Bill Miller: Too Many Value Investors Focus On ‘Accounting Value’

In this interview with WealthTrack, Bill Miller discussed the mistake made by too many value investors in focusing on ‘accounting value’ instead of economic value. Here’s an excerpt from the interview:

Miller: Many value investors are driven more by what I call accounting value as opposed to economic value. And I think probably the greatest example of that in the markets in the last 25 years is the people that have hated Amazon since it became public because they claimed it never made any money.

And so while Amazon rarely reported GAAP accounting profits it didn’t go from a $400 million company to a $400 Billion company not making any money.

They generated enormous economic value but it wasn’t captured by the accounting metrics.

You can watch the entire discussion here: