Bear Market Statistics - Bob Brinker Still Fully Invested

One wonders how long Bob Brinker can talk about anything but the poor performance of the stock market on his "Moneytalk" show. Here are my ideas on what he might talk about this weekend to avoid "Market Talk."

• The Rise and Fall of Fannie Mae and Freddie Mac
  
  
• Warren Buffett on Goldman Sachs and Financial Bailout Package
  
  
• Washington Mutual - Largest Bank Failure in History
  
  
• VIX: CBOE Volatility Index Signals Fear is High
  Hmmm, maybe not that... it has to do with the stock market!
  

This chart clearly shows we remain in a bear market.

Click chart courtesy of stockcharts.com for full size image

Bob Brinker has been bullish and recommending a fully invested position in the stock market since March 2003. I wish he would talk about what went wrong with his timing model on the radio or even in his newsletter.

Bob Brinker wrote in the January 2008 Marketimer with S&P500 @ 1468.36:

“In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008."

And

"We expect the S&P Index to achieve new record highs this year and to reach the 1600’s range in the process. “

Instead of talking about what went wrong with his timing model, he keeps issuing new buy signals as the market falls, perhaps hoping new subscribers will think he called a bottom if the market turns up. Either that or he hopes his current subscribers have poor memories.

Note in my newsletter I don't pretend to be able to time the market. I try to be READY for whatever the market throws at me with an asset allocation designed to do well over the long term aided by exceptional stock selection that I HOPE continues.

Experts from Bill Sharpe and Larry Swedroe to John Bogle approve of what I do and NONE of them believe in market timing but for an "entertainment" portion of their portfolios.

To learn what I recommend for newsletter portfolios, subscribe now!

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Bob Brinker, Hank Paulson and QQQQ

Regular readers here are aware of Bob Brinker's advice to buy the ETF for the NASDAQ100 (QQQQ) back in October 2000 with up to half the 65% cash reserves. (If you are new, then read Bob Brinker's QQQ Advice.) US Treasury Secretary Hank Paulson may have the solution to Brinker's problem of a poor investment still on the books for many of his subscribers. Let me first summarize the situation.

In the first half of 2000 when the S&P500 was about 1500, Bob Brinker recommended his subscribers raise 65% cash reserves and wait for instructions on how to deploy these cash reserves in cyclical bear market rallies in what he thought was going to be an 8 to 20 year secular bear market.

In October of 2000 when the QQQQ was about $83, Bob Brinker told his aggressive subscribers :

• We recommend Marketimer subscribers with aggressive objectives invest 30% to 50% of existing CASH RESERVES in QQQ shares in order to exploit this opportunity.

Conservative investors were told

• Also we recommend subscribers with conservative objectives invest 20% to 30% of CASH RESERVES in the QQQ shares in order to take advantage of this opportunity.

Brinker let this "short term trade" turn into a long term "investment" when they fell to $46 in June 2001 and he wrote:

• For subscribers with a position in Nasdaq 100 Index (QQQ) shares, we recommend holding these shares for future recovery.

His subscribers who follow his instructions have been holding these waiting for a recovery, for 8 years now!

I have the solution to Brinker's problem. Bob Brinker should tell his audience to send a note to Hank Paulson and ask the US Treasury to take these "troubled assets" called the QQQQ off their hands for 50 cents on the dollar, which would be a bit more than they are worth today!

If the economy recovers, then the QQQQs will go up in value and tax payers will make money!

More information:

• Bob Brinker's QQQ Advice
• Effect of QQQ advice on reported results
• Brinker's Asset Allocation History

BTW, last summer when the market was making new all time highs, Brinker abandoned his idea of an 8 to 20 year secular bear market. Unfortunately for him, that was very poor timing.

If you want updates on what Brinker is saying on Moneytalk delivered to your email box, often within 24 hours after Sunday's show, then send us a note at TalkAboutMoney@gmail.com and ask to get on our FREE mailing list.

Bear Market Statistics - Bob Brinker Still Fully Invested

2007-2008 Bear Market Statistics 09/19/08

I read the average bear market, including the great depression, drops 30%. We were off 28.1% this week so perhaps the market gods are feeling average and the worst is over. I was a buyer Wednesday, Thursday and Friday using dry powder.

S&P500 Chart

Last Market High 10/11/07 at 1,576.09
Last Market low 09/18/08 at 1,133.50
Current S&P500 Price 1,255.08
Decline in Points = 321.01
Decline in percent = 20.4%
Max Decline = 28.1%

=>This means the decline from intraday high to intraday low is 28.1% and we are currently 20.4% off the peak.
=>The decline in the S&P500 from the closing high to the closing low was 26.1%

Click chart courtesy of stockcharts.com for full size image

DJIA Charts

Last Market High 10/11/07 at 14,279.96
Last Market Low 09/18/08 at 10,403.75
Current DJIA Price 11,388.44
Decline in Points = 2,891.52
Decline in percent = 20.2%
Max Decline = 27.1%

=>This means the decline from high to low has been 27.1% and we are currently 20.2% off the peak.
=>The decline in the DOW off the closing high to the closing low was 25.1%

NASDAQ Charts

Last Market High 10/31/07 at 2,861.51
Last Market Low 09/18/08 at 2,070.22
Current NASDAQ Price 2,273.90
Decline in Points = 587.61
Decline in percent = 20.5%
Max Decline = 27.7%

=>This means the decline from intraday high to intraday low is 27.7% and we are currently 0.205349623 20.5% off the peak.
=>The decline in the NASDAQ off the closing high to the closing low was 26.6%

I was a buyer Wednesday, Thursday and Friday. To learn what I bought for my newsletter explore portfolio, subscribe now!

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Bear Market Statistics - Bob Brinker Still Fully Invested

2007-2008 Bear Market Statistics 09/07/08

This graph shows the DJIA and the S&P500 are currently at bear market levels less then 2% above their July 2008 lows. I am sure Bob Brinker has his fingers crossed that the S&P500 does not make a fifth lower low in an ongoing bear market.


The NASDAQ is showing relative strength at 4% above its bear market low set in March 2008. The worry with the NASDAQ is it broke the potentially bullish trend of higher lows by making a low Friday that was lower then its July and August lows. Ideally, you like to see new bull markets making a series of higher lows. Now it looks like we are testing the recent market lows.

It was refreshing to hear bond guru, Bill Gross of PIMCO, tell he readers and people on CNBC last week that he was too early buying troubled bonds which has resulted in losses.

From Bill Gross's September 2008 Investment Outlook

Too bad for us and for everyone else who bought too soon. There are few of these deals now priced at par or above, which is bondspeak for “they are all underwater.”

Don't you wish Brinker could admit similar mistakes and discuss them openly on his radio show?

Brinker Buy Levels:

This next graph shows Bob Brinker's Recent "All In" Buy Levels:

Despite recommending 100% in equities for his model portfolios one and two since March 2003, Brinker recommends dollar cost averaging "new money" into the market unless there is a decline to one of his "buy levels" where he then advises a lump sum investment.

Brinker's last five "all in" buy levels:

• March 2007 Special Subscriber Bulletin @ 1380
• Aug 16, 2007 @ 1411: Mid 1400s
• Feb 10, 2008 @ 1331: Low 1300s
• Aug 5, 2008 @ 1285: 1240 or less
• Sept 2, 2008 @ 1282: Low-to-mid 1200s

Question: How many all in buys while advising 100% in equities is one allowed???

S&P500 Chart

Last Market High 10/11/07 at 1,576.09
Last Market low 07/11/08 at 1,200.44
Current S&P500 Price 1,242.31
Decline in Points = 333.78
Decline in percent = 21.2%
Max Decline = 23.8%

=>This means the decline from intraday high to intraday low is 23.8% and we are currently 21.2% off the peak.

=>The decline in the S&P500 from the closing high to the closing low was 22.4%

DJIA Charts

Last Market High 10/11/07 at 14,279.96
Last Market Low 07/15/08 at 10,827.71
Current DJIA Price 11,220.96
Decline in Points = 3,059.00
Decline in percent = 21.4%
Max Decline = 24.2%

=>This means the decline from high to low has been 24.2% and we are currently 21.4% off the peak.

=>The decline in the DOW off the closing high to the closing low was 22.6%

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 2,255.88
Decline in Points = 605.63
Decline in percent = 21.2%
Max Decline = 24.7%

=>This means the decline from intraday high to intraday low is 24.7% and we are currently 0.211646998 21.2% off the peak.

=>The decline in the NASDAQ off the closing high to the closing low was 24.1%

I did not get to listen to more than a few minutes of Moneytalk yesterday but I would expect someone still bullish like Brinker who was bullish and advising 100% of a portfolio to be in equities when the market was at 1565 to be telling his listeners to "hang in there" with the market now in the low 1200s. Did anyone hear any comments from Brinker to "hang in there" or "I was wrong to be so bullish at the top?"

See Bob Brinker's Asset Allocation History

I sure hope Brinker isn't thinking of selling near the bottom of the bear market like he did in 1988 when he sold and went to 100% cash when the markets were a similar level off the 1987 highs just before the market started a recovery.

CAL (2-0) won 66 to 3, GO BEARS!

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