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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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