Summary of Terry Smith's Investing for Growth

By IRB Media

Get the Summary of Terry Smith's Investing for Growth in 20 minutes. Please note: This is a summary & not the original book. Original book introduction: Some people love to make successful investing seem more complicated than it really is. In this anthology of essays and letters written between 2010–20, leading fund manager Terry Smith delights in debunking the many myths of investing – and making the case for simply buying the best companies in the world.

These are businesses that generate serious amounts of cash and know what to do with it. The result is a powerful compounding of returns that is almost impossible to beat. Even better, they aren’t going anywhere. Most have survived the Great Depression and two world wars.

• Language: English
• Publisher: IRB Media
• Release date: Nov 29, 2021
• ISBN: 9781638159421

IRB Media

With IRB books, you can get the key takeaways and analysis of a book in 15 minutes. We read every chapter, identify the key takeaways and analyze them for your convenience.

Book preview

Insights from Chapter 1

#1

The author of this book, Terry Smith, is the founder of Fundsmith, a UK mutual fund that specializes in investing in consumer staples and technology stocks.

#2

Fundsmith invests in companies with low valuation, which may seem like a suboptimal strategy. However, these companies have high growth and superior returns on capital employed, which results in their compound growth over time.

#3

A good example of this is the stock market crash of 2008, which was caused by the subprime mortgages in the US. Because these mortgages were of such low quality, they were defaulting at an alarming rate.

#4

The author previously stated that low interest rates do not equal good value. He now recognizes that the inability of forecasters to predict future events is not due to a lack of ability, but rather a lack of objectivity.

#5

To succeed in the long run, you must avoid the pitfalls of the Shiller CAPE. The future is inherently unknown, so you can’t rely on past data to predict it. Instead, you must carefully examine each company, and only accept those that offer a superior product or service and are well received by consumers.

#6

The author previously bought a quality company at a cheap price when it had a problem. He figured out that the company’s products, services, management, competitive position, and prospects were all solid, which led him to pay a higher price for the company than its current market value.

#7

The author wants to leave a lasting legacy by ensuring that Fundsmith continues to provide superior returns to its investors.

Insights from Chapter 2

#1

One of the author's new ventures is Fundsmith, a fund management company.

#2

Fund managers will continue to pay advisers on investments in funds made by clients, even after 2012, through trail commissions.

#3

The 1. 5 percent management fee and 15 percent performance fee charged by most hedge funds is not fair, since it takes too large a percentage of the return. The only way to compensate your fund manager fairly is to invest a large portion of your money with them on the same terms.

#4

The cost of investing in a fund is made up of three parts: the management fee, the brokerage fee, and the bid-offer spread.

Insights from Chapter 3

#1

The Fundsmith Equity Fund delivered a return of 6. 14 percent for the one-year period that ended on 31 December 2010. This performance compares favorably with the benchmark indices.