While I am a huge fan of growth investing and index funds, from international and emerging markets to REITs to small caps, I also pay attention to value funds and markets. With various industries and sectors, loading too much in one risks the potential for losing timing in another. Case in point: Miller's Legg Mason Value Trust (NASDAQ: LMVTX) was overweight in telecom and tech, and underweight in the energy sector in the last year or so, and that explains not beating the S&P 500.
How could such a seasoned manager miss the boat here? Like many of you, I've missed plenty of boats, and the man is only human. One of Miller's top 10 holdings is Amazon.com (NASDAQ: AMZN), which has seen a great rally this year, but still is overvalued once you consider the fundamentals of the company's financials.
Miller said in a letter to shareholders that he is re-shaping the portfolio for the fund he manages, which to some may seem long overdue. Miller says he'll be buying securities that people are panicked about now to grow the greatest gains in the next five years. What are those areas, you may ask? While not directly stating any companies, Miller hinted at the financial and consumer goods sectors. Miller already has Countrywide Financial Corp. (NYSE: CFC) and Citigroup (NYSE: C) in his holdings, both of which are down heavily this year on the subprime mortgage mess and lending nastiness still going on now. Are you game for buying when the chips are down? Miller is.
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Reader Comments (Page 1 of 1)
11-05-2007 @ 2:53PM
Americas Watchdog said...
We do not run a huge hedge fund but in June 2005 we called the "real estate market a train wreck waiting to happen" in Money Magazine. We have the National Mortgage Complaint Center & Americas Watchdog and only a fool would be holding mortgage related, or homebuilder stocks right now. The 4th quarter of 2007 will be crushing for both sectors and the 1st quater of 2008 will be even worse. You do not need a Harvard MBA to figure this out. Perhaps when Wall Street starts to look 6 to 10 months out rather than 6 to 10 minutes out, things will change. If my fund manager had not already got out of mortgage/homebuilder stocks.........................I'd be looking for a new fund manager.