Advertisement

Terry Smith: Ignore global events

Fund manager Terry Smith thinks basing your investment decisions on global events is a waste of time.

"I remain amazed by the number of commentators, analysts, fund managers and investors who seem to be obsessed with trying to predict global events on which to base their investment decisions," fund manager Terry Smith tells The Daily Telegraph.

This is a waste of time, as it is unlikely to result in better investment returns. "To usefully employ your predictions you would not only have to be mostly correct, but you would also need to gauge what the markets expected to occur in order to predict how they would react."

Advertisement - Article continues below

In his annual letter to his investors for 2017, Smith took a swipe at rivals who had warned of a stockmarket bubble, noted Citywire earlier this year especially a bubble in the type of stocks he holds. Critics had been predicting for the past five years that these firms would soon start to underpeform. "During that time the [Fundsmith Equity Fund] has risen in value by over 175%," Smith wrote. "So far, they have only managed to demonstrate the difficulty in making predictions and implementing actions based upon them."

Investors should focus on things they can control for example, "whether we own good companies and what price we pay to own their shares". Smith favours healthcare, consumer staples and technology. He recently bought shares in Facebook at near all-time highs, but isn't worried he's missed the boat, says The Daily Telegraph. Facebook's share price may be high, "but its cash flows and earnings have grown faster than the share price, which may make it cheap".

Advertisement
Advertisement

Recommended

Brexit begins: what do the UK and the EU want from a trade deal?
Brexit

Brexit begins: what do the UK and the EU want from a trade deal?

With Brexit now done, the trade talks can begin. But who wants what from a UK/EU trade deal, and how likely are they to get it?
3 Feb 2020
Another Brexit delay – so what happens now?
Economy

Another Brexit delay – so what happens now?

Last week’s excitement over a Brexit deal getting done proved to be premature. John Stepek looks at where we are now, and what it means for your money…
21 Oct 2019
Brexit: Will we stay or will we go? And what does it mean for investors?
Share tips

Brexit: Will we stay or will we go? And what does it mean for investors?

Brexit has descended into a farcical war of attrition. John Stepek looks at what it all means for your money – whatever the eventual outcome – and pic…
10 Oct 2019
It’s “Brexit or bust” for Boris
Economy

It’s “Brexit or bust” for Boris

Boris Johnson’s strategy is straightforward – to make sure that he’s “the people’s choice” at the inevitable upcoming general election
10 Oct 2019

Most Popular

BP has slashed its dividend – and markets love it
Income investing

BP has slashed its dividend – and markets love it

BP has bowed to the inevitable and cut its dividend in half – and its share price promptly rose. John Stepek explains what it means for shareholders …
4 Aug 2020
Listed companies are dying out, and that could have serious consequences
Stockmarkets

Listed companies are dying out, and that could have serious consequences

Private equity is taking over from public stockmarkets as the biggest provider of capital to companies. That’s bad for investors and bad for society a…
3 Aug 2020
Can the recent rally in sterling continue?
Sponsored

Can the recent rally in sterling continue?

A "double top"  – a very recognisable pattern – is forming in in the US dollar. Dominic Frisby explains what it is, and what it could tell us about st…
3 Aug 2020