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, 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.

Kirk Lindstrom's Investment Letter:

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Make sure you read:

• May 26: Market Update - New Record Closing Highs