Summary of Bob Brinker's Moneytalk September 29-30, 2007

Bob Brinker talked about the GM contract problems quite a lot over this weekend. He made the point that GM pays employees a total of $80 per hour “all inclusive” wages, while Toyota pays it’s employees a total of $50 per hour (all inclusive). Brinker pointed out that this makes it difficult for GM to compete with Toyota.

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A couple of callers pointed out that the people at the “top” in some of these companies make unbelievable amounts of money. Brinker said he agreed with the callers -- in general -- that over $100,000 per day was absurd.

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Here is a brief summary of Bob Brinker’s take on important subjects that he covered over the weekend:

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• Stock market: Very close to new high. S&P for month of September total rate of return 3.7%, which translates to 44% annualized rate. “Defied” the bad news bears.
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  S&P returns since March 2003: Almost 100% -- COUNTING dividends.
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  Interest rates: Brinker expects them to trend lower.
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  Economy: “Hampered” by a housing recession, but is “fair.” Expect slow growth for the remainder of the year.
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  Inflation: “Inflation is a dead duck.” YOY core inflation is less than 2%.
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  Ongoing housing recession: Could be around for a good part of 2008. Real loss in nationwide house-prices for the past year is 6.6% The days of using home equity lines as ATM’s is “over.” New mortgage market will be based on “stronger underpinnings.”
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  Recession…Brinker said: “We’re not having a recession. There’s no probability of a recession in here.......”
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  In case of a major disaster, such as a whole city being wiped-out: The only 100% protection for portfolios would be Treasuries. Gold is doubtful.
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  Effects of weaker dollar: Increases corporate earnings/helps make exports more competitive/imported products less competitive in U.S.
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  Precious Metals: No recommendations. For those who want a hedge, use GLD
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  Dependency on middle-east oil: We’ve had no real leadership the past 15+ years. We need to be building nuclear power plants.
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  Bob Brinker said that he did not have a recommendation for Emerging Market Funds, but that in each of his “model portfolios” he had international investments. The international funds that Brinker was referring to in his “model portfolios” are Vanguard International Growth (VWIGX) and Dodge and Cox International (DODFX).
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  Record-keeping for IRS: The IRS can check back seven years, so keep anything that has to do with tax returns for seven years.
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  Brinker’s last “buying opportunity” was in the “mid-1400s” range. He reminded listeners of this several times this weekend and pointed out that the market is now close to its all time high. He pointed out that there were many opportunities to buy at that level and even lower.
  
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Honeybee sez: The sad, but important fact that Brinker neglected to mention is that he didn’t tell Moneytalk listeners about this buying opportunity until AFTER the market was way above that level. Generally speaking, you can't buy stocks retroactively. Although, I understand it's possible to call the end of a non-existent secular bear megatrend that way. 8^)

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Saturday, September 29, 2007 Bob Brinker’s Excerpts and Moneytalk Commentary

Please note: I will post a brief summary and commentary about the remainder of the program after tomorrow's program has aired. Here are some excerpts from one of Brinker's monologues today:

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Today Bob Brinker said: “We commented earlier about how the bad news bears were shouting fire in a crowded market a month ago, telling people, oh look out for this market, oh brother, things are really going to get bad and here comes September and you know what that means, and all this NONSENSE that the bad news bears were spouting a month ago during that short-term correction we saw that was nothing more than a buying opportunity. That’s exactly, exactly what it was, and it’s just amazing the way these people spout this nonsense.”

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*Marketimer, July, 2003, Bob Brinker said: “We believe that the U.S. stock market entered into a new secular bear market megatrend based on the March 24, 2000 Standard and Poor’s 500 Index close of 1527.46............ a series of cyclical bear markets and cyclical bull markets appears inevitable within the secular bear market megatrend.” ……………..”

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Today Bob Brinker said: “And of course the recession forecast. We’re not having a recession. There’s no probability of a recession in here, and yet a month ago we were getting this constant stream of recession forecasts. Even people like Alan Greenspan out saying, oh you know, today the percentage of a recession is “Y” then change it tomorrow and the next day -- just absolute nonsense.”

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*Marketimer, November 3, 2006, Bob Brinker said: “We regard this cyclical bull market as an outlier in terms of its unusually long durations.”

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Today Bob Brinker said: “It’s just amazing, you know. It never seems to end. And why is it that every time we have a short-term correction in the market, we get these bad news bears shouting their stories of Armageddon? I mean, they are wrong so often. Do you realize that the bad news bears have been wrong for the last 4 ½ years, going back to March of 2003. The S&P was setting in around 800 when we issued our buy signal on March 11, 2003 – around 800 on the S&P. Now where is it, 1526.75 – throw in the dividends up close to 100%.”

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*Marketimer May, 2006 Bob Brinker said: "The current cyclical bull market, which in our view is unusual in terms of its length, has had to battle the headwinds of the secular bear megatrend that began in the first quarter of Year 2000. ...........We estimate the likely duration of this secular bear megatrend within a broad range of eight to twenty years, and we are now into year seven."

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Today Bob Brinker said: “And you know all the way up – all the way up, the bad news bears have been there and they get loudest whenever there is a short-term correction. We’ve had several short-term corrections of less than 10% in all cases, but we’ve had several and every time it happens, these bad news bears start trying to scare everybody half to death. And you know, they do scare people and force people to make bad decisions. They force people to panic out for no reason.”

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*Marketimer March 2003, Bob Brinker said: “……investors should remember that we are in a secular bear market megatrend. We estimate the probable duration of this secular bear trend at 8-20 years based on historical experience.

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Today Bob Brinker said: “I mean, in this last buying opportunity that we saw down in the mid-1400s area, believe it or not there were people selling out of the market because they were scared. Yeah, it’s true. They sold out of the market because they were scared. What were they scared of? Well maybe they were scared because the bad news bears were telling them to look out for September. Well, here’s the number. Total return in the stock market, S&P, September up 3.7%. Ha, not much to be scared about there, is there? Never ceases to amaze me.”

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*Marketimer, June 2004, Bob Brinker said: “It is our view that a new secular bear megatrend commenced in the first quarter of Year 2000, and that we are now in the fifth year of this new megatrend.”

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Here are some Moneytalk comments by David Korn from February (2007). David Korn wrote:
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David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2007 (begininvesting.com)
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"February 3-4, 2007 Newsletter

BOB BRINKER'S LONG TERM STOCK MARKET OUTLOOK

Caller: This caller asked Bob how he handles cyclical markets within the longer term secular markets and what level he thought the S&P 500 would go to before the bear market arrives. Bob said he hasn't put a final number on where the S&P 500 will go to and that is something he evaluates on a continuous basis in his newsletter. However, Bob said that what we do know is that within secular trends, there are no cases where a trend has gone beyond the previous peak by more than 10%. That has never happened and so until it happens, Bob said the secular trend is intact.

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EC: When the bear market came in 2000-2002, Bob said he would stay with his forecast of a secular bear market unless the market exceeded its prior high by 5%. Today's statement marks a change in that Bob now says the new highs must be breached by 10%. Perhaps Bob did more study of secular markets to come up with this number. Whatever the case, Bob remains convinced that the secular bear market is still here."

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Here is what Brinker told a Moneytalk caller in February 2007: “Now the secular trend that began in year 2000 when the S&P was up in the 1500s, awww, that remains intact.”

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Bob Brinker has never informed the Moneytalk audience that in the June 2007 issue of his newsletter he said that the “secular bear market megatrend” had ended in June 2006, a whole year ago!

Honeybee sez: Changing one's mind or realizing one is mistaken (as Brinker was about the secular bear megatrend) is perfectly acceptable. But inferring to thousands of Moneytalk listeners that it never happened is not acceptable, in my opinion.
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Bob Brinker is misleading listeners who, unless they are Marketimer subscribers, have every reason to think that Brinker believes the market is still in a cyclical bull cycle in a very long secular bear trend.

Click Chart to see it full sized

Bob Brinker's "Parlor Tricks" VS. "Buy the Dips"

An entertaining and insightful treatise about the true meaning of Bob Brinker's "buying opportunities." This was written by pen-name, "Invest Ting":

"Ok let's boil down this parlor trick of Brinker's a bit.
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Brinker makes his gift horse calls in a bull market when everyone is supposed to be fully invested. Recently math claims that he is going to start trading on these calls but that is not what Bob brinker has ever recommended. If following Bob Brinker you were supposed to be fully invested and adding new funds on a regular basis at the time every one of these gift horse games were played. For almost any person following Brinker's advice that would preclude any significant additional investment based on these games.
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So who is it for?
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The syncophants will tell you that it is for everyone who inherited a large sum of money or won the lotto. Duh, do you know anyone who ever did this and waited for Bob Brinker to jump into the market on a "gift horse" game ? Please be specific and include when.
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I have never known a single person who claimed to have inherited money, won the lotto or got a huge divorce settlement and used one of these gift horse games of Brinker to profit. I've never seen a credible internet posting describing such an event.
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Yet many act as though these parlor games which amounted simply to a 'buy the dips" program are terribly important.
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It is amusing to see how easy the sycophants grade Brinker.
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1) If he announces a point at which to "buy" that never materializes....he is not wrong it was a good place to buy but didn't happen. Now remember people who believe this hogwash are supposedly holding their finger on the trigger. Let say it was this year. Brinker sends the 1380 special bulletin. Your divorcee sitting there with the big settlement is anxious to pounce. Alas the market goes up and she waits for the 1380 magic number. Frustrated our ex Mrs. keeps the cash under the mattress and hopes the market goes down. But it goes up. She could have invested at 1390 something but "Bob's gifthorse" was 1380.
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2) The market goes to new highs and then begins to drop. Brinker having been the laughing stock of the internet for calling his "gifthorse" after it had left the barn tries a new ploy. He uses a broad brush if you will. This time he proclaims the "mid 1400s" is a gifthorse. Our rich alimony queen decides that this time she won't be shut out at the Brinker gift horse window and pounces at 1465 remembering what happened last time.
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3) But this time the market doesn't heed Brinker's broad brush mid 1400s call and drops down below 1380.
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Our faithful woman spurned has taken Brinker's advice perfectly. Does it really seem to be a prudent approach to investing? Doesn't it seem to be more of a cheap trick than anything else?
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Why all the hubris "my model tells me this or that" (notice even Brinker apparently thinks these days that talking about the model is too much BS for people to buy into on these "fully invested buy more" signals). Why not just admit what he is doing is "buy the dips" and tell you that he really doesn't know when the bottom of the dip will occur or what the price will be. Short term moves in the market are unpredictable. If one thinks the market is going up, any decrease in price is a good time to buy. Why add all the hubris?
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One poster claimed he knew with 100% accuracy the price and the timing and that each of these gift horse opportunities of Brinker's was successful 6 months later going back to 1993. He was unwilling of course to document that claim with dates and prices.
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Does anyone really believe that an investor would not have done just as well during his investing career investing any monies he got on the first day of the month or the 10th or the 28th as waiting for this BS from Brinker?
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A $ cost averaging strategy presupposes that you cannot predict moves in the market and are spreading the buys over time and price. Just as if Brinker could really time the market there is no reason in the world to have a bond allocation as part of an asset allocation, simply moving from equites to cash would be more profitable; there would be no reason to $ cost average funds if you could predict the short term moves in the market.
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All silliness seemingly to fool those looking for a reason to believe."___Invest Ting
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Bob Brinker's Moneytalk Stock Market Comments

Bob Brinker is quite gifted when it comes to making callers "regret" it if they are not subscribers. Here is how he answered a caller today when the caller explained that he had a large sum of new money to put in the market.
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Of course, Brinker doesn't actually "lie" but he certainly doesn't tell the whole truth either. (Remember that the S&P is now at 1525.) I'm sure the caller felt real good when he heard how he missed out on Brinker's "extraordinary opportunity" to put his money to work. I'm sure he found that information very helpful. If I was a gamblin' woman, I'd bet he immediately subscribed to Marketimer. 8^)
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EXCERPT from Bob Brinker’s STOCK MARKET Comments Sunday, September 23, 2007.

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Bob Brinker said:
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“I agree with your dollar-cost-average report. We rated the market attractive for purchase for the past couple of months on weakness into the mid-1400s of the S&P 500. And we had more than a dozen opportunities to get into the market down around that general vicinity of the mid-1400s of the S&P Index. And it was an extraordinary opportunity to put money to work. And that certainly was my recommendation. But I agree with you, with the market up here near its all time high, I would prefer the dollar-cost-average approach for new money.”
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Now here are the facts

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• 1) In March 2007, Bob Brinker gave a buy signal at "1380 or lower" and the stock market stayed above that level, so the advice to dollar-cost-average would have trumped that buy signal.

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• 2) In August 3, 2007, Bob Brinker gave another buy signal in the "mid-1400" range and the stock market almost immediately began to drop below that, reaching 1380 intraday, closing at a low of 1406 on August 15, 2007.

Ding! Ding! Ding! A rather large miss if you bought at 1450 or above and the 1380 never was hit (on a closing basis).

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Brinker's Most Recent Stand on the Market and Economy

Greetings,

I have committed my Moneytalk commentary for this weekend to a friend for publication, but I will give a brief recap here of Brinker's latest market and economic views.

Saturday September 22, 2007, Bob Brinker was very enthusiastic about recent stock market activity. He said that it "continues to act beautifully as it gets very, very close to setting another all time record closing high......" He pointed out that the S&P is "just 2% below the all time historic high of 1553" and continues to do "very well."

Brinker sees no sign of an impending recession and believes the doomsayers are "blowing smoke." He predicted a "slow growth economy."

Brinker believes that the "housing recession" will be with us for some time because we have a very large inventory of unsold properties.

Brinker sees no sign of inflation.

So there you have the bottom lines from Brinker today -- he is very optimistic on the economy and the stock market.

....Honeybee


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Samule Mistaken About What Bob Brinker "Always" Said

(A friendly reminder that only on-topic comments will be allowed on this Blog.)

Samule said: “Bob always said nobody could accurately call a secular bear market until it was over. He also always said he didn't have a crystal ball.”

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Greetings Samule and welcome to Honey’s Bob Brinker Beehive Buzz Blog.

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You are correct that Bob Brinker has “always” said that he didn’t have a crystal ball, but you are certainly "wrong" when you say that he “always said nobody could accurately call a secular bear market.”

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I can prove that Bob Brinker, himself, claimed to call the beginning of a secular bear market—right down to the exact day and market level. And then Brinker declared the very month that a secular bear megatrend ended.

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With the Dow at 8506.62 and S&P at 884.66, Bob Brinker begins the August 2002 Marketimer with this proclamation:

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“In our view, the U.S. stock market entered a secular bear market in the first quarter of year 2000. The benchmark starting points for this secular bear are:

Standard and Poor’s 500 Index: 1527.46 = March 24, 2000

Dow Jones Industrial Average 11722.98 = January 14, 2000

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In the September 2002, Marketimer, Bob Brinker described exactly how a secular bear megatrend should play out. Brinker said: “.........We believe the ongoing secular megatrend we are now experiencing will see a succession of cyclical bull and bear markets lasting approximately one-to-three years each."

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It was in May 2006, just one month before he now claims the secular bear market ended, that Brinker told us that we were in “year seven of a secular bear megatrend” and that he estimated it would have a duration of “eight to twenty years.”

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Samule…here is what Bob Brinker told a Moneytalk caller about the secular bear market in February 2007. Does this sound like Brinker is saying that NOONE can call a secular bear megatrend?

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Excerpt of Brinker's Moneytalk reply to Peter:

“But what we do know is within secular trends there are no cases where a secular trend has gone beyond the previous peak by more than, by more than 10%. It's never happened, so I think it's fair to say that until that happens, the secular trend is intact."
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Now the secular trend that began in year 2000 when the S&P was up in the 1500s, awww, that remains intact. The S&P 500 Index - and this is measured by the Index itself - has not gone above the prior high of 1527 close. In fact, in remains in the mid-1400s at this point. In order for it to move beyond an existing secular trend, such as the one we've had the past seven years, you would have to exceed it, I would think, by at least 10%. There are many cases, Peter, where we have exceeded it in the single digits. There are many cases, for example, go back to 1966-1982-that was a secular bear trend. And there were many cases during that trend, where the Index exceeded the prior cyclical bull market high during that secular trend by let's say, 4%, 5%, 6%, but there were no cases where it was exceeded by 10% or more. So for now, the secular trend remains intact because the S&P has been unable to exceed the prior high of 1527 by anything close to 10%.......”

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Then in June 2007 issue of Marketimer, Bob Brinker (seemingly in passing) announced that the secular bear market had ended A YEAR EARLIER when he said:

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"In our view, the……….secular bear market that was established following the March, 2000 closing high for the S&P500 index (1527.46) and following the January, 2000 closing high for the DJIA (11723), reached its conclusion on June 13, 2006…….."

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Samule also said: “I think the important thing to remember here is that no asset allocation changes were made. No recommendations were made based on the prospect of a secular bear market. It didn't really matter one way or another.”

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Samule…you are indeed correct that Bob Brinker made no asset allocation changes as a result of his secular bear megatrend prognostications. However, is there any doubt that Brinker snagged a lot of subscription renewals as a direct result of that impending return of that big mega-bear?

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And Samule… are you aware that there are people who missed out on a lot of stock market gains since March 2003 because they were overly cautious or waiting for MOABO or the return of the bear?

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Samule said: “David Korn, Kirk Lindstrom and others say they have figured out Brinker's model yet none of them ever refuted the prospect of a secular bear market.”

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I'm very sorry Samule, but you are “wrong” again. Kirk has clearly stated that he believes that the secular bull market (which started in 1982) never ended. Kirk correctly believes that the market simply went through a cyclical bear between March 2000 and October 2002.

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Thank you for your comments Samule...I love nothing more than setting Bob Brinker's record straight, but I always want to be perfectly accurate when I present my facts. Of course, when I interject my opinions, that is just what it is--opinion.

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For instance, I think that the reason Bob Brinker "ended" his so-called secular bear market a year ago and has been so quiet about it (never mentioned it once on Moneytalk), is because he is so very BULLISH on the market right now--and obviously, the old 2000 highs had already been taken out on both the S&P and on the Dow.
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So the stock market appeared to have Brinker between a "rock and a hard place," and I believe that Brinker saw that he had been wrong all along about the secular bear, and rather than just say so (which is not in his nature), he simply declared it over.
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That's my 2-cents worth. .....Honeybee 8^)

Bob Brinker's "Off the Books" Advice

One of the main purposes of this Blog is to inform readers about Bob Brinker’s “off the books” advice that he does not show in his “official” record and does not take responsibility for (or account for) either in Marketimer or on his six-hour national radio program, Moneytalk.

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Bob Brinker regularly brags about his “good” market timing calls, but never mentions those that were not good or even disastrous. As a result, Moneytalk listeners are totally misled and some might even say lied to — at least by omission.

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Kirk Lindstrom wrote the following comments about Bob Brinker’s “off the books” advice:

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“Brinker seems to put most his risky advice "off the books" so he can delete it from the newsletter if they go down (UTEK, ONTK, TEFQX) or keep them as multi year "HOLDS" if they go up (MSFT & VOD). In this day and age of exposing those that "cook the books" consumers should DEMAND accounting accuracy from those in the national spotlight. This sort of behavior (off the books accounting) from a national figure on a Disney Network should be held to EVEN HIGHER standards.”

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Bob Brinker devoted a lot of Marketimer space to touting TEFQX. In the February 2000 issue he wrote a full page about B2B in general -- and Kevin Landis’ Firsthand e_Commerce Fund in particular. Brinker relegated TEFQX to a “hold” about a year later after it had dropped from $15.99 to $.3.93. Brinker never mentioned TEFQX again.

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Brinker, Feb 8, 2000 Marketimer; TEFQX=$15.99:

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"Firsthand e-Commerce Fund is the newest addition to the Marketimer No-Load Fund Recommended List on Page four…… ..we would regard a five percent exposure to this fund as the maximum we would be willing to accept in the current difficult stock market environment.”

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Brinker, March 7, 2001 Marketimer; TEFQX=$3.93:

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"We are removing Firsthand e-Commerce Fund from the Recommended List. We rate the fund a "hold" at these levels… we expect the shares to recover value over time."

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Most of the time, Bob Brinker offers no follow up guidance after he puts these risky recommendations on “hold.”

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David Korn, who is Editor of David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service, wrote the following comments about Brinker’s handling of TEFQX:

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“Other than the QQQQ recommendation from Bob Brinker, the recommendation he gave that probably comes in second place insofar as complaints that I get from my subscribers is TEFQX - the mutual fund that Bob recommended in early 2000. You may recall the excitement both on Moneytalk, and on Bob Brinker's discussion message boards at the time over this recommendation. I do give Bob credit on one count relative to this recommendation -- he put some of his money where his mouth was because he said that he owned the fund. Why? Because he felt that Kevin Landis, the fund manager, was a great stock picker.

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Unfortunately, Bob simply dropped the fund from his Marketimer newsletter and hasn't brought up the topic in years leaving many people who bought it on his recommendation to decide for themselves what to do about it. It is a familiar story when one of Bob's recommendations goes afoul I am afraid. I suppose its the ego thing. Do any of you still own TEFQX and have an opinion on it? I keep track of it because I get questions about it on a somewhat regular basis from my subscribers. Its net asset value closed at $3.81 Friday. It has $38.8 million under assets. It returned 15.74% in the year ending June 30, 2006. However, its 5-year return is -1.15% and even more dismal is the fact that it is down 14.21% since the fund's inception on September 30, 1999. - David Korn

What Happened to Bob Brinker's Secular Bear Market Megatrend?

From 2001 to June 2007, Bob Brinker claimed that the stock market had entered a "secular bear market megatrend" in March 2000.
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In June 2007, Bob Brinker claimed that this secular bear megatrend had ended the previous year-- in June, 2006.
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Stock market action over the past seven years has proven that there never was a secular bear megatrend as Bob Brinker adamantly proclaimed for so long. No doubt Brinker knows that now, but it's very likely that many Moneytalk listeners are still in the dark about it. Why wouldn't he tell his listeners about this change of views? Right now, it's been almost three months since he informed Marketimer subscribers that, in his opinion, a secular bear megatrend had ended in June 2006.
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It's very likely that some people (possibly many) have stayed out of the stock market because they trusted Bob Brinker's "market-timing" abilities and they still believe that he sees a big bear just around the corner. On the other hand, in March 2003, when Brinker gave his buy signal, there were some who knew how completely Brinker blew the QQQ "counter trend rally" and didn't trust him to call this "counter trend rally in a secular bear market" any better than he had done the last one so they didn't jump in to 100% invested as Brinker recommended.
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Now that the stock market has proven that there was no secular bear market beginning in 2000, Bob Brinker is dealing with the issue the same way he dealt with the QQQ-trades that damaged so many of his subscribers-he is distancing himself from the whole thing.

Here is how it all happened:

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Bob Brinker began speculating about the possibility of a "secular bear megatrend" in the early 2001 Marketimers. Then in the October 2001 Marketimer, Brinker devoted almost two pages to the "history of the two major secular bear market periods that have occurred in the United States over the past seven decades." He focused primarily on the 1929-1949 and 1966-1982 secular bear markets.
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Bob Brinker laid out a scenario that was designed to make subscribers believe that there would be "several" cyclical bull and cyclical bear markets cycles occurring during a secular bear market. In October 2001 he said: "Although the probabilities suggest to us that a new secular bear market began in the first quarter of 2000, we anticipate several cyclical bull and bear markets will occur within the context of a secular bear trend."
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It wasn't until August, 2001 that Bob Brinker unequivocally stated that the stock market had entered a secular bear. He said this:
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"U.S. stock market entered a secular bear market in the first
quarter of year 2000.
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Standard and Poor's 500 Index: 1527.46 = March 24, 2000
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Dow Jones Industrial Average 11722.98 = January 14, 2000 "

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Bob Brinker re-stated his analysis of the ongoing stock market, and again explained what investors should expect in the September 2002 Marketimer, he said:

"We believe the ongoing secular megatrend we are now experiencing will see a succession of cyclical bull and bear markets lasting approximately one-to-three years each."

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In March 2003 Bob Brinker issued a buy signal and predicted the beginning of a cyclical bull market. However, he repeatedly cautioned subscribers and listeners that the cyclical bull was part of an ongoing bear market megatrend and would last 1-2 years. He later changed that to 1-3 years. However, as the cyclical bull became long-in-the-tooth and showed no indication that it would be ending (as he had predicted), Brinker declared that it was an "outlier" within a secular bear megatrend.
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It's interesting to note that only four months before Bob Brinker later claimed that the secular bear megatrend had ended, he clearly stated that the cyclical bull market was an "outlier" and was "within the context of the four cyclical bull markets that occurred during the 1966-1982 secular bear megatrend....."
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On Moneytalk, Brinker was very clear about what would signal the ending of the secular bear megatrend. Here are some excerpts from a call to Moneytalk in February, 2007 (Please note, this was eight months AFTER Brinker now claims the secular bear megatrend ended:
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Peter in Scottsdale: "I'm a subscriber too, and I guess I started just somewhere prior to 0-3 and I really appreciate all your letters and information you have."
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Bob Brinker: "Well, Peter, thank you for that. We'll have the February letter out by Monday afternoon, so make a note of that. We'll, we will have it out by Monday afternoon."
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Peter: "Just a quick question. It's kind of a philosophy of what you do - the secular bear, cyclical bull thing." (Brinker: "Yeah, sure.") "I'm curious because I've read previous letters and it may be some time ago, but I think you gave some kind of an actual projection what you thought the S&P would actually get up to before it may roll over into the bear cycle."
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Bob Brinker: "Well, we haven't put a final number on that, and we'll certainly update that by the way on a continuing basis in the monthly letter, which is just part of what we do. But no, we have not put a final number on that. But what we do know is within secular trends there are no cases where a secular trend has gone beyond the previous peak by more than, by more than 10%. It's never happened, so I think it's fair to say that until that happens, the secular trend is intact."
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Now the secular trend that began in year 2000 when the S&P was up in the 1500s, awww, that remains intact. The S&P 500 Index - and this is measured by the Index itself - has not gone above the prior high of 1527 close. In fact, in remains in the mid-1400s at this point. In order for it to move beyond an existing secular trend, such as the one we've had the past seven years, you would have to exceed it, I would think, by at least 10%. There are many cases, Peter, where we have exceeded it in the single digits. There are many cases, for example, go back to 1966-1982-that was a secular bear trend. And there were many cases during that trend, where the Index exceeded the prior cyclical bull market high during that secular trend by let's say, 4%, 5%, 6%, but there were no cases where it was exceeded by 10% or more. So for now, the secular trend remains intact because the S&P has been unable to exceed the prior high of 1527 by anything close to 10%. In fact, it's never even been back to that level and even today remains below that level."____Bob Brinker

David Korn wrote the following:

"Bob Brinker on the Secular Bear Market." February 2007
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"Just a few months ago, Bob Brinker discussed on Moneytalk his view
that we are still in a secular bear market. Here is an excerpt from my
newsletter where that was discussed. Enjoy! - David
.
David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob
Brinker Host), Financial Education, Helpful Links, Guest Editorials,
and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2007
.
February 3-4, 2007 Newsletter
.
BOB BRINKER'S LONG TERM STOCK MARKET OUTLOOK
.
Caller: This caller asked Bob how he handles cyclical markets within
the longer term secular markets and what level he thought the S&P 500
would go to before the bear market arrives. Bob said he hasn't put a
final number on where the S&P 500 will go to and that is something he
evaluates on a continuous basis in his newsletter. However, Bob said
that what we do know is that within secular trends, there are no cases
where a trend has gone beyond the previous peak by more than 10%. That
has never happened and so until it happens, Bob said the secular trend
is intact.
.
EC: When the bear market came in 2000-2002, Bob said he would stay
with his forecast of a secular bear market unless the market exceeded
its prior high by 5%. Today's statement marks a change in that Bob now
says the new highs must be breached by 10%. Perhaps Bob did more study
of secular markets to come up with this number. Whatever the case, Bob
remains convinced that the secular bear market is still here.
.
Brinker Comment: The secular bear market trend began in 2000 when the
S&P 500 was up in the 1500s. The S&P 500 has not gone above the prior
high of 1527 on a closing basis. In fact, it remains in the mid-1400s
at this point. In order for it to move beyond an existing secular
trend, such as the one we've had the past seven years, you would have
to exceed it by at least 10%.
.
EC: This comment clarifies that Bob does not include dividends in his
secular forecast. Why? I have no idea. He lambasted advisors who don't
include dividends when making calculations a few weeks ago. Perhaps he
realizes that when you include dividends, the Wilshire 5000 is already
above its prior highs. Or, maybe he just analyzes price (excluding
dividends) when conducting cyclical/secular market analysis. I don't
include dividends when doing my studies of past cyclical bull/bear
markets.
.
Brinker Comment: There are many cases where the market has exceeded
the prior secular highs in terms of single digit percentages. This
happened, for example, back in the 1966--1982 secular bear trend.
There were many times when the cyclical bull market high exceeded the
secular trend by 4%, 5% or even 6%; however, there was no case where
it exceeded the high by 10% or more. So for now, the secular trend
remains intact because the S&P 500 has been unable to exceed the prior
high of 1527 by anything close to 10%. In fact, it's never even been
back to that level and remains below that level today.
.
Caller: If the S&P 500 did get above the prior secular bull market
high, would that get you trigger-finger happy about viewing the trend
as over? Bob said he doesn't have to worry about that. Bob noted that
he has been fully invested since March 11, 2003 when the S&P 500
closed at 800.73. In fact, the S&P 500 is up now 80%, not counting
cash dividends. This is a cyclical bull market and it has been a
really good one. Bob said he remains fully invested for now, and the
cyclical bull market remains intact.
.
EC: Well there you have it. The cyclical bull market continues. I
suspect that in Bob's next newsletter which is published in two days,
that he may even raise his target for the S&P 500."_____David Korn (To
subscribe to David Korn's outstanding newsletter go to this website at
begininvesting.com)
.
.
Bob Brinker also told subscribers exactly what would signal the end of the secular bear megatrend. In the May 2006 Issue of Marketimer (just one month before Bob Brinker now claims the secular bear megatrend ended), Bob Brinker said,
.

"The current cyclical bull market, which in our view is unusual in terms of its length, has had to battle the headwinds of the secular bear megatrend that began in the first quarter of Year 2000. ...........by definition, the secular bear megatrend will continue as long as the S&P 500 Index is unable to achieve a significant breakthrough of its March, 2000 historic high. We estimate the likely duration of this secular bear megatrend within a broad range of eight to twenty years, and we are now into year......"

.

Here is what happened next:

.
In June and July 2007, the Dow and the S&P 500 Index closed above the Y-2000 closing highs. In the June 2007 Marketimer, Bob Brinker said:

"In our view, the valuation based secular bear market that was
established following the March, 2000 closing high for the S&P500
index (1527.46) and following the January, 2000 closing high for the
DJIA (11723), reached its conclusion on June 13, 2006 at the bottom
of the mid-term off-presidential election year correction."

.
Bob Brinker has never informed Moneytalk listeners that he retroactively declared that a secular bear market ended over a year ago, in spite of the fact that, as I have shown, he has regularly talked about it on Moneytalk.
.
One might wonder why Bob Brinker would be silent about this? Could it be because he is now EXTREMELY bullish and has been for several months? Did he finally realize as the market kept charging ahead-- breaking Y-2000 closing highs--that he had been totally mistaken about the stock market's secular trends?
.
Anyone who has listened to Moneytalk for any length of time, knows that Brinker seems to find it difficult to admit when he is wrong- especially about his market-timing "skills." This is not the first time that he has basically covered-up major market-timing blunders and mistakes. (More about that later.)
.
I believe that he was caught between a rock and a hard place because as the stock market continued to charge forward even beyond his "outlier," scenario, and he continued to see more gains ahead, he had to become 100% bullish. And the only way he could do that was to make the secular bear megatrend disappear.
.
No way could he continue to warn subscribers about a big bear hiding just around the corner without looking really ridiculous. So rather than explain the truth to listeners and subscribers--that he had been mistaken because the market never entered a secular bear megatrend Brinker simply said that it had ended a year ago--June 2006. (The stock market actually underwent a cyclical bear between 2000-2002, but the secular bull that began in 1982, never ended.)
.
To listen to him now, one would not suspect that just mere months before he now claims the secular bear megatrend ended, he was claiming that it would last "eight to twenty years."
.
Is it possible to "time" the market. These two giants in the industry have this to about it:
.
John Bogle said:
.

"The idea that a bell rings to signal when investors should get into
or out of the stock market is simply not credible. After nearly 50
years in this business, I do not know of anybody who has done it
successfully and consistently. I don't even know anybody who knows
anybody who has done it successfully and consistently."_________John
C. Bogle

.
Professor Burton Malkiel said:
.

"Well, let me tell you, I have been following markets for about 50
years, and I've never met anybody who could time the market correctly.
And I say, stay the course............. And what I'm absolutely
convinced of is: You'll NEVER, NEVER, NEVER be able to time the
market."_____Burton Malkiel
.

Topic of This Blog

The topic of my blog is Bob Brinker, host of Moneytalk. Comments are welcome as long as they are on topic. Comments about anyone else, including "moi" will be deleted.

However, if this simple rule of staying on topic is abused, I will have to begin screening comments before they are published.

I hope as we move forward that you will benefit from learning historical facts about Bob Brinker's complete market-timing record that he has "almost" completely covered up. Facts that are not revealed to new Marketimer subscribers. Facts that Bob Brinker will never allow to be discussed on Moneytalk. Facts that prove that his published performance record is questionable.
.
Thank you....Honeybee

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Honeybee's Commentary and Brinker Quotes September 8,9, 2007

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Honeybee’s Commentary on Moneytalk Saturday, September 8, 2007:

.

Firstly, let's talk about some of the things Bob Brinker did NOT talk about today. He did not talk about the stock market activity from the past week and certainly didn’t mention Friday’s 250 point drop (a caller mentioned it, but Brinker ignored the comment). Of course, he is on record as saying that he thinks anything up to 10% correction is “health-restoring” for the stock market. In the good old days before Y-2000, Brinker would have offered some stock market commentary and perhaps some reassurance to his Moneytalk listeners.

.

Second, he did not talk about his recent declaration that a “secular bear megatrend” had ended a year ago. (I’ll post more information about that later.)

.

In the opening monologue, Brinker talked about the jobs report at length and he relentlessly slammed Ben Bernanke, even calling him a “rookie” again. Brinker is outraged that the Fed has been targeting inflation and feels that they raised interest rates too high and have not lowered them quickly enough.

.

Brinker believes that the Fed will be “dragged kicking and screaming” into lowering the discount rate on September 18^th. The only thing that Bob Brinker is NOT certain about is how much they will lower rates--1/4 or 1/2 of 1%.

.

OTOH, Bob Brinker says that there is no chance that we are headed for a recession, which he defines as two consecutive quarters of declining GDP.

.

Caller John asked Brinker what he thought about cutting equity allocations. Bob Brinker said that was NOT his recommendation. (Bob Brinker is very bullish on the stock market right now.)

.

Caller Matt, a subscriber who follows Brinker’s Model Portfolio Three, asked Brinker about moving his money out of the “inflation protected” fund and into a money market fund.

.

Brinker said that the fund he recommended was near an all time high. Brinker said that while it was not his recommendation, if the caller wanted to make that kind of change in Portfolio Three, he would advise going into GNMA’s instead of a money market in order to benefit from expected interest rate cuts. (Brinker recommends Vanguard Inflation-Protected Securities (VIPSX) in his fixed-income portfolio and in Model Portfolio Three.)

.

Caller David who is in real estate tried to politely ask Brinker not to be so negative about the status of the real estate market. It seemed to go right over Brinker’s head. Brinker said the “housing recession” is well under way and may extend into 2008.

.

A caller asked about buying gold. Brinker said that if the caller was expecting “run away inflation” and wanted to buy gold, that he would advise using the exchange traded fund, GLD as a way to invest in gold in the stock market. Bob Brinker said he regards “hyper-inflation at this time as impossibility.”

.

Caller Jim said he agreed with Ben Bernanke about inflation. That is not something Brinker wants to hear, so he replied by saying that was “nonsense.”

.

Another caller raved about how right Brinker has been about inflation calling Brinker a “really sharp cookie.” Bob Brinker replied, “Well, you know, if you’re a listener then you know it’s completely against my nature to brag, right?”

.

Brinker’s guest today was Charlie Maxwell.

.

Moneytalk Caller Excerpts Sunday, September 9, 2007:
.

Dennis in Michigan: “After the release of the job numbers on Friday, do you think we are getting dangerously close to recession and at least a sharp market downturn?”

.

Bob Brinker: “Well, we certainly have a slowdown in the economy – that we know and that we have expected. Now in terms of the initial 4000 decline in jobs in August, that is not enough to give you a recession. You need a lot more than that. You need several months of huge decline in employment to give you are recession. Remember a recession is defined officially as two consecutive quarters of down real GDP. Now let’s look at the numbers: First quarter real GDP 0.6 positive, so that was not a recession quarter--second quarter real GDP up 4%, which gave the first half an increase of 2.3 on average – certainly no recession there. So we are looking for a positive number on third quarter real Gross Domestic Product at this time, and so we don’t have the material in hand to forecast a recession, so we can’t do it.”

.

Dennis: “Do you think the stock market is going to survive long enough for the Fed to react?”

.

Bob Brinker: “Oh, I think the stock market is going to survive a hundred years from now. I don’t think the stock market going out of business – no.”

.

Dennis: “Do you think in the short-term?”

.

Bob Brinker: “What about the short term?”

.

Dennis: “What you think about the short-term of how the market is going to react to this?”

.

Bob Brinker: “Well, I don’t think there’s anything that the market doesn’t know. The market knows that the jobs number was negative for the month of August. The market knows that there was a downward revision for June and July. The market knows that the Fed has been very slow to change its monetary policy. I mean, I don’t think there’s anything out there that is not in the market. I think that the market is well aware of what has been going on with the economy and what has been going on with the Federal Reserve. And I think that if you believe there is definitely going to be a recession then you have to react to that accordingly. But I sorry, I cannot agree with you, I don’t believe we are in for a recession based on what we have in hand right now. I don’t think we have the economic fundamentals right now that would produce a recession. We have a housing recession—that we know, but to have a general recession throughout the economy that would drive real Gross Domestic Product into negative territory for two consecutive quarters. Wow I mean that would be a leap of faith to take a 4000 month decline in new jobs in August and to project that into a recession -- that would be a gigantic leap of faith in the direction of a recession that I’m not willing to make. Moneytalk on…………..”

.

Honey Sez: Bob Brinker is very adept at avoiding any questions about his stock market views going forward. He dances around those questions so well that he makes Fred Astaire look clumsy. :) Actually, since Y-2000, he has cleverly talked about the stock market only as it appears in the rearview mirror. One might even think that he is using his National radio program as a six-hour infomercial.

.

Was this Sunday call a setup? I report--you decide:
.

Bruce in Baton Rouge told Brinker that he'd be retiring soon and
wanted to put his money--about $1.5M (Nice number, did Brinker's
ears perk up?)--into Vanguard Mutual Funds or possibly American
Funds. He said he was looking for "good, solid returns," but with
"maximum safety" and wanted to know what direction Bob Brinker thought
would be the best.
.
Bob Brinker asked if it was tax-deferred money (yes) and then told
the caller that he would be VERY comfortable with his using the
Total Stock Market Index for stock market allocation and Vanguard GNMA
Fund for bond allocation.
.
Then Bob Brinker did a FREEBEE PITCH for his newsletter:

.

"As you well know I make recommendations in my letter about funds as well. But that depends on what investment objective you are taking. I mean if you are taking a balanced approach with the money, it would be the approach that I described. If you are going to take a different approach, you could look at the Model Portfolio, select an investment objective that works for you."

Bruce ended his call to Brinker by saying a very strange thing in light of the fact that Brinker does NOT recommend any American Funds in his newsletter: Bruce said: "Yeah, well, I like them both, I really do. That explains them-good newsletter."

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Excerpts from Bob Brinker Moneytalk Monologue About "Tone of Callers," Sunday, September 09, 2007
.

Bob Brinker said: “I want our Moneytalk listeners to take note of the tone of the calls on this weekend’s Moneytalk broadcasts. Sometimes the tone of the calls can be fascinating. This weekend we are getting calls from people who want to borrow on their 401Ks to pay off $50-$100,000 in credit card debt. This weekend we are getting calls from Moneytalk listeners who want to know what they should do when their mortgage company goes bankrupt. One caller wanted to know what she should do if her mortgage company – Countrywide Mortgage – Countrywide Financial goes bankrupt, and of course, Countrywide is not bankrupt.

.

We’ve had calls this weekend asking about what happens if their broker goes bankrupt. Listen to the tone of the calls this weekend. Listen to the mind-set of the Moneytalk listeners this weekend. This is all a direct result—direct fallout of the sub-prime mortgage meltdown and the housing recession. People can see now houses in general are not going up in value anymore and some of them are going down. People can see now, because we had a call recently from someone that now owes more money on the mortgage—he owes a $150,000 on his mortgage, but his house is only worth $137,000—so he’s in the red $13,000 right now and maybe more if he sold though a broker. And so all of this is direct fallout from what’s happened in the housing recession, from what’s happened in the mortgage debacle—especially in the sub-prime and from what’s been happening even more recently in the jobs report. Notice how people react very rapidly to the news of the day.”

.

Honey sez:
Sometimes the mighty fall fast and hard when they become too full of themselves or arrogantly sound like "know-it-alls" the way Bob Brinker did on Sunday when he pompously announced that "we only went to Iraq for the oil." Bob Brinker got slammed with a BIG DOSE OF REALITY just an hour or so after he said that when he asked his Moneytalk guest, Lieutenant Colonel John Nagl, an Iraq war veteran and author of a book about "counterinsurgency," if he thought that we went to Iraq because of oil.
.

Lieutenant Colonel John Nagl replied:
.

"The reason we went into Iraq had nothing to do with oil and everything to do with the thought that Saddam Hussein had weapons of mass destruction and had proven that we he was such an unstable regional influence that it was very likely that he would either use those weapons of mass destruction against us or provide them to enemies of the United States who would then use them against us or our friends. However, though I don't think oil had much, if anything to do with our initial decision to invade, I think it had a great deal to do with why--what happens in Iraq over the next five years, ten years, fifty years will continue to matter to the United States. Iraq and its oil fields, and even more importantly, the oil fields of Saudi Arabia, which are adjacent to Iraqi territory are incredibly important to the whole world's economy. And this why a broader regional war in Iraq would be such a horrific risk--not just to us, but to all the countries of the world that depend on oil and the free flow of oil to make their economies go. So oil, I don't think oil was important in the initial decision to invade, but guaranteeing access to Iraqi oil and to Saudi Arabian oil is a national security interest of the United States, and will remain one for at least the next 50 years."
.

Immediately Bob Brinker said: "Dave is on the line......"
.
Honey Sez: Regardless of your political views or your views on the Iraqi War, IMO, it is very wrong for Bob Brinker to use his "bully pulpit" microphone to promote his own political PROPAGANDA.

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5 Root Causes of a Bear Market Sept 2007

Kirk Lindstrom's Interpretation of Bob Brinker's 5 Root Causes of a Bear Market First published May 31, 2007 here

This article examines Bob Brinker's 5 root causes for a bear market. Please post your questions in our comments section that follows.

First lets look at what Brinker listed as his "Five Root Causes" for a bear market back when he make his last call to reduce asset allocation to equities for an "unfavorable" market.

In Bob Brinker's January 2000 Marketimer he published his "Five Root Causes for a Bear Market."

I believe not enough of Bob Brinker's "5 Root Causes of a bear market" are present today so Brinker will remain bullish. Before I examine the causes in detail, lets look at them in an historical perspective.

The 5 root causes of a bear market, according to Bob Brinker, are:

1. Tight Money:
2. Rising Rates:
3. High Inflation:
4. Rapid Growth:
5. Over Valuation:

In January 2000, Bob Brinker advised taking 60% out of the market because:

1. Tight Money: He said the Fed was reducing M2 to slow growth - BEARISH and correct as economic growth collapsed. This chart of M2 money supply growth shows the Fed Cut it to below zero in early 2000.
2. Rising Rates: He predicted higher long and short term rates to continue. This did not happen but it was - BEARISH for his model..
3. High Inflation: He said the CPI was approaching 3% and import prices were up 5% which would further impact inflation. We didn't get high inflation, but this was BEARISH for his model none the less.
4. Rapid Growth: Real GDP growth was approaching 5%. Bob felt the FED would use rates to try and slow this. This was BEARISH and correct.
5. Over Valuation: Bob wrote: "We believe valuation levels in the U.S. market are stretched to the limit." BEARISH and correct. Market PEs were at record levels

All five of his root causes were BEARISH in January 2000. On the radio program at the time, he said he was not bearish, but the odds favored a decline over the market going up more than 5%.

Brinker recommended reducing the equity allocation from 100% to 40% in his model portfolio numbers one and two. He also lowered his Model Portfolio III (which is a balanced portfolio) equity allocation from 50% to 20%.

Here are some newsletter quotes from early 2000:

• January 8 2000 Marketimer: "The Marketimer stock market timing model has turned unfavorable....We recommend raising a 60% cash reserve at this time."
  (S&P500 = 1402.13; DJIA = 11122.65, QQQQ=86.25)
• February 2000 Marketimer: "The Marketimer tactical equity asset allocation change in January has placed subscribers in a strong position as the market continues to deal with several unfavorable factors....."
• April 2000 Marketimer: "The Marketimer stock market timing model remains cautious as the second quarter gets underway........"
• April 2000 Marketimer: "Marketimer recommends the following investments as our best ideas for 1999 I.R.A. contributions, which can be made through April 17, and Year 2000 contributions. Each investment should be selected based on your personal investment objectives and should be integrated as part of your overall asset allocation strategy managed from the top down.
  
  • 
    Equity Funds: Aggressive:
    Janus Olympus JAOLX (Did so bad they shut the fund in 2006!)
    Strong Growth SGROX Growth: TIAA/CREF
    Growth Equity Vanguard Total Stock Market .
    Conservative: Fidelity Utilities: FIUIX
    International: TlAA/CREF International Equity
    Fixed Income: Ginnie Maes: Vanguard Ginnie Mae Fund
  
  These selections represent funds which we believe are excellent investment vehicles for each investment objective category. We recommend I.R.A. accounts as vehicles for tax deferred investment and we suggest maximizing the I.R.A. accounts available to you."

In August of 2000, when the market was a bit higher, Brinker recommended taking another 5% out of equities for a 65:35 Equities-to-Cash asset allocation.

.

Had Brinker remained at 65% cash reserves until returning to fully invested in March 2003, he would have looked brilliant. Unfortunately, in October 2000 Brinker recommended putting 20 to 50% of cash reserves back into the market via the NASDAQ100 (QQQQ Bulletin ) for a counter trend rally despite saying his model had not given a buy signal. The QQQQ trade was a disaster, but his long term model was correct to predict further weakness because 2001 and 2002 were both down years for the markets.

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The markets bottomed in October 2002 and his model correctly gave him a bullish buy signal within 5% of the S&P500 bottom in early 2003. Since returning to 100% invested in March 2003, Bob Brinker has correctly remained fully invested with no QQQQ-like side trips to hurt his performance.

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Now, let's look at the 5 Root Causes of a Bear Market as of May 31, 2007:

1. Tight Money. Economagic.com shows the growth of M2 Money Supply is positive at 9.72%. I rate this as BULLISH even though Bob has been upset with the Federal Reserve for raising the Fed Funds rate above 4.5% to its current 5.25%.
2. Rising Rates: The idea behind this indicator is one of the ways to start a bear market is for the Federal Reserve to start a recession by going to far in raising rates. Brinker was correct that the Fed tightned too far in 2000 but so far in 2007, the Fed seems to have learned its lesson and is doing a great job.After the Fed raised rates to 5.25%, Bob said on the radio Saturday 06/03/06 that he thought the Fed had gone too far and will have to lower rates. He says they should have stopped at 4.5%. The Federal Reserve has raised short-term Interest rates from a low of 1.0% on June19, 2004 to their current 5.25%. After an historic 17 straight rate increases, the Fed has held rates steady at 5.25% . The 10-year Treasury bond remains "well behaved" at 4.90%. Bond investors have long term rates lower than short term rates as they believe the Fed will do what it takes to get core inflation back under 2.0%. Bob recently said "the Fed will eat crow " and lower rates to prove he was right all along about higher priced oil not being inflationary. I think that is like telling a fireman after they put out a fire "you didn't need to put water on the fire. It went out just as I said it would." You have to love Bob's modesty! I think Bob has had this indicator BEARISH while I have it as neutral or even bullish.
   Note, in past updates, I had this as BULLISH but I now think that was a mistake. I was using my interpretation of the data rather than Bob's interpretation of the data. Brinker has said many times he thinks the FOMC should have the Fed Funds rate between 4.0 and 4.5%, not its current 5.25% level, thus I think Brinker views this as BEARISH.
3. High Inflation: Despite the inflationary pressures of higher food and energy, Federal Reserve monetary policy (including higher rates) has kept inflation from getting out of control . Sure higher priced commodities, especially oil, has core inflation above the one to two percent "comfort zone" for the Federal Reserve, but inflation is still well below the problem levels of the 1970's and 1980's. Unlike Brinker, I believe the Federal Reserve, led by Allan Greenspan and now Ben Bernanke, has done a fantastic job of deflating the housing bubble and limiting the inflation effects of higher priced oil without sending us into another recession. Overall, this is BULLISH
4. Rapid Growth: This is not a problem. In fact, GDP has been below trend mostly due to the Federal Reserve keeping rates high to control inflation. Q1-2007 GDP growth was estimated to be only 1.3% after Q4-2007 came in at 2.5%. Today the government announced GDP came in at a very weak 0.6%, the lowest since Q4 2002 when it grew only 0.2%. On the radio, Bob said he is not calling for a recession. ECRI is calling for growth to improve, but they are not looking for rapid growth. BULLISH
5. Over Valuation: In the June 2007 issue of "Kirk's Investment Newsletter," I wrote in "Standard and Poor’s estimates 2007 "Bottoms Up" operating earnings for their S&P500 index will be $94.11, up from $93.01 last month. At $1,501, this gives a price to earnings ratio (PE) of 16.0 on 7.3% earnings growth over 2006. The earnings yield, inverse of the PE, is 6.3% for 2007. The PEG, PE over earnings growth rate, is 2.2. The 10-year US Treasury bond is yielding 4.70%, well below the S&P500 earnings yield so the market is not over valued according to the “Fed Model.” Despite the recent record level of the S&P500 and the Treasury yield increasing to 4.90%, the PE and earnings yield are still quite BULLISH.

What do you think?

Sept 7, 2007 Update: I wrote the above five months ago. Did I make a mistake on any of these five indicators? I had all FOUR as BULLISH and ONE BEARISH the way Brinker looks at his model. TODAY, Brinker seems to think the Fed is going to lower rates and he seemed happy with Ben Bernanke whom he said made "rookie mistakes" in raising rates. So TODAY I have all five as BULLISH!

.

Agree or disagree, I believe Bob Brinker will continue to be bullish.

Kirk Lindstrom