He outperformed the S&P500 for 15 years straight...

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• Stories of the Week.

• Learning from the investor who outperformed the S&P 500 from 1991 to 2005.

• Meme of the Week.

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Stories of the Week

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Bill Miller’s Investment Principles

Most people in the investment world have heard about Warren Buffett, Charlie Munger, and Ken Griffin, but few know who Bill Miller is.

He’s worth studying because:

• He outperformed the S&P 500 index for 15 consecutive years.

• From 1982 to 2004, his fund, Legg Mason Value Trust Fund, averaged an annual return of 19.3%.

Here are the investment principles that made Bill Miller so successful:

Commit to Your Strategy

In the investment world, patience is a virtue, but few have adopted it better than Miller himself.

During the 90s, the tech bubble was all the rage, so everyone and their mother were investing in tech stocks but not Bill Miller.

His focus was on undervalued, traditional companies, so during that time, his fund underperformed.

People called Miller and his strategy outdated and questioned his ability.

But Miller remained committed to his strategy, and as the bubble burst, he outperformed the market for 15 years straight.

Discipline = Financial Returns

During the 2008 financial crisis, one of Miller’s key holdings, Warren Buffett’s Berkshire Hathaway stock, plummeted.

It fell over 50%, so the entire sentiment around Buffett and his company shifted.

Many people sold the stock, but not Bill Miller.

He kept the stock, and its price rose over 120% over the next 5 years.

Discipline and patience pay off in the investment game.

Long-Term Mindset

Similarly to Buffett, Miller is focused on value investing - he buys companies that are trading below their intrinsic value.

He studies the fundamentals, management, and the industry to find gems.

While people called him “out of touch” in the 90s, he made one of his best investments during that period - Amazon.

At the time, Amazon was a small company that didn’t have profits, but Miller saw its potential and paid off handsomely.

At one point, his returns were over 2,000%, making it one of the best (and most profitable) bets in history.

So, if you want to emulate Bill Miller’s success, you need to:

• Find the right strategy for you and commit to it.

• Be disciplined about it.

• Follow it long-term.

This is how you win in the investment game.

Meme of the Week

Hey!

Tanyo here, I wrote this piece.

In my day job, I’m the founder of FinLetter, an email marketing agency for the finance space.

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