Bob Brinker's Peter Navarro Interview

Bob Brinker's guest today was Peter Navarro. Peter Navarro is a business professor at the University of California, Irvine. His latest book is "The Well-Timed Strategy: Managing the Business Cycle for Competitive Advantage." For a list of all his books, see "More about Peter Navarro."

Permabear wrote a short summary of this interview and posted it in our "Bob Brinker" discussion forum at "Investing for the long term" on facebook. I've reposted some of it here:

Peter Navarro was Brinker's guest in the third hour of Saturday's show. I am very familiar with Navarro's thinking from his contributions on bearish web sites I read as well as his regular participation on Larry Kudlow's show, which I watch religiously. Peter Navarro is a little more conservative than my tastes politically and economically, but I think his central message is very very important and no one seems to be listening. The name of his book is "The Coming China Wars". His main point, expressed well on the Brinker show, was that China is really taking advantage of the U.S., using currency manipulation and unfair trading practices, to pretty much steal America's manufacturing base away and contribute to great imbalances in the world economy. He argues that besides blatant currency manipulation, China also encourages stealing intellectual property (think Google and all the piracy of software), protects their own markets, and subsidizes their exports, basically contributing to a mercantilist economy, with America ultimately being the victim. His point is that China is surreptitiously engaged in economic warfare against the U.S. and the U.S. isn't even fighting back. We are just playing along as our manufacturing base disappears, as we go into trade debt, and as both Bernanke and our politicians encourage this trade debt by facilitating the funding of spiraling budget deficits. Navarro argues that if China floated their currency and abided by fair trading practices, that the U.S. could compete with China and take back much of our manufacturing, and thus our future. I really feel that Peter Navarro is right on these issues. China has been playing us for about 15 years, and combined with our energy imports, we are just exporting our wealth away, running up massive debts, and creating huge imbalances in the world economy which will have a very bad ending for everyone.

I sensed that Bob Brinker disagreed with much of what Navarro was preaching, but I think by the end, Navarro had made a strong case, which Brinker had to have at least taken account of. Along with an interview with doom and gloomer Ravi Batra about two years ago, I don't think I've ever sensed such irritation in Brinker's voice when interviewing a guest. But Navarro had it exactly right and Brinker was naive on these issues IMHO.

• More about Peter Navarro.

Bob Brinker Bullish for 2010

In the recent article "Top Market Timers Give Their 2010 Outlooks" editor Mark Hulbert says only five market timers are still in business whom he considers worth consulting for advice.

"For guidance, I decided -- as I often do -- to turn to those investment newsletters with the best market timing records in the Hulbert Financial Digest's ranking system."

The editors Hulbert turned to are in alphabetical order

"Blue Chip Investor" editor Steven Check who is Bullish.

Based on the issue of his newsletter published earlier this week, that model currently rates the stock market as being "undervalued," though not "extremely undervalued" as it was one year ago.

"Bob Brinker's Marketimer" editor Robert Brinker who is Bullish.

"In his latest issue, published earlier this week, in which he reported that his market timing model is bullish and his model portfolios are fully invested, Brinker wrote: "Our indicators suggest that a new cyclical bear market decline in excess of 20% is not likely to begin during the winter season. While it is true that cyclical bull market corrections can occur at any time, we would regard any such pullback as a health restoring event if it were to occur in the weeks ahead. Cyclical bull market corrections are usually contained with a range of five to ten percent, and are followed by significant rallies to new cyclical bull market highs."

"The Chartist" and "The Chartist Mutual Fund Letter" editor Dan Sullivan who is bullish.

"We're betting that the bull market will remain intact over the next year. That's our best guesstimate, but in all candor, we really don't know what the market is going to do over the next 12 months or 6 months or, for that matter, 3 months; and nobody else knows either."

"Fidelity Independent Adviser" editor Donald Dion who is bullish.

Dion does not hazard a prediction about the stock market's trend for all of 2010, preferring instead to write that the year will test the stock market's "strength and stamina." In the meantime, however, Dion is keeping his equity-oriented model portfolios fully invested.

"Fidelity Sector Investor" editor James Lowell who is bullish.

"I think 2010 will be another 20% gainer."

Brinker was fully invested for the worst bear market since the Great Depression and he issued a "gift horse" near the very top yet he is one of Mark Hulbert's "top market timing newsletters."

On his May 31, 2008 radio show with the S&P500 in the 1400s Bob Brinker bashed those of us warning of a recession as "recession Cassandras"

• See 5/31/08: Cassandra Bashing
• “The stock market had a good month in the month of May, finishing at 1400.38 in the S&P 500 Index."
• “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……….”
• My March 28, 2008 article "ECRI Calls it "A Recession of Choice"

If that puts you at the top of the list for market timers, it should tell you just how poorly market timers as a whole do compared to stock pickers, asset allocators or simply buy and hold index fund investors.

Some of the comments to the article are quite telling:

January 7, 2010: Larry Merritt wrote:

Bob Brinker was fully invested during the entire bear market - all during 2007 through 2009. He has remained fully invested for years. So how can his record be considered to be better than a buy-and-hold investment approach? Hulbert is wrong about Brinker.

January 8, 2010: Ronald Blum replied:

Hulbert made the same assertion about Brinker in a MarketWatch piece a short while ago. He has chosen to ignore that criticism and repeat his mistake.

January 10, 2010: Jason Setlock wrote:

Really, as someone above posted with regard to Brinker's Market timer. I believe In 2007 the newsletter declared that a new secular Bull Market had arrived. One may say it turned absolutely bullish near the absolute top. From then on it was "buy the dip" all the way down as far as I know. I think we can all agree that 2007 did not usher in a new bull mkt for much except Tbills, greenbacks, and golden parachutes.

So, if you still care, Bob Brinker is bullish as we start 2010, but he said the same thing at the start of 2008 except then he was predicting the S&P500 would go to the 1600s rather than the 600s.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09)

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
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Bob Brinker 2007 to 2010 Advice on a Chart

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