Bill Miller’s March Market Perspective

Bill Miller’s March Market Perspective

Bill Miller shares his perspective on this month’s market on the Miller Value Partners website, noting how attention has shifted from how low can stocks go to how long can this equity market rally last. While there are many unknowns at the moment—how long the war in Ukraine will last, what its outcome will be, how high will oil prices rise, how many times will the Fed raise rates—what we do know, he writes, is that the stock market is an ever-changing entity that updates itself in real-time.

Those updates are the result of investors collectively believing one thing and then another about the companies they’re investing in, affecting the value for better or worse. The current rally is likely due to a more optimistic outlook about the war in Ukraine, and indicates that portfolios had taken a deeply pessimistic view. Investors are analyzing all possible outcomes, navigating through the highest inflation in 40 years, interest rates that are the most negative in decades, solid commodity prices, and a central bank that has said it will do “whatever it takes” to reduce inflation, Miller writes. Meanwhile, if a resolution to the war in Ukraine comes sooner rather than later, that would likely cause stock prices to rise sharply, but the ramifications of the conflict will still be felt for years to come.

Even with the current rally, stock prices are still down this year, offering many opportunities in the market, Miller contends. And as the U.S. economy continues to strengthen due to low unemployment, rising wages, plentiful jobs, and real growth, Miller foresees a shift towards value stocks and away from growth that has dominated the market for the past decade. Among the areas that Miller currently favors are energy, Chinese stocks (which he estimates are valued too low), the financial sector, housing (also valued too low), and the travel industry such as cruise ships and airlines as the industry rebounds after the pandemic. Lastly, Miller advises investors to look at a basket of stocks that are down at least 50% from a 52-week high; doing so is sure to uncover good, long-term bargains.