저자: Killik&Co진행자;주인용인물TerrySmith · 외국인
요약 보기
패시브 투자(인덱스/ETF) 확산이 시장 모멘텀을 과도하게 키우고 있으며, 상위 소수 종목(AI·하이퍼스케일러)에 대한 쏠림이 심하다고 경고한다. 패시브 자금 흐름 주도로 모멘텀이 30년래 최고 수준이며, 1990년대 액티브 펀드 거래 비중 80%에서 현재 10%로 감소했다는 점을 지적한다. Terry Smith는 ROCE, 매출총이익률, 영업이익률, 현금전환율, 이자보상배율, FCF 수익률 같은 기본 지표를 점검하고 좋은 기업을 적정가에 사서 보유하라고 강조한다. 과거 닷컴 버블과의 유사성을 언급하나 역사가 그대로 반복된다고 단정하지는 않는다.
다듬은 글
Welcome to this Killik Explains video. This time I want to turn to the views of a man I have often quoted, a very well-known one, one of the most successful retail fund managers in the UK, if not the world, namely Terry Smith. He's had a somewhat more difficult period of performance right now, but despite that, he's extremely experienced, analytical, and I always think it's worth paying attention to what he says .
And now he has some reservations about the markets. Well, yes, that's certainly his opinion. Certainly, to some extent he is trying to justify a period of, by his standards, his high standards, somewhat lower productivity. But, despite that, never dismiss what Terry Smith says, in my opinion. The CEO of Fundsmith, for those who have n't encountered him before .
Now, Simon Evan-Cook from Wealth Yourself, he's the foundation of where we're going with this. Passive investing has conquered the world. What could go wrong? Quite a lot. And this reflects the argument that Terry Smith has made about the seemingly unstoppable growth of something called passive investing.
Passive investing is when you don't make active decisions about which stocks, funds, or bonds to buy. You are simply tracking a portion of the market with a very simple exchange-traded fund, for the sake of argument. So the arguments for this, for using passive exchange-traded funds, things that just track other things, okay?
You can do it mechanically. You can create them using a computer program, a spreadsheet. You don't need a person, okay? Simplicity is one thing. Perfectly. I have a " spider", Tim. "Spider" is an S&P 500 tracker. All it tries to do is mirror, with a small tracking error, the little things, but mirror the S&P 500 as it rises and falls, percentage by percentage.
So, the underlying index goes up by 1%, the stock you bought goes up by about 1%, not including commissions, fees, etc. If the S&P 500 drops 1%, this thing tracks that . What could be simpler than that? Of course? The cost is generally lower than active funds because, I mean, how hard is it to create something that just tracks something else?
The answer is not very much. Okay, you're getting algorithms involved, and there's a little more science to it than I'm going to talk about, but essentially it's a pretty simple thing to create, and it can be automated. And the latest figures. As markets around the world rose, these exchange-traded funds—stocks that simply mechanically and automatically track other parts of the market— tend to rise as well.
Of course? So, three pretty strong arguments. Now, recent results are obviously an important factor. Investors look primarily at, well, how am I doing? Let's say if I took— this is not an advertisement, but it's often quoted—the Vanguard UK All Share Tracker, it's up 66% in 5 years. Here's an example.
The average active fund manager, by comparison, only performed about half that . Of course? So, you know, it's like machines versus people, if you will. So, this, whatever it is , is an obvious choice, right? I mean, why delegate the hard work to someone else when, essentially, a spreadsheet and an algorithm can double your money or your relative profitability?
This is a valid question. So, now let's move on to the "but". Of course? And one of these "buts" is this. As one analyst put it: if they can do it in 5 years, what's really stopping them from doing the opposite? If markets decline, these funds will not be able to suddenly flee into cash. They cannot take steps to avoid losses in the way that, for example, some active managers could.
So, you know, the first point you'll see on the next slide: is there anything theoretically that would prevent this from going in the opposite direction? The answer is no. How passive are passive funds? Terry Smith is one of those people who doesn't like the word " passive," because the moment you choose to invest your money somewhere rather than leave it under your mattress, you're making an active decision.
And I would say that even hiding money under the mattress is an active decision. You choose to put them where, frankly, they will be relatively safe unless your house burns down, but they will not generate a high income. So “passive” is one of those somewhat seductive marketing terms that makes it seem like you’re getting paid for nothing, without doing anything.
But in reality, every investment decision about where to invest and where not to invest involves some thought, and is probably an active one. And here's another problem. Someone said that if you gave an intern money to invest and he offered a solution like some of these passive funds offer, you would think he was crazy.
Okay, because the market right now —and I know it's happened before, think of the Nifty Fifty a decade ago—it's so skewed toward a certain group of very expensive, AI- focused hyperscale stocks that, you know, half of that Vanguard index that I mentioned, and it's not the only one. I could name others, the S&P 500 index is represented by only 10 stocks.
If you had asked someone to build a portfolio like this a few years ago, you would have said, "Yeah, you're not serious, are you?" Given the dependence it creates on, you know, a fairly narrow circle of huge companies. So I'm not saying that, you know, any of this is a problem per se . It takes two to make a market, but people are starting to ask these questions, and Terry Smith is one of them.
OK? So, other data that some would call remarkable and others would call somewhat alarming. Active funds accounted for 80% of trading in the 1990s, but now only 10%. In other words, people are just thinking, whether for themselves or on your behalf, where to direct the funds. Machines, if you want to see it that way, trackers, passive investments do everything else.
OK? Therefore, momentum is now the key factor driving markets. It reached a 30-year high. Momentum is the effect of a huge flow of money pushing stocks higher and higher. OK? They grow because they grow. Such is the logic. And I mean, I recently made a video about trying to understand SpaceX's valuation, it's really, really difficult.
You know, the only thing you can say, if you look at any normal metrics, is that a lot of people want to buy these stocks. Honestly, there's nothing else to rely on. That's what it is, yes, that's what momentum is, essentially. And that's why index funds, according to David Booth, and Terry Smith would n't argue, are turning into trading platforms.
You know, they bet on an incredibly narrow range of stocks. And their entire future depends on these stocks not suddenly going down. So, what do these funds mainly invest in ? In the development of AI. I've mentioned this before in other videos. In all the accompanying technologies around this. You know, data centers, SpaceX.
You know, can we build data centers in space where energy is free, cooling is free, and we don't run out of space? Boom, boom. OK. Nobody knows. Elon Musk believes it is possible. So, a good initial rationale. Some would say that cases like SpaceX's entry into the market are taken to extremes. So, yes.
AI will undoubtedly become a kind of industrial revolution. We are going through this now. Yes, this will change the way many businesses are managed. Of course? But hasn't it gone too far, too fast? You know, just to remind you, Barclays Bank recently published a report, which I'll be happy to send you a link to, that looks at whether some of the performance metrics that were promised to us are actually being delivered .
I don't want to belittle or be wrong. I'm just saying that a lot of money depends on whether these passive index funds correctly identify what they need to passively track in order to stay in the market. So Terry Smith is essentially saying: yeah, being a regular investor isn't very interesting right now.
All the excitement is concentrated in that basket of 10-12 stocks. OK. And to be fair , these 10-12 stocks are mostly profitable. They mainly generate cash flow. OK. And they have solid business ideas behind them. So, by some measures, we are not "dotcom 2.0." But Terry Smith's argument is that, for the love of all that is holy, don't lose sight of the six metrics that have served you well for decades and helped many other people, like Warren Buffett.
Now I will give you a source of additional information about them at the end. So, a quick overview. This is the return on capital employed. In other words, what profit the business is able to make from the total amount of capital raised from debt or equity investors. This is important because, roughly speaking, if you are only getting 3%, for example, some would say that it is better to sell those shares and put the money in a bank account, because you can get more, especially if you keep the cash in an ISA .
Okay, I'm not saying you need to hold cash, but you should look at the return on capital employed. Okay, you shouldn't just blindly invest money in stocks and think, "Well, these are old methods." " Who cares?" Um, gross profit and operating margin. Terry Smith calls it the ability of a business to overcome bumps in the road or potholes, as I wrote on the last cover of Confidence or the summer issue.
Um, gross margin is essentially the percentage difference between sales volume and cost of goods sold. So, the basic elements of doing business, if you will. In other words, what are you buying as your main ingredients or components? How much do you sell them for? Before worrying about overhead costs, factory operations, staff salaries, etc.
Many analysts watch operating margin closely like hawks. This is essentially the margin you get after taking into account all overhead costs. That is, the total expenses of the business are taken into account and subtracted from the income as a percentage . So, they are key to understanding whether a business can withstand a shock , especially one in the middle.
And now I'll just remove these notes for you. Um, currency conversion . Yes, some of these hyperscalers, like SpaceX, are not very good at generating cash, rather they are absorbing it. Okay , cash conversion is the ability of a business to convert operating income into cash flow. Because a business that can't do this is potentially in trouble unless it continues to borrow to cover the difference.
Interest coverage: If a business borrows, and some hyperscalers borrow more and more, does the business have the profit to cover the interest? To give you an idea, very roughly: if you want to have an AAA rating today, you need to have interest coverage of at least 10–20 times, okay? And now— free cash flow yield.
This means: if I look at the profitability that this business generates in pure cash terms, then ultimately it is cash that pays the bills, cash is what you can take away as an investor to reinvest. Free cash flow yield, I 've talked about this in other videos, I'll be brief here—it's the annual cash flow that a business generates after deducting what it has to pay, like interest on bank loans, in percentage terms, as a return on invested capital, okay?
Or the current stock price. So, this is another way to look at return on capital. Terry Smith is essentially saying: yes, these aren't particularly attractive metrics in the context of "this time it's different" companies like SpaceX, but they matter. And while hyperscalers, the companies at the forefront of this passive acceleration of money in the market, have shown the ability to generate profits and cash flow, be vigilant, because this needs to continue.
Of course. So, let's wrap up with where I started— Terry Smith himself. Our investment mantra is to buy good companies, not overpay, and do nothing. And what worries me is that people are stopping to think about what they're investing in, just assuming that market momentum will take care of everything, a bit like what happened at the end of the dot-com boom.
I'm not saying history will repeat itself, but sometimes it rhymes. Terry Smith says you should always think about what you're buying and why. Don't blindly accept indicators and don't assume that the past will automatically continue in the future. So, I'll end with my usual slide— additional resources.
Now, if you're thinking, "Wow, you covered so much. You know, operating profit , cash conversion, free cash flow profitability." I have separate videos about all of these things. So try killit.com slash resources or just Google YouTube. You have my guides. One on how to invest in stocks, "Blue Cover," and of course, our quarterly magazine, "Compendium."
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