Case Finance

Published: 2021-09-10 12:25:09
essay essay

Category: Business

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ProblemIn 2005, Value Trust, a mutual fund managed by William H. (Bill) Miller III at Legg Mason, Inc., did a remarkable performance record. The case describes the investment style of Miller, which allows Value Trust beaten the S&P 500 fourteen years in a row. The average annual return of Value Trust is 14.6% and the S&P 500 index is only 10.93%. However, many scholars believe that it is impossible of money managers in mutual fund to constantly beat the market because they believe that when they are able to beat the market, they simply being lucky. However, is it the case was Miller and Value? Is he lucky or he is able to beat the market?Recommendation/ ConclusionI believe that Miller’s performance and investment are not simply pure luck. Because he maximizes his return through not relying on fast pace trading. He holds his investment for a long period of time, combine with the types of stock that he purchases which are low prices and low expectation. He believes that low prices and low expectation stock are often times undervalued and carries more room for growth and profit. This combination allows him to gain exponential growth for his investment portfolio allowing him to be able to earn above average return in the market. As it is explain in the article, Miller tries to be more aggressive when the market is down and less aggressive when the market is up. He focuses in buying when the market is falling, instead of growing.

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