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Tuesday, November 10, 2009

Bob Brinker on Stock Market Secular Trends

Posted November 10, 2009.... Here is a complete record of Bob Brinker's views on stock market secular trends that goes back to 1982.

Bob Brinker said that a secular bull market began in 1982 and ended in the first quarter of year 2000. Marketimer, April 5, 2002, Bob Brinker said: "We continue to believe that the weight of the evidence suggests the secular bull market that began on August 13, 1982 came to an end in the first quarter of the year 2000...However....the secular bull trend in early 2000 appears to have led to a new secular bear market, which is now into its third year."

In the August 8, 2002 Marketimer, Brinker stated unequivocally: "In our view, the U.S. stock market entered a secular bear market in the first quarter of the year 2000. The benchmark starting points for this secular bear are: Standard and Poor's 500 Index: 1527.46 on March 24, 2000. Dow Jones Industrial Average: 11722.98 on January 13, 2000."

September 2002 Marketimer, Brinker said: "We believe the ongoing secular megatrend we are now experiencing will see a succession of cyclical bull and bear markets lasting approximately one-to-three years each."

In the May 2006 Marketimer, Bob Brinker wrote his definition of what would signal the end of a secular bear market: "The current cyclical bull market, which in our view is unusual in terms of its length, has had to battle the headwinds of the secular bear megatrend that began in the first quarter of Year 2000. definition, the secular bear megatrend will continue as long as the S&P 500 Index is unable to achieve a significant breakthrough of its March, 2000 historic high. We estimate the likely duration of this secular bear megatrend within a broad range of eight to twenty years, and we are now into year seven."

Now history shows that Brinker's carefully laid out scenarios never happened. What did happen is that the cyclical bull market continued for five years (and then turned into the worst bear market since the 1930's).

Brinker made excuses to explain this and repeatedly cautioned subscribers and listeners that the cyclical bull was part of an ongoing secular bear market megatrend and would last 1-2 years. He later changed that to 1-3 years, and then he called the cyclical bull market "long-in-the-tooth," and finally he said it was an "outlier" within a secular bear megatrend.

By the time the market reached its high in October of 2007, Brinker was a raging bull and predicting the S&P 500 Index would reach mid-1600's. It must have looked to him like he would soon appear very foolish with his secular-bear stance because he made the choice to declare retroactively that it had ended the previous year.

In the June 2007 Marketimer, Bob Brinker claimed the secular bear megatrend had ended the PRIOR year -- in June, 2006! Brinker said: "In our view, the valuation based secular bear market that was established following the March, 2000 closing high for the S&P 500 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." [Note what he said in May, 2006 in the quote above -- one month earlier than the date he said the secular bear had ended.]

Brinker never informed Moneytalk listeners that in June 2007, he said the secular bear megatrend had ended in June 2006 -- in spite of the fact that he had talked at length about it on the air -- which explains why some listeners never knew that he had made any changes. And he never mentioned it again in Marketimer until May, 2009.

May 5, 2009 Marketimer, Bob Brinker wrote: "Although it appeared to us that the secular bear megatrend that began in Year 2000 had reach its conclusion, there is no question that the secular bear megatrend remains intact. We define a secular bear megatrend as one during which the major indexes make no material and sustainable progress above their historic highs. During such extended periods, a series of cyclical bull and cyclical bear market occur." [Does this have a familiar ring? Yes, these are exactly the same things Brinker said before.]

It's important to be aware that Brinker has remained fully invested since March 2003 and never recommended raising cash reserves during the 50%+ bear market which occurred between October, 2007 and March, 2009. Brinker remains bullish, and his latest advice for "new money" is to "buy on weakness."

Here are a couple more of the pictures that SJ_Al's wife took. This is the Golden Gate Bridge. If you ever visit San Francisco, it is a wonderful experience to walk across this breathtaking bridge.

Downtown San Francisco:

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