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Sunday, June 6, 2010

June 6, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

June 6, 2010....Bob Brinker's Moneytalk is now broadcast on Sundays only. Bob Brinker opened the program by talking about the stock market.

Brinker said that he believes the stock market is undergoing a correction -- that it is not going to turn into a bear market (defined as more than a 20% decline) -- and that when the correction is over, the S&P 500 Index will exceed its April 2010 high.

* Gary from Columbus asked Bob Brinker what might serve as a catalyst to drive the stock market forward since we seem to be inundated with bad news every day.

Bob Brinker replied: "I've given my projections in my June investment letter and some parameters that go with that. [Honey EC: Brinker's little infomercial was correct. I checked it out and this is what he said in the June 2010 Marketimer: "We regard the current period of stock market weakness as an opportunity to increase equity holdings......We are now five weeks into the correction process, which we fully expect will mature with a decline of less than 20% in the S&P 500 Index.....We expect the S&P 500 Index to reach the 1275 to 1325 range by next winter. We are optimistic regarding the likelihood of additional S&P 500 earning gains in 2011.....All model portfolios remain fully invested....."]

Brinker continued with his reply to Gary: "Suffice to say this. I think that we're in a correction. I think that when all is said and done, it will amount to less than 20% on a closing basis from the 1217, April 23rd high....So far, we're 12 1/2%.....I've seen some things develop on the sentiment side that are definitely going in the right direction. There are some other things that I'd like to see fall in place and sometimes it takes some time for these things to fall in place.....

[Honey EC: Once again, Brinker is playing his ridiculous and meaningless game of pretending he can call tops and bottoms in the market while remaining fully invested. Notice he totally ignores the real high in the market of 1565 in October 2007. He simply gave himself a complete pass on the 57% market decline in 2008-2009 (note my summaries during that period, Brinker almost NEVER mentioned the stock market). Then he re-set his scorecard to a chosen date and started the game of "secular bears-cyclical bulls" all over again. The purpose? Why the obvious one, of course. Keep reading.]

Brinker continued talking to Gary: "Is it possible that we could get an outright buy signal on the market? Yeah, it's possible. If that were to happen, I would issue that in a special subscriber message at my website at Bob has not happened to date. We're in a dollar-cost-average mode at this juncture.....

[Honey EC: "an outright buy"? ROFLOL! That's a good one, Bob Sr. If your subscribers have followed your advice, they already have every dime of stock market money IN THE MARKET. Unless perhaps they won the lottery or inherited a bundle or maybe retired with a lump sum. The last time you raised any cash was in year-2000, and that was a rather small percentage after all was said and done....

....And oh yeah, by all means, let's wait for one of Brinker's special "buy bulletins." LOL! The last bulletin he issued was in January 2009. It contained his last buying-opportunity level to get in the market in the "mid-800's." The last chance to ride the market down to the 677 bottom in March, 2009. "ROAR!" All the other gift-horse buying opportunities were much higher -- as much as 50% higher. They were: mid-1400's, low-to-mid 1300's, low-1200's. Yikes! Be very glad if you missed any or all of them. 8)

Prior to the January 2009 special bulletin, Brinker issued one in February 2008. (Recall that in 2008, the S&P declined from the 1400's to the mid-8oo's.)

Here are some excerpts from Brinker's February 2008 special bulletin:
February 10, 2008
S&P 500 Index: 1331.29

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 January 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 January 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 1300's, or any minor weakness that occurs below that level. We view any such stock market weakness as an attractive buying opportunity for subscribers seeking to add to stock market positions. We regard any additional testing and probing in this S&P 500 Index price range as an
opportunity to purchase equities at what we regard as bargain level prices.
Brinker continued talking to Gary: "I think that if you go back on any correction historically, you will find that there are always several reasons that the market corrects.....I think the catalyst for this correction more than anything else -- remember I've already gone over the fact that we already had the pre-conditions for a correction because we had a lot of people over on one side of the boat when the investor sentiment got to 75% bullish. That's a really high number. That's come down substantially to the current reading of 58%......You had a market at that point in late April that had gone up 80% pretty much in a straight line.....

...... I talked about the very insignificant correction from mid-January to early February. A period of only three weeks. A decline of only 8% in the S&P 500.....Other than that, we had no meaningful corrections going all the way back to March of last year.....So I believe that the market was ripe to have some sort of a profit taking period and certainly a correction was part of that. .....I don't think there's anything unusual about, but I do think it's healthy....I think what is does is it strips out of the market place a lot of people that don't belong in the market...

[Honey EC: "healthy correction"?? Beware, he was saying the same thing back in 2007 as the S&P was nearing it ALL-TIME-high.] 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."

Brinker continued talking to Gary:
"You know you get people that go into a market when it's rising. They tend to buy at very high levels, usually after the market's taken a big run and then they decide, oh wow, this looks like an easy deal, and then they join in. And usually at that point, it's too late. And that's what happens when you see these sentiment ratings getting up to 75%. That's a really high number, and when you see that, it's telling you that a lot of people are joining the party.....Well it's never easy. There's no room for complacency in stock market investing, and it's never easy. And those who think it's easy usually wind up finding out it's not as easy as they thought....."

[Honey EC: Evidently Brinker thinks the "church of buy and hold" is a much nicer way to go. Both of his stock model-portfolios are underwater year-to-date -- again.]

Brinker concluded his comments to Gary:
"To answer your question very specifically, I think the market is driven by earnings. And I think corporate earnings are looking very, very good in 2010. And I think the outlook for 2011 is encouraging as we look forward.....I actually think when correction runs out of gas -- and I believe it will run out of gas, that we're going to see a market that is not only going back to the 1217 level of late April, but will rise above that level quite significantly, frankly. And I think those that go with that market are going to be happy campers....I can't join those who think it just gets worse and worse from here."

Brinker's guest-speaker was Douglas Irwin:

To Go is Available on Demand Totally Free at KGO810 radio for seven days after broadcast. The three hours of the Sunday-only program is archived in the 1-4pm time slots. To download and listen later, right click on each hour that you want and use "Save Link as." KGO Moneytalk Archives [Link] If you want to call KGO and complain about (or praise) Bob Brinker's Moneytalk, here are the numbers: Comments line: 415-216-1052....Listener services: 415-216-1050. Here is the KGO email address -- cut-and-paste it into your email compose window:

Dixiegeezer snapped these gorgeous purple water lilies:


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