Terry Smith is often referred to as "the English Warren Buffett".

He runs Fundsmith which has a fund size of £27.9bn.

Despite the size, Fundsmith did a CAGR of 18.4%.

In his book Investing for Growth, he explains his investing philosophy.

Here's a breakdown:

1. Fundsmith's winning formula

Find companies that focus on delivering value.

Not those who are looking to pacify Wall Street with short-term results.
2. Avoiding "cheap" companies?

Low multiples are not a reason to buy a company.

A ship will continue to sink if it has a hole in it.

"A stock may have a low valuation but an even lower intrinsic value. Buying such a stock is not a recipe for investment success."
3. Getting quality right

For long-term investors, getting the quality of the business is more important than the valuation.

“An investor could have paid 281 times earnings for L’Oréal, 156 times for Colgate, and 147 times for Brown-Forman and still beat the market.”
4. "Unprofitable" companies could be good investments

Many of the best companies don't show earnings today.

But that's because they're heavily reinvesting for the future.

It's just that the earnings hasn't show up.
5. Not all growth are good

Growth is good only when the return on invested capital (ROIC) exceeds the cost of capital (COC).

If COC > ROIC, the company destroys value as it grows.
6. On share buybacks

A repurchase only creates value if the shares are trading below intrinsic value and there is no better use for the cash.
7. On price anchoring

Often times investors hold back from buying because they "missed the boat".

Or they're waiting for it to "retrace back".

If it's a good company and within your buy range, just buy it.
8. 10 advice for retail investors

-If you don't fully understand it, don't invest
-Don't try to time the market
-Minimize fees
-Deal as infrequently as possible
-Don't over-diversify
-Never invest just to avoid tax
-Never invest in poor-quality companies
-Buy shares in a business which can be run by an idiot
-Don't engage in "greater fool theory"
-If you don't like what's happening to your shares, switch off the screen
If you like this, follow me here @steadycompound

I write about investment concepts, business breakdowns and growth philosophies.
If you have enjoyed this thread, you're gonna love my newsletter where I curate 3 ideas on investing and growth philosophies.

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More from Thomas Chua

Having a finance degree did not make me a better investor.

Rather, I learned 10x more about investing from Twitter University.

🧵 Here are 5 threads from world-class Fintwitters.

What you learn: Build an investing checklist.

From: @BrianFeroldi, writer at Motley


What you learn: Read 10Ks like a Hedge Fund

From: @FabiusMercurius


What you learn: Perform a DCF analysis.

From: @10kdiver


What you learn: When to sell your stocks

From: @borrowed_ideas, founder at

More from Finance

1/ My Mission: To Spread Financial Wellness (thread)

Here’s what "financial wellness" means to me

⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️

2/ Mindset

Humans are programmed to think short-term

Evolutionary, thinking short-term makes sense. It helps with survival.

Financial wellness is all about training yourself to develop a long-term mindset

Not easy -- it takes practice


3/ Mindset

If you join the right tribes, you can’t help but improve

My favs:
@AffordAnything
@ChooseFiFI
FinTwit
@MicroCapClub
@themotleyfoolFool
@visualizevalue

Twitter / Podcasts / Blogs / YouTube -- when used correctly -- are amazing


4/ Mindset

Educate yourself - constantly!

Especially about:

1⃣Money
2⃣Relationships
3⃣Health

These 3 categories have an outsized influence on all areas of your life

Books


5/ Career

In the beginning, focus on growing your income

Do more than what is expected

Become a lynchpin

Find a career that you ENJOY (<- important!) that also has high-income potential

Start a side hustle (<- important!)

Build your talent
Last week Hizbollah's finance institution Al Qard el Hasan was hacked by Spiderz. A group of people took that Data and tried to make sense out of it. Below are the findings

https://t.co/eGLqvb28o5


Loans are provided to borrowers for gold deposits or other guarantees, to the association's members and to unsecured applicants.

AQAH had a carried forward loan balance of $450 million as of December 31, 2019. This balance has been increasing at a yearly rate of 13.4%.


AQAH laundered around $475 million in 2019 in the form of disbursed loans paid to more than 20,000 borrower accounts; mostly to borrowers with gold deposits.

Deposits accounts have been offered to 307,000 members of the association, 83,000 contributors as well as to 600 companies. AQAH closed 2019 with an overall depositors accounts balance of around $500 million.

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