Ouch. Bill Miller looks set for two straight years of lagging the S&P 500 after beating if for fifteen consecutive years. Conceding upfront that he is a very smart and skilled guy, anyone want to change their estimate, ex post, of the likelihood that the prior market-beating streak wasn’t due to chance?
Miller’s fund failed to outperform the S&P 500 in 2006. And as of Dec. 3, Miller’s chances of beating the market this year do not look promising. The Legg Mason Value Trust fund is down 6.1 percent year-to-date compared to a 5.8 percent total return for the S&P 500. (Total return includes the reinvestment of dividends.)
Although Miller has had some big successes this year — Amazon.com, which has more than doubled in 2007, is his top holding, while Google, which is up nearly 50 percent, is the fund’s fourth-largest investment — the fund’s performance has been hurt by exposure to struggling telecoms and the troubled financial services industry.