Bill Miller, a legendary US hedge fund manager who has outperformed the S & P 500 for 15 years in a row, believes that current stock market valuations look reasonable, although some other investment bosses predict a stock market crash.
Miller said in a letter to his fund clients that investors like Michael Berry, Jeremy Grantham, Leon Cooperman and Stanley Druckenmiller were all predicting an epic market collapse, which made him feel strange because "We just went through it 15 months ago."
He said the economic turmoil and concerns about the impact of the COVID-19 crisis led to the market's worst decline in history in March 2020 before it began to recover significantly.
He added: "in my opinion, the market valuation is generally reasonable and most stocks are priced at a few percentage points plus or minus the average rate of return in the market. Retail investors seem to be quite optimistic about the expected return on their stocks. "
In Miller's view, 7% growth expectations, higher corporate earnings expectations and growth in household net worth in the United States are all driving the economic recovery. The only issue is the inflation outlook.
While prices in all sectors are rising at their fastest pace in decades, the pandemic-driven boom in some commodities, such as timber, is cooling, he said.
He also believes that fund managers should be able to "find a lot of names to fill our portfolio and keep investing fully."
The legendary investor also commented on the future of Bitcoin. "Bitcoin was born in the 2008 financial crisis and was designed to be free from government control and manipulation and eventually become an anti-inflation asset," he said. Whether it will become a lasting store of value is open to question, and there are many strong opinions on both sides. "
Miller once outperformed the S & P 500 as a fund manager at Legg Mason for 15 years in a row, a record that no one has yet broken. But leveraged investments in Bear Stearns, Freddie Mac and other hard-hit financial stocks in 2008 shrunk his wealth as the Fed failed to help as he expected.
However, Miller revealed in a recent interview that thanks to AmazonWith earlier bets on stocks and Bitcoin, he is now a billionaire.
Miller began investing in the e-commerce group shortly after Amazon went public in 1997. He says he may now be Amazon's largest individual shareholder after Bezos and his ex-wife Mackenzie.
In addition, he started buying the cryptocurrency when bitcoin was only $200 to $300, and his average cost was about $500.