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Tuesday, September 23, 2008

Bob Brinker, Hank Paulson and QQQQ

Regular readers here are aware of Bob Brinker's advice to buy the ETF for the NASDAQ100 (QQQQ) back in October 2000 with up to half the 65% cash reserves. (If you are new, then read Bob Brinker's QQQ Advice.) US Treasury Secretary Hank Paulson may have the solution to Brinker's problem of a poor investment still on the books for many of his subscribers. Let me first summarize the situation.

In the first half of 2000 when the S&P500 was about 1500, Bob Brinker recommended his subscribers raise 65% cash reserves and wait for instructions on how to deploy these cash reserves in cyclical bear market rallies in what he thought was going to be an 8 to 20 year secular bear market.

In October of 2000 when the QQQQ was about $83, Bob Brinker told his aggressive subscribers :
  • We recommend Marketimer subscribers with aggressive objectives invest 30% to 50% of existing CASH RESERVES in QQQ shares in order to exploit this opportunity.
Conservative investors were told
  • Also we recommend subscribers with conservative objectives invest 20% to 30% of CASH RESERVES in the QQQ shares in order to take advantage of this opportunity.

Brinker let this "short term trade" turn into a long term "investment" when they fell to $46 in June 2001 and he wrote:
  • For subscribers with a position in Nasdaq 100 Index (QQQ) shares, we recommend holding these shares for future recovery.
His subscribers who follow his instructions have been holding these waiting for a recovery, for 8 years now!

I have the solution to Brinker's problem. Bob Brinker should tell his audience to send a note to Hank Paulson and ask the US Treasury to take these "troubled assets" called the QQQQ off their hands for 50 cents on the dollar, which would be a bit more than they are worth today!

If the economy recovers, then the QQQQs will go up in value and tax payers will make money!

More information:
BTW, last summer when the market was making new all time highs, Brinker abandoned his idea of an 8 to 20 year secular bear market. Unfortunately for him, that was very poor timing.

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