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Monday, March 9, 2009

Market Performance Since Bob Brinker's Timing Model Turned Favorable in 2003

Bob Brinker's model portfolios have remained fully invested since March 2003 when he returned the 65% cash reserves that he had raised in 2000 to the market (please note that his October 2000 QQQQ trade, for which he recommended using model portfolio cash reserves, was kept off the books and was never accounted for).

David Korn, in his weekly newsletter, publishes some very interesting statistics that go back to 2003. David Korn wrote all of the following including the ECs. (Posted with David's permission, March 8, 2009 newsletter):

"Editorial Comment ("EC"): Here is how the major market indexes have performed (excluding dividends) since Bob Brinker's timing model turned "favorable" based on the S&P 500 Index's close on March 10, 2003, and he recommended investors redeploy their cash reserves into a fully invested position by bulletin issued at 2:00 a.m. on March 11, 2003:
  • S&P 500 Index: Down 15.37%
  • Dow Jones Industrial Average: Down 12.44%
  • Nasdaq Composite: Up 1.2%
For those of you who also followed Bob's recommendation to invest anywhere from 20% to 50% of your cash reserves in the Nasdaq 100 (QQQQ shares), here is how those shares have performed based on various times Bob recommended that security:
  • October, 2000 (Original Recommendation using $83.12 as entry price): Down 68.40%
  • January, 2001 (Second Recommendation using $62.44 as entry price): Down 57.88%
  • March 11, 2003 (Third Recommendation using $24.01 as entry price): Up 9.5%

NOTE: The foregoing numbers suggest that if you had purchased a high yielding CD in March 2003, you would have done better than fully invested following Brinker's timing, even when you account for dividends. More importantly, you would have cash to invest in stocks at these levels. Hindsight is 20/20, but this is a fact that I thought was worth noting since the stats I cite don't specifically mention the comparison."

[Link for complimentary copy of David's newsletter.]

Honeybee here: It's interesting to remember that several times back in 2007, Brinker bragged on Moneytalk that the S&P had risen 95% from his March 2003 buy signal of 807. Six years later, the S&P is now below 700. OUCH!


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