Renown portfolio manager Bill Miller of Legg Mason recently wrote to his investors in a letter that he is taking advantage of the depressed prices on financial services, housing and consumer stocks because he fully expects a turnaround, The Wall Street Journal reports.
“The greatest gains over the next five years will be made in those securities people are panicked about today,” he wrote. “Today, fear dominates the pricing of housing stocks, of mortgage-related securities, of financials and of many consumer stocks.”
Miller is even optimistic about Countrywide Financial, the mortgage lender that has suffered some of the worst losses in the subprime crisis, with its stock tumbling from $45 in January to $15. He believes it can return to its high valuations.
“Large-cap U.S. is the cheapest part of the equity market,” he said, adding that the fund he runs, Legg Mason Value Trust, will begin investing in new sectors, but he didn’t cite any.
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