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Friday, January 1, 2010

Reviewing Bob Brinker's Two-year Market-Timing Record, Part II

January 1, 2009....The topic I'm going to focus on in this article is Bob Brinker's market-timing predictions/forecasts and what he said about them in 2009. I intend to pull no punches in my editorial comments. I believe Brinker's radio audience contains a lot of shark bait and he has complete control over how the chum is put in the waters. This little blog points out where to look for it.

Let's review Brinker's market-timing predictions for 2009. [I posted a summary of Bob Brinker's 2008 market-timing calls on the previous page. They need to be compared side by side because in these two years, there was the worst bear market since the Great Depression and then a 60%+ bounce back!

January 4, 2008 Marketimer (S&P: 1447.16) Brinker wrote: "....the risk of a cyclical bear market decline in excess of 20% is not likely to materalize anytime soon....We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400's range....All Marketimer model portfolios remain full invested as we enter 2008."

January 6, 2009 Marketimer (S&P: 927.45) Brinker wrote:
"We believe the most likely area for a successful test to occur is within the low-to-mid 800's S&P 500 Index price range." [He recommended dollar-cost-average until he issued a confirmation that he believed the bottom was in.]
That confirmation was forthcoming in a special bulletin on January 15, 2009. He basically repeated his "low-to-mid 800's" buy signal. That was based on his belief that the November 2008 low of 752.44 would hold and the bear market had bottomed. Notice the last sentence in this excerpt from the bulletin:
January 15, 2009 Marketimer Special Bulletin excerpts: "We regard any weakness in the low-to-mid 800's S&P 500 Index price range as an opportunity to buy into the stock market at favorable price levels. We expect calendar year 2009 to be a significant positive year for the stock market."

The November low also failed, so he removed his last "buying opportunity" from the March 5, 2009 Marketimer. [The "low-to-mid 800's" was the last "attractive for purchase" level Brinker has specifically named. Since then, he simply gives the useless, untrackable, generalized advice: "buy on weakness."]

March 4, 2008 Marketimer, Bob Brinker wrote: "This gives the S&P 500 Index the potential to trade into the 1600's range as we move closer to the time when investors will discount the 2009 earnings recovery."

March 5, 2009 Marketimer, Bob Brinker wrote: "Due to the fact that the November 20, 2008 S&P 500 Index closing low failed to hold during the testing process, we believe a new bottoming process will be necessary in order to put an end to the bear market. This means that in order to set the stage for a sustainable market advance, we need to see a sequence of events consisting of (a) the establishment of an initial closing low; (b) a short-term rally; (c) a test of the area of the initial closing low on reduced selling pressure."
Wrong again! And he missed the bottom altogether. It was just four days later that the market bottomed at 677, turned around and never looked back during the rest of 2009!

On Moneytalk in January, February and March 2009, Brinker was almost totally silent about the stock market. (You can verify this by reading through my summaries -- I ALWAYS report when/if Brinker talks about the stock market.) He had nothing to say as the market dropped to 677!

Finally in the first week of April when the S&P had recovered to his January buy-level of mid-800's, Brinker had this to say --from my April 4, 2009 Moneytalk Summary:

Brinker said: "The S&P 500 is setting in at 842 1/2. And as I mentioned to a caller, if you go all the way back to the October 2007 high and you add back the cash dividends that you've received over that year and a half period, the S&P 500 has declined on a total return basis a little bit over, just slightly over 40% counting everything. If you go back to the March low, which was just less than a month ago, you've had a rebound of about 24.7 including the cash dividend. And about 25.5 in the total stock market......"

..... "It is my opinion that the decline that occurred in mid-to-late February into early March was a direct result of bear raids on financial stocks that spilled over into other stocks during that time. That's when you saw that very brief period of time from late-February to early-March where you saw the S&P 500 dip down to close at the benchmark low of 676. [In retrospect, and even without any "sequence of events" Brinker declared 676 the market "benchmark low."] Now there's no question in my mind that that drop below the 700's, where there was strong support for the market off the November 20th lows.....that brief dip that we had from the mid-700's to 676, and then it snapped right back, was due to the fact that there were bear-raiders at work. [Blamed the drop below his mid-800's buy level on bear raids.]

April 25, 2009 Moneytalk was the first time Brinker began to brag that he had made a call
to "buy on weakness." He said: "Well our recommendation to our subscribers has been to be a buyer on weakness. We have regarded the market as a buy on weakness. That is our view and that's certainly a view that has not changed in recent weeks. FALSE! He waited until the market had rebounded the last two weeks of March. Then in the April 3, 2009 Marketimer, Bob Brinker wrote: "....we would view any short-term weakness that occurs in the S&P 500 Index as a buying opportunity for those looking to add to equity positions......All of our model portfolios remain fully invested...."

I admit I was flabbergasted the first time I heard that truth twisting...

It was May 10, 2009 that Brinker introduced his next unscrupulous market-timing ploy which he continued throughout the remainder of the year:
Moneytalk, Brinker said: "You know, I published a statement in January that I thought that 2009 could be a good year for the stock market – and that was back in January……A lot of people thought basically I had gone insane to make a comment like that. Look, it’s only May and we’re already in positive territory."
Of course, Brinker is referring to the tag line he added to the January 15, 2009 Marketimer special bulletin I cited above. He did not say that in the January issue of Marketimer. As usual, Brinker doesn't blatantly lie, he simply picks and chooses what truth he will single out to hang his hat on.

Brinker missed the beginning of the bear market, he missed when he called several market bottoms, and he then missed calling the real market bottom. Common sense told him that the market either had to correct or it might be tragedy for the U.S. financial system. He rolled the dice one more time and said 2009 would be a good year -- just as he did in 2008. He was long overdue to get something right, but wouldn't it be nice if he had enough integrity to be balanced with his bragging.

Brinker has cleverly covered up the fact that he NEVER posted his 2008 bear market one-year model portfolio performance on his website. He did this by now posting the 2009 one-year performance.
Do you trust a financial advisor who does something that deceptive?

What he doesn't want you to know is: because he rode the bear market down in 2008, all of his portfolios are still well underwater even after the market gains of 2009.

Kudos to JeffChristie for crunching Brinker's model portfolio two-year performance numbers for us. JeffChristie wrote:

I start with the values as of 31 Dec 08.

Portfolio 1 was at $171,451. Brinker says it was up 35% in 09. $171,451 X 1.35 = $231,458. The value on 31 Dec 07 was $283,874. $283,874 - $231,458 = ($52,416).
$52,416 divided by $283,874 = (18.5%)

Portfolio 2 was at $143,294. Brinker says it was up 35% in 09. $143,294 X 1.35 = $193,447. The value on 31 Dec 07 was $229,074. $229,074 - $193,447 = ($35,627) $35,627 divided by $229,074 = (15.5%)

Portfolio 3 was at $163,563. Brinker says it was up 22% in 09. $163,563 X 1.22 = $199,546. The value on 31 Dec 07 was $213,493. $213,493 - $199,546 = $13,947.
$13,947 divided by $199,546 = (6.5%).

In summary the two year results from 31 Dec 2007 through 31 Dec 2009 are as follows:

Portfolio 1 (18.5%)
Portfolio 2 (15.5%)
Portfolio 3 (6.5%)

[Honey here: As of January 2, Brinker has not posted December 31 portfolio dollar values on his Marketimer website. He posted what he claims are 2009 percentage gains -- that is why Jeff had to use Brinker's percentage gain numbers to compute the two-year losses.]

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