Honey's Bob Brinker Beehive Buzz: April 10, 2012, Bob Brinker's Most Recent Market Outlook and Fairholme Fund Tax Losses

Tuesday, April 10, 2012

April 10, 2012, Bob Brinker's Most Recent Market Outlook and Fairholme Fund Tax Losses

April 10, 2012... With the S&P 500 Index dropping 4%, from 1419 to 1358, in the past five days, Bob Brinker fans may be wondering if he has made any changes in his stock market views. The answer is no, he's very bullish. All of Bob Brinker's Marketimer model portfolios remain still fully invested. However, he recommends dollar-cost-averaging for adding new money to the stock market.

As the market was rallying, Brinker gradually raised his S&P 500 target range. Last month, he raised it slightly from low-to-mid 1400s to mid-to-high 1400s. Now in the April 2012 Marketimer, he raised it again. Brinker wrote: "....we are taking a slightly conservative stance and using a P/E multiple range of 14.5% to 15 times 2012 estimated operating earnings. This P/E ratio range leads to a 2012 S&P 500 Index price target range in the upper 1400s to low-1500s going forward."

Caution: It's very important to remember that Brinker's advice has been wrong as many times as it has been right -- kinda like flipping a coin. For example, in October 2007, almost to the day that the biggest bear market in 70 years began, Brinker wrote this in the October, 2007 Marketimer: "Investors will begin to look forward to 2008 operating earnings, and based on our estimate of $99.50, we see the potential for the S&P 500 Index to rise at least into the mid-1600s range next year."

ITEM TWO:

Bartee commented that his tax accountant told him that one of the mutual funds that Bob Brinker recommended and then sold last year had created a tax loss for him.

Bartee said...

honeybee is right , can't stand to hear the voice of lynn or her views,, gasp,,, I went over my assets today being tax time,, and my tax accountant pointed out to me that brinkers choice of the fairholme fund had lost 75% of its value and then in 2010 or 11 .. brinker had us sell it ,, at a loss,, I am now aware of running the numbers month to month so this doesn't happen again,, honeybee is right, those numbers bob puts out of gain on his portfolios are for his newsletter to make him look good ,, thank you ms bee for making me aware again,,, buzzzzz

April 10, 2012 9:51 AM

(LOL! You gotta love Bartee's enthusiasm, and that's good advice to keep track of the funds in Bob's portfolios.).....I checked back through old Marketimers and found out that Bob told subscribers to add Fairholme Fund (FAIRX) to Marketimer model portfolios II and III in January 2007, and sell it in April 2011.

I don't know exactly when Bartee sold the fund, but today it is trading very near what it was when Brinker made the buy. But considering how volatile the fund is, it's surprising that Brinker would add it to his more conservative portfolio II and his balanced portfolio III which is for those nearing or in retirement.

Which reminds me, if you are in Brinker's Marketimer model portfolio III and comfortably think that you are 50-50 stocks and fixed income, better check it out. The portfolio is about 2/3 equities now.

READ AND POST COMMENTS

15 comments:

Bartee said...: Bartee ,,here... I sold the fund in 2011 when bob told us to sell in his newsletter.. and at that time I had gone down 75%.. so what if it was trading higher by that time,, I still lost that percentage and I followed the marketimer and our great Brinker and lost.. I am watching his funds like a hawk.. another one that I am watching is the meridian fund.. that baby is a slow mover.. honey bee is right .. those gains bob posts are really questionable.. watch your dough.. rich is the best revenge; April 11, 2012 at 2:33 AM
Honeybee said...: Bartee...That is very good advice. This is not the first mutual fund that Bob Brinker has recommended that went down 75%, but he usually is clever enough to refrain from adding them to his model portfolios.

For example, the Firsthand Fund (TEFQX) he advertised in Marketimer for subscribers to buy. He sang the praises of Kevin Landis and wrote a full page about it in Marketimer.

He was able to simply drop mentioning it without giving any sell signal on it because he didn't make it official.

He has done this sort of thing several times over the years and it covers his butt well because new subscribers have no way of ever finding out.; April 11, 2012 at 4:08 PM
Anonymous said...: I recall that Da Brink has Thompson and Plumb in his portfolios and I believe that fund has been a dog. I remember seeing it in portfolio maybe around 2006. I doubt that thing has ever recovered.

If what I stated is true then this link is relevant:

Thompson and Plumbtext

'cause that dog don't hunt.; April 11, 2012 at 4:56 PM
Bartee said...: yeah,,, and check out the performance off meridian fund,, that is a slow mover and dog,,, arf; April 13, 2012 at 3:34 PM
Anonymous said...: So what are we saying here, Brinker cannot pick stocks, he cannot pick actively managed mutual funds, and he cannot time the market? LOL!

tfb; April 13, 2012 at 5:07 PM
Honeybee said...: TFB,

I think that indeed, we are saying that Bob Brinker's stock picks, mutual fund picks and market timing are about as good flipping a coin. :); April 13, 2012 at 6:34 PM
Anonymous said...: Well HottieBee I think there is a difference. When you flip a coin, the coin does not gouge you for $185 a year.

Bob clearly preys on the ignorance of the investor. If his callers are any indication of his overall subscription base he directs his marketing to the ignorant, foolish, and stupid.

Think about it this way. According to the Employee Benefit Research Institute (EBRI) the average balance of all retirement accounts owned by an individual was $69,498. This is about 14k higher than the number that is typically reported for an averge retirement plan. So if you go with the larger number, over a 10 year period your average investor would have paid 2.66% of their portfolio to Da Brink.

Think bout that, giving up 2.66% to some clown hawking what amounts to fairies dancing on a pinhead, and then calling him to thank him for it. It is an amazing testament to the abject failure of public education.

Here is the math.

((Price of a yearly subscription to the wizard of hoax) * (number of years the ignorant victim subscribed to the hoax)) / (average Retirement asset balance) =
amount the typical investor was screwed by Da Brink.

So let's work this with some real numbers.

Let the number of years the victim was victimized be 10.

So, using the above formula:

((185) * (10)) / (69498) =

1850 / 69498 =

.0266

expressed as percentage (* 100)

2.66%

of course it is even more brutal if you use the average IRA balance of $54,863. In that case:

((185) * (10)) / (54863) = .0337

Amazing isn't it!!!! Your average investor out there has between $54,863 and $69,498 and Da Brink is in there for a painless 2.66% to 3.33% of it all!!!

As it is said often in this forum, you can't make this stuff up!

tfb; April 13, 2012 at 7:32 PM
Anonymous said...: So using your same "math", if you were paying 2% per annum for a professional to manage your money
and you had $10 million invested, after 25 years the manager would have taken 50% of your money, or $5 million. Doesn't make sense.. JMHO; April 14, 2012 at 9:43 AM
Beardown said...: "So using your same "math", if you were paying 2% per annum for a professional to manage your money
and you had $10 million invested, after 25 years the manager would have taken 50% of your money, or $5 million. Doesn't make sense.. JMHO"

Of course it doesn't make sense. His whole straw man argument makes no sense at all.

Set up a straw man to bash Brinker. How much talent does that take?; April 14, 2012 at 10:59 AM
Dan G said...: Are you considering ignoring seasonal market tendencies (Sell in May...")? If so, you might want to check out the current Barron's article "The Trader".

It indicates that investing $100 in the S&P500 in the October-April period since WW-II would have yielded $9,329 to present.

Investing that same $100 in the May-September periods would have yielded...$99!

Just something to consider as May lurks just around the corner! Better safe than sorry? I'm thinking so, but everyone must make their own decisions. After all, it doesn't work EVERY year!; April 14, 2012 at 11:10 AM
jamesj said...: Honeybee,

This is Jim in SF (jamesj24). Thanks for updating your readers on Bob's latest bullish stance. Of course, based on his market timing blunders over the last 3-4 years, his bullishness could just as easily be used as a contra-indicator. Fixed income looks superior to Brinker's bullish speculation on the stock market. One short term government fund I particularly like is Victory, IPFIX, yielding over 5% investing mostly in government securities. Similarly NZH-C is a good money market alternative yielding 2.9%, tax free for CA residents.

Regarding Brinker's ability to predict the market, I keep thinking of the expression that, even a broken clock tells the correct time once a day. But, riding the market all the way down to March 2009 is simply unforgivable. The miracle is that he still has enough following to have a radio show.; April 14, 2012 at 10:05 PM
jamesj said...: Honey,

This is Jim in SF (jamesj). Thanks for updating your readers on Bob's latest bullish stance. Of course, based on his market timing blunders over the last 3-4 years, his bullishness could just as easily be used as a contra-indicator. Investing in fixed income still looks better to me than Brinker's bullish speculation on the stock market. One fund I particularly like is the Victory Income Fund, IPFIX, yielding over 5%, investing mostly in short term government securities. Similarly NZH-C is a good money market alternative yielding 2.9%, tax free for CA residents with little price volatility.

Regarding Brinker's ability to predict the market, I keep thinking of the expression that, even a broken clock tells the correct time once a day. But, riding the market all the way down to March 2009 is simply unforgivable for someone who claims to be a market timer. The wonder is that he still has a following who listens to his radio show and buys his newsletter.; April 14, 2012 at 10:10 PM
noload said...: IPFIX has a 2% load and a 0.96% expense ratio. Who needs that?; April 15, 2012 at 8:06 AM
Honeybee said...: JamesJ said: "But, riding the market all the way down to March 2009 is simply unforgivable for someone who claims to be a market timer. The wonder is that he still has a following who listens to his radio show and buys his newsletter."

It's great to hear from you! Thanks for the mutual fund tips...

I agree that Bob Brinker riding the 2008-2009 MEGA bear market down fully invested was so egregious that one would not expect him to still sell himself as a market-timer.

Not only was he fully invested throughout the bear market, he kept issuing buy-signals as the market declined for over a year.

But the truth is, because of his radio program, he can lie to listeners, snag new subscribers and basically start fresh in Marketimer in any given month.

I'm totally convinced that he depends almost solely on turnover and that there are enough new subscribers to make it worthwhile for him to continue working on Sundays well past retirement age.

He scams by not mentioning any of his higher buy signals (mid-1400, mid-1300s, low-1200s) as the market drops lower -- in either Marketimer or on the radio. Instead, he touts the one he made last fall in the low-1100s because FINALLY, the market turned up.

As you said, even a stopped clock is right twice a day.

In the April 2012 Marketimer, he wrote a couple of paragraphs about this September 2011 buy signal. But he NEVER mentioned any of the blunder-buys in Marketimer during the bear market.

He can get away with this partly because he refuses to allow libraries to carry Marketimer. He pulled them from libraries when the QQQ-trade debacle happened.

So the truth is that as long as he can spin and mislead on national radio, he can snag new shark-bait to send him money to read about his latest "market-timing" garbage.; April 15, 2012 at 8:21 AM
jamesj said...: Noload investors: IPFIX is available without a load or commission if purchased as one of Schwab's One Source funds, although there is a $50 fee for any redemptions of purchases not held 90 days or longer, so be sure you won't need to access the money for 90 days. The expense ratio is <1%, which I think is reasonable, considering the extraordinary returns that the fund manager has consistently achieved in a low interest rate environment. She must use leverage to get the yield above 5%.; April 15, 2012 at 10:27 AM