Grant Williams on UK stocks and the return of active investing

There are some phenomenal companies in the UK, no doubt about it.  And as you said, it's an equity market that's been there forever.  So given the fact that it's fallen so far behind, there is definitely opportunity in the UK.  But I think the important thing to understand here is - this comes back to another trend that I've been looking at - the idea of having to do less to be more successful, i.e. we talked about the bitcoin ETF.  It would be easy from this part of our conversation to say that "oh, the UK's cheap, I'm going to buy the UK."  And that is kind of where we've come to.  We buy these abstract ideas.  We buy countries.  

We used to buy companies.  We used to buy a share in a business.  And now we buy stocks.  And the difference in mindset for that is extraordinary because if you're buying a stock, you just own a number and you're buying it because it's going to go up.  You haven't done the work to understand the business, you haven't gone into it feeling like an owner of a series of cash flows, which is what this used to be all about.  And it changes your mindset.  You're not a long-term holder; we've seen that the average holding time data and how that's cratered in the last 20 years.  

Again, I believe this is a change in mindset that I suspect is going to start to come back the other way, i.e. if you do want to make money in UK stocks, you will be able to make some terrific money in UK stocks, but the tradeoff is you're going to have to go back to work again.  You're going to have to sit there and start to find individual companies instead of buying the UK ETF if you want to outperform.  And I think that's a great thing, to be honest with you.  It will bring back the talents of these extraordinary managers who've been marginalized by ETFs and the Vanguards and BlackRocks of the world.  And the idea that you make money by working hard, I mean what a great idea that is.  What a great idea.  And to Peter [Atwater's] point about luxury, it's the antithesis of that.  It's not "we deserve to make money in the stock market," it's "we're going to have to work to earn money in the stock market."  And that to me is where this will always come back to over time when the froth of the entitlement dissipates.

~ Grant Williams, interview with Meb Faber, The Meb Faber Show, 28:10 mark, March 15, 2024