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Thursday, December 29, 2005

Bill Miller Beats The S&P Again

It is a generally accepted principle in the financial world that over 90% of the mutual fund managers out there can't and don't beat the S&P 500 Index on a year in year out basis. So since investors can't beat them, they are encouraged to invest in an actual S&P 500 Index mutual fund like Vanguard's flagship S&P 500 index fund or the like. There is one guy though in the mutual fund investing world that is the Joe DiMaggio/Babe Ruth of fund managers. His name is Bill Miller. He has beaten the S&P 500 now for fifteen years in a row. That's right, fifteen consecutive years he has outperformed the S&P. Of course there are other great managers out there also like Warren Buffet, Peter Lynch, Bill Nygren, etc, but none of them have come close to doing what Bill has done. Mr. Miller is the manager of the Legg Mason Value Trust Fund. Here is a quote from the article:

In hard cash terms, Miller's performance means that $10,000 invested in the Legg Mason Value Trust in early 1991, when he took over as fund manager, had grown to $99,262 as of last Monday, compared with about $51,713 had the same amount been invested in the S&P 500

This is absolutely huge. You can see what a few extra points better than the average means to the bottom line of investors over the years versus the S&P 500. The power of compound interest at work.


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