00:00 – 07:50
David Yazdan, Miller Value’s head of investor relations, highlights historical data that supports staying invested through volatility. Having a long term mindset allows us to take advantage of dislocations in public markets, and why we believe the current uncertainty is short term in nature, and provides us with great long term, buying opportunities.
07:51 – 18:48
Dan Lysik, CFA gives historical context on why an investor should stay invested (or buy) in turbulent markets. He highlights the opportunities he sees in today’s market.
1. Historically, periods marked by high uncertainty and/or low Consumer Sentiment has been a good time to buy.
- U.S. policy uncertainty has spiked to levels not seen since the COVID-19 outbreak, with the index reaching 446 at the end of March—one of only two major outliers in the past 40 years. This surge is notable not just for its magnitude but also for the speed of the increase, driven by factors like tariff confusion and economic uncertainty.
- Historical analysis shows that periods of high policy uncertainty have often been followed by strong long-term returns in the S&P 500, especially when uncertainty is at its highest. Similarly, low consumer sentiment—currently at recession-like levels—has historically preceded double-digit market returns one year later.
2. Market Structure seems to favor a run for Value
- While large-cap growth stocks have outperformed in recent years, their valuations are now stretched, resembling the conditions before the 2000 dot-com bust. Historically, after such periods, small and mid-cap value stocks have significantly outperformed, sometimes by over 150% to 215% over six years.
- Stocks with extremely high price-to-sales ratios (over 20x) are at record market cap levels, but these companies have a low probability of outperforming over the next 1–3 years and a high risk of being delisted over a decade.
3. Small and Mid Caps are attractive opportunities.
- Mid caps are underrepresented in indexes and are trading at historically low valuations relative to large caps, similar to previous periods that led to multi-year outperformance.
- Small caps, especially cyclical sectors, have been hit hard—more than in typical recessions—but have historically rebounded strongly in the second half of recessions and the year after, often delivering returns above 30%.
- Small and mid caps are currently under-owned and undervalued, positioning them for potential outperformance as the market broadens and benefits from ongoing deregulation and tax relief policies.
18:49 – 29:34 – 23:15
Bill Miller IV, CFA, CMT gives the “Outside View” on tariffs and inflation.
1. Speculating about the future is just that – Speculation
- Tariffs are taxes that prioritize national interests over consumer prosperity, and notes that free trade generally benefits consumers. We acknowledge the rationale for addressing imbalances, but it seems the current approach resembles coercion rather than negotiation.
2. The “Outside View” of the Market
- We see positive economic indicators, such as low trueflation (1.2%), declining gas and egg prices, and a weaker dollar boosting exports. There are parallels to 2018 when similar actions led to a market downturn followed by monetary easing.
- Stay the course, the market has a tendency to adapt and improve.
- Analysis of credit spreads and the 2 to 10-year Treasury spread indicates that the economy is not collapsing and may be entering a long expansion.
29:35 – 50:17
The managers answer questions from the audience.