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Wednesday, April 6, 2011

Bob Brinker's Path to the Land of Critical Mass

April 6, 2011...Some of you have posted in the comments section, speculating about how many newsletter subscribers Bob Brinker might have had over the years -- and now. Having a radio talk show where one can give out only carefully selected information is certainly an great advantage when it comes to selling "investment letters."

A national radio show (even one day a week) gives one access to millions of new shark baits. Common sense says that turnover is critical with someone like Brinker because he's made some major market-timing blunders -- and market-timing is his "claim to fame."

How many bought the QQQ's on his advice in 2000 and lost 70% of their money, then continued to subscribe? How many rode the 2008 megabear market down 57% fully invested on his advice, then continued to subscribe? Nope, it's clear to me that new blood is critical, even just based what people say on this blog and personal emails that I get.

So I am going to report some facts, you make up your own mind what it all means. Here goes:

Bob Brinker is no longer affiliated with Genworth Financial (BJ Group). Apparently, he broke off with them just before the big class action suit against the company that had bought out his own BJ Group. (See link below for full story of lawsuit.)

Brinker and Jacobs' BJ Group charged clients a hefty fees for money management, and in 2000 sold it for a purported $25 million. After the sale, Brinker continued with Genworth. Here is an excerpt from a news article about the sale:
While Mr. Brinker and Mr. Jacobs no longer will run the company, they have signed multiyear contracts to continue providing asset allocation advice to BJ clients, says Mr. Duran.
Here are more details about the sale from the same newspaper article:
"BJ Group's 2,247 accounts through December 1999 held an average of $273,000. The advisory requires at least $100,000 to open an account and allocates customer funds into no-load mutual funds available through Charles Schwab Corp.'s fund supermarket.

Annual fees range from 1.5% of assets for accounts less than $500,000 to 0.6% for accounts under $4 million, generating an estimated $6 million annually.
Brinker continued to publish Marketimer. In October 2000, Bob Brinker made one of the most costly market-timing blunders of his career. He predicted a stock market "countertrend rally" that would be led by the Nasdaq. He sent a special bulletin to Marketimer subscribers instructing them to invest up to 50% of the 65% cash reserves raised in January, 2000.

Brinker never took responsibility for that trade in his model portfolios even though he instructed his followers to use cash raised from them. I personally know of innumerable people who were damaged by trusting Brinker on the trade.

Unbelievably, after almost 3 years of Marketimer instructions to "hold for recovery," the trade was made to disappear from the radar -- never to be heard of again.

But shockingly, Brinker also advised BJ Group/Genworth to put their clients into the trade. The same clients who were paying up to 2% fees for professional advice.

The BJ Group A Division of Centurion Capital Management's Private Client Group Robert J Brinker Sheldon Jacobs

October 19, 2000

Dear Client: I am pleased to inform you that the BJ Group has executed a significant trade for you under the guidance and supervision of Bob Brinker.

Bob Brinker advised us of a short-term trading opportunity (countertrend rally) in the Nasdaq 100 Index. In response, we have purchased for your BJ account(s) a position in the Rydex OTC fund--a proxy for the Nasdaq 100 Index.

Aggressive accounts will receive a more significant position; conservative acounts will have exposure to a lesser degree given the risk profile of the technology-laden Nasdaq 100.

It is important to note: we have not sold any existing funds. This purchase reduces your money market reserves or cash position for the duration of the trade. As of this writing, it does not imply a change in Bob's longer term outlook for the market.

We are committed to the Brinker investment strategy and look forward to the exciting prospects of this recent development. (LINK to photocopy of original)

The following writer summed it all up beautifully, and I suspect he spoke for many, he certainly spoke for me:

Will L. wrote:

“Kinds of puts the kabosh to that silliness of "Brinker is not being dishonest because the QQQs weren't in the model portfolios thus it shouldn't count in his record." That was said though Brinker didn't distinquish the money raised from the model portfolios from being designated "cash reserves" to purchase QQQs and anyone reading that ACT IMMEDIATELY bulletin had to come away thinking it was money that included model portfolios he was wanting them to use.

We know that Brinker, like a crafty fox, has lied by misdirection on his radio program about the QQQ trade. When a caller asked about the QQQs he had been holding since 2000, Brinker claimed that "we closed that position in our model portfolios for conservative investors....yada yada. He claimed he had bought them for 25.00 in 03 and sold them for a profit so that every goober and geezer listening to the guy's Question were misled.

Now we have proof that Brinker's expensive wrap fund (though he ridicules people paying other wrap fund fees) does the exact same hoodwinking deception. We have the record of them slamming everyone into the QQQs and now using the same cr*p "model portfolio" deceptive advertising to hide the abysmal failure on a large investment in the QQQs.

I don't know how you feel ok with yourself arguing to support ole Brinker when nearly every time you make great efforts to alibi for clearly less than honest practices, the truth shows that you were a dupe enabling his marketing your high horse claim about Brinker removing library subscriptions.

Now this advertising from the BJ group shows that he/they are hiding the QQQ call which was included in every portfolio during the time they are pimping their performance by the clairvoyant Bobby Brinker with the same hooey many of you use to dismiss the newsletter performance numbers lack of proper accounting for the QQQ event.”__Will L

Link to original Marketimer QQQ Special Bulletin

* Kirk Lindstrom's Summary of the BJ Group lawsuit.

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