Terry Smith: Déjà vu in Stocks: Have We Seen This “Magnificent Seven” Before?

Johnny HopkinsTerry SmithLeave a Comment

During his latest 2024 Fundsmith Annual Meeting, Terry Smith argues that there’s nothing new under the sun, using movies and stock market trends as examples.

Movie plots are recycled, exemplified by the “Magnificent Seven” being a remake of “Seven Samurai”.

Similarly, hot stock picks aren’t entirely new either. The “Magnificent Seven” stocks of 2023 resemble the “Super 7” picks from 2000 by Goldman Sachs, whose future performance was underwhelming.

Here’s an excerpt from the meeting:

I like movies a lot. I’m very keen on movies, and I think you can learn a lot from movies.

One of the things that I think you learn if you watch enough of them is there’s no such thing as a new movie plot.

Everything’s been done before. Basically it all gets rerun and the Magnificent Seven which they’ve used as this term for these seven stocks which drove the market performance last year of course comes from the 1960 movie of the same name.

Have we seen this movie before? You bet we have. Because in 1954 the 7 Samurai was released, and the Magnificent 7 is clearly a copy of it.

They just wear cowboy hats and carry guns instead of swords.

So we have seen this movie before, and you know the Magnificent Seven stocks we’ve seen this movie before.

In 7th of April 2000 Goldman Sachs named their ‘Super 7’, even I’m guessing that they maybe had somebody like Lotus or Caterham Cars on the staff at the time for ‘Super 7’ even.

And here they are First Data. Oracle, Teradyne, PMC, EMC Squared, Cisco, and Dell. Those were the Magnificent Seven of 2000.

How did they do?

There you go, there’s the next 5 years performance there and there’s the next 10 years performance there basically… Julian and his team who have to prepare these things I dream up from time to time struggled to find some of these because they barely exist anymore.

You know in terms of where they they got to after this.

And there’s a great saying, history doesn’t repeat itself but it rhymes right.

And I think we may find that if we had on your behalf entered into a full blown let’s own the Magnificent 7 last year we might eventually be into watching the the sequel to it, and with the same outcome.

You can watch the entire annual meeting here:

2024 Fundsmith Annual Meeting

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