Monday, October 12, 2009

The Legacy of Bill Miller

Quick... predict the Barron's title for a fund manager that has underperformed their benchmark (in this case the S&P 500) by 15% over the last 12 months.

  • "Tough Times for Bill Miller"
  • "The Rise and Fall of Biller Miller"
  • "Bill Miller Loses His Edge"
Nope.... the actual headline? "He's Back".

Lets go to Barron's for the fluff:
The aggressive manager of the Legg Mason Value Trust, whose remarkable run of success preceded a more recent patch of dreadful yearly returns, is again near the top of his peer group in 2009. Through last Thursday, the Value Trust (ticker: LMVTX) was up a whopping 37.52% so far this year, putting it in the fifth percentile (top 5%) of all large blended-fund returns. It's an amazing about-face from early March, when his fund had lost 72% of its value in a matter of about 18 months.

"If you do this long enough, the market has a way of making you look stupid from time to time," says Legg Mason Value Trust manager Bill Miller.

"The shareholders who stuck with us believed in our process and have seen us underperform; it has happened before," Miller told Barron's in a recent interview. At least "we built up large tax-loss carry forwards, which will mean no capital-gains taxes, which may go up."
True, he has underperformed before.... in fact, over the last ten years his fund has underperformed the S&P 500 by more than 17% and is down 23% in absolute terms over that time.

World Beta sums it up perfectly with his post:
Lose 72% of Your Investors Money, Make the Cover of Barron's
Source: Yahoo

1 comment:

  1. This post brightened my day. ;)

    Financial propaganda is killing the middle class. Not to mention massive quantities of fraudulently issued debt.


    From the market peak in 9/1929 until 9/1938 (nine years later), the S&P 500 had annualized real total returns (including dividends) of -2.95%.

    From the market peak in 9/2000 through 8/2009 (nine years later), the S&P 500 had annualized real total returns (including dividends) of -4.82%!!!

    In real terms, stocks in the first nine years of the Great Depression outperformed stocks over the past nine years by 18% (nine years @ 1.87%)!!! Of course Nasdaq investors fared much worse (winners of the new world, woohoo! Cramer rocks!).

    Yeah, Bill Miller is an investment iCON. He's underperforming an index that is sporting returns worse than the Great Depression.

    The propaganda is mind boggling. The greatest story never told.