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Thursday, June 11, 2009

Bob Brinker Says Stock Market is in a Secular Bear Megatrend

June 11, 2009, Bob Brinker now says the secular bear megatrend that he claimed began in March 2000 and ended in 2006, did not end when he said it did. A bit of Bob Brinker-history:

After two years of speculation in Marketimer, in August 2002 (Dow at 8506.62 and S&P at 884.66), Brinker finally stated unequivocally that a secular bear market had begun in 2000. August 2002 Marketimer, Bob Brinker said: “In our view, the U.S. stock market entered a secular bear market in the first quarter of year 2000. The benchmark starting points for this secular bear are: Standard and Poor’s 500 Index: 1527.46 = March 24, 2000; Dow Jones Industrial Average 11722.98 = January 14, 2000."

Bob Brinker talked about this so-called secular bear megatrend occasionally on Moneytalk until mere months before the onset of the October 2007-March 2009 bear market when he wrote the following:

(Note that this is RETROACTIVE by a year.) June 2007 Marketimer, Bob Brinker wrote: "In our view, the valuation based secular bear market that was established following the March, 2000 closing high for the S&P500 index (1527.46) and following the January, 2000 closing high for the DJIA (11723), reached its conclusion on June 13, 2006 at the bottom of the mid-term off-presidential election year correction.”

Brinker never mentioned the secular bear megatrend again in Marketimer UNTIL May 2009. (He never told Moneytalk listeners about his change of views.)

Now, RETROACTIVELY by two years, Brinker says that he was wrong again:

May 2009 Marketimer, Bob Brinker said: "Although it appeared to us that the secular bear megatrend that began in the Year 2000 had reached its conclusion, there is no question that the secular bear megatrend remains intact. We define...."

I've presented this bit of Brinker-history as a heads-up to those who might not know they should beware of "market-timers" who, in order to hawk their snake oil, might scare them out of the market when they should be in it, and then fail to warn them when the market is headed for 50%+ losses. (Brinker admitted on Moneytalk that his "timing model" did not forecast this bear market. Indeed, Brinker's timing model has never successfully forecast a bear market.)

There were many who didn't buy during the 2002-2007 bull market because they were waiting for the imminent return of Brinker's secular bear megatrend from what he was calling a "cyclical bull market." I know personally of one person who stayed out of the stock market until Brinker called the end of the "secular bear market," then he dumped a lot of money in just in time to ride the S&P down to 677 (Brinker advised against selling -- all the way down).

In 2007, Brinker said that the secular bear megatrend had ended in June 2006. In 2007, Brinker was a raging bull and kept his followers fully invested for the whole round trip from S&P 811 to 1565 and back down to 677. Now he says that he was wrong, that the secular bear did not end after all. This might all be funny if it wasn't so dangerous to "believers" financial health.

I wrote an in-depth article in 2007 about Brinker's "secular bear megatrend" which is archived here [LINK]. In it, I post the transcript of a Moneytalk interview where Brinker explains to a caller exactly what would have to happen to signal the end of a secular bear market. [LINK]

Sweet peas and Alyssum from my garden.....


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