“It is a mark of prudence never to place our complete trust in those who have deceived us even once.”Bob Brinker speaks about "going out on a limb" in January of 2009 with a prediction that the market will be significantly higher in 2009. What Brinker neglects to mention is he said the same thing at the start of 2008 PLUS he issued a "gift horse buying opportunity" with the S&P500 in the mid 1400s! .
__Descartes’ first meditation
"In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008. We expect the S&P Index to achieve new record highs this year and to reach the 1600's range in the process. We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400's range. Above this range we prefer a dollar-cost-average approach for new purchases. All Marketimer model portfolios remain fully invested as we enter 2008. "Brinker has had 100% of his model 1 and model 2 portfolios invested in the stock market since March 2003. At the peak of the bull market in 2007, he had nearly 2/3rds of his "balanced" model portfolio #3 in equities and he told a caller to NOT REBALANCE back to 50% equities. He was more bullish at the top than at the bottom.
___January 2008 Marketimer, pg 3, with S&P500 @ 1468.36
To brag now about predicting higher stock prices is like a broken clock bragging about telling the correct time twice a day.
Brinker also neglects to mention that the market had bear market performance right after his January 2009 prediction for a higher market. The S&P500 dropped about 25% to 676.
March 5, 2009 Marketimer Newsletter with S&P500 at 696.33: “The process of establishing a major bear market bottom can extend over a period of several months, as we saw in 2002-2003. Clearly, the process of registering the final bottom in this bear market has been relentless, which has rendered our efforts to date unsuccessful.Brinker did not issue a buy at 696 nor did he mention “dollar cost average” anywhere in that March newsletter. With the market back in the 1,000s as I type (S&P500 chart is currently 1,010) in Auguest 2009, he recommends “using periods of short-term weakness as buying opportunities,” but he doesn’t define what “weakness is!
“Due to the fact that the November 20, 2008 S&P 500 Index closing low failed to hold during the testing process, we believe a new bottoming process will be necessary in order to put an end to the bear market. This means that in order to set the stage for a sustainable market advance, we need to see a sequence of events consisting of:
(a) the establishment of an initial closing low; (b) a short-term rally; (c) a test of the area of the initial closing low on reduced selling pressure.”
Also note the the market has rallied 49% without a test of the bottom that Brinker said was needed for a "sustainable market advance" five months ago.
(1010 - 676) / 676 x 100% = 49%This shows the calls graphically:
"Market Timing is a wicked idea. Don't try it --- ever."Vanguard founder John (Jack) Bogle in Common Sense on Mutual Funds: , pg 20
"The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike."