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We Study Billionaires - The Investor’s Podcast Network
TIP247: Legendary Investor Bill Miller (Business Podcast)
Jun 16, 2019
Legendary investor Bill Miller, known for outperforming the market for 15 consecutive years, discusses various topics, including his thoughts on the Trade War, his fully invested stance in stocks, and why the traditional value investing approach has been broken. He also shares advice for value investors, explores the perception of value investing, and discusses the changes in the market, such as the rise of technology companies. Additionally, he dives into the use of momentum in stock assessment, highlighting factors like volatility and dividends.
39:39
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Quick takeaways
- Incorporating momentum in value investing can provide entry points for better-priced investments and potential exit signals for winners, as long as consistent criteria are applied to assess a stock's price behavior relative to its historical range.
- Value investors should treat momentum as a validation tool rather than the primary focus of their strategy, using it to flag stocks that exhibit significant deviations from historical ranges and assessing whether to buy or sell based on capital gains, dividends, and yields.
Deep dives
Importance of Incorporating Momentum in Value Investing
When applying momentum to value investing, it can yield better returns by allowing you to buy stocks at better prices and potentially sell winners before they decline. However, it is possible to implement momentum without relying on technical indicators, as they may not align with a value investor's comfort level. Instead, you can define consistent criteria for assessing momentum based on factors like long-term volatility and moving averages. These criteria can serve as buy and sell signals, with careful consideration given to capital gains, dividends, and the overall value of the investment. By understanding the distinction between cyclical and secular trends, value investors can effectively exploit behavioral tendencies in the market. Overall, the key is to adopt momentum as a validation tool for value picks rather than making it the primary focus of your investment strategy.
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