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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

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18 comments:

StevieD said...

"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%..."

Please double check your figures. From the high close in October 2007 to the low close on January 22 the market slid about 15%, not the 20% you quoted. Also, there has not been a correction and Bob has never said there was one. A correction needs 20% or more from close high to close low, hasn't happened.

Honeybee said...

stevied, rather than quibble with my word "almost" 20%, I posted the exact statistics.
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You said: "Also, there has not been a correction and Bob has never said there was one. A correction needs 20% or more from close high to close low, hasn't happened."
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stevied, you are very mistaken. Brinker calls anything up to 20% decline a "correction."

To be more specific, he calls a 10% correction normal and to be expected at any time. Anything between 10-20%, Brinker calls an "intermediate correction."


He calls declines that are more than 20% a cyclical bear market.

He is on record saying that there is "zero" chance of a 20%+ decline bear market at the present time.

mike said...

"He is on record saying that there is "zero" chance of a 20%+ decline bear market at the present time."

That's an absolute lie Honey and you know it, or should know it.

Please provide your basis for this outlandish statement.

Brinker has said in the past there was zero chance of a recession LAST year and he was right.

Honeybee said...

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Mike...you said: "Brinker has said in the past there was zero chance of a recession LAST year and he was right.


So why do you accuse me of lying and then verify what I said is true?
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I clearly stated that he "changed" his recession views. Please read this and I'll await your apology:
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Honeybee said: 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.

BTW: In the January, 2008 issue of Marketimer, Page 1; Paragraph 3; Bob Brinker said:
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"Marketimer continues to estimate real gross domestic product growth within a range of 1.7% to 2.7% for 2008."
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So Mike, are you aware of Brinker's definition of a recession. Here's a clue: That ain't it. 8^)

mike said...

Honey, a recession and a bear market are two different things but I wouldn't expect you to know that.

Here is your lie once again...

"He is on record saying that there is "zero" chance of a 20%+ decline bear market at the present time."

Brinker NEVER said there was zero chance of a 20%+ decline in the market.

Just a another one of your blatant lies.

princepro110 said...

As a long time fan of Brinker over the years having used his models as a guide, I use him less and less. I feel that as he blew the QQQ call..........he is vulnerable to a global/financial economy he as many others don't understand or can forecast.

Many think the Fed is seriously worried about a financial meltdown.........hence the manic rate drops. The fed is but a player in a US and global potential meltdown. Brinker is now one of many that have no clue as to the direction of this market in my opinion as we continue into uncharted waters.

Honeybee said...

Mike...you have accused me of lying twice now. That is two too many times. If you cannot discuss issues without insulting me, then the conversation is over.
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You were not talking about bear markets, you were talking about recessions. Now you act like I am the confused one. You may want to calm down.

I'm not sure where you got that quote about the bear market, it's not in my most recent post, but the fact is Bob Brinker has said more than once that there was no chance of a 20%+ market decline.

Honeybee said...

Princepro...I can't disagree with anything you said. 8^)

mike said...

"...but the fact is Bob Brinker has said more than once that there was no chance of a 20%+ market decline..."

Show me ONCE where Brinker EVER said there was NO chance of a 20% market decline!

He's never said anything like that in his entire career! That would require a crystal ball.

Either show me that quote or just admit that you are flat out wrong!

Stop wasting my time.

mike said...

Honeybee said.

"He is on record saying that there is "zero" chance of a 20%+ decline bear market at the present time."

February 14, 2008 7:01 PM

FALSE!

Honeybee said...

Mike...here are your examples:
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November 5, 2007, Marketimer, Page 1; Paragraph 1; Bob Brinker said:
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"We continue to believe that there is no risk of a cyclical bear market (a decline of 20% or more as measured by the S&P 500 Index) in the months ahead."
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December 5, 2007, Marketimer, Page 2; Paragraph 2; Bob Brinker said:
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"We continue to believe that a bear market (S&P 500 Index decline in excess of 20%) is not on the radar screen at this time. We expect the bull market to continue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs."
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January 4, 2008, Marketimer, Page 1; Paragraph 1; Bob Brinker said:
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"....the risk of a cyclical bear market decline in excess of 20% is not likely to materialize anytime soon."
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jumpnjoey said...

"....the risk of a cyclical bear market decline in excess of 20% is not likely to materialize anytime soon."

LMAO.

jumpnjoey said...
This comment has been removed by the author.
jumpnjoey said...

Nasdaq was down 21.3% from the October high on Feb 7.

Good thing he does comment on tech anymore.

Pig said...
This comment has been removed by the author.
Kirk said...

With great authority, "Mike" said:

"Brinker NEVER said there was zero chance of a 20%+ decline in the market. Just a another one of your blatant lies."

ONLY Bob Brinker would know what Bob Brinker has "never said" since I doubt anyone could have attended all his charity events, been wih him 24x7 be it gambling in Vegas, playing golf or listened to all of his radio shows, no matter how devoted.

Thus, I conclude you proved Bob Brinker not only reads this forum, but posts here with different names such as "Mike"..... unless of course you don't have a clue what you are talking about. That would not be a first for the people accusing Honey of "lying." They have no credibility.

Dan said...

Why doesn't BrinKer have the guts to go on the radio and talk about his blunder and take calls from the radio show audience who are calling in wanting to ask him about the economy. He is clearly steering away from these topics particularly when he turns the show over to boring Billy.

Honeybee said...

Dan,

That's an excellent question. Perhaps Mr. Brinker will read it, or one of his team will tell him about it, and he will act accordingly. 8^)
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It most assuredly would increase his stature as an honest and trustworthy investment guru. Unfortunately, I doubt that he will see it that way.