Hey Brinker, The Cassandras Were Right. You Were Wrong!

Less than a year ago the stock market rallied from the low 1300s to its 200 day moving average around 1400 just before rolling over and falling over 50% into the 600s. Brinker bashed the bears as "Cassandras" with one of his rants that makes him such a great entertainer.

Brinker said at the end of May, 2008:

“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.

Brinker thought those of us who warned the economy was slipping into a recession were wrong. He called us Cassandras. Brinker said:

“What we have right in here now is evidence that the Cassandras, who earlier this year, were telling us we were in recession – right now they’ve basically – well I’ll be kind, basically, they look like fools right now. Because all that they’ve accomplished with their talk about recession…………all that they have to show for their efforts is that they scared the people who listened to them out of the stock market this past winter……….”

Here is the article I did with my friends at ECRI in March 2008:

ECRI Calls it "A Recession of Choice"

Brinker was clear he thought the market was coming back from a correction and anyone who sold were fooled by the bears:

“……..And probably a lot of those people got scared out near the correction lows. The initial correction low in January, which was successfully tested in mid-March, before the market reversed and resumed its uptrend. And basically, if you were to total up all of the accomplishments of the Cassandras, that would be it – that they scared people out of the market during a stock market correction in the first quarter………..Because they have been unable to present any evidence of a recession."

Here is the Full Report of Brinker's Cassandra Rant

Brinker is quick to pat himself on the back when one of his lucky guesses (or market timing calls) turns out to be correct but he goes into hiding when he is wrong. Brinker needs to own up on the radio and explain to his audience

• why he was so very wrong about the economy
• why his timing model gave a rare "gift horse buying opportunity" near the very top before the worst bear market since the Great Depression, so far.
• What he would change to his timing model to make it work again

or be truthful and explain

• Why trying to time the stock market is a fools' game.

I also think he owes some of us who warned of a recession an apology, but I am not holding my breath for any of this.

A Different Opinion Than Bob Brinker The Raging Bull

This was posted anonymously on another message board. I am adding it here (in blue) as it is very different than Bob Brinker's extreme level of bullishness. (Brinker remains bullish and now expects very large gains, as most other bulls predict after a major market bottom.) Pay attention to the last bit about who was right last year.

If anyone had told you on Dec.31 2007 that:

1. Bear, Lehman, Merrill would all be gone in virtual bankruptcy, while Goldman and Morgan became banks

2. Citi, Fannie, Freddie, were all basically nationalized and bankrupt

3. The US financial system was insolvent, and estimates to repair it are from $2 to $4 TRILLION in new money...AFTER a $700 B bailout.

4. Copper inventories were going back up to all time highs, oil was overflowing at Cushing, and many of the biggest miners in Canada were at serious bankruptcy risk

5. California was essentially bankrupt...

6. Chinese Manufacturing would have CONTRACTED for the sixth straight month

7. The DOW holding 8000 would be considered a victory

There isn't anyone who would have believed em. I sure wouldn't have believed it. This is some seriously bizarre things we're seeing in the world. Things we haven't seen since the Great Depression...some things we've never seen. Yet there are still people out there who want to pretend this is 1974 or 1982?

At every step of the way its been bigger, badder and more destructive than almost ANYONE predicted. And the only people who did predict any of it think its still getting worse.

Yet many are cheered when the same people who thought 2008 was going to be a good year think 2009 is going to be a good year.

Bob Brinker a Year ago in his January 2008 Marketimer with S&P500 @ 1468.36 :
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.

We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range. Above this range we prefer a dollar-cost-average approach for new purchases.

All Marketimer model portfolios remain fully invested as we enter 2008."

Wake up and protect yourself. These are some crazy days.

I don't believe anyone can time the stock market but a bear friend of mine told me over a decade ago that the CEOs of most companies were cheating shareholders via stock options and excessive salaries while banks were creating a credit buble by lending money too easily. He was not right in all his price predictions, but he was right about the banks and CEOs. My house is still nearly double where he told me to sell but the stock market is back to where it was when he issued his warning.

Here is a chart showing Brinker's Buy Levels prior to his most recent "buy bulletin."


Needless to say, with so many buys at higher levels, eventually he'll get one right.

For me, I take profits when the market is up and buy back shares when it is down such as times like these. The idea is keep a fairly constant asset allocation and rebalance when the market makes major moves, either up or down. With my "explore portfolio" I do it with individual stocks for more opportunity for good long term gains.

Kirk Lindstrom's Investment Newsletter
FREE SAMPLE

Post and Read Comments

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!

Jim Cramer Says Sell Everything

Will Bob Brinker bash Jim Cramer's advice to sell everything this weekend or will he wait for the markets to recover sometime in the future for his typical "Bad News Bears" Bashing as reported in "Bob Brinker Fan Club Market Update - DOW down 19%?"

CNBC's mega-star Jim Cramer says "Sell Everything!" in "Cramer: The Way Ahead Is Down"

Click this chart courtesy of stockcharts.com to see the S&P500 vs. the price of oil ($WTIC) since last summer:

As of this minute, oil futures are trading at $142.57 and Gold is up $16 to $931.60 on fears of inflation.

Excerpts from Cramer's 06/27/08 - 07:11 AM EDT article:

"Sell everything. Nothing's working. Revisit when the prices are adjusted for a big recession, soaring inflation and a crushed consumer. Sell at 12,000 and come back at 10,000. Even better: short it. "

I wonder where Cramer gets off saying sell at 12,000 when the DOW was already 600 points lower and his article was posted today!

and

"The negativity coming into today's session is as thick as I can recall nearing most short-term bottoms. The issue is there is not enough fear out there. Despite the consensus, which obviously creates a need for lower prices before it is worth buying, there isn't a big spike in the VIX, there isn't a gap down, or a crescendo of selling. There isn't even any volume. So while the bearishness is real thick, the selling isn't."

and

"I think we lack a climax because we haven't had a climax, some session where people can say, "I don't care how much lower GM goes, I know it is a buy." Same with Citigroup. "

and

"All my indicators say that it is extremely dangerous to short here: oscillators, attitudes, polls. They haven't worked either -- or yet. I think the palpable gloom simply does one thing -- it'll be a stair-step down rather than a cascade, where you can make a little money when you are on the stair but then give it back on the next step, until we get to some level that better reflects a GM bankruptcy or a Citigroup collapse, one or the other, or both."

Market Summary:

.DJIA = 11,379.73 -73.69 @ 1:00 pm EST
.NASDAQ = 2,308.05 -13.32 @ 1:00 pm EST
.S&P500 = 1,280.24 -2.91 @ 1:00 pm EST

Who is right? Who will be right? Discuss both men at our facebook discussion forums for:

Bob Brinker and Jim Cramer

.

Bob Brinker's Bad News Bear Mahendra Sharma Predicts Market Melt-down

Mahendra Sharma predicts that all stock markets will "Melt-down" and everyone should exit all positions today. Sharma advises "Get out from all position before 18 October including metals, Uranium and Alternative energy stocks."

I found this interesting post on Silicon Investor.

To: da_cheif™ who wrote (28242) 10/18/2007 10:54:54 AM
From: Chip McVickar Read Replies (1) of 28249

Here's some entertainment and a posting for the wall


My date for melt-down in all financial area has arrived, we are 24 hours away from it...it shall start with asia.....
More -
Thursday, October 18, 2007, Mahendra Sharma

**********************************************

Prophecy - i am warning to every one as i see great fall in all..i am buying us dollar.....
More -
Thursday, October 11, 2007, Mahendra Sharma

**********************************************

Free- "CRASH" Worst period like 1929/1987 will repeat again any time after 11, October 2008
but this time fall will be so huge in all...


Thursday, October 11, 2007


Dear Member,

We are approaching toward worst volatile period like 1929 and 1987. I advise please stay alert and just watch market. Hold cash as many will fall with fall of commodities, stock market and hot bubble currencies. This will happen in the next two weeks.

As predicted today ....

I predicted major crash in all stock market from 18 October so watch this date closely and plan your trades accordingly. There will blood-bath in Asian market and may few of the market will close down for few days so watch carefully. Get out from all position before 18 October including metals, Uranium and Alternative energy stocks.

........

Thanks & God Bless
Mahendra Sharma,

11 Oct 5.50AM

http://www.mahendraprophecy.com/

Mahendra Sharma must be one of those "Bad News Bears" that Bob Brinker Talks about.