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Thursday, January 17, 2008

Bob Brinker Blindsided by This Correction

Since June, 2007, Bob Brinker has been 100% bullish--short- term, intermediate-term and long-term. All of his Model Portfolios are 100% invested and he has been predicting new highs throughout most of 2007 and that the S&P would be trading in the "mid-1600's by next year.........."
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September, 2007, Brinker indicated that he thought the correction was over and had been "health-restoring."
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September, 2007, Marketimer, Brinker said: "....highly favorable territory as the health restoring summer correction has significantly enhanced our market outlook into 2008." He added: "......anticipate significant stock market gains going forward."
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This is not the first time that Brinker has missed major corrections or bear markets:
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  • In October 1987, Brinker was 100% bullish the day the market dropped 30%+.


  • In 1998, he remained 100% bullish as the market dropped over 21% before turning around. (Please see the chart above.) Unbelievably, he claimed that the 1998 decline was fractionally less than a full 20% and therefore, didn't count as a "bear"


  • OTOH, when the cyclical bear market began in March 2000, Brinker did not go to 100% cash, as he always claimed he would. Rather, he rode that bear down with 35% equity-allocation (plus what went into the QQQQ-trades).

Brinker's new-money buy level has been "mid-1400's" since August, 2007. (Logically, that could be as much as 1470.) As I type, the S&P is at about 1350.
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So what should we conclude? I report, you decide. But I wonder why anyone would trust Brinker's Moneytalk schtick--that he can magically predict what the stock market is going to do short-term, intermediate-term or long-term.
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If you can't decide, take a look at what Brinker wrote on January 4, 2008: "In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008.
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17 comments:

Tom T said...

Thanks for the review of the facts, Honeybee. I started a subscription to Brinker's newsletter in '03, and was fortunate to have bought in the market when he gave the signal. I didn't know his past blunders then, & now recognize he isn't the sage he claims to be. Think I'll save $185. this year! Keep up the good work.

Wonder said...

Brinker was screaming bullish two weeks ago. A couple people called and ask about selling. Brinker smacked them down. "If you can't take a 10% drop then you should not be in the stock market". I wish someone would say, "Your newsletter should not be called markettimer if you can't side step a 10% move."

The gains for 2007 are gone. 2006 is not far behind.

dundeenatal@yahoo.com said...

It's a guessing game no matter who it is. I think this is bear, bear, bear time. Why? Tell me one thing on the horizon that looks good?

Wonder said...

If Brinker is on this weekend I wonder how is going to blame. Let me guess: Hillary. Because Brinker is never wrong.

Tom said...

Honeybee,
You raise an important issue I haven't seen discussed elsewhere, the infamous "20%!" And here's the key aspect of it that I don't agree with: if the S&P were to rally from 800 to 1600, say, it would have gained 800 points from bottom to top. What I think is relevant, then, would be a drop of 20% in all of the gains from bottom to top, NOT a drop of 20% in the absolute value of the index itself. A drop of 20% in the index itself would be a drop of 320 points in this case, erasing 40% of the gains from a buy at 800. I believes Brinker bases his "no 20% bear market" call on the absolute value of the index itself because he called the drop from the high to 1400 a 10% correction whereas it actually erased over 20% of the gains (not counting dividends) from someone who bought at the low. To be fair, the financial media also seem to use the same method of calculation as Brinker, but I've never seen it justified or even stated expliclty.

hairie13 said...

Tom..

Excellent point.

So at the current S&P decline of (-14.81), Brinker would already have given up about 32% of his gains.

A decline of -25% in the S & P would be about equal to giving up about 52 % of his gains!

Wonder said...

Brinker seems to calculate all his gains from March 2003. Completely ignoring he reissued "all in" buy calls at higher levels.

Honeybee said...

Hi Tom,

I'm glad to hear that you benefitted from Brinker's buy-signal in 2003. I'm always glad when people show that some of Brinker's calls are very good.

However, as you pointed out, anyone who has subscribed to Marketimer since 2003 has no way of being made aware of his blunders.

The last time he mentioned "those holding QQQQ-shares" was in the March, 2003 issue of Marketimer, which was just days before he made the March 11, 2003 buy-signal.

Brinker has also covered up his recommendation to buy TEFQX by simply placing it on hold and never mentioning it again.

And a subscriber would have to search with an high-powered microscope to find any mention that he had only a maximum of 65% of cash reserves available for that buy signal. That was because he rode that March, 2000-October, 2002 cyclical bear down with at least 35% invested in equities.

Honeybee said...

Hi Wonder,

You said: "I wish someone would say, "Your newsletter should not be called markettimer if you can't side step a 10% move.""

I agree...it really seems utterly ridiculous to trust someone who clearly says that he can't/won't get out of the market unless he "sees" a 20%+ drop coming.

The remainder of his schtick is just so much hocus-pocus, and he never takes responsibility for that if doesn't work out.

For instance, how long do you think it will be before he mentions that he's had a "MID-1400's" all-aboard buy-signal since last August? But I've heard him brag about other buy signals when the market rose above them, rather than dropping 100+ points below them. 8^)

As I've said many times, his parameters are so wide that it would take an "exogenous event" to absolutely prove he is wrong and he's got that covered too.

But the least he could do is offer some reassurance or guidance, instead of a slap up the side of the head--like you pointed out.

Honeybee said...

Hi dundeenatal,

I agree. Unfortunately, things do look rather grim right now, but let's hope the Fed will make some more cuts and that will be helpful.

Honeybee said...

Tom and Hairie,

Thanks for the VERY interesting comments about the 20% drop.

One word comes to mind: OUCH!! 8^(

Thoughts of a genius mind said...

Bob Brinker will always be ahead, he will just change the dates of his calls to show how much money he has made in the stock market.

hairie13.1 said...

Current Maket Decline, as of: 1/18/2007:
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Dow: -14.58
SP : -15.33
VTSMX:-15.90.

Keep your eye on the VTSMX (Total Market Index)

It will be the first to go below -20%.

Then get ready for the "Spin of all Spins", if we enter a Bear Market!

Wonder said...

"Dow: -14.58
SP : -15.33
VTSMX:-15.90."

Brinker tells listeners not to invest in the long term bonds.

The 30 year is up 15% the same time the SPX is down 15%.

Ouch. 30% a swing.

Whatnow said...

Listening so far today (Saturday), Bob is totally skirting the issue regarding his recent bulletin and newsletter recommendation to buy (and not sell) at S&P 1450 or below. I was hoping he would guide his listeners as to where the market is heading (is he saving this info for subscriber's only...maybe he is planning another bulletin with this info?). HIs Moneytalk radio show seems to be more focused on the Nevada political race today; I am more concerned what to do with my money in this possible bear market (does he realize that the Russell 2000 is in a bear market as it is already down more than 20% this year)!

BILL said...

BRINKER IS SOOOOO COCK SURE WHEN HE TALKS AND SOOO CONDESCENDING WHEN HE IS ASKED QUESTIONS. PERFECT EXAMPLE INVESTORS EXPRESSED RECENT CONCERN ON MARKET BRINKER TELLS THEM THEY ARE FOOLS THAT OF COURSE HE IS RIGHT AND MARKET WILL KEEP GOING UP BUT ALAS BRINKER IS WRONG S/P WAS DOWN ALMOST 19 % IN 4 VERY SHORT WEEKS AND BRINKER TOTALLY MISSED GETTING HIS INVESTORS OUT. ANOTHER BLOWN CALL BY BRINKER. ULTRATECH STEPPER TEFQX QQQ 1989 2000 AND NOW 2007 WHEN WILL HIS PEOPLE REALIZE THIS GUYS HAS HAD
7 MAJOR BAD CALLS AND 2 GOOD ONES HIS RECORD IS TERRIBLE
PLUS HE ACTS LIKE A GOD AND THEN HIDES WHEN HIS ADVICE GOES WRONG WHAT A COWARD AND A CROOK !

shadowclone said...

Hi All:

Your points are well taken about Bob. He made some good calls but also some bad ones. His model works sometimes but not all the time.

As an on-and-off follower of Bob's signals, I noticed that his model is more accurate when the market conditions are more mainstream.

As some other excellent Bob critics/analyzers have discussed extensively before, Bob seems to use fundamental economic indicators such as inflation, money supply, interest rates, etc., to base his market-timing model on.

Unfortunately, the market is bound to be hit by unpredictable major economic events, such as the recent sub-prime fallout and real estate bust. When these events come into play, Bob's model seems to have lost its magic.

So, the conclusion may be that market timing is something that can't be done consistently, as Honeybee & some learned professors opined. But it doesn't stop people from trying. Not me, for sure. I usually just take a very simple approach - be a contrarian and "buy low & sell high."

For now, I'll wait till the market retest the bottom at least one more time and "buy, buy, buy."

Just my humble opinion.