Markets Plunge. Bob Brinker Says "Remain Fully Invested"

Despite the market's decline from record highs, Bob Brinker recommended in a special bulletin last night that his subscribers remain fully invested and dollar cost average new money into the markets. His model portfolios one and two are 100% in stock market equities so they have benefited greatly from the bull market that began in October 2002. Now that the market is down considerably, they too are down. Model Portfolio Three is a "balanced" portfolio with half in equities and half in fixed income so it goes up less in bull markets and down less in bear markets.

Since Brinker did not rebalance his "balanced portfolio" as it went up, it is suffering more in this decline than many in retirement want to see. This is a why I recommend rebalancing once a year since I believe NOBODY CAN TIME THE MARKETS, including Bob Brinker.

Based on the sell-off in the S&P500 Futures Market, the S&P500 is currently in "bear market status"

• (1597-1261)/1597 = 21.04% A bear

The fear that the US is headed towards a recession over its subprime meltdown mess caused the stock markets in Asia to plummet today. The US Stock markets are closed today to celebrate Dr. Martin Luther King's birthday, but the S&P futures market was open and it continued to plunge to enter into official bear market territory, down 21% from the peak, earlier today.

Charts at a Glance - Daily

• Americas - Asia/Pacific - Europe - Africa/Middle East

Charts at a Glance - 5 days

• Americas - Asia/Pacific - Europe - Africa/Middle East

Charts at a Glance - 1 yr

• Americas - Asia/Pacific - Europe - Africa/Middle East

India's Mumbai index set a record with a 7.4% plunge.

The markets in Singapore, Hong Kong and mainland China all saw 5% or more declines on the day.

Hang in there. If this decline is too painful for you, then wait for market strength to lower your exposure to equities. If we are not in a true bear market rather than a selling panic, then we should get a rally to new highs where you should THEN use the opportunity to lower your allocation to equities and give up the false belief in Santa Clause and Market Timing.

Most people who under perform the markets do so by trying to time them, failing at the attempt, then selling in a panic which is what makes markets bottom.

This only goes to show why experts say "nobody can time the markets" so the best way to hadle market volatility is with a diversified portfolio of equities and fixed income such as I recommend in "Kirk's Investment Newsletter" where I advise a "core and explore" approach to investing.

My most aggressive model portfolio is 80% in equities at max so there is always money to buy declines. My "explore portfolio" is 70% in very volatile equities to make up for the 30% in fixed income. I use this portfolio to buy and sell as the markets or my individual stocks go up and down, using mostly asset allocation. Keeping to a fixed, target asset allocation and regular rebalancing (at least once a year) means I take profits when the markets are up and put them back into equities when the markets are down.

I believe Brinker did not rebalance his "balanced" 50:50 portfolio so it started 2008 with much more than 50% in equities, something I do not recommend for retired people. I think they should ALWAYS rebalance once a year to maintain their 50:50 target so declines like we are in now are not so painful.