Bill Miller: Bond Bubble as Big as Housing, Internet Bubbles

By on February 14, 2013

Bill Miller - Legg MasonConsuelo Mack of Wealthtrack had a very interesting, and quite lengthy conversation with Legg Mason’s infamous mutual fund manager, Bill Miller. His Legg Mason Opportunity Trust mutual fund has risen from the ashes of a horrible 2011 loss of 34% to become the top performer in 2012; up 41% last year.

Mack noted that investor bullishness regarding the stock market has been on the rise leading to a shift in mutual fund flows towards stocks.

Miller proceeded to discuss his interest in housing stocks and his bullish view of airline stocks.

Miller explained why the bond bubble is as big as the housing bubble in 2005 and the internet bubble.

Miller talked about the stock market being “the only game in town” and mentioned the risks to his bullish scenario.

Miller touched on Apple (AAPL), the “Dr. Jekyll and Mr. Hyde of the stock market,” and their “dumb capital allocation.” Miller predicted Apple would rise 50% with sensible capital allocation.

Miller said he added Ford (F) to his portfolio in the 4th quarter based on his view earnings will rise for years. He noted that Ford trades at 2.5 to 3 times EBITDA and should easily be 50% higher.

Mack asked Miller to comment on the disastrous performance of his funds in 2008 and 2011 and what he’d do differently to avoid a repeat. Miller discussed the idea of using hedges to mitigate risk.

Finally, Miller recommended the iShares S&P 100 Index ETF (OEF) as a way for investors to get exposure to extraordinarily cheap, large cap equities, or the best risk/reward opportunity in his opinion.

Back in April 2012, Miller discussed the various risks around the world which he saw receding [link].

Below is the interview which was taped on January 24, 2013:

3 Comments

  1. Amanda Lay

    February 14, 2013 at 3:07 pm

    It’s a little known fact that Bill Miller was Frank Sinatra’s pianist.

    • Stephen Barnes

      February 23, 2013 at 12:56 pm

      LOL
      Yes, Bill Miller was Ol’ Blue Eyes’ pianist. But not THIS Bill Miller. Pianist Bill Miller passed away more than six years ago.

      I presume you both know that but are just funnin’ us.

  2. Hyman Berston

    February 16, 2013 at 11:47 am

    Glad to see he’s making a comeback. Everybody wanted to pile on when he ran into a rough patch. He always downplayed his success and predicted an eventual downturn. Still didn’t stop the ineffectual bloggers from piling on the scorn. Through it all, he played the piano beautifully. It’s not easy being Sinatra’s foil.

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