No one ever makes money underestimating the America consumer. While the GDP growth rate slide to 1.6% (before numerous revisions), personal consumption grew by 3.2% versus a prior 2.6%. University of Michigan consumer survey rose to 93.6 for September. Consumption depends on jobs and job prospects, not housing prices or sales. Residential investment dropped by 17%.
Bill Miller's quarterly letter is a good read. There are three edges in investing; informational, analytical and behavioral. I agree with the first two. Private equity and venture can exploit the first but public market traders legally cannot. Quants exploit the second. I wonder if the third describes the fact the money managers and hedge funds take advantage of investor gullibility to raise money based on psychology of investors. Miller ends the letter with reading suggestions on the study of beliefs.
He is very very bullish.
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