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Saturday, May 7, 2011

May 7, 2011, Mark Hulbert's Most Current Ranking: Bob Brinker's Marketimer

May 7, 2011....At Bob Brinker's Land of Critical Mass website, they use carefully selected portions from Mark Hulbert's Financial Digest to advertise the Marketimer investment letter. So how does Bob Brinker's investment letter really stack up against other newsletters in HFD? And how objective is Hulbert when he ranks newsletter performances. A few facts that may surprise you.

In the March 2011 issue of Hulbert's Financial Digest, Mark did a full page summary of Brinker's Marketimer.
Mark said: "Bob Brinker's newsletter is primarily intended to help mutual fund investors time the domestic and international stock and bond market as well as select individual funds. His approach involves a combination of both technical and fundamental analysis."
* Say what? Mark claims Brinker uses Technical Analysis? Wow, that will no doubt come as a big surprise to our friend, DanG. It surprised me. Brinker usually claims that it's all about his "timing model."

* For Mark to give Brinker credit for timing the bond market is a bit of a stretch. Although, Brinker recently lowered the Vanguard Ginnie Mae Fund holdings in balanced portfolio III and the off-the-books fixed income portfolio. (AKA: "income portfolio" since Wellesley Income Fund was added.) And as he mentioned last week on Moneytalk, he sold all Vanguard TIPS holdings.

* Brinker owns no international bonds in any portfolios. He does have a minuscule (total 7.5%) international stock fund weighting in portfolio III -- Vanguard Funds. More importantly, Mark does not include Brinker's fixed-income portfolio in his performance rankings.

* Another thing about Mark's analysis, Brinker has made no "timing" changes in his portfolios since March 2003. Since then, Brinker seems to have joined his infamous, "church of buy and hold." Wonder why that fact doesn't appear in Mark's Brinker analysis? As you saw, he simply mentioned that Brinker "focuses on longer-term trends." Wow I guess so, eight years is a rather long time to remain fully invested for a newsletter named "Marketimer," especially when the worst bear market in our lives happened during those years....

In my opinion, the facts never get between Mark Hulbert and his typewriter when it comes to Bob Brinker or Bob Brinker. He seems to go to great lengths to promote both of them.

Mark ends his Bob Brinker analysis with a footnote. He's done that for over a decade now because he was bombarded by outraged Marketimer subscribers when they noticed that Mark was giving Brinker a mulligan on the QQQ trade.

Here is Mark's footnote from the bottom of the Brinker-analysis page:
"Brinker's bear market bet on QQQQ

Please Note: In late 2000, Brinker forecasted a several-month bear market rally and recommended an investment in the NASDAQ 100-Index--a trade that turned out quite unprofitably. However, because Brinker at the time of making this forecast chose not to make this trade part of his model portfolios, his HFD record did not suffer as a result."
The footnote contains a known falsehood. Brinker decided well after he sent the "Act Immediately" Bulletin not to include it in his official record. I personally know that Mark is aware of that - I wrote and told him. He denied the documented facts. And even if Brinker did "choose" to not hold his record accountable for the trade, does that make it right? Do two wrongs ever equal a right? Hardly, but that is exactly what's going on to this day.

It's apparent that due to the fact that HFD does not allow Brinker's "record to suffer as a result" of the double-dip usage of a large percentage of Brinker's model portfolio cash reserves, all HFD performance numbers for Marketimer are suspect (I would call them highly exaggerated). There is no way that those gigantic losses can be ignored without drastically affecting Brinker's performance since October 2000. That is when he recommended using up to 50% of the 65% model portfolio cash reserves to buy QQQQ with -- then the Q's lost over 70%....

Even with all that, in the April 2011 HFD, Brinker's Marketimer did not make it into the top-7 Mutual Fund letters over the past 5-year time frame. And it did not make it into the "Overall Performance Scoreboard" top-7 over the past five or ten year time frames. Marketimer squeaked into 7th place over the 20-year time frame in Hulbert's "unadjusted" column.

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Timer Digest Features
Kirk Lindstrom's Investment Letter
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