Market and Bob Brinker Update

The market is down. The S&P500 closed yesterday at 1390.19, down 185.9 points or 11.8% since it peaked at 1576.09 in early October 2007.


Click chart to see full sized version courtesy of stockcharts.com

The gains from the past year are gone.

People are scared. Just this weekend Bob Brinker said anyone who can't stand a 10% decline should not be in the market. I think he should have widened this to say "anyone who can't stand a 50% decline in the market and know how it will effect your portfolio over the long term should not be in the market until they do." The truth is markets go down and selling causes more selling until a final bottom is made when the last person can't take the pain any more sells. NOBODY can accurately say when or at what market level this will be. Those who stick to their asset allocation, add on the declines and take some profits after some nice gains or new market highs are usually able to do much better over the long term than those who think they can get in at the bottom and out at the top.

If you are worried about holding positions, remember Brinker gave a bulletin to buy any dips under 1380 back in March 2007 AFTER the market was under 1380 and closed at 1390. Later on in the year, he raised this "lump sum buy level" to "mid 1400's." Since then, the maket has offered many opportunities to buy in the mid 1400's and Brinker has reaffirmed that level as good for lump sum rather than dollar cost average many, many times.

On the radio this weekend Brinker said all the funds in his "Marketimer" newsletter are a BUY at last week's higher prices. Remember this includes the Total Stock Market Index and the NASDAQ100 ETF called QQQQ.

More Reading:

• December 24, 2007: "Bob Brinker's Mid 1400's Buying Opportunity"
  
• December 31, 2007: "Bob Brinker Shadow Stock Market Timing Model Update"
  
• January 04, 2008 "Brinker's 60-day Moving Average Put/Call Ratio Indicator Remains Bullish"

Don't be one to sell into the panic. If you are losing sleep over this decline, then consider lowering your asset allocation to equities the next time the market rallies. If you are like me and optimistic for the future, then consider buying some beaten down stocks in my newsletter or some more VTSMX, VTI or SPY if you don't like the added risk of individual stocks.

Bob Brinker Predictions for S&P500 1600s

In past years when the stock market has sold off 10% or more and Brinker was fully invested, he was a guest on KGO radio in SF to tell their listeners to "not panic" by listening to and acting on the cries of the "bad news bears." I wonder if he will repeat this given the recent market action that has many scared?

(More S&P500 Charts)

In our Facebook Bob Brinker Discussion Forum today, Jim F. replied to Honey's post and said:

Honey, In both the October and November newsletters, Brinker stated the S&P500 should rise " at least into the mid 1600's range in 2008." After todays drop we need about a 16-17% rise to achieve that level.

In his January Marketimer, Bob Brinker reported:

"The 60-day put/call ratio remains in bullish territory as the new year begins."

Brinker remains bullish, does not expect a bear market (as defined as a 20% or more decline in the S&P500) and he looks for new highs to be made in the year ahead.

If you want to read what Brinker said in his full update of this Marketimer stock market timing indicators, then you have to subscribe to Marketimer.

You can also read Bob Norton's free "estimate" of what Bob Brinker's timing model would do in "Bob Brinker Shadow Stock Market Timing Model Update." Brinker doesn't say if his individual indicators are bullish or bearish, but it seems Bob Norton made a direct hit with his estimate Brinker would remain bullish and fully invested.