저자: TerrySmith · 외국인
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영상은 테리 스미스의 투자 10계명을 소개한다. 핵심은 이해하지 못하는 상품 투자 금지, 시장 타이밍 시도 금지, 수수료 최소화, 잦은 매매 금지, 과도한 분산 지양, 절세 목적 투자 금지, 저품질 기업 회피, 바보도 운영 가능한 기업 선호, 더 큰 바보 이론 경계, 주가 변동 무시. 주가는 단기에 투표기계, 장기에 저울이라는 관점. 특정 자산에 대한 가격 방향 예측 발언은 없음.
다듬은 글
Imagine you go shopping and suddenly the butter costs twice as much . Are you buying extra of it now ? Probably not. But on the stock market, we often do exactly that. We only buy when prices have already skyrocketed and we sell in absolute panic as soon as prices plummet. We are blinded by tax advantages.
We are reaching for complex financial products that we do n't actually understand. In short, as investors, we often stand in the way of our own success . Why this is the case and how we can avoid these psychological traps, has been summarized by one of the most successful investors of our time. And with that, a warm welcome to The Love of Money, the podcast for investing and wealth building.
My name is Max Franke and this episode is about the ten investment rules of Terry Smith. Terry Smith is considered one of the most successful investors of our time. With his investment company Funsmith, he pursues a radically simple investment style, which has earned him the unofficial title of England's Warren Buffett.
And this investment approach can be summarized in three concise sentences. Buy good companies. Don't overpay, do nothing. And he repeats this philosophy almost like a mantra. e.g. in his almost legendary annual letters to his shareholders. And Smith has written a lot about investing, making a name for himself as a friend of very direct language.
He became known for his 1992 book Accounting for Growth, in which he bluntly explained how companies used creative accounting methods to fake artificial growth. He has also written numerous newspaper articles in which he dispels the not infrequent myths and some nonsense about investing. These thoughts and writings are very instructive for investors, and I particularly recommend his book Investing for Growth.
This book is an anthology of his writings from 2010 to 2020, a kind of "Best of Terry Smith". And the book includes an article he published in the Financial Times in 2013 entitled "10 Golden Rules of Investment". And this post inspired me to create this episode . In it, Smith describes how private small investors have numerous advantages compared to professional form managers .
A topic that I've discussed several times in this podcast . As a private investor, you don't need to perform in the short term. You can invest with a long-term perspective . You are very independent in your investment decisions . You are not subject to any restrictions and you do not have to meet the expectations of others with your behavior .
But Smith notes that many investors do not fully exploit these benefits because they make mistakes. And he describes how to avoid these mistakes and potential pitfalls with his ten investment rules. Rule number 1: If you don't fully understand it, then don't invest. Very simple, very easy to understand, widely known.
Only invest in what you understand. And Smith means this particularly with regard to structured financial products. Structured financial products include, for example, certificates or warrants that are based on an underlying asset such as a share, a commodity or a currency. The aim of such securities is to serve a specific risk profile, to improve one's return opportunities or to protect one's capital.
And Smith believes that many investors make such investments without truly understanding the associated risks . And if you don't understand it well enough, keep your hands off. In my opinion, this also applies to investments in individual stocks. If you want to invest in a particular stock , it's not enough that you 've read an exciting article or that an acquaintance has told you a very convincing story about the stock's potential.
If you want to invest in a stock, you should really understand the underlying company . And that is work, and quite honestly, it 's not easy at all. You can be intelligent, clever, well-read, and well-informed. But ultimately, your knowledge is very limited. Episode 17 about successful investing within the Circle of Competence.
And if you have spent some time researching a company, that can also be deceptive and lead to a false understanding of your own situation. Episode 58: You do n't know what you don't know. Rule number 2: Don't try to time the market . Market timing means trying to invest at the lowest point of a market cycle and exit at the highest point .
This does n't work, at least not reliably and in the long term, and this poses a high risk of destroying capital. And rule number 2: don't try to time the market . This is also a classic, widely known, but truly important, and one should always keep that in mind. But the reality is exactly the opposite.
Investors invest when prices have already risen and they sell their securities when prices have already fallen. The term for this is Giffengut. The term "Giffengut" refers to a product whose demand increases when the price rises and falls when the price falls. So, contrary to classical theory. I will elaborate on this in a later episode .
So, when it comes to investing, we experience a paradox. Demand increases the stronger the price rise, and we sell when everyone else does too, episode 15 about herd instinct. Smith says that we humans are naturally worse at timing our actions in the market. So we shouldn't even try. It's a nice idea that we can make our decisions independently, that we don't let ourselves be swept away by emotions, and that we can consciously take a stand against the prevailing opinion.
A really nice idea, but in practice it's not so simple. Rule number 3: Minimize the fees. This too is generally known, but equally underestimated. Fees or costs in general reduce investment performance, and even a seemingly small difference of perhaps 0.25% really adds up over a long period. Save yourself high fees.
Rule number 4: Trade as infrequently as possible. This follows from rules 2 and 3. Market timing does n't work. Costs and fees are eating up our profits. Every trading transaction is a decision to sell, and then the freed-up money has to be reinvested, and every buying and selling transaction costs money.
Therefore, trade as infrequently as possible. Rule number 5: Don't diversify too much. It's even more concise in English . Don't overdiversify. Diversification means spreading risk, i.e., distributing available capital across different asset classes, regions, and industries. It is a fact that diversification can improve our investment performance, and it is also known that we should n't put all our eggs in one basket, especially with regard to risk management, and Smith doesn't dispute that, but he believes that diversification has its limits and that it always comes with a warning label.
He points out that 90% of the benefits of diversification can be achieved with a portfolio of just over 20 stocks . The more you diversify, the more confusing the portfolio becomes, and the less you know about each individual stock. And as already mentioned, one's own circle of competence is limited.
Furthermore, there are very few truly good stocks, and the more stocks I hold, the higher the probability that the quality of my decisions will suffer. However, this assumes investing in individual stocks. ETFs are different. With ETFs, I'm buying the market or a market segment in its entirety, and that includes the poor performers.
But overall, I stay within the market average when I invest in individual stocks. I need to be very sure that I can identify 20 or even just ten really good companies out of the thousands of shares traded. Smith is confident he can do it and he has proven that he is quite good at it. Most people fail to do so.
Rule number 6: Never invest solely to save on taxes. Here too, I prefer the English version, "never invest tax". Smith argues that people tend to invest in tax-advantaged investment products even though they may not be entirely convinced of the investment's merits . We are blinded by tax advantages and overlook high fees or poor returns.
According to Smith, it is often cheaper to simply pay the tax . He says this as an Englishman with regard to British tax law, but I believe it is also relevant in Germany. We have a complex tax system, and the mere mention of the term " tax-saving model" can temporarily switch off our brains. I immediately think of the Riester pension scheme.
The state offers incentives such as subsidies and special expense deductions, but there are usually high setup and administration costs, and due to the legally mandated contribution guarantee, the money is parked in low-yielding securities during turbulent market phases instead of being invested in the stock market.
Often, the return after deducting costs is so low that one would end up significantly better off with a simple ETFD despite the lack of subsidies . Another example is listed buildings. There are many tax deductions available for renovation work, and that alone can be enough to attract the attention of potential buyers.
Property developers and builders are aware of this, and it is not uncommon for there to be a tax surcharge, meaning that the purchase price is completely inflated. At the same time, maintenance costs are high, the resale value is uncertain, and the rental yield is low. So if you're only buying because of the tax , you might end up paying more.
and save on taxes. This is also a trigger often used by many so-called advisors to convince clients to make an investment. Saving on taxes can be useful, but you should look at it carefully, and the mere possibility of a tax advantage does not automatically qualify it as a good investment. Rule number 7: Never invest in low-quality companies.
That's true, of course, but it's not easy at all. This brings us back to rule number 1: Only invest in what you truly understand. When I invest in individual stocks , I shouldn't follow a compelling story. I should only invest in companies that I truly believe are great. For Terry Smith, a high-quality company is characterized by achieving a high return on capital employed.
In German, it's the capital return. This means, how efficiently is the capital employed used to generate profits? And according to Smith, good companies are characterized by investing in their own business and achieving a positive return, which means that the investment in the company or the stock must improve over time.
He says that bad companies fail to generate a good return on capital, and investors fall into the trap of believing in a glorious future, for example, because a renowned manager is taking over, because the company could be acquired by a competitor, or because they hope for a boost from a positive economy.
But that's just hope for the future, and until then, from an investor's point of view, value is being destroyed every day. In contrast, with a good company, time is on your side, and to put it bluntly, every day is a gain. And what he says makes perfect sense. But this also leads to the question of how many private investors are able to conduct an analysis at such a business management level, and would n't most be better advised with an EDF portfolio?
Rule number 8: Buy shares in companies that can be run by an idiot . This is probably inspired by a famous thought from Ron Buffett. He said something to the effect of: "One should invest in companies that could even be run by a ham sandwich , because sooner or later an idiot will indeed be at the wheel." And Smith adds that one should never invest in shares of companies that only function thanks to a brilliant or charismatic manager.
One day this person will no longer be there, and what will happen then? Rule number 9: Don't fall prey to the Greater Fool Theory. Greater Fool Theory can be roughly translated as the theory of the greatest fool. This means that you can make profits with overvalued assets as long as you find an even bigger fool to sell them to at an even higher price.
This means completely ignoring the underlying fundamental values, pure speculation, and this can be observed time and again in the crypto market, but also in stocks that cater to a current trending topic. Smith says that one should only buy securities and invest in companies that one truly wants to own.
If you buy stocks or other securities with the sole intention of selling them again, or if you pay too much for a good company, then you are falling prey to the Greater Fool Theory. The success of this strategy therefore really depends on the sentiment of the market or the naivety of the other party.
In my opinion, that's not a good approach to building wealth. A very interesting topic, which I will discuss in more detail in a later episode . Rule number 10: If you do n't like how your stocks are performing, turn off the screen. Smith is suggesting that the reasons for a fluctuating share price may have nothing to do with the company's fundamentals and performance.
Therefore, the price is a rather poor indicator of whether you have made a good or a bad investment decision . If you have chosen to invest in the shares of a solid company and have acquired them at a reasonable price, and the prices are fluctuating, then according to Smith you should simply stop paying attention to the prices .
And that underlines a point I discussed in episode 117 regarding the long-term perspective . The stock market may go crazy at times. A stock may be severely punished even though the company is not doing badly at all. In the long run, what matters is not what the stock market says today, but how the company performs.
In the short term, the market and prices are susceptible to opinions, emotions, and irrational behavior, but in the long term, I prevail with quality. And if a company performs well, then in the long term the market will reflect this in the share prices and mirror the company's success. Or to put it with investor Benjamin Graham, in the short run, the market is a voting machine, but in the long run, it is a weighing machine.
In short-term terms, the stock market is a voting machine, but in the long run it is a scale. Those were Terry Smith's ten investment rules . In my opinion, this is a good example of how we can learn from other investors and that we should study their thoughts and ideas. I highly recommend Terry Smith's book Investing for Growth .
As far as I know, it exists, but only in English. Otherwise, I've already talked about the strategies and philosophies of successful investors in this podcast. For example, investing like Howard Marks in episode 133 or investing with the three-legged chair in episode 41. That's it for today, the money talk is over.
Thank you for turning on . Subscribe to the podcast for free on your favorite podcast player and activate the bell to always be informed about new episodes . Feel free to send me your feedback, questions, or topic suggestions via email to [email protected]. A new episode will be released in two weeks. See you next time. God is almost
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