In 1991, financial markets opened the New Year with significant weakness, weighed down by a lingering recession in the U.S. housing market, soaring oil prices and fallout from war in the Middle East. Markets were also contending with a major crisis in the financial sector that arose from junk bond investments in the savings & loan industry.
Sound familiar? It should, as we face similar challenges today -- only this time, the turmoil in the financial industry stems from the subprime lending collapse.
Reflecting on his [poor] recent performance, Bill Miller noted that 2007 was "the first time since 1990 the Value Trust has lagged the S&P 500 in two consecutive calendar years. Perhaps, not surprisingly, that was also a time of panic due to a housing market recession, soaring oil prices, plus huges losses in the banking and financial sector. We took advantage of lower prices back in the 90s, which ushered in a pretty good period of excess returns.
-- from Legg Mason's empower Magazine, Spring 2008
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