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Friday, August 29, 2008

Bob Brinker's "Inverse Correlation" and Missed Bear

Bob Brinker has acknowledged the inability to predict future oil prices. He actually said that only a "fool" would try to do so. At the same time, on Moneytalk, beginning the first week in July after the bear market hit, Brinker began to claim there was a "direct correlation" between the the S&P 500 Index and the price of Oil (later, he called it an "inverse correlation").
In the August issue of Marketimer, Brinker wrote: "In summary, we continue to regard oil prices as the key variable for stock prices..........We rate the market attractive for purchase on any weakness below the S&P 500 Index 1240 level. Above that level we recommend a dollar-cost-average approach for new stock market money."

So has this actually happened? Has the price of Oil and the S&P had an inverse correlation since Brinker said that Oil was the "wildcard" on which all of his market-timing forecasts hinged?
  • For the month of July, the S&P declined 1%
  • For the month of July, the price of Oil declined about 12%.
  • For the month of August, the S&P gained 1.22% (8/29/08: 1282.83)
  • For the month of August, the price of Oil declined 6.94% (8/29/08: 115.60)

January 4, 2008, Marketimer, Bob Brinker said: "In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008. We expect the S&P 500 Index to achieve new highs this year and to reach the 1600's range in the process."

July 26, 2008, Moneytalk, Bob Brinker said: Would the market get to new all-time-highs within your time-frame of 1 to 3 years? Yeah. For me, my opinion on that would be -- without question."
Here are some excerpts from comments that were sent to the last Blog article:
Pen-name, "Pig" said:

2. The Timing Model is qqqquite likely broken. Who is going to trust
the next call?

3. Brinker's poor record for the last 5 years. Not even in the top 5
anymore by Hulbert.


Kirk Lindstrom wrote about how Brinker may again avoid talking about the "missed bear" this weekend:
"Here is what my guess is for how Brinker will avoid admitting he missed the bear market this weekend.

He will go on and on about the wise energy policy of VP candidate Sarah Palin! See Sarah Palin - Pictures & Biography for "Palin favors drilling for oil in the Arctic National Wildlife Refuge (ANWR) which McCain currently opposes"

Brinker and his entourage of shills seem willing to talk about ANYTHING but how his timing model

#1 [Brinker] Said there was no bear market in sight several months into this bear market

#2 near the very top at record all time highs, his model predicted new highs for the market in 2008.

#3 Called several buying opportunities at HIGHER than current levels then made yet another at a low level After the market rallied

That is the elephant in the room that he will attempt to cover with oil (talk) this weekend in the hope it slips by."

Brinker historian, "Investing" wrote:
"Alas I can understand the angst if I had to alibi for Bob Brinker's Marketiming. He just missed a big bear. He admitted that he cannot predict the equity market. He claims it is totally dependent on oil prices and nobody can predict them. This coming week we will learn that his predictions are also dependent on the weather -- which affects greatly oil prices and thus is another stake thru the heart of the marketimer.
When you think about it--there is nothing quite so silly as claiming you can predict the equity market with accuracy that would cause one to rotate into and out of stocks profitably.

Marketiming advice requires the art of selling a service that does not work:

  • Is the best way to vastly under perform the stock market return

  • Requires a crystal ball

  • Risk adjusted return-is a marketing term and refers to the performance after you hide the worst performing investments

  • Does not work if you cannot predict the price of oil. "Nobody can predict the price of oil"-Bob Brinker

  • Works best when major recommendations can be dropped and hidden from performance

  • Requires shills to obfuscate the exposure of the game on the internet.

  • Has not one single academic financial expert recommending it as a rational approach to investing.

  • Has not one author of a mainstream financial book that recommends marketiming.

  • Calls of marketimers who have radio show tend to morph over time. "I am not bearish" --in January 2000 becomes "When we became bearish in January 2000".

  • It is very easy to make a million dollars in two to four months with marketiming. The key--start with two million dollars.___Investing

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