Mark Hulbert still uses a footnote to explain why he ranks Marketimer without accounting for that trade. The footnote claims that Brinker "chose" not to take responsibility for the trade in his model portfolios at the time he sent the bulletin. That is simply not true. Brinker "chose" not to take responsibility weeks later. I have informed Mark of that, but he "chooses" to ignore the facts.
Will Brinker ever again raise cash in his newsletter model portfolios? Why should he? He is on record saying that if you can't tolerate a 10% drop in the stock market, you should not invest in it. And he considers up to a 20% drop an intermediate correction which only becomes a bear market when it drops more than 20%.
With that in mind, recall that he says never sell into weakness and he seems to be perpetually bullish. If the market goes into another bear, he always has those pesky "exogenous events" to fall back on like he did the 2008-early 2009 megabear.
Beware of Bob's "special bulletins." This one was sent in February 2008 just as the megabear market was getting started. Excerpts:
February 10, 2008
S&P 500 Index: 1331.29
We view any such stock market weakness as an attractive buying opportunity for subscribers seeking to add to stock market positions. We regard any additional testing and probing in this S&P 500 Index price range as an opportunity to purchase equities at what we regard as bargain level prices."
The following "special bulletin" was sent a year later when the S&P was below 900. This was his fifth and final bear-market buy level and it was 150 points above the March 2009 market bottom. Excerpts;
January 15, 2009
In the January edition of Marketimer we stated that "when the conditions fall into place to justify a renewed buy recommendation, we will post a Special Subscriber Message" at the website. We also stated that "we believe the most likely area for a successful test to occur is within the low-to-mid 800's S&P 500 Index price range...............The return of the S&P 500 Index to that price range is an encouraging development, in our view. We regard any weakness in the low-to-mid 800's S&P 500 Index price range as an opportunity to buy into the stock market at favorable price levels."
Brinker's most recent bulletin on August 10th, which he basically covered on Moneytalk two weeks ago (reviewed here), didn't give any new buy level.
Conclusion: Be very careful about following Brinker's "special bulletins"! Ask yourself why would he bother to issue new "buying opportunities" without issuing a "sell-signal" first.
Chart courtesy of Kirk Lindstrom Please click to enlarge:
31 comments:
Risk Adjusted Return
The risk-adjusted return of an asset or a portfolio is the return it provides adjusted for how risky it is. An asset with a superior risk-adjusted return is one that has the highest return for a given level of risk. Risk-adjusted return enables investors to compare the performance of low risk, low return investments to high risk, high return investments. Risk-adjusted return is calculated using the Sharpe ratio, a volatility-adjusted measure of return. To calculate risk-adjusted return, subtract the risk-free rate from the investment's return, then divide the resulting number by the standard deviation of the investment's return. The value of a risk-adjusted return lies in its ability to reveal whether an investment's returns are attributable to smart investing or excessive risk-taking. Risk-adjusted return is a useful tool for factoring volatility into investment decisions.
Please give proper attribution for copy-and-paste quotes. Otherwise, it's simple thievery:
Investorglossary.com
Well said Honey Bee. I was thinking the same thing as I was reading that comment.
I love your site, I've been reading it a year or so. I however am a bit too stupid financially to contribute.
Ha Ha.
Jeff
Hi Jeffects,
Glad to hear that you enjoy this blog. However, I simply do not believe you are "too stupid financially" to contribute. :)
I think most everyone is feeling a bit stupid about the world of finance right now.
I participate in a contest for "gurus" that is strictly for fun, but there are some expert market-timers there, and even the best are struggling to get a handle on this market. The host is Ground Zero.
Here's the link: Market Guru of the Month
Great article! Here is a summary for those who followed the QQQ (thanks for your help with the MT quotes!)
Update on Bob Brinker's 2000 QQQ Advice as of Thursday, August 25, 2011
The last time Bob Brinker recommended reducing equities was in the summer of 2000 when he increased his 60% cash position to 65% of the total portfolio in P1 and P2.
Brinker told his audience to stay in the money fund at Vanguard to be liquid for "trading opportunities" .
On October 16, 2000 Bob Brinker sent a special subscriber bulletin via email urging them to "Act Immediately" and put up to 50% of their cash reserves into the NASDAQ 100 index via QQQ for a trade he expected would occur quickly and end in 2 to 4 months
You can see an actual copy of the special bulletin HERE.
When the rally in QQQ failed to materialize as predicted, Brinker decided to NOT include this in his model portfolios when he published his November Marketimer newsletter dated November 6, 2010,
The odd thing was he continued to recommend the investment in his newsletter until the QQQs lost about half their value, falling to the $40s, where he said to "hold for future price recovery."
January 2001 Marketimer: Bob Brinker said, "We continue to emphasize the guidelines we have recommended with regard to the exposure in the Nasdaq 100 Index for the countertrend rally phase we expect.......we are expecting potential gains for the Nasdaq 100 Index of up to 50% or more as measured from the January 2 closing low....." (January 1, 2001, QQQQ closed at $64.30)
April 6, 2001 Marketimer, Page 2; Paragraph 5: Bob Brinker said, "Recent weakness in the Nasdaq 100 Index (QQQ) shares has far exceeded our expectations. However, we believe subscribers holding a position in these shares will eventually be rewarded, although this holding will require both time and patience. With or without a buy signal from our long-term model, we expect the Nasdaq Composite and Nasdaq 100 Index to stage a significant recovery over the next several months." (April 1, 2001, QQQQ closed at $46.15)
If you followed Brinker's advice to buy the QQQ shares any time following the October 16th bulletin until he stopped recommending QQQ for up to 50% of cash reserves, the top price you could have paid was $87.87 on Oct 20, 2000
From Yahoo! QQQ from Oct 10 to Nov 1, 2000
Today QQQ is $51.83 which is down 41.0% from $87.87, the highest QQQ was while Brinker was recommending it for up to 50% of cash reserves.
Thank you for that info, Kirk. The fact that Bob Brinker never closed the trade makes it pertinent. And the fact that he never accounted for using model portfolio money, means that his ongoing performance record is skewed quite a bit to his favor.
However, are you aware that Bob Brinker actually made two more predictions of QQQQ countertrend rallies after the initial one in October 2000? It's largely overlooked that he meant this for the whole stock market, but specifically, this is what he said about those holding the Q's.
This was three months after the October "Act Immediately" bulletin:
January 2001 Marketimer: Bob Brinker said, "We continue to emphasize the guidelines we have recommended with regard to the exposure in the Nasdaq 100 Index for the countertrend rally phase we expect.......we are expecting potential gains for the Nasdaq 100 Index of up to 50% or more as measured from the January 2 closing low....." (January 1, 2001, QQQQ closed at $64.30)
And in the March 2001 Marketimer, Bob Brinker admits that he was "wrong" in October 2000 and January 2001, but amazingly, predicts a THIRD "bear market rally" for QQQQ in March 2001, and said it will "begin shortly" and last "three to six months."
March 7, 2001, Marketimer: begins with Bob Brinker admitting that "we were wrong in our earlier expectations that a countertrend rally would develop late last year...." He then admits that even his call for a new bear market rally beginning on January 3 "was unable to sustain upward progress in February." In spite of these admissions of being "wrong," in the same issue of Marketimer, Bob Brinker again made the following recommendation to subscribers: "In our view, the probablilities favor a three to six month bear market rally phase beginning shortly. Such a rally has the potential to carry the Nasdaq composite Index above the 3000 level by spring or summer as measured from the closing lows." (March 1, 2001, QQQQ closed at $39.15)
Bob Brinker's credibility ad character are unimpeachable. He is an iconic financial superstar and we should all be thankful that he wastes his valuable time trying to educate us.
tfb
Much has been written (and I've contributed) about Mr B's all-in recommendation at S&P 1400 a few years back and his silence on the matter except when a caller asked him, as a market timer, if he avoided the Great Recession.
Bob's tight lipped response:
"I did not avoid it."
Questions for the panel:
Lost in the bashing of Cassandras during that terrible call, does anyone recall his reasons for being so bullish as to lump sum when the S&P was only ten percent off its high of 1565?
Hasn't he claimed that ten percent flucuations are part of long term investing?
Also, even a new listener last July who acted on Bob's 68th buy selection (at 1030) saw a 30% increase in over twelve months, only to watch that investment shrink to a 13 percent gain.
This from a market timer?
Therefore I suggest
BOB BRINKER'S MARKETHOLDER
"Proudly standing still on the markets for eight years"
Has anyone seen a study of Value Lines marketing timing. It is carried out via asset allocation as apparently is Da Brinks. I was trying to find a review to see how it actually has fared over time.
tfb
Hello Everyone,
Thanks for the "Guru" link Honeybee. It looks like fun. I was going to vote the market would be up today. Oooops. That was before I knew Bernanke was going to make another announcement.
I listened to BB for years, I actually thought he was kinda smart. Oooops again.
I bought into his twisting of past performance. Luckily however, I didn't have the cash to follow his advice so I still have my house.
I even got a free copy of his newsletter, Wow, He's right, He is a genius. Well, so am I if the market keeps going up.
When the market went south in 2008 I couldn't understand him singing the same old tune. As my 401k dissapated faster than my looks, I started thinking I was as smart as Bob. I can be as wrong as him and it's free.
Thank goodness for Google. I think I typed in "Brinker" and "wrong". Yikes, I almost crashed my computer, but fortunately found this site.
Thanks everyone for the great info.
I still listen to BB, mainly so I can read Honeybees comments on Monday.
I enjoy listening to Ric Edelman and Chris Markowski now. When the market tanks, they try to explain why. All they need now is Fido to agree. Hey, didn't Berkowitz communicate with dogs also? But he was crazy.
TFB,
Sorry, I don't know anything about Value Line except what is on their website. I can't find anything there about market-timing.
They have an article about dollar-cost-averaging which you might find interesting.
Also, they give a free sample of their newsletter, but it goes back to February 2009. I suppose it could give you a flavor of what they do with their four model portfolios.
Valueline.com
ECRI Leading indicators now negative: http://www.businesscycle.com/resources/
Yes, ECRI is now negative:
Businesscycle.com
Birdbrain said: "Lost in the bashing of Cassandras during that terrible call, does anyone recall his reasons for being so bullish as to lump sum when the S&P was only ten percent off its high of 1565?
Hasn't he claimed that ten percent flucuations are part of long term investing?"
Birdbrain,
That's a BRILLIANT observation. One that never occurred to me in all of these years!
Indeed, when one looks at his ever-lower buy signals during the 2008-2009 bear, one could ask the same question on most of them:
January 4, 2008, S&P @ 1411: "Mid-1400's"
Feb 10, 2008 S&P @ 1331: "Low-1300's" (delivered via "special bulletin" - no mention of January Marketimer mid-1400's buying opportunity)
Aug 5, 2008 S&P @ 1285: "1240 or less"
Sept 2, 2008 S&P @ 1282: "Low-to-mid 1200's"
September 16th -- rescinded low-to-mid 1200's (recommended dollar cost-average only)
January 2009 S&P @ 931: “bear market bottom range of 750 to 850."
Feb. 2009 S&P @ 826: “low-to-mid 800’s"
March 5, 2009 S&P @ 696: waiting for a bottom and a test of that low. No DC or buy levels.
April 3, 2009 S&P @ 798: 676 benchmark low in. Short-term weakness is buying opportunity. He gave up giving specifics. S&P500 Target: 1000s to 1100s in next 12 to 18 months. (we got there in 5 months!)
And his final call that he still brags about without mentioning any of the others:
July 1, 2010: S&P 1030: "attractive for purchase."
Birdbrain said: "Also, even a new listener last July who acted on Bob's 68th buy selection (at 1030) saw a 30% increase in over twelve months, only to watch that investment shrink to a 13 percent gain.
This from a market timer?
Therefore I suggest
BOB BRINKER'S MARKETHOLDER
"Proudly standing still on the markets for eight years"
Birdbrain,
Thanks for the data on how much of the increase -- even from the July 2010 buy at 1030 -- has been given back. Imagine how those who bought on the higher signals feel. Like his own model portfolios, they are underwater.
Based on what he did in 2008-2009, if the market actually goes into another bear, he will continue to remain fully invested as he makes bottom call after bottom call, AKA: "buying-opportunities."
Then when the market actually bottoms, he will miss it and his next buy signal will be 353 points above the bottom.
*March 2009 S&P bottom: 677
* Next buy signal: 1030 (July 2010)
And yes, all the while this hokum-pokum was taking place, he was "MARKETHOLDING."
Honey:
Value Line does a form of market timing by playing with the asset allocation percentage of cash verses equity allocation percentage that they vary depending on their market outlook.
Hulbert mentioned it a couple of times, but as we now know you can not trust/believe a thing he says so even if he tracks it his credibility is impugned.
I was just wondering how it has faired over the years and I failed to turn up any meaningful evaluations in the various search engines.
I did not that they make a statement that you need to consider several factors among them taxes before choosing to act when they alter their model.
Jeffects said: "I even got a free copy of his newsletter, Wow, He's right, He is a genius. Well, so am I if the market keeps going up."
Hi Jeffects,
I enjoyed reading your comments. Thank you! I too, am glad that you Googled "Brinker" and found this blog.
BTW: What is the date of the free issue of Marketimer that you got?
Copying DanG's post from here to here:
Dan G said...
The "flag" pattern in the DJIA appears to have morphed into a triange. But it still has the same significance, since triangles are usually continuation patterns rather than reversals.
The measuremen of the pattern, if it flys at "half-mast" would be to the Dow 9,500 area if/when it breaks down out of the pattern.
Of course if it breaks out upwards (unlikely, but possible) it will be one of those rare occasions where a triangle does become a reversal pattern. Until the breakout occurs, patience is in order in my opinion. Pioneers usually wind up with arrows in their behinds!
August 26, 2011 10:18 AM
9:56 Am was from tfb
Hmmm, too many comment groups! I always choose the wrong one. And then I misspell words, like "triangle" and "measurement". But I try!
With the market at the top of that triangle, I think a very small short postition could be justified, with a stop above the upper boundary. But the very conservative investors should probably wait for a confirmation either way. Just my opinion...but flawless, nevertheless! :-)
LOL Dan,
No, there isn't any "wrong" one. I just didn't want those who are only reading the latest article comments to miss your post.
Hi Honeybee,
I don't recall the month of the sample newsletter. It was about four years ago when I recieved it and it wasn't current.
I do recall it was very favorable to BB's ability to "call" future market trends, so it was no doubt cherry picked.
I would have subscribed based on the "brilliant" light it cast him in, but I didn't consider myself a serious investor. (i.e. I just had a 401k)
Jeff
I must confess to another day-trade! I "shorted" SPX via SDS today, but only a small amount. But I wanted out for the weekend, so took a profit of less than $100. (About $85, to be more exact)
Oh well, that will buy Annie and me a couple of martinis at the Black Angus' Happy Hour tonight!
I am proud to have two family members competing in Ironman Canada this Sunday.
You can read about it and root for them too, at the website below (sorry that I can't post names).
My family members have raised about 70% of their $5000 goal for luekemia/blood cancers.
Subaru Ironman Canada Preview
Shawn Skene previews this weekend's Ironman racing in the Canadian west
Published Wednesday, August 24, 2011
29-years athletes have soldiered their way to Penticton, British Columbia at the end August for the opportunity to race in one of Ironman's oldest events. This year will be no exception as 2,700 athletes prepare to compete in this weekend's Subaru Ironman Canada in the Okanagan Valley region of the Canadian western province.
The lure of Ironman Canada, for some, is its traditional single loop swim and bike courses followed by an out-and-back run. For others it is the sheer beauty and challenging nature of the course that travels over mountain passes, through desert regions, fruit orchards and stands, and past farms, mountain lakes, gorges and wineries.
The draw to this race is much more than the splendour of the course. The genuine emotion, enthusiasm, pride and unconditional support that the citizens of Penticton and the surrounding communities display is what impacts Ironman Canada veterans and first-timers alike. Ironman Canada is part of Penticton’s identity.
The course
The 3.8 km single-loop rectangular shaped swim starts off the south shores of Lake Okanagan. Stretching to the north of Penticton, the lake is huge by inland standards and measures 135 km long and averages about four km in width. The lake also is home of the infamous and elusive lake monster known as Ogopogo. Think we’re kidding? There have been countless books, TV shows and movies about this creature. Children’s parks, car dealerships, hockey team logos and restaurants bear the creature’s name or likeness. The Supreme Court of Canada dealt with the “Ogopogo Case,” a Canadian stamp depicting the beast was once issued and T-shirts portraying the elusive beast are plentiful.
Once athletes have dodged their fellow competitors and the clutches of Ogopogo in the water, they commence their 180 km journey on one of the most scenic and challenging bike courses Ironman has to offer. The single-loop course heads south of Penticton and is generally flat or slightly downhill for the opening 60 km, with a pair of short and stinging climbs to deal with before hitting Osoyoos. Those racing will then contend with the four steps of Richter Pass and then into a series of rollers. All that is followed by a hot out-and-back section before the final two climbs during the last 50 km near Penticton.
The out-and-back 42 km run starts through town as it works its way toward Skaha Lake on the south end of Penticton. Athletes then follow the lake on its eastern shoreline to the town of Okanagan Falls. From 16 km to 26 km the run includes some serous climbs before returning to town where the crowd and volunteer support carry athletes to the finish on Lakeshore Drive.
2011 Ironman Canada Preview
Does Ground Zero post here? I see a link to his board and I follow him there but I would like to know if his model has another buy signal.
No, Ground Zero does not post here. I posted the link to his contest. Here is the link to his "Buys and Sells":
Buy and Sell Signals: Silicon Investor
I am proud to have two family members competing in Ironman Canada today. She wrote this morning:
"Racing today in honor of those who are, have, and will battle cancer. Track Jeff and I at www.ironmanlive.com! My number is XXXX and Jeff is XXX. Together our south bay and SF Ironteams raised over $150,000 for cancer research and patient care. GO TEAM!!!
Good luck to your family members in the Ironman.
Hi to all, from LODI,CA.
Not stuck outside of, just passing through.
I'll be tuning in at 1 pm to pass time driving south thru the Central Valley.
Listen for the phrase that pays and call in: "the market has been bouncing around like a ping pong ball."
The 10th caller gets a free subscription to Bulb Timer.
-- Frankj
Thank you for the good wishes, FrankJ.
They just finished the 2.4 mile swim portion and are now on bikes for 112 miles. THEN, they begin the running.
Can you imagine?
My sister-in-law posted this on Facebook:
"So proud of my niece & her husband, xxxxx & xxxx, doing an IronMan Triathalon today in Canada. What is super about this is that Jeff is an amputee, so let's not complain that we "can't." So proud of you two!
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