Nobody can predict the future to know if the worst is behind us, or there is more downside to come in the volatile stock market.

Legg Mason’s (LM) Bill Miller, who is a celebrated value investor,  but his stock picks this year have not been good.  He recently stated that the “bottom has been made” in U.S. equities, and he now forecasts opportunities for strong gains once markets begin to rally.

Mason bases his opinion on that act that the Federal Reserve should now buy stocks and junk bonds to avert a deeper financial crisis. He adds “the taxpayer would make a killing” as markets rebound.

Speaking at Legg Mason’s annual luncheon for media, Miller commented that all long-term investors believe that stocks today are cheap.  The real issue has been that the credit markets must regain health before equity markets can really rally.

It “looks as if the bottom has been made” in U.S. stocks, he said.

Miller, who runs Legg Mason’s $7.6 billion Value Trust fund, told Reuters the year has been “terrible, a disaster and awful.” Miller feels his past performance successes in down markets as a reason why his opinions should not be counted out.

“We’ve performed in most of the financial panics that we’ve had — the last one being the three-year bear market ending in 2002 — we outperformed all the way through that,” he said.

“So even though we lost money, we lost a lot less money than the market did,” Miller added.

Miller did acknowledge his performance this year has been worse than in past downturns.

“When you’re under performing and losing more money than the market in a down market, then that’s a much more problematic situation. We’ve performed far worse than I would’ve predicted we would,” he said.

For the year, Miller’s flagship Value Trust (LMVTX) fund was down 59.7 percent as of Tuesday, compared to a 41 percent decline in the reinvested returns of the S&P 500 index, according to Lipper Inc., a unit of Thomson Reuters.

Miller’s past track record of calling market bottoms also has not been that accurate.

In late April, one month after Bear Stearns’ spectacular fall, Miller told his shareholders: “I think we will do better from here on, and that by far the worst is behind us.”

We can all be Monday morning quarterbacks and say “we told you so”, but at least Legg Mason’s Bill Miller  is sticking his neck out on the line.  Will be rewarded or actually have his head cut off by angry investors?  Time will tell.