Bill Miller Gets It Wrong on the Market Bottom…Again

Bill Miller, the famed mutual manager who beat the S&P 500 Index a remarkable 15 years in a row during the bull market and beyond, is becoming known, as of late, for trying to time the market.

And for getting it wrong.

His first foray was in a letter to shareholders in April 2008. From Money Morning:

“The collapse and rescue of Bear Stearns, [is] an event that I believe (though no one knows) ended the panic phase of the credit cycle. The economic consequences of curtailed credit, increased risk aversion, de-leveraging, lost jobs, falling house prices, and negative equity returns remain, and are likely to take some time to play out. All of those issues have been front-page news for some time, and I believe they are well discounted by the market, which is why stocks have risen since Bear’s collapse,” he wrote.

Miller’s advice is simple: “For planning purposes, here is my forecast: I think we will do better from here on, and that by far the worst is behind us.”

Market timing is tough work.

But Bill Miller was at it again in December 2008, right after the atrocious November sell-off.

From Marketwatch:

It looks as if the “bottom was made” in the stock market earlier this year, both from a psychology standpoint and “from what we’ve seen in the credit markets,” said Miller, chairman and chief investment officer of Baltimore-based Legg Mason Inc.’s Legg Mason Capital Management Inc.

If we aren’t going to have 20% unemployment and gross domestic product down 15% or 20%, historical odds favor the market being up well over 20% in the next year, Miller said at the money manager’s year-end briefing.

“Panic is really hard to sustain,” said Miller, so the worst case for next year “is the market just moving sideways.”

Calling a bottom is a very tricky thing. Even Warren Buffett refused to do it in his editorial in the New York Times last year. He said he had no idea where the markets were going in the short term.

So why do the “gurus” insist on calling the bottom?

Is it ego?

Arrogance?

Cluelessness?

Or do they really think they have a crystal ball?

After all, they have a 50/50 chance of being right.

We’re now lower than the November 20 “bottom” and the markets have started off 2009 right where it left off 2008- with blood in the streets.

What will Mr. Miller be telling his shareholders at the end of THIS quarter?

I await with bated breath.