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The Thesis
Miller combined deep value investing with an openness to technology stocks that traditional value investors avoided, creating the longest market-beating streak in mutual fund history.
The Story
From 1991 through 2005, Bill Miller's Legg Mason Capital Management Value Trust beat the S&P 500 for 15 consecutive calendar years — a record that has never been matched in the mutual fund industry. What made Miller's streak remarkable was his unconventional approach to value investing: unlike most value managers who shunned technology, Miller was willing to apply value principles to companies like Amazon, Dell, and AOL, arguing that traditional value metrics like price-to-book were outdated for asset-light businesses.
Miller's willingness to think independently about what constitutes "value" generated enormous returns during a period when technology was transforming the economy. While other value managers sat on the sidelines, Miller recognized that a low price relative to future cash flows was still cheap, even if the P/E ratio looked high. His streak proved that the best investors evolve their frameworks while staying true to core principles. Miller showed that dogma is the enemy of returns.
Key Insight
Value investing isn't about blindly following ratios — it's about buying future cash flows for less than they're worth, and that requires evolving your framework as the economy changes.
“The market is not a weighing machine. It's a complex adaptive system.”
Bill Miller
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