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Interview with Bill Miller: "We may be in the best bull market of our lifetime."


ni-co
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Bill Miller on CNBC thinks that

 

http://video.cnbc.com/gallery/?video=3000265869

you could throw a dart at the market and anything you'd buy would go up within the next six months,

 

http://video.cnbc.com/gallery/?video=3000266062

that valuations are likely to be going a lot higher ("we may be in the best bull market of our lifetime"),

 

http://video.cnbc.com/gallery/?video=3000264710

that his "three pillars of a bull market" (liquidity, growth, valuation) are still there and he continues to like homebuilders, airlines, tech companies…

 

http://video.cnbc.com/gallery/?video=3000266119

…and financials,

 

http://video.cnbc.com/gallery/?video=3000266084

last, owns bitcoin and has an interesting theory on why it's going to succeed.

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Uh oh.

 

What we have seen the last few months: new stock market highs, big mergers, record week for IPO's since 2007 market peak, bubble territory in specific sectors (now coming down but still!), forum members (! not your average joe right?) talking about cheap ways to leverage, margin debt (logically correlated with market levels but still) at peak, Berkshire holding ~$50B, ...

 

This year one relative finally decided to jump into the market through a fund after sidelining for most of his life. This person didn't even have stocks in '07-'08 and generally only put money in savings accounts, very risk averse. Sure, this is a very selective data point but I just see it as another sign given how extreme this decision is considering his personality.

 

Guys like Hussman and Watsa aren't idiots either. They still have great long term results and as always these guys are likely to regain past glory. I'm not so sure about guys like Bill Miller! I'm not saying that I believe a huge correction is coming but at some point we will at least see overvalued parts of the market correct fiercly (a hell of a lot more than we have seen until now I mean), bringing all else down a bit as well. What we have seen until now is just a skittish but still very greedy market IMO.

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The throwing a dart comment is highly disturbing, and exactly why any intermediate term sentiment gauge I track remains stuck in highly optimistic territory, DESPITE a very obviously deteriorating market. Gunna take a lot of downside to shake out those making comments like that.

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Just keep in mind that the World Cup is over July 13, & the build-up has been a big stabilizer in Brazil. When it is over, a temporary slowdown is pretty much a given; & when Brazil is one of the major BRICs there will knock-on effects. Add in Ukraine/European Gas supply instability, & amplification would seem to be on the cards as well. http://www.telegraph.co.uk/finance/alex/?cartoon=10753488&cc=10735525

 

Most would argue that it is pretty hard to see how Q4 will be better than Q2.

 

SD

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Haha, I knew this interview would get the discussion going…

 

My philosophy is being invested 100% as long as I find at least 5 or 6 good ideas. However, I enjoy thinking about in which phase the swing of "the pendulum" is, as Howard Marks puts it. Bill Miller doesn't say that it's right at the beginning of a bull market but, according to him, it's not the end either. That's my opinion, too. Market participants are still a bit too cautious.

 

 

In “The Drunkard’s Walk”, Caltech physicist Leonard Mlodinow’s book about how people misunderstand the amount of randomness in their lives, there’s a short but fascinating passage discussing Bill Miller’s 15-year streak, beginning in 1991, of beating the S&P 500.

 

Mlodinow’s book is what first came to mind when we heard the news last week that Miller was stepping down from the Legg Mason Value Trust fund, which he’d managed for thirty years. In the five years since the streak ended, Miller’s fund lost 9 per cent annually and ranked dead last out of the 840 funds in its category, according to Lipper.

 

Just to add some fuel to the fire: Isn't this the result you would expect from highly unconventional investing and from aiming at beating the market? You can't always be right and at least you can't accuse Bill Miller of index hugging...

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