Don't feel too bad for him. He's made enough money from management fees over the years. He gets to keep those while investors take the full brunt. His 5 year performance record is now -1%. Mutual funds are a heads I win, tails you lose game. So are hedge funds for that matter but at least some hedge funds have a high water mark. Mutual funds get to start over at the beginning of the year with a clean slate. What a business.
Wow! I don't think increasing his shares on the way down was necessarily his biggest mistake, as much as the stock he did it on. Here we are in the middle of a financial crisis caused by mortgage defaults and he's averaging down on one of the biggest mortgage backers in the world?
I'm wondering if Legg is quietly talking removing or restraining him. Seriously guys, what does the company do here?
That's funny. S2007S swears by averaging down without using any stops . . . He and Miller must be related.
His rollercoaster ride is like jesse livermore's...ISnt it funny how many experts like cramer etc were pumping financials last month.In fact cramer called the july low the beginning of a new bull and that fnm,fre were buys-they have tanked more than 50% since.Bottom fishing and knife catching should never be recommended as anything other than gambling at the casinos. Banks have no future earnings til the housing and mortgage business climate improves.And at this point that could be years from now.
Cramer is a self-promoting idiot. I have no idea why people continue to mention his name in the context of an "expert". Bill Miller. He actually has a pretty successful track record over the past 15 years. His error in this instance is shocking. I'm unable to understand why he thought that the banks would have any real earnings anytime soon, given how bad their balance sheets are.
I hear what you're saying but there is a big difference between dollar cost averaging (that's a much nicer way of saying it ) on a stock like FRE/FNM during a mortgage crisis vs doing the same on a consumer staple like KO, WMT, PG, JNJ, and such. Miller's biggest mistake was stock selection. He probably knew he was in trouble from the get-go and increased his size in the hope of correcting his mistake. Then the shit hits the fan and now he's stuck. Value investors buy down all the time. That is the nature of their strategy. If it's a good value at $50 it's a great value at $25 but it only works if stock selection is right.
Ahhh,what happened to bm is what many of us have done.He acted human,gave in to his emotions and got trapped in his emotions and started rationalizing fnm,fre scenarios. Besides psychology,he really got whacked by averaging down.Averaging down more than 2x on a loser is insane. Lastly,going against the trend and then doubling down while losing more and more shows total mental collapse. At this point all bm had left was hope-the death knell.