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Sunday, September 07, 2008

Bear Market Statistics - Bob Brinker Still Fully Invested

2007-2008 Bear Market Statistics 09/07/08

This graph shows the DJIA and the S&P500 are currently at bear market levels less then 2% above their July 2008 lows. I am sure Bob Brinker has his fingers crossed that the S&P500 does not make a fifth lower low in an ongoing bear market.

The NASDAQ is showing relative strength at 4% above its bear market low set in March 2008. The worry with the NASDAQ is it broke the potentially bullish trend of higher lows by making a low Friday that was lower then its July and August lows. Ideally, you like to see new bull markets making a series of higher lows. Now it looks like we are testing the recent market lows.

It was refreshing to hear bond guru, Bill Gross of PIMCO, tell he readers and people on CNBC last week that he was too early buying troubled bonds which has resulted in losses.

From Bill Gross's September 2008 Investment Outlook
Too bad for us and for everyone else who bought too soon. There are few of these deals now priced at par or above, which is bondspeak for “they are all underwater.”
Don't you wish Brinker could admit similar mistakes and discuss them openly on his radio show?

Brinker Buy Levels:

This next graph shows Bob Brinker's Recent "All In" Buy Levels:

Despite recommending 100% in equities for his model portfolios one and two since March 2003, Brinker recommends dollar cost averaging "new money" into the market unless there is a decline to one of his "buy levels" where he then advises a lump sum investment.

Brinker's last five "all in" buy levels:
  • March 2007 Special Subscriber Bulletin @ 1380
  • Aug 16, 2007 @ 1411: Mid 1400s
  • Feb 10, 2008 @ 1331: Low 1300s
  • Aug 5, 2008 @ 1285: 1240 or less
  • Sept 2, 2008 @ 1282: Low-to-mid 1200s
Question: How many all in buys while advising 100% in equities is one allowed???

S&P500 Chart
Last Market High 10/11/07 at 1,576.09
Last Market low 07/11/08 at 1,200.44
Current S&P500 Price 1,242.31
Decline in Points = 333.78
Decline in percent = 21.2%
Max Decline = 23.8%
=>This means the decline from intraday high to intraday low is 23.8% and we are currently 21.2% off the peak.

=>The decline in the S&P500 from the closing high to the closing low was 22.4%

DJIA Charts
Last Market High 10/11/07 at 14,279.96
Last Market Low 07/15/08 at 10,827.71
Current DJIA Price 11,220.96
Decline in Points = 3,059.00
Decline in percent = 21.4%
Max Decline = 24.2%
=>This means the decline from high to low has been 24.2% and we are currently 21.4% off the peak.

=>The decline in the DOW off the closing high to the closing low was 22.6%

Last Market High 10/31/07 at 2,861.51
Last Market Low 03/17/08 at 2,155.42
Current NASDAQ Price 2,255.88
Decline in Points = 605.63
Decline in percent = 21.2%
Max Decline = 24.7%
=>This means the decline from intraday high to intraday low is 24.7% and we are currently 0.211646998 21.2% off the peak.

=>The decline in the NASDAQ off the closing high to the closing low was 24.1%

I did not get to listen to more than a few minutes of Moneytalk yesterday but I would expect someone still bullish like Brinker who was bullish and advising 100% of a portfolio to be in equities when the market was at 1565 to be telling his listeners to "hang in there" with the market now in the low 1200s. Did anyone hear any comments from Brinker to "hang in there" or "I was wrong to be so bullish at the top?"
See Bob Brinker's Asset Allocation History
I sure hope Brinker isn't thinking of selling near the bottom of the bear market like he did in 1988 when he sold and went to 100% cash when the markets were a similar level off the 1987 highs just before the market started a recovery.

CAL (2-0) won 66 to 3, GO BEARS!

==>Sept 6: Charlie Maxwell Says $300 Oil Inevitable <==

==> More Oil Price Charts <==

==> Very Best CD Rates with FDIC <==


  1. In his August 2007 Marketimer Bob Brinker wrote

    "We rate the stock market as attractive for purchase on weakness that occurs in the area of the S&P 500 Index mid-1400's. Above that level, we recommend a dollar-cost- average approach."

    Brinker repeated the "mid-1400's" buy signal in September, October, November and December 2007.

    In February 22, 2008, Peter Brimelow wrote of Brinker:

    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."

    Now he is looking for a new bottom after the market traded in the 1100s! Calling bottoms while fully invested from the top with no funds available to buy is laughable. Who can make this stuff up?

  2. I did not renew Bob's newsletter as of 9/1/08. It doesn't bother me that he was wrong by a long shot but that he has yet to admit his mistake in his newsletter or his radio show.
    I don't know what his current Alert says, however if it is either sell or buy they would be both wrong.

  3. I also am irritated that Bob cannot admit he is wrong. Also, in the past, he tried to stay apolitical. Now he has become Mr. Republican. Just once, I would like him to take a stab at George W. and leave poor Bill Clinton alone. Don't forget that it was Reagonomics and a hands-off government that got us into this mess.
    And Bob, you never saw the current situation coming.

  4. I am grateful to Bob for many years of entertaining and highly educational weekend radio. However, when it comes to his newsletter, past performance has unfortunately proven to be no guarantee of future results. It is particularly grating to me that the annoying egotist Gary Kaltbaum, who I consciously chose to ignore given Bob's positive sentiment, was right on about this crash (as well as the emerging markets crash back in 2006). The lesson I draw from all this is that you cannot trust any prognosticator and more than you trust yourself.


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