How To Keep Bob Brinker on the Radio

I am a huge fan of Bob Brinker the "radio entertainer." I don't see my being critical of Brinker's promoting snake-oil called "market timing" as any different than a fan of the SF Giants baseball team wanting Barrie Bonds off the team for cheating with steroids. Are you any less a fan of the New England Patriots if you were revolted by their cheating using electronic means to steal signals and violate league rules?

It has come to my attention that there is a letter writing campaign to get Bob Brinker off the radio. I hope that is not successful. [See "For Those Who Want Bob Brinker Taken Off the Air" at "Honey's Bob Brinker Beehive Buzz"]

If you like the radio show but hate the snake-oil, mostly the cover-ups of bad advice like it was never given, then you could send your own letter with your suggestions on how to improve the show!

Perhaps suggest in your letter Moneytalk add warning words before the show starts that Brinker's attempts to time the market have been 100% wrong with many "buying opportunities" while fully invested given all the way down as the market plunged from its high at 1576 all the way into the 600s. Jim Cramer's show "Mad Money" on CNBC has a ton of warnings so it would not be a precedent.

My suggestion: Warn people about the dangers of market timing and "predicting the future" but keep the show on for all the other good information Brinker gives out each weekend.

Chart showing Brinker's ability, or lack of ability, to predict the future.

Click chart courtesy of Stockcharts.com for full size image

Here are the letters asking him to be removed.

JFHAAA Letter One:

"Hi Honeybee-

I am a long time lurker, and this is my first contact after several years of enjoying your website.

I am also unfortunately a former long-time Brinker subscriber (over 10 years), recently cancelled, who should have known better. I did start having serious misgiving about Brinker in 2007, especially when he unilaterally declared that the "Secular Bear Megatrend" that he had been yammering about for years had ended, one year previously. I remember thinking: "An honest, serious person doesn't pull something like this" That certainly wasn't the only jarring note from Brinker in recent years, but it was the one that finally convinced me (along with comments on this board) to be very, very leery of this man.

Still, I can't quite explain why I renewed my subscription in 2008, even though by then I was no longer following his "attractive for purchase" recommendations. Still, the damage has been done, and I have lost several hundred thousand dollars waiting for a sell signal that never came.

This is clearly a perceptive group of quality people at this forum, and I am sure it causes the Brinker clan some degree of discomfort, but my aim is to cause him and junior more than mere discomfort. After all, his wretched, indifferent, self-serving "guidance" has caused many people to lose many millions of dollars. Since he doesn't have the courage or integrity to address these people on the air, I believe the best way to hurt him is get him taken off that air, at least in "KGO Country," where I used to listen to his infomercial on a fairly regular basis.

To that end, I wrote Brinker a letter declining his offer of renewal, and also copied the President and General Manager of KGO, Mickey Luckoff. I think you and your readers might find it interesting reading, but since it is three pages long I thought I should ask permission before sending it. In any case, I appreciate your work here. If nothing else, I can keep tabs on that snake oil salesman without having to waste my time actually listening to him. I can let you do it! Sometimes, after a particularly eventful week in the stock market, it is amusing to see what lengths he will go to avoid the obvious elephant in the room. Thanks for your good work!"

JFHAAA Letter Two:

"When I sent this letter off last week I really didn’t hope to accomplish much other than personal catharsis, but I am wondering now if I might have also inadvertently tapped into a sweet spot in the zeitgeist. I figure my letter arrived on Mickey Luckoff’s desk at about the same time as Jon Stewart’s glorious smackdown of the laughable CNBC network. I am probably deluding myself that Luckoff will even read the thing, but is it possible that the palpable and growing anger of ordinary investors, combined with declining ratings (I hope), might contribute to getting Brinker and others like him yanked of the air? I suppose we shall see “In the fullness of time.”

Like Stewart and many others, I am sick and tired of these financial “experts” who make pronouncements one day and than ignore or disavow them the next. No one is perfect and I can deal with mistakes, what has become unacceptable is the complete lack of memory or accountability in these prognosticators. The ability to forget your miscues may be a valuable trait in a defensive back who has just been burned for a touchdown, but it sure stinks in a financial “expert.” Brinker is not the only one guilty of obscuring and evading his record, but he strikes me as the one of the worst and most blatant offenders in this area.

Anyway here is the Marketimer cancellation letter that I sent last week with a copy to Mickey Luckoff at KGO:

Bob Brinker’s Marketimer
10789 Bradford Road # 210
Littleton, CO 80127

Mr. Brinker:

Re your Markettimer renewal request: Surely you must be joking?

You promote yourself on your radio program as a “Marketimer” and yet it would be hard to imagine a worse market timing record.

You totally, utterly failed to call the current bear market, and mocked those that did on your radio program. In addition to not being forthright and courageous enough to face up to your (many) mistakes, either on the air or in your newsletter, you obstinately manage to ignore altogether the obvious, glaring disaster that is the stock market and your so-called “Market Timing Model.” This is unacceptable.

I am planning to copy the head of KGO radio with this letter, so just in case he is not familiar with your wretched track record, here are just the “high” points from the last twelve months:

Jan 2008 S&P 500 in the 1460’s
You begin the year predicting in Bob Brinker’s Marketimer Newsletter new highs for the S&P 500 into the 1600’s range. The market is falling rapidly. Jan 20 you issue a bulletin to paying subscribers retracting your mid-1400’s BUY recommendation.

Feb 2008 S&P 1378
You reiterate that you do NOT believe a bear market is underway, and predict again that the S&P will work its way into record new high ground by late this year (2008) or in 2009, and that the S&P is ATTRACTIVE FOR PURCHASE in the low 1300’s or lower. (emphasis mine)

March 2008 S&P 1330
You express confidence that a stock market BOTTOM (emphasis mine) is in place and has unfolded in “text-book fashion.” Again, the S&P is at 1330.

April 2008 S&P 1323
On the air you take a swipe at those who say we are in a bear market, but strangely there are no callers with contrary viewpoints. Or are they just screened out?

May 2008 S&P 1386
With the S&P at 1400, you clearly feel safe in your position so you really go off on the “Bear Market Cassandra’s”. “They blew it!” Of course you have not had the courage to revisit those sentiments since then, and anyone who would care to challenge you is clearly not allowed on the public airwaves.

June, July, August 2008 S&P 1400-1267
Still bullish, still fully invested. From August 08 Marketimer “If you have any new money, inheritance, retirement, lotto winnings or house-sale proceeds that you want to invest in equities, any weakness below the S&P 500 Index of 1240 is an ATTRACTIVE PURCHASE LEVEL.” (emphasis mine). As of this writing, the S&P is 43% BELOW this buy recommendation.

In July with oil trading in the $140.00 a barrel range, you begin attributing stock market declines to increasing oil prices, both on the air and in the Marketimer. Indeed you devote entire tedious shows to this false and simple-minded theme. Naturally, since you have become such a reliable contrary indicator, oil and stock prices begin moving in the same direction: DOWN!

Of course since you are Bob Brinker, once this theory blows up in your face you drop it, never to mention it again. But then this is your craven pattern, isn’t it? (see “Secular Bear Megatrend,” the disastrous QQQ call of 2000, and some others I could mention)

September S&P 1283
You issue a bulletin that advises nothing more than “dollar cost averaging” This is an obvious and dishonest marketing ploy to lure back former subscribers who were smart enough to drop you. I hope it failed.

Oct 12, 2008 S&P 1165
On the air, and obviously under pressure from somewhere, you make a mild and extremely unsatisfactory mea culpa without ever apologizing for your disastrous performance and without taking follow up calls on the subject. NOT GOOD ENOUGH!

Dec 2008 S & P 890’s- 800’s
I won’t even attempt to summarize your baffling and inexplicable prattle about “Treasury backed California general obligation bonds,” followed two weeks later by a complete flip-flop, and then silence.

As for the stock market, you are once again anticipating a “bottoming process;” this time in the 750-850 range. Jan-Feb 2009 newsletters suggest adding to positions when the S&P is in the low to mid 800’s

Questions:

· Since your subscribers rode this terrible bear market all the way down, how exactly are we supposed to “add to positions” now that thanks to you, our portfolios (and retirement plans) have been decimated?

· After calling bottoms at mid-1400, low 1300’s, 1240’s and now 750-850, who in their right mind cares what you think anymore? ABOUT ANYTHING??

· Even if you didn’t before, you now have to KNOW that your timing model doesn’t work. Why are you still selling it?

In conclusion,
Eventually I expect that even you will get one of these sad, pitiful bottom calls right and then you will casually imply on the air that you were on top of the market all the time and that your subscribers are prospering thanks to your great insights. I won’t be around anymore for that nonsense, but I don’t want this ploy to succeed in luring in a new crop of paying newsletter suckers either. You are very, very good at that game (if nothing else), but I won’t stand for it anymore.

That is why if you are on the air when a new FCC commission convenes, I intend to make my views known to them, as well as the Citadel Broadcasting Corporation. Hopefully with a new administration we will eventually have a commission that will be as receptive to the needs of ordinary tax paying citizens as they are to major media conglomerates.

You advertise yourself as a successful market timer, yet in 2008 the S&P declined over 40% in a vicious bear market that you never saw coming and have seldom even acknowledged, either on the air or in the newsletter that you have advertised on the public airwaves. You can’t possibly believe in it anymore (if you ever did) and yet you are still selling it knowing full well that it doesn’t work. This makes you nothing more than a snake-oil salesman. (And taking a temporary hiatus from promoting your stupid newsletter on the air does not absolve you from past sins, nor will make it acceptable to promote it in the future.)

The fact that you are wrong (and wrong, and wrong, and wrong…) would be bad enough, but what is unacceptable is that you never admit it, obscure the truth, don’t allow contrary viewpoints, and do all of this is on the public airwaves. Enough is enough Brinker; you are a menace and need to be dismissed, and soon.


Sincerely, XXXXXX


PS- Actually, there is one useful service you could perform before you go away: Would you mind capitulating out of the market like you did way back in 1988 after the ’87 crash? It wouldn’t make up for your sins, but it would at least guarantee a market bottom.


cc Mickey Luckoff, President and General Manager, KGO, KSFO


Well, that was my letter, and I am certainly not asking for or expecting any support, but if anyone wants to write to Brinker’s enablers at KGO, the address is:

KGO 810
900 Front Street, 16th Floor
San Francisco, CA 94111

Citadel owns KGO (and KSFO) as well as many other stations. The holding company is located in Las Vegas:

Citadel Broadcasting Corp.
7201 West Lake Mead Blvd.
Suite 400
Las Vegas, NV 89121

Citadel Broadcasting Corp.
142 W 57th Street
New York, NY 10019

The Chairman and CEO of Citadel is Farid Suleman

(In the interest of full disclosure, I have not contacted Citadel yet myself. I am waiting to see if I at least receive some sort of pro-forma response from KGO.)

Perhaps you can counter the points made in your own letter if you want Brinker kept on the radio.

I am "revolted" by Brinker's cover-ups of bad advice that makes it nearly impossible for a regular person with limited time to do proper due diligence. That doesn't mean I want him off the radio... He just needs a warning label like a pack of cigarettes saying his recent attempts at market timing and perhaps future attempts are dangerous to your financial health!

Nouriel Roubini, Bob Brinker's Cassandra, Says DOW 5,000 is Possible

Less than a year ago, Bob Brinker bashed the "recession Cassandras" on his Moneytalk radio show. One of the biggest Cassandras, who also turned out to be right, is Nouriel Roubini, chairman of RGE Monitor.

• See Brinker's 5/31/08 Cassandra Bashing

How low can the stock markets go? Nouriel Roubini, called "Dr. Doom" by many who didn't like his message last year before the markets crashed over 50%, says they can go much lower.

In the best case, Roubini sees the S&P500 (closed today at 676.53 - Charts) at 720, a gain of 6.4%. In the worst case, Roubini thinks there could be another 20% left in the decline with the S&P500 falling as low as 500 to 600 with the DOW down to 5,000 or 6,000.

The good news is he thinks liquidity measures instituted around the world have lessened the chances for a meltdown into a full depression, but there is a rising risk of an L-shaped "near depression" recovery. This means he thinks it will be many years for the economy to recover, not the one year for a recovery as many like Abby Cohen and Bob Brinker believe.

Roubini has argued that, in spite of the sharp fall in US and global equities significant downside risks to stock markets remain. He keeps saying that "repeated bear market rallies would fizzle out under the onslaught of worse than expected macro news, earnings news and financial markets/firms shocks." Today he wrote

"If you take a macro approach earnings per share (EPS) of S&P 500 firms will be – quite realistically in 2009 - in the $ 50 to 60 range (I say realistically as some may even argue that in a severe recession they could fall to $40). Then, the question is what the multiple, i.e. the price earnings (P/E) ratio will be on such earnings. It is realistic to expect that the multiple may fall in the 10 to 12 range in a U-shaped recession. Then, even in the best scenario (earnings at 60 and P/E at 12) the S&P index would be at 720. If either earnings are closer to 50 or the P/E ratio is lower at 10 then the S&P could fall to 600 (12 x 50 or 10 x 60) or even to 500 (10 x 50). Equivalently the Dow (DJIA) would be at least as low as 7000 and possibly as low as 6000 or 5000. And using a similar logic we argued that global equities – following the US - had another 20% plus downside risk."

He thinks any rally in 2009 would be a "bear market sucker's rally" driven by temporary improvements in the rate of change (second derivative) in economic growth from stimulis in China and the United States:

Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.

Roubini thinks US and Global equities could fall anouther 40 to 50%:

On the downside we have argued here that there is at least a third probability of a L-shaped global near depression rather than the mere current severe U-shaped recession. If a near depression were to take hold globally a 40% to 50% further fall in US and global equities from current levels could not be ruled out. But in this L-shaped near depression the last thing one would have to worry about would be stock markets as more severe issues would have to be addressed (unemployment rates in the mid-double digits – 15% or above - and multi-year stagnation and deflation).

Roubini thinks Abby Joseph Cohen is too bullish in her belief that investors will give the market a PE as high as 17 or more as they discount earnings getting better:

Earlier this year – at the peak of the latest bear market rally - I met Abby Cohen – the ever bullish equity markets expert at Goldman Sachs who predicted a 25% equity rally for 2008 and is making again a similarly bullish call for 2009. I asked her if we disagreed on earnings or on the multiple (P/E). It turns out that our forecast for earning per share for S&P 500 firms are similar: 50-60 range for me, 55-60 range for her. But she argued that a P/E in the 10 (to) 12 range was too low as investors would ignore the bad earnings numbers for 2009: if a rapid recovery of earnings were to occur in 2010 and beyond investors would discount the 2009 bad number and assign to them a much higher multiple of 17 or even more.

Roubini thinks Cohen is wrong. He does not believe we will have a significant economic recovery in 2010.

The trouble with that argument is that, with the US and global economy in a massive slump and with deflationary forces at work it is hard to believe that a massive economic recovery will occur in 2010 thus lifting sharply earnings: even in a U-shaped scenario US growth in 2010 would be 1% or lower and Eurozone and Japanese growth would be close to 0%. Thus, with weak growth deflationary pressure would be still lingering thus putting pressure on profits, pricing power of firms and thus profit margins. Thus, even in a U-shaped scenario a rapid rally of equities is highly unlikely.

Bob Brinker (Brinker Fan Club), like Abby Cohen, has said the same thing about PE ratios and he too was bullish in 2008 for an up year that did not happen. Roubini remains bearish and thinks the markets will bottom in the next 12 to 18 months. He cites how the last recession ended in 2001 and the markets did not bottom until 2002:

Also the “6-9 months ahead forward looking stock market view” is not always borne in the data. During the last recession the economic bottomed out in November 2001 and GDP growth was robust in 2002 but the US stock markets kept on falling all the way through the first quarter of 2003. So not only the stock market were not “forward looking”: they actually lagged the economic recovery by 18 months rather than lead it by 6-9 months. A similar scenario could occur this time around: the real economy sort of exits the recession some time in 2010 but growth is so weak and anemic while deflationary forces keep an additional lid on pricing power of corporations and their profit margins that US equities may – like in 2002 - move sideways for most of 2010 – with a number of false starts of a real bull market – as economic recovery signals remain mixed.
Thus, most likely we can brace ourselves for new lows on US and global equities in the next 12 to 18 months. Eventually a more sustained recovery will occur once we are closer to clear signals that this ugly global U-shaped recession is not turning into a L-shaped near depression and that the global economic recovery is clear and sustained. Until then expect very volatile and choppy US and global equity markets with new lows reached in the next months and the year ahead.

Roubini was correct as the "bear voice" on Larry Kudlow's show during most of 2008 when he argued Larry and the rest of the bulls were too optimistic. I hope he is wrong and the markets recover soon with the Obama and Chinese stimulus efforts. I don't believe anyone can time the markets  to add significant value over and over for a large audience, but those who are correct in the recent past sure get a lot of press.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 94% vs. S&P500 DOWN 14% vs. NASDAQ down 28% vs. Warren Buffett's Berkshire Hathaway (BRKA) up 37% (All through 12/31/08) (More Info)

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More information:

• Bob Brinker's 5/31/08 Cassandra Bashing
• Major World Market Graphs at a Glance
  
• US Treasury Rates at a Glance
• Market Sentiment Indicators
• Roubini: How Low Can the Stock Markets Go? Much Lower

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