I always read Smith’s annual letters—they’re rare examples of plain-spoken investment thinking. This year, three things stood out:

• He expects weight-loss drugs to reshape consumer spending, particularly reducing alcohol consumption and potentially becoming tools in treating alcoholism.
• He remains bullish on tobacco harm reduction. Not necessarily a surprise, but worth noting for its consistency.
• Most interestingly, he argues that passive investing via index funds “is in fact a momentum strategy”—an underappreciated point.

Read the full letter here.