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Friday, May 14, 2010

Bob Brinker's Market-Timing Over Past Ten Years

Posted May 14, 2010....Today, Drudge reported that the Dow closed exactly where it was ten years ago. Bob Brinker sells himself as a market-timer. See ten-year Dow chart.

It was pointed out to me that if you plug the S&P 500 Index into that same chart, it shows that it is down 20% over the same time frame! Bob Brinker uses the S&P as a market gauge: Here is the ten-year chart.

On Moneytalk (when the market gives him opportunities) Bob Brinker will infer that he has made some good timing moves, even when he has actually made no changes whatsoever to his model portfolios and has not raised any cash reserves.

Joe sent these comments (posted here):

"As BB hate to admit he missed the 2008 correction; and the jury is still out on the lastest correction 5/4 - 5/14 when all gains for the year was wiped out.

No fun taking a roundtrip; wise to take some profits off the table once you have at least a 20%-25% gains.

BB does not want to wipesaw readers in and out of the markets."

My reply to Joe:

"You are correct that Brinker does not do short term trades anymore.

The last one he did was when he predicted a "countertrend rally" in October 2000 and sent the special bulletin advising subscribers to use up to half of their Model Portfolio cash reserves (65%) to purchase QQQQ at $83.

That trade has never been closed and today QQQQ is selling for $46.93 (almost TEN YEARS LATER).

But OTOH, it is ridiculous for a financial adviser who sells himself as a market-timer to remain fully invested as the stock market drops 50%+.

I would be curious as to how you think "the jury is still out" for Brinker on this latest correction.

You are aware that he has made ZERO cash reserve changes since March 2003 when he returned all Model Portfolios to fully invested?"

So the question remains, if Bob Brinker has been fully invested since 2003, including the ravenous bear market of 2008-2009, by what stretch of logic should Brinker get credit for the 2009 - 2010 market gains? And how many round-trips and failed "buying opportunities" should Brinker get before it becomes clear even to himself that he cannot time the stock market.

This chart (courtesy of Kirk Lindstrom) shows Brinker stock market timing calls since 2003.

All I would add to that chart is that in January 2000, Brinker raised 60% cash reserves, and increased that to 65% in August 2000.

[Bob Brinker's radio talk show time will be cut to one day only (Sundays) beginning June 6th. Please see prior post.]


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