value player's are idiots. They totally ignore the time value of money, for one. Second, they totally ignore reflexivity of the market, a la Soros, i.e. investors actions can change fundamentals. Third, they give into data mining to support their conclusions-low p/e stocks did well in the past, so they have to do well in the future...oh wait. No one "time tested strategy" works. The market is a complex adaptive system.
You're confusing quantative investing with value investing. Value investing is about looking for stocks with a wide safety margin. This margin is provided by the market by offering a security at a discount to its intrinsic value.
On THE day of the low in '03, she made a comment on air about "getting people on here [CN-BS] to tell us how to short this market".
^Value investing, a la Benjamin Graham, made sense in the 50's. Stocks in the S&P don't trade below their real Net Asset value anymore. The market is much more efficient. 95% of a securites return can explained by it's sector, style and market cap. DCF modeling is stupid. It just makes you artificially comfortable with a stock. I can predict high future cash flows, and I'll come up with a high intrinsic value. Great. Generally, the market is right. The only way to find outsize profits is for their to be real inefficiency, not imagined. Us small investors can make money off of situations the big guys can't because we aren't constrained by the lack of liquidity. We can also adapt faster. We don't have to stick to the same rules. I'm amazed at how well Bill Miller did, considering how awful the choices are for a large mutual fund. But why would we try to guess where C is going? There's a million analysts already covering it. The "buy and hold" established companies is a terrible strategy. I just don't buy this bottom up investing crap.
Value is a very very misquoted or misunderstood genre. Anything with a low P/E is touted as 'value' - it is more likely a failing company. Don't confuse pseudo value players with real 'margin of safety' value players. Bill Miller is an idiot who says he is a value player for marketing purposes and because he buys an overextended stock just below its peak so it must be cheap i.e "value" right? He seems much keener to be evaluated relative to S&P rather than in absolute terms which is what true value investing is about. I agree that Pseudo Value investing is for fools, real value investing as per Graham (open to criticism and overrated IMHO), Buffet (had braiins, but also cash and balls at the right time) and Klarman has merit People see that they are buying cheap but they also miss that by buying when they do the majority of any losses will be temporary drawdowns, i.e. their portfolio is not subject to the devastating permanent losses from buying growth that implodes with the market. Coke was an S&P constituent when Buffet bought it in 1987 - he avoided buying it until it represented the right opportunity ie he 'not' bought it for years. As for DCF, nobody is interested in a DCF valuation other than their own, and really experienced people don't put too much emphasis on that, it's value is more for scenario modeling than determinimg a point estimate of value. Klarman states that you are paying a true value manager not to buy, i.e to stay in cash until such time as real opporunities present themselves.
this guy had more pearls of wisdom that year http://seekingalpha.com/article/15054-bill-miller-on-why-housing-stocks-are-a-buy
Buying stocks that trade below net asset values is but one way to be provided with a margin of safety. A better way is to determine all of the risk factors associated with a security and then conclude if the discount is appropriate or not. After all, buying a discounted cash flow only makes sense if you think the cash flow is still going to be there in the future. Seen from that perspective, quantative style investing that only takes into account statistical models and ratios derived from fundamental data appears very ineffective.