When Bernanke Says the Storm's Not Over, Is It Over?

by: Todd Chalem

Yesterday Ben Bernanke said the hundred year storm/perfect storm/hurricane/gale force/tsunami/overused Mother Nature metaphor of your choice that's mangled credit and equity markets for the last year isn't yet done. Warren Buffett echoed those thoughts. Three months ago, JPMorgan CEO Jamie Dimon referred to his company's absorption of Bear Stearns (a deal at the epicenter of financial market turmoil) as "mission not accomplished" in an unsubtle dig at our current President.

The market is littered with money managers who've called the bottom in housing, banking, retail and the market generally over the last year and each one of them, I assure you, thought of him or herself as a contrarian (of course, if everyone's a contrarian, then no one is). Bernanke, Buffett and Dimon are each, to a man, smarter and more accomplished than me, so fading them is a fool's game. I've written repeatedly that I have no clue if we've bottomed and put no effort whatsoever into figuring if we have. If I could reliably pick tops and bottom I'd be living in a far sunnier, sandier place than Chicago (except during baseball season).

Nevertheless, market bottoms generally happen before economic bottoms, right? Big money sees the light at the end of the tunnel while the rest of us just see more tunnel. And if Bernanke, Buffett and Dimon (none of whom ever receive dinnertime phone calls from angry credit card companies) are publicly pessimistic about near term conditions, how despondent must your overlevered neighbor be? He's the genius stockpicker on the way up and a massive bear at S&P 1175. Isn't there a market aphorism that stocks go up after they've been returned to their rightful owners? Personally, because I'm not levered and my portfolio isn't tied up in the very expensive stocks of speculative, money losing companies, it's comparatively easy for me to ride out the tough times. If yours however is, you should worry. A lot. Trust me, when the market does turn you won't be rewarded.

So, is Ben calling the bottom by not calling the bottom? Is this little act of CYA an unintentional way of saying it will be partly cloudy until it's partly sunny?