U.S. stocks may rise 15 percent in the next 12 months

Legg Mason Inc. 's Bill Miller said U.S. stocks could increase 15 percent over the next 12 months, the Federal Reserve is continuing efforts to inflate asset prices and boosting the economy.

"The Fed wants the stock market go up, and they will do whatever it takes to reach the level that is necessary for the wealth effect of stock prices to stimulate growth," Miller wrote in a letter to shareholders released today.

Miller, famous for beating the S & P 500 for a record 15 consecutive years until 2005, followed by the U.S. reference for the next three years as it underestimated the gravity of the financial crisis and the stakes in banks and real estate companies failed. He surpassed his peers in 2009 as the stock market recovered from a minimum of 12 years.

The decrease in first-class farms as an energy producer AES Corp. have hurt returns in 2010. $ 4,100,000,000 Miller of Legg Mason Capital Management Value Trust Fund was up 3.8 percent this year through Nov. 12, compared with a 9.4 percent return for the S & P 500, including dividends reinvested. In the past five years, the fund was reduced to an average annual rate of 7.7 percent.

The Federal Reserve on Nov. 3 announced plans to buy $ 600 billion in U.S. Treasury bonds in a round of unconventional monetary stimulus known as quantitative easing. The Fed left unchanged its commitment to keep interest rates low for an "extended period."

Critics of the Fed

The Fed's plan has drawn criticism from the leaders of China, Germany and Brazil, have said that lowering the value of the dollar and has the potential to fuel the speculative flows of money. It has also encouraged U.S. investors and economists, including the hedge fund manager Cliff Asness and Stanford University professor John Taylor, to urge the Fed chairman, Ben Bernanke, to stop the encouragement, saying that the risks of rising inflation .

Miller said the most likely negative impact of purchases by the Fed is higher prices for commodities, which could slow economic growth and mitigating the impact of the stimulus.

"This is not an endorsement of the policy, only a statement that I think the Fed has the tools to change the preferences on aggregate portfolio towards riskier assets, and intends to use them."

Miller, who has managed the fund Value Trust since its inception in 1982, remained a long-term optimism in the U.S. market, even amid the crisis that dragged stocks 39 percent in 2008. He stuck to his bets optimistic about an economic recovery last year, rejecting the idea of a "new normal" characterized by the growth of U.S. below average economic and high unemployment as shown by Pacific Investment Management Co. 's director general, Mohamed El-Erian.