Bill Miller, the founder of Miller Value Partners, is bullish on the US stock market for the second half of the year. According to Miller, a strong economy and the defeat of bearish sentiment will drive stocks higher. He highlighted his stock picks, including OneMain Financial, Chico’s, and MicroStrategy, which is benefiting from its bitcoin stash. The positive economic backdrop, with inflation and GDP growth showing promising signs, has fueled hopes of a potential reversal in interest rate hikes by the Federal Reserve and a possible recession-free future. Miller’s optimism is further supported by historical trends, as a robust first-half performance in the stock market is often followed by a strong second half. He expects skeptical investors to join the crowd and invest in equities to catch up to their peers. Miller’s track record as an early investor in Amazon and his success in recent years thanks to bets on the e-commerce giant and bitcoin add to his credibility.
Bill Miller Expects Strong Second-Half for US Stock Market
Renowned investor Bill Miller is optimistic about the performance of the US stock market in the second half of the year. He believes that a positive economic outlook and defeated bearish sentiment will drive stocks higher. Miller has identified several stock picks, including OneMain Financial, Chico’s, and MicroStrategy, which he believes have strong potential.
Economic Factors Driving Optimism
Miller points to several economic factors that support his positive outlook for the stock market. Inflation has significantly decreased from over 9% last summer to around 3% in recent months. This, combined with solid GDP growth of 2.4% in the last quarter, has fueled hopes that the Federal Reserve will reverse its interest rate hikes and potentially prevent a recession.
Expectations of Higher Valuations
If the economy continues to perform well without experiencing a recession, Miller believes that the market could reach a 2% inflation rate by the end of the year. This, along with decent earnings, could lead to higher valuations in the stock market. Miller suggests that the market is currently undervalued and could see a significant boost if these conditions are met.
Bearish Investors Expected to Join the Market
Miller predicts that bearish institutional investors who have been skeptical about the market will be forced to join the rally in the second half of the year. As they realize that they are falling behind their peers, they will have no choice but to buy stocks to catch up. This influx of investors could further drive stock prices higher.
Miller’s Stock Picks
During a recent call, Miller shared three stock picks that he believes have strong potential. First, he highlighted MicroStrategy, which he expects to benefit from a "very strong tailwind" in the coming years due to its significant holding of bitcoin. Miller has previously praised bitcoin as an "insurance policy against financial catastrophe."
Miller also touted OneMain Financial, a subprime lender, for its attractive valuation and large dividend yield. Additionally, he praised apparel retailer Chico’s for its stellar management, cheap valuation, and stock-buyback program.
Takeaways
Bill Miller’s positive outlook for the US stock market in the second half of the year is based on several economic factors, including decreasing inflation and solid GDP growth. He expects the market to reach higher valuations if these conditions continue. Miller also predicts that bearish investors will be compelled to join the market, further driving stock prices higher. His stock picks, including MicroStrategy, OneMain Financial, and Chico’s, are based on his assessment of their potential for growth and attractive valuations.
