Posted December 26, 2009...Today, I will review Bob Brinker's 2008 market-timing record. As the year ends next week, I will post a review of Bob Brinker's 2009 market-timing record.
It's important to remember that in spite of all of Brinker's market forecasts and off-the-books advice, he has not raised any cash reserves from his model portfolios since March 2003 when he returned to fully invested. I made this statement in January, 2008: "I do not believe that Bob Brinker will ever again issue another sell signal--not even a partial one like he did in January, 2000." I'm not usually that prescient. 8^) [LINK]
BOB BRINKER 2008 YEAR IN REVIEW (The S&P 500 Index topped at 1565 in October 2007.)
January 2008 Marketimer (S&P 1468.36), Brinker said the stock market conditions were "favorable as we enter 2008” and he took a whack at the “bad news bears.” He repeated his prediction of new highs reaching into the “1600’s range.”
January 19, 2008 (S&P 1325.19), Moneytalk, Brinker said that the correction was more than he "expected," ".....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....."
January 20, 2008 (S&P 1325.19), Brinker issued a special Marketimer bulletin retracting his “mid-1400’s” buy-in level and replacing it with dollar-cost-average ONLY.
New and lower buy-signal (S&P 1331.29)....February, 2008 Marketwatch column, Peter Brimelow quoted the February special bulletin and Marketimer. Brimelow published:
"Brinker said recently: "Marketimer views the establishment of a correction bottom as a process which unfolds over a given period of time. This process involves the initial establishment of a closing S&P 500 Index low, followed by a short rally, followed by a test of the area of the previously established low on reduced trading volume. The initial closing low in the current stock market correction process occurred on Jan. 22, when the S&P 500 Index closed at 1310.50. The market subsequently rallied for eight days, at which point it began the process of testing the area of the Jan. 22 closing low.....
.....In our view, the correction bottoming process has proceeded with a high degree of historical consistency to date. We have witnessed a decided reduction in selling pressure during the testing process, which is essential to a successful outcome. We now rate the stock market attractive for purchase on any weakness that occurs in the current area of the S&P 500 Index low 1,300s, or any minor weakness that occurs below that level....
....Market timer's summary: "As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S$P 500 Index to work its way into record new high ground by late this year or in 2009." [LINK to Brimelow Column]
Says Market Bottoming...March 4, 2008 (S&P 1326.75), Marketimer, Brinker said: "The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."
Honey EC: Remember that this was March 2008. Brinker said almost the identical things in March 2009. I'll post the 2009 review next week.
Brinker says he bought at S&P low-1300's (S&P 1390.33), Moneytalk, April 19, 2008, Brinker said:
“Those who are out there with the bear stories now are making fools of themselves because it just doesn’t compute does it? When you have a market that’s seen this kind of buying it just doesn’t compute……. that America is spiraling downward – doesn’t make any sense...."
“You’ve heard me say on the broadcast, I think we are going to new all-time-historic-record stock market highs by 2009. I think by the time we get into 2009, we are going to be talking about all-time-historic record highs on the S&P 500 Index. But I know what you are talking about, I see it all the time.....in writings….in talking heads. They are talking down the United States of America. They are talking down our economy………(Caller: “Do you think people tend to focus too much on short-term?”) "Oh, absolutely, absolutely, I know this for a fact because when we have gone through this recent bottoming process, and certainly we have worked very, very hard to identify the bottom that I believe that we did accurately identify in the first quarter.
It’s my opinion that the March 10th low on the S&P 500 was the bottom for the correction. And I think that what happened was that was a very successful test of the initial low recorded January 22nd. You might remember the S&P 500 closed on January 22nd in a very high volume panic-atmosphere at 1310. Well we knew, that despite the fact there’d be some short-term rally.......back then, we knew there was going to have to be a successful test of that low. And we knew what was required of that test before it occurred. Now that is exactly is what happened. And the closing test in March was, actually it was less than 3% below the initial low established on January 22nd. So we are talking about a text-book testing process in that correction low that we looked at.
Unfortunately, unfortunately, and I’m sure you’ve heard this, there were a lot of people out there, and I mean a lot of people out there, who got it completely backwards off that correction low and that successful test……I’ve been telling people, going to, actually to February because we do this through the investment letter, of course, I’ve been telling people to actually use periods of weakness to buy into the market at specifically down in the low-1300’s or any minor weakness just below that level, which we got a little bit of there on March 10th and in mid-March, to take those opportunities to add to positions if you’re looking to add to positions – no mention, no thought of selling anything into this kind of weakness……”
Caller John concluded by saying: “I took your recommendation, Bob. When it was below the 1300’s I added…….I’m just glad I got you, your son and the Marketimer on demand.”
Brinker replied: "And just for the record, I’m right with John. I was doing the exact same thing that John was doing. When we saw that weakness on the correction test into the low-1300’s and that very, very minor weakness that we had just below that level for a very short window of time, I was doing the same thing that John was doing – which was adding to positions." (S&P 1390.33) Honey EC: Since the S&P was close to 1400 again, Brinker was probably confident that he could safely brag about buying at low-1300's and make the audience regret not having been apprised of his buy signal if they weren't subscribers. He's done that sort of thing many times. By July, he might have been embarrassed -- if that was a possibility. It's not....
Moneytalk, May 31, 2008 (S&P 1400.38) Brinker said: “What we have right in here now is evidence that the Cassandras, who earlier this year, were telling us we were in recession – right now they’ve basically – well I’ll be kind, basically, they look like fools right now. Because all that they’ve accomplished with their talk about recession…………all that they have to show for their efforts is that they scared the people who listened to them out of the stock market this past winter………."
June 2 2008 (S&P 1385.67) Marketwatch, Mark Hulbert wrote:
"Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early June, editor Bob Brinker wrote that his market timing model "remains in favorable territory as we approach the start of the summer season. We continue to expect stock prices to work higher and to achieve new historic highs in the market indexes." Brinker's model portfolios are fully invested." [Link to Hulbert Column]July 9, 2008 (S&P1244.69) Mark Hulbert wrote a column for Barron's online. Hulbert published:
"Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early July, Editor Bob Brinker reported that his stock-market timing model remains in favorable territory. However, he cautioned that oil's price constitutes a "wild card." "In the event oil prices continue to rise, consumers and the stock market will be held hostage to the cost of energy. This would provide a strong headwind against the economic recovery process. If oil prices stabilize or decline from current levels, we believe stock prices can make progress into 2009.." Brinker is recommending that subscribers' stock portfolios be fully invested." [Link to Barron's column]July 26, 2008, Moneytalk (S&P 1257.76), Bob Brinker replied to a caller: "Would the market get to new all-time-highs within your time-frame of 1 to 3 years? Yeah. For me, my opinion on that would be -- without question."
Late June/July/August 2008 Brinker blamed the market drop on the price of oil -- until it became painfully obvious, he was totally wrong. June 28, 2008, Moneytalk, Bob Brinker said: "--we see it with a direct correlation. We saw just this week between rising oil prices and the stock market..."
Kirk Lindstrom posted a chart [LINK] and said: "The market seems to "correlate" much better to what is happening with the banks than with oil. Funny Brinker fails to notice this."
"According to Bob, oil is the key to the markets and not the financials- I definitely do not agree- guess I have facts on my side now as oil has fallen from $147 to $112 and the markets have barely moved off the 1216 closing low in mid July..
Bob says the following in his (August, 2008) letter:
."In summary, we continue to regard oil prices as the key variable for stock prices. Lower oil prices combined with low interest rates would provide the basis for an improving economy next year. We believe such a scenario would be embraced enthusiastically by investors. We rate the market attractive for purchase on any weakness below the SPX 1240 level. Above that level we recommend a dollar cost average approach for new stock market money." [LINK to Shark Report]
Honey EC: It's astonishing to me how Brinker completely switched horses so smoothly and and now blames the whole economic and market meltdown on the repeal of Glass Steagall.
New lower new-money buy signal, August, 2008 (S&P 1284.88) Marketimer, Brinker wrote: "We rate the market attractive for purchase on any weakness below the S&P 500 Index 1240 level. Above that level we recommend a dollar-cost-average approach for new stock market money." (September 16, 2008, Brinker rescinded this buy signal.)
Moneytalk, September 27, 2008 (S&P 1213.27) Bob Brinker's advises a caller not to sell:
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..... "
Moneytalk, October 12, 2008 (S&P 899.22) Brinker admits his timing model did not "forecast" the bear decline that had been happening for almost a year. Again, he says don't sell stock: “I want to make a comment about what we have seen recently which is unprecedented. Without question, this is the most difficult market environment I’ve seen, and my work did not forecast this bear market decline. I had no way of forecasting a global banking crisis. If I had, that would have been a huge forecast to make. And yes, it would have caused a lot of disbelief but I would have made that forecast if I had been convinced it was going to happen." [October, 2008 was the last time that Brinker ever mentioned the "Marketimer Timing Model©" in his newsletter. On a later Moneytalk program, he claimed that he was referring to his timing model here when he said "my work".]
November 2, 2008 (S&P 968.75) Moneytalk, Brinker is starting to look to Lehman Brothers to explain market drop, still says don't sell: Brinker then said: "......And that's when we saw the market really enter into a free-fall period that carried the S&P 500 into the 800's range during the month of October....And I think it was very much related to what was happening at Lehman Brothers in terms of that bankruptcy.....
.....In reference to your investment portfolio, as regards the stock market, what I would be doing right here would be taking a dollar-cost-average approach at this time especially during periods of weakness and there's been no shortage, no shortage of periods of weakness the last several weeks. Especially during periods of weakness I would be willing to dollar-cost average money to add that to your stock market portfolio within the context of your tolerance for risk and your asset allocation......
.......But I have not yet reached a point right now where I have been willing to upgrade the recommendation on the stock market right now from dollar-cost-average to buy. I do anticipate as we move forward that there will be an opportunity to upgrade the stock market recommendation, which is currently for new money -- we are talking new money -- as you have, which is currently dollar-cost-average, I do expect there's going to be an opportunity to upgrade that to buy a recommendation. But until those conditions fall into place, I would remain on a dollar-cost-average approach........"
November 19, 2008 (S&P 806.58) The S&P closed below Brinker's S&P 807 March 11, 2003 buy signal -- a complete round trip up to a high of 1565 and back down again -- fully invested all the way.
The last Moneytalk program that Brinker did in 2008, he didn't actually talk about his own market views, he spent a lot of time talking about the "Mad Dog." He said: "....we'd have to nominate The Mad Dog as one of the great, and the great is meant in a pejorative sense, one of the great Ponzi schemes of all time.....This is Moneytalk."
In the December 2008 issue of Marketimer (S&P 816.21) Bob Brinker explained that even though there is widespread fear of "financial Armageddon," he takes the opposite view and was "focusing" on the "ongoing bottoming process that we regard as essential to establishing the level from which a sustainable market uptrend can occur."
The S&P began 2008 at 1468.36 and closed on December 31, 2008 at 903.25.....and the bottom was still to be 25% lower -- but Brinker never wavered in 2008. He always recommended investors dollar-cost-average or lump sum (at various levels) all new stock money into the market.