A Book with Legs · Sep 28, 2026 · 57m · 44m saved
With Cole Smead, CEO and Portfolio Manager, Smead Capital Management · Bill Smead, Chairman and Chief Investment Officer, Smead Capital Management
Every stock picker Bill Smead has ever asked would rather own the S&P 500 than a 10-year Treasury paying 5%. He would take the Treasury.
Cole and Bill Smead run Smead Capital Management's quarterly book-list episode, where the reading list is a way into their actual argument: that a market trained since 2009 to love stocks is about to relearn what a bond is for.
"Every time I ask a stock picker that generic question, they all tell me they'd rather own the S&P cuz, you know, stocks for the long run."
Cole Smead, CEO and portfolio manager, and Bill Smead, chairman and chief investment officer, on A Book with Legs, the firm's own podcast. Both manage funds that hold no technology or AI stocks and own large positions in energy.
The full episode is covered here so you can skip it. 57 minutes of audio, 13 minutes of reading.
Here are the 8 predictions that matter.
Key Takeaways
Bill Smead would rather own a 10-year Treasury at 5% than the S&P 500 for the next decade
Every stock picker he asks gives the opposite answer
He has a new framework for Bitcoin: it tracks the supply of fraud and criminality, not adoption
The half-trillion dollars big tech held in cash has stopped buying short-term Treasuries, pushing yields up
Nike's shoe business needed no marketing, and its apparel side never mattered as much
The insight traces back to a 1983 fund built on Sir John Templeton's money
Wealthy investors are borrowing against appreciated stock instead of selling it, deferring the tax bill until death
The median single-stock ETF has lost investors 38%, and a prime broker told Bill that business is booming
Google went from 100% of search market share to 85% in about four years — proof, they said, that no dominant company's core business is safe
Municipal bond insurance never recovered after rates fell in the 2000s, their parable for what a changed environment can do to a good business
1. A Bet Against the S&P 500
Asked what could move software stocks after a rough year, Bill turned the conversation to a bigger question: what a 10-year bet should look like now that the 10-year Treasury yield has climbed to 5%.
He would take the bond over the index
"It's like, okay, gun to your head, would you rather own the S&P 500 right now for 10 years or would you rather own the 10-year Treasury at 5%. Oh, I'd rather own the 10% or 5% Treasury for 10 years, okay, than own the S&P 500 index." — Bill Smead
He said stock pickers never give that answer.
"Every time I ask a stock picker that generic question, they all tell me they'd rather own the S&P cuz, you know, stocks for the long run." — Bill Smead
He called it a cult that has not yet been tested, pointing out that the 2020 decline lasted only 60 days and the 2022 bear market about 13 to 14 months — not long enough, in his view, to change most investors' minds. A 50% loss followed by 10% annual returns takes six years just to get back to even.
No valuation model says stocks win from here
"You could try almost every mathematical equation that's out there for valuing markets and you can't find a single one that doesn't say that 10 years from now the S&P is going to be lower than it is today." — Bill Smead
Cole added the caveat that this is their opinion, not a certainty, but Bill said most financial advisers will not tell clients to sell part of an S&P position even when they privately agree, because a client who gets that advice and later sees stocks rally will fire them.
"That's career risk. And John Nef said, if the client had fire you if you sell a stock, you should sell the stock." — Bill Smead
