Bill Miller: One Of The Best Ways To Find Opportunities

In this interview on The Investors Podcast, Bill Miller discusses one of the best ways to find opportunities. Here’s an excerpt from the interview:

Miller: One of the things that we try and do is abstract away from the day to day noise in the market. The future is unpredictable, so nobody has privileged access into the future. So, there’s always going to be new stuff that happens. The market is a real time information processing machine. It basically takes that information and incorporates it into prices.

What I tend to tell our analysts is, if it’s in the newspapers, especially if it’s in the newspapers every day, then it’s in the price. What isn’t in the price are changes from off that base case. Most of the things that people worry about, and there’s always whenever you say something about what about this? What about this? What about this? It’s those “What about this” that create the opportunity because the “What about” that always some level of problems that you just enumerated some Brexit, trade war, that kind of thing.

Those usually for us create opportunities because they’re fleeting. So we try and distinguish between things that we call cyclical and that would include things like recessions. I would agree with Peter Lynch, the great former manager at the Fidelity Magellan Fund, who said that more money has been lost worrying about recessions or preparing for recessions than is lost in the recessions themselves.

We saw that last fall when the market was down 20% on no news whatsoever, except people’s worries. There was no new information at all in the marketplace. We just had a bad May, that also just part of the normal corrective process.

There have been, I think, 25 or 26 corrections of more than 5% in this 10-year bull market. So, two and a half a year, whenever the market goes down, we’re down to 6% in May, people flip out, sell everything and push prices down and that creates the opportunity.

You can listen to the entire interview here: