Bob Brinker and Bear Markets

Bob Brinker has never (in the past 21 years) actually side-stepped a bear market with all of his equity allocation in his Model Portfolios in cash.
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• He completely missed the October 1987 bear market crash.
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• He missed the 1998 correction that was fractional less than 20%
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• He (admittedly) completely missed the latest 15-20% (and it could get worse) correction.
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• He did not see the 2000-bear until it was well under way.

In January 2000, he said the market was "unfavorable" and raised 60% cash reserves. By August 2000, he said the market was bearish and he raised another 5% cash reserves. (He never raised any other cash reserves throughout the 2000-2002 bear market, so he rode it down 35%+ invested.)
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Subsequently, Brinker predicted THREE stock market counter-trend rallies (which he believed would be led by the Nasdaq) that never materialized.

• One in October 2000, when he recommended QQQ at $83.
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• One in January 2001, when he recommended QQQ at $62.
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• One in March 2001 when he said: "In our view, the probabilities favor a three to six month bear market rally phase beginning shortly. Such a rally has the potential to carry the Nasdaq composite Index above the 3000 level by spring or summer as measured from the closing lows." (March 1, 2001, QQQQ closed at $39.15)

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Brinker made no further portfolio changes until March, 2003, when he predicted a 1-2 year "cyclical bull market" WITHIN A SECULAR BEAR MEGATREND and returned "all available cash reserves" to the stock market.
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Obviously, he was incorrect on the secular trend because the market remained in bullish territory for the ensuing four years+. Brinker finally did away with the "secular bear megatrend" and became 100% bullish in June, 2007.
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Brinker does not see a bear market (decline of 20%+) "on the radar." Indeed as recently as December 2007, Brinker said: "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 contue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs."
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While Brinker has recommended investors have 100% of their equity allocation in the stock market since March 2003, he often touts his latest "buying opportunity" to callers on Moneytalk and points it out if they missed them -- so it is very apropos to discuss them here.

Let's take a look at Brinker's "attractive for purchase" levels over the past couple of years:
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• August 2006: S&P "1250"
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• April 2007: S&P "1380 or lower"
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• August 2007 - January 2008: S&P "mid-1400's"
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• January 2008: None -- looking for market bottom -- "dollar cost average" new money.
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• February 2008: S&P "low 1300's"
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The S&P closed Friday at 1293.37....

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