Legg Mason's (LM) Bill Miller says large-cap stocks are significantly undervalued compared to...

Legg Mason's (LM) Bill Miller says large-cap stocks are significantly undervalued compared to bonds, and sees it as a "once in a lifetime opportunity" to buy quality companies at bargain prices. "The last time [stocks] were this cheap relative to bonds was 1951."

Comments (18)
  • Trader14
    , contributor
    Comments (224) | Send Message
    Perhaps bonds are simply extremely overpriced.
    21 Jul 2010, 03:13 PM Reply Like
  • Trader14
    , contributor
    Comments (224) | Send Message
    In a related note Miller commented "that while housing prices likely still had room to fall, he noticed that houses built on poor foundations on top of large cliffs seemed remarkably cheap"
    21 Jul 2010, 03:54 PM Reply Like
  • The_Hammer
    , contributor
    Comments (5044) | Send Message
    The key is RELATIVE to bonds. Bonds are in a massive bubble.
    This guy is just out of touch with the real world. If stocks are in a once in a lifetime buying opportunity I can't wait to see when stocks are 30-50% lower what this cash burner calls stocks at those values.
    21 Jul 2010, 03:16 PM Reply Like
  • Duude
    , contributor
    Comments (3413) | Send Message
    Relative to the yield on bonds he's right. But there are a lot of things happening now that we haven't seen since the 1930's, so who cares about 1951?
    21 Jul 2010, 03:26 PM Reply Like
  • Archman Investor
    , contributor
    Comments (3316) | Send Message
    Poor Bill Miller.


    This poor liar and destroyer of wealth actually has the nerve to believe that he still matters.


    The fund he manages is still at 1998 levels. He has lost millions if not a billion dollars for investors over the past decade. Though he "beat" the S&P over 15 years, he did so by only a few points a year most of the time. So when the S &P lost 40% from 2000-2003 he "only" lost 38% over that time frame.


    Do you see the deception that the media and mutual funds attempt to pull off?


    Bill Miller is a product of media hype, in collusion with outfits such as Morningstar. Bill Miller has no real talent. He never has. He, like many others could only make money in bull markets. They have no clue, none, how to manage money and protect investors money during bear markets.


    Mr. Miller is so deep and so in trouble with many of his holdings, he is desperate to unload them. That is why he is out today begging people to buy stocks. He is a vomitous bold faced liar.


    Bill Miller should be returning millions upon millions of dollars to those whose net worth he has destroyed over the past decade.
    Instead he has tens of millions of dollars in his bank accounts, yachts, houses, etc, all paid for by the fees that were given to him for the lousy performance of his fund over the past decade.


    It is a disgusting God damn shame that anyone in the media even gives him the time of day and the fact that they call this thief "legendary" still is beyond absurd.


    No one should be falling for this mans shameful lies and fundholders of his fund should be suing Legg Mason to get their money back while Bill Miller lives the high life.
    21 Jul 2010, 03:28 PM Reply Like
  • bluk1
    , contributor
    Comments (24) | Send Message
    Well that does not leave much to guess as to your opinion on Miller and Morningstar. It does leave a lot to guess as to what YOU would do at this stage with the money other than leaving in T bills perhaps?


    Seriously, I hear and agree with many comments which challenge the current "majority", but those who really learned from the 20's and 30's are either not here anymore or have not figured out how to use a keyboard to add comments based on their relevant experience to the discussion
    21 Jul 2010, 03:48 PM Reply Like
  • Archman Investor
    , contributor
    Comments (3316) | Send Message


    I am not a money manager.
    I will gladly tell you what I am doing right now:
    Exactly what I have been doing for years.


    I have a core portfolio of non-US fat monthly dividend paying stocks. I reinvest into those companies when I can.


    I use high yield bonds, high yield emerging market debt, and preferred shares to provide me with monthly cash to further my dividend reinvestment. They are diversified and the share price is of no interest to me. They are simply cash generators. I have enough capital appreciation on them that I can afford share prices to decline significantly.


    I maintain a 2X S &P 500 short position at this level in conjunction with my long only holdings. I am not a trader and have no idea when I might close or add to the position.


    I buy silver bullion every month, take physical possession of it, and bury it...somewhere.


    I lend money on Lendingclub.com and receive an approx 9% annual yield on those investments.


    Unlike Bill Miller who is worth millions, been paid millions, and has a zero percent total return over the past decade, my portfolio is happily up 280% over the past decade simply because I invest outside the pre-packaged lies that Wall Street spits out to the general public.


    Bill Miller has no clue, none, how to manage money unless it is a full blown bull market when stocks only go up. He is the product of hype and deceit.
    21 Jul 2010, 04:10 PM Reply Like
  • Ohrama
    , contributor
    Comments (568) | Send Message
    Well, stay on cash. I stayed on money market funds since the days of rational exuberance, went into gold and gold mines from early 2000 (when GLD was not there and was happy to see it) and got out in Nov. 2009 (still have 4 times of what I had in 1999). In fact, I used to tell my wife and friends that gold is going up, but you can't put all your eggs in one basket (and hence missed more potential gain, but that is life). Investing is a matter of discipline and just because Ben is forcing you out of MMFs and CDs, you should not jump into stocks or housing. It would be like jumping from frying pan to boiling water or the other way and if most folks have not learnt it in the last 15 years, perhaps they may never learn (30 years of professorial experience in identifying students who can and who cannot learn).
    21 Jul 2010, 06:35 PM Reply Like
  • If U Say So
    , contributor
    Comments (348) | Send Message
    Don't hold that 2X s&P 500 too long. Unlike the 1X time short, you're not getting what they're marketing by the name. Its meant for short-term moves. The longer you own it through up and down markets you lose a bigger percent when the S&P 500 goes up than you make when the S&P 500 goes down.
    21 Jul 2010, 07:24 PM Reply Like
  • Archman Investor
    , contributor
    Comments (3316) | Send Message
    Incredibly well put Ohrama!


    Huge thumbs up for you in my book!
    21 Jul 2010, 07:25 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
    Well summarized. Mutual funds are and always have been a poor investment. Designed to make fund managers like Bill Miller wealthy on management fees. Sadly Bill Miller probably did better than most other mutual fund managers, which just goes to show how incredibly bad other mutual funds were.


    As Jeremy Grantham just pointed out in his latest newsletter. In the 1960's the finance industry accounted for 3.5% of GDP and did a more than satisfactory job for that "fee". Today they are more than 2x that and doing a miserable job for excessive and unproductive fees.


    No question that individual investors who have taken the time and made the effort to learn and manage their own investments are far better off today than those who "trusted" so-called professionals to manage their investments. The trade off is that it takes a lot of time and effort, which unfortunately most individual investors are not willing to make. But those who did not have paid a big price for not doing so.
    21 Jul 2010, 08:43 PM Reply Like
  • Archman Investor
    , contributor
    Comments (3316) | Send Message
    Thanks. Yes I have never really held the 2X S&P short ETF's to long.


    About a month ago I started the position and remain pretty flat on it.


    Thanks Again!
    21 Jul 2010, 08:50 PM Reply Like
  • BetTheHouse
    , contributor
    Comments (147) | Send Message
    "Legg Mason's (LM) Bill Miller says large-cap stocks are significantly undervalued compared to bonds, and sees it as a "once in a lifetime opportunity" to buy quality companies at bargain prices. "


    I'm sure Bill Miller does say that.
    21 Jul 2010, 03:31 PM Reply Like
  • Credible Clarity
    , contributor
    Comments (160) | Send Message
    Could be cuz investors are wising up to reality that companies (and our legal system) tend to protect bondholders much better than equity investors. Just saying . . .
    21 Jul 2010, 03:34 PM Reply Like
  • Duude
    , contributor
    Comments (3413) | Send Message
    I don't think they "tend to protect bondholders much better than equity investors." They do!!!! But that's what bonds are supposed to do by contract law. All bonds, even junk bonds have a first call on assets of a corporation before the owners, (shareholders) unless of course the company in question is General Motors.
    21 Jul 2010, 03:43 PM Reply Like
  • enigmaman
    , contributor
    Comments (2868) | Send Message
    When you hear some one say " once in a lifetime opportunity" run and dont look back because if it was true there would no shortage of smart buyers (with dumb money on the sidelines)and the markets would be roaring ahead, but alas the markets are treading water even in the face of super duper spectacular earnings, makes you wonder, whats UP?
    21 Jul 2010, 03:39 PM Reply Like
  • elliotz
    , contributor
    Comments (251) | Send Message
    Maybe I am ignorant but shouldn't a stock be cheap relative to the company's intrinsic value? If bonds are overpriced(as they are now) that will make stocks relative to bonds cheap but stocks still may be overpriced on an absolute basis.
    21 Jul 2010, 03:41 PM Reply Like
  • herbert hoover
    , contributor
    Comments (2001) | Send Message
    I just don't understand how these "once in a lifetime" opportunities seem to come around at least three times a week. Maybe these salespeople ought to buy a thesaurus or consider doing some original research.
    21 Jul 2010, 04:11 PM Reply Like
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