In this article we will be reading some of the insights of a very successful portfolio manager, Bill Miller. Miller III is an American investor, fund manager, and philanthropist. He served as the chairman and chief investment officer of Legg Mason Capital Management as well as the principal portfolio manager of the Legg Mason Capital Management Value Trust he also runs a fund based management company known as Acunari. He is currently the portfolio manager of the Legg Mason Opportunity Trust mutual funds.
Bill Miller is suggesting every aspiring investor should read the reminiscence of a stock operator. His reasoning about the importance of the book is not because of the way in which Jesse Livermore necessarily invested or traded in the short run on a momentum basis it’s much more of the showcase of the standpoint of market psychology behavioral finance. Those kinds of insights that are important and that might be the most important thing in that entire book is his point about the big money is made in the big move. So most people aren’t really thinking about that they’re thinking much much shorter term but shorter term moves. He also said that in any type of charting technique they don’t make investment decisions based purely on you know on on a chart pattern. It’s based on fundamentals but they use that for supply demand as evidenced to maybe help or timing from time to time and again it also helps understand if the.
Miller expresses the importance of looking at the economy along with the moving average. He looks at the 10 day the 50 day the 200 day to get a picture. Not only that, you can also get the sense of what other people are doing because they tend to make decisions on moving averages. 10 percent of the corrections are actually connected to the 200 day moving average. 80 percent going back 20 years have gone through the 200 day in and undercut low for before bouncing.
Miller also said that he thought that lower prices made assets more attractive. Other things equal higher prices made them less attractive. But Amazon went down over 95 percent and three years later it turned out fine.
Being an investor in the financial markets for quite some time now, Miller said this is the same is true for Bitcoin. He said, “And I think that with respect to me I have no ability to know exactly how much of the psychology around Bitcoin represents fraud that needs to be corrected. When I get asked what I get asked about the bitcoin correction how low would go. My comment was go low enough to shake all the people that don’t really understand what they’re doing or are afraid of losing might and wants their daughter to start back up again.”