Bob Brinker Timing Model Update

Update on what Bob Brinker's "5 Root Causes of a Bear Market" and "Marketimer Stock Market Timing Model" are saying to the members of our discussion group.

This was posted today in our "Bob Brinker Discussion Forum" at Facebook's discussion group "Investing for the Long Term."

George asked:

Since the chances of a recession keep going up each day, could someone explain to me how a recession fits into the 5 root causes of a bear market as developed by Brinker? I think I understand the 5 root causes fairly well from reading the Brinker web sites and having subscribed to his newsletter in the past. However, none of the 5 root causes seem to deal with a recession. It seems to me that if you have a recession, profits are going to drop significantly. If profits drop significantly I would think you could easily have a bear market at least until the market could see the end of the recession. The 5 root causes could all be favorable or neutral but it seems like you could still have a bear market. The impression I have is the 5 root causes model has a lot of credibility with people associated with this site. What am I missing?

Allan replied to George's post:

In his November 5th newsletter , George , Bob Brinker sees " no evidence in our work that a recession will occur " . " The Conference Board Leading Economic Indicators and Coincident Economic Indicators show no signs that a recession is on the horizon , and we view the cacophony of financial media stories on this subject as highly suspect " .

Ivan replied to George's post:

A recession could follow if all 5 of the data points lined up and pointed to a bear which they do not.

The biggest piece would be tight monetary policy which we did not have IMO, and we never truly inverted the yield curve which is significant.

+ 5 major causes for a bear market (20-50% decline)

1) tight monetary policy - tight money when fed acts to limit the growth of money supply;
2) rising interest rates - currently or prospectively
3) high inflation
4) rapid econmic growth
5) overvaluation - overvaluation will not cause a bear

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His timing model will give you clues of possible recession

Valuation
Monetary
Sentiment
Economic Cycle

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it is not however fool proof IMO

Dan replied to Ivan's post:

"Smile, in light of the dismal stock market, it is amazing that not a single one of those 5 causes is negative. I don't think we have to have all five negatives for a bear market, but when not even one is, that makes you think.

The only one I can see that might even remotely be negative is inflation, and that's only if you view oil prices as the sole measure of inflation. And that's certainly not the case."

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Join us and give your inputs on what the model is saying to you these days! Request Invitation to facebook discussion group "Investing for the Long Term" to participate in our "Bob Brinker Discussion Forum."

Have a safe and Happy Thanksgiving!

Kudos for Bob Brinker Analysis

Kirk's assessment and analysis of Brinker's recommendations are brilliant. My interest in the market has been tinged with naivety, and I appreciate someone like Kirk, who can truly work with the numbers and objectify results. Many thanks, Kirk.

- Dick M on November 17, 2007

Thanks for the kind words Dick. I appreciate them. It would be nice if I could share this with others. Thanks again for your support.

- Kirk L on November 18, 2007

Feel free to share, Kirk. I'm not particularly facile with facebook, despite my kids' abilities... - Dick

- Dick M on November 18, 2007

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Request Invitation to FREE facebook group "Investing for the Long Term" where you can participate in the "Bob Brinker Discussion Forum."

Missing Audio - 11/10/07 Moneytalk On Demand

Bob Brinker's "Moneytalk on Demand" delivered less than advertised.

A reader named "Rob" sent in the following:

The hourly MP3 downloads for hours 1 and 2 for Moneytalk on 11/10/07 only have about 28 minutes of audio each, as opposed to the typical 38.5 minutes. Bob's program opening monologue is completely missing from hour 1 (though it is referenced by a caller at minute 10), and instead it starts abruptly with a call to the show. I find it frustrating that I don't listen to the radio broadcast because I count on this paid service, yet sometimes I receive less program with the paid service than had I listened to the free on-air broadcast. I'm not sure how this happens, but strongly feel that the quality control for this paid service (that I know generates a ton of money) needs to be higher.

-Rob

I recommend "Replay A/V." For details, see "How to record streaming Audio & Video"

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Bob Brinker Still Bullish According to Mark Hulbert

Mark Hulbert reported today that Bob Brinker remains bullish along with the other eight top market timers Mark tracks. The best news is the worst market timers are bearish.

In his article "The best vs. the worst: Best long-term market timers believe we're in a bull market," Mark writes of Bob Brinker:

Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early November, editor Bob Brinker writes: "We continued to believe that there is no risk of a cyclical bear market (a decline of 20% or more as measured by the S&P 500 index (S&P500 chart) in the months ahead ... We expect the stock market to set a series of new record highs into next year." His model portfolios are fully invested.

Mark covers nine of his top market timers and concludes Bob Brinker is not a "lone voice in the wilderness" with his bullishness.

"None of these nine top timers is bearish. The average equity allocation among all nine is 83%. This is down only slightly from where this average stood in recent months."

The best news is the worst market timers Mark Hulbert covers are quite bearish with an average recommended equity weighting of only 9%:

This 83% average is good news for the stock market in its own right, of course. But it's particularly bullish relative to the average forecast of the ten stock market timing newsletters with the very worst risk-adjusted performances over the last decade. The average recommended equity exposure among these worst performers right now is just 9%.

In other words, the worst market timers are quite bearish right now, while the best timers are quite bullish. Rarely are we presented with a contrast this stark.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

Full article by Mark Hulbert: "The best vs. the worst: Best long-term market timers believe we're in a bull market"

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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Bob Brinker's LTSM Timing Model Update for November 2007

Bob Norton's "shadow" Update of Bob Brinker's Long Term Stock Market Timing Model (LTSMTM) has been posted at the "Bob Brinker Fan Club." Here is the URL:

• LTSMTM UPDATE November 6, 2007

Bob writes: "My version of the LTSMTM remains in favorable territory as we move through the month of November." Read his full report to see if you agree with his conclusion and update on the four basic model indicators:

• Valuation
• Monetary
• Sentiment
• Economic Cycle

Then give Bob your feedback on this in our Bob Brinker Free Discussion Forum at facebook's "Investing for the Long Term" group.

Jim Rogers Says Bernanke Is `A Nut' for Cutting Interest Rates

According to Jim Rogers, Federal Reserve Chairman Ben Bernanke is "a nut" for cutting interest rates in "an inflationary environment." Rogers says cuts in the Fed Funds Rate is harming the US Economy by fueling inflation. "“It’s been a disaster... He’s going to print money until we run out of trees."

Visit the Jim Rogers Fan Club

Rogers predicts the dollar will rally now that "everyone is short" but he advises selling dollars on this rally before it collapses.

Rogers, in a video interview with the Financial Times, said the U.S. Federal Reserve and Secretary of the Treasury’s willingness to print money and drive down the greenback is clear. “It doesn’t take a genius to figure out that it’s a currency that’s going to be going down for some time to come."

Rogers on Bernanke:

• "This man is a nut. The dollar is collapsing, commodities are going through the roof, which means inflation's going through the roof. These people are leading us to terrible problems down the line.''
  
• "Bernanke loves printing money."

Rogers says of FOMC chairman Bernanke's job performance:

• “It’s been a disaster." and "If a 6% decline in the stock market causes the man to go and cut interest rates by a half a percent, when inflation is running rampant, when the dollar is under pressure anyway, what’s he going to do when the market is down 36%? What’s he going to do when we have a real crisis? He’s going to print money until we run out of trees. I don’t want to own U.S. dollars in an environment like that.”

On US Election:

• "A pox on both their houses as far as I am concerned. Both Democrats and Republicans."
• "If Ron Paul gets anywhere near the nomination, I'll support him." "He's the only one with a clue."

On China:

• "China is one of the best run governments in the World."
• Says they are having their problems just like the US and UK had when we were emerging world powers.

Bookmark the Jim Rogers Fan Club