If they didn't already own them, that is. Legg Mason's Bill Miller, manager of the famous Value Trust mutual fund, says he's "bullish" and would buy homebuilder and mortgage stocks "amidst the panic selling currently underway." Unfortunately for him and his shareholders, he bought them last year and in 2005, which was way too early. It still may be too early, but Miller isn't dumping his housing stocks. He may be in for a long wait.

Other nuggets from Miller's most recent quarterly commentary:

-- We were clearly too early in buying [housing] stocks in late 2005 and 2006—and if you are early enough, that is indistinguishable from being wrong—thinking that the US housing experience would be similar to that in the UK and Australia, a correction from inflated levels that would be over in less than 2 years, that is, just about now. The very poor housing fundamentals, now exacerbated by a subprime loan collapse and the continuing upward repricing of adjustable-rate mortgages made in the past few years, show no signs of improvement. But the market looks forward, and by the time those signs are tangible and evident, the stocks will likely be a lot higher.

-- Energy and energy-related stocks continue to be among the market’s best performers and we don’t own them. That sector was the strongest performer in the month of June, in the second calendar quarter of 2007, in the six months ending June 30, and in the three and five year periods ending June 30. Only in the 12 months ending June 30 did other sectors perform better. It is said the only thing worse than being wrong is staying wrong. The question for us now is have we experienced a long cycle in energy, or is this a secular change where energy prices will not decline in real terms, as has been the historic norm, but will be stable or maybe even increase after adjusting for inflation? That question should be answerable shortly.

-- According to data compiled by Bloomberg, stocks are now the cheapest they have been in 16 years. The S&P 500 is valued at 15.4x estimated earnings, the lowest since January 1991. Again, a pretty good time to be a buyer of stocks! Even after this decline in the stock market, over the past 12 months the market is up 17% with dividends reinvested, which is well above the long-term average.I began the year quite bullish and remain so.