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Right up until the time that the market dropped over 15% in January, Bob Brinker had been repeatedly predicting new all-time-highs. He said that the stock market outlook was favorable as we entered Y-2008..
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December 5, 2007, Marketimer, Page 2; Paragraph 2; Bob Brinker said:
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"We continue to believe that a bear market (S&P 500 Index decline in excess of 20%) is not on the radar screen at this time. We expect the bull market to continue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs."
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On Moneytalk, Brinker said that the correction was more than he had "expected." That is quite an understatement, since Brinker had not been expecting ANY correction. Indeed, in December 2007, Brinker wrote: "The short-term correction that began in October and continued into November has served as a health-restoring pullback and has paved the way for new record highs in the S&P 500 index in our view."
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So how has he reacted to this unexpected more-than-10% correction -- besides letting Bill Flanagan do Moneytalk? 8^)
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Firstly, it is important to note that Bob Brinker has not recommended raising any cash reserves since January/August 2000, when he went to 65% cash reserves. Throughout the bear market between 2000-2002, he was 35% (not counting the QQQQ disasters) invested in equities. His Model Portfolios have been 100% invested since March, 2003.
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On January 20, 2008, he removed his mid-1400's "attractive for purchase" buy-signal which had been in place since August, 2007, and advised only dollar-cost-averaging into the market. At the same time, he said he was looking for a new market bottom.
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As of February 10th, Brinker has issued a new buy level in the "low 1300's." This is not only way below the prior buy level of mid-1400's, it's below the one prior to that--which was "1380 or lower." And now says that we may not see any new stock market highs until 2008 or into 2009. That is quite a change because he has been predicting new highs ahead for at least 8 months....
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He has also changed his recession views. He formerly was saying there was no chance of a recession, or that there was none "on the radar." He now says there is a chance of a mild and brief recession during the first half of 2008.
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Pity the people who might have come into a large chunk of money during the last couple of months of 2007 and sunk it into the stock market on Brinker's advice, just to ride it down almost 20% intraday and 16% on a closing basis....
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Kirk Lindstrom posted these market statistics on Facebook the day after Brinker's last bulletin:
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"Correction Statistics for 02/11/08 S&P 500 Chart (Using Intraday prices):
http://home.netcom.com/~kirklindstrom/Charts/SnP500.html
Last Market High 10/10/07 at 1,576.09
Last Market low 01/23/08 at 1,270.05
Current S&P500 Price 1,339.13
Decline in Pts 236.96
Decline in % 15.0%
Max Decline 19.4%
This means the correction from intraday high to intraday low is 19.4% and we are currently 15.0% off the peak. The decline from the high to the low on a closing basis is 16.3%
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DJIA Chart (Using Intraday prices): http://home.netcom.com/~kirklindstrom/Charts/DJIA.html
Last Market High 10/10/07 at 14,198.10
Last Market Low 01/22/08 at 11,634.82
Current DJIA Price 12,240.01
Decline in Pts 1958.09
Decline in % 13.8%
Max Decline 18.1%
This means the correction from high to low has been 18.1% and we are currently 13.8% off the peak. The decline off the high on a closing basis has been 15.5%"
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"The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.___________John C. Bogle.
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"Well, let me tell you, I have been following markets for about 50 years, and I've never met anybody who could time the market correctly. And I say, stay the course............. And what I'm absolutely convinced of is: You'll NEVER, NEVER, NEVER be able to time the market.____Professor Burton Malkiel
