Bill Miller’s 4Q 2017 Market Commentary

Bill Miller was recently in the headline related to his bullish view on Bitcoin. He recently published his Q4 market commentary.

On stocks and bonds:

 I believe that if rates rise in 2018, taking the 10-year treasury above 3%, that will propel stocks significantly higher, as money exits bond funds for only the second year in the past 10, and moves into stock funds as happened in 2013. Stocks that year were up 30%, mostly as result of that shift in fund flows.

10-year yields bottomed in the summer of 2016 at under 1.4% and now are well over 100 basis points higher. I think they will continue to move persistently, but irregularly, higher until the next recession, whenever that may be. Bonds have outperformed stocks for an entire generation and have done so with lower volatility and greater inherent safety due to their contractual payouts. That era is now over in my opinion and stocks will revert to their historic return premium over bonds as global economies grow, and central banks around the world follow the Fed in ending quantitative easing and reducing their balance sheets.

 

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