In his 2016 Annual Shareholder meeting, Fundsmith’s Terry Smith explained his strategy of only buying good companies, trying not to overpay, and then doing nothing. Smith also discussed the industries that investors should avoid. Here’s an excerpt from that meeting:
We only regard approximately seventy companies in the world as satisfying our standards… The nature of our strategy means we don’t own certain things. Any of you been to our presentations will know there’s a very long list of companies in sectors that we would not own.
They include banks… We don’t own any banks. We won’t own any banks. We won’t own any insurers. We don’t own any real estate companies. We don’t own any steel companies, chemical companies, heavy construction companies, or engineering companies. All of which are quite volatile. They are cyclical volatile businesses. But the sort of things that we own are pretty boring stable businesses, and that’s I think the main advantage that we have.
You can watch the entire presentation here:
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