Bob Brinker Sees New Market Highs

This weekend Bob Brinker told a caller to "Moneytalk" that he thought the S&P500 could make new highs in the next one to three years.

Click charts courtesy of stockcharts.com to see full size images

This is good news as the S&P500 is about 300 points away from "new highs." New highs would be a gain of 20%!

• [(1576-1261) /1576] x 100% = 19.99%
  

From Kirk's Market Update for July 26, 2008:

Index (1)	Started Week	Ended Week	Change	% Change	YTD
DJIA	11496.57	11370.69	-125.88	-1.1 %	-14.3 %
Nasdaq	2282.78	2310.53	27.75	1.2 %	-12.9 %
S&P 500	1260.68	1257.76	-2.92	-0.2 %	-14.3 %
Russell 2000	693.08	710.33	17.25	2.5 %	-7.3 %

Note 1: Index returns do not include dividends.

From Honeybee's Summary, Commentary and Moneytalk Excerpts, July 26, 2008:

Caller Gary: “I was just wondering what your opinion was on the market returning to its previous highs?”

Brinker replied: “Well, I would say that uhhhhh….what kind of a time frame do you have in mind, that’s the key? It’s not going to happen this week, you know we’ve got to get up 300 points in the S&P – 300 points in the S&P to get to new highs. What kind of a time-frame were you thinking about?” .

Gary: “Well, I don’t know –1 to 3 three years. What kind of a time-frame would you………”

Brinker replied: “Oh, I would say within your time-frame of 1 to 3 years, would the market get to new all-time-highs in the S&P 500. For me I think the answer would be without question – that would be my opinion. Would the market get to new all-time-highs within your time-frame of 1 to 3 years? Yeah. For me, my opinion on that would be -- without question."

Brinker sure sounds confident. Of course he was confident in new highs at much higher levels too so this is nothing new.

From Bob Brinker Timing Model Mauled By Bear Market:

Months into the bear market, Brinker thought we were still in a bull market. The bear market started at the high, in October 2007!

January 2008 with 100% invested & S&P500 @ 1468.36

• Dollar Cost Average. Lump sum mid 1400's
• Pg 3: “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 range in the process."
  

March 2008 with 100% invested & S&P500 @ 1330.63

• Dollar Cost Average. Lump sum low 1300's
• Marketimer Pg 1: "Based on the model’s current readings, we expect the area of the correction bottom established during recent weeks in the S&P500 Index low 1300’s to contain any further testing and probing that may occur."

May 2008 with the S&P500 back over 1400 he gave a bad news bashing on the radio that had their heads spinning. Brinker said:

“So what we have here basically, is an example of false prophets and it’s sad. And the reason it’s sad is the damage done. Think of the people that are looking today at the market, S&P at 1400 and they’ve been scared out of the market in the first quarter by these bears………It’s just amazing and yet these people are out there, and these people are not happy, I’m sure, to find themselves out of a rising market since March. To find themselves looking for ever lower prices when in fact we’ve had the opposite.

But it is good to know Brinker is still bullish. I look forward to new market highs when Brinker can bash the "bad news bears" yet again!

Bob Brinker Throws Charlie Maxwell Under the Bus

Is Brinker admitting he can't predict the future price of the stock market because he can't predict the future price of oil? On Saturday July 12, Bob Brinker commented on oil prices:

Here we see oil having closed the week at an all-time-record-high, close to $145 for a barrel of oil………..And there is an inverse relationship that has developed between upward spikes in oil prices and the stock market, and that inverse relationship has really been showing up now for some time.

"The stock market wants to see an economic recovery scenario. It does not want to see an increased oil price scenario, which is was it’s seeing right now. Now I wish I could tell you what the price of oil is going to be in a week, a month, a year. I don’t know. I have no way of knowing and I think only a fool would try to forecast the price of a barrel of oil in the world we live in…….”

Is Bob Brinker calling himself and his guest Charlie Mawell fools for trying to predict the price of oil less than a year ago?

David Korn Moneytalk Commentary: (November 10-11, 2007):

Charlie Maxwell, the oil energy expert, was on Moneytalk in September and predicted that oil should stay in a range of $50s up to $80 a barrel for another two years. Bob took up this mantra in response to a caller some weeks back saying he was going to go with Charlie's prediction. Up until recently, Charlie had been pretty on the mark as oil had only gone to the upper $70s. With oil now knocking on $100 a barrel, the prediction Charlie last made is pretty much out the window.

David Korn Moneytalk Commentary (May 19-20, 2007):

Maxwell/Brinker: Bob opened the interview praising Charlie for his predictions on Moneytalk that the price of oil would trade in the $50s to the $70s which has been right on the mark in recent years. Bob asked Charlie if he had changed his forecast. Charlie said we have seen oil go from $25 a barrel in early 2003, to as high as $75 a barrel, with a peak at $78. There was a lot of oil being traded at $75. The rise from $25 to $75 is huge and represents a 200% increase. Nevertheless, Charlie said he thinks supply and demand are roughly in balance today and might stay here for a while, particularly given the weakness that is going on in the U.S. economy. A slower U.S. economy can translate into reduced imports, and thus slow foreign demand from countries like China. This period of transition where we stay in the range of $50s up to $80 a barrel should stay with us for another two years.

• Kirk Comment: Just today the CFTC task force study concluded supply and demand are main factors in oil price run up to record levels

With this as a backdrop, Charlie thinks that by 2010-2011, we could see oil trade at over a $100 a barrel.

David Korn: Charlie has actually gone on record in the past projecting that West Texas Intermediate Crude ($WTIC) would rise to rise to $85 by 2010, $180 by 2015 and $300 by 2020. Based on today's interview, it looks like he raised his 2010 prediction by $15 a barrel.I don't think Charlie Maxwell and Bob Brinker are fools. They were just very, very wrong.

James Rogers (Mr. Bow Tie as Bob Brinker used to call him) and many others predicted commodity prices would soar for many reasons including "easy money made available by the Federal Reserve."

For years Bob Brinker has been in favor of a low Fed Funds rate as he has dismissed the effects on inflation these low rates have. Brinker was wrong while others like me who warned about inflation from higher priced oil (and other rising commodities) were correct.


The above chart shows the S&P500 is back to where it started 2006 while the price of oil has more than doubled. The chart also shows the S&P500 made a record high even as the price of oil soared 50% from $60 to $90.

Bob Brinker needs to look at the credit crisis for what caused the stock market to have a bear market. Here is the same chart with the Financial Sector exchange traded fund, XLF, added.

This chart of oil prices, the S&P500 and XLF since June 1st shows just how wrong Brinker is about what is driving stock prices. Hint... it is not oil!

I think Bob Brinker has thrown Charlie Maxwell under the bus so he can blame someone for missing a bear market over the price of oil. The trouble is, the collapse of the financial sector is driving the price of the stock market, not oil! Oil is where it was in early June while the S&P500 is down considerably. Brinker should admit he was wrong and stop trying to find scapegoats.

CDARS or Certificate of Deposit Account Registry Service

Today Bob Brinker recommended CDARS for people looking for FDIC insurance on CDs between $100,000 and $50,000,000 (fifty million dollars.)

CDARS stands for "Certificate of Deposit Account Registry Service."

From the Website: www.cdars.com

CDARS for Individuals

With CDARS, banks can offer you up to $50 million in Federal deposit insurance coverage. So you can manage all of your CDs through a single bank, without hassle.

With CDARS, you get One Bank, One Rate, One Statement

• One Bank: Investors can access multi-million dollar FDIC insurance coverage by working with just one bank — the bank they know and trust.
• One Rate: Investors negotiate one rate for each CD maturity and enjoy the option of reinvesting them through a simple process.
• One Statement: Investors receive one easy-to-read statement summarizing all of their CD holdings.

With CDARS, you can say “goodbye” to running around town to multiple banks. No more opening up multiple title accounts in different rights and capacities of family members to maximize FDIC insurance at one bank. There also is no need to manually consolidate account statements or interest disbursements, which frees up your valuable time. You can enjoy the peace of mind associated with access to full FDIC insurance on your CDs. You’ve worked hard for your money. Now, let it work hard for you. As always, your confidential information remains protected.

Institutions Offering CDARS by State

AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MS MT NC ND NE NH NJ NM NV NY OH OK OR PA RI SC SD TN TX UT VA VT WA WI WV WY

==>Highest Yield CDs with FDIC <==

2007-2008 Bear Market Statistics through 07/11/08

We are currently in a bear market that Bob Brinker's stock market timing model did not expect. Bob Brinker has been fully invested since March 2003. (See Bob Brinker Timing Model Mauled By Bear Market) Hopefully this bear market is close to being over, the market recovers and Brinker can go back to bashing "the Bad News Bears" someday in the not too distant future.

We had similar bear markets with just over 20% declines in 1990 and 1998 but the average bear market is more like 30% because that includes the 2000 to 2002 bear market where the S&P500 fell 50% and the great depression where the markets fell much more.

2007-2008 Bear Market Statistics 07/12/08

S&P500 Chart
Last Market High 10/11/07 at 1,576.09
Last Market low 07/11/08 at 1,225.35
Current S&P500 Price 1,239.49
Decline in Pts 336.60
Decline in % 21.4%
Max Decline 22.3%

• =>This means the correction from intraday high to intraday low is 22.3% and we are currently 21.4% off the peak.
• =>The decline in the S&P500 from the closing high to the closing low was 20.8%
  

DJIA Charts
Last Market High 10/11/07 at 14,279.96
Last Market Low 07/07/08 at 11,120.74
Current DJIA Price 11,100.54
Decline in Pts 3,179.42
Decline in % 22.3%
Max Decline 22.1%

• =>This means the correction from high to low has been 22.1% and we are currently 22.3% off the peak.
• =>The decline in the DOW off the closing high to the closing low was 21.6%
  

NASDAQ Charts
Last Market High 10/31/07 at 2,861.51
Last Market Low 03/17/08 at 2,155.42
Current NASDAQ Price 2,239.08
Decline in Pts 622.43
Decline in % 21.8%
Max Decline 24.7%

• =>This means the correction from intraday high to intraday low is 24.7% and we are currently 0.217518024 21.8% off the peak.
• =>The decline in the NASDAQ off the closing high to the closing low was 24.1%

Make sure you read:

• Bob Brinker Timing Model Mauled By Bear Market
  
  
• Bob Brinker's Asset Allocation History
  
  
• Bob Brinker's Bear Market Definition

For us mere mortals who KNOW we can't read the future with a crystal ball, a well diversified basked of index funds for our core portfolios, such as the ones I recommend in "Kirk Lindstrom's Investment Newsletter" are the way to go.

To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!

• Since 1/1/1999 through 6/31/08 my "explore" portfolio is up 175% while the S&P500 is only up 20% and Warren Buffett's Berkshire Hathaway is only up 71%
  .
• Subscribe TODAY and get the July 2008 issue for FREE!

Bob Brinker Timing Model Mauled By Bear Market

Bob Brinker's premature bashing of his "Bad News Bears" in May when the S&P500 was over 1400 was early at best and wrong if the market continues to go down. Brinker was also wrong last December when he wrote "We expect the bull market to continue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs." The market was already in the early stages of the bear market when he wrote that as the graph and table of data below show.

A picture is worth a thousand words.

But for those who don't read graphs, here are some words. By Brinker's own definition, we are in a bear market as the S&P500 closed down over 20% from its all time

Date of last high is 10/09/07
Last Market High is 1,565.15
Date of last low is 07/09/08
Correction Low = 1,244.69
Decline in Pts = 320.46
Decline in % = 20.5%

Besides being fully invested at the top and looking for new highs in 2008 he had an "All in" buy for new money in the mid 1400s. Marketimer newsletter quotes follow:

October 2007 with 100% invested & S&P500 @ 1526.75

• Dollar Cost Average. Lump sum mid 1400's
• "Although we do not believe further weakness into the mid-1400's range must occur, we remain comfortable with rating the market attractive for purchase should any such additionalweakness occur. Above that price range, we prefer a dollar-cost-average approach for new stock market investing. All Marketimer® model portfolios remain fully invested."

Dec. 2008 with 100% invested & S&P500 @ 1481

• Dollar Cost Average. Lump sum mid 1400's
  
• "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. We expect the bull market to continue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs."

Months into the bear market, Brinker thought we were still in a bull market. The bear market started at the high, in October 2007!

January 2008 with 100% invested & S&P500 @ 1468.36

• Dollar Cost Average. Lump sum mid 1400's
• Pg 3: “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 range in the process."
  

March 2008 with 100% invested & S&P500 @ 1330.63

• Dollar Cost Average. Lump sum low 1300's
• Marketimer Pg 1: "Based on the model’s current readings, we expect the area of the correction bottom established during recent weeks in the S&P500 Index low 1300’s to contain any further testing and probing that may occur."

May 2008 with the S&P500 back over 1400 he gave a bad news bashing on the radio that had their heads spinning. Brinker said:

“So what we have here basically, is an example of false prophets and it’s sad. And the reason it’s sad is the damage done. Think of the people that are looking today at the market, S&P at 1400 and they’ve been scared out of the market in the first quarter by these bears………It’s just amazing and yet these people are out there, and these people are not happy, I’m sure, to find themselves out of a rising market since March. To find themselves looking for ever lower prices when in fact we’ve had the opposite.

We’ve had the market rising since mid-March. It’s rather significant when you stop to think about it. If you go back to mid-March and you take a look at the S&P 500 Index since mid-March, right now you have a total return, including cash dividends of about 10 1/2%.....................So it’s fair for you to say to the Cassandras, where is that recession, where are those millions of lost jobs, where are the two quarters of negative real GDP growth? Where’s the bear market? …………The answer is, they blew it! That is the answer, they blew it. They got caught up in their own negativity and they pronounced that it was all over, it was going to spiral downward and there was no end in sight – and they got it completely backwards. Truly amazing to see, and sad to see the people that are harmed by such unjustified negativity.”

June 3, 2008 Article "Bob Brinker's June Market Outook"

• Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early June, editor Bob Brinker wrote that his market timing model "remains in favorable territory as we approach the start of the summer season. We continue to expect stock prices to work higher and to achieve new historic highs in the market indexes." Brinker's model portfolios are fully invested.

July 10, 2008 Barrons article:

• Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early July, Editor Bob Brinker reported that his stock-market timing model remains in favorable territory. ..... Brinker is recommending that subscribers' stock portfolios be fully invested.

All quotes are detailed at:

>>Bob Brinker's Asset Allocation History<<

Brinker's belief that he can time the stock markets is flawed at best. The good news is his other advice to become your own financial advisor, use low cost index funds and avoid excessive concentration in any one stock is sound. Sadly, I think the good advice is to lull you into the belief that he can time the stock markets.

"Market Timing is a wicked idea. Don't try it --- ever."
[Charles D. Ellis, Winning the Loser's Game]

"I have been following markets for about 50 years, and I’ve never met anybody who could time the market correctly."
(Burton G. Malkiel on 4/28/07 as a guest on “Moneytalk with Bob Brinker.” Malkiel won the 1973 Nobel Prize in Economics for his work on efficient markets presented in his book “A Random Walk Down Wall Street

Official Bear Market By Bob Brinker's Definition

Bob Brinker defines a bear market as a 20% decline in the S&P500 on a closing basis. (See the article "Bob Brinker's Bear Market Definition")

Yesterday the S&P500 closed down 20.0% from its all time closing high.

Click charts courtesy of Stockcharts.com to see full size images.

Correction Statistics for 07/07/08

S&P 500 Data using Closing Prices
Date of last high: 10/09/07
Last Market High: 1,565.15
Date of last low: 07/07/08
Correction Low: 1,252.29
Decline in Points: 312.86
Decline in %: 20.0%

If the market goes up from here, does anyone want to bet that Bob Brinker will say the S&P500 "only" went down 19.99%, not 20%?

Using the MarketWatch Mutual Fund Analyzer, Treasury Inflation Protected Securities, or TIPS, have been the top performer this past year going up more than the stock market has gone down!

Table of Vanguard Index Fund Performance

	Ticker	Asset Class	YTD		1-YR		3-Yrs		5-Yrs		10-Yrs
	VIPSX	TIPS	5.99%		17.34%		6.17%		6.43%		NA
	VFINX	S&P 500	-13.84%		-16.59%		3.33%		6.33%		2.40%
	VTSMX	Total Stock	-13.31%		-16.56%		3.66%		7.29%		3.09%
	VBMFX	Total Bond	1.05%		7.88%		4.12%		3.87%		5.38%
	VFIIX	GNMA	1.11%		8.17%		4.53%		4.07%		5.50%

I love 20% off sales! Why should the stock market be any different than Macy's? Do you wait for pants to go up 20% above list price to buy or do you look for sales?

Just yesterday I added about $5,000 worth of SPY (Charts) to my explore portfolio at $125.25 a share using money raised from taking profits when the markets were higher.

I wish someone like Bob Brinker really could time the markets. Can you imagine how much more money you would have if you sold out of stocks a year ago on fear of stagflation (low economic growth and high inflation) and put the money into TIPS?

Instead of $100 in VTSMX (Total Stock Market Index Fund for Wilshire5000 Charts) turning into $83.44 you would have $100 in VIPSX (TIPS index Fund) growing to $117.34 for a difference of $33.90.

Those in the total stock market index fund, VTSMX, now need a 40.6% gain to catch up with someone who switched to TIPS a year ago!

(117.34-83.44)/83.44 x 100% = 40.6%

Of course, that sort of performance with near perfect market timing is why market timing appeals to so many. Sadly, Jack Bogle, founder of Vanguard and a regular guest on Moneytalk, wrote:

The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike.
[John C. Bogle in Common Sense on Mutual Funds: , pg 20]

For us mere mortals who can't read the future with a crystal ball, a well diversified basked of index funds for our core portfolios, such as the ones I recommend in "Kirk Lindstrom's Investment Newsletter" are the way to go.

To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!

• Since 1/1/1999 through 6/31/08 my "explore" portfolio is up 175% while the S&P500 is only up 20% and Warren Buffett's Berkshire Hathaway is only up 71%
  .
• Subscribe TODAY and get the July 2008 issue for FREE!

Bob Brinker's Bear Market Definition

Bob Brinker defines a bear market as any move 20% off the peak on a closing basis. That is Brinker's definition.

The S&P500 all time record high was set last October at 1565.15. A 20% off bear market, according to Bob Brinker, would be any close at or below 1252.12. I show both these levels on the chart of the S&P500 closing values along with Bob Brinker's two "all in" buy signals where he recommended his readers lump sum any new money into the market.

[ALL charts are clickable to view them in full size.]

The official definition of a bear market on pg 745 and 747 of "Technical Analysis of Stock Trends" by Robert D. Edwards and John Magee doesn't list a specific percentage but plenty of talk about bull markets end when the "public" tries to profit from a rising market. I can't think of a better example of this distribution phase when a well known National radio host (Brinker) told his readers a secular bear market he told them they were in all the way up from the 2002 bottom ended the year before (in Summer 2006)... nearly to the day the markets peaked!

• Technical Analysis Bible: Technical Analysis of Stock Trends

I like to use intraday trading numbers for my market analysis since those show prices traders can actually buy and sell rather than what the very last trade of the day went off at, a number that is often manipulated.

This next chart shows we've already had a 20% bear market on an intraday basis.

The Good news in the chart is it clearly shows we are testing those March 2008 bear market lows now on what looks to be lower volume. Of course, the March low was at lower volume than the Januarly low, so the hope is we are slowly exhausting the sellers.

What I am hoping we are seeing now is the washout phase discussed in "Technical Analysis of Stock Trends" that ends bear markets.

Watch this chart to see intraday trading as it will update in real time if you return here.

Note: Bob Brinker has been FULLY INVESTED in all his model portfolios since March 2003. He has advised his subscribers to dollar cost average new money into the market except for special "all in" buy levels in the mid 1400s and again in the low 1300s that have not worked out too well. See Bob Brinker's Asset Allocation History.

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• Excerpts from my 10/19/07 newsletter when I advised taking profits last year at 1540.
  
  
• Since 1/1/1999 through 6/1/08 my "explore" portfolio is up 199% while the S&P500 is only up 31% and Warren Buffett's Berkshire Hathaway is only up 91%
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• Subscribe TODAY and get the July 2008 issue for FREE!