Caller-Barbara, Here are the Facts About Bob Brinker and Bear Markets

November 22, 2009: Hi Barbara.....Beware of trusting Bob Brinker to accurately "market time a major bear market." And be warned that there are things he never mentions from his market-timing history that could make you long for some shark-repellent.

Barbara...Be aware that in spite of what he told you yesterday, Brinker has never completely side-stepped a bear market. And out of the last three major bear markets he only partially went to cash in one of them -- that would be the one he bragged about to you yesterday (see my November 21st summary).

Barbara...Brinker denigrated "buy and holders" to you, but be warned that he has been a total buy-and-holder for almost 6 years now. Following his model portfolios over the past three years would have left you with much greater losses than you have now. In 2008 alone, Brinker's Model Portfolio I lost 39.7%, and the "balanced" Portfolio III that he talked to you about, lost 23.9% in 2008. Both of them lost much more from the top to the bottom of the bear market. Here are the facts that Bob Brinker did NOT TELL YOU:

* Brinker was fully invested during the October, 1987 market crash.

* Brinker declared (what was) a non-existent bear market in January 1988 and went to 100% cash. He returned to 100% invested position in January 1990 AFTER the market had risen 50% from his sell level.

* Brinker raised 60% model portfolio cash reserves in January 2000 (he raised that to 65% in August 2000). So he remained 35% invested in equities throughout the entire 2000-2003 bear market. However, what he doesn't want you to know is that in October 2000, he sent out a special subscriber bulletin recommending that subscribers invest up to 50% of those model portfolio cash reserves in a QQQQ trade. That trade lost over 70% and has never been closed. Brinker kept this trade off the books and never took responsibility for it in his model portfolio performance numbers.

* Brinker returned the remaining model portfolio cash reserves to 100% invested in March 2003 and has been fully invested since then. His Timing Model© completely missed the 2007-2009 major bear market -- the worst since the 1930's!

* Brinker was a raging bull in October 2007 at the market highs, expecting the S&P 500 to reach 1650, and was fully invested as the major bear began in earnest in January 2008.

* Brinker remained a raging bull throughout 2008 and issued several "all new money in" buy signals as the market continued to drop: mid-1400's, mid-1300's, low-to-mid 1200's and finally in January 2009, mid-800's. (From his mid-800's buy level, the S&P dropped another 25% before turning up in March.)



Jeffchristie said: "Honeywell and Todd was the mythical investment firm that Margie's father worked for in the 1950's TV series My little Margie. Had she made this move to Brinker three years ago her $989.000 would be worth $807,000 today per Portfolio 1 losses instead of the 1.2 million."

jeffchristie wrote:

Barbara continued: "So we are meeting with our guy on Monday to go over our portfolio and our thought is to hear what he has to say based on what we brought him 3 years ago, $989,000. Today we have $1.2, but out of that, we've paid him, out of that money has come $25,000 to pay him. So he hasn't done so well over three years."

I would love to be her advisor on Monday. Good morning Barbara what can I do for you today. I see you are not satisfied with our returns over the past three years and you are planning to follow the advice of some radio host and newsletter writer. Since you have been with us the past three years your account has appreciated by $211,000. That is an increase of 21%. We here at Honeywell and Todd are quit proud of those returns given the market conditions over the past three years. Are you sure you have done your homework here?

First of all lets look at a bench mark. The SPY which tracks the S&P 500 closed Friday at 109.43. On 31 Dec 2006 it stood at 141.63. That represents a loss of 32.2 or -22.7%. Now the way you have described Mr.Brinker he sounds like some kind of investment genius. You know that I could lie to you or he could be lying to you but numbers don't lie. When you go to Mr. Brinker's website you can find the value of his three investment portfolios. They are as follows: Port 1 $212,009 Port 2 $177,751 Port 3 $188,950.

http://www.bobbrinker.com/portfolio.asp

The value of these portfolios on 31 Dec 2006 were: Port 1 $260,032 Port 2 $210,074 Port 3 $197.790

http://web.archive.org/web/20070105132243/http://www.bobbrinker.com/portfolio.asp

Here is how Mr. Brinker has done over the past three years: Port 1 -$48,023 (18.4%) Port 2 -$32,323 (15.3) Port 3 -$8,840 (4.5%)

As I stated earlier we here at Honeywell and Todd are quit proud of +21% we got for you over the last three years. Mr.Brinker is a marketimer. Did he tell you his record for doing that over the past 25 years? There were three major market sell offs in that time period. They were 1987, 2000 and 2008. Brinker was fully invested in 1987 and 2008. He got 60% out in 2000.

The real risk of being a market timer is selling into a bear market that does not occur. Brinker did just that around 1990. He got out sometime after the 1987 crash and the market kept going up.

Brinker was also a raging bull in May of 2008. He bashed other timers who got people out of the market. They were right he was wrong. He did the same thing he criticized me of doing to him.

Given all of this information I am going on the record that I advise you NOT to follow Bob Brinker's advice. You certainly have every right to be your own financial advisor but given what I have just presented to you today I regret to say it but you appear to me to be a woman of colossal ignorance when it comes to investing. We wish you luck Barbara, all the folks at Honeywell and Todd do.

November 22, 2009 7:03 AM [LINK] to Jeffchristie's comments

Detailed Summary of Brinker's QQQQ Advice Including Copy of Buy Bulletin

Detailed Summary of Brinker's Asset Allocation, 1982 to Present

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