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Tuesday, March 31, 2009

Best Investment Newsletter

2009 YTD (through April 30, 2009)
"Kirk's Newsletter Explore Portfolio" is UP 5.2% vs. S&P500 DOWN 2.6%
HURRY! Subscribe NOW and get the April 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

Message to Bob Brinker Fans:

Did your current investment newsletter tell you to raise cash by taking profits near the market top in 2007?

Mine did! I took profits to increase the cash position of my most aggressive "explore portfolio" to 30%.
Did your current investment newsletter tell you to use cash raised when the markets were near their highs to buy a blue chip DOW stock when the markets were at their lowest levels in 13 years?

Mine did! When the markets made a 13 year low, I had cash in the portfolio and told my subscribers to use some of it to buy some General Electric (GE Charts) shares at $6.76.
Click to view full size GE chart courtesy of

HURRY! Subscribe NOW and get the April 2009 Issue of "Kirk Lindstrom's Investment Newsletter" for FREE! !

Did your current investment newsletter tell you to use cash raised from when the markets were near their highs to buy a speculative, very high growth telecom growth stock when the markets were at their lowest levels in 13 years and that telecom stock was making an all time low?

Mine did! I had cash in the portfolio and told my subscribers to use it to buy some some Finisar (FNSR Charts) shares at $0.24. It is up 50% already as I type!
Click to view full size chart courtesy of

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 104% vs. S&P500 DOWN 16% vs. NASDAQ down 22% vs. Warren Buffett's Berkshire Hathaway (BRKA) up 33% (All through 04/30/09) (More Info)

2009 YTD
"Kirk's Newsletter Explore Portfolio" is
UP 5.2% vs. S&P500 DOWN 2.6%

HURRY! Subscribe NOW and get the April 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

Tuesday, March 24, 2009

Bob Brinker Market Advice to a 46 Year Old Caller

Last weekend a caller named Jim was able to ask Brinker about the stock market. (We've read many have called in to ask Bob about the stock market but their calls were not put on the radio.) First the market statistics.

IndexEnded WeekYTD %
S&P 500735.09-18.6
Russell 2000389.02-22.1
Jim asked:
“I’m 46. I saw that the market was going up in 2006 and it wasn’t correcting. So I moved everything into fixed funds, guaranteed stuff. Is it time for me to get back into the stock market with my allocation?”
First off, Jim should be giving Brinker market advice since he got out when the markets were much higher while Brinker issued buy signals all the way down from the top while fully invested.

Brinker missed the opportunity to congratulate Jim on exceptional market timing. Brinker's reply was:
“Well, Jim, I think the first thing you have to ask yourself is what is your tolerance for risk. I mean do you have the tolerance for the volatility that occurs in the stock market?"
Jim replied:
“I probably don’t personality-wise, but I’m thinking this is a buying opportunity.”
Brinker said:
“Well, I think what you should do is you should definitely, if you feel as though you have room in your risk tolerance to have a portion of your portfolio in the equity market, then I certainly would get started on that. And you can certainly put money to work in here...."
Brinker didn't tell the caller he gave "ALL IN" buy signals all the way down with the last one with the market at $850 for "low to mid 800s."

Odd to that at 1576 Brinker was fully invested and had a "gift horse buying opportunity" if the market fell to the "mid 1400s." Brinker has been fully invested since March 2003 when he gave the "all in" buy signal with the S&P500 at 808. With the market about half its peak at 735 and Brinker still fully invested in his newsletter portfolios, you would think he'd be "more encouraging" towards equities for long term investors who managed to miss most of the bear market decline.

Brinker continued:
".....I mean, the market is actually fairly close to its closing low right now. The closing low on the S&P is 676. We’re looking at a market right now trading in the 768 area."
What is 92 points between friends? Well:
92 / 676 x 100% = 13.6%!
If you got a 13.6% raise, would you call that "fairly close" to the same salary? That is why I think Brinker is such an entertainer...

Brinker continued:
"You’re looking at a market that has lost half of its value relative to where it was less than two years ago. So I mean in the broad context of accumulating an equity position, I certainly would not have a problem with that for you -- if you, again, if you feel you have the tolerance for risk to do so and that would be the key.”
Could Brinker be any more hedged with his advice? Perhaps Brinker should have take his advice from caller Jim who got out near the top and thought the markets were at a buying opportunity after a 50% hair cut.

Not everyone was fully invested at the top. Read Best Investment Newsletter. Not everyone was sitting in 100% equities at the bottom unable to buy at what Doug Kass called "a generational bottom."

Recent Articles of note:

Saturday, March 21, 2009

Beware Bob Brinker Marketiming and the Ides of March

A soothsayer warned Julius Caesar "Beware the Ides of March" shortly before he was assassinated on March 15, 44 B.C. thus making "the Ides of March" famous. A more modern soothsayer, Bob Brinker, has not been so accurate with his March predictions. Brinker follower Honeybee in "Bob Brinker's Two March Stock Market Forecasts" compared what Brinker is saying now to what he said a year ago:
In March 2008, Bob Brinker predicted that the stock market was in a bottoming process, and (for new money) he recommended S&P 500 Index low 1300's as "attractive for purchase." [Brinker's model portfolios have remained fully invested since March 2003.]

In the March 2008 Marketimer, Page 3; Paragraph 3; Bob Brinker said: "This gives the S&P 500 Index the potential to trade into the 1600's range as we move closer to the time when investors will discount the 2009 earnings recovery."

Over the remainder of 2008, Brinker declared several market bottoms and "attractive for purchase" all-in buy-levels. Brinker ended 2008 still fully invested, and looking for ANOTHER new market bottom.

[Kirk Comment: Brinker issued a "gift horse buying opportunity" for the S&P500 in the "mid 1400's" when it was near its all time high of 1576. Brinker has been calling buying opportunities all the way down during the largest bear market since the Great Depression!]

In January and February 2009, Brinker seemed quite sure that the market was bottoming in the 750 to 850 range, and he declared the low-to-mid 800's "attractive for purchase."

The S&P 500 bottomed out (as of now) on March 9th at 677....

As of March 5, 2009, Bob Brinker once again said he was looking for a new stock market bottom and was waiting for a "sequence of events" to take place. Without officially saying so in his March newsletter, he simply dropped the low-to-mid 800's buy-level and for the first time in years, did not recommend dollar-cost-averaging.

However please note that last Saturday, Brinker told a 32 year-old caller that "at his age," he had no problem with dollar-cost-averaging into the Total Stock Market Index -- Brinker recommends the Vanguard Fund. [Read what Brinker said to the caller in my Summary at this LINK.]

Now what has the market done over the past couple of weeks?

The stock market has had a sizable rally-- up 6 out of the last 9 sessions. And in spite of Friday's decline, the Dow, S&P and Nasdaq indexes were all up for the week -- they had their best 2-week gains since 1974. As usual over the past few months, oil traded in tandem with the stock market -- it closed up about 10% this week.
Click to view full size chart courtesy of

I prefer to leave market timing to the soothsayers while I beat the markets using "core and explore" investing.

After the markets bottomed in 1998, "Kirk's Newsletter Explore Portfolio" gained 117% in 1999.

After the markets bottomed in 2002, "Kirk's Newsletter Explore Portfolio" gained 77% in 2003.

I look for similar gains after this bear market bottoms . The gains have already started since my portfolio, though down from the peak since I don't pretend to time the markets, is ahead of the S&P500 for both 2008 and 2009.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 94% vs. S&P500 DOWN 14% vs. NASDAQ down 28% vs. Warren Buffett's Berkshire Hathaway (BRKA) up 37% (All through 12/31/08) (More Info)

HURRY! Subscribe NOW and get the March 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

Friday, March 20, 2009

Doug Kass Market Bottom Call

Jim Cramer & Debra Borchardt discuss the "Doug Kass Bottom Call" on RealMoney TV. I saw Doug say on CNBC TV that the market would make a generational bottom sometime in the next few days just two days before the S&P500 (S&P500 charts) hit 666.76 then rebound to 803.24, up 20.5%.

Jim tells Debra why we should listen to Doug:
"A guy who saw things coming when no one else did is a guy who may see things coming that no one else does."
Jim says listening to Kass is not the same as betting on the guy who got two blackjacks in a row in a card game.

Cramer says he has known Doug for 15 years and Doug has "always been short" so to have Doug say it is a "a generational bottom" is "shocking" and worth paying attention to.

I prefer to leave market timing to the soothsayers while I beat the markets using "core and explore" investing.

After the markets bottomed in 1998, "Kirk's Newsletter Explore Portfolio" gained 117% in 1999.

After the markets bottomed in 2002, "Kirk's Newsletter Explore Portfolio" gained 77% in 2003.

I look for similar gains after this bear market bottoms . The gains have already started since my portfolio, though down from the peak since I don't pretend to time the markets, is ahead of the S&P500 for both 2008 and 2009.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 94% vs. S&P500 DOWN 14% vs. NASDAQ down 28% vs. Warren Buffett's Berkshire Hathaway (BRKA) up 37% (All through 12/31/08) (More Info)

HURRY! Subscribe NOW and get the March 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

Monday, March 16, 2009

How To Keep Bob Brinker on the Radio

I am a huge fan of Bob Brinker the "radio entertainer." I don't see my being critical of Brinker's promoting snake-oil called "market timing" as any different than a fan of the SF Giants baseball team wanting Barrie Bonds off the team for cheating with steroids. Are you any less a fan of the New England Patriots if you were revolted by their cheating using electronic means to steal signals and violate league rules?

It has come to my attention that there is a letter writing campaign to get Bob Brinker off the radio. I hope that is not successful. [See "For Those Who Want Bob Brinker Taken Off the Air" at "Honey's Bob Brinker Beehive Buzz"]

If you like the radio show but hate the snake-oil, mostly the cover-ups of bad advice like it was never given, then you could send your own letter with your suggestions on how to improve the show!

Perhaps suggest in your letter Moneytalk add warning words before the show starts that Brinker's attempts to time the market have been 100% wrong with many "buying opportunities" while fully invested given all the way down as the market plunged from its high at 1576 all the way into the 600s. Jim Cramer's show "Mad Money" on CNBC has a ton of warnings so it would not be a precedent.

My suggestion: Warn people about the dangers of market timing and "predicting the future" but keep the show on for all the other good information Brinker gives out each weekend.

Chart showing Brinker's ability, or lack of ability, to predict the future.
Click chart courtesy of for full size image

Here are the letters asking him to be removed.
JFHAAA Letter One:

"Hi Honeybee-

I am a long time lurker, and this is my first contact after several years of enjoying your website.

I am also unfortunately a former long-time Brinker subscriber (over 10 years), recently cancelled, who should have known better. I did start having serious misgiving about Brinker in 2007, especially when he unilaterally declared that the "Secular Bear Megatrend" that he had been yammering about for years had ended, one year previously. I remember thinking: "An honest, serious person doesn't pull something like this" That certainly wasn't the only jarring note from Brinker in recent years, but it was the one that finally convinced me (along with comments on this board) to be very, very leery of this man.

Still, I can't quite explain why I renewed my subscription in 2008, even though by then I was no longer following his "attractive for purchase" recommendations. Still, the damage has been done, and I have lost several hundred thousand dollars waiting for a sell signal that never came.

This is clearly a perceptive group of quality people at this forum, and I am sure it causes the Brinker clan some degree of discomfort, but my aim is to cause him and junior more than mere discomfort. After all, his wretched, indifferent, self-serving "guidance" has caused many people to lose many millions of dollars. Since he doesn't have the courage or integrity to address these people on the air, I believe the best way to hurt him is get him taken off that air, at least in "KGO Country," where I used to listen to his infomercial on a fairly regular basis.

To that end, I wrote Brinker a letter declining his offer of renewal, and also copied the President and General Manager of KGO, Mickey Luckoff. I think you and your readers might find it interesting reading, but since it is three pages long I thought I should ask permission before sending it. In any case, I appreciate your work here. If nothing else, I can keep tabs on that snake oil salesman without having to waste my time actually listening to him. I can let you do it! Sometimes, after a particularly eventful week in the stock market, it is amusing to see what lengths he will go to avoid the obvious elephant in the room. Thanks for your good work!"

JFHAAA Letter Two:

"When I sent this letter off last week I really didn’t hope to accomplish much other than personal catharsis, but I am wondering now if I might have also inadvertently tapped into a sweet spot in the zeitgeist. I figure my letter arrived on Mickey Luckoff’s desk at about the same time as Jon Stewart’s glorious smackdown of the laughable CNBC network. I am probably deluding myself that Luckoff will even read the thing, but is it possible that the palpable and growing anger of ordinary investors, combined with declining ratings (I hope), might contribute to getting Brinker and others like him yanked of the air? I suppose we shall see “In the fullness of time.”

Like Stewart and many others, I am sick and tired of these financial “experts” who make pronouncements one day and than ignore or disavow them the next. No one is perfect and I can deal with mistakes, what has become unacceptable is the complete lack of memory or accountability in these prognosticators. The ability to forget your miscues may be a valuable trait in a defensive back who has just been burned for a touchdown, but it sure stinks in a financial “expert.” Brinker is not the only one guilty of obscuring and evading his record, but he strikes me as the one of the worst and most blatant offenders in this area.

Anyway here is the Marketimer cancellation letter that I sent last week with a copy to Mickey Luckoff at KGO:

Bob Brinker’s Marketimer
10789 Bradford Road # 210
Littleton, CO 80127

Mr. Brinker:

Re your Markettimer renewal request: Surely you must be joking?

You promote yourself on your radio program as a “Marketimer” and yet it would be hard to imagine a worse market timing record.

You totally, utterly failed to call the current bear market, and mocked those that did on your radio program. In addition to not being forthright and courageous enough to face up to your (many) mistakes, either on the air or in your newsletter, you obstinately manage to ignore altogether the obvious, glaring disaster that is the stock market and your so-called “Market Timing Model.” This is unacceptable.

I am planning to copy the head of KGO radio with this letter, so just in case he is not familiar with your wretched track record, here are just the “high” points from the last twelve months:

Jan 2008 S&P 500 in the 1460’s
You begin the year predicting in Bob Brinker’s Marketimer Newsletter new highs for the S&P 500 into the 1600’s range. The market is falling rapidly. Jan 20 you issue a bulletin to paying subscribers retracting your mid-1400’s BUY recommendation.

Feb 2008 S&P 1378
You reiterate that you do NOT believe a bear market is underway, and predict again that the S&P will work its way into record new high ground by late this year (2008) or in 2009, and that the S&P is ATTRACTIVE FOR PURCHASE in the low 1300’s or lower. (emphasis mine)

March 2008 S&P 1330
You express confidence that a stock market BOTTOM (emphasis mine) is in place and has unfolded in “text-book fashion.” Again, the S&P is at 1330.

April 2008 S&P 1323
On the air you take a swipe at those who say we are in a bear market, but strangely there are no callers with contrary viewpoints. Or are they just screened out?

May 2008 S&P 1386
With the S&P at 1400, you clearly feel safe in your position so you really go off on the “Bear Market Cassandra’s”. “They blew it!” Of course you have not had the courage to revisit those sentiments since then, and anyone who would care to challenge you is clearly not allowed on the public airwaves.

June, July, August 2008 S&P 1400-1267
Still bullish, still fully invested. From August 08 Marketimer “If you have any new money, inheritance, retirement, lotto winnings or house-sale proceeds that you want to invest in equities, any weakness below the S&P 500 Index of 1240 is an ATTRACTIVE PURCHASE LEVEL.” (emphasis mine). As of this writing, the S&P is 43% BELOW this buy recommendation.

In July with oil trading in the $140.00 a barrel range, you begin attributing stock market declines to increasing oil prices, both on the air and in the Marketimer. Indeed you devote entire tedious shows to this false and simple-minded theme. Naturally, since you have become such a reliable contrary indicator, oil and stock prices begin moving in the same direction: DOWN!

Of course since you are Bob Brinker, once this theory blows up in your face you drop it, never to mention it again. But then this is your craven pattern, isn’t it? (see “Secular Bear Megatrend,” the disastrous QQQ call of 2000, and some others I could mention)

September S&P 1283
You issue a bulletin that advises nothing more than “dollar cost averaging” This is an obvious and dishonest marketing ploy to lure back former subscribers who were smart enough to drop you. I hope it failed.

Oct 12, 2008 S&P 1165
On the air, and obviously under pressure from somewhere, you make a mild and extremely unsatisfactory mea culpa without ever apologizing for your disastrous performance and without taking follow up calls on the subject. NOT GOOD ENOUGH!

Dec 2008 S & P 890’s- 800’s
I won’t even attempt to summarize your baffling and inexplicable prattle about “Treasury backed California general obligation bonds,” followed two weeks later by a complete flip-flop, and then silence.

As for the stock market, you are once again anticipating a “bottoming process;” this time in the 750-850 range. Jan-Feb 2009 newsletters suggest adding to positions when the S&P is in the low to mid 800’s


· Since your subscribers rode this terrible bear market all the way down, how exactly are we supposed to “add to positions” now that thanks to you, our portfolios (and retirement plans) have been decimated?

· After calling bottoms at mid-1400, low 1300’s, 1240’s and now 750-850, who in their right mind cares what you think anymore? ABOUT ANYTHING??

· Even if you didn’t before, you now have to KNOW that your timing model doesn’t work. Why are you still selling it?

In conclusion,
Eventually I expect that even you will get one of these sad, pitiful bottom calls right and then you will casually imply on the air that you were on top of the market all the time and that your subscribers are prospering thanks to your great insights. I won’t be around anymore for that nonsense, but I don’t want this ploy to succeed in luring in a new crop of paying newsletter suckers either. You are very, very good at that game (if nothing else), but I won’t stand for it anymore.

That is why if you are on the air when a new FCC commission convenes, I intend to make my views known to them, as well as the Citadel Broadcasting Corporation. Hopefully with a new administration we will eventually have a commission that will be as receptive to the needs of ordinary tax paying citizens as they are to major media conglomerates.

You advertise yourself as a successful market timer, yet in 2008 the S&P declined over 40% in a vicious bear market that you never saw coming and have seldom even acknowledged, either on the air or in the newsletter that you have advertised on the public airwaves. You can’t possibly believe in it anymore (if you ever did) and yet you are still selling it knowing full well that it doesn’t work. This makes you nothing more than a snake-oil salesman. (And taking a temporary hiatus from promoting your stupid newsletter on the air does not absolve you from past sins, nor will make it acceptable to promote it in the future.)

The fact that you are wrong (and wrong, and wrong, and wrong…) would be bad enough, but what is unacceptable is that you never admit it, obscure the truth, don’t allow contrary viewpoints, and do all of this is on the public airwaves. Enough is enough Brinker; you are a menace and need to be dismissed, and soon.

Sincerely, XXXXXX

PS- Actually, there is one useful service you could perform before you go away: Would you mind capitulating out of the market like you did way back in 1988 after the ’87 crash? It wouldn’t make up for your sins, but it would at least guarantee a market bottom.

cc Mickey Luckoff, President and General Manager, KGO, KSFO

Well, that was my letter, and I am certainly not asking for or expecting any support, but if anyone wants to write to Brinker’s enablers at KGO, the address is:

KGO 810
900 Front Street, 16th Floor
San Francisco, CA 94111

Citadel owns KGO (and KSFO) as well as many other stations. The holding company is located in Las Vegas:

Citadel Broadcasting Corp.
7201 West Lake Mead Blvd.
Suite 400
Las Vegas, NV 89121

Citadel Broadcasting Corp.
142 W 57th Street
New York, NY 10019

The Chairman and CEO of Citadel is Farid Suleman

(In the interest of full disclosure, I have not contacted Citadel yet myself. I am waiting to see if I at least receive some sort of pro-forma response from KGO.)
Perhaps you can counter the points made in your own letter if you want Brinker kept on the radio.

I am "revolted" by Brinker's cover-ups of bad advice that makes it nearly impossible for a regular person with limited time to do proper due diligence. That doesn't mean I want him off the radio... He just needs a warning label like a pack of cigarettes saying his recent attempts at market timing and perhaps future attempts are dangerous to your financial health!

Monday, March 09, 2009

Nouriel Roubini, Bob Brinker's Cassandra, Says DOW 5,000 is Possible

Less than a year ago, Bob Brinker bashed the "recession Cassandras" on his Moneytalk radio show. One of the biggest Cassandras, who also turned out to be right, is Nouriel Roubini, chairman of RGE Monitor.
How low can the stock markets go? Nouriel Roubini, called "Dr. Doom" by many who didn't like his message last year before the markets crashed over 50%, says they can go much lower.

In the best case, Roubini sees the S&P500 (closed today at 676.53 - Charts) at 720, a gain of 6.4%. In the worst case, Roubini thinks there could be another 20% left in the decline with the S&P500 falling as low as 500 to 600 with the DOW down to 5,000 or 6,000.

The good news is he thinks liquidity measures instituted around the world have lessened the chances for a meltdown into a full depression, but there is a rising risk of an L-shaped "near depression" recovery. This means he thinks it will be many years for the economy to recover, not the one year for a recovery as many like Abby Cohen and Bob Brinker believe.

Roubini has argued that, in spite of the sharp fall in US and global equities significant downside risks to stock markets remain. He keeps saying that "repeated bear market rallies would fizzle out under the onslaught of worse than expected macro news, earnings news and financial markets/firms shocks." Today he wrote
"If you take a macro approach earnings per share (EPS) of S&P 500 firms will be – quite realistically in 2009 - in the $ 50 to 60 range (I say realistically as some may even argue that in a severe recession they could fall to $40). Then, the question is what the multiple, i.e. the price earnings (P/E) ratio will be on such earnings. It is realistic to expect that the multiple may fall in the 10 to 12 range in a U-shaped recession. Then, even in the best scenario (earnings at 60 and P/E at 12) the S&P index would be at 720. If either earnings are closer to 50 or the P/E ratio is lower at 10 then the S&P could fall to 600 (12 x 50 or 10 x 60) or even to 500 (10 x 50). Equivalently the Dow (DJIA) would be at least as low as 7000 and possibly as low as 6000 or 5000. And using a similar logic we argued that global equities – following the US - had another 20% plus downside risk."
He thinks any rally in 2009 would be a "bear market sucker's rally" driven by temporary improvements in the rate of change (second derivative) in economic growth from stimulis in China and the United States:

Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.
Roubini thinks US and Global equities could fall anouther 40 to 50%:
On the downside we have argued here that there is at least a third probability of a L-shaped global near depression rather than the mere current severe U-shaped recession. If a near depression were to take hold globally a 40% to 50% further fall in US and global equities from current levels could not be ruled out. But in this L-shaped near depression the last thing one would have to worry about would be stock markets as more severe issues would have to be addressed (unemployment rates in the mid-double digits – 15% or above - and multi-year stagnation and deflation).
Roubini thinks Abby Joseph Cohen is too bullish in her belief that investors will give the market a PE as high as 17 or more as they discount earnings getting better:
Earlier this year – at the peak of the latest bear market rally - I met Abby Cohen – the ever bullish equity markets expert at Goldman Sachs who predicted a 25% equity rally for 2008 and is making again a similarly bullish call for 2009. I asked her if we disagreed on earnings or on the multiple (P/E). It turns out that our forecast for earning per share for S&P 500 firms are similar: 50-60 range for me, 55-60 range for her. But she argued that a P/E in the 10 (to) 12 range was too low as investors would ignore the bad earnings numbers for 2009: if a rapid recovery of earnings were to occur in 2010 and beyond investors would discount the 2009 bad number and assign to them a much higher multiple of 17 or even more.
Roubini thinks Cohen is wrong. He does not believe we will have a significant economic recovery in 2010.
The trouble with that argument is that, with the US and global economy in a massive slump and with deflationary forces at work it is hard to believe that a massive economic recovery will occur in 2010 thus lifting sharply earnings: even in a U-shaped scenario US growth in 2010 would be 1% or lower and Eurozone and Japanese growth would be close to 0%. Thus, with weak growth deflationary pressure would be still lingering thus putting pressure on profits, pricing power of firms and thus profit margins. Thus, even in a U-shaped scenario a rapid rally of equities is highly unlikely.
Bob Brinker (Brinker Fan Club), like Abby Cohen, has said the same thing about PE ratios and he too was bullish in 2008 for an up year that did not happen. Roubini remains bearish and thinks the markets will bottom in the next 12 to 18 months. He cites how the last recession ended in 2001 and the markets did not bottom until 2002:
Also the “6-9 months ahead forward looking stock market view” is not always borne in the data. During the last recession the economic bottomed out in November 2001 and GDP growth was robust in 2002 but the US stock markets kept on falling all the way through the first quarter of 2003. So not only the stock market were not “forward looking”: they actually lagged the economic recovery by 18 months rather than lead it by 6-9 months. A similar scenario could occur this time around: the real economy sort of exits the recession some time in 2010 but growth is so weak and anemic while deflationary forces keep an additional lid on pricing power of corporations and their profit margins that US equities may – like in 2002 - move sideways for most of 2010 – with a number of false starts of a real bull market – as economic recovery signals remain mixed.
Thus, most likely we can brace ourselves for new lows on US and global equities in the next 12 to 18 months. Eventually a more sustained recovery will occur once we are closer to clear signals that this ugly global U-shaped recession is not turning into a L-shaped near depression and that the global economic recovery is clear and sustained. Until then expect very volatile and choppy US and global equity markets with new lows reached in the next months and the year ahead.
Roubini was correct as the "bear voice" on Larry Kudlow's show during most of 2008 when he argued Larry and the rest of the bulls were too optimistic. I hope he is wrong and the markets recover soon with the Obama and Chinese stimulus efforts. I don't believe anyone can time the markets  to add significant value over and over for a large audience, but those who are correct in the recent past sure get a lot of press.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 94% vs. S&P500 DOWN 14% vs. NASDAQ down 28% vs. Warren Buffett's Berkshire Hathaway (BRKA) up 37% (All through 12/31/08) (More Info)

Subscribe NOW and get the March 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with the May 2009 issue.)

More information:

Sunday, March 08, 2009

Brinker & CNBC Not So Bullish Sounding These Days

We've read reports that Brinker did not say "dollar cost average" or give a new "all in buy level" in his latest Marketimer newsletter. I checked a current issue and can report that Brinker remains fully invested. Also, I was unable to find any mention of a new buy level or dollar cost average. In fact, in a mastery of understatement, Brinker writes "Clearly, the process of registering the final bottom in this bear market has been relentless, which has rendered our efforts to date unsuccessful."

Perhaps after calling bottoms all the way down, Brinker has given up!

This report was just posted by "lightwaves - Dryer sheet aficionado."
Bob Brinker now as negative as CNBC

Just heard some of Bob Brinker's Moneytalk show on the radio today. He sounded just like the commentators on CNBC. Bitching and moaning about Obama, Geithner, Bernanke etc. Obama has been President for 6.5 weeks and he is supposed to have solved this disaster by now. This complaining coming from the fellow that publishes the MARKETTIMER newsletter who missed the biggest drop in the market in decades. These bitter "Masters of the Universe", with their gigantic egos, are looking for someone, anyone to blame for their total misreading of the economy.

Unlike all of these Wall Street egomaniacs, I will be patient and see what the Administration can do over the coming months.
This negativity could be good news. Bob Brinker recommended aggressive and moderate portfolios be 100% in stocks since the top. He did not take any profits or advise rebalancing his balanced model portfolio #3 which had become 66% equities at the top. He specifically told a caller to Moneytalk his advice was to not rebalance P3 despite its very aggressive asset allocation with 66% in stocks, well above its "neutral position" of 50% equities and 50% fixed income.

Brinker has called bottoms all the way down from the top at S&P1576 with a "gift horse buying opportunity" in the mid 1400s. The market would have to MORE THAN DOUBLE to get back to the 1400s where he bashed the "Cassandras" less than a year ago.

After missing the biggest bear market since the Great Depression, Brinker needs to admit he can't time the stock market and change the name of his newsletter.
Chart courtesy of

This is the sort of "capitulation" by newsletter writers who ATTEMPT to time the market and the bulls on CNBC that Mark Hulbert says needs to happen before the market bottoms.

BTW, from reading Brinker's newsletter, it sounds like he's never heard of a "V-shaped bottom" or he places the odds of a V-shaped bottom at zero. That too can be good news as most on TV and radio now expect an "L-shaped recovery" which means we bottom eventually then recover very slowly.

Whatever the case, I've been using my cash reserves to SLOWLY nibble at the "early recovery" stocks I have in my newsletter explore portfolio. I took profits at the top to be 30% in cash. I have funds to buy at prices that could be once in a lifetime bargains for those of us with 20 to 50 year time frames. Some of what I bought last week is up already. See these slow to load emailed alerts copied to pdf:
My hope is EVERYONE is wrong and the market is down on excessive pessimism. That can lead to a snap-back rally that surprises everyone even before we see hints of an economic recovery.

I recommend a "core and explore" approach to investing. This means you place 80 to 95% of your assets in one of my core portfolios made up of index funds from Vanguard (or Fidelity). Then you invest the remaining 5 to 20% in my explore portfolio which is mostly invested in volatile, individual stocks. My newsletter stocks are volatile by design to add to overall returns via rebalancing (taking profits when the stocks are up and buying the stocks back when prices are down, but you need a good core portfolio to sleep well at night.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 94% vs. S&P500 DOWN 14% vs. NASDAQ down 28% vs. Warren Buffett's Berkshire Hathaway (BRKA) up 37% (All through 12/31/08) (More Info)

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Tuesday, March 03, 2009

Hey Brinker, The Cassandras Were Right. You Were Wrong!

Less than a year ago the stock market rallied from the low 1300s to its 200 day moving average around 1400 just before rolling over and falling over 50% into the 600s. Brinker bashed the bears as "Cassandras" with one of his rants that makes him such a great entertainer.

Brinker said at the end of May, 2008:
“So what we have here basically, is an example of false prophets and it’s sad. And the reason it’s sad is the damage done. Think of the people that are looking today at the market, S&P at 1400 and they’ve been scared out of the market in the first quarter by these bears………It’s just amazing and yet these people are out there, and these people are not happy, I’m sure, to find themselves out of a rising market since March. To find themselves looking for ever lower prices when in fact we’ve had the opposite.
Brinker thought those of us who warned the economy was slipping into a recession were wrong. He called us Cassandras. Brinker said:
What we have right in here now is evidence that the Cassandras, who earlier this year, were telling us we were in recession – right now they’ve basically – well I’ll be kind, basically, they look like fools right now. Because all that they’ve accomplished with their talk about recession…………all that they have to show for their efforts is that they scared the people who listened to them out of the stock market this past winter……….”
Here is the article I did with my friends at ECRI in March 2008:
ECRI Calls it "A Recession of Choice"
Brinker was clear he thought the market was coming back from a correction and anyone who sold were fooled by the bears:

“……..And probably a lot of those people got scared out near the correction lows. The initial correction low in January, which was successfully tested in mid-March, before the market reversed and resumed its uptrend. And basically, if you were to total up all of the accomplishments of the Cassandras, that would be it – that they scared people out of the market during a stock market correction in the first quarter………..Because they have been unable to present any evidence of a recession."

Here is the Full Report of Brinker's Cassandra Rant

Brinker is quick to pat himself on the back when one of his lucky guesses (or market timing calls) turns out to be correct but he goes into hiding when he is wrong. Brinker needs to own up on the radio and explain to his audience
  • why he was so very wrong about the economy
  • why his timing model gave a rare "gift horse buying opportunity" near the very top before the worst bear market since the Great Depression, so far.
  • What he would change to his timing model to make it work again
or be truthful and explain
  • Why trying to time the stock market is a fools' game.
I also think he owes some of us who warned of a recession an apology, but I am not holding my breath for any of this.

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