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Stock Strategist

All-Star Managers' Second-Quarter Update

Topnotch stock-pickers persevere in the face of falling prices.

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Each quarter, we review the shareholder letters and holdings of 16 of our favorite fund managers. When we last checked in, this group of value managers was "beginning to get excited" about opportunities created by lower stock market prices. Only a few months later, the psychological stress of watching prices fall seems to be taking a toll on even the best investors, leading  Legg Mason Value Trust's (LMVTX) Bill Miller to propose a "12-step program" for value managers "losing clients and assets over and above...losses in the market." More than one manager mourned the recent death of legendary investor Sir John Templeton by invoking his call to "buy at the point of maximum pessimism," perhaps subconsciously hoping that the moment has passed.

But despite their apparent troubles, none of our managers has abandoned the value approach. In fact, virtually all are, like  Ariel's (ARGFX) John Rogers, "brimming with optimism."

Jim Sinegal has a position in the following securities mentioned above: BRK.B, AIG. Find out about Morningstar’s editorial policies.