Bill Miller third quarter letter to shareholders: "Today fear dominates the pricing of housing stocks, of mortgage related securities, of financials, and of many consumer stocks."
"Confidence and optimism underlay the pricing of energy, materials, industrials, and non-US stocks, especially those of emerging markets, and China in particular."
am reminded once again of the quote that sits in the front of Ben Graham's Security Analysis, from Horace's Ars Poetica: "Many shall be restored that now are fallen and many shall fall that now are in honor." (The quote does not say "all" by the way, just "many").
In Value Trust, we have been taking advantage of the market's current turmoil to make adjustments as the market misprices some securities in relation to others. Here is what you can expect: the fund will become more of what it already is, large capitalization US, as we systematically reduce our mid-cap names in favor of those with larger market values. As I noted elsewhere, I think large-cap US is the cheapest part of the equity market and so we will have more of those names. We will also extend exposure into some sectors from which we were previously absent. Inter industry valuations are pretty homogeneous and so concentration pays less than it used to. In other words, we will own more stocks, and in new industries. We will still be quite concentrated compared to the average mutual fund, just less than we have been previously.
We will likely reduce the weightings of many of our top 10 holdings. They will still be among our largest holdings, we will just have less of them. This is being done to reduce risk in the over-all portfolio, and to fund some of the new names we are buying.
This is the first time since 1990 we have had two calendar years behind the S&P 500. Perhaps not surprisingly, that was also a time of panic due to a housing market recession, soaring oil prices, banks and financials collapsing. We were able to take advantage of the values then offered to begin a pretty good period of excess returns.
Read the complete letter
Also check out:
"Confidence and optimism underlay the pricing of energy, materials, industrials, and non-US stocks, especially those of emerging markets, and China in particular."
am reminded once again of the quote that sits in the front of Ben Graham's Security Analysis, from Horace's Ars Poetica: "Many shall be restored that now are fallen and many shall fall that now are in honor." (The quote does not say "all" by the way, just "many").
In Value Trust, we have been taking advantage of the market's current turmoil to make adjustments as the market misprices some securities in relation to others. Here is what you can expect: the fund will become more of what it already is, large capitalization US, as we systematically reduce our mid-cap names in favor of those with larger market values. As I noted elsewhere, I think large-cap US is the cheapest part of the equity market and so we will have more of those names. We will also extend exposure into some sectors from which we were previously absent. Inter industry valuations are pretty homogeneous and so concentration pays less than it used to. In other words, we will own more stocks, and in new industries. We will still be quite concentrated compared to the average mutual fund, just less than we have been previously.
We will likely reduce the weightings of many of our top 10 holdings. They will still be among our largest holdings, we will just have less of them. This is being done to reduce risk in the over-all portfolio, and to fund some of the new names we are buying.
This is the first time since 1990 we have had two calendar years behind the S&P 500. Perhaps not surprisingly, that was also a time of panic due to a housing market recession, soaring oil prices, banks and financials collapsing. We were able to take advantage of the values then offered to begin a pretty good period of excess returns.
Read the complete letter
Also check out:
