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Wednesday, November 19, 2008

Two of the Worst Stock Market Calls in History

Humor is the only medicine for those who took Bob Brinker's advice to be 100% in equities at the start of 2008 and to hold those 100% positions all the way down. (Advice for Model portfolios #1 and #2. Model portfolio #3 was about 66% in equities at the top.)

"Tom" posted this bit of humor on "Honey's Bob Brinker Beehive Buzz" in the comment section for her article titled "S&P 500 Index Below Brinker's March, 2003 Buy Signal."
2 very bad market calls in history:

"Stock prices have reached what looks like a permanently high plateau."
Irving Fisher, October 1929

"We continue to believe that a bear market (S&P Index decline in excess of 20%) is not on the radar screen at this time."
Bob Brinker, December 2007
Tom had some good ones, but these are pretty good also:

June 2007 Marketimer:

”In our view, the valuation based secular bear market that was established following the March, 2000 closing high for the S&P500 index (1527.46) and following the January, 2000 closing high for the DJIA (11723), reached its conclusion on June 13, 2006 at the bottom of the mid-term off-presidential election year correction.”
December 5, 2007 Marketimer (S&P 1481) Bob Brinker wrote:
The short-term correction that began in October and continued into November has served as a health-restoring pullback and has paved the way for new record highs in the S&P500 index.”
and
“Marketimer subscribers have been able to add to positions on this short-term correction based on our recommendation to view the stock market as attractive for purchase on any weakness into the mid-1400’s range”
and
"We continue to believe that a bear market is not on the radar screen at this time. We expect the bull market to continue at least well into 2008, and look for significant stock market gains."
Finally, he wrote
We continue to rate the market as attractive for purchase in the mid-1400’s… Any additional weakness below this range is regarded as a gift horse buying opportunity.

Riddle
: What do you call a "market timer" who rides a 45% or more bear market down while fully invested and giving "gift horse buy signals" after the first decline under 10% near the top?

Please post your answers in our comment section.

4% to 5% CDs are looking pretty smart these days.

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5 comments:

  1. 11/20/2008 Dow down another 445 points
    Bob Brinker is going to be remembered for his inability to see the signs of a bear market. Instead telling subscribers to stay 100% in stocks and even buy with his comment 'gift horse' 'buy if below 1400'. In fact I see his news letter having fewer subscribers now and eventually dwindling down to zero subscribers. It's time for his 'cash cow' income from his confusing 'Market Timer' to stop.
    Like inept politicians we can vote them out and punish them for leading us down the wrong path. Let's punish Bob Brinker and stop paying him $185.00 for each subscriber a year to lose money.

    ReplyDelete
  2. JS,

    I think that many will remember Brinker for his inability to see the signs of a bear market, just as many remember him for the QQQQ-disaster, but I think it's wishful thinking to believe that his newsletter will dwindle to zero. Here is why:

    On Moneytalk, he will never admit that he was fully invested during the whole bear market, and he will not allow any caller on the air to give that fact away.

    Even in Marketimer, his past blunders are completely hidden from new subscribers. For example, each time he issued a new, lower new-money buy-signal as the market dropped, he did not mention the fact that there had been higher ones the prior months.

    So as long as he is on the national airwaves reaching perhaps millions of listeners, there will always be a new crop of subscribers to step up to the plate.

    And notice that right now, he is advertising his son's fixed income newsletter -- not Marketimer. Although, the ads are presented in such a way that listeners assume it is the talk show host's newsletter -- and maybe it is. There is no way to tell the younger Bob Brinker from the talk show host.

    ReplyDelete
  3. “We continue to rate the market as attractive for purchase in the mid-1400’s… Any additional weakness below this range is regarded as a gift horse buying opportunity.”

    "GIFT HORSE" NO I think he was riding a JACKASS?

    Duratek

    ReplyDelete
  4. Luckily I decided not to follow brinker's advice at the top of the market--I managed to avoid the carnage. However, i did wait, as many of my friends did, for brinker's "buy' signal at S&p 700--which of course never came. The market goes from around 1400 to 660 and not a single buy or sell signal???? Amazing. I DIDN'T REALIZE I WAS SUBSCRIBING TO BOB BRINKER'S DOLLAR COST AVERAGE NEWSLETTER!!!Anyone thinking of a lawsuit for breach of trust or breech of contract?

    ReplyDelete
  5. The idiots at Barrons just repeated Hulbert nonsense that ignores Brinker has been fully invested since 2003 and calling buy the dips with every decline since the S&P500 was in the 1500s!
    Bob Brinker (Bob Brinker’s Marketimer) — Brinker writes: “In our view, the S&P 500 index (SPY) has the potential to trade into the low-to-mid 1400s range in 2012. On a valuation basis, using our conservative operating earnings estimate of $101 for next year, a price/earnings multiple of 14 would enable the S&P 500 index to reach the low-to-mid 1400s level.”

    Brinker in early 2008 wrote the market would go to 1600s! What is Hulbert and Barron's smoking?

    I won't link to the article since they don't deserve the publicity.

    This article at Forbes got it right: Thank Goodness for Index Funds
    Finally, index investors were saved from countless terrible market calls made by so-called experts. Here is a sample of bad advice that torpedoed the savings of many people:
    ...
    Bob Brinker couldn’t have been more off the mark with his market prediction in late 2007. “The short-term correction that began in October and continued into November has served as a health-restoring pullback and has paved the way for new record highs in the S&P 500 index.” The S&P 500 collapsed 37 percent in 2008.
    "

    What is a small investor to do when so many of the big magazines seem to be in bed helping people like Brinker sell snake oil?

    I subscribe to Forbes (for MANY years) and cancelled my Barron's subscription long ago.... You should do the same!

    ReplyDelete

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