FredBloggs wrote:GeoffF100 wrote:It occurs to me that what we may be witnessing here is a bubble phenomenon. Smith has been lucky enough to have a good "track record", and spins a good yarn. He attracts more investors. He buys more of the same stocks, pushing the prices up. His "track record" looks even better. He attracts more investors... Eventually, the bubble comes to an end when the prices of the stocks he is buying become so ridiculous that people start selling the stock faster than he can buy it, and then the whole process goes into reverse.
How far would you like to go back? It is only the last seven years that the public have been fortunate enough to be able to invest with Smith. The guy has been doing the exact same thing all the way back for several decades, including when he ran the Tullet Prebon pension fund. Fundsmith has directly evolved from this decades long experience. The suggestions that the guy is in some way "lucky" is quite laughable frankly speaking, and so is the suggestion that he has any influence of the share price of companies he invests in. OK, the more you try, the luckier you seem to get. However, I'm really not here to defend the bloke but I do feel the need to debunk any thinking that the guy is merely "lucky". It simply doesn't hold water I'm afraid.
smith did a presentation where the tullet prebon pension fund compounded by over 14% annually, including through the recession. fund smith has compounded at 18.2% which is broadly in line with that given the business cycle the fund was started in.
after some scepticism, i have done some research on the fund, and i've decided to add it to my portfolio. i noted that the top holdings in the fund are technology and healthcare businesses, not consumer staples.
the focus is on how much cash a business has at the end of the year, either to reinvest or pay dividends. that is what investing boils down to ultimately and i'm surprised how many people try and complicate it.