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Tuesday, September 25, 2007

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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