Every year events prove that forecasting is futile and 2020 was no exception, says Bill Miller, chairman and chief investment officer of Miller Value Partners, in his latest quarterly letter to investors. It’s far better to understand what is going on today than to make guesses about the future, says Miller, who made his name at Legg Mason when his fund beat the S&P 500 for 15 years in a row from 1991 to 2005.
Today “we are in a bull market in stocks that began in March 2009 and that shows no sign of ending”. Valuations are high, but “not as high as they look”, given a supportive Federal Reserve and a strong recovery from coronavirus. Markets may even be underestimating the rebound’s likely strength. If growth beats hopes, the “rotation to value” should continue, which would be good news for “some groups that have trailed the market for years, such as banks and energy”. Added to that, inflation is likely to rise more sharply than expected “as the economy becomes more ‘normal’ in the second half”. Commodities and precious metals have already enjoyed significant gains, which should “continue in 2021”.
Miller also views ongoing loose monetary policy as good news for bitcoin, which he has been actively investing in since at least early 2017. He notes that several companies already hold some of their cash in bitcoin, a “relative trickle” that could “become a torrent” if inflation picks up. “Warren Buffett famously called bitcoin ‘rat poison’. He may well be right. Bitcoin could be rat poison, and the rat could be cash.”
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
DIY pension investors take tax-free cash amid switch to ISAsSelf-invested personal pension (SIPP) investors are rushing to withdraw their tax-free cash and turning to ISAs amid fears of a pension tax raid in the Autumn Budget
-
12 ways pensions could be reformed in Budget – including an alternative to charging IHTPension savers could face new rules after the Budget if chancellor Rachel Reeves targets their pots to fill her own fiscal black hole – what potential pension changes could be on the way?
-
Global investors have overlooked some of China’s best growth stocksOpinion Dale Nicholls, portfolio manager, Fidelity China Special Situations, highlights three Chinese businesses where he’d put his money
-
How Next defied the odds and positioned itself as a British high-street stapleNext rose from a near-death experience and now thrives as a high-street staple. What's driving its success – and should you invest in the retailer?
-
Alok Sama on AI and how to invest in the future of technologyInterview Alok Sama, the former president and chief financial officer of Masayoshi Son’s investment vehicle SoftBank Group International, explains AI’s potential
-
The private equity puzzleListed private equity trusts still trade at large discounts, despite sales that validate their valuations
-
Why investors should avoid market monomaniaOpinion Today’s overwhelming focus on US markets leaves investors guessing about opportunities and risks elsewhere
-
Can Rachel Reeves save the City?Opinion Chancellor Rachel Reeves is mulling a tax cut, which would be welcome – but it’s nowhere near enough, says Matthew Lynn
-
Pierre-Édouard Stérin wants to make France great againConservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
-
Global investors have overlooked the top innovators in emerging marketsOpinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
