Bill Miller explains his performance -- and stands firm

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Bill Miller, manager of the Legg Mason Value Trust mutual fund, has published his first-quarter shareholder letter, in which he explains and defends his abysmal performance.

As many investors know, Miller had a legendary record with the fund, beating the S&P 500 index for 15 straight years through 2005. Things fell apart after that: In 2006 Miller trailed the S&P by about 10 percentage points. In 2007 he lost 6.7% while the S&P rose 5.5%. And in the first quarter of this year the bottom fell out: Miller’s fund crumbled almost 20%, double the S&P’s loss.

He is, once again, optimistic about the prospects for his portfolio, which includes many tech, financial and housing stocks. And once again he takes a swipe at the commodities markets, a sector he has long reviled.

He writes: ‘Although the economy is likely to struggle as it did in the early 1990s, the market can move higher, as it did back then. The wild card is commodities. If commodities break, or even just stop their relentless rise, equity markets should do well. If they continue to move steadily higher, they have the potential to destabilize the global economy.’

Read the entire letter here.

Posted April 24, 2008