annual report can work as a reasonable replacement for the "silver bullet" approach, most companies are going to mention one or two competitors they believe are a threat.

[lakhangangurde]

Very very nice video sir 👌...
I love your video. ❤️

[dollarpubg]

You u uploaded so late i was waiting for videos 😍