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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.
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26 comments:

StevieD said...

Perhaps you've forgotten his recommendation to continue to dollar cost average while the market probes this low. And that he also predicted that there may be another test of this low in the coming weeks before the market continues its rise to new highs in 2008.

As for forecasting "noise" he doesn't do a real good job of it. But that's because he doesn't try to predict the "noise" like what has been happening the last couple of weeks.

Honeybee said...

Stevied,

Hasn't Brinker been recommending dollar cost averaging into the market with new money for the last 20 years?

I don't recall a time when he ever said NOT TO dollar cost average. Do you?

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StevieD said...

I'm not sure exactly when he advised folks not invest at all. Perhaps just after the 2000 sell call? DCA is always a good strategy at most any level of the market.

Brinker is mostly a buy and hold, long term adviser and attempts to sidestep downward moves over 20%. Other than the QQQ call, I've made my million with Bob's advice and happy I started investing with his recommendations back in 1986.

This 1-2 month 15-18% "noise" drop doesn't bother me at all.

Jody said...

Prediction: Bob Brinker will lower his stock market forecast in the February MarketTimer thanks to deteriorating earnings forecasts. Standard and Poor's projections are getting lower and lower every week, so the "valuation" factor in Brinker's model will not be as bullish as it was last month.

However, even Brinker's revised forecast is still going to miss the mark. I think we're in a real bear market right now, and that we have further to fall.

jeffchristie said...

StevieD said...

"Perhaps you've forgotten his recommendation to continue to dollar cost average while the market probes this low. And that he also predicted that there may be another test of this low in the coming weeks before the market continues its rise to new highs in 2008.

As for forecasting "noise" he doesn't do a real good job of it. But that's because he doesn't try to predict the "noise" like what has been happening the last couple of weeks."

Congratulations Steve you have the BrinKer scam down pat. In your second paragraph you say "he doesn't try to predict "noise" but in your first paragraph you say "he also predicted that there may be another test of this low in coming weeks" You have done exactly what BrinKer does. You have predicted both alternatives. So now if the market tests the low he is right and if it continues to go up he is still right because he doesn't claim to be able to predict "noise". BRILLIANT

steve said...

jeffchristie,

Brinker said there may be another test of the low before going on to new highs in 2008.

He didn't PREDICT anything!

Readers should know that jeff is one of those consummate Brinker bashers and usually posts nonsense about how much smarter he is than Brinker.

Also jeffie has made a crusade of finding Brinker's work experience from last century!

Honeybee said...
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Honeybee said...
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Dan said...

It amazes me just how gullible people are. Brinker has made blunders before and he will make then again and in fact he is in the middle of one right now, with his finger pointing at everyone EXCEPT himself (bring out the carpet so he can sweep it under!) yet people want to believe.

The guy who made his million off of Brinker could easily lose it if he continues to follow the GReaT OnE, Mr.BrinKer.

Interesting reading:

https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20080202/STBUYSIDE02

Dan said...

https://secure.globeadvisor.com/newscentre/article.html?/education/generated/edumandelman.html

Dan said...

https://secure.globeadvisor.com/
newscentre/article.html?/education/generated/edumandelman.html

Dan said...

News from globeandmail.com
Saturday, February 2, 2008

If this is indeed a bear market, you should sell on the rallies


AVNER MANDELMAN
Avner Mandelman is president and chief investment officer of Giraffe Capital Corp. and the author of The Sleuth Investor. amandelman@giraffecapital.com



The market is down a lot, the Fed cut rates twice, and brave contrarians come out of the woodwork telling you to buy. Should you? Short term you may catch a bounce, perhaps even a good one, but don't stay in long. We are in a bear market and it has probably just begun.

Yes, I know the best time to buy for the long term is when the market plunges. And I also know that the most dangerous words in the market are: "This time it's different." But this time it probably is. Why? Because the enormous damage done by speculation in real estate, financed by subprime bonds, is of a scale far larger than any we have seen since the 1970s, and therefore would likely take far longer to mend.

Now, money destruction by itself is not the issue. Most bear markets start with a meltdown of capital, after a mass of financial lemmings lose their common sense and buy tulip bulbs on credit. When the tulips (or dot-coms, or unneeded homes) crash, the debt must be written off - which causes a slowdown or a recession, such as the one we are in now.

How sure am I we are in a recession? Quite sure, based on what we see in our due diligence. On top, one of Giraffe's clients is a diamond merchant, and he tells us that for the last 25 years, a sales slump in high grade stones always coincided with a recession - and a month or two ago a deep recession began. Just how deep? To answer this we have to estimate the size of the capital destruction. Here's how:

When a company writes off a failed investment, it does so via the income statement. A country's income statement is the gross domestic product, and capital destroyed by speculation reduces the GDP.

How big a reduction is required to cause a recession (a GDP decline of at least two quarters)? Let's see. The United States' annual GDP is about $14-trillion (U.S.)., growing at between 2 per cent and 3 per cent a year, or 0.25 per cent to 0.75 per cent per quarter.

Therefore a damage of, say, $200-billion, or 1.5 per cent of GDP, is enough to tumble two or more quarters into negative. Stock speculation, such as the 1990's dot-com mania, is of such a scale, and so is a standard recession caused by inventory accumulation.

But bond speculation is a beast of an entirely different ferocity. Bond speculation to stock speculation is like nuclear bomb to TNT - its awfulness is of a different order. That's because the bond market is 10 times the size of the stock market. So when you mess up stocks, in a year or two it can be fine. But if you mess up bonds, you're likely to botch the economy for several years.

Japan suffered a decade's recession in the '90s, after its '80s stock market speculation spilled into real estate and bonds. Even the minor U.S. junk bond speculation of the late '80s caused a bad economic hangover in 1990-1991.

What of today's subprime debt recession? I'm afraid this mess is far bigger than previous messes, because this time the speculator has been the U.S. government itself.

Years ago, the U.S. government got suckered into insuring home mortgages via two federal mortgage insurers, Fannie Mae and Freddie Mac. As a result, home ownership came to be seen as near-riskless investment - but it really only transferred the risk to the U.S. government via its agencies F&F - which today own more than $5-trillion of mortgages - or a third of the U.S. GDP - with arguably an almost equal amount of other obligations and mortgage derivatives off balance sheet, for a total of two-thirds of the GDP.

These holdings are likely worth far less than what they are carried at. How much less? Well, private mortgage insurers like MBIA whose portfolios were marked to market saw declines of 15 per cent, 20 per cent, and more. If F&Fs similarly marked their holdings to market, it would imply a writeoff of about $1.5- to $2-trillion, or 10 to 15 per cent of the U.S. GDP! This is a scary number, far bigger than the dot-com hangover, far bigger than the 1990-91 junk bonds problem, and can only be compared - maybe - to Japan's 1990s. Such a big hole almost dictates a deep recession of two to three years à la 1982, or a Japanese-style on-off recession of perhaps half a decade.

But, you may ask, can't the government fill this hole by cutting rates even more? How about cutting more taxes? Or handing out even more money? My view is that this time the government cannot fix things, since, for the first time ever, the hole is of GDP scale. Just see what happened after the Fed cut rates - nothing. Heck, after the second cut, the market actually fell.

What then should you do, if it's indeed a bear market? Two things.

First, you should recognize that in a bear market, bear rules apply. Whereas in a bull market you buy the dips, in a bear market you sell (or short) the rallies. Sure, some sectors will do well - those representing scarcity, necessity, or special situations; but the market as a whole won't be up.

Second, in a bull market you can afford to invest mostly by yourself, because most stocks go up. But in a bear market, you should let a pro handle your money - and better find one who can go both long and short. This way you'd sleep well while the pro sweats for you. Because in the next two to three years, if I am right, there'll be plenty to sweat about.

absolutereturns said...

Gotta Love how Bob B says..."Clearly the economy is slowing...clearly ! " when only last Oct / Nov he was railing about the 'bad news bears' and swearing off Any chance of a recession. This guy should be a politician b/c that's all he likes to talk about AND he loves to take both sides of the issues.

steve said...
This comment has been removed by a blog administrator.
Honeybee said...

Jody said: "I think we're in a real bear market right now, and that we have further to fall."

I sure hope you are wrong. 8^(

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I can't make a guess as to what Brinker will say in his February Marketimer. I have a hunch he's a having some difficulty figuring it out too. LOL!
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Honeybee said...

Jeffchristie said: "Congratulations Steve you have the BrinKer scam down pat. In your second paragraph you say "he doesn't try to predict "noise" but in your first paragraph you say "he also predicted that there may be another test of this low in coming weeks" You have done exactly what BrinKer does. You have predicted both alternatives. So now if the market tests the low he is right and if it continues to go up he is still right because he doesn't claim to be able to predict "noise". BRILLIANT"
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And Honeybee replies: BINGO!
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Honeybee said...

Steve,

Please stay on topic if you want your comments to stay posted.

Honeybee said...

Absolutereturns wrote: "Gotta Love how Bob B says..."Clearly the economy is slowing...clearly ! " when only last Oct / Nov he was railing about the 'bad news bears' and swearing off Any chance of a recession. This guy should be a politician b/c that's all he likes to talk about AND he loves to take both sides of the issues.
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Yep, he never mentioned the stock market, but he gave a nice history about John Maynard Keynes. He sure sounds like he thinks Keynes' was an economic-diety.8^)
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princepro110 said...

I just tuned in...........what was the guy saying that Bob dumped after he made a remark about Larry the "Raging Bull" Kudlow......BB buddy?

Honeybee said...

Hi Princepro

It was difficult to follow the caller because he was rambling, but it seemed to me that he was making a case that would put Brinker in a bad light, so Brinker used that as an excuse to jump on him and cut him off.

I will have to listen again to be certain exactly what the caller said about Kudlow, but I don't recall him calling Kudlow a liar.
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jeffchristie said...

Honey

That caller reminded me of our old friend Fahrenheit451 the mathjunkie. He did call Kudlow a liar and Bob BrinKer said that was a rotten thing to say. Our pal F451 called retiredinprescott a liar and I think that was a rotten thing for him to say as well. Not only did Brinker defend Kudlow but several subsequent callers also did. I prefer L
Kudlow as a guest host over Flannigan since he usually has great guests on from Wall Street.

Honeybee said...

Jeffchristie...thanks for clarifying that Brinker was justified in defending Larry Kudlow.

I had not been paying too much attention to the caller, so missed the point of what he was saying.

And about "retiredinprescott" who lost a large portion of his retirement money on Brinker's QQQQ-trade: It's a real shame, but many of Brinker's most devoted sycophants falsely accuse "retired" of lying.
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burt said...

"It's a real shame, but many of Brinker's most devoted sycophants falsely accuse "retired" of lying."

Of course he lied and admitted as much.

You do know that to this day, Kirk won't allow RIP to post on SI or your moribund message board.

BTW, it's a pity that you have to get up early Sunday morning to delete posts. Don't you have better things to do?

Honeybee said...

Burt...I'm going to leave your comments for now because I want readers to see for themselves the depth that you will sink in your effort to demean, discredit and insult those who don't kiss Brinker's ring.

You lied about Retiredinprescott, you lied about Kirk--he has no control over who posts at SI, I have autonomy on this "moribund message board"--and your childish dig at this being "Sunday," is beneath contempt--but it's certainly nothing new.

Honeybee said...

Note to the person who posted the political/religious viewpoints...they were deleted because they are off topic.

Stay on topic or leave.

Pig said...

Burt (how do you keep tract of these ID's?) said about RIP:

"Of course he lied and admitted as much."

Now that is not true, is it? (Strike 1)

Burt (his phony name for today) continues:

"You do know that to this day, Kirk won't allow RIP to post on SI or your moribund message board."

Now, that is not true, is it? (Strike 2)

Burtie-baby continues to whine:

"BTW, it's a pity that you have to get up early Sunday morning to delete posts. Don't you have better things to do?"

Strike 3. AAR, what is so important about Brinker that YOU have to post LIES so early on a Sunday Morning?

BTW, why does Brinker need LIARS, such as, you to promote him? Do you think you are doing him a favor by acting so silly? Of course, you will never answer any of these questions, the same way that your multiple ID's over at several other sites never answer.

BTW, I gave you 46 negative recs, all within 3 minutes! (((ROAR)))