Bob Brinker Market Advice & Marketimer Special Bulletin

This article gives a short update on the stock market followed by an update of Bob Brinker's May investment advice.

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Market Update:  The four major US stock indexes I track are all in the green year-to-date (YTD) with the Nasdaq up 7.6% and the Dow only up 0.7%.

This year the market as measured by the S&P 500 had its fourth largest correction of 12% since the secular bull market began in March of 2009.  It would be very bullish if the S&P 500 corrects down to the falling upper dashed green support line then quickly reverses.   

Likewise, it would be very bearish for it to drop below the lower dashed green support line where filling the gap at 20% off the record high would be highly probable. 

Bob Brinker remains firmly in the Bull Camp:

• Bob Brinker did not issue a "Special Bulletin" to take profits before that correction nor did he issue a bulletin to buy when the market was down 12%.
• Since March 2003, Bob Brinker has had his portfolios one and two 100% in equity mutual funds.  See Bob Brinker's Asset Allocation History.
• Brinker continues to favor dollar cost averaging new money into the market "especially during periods of weakness" which he has not defined.
• Brinker says if a "Marketimer buy signal develops" between his monthly newsletters, then he will "post a Special Subscriber Message for access" at his website.   How old fashioned is that?  I send email alerts the same day, usually within hours when I buy or sell something in my portfolio.  Below my newsletter ad is an example.
• Reading between the lines, the fact Brinker only talks about a special message for a "Buy Signal" between monthly newsletters is a clear indication he's firmly in the Bull camp.

Twenty years ago the market was down a similar 10% and Brinker talked extensively about it on his show and in the newsletter.  He even issued a special buy signal just before it fell another 10% to make an official intraday bear market correction.  
Many of my online friends who follow the markets and especially Brinker lost faith in how he handled this miss. That is he didn't discuss why he was wrong or what he learned. 
My guess is the markets look similar today... they've have a huge run up but are not over valued like they were in 2000 but they are highly valued on a PE ratio basis as you can see in my table in my Brinker article "Bob Brinker Stock Market Targets."

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More articles:

• Bob Brinker Stock Market Targets
• Beware of Annuities
• Winning the Zigs, losing on the Zags - Why small investors usually do poorly
• Make Money In A Flat Market With Asset Allocation & Market Volatility

Bob Brinker Stock Market Targets

This article compares Bob Brinker's S&P 500 earnings estimates for 2018 and 2019 with those of one of my favorite economists, Dr. Ed Yardeni. 

In almost every Marketimer Newsletter, editor Bob Brinker publishes his earnings estimate for the S&P 500, his estimate for a reasonable price to earnings (PE) ratio range, then a reasonable "potential" price for the S&P 500 index usually calculated by multiplying the two numbers then applying some spit-shine.

Brinker currently estimates the market "has the potential" to reach $2900 when it starts to discount 2019 earnings of $163 with a PE ratio of 17 to 18.  As my table below shows, this is about the highest PE ratio Brinker has thought acceptable since 2008 based on the Marketimer newsletters I surveyed to make the table below.

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Of course, you need to take this numerology with large grains of salt.  For example, ten years ago the market was at $1331 and about to crash to $666 while Brinker predicted new highs into the "$1600s range" as I highlight in this table.

I'll try to provide regular updates of that table here because it has some interesting calculations and it provides a good historical record.

 Here is an example from his May 3, 2017 Marketimer how he frames the data with words.

From over 20 years of following Brinker, I've noticed he usually starts his S&P 500 earnings estimates lower than the consensus of the average of most analysts tracked by tracking services. Then if the year goes well, Brinker raises his estimates such that by the end of the year they are close to consensus.  This also allows him to raise his estimates for the market price before it moves "closer to the period when investors will discount" the next year's earnings estimates.   

Dr. Ed Yardeni's Estimates: This is what one of my favorite economists, Dr. Ed Yardeni, publishes.

Note how Dr. Yardeni also has a below consensus forecast for 2018 and 2019 S&P 500 earnings of $155 and 166, respectively.

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Today's S&P 500 Chart

Dr. Ed Yardeni is a regular guest on CNBC, the financial show that runs from "Squawk Box" starting at 3 AM PST to Jim Cramer's "Mad Money" ending at 4 PM PST.  See www.yardeni.com for more information about Dr. Ed.

Bob Brinker's Market Outlook & Latest Investment Advice

Bob Brinker has a weekly radio show "Moneytalk with Bob Brinker" and writes or contributes to two investment letters, "Marketimer" and "The Fixed Income Advisor."  His Son, Bob Brinker Jr., owns the fixed income newsletter and Brinker Sr. is listed as a contributor.  Bob Brinker Sr. started "Marketimer" in the 1980s when Bob. Jr. was just a lad.

Kirk's Stock Market & Sentiment Charts for Feb. 9, 2018

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Bob Brinker, in his February 2018 "Marketimer" newsletter, remains fully invested with his model portfolios one and two 100% in stocks.  He has not taken any profits or raised any cash in his Model Portfolio One or Two, that are 100% in stocks, for any potential corrections or bear markets.  Due to rising interest rates, in his Model Portfolio Three and "Income Portfolio," Bob said he will sell one of the three bond funds on Feb. 12 and put the funds in a money market fund.  Interest rates are already up significantly this year so that fund will probably show a loss for the year.

Bob believes any declines will be contained by either a "minor correction category of 5% to 10%, or the major correction category of 10% to 20%."

Special update for 2/8/18:  We are there now!

Bob's Advice for New Money:  Bob continues to say "we recommend a dollar-cost-average approach for new money, especially during periods of market weakness."  

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Recently a reader send me this question about investing a "large sum of money."

I’m listening to Brinker right now. He just had a woman call in telling him she had a large sum of money and gave Bob a variety of ways to invest it in the market asked Bob which was the best way to go. Bob segwayed into asset allocation....and never did say which was the best way to invest a large sum of money in the market. 

Do you have a recommendation on the best way to invest a large sum of money in the market?

Here is my reply

If you don't mind, I'll use your EXCELLENT question for a short blog post and share my reply.  

Statistics show lump sum is best as many (perhaps thousands) listen to Brinker and think they should DCA on "weakness" which he usually doesn't define. Many may never get in until a market top just as they give up waiting for weakness in what is called "FOMO" or Fear Of Missing Out.

IF you have the discipline to do monthly DCA into the funds I recommend in my newsletter,  you can have Vanguard set it up for you automatically since all my funds are at Vanguard with ETF equivalents you can buy anywhere, then do the DCA following the plan listed on pg 35 or my January 2018 newsletter near the bottom. 

As for asset allocation, I like being aggressive with money I made and saved while working but for inherited money, I like to keep the memory of who gave it to you alive so I recommend that go into my "Core Conservative" portfolio. 

Brinker is far too careful to make sure he doesn't give any advice that someone can say was "wrong" with market timing and cares less about helping people.   Think of all the years he's said to " DCA on "weakness" and the market pretty much went straight up!  You can see from my advice on pg 34 of my newsletter that I have a SIMPLE PLAN to accelerate DCA payments if the market corrects. 

Kirk's Stock Market & Sentiment Charts for Feb. 9, 2018 

Bob Brinker's Market Outlook and Advice for New Money

Bob Brinker Market Update for August 2017.  In this issue I discuss:

1. Bob Brinker's August 2017 Market Outlook.
2. Marketimer Allocations
3. Advice for new money.
4. Series I-Bonds
5. Timer Digest Update
6. Link to Listen Live on internet radio
7. Newsletter Special Offer - August Issue for Free!

#1 Bob Brinker's August 2017 Market Outlook.  In his August 2017 Marketimer newsletter, Brinker remains bullish on the US stock market.  In the first two pages, he covers his "primary" causes for a bear market.  I guess he changed the name from "five root causes of a bear market" after they completely missed the last bear market where the S&P 500 fell over 50% while Brinker issued "buy alerts" all the way down to the 800s then stopped before the actual bottom in the 600s. Why would he change the name?  Easy, "Google Search."  As such, I take his timing with a grain of salt.  With that said, Brinker:

• says you can get a PE of 17 to 18 times earnings 
• projects the S&P 500 earnings will be $140 in 2018
• thus the market has a "potential" for mid-2500s "going forward."
  [18 x $140 = $2,520]
• At the time of publication, the S&P500 was $2470.30 so $2534 (the lower end of mid $2500s or $2534 to $2567) is only a gain of 2.6%.  Thus, he's not going out on a very big limb with that projection.

#2 Bob Brinker's Marketimer Allocations:   

• Model Portfolio's one and two are 100% in stock funds 
• Model Portfolio three is listed as 50% in stocks but I calculate he has 56% in stocks which means he's more bullish than "balanced."

#3 Bob Brinker's Advice for New Money:   

• Bob continues to recommend a "dollar-cost-average approach, especially during periods of market weakness" but gives no guidance on what he considers weakness or why not just do a typical dollar-cost-average no matter what the market does.  This waiting for "weakness" has kept a good number of individual investors on the sidelines missing this great opportunity to make a lot of money!

#4 Series I-Bonds

• Bob didn't mention Series-I US Savings bonds in the latest Marketimer but he has talked about them in the past on his radio show, Moneytalk. 
• I have iBonds in my "Explore Portfolio" of "Kirk Lindstrom's Investment Letter."  I think iBonds are a good, conservative investment that will keep pace with inflation and defer taxes thus they are great for taxable savings when you are in a high bracket.
• Read more at:  Current Series I Bond Rates  and  Historical Series I Bond Rates

#5 Timer Digest Update

• Here is an update from the August 9, 2017 Timer Digest Hotline.  (Bob Brinker isn't mentioned but I am in the top 10.)

• Last week I added to GE (charts) at $25 and change.  I last took profits in GE last year at $32.50.  It may go lower, but I like the juicy yield here and I have more buy targets in my newsletter to get more shares as I "dollar cost average" back into stocks after I take profits at higher levels.  Send for a free sample issue if you wish to learn more how I do this.
  
• Here is an update from the August 7, 2017 Timer Digest Newsletter.  Bob Brinker isn't mentioned but I am in the top 10 for 1-year and I am tied for first place in "Long-Term" timing.

• Get a Free Issue of Timer Digest here

#6 Click to Listen Live at KFNN from 1-4PM PST, 4-7PM EST

#7 Newsletter Special Offer 

• Subscribe NOW and get my August 2017 Issue for Free!
• Your 1 year, 12 issue subscription will start with next month's issue.
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• Unlike "others," I will answer All questions about what I write by Email.  If what I write is not clear to you, just ask! 

Bob Brinker's Market Outlook, Advice for New Money & More

Bob Brinker Market Update for May 2017.  In this issue I discuss:

• Bob Brinker's May 2017 Market Outlook.
• Marketimer Allocations
• Is Brinker more or less bullish than in past years at this time?
• Series I-Bonds
• Advice for new money.
• GNMAs
• Timer Digest Update
• Link to Listen Live (1-4PM PST, 4-7PM EST)

Bob Brinker's May 2017 Market Outlook.  In his May 2017 Marketimer newsletter, 

• As of May 3, 2017 with the S&P500 at $2,384.20, Bob Brinker is bullish and fully invested.
• He expects the S&P500 to earn $130 in 2017 and says it can support a P/E ratio of 17 to 18 times that.
• Bob says the market can "trade well into the S&P 500 Index 2400s range going forward."
  
• We're nearly there already given the market has traded into the 2400s already this month!
• Bob also says "tax reform legislation" going forward could lead to "a healthy increase in operating earnings in 2018."  This is pretty much what every talking head on CNBC from both political parties says would happen if companies get to keep more of the money they earn.

Marketimer Allocations:

• Model Portfolio's one and two are 100% in stock funds with 80% in the US and 20% as the listed percentage in an "All-World" index fund.  

• The actual percentages in his portfolios vary from what is listed since he doesn't rebalance or update the percentages often.   

• It seems odd he offers zero guidance for using the percentage he recommends or the actual percentage in the portfolios he shows and reports measured performance for.  For example, he recommends 30% in VTSMX for P3, but the actual percentage is 33.5%, over 10% more than he recommends!

• Model Portfolio three is listed as 50% in stocks but since he doesn't rebalance often, he has quite a bit more in stocks than fixed income.  Of the stocks, he has about 20% of that in the same "All-World" index fund.  (so 10% "All-World" and 40% US)
• His "Active/Passive Portfolio" is 100% in stocks with the same 80:20 balance between US and foreign
• His "Income Portfolio" is 100% out of stocks with money spread between three managed funds with duration between 1.25 to 1.52 years and yield between 1.95% and 4.62%

May 13, 2017 Market Update - Summary

• The four major US markets I follow are up between 1.9% and 13.7% YTD.
• The S&P500 and Nasdaq markets set new record closing highs this week.
• The 2400 level continues to be strong resistance for the S&P500 while open gaps are cause for concern.
• The New Rates for New and Old I-Bonds are out.
• My Explore Portfolio continues to do well in 2017 after a great 2016.  It finished the week at a new record high!
• Full Article: Markets Near Record Highs, Open Gaps & 2400 Resistance Level

I plan to add to and finish this article over the next few days so come back and look for more.

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Make sure you read:

• May 26: Market Update - New Record Closing Highs

Bob Brinker Moneytalk Podcasts For 2017

Bob Brinker Podcasts for January 2017 plus Bob's Current Market Outlook at the bottom of the page. 

Bob Brinker's Moneytalk. 

Bob Brinker's:

•  => Advice for New Money   
•  => Asset Allocation History
• For questions and more:
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Free On Demand podcasts for January 2017:

January 8, 2017: 

• Bob Brinker 1/8/17 - 10PM

January 1, 2017:

• Bob Brinker 1/1/16 - 11PM
• Bob Brinker 1/1/16 - 3PM

Bob Brinker's Stock Market Outlook:  

In the November 2016 Marketimer, 

• Bob Brinker remains bullish & fully invested. 
• Nov. 4, 2016: "We anticipate new record highs for the S&P500 Index as we move into the winter season and investors become more confident in an improving earnings trend in 2017"
• Bob says dollar cost average new money into the market.

Since there is no real change, read Bob Brinker's Market Update for September 2016

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Bob Brinker & Louis Navellier Market Projections and Outlook

Bob Brinker & Louis Navellier Market Projections and Outlook:  Both Brinker and Navellier expect the markets to "test" their recent lows

The stock markets are up significantly from their August 2015 lows.  Both Bob Brinker and Louis Navellier expect the market to test those lows before making new record highs.

More S&P 500 Charts

From the comments section of the article Intel Buying Opportunity - Bob Brinker's Favorite Trading Stock, John wrote:

Bob Brinker is still constructive on the stock market. Although the primary catalyst for the current correction is concern related to the slowdown in economic grow in China, he does not see indications that a recession is on the horizon in the US. In the absence of a recession outlook he does not anticipate a bear market decline of 20% or more.

The initial stage of the current major correction (more than a 10% decline) has taken the S&P 500 Index into the 1800s range. Now that the initial correction stage is completed, Bob expects the S&P to stage a short-term rally which will run out of steam and roll over into a test of the initial bottom area. The establishment of an initial area of a correction bottom, followed by a successful test of the bottom area, is a pattern of market behavior that has occurred many times and has led the market higher going forward.

This matches what Louis Navellier sent me via email this morning titled

"Caution: We Could See another Retest of the Market Lows This Week"
The big sell-off on Tuesday looked like a classic retest of the August 24th lows, but trading volume was light due to the upcoming Labor Day weekend, so I believe that a real retest on higher trading volume is likely this week, after the long holiday weekend. 

I know it's painful to watch CNBC and fear the worst, but this is a normal market shake-out. All I care about is that any selling pressure is "exhausted" on the inevitable retest(s). I expect that any such higher-volume retest will occur by next Tuesday, September 16, the day the Federal Open Market Committee (FOMC) meets. The next day, September 17, the Fed will announce its long-awaited interest rate decision and also provide guidance on its policy parameters moving forward. Due to chaos around the world and an abrupt slowdown in China, I expect that the Fed will postpone the expected September interest rate hike until its December FOMC meeting. I also expect a substantial stock market rebound if the September 17th FOMC statement is interpreted as "positive."

Are Bob Brinker and Louis Navellier correct or have they missed the lows?

Beware! In 2007 and repeated in early 2008, Bob Brinker said (see Bob Brinker's Asset Allocation History) the roughly 10% declines off the then record all-time highs in the mid 1,500s were "Gift Horse" buying opportunities.   From page 3 of the January 2008 Marketimer, Brinker wrote:

“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 rang 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 turned out to be 100% wrong as the S&P 500 index fell like a rock to a low of 666 before turning and reaching the 1600s years later.

If the S&P 500 makes a new, record high without testing its August 2015 lows, then Brinker will brag he remains fully invested.  Of course, he's been "fully invested" since March 2003 with no changes to his asset allocation since then.

• See Bob Brinker's Asset Allocation History
• Moneytalk Podcasts (links to past shows)
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Bob Brinker Sees 1900s for S&P500

With the S&P500 just 1.4% below its all-time closing high at 1864.85, Bob Brinker remains fully invested.  This summary is an enhanced version of what I got from reader via email:

Bob Brinker continues to be constructive on the Equity markets and increased his estimate for the S&P 500 to trade into the low-to-mid 1900’s range going forward. 

Brinker says the fact the stock market has not experienced a significant correction (10% or more) since the autumn of 2011 cannot be ignored. 

Given the fact that 2014 is a mid-term off-presidential year, Brinker believes’ that the probability of a meaningful correction this year is high. A correction of at least 8% has occurred in every mid-term off-presidential year since 1960. 

Brinker views a correction as a health restoring event for the equity markets.  That means he is not predicting a bear market. 

Brinker is unenthusiastic about adding new money to the stock market at this time.  

Brinker recommends dollar-cost-average purchases to be made on market pullbacks when possible. 

In order to reduce interest rate risk, Bob has replaced all the Bond Funds in his recommended portfolios to lower duration Funds.

It seems Brinker has been weary of this market for a long time. This is what we reported (Feb 24, 2013 Summary) Brinker said in February 2013, over a year ago

Brinker Comment: The stock market indexes are all at or close to their 2013 year-to-date highs and for the most part the highest levels in several years. Those indexes have been strong year-to-date. Having said that, there is a lot of bullish sentiment. A lot of the indicators are showing a lot of bullishness. Usually, at some point, that kind of over-zealous participation is very frequently cause for profit taking. So if you see some profit taking coming into the market, you should not be surprised given the high level of sentiment in a number of indicators.

From a summary of the March 2013 Marketimer posted on the "Bob Brinker Asset Allocation History" we have Brinker also cautious:

"The S&P500 Index has the potential to trade in the mid-1500s range.... The absence of a health restoring correction in 2012 remains a concern"

There you have it.  Brinker has all bases covered.  If the market goes down, he can say he warned it might go down and not to put new money in.  If it keeps going up, as it always does eventually, then he's fully invested and can point to that.

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