Despite predictions for a market crash from other top investors, the stock market looks fairly valued, famed stock picker Bill Miller said in his latest letter to fund clients.
The star investor, whose flagship fund beat the market for 15 years straight, but tumbled 55% in 2008, said he found it curious that investors like Michael Burry, Jeremy Grantham, Leon Cooperman, and Stanley Druckenmiller are predicting an epic market crash because “we had one only 15 months ago.”
Economic turmoil and anxiety over the effects of the COVID-19 crisis saw the market decline the most in history during March 2020 before it kicked off a remarkable recovery, he said.
“The market looks broadly fairly valued to me, with most stocks priced to provide a market rate of return plus or minus a few percent,” he added. “There does appear to be considerable optimism among individual investors about their expected returns from stocks.”
For Miller, factors including a 7% growth estimate, higher expectations of company earnings, and a rise in the net worth of US households are all adding to the recovery story. The only point of contention is the outlook for inflation.
He said that while prices are broadly rising across sectors at the fastest pace in decades, the pandemic-driven boom in certain commodities like lumber is cooling off.
He also thinks fund managers should be able to “find plenty of names to fill our portfolios and so remain fully invested.”
The billionaire, whose bitcoin holdings are worth more than his Amazon stock, also gave his take on the outlook for the cryptocurrency, which is currently holding between $32,000 and $36,000 per coin.
“Bitcoin was born out of the 2008 crisis and was designed to be free of government control and manipulation, to be the ultimate in an inflation proof asset,” he said. “It is an open question if it will be an enduring store of value, with many strong opinions on both sides.”
Miller began buying bitcoin when it cost $200-300. It was last trading at $33,237 per coin as of 4:00 a.m ET on Tuesday, a decline of about 41% in the past three months, but still up nearly 260% in a year.