Ken's Saturday call to Moneytalk and Brinker's response. David Korn explains it best in his commentary below -- don't miss it! Here's an excerpt:
"This was high drama on Moneytalk as it is the first caller that got through and asked Bob to comment on his stock market outlook in the wake of the declines. Frankly, I don't have much sympathy for Bob because he still hasn't even mentioned that we are in a bear market which is sort of ludicrous given that we heard ad nauseum about the bear market in 2000-2002 and the bull market (cyclical and secular) up until this market started declining. "
Honeybee here: Bob Brinker took a call from Ken Saturday. Ken used a bit of Brinker-ring-kissing in order to get the chance to point out that Brinker has had "everyone fully invested in the market after it has taken such a precipitous losses." Ken wanted to know if it might not be time to get out of the market.
Brinker avoided responding to the heart of Ken's question -- completely ignoring that his subscribers have ridden this bear market down fully invested. Instead, Brinker zeroed in on "RIGHT NOW" and repeatedly said he had no recommendation to sell stocks "right now."
Here is a transcript of the call that everyone is talking about:
Caller Ken from Times River, New Jersey said: "Hi Bob, it's certainly a pleasure speaking with you. I've been a subscriber and a faithful listener for at least 20 years, and I have only the utmost regard for your market timing philosophy. And I think you did a beautiful, beautiful job when the stock market collapsed when the dot-com bubble bursted in the early 2000.
But I've seen some precipitous declines in the market since that time -- stocks going down 20-25%, and at no time have I heard you say anything other than become fully invested. And I wonder, did you miss the boat, or am I mistaken?"
Bob Brinker said: "Mistaken about what, Ken?"
Ken replied: "About the fact that you still have everybody fully invested in the market after it has taken such precipitous losses. Do you think, is this still is the time to be invested? Is it the time to sell and get out of the market?"
Brinker said: "Actually Ken, it's not my opinion that you should be selling stocks right now. I don't have a recommendation to sell stock right now. And if I did have a recommendation to sell stock right now, you would know about it. No, I do not have that recommendation. And really, that's all I can say. We have not, we have not issued a sell signal on this market. And in fact, as things stand right now, I think that we are in a scenario right now -- this is just my opinion -- I think selling stocks here is a mistake. 1-800-xxx-xxxx. Linda in Thousand Oaks, you're on Moneytalk.
Honeybee EC: The last time Brinker sold equities after missing a bear market was in 1988 (he missed the 1987 Crash) and it was a huge mistake. The market turned up and he missed out on large gains for the next couple of years until he returned to 100% invested in late 1990.
All Brinker can do now is try to keep information like Ken revealed covered up so that any potential new newsletter subscribers will not be made aware of how he has made one blunder after another for the past year.
One of his most-used market-timing ploys is to issue new "attractive for purchase" buy-levels even though he is 100% invested. Moneytalk listeners have heard him brag about them. First he bragged about the mid-1400's buy signal. He did that with a caller back at the S&P's ATH. In essence, it served to embarrass the caller and shame him for not being Marketimer subscriber. Ka-ching!
Later, he bragged about the low-1300's buy-level after the market had briefly returned to 1400. He told a caller that he personally had been buying at the level. Again, this appeared to be designed to make listeners regret that they had "missed out" on Brinker's market-timing call. Ka-ching!
Now that the market has hit new lows in the mid-1100's, Brinker has thrown out ALL buy-levels and recommends only DCA. Has he mentioned this or any of the previous higher buy levels? Nope! Ka-ching!
This whole marketing-hook may appear silly, but it is quite effective. As was shown by Ken's call, it is not easy to get on the air and actually ask Brinker about the bear market, why he didn't raise cash and/or what does he recommend going forward. And you can bet your soup that if Ken hadn't talked long enough to get past the 7-second delay button, his questions would have been cut off at the pass. Ka-ching!
It would show great character if Brinker had taken the opportunity that Ken gave him to actually speak honestly and openly. Again, he chose to obtusely dissemble, distract and avoid.
Saturday, the remainder of the program was largely Brinker's opinions about what caused the financial crisis, what should be done about it, and the government bailout. Most of which, Brinker has talked about before. He expects an agreement to be reached by Sunday evening and then congress can move forward with legislation.
David Korn has generously offered to share his commentary with us:
BOB BRINKER SAYS DON'T SELL STOCKS
Caller: This caller told Bob he has the utmost regard for Bob's market timing philosophy and thought he did a wonderful job during the dot-com meltdown in early 2000. However, he has seen some precipitous decline in the stock market over the last year, with stocks declining as much as 25% and at not time has he heard Bob say anything other than to remain fully invested. Have you missed the boat or is he mistaken? Bob paused. The microphone picked up the irritation in daBrink's breath as he leaned a little closer to the microphone and asked the caller exactly what he meant by "mistaken." The caller told Bob "mistaken" in that you have had everyone fully invested in the market even through this significant decline in stocks.
Another dramatic pause. A side glare at the call screener and then...
Bob said it is NOT his opinion that you should be selling stocks right now. Bob told the caller that if he did have a recommendation to sell stocks right now, you would know it. Bob said he has not issued a sell signal on this market. Bob concluded by saying that "as things stand right now" we are in a scenario such that if you sell stocks here that "would be a mistake."
EC: This was high drama on Moneytalk as it is the first caller that got through and asked Bob to comment on his stock market outlook in the wake of the declines. Frankly, I don't have much sympathy for Bob because he still hasn't even mentioned that we are in a bear market which is sort of ludicrous given that we heard ad nauseum about the bear market in 2000-2002 and the bull market (cyclical and secular) up until this market started declining. Moreover, Bob's stock market timing model really blew it this time. I mean let's put the cards on the table. The fact that he took a hard core approach to bashing the people who were bearish on the economy and stock market earlier this year, and the fact that he has not really been forthright or humble (if that is possible) has gotten under a lot of my subscriber's skins. I can't blame them.
EC#2: It bears noting that in the 22 years of Moneytalk, Bob has only issued a sell signal twice. Once following the crash of 1987 which turned out to be a very bad timing move and resulted in the subsequent modification of his timing model to include a sentiment indicator. The second time was based on the market's close on January 8, 2000, where he reduced his stock market allocation from a fully invested position, to 60% cash (later increased to 65% cash). I would certainly not expect him to issue a sell signal at this juncture. During 2000, he had recommended that subscribers use the 65% cash and invest a portion of it (anywhere fraaaaarom 20-50% of that cash reserves) into the Nasdaq-100 (QQQQ shares). At the time of the initial QQQQ recommendaion, the shares were trading at about $83. As the security declined, he recommended purchasing them at different levels. Today, 8 years later, the initial purchase remains down 50%. I bring that up because I get questions about whether I think Bob will issue any kind of sell signal and my response has always been that Bob's pattern is to ride a position down even if he is wrong and wait for it to recover. He is clearly banking on that happening with the market at this juncture.
EC#3: For those seeking reassurance from Bob, today's response is about the best you can ask for. The fact that Bob answered the question and said he would NOT sell stocks now, indicates that he believes you would be making a mistake by selling into the lows. Fortunately, I agree with him at this juncture as evidenced by my buy alert earlier this week which so far is in the black.
Complimentary issue of David Korn's Newsletter
Brinker's guest speaker on Saturday was Charles Guist, who wrote: Wall Street: A History: From Its Beginning to the Fall of Enron
Brinker's guest speaker on Sunday was John Zogby, who wrote: The Way We Will Be: The Zogby Report on the Transformation of the American Dream. (Note: John Zogby said that he is a "lifelong democrat" but hopes his polling work is objective.)