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Friday, December 11, 2009

Bob Brinker's Rear-View Mirror Crystal Ball

December 11, 2009..... Bob Brinker is an outstanding stock market history REPORTER, but he is a sad-sack stock market forecaster. Lately on Moneytalk, he has been patting himself on the back for being fully invested in 2009, and claiming that he predicted a "significantly positive" year in 2009.

After being 100% on the wrong side of the fifteen-month megabear market, he has finally found an opportunity to play the market-timing guru again. Throughout all of 2008 and until April, 2009, months would go by where Brinker never mentioned the stock market. However, early on and at various times when the market seemed to be recovering a bit, Brinker would actually claim that he was the "lone voice" and time would prove him right, and the Casssandras and Bears wrong. That was just before the S&P 500 Index dropped 57%....

Last weekend Bob Brinker said that anyone who was fully invested in 2009 deserves the good returns because 2008 was a "rough year." When you consider how bullish Brinker was throughout 2008, it's almost laughable for him to now point out that it was a "rough year."

Let's take a look at what he was saying at the beginning of the "rough year."

Moneytalk, January 5, 2008, Brinker lectured a caller [LINK] “....maybe your risk tolerance just is not such that you can deal with the kind of fluctuation. You know my definition for a bear market is a decline in excess of 20%........So in order for us to be in bear market territory — by my definitions — we would have to see the stock market, the S&P trading below 1250.” [The market bottomed in March, 2009 at S&P 677]

And followed up with this prediction, January 5, 2008

Honey wrote: Several times on Sunday, Bob Brinker hammered the point that the market was "volatile," and probably would remain volatile for some time to come. After saying that he believed that we are in for a period of very, very slow economic growth in the first and second quarters, but expects a rebound in the second half of 2008, Brinker made these comments: “Now if you study the stock market you know the stock market discounts the future about six to seven months in advance. So if we were to see a recovery in the second half of 2008, following this slow period then the stock market would be in the process of having discounted that as we speak.”

That may have been the first time during the 2008-2009 megabear that Brinker said the market was discounting 6 months out, but it certainly was NOT the last. Recall that just last Friday, he called a 200 point move "volatility." While that seems correct this time, we know it was 100% wrong when he said it back in January 2008 -- and in the interim.

Going back into 2007 just before the bear market began, Brinker was a raging bull! He was predicting S&P 1650, and opined that the market had had a "health-restoring summer correction":

September, 2007, Marketimer, Brinker said:
"....highly favorable territory as the health restoring summer correction has significantly enhanced our market outlook into 2008." He added: "......anticipate significant stock market gains going forward."

The worst bear market since the 1930's began in October 2007, Brinker said this on November 18, 2007. [LINK] Bob Brinker said: “Well it’s been an interesting week in the stock market….remember last week the bad news bears were telling us, it’s all over now – we were in big trouble now. Well that’ what they were saying a week ago. Of course, it did not turn out that way. We talked about this last weekend. About those bad news bears and how wrong they have been for several years every year as they have been screaming fire in a crowded market only to find that their views were wrong again. This week the S&P 500 chalking up a gain to 1458.74 – a gain of about 1/3 of a percent. The Dow going up 1% to 13,176 and the Nasdaq gaining close to ½ percent, at the 2637 level…….”

Brinker was still in denial on January 19, 2008:

Caller: “Do you think we’re finally reaching a point where it’s time to maybe get out of the stock market like it was here a few years back and wait to see what’s going to happen?”
Brinker: “That’s not my opinion right now. I think there’s lots of fog out there right now. I think there’s very low visibility out there right now, and I think that low visibility has been caused by all of the things we’ve been seeing over the past several weeks—especially the last week……but it has not been my view that we would be looking to run for the hills and expecting the stock market to go down 50%. That has not been my view, and that is what it went down earlier in the decade. The S&P closed down 49.1% from closing high to closing low. Right now, we are looking at a 15% correction in the market as we speak. So to compare the two, at this point, is to compare apples and oranges."

It was just a few weeks ago that Brinker allowed callers on Moneytalk to talk about the bear market "earlier in the decade," but he has never allowed a caller to talk about the most recent and much more severe bear that happened in 2008-2009.

Chart courtesy of Kirk Lindstrom
[LINK] Please click to enlarge chart:


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