Bob Brinker's Last Buying Opportunity

Bob Brinker's last "Buying Opportunity" was issued via a bulletin to his subscribers on September 22, 2011.  It read:

September 22, 2011
S&P 500 Index: 1129.56  

In the September edition of Marketimer we continued to recommend a dollar-cost-average on market weakness approach for subscribers looking to add to their stock market holdings. We also stated that in the event an attractive buying opportunity developed between regular monthly investment letter editions, we would post a Special Subscriber Message on the website for subscriber access.  

In our view, the conditions are now in place to justify an upgrade of our stock market view to "attractive for purchase" for subscribers looking for an opportunity to invest new money into the market at attractive prices.  

Following any additional backing and filling that may occur within the vicinity of the recent correction lows, we anticipate that the market will transition into a renewed uptrend based on our corporate earnings outlook into next year. In our view, the S&P 500 Index has the potential to trade into the low-to-mid 1400s range in 2012. 

That was a good time to buy, of course with the markets near record all-time highs, any time in the past has worked out as a great time to buy, even if you bought at the last tops and reinvested dividends.  

With the markets very near their record highs, I can see why he's worried now, but you have to wonder why he missed 1278 and 1353 in 2012 or even a "gift horse buy" at the start of 2013 before the market gained over 32%.

IF you look at a long-term trend chart of the S&P500 on a log scale, you can make a case to say it is about in the middle of its long-term trading range.  Thus my advice is dollar cost average into an appropriate asset allocation for your age.

I can also see why he has remained fully invested since March 2003.  He knows he doesn't add value with his timing.

My advice is ignore all of Brinker's market timing hocus pocus.  If he could really time the stock market, then he

• would not have missed the greatest bear market since the Great Depression by issuing a "Gift Horse Buying Opportunity" in the mid 1400s as the market began its plunge from the 1500s to 666.  See Bob Brinker's Asset Allocation History
• Would not have told subscribers to invest up to half their cash reserves into the NASDAQ just before it fell by over 80%.  See Effect of QQQ Advice on Reported Model Portfolio Results

Follow his advice to use low cost index funds then rebalance once a year at a minimum as I recommend in my newsletters.

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Bob Brinker Buy Levels

This chart shows the most recent buy levels for the market from Bob Brinker.  Note he gave these "buy levels" despite being fully invested (model portfolios one and two 100% in equities since March 2003) so you would need to win the Lotto or inherit great sums of money to take advantage of buy levels, especially since his advice was to dollar cost average when he has not had a buy level.

Click for full size image

I believe Brinker had one or two more "buy the dips" since July 1, 2010 but I didn't record it/them.  As I wrote on the chart in 2010 after his "Market Attractive for Purchase" after missing the greatest bear market since the Great Depression, who cares?

From March 5, 2009 Marketimer:

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. This is, by far, the most difficult stock market we have ever seen. This is only the second time since the end of World War II that the year-over-year decline in the S&P 500 Index has exceeded 35%. The other occurrence, in the fourth quarter of 1974, was also accompanied by a very severe recession.  

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. Going forward, we expect the combination of aggressive monetary and fiscal policy measures, and initiatives to improve the health of the banking system, to favorably effect the economy. 

Excerpt from March 2009 Marketimer

The key to me is he had no, zero, nada buys in the 600s and 700s.  When the market was making a final low, he didn't even have a dollar cost average in the newsletter.  Then when the market rallied in 2009, he gave a buy in his newsletter for a "test of the lows" that never came.  It was not until the market rose from 666 to 1031 that I believe he actually gave a new "buy signal."  Of course he was fully invested so it was only useful for lotto winners and those inheriting large sums of money who took his advice.

Bob Brinker's Asset Allocation History

Brinker Says BUY: Market Attractive for Purchase

Bob Brinker just now said on the radio that he thinks the market is in a correction. He also said he thinks the market is "attractive for purchase" in the neighborhood of the June 30th low which he said was SnP500 1030.

Here is a list of Bob Brinker's other "attractive for purchase" levels with dates. Note that he has not identified an "attractive to sell" or "attractive to take profits" since the summer of 2000.

Brinker 2008, 2009 and 2010 Buy Levels

• January 4, 2008, SnP500 at 1411: Mid-1400's "Gift horse buying opportunity"
• Feb 10, 2008 SnP500 @ 1331: Low-1300's
• Aug 5, 2008 SnP500 at 1285: 1240 or less
• Sept 2, 2008 SnP500 at 1282: Low-to-mid 1200's
• September 16th -- rescinded low-to-mid 1200's (recommended dollar cost-average only)
• January 2009 SnP500 at 931: “ bear market bottom range of 750 to 850.
• Feb. 2009 SnP500 at 826: “low-to-mid 800’s.
• March 5, 2009 SnP500 at 696: waiting for a bottom and a test of that low. No dollar cost average or buy levels near the very lows!
• April 3, 2009 SnP500 at 798: 676 benchmark low in. Short-term weakness is buying opportunity. He gave up giving specifics. SnP500 Target: 1000s to 1100s in next 12 to 18 months. (we got there in 5 months!)
• July 2, 2010  SnP500 at 1030:  Attractive for purchase.  Confirmed on Moneytalk on July 11, 2010.

Click graph for full size image

Brinker returned to "fully invested in March 2003 and has stayed that way ever since.

Bob's guest today was Suzanne McGee, author of the book Chasing Goldman Sachs: How the Masters of the Universe Melted Wall Street Down . . . And Why They'll Take Us to the Brink Again


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You can listen to the Sunday Moneytalk broadcast for free at the KGO Archives (1 - 4 PM PST) for the week following the show.  After listening, the ReplayAV software will let you copy the file from your computer's memory to a permanent place on your hard drive to upload to a portable MP3 player.

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

Click to see full size chart

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.”

Click to see full size chart

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.

• 4% 1YR CD at Wachovia Bank
  
• 5% 3 to 7 Yr CDs at Pentagon Federal Credit Union

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Another Bob Brinker Buy Signal Possible

Bob Brinker fans take note! Today the market closed a tiny bit lower than its October 10, 2008 low but on lower volume.

Click charts courtesy of stockcharts.com for full size images
More S&P500 Charts

This is the type of "successful test of the low" that BobBrinker has used in the past to give buy signals. I would not be surprised if he issues a bulletin soon.

Click charts courtesy of stockcharts.com for full size images

Of course, Brinker has been fully invested since March 2003 and gave many buy signals at much higher levels already. Thus any announcements of a new "buy level" now would be more entertainment than value to his subscribers.

Chart of Bob Brinker "All-In" Buy Levels

Click charts courtesy of stockcharts.com for full size images
More S&P500 Charts

My Recent Buys

Equities: Using profit taking dollars from selling shares (announcement in pdf) when the market was higher, I recently purchased Google (GOOG Charts) at $310 for my personal and newsletter explore portfolios. I also bought Spiders (SPY charts) at $87.54 for my personal core portfolio to rebalance when the market was at an extreme oversold level.

Fixed Income: I also recently purchased a 4.30%, 1-year CD at Wachovia Bank.

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For Brinker, Three Strikes Is Not An Out

How many people have money left over for a new buy level after three "all in buys" at 1380, the mid 1400s and low 1300s?

3-strikes is not an out for Bob Brinker

Click charts courtesy of stockcharts.com for full size images

Bob Brinker has been recommending a "fully invested" position in the stock market since March 2003. (See Bob Brinker's Asset Allocation History.)

We can only speculate why Bob Brinker keeps giving "all in" buy levels. How useful are new buy levels every time the market drops?

Since March 2003, Brinker has recommended investors be FULLY INVESTED in the stock market. If they get any "new money" say from winning the lottery or a big inheritance, then they are to dollar cost average that money into the market except for when the market drops into one of his "BUY ZONES" where he recommends a lump sum (immediate) investment in equities. Here are some of my ideas why he has given four "all in buys" in the past 18 months without a single "take profits" or sell signal.

• His subscribers have a short memory and only remember the latest buy level so he will eventually look brilliant to some of them.
  
  
• He has a high turnover of subscribers when he has periods of poor market timing. Since he does not talk about past mistakes in detail in his newsletter, new subscribers have no idea his prior buy levels were a bust nor do they know he was advising a fully invested position through the latest bear market from its peak at 1565. To them, he might look like he called the bottom should one of the buy levels turn out to be a bear market bottom.
  
  
• His 8 page Marketimer newsletter has three pages of new text each month with the remaining 5 pages filled with performance tables. Perhaps Brinker can't find anything else to write about to fill the three pages of new text each month.
  

Did I miss any?

Feel free to use to comments section to add your ideas.

Bob Brinker Test Of Low Conditions Met

Today the S&P500 closed at a marginal new low on lower volume than the last time it was near this level on January 22. Thus it meets Bob Brinker's conditions for a successful test of the prior low.

Click the charts courtesy of stockcharts.com to see them in full size.

Intraday Charts (Candlestick Chart)

Closing Basis (Dots)

Only time will tell now if this is a good indicator.

Correction Statistics for 03/06/08

S&P 500 Charts (Using Intraday prices):
Last Market High 10/11/08 at 1,576.09
Last Market low 01/23/08 at 1,270.05
Current S&P500 Price 1,304.34
Decline in Pts 271.75
Decline in % 17.2%
Max Decline 19.4%
This means the correction from intraday high to intraday low is 19.4% and we are currently 17.2% off the peak.
The decline from the high to the low on a closing basis is 16.7%
.
More DJIA Charts (Using Intraday prices):
Last Market High 10/11/08 at 14,279.96
Last Market Low 01/22/08 at 11,508.74
Current DJIA Price 12,040.39
Decline in Pts 2239.57
Decline in % 15.7%
Max Decline 19.4%
This means the correction from high to low has been 19.4% and we are currently 15.7% off the peak.
The decline off the high on a closing basis has been 18.7%

More NASDAQ Charts (Using Intraday prices):
Last Market High 10/31/07 at 2,861.51
Last Market Low 01/23/08 at 2,202.54
Current NASDAQ Price 2,220.50
Decline in Pts 641.01
Decline in % 22.4%
Max Decline 23.0%
This means the correction from high to low has been 23.0% and we are currently 22.4% off the peak.
The decline off the high on a closing basis has been 22.3%

Bob Brinker's Low 1300s Buying Opportunity

• On February 21, Peter Brimelow wrote of Bob Brinker's "Buying Opportunity" in the S&P500 mid 1300s. [ See "Bob Brinker Likes Low 1300s According to Peter Brimelow"]. All conditions are being met so far today. Unless we get a sudden surge of volume in the last hour to take us from under 4B to over 6B shares, which is not probable, we should have a test of the January 22nd low.
  
  Brimelow wrote:
  
• Brinker said recently: "Marketimer views the establishment of a correction bottom as a process which unfolds over a given period of time. This process involves the initial establishment of a closing S&P 500 Index low, followed by a short rally, followed by a test of the area of the previously established low on reduced trading volume. The initial closing low in the current stock market correction process occurred on Jan. 22, when the S&P 500 Index closed at 1310.50. The market subsequently rallied for eight days, at which point it began the process of testing the area of the Jan. 22 closing low."
  
  "In our view, the correction bottoming process has proceeded with a high degree of historical consistency to date. We have witnessed a decided reduction in selling pressure during the testing process, which is essential to a successful outcome. We now rate the stock market attractive for purchase on any weakness that occurs in the current area of the S&P 500 Index low 1,300s, or any minor weakness that occurs below that level."
  
  Market timer's summary: "As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S&P 500 Index to work its way into record new high ground by late this year or in 2009."
• Well, it looks like today we have a test of the January 22 low with lower volume.
  
  Click image courtesy of stockcharts.com to see it full sized

Did the "Bottom Bell" ring at your house? Did you grit your teeth and buy through your fear today? I bought stock today.

It should be noted that with the S&P500 at 1411, Bob Brinker sent out a bulletin to his subscribers on August 16, 2007 that said:

"Any further testing of the area of the correction lows, which we expect to be close to the current S&P 500 Index level (1411), is regarded as an additional buying opportunity for subscribers looking to add to stock market holdings."

and

"Marketimer expects the S&P 500 Index to register new historic record highs as we move forward into next year."

Visit our Facebook Bob Brinker Discussion Forum at "Investing for the Long Term" to ask questions or discuss this article.

Disclaimer: I own SPY (the Exchange Traded Fund for the S&P500) in my IRA. Also, I did some buying of an "explore stock" from my newsletter "Explore portfolio" today with money from taknig profits when the market was higher.

After Market Close Update (1:20PM PST)

You can see from the chart the market probed the January 22 closing lows on much lower volume. Even more exciting, it finished the day with a very bullish "Dragon Fly doji"

From Stockcharts.com

Dragon Fly and Gravestone Doji

Dragon fly doji form when the open, high and close are equal and the low creates a long lower shadow. The resulting candlestick looks like a "T" with a long lower shadow and no upper shadow. Dragon fly doji indicate that sellers dominated trading and drove prices lower during the session. By the end of the session, buyers resurfaced and pushed prices back to the opening level and the session high.

The reversal implications of a dragon fly doji depend on previous price action and future confirmation. The long lower shadow provides evidence of buying pressure, but the low indicates that plenty of sellers still loom. After a long downtrend, long black candlestick, or at support, a dragon fly doji could signal a potential bullish reversal or bottom. After a long uptrend, long white candlestick or at resistance, the long lower shadow could foreshadow a potential bearish reversal or top. Bearish or bullish confirmation is required for both situations.

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Bob Brinker Likes Low 1300s According to Peter Brimelow

Yesterday Peter Brimelow reported that his "Bold Bulls are bloodied but unbowed." He says the bold bulls are all "shaken by the economy's deterioration, but still positive long-term."

About Bob Brinker, Brimelow wrote:

Brinker said recently: "Marketimer views the establishment of a correction bottom as a process which unfolds over a given period of time. This process involves the initial establishment of a closing S&P 500 Index low, followed by a short rally, followed by a test of the area of the previously established low on reduced trading volume. The initial closing low in the current stock market correction process occurred on Jan. 22, when the S&P 500 Index closed at 1310.50. The market subsequently rallied for eight days, at which point it began the process of testing the area of the Jan. 22 closing low."

"In our view, the correction bottoming process has proceeded with a high degree of historical consistency to date. We have witnessed a decided reduction in selling pressure during the testing process, which is essential to a successful outcome. We now rate the stock market attractive for purchase on any weakness that occurs in the current area of the S&P 500 Index low 1,300s, or any minor weakness that occurs below that level."

Market timer's summary: "As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S&P 500 Index to work its way into record new high ground by late this year or in 2009."

It should be noted that with the S&P500 at 1411, Bob Brinker sent out a bulletin to his subscribers on August 16, 2007 that said:

"Any further testing of the area of the correction lows, which we expect to be close to the current S&P 500 Index level (1411), is regarded as an additional buying opportunity for subscribers looking to add to stock market holdings."

and

"Marketimer expects the S&P 500 Index to register new historic record highs as we move forward into next year."

Click image courtesy of stockcharts.com to see it full sized

Bob Brinker has recommended a fully invested position all this time so it is good news for bullish investors that Bob Brinker is still bullish for the long term.

Of the other two "bold bulls" Index Rx remains bullish like Brinker:

• "Don't let the proclamations of experts frighten you into straying from your chosen strategies. Stay the course; we will be vindicated."

while Richard Band of "Profitable Investing" is defensive:

• "I continue to recommend a defensive posture for the model portfolio ... Buy gradually and cautiously, focusing on high quality blue-chip stocks (preferably those with the strongest earnings prospects for the year ahead).
  
  Currently, Band is 69% stocks, 31% fixed income. One stock recommendation is International Business Machines (IBM)
  
  Band writes: "Buy at $107 or less for a potential return of 20%-30% in the next 12 months."

Visit our Facebook Bob Brinker Discussion Forum at "Investing for the Long Term" to ask questions or discuss this article.

Disclaimer: I own IBM with huge gains from a big buy back in 1994 at about $11 a share when IBM was having major problems since its 1987 peak much like we are seeing today for the NASDAQ100 technology index (QQQ) that remains down over 60% from its 2000 peak. I also have shares from the 1980s via a DRIP (dividend reinvestment plan) that have done very well overall despite the bad times between 1987 and 1994.

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Bob Brinker Fan Club Special Alert

As Honeybee posted in the article "Bob Brinker's Market Timing"

Bob Brinker is currently very bullish on the stock market. As he has said on Moneytalk and in Marketimer, he rates the S&P 500 Index “attractive for purchase on any weakness that occurs in the area of mid-1400’s.” Above that level, he recommends a “dollar-cost-average approach.”

$1450 qualifies as "mid-1400s!"


Click for more charts
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