Wisdom from Ben Miller


Ben Miller is an investment guru and value investor. Below are the word of wisdom from him that will help you as an investor to be a best and successful value investor.1. I often remind our analysts that 100% of the information you have about a company represents the past, and 100% of a stock’s valuation depends on the future.2. The market does reflect the available information, as the professors tell us. But, jut as the funhouse mirrors don’t always accurately reflect your weight, the markets don’t always accurately reflect that information. Usually they are too pessimistic when it’s bad, and too optimistic when it’s good.3. What we try to do is take advantage of errors other make, usually because they are too short-term oriented, or they react to dramatic events, or they over estimate the impact of events, and so on.4. Many value investors ignore technology companies or maintain minimal exposure to them, despite compelling evidence that this sector has had the ability to create substantial, long-lasting shareholder wealth. The reasons typically given are that technology is difficult to understand, that it changes rapidly, and that the stocks are usually to expensive, according to standard valuation methods. All of these reasons are weak…. The theory of value indicated that all of an asset’s value derives from the future. Avoiding the analysis of possible futures, their probabilities and expected payoffs, may constitute the greatest error of fall.5. Value investing means really asking what are the best values, and not assuming that because something looks expensive that it is, or assuming that because a stock is down in price and trades at law multiples that it is a bargain…. Sometimes growth is cheap and value expensive… The question is not growth or value, but where is the best value….6. We construct portfolio by using factor diversification. We own a mix of companies whose fundamental valuation factors differ. We have high P/E and low P/E, high price-to-book and low price-to-book. Most investors tend to be relatively undiversified with respect to these valuation factors, with traditional value investors clustered in low valuations, and growth investors in high valuations.

7. It was in the mid 1990s that we began to create portfolios that had greater factor diversification, which became our strength. We own low PE and we own high PE, but we own them for the same reason: we think they are mispriced. We differ from many value investors in being willing to a analyze stocks that look expensive to see if they really are. Most, in fact, are but some are not.