Best of all, legendary investor Bill Miller scored that humongous return doing absolutely nothing in the last quarter.

That’s right, Miller neither sold nor bought anything in the dying months of 2019. That takes some doing for an actively managed fund, but Miller kept his hands off a portfolio that held names such as Amazon (+23% in 2019), and small-cap biopharma Flexion Therapeutics (+83% in 2019). (Markets Insider citing Bloomberg)

Now, Miller’s fund reportedly uses leverage varying between 1X and 3X of the value of its investment. Knowing how leverage magnifies gains (and losses), it makes sitting out the party even harder.

It’s not the thinking…it’s the sitting!

At the risk of repeating an old chestnut, here’s a quote from an equally legendary book:

“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!… Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.”

― Edwin Lefèvre, Reminiscences of a Stock Operator

Keep in mind that Miller’s fund earned 60% during those lethargic months.

“This doesn’t happen as often as it probably should,” Miller acknowledged in his letter to investors that was seen by Bloomberg.

The active-passive strategy paid off in spades, especially when Miller’s returns are juxtaposed alongside the following metrics for 2019:

• Average hedge fund return +9%
• S&P 500 +29%
• Nasdaq +35%

Miller – on 2020

The veteran stock-picker is unequivocally bullish on stocks for 2020: “The path of least resistance for stocks remains as has been for a decade: higher,” he says.

Related Story:  Bill Miller rides Amazon stock, Bitcoin to 46% Return this year