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Bill Miller: Bull Market is Here

By Dan Weil   |   Friday, 31 Jul 2009 01:40 PM

Legg Mason mutual fund manager Bill Miller is bullish on the stock market and believes that technology and financial issues will lead the way.

“Bull markets typically begin when the following four conditions are present: the economy is bottoming, profits are bottoming, the Fed is stimulating, and valuations are low,” Miller writes in his quarterly report to investors.

“That’s where we are now. The path of least resistance, as Jesse Livermore used to call it, is higher.”

Miller’s Legg Mason Value Trust stumbled in 2007 and 2008 after beating the S&P 500 Index 15 years in a row.

Now he’s back. The fund gained almost 20 percent this year through July 21, beating the S&P by 12.6 percentage points.

“The extreme risk aversion that characterized the period from early October to early March is over,” Miller writes.

As for technology, the sector “has a great balance sheet, is flush with cash and trades at a large discount to the market on a free cash flow yield basis,” Miller explains.

“It should continue to perform well.”

As for financials, “pre-tax, pre-provision earnings at banks continue to rise, setting a new record last quarter, which means that banks are likewise set to report record results as the economy improves,” Miller says.

Investment legend Warren Buffett also is bullish on stocks.

“I would much rather own equities at 9,000 on the Dow than have a long investment in government bonds or … short-term money,” he tells CNBC.

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Legg Mason mutual fund manager Bill Miller is bullish on the stock market and believes that technology and financial issues will lead the way.“Bull markets typically begin when the following four conditions are present: the economy is bottoming, profits are bottoming, the...
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