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Wednesday, October 01, 2008

Bob Brinker Missed Another 30% Bear Market

I like how Bob Brinker has taught thousands of listeners over the years to become their own investment advisers by:
  • Asking questions when people make great claims
  • Learning to know and understand what they own
  • and to not take the word of annuity salesman or insurance agents selling whole life policies.
With the "polishing Brinker's assets" segment out of the way, my big disagreement with Brinker is his "act" that he can time the stock market to add value over buy and hold of a diversified basket of index funds so he can sell a newsletter called "Marketimer." Even worse is I strongly disapprove of Brinker's total lack of transparency for his past advice that did not work out well.

One would think a "top rated" market timer would have a good record calling bear markets rather than buy, buy, buy as it fell 30% then switch back to "dollar cost average" near the bottom (or the bottom to date.)

By my count we have had five bear markets since Bob Brinker has had a newsletter and he has only partially called one.

On the radio during the late 1990s when Brinker was selling himself as a market timer who would call the top, he said he planned to go to 100% cash if his Marketimer Long-term Stock Market Timing Model went bearish. He went so far in one newsletter as to tell his subscribers to get the prospectus for a fund that would short the market so they could act quickly when he gave his sell signal. When the 2000 to 2002 bear market began, he went to 65% cash then put up to half of that back in to the NASDAQ "off the books" in October 2000 so he had his "assets" covered no matter where the market went.

Here are the last five bear markets, how far they declined from peak to bottom and what Bob Brinker recommended:
  • October 1987: 30% decline
    =>Brinker rode it down fully invested then went to 100% cash in January 1988

  • Gulf War Bear; just over 20%
    =>Brinker got back to 100% invested just before this bear market started.

  • 1998 Bear Market; About 22%
    =>Brinker rode it down fully invested. It was a short bear market so while painful for subscribers who were fully invested, holding through it was not bad advice.

  • March 2000 to October 2002 Bear Market; About 50%
    =>Brinker went to 60% cash about 5% below the top in Jan. 2000, raised another 5% cash in the summer then in October 2000 he recommended putting up to half that cash into the NASDAQ100 ETF known as QQQQ which was in the $80s at the time. In March 2003 he advised putting the reset of the cash back into the market when it was about 4% above the 2002 bottom.
    =>See Bob Brinker's QQQ Advice and Effect of QQQ advice on reported results

  • October 2007 to now bear market; 30% decline so far
    =>Brinker was fully invested at the top and gave "all in" buy signals in the mid 1400s, mid 1300s and mid 1200s.
    =>After the market fell to the low 1200s, he changed "lump sup in mid to low 1200s" back to "dollar cost average."
    =>With the market hitting the very low 1100s the other day, he was back to "dollar cost average" new money.

  • See Bob Brinker's Asset Allocation History
Five bear markets with little value added before taxes and yet he still calls his newsletter "Marketimer" and sells the idea on his show that he tries to time the market. It is like a rock selling itself as "trying to float."

What sort of market timer is fully invested at 1576, calls for an "all in buy" in the mid 1400s then has "dollar cost average" while in the 1100s after riding the bear down 30% fully invested and won't reassure his listeners on the radio that he was wrong to be so bullish at the top so they don't panic now and sell? The ONLY time he has talked about his market advice since it fell below 1400 was when a caller ambushed him to ask if he missed the sell signal. Brinker answered a different question to make it look like the caller was mistaken.



4 comments:

  1. Very strange that a stock market show which is educaitonal and informative on so many fronts would completely ignore the end of the 3rd quarter in terms of how the major averages have performede year-to-date or since hitting the top on year ago on the Dow and S and p 500.
    Maybe he figures we can get that information anywhere but a few months ago, comments like "how sweet it is" would follow the syncophant subscribers about how the market was holding up and all the "bad news bears" were trying to rain on the parade. Guess is was a mirage
    Robert

    ReplyDelete
  2. I would like to know what Bob Brinker has learned from this bear market. How did he miss it so badly? In January he was perdicting 1600 by the end of this year in the S&P 500. Now it's below 900. Everyone could see that the real estate market was in a mess, but Brinker has been perdicting higher and higher returns in the stock market. It appears that Brinker has joined the church of, "buy and hold."

    ReplyDelete
  3. Bob's competence is obviously questionable. Wiping out of my retirement is ultimately my fault but I think it's not responsible to just let him pontificate over the airwaves. I am emailing the program director of the local affiliate. If anyone else feels the same they should visit Brinker's website and find their radio station and do the same. This man should be fired from the airwaves before he does more damage.

    ReplyDelete
  4. Bob Brinker went on and on yesterday about "taxes decreasing by 240 billion" ~ as if Oh bah mah had anything to do it that as a TAXCUT! The tax collection went down because 10% are out of work and economic acticity is low. Bob was trying to credit the Dems with a tax decrease! What a shill.

    See how your food prices have gone up since 2008, the real inflation rate calc the old way is 10%, see how your health care premiums are going up, gas up over $1 /gallon thanks to OBIE's moratorium on off shore drilling, those are de facto taxes. The real taxes would go up NEXT year, death tax, marginal rates for people earning 250K+...

    what a stooge.

    ReplyDelete

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