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Tuesday, September 23, 2008

Brinker's Advertised Performance Ranking Deception

Bob Brinker advertises his newsletter's "performance ranking" in Hulbert's Financial Digest on his website and often in Marketimer.

This is currently on Brinker's Marketimer website:

"Hulbert Financial Digest ranks Bob Brinker's Marketimer © number one for model portfolio performance for the ten-year period through August 31, 2008. Marketimer © earned a risk-adjusted compound annual rate of return of 10.6% for the ten-year period, versus a compound annual rate of return of 5.7% for the Wilshire 5000 Total Stock Market Index."

Here are the facts:

The Hulbert Financial Digest "risk-adjusted" category is not the "Total Return Ranking."

The "Risk-Adjusted Ranking" is one that Hulbert says, "Reports monthly performance per unit of risk, calculated using the Sharpe Ratio."

Brinker does not make it into any of HFD's top-5 slots for "Total Return Ranking" in the "Top 5 Performers Through 8/31/2008" category of all ("newsletters that HFD follows") over ANY time period -- 5, 10,15, 20, 25 years.

Brinker does not mention that Hulbert uses a footnote to explain why the disastrous QQQQ trade is not accounted for in his performance rankings.

So we have a circle of deception that Brinker is well aware of, but chooses to take advantage of anyway in advertising his newsletter, otherwise HE would mention Hulbert's footnote!

Even Hulbert's Brinker footnote is not accurate. Hulbert makes the statement that Brinker decided at the time of the QQQQ trade to keep it "off the books." That is not true -- Brinker did NOT announce that he would not take responsibility for the trade in his model portfolios until the month following the trade.)

Hulbert's Brinker footnote:

"PLEASE NOTE: In late 2000, Brinker forecasted a several-month bear market rally and recommended an investment in the NASDAQ 100-Index--a trade that turned out quite unprofitably. However, because Brinker, at the time of making this forecast, chose not to make this trade part of his model portfolios, his HFD record has not suffered as a result.”

Bob Brinker repeated the following instructions to subscribers in several issues of Marketimer.

November 6, 2000 Marketimer, Bob Brinker said:
"Marketimer subscribers with aggressive objectives can invest up to 30% to 50% of cash reserves in either the QQQ shares or Rydex OTC Fund in order to participate in this recommendations. That translates into potential exposure of 19.5% to 32.5% of a TOTAL AGGRESSIVE PORTFOLIO. (30% of 65% CASH RESERVES equals 19.5%. 50% of 65% cash reserves equals 32.4%). The balance of reserves remain in money market funds.

Conservative subscribers can invest up to 20% to 30% of cash reserves in this recommendation, using either QQQ shares or Rydex OTC Fund shares. That translates into potential exposure of 6.5% to 9.75% of a total BALANCE PORTFOLIO. (20% of 32.5% cash reserves equals 6.5%, 30% of 32.5% CASH RESERVES equals 9.75% of a BALANCED PORTFOLIO. The balance of reserves remain in money market funds."
Brinker's QQQQ-trade has never been closed and all follow-up guidance ended in March 2003.

Seabiscuit wrote a Brinker-Shave about Brinker's monologue last weekend: 8~)

He read it like a newsreader

Rambling on and on about the bailout

But not a word on the bear-market

What a total cop-out!

Brinker Shave


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