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Bill Miller on This Tough Market

Discipline trumps conviction. Don't fight the market. I would rather keep my cash for a more opportune moment than suffer the psychological water torture of holding on or adding to losing positions. Yes, stocks do eventually come back, but "eventually" is anyone's guess (tell that to Japanese investors who've been underwater for so many years). Preserve capital. Value investors are infatuated with buying stocks they think are bargains. However bargains may become even cheaper. Stop trying to pick bottoms. You can still make money arriving at the party late, however if you arrrive early it may be long hard wait. Miss the first 20% of the upside to be sure. If it is the beginning of the bull run, then missing the first year of gains is no big deal, bull markets usually last fo 3-4 years. Dont be caught in the trap of buying today's leaders which may become tommorrow's laggards. When I met Mr. Buffett, he told me it is much harder to make the returns he did, 40 years ago because information sources are so much more efficient. Where now can you really find stocks trading with large margins of safety?
Value investors hate to concede defeat. As the old adage goes.."Cut your losses and let you profits run". Losers average losers.