Conviction Investing: Masters in Business with Bill Miller IV

Barry speaks with Bill Miller IV, Chief Investment Officer and the Portfolio Manager for the Miller Value Fund about his start in investing. They discuss the rise of bitcoin, and how it may mirror technology in general. They also discuss his firm's approach to high concentration and conviction investing. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  At Brookfield, we believe you can own wealth that's measured in generations. Because true ownership looks beyond today and beyond cycles. For 125 years, we've built long-term wealth through expertise, discipline, and a clear vision for the future. Providing investors access to alternative strategies built for what's next. Brookfield. Own what's next. Learn more at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. Past performance is not indicative nor a guarantee of future results. Please review performance and offering materials before investing.

• 0:38Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 1:21Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 2:03Speaker 02

  Bloomberg Audio Studios, podcasts, radio, news.

• 2:11Speaker 02

  This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

• 2:17Barry Ritholtz?

  This week on the podcast, I have yet another extra special guest. Miller Value Funds, Bill Miller, the fourth. He is the son of Bill Miller, the third. Fascinating investor, portfolio manager, and World Series of Poker player. They have a very unique approach to value. It's not your traditional, just buy them cheap. I thought this conversation was fascinating, and I think you will also. With no further ado, my conversation with Miller Value Funds, Bill Miller.

• 2:50Speaker 04

  Thanks for having me. It's great to be here.

• 2:52Barry Ritholtz?

  So, so I want to talk about your investment philosophy, what you're doing at Miller Value today, but let's roll back a little bit. Beforehand, you get a degree in economics from Tufts and then an MBA from Dartmouth Tufts School of Business. Was investing the original career plan?

• 3:11Speaker 04

  No, it wasn't the original career plan. You know, when I was growing up, went to a small, private boys' school in Baltimore, Maryland. Never really knew what I wanted to be when I grew up, but when I pointed it out to my parents, they said, well, just consider school as your job. And the harder you study, the more options you'll have down the line, and it'll help you figure it out. So.

• 3:33Barry Ritholtz?

  That sounds like pretty good advice.

• 3:34Speaker 04

  I followed it. Did well academically in school. So when I went to Tufts, I think the primary concern was somewhere where I could actually play baseball. So growing up as a huge Orioles fan, that was something that my dad and I often did together. He was my coach in Little League, something I'm doing now today for my son. Sports teach you a lot about being on a team, about how to operate, how to internalize what you can and control what you can and not focus on the rest. So, learned a lot from that.

• 4:05Barry Ritholtz?

  Did you play baseball in college?

• 4:06Speaker 04

  Yeah, but I wasn't very good. Learned that pretty quickly. I played for two years.

• 4:11Barry Ritholtz?

  The difference between the guys who are good and really good is so tiny, just like a little wood on the bat once or twice more a week, and you're in a different tier.

• 4:21Speaker 04

  Exactly right.

• 4:22Barry Ritholtz?

  It's fascinating.

• 4:23Speaker 04

  Yeah, and you know, I probably deluded myself for a while about how good I could be, but I also probably didn't focus on the right things. And knowing what I know now about how to get better and improve at things, I could have been much more systematic about it than I was.

• 4:37Barry Ritholtz?

  So, so you start your career at McKinsey. Why, why consulting? What, what led to that?

• 4:43Speaker 04

  Yeah, well, so I interned for my dad's group in college. Loved it, learned a lot. But then, you know, on-campus recruiting came along and McKinsey was one of the names and I just applied to it, did a little work on it, and made it through that interview process. It was pretty rigorous. And I got an offer from McKinsey and I said, hey dad, I love being with your group. Investing is a lot of fun. You know, what would you do if you were me? And he said, well, you can always tell McKinsey, you can always come back and work for me. But if you tell McKinsey no, you'll never have a chance to work there again.

• 5:19Barry Ritholtz?

  Right.

• 5:20Speaker 04

  So it was this concept of optionality again. And also there was, he knew and I didn't know at the time, but they placed an immense amount of focus on professional development. And so that was a really valuable place to spend the first three years of my career. So I was working on a huge variety of consulting projects. Mainly, actually, the job I had there now, I don't, I don't know if it exists because of AI. So what I was doing was remotely supporting teams on research efforts, deep dives on stuff, which now you just ask ChatGPT about and he probably does a better job summarizing everything I could possibly do and.

• 5:52Barry Ritholtz?

  Assuming it's accurate, which is always a little bit of an if.

• 5:55Speaker 04

  Right. That is a big if for sure. Yeah. Focusing on primary sources is a, is still a critical skill that I think a lot of people underemphasize.

• 6:02Barry Ritholtz?

  What'd you take from your years consulting that showed up and as helpful as an investor?

• 6:12Speaker 04

  You know, one of the things, this might surprise you, less so about the data-driven nature, because my dad's a data-driven thinker and thinking quantitatively has always been in my wheelhouse. But the thing that I learned at McKinsey more than anywhere else would be to focus on client service and how to interact with people, how to do the subtle things that show you know somebody else is the client. In finance, you know, when you're managing money, it's very hard to differentiate yourself. And that, you know, Ken French, who was a professor of mine at

• 6:41Barry Ritholtz?

  Famous Fama French Factor Model at Dartmouth.

• 6:43Speaker 04

  You got it, exactly. One of the things he imparted on us was, how long does it take to know if a money manager is actually any good? And the answer is, from a statistically significant basis, longer than any money manager's career.

• 6:54Barry Ritholtz?

  Right. I was gonna say 10 years, 20 years?

• 6:57Speaker 04

  It's 20 plus to see if it's statistically significant, right? So you have to be doing other things, like we were talking about before we came in here. Content's a big focus, right? That's a way to differentiate yourself. The way you communicate with clients, getting back to them quickly. All of these things are really important, and I learned those at McKinsey, and I'm not sure I would have learned those to the same extent if I had just directly joined my dad's firm. So that might be a surprising answer, but it is a

• 7:19Barry Ritholtz?

  No, it's really, really interesting. So McKinsey was a solid place to get grounded. What led to the pivot to investing late 07, 08?

• 7:30Speaker 04

  Yeah, so at McKinsey, we were effectively handing over analyses to clients and then leaving and moving on to the next analysis. And it occurred to me that if you actually wanted to, you know, build any equity in your analysis and what you were doing, you had to actually take a real stake in something. And so that made me think, okay, you know, this is, it'd be a great time to pivot from what I was doing at McKinsey to my dad's side of things, where that's exactly what you're doing all day, every day. Excuse me. And then I also, during college, I took a liking to poker. And so played a lot of No Limit Hold'em. Back then PokerStars was kind of an illegal gray area, and so I played a lot online. And I saw a lot of similarities between what my dad did, poker, analytical

• 8:14Speaker 04

  edge in terms of thinking quantitatively at McKinsey, and it all kind of Came around to moving in that direction.

• 8:22Barry Ritholtz?

  So, speaking of your father, how did growing up in the Bill Miller household influence how you look at risk and reward, at investing, at...how big of an influence was he on your initial philosophy?

• 8:39Speaker 04

  I think he's most of it. It's hard for me to specifically say A, B, and C because it was as much learning from watching him and how he operated. So, number one, he was always, always had a stack of research and was always going through content, always looking for new perspectives. He's a relentless truth seeker, and I think that's ultimately what we're doing as investors, is trying to separate where the truth is from where the perception is around what's going to happen. And the bigger the gap, the more you want to place a bet.

• 9:09Barry Ritholtz?

  That variant perception is really important, is it?

• 9:12Speaker 04

  Exactly.

• 9:13Barry Ritholtz?

  Especially when that gap gets bigger and bigger.

• 9:15Speaker 04

  Yeah, and especially if there's a margin of safety there to protect you on the downside. So relentless truth-seeking. And the other thing is, you know, there were no shortcuts for him. There's no substitute for actually putting in the time to going through that content all the time and being in front of your machine all day. And just, time is the ultimate resource and constraint for everyone. And so, thinking in blocks of time and thinking how to maximize your productivity per unit of time, I think is something that I took away from him.

• 9:49Barry Ritholtz?

  Really, really interesting. So, going back to the family business, that's a pretty loaded concept for a lot of people. What was it like first going back to work with your father and then becoming the controlling owner of Miller Value Partners?

• 10:06Speaker 04

  It was fantastic because we were a small group at Leg for a good period of time, probably from 2013 or 2014 until we split off and went independent in, I think it was 2019 or so. So, got to work with my dad very closely a lot.

• 10:25Speaker 04

  You know, but at the same time, one of the things I love about it is the market doesn't really care what he did or didn't do.

• 10:31Barry Ritholtz?

  Mm-hmm.

• 10:31Speaker 04

  And ultimately, now that I'm in charge of the portfolios, it'll hinge upon my decision making more so than what he did. And so it's on me to now take everything I've learned and run with it and do what we can do.

• 10:46Barry Ritholtz?

  Was your father a poker player? How did you find your way into that?

• 10:49Speaker 04

  No, he wasn't a poker player. It was when Chris Moneymaker won the World Series. I don't know if you remember.

• 10:55Barry Ritholtz?

  Sure.

• 10:56Speaker 04

  I think it was maybe '02 or '03.

• 10:57Barry Ritholtz?

  The big funny glasses and...

• 10:59Speaker 04

  He was an accountant, actually.

• 11:01Barry Ritholtz?

  Yeah.

• 11:01Speaker 04

  And so, you know, he stressed a lot of quantitative decision making. And the other thing I actually looked at coming out of Tuck was baseball operations stuff because Moneyball was a, you know, the whole analytical side was just coming around then. And, you know, I know you like to talk about mistakes, but I think specifically that recruiting process, my attitude towards it, and just some mistakes I made there. So...

• 11:28Barry Ritholtz?

  Well, we seem to learn more from our failures than we do from our successes because we don't know if our successes were the result of good fortune or skill. If it takes 20 years to figure out, which it is, you're going to obviously learn more from the errors. Hey, we know this was a bad choice.

• 11:45Speaker 04

  That's right.

• 11:46Barry Ritholtz?

  Or was it a good choice with a bad outcome?

• 11:48Speaker 04

  Well, I think in this case, it was a, you know, the outcome was good because it was ultimately where I was probably looking to wind up. But at that time, I was thinking, I want to do baseball, baseball, baseball. You know, I mentioned earlier, I wasn't good enough to play. I wanted to sort of use my analytical talents to, talents, my analytical background and training to go into the analytical side. And as I went through the recruiting process, it became very clear that I was jumping through hoops, waiting for callbacks, and it was a very intense process. And I realized that I was probably going to be charting pitches in Topeka at the end of it, which to me didn't seem all that exciting. But in retrospect, if you want to be in baseball operations, you should do anything you possibly can to get your foot in the door to these competitive businesses.

• 12:30Barry Ritholtz?

  Let me point out, a little over a decade ago, a kid became an intern in the NFL, and he just won the Super Bowl as head coach. So if you really love it that much and you're that committed, I'm with you. I can't count pitches in Topeka. I just couldn't imagine that. Right, I mean.

• 12:49Speaker 04

  Yeah.

• 12:49Barry Ritholtz?

  Especially because you have how many other people were interns and they didn't head coach the Super Bowl winner.

• 12:56Speaker 04

  But it's funny because now I see that on the other side, right? So I get LinkedIn's and messages all the time. Hey, I'm a really good software analyst. I want to come and work for you and be a software analyst. And I'm like, we don't need a software analyst right now. We need somebody that can go get me a sandwich at lunchtime, you know? But like, so, but I understand the perspective too. It's just that I think if you want to become a member of a team, you have to understand what the team needs and where you can genuinely help. And it may not always necessarily align with what you want to do. And I think that's important to keep in mind.

• 13:28Barry Ritholtz?

  Really, really very interesting. So as long as we're talking about all these career choices, if you were starting out today, would you follow this, a similar path to what you did previously? Or would you go a different route?

• 13:45Speaker 04

  Um, I really like what I'm doing now and I want to do it indefinitely. So it's hard for me to go back and say I would do something differently because I'm where I want to be in, uh, for the long term. I do think one of the lesser considered paths that a lot of undergrads don't think about would be actually going into something entrepreneurial. And, and I don't mean like starting a startup that you're trying to scale from zero to a gajillion dollars over the next year. Right, but that's what people tend to think of because that's where all the returns look like they are. In reality, I think potentially scaling a small services business, you know, whether that's power washing, home cleaning, just things that where you can get your arm around the fundamental service

• 14:27Speaker 04

  and scale that and make it bigger is potentially a more, a safer risk adjusted way to a big outcome than people consider.

• 14:35Barry Ritholtz?

  Just because you're learning a business from the ground up and customer relations and all those other things?

• 14:40Speaker 04

  Yeah, well, you know, even in our business, it takes time to build a track record. It takes time to build the assets. And so anything you do where you're going to have a good outcome in the, in the long run, just takes repetitive effort and, and the right focus. And so sometimes the learning around something that you can get your arms around can be easier than the learning around software development or, you know, scaling a big fund or things like that, so.

• 15:07Barry Ritholtz?

  Really, really interesting. Coming up, we continue our conversation with Bill Miller IV, Miller Value Fund's Chief Investment Officer, talking about his investment philosophy. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 15:31Speaker 00

  At Brookfield, we believe you can own wealth that's measured in generations because true ownership looks beyond today and beyond cycles. For 125 years, we've built long-term wealth through expertise, discipline, and a clear vision for the future, providing investors access to alternative strategies built for what's next. Brookfield. Own what's next. Learn more at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. Past performance is not indicative nor a guarantee of future results. Please review performance and offering materials before investing.

• 16:10Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk, and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices, but according to recruiters,

• 16:55Speaker 01

  advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 17:36Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is Bill Miller. He is the Chief Investment Officer and Portfolio Manager of Miller Value Fund, where he works with his famous father, Bill Miller III. So let's talk about your investment philosophy, separate from your dad's, starting with how do you define value in a world where a lot of the traditional metrics, like price to earnings or price to book, seem to have been downgraded somewhat? Perhaps they don't fully

• 18:15Barry Ritholtz?

  capture modern intellectual property-based business models? How do you think about those?

• 18:22Speaker 04

  Yeah, I think you have to have a flexible definition of value, and that if it's just based on accounting figures, you're probably not going to do very well over the long run, because if you look at some of the best-performing asset stocks of all time, they never look cheap, just because they have such a right tail and they compound with very, you know, they're investing all their earnings and they're constantly seeking to grow that edge. And so solely focusing on accounting factors is not a great way to capture long-term value or outperformers, although it can be. You know, we have a strategy whereby my business partner, Dan Lysick, has this collection of 10 or 12 names that look insanely cheap on these metrics. So you can do, there's a lot of different ways to skin the cat, right?

• 19:02Barry Ritholtz?

  So what are the different thought processes around defining value? So cheap, but not broken, is obviously what your partner is focusing on. How do you contextualize things like Amazon, or Nvidia, or Google, which have looked expensive for 10 years and have just shot the lights out?

• 19:25Speaker 04

  Yeah, well, in the case of Amazon, they started with a very small idea around just selling books online. And it was, you know, it ended up being this retail juggernaut, just because if you look at now, the distribution logistics networks that they've used to fulfill their orders, it's just a, it's a network that can't be touched, right? It's the everything store. And it depends on the actual scenario. So, you know, one of the things that I've been vocal about now for probably 10 years is our view that Bitcoin is still a massively undervalued technology.

• 20:00Speaker 04

  And so that would be one where you'd probably say, well, why it has no cash flows, it, you know, speculative, it's based upon other people's beliefs. And I'd say that's exactly right. It is based upon other people's beliefs, but other people don't haven't yet come around to the view that it is a functionally superior technology to gold. It's a form of capital governance. I think it requires a lot of different lenses, right? When we say we have a flexible definition of value, you have to approach things from a variety of different perspectives. In this case, one of the reasons I think Bitcoin is so interesting and compelling, 17 years in, you know, it's gone from this weird technology on the internet that only criminals use to now it's collateral for loans in our modern day financial system,

• 20:41Speaker 04

  right? And so what explains that? Well, markets explain it to an extent in that people are increasingly coming around to view it as an interesting place to put money and an interesting capital governance system. It's totally separate from the fiat systems that everyone has known for their entire lifetimes and multiple centuries before us. It wasn't possible prior to 2009 or 2010 when the white paper came out. And so now you've got this new emerging system of capital governance that I think it's one of the most dynamic areas of finance in general, as a matter of fact. So it's an area I'm very optimistic about over the long term. It'll bounce around, it'll be volatile, but I think it's headed to much bigger places.

• 21:21Barry Ritholtz?

  So, so we're recording this the day after it briefly broke 60,000. Are you a buyer of Bitcoin at these prices?

• 21:30Speaker 04

  Yes. So it's a big part of my personal financial situation. And, and one of our, in our MBPA, it's roughly, or digital assets collectively are about 10% of that fund.

• 21:41Barry Ritholtz?

  So we'll talk more about state of markets in a little bit. Let, let's stay with the concept of philosophically, this is an interesting technology. I've described this as stop thinking as a unique asset class. I think of it as, hey, it's somewhere between Facebook and Google, between Meta and Alphabet as a technology company, which gives it a little more perspective. But at the same time, it came out around the same time as an iPhone, and I would never give up my iPhone. I don't know how I would, my, my train tickets, my plane tickets, my communication, my portfolio, everything I do, I do on this. If Bitcoin were to disappear tomorrow, it wouldn't affect my life in the least.

• 22:26Barry Ritholtz?

  Why is it that 17 years in, we're still waiting for this to gain broad usefulness? I'm still waiting for smart tickets that cut out StubHub and those guys and all sorts of technological uses that I heard about five, 10 years ago, but still haven't happened? What's the response to the skeptics?

• 22:51Speaker 04

  Well, so if you look at the introduction of running water in households, it took 100 years for it to go from possibility to ubiquitous. Okay? And that was a clearly better technology than using an outhouse or boiling water to put it on Unite or whatever. So this is an entirely new idea. And again, from my perspective, it's a capital denominator. It's not a numerator. It's a capital denominator. So Bitcoin is a denominator for capital. And the reason I think it's so superior to what we've known before is that money, the way it works right now, it's ultimately backed by the threat of state-ordered violence.

• 23:29Barry Ritholtz?

  Standing army and a set of laws, right?

• 23:33Speaker 04

  That's right. You don't pay your taxes, we'll throw you in a box and lock the key away. Throw the key away. But this, and if you think about actually around the world, the countries you want to visit, most of them are going to have stability of process and rule of law, right? And the places where that's not the case, there's a much less distinct, must less of distinction between who controls the ledger and who controls the guns. So the farther apart those two things are, the better. So in this case, we now have a distinct ledger entirely apart from any state, and its units can't be controlled by anyone, right? In that they're controlled by actual energy. So you need to have energy to crank out a new Bitcoin, because that's what the whole

• 24:18Speaker 04

  mining process is about, right? You verify a transaction, takes a lot of energy to do that, and in exchange for expending that energy, you get more Bitcoin. That's the miner reward.

• 24:28Barry Ritholtz?

  Right.

• 24:29Speaker 04

  Right? So this is a capital denominator whereby energy input is actually required to create new units. What happens now? What happens now is a bunch of congresspeople sign something, Fed goes and prints money to keep rates roughly in line, prices roughly stable, employment roughly full. And so it's... It's, there's, uh, there's still some issues with that from a process perspective, right? So they're trying to control the money supply to come engineer outcomes as opposed to having a fair set of value that we all agree upon, right? This is a valuable thing because it takes energy to produce and having that be the arbiter of value.

• 25:11Speaker 04

  And so if you look at the political process today, it's not, it's, it's a process issue more than anything else in that oftentimes the least accountable party ends up winning in office because of all the promises they make. And what happens then? Well, more units get printed, right? And they just get printed and printed over time and that's what ultimately causes inflation. And it's, you know, it's, it's not a red or issue or a blue issue. Most of the time Republicans are cutting taxes in a way that probably doesn't make sense from a systemic perspective. Uh, at the other side of the, the equation, oftentimes the, the blue side of the aisle increases entitlements, right? Without an offset. And so both of those are bad things for the, for the overall medium through which we transact over time.

• 25:56Speaker 04

  And so now you've got a system that offers a promise of effectively cutting that whole, the clown show, as I call it sometimes, out entirely. So you look like you're not believing it.

• 26:07Barry Ritholtz?

  Um, well, you know, I don't care about deficits. Since past 50 years, I've been hearing about the problem with printing money and everything that we were warned against didn't happen. The dollar hasn't devalued. We haven't had hyperinflation. We haven't crowded out private capital and you could still lend money to Uncle Sam at historically low rates, um, if, if you want three and a half, four percent as a yield. So all the warnings about printing money and deficits have been, you know, the boy who crawled, cried wolf for half a century. Um, so, so there's that. And then there's, okay, so here's an idea that we're going, what are we limited to 24 million?

• 26:50Speaker 04

  21.

• 26:51Barry Ritholtz?

  21 million coins and that, um,

• 26:56Barry Ritholtz?

  Scarcity creates value.

• 26:59Barry Ritholtz?

  I understand it's virtual. I understand the advantages of having things be purely digital from conception forward. I have a hard time getting past the criminality and the pig butchering and the blackmail. That's a little problematic. And it's sort of like democracy, all the others, you know, it's the worst system except all the others. Well, a central bank and a government that makes sure we're doing something within reason is better than just opening it up to the Wild West, which is what this seems to have been for a long time.

• 27:42Barry Ritholtz?

  The US did a, was pretty aggressive in embracing it, especially this administration. And it seems to have speculative run up in anticipation from that. And, you know, once it was all in the price, you know, we got cut in half. It's, when you're talking about stability, yeah, the US dollar was down 9% in 2025, not cut in half. This is a giant whack in, you know, less than six months. So I, I have a hard time just wrapping my head around, oh, the source of stability is something with no fundamental value but swinging wildly up and down. So I, I'm, I'm not as negative about it as a lot of people are.

• 28:27Barry Ritholtz?

  I was really negative about the NFTs and my, which, wait, you want to take something with literally no value and totally reproducible and, like, I understood the idea of, hey, you're going to buy a $10,000 Birkin bag and here's a unique identifier on the blockchain. All right, that made some sense, but not $68 million, this is sort of crazy prices these traded at. So there seems to be a lot of speculative excess that get in the way of the, the technological story underneath.

• 29:04Speaker 04

  Yeah, and I think you bring up a good point with regard to the United States and the deficits not making a big impact, and that's because we are the best house in a bad neighborhood from a fiat perspective. I mean, we have the reason that America is the most desired place to be from an immigration perspective. I think we have, you know, four times multiples the number of immigrants as the next four closest countries combined. Again, that comes down to stability of process, rule of law, and property rights.

• 29:30Barry Ritholtz?

  Right.

• 29:30Speaker 04

  And so if there's now a form of currency that wasn't possible 20 years ago, call it, that has more stability of process and more certainty around property rights over the long term, I think it's an education issue as much as anything else.

• 29:45Barry Ritholtz?

  Interesting.

• 29:48Speaker 04

  And people may not come around to that view, but from my perspective, the quantitative inevitability of the technology is pretty compelling. When you look at just the Bitcoin versus gold, right? Gold's done amazing in the past year, I get it, it's a deep part of the debasement trade, Bitcoin hasn't. But when you think about, you know, if gold is the predominant check and balance on fiat, fiat's a lack of accountability, and then you look at the functional attributes of Bitcoin, it's so far superior to gold.

• 30:18Barry Ritholtz?

  So you joined Legg Mason in '08, pretty much right in the middle of the financial crisis. How did that experience shape your perspective on investing, and in particular, on value?

• 30:30Speaker 04

  Wow. Start with a hard-hitting question here. So that was a, as you point out, I joined right at the top. I think when I joined Capital Management, there were roughly 150 people working there, and then by the time, you know, Capital Management merged with ClearBridge, there was a substantially fewer number of people working there, just because...

• 30:58Speaker 04

  Assets flew out the door, performance struggled and you know, that could be a pretty ugly compounding effect on an asset manager, so.

• 31:05Barry Ritholtz?

  For sure. By the way, that story was pretty much ubiquitous throughout finance.

• 31:10Speaker 04

  Yeah, and so I think that taught me, you know, you to run one of these businesses, you obviously want to have some extra gas in the tank, you know, at all times. You want to, you don't want to run it too thin from an operating capital perspective, if you want to build it for the long term. And so it's a good idea to keep those fixed costs lower than you might even anticipate.

• 31:36Barry Ritholtz?

  So, so let's talk about building on that. You, you come out of the financial crisis, you get your CFA soon after 2011, something like that.

• 31:45Speaker 04

  It sounds right.

• 31:46Barry Ritholtz?

  And then become a chartered market technician in 2018. Unusual combination. Tell us why you went that route.

• 31:54Speaker 04

  Yeah, so the analogy I make is if the CFA teaches you to play your cards on the poker table, CMT teaches you to play the other players at the poker table. And in that, one of the interesting things about the CMT is, number one, it takes a lot less time than the CFA.

• 32:11Barry Ritholtz?

  Uh huh.

• 32:12Speaker 04

  But number two, I use that in some of the teachings from that more often now than I use the CFA.

• 32:17Barry Ritholtz?

  It's funny, you, you, the way you described it, I always thought the difference was, financial analysts tell you what to buy, technicians tell you when to buy.

• 32:28Speaker 04

  Well, I think that's accurate as well. Yeah, and so one of the things that it's very easy to do as a value investor is see multiples coming down and a stock going down, you go, wow, this is way too cheap. The reality is that it's could just keep going down because it's going down and people are selling it. And you have to be able to read that on the chart and when the volumes change and when the investor behavior changes. So it teaches you to look at investor behavior, it teaches you how to figure out what other investors are thinking based upon price trends and action and volume. And it's been a really valuable skill set and complement to the CFA.

• 33:03Barry Ritholtz?

  So walk us through your process from idea generation to execution and position sizing. What sort of steps do you have to work your way through?

• 33:13Speaker 04

  Well, I think a lot of it starts with the appreciation that most assets are efficiently priced, right? So we have a portfolio of things that we believe are undervalued. And so, all day, every day, we're constantly running through screens, we're reading research, we're looking at price movements, we're looking at insider action a lot of the time when insiders are buying or selling to potentially point us, point something out to us. But then we have to then, once we identify something that looks interesting, it has to then be better than what else we have in the portfolio. So, we have a group of things that we own and like, but at the same time, we're constantly comparing new ideas to see if it can be a fit to come into the portfolio.

• 33:56Speaker 04

  And so, how we make changes is going to be, obviously, directly relevant to that thesis. In some cases, we'll have a name that, the investment thesis completely changed with the latest earnings report, or something went out the window, and then we'll have an ability to either add something new, or bump something up. But it's always about constantly looking for new ideas that could be undervalued, and then trying to figure out the right way to weight them. Because as unconstrained investors, all of our torque is in our position sizing in the weights. So, you know, we've made a lot of mistakes, and oftentimes, the answer to those mistakes is sitting right in our portfolio. You know, it almost always is, we should own more of that and less of that. And so, I spend a lot of time just going through the portfolio and figuring out where the relative weights should be.

• 34:41Speaker 04

  But I would say at a high level, probabilistic fundamental value.

• 34:46Barry Ritholtz?

  Probabilistic fundamental value, alright, I like that phrase. When you're looking at fundamental values, how do you distinguish between something that's only temporarily out of favor, temporarily hated, to, oh, this business model is structurally broken? How do you avoid the classic value traps?

• 35:06Speaker 04

  Well, we don't always, unfortunately.

• 35:10Speaker 04

  You know, and just because something is undervalued doesn't mean that other people are going to agree that it's undervalued. So I think that's an important thing to keep in mind, too. And it's important to use the markets to help you figure out how to change your position sizes. Because sometimes you start legging into something and it just keeps going down. You should probably heed the market's feedback a lot of the time relative to your own positions and their sizes. So one of the key reports that my dad looked at every day, I still look at every day, is our daily performance report. And basically, it just has the entire portfolio ranked by weight, and then how it's done over the past day, how each name has done over the past day, week, month, quarter, six months, year.

• 35:54Barry Ritholtz?

  What about the reverse? When something's working out, do you pyramid and add to the position as it runs?

• 36:00Speaker 04

  It depends. So I mean, we just, I know you don't like to talk about short-term stuff and market-related things, but we just eliminated our Google position a few days ago. Right? So we

• 36:09Barry Ritholtz?

  I mean, that had a great 2025.

• 36:11Speaker 04

  It did. And we actually got the, I think, the investment thesis right. Hopefully, we got the exit right. But, you know, the thesis there was, okay, here's Google. This is, this should be a huge AI winner. Everyone was concerned about their search business at the time and AI replacing search. And, you know, our position was, hold on, this trades at a massive discount to the Mag7, it trades at a discount to the market on an earnings and cash flow basis. Yet it has all the distribution mechanisms for AI. You know, they're in seven out of 10 phones globally.

• 36:41Barry Ritholtz?

  And all the technology capability to implement AI. I mean, they're a giant tech brain trust, right?

• 36:48Speaker 04

  Exactly. And they had a ton of funding to build it with. So, and, you know, Waymo and all these other, you know, YouTube, all these other insane businesses, and it was trading at a discount to the market. It just didn't make any sense. So we bought that. That's probably fairly valued today, I think, you know, and obviously, one of the classic mistakes is selling things too early. Could it continue to compound? Yes. But if you look at why the whole Mag7 hyperscalers have done so well over the past two to three years, the answer has been, well, they're number one, growing faster than everything else. And number two, they've got these huge incremental free cash flow margins. But if you look at what's been going on recently, they don't really have big incremental free cash flow margins anymore because they're dumping so much money into the AI space that

• 37:32Speaker 04

  there really is no free cash flow. And now you're betting on it materializing down the line. So where we take the other side on the AI situation is if you actually look at the dollars required to be found in revenues five years out, they're so substantial, that the number one, they're bigger than the entire software as a service business right now globally around the world. Okay. And number one, number two, the total revenues that are required to justify all the investment that's gone in is bigger than the combined revenue of Mag7 today. And those companies have been scaling for 30 to 40, 50 years in some cases. And so you got to find that in five years to make all this investment worth it. And if you think about the structural, the way it works, it's all this capex investment upfront,

• 38:16Speaker 04

  and then it's very little marginal cost, right? So you potentially have a race to the bottom on pricing on the top line in a few years as well. So that gives us a little bit of pause, whether or not it's right, who knows?

• 38:27Barry Ritholtz?

  Huh. So, so what I'm hearing is that there's a probabilistic quantitative discipline. You're looking at value, you're looking at growth rate, you're looking at risk, combined with a qualitative judgment about management and sounds like specific industry and whether these moonshots are going to pay off or not. How do you balance between the squishy qualitative side and the more quantitative mathematical side?

• 38:56Speaker 04

  Well, I think there always has to be a quantitative value perspective in anything we're buying and thinking about, often from a total addressable market perspective versus versus the current valuation. One of the big themes for us also is alignment. So we want to see managers, you know, actually using their cap. So it's capital allocation alignment. So are they using their capital in ways that align with our view of the stock? You know, are they buying back a lot of shares if it's mispriced? Hopefully, yes. Are they aligned with you as a manager of the company? You know, principal agent conflict is one of the biggest sources of value destruction you can possibly imagine. And so that's important to us. As managers, we are the biggest investors in our own funds as well.

• 39:41Barry Ritholtz?

  Oh, really?

• 39:42Speaker 04

  So that's important.

• 39:42Barry Ritholtz?

  Very interesting.

• 39:45Speaker 04

  But it's a first principles based approach. So one of the things we pay special attention to, I think more so than most, and can be opportunistic about moving on is insider activity. So when you see a big insider buy, if you can then reverse engineer a quantitative value perspective into that insider buy that makes a lot of sense, that can be a really compelling.

• 40:06Barry Ritholtz?

  I just saw a big Wall Street Journal piece on do insider buyers indicate future performance? And I saved it. I haven't read it yet. What's your take? I mean, the assumption is insiders, there's a million reasons to sell a stock if you need liquidity. There's only one reason to buy a stock. You stay with that conclusion insider buying is indicative of positive things to come?

• 40:33Speaker 04

  I think it's a potentially high signal source of information. So in the aggregate, does it necessarily guarantee it? No, but if you can contextualize and say, okay, this CEO is really smart. He's done this sort of thing in the past. He has a plan for this company. Here's what it's looking like. And he just put a huge amount of personal capital in. That can be a really good.

• 40:57Barry Ritholtz?

  So it's not binary. There are other factors that have to be. It's a little more nuanced than the way we typically think of it.

• 41:03Speaker 04

  Context matters always.

• 41:05Barry Ritholtz?

  Really interesting. Coming up, we continue our conversation with Bill Miller, the fourth chief investment officer at Miller Value Fund, talking about today's market environment. I'm Barry Ritholtz. You're listening to Masters of Business on Bloomberg Radio.

• 41:33Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means that. adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs. And hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 42:16Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 42:58Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio or watching us on YouTube Television. I'm speaking with Bill Miller IV. He's Miller Value Fund's Chief Investment Officer and Portfolio Manager. He works with his father, Bill Miller III, the famous value investor. So let's talk about what's going on in the current environment. If you look at today's markets, where do you see things that are very much mispriced? Either by asset class, sector, geography, factor, whatever? What's out there that's not fully priced? Or what's out there that's overpriced?

• 43:40Speaker 04

  Yeah, I think aspects of the current environment remind us of 1999, right? So you've had a narrative-driven performance led by AI. You have a very narrow market for the most part, with Mag 7 leading huge returns to momentum, momentum factor last year.

• 44:00Speaker 04

  But then if you look at the actual macroeconomic backdrop, you're seeing deregulation. You are seeing

• 44:08Speaker 04

  Weaker dollar and you're seeing economic acceleration potentially in the US. And so when you think about all those things combined and you look at what happened between, call it 1999, 2000, all the way until 06, 07, you had the market go effectively nowhere for seven years. I mean, it went down and bounced around, right? Because I think valuation heading into that period was very high. But what did really well during that period? Actually, small mid-cap value. And if you look at the relative valuation discrepancies today between SMID value and large growth, they're right at the same sort of extremes that occurred in 1999. And so you have same valuation extremes.

• 44:53Speaker 04

  You have compelling valuations in a lot of the small-cap, mid-cap value space. And you have an economic acceleration backdrop. So that means that a lot of more cyclically oriented things, value-oriented names that are, you know, care more about what's going on in the economy. There's a much lower hurdle rate for those guys to exceed the expectations embedded in the valuations, right, over the next five to seven years than there are in the massive AI space.

• 45:23Barry Ritholtz?

  So, so let's talk a little bit about small and mid-cap value. Last year, we only saw two, that's 2025. We only saw two of the seven, Mag7, outperform the S and P 500, which tends to suggest, hey, maybe this is broadening out. We're going to see more mid-caps and more small caps. The value skeptics are going to say, hey, we've had so many false starts in value. It's been 15 years of growth winning. How do you respond to that?

• 45:54Speaker 04

  Yeah, I think that those snapbacks can be violent, right? We actually had one of our research providers recently calls mid-cap value a quote-unquote inferior asset class. I mean, that sounds like capitulation to me. There's a lot of under-loved stuff out there that's really interesting. So, energy.

• 46:10Barry Ritholtz?

  What sectors?

• 46:11Speaker 04

  Energy is interesting to me right now. You know, if you look at its weight in the market, it's three or 4%. But if you look at its free cash flow contribution over the next year to the market, it's going to be 10 to 12% most likely.

• 46:22Barry Ritholtz?

  What's that historic relationship look like?

• 46:24Speaker 04

  I don't know if it's that large, to be honest, that gap. And so, you know, energy is under love, it's underperformed for so long, it's not the best industry from a capital allocation alignment perspective, but it's gotten a lot better over the past few years. And I think you could see those types of stocks do really well. You know, sadly, I do think it's a really cheap call option on global strife right now. Energy prices, you know, they're pretty bouncing pretty close to the marginal cost of production.

• 46:52Barry Ritholtz?

  Which is shocking when you think about Russia and Ukraine and Gaza and Israel and what's going on in Venezuela and who knows what's going to happen. By the time this comes out, we can own Greenland. So, given, given all of that, what does it, what does it mean to see despite all this geopolitical turmoil, energy prices are almost reasonable?

• 47:19Speaker 04

  Yeah, they are. They've started to turn up and energy's done well over the past few weeks. It could continue to do really well, so that's why we're overweight energy.

• 47:28Barry Ritholtz?

  What other sectors do you like?

• 47:31Speaker 04

  You know, financials, we're still overweight. I think you're going to continue to see curves steepening. And that should be a decent earnings growth in those. I think utilities are finally attractively valued again at, you know, 10 to 13 times earnings in a lot of cases with very clear growth pathways and I'd say little risk. You know, we don't have enough energy in the country and utilities are pretty attractive here.

• 47:55Barry Ritholtz?

  Especially as AI and data centers continue to come online. You take very concentrated position, at least compared to traditional value managers. How do you, what's the framework for thinking about this? How do you position size these? Is this just strictly a function of, hey, we're not closet indexers, we have a high active share and when we have high conviction, we really, we go all in to follow the poker analogy?

• 48:24Speaker 04

  Yeah, that's a good way of putting it. I mean, if you consider that most stocks underperform the index for their lifetime in it.

• 48:35Speaker 04

  It's an interesting exercise to come at it from the entire other side and just say, okay, what are the 10 to 15 names that you think have the highest probability of actually outperforming instead of effectively what most active managers do is they have these risk constraints and they can only overweight certain sectors a little bit or so, you know, the closer you are to the benchmark, the more likely you are to underperform it, right? Because you're just layering higher fees on something that looks more like the benchmark. So, you know, we're very comfortable taking bets entirely outside of the index with the obvious caveat that there are going to be periods when we're going to underperform meaningfully just because we're taking entirely different risks and there'll be some periods

• 49:19Speaker 04

  where we outperform by a lot. So I think that's really the only way to do it.

• 49:23Barry Ritholtz?

  Is to not be a closet indexer essentially.

• 49:27Speaker 04

  Yeah, and you have to match the investment process to your IP. So, you know, for us thinking that the edge is on the 37th page of the Excel spreadsheet is just not realistic, right? And where if you're Fidelity and you got a guy that's been following a certain industry for a long period of time and really understands the nuances of every single company and what could change, you know, that might make sense, but it just depends on what you're trying to do and you have to match up those two things.

• 49:52Barry Ritholtz?

  So we've been kind of dancing around AI throughout this conversation. So let's talk about that a little bit. Are you thinking of AI as its own investment entity? Are you thinking of it as disrupting traditional business models? Are you thinking of other businesses, forget the Mag 7, the Mag 493, as being the beneficiaries of AI to be more productive, efficient, profitable? How are you thinking about AI as an investor?

• 50:22Speaker 04

  I think it's all of those things.

• 50:27Speaker 04

  Yeah, it's all those things. I use it all day, every day.

• 50:30Barry Ritholtz?

  How do you, that was really my next question. How do you use AI throughout the day for your process, both for selecting investments and just managing a large investment firm?

• 50:43Speaker 04

  Well, it's an enormous time saver and it's not necessarily always a time saver on the investment front, although it often is. It can just be a time saver personally. Like if you have an interpersonal issue that is weighing on you, sometimes you throw it into AI and you get a better answer than you could have gotten from asking your, you know, three closest friends and move on. So if you're thinking in units of time, it's a huge time saver for me personally. I think a lot of life is about asking the right questions and you got a pretty good set of answers there or method for answering questions. You pointed out earlier, it can be wrong often and you have to consider that, but it's got a lot of good perspectives in there that can bring to bear on a lot of different things. So.

• 51:20Barry Ritholtz?

  What, what tools do you use? What's your favorite AI?

• 51:24Speaker 04

  At the moment, we have ChatGPT and Jim and I going for business, both for business. And then we're also adding Claude here soon.

• 51:32Barry Ritholtz?

  I just, I just put Claude on a couple of desktops and a laptop. And the coding side of it is really fascinating. And I, I can see why people are concerned that this could replace certain, at least menial kind of work, grinding work. Like, oh, it does this so much faster and better than I could ever grind out on my own. Yeah, Claude's kind, especially Claude Pro, it's really kind of impressive. And the question is, is 200 a month a lot? Is that not a lot? Is that a fair price? I, I think it, it sounds like a lot of money compared to, what is perplexity? 20 bucks a month?

• 52:14Barry Ritholtz?

  That seems like free practically for that much power. So you're using it everywhere?

• 52:20Speaker 04

  Yeah.

• 52:21Barry Ritholtz?

  What are you hearing from your peers? Is this the sort of thing that everybody has gone all in on? Is the fear, hey, if we don't do this, our competitors are, so we better step up?

• 52:32Speaker 04

  Um, I don't know if it's fear just as much as the ability to cover so much more ground in the same amount of time or less. Um, you know, it's just a super powerful technology and we use it a lot.

• 52:44Barry Ritholtz?

  Huh, really, really interesting. Um.

• 52:49Barry Ritholtz?

  So I wanted to get to this question and I forgot about it. So we're talking about the current environment. AI is obviously a game changer, but we've gone through a few decades of major regime changes. We had the era of monetary policy and then starting in 2020, we've had the era of fiscal policy. When you're, when you're looking at central banks and the government, higher for longer, zero interest rates, all these different things. How do these geopolitical variables affect how you think about putting capital to work? How you think about risk?

• 53:28Speaker 04

  Well, I think one really big picture change, sort of going back over the past decade to today is coming out of the financial crisis, capital effectively had no cost. I mean, you saw the insane amount of money, money printing that occurred, but that's because that was to offset a huge hole in CapEx that had gone into housing that wasn't necessarily needed, right? And we had to work that out from a demand, supply, demand perspective, and we've now done that. But if you go back and read what the Fed said, there was a study that came out of, I think the San Francisco Fed, where they used computers to look at the language that was used in meetings, right, about how to set rates.

• 54:11Speaker 04

  And what they found was that the 2% inflation number, that's kind of the bogey, supposed to be a quote unquote symmetrical goal, it wasn't symmetrical at all, the way they were setting rates for the, between 2010 roughly and call it 2020 or so. And so that has an enormous implication, I think, for the way all kinds of different assets perform. And I think that's why massive growth had the run it did over the past decade, right? Because when capital has no cost, you're willing to look out a huge distance.

• 54:39Barry Ritholtz?

  Embrace more risk because what are you, what are you going to get? One and a half, 2%? It doesn't make sense otherwise.

• 54:44Speaker 04

  Exactly. And so that's why huge growth had the run it did, because capital had no opportunity cost. And now, if you look at where we are with mortgages at 6% and capital actually has a cost again. It has major implications for the kinds of assets that are likely to do well in the future. And it comes back to the whole theme we talked about earlier around SMID value, more capital intensive things, potentially having a better decade now that capital has a cost again.

• 55:10Barry Ritholtz?

  Let me, let me share a favorite factoid with you. Former Fed Vice Chair Roger Ferguson wrote a white paper on the origination of the 2% target. And he traced it back to some random television interview in the 1980s in New Zealand, where someone threw out 2% and that was it. It just magically stuck. And you could find that, you can find that paper online. It's pretty hilarious. It's just such a random number that doesn't, like it's not, there's no underlying thesis for why it's two and not three or one. It's just, it just seems like, yeah, that sounds about right.

• 55:54Speaker 04

  Well, I think it's got to actually be higher than that, if you think about it, because

• 55:58Barry Ritholtz?

  Certainly in an era of fiscal rather than monetary stimulus, right? You're gonna just inherently have higher prices.

• 56:04Speaker 04

  Right. Well, I mean, if you think about the fact that most consumers' overwhelming saving vehicle is their home. Okay. What's the blended rate on mortgages right now out there? That's just in the system?

• 56:18Barry Ritholtz?

  Four and a half?

• 56:19Speaker 04

  Yeah.

• 56:20Barry Ritholtz?

  Well, half, half the individually owned homes, there are no mortgages. And the remaining half, it's a crazy set of numbers of two and a half, three, three and a half, four. Just everybody was smart, locked in a fixed rate before the pandemic.

• 56:33Speaker 04

  Well, so if house prices in the aggregate don't appreciate by more than that interest rate, right? People are going broke in their primary savings vehicles. So housing actually does need to increase in value over a long period of time, where people slowly go broke.

• 56:48Barry Ritholtz?

  Makes a lot of sense.

• 56:49Speaker 04

  Yeah. So I think that 2% is, I know it was thrown out there, but I think it actually has to be higher over the long term to kind of make the math work for most people.

• 56:57Barry Ritholtz?

  I couldn't agree more. All right. I only have you for a limited amount of time. Let's jump to our favorite questions, some of which I know the answers to, starting with, who were your mentors who helped shape your career?

• 57:13Speaker 04

  Wow. So Mr. Keeney was my dad's original business partner.

• 57:18Barry Ritholtz?

  Uh huh.

• 57:18Speaker 04

  And he's a fascinating human, worked until the day he died, like 92.

• 57:24Barry Ritholtz?

  Wow.

• 57:24Speaker 04

  An incredibly nice human being. I don't think ever said a bad word about anyone. One of the things that was so interesting to me about Mr. Keeney is he didn't start his career at Legg Mason in research until he was 50.

• 57:37Barry Ritholtz?

  Wow.

• 57:37Speaker 04

  So, you know, a lot of people, young people think, oh, here I am, I'm locked in this career. There's always time to switch. And then he hopped over at 50 to start this role where he had a prolific career and influenced a lot of people and did that for 40 something years.

• 57:52Barry Ritholtz?

  Wow.

• 57:53Speaker 04

  So he was a very smart guy, generous to a fault. One of my favorite stories about him and him and my dad were heading out for lunch one day downtown Baltimore and, you know, some, a homeless person comes up and says, starts with the story, I haven't eaten in this many days and blah, blah, blah. And Mr. Keeney sits there listening to it and gets out his wallet and he gives her, you know, I think it was like a $50 bill. Certainly inflation adjusted. He says, oh man, here, just, just go get yourself some hot soup, take care of yourself. And she looks at it. She looks back at him, she looks at it, she goes, the hell with soup, I'm gonna get me some whiskey. But, uh, yeah, so he was incredibly generous human being, contributed a lot to animal welfare stuff. I'm a big believer in animal

• 58:38Speaker 04

  welfare causes.

• 58:41Speaker 04

  So he was an influence on me. I can also think of a handful of times just from business school that, uh, not necessarily an individual mentor, but just one liners from business school that I remember over the years. So that line I gave you earlier about Ken French and how long it takes for a manager to prove whether or not his work is statistically valuable or not. The other one liner he told us is never pay a load for a mutual fund. He said, if there's one thing you take away from my class, it's never pay a load on an investment fund. And that's certainly still true today.

• 59:11Barry Ritholtz?

  Yeah, absolutely. Let's talk about books. What are some of your favorites? What are you reading right now?

• 59:16Speaker 04

  Yeah. Uh, right now I'm reading a book called The Mattering Instinct. By, I think it's Rebecca Goldstein, but it's a fascinating book.

• 59:23Barry Ritholtz?

  Uh, The Mattering?

• 59:25Speaker 04

  The Mattering Instinct. And it's about, um, people's desire to matter and what that means.

• 59:30Barry Ritholtz?

  Uh huh.

• 59:31Speaker 04

  So there's a lot of psychology in it. There's a lot of philosophy in it. Uh, the basic premise is that we're all just trying to overcome entropy. So the tendency for disorder and systems to increase and we're all gonna die eventually.

• 59:44Barry Ritholtz?

  I was gonna say it's a losing battle, but while we're here.

• 59:47Speaker 04

  Exactly. Let's do something interesting, right? So that's what I'm reading now. I just read prior to this, Let Them, the Mel Robbins book. So it's one of the, I think it's the best selling book last year, right? So I can sum that one up pretty succinctly and it's focus on what you can control and don't let anything else get to you.

• 1:00:09Barry Ritholtz?

  Sounds like good advice.

• 1:00:10Speaker 04

  It's good advice. And I mentioned that to my dad because he sees me reading it. And he's like, haven't you ever read Marcus Aurelius's Meditations? This is not a new idea.

• 1:00:18Barry Ritholtz?

  Stoicism created the idea of controlling what's within your control 3,000, 2,000 years ago.

• 1:00:24Speaker 04

  Exactly. And I have read that and that's a phenomenal book as well. It's just good to have more modern stories that you can relate to.

• 1:00:30Barry Ritholtz?

  What's keeping you entertained these days? What are you streaming? Either podcasts or Netflix or whatever?

• 1:00:37Speaker 04

  That's one of my things I don't really do. Is Netflix.

• 1:00:41Barry Ritholtz?

  No Netflix.

• 1:00:42Speaker 04

  No. I'll watch competitive events. I'll watch sports. I'll watch, you know, an occasional stand-up comedy show, but I don't watch the series.

• 1:00:48Barry Ritholtz?

  Did you see the Australian Open this year?

• 1:00:50Speaker 04

  I did. I watched some of that. It was pretty awesome.

• 1:00:52Barry Ritholtz?

  I have the finals DVR'd. I haven't, I haven't watched it yet, but I know you're a tennis guy.

• 1:00:58Speaker 04

  Yep.

• 1:00:59Barry Ritholtz?

  It's rare to find someone who can take Djokovic and put him back on his heels.

• 1:01:05Speaker 04

  Yeah. Well, the Djokovic Sinner match was pretty awesome.

• 1:01:08Barry Ritholtz?

  Yeah. Yeah. I save these. I watch them like months later when I get around to it.

• 1:01:14Speaker 04

  Yeah. I do golf. So that's, that's something I've just started taking on terrible. You know, I'm an 18 handicap, high variance 18 though, so I can have some pretty good days. But it's interesting because there's a similarity to investing in golf, which is golf. So you get better at golf by narrowing your misses. And I think that's also true with investing. You start narrowing the misses. It's a way to get better.

• 1:01:34Barry Ritholtz?

  Charlie Ellis made the same argument with tennis. Most tennis players lose because they make all these unforced errors. Other than the pros, most of us would be better off being less bad rather than trying to be more good, if that makes any sense.

• 1:01:50Speaker 04

  Absolutely. He can shave a lot of strokes doing that.

• 1:01:53Barry Ritholtz?

  Yeah. Yeah. Final two questions. What sort of advice would you give to a recent college grad interested in a career in either investing or value or what have you?

• 1:02:06Speaker 04

  Choose your dad well.

• 1:02:07Barry Ritholtz?

  That certainly helps. I love what your father said to you in terms of create future optionality by studying and doing well in school. I've never quite heard it phrased that way, but that really sums up, why do I have to study algebra? Because you're just creating optionality.

• 1:02:28Speaker 04

  Investing is about optionality and creating more options for yourself down the road. And so anytime you can invest in yourself and create additional options is a good thing to do.

• 1:02:39Barry Ritholtz?

  Yeah, say the very least. And our final question, what do you know about the world of investing, valuations, portfolio management today that would have been useful when you were first getting started 20 years ago or so?

• 1:02:55Speaker 04

  Well, you know, we were talking about books earlier. I personally think that the best book on personal finance is The Psychology of Money by Morgan Housel. So if you haven't read that, anyone that gets a bank account should be required to read that and just internalize the concepts. I know if you've been in the industry a while, not all of it's new, but it's a lot of it's a really good reminder on how you should behave to create wealth over the long term for yourself.

• 1:03:22Barry Ritholtz?

  Absolutely. Bill, thank you for coming in and for being so generous with your time. We have been speaking with Bill Miller, the fourth. He is the Chief Investment Officer and Portfolio Manager at Miller Value Funds. If you enjoy this conversation, well, check out any of the 600 we've done over the past 12 years. You can find those wherever you find your favorite podcasts, iTunes, Spotify, Bloomberg, YouTube. I would be remiss if I didn't thank the crack team that helps put these conversations together each week. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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