Bill Miller, Legg Mason Value Trust's manager, used to be a good investor but he's outlived his usefulness in that role. Legg Mason (NYSE: LM) has kept him on for too long and if it doesn't give him the hook fast, he will sink the company. The problem? Miller's success has gone to his head and he can't adapt.

This phenomenon is quite common. It's called confirmation bias -- the tendency of decision-makers to seek out information that reinforces their views of the world and to reject information that challenges those views. This is particularly common among those who have been successful. They think that they have figured out a winning formula and when it stops working, they blame everyone but themselves.

This came to mind as I read a CNNMoney story on how Miller's fund has lost 34% of its value since last July. Miller had been famous for beating the S&P 500 every year between 1990 and 2005. But his methods have failed him since. And investors have yanked $2.4 billion from Legg Mason which CNNMoney notes, reported a second quarter loss last week.

CNNMoney says that Miller has stuck with his strategy of investing in financials and over-priced tech stocks -- both of which have been pummeled. And it observes that "he seems to dismiss critics who suggest that his bad bets on housing and banking stocks were foreseeable, or that he should have anticipated the commodities boom driven by growth in China and India." This is confirmation bias in all its ugly glory.

Bill has had a nice run. Now it's time for him to go.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He is a Legg Mason Value Trust investor.