Latest news with #BillSmead
Yahoo
3 days ago
- Business
- Yahoo
Stocks just hit a 'line of death' last reached at the peak of the dot-com bubble, veteran investor Bill Smead warns
Bill Smead warns the stock-market rally is vulnerable to a reversal. Smead shared a chart showing the S&P 500 hitting a resistance trend line. Smead also cites Warren Buffett's cautious cash position as a sign of potential market trouble. Bill Smead doesn't know how long the current stock-market rally can continue, but the veteran investor does think it's in a particularly vulnerable spot. In his Q2 letter to investors on July 15, Smead — whose Smead Value Fund (SMVLX) has beaten 96% of peers over the last 15 years, Morningstar data shows — shared a chart displaying inflation-adjusted S&P 500 returns since the 1960s. An upward trend line shows resistance at two major market peaks, in 1966 and in 2000, is also shown. In both of those instances when S&P 500 inflation-adjusted returns hit the trend line, a significant correction followed. In recent weeks, the market has touched the line for the third time since 1960 as the S&P 500 has surged to all-time highs around 6,300. There's no rule that says the market's rally can't break higher, especially if economic fundamentals, like inflation, consumer spending, and the unemployment rate, remain solid. But to be sure, it's a foreboding reminder about how frothy the current environment is, and Smead thinks the market is set up for disaster where the S&P 500 delivers exceptionally poor returns over the decade ahead. "That doesn't tell you when, but it does tell you a lot about the magnitude and the duration of what's going to happen," Smead told Business Insider. "You can't hold your breath until it breaks," he continued. "It's not a question of whether, it's a question of when." The market's impressive returns recently have been driven by growth stocks, particularly the Magnificent Seven mega-cap tech companies. So it's not necessarily surprising that Smead, a value investor, is bearish on growth stocks' prospects. A shift toward value outperformance would benefit Smead's fund, which is down 10.6% over the last 12 months. The Smead Value Fund's holdings are most heavily concentrated in the energy, consumer cyclical, and financials sectors. Still, Smead's impressive long-term track record shows he could be onto something. Other popular measures of investor euphoria also show the market is at historically rich levels. For example, the Shiller cyclically-adjusted price-to-earnings ratio is near all-time highs. Smead also cited Warren Buffett's seemingly cautious approach in recent years, holding a record cash position, as a warning sign that things could go awry in the market. Buffett warned of froth in the market leading up to the dot-com bubble, leading him to take a more conservative stance in his portfolio. As a result, his performance suffered in the year leading up to the bubble's peak, but Buffett later smashed the S&P 500's returns when the market crashed over the course of a few years. "Everybody wants to know why Warren Buffett holds so much cash," Smead said. "It's because he knows that at some point here this thing is going to get slaughtered." Read the original article on Business Insider Se produjo un error al recuperar la información Inicia sesión para acceder a tu portafolio Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información
Business Insider
3 days ago
- Business
- Business Insider
Stocks just hit a 'line of death' last reached at the peak of the dot-com bubble, veteran investor Bill Smead warns
Bill Smead warns the stock-market rally is vulnerable to a reversal. Smead shared a chart showing the S&P 500 hitting a resistance trend line. Smead also cites Warren Buffett's cautious cash position as a sign of potential market trouble. Bill Smead doesn't know how long the current stock-market rally can continue, but the veteran investor does think it's in a particularly vulnerable spot. In his Q2 letter to investors on July 15, Smead — whose Smead Value Fund (SMVLX) has beaten 96% of peers over the last 15 years, Morningstar data shows — shared a chart displaying inflation-adjusted S&P 500 returns since the 1960s. An upward trend line shows resistance at two major market peaks, in 1966 and in 2000, is also shown. In both of those instances when S&P 500 inflation-adjusted returns hit the trend line, a significant correction followed. In recent weeks, the market has touched the line for the third time since 1960 as the S&P 500 has surged to all-time highs around 6,300. There's no rule that says the market's rally can't break higher, especially if economic fundamentals, like inflation, consumer spending, and the unemployment rate, remain solid. But to be sure, it's a foreboding reminder about how frothy the current environment is, and Smead thinks the market is set up for disaster where the S&P 500 delivers exceptionally poor returns over the decade ahead. "That doesn't tell you when, but it does tell you a lot about the magnitude and the duration of what's going to happen," Smead told Business Insider. "You can't hold your breath until it breaks," he continued. "It's not a question of whether, it's a question of when." The market's impressive returns recently have been driven by growth stocks, particularly the Magnificent Seven mega-cap tech companies. So it's not necessarily surprising that Smead, a value investor, is bearish on growth stocks' prospects. A shift toward value outperformance would benefit Smead's fund, which is down 10.6% over the last 12 months. The Smead Value Fund's holdings are most heavily concentrated in the energy, consumer cyclical, and financials sectors. Still, Smead's impressive long-term track record shows he could be onto something. Other popular measures of investor euphoria also show the market is at historically rich levels. For example, the Shiller cyclically-adjusted price-to-earnings ratio is near all-time highs. Smead also cited Warren Buffett's seemingly cautious approach in recent years, holding a record cash position, as a warning sign that things could go awry in the market. Buffett warned of froth in the market leading up to the dot-com bubble, leading him to take a more conservative stance in his portfolio. As a result, his performance suffered in the year leading up to the bubble's peak, but Buffett later smashed the S&P 500's returns when the market crashed over the course of a few years.
Yahoo
24-05-2025
- Business
- Yahoo
Top investor Bill Smead: 'This is maybe the most dangerous market of my career'
Bill Smead advises against investing in the S&P 500 as momentum fuels the rally. "I don't trust the S&P 500 farther than I can throw it," Smead told BI. Smead's fund has underperformed recently, but he's enjoyed long-term success. Bill Smead was driving around Northern Alabama on Thursday, pitching potential clients on why it's an optimal time to buy into his Smead Value Fund (SMVLX). He knows it may not be an easy sell. His energy and homebuilder holdings have gotten hammered recently, and the fund has had a rough 12 months. Since May last year, it's down 11% while the S&P 500 has risen 10%. But to Smead, that's the point. Every investment discipline has its hard times, and it's during those periods when investors make money. The opposite is also true, he argues: When an investment is soaring, the likelihood that the outperformance continues decreases. That's why Smead is warning against investing in the S&P 500, which remains just below its all-time highs. "Even though the index has been a really good idea from 1981 to now in a rising market, every investment discipline goes through cold stretches," Smead said. "The longer it goes on making people rich, the more likely it is for a catch-up period." One would probably expect Smead, a value manager, to question the merits of investing in a growth-led index like the S&P 500. But he has the long-term track record to lend him credibility — over the last 15 years, he's beaten 94% of similar funds, according to Morningstar data. In 2021, Smead crushed the market by returning 40% by betting heavily on unloved economic reopening stocks and ignoring pandemic darling tech stocks. Valuations also support Smead's concerns. The Shiller cyclically adjusted price-to-earnings ratio, which measures the current price of stocks relative to a 10-year rolling average of earnings, is at one of its highest-ever levels. According to a March report from Invesco, from 1983 to 2015, the Shiller CAPE ratio has explained 78% of the S&P 500's forward 10-year returns. When valuations have been high, returns over the next decade have been low, and vice versa. Smead also points to the momentum factor as a source for his unease about the S&P 500. Lisa Shalett, the chief investment officer at Morgan Stanley Wealth Management, noted earlier this year that while the S&P 500 rose 23% in 2024, the momentum factor was up 58%. That shows that a FOMO attitude is driving the market, she said, and prices are surging at a pace well ahead of earnings growth. Steve Sosnick, the chief strategist at Interactive Brokers, said in a client note on Thursday that we've seen "one of the most powerful momentum surges that I can remember" in the weeks since Trump's "Liberation Day" tariffs were paused. But market conditions have more or less been momentum-driven since the Great Recession stock-market bottom in 2009, Smead said. Eventually, he warns, things will turn in the other direction. "The momentum of the last 15 years is the biggest momentum market in US history — bigger than the roaring '20s, bigger than the go-go '60s, and bigger than the dot-com bubble in a wide variety of ways in measuring it," he said. "I don't trust the S&P 500 farther than I can throw it." "This is maybe the most dangerous market of my career, and that includes 1987's crash, that includes the savings and loan debacle market of the early '90s, that includes the 1999 to 2009 lost decade in the S&P 500 in the dot-com bubble," he continued. "This is the most difficult market of my 45 years." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
24-05-2025
- Business
- Yahoo
Top investor Bill Smead: 'This is maybe the most dangerous market of my career'
Bill Smead advises against investing in the S&P 500 as momentum fuels the rally. "I don't trust the S&P 500 farther than I can throw it," Smead told BI. Smead's fund has underperformed recently, but he's enjoyed long-term success. Bill Smead was driving around Northern Alabama on Thursday, pitching potential clients on why it's an optimal time to buy into his Smead Value Fund (SMVLX). He knows it may not be an easy sell. His energy and homebuilder holdings have gotten hammered recently, and the fund has had a rough 12 months. Since May last year, it's down 11% while the S&P 500 has risen 10%. But to Smead, that's the point. Every investment discipline has its hard times, and it's during those periods when investors make money. The opposite is also true, he argues: When an investment is soaring, the likelihood that the outperformance continues decreases. That's why Smead is warning against investing in the S&P 500, which remains just below its all-time highs. "Even though the index has been a really good idea from 1981 to now in a rising market, every investment discipline goes through cold stretches," Smead said. "The longer it goes on making people rich, the more likely it is for a catch-up period." One would probably expect Smead, a value manager, to question the merits of investing in a growth-led index like the S&P 500. But he has the long-term track record to lend him credibility — over the last 15 years, he's beaten 94% of similar funds, according to Morningstar data. In 2021, Smead crushed the market by returning 40% by betting heavily on unloved economic reopening stocks and ignoring pandemic darling tech stocks. Valuations also support Smead's concerns. The Shiller cyclically adjusted price-to-earnings ratio, which measures the current price of stocks relative to a 10-year rolling average of earnings, is at one of its highest-ever levels. According to a March report from Invesco, from 1983 to 2015, the Shiller CAPE ratio has explained 78% of the S&P 500's forward 10-year returns. When valuations have been high, returns over the next decade have been low, and vice versa. Smead also points to the momentum factor as a source for his unease about the S&P 500. Lisa Shalett, the chief investment officer at Morgan Stanley Wealth Management, noted earlier this year that while the S&P 500 rose 23% in 2024, the momentum factor was up 58%. That shows that a FOMO attitude is driving the market, she said, and prices are surging at a pace well ahead of earnings growth. Steve Sosnick, the chief strategist at Interactive Brokers, said in a client note on Thursday that we've seen "one of the most powerful momentum surges that I can remember" in the weeks since Trump's "Liberation Day" tariffs were paused. But market conditions have more or less been momentum-driven since the Great Recession stock-market bottom in 2009, Smead said. Eventually, he warns, things will turn in the other direction. "The momentum of the last 15 years is the biggest momentum market in US history — bigger than the roaring '20s, bigger than the go-go '60s, and bigger than the dot-com bubble in a wide variety of ways in measuring it," he said. "I don't trust the S&P 500 farther than I can throw it." "This is maybe the most dangerous market of my career, and that includes 1987's crash, that includes the savings and loan debacle market of the early '90s, that includes the 1999 to 2009 lost decade in the S&P 500 in the dot-com bubble," he continued. "This is the most difficult market of my 45 years." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-04-2025
- Business
- Yahoo
Smead Value Fund's Strategic Move: Millrose Properties Inc. Takes Center Stage
Warning! GuruFocus has detected 4 Warning Signs with SPG. Smead Value Fund (Trades, Portfolio) recently submitted its N-PORT filing for the first quarter of 2025, shedding light on its strategic investment decisions during this period. Smead Capital Management, the adviser to the Smead Value Fund (Trades, Portfolio), caters to a diverse clientele, including individuals, advisors, family offices, and institutions worldwide. The fund primarily invests in U.S. large-cap companies and offers various share classes, including Investor Share Class (SMVLX) and A Share Class (SVFAX), among others. Managed by Lead Portfolio Manager Bill Smead and Co-Portfolio Manager Cole Smead, CFA, the fund aims for long-term capital appreciation through concentrated positions, typically holding 25-30 companies. Smead's investment philosophy focuses on eight criteria, including economic need, competitive advantage, profitability, and shareholder-friendly management. Smead Value Fund (Trades, Portfolio) added a total of one stock to its portfolio this quarter: The most significant addition was Millrose Properties Inc (NYSE:MRP), with 1,081,478 shares, accounting for 0.46% of the portfolio and a total value of $24.72 million. Smead Value Fund (Trades, Portfolio) also increased its stakes in one stock: The most notable increase was in Merck & Co Inc (NYSE:MRK), with an additional 139,193 shares, bringing the total to 3,034,166 shares. This adjustment represents a significant 4.81% increase in share count, a 0.24% impact on the current portfolio, with a total value of $279.90 million. Smead Value Fund (Trades, Portfolio) reduced its position in 27 stocks. The most significant changes include: Reduced Simon Property Group Inc (NYSE:SPG) by 117,876 shares, resulting in a -5.25% decrease in shares and a -0.36% impact on the portfolio. The stock traded at an average price of $177.83 during the quarter and has returned -8.62% over the past 3 months and -6.81% year-to-date. Reduced Lennar Corp (NYSE:LEN) by 119,929 shares, resulting in a -5.25% reduction in shares and a -0.35% impact on the portfolio. The stock traded at an average price of $131.81 during the quarter and has returned -19.83% over the past 3 months and -13.61% year-to-date. As of the first quarter of 2025, Smead Value Fund (Trades, Portfolio)'s portfolio included 30 stocks. The top holdings were 7.41% in Simon Property Group Inc (NYSE:SPG), 6.3% in American Express Co (NYSE:AXP), 5.6% in Macerich Co (NYSE:MAC), 5.49% in Amgen Inc (NASDAQ:AMGN), and 5.24% in Merck & Co Inc (NYSE:MRK). The holdings are mainly concentrated in 9 of the 11 industries: Financial Services, Energy, Consumer Cyclical, Real Estate, Healthcare, Consumer Defensive, Industrials, Technology, and Communication Services. This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein. This article first appeared on GuruFocus. Sign in to access your portfolio
