Bill Smead Predictions

[18:11] the chance of the S&P being higher 10 years from now than it is right now is almost zero from a mathematical probability standpoint. and and you can use almost any valuation you want to use and it's all going to bring you to the same exact conclusion.

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[6:09] these interest rates are going to go up until the fever breaks. And the two places the two things that'll happen is they will go get money from where it is and that is the 20 largest stocks in the S&P 500 which will ruin the S&P index trade and it will ruin the trade in those stocks.

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[6:17] they will go get money from where it is and that is the 20 largest stocks in the S&P 500 which will ruin the S&P index trade and it will ruin the trade in those stocks. A and then the people that do that selling will turn around and buy interestbearing securities probably at the shorter end 0 to 5 years and that will begin to bring rates down.

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[0:00] They cut rates 200 basis points. That's what will happen. That's what will happen when the mania breaks.

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[20:31] A bare market. It's not a question of whether there will be. The question is when. But the longer we go without it, what's the magnitude going to be?

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[34:44] We very possibly will never again see $55 to $60 oil, but the companies we own organize themselves so they could still be very profitable at $60 a barrel. But just think of how much free cash flow they're going to have the next 10 years at oil anywhere from say 70 to $120.

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[30:23] Uh, that is delusional... we're in a bull market. We've got people by the throat.

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[33:35] we're in a 15 to 30year outperformance era for commodities relative to stocks because stocks are the most expensive they've ever been. And in 2020, commodities were the cheapest they've ever been.

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[44:29] our companies might make six years worth of income in the next two years.

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[44:22] It's going to take two or three years to establish normal inventory.

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[23:26] what's going to happen is mortgage rates are going to go down. And when mortgage rates go down and people are losing money on stocks, they'd much rather own a house than own a stock.

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[45:39] we won't even be close to a top in the oil stocks until they consolidate the industry. That'll be that'll be and we we haven't even started yet.

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[31:40] the index has as much chance of making money in the next 10 years statistically as the man on the moon. If you go back and look at every time that the index is in the situation it is now, and then look 10 years later, it it it 72 to 82, 99 to09, you lost money. You lost money counting dividends in the index for 10 years. the chance of the index making money over the next 10 years statistically from historical mathematical Schiller cape GDP to stock market value the Buffett indicator I don't care which indicator you they're all telling you the same thing there's no chance for the S&P 500 to do well

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[12:10] the nine people that created AI were named the time person of the year around December 27th just passed and guess what's ready to happen to them? The same thing that happened to Bezos stock. Now was Bezos hugely successful? Yes. Did anybody that buy it before it and own it while it went down 85% did any of them stick around? The answer is no.

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[21:08] the people that think if we settle up with Iran that the price of oil is going to go back to 60 bucks a barrel, they are they are either drinking the wrong thing or smoking the wrong thing.

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[25:14] I actually think it's probably preferable for the the oil companies for it to settle in at 80 to 100 bucks a barrel for an extended period of time

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[26:38] the demand for oil and gas is is is going to probably rise a little bit each year with the population of the world going up

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[22:45] Well, they're very undervalued compared to 90. The market is pricing him at 70 and and President Trump still has dreams of 60. So, so uh uh we ran numbers 6 8 weeks ago and just said okay if a year from now what's if at the price of oil what would the free cash flow be for Apache or what would the free cash flow be for Oxy or what would the free cash flow be for Senovas etc and the the numbers are really outstanding and it it means there's really good value in the stocks here even though they've run up at $70 $20 a barrel.

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[38:39] So we like the home builders. It's you have to buy the home builders when there's no hope. Right. That there's lots of people that don't have a home, but there's no hope. And that means you're getting low prices... we own LAR, we own Horton, and we own NVR. And and and and we we we think they have a bright future.

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[3:12] we're now at the process of going back to normality uh which is interest rates that settle into something closer to the average of the last 40 years and stocks having to be repriced against that more typical interest rate.

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[24:01] the next thing you're going to start seeing the consolidation in the industry right there. We own Apache and Oxy and we don't understand. We We're glad they haven't been bought out yet, but we don't understand why some of the big people aren't buying them because you've got to make sure you've got all the oil you're going to need to provide for the next 10 to 20 years.

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