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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 stockcharts.com

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)

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