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Friday, September 12, 2008

Bob Brinker's Rapidly Changing Market-Timing Advisories

Bob Brinker's equity allocations have remained 100% invested throughout the bear market declines of 2008. However, Bob Brinker has never acknowledged on Moneytalk or in Marketimer that the S&P dropped into actual bear territory.

Perhaps Brinker is embarrassed. Last fall he was a roaring bull looking for new market highs in 2008, and predicting 1600's in the S&P 500 Index.

January 4, 2008 Marketimer, Page One; Paragraph One; Bob Brinker said: "As Marketimer begins its 23rd year, the Marketimer stock market timing model stands in positive territory. This suggests that the risk of a cyclical bear market decline in excess of 20% is not likely to materialize anytime soon."

September 3, 2008 Marketimer, Page One; Paragraph One, Bob Brinker said: "In our view, the stock market is undergoing a protracted bottoming process in a market decline that began in the fourth quarter of last year. Although the overall decline has exceeded our expectations, we view the bottoming process that has been underway since January as a necessary precursor to an improved stock market outlook......The stock market has registered three important benchmark lows this year......."

On Moneytalk last May, Brinker stated that the market had bottomed on the "March lows" and that it was in an "upward trend." He was bashing the "bad-news bears" for "scaring people out of the market," and calling them "false prophets" and "cassandras."

After the market dropped into "official" bear territory in June and July, rather than acknowledge that he had been wrong about market direction, Brinker came up with the oil/S&P "inverse correlation" theory. Even that doesn't seem to be working out for him:
  • 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)
Last week:
  • S&P 500 close September 5th: 1242.31 -- down 3.2%
  • $Oil close September 5th: $106.52 -- down 9%
This week:

  • S&P 500 close September 12th: 1251.70 -- up 0.8%
  • $Oil close September 12th: $100.80 -- down 6.9%
If you go to Bob Brinker's website, you will see a flashing banner that gives performance numbers for his model portfolios as of December 31, 2007. Be aware that those numbers do not include what has happened to the stock market in 2008!

Those same model portfolios have remained fully invested all the way down from the October 2007 stock market highs through the 20%+ decline in 2008.

Bob Brinker's model portfolios have not made it into Hulbert's Financial Digest's Top-5 Performers (in any category) over the past 5-year time-period for a very long time now.

The Nasdaq declined over 25% at one point. Brinker never took responsibility for the QQQQ-trade from October 2000, and he certainly never accounted for it in his performance record. His very last guidance was "hold for recovery." Those shares purchased at about $83 are still down roughly 50% after eight years, so this latest 20% loss has to be especially painful for those still following his advice on them.

In March 2003, without closing the trade or telling subscribers to sell the QQQQ shares they were holding, Brinker issued a new (70% lower) buy-signal for RYOCX (a proxy for QQQQ) and added those lower-cost shares to his model portfolios. Two of the portfolios still contain RYOCX.

Even though Brinker has not mentioned the QQQQ "Act Immediately" trade since March 2003, one wonders how much he would be bragging if he had said to "Act Immediately" and buy REITS, GOLD or Oil instead of QQQQ.

Read more of this comparison-analysis by Kirk Lindstrom:

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