The Market’s Most Popular Loser

If you’ve struggled in stocks over the past decade or so, don’t feel bad… you have some company at the end of the bar.
Last week, one of the mutual fund industry’s “rock stars,” Bill Miller, announced he was stepping down as manager of the famed Legg Mason fund. He and his firm collected hundreds of millions of dollars in fees over the years by running one of the most famous mutual funds of the past few decades.
#-ad_banner-#But as today’s chart shows, Bill’s popular fund is another mainstream financial idea that was more foam than beer. Below is a chart that plots the performance of Bill’s fund (black line) alongside the performance of the benchmark S&P 500 stock index (blue line) since 2003.
As you can see, Bill slightly outperformed this basic benchmark from 2003 to 2007, while the market was rising. But disastrous bets in financial stocks and disastrous strategies – like adding to losing positions – caused a blowup in the fund… which it has never recovered from. Bill’s isn’t the only mutual fund loser, just the most popular one… and one of the richest.