Three Longs & Three Shorts

Bill Miller 3Q 2021 Market Letter

Author: Bill Miller, CFA
Source: Miller Value Partners (

As it is, the first question in a client pitch is our thoughts on how the market is likely to pan out in the near future. With the markets threatening to correct somewhat, it has occupied an even greater part of the conversation. In what is his last quarterly market commentary, Bill Miller helps us put things in perspective. Miller’s 40yr career in investing included a freak 15yr streak of consecutively beating the index (Mauboussin famously wrote about such an occurrence having a probability of one in 2.3 million).
“since no one has privileged access to the future, forecasting the market is a waste of time. It is more useful to try and understand what is happening now and give up trying to predict what is going to happen. In the post-war period the US stock market has gone up in around 70% of the years because the US economy grows most of the time. Odds much less favorable than that have made casino owners very rich, yet most investors try to guess the 30% of the time stocks decline, or even worse spend time trying to surf, to no avail, the quarterly up and down waves in the market. Most of the returns in stocks are concentrated in sharp bursts beginning in periods of great pessimism or fear, as we saw most recently in the 2020 pandemic decline. We believe time, not timing, is key to building wealth in the stock market.
When I am asked what I worry about in the market, the answer usually is “nothing”, because everyone else in the market seems to spend an inordinate amount of time worrying, and so all of the relevant worries seem to be covered. My worries won’t have any impact except to detract from something much more useful, which is trying to make good long-term investment decisions.
Today’s worries include, but are not limited to, China’s regulatory actions, high and rising fuel and food prices, labor shortages, inflation or stagflation, the effect of Federal Reserve tapering, disrupted supply chains, potential default due the debt limit standoff and the ongoing dis-function and polarization in Washington. These are legitimate concerns and seem adequately reflected in the market, particularly so when stocks corrected in September. One thing I am pretty confident of is that twelve months from now those worries will have been replaced by a new set of worries.”