Bob Brinker, who came from the canyons of Wall Street, was a former banker, and has been a "market-timer" on the national airwaves for over 20 years, missed the warning signs of a financial tsunami and remained invested throughout a 50% bear market that began in January -- but today was the first time a caller has had an opportunity to actually talk about it on the air.
Lynne from Santa Clara called Moneytalk about halfway into the third hour. She spoke eloquently about having read two outstanding articles that sounded the alarm of impending trouble. One was an op-ed piece written by George Mullen for the San Diego Union in 2005, titled the Coming Financial Tsunami. The other was a sequel written by George Mullen's father, Tom Mullen, in 2006. I could not find a link to the sequel. (Note: In the June, 2007 Marketimer, Brinker wrote that the "secular bear market megatrend" had ended in June, 2006.)
Lynne then said this:
“I know Bob missed the timing – the exit……I checked Mr. Mullen’s story to what Bob Brinker was saying. I kind of (unintelligible)Bob Brinker, but I know he missed the bucket on this one by kind of a wide mile. I know he’s done a mea culpa and said that he’s not infallible that we thought he was, like the Maestro, Mr. Greenspan. But I do kind of wonder, with all due respect – I’m not a disrespectful type at all…..and certainly not on the air.But I have wondered how Bob managed to not connect the dots on the exit when he had worked on Wall Street and banks and you know, when you have a housing, who backs housing… (Flanagan begins talking over the caller, telling her he had to interrupt -- Bob can speak for himself...)….Oh, yes, definitely, definitely. I guess all of us who are staunch listeners and respect much of his advice, and much of it is very, very good, wondered how he missed the exit there through, you know,a year-long 6000 point sell-off. But anyway, I’ll let it go there, Mr. Flanagan. Top of the Sunday evening to you, sir."
Lynne was bending over backwards to be respectful, even to the point of saying that Brinker had given a "mea culpa." All Brinker has ever said that some might interpret as a mea culpa, is that he could not be expected to forecast a "global meltdown." I've covered what Brinker has said about "his work" not warning him of the imminent arrival of what Flanagan said was the "worst financial period of his lifetime." It's all available in previous Moneytalk Summaries.
June 4, 2008, (S&P 1400.38) Marketimer, Bob Brinker said: "The market registered its initial correction low in mid-January, and completed a successful test of the bottom area in mid-March........we expect the market to trade with an upward bias until new record highs are achieved above the S&P 500 Index closing highs of 1565.15 registered last October. Our S&P 500 Index price target remains in the 1600 range either late this year or in 2009."
Almost immediately after Brinker said the lows were in, and he predicted new highs, the stock market dropped into bear market territory. Brinker first blamed the market drop on the rise in the price of oil -- calling it a "wild card" and saying it had an "inverse correlation" to the stock market. When that theory failed he gave it up and never mentioned it again. It's obvious that Brinker did not have a clue that financials were the reason for the market problems, in spite of the fact that it had been pointed out to him.
Bob Brinker's Moneytalk: Excerpts, Summary and Commentary, November 29, 2008. Dow: 8829 (up from 8046 last week); S&P 500 Index: 896.24 (up from 800.03 last week); Nasdaq: 1535.57 (up from 1384.35 last week) Oil: $55.03 (up from $50.35 last week)
Bob Brinker's guest-host was Bill Flanagan today. Brinker usually takes holiday weekends off.
Flanagan began the program by mentioning that it was nice to have a bit of good news in the stock market for a change. He said that it is the first time there have been five consecutive gaining-sessions since July, 2007. He recited the current year-to-date market decline percentages: Dow down 33.4%; S&P 500 down 38.9%; Nasdaq 100 down 43.1%.
Flanagan commented that we sure don't want things to get any worse than they are -- or so bad that there is no light at the end of the tunnel, but that it would be naive to assume that we have seen the end of what he called the "worst financial period of his lifetime."
Caller Hank from Ohio said:"I've been following Bob's model portfolio three which is a balance between equities and fixed income.........My model portfolio-three a year ago was about 50-50. Today in round numbers it's about 60-40, as the fixed side has kinda remained stationary and about a 40% loss in actual equities. So should I be rebalancing the portfolio right now to bring it back to 50-50......And more importantly, I anticipate being able to make additional contributions to my retirement program over the next four years. How do I invest that money?"
Honeybee EC: Hank is VERY mistaken about his asset allocation if he has been following Brinker's model portfolio3 since last year as he said. It was not at 50-50 a year ago. At the market top in October 2007, portfolio3 was a VERY BULLISH 66% in stock funds and 34% in fixed income funds. Brinker did not rebalance that portfolio! Sadly, the market-drop rebalanced it for him and his subscribers, with huge equity losses.
Since the beginning of Porfolio3 in 1990, Brinker has never advised an actual rebalancing of the 50-50 starting positions. Last February on Moneytalk, Brinker explained how the allocation in the portfolio varies:
February 16, 2008, Bob Brinker said:“The recommended balanced portfolio that I publish in my investment letter calls for a recommended allocation in a balanced portfolio essentially 50-50. Where you would have about half of the money in quality fixed income and half of the money in the equity market. So that’s the way I define a balance portfolio. We’ve also defined a balanced portfolio as having a range on the equity side that can go a little higher. You could have a balanced portfolio that could be 60-65% equities and the rest in fixed income.......In the investment letter, I use a 50-50 starting point. Obviously over time, that can vary, but I would say that on the upside, you would be unlikely to see it much above 60-65% equity and on the downside, you’d be unlikely to see it much below 50% equity........"
Clearly, model portfolio3 was NOT at his "starting point" a year ago when the S&P was at its all-time-high.
* Fixed Income Funds: 74,344 / Total: 219,263 x 100% = 34%
* Total: 219,263 = 100%
The 66% stock portion of Brinker's balanced portfolio has taken a big hit in the past year during this 50% bear market decline. I don't have the numbers for November yet, but here are the numbers as of October 31, 2008:
* Port3 as of October 31, 2008:
* Stock Funds: $91,378 /Total: $164,891 x 100% = 55% * Fixed Income Funds: $73,513/ Total: $164,891 x 100% = 45%
* Total: $164,891
OUCH!That's a drop of $53,541 (over 30%) in the stock portion of Brinker's balanced portfolio in one year.
This was Flanagan's answer to Hank's question:"I'm not speaking for Bob here of course. You've been following his regimen, I'd stick to it. But I believe if 50-50 is what you've been used to and adjusted your portfolio annually to re-balance 50-50, makes perfect sense. Obviously you have enough composure to realize that as bad as this storm is, it shall pass......
......It will take different forms from what we have been used to. It's not going to be led by General Motors.......I don't even know if we will have a General Motors by the end of next years.......It's going to be very bad news if that company fails, and it is very close to doing just that.......Tuesday should be the day that the auto makers go back to Washington with a plan and see what Washington gives them. .....General motors literally may not be able to make their payments after Christmas.....So in all probability they will get something to go home to be able to last a little bit longer and see what the new administration might be hammered out in the long run......
.....But the experts in the field, from Jack Welch, across the board, really seem to indicate that bankruptcy is the only way that General Motors can be saved. And that would incorporate a lot of changes and renegotiation of contracts and lower labor costs, freedom to operate plants in states that don't require meeting the union standards, expensive wages and benefits......
......There would be whole scores of brands that would disappear. I think already you may have heard that Pontiac is going out business and Saturn is fading from the horizon, and there are going to be more to come. Those suppliers are going to be impacted significantly -- the folks that provide the parts that they need to put those things together. Now this is not only affecting U.S. automakers, by the way. Toyota and Honda that operate here are also hurting and they'll be scampering off the Washington too. It's going to be a dicey time."
Bob Brinker had a caller on October 25, 2008 who asked a question that was very similar to Hank's. Brinker clearly told the caller to "wait" before rebalancing back into 50% equities. Here are some excerpts from my October 25th Summary:
Bob Brinker said: ".......And as long as there is uncertainty out there, as long as there is extreme difficulty in getting a handle on the future as there has been recently in these chaotic times all over the world, as long as that situation prevails, I would stay where you are. Now if you get down the road to a point where you say we've seen some stabilization develop -- and in the ideal world we've seen a successful test of a market bottom area develop on reduced volume, reduced emotion, if you get to a position like that, then I would consider returning yourself to 50-50. You're at 42-58. I'd stay there right now. But if you could identify a position like that -- and I'm certainly working to identify a position like that -- then I think you could think about the possibility to returning to a 50-50 situation.......
........ Believe it or not, 'This too shall pass,' this is not the end for the United States of America. There is no way that I can believe this is the end of the United States --'This too shall pass'. This economy will eventually right itself. It will return to a growth track, and it will do so without all these excesses we've been seeing. And when that happens, I think we'll be back in period where the stock market will make good returns. But I think we are in a period right now where I'd be patient and allow things to work themselves out and get to a point where you can say now it makes sense, maybe I'll return to 50-50."
Honeybee EC:Quite frankly friends, I didn't hear anything else on the program today that I found interesting or informative enough to write about.
If you missed Moneytalk this weekend, I highly recommend that you go to KGO810 Archives.You can either listen or download programs and take them with you and listen at your leisure. KGO810 has Moneytalk programs available for seven days after they are broadcast.IT IS FREE!
(Friday stock market update and chart added below.)
Bob Brinker says he is still looking for an opportunity to recommend a new S&P 500 Index "attractive for purchase" level. This would be for new money, since all of Brinker's model portfolios have remained 100% invested throughout this entire bear market megatrend.
Brinker removed all of his prior buying opportunities on September 16th and said this on November 8th:
".......But I have not yet reached a point right now where I have been willing to upgrade the recommendation on the stock market right now from dollar-cost-average to buy. I do anticipate as we move forward that there will be an opportunity to upgrade the stock market recommendation, which is currently for new money -- we are talking new money -- as you have, which is currently dollar-cost-average, I do expect there's going to be an opportunity to upgrade that to buy a recommendation. But until those conditions fall into place, I would remain on a dollar-cost-average approach........"
The market has just had a rare five-day major up-trend from the intraday lows:
Friday, November 28, 2008: Now we are nearly back to S&P 900. It must be painful for those who heard Brinker say he was looking for a new-money buy-signal just two weeks ago, when they contemplate Brinker missing a 20% gain from the mid-700's -- or even the mid-800's.
For the car lovers who read this Blog -- this is my Idaho-brother's classic car. I think it is a 1936-37 Ford or Plymouth. Someone will correct me if I'm wrong. 8-) This was taken at my cousin's house in Lakeview, Oregon. My daughter and son-in-law are in the rumble seat.
Bob Brinker's Moneytalk: Excerpts, Summary and Commentary, November 22-23, 2008. Dow: 8046 (down from 8497.31 last week); S&P 500 Index: 800.03 (down from 873.29 last week); Nasdaq: 1384.35 (down from 1416.85 last week) Oil: $50.35 (down about 10% from last week).
!!!NOTE TO BOB BRINKER...You need to correct the "free marketeer" misinformation you gave out about the Bush Administration Saturday on Moneytalk. There is video proof that the Republicans fought for oversight at Fannie Mae and Freddie Mac and they were shot down by several Democrats. Go to this link and scroll down to the videos: Bush Proposed Fannie Mae/Freddie Mac Supervision in 2003
"Fearing that mortgages would no longer be available to people who were unable to pay them back, Democrats eventually killed the proposal. The current meltdown in the mortgage industry is a direct result of giving mortgages to people who could not pay them back, a practice protected by Congressional Democrats."
STOCK MARKET Caller Darryl asked:"Did your market timing model detect any of this chaos in the market?"
Bob Brinker said:"It did not. And this is why earlier in October when I commented on this on the program I was forthright in stating so because I thought it was important to do at the time."
Honeybee EC: Bob Brinker NEVER said anything on Moneytalk (in October or any time in Y-2008) about his "timing model" not predicting this bear market. But to give him the benefit of the doubt, perhaps he thought he did. Here is what he actually said on October 12th as I reported in my Moneytalk Summary:
Bob Brinker said:“I want to make a comment about what we have seen recently which is unprecedented. Without question, this is the most difficult market environment I’ve seen,and my work did not forecast this bear market decline.I had no way of forecasting a global banking crisis. If I had, that would have been a huge forecast to make. And yes, it would have caused a lot of disbelief but I would have made that forecast if I had been convinced it was going to happen.......I’m not a person that believes in selling into a panic atmosphere and much prefer not to do so. My personal opinion is, it’s not the right thing to do. So recognizing that this is a situation that is going to require patience and time to resolve, that’s the way I feel about it."(The S&P 500 Index closed @ 1000.03 on October 13th. It closed at 800.03 this Friday-- a 20% loss.)
MONDAY UPDATE: In his hot-off-the-press Newsletter, David Korn commented on what Brinker said about his Timing Model:
TIMING MODEL QUESTION
Caller: This caller slipped in the question of whether Bob¹s timing model detect any of this chaos in the market? Bob said it did not. Bob noted that earlier in October when he commented on it he was forthright in saying so on Moneytalk because he thought it was important to do at the time. After saying that, Bob immediately moved to the next caller.
EC: I thought that was kind of an odd response. Not the part about Bob saying that he commented on it in October, but that he thought it was important to be forthright about it at the time. Anyhow, if you are a new subscriber or missed it, on the October 11-12, 2008 weekend, Bob said this is the most difficult market environment he has seen and that "his work did not forecast this bear market decline, and he had no way of forecasting a global banking crises and if he had, that would have been a huge forecast and that would have caused a lot of disbelieve, but he would have made it if he had been convinced it would happen." Incidentally, during the show he also said that that he does not believe in selling into a panic atmosphere.
EC#2: With the S&P 500 at 800, Bob has basically done a round-trip. What I mean by that, is that his timing model last turned ³favorable² in March 2003, when the S&P 500 was at 810. He stayed fully invested from 2003 to the present, thus his timing model completely failed. One would have thought that he might have made some asset allocation change in the last 5 years to protect some of the gains, but he did not."
ECONOMIC TURNAROUND Brinker said, "It will not be anytime soon."
INFLATION/DEFLATION Brinker commented that inflation figures show the "deflation effect coming in," and that consumer prices dropped 1% in October (12% annual rate) -- the largest decrease in consumer prices since the 1940's. Taking the last three months of consumer price index price changes, you get an annual rate of deflation of 4.4%.
MODEL PORTFOLIO BOND HOLDINGS Darryl asked Brinker if he still recommends Vanguard Inflation Protected Securities (VIPSX) in his Portfolio III.
Brinker answered: "We have a small holding there. It's a 10% rating in our fixed-income portfolio, and that's where we are leaving it."
Honeybee EC: Was Brinker confused about his own portfolios? His fixed-income portfolio and Portfolio III are not the same. Portfolio III is a balanced fund -- 50% stocks and 50% fixed income. Brinker's fixed-income portfolio is 100% fixed income, and it contains 10% VIPSX, as Brinker said -- but it also contains 15% Vanguard High-Yield Corporate Fund (VWEHX). To answer the callers question: Yes, Portfolio III contains 10% VIPSX.
HIGH YIELD CORPORATE BOND FUNDS Even though Brinker doesn't talk about it, this fund has taken a big dip in the past few months. Brinker has not issued a sell signal on it. Some believe, as Brinker evidently does, that the fund will eventually recover NAV losses. In the meantime, the dividend payout is over 10% right now, which offsets some of the losses. But one has to be prepared for price fluctuation -- the same applies to Vanguard GNMA Fund. The NAV fluctuates inversely with interest rates. At some point, when the economy recovers and interest rates rise, Ginnie Mae NAV will drop.
AUTOMOBILE INDUSTRY A caller asked Brinker if the three auto companies were "too big to fail." Brinker said that not all three, but that it is possible for any one of them to fail.
UNITED AUTO WORKERS Brinker said that the democrats "sold out to the UAW" and are "beholden" to them. Consequently, the UAW may get more money out of Congress even though the auto company "business model is broken."
BANKING INDUSTRY(Brinker comments paraphrased) Downey Financial Corp, one of the largest companies selling the "optional adjustment rate mortgages," has been acquired by U.S. Bancorp. (170 Downey Branches gone -- taken over by U.S. Bancorp) Insured accounts will remain insured accounts. The only accounts in jeopardy are those above the FDIC insured limits......
.....Optional adjustment rate mortgages allow the borrower to defer part of their monthly payment and add it on to principal. So in many cases the price of mortgage is going up and the price of the house is going down. Downey had over 15% of their assets in loans no longer collecting interest.....
.....IndyMac was also a large player in this dangerous mortgage game. Most of the big players in optional adjustment rate mortgages are all gone now. Washington Mutual (the biggest S&L) sold it assets to J.P. Morgan; Chase earlier this year; and Wachovia Corp (at one time the sixth largest bank) made a deal with Wells Fargo.
CITIGROUP Bob Brinker said that Citigroup will be "rescued" by the government "one way or the other," but it may not help the common stock. Remember what happened to Freddie Mac and Fannie Mae, they were bailed out and remained solvent, but are now penny stocks.
"The federal government agreed Sunday night to rescue Citigroup Inc. by helping to absorb potentially hundreds of billions of dollars in losses on toxic assets on its balance sheet and injecting fresh capital into the troubled financial giant.
The agreement marks a new phase in government efforts to stabilize U.S. banks and securities firms. After injecting nearly $300 billion of capital into financial institutions, federal officials now appear to be willing to help shoulder bad assets, on a targeted basis, from specific institutions............."
"ECONOMIC TRAIN WRECK" Brinker said:"The market has been shellacked in this economic train wreck that we are in, but I was looking at the financial stocks........pretty interesting stuff. Some of the big four, the bank stocks, the ones that we could say are too big to fail because these are the ones who got the most money in the TARP Program, so these are the banks that are viewed as the big-hitters......." Brinker recited this data: Citigroup down 89% off its high; Bank of America down 75% of its 52-week high; J.P. Morgan is down 55% from its 52-week high; Wells Fargo -- invested in by Warren Buffet -- down 51% below its high.
INSURANCE STOCKS Declines are much greater than bank stocks -- "Staggering." All these are off the 52-week high right now: Hartford Financial down 95%; Lincoln National down 90%; Prudential down 83%; Metropolitan Life down 72%. This is the reason that Henry Paulson recently opened the door to the possibility that some of the TARP money could wind up as capital injections into the insurance industry.
Brinker pointed out that the United States of America requires a viable banking industry and a viable insurance industry in order to do business. He said that there are several ways that only an insurance policy stands between each of us and financial disaster -- car, home, life and businesses all require insurance or everything comes to a halt.
BARACK OBAMA A caller asked Brinker if he "was encouraged by" Barack Obama's choice for Secretary of the Treasury. Brinker replied:"Yeah, I think it's a great choice......and you know, I find it so ironic -- we were told by so many that Barack Obama was a, what are the terms they are using, a Marxist, a Socialist. Well, so far, he's surrounding himself with Timothy Geithner, the Federal Reserve Chair, and the former Republican -- he's now independent. He's surrounding himself with Paul Volcker. He's surrounding himself with Larry Summers.......Surrounding himself with Warren Buffet -- apparently going to name Hillary Clinton Secretary of State. Strange behavior for a Marxist."
WASH SALE In order to not trigger the wash sale, Brinker explained that you need to have 31 days between selling an individual stock (such as IBM) at a loss and buying it back -- because it is identical. Brinker said:"But if you purchase similar securities then you can do it the same day. For example, you could sell Spiders on Monday, you could buy Total Stock Market on Monday, and that would be sufficiently different that you could do it the same day......."
"FREE MARKETEER" This is a term that Brinker seems to have coined to define the people "currently in the White House." Brinker hopes that the new administration will be "pro-active" in dealing with current problems. Brinker said: "You have people in power, and you've had people in power the past eight years in the White House who really do not believe in regulation. They really are not oriented to oversight and regulation. They are oriented to a completely different philosophy which is called FREE MARKETS........
.......Now you are talking about polar opposites here. You can have free markets to an extreme which is what we've had for the past eight years, where you don't have oversight and regulation, and you have the mortgage industry gone wild.........which is what gave us all this toxic mortgage waste.......Or over on the other side, you can have oversight and regulation, which we have not had.......And I think that they have pretty much admitted that we have not had it. And they've also said they don't really believe in it very much because they are FREE MARKETEERS."
Honeybee EC: Brinker seems to change his tune rather frequently when it comes to placing blame for these financial crises. Later in the program, he was hammering Bill Clinton for signing the repeal of the Glass Stegiel act. However, I have never heard him mention Barney Frank's role in this -- or the congressional requirements to make loans to underqualified people, focusing specifically on getting minorities into home ownership. Placing all the blame on the White House and mortgage brokers is disengenous, in my opinion.
NOTE: Monday Honeybee Update: After doing some research, I found that Brinker was incorrect when he said that President Bush has been against all regulation of the mortgage industry, as this 2003 New York Times article proves:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry...........
..........At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families........
ALAN BLINDER Several times this weekend, Bob Brinker quoted what Alan Blinder said about some banks being "too big to fail." I wrote about Blinder's appearance on Moneytalk and posted some of his excerpts in the September 13th Summary. Occasionally, Brinker has a very interesting guest-speaker. I would suggest that if you don't have time to listen when the program airs, that you go to KGO and download it to your MP3 or Ipod and take it with you.
If you missed Moneytalk this weekend, I highly recommend that you go to KGO810 Archives.You can either listen or download programs and take them with you and listen at your leisure. KGO810 has Moneytalk programs available for seven days after they are broadcast. (Note: Saturday, Moneytalk was pre-empted for a ball game, but hour-two is archived at the 6pm time slot, and hour-three, which includes the guest speaker, is archived at the 7pm time slot. Sunday the program was broadcasted at the regular 1-4pm slots.) IT IS FREE!
Brinker has to be viewed as a total incompetent in his ability to forecast bear markets and avoid them for subscribers who pay him a fee. Indeed he has compounded the proof of his incompetence with his bombastic attacks on those "bad news bears" and "false prophets" and "cassandras" who were bearish in the 1400s and according to Brinker ruining people's finanical portfolios by scaring them out of the stock market. Today the market is about half what it was when Brinker was blasting those bears--just about 5 months ago.
To further show his ignorance and prove once and for all that his "buying opportunities" were nothing more than a parlor trick, Brinker has with pomp and ceremony on several occasions picked a bottom or "buying opportunity" only to watch the market fall another 100 ponts or more and pick another one; pretending never to have picked several higher.
Now he's shell shocked and retreated to a hole like a prarie dog who knows there are hunters on the hills above him. He talks about politics and energy and automobile problems, but he seldom mentions what he once claimed to be an expert in--the equity market. The only time he does these days; he skips over his own obvious incompetence and the plethora of failed "bottoms" he has called previously and talks about doing his "work" in "identifying a bottom". And until then $ cost average LOL.
Well you can usually bet on Brinker being a creature of habit and predictable; except for the QQQ debacle. You could predict his rather qualified and somewhat bogus "re-entry" call in March 2003. He was afraid he had missed the lows--he did they were in Oct 2002-and wanted badly to get into the market. The Iraq war worked the last time so it was likely he would take another shot on the opening of hostilities.
Now the market is below where it was when it worked the last time in 2003. Brinker would like to put something in writing with some hoopla--not to much in case we go to 400--claiming this is a buying opportunity. The "point" could be spun later to make it sound like a big deal to new listeners who were unaware of the fact that Brinker was bullish all the way from 1575 to wherever this debacle ends.
Now of course such a call will not sit well with those who took the last call in 03 and have now taken more than a round trip. It will seem to slick by half. But that is what Brinker often is. A tricky fellow QQQuite often hard to pin down.
He has to start a whole new bunch of goobers and geezers now. He is going to lose those with a brain when the subscription is up. He has really nothing to lose to throw up another buying point and hope it sticks.
Bob Brinker made a good call on March 11, 2003. He had 65% Model Portfolio cash reserves that he had raised in 2000. He returned it to the market at S&P 807 as this shows:
Bob Brinker's April, 2003, Marketimer, Page One; Paragraph One: "On March 11, the Marketimer stock market timing model returned to bullish territory for the first time since January of Year 2000. In our view, on March 11 (......S&P 500 Index 807), the market reached the vicinity of a major cyclical bear market bottom.........."
The S&P 500 Index closed at 806.58 today!
Between March 2003 and October 2007, the S&P 500 Index went up 98% and topped out at 1576. Today, November 19, 2008, The S&P closed below Brinker's March 2003 buy signal today -- after a 50% bear market decline this year.
Brinker will not be able to issue a buy signal this time because he has absolutely no cash reserves -- he never issued any sell signals all the way down. Just the opposite, he has called several bottoms and recommended several new buy levels for "new money," including mid-1400's, low to mid 1300's, and 1200's. At the same time, he continuously recommended dollar-cost-averaging new equity money.
. If Brinker tries to scam Moneytalk listeners into believing that he is issuing another buy signal, if and when he decides to call another market bottom, it will be a huge SHARK attack. He got away with that sort of deception once before with the QQQQ-trades. Let's hope he doesn't try it again. Let's hope he does the right thing.
. While the market is dropping like a rock and CNBC is all abuzz nearby, Lama is not a bit worried. 8-) .
Bob Brinker isn't saying much about the stock market these days and he won't respond to subscribers who used to trust him. This person wrote to "Uncle Bob" and here is his story. He/she chose to remain anonymous. There may be good reason for him to do that, but it would be nice if he would create an "alias" so that we could get to know him. (Hint, hint) 8-)
Anonymous said...
I was MT subscriber - no longer - wrote Uncle Bob a note (no response) that he should offer a free year to subscribers as a token. No Mea Culpa from this self-appointed, dangerous Guru. Personally, I rolled over a large lump sum into my IRA invested 70% in the market before the crash at around 1220 on the S&P - although I assume responsibility, I did reference Bob's new money call at this level (August) timer. Fortunately I do not need this money for several years, however, it will probably take that long to get back to even.
Everything prior to 2008 has washed away for Bob. He needs to start over now perhaps joint 12 steps for fallen Guru's - I understand that Greenspan attends now.
November 17, 2008 10:42 AM
Anonymous said......
Per my previous post regarding my note to Uncle Bob, this is what I wrote (without response from Bob or MT). What is interesting though is that I never received notice that my MT subscription was due to expire in November (I wonder why) - read on:
Subject: When will the Mea Culpa from Bob arrive?
The advice for better than a year has been way, way, off. Several times Bob called (what he defined as good entry points for investors), once those levels were taken out, the message changed to dollar cost averaging (This was done in the low 1400’s, 1300’s and 1200’s). Now Bob tells us he’ll send a message for the infamous “BUY” signal. Buy with what? We were never given a “SELL” signal. Instead over the last 12+ months all we’ve been given is the same old rehash of recession evaluation metrics – always bullish! Still calling for new records next year as of the last issue? Ludicrous at this point, S&P 500 earnings in the 80’s or 90’s, do you still believe that Bob?
With all due respect, Bob has done great work over the years educating the masses and his on the air advice has always been pretty good. But somewhere along the line over the last 18 months Bob has either been dialing it in, or has lost the “touch”. We sit at quite possibly the cusp of a depression (or at least a severe downturn) and a sell signal never came.
As a token, Bob should offer a one year free subscription to the current customers of such and get serious about developing a new play book. The old one did not work this time around. I’m sure I speak for many that using Bob’s guidance this year has proven very costly and may take many, many years to recover.
Tell it like it really is Bob – you blew it big time on this one! Folks will be battening down the hatches and spending will come to a crawl.
My subscription expires in November and I certainly will not be renewing it as that $185 looks like a very poor investment (similar to index buys I made at entry point calls).
Mea Culpa Bob, you owe it to your base subscribers. Obviously the economic problems are not your fault, and we all need to filter things to make our financial decisions, but regardless, your business model and the very name of your newsletter “MarketTimer” depends on your ability to Shepard your flock ahead of the curve. Instead it looks like we went over the cliff like everyone else. Turns out this could probably be the worst of all times for you to miss a call.
Bob Brinker's Moneytalk: Excerpts, Summary and Commentary, November 15-16, 2008. Dow: 8497.31 (down 5% for week); S&P 500 Index: 873.29 (down 6.2% for week); Nasdaq: 1416.85, (down 7.9%) for week; Oil: $56.29 (down 6.8% for week).
STOCK MARKET:
Bob Brinker did not mention the stock market specifically today, and there were no calls about it.
Brinker began the program by saying that it had been a "week of great volatility in the financial markets." Brinker devoted the rest of the opening monologue to the auto industry, unions, Washington D.C., and Henry Paulson's announcement that the TARP (Troubled Asset Relief Program) program has been dropped. Brinker said there would no longer be an effort to purchase bad loans -- it's not going to be done.
BRINKER'S OPENING MONOLOGUE PARAPHRASED:
So now what's going to happen to the $700Billion? $290Billion has already been allocated this way: $250Billion to the nation's banking system on a capital injection program, with $125Billion of that money going to large banks such as Wells Fargo, Citigroup, J.P Morgan, Morgan Stanley, Goldman Sachs, Bank of America and a couple of others. The other half will be soaked up by other banks around the nation -- and an additional $50million was made to AIG on top of the earlier allocation........
.......So there is an additional $410Billion available, however it appears that it will be spent. The Treasury Secretary, while calling off the original purpose of the TARP Program, has replaced it with three other possibilities: Car loans, credit card loans and student loans -- those three will be the new areas of focus unless there are other changes, and there may be other changes because there will be a new Treasury Secretary sworn into office when the administration changes on January 20th. Who knows what new change he may order up........
........The government has been taking an Ad hoc approach to these situations -- the way they handled Bear Stearns in March. Following that was the Freddie Mae, Freddie Mac and AIG conservatorship along with a lot of money allocated to AIG........Then the fatal mistake of allowing Lehman Brothers to fail in September, which set off serious ripples that the government did not expect. Then they had to put in a guarantee program for money market funds that chose to join the program and establish a commercial paper funding facility that has $hundreds of billions of top-grade commercial paper obligations on the books and another number of things along the way.
AUTO INDUSTRY (GM) BAIL-OUTS: Brinker thinks the books on a bail-out of the automobile industry should be closed today because the chief spokesman for United Auto Workers has stated that there will be no more labor concessions for the UAW workers. Brinker says that should close the door on any further bail-out discussion because without concessions by labor, the auto companies are doomed to the same failed business model that is clobbering their balance sheets and income statements.......The U.S./Detroit auto manufacturing companies have a failed marketing plan and cannot compete with other auto manufacturers under the current set-up.
Brinker said:"It's failed because the workers have earned so many benefits by winning their negotiations with management over the years that the companies are facing the risk of bankruptcy..........If management does not responsibly negotiate for the shareholders, then what can happen is that the pendulum can swing so far to the union's side that the unions basically own the company. They don't own it in an equity sense, but they own it in a job sense. The viability of their future employment gets washed out when the company gets washed out. And that's what we are seeing in the automobile industry. So on the one hand, there will be continued discussion on providing a bailout to Detroit, but on the other hand, it will have no long-term consequence unless the unions join in with give backs to re-negotiate their contracts.......
.......The automobile companies, as you well know, are no longer in a position to provide healthcare to their retired workers. They're struggling to provide healthcare to their current workforce........This is just one of many examples of how the auto companies management have literally given away the company. And they gave the company to the unions. And the unions will benefit as long as the company is able to the cut checks. Once that stops, then that's the end of that........at this point, there is no point in carrying further any discussion of the bailout of the automobile industry, especially given the fact that labor wants everything they've won at the negotiating table and they refuse to even discuss making further concessions........
........The business model is broken. It's broken at General Motors, it's broken at Ford and it's broken at Chrysler..........this is Moneytalk"
The remainder of the program and most of the calls were basically about the subjects covered in the opening monologue. There was one call from a man who is very worried about the possibility of a government take over of 401K plans. This subject was covered at length in my Summary of last week's Moneytalk. Brinker simply repeated pretty much what he said last week -- with less detail.
Honeybee EC: This was a gut-wrenching week on Wall Street. The S&P lost over 6% this week alone, and the Nasdaq lost almost 8%. It astonishes me that a "financial advisor" who established his reputation and following as a stock market-timer, and has bragged about his market-timing prowess for over 20 years, now spends a whole program talking politics (yes, he even spent some time defending Obama), and government bailouts, without making any prognostications about how they might affect the stock market.
Last week, giving himself a complete mulligan on all of his prior buy levels this year, Brinker commented that he was looking for a new buy-level and recommended dollar-cost-averaging new money into the market. He failed to point out that so far this year, while he was FULLY INVESTED, he has made SIX changes to his advice for investing new money into the stock market.
In the December 2007, Marketimer, Brinker called the "mid-1400's" a "GIFT HORSE BUYING OPPORTUNITY" and said that there had been 18 opportunities to take advantage of it. By January 20th, he had dropped that advice altogether and recommended only dollar-cost-averaging. As the S&P 500 Index declined precipitously and relentlessly, Brinker issued other buying opportunities in the 1300's and 1200's....finally removing the last one in September, 2008.
Last week, Brinker said: "........during periods of weakness I would be willing to dollar-cost average money to add that to your stock market portfolio within the context of your tolerance for risk and your asset allocation........But I have not yet reached a point right now where I have been willing to upgrade the recommendation on the stock market right now from dollar-cost-average to buy. I do anticipate as we move forward that there will be an opportunity to upgrade the stock market recommendation, which is currently for new money -- we are talking new money -- as you have......."
Honeybee EC: Which is something (new money) you don't have in your model portfolios, Mr. Brinker....
Will Brinker bury all of this year's failed bottom calls and only brag about the latest one -- whatever that might be when it arrives? What about the people that believed he was correct at 1400, 1300, 1200? Too bad, so sad for them?
There was not one mention of the stock market on Moneytalk today. There was lots of political talk and much rehash of the same topics that were covered Saturday. Several annuity questions and some concern for annuities held by insurance companies.
Here are a few points that Brinker made on Sunday:
* Annuities held by insurance companies have NO guarantees except what is provided by the insurance company. BEWARE.
* The TARP equity stakes in banks and private companies is "total socialism."
* We are in a recession.
* Recessions are counter-inflationary.
* There will be deflation for the month of October
* There will be no economic recovery in the 4th Quarter -- "forget about it."
If you missed Moneytalk this weekend, I highly recommend that you go to KGO810 Archives. You can either listen or download programs to your MP3 players or Ipods and listen at your leisure. They have Moneytalk programs available for seven days after they are broadcast.IT IS FREE!
Please note: Moneytalk was pre-empted for the Cal Bears football game Saturday (sometimes they broadcast it after the game). The program was on at its regular time 1-4pm Pacific Time Sunday.
If you want updates on what Bob Brinker is saying on Moneytalk delivered to your email box, then send us a note at TalkAboutMoney@gmail.com and ask to get on our FREE mailing list. (The mailing list is not done by Honeybee.)
Brinker's Hobson's choice
Brinker has to be viewed as a total incompetent in his ability to forecast bear markets and avoid them for subscribers who pay him a fee. Indeed he has compounded the proof of his incompetence with his bombastic attacks on those "bad news bears" and "false prophets" and "cassandras" who were bearish in the 1400s and according to Brinker ruining people's finanical portfolios by scaring them out of the stock market. Today the market is about half what it was when Brinker was blasting those bears--just about 5 months ago.
To further show his ignorance and prove once and for all that his "buying opportunities" were nothing more than a parlor trick, Brinker has with pomp and ceremony on several occasions picked a bottom or "buying opportunity" only to watch the market fall another 100 ponts or more and pick another one; pretending never to have picked several higher.
Now he's shell shocked and retreated to a hole like a prarie dog who knows there are hunters on the hills above him. He talks about politics and energy and automobile problems, but he seldom mentions what he once claimed to be an expert in--the equity market. The only time he does these days; he skips over his own obvious incompetence and the plethora of failed "bottoms" he has called previously and talks about doing his "work" in "identifying a bottom". And until then $ cost average LOL.
Well you can usually bet on Brinker being a creature of habit and predictable; except for the QQQ debacle. You could predict his rather qualified and somewhat bogus "re-entry" call in March 2003. He was afraid he had missed the lows--he did they were in Oct 2002-and wanted badly to get into the market. The Iraq war worked the last time so it was likely he would take another shot on the opening of hostilities.
Now the market is below where it was when it worked the last time in 2003. Brinker would like to put something in writing with some hoopla--not to much in case we go to 400--claiming this is a buying opportunity. The "point" could be spun later to make it sound like a big deal to new listeners who were unaware of the fact that Brinker was bullish all the way from 1575 to wherever this debacle ends.
Now of course such a call will not sit well with those who took the last call in 03 and have now taken more than a round trip. It will seem to slick by half. But that is what Brinker often is. A tricky fellow QQQuite often hard to pin down.
He has to start a whole new bunch of goobers and geezers now. He is going to lose those with a brain when the subscription is up. He has really nothing to lose to throw up another buying point and hope it sticks.
November 21, 2008 9:07 AM