Mark Hulbert and Bob Brinker's Marketimer

May 21, 2009

It looks like Bob Brinker's Marketimer received another major Mark Hulbert "Mulligan." In my opinion, Hulbert's spin for Brinker in his Marketwatch column is disgraceful, disingenuous and dishonest. Hulbert claimed that Bob Brinker "did better than buy-and-holders" in the bear market that started in 2007.

Hulbert ignored the fact that Brinker has been a buy-and-holder during this mega-bear market. Brinker's advice has been to keep all stock market money fully invested. He told Moneytalk callers, "do not sell." At the same time, Brinker attempted to find new bottoms and new "buying opportunities" several times and utterly failed, but unbelievably missed the March 9, 2009 bottom.

Hulbert also ignored the fact that Brinker was a raging bull at the beginning of the mega-bear. In October, 2007, Brinker was calling S&P mid-1400's a "gift-horse buying opportunity" and looking for S&P 1650.

Here are some excerpts from Mark Hulbert's May 20th Marketwatch column [LINK]:

Mark Hulbert wrote: "Another week and we're still no closer to a consensus on whether we are in a brand new bull market or a bear market rally......

.....To gain hopefully more insight, I decided to mine my investment newsletter database for a select group of top stock market timers who've been consistently right in recent market cycles. Specifically, I wanted to find those services whose stock market timing advice did better than a buy-and-hold in each of the last two bear markets (2000-2002 and the one that began in 2007), as well as during the intervening bull market......

.....This is a demanding set of criteria, as it turns out. Merely beating the market over the entire period since early 2000 would not be good enough to meet this test -- hard as it is to do that. I was interested instead in services that performed well in each of the three market periods. Only seven of the nearly 200 newsletters I track were able to jump over these hurdles.

Here's a list of these seven, in alphabetical order, along with a brief summary of their current stock-market forecast:

• Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early May, editor Bob Brinker wrote: "We believe the final bottom for the cyclical bear market was registered with the series of benchmark closing lows that occurred in early March on reduced trading volume. Since that time, we have been in the early stages of a cyclical bull market which should carry into next year and generate large percentage gains for the major indexes." Brinker is recommending that subscribers' stock portfolios be fully invested." [End Hulbert quote]
  

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Mark Hulbert also quoted Brinker as being "bullish," in an October, 2008 column in Barrons: [LINK]

Hulbert wrote: "Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early October, editor Bob Brinker wrote: "We believe the stock market will return to an uptrend within six months of the start of the next economic recovery. Although the timing of the recovery is uncertain, our view is that it could be underway by next spring. If that scenario unfolds, we could be looking at a stock market turnaround beginning in this year's fourth quarter. This bear market decline has been accompanied by an extraordinary flow of negative financial news, but we are focused on stock market recovery in 2009 as investors go through the process of discounting economic recovery prospects in advance of an improved economic outlook." Brinker is recommending that subscribers' stock portfolios be fully invested." [End Hulbert quote] [Honeybee EC: Hulbert's Marketimer quote is from the October, 2008 issue.]

Mark Hulbert also quoted Bob Brinker as "bullish" in a December 2008 Marketwatch column [LINK]:

Hulbert wrote: "Brinker currently believes the stock market is in a perhaps extended bottoming process, and he therefore recommends that subscribers invest in the stock market on a dollar-cost-averaging basis. "We are aware that there is widespread fear that financial Armageddon is the likely outcome of the global financial crisis. We take the opposite view, and expect the stock market to record significant gains during the next major market uptrend. We continue to focus our efforts on the ongoing bottoming process that we regard as essential to establishing the level from which a sustainable market uptrend can occur. When we reach the point at which we can upgrade our current stock market view from dollar-cost-average to a renewed buy recommendation, we will do so."[End Hulbert quote] [Honeybee EC: Hulbert's Marketimer quote was from the December 2008 issue.]

As I said, Brinker's bullishness and bottom calls go way back to the early stages of the bear market. In a February 21, 2008 Marketwatch column, [LINK] Peter Brimelow published a major portion of the special bulletin that Brinker issued on February 10, 2008:

Brimelow wrote: “All of them (“Bold Bulls”) seem shaken by the economy's deterioration, but still positive long-term. Brinker said recently: "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 Jan. 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 Jan. 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 1,300s, or any minor weakness that occurs below that level." [End Brimelow quote] [Honeybee EC: Brimelow's quotes are from Brinker's February 10, 2008 special bulletin]

One has to wonder if Bob Brinker and Mark Hulbert have a symbiotic relationship. Does "one hand wash the other" -- so to speak?

Brinker uses HFD in ads for his newsletter on his website -- which gets millions of hits. Hulbert uses a footnote to cover the fact that he gives Brinker a mulligan on his blown QQQQ trade in 2000 for his performance rankings. However, Brinker never mentions Hulbert's footnote in his newsletter ads when he quotes Hulberts Financial Digest. Even the footnote contains false information about when Brinker decided to keep the trade "off the books." I have proof of that and have offered it to Hulbert. He isn't interested in seeing it.

In the April issue of Hulbert's Financial Digest, Mark Hulbert did a full page write-up about Brinker's Marketimer. Hulbert wrote:

"Brinker’s fund selections on average have lagged the market. The HFD reports an 8.7% annualized gain for his “Aggressive” portfolio, which is 0.6 percentage points per year less than what this portfolio would have made if each of its funds were invested in the DJ Wilshire 5000 during the times they were owned.

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 has not suffered as a result." [End of Hulbert quote] [Honeybee EC: Brinker did not tell his subscribers that he would NOT make the trade part of his official record until weeks after the rally failed to materialize, even though he recommended that THEY use cash raised from model portfolio stock sales in January 2000.]

"There are three classes of men: lovers of wisdom, lovers of honor, lovers of gain." __Plato

My Idaho sister-in-law sent these pictures. Notice worried Momma Robin on the fence in the second picture. Barb wrote this: "New baby Robins, maiden voyage out of the nest! Mom & Dad are teaching them how to get worms etc. I walked within 3 feet of these babies! Of course, I almost got dive-bombed like a Blue Jay does when I got close, but I got these pictures. There are 3 babies in this group!"

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David Korn Comments on Brinker's Latest Stock and CA Bond Views

May 19, 2009

Bob Brinker's 2009 stock market projection.

May 13th, Bob Brinker said this on Moneytalk: "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. Certainly we can slip back into negative territory for a period. Nobody can rule that out because we are only in minor positive territory using the S&P 500…..I still think 2009 is going to be a significant positive year for the stock market. I’m on record back in January having said that and I’m not changing anything about that forecast. I think that 2009 will be a significant up year for the stock market. And I certainly think that what we have seen so far, despite the volatility…..bears that out.....

.....I’ll give you the exact quote on that comment, ‘We expect calendar year 2009 to be a significant positive year for the stock market.’.....So I would have to tell you, from everything I’m looking at, and it just represents my opinion of course, that I think that comment is on track – that calendar 2009 should be a significant positive year for the stock market. We’ll see how that works out. I don’t see any reason to make a change in that projection, and that projection was made back in January.”

David Korn's interpretation and commentary about Brinker's projection. [written May 17th]:

[David Korn] "EC: Bob was referring to a special bulletin he did in mid-January of this year where he recommended that new stock market money be added when the S&P 500 was in the low-to-mid 800s. It is nice to hear that he is bullish, but I don't give him much credit for coming out on the radio 5 months later to crow about it. After all, he missed a bear market already this year when you measure from the beginning of 2009 to where the market bottomed on March 9th at 676.53...

...Moreover, he had dropped his lump sum buy level once the market went into the low 700s and he said he was going to look for a new bottoming process. But he never identified it as the market took off on a tear following the inflection point on March 9th. Look, if he didn't advertise himself as a market-timer, I wouldn't be critical of this. But for someone who had been bashing buy and holders and ribbing the "bears" in 2007-2008, I got to tell it like it is."

[David Korn] "EC#2: For those trying to "interpret" daBrink's words, a logical question would be what he means by 'significant" positive year. As of last Friday, the market was up a couple of percentage points for the year. (It is now down 2.3% year-to-date, excluding dividends). To me, a significant positive year would be at least 15%. That's just my take on it though. Incidentally, for the S&P 500 to put in a 15% return based on price change, it would need to rise to 1038."

[David Korn] "EC#3: If you are going to make timing moves based on Bob's timing recommendation, then presumably you would be buying into the market right now with the market in negative territory for the year. After all, if you believe Bob is right and this will be a "significant" up year for the market, than you would do pretty well. I would note that on January 15th when Bob gave that special bulletin, the S&P 500 was at 843.74. The S&P 500 closed Friday at 882.88."

Bob Brinker's latest views on California General Obligation Bonds.

May 16th on Moneytalk, Brinker said: "Now California, although it is investment grade, it's the lowest investment grade of any municipal bond in the United States. Now why is that the case? Fiscal irresponsibility on steroids in California........That means that they not interested in balancing the budget -- which they must do, and they have shown no propensity to get their financial house in order......So there is always the possibility that they are going to be unable to come up with the money to do whatever they have to do to meet their obligations.....

.....Hypothetically, my personal view is, if you had a default in the State of California, I'd expect you'd get assistance from the federal government. Now whether that assistance would bail out the bondholders is an entirely different story."

David Korn's interpretation and commentary on Brinker's radical reversal on Ca. GO's. [written May 17th]:

[David Korn] "EC: The foregoing comments marked a subtle, but dramatic 180 degree reversal on Bob's longstanding position. He didn't make a big deal about it to the caller, but he is basically saying that all bets are off for bondholders of California. For many years, Bob strongly recommended California General Obligations. Then last year when they were tanking, he came up with some kind of weird justification saying that the California GO's that he held had extra government protection. After getting some flack for that position, he reverted to his belief that the government would step in and bail out California.....

.....Today, he acknowledged that even if they do that, they might not bail out the bondholders. At this point, Bob has basically taken every possible position such that if the bonds recover, he can claim he was right, and if the bond holders get screwed, he can say he pointed out that risk on Moneytalk. Bob has been flip-flopping on this issue a lot lately, and now I think he is just trying to cover his tracks as best he can."

Honeybee EC: It is worth noting again that Bob Brinker has been a "buy and holder" since March 2003. His timing model did not predict the biggest bear market in over 70 years, and he never recommended raising cash at any time during it.

Additionally, every one of Bob Brinker's market bottom calls in 2008/2009 [mid-1400's, low-1300's, low-to-mid 1200's, low-to-mid 800's] were taken out as the market continued to drop to 677 on March 9th -- the real bottom -- the one that Brinker totally missed. The market has recovered over 30%; now Brinker says "buy on weakness."

Please request complimentary issues of David Korn's outstanding weekly newsletter and the Retirement Advisor. The Retirement Advisor Portfolio 3 gained 3.73% in 2008. According to Mark Hulbert, Bob Brinker (the son, who now uses the same name as the talk-show host) lost 5.2% in his Portfolio 3 of Fixed Income Advisor in 2008. [LINK to David Korn's newsletters]

SJ Al sent this picture taken from his hotel room in Destin, Florida:

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