Many in the Bob Brinker-entourage are shouting that Brinker correctly called the market bottom in January. Well, as someone once said, if you call a bottom often enough, then eventually you nail one! But it is not good to put new wine in old skins -- you can’t make a silk purse out of a sow’s ear -- and you can’t un-ring a bell. Brinker spilled the milk and that’s the name of that tune. 8^)
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But let’s get serious because trusting Brinker's market-timing can be dangerous to your financial health. One could even ask what good it does to call a bottom at 1331 if you were 100% invested since 1565 and have watched the market drop to 1251. Is it logical to then say "we were right" when it recovers to 1331?
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This correction has been a complete wipe-out of everything Brinker has been asserting for months (except the S&P has not broken into his 20% bear rule yet -- some like Larry Swedroe, argue that rule is just plain silly). So how is it possible for him to be “right” after the fact, no matter what he says? Looks to me like all he can do is damage-control.
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He admits that he didn’t see this 15%+ (Nasdaq 25%) correction coming. He’s had his subscribers 100% invested since the top. He lowered his all-new-money-in buy-level (after it had been in place for five months) from “mid-1400’s” to “low-1300’s.” Does anyone think those who sunk a chunk of new money in the market at S&P 1470, and watched it drop to a low of 1251, think Brinker’s bottom call in “low-1300’s” is “right?”
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Now let’s do something that Brinker will NEVER DO. Let’s take a look at the whole picture from June 2007 until now.
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In June, 2007, Brinker claimed that a "secular bear megatrend" had ended the previous year -- in June 2006. (Wrong again...there was no "secular bear megatrend" as Brinker touted for over six years -- not even by HIS OWN definition!) Brinker then became a raging bull!
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In August 2007, Brinker began recommending "mid-1400's" as "attractive for purchase" for all new money. He bragged that “Several excellent buying opportunities occurred….” He repeated this advice each month through January 4, 2008 Marketimer.
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In October/November 2007, Brinker was predicting S&P "mid-1600's," and almost zero chance of a recession.
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In December 2007 and January 2008, Brinker was predicting (he removed the "mid") S&P in the “1600’s range” in 2008.
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December 2007, Marketimer, Brinker said: “We continue to rate the market attractive for purchase on any weakness in the area of the mid-1400’s range of the S&P 500 Index. Any additional weakness below this range is regarded as a gift horse buying opportunity. We prefer a dollar-cost-average approach for new purchases when the S&P 500 Index is aboe the mid-1400’s range.”
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January 6th 2008, Brinker said the stock market conditions were "favorable as we enter 2008” and he took a whack at the “bad news bears.” He repeated his prediction of new highs reaching into the “1600’s range.”
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Then the market began its fall! Brinker was absent from Moneytalk on January 12-13, 2008.
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January 19-20th, when Brinker returned to Moneytalk, he said that the correction was more than he "expected." The truth is, Brinker did not "expect" any correction at all (beyond the usual 10% maximum that he says can happen any time).
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January 20, 2008, Brinker issued a special bulletin retracting his “mid-1400’s” buy-in level and replacing it with dollar-cost-average ONLY.
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February, 2008, Brinker told Moneytalk guest, Larry Swedroe, that we have not had a “bear market.”
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February 10, 2008, Brinker said that the correction bottom had unfolded on January 22 with the S&P 500 Index at 1310.50. Brinker issued a new “all-new-money-in” buy level at th S&P 500 level of “low-1300’s.”
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“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."As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S$P 500 Index to work its way into record new high ground by late this year or in 2009."
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March 4, 2008 Marketimer, Brinker said: "The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."
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Here are some comments on the subject from other readers:
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Pen-name tamworth wrote: "Well, looks like Bob may have nailed another one...I really don't care if the correction went farther than he thought..just gives me a chance to load up even more..."
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Jeffchristie replied: "Nailed another one? Now that's a joke. Bob told his subscribers to lump sum into the market at S&P 1450. The markets recent low was was in the high 1200's. This morning it sits at 1352 with the futures pointing to a lower opening. Good to see you didn't follow his advice and shoot your wad at 1450 as he recommended. I think Bob has egg all over his face on this one.
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I am glad I don't invest the way Brinker does."
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Pen-name Quis wrote: “Anyhoo, Bob says it's no big deal the market is down 15%; we're not in a bear market. But what happens if the market goes sideways for the next two or three years and stays down between 1 and 19% from its high.”
