June 3, 2011, Bob Brinker: Stock Market Decline is "Noise" and "Hill of Beans"

Posted June 3, 2011.........[Post or Read Comments]

After dropping for the last five weeks, the S&P 500 Index closed  this  Friday (June 3rd) at 1300.  The Dow closed at 12,151  and the Nasdaq closed at 2732. 

For the past month on Moneytalk, Bob Brinker  limited  his stock market comments to  reciting closing numbers. In my last couple of Moneytalk summaries, I even started calling it  "Brinker's stock market Groundhog Days." (Thank you, Jeffchristie.)  :)

Perhaps the reason that Brinker has been reluctant to say much about the stock market this past month  is because it has been down every week  for the last five weeks. The Dow average has had its longest weekly decline since 2004.

It was on the May 1, 2011 Moneytalk program that  Brinker enthusiatically reported that the Dow Jones Industrial Average traded at the 2011 high of 12,810 on Friday's close and the S&P 500 at  the 2011 high of 1363.63.  Brinker  commented:

"If you go back over the past couple of decades, the annual total return on the S&P 500 is very close to 10%, which by the way, is a pretty outstanding return when you look at the world we are in today and the interest rates.....As you know, we've had a couple of great years here, 2009 was an extraordinary year and 2010 was a very good year. And now 2011, with 4 months in the books, has a 9% rate of return. So it's off to a very good start. Nasdaq Index doing alright itself, 2873. The Nasdaq 100, which is the basis for the triple-Q ETF stock price, 2404.....Of course, the bear stories have been out there. The people with their bearish forecasts have been out there this year. So far, what they're left with, at least as we complete the month of April, they're left with the 2011 stock market highs on the close on Friday."

==> The May decline still  fits into the categories that Brinker called "noise" and not even a "hill of beans" on Moneytalk  in March. 

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.

Now we've had outright buy signals on the market over the past couple of years for those sitting with some money to invest. We have had a buy signal that we gave in the beginning of July last year when the S&P was around 1030........ And we upgraded the market at the beginning of July last year to attractive for purchase and we're glad that we did it.....

When we look at the correction, if you want to call it that. Some people call it noise and it certainly is noise at this point, the market is setting just 4 3/4% below the high year-to-date in 2011......
 
When you look at what's going on around the world.....it's pretty amazing when you look at the resilience in this market.....We have war in Libya. We very high tension in the Mid-East. We have Saudi Arabian military forces moving into Bahrain to protect against protesters. We have protests going on at a number of other countries in the mid-east......We have the virtual elimination of oil supplies from Libya. We have the earthquake and tsunami in north eastern Japan, and the Fukushima nuclear situation......When you take a look at all of them, including the continuing sovereign wealth problems in Europe, you say how is it possible that the S&P 500 is only 4 3/4% below it's 2011 high mark. There is only one word and that 
is resilience.

You need about 120 on the Dow to get up to 1%. You need 240 points on the Dow to get to 2%. 360 points on the Dow still only 3%. J. P. Morgan told us long ago that stocks tend to fluctuate.....So a move 100, 150 or 200 points doesn't really amount to a hill of beans.....as we speak the Dow is 11,858. By the way, I don't think the Dow is the best average to use when a gauging market activity. I think the best index to use when gauging day to day activity in the market is the S&P 500....it's currently at 1279. Now the index has been as high as 1343 on a closing basis back in February."

==> NOT TO WORRY (if you trust Bob Brinker's market-timing skills). 

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 June 4, 2011, Brinker's model portfolios are  still fully invested and he still  recommends dollar-cost-averaging new money into the market. He predicts that the S&P 500 Index will reach the low-to-mid 1400's range over the next 12 months.

 Dixiegeezer's Osprey and fish (Please click to enlarge):

 

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