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Monday, September 15, 2008

Bob Brinker Forecasted 2008 Bull Market

Brinker failed to forecast this bear market -- just the opposite, he began 2008 as a roaring bull.

In June 2007, Brinker said the "secular bear megatrend" had ended in June, 2006.

January 2008, 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 Index to achieve new record highs this year and to reach the 1600’s rang in the process. We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range."

Brinker has not make any changes in equity allocation and his model portfolios remain fully invested. Even so, Brinker continued to issue new and lower buy signals as the market dropped.

In June/July, Brinker theorized (alibi?) that his forecasts were dependent on the price of oil because there was an "inverse correlation" between oil and the S&P 500 Index. Now Brinker seems to have dropped that theory too.

Over the past two weekends, he has not mentioned the stock market or how it has reacted as the price of oil has dropped from $147 to $100. However, he has talked about the drop in oil being good for the economy, and even said he expects it to help bring inflation down.

For years, Brinker has proclaimed that higher energy prices are NOT inflationary. So why would lower energy prices contribute to lower inflation? Is that what one could call a paradox?

Here is an example of what Brinker has said for years about oil vs inflation. April 2006 opening monologue, Brinker said:

"We have kept you informed what is really going on in the world of inflation, which is virtually nothing. As you know, oil prices have skyrocketed and are now setting up near all time highs in the low $70s. Oil prices literally going through the roof, and yet to the consternation of many, not listeners to Moneytalk, but to many, including, apparently, the Fed Chairman, they think oil prices are inflationary. That's because they don't understand........."

Saturday, Brinker was bragging that he had never recommended Freddie Mac or Fannie Mae. David Korn has a different take on that. In David's newsletter, he wrote:
"Caller: Do you have any predictions on where shares of Fannie Mae/Freddie Mac are going in the next few years? Bob said he did not and has never recommended either Fannie Mae or Freddie Mac on Moneytalk and has instead recommended Ginnie Maes. Bob noted that the GNMA fund that he recommends is trading near 1% of its 52-week high, during which the common shares of Fannie/Freddie have declined over 90%.

EC: The common shares of Fannie Mae and Freddie Mac were components of the S&P 500 Index Fund and the Total Stock Market Index Fund, which are funds that Bob Brinker recommends and which most of us own in some part in our portfolios. Standard & Poor's announced last Tuesday that it was removing Fannie Mae and Freddie Mac from the S&P 500 index after the close of trading on Wednesday because the companies no longer meet the $5 billion market capitalization standard needed to be an S&P 500 stock. Big help to us shareholders selling at the bottom. The two companies replacing Fannie and Freddie are and Fastenal Co."

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