Warren Buffett doesn't call market bottoms

The news late Tuesday that Warren Buffett was buying $5 billion in Goldman Sachs preferred stock was hailed in some quarters as a sign of a market bottom. It's certainly likely to send Goldman shares skyrocketing tomorrow (they were up 6.5% in after hours trading) and will probably help the overall stock market as well. It's also an important expression of confidence from a really smart guy that the U.S. financial system will not dissolve into a puddle of goo.

But a key to Buffett's success as an investor has been that he's never tried to call market tops or bottoms. He simply buys when things seem cheap and sells (or, more commonly, stays put) when they seem expensive. Eventually that approach almost always pays off. But for years on end, cheap can keep getting cheaper, and expensive can keep getting more expensive. So don't read too much into this news.

Update: Barbara has a story on the new Warren Buffett book and the women in Buffett's life online here.