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Friday, February 15, 2008
Thursday, February 14, 2008
Marketiming Stumbles
When Bob Brinker's Market Timing Stumbles
Right up until the time that the market dropped over 15% in January, Bob Brinker had been repeatedly predicting new all-time-highs. He even said that the market looked "favorable" as we entered Y-2008.
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On Moneytalk, Brinker said that the correction was more than he had "expected." That is quite an understatement. Brinker had not been expecting ANY correction. Indeed, he said that the correction from last summer had been "health-restoring" to the stock market.
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So how has he reacted to this unexpected correction -- besides letting Bill Flanagan do Moneytalk? 8^)
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Firstly, it is important to note that Bob Brinker has not recommended raising any cash reserves since January/August 2000, when he went to 65% cash reserves and 35% remained in equities throughout the bear market between 2000-2002. His Model Portfolios have been 100% invested since March, 2003.
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On January 20, 2008, he removed his "attractive for purchase at mid-1400's" buy-signal which he has advised each month since August, 2007, and advised only dollar-cost-averaging into the market. At the same time, he said he was looking for a new market bottom.
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As of February 10th, Brinker has issued a new buy level in the "low 1300's." This is not only way below the prior buy level of mid-1400's, it's below the one prior to that--which was "1380 or lower."
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Brinker now says that we may not see any new stock market highs until 2008 or into 2009. That is quite a change for him because he has been predicting new highs ahead for at least 8 months...
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He has also changed his recession views. He formerly was saying there was zero chance for one. He now says there is a chance of a mild and brief recession -- during the first half of 2008.
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Pity the people who might have come into a large chunk of money during the last couple of months of 2007 and sunk it into the stock market on Brinker's advice, just to ride it down almost 20% intraday and 16% on a closing basis....
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Kirk Lindstrom posted these market statistics the day after Brinker's last bulletin:
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Correction Statistics for 02/11/08 S&P 500 Chart (Using Intraday prices):
http://home.netcom.com/~kirklindstrom/Charts/SnP500.html
Last Market High 10/10/07 at 1,576.09
Last Market low 01/23/08 at 1,270.05
Current S&P500 Price 1,339.13
Decline in Pts 236.96
Decline in % 15.0%
Max Decline 19.4%
This means the correction from intraday high to intraday low is 19.4% and we are currently 15.0% off the peak. The decline from the high to the low on a closing basis is 16.3%
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DJIA Chart (Using Intraday prices): http://home.netcom.com/~kirklindstrom/Charts/DJIA.html
Last Market High 10/10/07 at 14,198.10
Last Market Low 01/22/08 at 11,634.82
Current DJIA Price 12,240.01
Decline in Pts 1958.09
Decline in % 13.8%
Max Decline 18.1%
This means the correction from high to low has been 18.1% and we are currently 13.8% off the peak. The decline off the high on a closing basis has been 15.5%
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"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
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"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.____Professor Burton Malkiel.
Monday, February 11, 2008
Bottom Calls or Using Asset Allocation To Make Money Trading Ups and Downs
Bob Brinker writes a newsletter called "Marketimer" which implies he attempts to time the stock market. To me, "Market timing is entertainment." It is something fun to discuss such as “I think we might have made a bottom for now” or “this chart will get some bears scared they missed a bottom” but the performance beating returns over the long term come from asset allocation and stock selection.
If anyone is interested in making money from the market’s ups and downs, then they should sell something when the market is up so they can buy it or some other security back when the market is down if they want to do anything other than buy-and-hold. Anything else is just a lot of noise to generate interest.
Brinker advised a fully invested position for his subscribers when the market was at a record high of 1565.
He then "called an all in" when the market was in the mid 1400's which some call a "buy signal" or a "bottom call." I call it good advertising since he already told people "all in the pool" at 1565. Granted it can be helpful for new subscribers who were dollar cost averaging to a fully invested position.
Unless you inherited great wealth, few people get meaningful infusions of new cash to lump sum into the market. Your 401K investments look like dollar cost averaging, but they are mini lump sums the day you get them.
Other than advertising, what good in “yet another all in the pool” call here in the low 1300’s after we already had advice to be fully invested when the S&P500 was 1565 and told to “go all in” when it “corrected” to the mid 1400s?
I, on the other hand, use asset allocation to guide me when to buy and sell. I'll often say something like "the market is up and I am taking profits" just like I will say "the market is down, we probably have a local bottom and I'll buy something now with the cash I have from taking profits earlier."
I will use an example of one of the stocks I trade around a core position, VLNC.
In January 2000, the stock was down so I added 1000 shares to my newsletter explore position at $1.37. By October 22, 2007 Valence was at $1.97 so I sold those shares for a nice $600 gain before counting the $24 in round trip commissions. I wrote in my newsletter that there was a gap in the stock back around $1.64 that I’d wait for a potential correction to fill where I might buy the share back. Sure enough, in January 2008 the market corrected hard and I was able to buy those 1,000 shares back at $1.64. We used an "Auto Buy" to pick up the shares. This is simply a "Buy Limit Order" you set at your broker (online or over the phone) ahead of time so your shares are purchases automatically. It helps buy in times of fear.
Last week great news came out for Valence and it soared to today’s closing price of $2.44!! Friday I put in a stop loss for those shares just below $2 that I might raise if it runs out of momentum.
Am I calling a “top” or a “bottom” just because I say “this or that chart looks like it could be a bottom” doesn’t matter. Of course not!
The chart above shows I did not buy VLNC at the "optimum" time but I did "good enough” to make nearly $600 on at $1370 investment (less $24 commissions.)
What matters is do I buy or sell and take advantage of the situation to make money.
Read my article Valence Technology: A Green Stock with Potential for more info on this company.
Remember past performance is no guarantee of future success, but someone has paid the bills for me to have a great life and leave the workforce at the age of 41 and still write about it for extra income at the age of 50 while living in a very nice place. If given a choice who to listen to, I would pick someone who has shown they are successful investingWhat matters is do I buy or sell and take advantage of the situation to make money.
Read my article Valence Technology: A Green Stock with Potential for more info on this company.
Remember past performance is no guarantee of future success, but someone has paid the bills for me to have a great life and leave the workforce at the age of 41 and still write about it for extra income at the age of 50 while living in a very nice place. If given a choice who to listen to, I would pick someone who has shown they are successful investing.
I don't monitor this forum so if anyone wants to discuss how I invest, then they are welcome to join me in "Kirk's Market Thoughts" at facebook's "Investing for the Long Term" to dicuss this article.
If anyone is interested in making money from the market’s ups and downs, then they should sell something when the market is up so they can buy it or some other security back when the market is down if they want to do anything other than buy-and-hold. Anything else is just a lot of noise to generate interest.
Brinker advised a fully invested position for his subscribers when the market was at a record high of 1565.
He then "called an all in" when the market was in the mid 1400's which some call a "buy signal" or a "bottom call." I call it good advertising since he already told people "all in the pool" at 1565. Granted it can be helpful for new subscribers who were dollar cost averaging to a fully invested position.
Unless you inherited great wealth, few people get meaningful infusions of new cash to lump sum into the market. Your 401K investments look like dollar cost averaging, but they are mini lump sums the day you get them.
Other than advertising, what good in “yet another all in the pool” call here in the low 1300’s after we already had advice to be fully invested when the S&P500 was 1565 and told to “go all in” when it “corrected” to the mid 1400s?
I, on the other hand, use asset allocation to guide me when to buy and sell. I'll often say something like "the market is up and I am taking profits" just like I will say "the market is down, we probably have a local bottom and I'll buy something now with the cash I have from taking profits earlier."
I will use an example of one of the stocks I trade around a core position, VLNC.
In January 2000, the stock was down so I added 1000 shares to my newsletter explore position at $1.37. By October 22, 2007 Valence was at $1.97 so I sold those shares for a nice $600 gain before counting the $24 in round trip commissions. I wrote in my newsletter that there was a gap in the stock back around $1.64 that I’d wait for a potential correction to fill where I might buy the share back. Sure enough, in January 2008 the market corrected hard and I was able to buy those 1,000 shares back at $1.64. We used an "Auto Buy" to pick up the shares. This is simply a "Buy Limit Order" you set at your broker (online or over the phone) ahead of time so your shares are purchases automatically. It helps buy in times of fear.
Last week great news came out for Valence and it soared to today’s closing price of $2.44!! Friday I put in a stop loss for those shares just below $2 that I might raise if it runs out of momentum.
Am I calling a “top” or a “bottom” just because I say “this or that chart looks like it could be a bottom” doesn’t matter. Of course not!
The chart above shows I did not buy VLNC at the "optimum" time but I did "good enough” to make nearly $600 on at $1370 investment (less $24 commissions.)
What matters is do I buy or sell and take advantage of the situation to make money.
Read my article Valence Technology: A Green Stock with Potential for more info on this company.
Remember past performance is no guarantee of future success, but someone has paid the bills for me to have a great life and leave the workforce at the age of 41 and still write about it for extra income at the age of 50 while living in a very nice place. If given a choice who to listen to, I would pick someone who has shown they are successful investingWhat matters is do I buy or sell and take advantage of the situation to make money.
Read my article Valence Technology: A Green Stock with Potential for more info on this company.
Remember past performance is no guarantee of future success, but someone has paid the bills for me to have a great life and leave the workforce at the age of 41 and still write about it for extra income at the age of 50 while living in a very nice place. If given a choice who to listen to, I would pick someone who has shown they are successful investing.
I don't monitor this forum so if anyone wants to discuss how I invest, then they are welcome to join me in "Kirk's Market Thoughts" at facebook's "Investing for the Long Term" to dicuss this article.
Sunday, February 10, 2008
Moneytalk Commentary February 9-10, 2008
Bob Brinker did not do Moneytalk this weekend. This is the 4th time that Bill Flanagan has replaced Brinker since the weekend before Christmas.
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Flanagan made the point that this was the worst week in Dow performance since March 2003 and he said: “I’m beginning to think that when I fill in for Bob, I’m kind of a negative indicator, but this week really was one we’d rather forgot………Ugly, ugly, ugly, as we watch our portfolios shrink.”
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Flanagan does not expect the market to change direction very soon -- "perhaps second, third, fourth quarter or even next year." He said, “But it’s not a very good time for sunny days on Wall Street.” However, unlike Bob Brinker, Bill Flanagan doesn't profess to be a market-timer.
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Renowned and entertaining Brinker-commentator, Will L. wrote the following:
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"As you know Brinker without explanation (and as far as I know never to be mentioned again) pulled a date in June 2006 out of his assets in the June 2007 Newsletter and proclaimed that the bear market ended on that June 06 day. Beyond silly of course --but look at the chart. From the time Brinker claims the secular bear market ended and the secular bull market began and today; you would have been better off in a money market fund.
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Now Brinker just weeks ago when the market was at it's high of the year was very bullish. When others were getting nervous in October, Brinker began to make fun of them. He called for highs in 1600s in 08 and encouraged a huge "go all in" gamble at 1450 on the S&P. He was BULLISH to the max. And curiously he was nearly back to his old boisterous self, Yammering at the "bad news bears", ragging on anyone who disagreed with his very bullish stance.
Well here we are at the weekend. If Brinker shows up today (Honeybee sez: he didn't) do you think he will:
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Brinker I don't believe ever talks about his timing model these days. It's the biggest trough of hogswill (apologies to pig) anywhere. This "timing model" that said the market turned bullish in June 2006 and we are in a secular bull market since then? The timing model that issued a buy signal at 1380--after the market was at 1400 or so...and issued another buy signal weeks ago at mid 1400s? The s&p is at 1330 now. LOL Off about 15% from the extreme top.
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Now Brinker used to boast that his timing model was "designed" to call market bottoms within 3% of the final "closing low". If that were true--why would he not he be in cash? After all I believe Brinker claimed that only up to 10% corrections were "normal" market movement. Indeed wasn't Brinker hammering the "bad news bears" just a couple weeks ago? Foggy? Perhaps Old Foggy? At what point do people realize the emperor hasn't had a stitch on for years??"
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Flanagan made the point that this was the worst week in Dow performance since March 2003 and he said: “I’m beginning to think that when I fill in for Bob, I’m kind of a negative indicator, but this week really was one we’d rather forgot………Ugly, ugly, ugly, as we watch our portfolios shrink.”
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Flanagan does not expect the market to change direction very soon -- "perhaps second, third, fourth quarter or even next year." He said, “But it’s not a very good time for sunny days on Wall Street.” However, unlike Bob Brinker, Bill Flanagan doesn't profess to be a market-timer.
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Renowned and entertaining Brinker-commentator, Will L. wrote the following:
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"As you know Brinker without explanation (and as far as I know never to be mentioned again) pulled a date in June 2006 out of his assets in the June 2007 Newsletter and proclaimed that the bear market ended on that June 06 day. Beyond silly of course --but look at the chart. From the time Brinker claims the secular bear market ended and the secular bull market began and today; you would have been better off in a money market fund.
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Now Brinker just weeks ago when the market was at it's high of the year was very bullish. When others were getting nervous in October, Brinker began to make fun of them. He called for highs in 1600s in 08 and encouraged a huge "go all in" gamble at 1450 on the S&P. He was BULLISH to the max. And curiously he was nearly back to his old boisterous self, Yammering at the "bad news bears", ragging on anyone who disagreed with his very bullish stance.
Well here we are at the weekend. If Brinker shows up today (Honeybee sez: he didn't) do you think he will:
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- 1) Act as though the market is doing exactly as he predicted and there is no concern?
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- 2) Continue saying the market future is "foggy" (LOL that's sure investable information isn't it?)
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- 3) Blame the fed, or the greedy condo flippers or developers or hedge funds ---etc etc for this "exogenous event" that "noone" could have predicted? (Honeybee sez: don't forget the French "rogue" trader. LOL)
Brinker I don't believe ever talks about his timing model these days. It's the biggest trough of hogswill (apologies to pig) anywhere. This "timing model" that said the market turned bullish in June 2006 and we are in a secular bull market since then? The timing model that issued a buy signal at 1380--after the market was at 1400 or so...and issued another buy signal weeks ago at mid 1400s? The s&p is at 1330 now. LOL Off about 15% from the extreme top.
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Now Brinker used to boast that his timing model was "designed" to call market bottoms within 3% of the final "closing low". If that were true--why would he not he be in cash? After all I believe Brinker claimed that only up to 10% corrections were "normal" market movement. Indeed wasn't Brinker hammering the "bad news bears" just a couple weeks ago? Foggy? Perhaps Old Foggy? At what point do people realize the emperor hasn't had a stitch on for years??"
Saturday, February 9, 2008
Flanagan on Moneytalk Today
Bob Brinker is not on Moneytalk today. Bill Flanagan is on.
Bob Brinker is on record saying he did not expect this correction. How much has the stock market declined so far?
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I posted this on Kirk's Facebook Brinker Discussion Forum: "The Dow had its worst week since 2003, I'd sure be interested in knowing what the percentages are now."
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Kirk Lindstrom replied:
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"I am working on this spreadsheet to put the numbers in with words to post. Hopefully there are no mistakes: Correction Statistics for 02/08/08 S&P 500 Chart (Using Intraday prices):
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http://home.netcom.com/~kirklindstrom/Charts/SnP500.html
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Last Market High 10/10/07 at 1,576.09
Last Market low 01/23/08 at 1,270.05
Current S&P500 Price 1,331.29
Decline in Pts 244.80
Decline in % 15.5%
Max Decline 19.4%
This means the correction from intraday high to intraday low is 19.4% and we are currently 15.5% off the peak.
The decline from the high to the low on a closing basis is 16.3%.
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DJIA Chart (Using Intraday prices): http://home.netcom.com/~kirklindstrom/Charts/DJIA.html
Last Market High 10/10/07 at 14,198.10
Last Market Low 01/22/08 at 11,634.82
Current DJIA Price 12,182.13
Decline in Pts 2015.97 Decline in % 14.2%
Max Decline 18.1%
This means the correction from high to low has been 18.1% and we are currently 14.2% off the peak.
The decline off the high on a closing basis has been 15.5%"
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Bob Brinker is on record saying he did not expect this correction. How much has the stock market declined so far?
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I posted this on Kirk's Facebook Brinker Discussion Forum: "The Dow had its worst week since 2003, I'd sure be interested in knowing what the percentages are now."
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Kirk Lindstrom replied:
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"I am working on this spreadsheet to put the numbers in with words to post. Hopefully there are no mistakes: Correction Statistics for 02/08/08 S&P 500 Chart (Using Intraday prices):
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http://home.netcom.com/~kirklindstrom/Charts/SnP500.html
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Last Market High 10/10/07 at 1,576.09
Last Market low 01/23/08 at 1,270.05
Current S&P500 Price 1,331.29
Decline in Pts 244.80
Decline in % 15.5%
Max Decline 19.4%
This means the correction from intraday high to intraday low is 19.4% and we are currently 15.5% off the peak.
The decline from the high to the low on a closing basis is 16.3%.
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DJIA Chart (Using Intraday prices): http://home.netcom.com/~kirklindstrom/Charts/DJIA.html
Last Market High 10/10/07 at 14,198.10
Last Market Low 01/22/08 at 11,634.82
Current DJIA Price 12,182.13
Decline in Pts 2015.97 Decline in % 14.2%
Max Decline 18.1%
This means the correction from high to low has been 18.1% and we are currently 14.2% off the peak.
The decline off the high on a closing basis has been 15.5%"
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Friday, February 8, 2008
Bob Brinker's Market-Timing
Bob Brinker's Bungled Market-timing
Jumpnjoey left this comment on the previous thread: "S&P 500 closed at the same price it was on 26 Sep 06. 16 months worth of gains - bye bye. "
Hi Jumpnjoey,
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According to Bob Brinker, the stock market has been in a “secular bull” trend since June, 2006.
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Between January, 2000 and June, 2007, Brinker claimed that the stock market was in a “secular bear megatrend” (In June, 2007, he retroactively declared the secular bear megatrend had ended as of June, 2006 -- oops).
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In August 2007, Bob Brinker raised his buy level for all new money to the “mid-1400’s range."
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He was 100% bullish throughout 2007 (seemingly more so as the year progressed), and in the January, 2008 issue of Marketimer, he said this:
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January 4, 2008, Page Three, Paragraph One: (S&P 1468): “In every case, despite dire warnings from the bad news bears, subscribers who used these corrections as buying opportunities were on the right side of the market."
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After the market dropped over 15% in January, on Moneytalk, Brinker said that it was more than he had "expected." He removed the buy in the "mid-1400's range" signal, and now recommends only dollar-cost-averaging new money into the market, and he's supposedly looking for the market bottom.
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Throughout most of 2007, Brinker repeatedly said there was no chance of a recession or a bear market correction.
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Now he thinks that it may be the end of 2008 or into 2009 before we see any new highs. This is quite a change for him because he was repeatedly predicting new highs during the last half of 2007.
He has also changed his recession views from "zero chance"of one happening, to yes, there is a chance of one after all, albeit, a mild and brief one -- during the first half of 2008.
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Wednesday, February 6, 2008
Market Similarities Between 1998 and 2008
Bob Brinker would take calls about the stock market and discuss his views on Moneytalk back in 1998. Steve T, a "Guest Contributor" to David Korn's most recent newsletter, has shared an archived record of a conversation that Brinker had with a caller about the 1998 market correction which was very similar to the one that is occurring now -- both would definitely fit into the description of an "intermediate-term correction."
Even though this call was 10 years ago, Brinker's "Timing Model" has not substantially changed for 20 years. What Brinker says to this caller may offer some insight in how he actually views the current stock market activity.
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Here are excerpts from 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. 2008 http://david-korn.blogspot.com/
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All of the following is posted with David Korn's permission from his February 2-3, 2008 Newsletter:
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(Guest Contributor) Steve T. comments on Brinker's Timing Model Indicators: As I see it, Bob Brinker would interpret his model with three our of four indicators in the bullish camp. I don't think Bob will turn bearish yet, but like many of you perhaps, I am sure he is watching and listening to the data very closely as it becomes available. Many of us have been worried that this decline of over 10% will turn into a full blown bear market. Based on what I see of his model, I don't think the time is yet upon us.
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I would like to leave you with an interesting call to Moneytalk from years back which is relevant to today's market action. During the heydays of Moneytalk, before the QQQQ debacle, Bob used to talk in depth about the market and his model. Back then, I used to follow his show very carefully and I had kept a summary of a caller to the show back in March 1998. During that show, Bob had a question about asset allocation from a 55-year old caller that was 100% invested in equities. Bob advised the caller to reduce his equity exposure to 80% and move 20% into fixed income. The rest of the call was very interesting as it brought up the issue of intermediate corrections and I thought David's subscribers would enjoy reading it, so here it is:
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CALL TO MONEYTALK MARCH 1998
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BRINKER: I would be willing to stay at your age of 55 still at a very aggressive 80/20. After making that adjustment, which I would make at current strength. Then I would say what I would do is take the following approach. I'd take that approach that I am going to go 60/50 if we get a final top in the bull.
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CALLER: I see.
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BRINKER: Or even if we get the likelihood of a major intermediate correction. Now we've talked about this many times. There are three types of pull backs in the markets. And this is always true. You can get a short term pull back, which is generally 10% or less. And by the way as measured by the New York Stock Exchange, even the last pullback was only 9.9%. So you can get a short-term pull back generally about 10% or less. That usually in a bull market is always a buying opportunity. And we've had many of those over this bull market. You can get an intermediate term correction,which is defined as a correction lasting let us say between several weeks and several months. That could be along the magnitude of let us say, let's put out numbers of less than 20% but more than 10%. So we call it over 10%, but less than 20% for an intermediate term correction. And then of course you can have the bear market which is generally speaking a decline of 20% or more. But a bear market can be a decline of 30%, or 40 or even more. So these are the scenarios you are looking at.
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Right now, I'd go from 100% stocks and 0% fixed income, to 80% stocks and 20% fixed income at your age and you no tax consequences in doing so. Use the GNMAs for the fixed income interest. Then I would watch the market and ignore short term corrections except to buy. If we had a bear market, I certainly would go, well if I went, if we had a bear market, that would result in a sell signal. Which could produce no equities. And if we had an intermediate correction, you might have to also consider going to no equities if it could lead to a bear. Unfortunately, with intermediate corrections, they usually infrequently. Let me put it this way. Let me see if I can be very specific about this. In almost every case a bear market is preceded by an intermediate correction. Let me repeat this, because I am sure that I am confusing somebody. As long as I am not confusing myself, I'm all right. In virtually every single case a bear market is proceeded by an intermediate correction. All I just said was virtually every time the market goes down over 20% in a bear market, it is preceded by a decline of over 10% but lessthan 20%.
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CALLER: Over what time period though?
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BRINKER: The over 10 but less than 20 could last several months, but the bear market can last six to 24 months.
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CALLER: Are you saying you might see this thing drop between 10 and 20% and then come back up?
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BRINKER: That is a possibility. You could have, see that's the problem with intermediate corrections. And thank heavens we haven't had any in this bull market. We haven't had to worry about it. But that's the problem with intermediate corrections. Once you get an intermediate sell signal, that tells you that the market, if the model works, the market will do down more than 10%. That at least, I have to be very specific here to be accurate. If you get an intermediate term sell signal that tells you that the market will go down more than 10% but less than 20%.
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CALLER: OK
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BRINKER: There's always the possibility that can come after the market is in the tank. That can then be followed by a bear market sell signal which would by definition be over 20%, so I generally follow the principal that if you get an intermediate term sell signal you go to cash. Or, if you hedge your portfolio to zero equities, in the United States I am talking about. In order to avoid the risk that you could roll over into a big bear.
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CALLER: I think you just covered the strategy that I as an unsophisticated investor would probably follow. That was being a subscriber if theintermediate correction seems to be at hand my strategy would be very simply to take everything in equity and go right to a money market.
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BRINKER: Yea money market or depending on the reason for the decline you might be able to go to a bond fund, also it depends on the reason for the decline. But yes a money market or Treasury funds of some sort would be the answer in that scenario. And I would agree with that.
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CALLER: And that scenario we're talking about that would not affect at all GNMAs?
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BRINKER: Well no. Only if we thought rates were going to go up. You know only if the cause was over heating economy. And right now that doesn'tappear to be a problem. Although it could change in the future. If everything turns out to be copasetic in Asia and the economy comes roaring back out of the gate then we have to worry about that but not for the moment. I am Bob Brinker and this is Moneytalk.* * * *
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DavidK EC: Very interesting call! You know that call was back in March 1998 and there are some similarities between now and that year. The S&P 500 was trading around 1100 in March 1998 and during that year the global currency markets went crazy and stock markets caved. We had Asian Contagion and then the bankruptcy of Long Term Capital Management. The S&P 500 underwent just shy of a 20% decline on a closing basis (but slightly more on an intra-day basis). Bob never adjusted his asset allocation, staying fully invested and claimed victory for his model since he claimed there technically was not a bear market in the S&P 500 on a closing basis. Back then, the Fed cut the Fed funds rate from 5.5% to 4.75% and the S&P 500 rocketed 39% over the next12 months. I provide that information for historical purposes only, not to make a prediction.
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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. 2008 http://david-korn.blogspot.com/
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Even though this call was 10 years ago, Brinker's "Timing Model" has not substantially changed for 20 years. What Brinker says to this caller may offer some insight in how he actually views the current stock market activity.
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Here are excerpts from 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. 2008 http://david-korn.blogspot.com/
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All of the following is posted with David Korn's permission from his February 2-3, 2008 Newsletter:
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(Guest Contributor) Steve T. comments on Brinker's Timing Model Indicators: As I see it, Bob Brinker would interpret his model with three our of four indicators in the bullish camp. I don't think Bob will turn bearish yet, but like many of you perhaps, I am sure he is watching and listening to the data very closely as it becomes available. Many of us have been worried that this decline of over 10% will turn into a full blown bear market. Based on what I see of his model, I don't think the time is yet upon us.
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I would like to leave you with an interesting call to Moneytalk from years back which is relevant to today's market action. During the heydays of Moneytalk, before the QQQQ debacle, Bob used to talk in depth about the market and his model. Back then, I used to follow his show very carefully and I had kept a summary of a caller to the show back in March 1998. During that show, Bob had a question about asset allocation from a 55-year old caller that was 100% invested in equities. Bob advised the caller to reduce his equity exposure to 80% and move 20% into fixed income. The rest of the call was very interesting as it brought up the issue of intermediate corrections and I thought David's subscribers would enjoy reading it, so here it is:
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CALL TO MONEYTALK MARCH 1998
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BRINKER: I would be willing to stay at your age of 55 still at a very aggressive 80/20. After making that adjustment, which I would make at current strength. Then I would say what I would do is take the following approach. I'd take that approach that I am going to go 60/50 if we get a final top in the bull.
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CALLER: I see.
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BRINKER: Or even if we get the likelihood of a major intermediate correction. Now we've talked about this many times. There are three types of pull backs in the markets. And this is always true. You can get a short term pull back, which is generally 10% or less. And by the way as measured by the New York Stock Exchange, even the last pullback was only 9.9%. So you can get a short-term pull back generally about 10% or less. That usually in a bull market is always a buying opportunity. And we've had many of those over this bull market. You can get an intermediate term correction,which is defined as a correction lasting let us say between several weeks and several months. That could be along the magnitude of let us say, let's put out numbers of less than 20% but more than 10%. So we call it over 10%, but less than 20% for an intermediate term correction. And then of course you can have the bear market which is generally speaking a decline of 20% or more. But a bear market can be a decline of 30%, or 40 or even more. So these are the scenarios you are looking at.
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Right now, I'd go from 100% stocks and 0% fixed income, to 80% stocks and 20% fixed income at your age and you no tax consequences in doing so. Use the GNMAs for the fixed income interest. Then I would watch the market and ignore short term corrections except to buy. If we had a bear market, I certainly would go, well if I went, if we had a bear market, that would result in a sell signal. Which could produce no equities. And if we had an intermediate correction, you might have to also consider going to no equities if it could lead to a bear. Unfortunately, with intermediate corrections, they usually infrequently. Let me put it this way. Let me see if I can be very specific about this. In almost every case a bear market is preceded by an intermediate correction. Let me repeat this, because I am sure that I am confusing somebody. As long as I am not confusing myself, I'm all right. In virtually every single case a bear market is proceeded by an intermediate correction. All I just said was virtually every time the market goes down over 20% in a bear market, it is preceded by a decline of over 10% but lessthan 20%.
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CALLER: Over what time period though?
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BRINKER: The over 10 but less than 20 could last several months, but the bear market can last six to 24 months.
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CALLER: Are you saying you might see this thing drop between 10 and 20% and then come back up?
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BRINKER: That is a possibility. You could have, see that's the problem with intermediate corrections. And thank heavens we haven't had any in this bull market. We haven't had to worry about it. But that's the problem with intermediate corrections. Once you get an intermediate sell signal, that tells you that the market, if the model works, the market will do down more than 10%. That at least, I have to be very specific here to be accurate. If you get an intermediate term sell signal that tells you that the market will go down more than 10% but less than 20%.
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CALLER: OK
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BRINKER: There's always the possibility that can come after the market is in the tank. That can then be followed by a bear market sell signal which would by definition be over 20%, so I generally follow the principal that if you get an intermediate term sell signal you go to cash. Or, if you hedge your portfolio to zero equities, in the United States I am talking about. In order to avoid the risk that you could roll over into a big bear.
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CALLER: I think you just covered the strategy that I as an unsophisticated investor would probably follow. That was being a subscriber if theintermediate correction seems to be at hand my strategy would be very simply to take everything in equity and go right to a money market.
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BRINKER: Yea money market or depending on the reason for the decline you might be able to go to a bond fund, also it depends on the reason for the decline. But yes a money market or Treasury funds of some sort would be the answer in that scenario. And I would agree with that.
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CALLER: And that scenario we're talking about that would not affect at all GNMAs?
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BRINKER: Well no. Only if we thought rates were going to go up. You know only if the cause was over heating economy. And right now that doesn'tappear to be a problem. Although it could change in the future. If everything turns out to be copasetic in Asia and the economy comes roaring back out of the gate then we have to worry about that but not for the moment. I am Bob Brinker and this is Moneytalk.* * * *
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DavidK EC: Very interesting call! You know that call was back in March 1998 and there are some similarities between now and that year. The S&P 500 was trading around 1100 in March 1998 and during that year the global currency markets went crazy and stock markets caved. We had Asian Contagion and then the bankruptcy of Long Term Capital Management. The S&P 500 underwent just shy of a 20% decline on a closing basis (but slightly more on an intra-day basis). Bob never adjusted his asset allocation, staying fully invested and claimed victory for his model since he claimed there technically was not a bear market in the S&P 500 on a closing basis. Back then, the Fed cut the Fed funds rate from 5.5% to 4.75% and the S&P 500 rocketed 39% over the next12 months. I provide that information for historical purposes only, not to make a prediction.
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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. 2008 http://david-korn.blogspot.com/
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Tuesday, February 5, 2008
Brinker is Still Bullish, Recession Possible
Bob Brinker has readjusted his market-timing views since the first week in January. He has done away with his "mid-1400's" new money "all-in" buy-signal and recommends only dollar-cost-averaging into the market with new money. And he is busy looking for the "bottom" of this correction -- no doubt so he can issue a new buy signal. (His portfolios are still 100% invested.)- While putting the blame on Societe General for the stock market "debacle," Brinker remains bullish and believes the "bad news bears" are mistaken. However, he has pushed forward the time frame for his new high prediction of "into 1600's" into "late this year or in 2009" (this is down from 1650 which he predicted in October, November, 2007).
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- Conveniently, that is almost a two years forward-move for his goal post.
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- Brinker has also opened the door for a possible "brief and mild recession" during the first two quarters of 2008.
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Will L. comments: 8^)
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"Yes we know from experience that if Brinker's predictions for the market are not borne out by the facts and movement of the market, he 'changes the subject' --like the year he took off from discussing the stock market after the bone headed QQQ fiasco (which has never been closed out btw for up to 1/3 of an entire portfolio).
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Brinker obviously has been caught bloviating and seems to be totally clueless. His parlor games of naming buying points, like it is based on some great mathematical formula via that "timing model", have been embarassing for him.
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He now just has his fingers crossed (notice the shills all want to mitigate the damage in the market but using the Brinker alibi lingo "closing market basis"--the market was down 16.8% ) that the market doesn't drop more than 20%. He doesn't have a clue whether it will or not; nor does anyone else.
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If there is a bear market under his conditions, you will likely never hear him mention it. Anyone dispute that?
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If it is true that Brinker moved his "1600" forecast into 2009 as is reported here, that is quite a reminder to me of his handling of UTEK. He pounded the table for the stock and it tumbled--and when it was pointed out to him, he claimed in 97 "I never said it would go up now-- Utek is a 98 story". When it sucked in 98, Brinker said it was a 99 story. LOL
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Looks like soon we'll be predicting 1600 for "the next off year presidential election" in 2010. The whole timing silliness is a JOKE!"___Will L.
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Monday, February 4, 2008
Brinker's Portfolio Results YTD
"Kirk Lindstrom posted the following on his Facebook Bob Brinker Discussion Forum:
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"January Indicator.
I sure hope Brinker's results for January are not an indication of how the year will go.
Get someone to check my math before reposting this data, but here is my preliminary analysis for 200(8) YTD
Brinker's P1 down 7.3% YTD
Brinker's P2 down 6.7% YTD
Brinker's P3 down 3.2% YTDW
5000 Down 5.3% YTD
Total Bond UP 1.79% YTD
50:50 Total Bond - W5000 down 1.8%So P3 is trailing its benchmark due to not rebalancing.
The QQQs that helped Brinker's P1 and P2 last year are hurting them this year. Thanks for the summary of "Moneytalk.""
___________
Jeffchristie replied:
"I only track Brinkers portfolio 1. I got the same number YTD.
I also calculated his return from 31 December 2006 and it is up a meager 1.25% for the last 13 months."
February 5, 2008 6:45 AM
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"January Indicator.
I sure hope Brinker's results for January are not an indication of how the year will go.
Get someone to check my math before reposting this data, but here is my preliminary analysis for 200(8) YTD
Brinker's P1 down 7.3% YTD
Brinker's P2 down 6.7% YTD
Brinker's P3 down 3.2% YTDW
5000 Down 5.3% YTD
Total Bond UP 1.79% YTD
50:50 Total Bond - W5000 down 1.8%So P3 is trailing its benchmark due to not rebalancing.
The QQQs that helped Brinker's P1 and P2 last year are hurting them this year. Thanks for the summary of "Moneytalk.""
___________
Jeffchristie replied:
"I only track Brinkers portfolio 1. I got the same number YTD.
I also calculated his return from 31 December 2006 and it is up a meager 1.25% for the last 13 months."
February 5, 2008 6:45 AM
Sunday, February 3, 2008
Bob Brinker's Moneytalk Summary February 2, 3, 2008
Brief Summary, Commentary and Moneytalk Excerpts, February 2, 3, 2008:
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I did not hear Bob Brinker talk about the stock market all weekend. Did I miss it? Did anyone hear him mention it?
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Bob Brinker's opening monologue on Saturday began with him talking about the use of fiscal and monetary policies to control the U.S. economy, but he made no predictions about the future of economic growth -- that I could discern.
Brinker said: “What we have here is a two-pronged effort that is being delivered in the United States with reference to the U.S. economy. And a lot this goes right back to the legendary British economist, John Maynard Keynes.”
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http://en.wikipedia.org/wiki/John_Maynard_Keynes
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Brinker claims that he has talked about Keynesian economics many times on Moneytalk and definitely agrees that the federal government should take a pro-active fiscal-policy when the economy slows.
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Brinker talked about the new “pro-active fiscal measures” that congress is working on which will include a rebate check that will be sent “to many” and will include a provision to allow Fannie Mae and Freddy Mac to buy larger mortgages. It will also include a provision to allow businesses to make large purchases this year and qualify for tax breaks. Brinker believes that the stimulus package is still “a work in progress,” but that it will be into the economy by the second quarter of 2008.
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About this fiscal govenment-intervention policy Brinker said: “Now they did not just dream this up. This is classic Keynesian economic policy" and that is why it is so important to have a balanced budget during "normal times." Brinker went on to declare that balanced budget talk is not just "political pap, it’s a fundamental economic principle that is at the core of managing the U.S. economy—as Keynes would tell us." Instead, when these kinds of measures are needed, “Uncle Sam has to borrow a ton of money to help the economy through some rough times.”
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Brinker said, "The blocks we have to play with, the blocks that we are given, with are deficit spending blocks.” Then he spent some time bashing the 2001-2006 congress for “spending us into oblivion." National debt is over $9Trillion—spent irresponsibly. For instance, prescription drugs for Medicare recipients, which was done on borrowed money, was not paid for and was “fiscally irresponsible.”
Then it was time to bash the Fed again, Brinker said: “Now here we are, the government is in a position where well-founded Keynesian principles tell us that it makes sense for them (congress) to participate along with the Fed in the monetary policy, and you see what the rates are doing – just as we said they had to right here on Moneytalk. We said rates have to go down. These guys are in an ivory tower. They have to get real. How many times do we have to say it? Well they are finally down out of their ivory tower now. They have the short-term rates down to 3%. They are finally getting the message and that’s a good thing. It took them long enough though."
Brinker summarized by pointing out that the congressional stimulus package to aid the slowing economy is (Keynesian) fiscal policy and the Fed lowering interest rates is the other prong, which is monetary policy.
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The calls on Saturday were either so esoteric that they were of no interest to anyone but the caller, or they were about the same subjects that have been repeated ad nauseam for some time now.
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Charlie Maxwell was Brinker’s guest speaker in hour three on Saturday.
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Brinker's Sunday opening monologue was devoted entirely to political speculation and personal opinions. He gave a lengthy rundown on the latest poll numbers for the leading candidates.
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Sunday, there were calls about CD’s, personal real estate questions, paying off mortgages, government health care, etc. This was followed by Brinker giving a report on political polls that he said “just keep rolling in” This seemed to prompt him to give more long-winded political-pontifications about which of the candidates will raise taxes and who is for or against the war in Iraq.
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This was followed by a caller who was worried about having bought a Bond Index Fund three weeks ago. Brinker told him that “for crying out” he should just invest in laddered CD’s and not worry about NAV fluctuation in the funds.
Sorry folks, I didn’t hear the last couple of hours of the program today. But I strongly suspect that the words “stock market” were not heard – at least spoken by Bob Brinker.
____Honeybee
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I did not hear Bob Brinker talk about the stock market all weekend. Did I miss it? Did anyone hear him mention it?
.
Bob Brinker's opening monologue on Saturday began with him talking about the use of fiscal and monetary policies to control the U.S. economy, but he made no predictions about the future of economic growth -- that I could discern.
Brinker said: “What we have here is a two-pronged effort that is being delivered in the United States with reference to the U.S. economy. And a lot this goes right back to the legendary British economist, John Maynard Keynes.”
.
http://en.wikipedia.org/wiki/John_Maynard_Keynes
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Brinker claims that he has talked about Keynesian economics many times on Moneytalk and definitely agrees that the federal government should take a pro-active fiscal-policy when the economy slows.
.
Brinker talked about the new “pro-active fiscal measures” that congress is working on which will include a rebate check that will be sent “to many” and will include a provision to allow Fannie Mae and Freddy Mac to buy larger mortgages. It will also include a provision to allow businesses to make large purchases this year and qualify for tax breaks. Brinker believes that the stimulus package is still “a work in progress,” but that it will be into the economy by the second quarter of 2008.
.
About this fiscal govenment-intervention policy Brinker said: “Now they did not just dream this up. This is classic Keynesian economic policy" and that is why it is so important to have a balanced budget during "normal times." Brinker went on to declare that balanced budget talk is not just "political pap, it’s a fundamental economic principle that is at the core of managing the U.S. economy—as Keynes would tell us." Instead, when these kinds of measures are needed, “Uncle Sam has to borrow a ton of money to help the economy through some rough times.”
.
Brinker said, "The blocks we have to play with, the blocks that we are given, with are deficit spending blocks.” Then he spent some time bashing the 2001-2006 congress for “spending us into oblivion." National debt is over $9Trillion—spent irresponsibly. For instance, prescription drugs for Medicare recipients, which was done on borrowed money, was not paid for and was “fiscally irresponsible.”
Then it was time to bash the Fed again, Brinker said: “Now here we are, the government is in a position where well-founded Keynesian principles tell us that it makes sense for them (congress) to participate along with the Fed in the monetary policy, and you see what the rates are doing – just as we said they had to right here on Moneytalk. We said rates have to go down. These guys are in an ivory tower. They have to get real. How many times do we have to say it? Well they are finally down out of their ivory tower now. They have the short-term rates down to 3%. They are finally getting the message and that’s a good thing. It took them long enough though."
Brinker summarized by pointing out that the congressional stimulus package to aid the slowing economy is (Keynesian) fiscal policy and the Fed lowering interest rates is the other prong, which is monetary policy.
.
The calls on Saturday were either so esoteric that they were of no interest to anyone but the caller, or they were about the same subjects that have been repeated ad nauseam for some time now.
.
Charlie Maxwell was Brinker’s guest speaker in hour three on Saturday.
.
Brinker's Sunday opening monologue was devoted entirely to political speculation and personal opinions. He gave a lengthy rundown on the latest poll numbers for the leading candidates.
.
Sunday, there were calls about CD’s, personal real estate questions, paying off mortgages, government health care, etc. This was followed by Brinker giving a report on political polls that he said “just keep rolling in” This seemed to prompt him to give more long-winded political-pontifications about which of the candidates will raise taxes and who is for or against the war in Iraq.
.
This was followed by a caller who was worried about having bought a Bond Index Fund three weeks ago. Brinker told him that “for crying out” he should just invest in laddered CD’s and not worry about NAV fluctuation in the funds.
Sorry folks, I didn’t hear the last couple of hours of the program today. But I strongly suspect that the words “stock market” were not heard – at least spoken by Bob Brinker.
____Honeybee
Saturday, February 2, 2008
Friday, February 1, 2008
Bob Brinker's Buy Signals
Nice week in the stock market
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It's back above Bob Brinker's "1380 or lower buying opportunity" that he issued after the market was above that level. But it's still lower than the "mid-1400's buying opportunity" that he recommended in August, 2007, and removed on January 20th when he said he was looking for a bottom to this correction that he did not "expect." Perhaps he will have something to say about it if he is on Moneytalk this weekend.
- The Dow Jones Industrial Average up 92.83 points to close at 12,743.2 on Friday, for a 4.4% gain on the week.
- The Nasdaq climbed 23.5 points to 2,413.36 on Friday, marking a 3.7% gain for theweek.
- The Standard & Poor's 500 Index rose 16.87 points to close at 1,395.42 a gain of 4.9% for the week.
Thursday, January 31, 2008
Bob Brinker's Market-Timing Scenarios
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I do not believe that Bob Brinker will ever again issue another sell signal--not even a partial one like he did in January, 2000. Why should he? He has all his bases covered so that he can claim he is "right," while he remains bullish and 100% invested--no matter what the stock market does. (Last June, he even dispensed with the so-called Secular Bear Megatrend that he touted for six years. He never mentioned that "little" detail on Moneytalk.) Here's how it works, IMO:
Renowned and entertaining Brinker-commentator, Will L., sez this:
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"I see some people jumping up and down claiming Brinker was "right" since we haven't had two quarters of negative growth and that makes him a great marketimer. Now that is funny.
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Beyond the fact that a recession is usually well underway or almost over before anyone knows it and "NOONE" can predict whether that will be the case or not right now, Brinker claims to be a "marketimer".
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He used to (though I think he even now finds talking about his "timing model" ludicrous) brag about his ability to use that great timing model with it's "hundreds of indicators" to see the future and indeed predict the markets with singular precision.
Bragging about being able to call bottoms of corrections within 3% (hardly more than a parlor trick if you call every sell off around 7-10% and you have a long period of sell offs not exceeding 10%. He could look at those schmindicators and make these confident pronouncements and then go on to rail against those who projected a different view.
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Now Brinker just weeks ago when the market was at it's high of the year was very bullish. When others were getting nervous in October, Brinker began to make fun of them. He called for highs in 1600s in 08 and encouraged a huge "go all in" gamble at 1450 on the S&P. He was BULLISH to the max. And curiously he was nearly back to his old boisterous self, Yammering at the "bad news bears", ragging on anyone who disagreed with his very bullish stance.
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Well how can anyone use the subsequent market/economy direction to claim Brinker was "right"???? A marketimer who could call the future of the stock market with unprecedented accuracy and bragged on himself profusely, seems to have been totally clueless in his bluster.
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Now whether the market technically drops more than 20% from the October highs, we know that Brinker's bravado and confidence was unwarranted. His "go all in at 1450" was silly in hindsight. All of his claims for earnings were simply hogwash as an entire sector --the financials that were making up about 35% of the S&P came a cropper that is nearly unprecedented in underperformance.
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Brinker in a "special bulletin" seemed to not want to mention a "gift horse buying opportunity" having thrown that out there with fanfare at 1450---the market trading down 10% below that "great call". Instead he yammered about being "foggy".
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It is obvious to anyone with a modicum of sense that Brinker's game that he plays of yammering and hoping the market doesn't move much in the wrong direction and then spinning events to pretend he "called it"---came up short as the market made a fool out of him.
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Now Brinker, his family minions and shills will likely jump up and down hollering "Who called this? Who called this? Show me a better marketimer". Of course, such a BS alibi, misses the point. Marketiming is impossible to do with enough certainty to be of financial benefit to an investor. It is a product made to sell, and depends on blarney of the seller to attract the goobers and geezers of the world to bite."___Will L.
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I do not believe that Bob Brinker will ever again issue another sell signal--not even a partial one like he did in January, 2000. Why should he? He has all his bases covered so that he can claim he is "right," while he remains bullish and 100% invested--no matter what the stock market does. (Last June, he even dispensed with the so-called Secular Bear Megatrend that he touted for six years. He never mentioned that "little" detail on Moneytalk.) Here's how it works, IMO:
1) The stock market keeps rising, he claims he is correct....but:- 2) The stock market can drop up to 20% and Brinker will remain fully invested while claiming he doesn't do short-term timing. (Those following his advice ride the market down.)
- 3) Without previously raising any cash from equity allocations, he regularly declares all-in "buying opportunities."
- 4) If the market corrects well below his latest buying opportunity, he will simply remove it. (Just a couple of weeks ago, he removed his mid-1400's buy level which had been in place since last August.)
- 5) If the stock market should go into bear territory (20%+decline) or an unexpected 15% decline while he's predicting new highs into the mid-1600's (like he has been since last July), he will blame it on "exogenous events," the Fed, or even a French trader. 8^)
- 6) When all else fails, and his subscribers have ridden the market down 15-20% (10% below buy signal), Brinker simply says he didn't expect it (Like he did on Moneytalk last Saturday) and that he will look for a bottom. (Mostly, he avoids the subject like he did last Sunday on Moneytalk--not one word about the stock market.)
- 7) What will he do if he missed his buy signal bottom on this correction? I guess we'll all find out in the "fullness of time." To quote my favorite ski-guy, "You really can't make this stuff up."
Renowned and entertaining Brinker-commentator, Will L., sez this:
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"I see some people jumping up and down claiming Brinker was "right" since we haven't had two quarters of negative growth and that makes him a great marketimer. Now that is funny.
.
Beyond the fact that a recession is usually well underway or almost over before anyone knows it and "NOONE" can predict whether that will be the case or not right now, Brinker claims to be a "marketimer".
.
He used to (though I think he even now finds talking about his "timing model" ludicrous) brag about his ability to use that great timing model with it's "hundreds of indicators" to see the future and indeed predict the markets with singular precision.
Bragging about being able to call bottoms of corrections within 3% (hardly more than a parlor trick if you call every sell off around 7-10% and you have a long period of sell offs not exceeding 10%. He could look at those schmindicators and make these confident pronouncements and then go on to rail against those who projected a different view.
.
Now Brinker just weeks ago when the market was at it's high of the year was very bullish. When others were getting nervous in October, Brinker began to make fun of them. He called for highs in 1600s in 08 and encouraged a huge "go all in" gamble at 1450 on the S&P. He was BULLISH to the max. And curiously he was nearly back to his old boisterous self, Yammering at the "bad news bears", ragging on anyone who disagreed with his very bullish stance.
.
Well how can anyone use the subsequent market/economy direction to claim Brinker was "right"???? A marketimer who could call the future of the stock market with unprecedented accuracy and bragged on himself profusely, seems to have been totally clueless in his bluster.
.
Now whether the market technically drops more than 20% from the October highs, we know that Brinker's bravado and confidence was unwarranted. His "go all in at 1450" was silly in hindsight. All of his claims for earnings were simply hogwash as an entire sector --the financials that were making up about 35% of the S&P came a cropper that is nearly unprecedented in underperformance.
.
Brinker in a "special bulletin" seemed to not want to mention a "gift horse buying opportunity" having thrown that out there with fanfare at 1450---the market trading down 10% below that "great call". Instead he yammered about being "foggy".
.
It is obvious to anyone with a modicum of sense that Brinker's game that he plays of yammering and hoping the market doesn't move much in the wrong direction and then spinning events to pretend he "called it"---came up short as the market made a fool out of him.
.
Now Brinker, his family minions and shills will likely jump up and down hollering "Who called this? Who called this? Show me a better marketimer". Of course, such a BS alibi, misses the point. Marketiming is impossible to do with enough certainty to be of financial benefit to an investor. It is a product made to sell, and depends on blarney of the seller to attract the goobers and geezers of the world to bite."___Will L.
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Wednesday, January 30, 2008
Dolly and Lama's Excellent View
Tuesday, January 29, 2008
Sunday Moneytalk Commentary
Honeybee's Commentary and Bob Brinker Excerpts from Sunday, January, 27, 2008
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On Sunday, I did not hear Bob Brinker mention the stock market even one time during the three hour program he calls “Moneytalk.” Moneytalk is no longer the program to listen to if you want any forward looking guidance on the stock market. The only guidance you will usually get is what you read between the lines. But as I said, there weren’t even any “lines” to read between this past Sunday.
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However, Brinker is on record saying that this latest decline was more than he “expected.” At the present time, he recommends dollar-cost averaging into the stock market.
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Brinker must have thought people were more interested in what was happening in France than the wild ride on Wall Street, because he spent most of his opening monologue bashing the French European Central Bank President and the management of Societe General. Here are some of his excerpts:
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Bob Brinker said “….the European Central Bank is in very, very weak hands, in my opinion right now, in the hands of the president, Jean Claude Trichet. And I don’t know why he’s as a poor a leader as he is or as misinformed on economics as he is, but it might have to do with his training. Because he was trained in France as an engineer and maybe that’s the reason. Now I don’t know if he was a locomotive engineer or an electrical engineer or what kind of an engineer it was but it doesn’t matter, he’s certainly not a financial engineer. And I just think it is amazing that the European Central Bank has to deal with this kind of poor leadership. The reality of the situation is that there’s a big difference of opinion right now between how to conduct monetary policy between Europe and the United States.
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Now I think Ben Bernanke is catching up to the curve he fell behind – he has more to go and I think he’ll do more Wednesday. ……..And I think he is right to do it and he deserves credit for catching up, not criticism as the European Central Bank President prefers to give……
After all, Ben is not alone in what he’s doing….... I mean the reality of the situation is that there have been others that have cut rates. How about the Bank of England – they’ve cut rates. How about the Bank of Canada – they’ve cut rates. ….so I don’t know if this is left over ill feeling between certain people in France and the United States…….The reality is the European Central Bank deserves better leadership than it has right now.
.
And while we are on the subject of France, what a disgrace, what an absolute disgrace to the senior management of Societe Generale, the second largest bank in France, with home offices in Paris, France……..I’ve been there, it’s quite impressive. What a disappointment to see the managers of Societe’ Generale allow over $7Billion of bank capital to disappear because they can’t oversee a 31 year-old mid-level employee making $70,000 a year………If you didn’t see the story, you would never believe it, but it’s true. …..the good news is it appears they are going to stay in business."
.
Honeybee sez: It seems like Brinker showed a bit of hypocrisy with his demeaning comments about not knowing “if he (Jean Claude Trichet) was a locomotive engineer or an electrical engineer or what kind of an engineer it was but it doesn’t matter, he’s certainly not a financial engineer.”
.
Bob Brinker’s own son was not trained as a “financial engineer,” in college. His original education and training was in IT/computer sciences. However, IIRC, after taking some kind of correspondence course, he began using the family name (which automatically caused Mark Hulbert to include it in HFD) to write and publish the "Brinker Fixed Income Advisor."
These days it’s very difficult to distinguish between father and son (son is middle-aged – we are not talking about a child here). When his fixed income newsletter ads play on Moneytalk, it is never explained that the “Brinker” in the title who publishes the newsletter, is not the radio talk show host.
Last weekend, I heard a caller tell Brinker that he subscribed to “both of his newsletters.” Brinker made no explanatory comment. MOF: I’ve noticed that the “Jr” seems to have been dropped altogether. And on his newsletter website, he signs his name simply Bob Brinker -- with no distinguishing middle initial or "Jr." Is Brinker "Jr" involved in writing Marketimer? I don't know....
.
One further note on this subject. I have read a sample BobJr's fixed income newsletter and I have read the latest copy of the Retirement Advisor, which is published by Kirk Lindstrom and David Korn. In my opinion, there is no comparison. Kirk and David's "Retirement Advisor" is superior, by far. If you are interested, I recommend that you get free copies of BOTH newsletters and make your own comparison. I am fully convinced that you will choose "Retirement Advisor." (Click for a Free Issue of The Retirement Advisor.)
.
Here is a list of all the calls on Sunday by subject
.
HOUR ONE:
.
1. Money market funds safe? >>Yes, if you stick with big names like Fidelity, Vanguard, etc.
2. Stimulus package
3. Laddered CDs
4. European Central Bank
5. Paid off high rate property loan thanks to Bob
6. Lost $250,000 because of bank bankruptcy >>Answer: Be sure to check for FDIC insurance
7. Sub-prime bail out
8. Stimulus package
9. Roll SHLD holdings into 401K? Sears going bankrupt? >>not likely based on price of stock, but do it if you are worried.
HOUR TWO:
1. Stimulus package
2. Car calorie use versus human calorie use
3. Stimulus package
4. Stimulus package
5. Where to invest $7 million.
6. I-bond versus TIPS >>Use TIPS in tax privileged account. There is a limit on I-bond purchases.
.
On Sunday, I did not hear Bob Brinker mention the stock market even one time during the three hour program he calls “Moneytalk.” Moneytalk is no longer the program to listen to if you want any forward looking guidance on the stock market. The only guidance you will usually get is what you read between the lines. But as I said, there weren’t even any “lines” to read between this past Sunday.
.
However, Brinker is on record saying that this latest decline was more than he “expected.” At the present time, he recommends dollar-cost averaging into the stock market.
.
Brinker must have thought people were more interested in what was happening in France than the wild ride on Wall Street, because he spent most of his opening monologue bashing the French European Central Bank President and the management of Societe General. Here are some of his excerpts:
.
Bob Brinker said “….the European Central Bank is in very, very weak hands, in my opinion right now, in the hands of the president, Jean Claude Trichet. And I don’t know why he’s as a poor a leader as he is or as misinformed on economics as he is, but it might have to do with his training. Because he was trained in France as an engineer and maybe that’s the reason. Now I don’t know if he was a locomotive engineer or an electrical engineer or what kind of an engineer it was but it doesn’t matter, he’s certainly not a financial engineer. And I just think it is amazing that the European Central Bank has to deal with this kind of poor leadership. The reality of the situation is that there’s a big difference of opinion right now between how to conduct monetary policy between Europe and the United States.
.
Now I think Ben Bernanke is catching up to the curve he fell behind – he has more to go and I think he’ll do more Wednesday. ……..And I think he is right to do it and he deserves credit for catching up, not criticism as the European Central Bank President prefers to give……
After all, Ben is not alone in what he’s doing….... I mean the reality of the situation is that there have been others that have cut rates. How about the Bank of England – they’ve cut rates. How about the Bank of Canada – they’ve cut rates. ….so I don’t know if this is left over ill feeling between certain people in France and the United States…….The reality is the European Central Bank deserves better leadership than it has right now.
.
And while we are on the subject of France, what a disgrace, what an absolute disgrace to the senior management of Societe Generale, the second largest bank in France, with home offices in Paris, France……..I’ve been there, it’s quite impressive. What a disappointment to see the managers of Societe’ Generale allow over $7Billion of bank capital to disappear because they can’t oversee a 31 year-old mid-level employee making $70,000 a year………If you didn’t see the story, you would never believe it, but it’s true. …..the good news is it appears they are going to stay in business."
.
Honeybee sez: It seems like Brinker showed a bit of hypocrisy with his demeaning comments about not knowing “if he (Jean Claude Trichet) was a locomotive engineer or an electrical engineer or what kind of an engineer it was but it doesn’t matter, he’s certainly not a financial engineer.”
.
Bob Brinker’s own son was not trained as a “financial engineer,” in college. His original education and training was in IT/computer sciences. However, IIRC, after taking some kind of correspondence course, he began using the family name (which automatically caused Mark Hulbert to include it in HFD) to write and publish the "Brinker Fixed Income Advisor."
These days it’s very difficult to distinguish between father and son (son is middle-aged – we are not talking about a child here). When his fixed income newsletter ads play on Moneytalk, it is never explained that the “Brinker” in the title who publishes the newsletter, is not the radio talk show host.
Last weekend, I heard a caller tell Brinker that he subscribed to “both of his newsletters.” Brinker made no explanatory comment. MOF: I’ve noticed that the “Jr” seems to have been dropped altogether. And on his newsletter website, he signs his name simply Bob Brinker -- with no distinguishing middle initial or "Jr." Is Brinker "Jr" involved in writing Marketimer? I don't know....
.
One further note on this subject. I have read a sample BobJr's fixed income newsletter and I have read the latest copy of the Retirement Advisor, which is published by Kirk Lindstrom and David Korn. In my opinion, there is no comparison. Kirk and David's "Retirement Advisor" is superior, by far. If you are interested, I recommend that you get free copies of BOTH newsletters and make your own comparison. I am fully convinced that you will choose "Retirement Advisor." (Click for a Free Issue of The Retirement Advisor.)
.
Here is a list of all the calls on Sunday by subject
.
HOUR ONE:
.
1. Money market funds safe? >>Yes, if you stick with big names like Fidelity, Vanguard, etc.
2. Stimulus package
3. Laddered CDs
4. European Central Bank
5. Paid off high rate property loan thanks to Bob
6. Lost $250,000 because of bank bankruptcy >>Answer: Be sure to check for FDIC insurance
7. Sub-prime bail out
8. Stimulus package
9. Roll SHLD holdings into 401K? Sears going bankrupt? >>not likely based on price of stock, but do it if you are worried.
HOUR TWO:
1. Stimulus package
2. Car calorie use versus human calorie use
3. Stimulus package
4. Stimulus package
5. Where to invest $7 million.
6. I-bond versus TIPS >>Use TIPS in tax privileged account. There is a limit on I-bond purchases.
Sunday, January 27, 2008
Bob Brinker's Moneytalk Summary January, 26-27, 2008
Brief Summary, Commentary and Moneytalk Excerpts, January 26-27, 2008
.
EXCERPTS FROM OPENING MONOLOGUE Bob Brinker said: “Well the stock market had volatile sessions on Tuesday and Wednesday of this week following the holiday on Monday and the chaos at Societe’ Generale’ on Monday where they dumped tens of $Billions of securities on the market in an effort to unwind a fraudulent trade that was put together by a 31 year old individual working in the bank who took positions of up to $80Billion, that is said, lost over $7Billion of company money and was found out last weekend in a routine audit check.
.
It wasn’t a good day for the people who manage the second largest bank in France….because they had to unwind — sell at the market -- positions in the tens of $Billions that caused the European market to cascade lower on Monday….and spread all over the globe…….
.
Tuesday and Wednesday were “tremendously volatile. We had some stability return, some normalization return to the U.S. marketplace on Thursday and Friday. Ironically, the day to day price changes at the close, which is what we study very closely, were small…..to finish the week up a fraction of 1% -- about 5 points on the S&P 500 gained on the week……..What we had was fear and emotion driving the market.………………
.
There are some key fundamentals that play into what we’ve been seeing in the stock market in the United States. And as usual, if you’re a Moneytalk listener for a good portion of the past two decades, you know it usually starts with Federal Reserve monetary policy, which is currently under the control of, by far, the most powerful man in the world. His name is Chairman Ben Bernanke, out of Princeton University in Princeton, New Jersey. And this new Fed Chairman decided when he took over the rains from the maestro a while back that he would continue to raise short-term interest rates. And so he raised them and he raised them and took them up their high point in the summer of 2006 of 5 ¼%. After he was done raising rates to 5 ¼%, he held the rates at that level for over one year.
.
And if you’re a Moneytalk listener you know that I disagreed vehemently with the Chairman’s decision to raise rates to 5 ¼. I said it on this program many, many times. That I believe that rates could easily been held in check as low as the 4 ¼ to 4 ½% area back then.”
.
Honey sez: It is certainly true that Brinker has been negative about Bernanke from the time he was first appointed as Fed chair. So why doesn’t Brinker explain why (until last week) he has recommended the S&P mid-1400’s level as “attractive for purchase” every month since last August? Why doesn’t he explain why he was 100% BULLISH (short-term, intermediate term and long-term) until last week when he said that he had not "expected" the market decline. Subsequently he removed the mid-1400's buy level, recommends only dollar-cost-averaging, and is now working to identify the “area of a meaningful market bottom.”
.
Brinker continued: “So after taking the Federal Funds rate, which governs short-term interest rates in the United States, up to this 5 ¼ level, the Federal Reserve Chairman found himself behind the curve of economic growth – behind the curve of this economy. This economy had to deal with the housing recession and consumers were dealing with high gasoline prices, high heating oil prices, high energy prices in general. And of course, how many times have we pointed this out – just stating the obvious – that these high energy prices simply tax consumers……..because of the higher prices which acted the same as a tax. This was a factor, of course, in slowing down the economy.
.
We’ve talked about the slowing down in the economy, which we are now seeing. However, with all of this going on, Federal Reserve Chairman Ben Bernanke was moving more slowly than a tortoise in lowering rates. He had taken them down some, but not much. Then last weekend, they were still at 4 ¼%. And then on Monday, perhaps related to what he was seeing in the European market –although at the time, he certainly did not know it was a fraud –doesn’t matter much – at the time on Monday he staged a conference call between the members of the Federal Open Market Committee that govern monetary policy for all Americans. In this conference call, they reached a decision – not far from the decision we suggested should be done on last weekend’s Moneytalk, almost identical -- and the decision was announced Tuesday morning. And that was the decision for a record breaking 75 basis point Federal Fund rate cut which came on Tuesday.
.
As far as I’m concerned the Federal Reserve Chairman made the mistake of holding short-term rates too high for too long because he misinterpreted high oil prices as an inflation threat, when in fact, it is an economic threat – certainly combined with the housing recession. But it is an economic threat to see prices high for oil…it taxes consumers and reduces their consumer discretionary spending power."
.
Honeybee sez: We know that Brinker has been aware of Fed policy all along, and has been ridiculing the “bad news bears” for months.
.
This is from my November 18, 2007 Summary: Bob Brinker said: “Well it’s been an interesting week in the stock market….remember last week the bad news bears were telling us, it’s all over now – we were in big trouble now. Well that’ what they were saying a week ago. Of course, it did not turn out that way. We talked about this last weekend. About those bad news bears and how wrong they have been for several years every year as they have been screaming fire in a crowded market only to find that their views were wrong again. This week the S&P 500 chalking up a gain to 1458.74 – a gain of about 1/3 of a percent. The Dow going up 1% to 13,176 and the Nasdaq gaining close to ½ percent, at the 2637 level…….”
.
Brinker continued yesterday: "The United States Congress and the President seems to understand this fact, that’s why they are fast-tracking a stimulus package to get money into the pockets of the consumer……..but the Fed Chairman did not understand this fact. As smart as he is, he did not understand it, as far as I can see. He preferred, at least until Monday, to fight his imaginary inflation gremlins and did not ease monetary policy earlier. The Federal Reserve fell behind the economic curve. And I believe that mistake by the Federal Reserve was the core mistake that produced the loss of confidence in the Federal Reserve that forced them to capitulate and reduce rates 75 basis points this past Monday.
.
It is the job of the Federal Reserve to anticipate economic developments. They have things to go on – they have the stats on the housing recession, irrefutable statistics. They have the statistics on what it is costing people to buy gasoline, heating oil and pay their energy bills. They have all of this information……. It is not just the job of the Federal Reserve to react to what happened, which of course is what we’ve been looking at.
.
Now the Federal Open Market Committee has a regularly scheduled meeting coming up this Wednesday, January 30th. And it’s very likely that an additional rate reduction will be announced at 2:15 Eastern…….and if another rate reduction is announced, as is likely, that would take the Federal Fund rate down below its current 3 ½%. And that will bring the Federal Reserve closer to where they should be – where they should have been recently in terms of their monetary policy.”
.
President Bush’ Stimulus Package: Bob Brinker thinks it’s a good idea as long as it targets those who will spend it. He also likes the incentives for businesses to invest in new equipment with an increase in allowable deduction. Brinker thinks this should be put on the fast track, but the bill still has to be signed. Brinker said: "So I think it’s a good package. I think it’s an extraordinary example – and it’s a piece, none of these things are meant to be deliverance from economic problems, it’s a piece of the puzzle, but I think it’s a good one. And I think the most remarkable thing to me – in fact this is exactly what we recommended on the first weekend of January right here on Moneytalk that they get a stimulus package out there. We talked a lot about it just three weekends ago right here. Congratulations to them, where they’ve come this far."
.
Here are excerpts from 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. 2008
.
http://david-korn.blogspot.com/
.
“January 5-6, 2008 Newsletter
.
GOVERNMENT STIMULUS PACKAGE NEEDED
.
Brinker Comment: A slowdown in the economy means lower interest rates. It means the Federal Reserve will continue to cut rates, adopting an accommodative monetary policy to stimulate the economy. In addition, thereis even word out of Washington of the possibility of a stimulus package forthe economy. Bob said if there is a package proposed, we would hope that itis aimed at the people who have 100% propensity to consume, and not just to the wealthy so they can put more into their retirement accounts. We need a middle class tax cut which could help consumer spending which is under pressure from the higher cost of gasoline, heating oil and issues related tohousing. In response to a caller, Bob said when he refers to the middle class he is including everyone in the 15% tax bracket and possibly some inthe 25% bracket. Bob said to maximize the impact of a stimulus package, it should come out in the first quarter, and if he were in charge, the proposal would come out tomorrow.”
.
TAX CUTS PERMANENT? Brinker said that the president was right to drop the subject off the table because it is irrelevant to this issue -- this issue is about stimulus for 2008. The tax cuts are on the book until 2010 under current law.
.
HOUSING RECESSION: Brinker said: “In terms of the housing market, which is in recession--the housing market is now in recession – I think they’ve done something good here too.” The proposal allows Fannie Mae and Freddie Mac to purchase mortgages of up to $729,750, which is way over $417,000 – a big increase over current limit. This throws a lifeline into the jumbo loan category, which is needed because some areas around the U.S. are VERY expensive, such as Honolulu, San Francisco, NY, Los Angeles, Silicon Valley.
.
Honeybee sez: It seems disingenuous to me for Brinker to say that the “housing market is NOW in a recession” as though this is something new. As my previous Moneytalk summaries show, for months now, he has said the housing market was in a recession.
.
Here is what Bob Brinker was saying about the economy January 5-6, 2008, as summarized by David Korn. (See information above) Posted with the author’s permission. The following was written by David Korn:
.
"OPENING MONOLOGUE - BOB'S TAKE ON THE ECONOMY
.
Brinker Comment: Bob opened the weekend off saying that he was expecting a poor job's report and we got it as expected. Bob said he has been talking about a slow down in the U.S. economy. A lot of people were still looking at the 4.9% growth rate in the gross domestic product that we got in the third quarter, but that number really means nothing. You won't see that kind of a number for a while. Instead, you should be of the mindset that there is a real slow down in the economy. How much of a slow down are we looking at? Bob said he expects to see hardly any growth in real GDP growth in the fourth quarter of 2007. In addition, Bob said he doesn't see much growth in the first quarter of 2008 and probably the second quarter of 2008.
.
That is three quarters, all of which will show very little real GDP growth. When we average those three months, we will see clearly that there will be a nine-month period from October 2007-June 2008, where we will see very little economic growth. Certainly, it will be below the long term trend rate of 3-3.5%. In fact, it should be well below that level and the average will be a very low single digit number.
.
EC: A little spin by Bob and a change somewhat in his outlook in this opening remark. Bob's comments implied that he was predicting a reduction in the new jobs growth which was announced Friday. I recall no such prediction and if you read his January Marketimer, he only discusses the fact that jobs growth is the key to 2008 growth rate. If Bob had been expecting this big down drop in new jobs on Friday, I think he would have said something.
.
EC#2: More importantly, is Bob's outlook for the economy because that plays an important role in Bob's long term stock market timing model. Bob has predicted real gross domestic product to come in a range of 1.7% to 2.7% in 2008. Given his comments today about the first two quarters having very little growth, he would need a good pick up in GDP in the second two quarters for this projection to come true.
Brinker Comment: Later on in the weekend, Bob made a prediction that when we get the GDP report out for the fourth quarter, he expects it will show that the economy grew at about 1% rate in real terms (adjusted for inflation) which is very low and way below trend. That slowdown will continue in the first quarter and second quarter. However, Bob said he thinks we can see a rebound in the economy in the second half of 2008. And if you study the stock market, you know that the stock market discounts the future by about 6-7 months in advance. So if we were to see a recovery in the second half of 2008, following this slow period, then the stock market would be in the process of having discounted that as we speak.
EC: I listened to that last segment a few times to make sure I had Bob's words absolutely correct. This last comment by Bob is really the foundation for his bullish outlook on the stock market. If Bob was expecting the economy to weaken further in the second half, presumably he would be forecasting a recession and that would throw his timing model into bearish territory. As he said today, he is expecting a rebound in the second half of this year."
.
EXCERPTS FROM OPENING MONOLOGUE Bob Brinker said: “Well the stock market had volatile sessions on Tuesday and Wednesday of this week following the holiday on Monday and the chaos at Societe’ Generale’ on Monday where they dumped tens of $Billions of securities on the market in an effort to unwind a fraudulent trade that was put together by a 31 year old individual working in the bank who took positions of up to $80Billion, that is said, lost over $7Billion of company money and was found out last weekend in a routine audit check.
.
It wasn’t a good day for the people who manage the second largest bank in France….because they had to unwind — sell at the market -- positions in the tens of $Billions that caused the European market to cascade lower on Monday….and spread all over the globe…….
.
Tuesday and Wednesday were “tremendously volatile. We had some stability return, some normalization return to the U.S. marketplace on Thursday and Friday. Ironically, the day to day price changes at the close, which is what we study very closely, were small…..to finish the week up a fraction of 1% -- about 5 points on the S&P 500 gained on the week……..What we had was fear and emotion driving the market.………………
.
There are some key fundamentals that play into what we’ve been seeing in the stock market in the United States. And as usual, if you’re a Moneytalk listener for a good portion of the past two decades, you know it usually starts with Federal Reserve monetary policy, which is currently under the control of, by far, the most powerful man in the world. His name is Chairman Ben Bernanke, out of Princeton University in Princeton, New Jersey. And this new Fed Chairman decided when he took over the rains from the maestro a while back that he would continue to raise short-term interest rates. And so he raised them and he raised them and took them up their high point in the summer of 2006 of 5 ¼%. After he was done raising rates to 5 ¼%, he held the rates at that level for over one year.
.
And if you’re a Moneytalk listener you know that I disagreed vehemently with the Chairman’s decision to raise rates to 5 ¼. I said it on this program many, many times. That I believe that rates could easily been held in check as low as the 4 ¼ to 4 ½% area back then.”
.
Honey sez: It is certainly true that Brinker has been negative about Bernanke from the time he was first appointed as Fed chair. So why doesn’t Brinker explain why (until last week) he has recommended the S&P mid-1400’s level as “attractive for purchase” every month since last August? Why doesn’t he explain why he was 100% BULLISH (short-term, intermediate term and long-term) until last week when he said that he had not "expected" the market decline. Subsequently he removed the mid-1400's buy level, recommends only dollar-cost-averaging, and is now working to identify the “area of a meaningful market bottom.”
.
Brinker continued: “So after taking the Federal Funds rate, which governs short-term interest rates in the United States, up to this 5 ¼ level, the Federal Reserve Chairman found himself behind the curve of economic growth – behind the curve of this economy. This economy had to deal with the housing recession and consumers were dealing with high gasoline prices, high heating oil prices, high energy prices in general. And of course, how many times have we pointed this out – just stating the obvious – that these high energy prices simply tax consumers……..because of the higher prices which acted the same as a tax. This was a factor, of course, in slowing down the economy.
.
We’ve talked about the slowing down in the economy, which we are now seeing. However, with all of this going on, Federal Reserve Chairman Ben Bernanke was moving more slowly than a tortoise in lowering rates. He had taken them down some, but not much. Then last weekend, they were still at 4 ¼%. And then on Monday, perhaps related to what he was seeing in the European market –although at the time, he certainly did not know it was a fraud –doesn’t matter much – at the time on Monday he staged a conference call between the members of the Federal Open Market Committee that govern monetary policy for all Americans. In this conference call, they reached a decision – not far from the decision we suggested should be done on last weekend’s Moneytalk, almost identical -- and the decision was announced Tuesday morning. And that was the decision for a record breaking 75 basis point Federal Fund rate cut which came on Tuesday.
.
As far as I’m concerned the Federal Reserve Chairman made the mistake of holding short-term rates too high for too long because he misinterpreted high oil prices as an inflation threat, when in fact, it is an economic threat – certainly combined with the housing recession. But it is an economic threat to see prices high for oil…it taxes consumers and reduces their consumer discretionary spending power."
.
Honeybee sez: We know that Brinker has been aware of Fed policy all along, and has been ridiculing the “bad news bears” for months.
.
This is from my November 18, 2007 Summary: Bob Brinker said: “Well it’s been an interesting week in the stock market….remember last week the bad news bears were telling us, it’s all over now – we were in big trouble now. Well that’ what they were saying a week ago. Of course, it did not turn out that way. We talked about this last weekend. About those bad news bears and how wrong they have been for several years every year as they have been screaming fire in a crowded market only to find that their views were wrong again. This week the S&P 500 chalking up a gain to 1458.74 – a gain of about 1/3 of a percent. The Dow going up 1% to 13,176 and the Nasdaq gaining close to ½ percent, at the 2637 level…….”
.
Brinker continued yesterday: "The United States Congress and the President seems to understand this fact, that’s why they are fast-tracking a stimulus package to get money into the pockets of the consumer……..but the Fed Chairman did not understand this fact. As smart as he is, he did not understand it, as far as I can see. He preferred, at least until Monday, to fight his imaginary inflation gremlins and did not ease monetary policy earlier. The Federal Reserve fell behind the economic curve. And I believe that mistake by the Federal Reserve was the core mistake that produced the loss of confidence in the Federal Reserve that forced them to capitulate and reduce rates 75 basis points this past Monday.
.
It is the job of the Federal Reserve to anticipate economic developments. They have things to go on – they have the stats on the housing recession, irrefutable statistics. They have the statistics on what it is costing people to buy gasoline, heating oil and pay their energy bills. They have all of this information……. It is not just the job of the Federal Reserve to react to what happened, which of course is what we’ve been looking at.
.
Now the Federal Open Market Committee has a regularly scheduled meeting coming up this Wednesday, January 30th. And it’s very likely that an additional rate reduction will be announced at 2:15 Eastern…….and if another rate reduction is announced, as is likely, that would take the Federal Fund rate down below its current 3 ½%. And that will bring the Federal Reserve closer to where they should be – where they should have been recently in terms of their monetary policy.”
.
President Bush’ Stimulus Package: Bob Brinker thinks it’s a good idea as long as it targets those who will spend it. He also likes the incentives for businesses to invest in new equipment with an increase in allowable deduction. Brinker thinks this should be put on the fast track, but the bill still has to be signed. Brinker said: "So I think it’s a good package. I think it’s an extraordinary example – and it’s a piece, none of these things are meant to be deliverance from economic problems, it’s a piece of the puzzle, but I think it’s a good one. And I think the most remarkable thing to me – in fact this is exactly what we recommended on the first weekend of January right here on Moneytalk that they get a stimulus package out there. We talked a lot about it just three weekends ago right here. Congratulations to them, where they’ve come this far."
.
Here are excerpts from 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. 2008
.
http://david-korn.blogspot.com/
.
“January 5-6, 2008 Newsletter
.
GOVERNMENT STIMULUS PACKAGE NEEDED
.
Brinker Comment: A slowdown in the economy means lower interest rates. It means the Federal Reserve will continue to cut rates, adopting an accommodative monetary policy to stimulate the economy. In addition, thereis even word out of Washington of the possibility of a stimulus package forthe economy. Bob said if there is a package proposed, we would hope that itis aimed at the people who have 100% propensity to consume, and not just to the wealthy so they can put more into their retirement accounts. We need a middle class tax cut which could help consumer spending which is under pressure from the higher cost of gasoline, heating oil and issues related tohousing. In response to a caller, Bob said when he refers to the middle class he is including everyone in the 15% tax bracket and possibly some inthe 25% bracket. Bob said to maximize the impact of a stimulus package, it should come out in the first quarter, and if he were in charge, the proposal would come out tomorrow.”
.
TAX CUTS PERMANENT? Brinker said that the president was right to drop the subject off the table because it is irrelevant to this issue -- this issue is about stimulus for 2008. The tax cuts are on the book until 2010 under current law.
.
HOUSING RECESSION: Brinker said: “In terms of the housing market, which is in recession--the housing market is now in recession – I think they’ve done something good here too.” The proposal allows Fannie Mae and Freddie Mac to purchase mortgages of up to $729,750, which is way over $417,000 – a big increase over current limit. This throws a lifeline into the jumbo loan category, which is needed because some areas around the U.S. are VERY expensive, such as Honolulu, San Francisco, NY, Los Angeles, Silicon Valley.
.
Honeybee sez: It seems disingenuous to me for Brinker to say that the “housing market is NOW in a recession” as though this is something new. As my previous Moneytalk summaries show, for months now, he has said the housing market was in a recession.
.
Here is what Bob Brinker was saying about the economy January 5-6, 2008, as summarized by David Korn. (See information above) Posted with the author’s permission. The following was written by David Korn:
.
"OPENING MONOLOGUE - BOB'S TAKE ON THE ECONOMY
.
Brinker Comment: Bob opened the weekend off saying that he was expecting a poor job's report and we got it as expected. Bob said he has been talking about a slow down in the U.S. economy. A lot of people were still looking at the 4.9% growth rate in the gross domestic product that we got in the third quarter, but that number really means nothing. You won't see that kind of a number for a while. Instead, you should be of the mindset that there is a real slow down in the economy. How much of a slow down are we looking at? Bob said he expects to see hardly any growth in real GDP growth in the fourth quarter of 2007. In addition, Bob said he doesn't see much growth in the first quarter of 2008 and probably the second quarter of 2008.
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That is three quarters, all of which will show very little real GDP growth. When we average those three months, we will see clearly that there will be a nine-month period from October 2007-June 2008, where we will see very little economic growth. Certainly, it will be below the long term trend rate of 3-3.5%. In fact, it should be well below that level and the average will be a very low single digit number.
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EC: A little spin by Bob and a change somewhat in his outlook in this opening remark. Bob's comments implied that he was predicting a reduction in the new jobs growth which was announced Friday. I recall no such prediction and if you read his January Marketimer, he only discusses the fact that jobs growth is the key to 2008 growth rate. If Bob had been expecting this big down drop in new jobs on Friday, I think he would have said something.
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EC#2: More importantly, is Bob's outlook for the economy because that plays an important role in Bob's long term stock market timing model. Bob has predicted real gross domestic product to come in a range of 1.7% to 2.7% in 2008. Given his comments today about the first two quarters having very little growth, he would need a good pick up in GDP in the second two quarters for this projection to come true.
Brinker Comment: Later on in the weekend, Bob made a prediction that when we get the GDP report out for the fourth quarter, he expects it will show that the economy grew at about 1% rate in real terms (adjusted for inflation) which is very low and way below trend. That slowdown will continue in the first quarter and second quarter. However, Bob said he thinks we can see a rebound in the economy in the second half of 2008. And if you study the stock market, you know that the stock market discounts the future by about 6-7 months in advance. So if we were to see a recovery in the second half of 2008, following this slow period, then the stock market would be in the process of having discounted that as we speak.
EC: I listened to that last segment a few times to make sure I had Bob's words absolutely correct. This last comment by Bob is really the foundation for his bullish outlook on the stock market. If Bob was expecting the economy to weaken further in the second half, presumably he would be forecasting a recession and that would throw his timing model into bearish territory. As he said today, he is expecting a rebound in the second half of this year."
Saturday, January 26, 2008
Bob Brinker Reviews Last Week Market on Moneytalk
In the opening monologue today, Brinker gave a brief review of what happened in the stock market last week.
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He placed the blame on a rogue trader in another country (anybody know who he was talking about?), and on Ben Bernanke.
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So far, he has not given even a hint of when he might expect to see the market find a bottom.
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He did not tell listeners how much the market has corrected from its high or from when his MID-1400's buy signal.
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Here are Jeffchristie's comments about the opening monologue: 8^)
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Honey
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"In the opening monologue Brinker said something like this: "....On Monday Bernanke held a conference call. They reached a conclusion not unlike we did last week on Moneytalk......
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That is in line with what I predicted he would say earlier this week here on your BlogYou also nailed it at when you predicted he would focus on the small change for the week in the index. Is he becoming too predictable? Or has he been reading your Blog for show prep."
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January 26, 2008 1:55 PM
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He placed the blame on a rogue trader in another country (anybody know who he was talking about?), and on Ben Bernanke.
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So far, he has not given even a hint of when he might expect to see the market find a bottom.
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He did not tell listeners how much the market has corrected from its high or from when his MID-1400's buy signal.
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Here are Jeffchristie's comments about the opening monologue: 8^)
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Honey
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"In the opening monologue Brinker said something like this: "....On Monday Bernanke held a conference call. They reached a conclusion not unlike we did last week on Moneytalk......
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That is in line with what I predicted he would say earlier this week here on your BlogYou also nailed it at when you predicted he would focus on the small change for the week in the index. Is he becoming too predictable? Or has he been reading your Blog for show prep."
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January 26, 2008 1:55 PM
What About Moneytalk This Weekend?
Our expert Bob Brinker commentator, Will L., speculates on what Brinker may say this weekend:
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"Well here we are at the weekend. If Brinker shows up today do you think he will
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My best guess would have been that he would focus on the relatively minor fluctuation from the beginning of the week to the end. He would use that to act as though many were 'too concerned" about this backing and filling and looking for a bottom.
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Ha! If anyone would have said last week that the fed would lower rates by 75 basis points and the market priced in another 50 basis points for next week for a total of 125 basis point easing---and the market would not move significantly higher, I think they would have been lying.
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Brinker, I don't believe, ever talks about his timing model these days. It's the biggest trough of hogswill (apologies to pig) anywhere.
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Now Brinker used to boast that his timing model was "designed" to call market bottoms within 3% of the final "closing low". If that were true--why would he not he be in cash? After all I believe Brinker claimed that only up to 10% corrections were "normal" market movement.
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Indeed wasn't Brinker hammering the "bad news bears" just a couple weeks ago? Foggy? Perhaps Old Foggy? At what point do people realize the emperor hasn't had a stitch on for years??"
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"Well here we are at the weekend. If Brinker shows up today do you think he will
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- 1) Act as though the market is doing exactly as he predicted and there is no concern?
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- 2) Continue saying the market future is "foggy" (LOL that's sure investable information isn't it?)
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- 3) Blame the fed, or the greedy condo flippers or developers or hedge funds ---etc etc for this "exogenous event" that "noone" could have predicted?
My best guess would have been that he would focus on the relatively minor fluctuation from the beginning of the week to the end. He would use that to act as though many were 'too concerned" about this backing and filling and looking for a bottom.
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Ha! If anyone would have said last week that the fed would lower rates by 75 basis points and the market priced in another 50 basis points for next week for a total of 125 basis point easing---and the market would not move significantly higher, I think they would have been lying.
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Brinker, I don't believe, ever talks about his timing model these days. It's the biggest trough of hogswill (apologies to pig) anywhere.
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- This "timing model" that said the market turned bullish in June 2006 and we are in a secular bull market since then?
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- The timing model that issued a buy signal at 1380--after the market was at 1400 or so...and issued another buy signal weeks ago at mid 1400s? The s&p is at 1330 now. LOL Off about 15% from the extreme top.
Now Brinker used to boast that his timing model was "designed" to call market bottoms within 3% of the final "closing low". If that were true--why would he not he be in cash? After all I believe Brinker claimed that only up to 10% corrections were "normal" market movement.
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Indeed wasn't Brinker hammering the "bad news bears" just a couple weeks ago? Foggy? Perhaps Old Foggy? At what point do people realize the emperor hasn't had a stitch on for years??"
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Octavian Sez
Pen-name, Octavian, a long time Brinker-supporter, defends Brinker's latest prognostications. I replied to him, and if he has follow-up, in all fairness I will also post that. I report--you decide:
(BTW, this is not the same Octavian that occasionally posts comments here--that person is a "fake." The "real" Octavian bought me a drink at Sam's Town in Vegas last year.) 8^)
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Octavian/Dija said:
"Bob was man enough to admit that the market was fooling him, and therefore he was canceling his 1450 buy signal and going back to a DCA approach while he reevaluates. And yet all you people want to do is criticize him. If he had remained silent on the 1450 buy signal, you would have bashed him for that. But he spoke up about it, and you STILL bashed him........Surely you all realize how ridiculous you are."
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Honeybee replied:
Octavian,
When you accuse others of "bashing" Bob Brinker for simply discussing what he is selling--which is predicting the direction of the stock market--you are acting as an enabler to aid him in selling a very dangerous and ongoing snake oil.
Brinker "sells" his ability to time the market in advance--not in the rearview mirror. For the most part it can't be done, as many highly respected men, such as Burton Malkiel and John Bogle have said.
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And Octavian, as you pointed out, Brinker says he was "fooled" (AGAIN) by the market and has cancelled his mid-1400's buy signal--and has moved to dollar-cost-averaging only. (BTW: It was NOT a 1450 buy level, as you so conveniently said. It was MID-1400's--so logically, it was at least as much as 1470!!!)
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Now you say he is "evaluating." Surely YOU see how ridiculous THAT is! As I said, he gave no "further guidance" as to when he thought the market would bottom. Indeed, he said he was still looking for the "bottom" in this market that "fooled" him. So why in the world would he recommend to continue dollar-cost average new money in until he finds his bottom. Of course, we know that is exactly what he also did between January, 2000 and March, 2003 as the S&P dropped precipitously.
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Why don't you have a bit of compassion for all the people who actually took the advice they paid him for when they subscribed to Marketimer and have lost a BUNDLE this month because Brinker was "fooled" again and is now "re-evaluating."
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What about the callers I've heard on Moneytalk in the past couple of months who said they were new subscribers and were busy going all-in to Brinker's "model portfolios?"
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What about those poor saps who actually came in to a bundle of new money and sunk it ALL into the stock market because Brinker has been saying every month since last August that the MID-1400's was a very good buying opportunity?
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Anyone that is 100% invested, including any new money that they may have come in to, is down about 8% on the Dow, 9% on the S&P, and about 12% on the Nasdaq--in ONE MONTH.
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Do you want to know how some subscribers are treated when they call Brinker's number and ask for guidance? They are hung up on...
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(BTW, this is not the same Octavian that occasionally posts comments here--that person is a "fake." The "real" Octavian bought me a drink at Sam's Town in Vegas last year.) 8^)
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Octavian/Dija said:
"Bob was man enough to admit that the market was fooling him, and therefore he was canceling his 1450 buy signal and going back to a DCA approach while he reevaluates. And yet all you people want to do is criticize him. If he had remained silent on the 1450 buy signal, you would have bashed him for that. But he spoke up about it, and you STILL bashed him........Surely you all realize how ridiculous you are."
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Honeybee replied:
Octavian,
When you accuse others of "bashing" Bob Brinker for simply discussing what he is selling--which is predicting the direction of the stock market--you are acting as an enabler to aid him in selling a very dangerous and ongoing snake oil.
Brinker "sells" his ability to time the market in advance--not in the rearview mirror. For the most part it can't be done, as many highly respected men, such as Burton Malkiel and John Bogle have said.
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And Octavian, as you pointed out, Brinker says he was "fooled" (AGAIN) by the market and has cancelled his mid-1400's buy signal--and has moved to dollar-cost-averaging only. (BTW: It was NOT a 1450 buy level, as you so conveniently said. It was MID-1400's--so logically, it was at least as much as 1470!!!)
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Now you say he is "evaluating." Surely YOU see how ridiculous THAT is! As I said, he gave no "further guidance" as to when he thought the market would bottom. Indeed, he said he was still looking for the "bottom" in this market that "fooled" him. So why in the world would he recommend to continue dollar-cost average new money in until he finds his bottom. Of course, we know that is exactly what he also did between January, 2000 and March, 2003 as the S&P dropped precipitously.
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Why don't you have a bit of compassion for all the people who actually took the advice they paid him for when they subscribed to Marketimer and have lost a BUNDLE this month because Brinker was "fooled" again and is now "re-evaluating."
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What about the callers I've heard on Moneytalk in the past couple of months who said they were new subscribers and were busy going all-in to Brinker's "model portfolios?"
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What about those poor saps who actually came in to a bundle of new money and sunk it ALL into the stock market because Brinker has been saying every month since last August that the MID-1400's was a very good buying opportunity?
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Anyone that is 100% invested, including any new money that they may have come in to, is down about 8% on the Dow, 9% on the S&P, and about 12% on the Nasdaq--in ONE MONTH.
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Do you want to know how some subscribers are treated when they call Brinker's number and ask for guidance? They are hung up on...
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Thursday, January 24, 2008
NOW If Market Rallies, Brinker Will "Look Pretty Silly"
So far, Bob Brinker hasn't found the bottom of this "correction" and has NOT issued a new "all-in" buy signal. However, he still recommends dollar-cost-averaging.
On Kirk's Facebook Bob Brinker Forum, James Kenney wrote:
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Jan 23, 2008 at 1:58 PM.
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"When I heard about Brinker's "e-alert" I thought at first he would be proclaiming this major correction had now presented us with a "gift horse" buying opportunity and saying to buy the market on weakness below 1300. But no he actually leaned more to the bearish side by telling subscribers to DCA into the market the mid-1400s on down he had previously told subscribers they should be more aggressively buying.
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Should the market stage a significant rally from here he's gone to look pretty silly with his market timing advice. On the other hand if the rout continues and we end up in a clear cyclical bear market he would have failed to get his subscribers even partially out. What is surprising is not that Bob's market timing leaves a lot to be desired but that this time Bob put himself in a position of looking foolish no matter what happens. The old master of double speak and spin seems to be lossing his touch."
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On Kirk's Facebook Bob Brinker Forum, James Kenney wrote:
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Jan 23, 2008 at 1:58 PM.
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"When I heard about Brinker's "e-alert" I thought at first he would be proclaiming this major correction had now presented us with a "gift horse" buying opportunity and saying to buy the market on weakness below 1300. But no he actually leaned more to the bearish side by telling subscribers to DCA into the market the mid-1400s on down he had previously told subscribers they should be more aggressively buying.
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Should the market stage a significant rally from here he's gone to look pretty silly with his market timing advice. On the other hand if the rout continues and we end up in a clear cyclical bear market he would have failed to get his subscribers even partially out. What is surprising is not that Bob's market timing leaves a lot to be desired but that this time Bob put himself in a position of looking foolish no matter what happens. The old master of double speak and spin seems to be lossing his touch."
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Real Reasons Brinker Should Bash Bernanke
George Johnson posted these thought-provoking comments on Kirk's Facebook Brinker Forum:
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"Per Honey's summary Brinker is again bashing Bernanke. (Thanks Honey for the summary). I think Brinker is way off base. IMO if you want to bash Bernanke, you should bash him for seeming to develop a policy that says each time the economy weakens, the Fed will slash rates some more. He will worry about inflation later. He is playing into the market's desires. The market may keep demanding more rate cuts.
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We need a Fed that is strong, cool, calm, principled, largely ignoring politicians, largely ignoring the markets, focused on price stability for the long run, focused on Fed policies that support a strong economy for the long run, etc. The current Fed policies are undermining the dollar and maybe setting the stage for a strong resurgence in inflation. We may avoid or have a mild recession now but could have a very bad one in the future.
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We have screwed up big time with sub prime loans, CMOs, bad loan underwriting, etc. We need this junk to work its way out of the system which may take awhile. We need a Fed and Government that is studying what happened and willing to be more proactive to carefully prevent similar financial crisises in the future. We especially need transparency for financial and risk mechanisims, all of them; derivatives, hedge funds, private equity transactions, CMOs, etc.
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Something appears to be terribly, terribly wrong when a Hedge Fund Manager can make $1 Billion dollars in one year. What did he do to justify this, develop a replacement for Microsoft Windows?, make a major scientific breakthrough to solve the energy and pollution problems?, develop a cure for a cancer? As far as I know all a Hedge Fund Manager did was take risk with other peoples money. Difficult to be successful but not in the class of difficulty like curing a cancer. In fact the more risk you take the more money you might make especially if you get lucky.
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How about a CEO where the profits actually go down or the business stumbles and the CEO gets $300 Million dollars in pay. This CEO pay is 500 times more than the aveage workers pay in the company and 25 years ago it was only 50 times more. Something appears to be terribly, terribly wrong."
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"Per Honey's summary Brinker is again bashing Bernanke. (Thanks Honey for the summary). I think Brinker is way off base. IMO if you want to bash Bernanke, you should bash him for seeming to develop a policy that says each time the economy weakens, the Fed will slash rates some more. He will worry about inflation later. He is playing into the market's desires. The market may keep demanding more rate cuts.
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We need a Fed that is strong, cool, calm, principled, largely ignoring politicians, largely ignoring the markets, focused on price stability for the long run, focused on Fed policies that support a strong economy for the long run, etc. The current Fed policies are undermining the dollar and maybe setting the stage for a strong resurgence in inflation. We may avoid or have a mild recession now but could have a very bad one in the future.
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We have screwed up big time with sub prime loans, CMOs, bad loan underwriting, etc. We need this junk to work its way out of the system which may take awhile. We need a Fed and Government that is studying what happened and willing to be more proactive to carefully prevent similar financial crisises in the future. We especially need transparency for financial and risk mechanisims, all of them; derivatives, hedge funds, private equity transactions, CMOs, etc.
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Something appears to be terribly, terribly wrong when a Hedge Fund Manager can make $1 Billion dollars in one year. What did he do to justify this, develop a replacement for Microsoft Windows?, make a major scientific breakthrough to solve the energy and pollution problems?, develop a cure for a cancer? As far as I know all a Hedge Fund Manager did was take risk with other peoples money. Difficult to be successful but not in the class of difficulty like curing a cancer. In fact the more risk you take the more money you might make especially if you get lucky.
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How about a CEO where the profits actually go down or the business stumbles and the CEO gets $300 Million dollars in pay. This CEO pay is 500 times more than the aveage workers pay in the company and 25 years ago it was only 50 times more. Something appears to be terribly, terribly wrong."
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Wednesday, January 23, 2008
What's a Brinker Follower to Do?
Pen-name, Great Gambino, wrote the following commentary under the title, "What's a Brinker Follower to Do?"
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"Now I know you are in a real tough position. Its obvious that the market is collapsing and there may be no end in sight. Who knows where it will stop? Even Bob has not a clue.
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Just wait and see where the bottom is he says after telling you to dive in with all market money at 1450 and now the market hovers at 1300. You lost 10% if you did it! Wait and see to put more money in, what the heck is he talking about? Any advice to hold off on putting more money in is ridiculous because he already told you to pour it in at 1450.
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But you brinker subscribers have to go back to 1988, to the mid 90's to the QQQ trade and see how Bob handled himself when the market did what he did not predict. You have to recognize that Bob hasnt seen the market going continuously lower over the past few weeks since he has not directed you to get out.
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Maybe he's at the golf course and cant be bothered. He's got enough $$$ to survive and that's really what counts, isnt it? Even a 4 0r 5% dodge of loss could mean something but he has done nothing.
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A deer in the headlights as he himself would say.
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Then you have to ask yourself, do you feel lucky? Because in reality that's all you got going for you at this point. "
Tuesday, January 22, 2008
Did Brinker "Lock in and Look for Reasons to Justify His Position?"
Under the pen-name "Investing" one of the most knowledgeble Brinker-historians wrote this commentary about Bob Brinker and how his "market-timing" might be compared to gambling.
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"Over the years on this site I've seen many people come to the conclusion that Brinker's stock market guidance was a product made to sell and cut to the bone, it was simply jabbering.
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As you see from David's post of a recent rant about "the bad news bears", Brinker was a "jabbering Raging Bull" bashing those "bad news bears".
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Just weeks ago he was issuing and bragging on a "mid 1450s" buying opportunity. He claimed to scoff at even the possibility of a recession. Indeed he as is the case (and I would say the danger of following Brinker) quite often made his financial commentary in wagering terms. Recall he once bragged about how he went to all of those casinos on the strip after having been on the right side of a super bowl bet?
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Under (the alias) Don Lane (later changed to "mistertopes") he posted here (Silicon Investor Brinker Savant Thread) about sports betting and his prowess and connections with odds makers. At any rate in the quotes from David, Brinker relished making it a simple bet --recession or no recession into a sporting event wager. Like you hear before the game starts around a casino sports book where loud people who have placed a bet and believe they have "special knowledge" Brinker was talking smack-belittling those who took the 'other team'.
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Over the years in watching Brinker I have come to believe that this is indeed his approach to investing. He gets into a position, locks in and looks for reasons to justify his position. He is totally closed to data that does not confirm his position. He feels insecure to the point of having to belittle those viewing the "game" differently. He cannot bring himself to admit he picked wrong--QQQuite costly with his still held to this day 80$$ QQQs.
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Now according to reports, rather than being a 'raging bull' in his commmentary this last weekend, he was a "raging foggy". I see the loud braggart in that casino sport's book who taunted those betting on the other team before the game, seeing his team getting pounded and pummeled, becoming meeker, but not willing to admit he had no reason to so sure of himself in the first place.
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What is clear is that Brinker didn't have a clue about the mortgage mess, the depth of housing problems that remain unknowable, or whether or not the economy would go into a recession. It is equally obvious then that Brinker didn't and doesn't have a clue as to whether the economy will go into a recession or not. If you don't know that you cannot possibly know what the earnings of the companies making up the stock market will be.
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Brinker might as well have been betting 'red or black' on the roulette table for all of his expertise when he was pounding those 'bad news bears'. Indeed that is how it is in the sport's book. A lot of people who "think" they have an edge, convince themselves they know the outcome of the event would save themselves a lot of trouble and just bet on a coin flip, because they have no more insight into the event they are trying to predict, but fool themselves into believing they do.
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So at what point do people realize that Brinker likely doesn't have a clue and has simply locked himself in this position and hopes it turns around? (Most people long the market of course, sure hope he gets bailed out, but they are exactly in the same boat as Brinker-clueless and powerless to predict the market future).
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If Brinker is the world's greatest marketimer and we watch this performance and the market doesn't bail him out....does anyone doubt that Professor Malkeil was right when he told a caller to Brinker's own show to NEVER try to time the market?"
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"Over the years on this site I've seen many people come to the conclusion that Brinker's stock market guidance was a product made to sell and cut to the bone, it was simply jabbering.
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As you see from David's post of a recent rant about "the bad news bears", Brinker was a "jabbering Raging Bull" bashing those "bad news bears".
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Just weeks ago he was issuing and bragging on a "mid 1450s" buying opportunity. He claimed to scoff at even the possibility of a recession. Indeed he as is the case (and I would say the danger of following Brinker) quite often made his financial commentary in wagering terms. Recall he once bragged about how he went to all of those casinos on the strip after having been on the right side of a super bowl bet?
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Under (the alias) Don Lane (later changed to "mistertopes") he posted here (Silicon Investor Brinker Savant Thread) about sports betting and his prowess and connections with odds makers. At any rate in the quotes from David, Brinker relished making it a simple bet --recession or no recession into a sporting event wager. Like you hear before the game starts around a casino sports book where loud people who have placed a bet and believe they have "special knowledge" Brinker was talking smack-belittling those who took the 'other team'.
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Over the years in watching Brinker I have come to believe that this is indeed his approach to investing. He gets into a position, locks in and looks for reasons to justify his position. He is totally closed to data that does not confirm his position. He feels insecure to the point of having to belittle those viewing the "game" differently. He cannot bring himself to admit he picked wrong--QQQuite costly with his still held to this day 80$$ QQQs.
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Now according to reports, rather than being a 'raging bull' in his commmentary this last weekend, he was a "raging foggy". I see the loud braggart in that casino sport's book who taunted those betting on the other team before the game, seeing his team getting pounded and pummeled, becoming meeker, but not willing to admit he had no reason to so sure of himself in the first place.
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What is clear is that Brinker didn't have a clue about the mortgage mess, the depth of housing problems that remain unknowable, or whether or not the economy would go into a recession. It is equally obvious then that Brinker didn't and doesn't have a clue as to whether the economy will go into a recession or not. If you don't know that you cannot possibly know what the earnings of the companies making up the stock market will be.
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Brinker might as well have been betting 'red or black' on the roulette table for all of his expertise when he was pounding those 'bad news bears'. Indeed that is how it is in the sport's book. A lot of people who "think" they have an edge, convince themselves they know the outcome of the event would save themselves a lot of trouble and just bet on a coin flip, because they have no more insight into the event they are trying to predict, but fool themselves into believing they do.
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So at what point do people realize that Brinker likely doesn't have a clue and has simply locked himself in this position and hopes it turns around? (Most people long the market of course, sure hope he gets bailed out, but they are exactly in the same boat as Brinker-clueless and powerless to predict the market future).
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If Brinker is the world's greatest marketimer and we watch this performance and the market doesn't bail him out....does anyone doubt that Professor Malkeil was right when he told a caller to Brinker's own show to NEVER try to time the market?"
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Where's the Bottom?
Brinker is on record saying that anyone who is bothered by a 10% correction may not be suited for investing in the stock market.
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Last weekend, Brinker said that he was not expecting the 15% decline in the market. Well, if he wasn't expecting that, was he expecting the almost 500 point drop this morning?
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As I have said before, he was completely blind-sided by this whole correction. He went into it as bullish as I've ever seen him in over 20 years.
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Brinker has never recommended selling into weakness.
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Here are excerpts from my summary of Moneytalk from January 5th and 6th. It's easy to see that he is not at all alarmed or expecting what the market has done since then:
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STOCK MARKET Bob Brinker did not mention any change in his views about the stock market. He considers recent activity nothing but expected "volatility." He offered no forward looking guidance and he did not say when he expected the correction to end.
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However, in the opening monologue, Brinker repeated his usual mantra, which is that those who are worried about a 10% decline may not be suited for investing in the stock market--and he reminded listeners that there has been several recent market corrections.
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One retired caller had 50% in stocks and was worried about the market. Brinker told him that 50% in stocks during retirement is fine in "generic" terms, but went on to say this: "....maybe your risk tolerance just is not such that you can deal with the kind of fluctuation. You know my definition for a bear market is a decline in excess of 20%........So in order for us to be in bear market territory -- by my definitions -- we would have to see the stock market, the S&P trading below 1250."
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Brinker's latest "attractive for purchase" level was way up there at the "MID-1400's" level. Obviously that it MOOT, MOOT, MOOT!
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As of this past weekend, he said that he stood by what he wrote in the January Marketimer. In it, he recommends dollar-cost-averaging into the market.
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So where does Brinker think the bottom of this will be? Is this a "gift-horse" or "MOABO"? I submit that he doesn't have a clue and that he would agree with me.
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Last weekend, Brinker said that he was not expecting the 15% decline in the market. Well, if he wasn't expecting that, was he expecting the almost 500 point drop this morning?
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As I have said before, he was completely blind-sided by this whole correction. He went into it as bullish as I've ever seen him in over 20 years.
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Brinker has never recommended selling into weakness.
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Here are excerpts from my summary of Moneytalk from January 5th and 6th. It's easy to see that he is not at all alarmed or expecting what the market has done since then:
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STOCK MARKET Bob Brinker did not mention any change in his views about the stock market. He considers recent activity nothing but expected "volatility." He offered no forward looking guidance and he did not say when he expected the correction to end.
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However, in the opening monologue, Brinker repeated his usual mantra, which is that those who are worried about a 10% decline may not be suited for investing in the stock market--and he reminded listeners that there has been several recent market corrections.
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One retired caller had 50% in stocks and was worried about the market. Brinker told him that 50% in stocks during retirement is fine in "generic" terms, but went on to say this: "....maybe your risk tolerance just is not such that you can deal with the kind of fluctuation. You know my definition for a bear market is a decline in excess of 20%........So in order for us to be in bear market territory -- by my definitions -- we would have to see the stock market, the S&P trading below 1250."
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Brinker's latest "attractive for purchase" level was way up there at the "MID-1400's" level. Obviously that it MOOT, MOOT, MOOT!
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As of this past weekend, he said that he stood by what he wrote in the January Marketimer. In it, he recommends dollar-cost-averaging into the market.
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So where does Brinker think the bottom of this will be? Is this a "gift-horse" or "MOABO"? I submit that he doesn't have a clue and that he would agree with me.
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Monday, January 21, 2008
Brinker's Clues Seem to be Missing
Brinker doesn't have a CLUE what the market will do in the future. When it appears that he has made a correct call, it can just as easily be attributed to sheer luck. He has been wrong on his market analysis for years now, but he keeps it under the radar, plays two sides of the street or simply makes it go away.
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He has been 100% bullish since he declared the end of a (non-existent) secular bear back in June, 2007.
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He predicted the S&P would make new highs and reach into the "1600's" since last August (Mid-1600's in October and November).
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Several times, he said that the mid-1400's was "attractive for purchase." Those who did sink a chunk of new money in at the 1450, 1460, 1470 level have lost a BUNDLE.
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January 6th, he said the stock market was "favorable as we enter 2008."
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Now he says it's "foggy out there." That FOG sure did roll in fast, in light of how recently he seemed to have a clear view of how "wrong" the bad news bears supposedly were... LOL!
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Now he is saying that he didn't "expect" the market to drop 15%. DUH!
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He blames it on Bernanke and acts like what Bernanke was doing was a big newsflash to him--NOT! He has been bashing Bernanke since he first became Fed Chair.
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However, you can take comfort in knowing that on Saturday, Brinker said that he did not expect a 50% decline--but do it at your own risk! What he "expects" seems to be totally unreliable as a guide to market-timing (even IF you believe it can be done).
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IMO, Brinker's Moneytalk scam is to say just enough about the stock market to sell newsletters to gullible listeners, but here again is some of what he said Saturday--for what it's worth: “That’s not my opinion right now. I think there’s lots of fog out there right now. I think there’s very low visibility out there right now, and I think that low visibility has been caused by all of the things we’ve been seeing over the past several weeks—especially the last week……but it has not been my view that we would be looking to run for the hills and expecting the stock market to go down 50%. That has not been my view, and that is what it went down earlier in the decade......"
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He has been 100% bullish since he declared the end of a (non-existent) secular bear back in June, 2007.
.
He predicted the S&P would make new highs and reach into the "1600's" since last August (Mid-1600's in October and November).
.
Several times, he said that the mid-1400's was "attractive for purchase." Those who did sink a chunk of new money in at the 1450, 1460, 1470 level have lost a BUNDLE.
.
January 6th, he said the stock market was "favorable as we enter 2008."
.
Now he says it's "foggy out there." That FOG sure did roll in fast, in light of how recently he seemed to have a clear view of how "wrong" the bad news bears supposedly were... LOL!
.
Now he is saying that he didn't "expect" the market to drop 15%. DUH!
.
He blames it on Bernanke and acts like what Bernanke was doing was a big newsflash to him--NOT! He has been bashing Bernanke since he first became Fed Chair.
.
However, you can take comfort in knowing that on Saturday, Brinker said that he did not expect a 50% decline--but do it at your own risk! What he "expects" seems to be totally unreliable as a guide to market-timing (even IF you believe it can be done).
.
IMO, Brinker's Moneytalk scam is to say just enough about the stock market to sell newsletters to gullible listeners, but here again is some of what he said Saturday--for what it's worth: “That’s not my opinion right now. I think there’s lots of fog out there right now. I think there’s very low visibility out there right now, and I think that low visibility has been caused by all of the things we’ve been seeing over the past several weeks—especially the last week……but it has not been my view that we would be looking to run for the hills and expecting the stock market to go down 50%. That has not been my view, and that is what it went down earlier in the decade......"
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Sunday, January 20, 2008
Bob Brinker's Moneytalk Summary January, 19-20, 2008
Brief Summary, Commentary and Moneytalk Excerpts, January 19-20, 2008
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The opening monologue on Saturday was quite lengthy -- much of it was spent bashing Ben Bernanke and the Fed. Brinker places most of the blame for the recent stock market decline squarely on the shoulders of Ben Bernanke.
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Here are some excerpts of Brinker's comments:
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Bob Brinker said: ".......Let’s take a look at what’s going on in terms of fundamentals out there? First of all, we have the Federal Reserve – we’ve talked about this many times over the past several months. We have the new chairman, Ben Bernanke, at the helm of the Federal Reserve. Ben Bernanke made a decision when he came in to continue to hike rates -- to pick up the baton from the Maestro and continue to hike rates. He hiked them all the way up to 5 1/4 %. You remember the criticism that I leveled at the new chairman, feeling that he’d gone too far. Then he held them there for a year, and now he has taken them down 1% -- down to 4 1/4 % as we speak.
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So the new chairman has been slow getting it together—getting his act together as the boss at the Fed. We have discussed this subject ad nauseam on Moneytalk. Why did he make this mistake? He made this mistake of being too slow in getting the Fed where it should be by misinterpreting high oil prices as inflationary.
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When you say that high oil prices are inflationary and therefore, you cannot reduce rates because you are worried about inflation, you are so wrong when you say that that it’s hard to believe that a Fed Chairman could make that mistake, but my opinion is that was the core mistake that the Fed Chairman made in failing to properly manage the short-term interest rate situation – driving rates too high, holding them there too long, cutting them too slowly. And that’s why we are where we are right now, in my opinion.
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Because when you misinterpret high oil prices as inflationary, and therefore, make the mistake of failing to adequately ease monetary policy in favor of economic growth, while fighting these imaginary inflation gremlins that are running around in your head or in your dreams, then you tax consumers, because the high oil prices tax consumers and they don’t get any relief when interest rates are held too high. Their discretionary spending power is reduced because they are leaving their money at the pump. They are leaving their money with the power company. Have you seen some of the power bills? They are leaving their money with the heating oil dealer.
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And instead of focusing on providing some help to the economy by lowering rates, in an adequate fashion – not just 1%, so far – what they do is they cause a problem......the problem that we have right now, which is the Fed has not done a very good job under this new Chairman. Which is unfortunate, but it’s in my opinion dead on straight, accurate talk about the situation with the Fed Chairman – and I like Ben Bernanke and I wish him well. I just don’t think he’s done a very good job, so far.
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Now of course it is absurd for the Federal Reserve to try to take on oil prices. Why would a Fed take on oil prices? First of all, they’re a tax on consumers so that’s going to slow the economy. Second of all, the Fed has no power whatsoever, zero, to impact oil prices. Oil prices are established by oil transactions on a global basis and therefore, the notion that the Federal Reserve controls oil prices is ridiculous – totally ridiculous. They are established by global supply and global demand. Not through Fed policy. So for the Fed to take on oil prices in the name of inflation worries while ignoring economic growth is really a huge mistake. I think that’s what they did……..and I think that’s the reason we are where we are.
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Now obviously they need to lower rates. They’re going to have to take them well under 4% --maybe they’re going to have to look at 3, 3¼% 3½% -- pretty soon, over the next couple of meetings, I certainly would expect we’d be into the 3-3½ range. In fact, I think at this meeting coming up January 30th or by then, I think you’ll see the Federal Funds rate down 50-75 basis points…….And I think that’s what the Federal Reserve has to do with what’s going on in Wall Street......."
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ECONOMY: Saturday, Brinker said he hadn’t changed his views on the outlook for the economy. He said that he expected “very little or no growth” during the first half of 2008. (Honeybee sez: This was the first time I ever heard him say "no" growth.) Sunday, Brinker said that the economy was "very close to the flat line in the first half of 2008," and expects the 4th quarter GDP number to come out very low-- single digit number. He expects some economic recovery in the second half of 2008 or into 2009.
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EXPECTED FED FUND RATE CHANGES Sunday Brinker excerpts: “I think that he (Ben Bernanke) should have never taken rates to 5 ¼ and brought them down more already than he did, while he thinks that 4 ¼, at least for the moment is the appropriate rate. Think about what I just said, if he does not believe that 4 ¼ is the appropriate rate today, let me ask you a question, why is it 4 ¼? (Honeybee sez: Brinker's question makes no sense to me, even after listening repeatedly) That’s a good question with not a very good answer likely……. By the 30th of this month, they’ll be 50-75 basis points lower – I don’t think there’s any question about that. And I think by the March meeting, we could see another….rate reduction. I would not be surprised to see the Federal Funds rate at 3-3 1/2 % by March."
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MYSTERY CALL OF THE WEEKEND Darryl said: “I really want to thank you, one thing I delayed the sale of my real estate –a small farm from 07 into 08 and I’m going to save myself a lot of money. And I thank you for that. (Brinker: “Thank youself, I didn’t do it.”) "You got me looking into it." (Brinker: “You are very kind….to share the credit.”) Darryl continues: “I’m a subscriber to your Fixed Income Advisor and your Marketimer……..”
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Honeybee asks: Does anyone have a clue what the caller and Brinker were talking about?
.
.
.
The opening monologue on Saturday was quite lengthy -- much of it was spent bashing Ben Bernanke and the Fed. Brinker places most of the blame for the recent stock market decline squarely on the shoulders of Ben Bernanke.
.
Here are some excerpts of Brinker's comments:
.
Bob Brinker said: ".......Let’s take a look at what’s going on in terms of fundamentals out there? First of all, we have the Federal Reserve – we’ve talked about this many times over the past several months. We have the new chairman, Ben Bernanke, at the helm of the Federal Reserve. Ben Bernanke made a decision when he came in to continue to hike rates -- to pick up the baton from the Maestro and continue to hike rates. He hiked them all the way up to 5 1/4 %. You remember the criticism that I leveled at the new chairman, feeling that he’d gone too far. Then he held them there for a year, and now he has taken them down 1% -- down to 4 1/4 % as we speak.
.
So the new chairman has been slow getting it together—getting his act together as the boss at the Fed. We have discussed this subject ad nauseam on Moneytalk. Why did he make this mistake? He made this mistake of being too slow in getting the Fed where it should be by misinterpreting high oil prices as inflationary.
.
When you say that high oil prices are inflationary and therefore, you cannot reduce rates because you are worried about inflation, you are so wrong when you say that that it’s hard to believe that a Fed Chairman could make that mistake, but my opinion is that was the core mistake that the Fed Chairman made in failing to properly manage the short-term interest rate situation – driving rates too high, holding them there too long, cutting them too slowly. And that’s why we are where we are right now, in my opinion.
.
Because when you misinterpret high oil prices as inflationary, and therefore, make the mistake of failing to adequately ease monetary policy in favor of economic growth, while fighting these imaginary inflation gremlins that are running around in your head or in your dreams, then you tax consumers, because the high oil prices tax consumers and they don’t get any relief when interest rates are held too high. Their discretionary spending power is reduced because they are leaving their money at the pump. They are leaving their money with the power company. Have you seen some of the power bills? They are leaving their money with the heating oil dealer.
.
And instead of focusing on providing some help to the economy by lowering rates, in an adequate fashion – not just 1%, so far – what they do is they cause a problem......the problem that we have right now, which is the Fed has not done a very good job under this new Chairman. Which is unfortunate, but it’s in my opinion dead on straight, accurate talk about the situation with the Fed Chairman – and I like Ben Bernanke and I wish him well. I just don’t think he’s done a very good job, so far.
.
Now of course it is absurd for the Federal Reserve to try to take on oil prices. Why would a Fed take on oil prices? First of all, they’re a tax on consumers so that’s going to slow the economy. Second of all, the Fed has no power whatsoever, zero, to impact oil prices. Oil prices are established by oil transactions on a global basis and therefore, the notion that the Federal Reserve controls oil prices is ridiculous – totally ridiculous. They are established by global supply and global demand. Not through Fed policy. So for the Fed to take on oil prices in the name of inflation worries while ignoring economic growth is really a huge mistake. I think that’s what they did……..and I think that’s the reason we are where we are.
.
Now obviously they need to lower rates. They’re going to have to take them well under 4% --maybe they’re going to have to look at 3, 3¼% 3½% -- pretty soon, over the next couple of meetings, I certainly would expect we’d be into the 3-3½ range. In fact, I think at this meeting coming up January 30th or by then, I think you’ll see the Federal Funds rate down 50-75 basis points…….And I think that’s what the Federal Reserve has to do with what’s going on in Wall Street......."
.
ECONOMY: Saturday, Brinker said he hadn’t changed his views on the outlook for the economy. He said that he expected “very little or no growth” during the first half of 2008. (Honeybee sez: This was the first time I ever heard him say "no" growth.) Sunday, Brinker said that the economy was "very close to the flat line in the first half of 2008," and expects the 4th quarter GDP number to come out very low-- single digit number. He expects some economic recovery in the second half of 2008 or into 2009.
.
EXPECTED FED FUND RATE CHANGES Sunday Brinker excerpts: “I think that he (Ben Bernanke) should have never taken rates to 5 ¼ and brought them down more already than he did, while he thinks that 4 ¼, at least for the moment is the appropriate rate. Think about what I just said, if he does not believe that 4 ¼ is the appropriate rate today, let me ask you a question, why is it 4 ¼? (Honeybee sez: Brinker's question makes no sense to me, even after listening repeatedly) That’s a good question with not a very good answer likely……. By the 30th of this month, they’ll be 50-75 basis points lower – I don’t think there’s any question about that. And I think by the March meeting, we could see another….rate reduction. I would not be surprised to see the Federal Funds rate at 3-3 1/2 % by March."
.
MYSTERY CALL OF THE WEEKEND Darryl said: “I really want to thank you, one thing I delayed the sale of my real estate –a small farm from 07 into 08 and I’m going to save myself a lot of money. And I thank you for that. (Brinker: “Thank youself, I didn’t do it.”) "You got me looking into it." (Brinker: “You are very kind….to share the credit.”) Darryl continues: “I’m a subscriber to your Fixed Income Advisor and your Marketimer……..”
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Honeybee asks: Does anyone have a clue what the caller and Brinker were talking about?
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Saturday, January 19, 2008
Brinker's Stock Market Comments Today
Moneytalk Commentary and Excerpts, January 19, 2008
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Here are some excerpts of what Bob Brinker said about the stock market today:
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Brinker placed the blame for the current stock market decline squarely on the shoulders of Ben Bernanke and the Fed. (Honeybee sez: More about this later.)
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Brinker said that the stock market is going through a “rocky period in here,” and has declined about 15% on the S&P Index, which is “more than I expected.” He also said it was “trading on fear here,” but in his opinion there was “…no Armageddon scenario.”
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In answer to a caller’s question, Brinker said: “I think the stock market is driven by the obvious that we’ve always talked about, the policy of the Federal Reserve, the economy, corporate earnings and all of those factors…….”
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Caller: “Do you think we’re finally reaching a point where it’s time to maybe get out of the stock market like it was here a few years back and wait to see what’s going to happen?”
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Brinker: “That’s not my opinion right now. I think there’s lots of fog out there right now. I think there’s very low visibility out there right now, and I think that low visibility has been caused by all of the things we’ve been seeing over the past several weeks—especially the last week……but it has not been my view that we would be looking to run for the hills and expecting the stock market to go down 50%. That has not been my view, and that is what it went down earlier in the decade. The S&P closed down 49.1% from closing high to closing low. Right now, we are looking at a 15% correction in the market as we speak. So to compare the two, at this point, is to compare apples and oranges."
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Honeybee sez: Brinker did not offer any opinions about when he thought the current market correction might end. Neither did he mention MOABO or even a "gift-horse." But as you can see, he doesn't expect a 50% decline.... 8^)
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