January 25, 2012....Bob Brinker's market-timing advice does not include making short or long-term trades. The last time he actually made a trade on the air was in the year-2000. That was when Bob Brinker recommended a short-term trade in QQQ at $90 to $100 -- and advised listeners to put in a stop-loss at $84.
It ended badly for many because it looked like the market-makers decided to take out those stops, and that is exactly what happened. The very next week, I was watching on my trading screen. QQQ started dropping until it hit exactly $84 and then turned up again. I can't recall where it closed that day, but it was several dollars higher than where it opened.
* I was reminded of that unfortunate trade (that ended Bob Brinker's Moneytalk trading) when I heard this call last Sunday:
Caller Harry from Nevada City said: "My IRA On January 1st, 2007, was worth $508,227."
Bob said: "How was that invested at that time?"
Harry said: "I'll tell you in a second. I just want to tell you where I ended up the five year annual compound return. Bob, are you with me?"
Bob: "I'm listening. I'm listening."
Harry: "Alright. My ending value, and this is without any additional money going in and no money coming out. My last earned income was 2001. So what I'm about to tell you is strictly the performance inside the IRA by the assets invested. It went to $930,908. Now I just checked the Vanguard Wellesley Fund. It had a 6.13% annual compound return, and that would have been $684,303. And of course the S&P would have been down a quarter percent."
Bob: "Harry, tell us how you did this."
Harry: "Well, the first two years, years 07 and 08. I finished off what I'd started in year 2000, and that is a (?)-structured pyramid of zero-coupon bonds which I traded opportunistically. I sold Bear Stearns St. Patty's Day Monday, reset July of '08, sold everything in October. Then in December, I went all into corporate bond mutual funds which had the best performance two years since the Depression."
Bob said: "So what you're saying, what you're telling the listeners is that you did this with a really a hyperactive trading approach, where you were skipping between securities of various assets classes, stock, bonds, whatever, and trading actively and you were doing it in an IRA to get the tax privilege. And that's the beauty of that IRA tax shelter.....This is Moneytalk."
Bob cut Harry off and put his own spin on the call. He chose to ignore the fact that Harry almost doubled his money in the same five years that Marketimer's fully-invested model portfolios made miniscule gains. But the best he could come up with was an "hyperactive trading approach," and the beauty of tax-sheltered accounts. Actually, if the caller had stated all the trading he did in five years, that was certainly NOT "hyperactive trading" by any stretch of the imagination. But to a market-timer who has been a buy-and-holder for eight years, perhaps that's the way it looks. LOL!
* Bob Brinker's third-hour guest-author last Sunday was Suzanne McGee: Chasing Goldman Sachs: How the Masters of the Universe Melted Wall Street Down...And Why They'll Take Us to the Brink Again. During the interview, Suzanne was talking about John Paulson, who made billions calling the collapse of the mortgage market in 2008, but whose mutual funds Brinker said "fell out of bed" in 2011, but I wonder if she wasn't also talking to Bob:
Suzanne said: "One lucky call, one astute, intuitive forecast does not make someone a genius. This is not specific to John Paulson, incidentally. We have a tendency, and again, I think it goes back to our own knowledge and awareness of financial matters generally, but we do have a tendency to elevate, to godlike status those people who have made money for us.......People who forecast the 1987 crash, very few of us remember their names today. One lucky call does not a guru make and we should remember that."
I think that Bob should pay close attention to what Suzanne said. One lucky call does not make one a genius. And even those who are elevated to "godlike status" for one good call, are soon forgotten (unless they have a national radio show and play fast and loose with history.
14 comments:
I've been doing well following Kirk's advice and selling high, buying low. My question is: How do I accumulated stock in my explore portfolio when I continue to make short term profit? I leave in the portfolio 25-75 shares of misc. stocks. Thanks, Rick
Suzanne's comments on Moneytalk remind me of a famous quote I read recently. Perhaps you are familiar with it:
"We have two classes of forecasters: Those who don't know,and those who don't know they don't know."
John Kenneth Galbraith
Hi Rick,
I'm glad you are doing well following Kirk trades. Just be aware that he does not always pick winners, so do your own due diligence.
I do not understand your question so don't really know how to answer your question. But I will guess that you are asking how to hold cash in your portfolio between trades??? If so, and you are going to re-invest it, I'd just leave it in money market funds.
"He chose to ignore the fact that Harry almost doubled his money in the same five years that Marketimer's fully-invested model portfolios made miniscule gains."
Firstly, I don't believe Harry for one minute. He went back and cherry picked the absolutely BEST investments he could have made.
First he "selectively trades" Zero coupon bonds, then he sells Bear Stearns the he sells everything at the top and buys Copororate bonds which took off.
And he traded his ENTIRE half million portfolio on these risky bets?
Give me a break. No financial adviser in his right mind would have recommended such high risk trades in his IRA even if they did turn out well (with perfect hindsight).
It's pretty easy to bat a thousand AFTER the game.
IMADoubter
Anonymous said...
"He chose to ignore the fact that Harry almost doubled his money in the same five years that Marketimer's fully-invested model portfolios made miniscule gains."
Firstly, I don't believe Harry for one minute. He went back and cherry picked the absolutely BEST investments he could have made.
Good for you. You should question everything you hear on Moneytalk. Bob is a master at spinning political issues. He claims that government employment is being reduced at all levels. I suspected this is not true for civilian federal government employees. I didn't have a source to back this up until this morning. Federal jobs excluding the post office have added 140,000 more employees since Jan 2009. The post office has decreases 115,000 jobs in the same time period. That leaves a net increase of 25,000 more people on the federal payroll. My source is Forbes.
I don't worry too much about the Federal work force Jeff. Looks like it is about the same for the past decade.
"In sum, the data on recent trends in federal employment show that while the size of the federal workforce is growing, its proportion of the total civilian labor force is not. Federal employees have remained at or around 1.2% of the total labor force for at least a decade and, given the hiring freeze that has been in place in many agencies, are unlikely to grow much higher.
Furthermore, the increases in staffing that we have seen are largely concentrated in just a few agencies. At the very least, this suggests that a one-size-fits-all approach to reducing the federal workforce could have disproportionate effects on some agencies more so than others."
http://www.thefactfile.com/2012/01/23/the-size-of-the-federal-workforce-rapid-growth-for-some-stagnation-for-others/
IMA
Jeff....Do you have a link to that info. Perhaps send it to me via email and I will post it. Thanks.....
Anonymous said...
"I don't worry too much about the Federal work force Jeff. Looks like it is about the same for the past decade."
IMA
I am afraid you missed my point. Brinker has his own political agenda just like Chris Mathews and Rush Limbaugh. Listeners should question anything he says. Several weeks ago he claimed Ron Paul was second in the GOP primary. Here is the current delegate count: Romney 33 Gingrich 25 Santorum 14 and Paul 4. At no time was Ron Paul in second place. After Iowa he had zero delegates. When it comes to politics Brinker has a history of making bizarre statements.
Oh I don't listen to Brinker for political information Jeff.
Maybe you just misunderstood what he said, Ron Paul WAS was in second place in Iowa and New Hampshire. Maybe Brinker was talking about his place in some state.
And I don't really care one way or the other. I don't listen to Rush Limbauch either.
It sometimes seems like people just go out of their way to find anything they can to complain about Brinker.
IMA
ima sez:
It sometimes seems like people just go out of their way to find anything they can to complain about Brinker.
I would say the same thing about how SOME people go out of their way to knock Rush limbaugh and people who knock brinker with FACTS, not opinions.
URA
scs00:
Suze Orman is a fraud on many levels. Just check out the tirade she launched at multiple bloggers who called her out on her fee-laden debit cards.
http://ptmoney.com/an-update-on-the-suze-orman-prepaid-debit-card-fiasco/
Anonymous said...
"Oh I don't listen to Brinker for political information Jeff.
Maybe you just misunderstood what he said, Ron Paul WAS was in second place in Iowa and New Hampshire. Maybe Brinker was talking about his place in some state."
MAYBE?????? There is no need to speculate because Honey reports on what Brinker says on those Sundays when he shows up for work. Here is what she wrote on the 15 January program:
"Bob also said that Ron Paul was coming in second in the Republican primaries.
Honey EC: Maybe someone can do some research on where Ron Paul is placing in the primaries. I think Bob may be wrong about that."
Ron Paul finished third in Iowa, second in New Hampshire and fourth in South Carolina. Brinker's comment is clearly incorrect and Honey suspected that when she documented it.
Jeff, maybe you missed my point.
I don't really care what Brinker may or may not have said about some senile old crackpot like Ron Paul.
IMA
IMA sez:
Jeff, maybe you missed my point. I don't really care what Brinker may or may not have said about some senile old crackpot like Ron Paul.
But I _DO_ care if the old geezer has lost it completely and is outta his confused mind, doncha agree?
URA
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