1. Manager of the Smead Value Fund
Bull Market Stew
Under a New Presidential Administration
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3. The Generational Opportunity
Here’s the rolling
40-year returns
of T-Bills and T-
Bonds over the
last 70 years:
Source(s): “Generational Opportunity” - O’Shaughnessey Asset Management

4. The Generational Opportunity
Here’s the rolling
40-year returns of
Stocks over the last
70 years:
Source(s): “Generational Opportunity” - O’Shaughnessey Asset Management

5. The Generational Opportunity
Let’s look at what happened to
US stocks the first time they
earned less than 4% per year
for a 40-year stretch, as they
did in 1941. Here is what
happened the following
5, 10, and 20 years following
that event:
Source(s): “Generational Opportunity” - O’Shaughnessey Asset Management

6. Bull Market Stew
What are the Ingredients?

7. Bull Market Stew
Ingredients
One or more major Bear Market
1.
declines in the prior ten years,
preferably with a decline of more
than 40% and overall poor multi-
year stock market performance

8. Bull Market Stew

9. Bull Market Stew
Ingredients
Historically depressed stock prices,
2.
especially among the traditionally
most admired companies

10. Bull Market Stew
BRK.A MRK DIS
Berkshire Hathaway Merck Disney
Avg Price in 1982 667.5 Avg Price $2.24 Avg Price $1.22
Dividends $0.08 Divdends $0.03
Div Yield 3.48% Div Yield 2.06%

11. Bull Market Stew
Ingredients (continued)
Massive negative psychology among
3.
individual and professional
investors

12. Bull Market Stew
AAII Index – March 5th, 2009
Bullish 18.9%
Bearish 70.3
Neutral 10.8
Source(s): Barron’s & Bespoke Investment Group

13. Bull Market Stew
Ingredients (continued)
Normally successful and admired
4.
money managers called out on the
carpet and in some ways humiliated
(preferably on the front page of the
Wall Street Journal)

14. Bull Market Stew
“A Recent Filing With Securities and Exchange Commission says the

trustees of DWS Dreman High Return Equity (KDHRX) voted last June to
remove the fund's manager after a 20-year run.”
“The manager, 72-year-old David Dreman of Dreman Value
Management, led the fund to a 47% loss in the past year, admittedly a
bad year for all, placing it in the bottom 3% of its peers, according
Bloomberg data.”
“In a surprise move, First Pacific Advisors said that its well-known chief

executive, Robert Rodriguez, will leave for a one-year sabbatical
starting in January.”
“Mr. Rodriguez has been frustrated with the world of professional
investing in the past year. He correctly predicted the credit crunch and
subsequent economic downturn but has struggled to deliver strong stock
returns.”
Source(s): WSJ.com

15. Bull Market Stew
Ingredients (continued)
Buy and hold investing viewed as an
5.
idea that is no longer useful

16. Bull Market Stew
Jim Cramer
CNBC Host
Source(s): Businessweek.com

17. Bull Market Stew
Ingredients (continued)
Seemingly unsolvable economic
6.
problems as part of a deep
recession

18. Bull Market Stew
“The 40 years ending in 1941 included the stock market
panic of 1907, which drove down the Dow Jones
Industrial Average nearly 38 percent; the World War I
Era, where the period between 1910 and 1919 was one
of the worst ever for stocks; AND, oh yes, the Great
Depression. Finally, icing on the 40-year cake, the
Japanese bombed Pearl Harbor on December 7, 1941.”
Source(s): “Generational Opportunity” - O’Shaughnessey Asset Management

19. Bull Market Stew
Ingredients (continued)
Accommodative Federal Reserve
7.
Monetary Polices and stimulative
fiscal policies from the U.S.
Government

20. Bull Market Stew
Source(s): frbatlanta.org

21. Bull Market Stew
Ingredients (continued)
Public short selling has hit record
8.
levels

22. Bull Market Stew
Value Line – December 26, 2008
% of total NYSE short sales by:
Wk. ending Wk. Ending
12/17 12/10
Public: 72 74
NYSE Spedialists: 7 6
Other NYSE Members: 21 20

23. Bull Market Stew
Ingredients (continued)
Cash in Money Market Funds at
9.
record levels in relation to stock
market capitalization and paying
low interest rates

24. Bull Market Stew
Source(s): Hays Advisory

25. Bull Market Stew
Source(s): Hays Advisory

26. Bull Market Stew
Ingredients (continued)
Very intelligent and credible
10.
economists and analysts explaining
clearly and logically how terrible
things are going to be for many
years.

27. Bull Market Stew
Nouriel Roubini
Professor at NYU
Source(s): The Wall Street Examiner

28. Bull Market Stew
Nouriel Roubini
Professor at NYU
Source(s): Badische Zeitung

29. Bull Market Stew
DJIA S&P 500 Index
Average over 1982 960.8 Average over 1982 131.6
Today’s DJIA Level 8409.85 Today’s Index Level 907.39
Appreciation 8.75x Appreciation 6.90x

30. Smead Capital Management
1420 5th Avenue, Suite 2625
Seattle, WA 98101
(877) 701-2883
info@smeadcap.com
www.smeadcap.com