In the chapter opener, you learned that Bill Miller’s investment performance was alternating between the very top and the very bottom of his profession. What aspect of his investment strategy would lead you to expect that his performance might exhibit greater volatility than that of managers of other mutual funds? The following table shows the annual performance from 2009 to 2012 of Miller’s fund and the S&P 500 index.

Opportunity S&P 500
Year Return on Miller’s Fund Return on S&P 500
2009      76.0%      26.5%
2010   16.6   15.1
2011  −34.9     2.1
2012   39.6   16.0

Calculate the average annual return of the Opportunity fund and the S&P 500. Which performed better over this period? If you had put $1,000 in ...

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