June 11, 2011 Bob Brinker Has Never Totally Predicted a Bear Market

Posted June 11, 2011.............................................[Post or Read Comments]

Bob Brinker fans look to Brinker to warn them ahead of time of an impending bear market so they can  sidestep it.   Some Bob Brinker fans even  believe that Brinker has done this in the past. Has he?   When the next bear market arrives, what will Bob Brinker do?

The documented truth is that in his 26 year Moneytalk and Marketimer history,  Brinker  has raised cash  only ONE TIME  ahead of  a bear market.  That was  in the  2000-2003 bear market and it was only  65% of equities, including model portfolios.

However,  soon after raising cash in Y-2000,  Brinker called  a counter-trend rally  and issued  a special buy signal on QQQ.  He told  subscribers to use 20 to 50% of those cash reserves to purchase QQQ.  That trade went very badly; QQQ lost over 70% of  value.  A few months later, Brinker put the trade on hold and has never mentioned it again in Marketimer or on Moneytalk. See documents at Brinker Fan Club QQQQ History.

The only other time that Brinker has raised cash  (100%)  was soon after the 1987 crash,  but that was a costly mistake because the market  started climbing at the same time and his portfolios missed out on gains before he got  back to fully invested.  See Bob Brinker's asset allocations since 1987 at Bob Brinker Fan Club Asset Allocation History.

Writer Jim has an outstanding recollection of Bob Brinker's bear market calls. Jim wrote this in November 2009, AFTER Brinker totally missed the 2008 bear market drop of 57%+: 

Jim said...

After reading Brinker's response to caller Barbara, it sounds like it does not really matter to him that he missed the bear market. He seems to be saying that all a marketimer must do to be successful is correctly call one bear market. He seems to think that if he misses 3 or 4 bear markets, it does not matter,as long as he calls one of them correctly, since a "buy and holder" is fully invested in all of them. However in Brinker's case he had people in cash from 1988 to 1990. A buy and holder would have done better during that 2 year period. So the bottom line is that Brinker partially side-stepped a bear in 2000-2003, but missed a bull from 1988-1990. So over time Brinker's marketiming has done nothing to help people who followed him since 1988, since he was partially right once(2000-2003), and wrong once (1988-1990). Any outperformance of his portfolios over time is probably due to fund selection, and not marketiming skills.

* Brinker denigrates  "buy and holders"  but be warned that he has been a total buy-and-holder for almost 8 years now. In 2008,   Brinker's Model Portfolio I lost 39.7%, and the "balanced" Portfolio III  lost 23.9%. Both  portfolios lost much more from the top to the bottom of the bear market.

* Brinker remained a raging bull throughout 2008 and issued several "all new money in" buy signals as the market continued to drop. He called bottoms at S&P 500 mid-1400's, mid-1300's, low-to-mid 1200's and finally in January 2009, mid-800's. (From his mid-800's buy level, the S&P dropped another 25% before turning up in March 2009.)

So  right now we have a stock market that has been down for the past six weeks.  The Nasdaq is in negative for the year. The Dow  had its longest weekly decline since 2004,  and the S&P  had the biggest 5 week decline since 2002.  What are Brinker's market-timing views right now?

Moneytalk,  March 20, 2011 Bob Brinker said: The generally accepted language for a correction is that the market is down over 10% but less than 20%.....I think anything in the single digits is a minor pullbacks. Some people would call it noise. That's really what we've had here.....And my forecast, as I've given it on this broadcast has been very consistent on this point......And that is, and we started saying this earlier this year, and that was that we thought that pullbacks would be in the single digit category..... So you can always see short-term corrections in a cyclical bull market, which is what I believe we are in right now.......From my point of view, it's just provided those looking for an opportunity to dollar-cost new money into the market, to do so."

April 2011, Marketimer, Bob Brinker said: "We expect the S&P 500 Index to make additional progress into the low-to-mid 1400's range within the next 12 months based on our earnings and P/E multiple expectations."

As of the  June 4, 2011, Marketimer,  Brinker's model portfolios continue to be  fully invested and he still  recommends dollar-cost-averaging new money into the market.  Brinker forecasts  "...new recovery highs in the S&P 500 Index 1400s range as part of the ongoing cyclical bull market trend." 

Questions we are all looking to have answered now: Is the stock market headed lower? If so, will Brinker do what he did in 2008, e.g., issue ever-lower buy signals while remaining fully invested? We shall know in fullness of time.

Dixiegeezer took this picture. Anyone know what kind of bird this is?  :)

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