Tuesday, March 25, 2008
Hats off to Bill Miller
I have been critical of Bill Miller on this blog. I find it strange that a guy as smart as he clearly is has failed to anticipate the energy bull market and not buy oil stocks. He's not perfect though, and so such a mistake is unavoidable. Friday's Wall Street Journal featured an article detailing his woes owning Bear Stearns(BSC), Countrywide Financial(CFC), Pulte Homes(PH), and Eastman Kodak(EK). So far he has wrong, very wrong on these picks. The streak has been over for two years now, largely aided by these wagers.
Reading his quarterly shareholder letter for Q407 from about a month and half ago really reaffirmed my respect for his intelligence and courage as an investor. First of all, he uses words like alacrity and enantiodromia. That's a tad bit more erudition than you should expect from the typical fund manager, but then again, Miller dropped out of a doctoral philosophy program in order to join Legg Mason(LM). He is also on the board at the Santa Fe Institute.
He flatly states in the opening line, "we had a bad 2007, which followed a bad 2006." He then goes on to say that losses are "unavoidable and unpredictable."
No B.S. No euphemisms. The naked truth. This is a man with whom you can feel comfortable entrusting your investment dollars.
He is not panicking like Stanley Druckenmiller did at the end of the tech bubble. He is sticking to his guns, waiting for the market to come to him rather than chasing it.
What exactly are his guns? Read his Q405 shareholder letter. You will not find a more well-reasoned, humble, or honest account of one's investment philosophy and performance from a fund manager. I mean, he even admits to screwing the pooch when it came to Enron!
Read both of the letters. You'll learn a great deal about investing.