MAGAZINE   January Magazine Contents Web Links Past Issues Try a Free Issue Customer Service Feedback GETTING STARTED   STOCKS Build a Strong Stock Portfolio Four Questions to Ask Before You Buy How to Make Sense of the Earnings Report   FUNDS Growing a Fund Portfolio Pick Funds the Right Way Time to Ditch Your Fund?   BONDS Add Balance with Bonds Bonds Made Easy MORE... TOOLS   STOCKS Kiplinger's Stock Finder Test your risk tolerance Pick the Best 'Bankerage' Company   FUNDS Kiplinger's Mutual Fund Finder Which fund is better? How do growth and income funds compare?   BONDS Which bond is better? What is my bond's yield to maturity? What price should I pay for a bond? UPDATE   The streak continues...   It came down to the wire, but Bill Miller extended his winning streak over the Standard and Poor’s 500-stock index. Including dividends, Miller’s Legg Mason Value ended 2004 up about 12%, compared with an 11% gain for the S&P 500.

FUNDS
Unlucky 14
by Steven Goldberg

Saddam Hussein invaded Kuwait and Seinfeld debuted on NBC the last year that Legg Mason Value trailed the market. But after outpacing Standard & Poor's 500-stock index for 13 straight years, 14 may be manager Bill Miller's unlucky number. Value's 5% gain through mid November trailed the S&P by three percentage points.

Miller's consistency has translated into big long-term gains. Value (LMVTX; 800-577-8589) has returned an annualized 17% since 1990, five points per year ahead of the S&P.

Miller's acumen as a manager isn't in question, and he's the first to admit his errors -- such as not jumping into energy stocks in 2004. Moreover, don't expect Miller, 54, to perform last-minute contortions to keep his streak going. He usually holds stocks for four or five years, and he says he's sticking with portfolio anchors Nextel, Amazon.com and IAC/InterActive.

That low turnover, however, may be indicative of Miller's biggest problem: He may have too much on his plate. In total, he's managing some $30 billion in the same style he employs in Value (that includes assets in private accounts). Miller himself suggests that asset bloat may be a problem. In a recent letter to shareholders, he acknowledged that his decision not to trim big positions in Amazon, Nextel and IAC (all of which performed poorly in '04 after advancing sharply in '03) was due in part to concerns that selling might "have created substantial market-impact costs."