Wednesday, October 10, 2007

Two Important Bob Brinker Market-Timing Anniversaries

Yesterday was the five-year anniversary of the end of the
cyclical bear market which began in Y-2000 and ended with
the S&P 500 Index closing at 776 on October 9, 2002 and the
Dow closing at 7,278.

Bob Brinker issued a buy signal in March 2003, returning
all "available" cash reserves to the stock market. However,
he repeatedly warned both subscribers and Moneytalk listeners
that it was only temporary because (he said) the stock market
had begun a secular bear megatrend in March 2000. That was a
long-held but erroneous opinion and has subsequently been
proved completely wrong.
October, 2007 is the seventh anniversary month of arguably
Bob Brinker's biggest market-timing blunder. Bob Brinker
sent all Marketimer subscribers a special bulletin
advising them to "Act Immediately" and purchase QQQQ at
a price that turned out to be very near the all-time-high.
The QQQQ lost over 70% of value over the next three years,
while Bob Brinker repeatedly advised a "hold" on it.


The QQQQ-trade has never been closed and all Marketimer
guidance ceased as of March 2003. Here is an copy of
the bulletin:

  • October 19, 2000
  • .

    MARKETIMER is projecting a significant countertrend rally which is expected to be led by the Nasdaq 100 Index. We expect this rally to persist over a period of approximately 2-4 months, and to generate Nasdaq gains in excess of 20% from the vicinity of the recently established Nasdaq closing low point.
    We view this projected Nasdaq rally as a significant trading opportunity for MARKETIMER subscribers seeking potential short-term capital gains. Our clear vehicle of choice for this opportunity is the Nasdaq 100, which is traded on the American Stock Exchange under the ticker symbol QQQ.
    We recommend MARKETIMER subscribers with aggressive objectives invest 30% to 50% of existing CASH RESERVES in the QQQ shares in order to exploit this opportunity. Also, we recommend subscribers with conservative investment objectives invest 20% to 30% of CASH RESERVES in the QQQ shares in order to take advantage of this opportunity.
    MARKETIMER will provide follow up guidance for this short-term opportunity in regular monthly editions, and, if necessary, in follow up bulletins.
    We recommend subscribers interested in taking advantage of this recommendation act immediately.
    P.O. Box XXX/ Irvington, NY 10533/ phone: 914-XXX-2655/ Editor: Robert J. Brinker"
A similar bulletin was sent to the clients of Bob Brinker and Sheldon Jacob's "Private Client Group." (Later sold to another company.)

(RYOCX is a proxy for QQQQ--as it clearly states in the BJ Group bulletin.)


  • The BJ Group
    A Division of
    Centurion Capital Management's
    Private Client Group
    Robert J Brinker
    Sheldon Jacobs
    October 19, 2000
    Dear Client:
    I am pleased to inform you that the BJ Group has executed a significant trade for you under the guidance and supervision of Bob Brinker.
    Bob Brinker advised us of a short-term trading opportunity (countertrend rally) in the Nasdaq 100 Index. In response, we have purchased for your BJ account(s) a position in the Rydex OTC fund--a proxy for the Nasdaq 100 Index. Aggressive accounts will receive a more significant position; conservative acounts will have exposure to a lesser degree given the risk profile of the technology-laden Nasdaq 100.
    It is important to note: we have not sold any existing funds. This purchase reduces your money market reserves or cash position for the duration of the trade. As of this writing, it does not imply a change in Bob's longer term outlook for the market.
    We are committed to the Brinker investment strategy and look forward to the exciting prospects of this recent development.
    Sincerely......(Signed by President and the Managing Director, BJ Group.)


Anonymous said...

And a few years ago Bob said he "blew that call." Why do you and Kirk keep beating that dead horse that Bob has all ready laid to rest?

Kirk Lindstrom said...

"Why do you and Kirk keep beating that dead horse that Bob has all ready laid to rest?"

Saying "oops" does not mean it was "laid to rest."

Being laid to rest would be reporting his results that included following his October 2000 advice in his model portfolios such as we have done with

Affect of QQQ advice on reported results

The conclusion is:

# Brinker's P1 on 01/01/88 $20,000
Brinker's P1 on 07/27/07 $206,144
# Brinker's Reported APR 12.7 %
# QQQQ Effect is 29.0 % or $59,782
# Subtract QQQQ Effect $146,362
# QQQQ Adjusted APR 10.7 %
# Wilshire 5000 APR 12.0 %

Someone doing the research should know that following Brinker's market timing advice for his best performing Portfolio #1 under performs the Wilshire5000 by 1.3% per year over nearly 20 years. With compounding, as shown HERE this means

$10,000 compounding at 10.7% between 1/1/88 and 7/27/07 grows to $73,181

$10,000 compounding at 12.0% between 1/1/88 and 7/27/07 grows to $91,848

If you are fine paying for market timing advice to underperform the Wilshire5000, perhaps you do much worse on your own and value the hand holding, then that is fine. But you should be aware going in of the past historical record.