* It's been twelve years since October 2000, when Bob Brinker sent a special bulletin to his subscribers telling them to "Act Immediately" and buy QQQ with up to 50% of the cash reserves that were raised in January/August 2000.
Last Sunday, Brinker told the Moneytalk audience that he had finally advised subscribers to sell all Nasdaq holdings. That includes all QQQ and RYOCX...Please see my last show summary.
Marketimer, November 5, 2000, Page One excerpts:
Paragraph one, Robert J. Brinker wrote: "As initially recommended in our mid-October subscriber bulletin, Marketimer is projecting a major countertrend rally to be led by the Nasdaq 100 Index. We expect this rally to last a minimum of two-to-four months, and to continue at least into the first quarter of 2001. We are projecting Nasdaq gains in excess of 20%....."
Paragraph 3: "Subscribers seeking to establish positions at the optimum price levels should, if possible, accumulate QQQ shares at the prices in the range between the low-70's and the mid-70's...."
Paragraph 5: "Marketimer subscribers with aggressive objectives can invest up to 30% to 50% of cash reserves in either the QQQ shares or Rydex OTC Fund in order to participate in this recommendations. That translates into potential exposure of 19.5% to 32.5% of a TOTAL AGGRESSIVE PORTFOLIO. (30% of 65% CASH RESERVES equals 19.5%. 50% of 65% cash reserves equals 32.4%). The balance of reserves remain in money market funds."
Paragraph 6: Conservative subscribers can invest up to 20% to 30% of cash reserves in this recommendation, using either QQQ shares or Rydex OTC Fund shares. That translates into potential exposure of 6.5% to 9.75% of a total BALANCED PORTFOLIO. (20% of 32.5% cash reserves equals 6.5%, 30% of 32.5% CASH RESERVES equals 9.75% of a BALANCED PORTFOLIO. The balance of reserves remain in money market funds."
Marketimer, November 5, 2000, Page One excerpts:
Paragraph one, Robert J. Brinker wrote: "As initially recommended in our mid-October subscriber bulletin, Marketimer is projecting a major countertrend rally to be led by the Nasdaq 100 Index. We expect this rally to last a minimum of two-to-four months, and to continue at least into the first quarter of 2001. We are projecting Nasdaq gains in excess of 20%....."
Paragraph 3: "Subscribers seeking to establish positions at the optimum price levels should, if possible, accumulate QQQ shares at the prices in the range between the low-70's and the mid-70's...."
Paragraph 5: "Marketimer subscribers with aggressive objectives can invest up to 30% to 50% of cash reserves in either the QQQ shares or Rydex OTC Fund in order to participate in this recommendations. That translates into potential exposure of 19.5% to 32.5% of a TOTAL AGGRESSIVE PORTFOLIO. (30% of 65% CASH RESERVES equals 19.5%. 50% of 65% cash reserves equals 32.4%). The balance of reserves remain in money market funds."
It's very clear that Brinker wanted his subscribers to use model portfolio money because that is the exact amount (65%) of cash reserves he had advised raising just a few months earlier.
Marketimer, November 5, 2000, Page Two excerpts:
Paragraph 3: "One of the great advantages inherent in our large cash reserve position is the flexibility to be able to take advantage of short-term countertrend rally opportunities when they are identifiable. We believe the current opportunity is very likely to produce very significant short-term gains at least into the first quarter of 2001."
Unbelievably, after that sales pitch about subscriber cash reserves, Brinker never accounted for the QQQ trade in his official model portfolio records:
Paragraph 4: "We will identify an exit point for this short-term countertrend rally in our Marketimer publications in the months ahead. Since this represents a short-term opportunity and is not part of our long-term investment approach, we will not include this recommendation in our model portfolios on page eight.
Brinker also promised to give "follow-up guidance" until he "identified an exit point." That is a promise that he did not keep. He only gave guidance for the next 30 months. At that time, he returned to fully invested, added RYOCX to his model portfolios AFTER the 70% decline and never mentioned it again.
Here is a complete list of the guidance that Brinker gave to those poor followers who purchased QQQ in the $83 range -- per his advice. I am posting this list because it helps make the whole picture crystal clear:
- #3) December 2000, Marketimer: Bob Brinker said that a "countertrend rally"...."has the potential to carry the Nasdaq indexes as much as 40% to 50% above their late-November closing levels over the next three to six months."
- #5) February 2001,
Marketimer: Bob Brinker stated that the "bear market rally" had
commenced and he expected the timeline to be "three to six months as
measured from the starting point Jan 3." Brinker added: "In
terms of Nasdaq 100 shares, our expectation of a target range in the 80 to
90 range remains intact. We believe this remains an achievable objective
into the second quarter." (
- #6) 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 probabilities 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." (
- #7) 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." (
- #8) May 7, 2001 Marketimer:
Bob Brinker said, "As we stated last month, '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.'"
(
- #12) September 2001,
Marketimer: Bob Brinker said the following on Page Two: "Subscribers
who own Nasdaq 100 Index (QQQ) shares purchased at higher prices in the
taxable accounts since the fourth quarter of last year can realize short-term
losses for current and future use by switching to......XLK.......the
differences are sufficient to avoid the wash-sale rule as long as you wait
at least 31-days before switching back into the QQQ
shares."....."Making this transaction in taxable accounts for
tax purposes is consistent with our recommendation to hold QQQ shares for
price recovery over time." (
- #14) November 2001,
Marketimer: Bob Brinker said, ".....we recommend subscribers with a
position in Nasdaq 100 (QQQ) shares hold these shares as we expect them to
trade at much higher levels during the next cyclical bull market." (
- #16) January 2002,
Marketimer, Bob Brinker said: "In the case of Nasdaq 100 (QQQ)
shares, we prefer to hold existing positions in the expectation that the
next cyclical bull market will provide a much better price level for the
Nasdaq 100 Index." (
- #17) February 8, 2002,
Marketimer: Page 1; Paragraph 4; "We remain concerned that a secular
bear market, based on declining valuations, began in March of
2000......The most difficult money making strategy in such a market
environment is the buy and hold approach. This strategy has led to large
losses since early in 2000, and in our view buy and hold investing is
likely to prove disappointing in the stock market environment we anticipate
within a secular bear trend. ......We recommend subscribers with a holding
in the Nasdaq 100 Index (QQQ) shares hold these shares for recovery during
the next cyclical bull market."(QQQ closed
- #18) March 8, 2002,
Marketimer, Bob Brinker said: "Subscribers holding Nasdaq 100 (QQQ)
shares can hold these shares in anticipation of much higher prices in the
next cyclical bull market in our view." (
- #19)
- #20) May 8, 2002
Marketimer, Bob Brinker said: "We are also retaining our hold rating
on Nasdaq 100 (QQQ) shares. Although the shares remain weak, we expect
them to trade well above current levels during the next cyclical bull
market." (
- #21) June 7, 2002
Marketimer, Bob Brinker said: "We continue to suggest a patient
approach, which includes holding on to your stock market cash reserves. We
are maintaining a hold rating on Nasdaq 100 (QQQ) shares, which have the
potential to trade at much higher levels during the next cyclical bull
market, in our view." (
- #22) July 5, 2002
Marketimer, Bob Brinker said: "We continue our policy of not selling
into weakness, and recommend those with a position in Nasdaq 100 (QQQ)
shares hold for higher prices during the next cyclical bull market."
(
- #23) August 8, 2002
Marketimer, Bob Brinker said: "We are maintaining our hold rating on
Nasdaq 100 (QQQ) shares, as we believe they can trade at much higher
levels during the next cyclical bull market." (
- #24) September 7, 2002
Marketimer, Bob Brinker said: "We are maintaining our hold rating on
Nasdaq 100 (QQQ) shares in anticipation of much higher prices for the
shares in the next cyclical bull market." (
- #25) October 5, 2002
Marketimer, Bob Brinker said: "We are now in the 31st month of one of
the worst cyclical bears since the 1930's. We recommend continuing to hold
stock market cash reserves at this time. We also recommend retaining
existing stock market holdings, as we do not view the current period as a
propitious time to be a seller of equities." (
- #26) November 8, 2002,
Marketimer, Bob Brinker said: "As we continue the process of
monitoring our stock market timing indicators, we recommend retaining
stock market cash reserves until our model returns to bullish territory.
We also recommend holding existing stock market positions at current
levels, along with holdings of Nasdaq 100 (QQQ) shares." (
- #27)
- #28)
- #29) February 7, 2003,
Marketimer, Bob Brinker said: "We also suggest holding existing
positions in the Nasdaq 100 Index (QQQ) shares, which have recently shown
a measure of resilience relative to the broad market indexes. We expect
the Nasdaq indexes to post gains well in excess of the broad market indexes
during the next cyclical bull market." (
- #30)
By Peter Brimelow,CBS.MarketWatch.com
NEW YORK (CBS.MW) -- ABC radio star Bob Brinker's Marketimer investment letter is one of the few letters to have beaten the stock market over the past 10 years, by Mark Hulbert's count. And Brinker actually turned bearish in January 2000 (right as the Dow peaked, 3,000 points higher than it is now -- remember? -- and the Nasdaq was at 5,000)
So why do clouds of vengeful investors buzz around his noble head? Indeed, they buzz around anybody's head who says anything nice about Brinker. You should see the e-mail that Mark Hulbert gets. And he's just keeping count.
Hell hath no fury like an investor steered wrong. Brinker is paying the price for his success, both in the markets and in attracting followers.
This is the problem: Later in 2000, Brinker was trying to catch a rally in what he still regarded as a primary bear market.
In a special bulletin, he suggested Nasdaq 100 Trust QQQ , the Nasdaq 100 exchange-trade fund on the American Stock Exchange.
But it did not appear in the detailed model portfolio published, as always, in the next month's letter. So Mark promptly sold out the QQQ position and no longer counted it.
Which was just as well, because QQQ fell from above 80 to a recent 24. Brinker is still sweet on it, in this peculiar, extra-marital sort of way.
24 comments:
Good Article Honeybee!!
I did a calculation that was verified by others and wrote an article "Effect of QQQ Advice on Bob Brinker's Reported Model Portfolio Returns" where I show the advice for Model Portfolio #1 cuts the total he reports by 29%!!!
It is amazing that Hulbert let him get away with this. You clearly show the advise was meant for the model portfolio cash raised in early 2000.
Thank you Kirk, and thanks for the link to your good work in showing the extent of the effects the QQQ trade would have had on Bob Brinker's advertised performance.
In my opinion, it's legal fraud, and Mark Hulbert is the biggest enabler.
Hulbert claims Brinker said when he made the initial call that he was not going to add it to his model portfolios. But I know that he knows that isn't true.
If that was true, why would Hulbert not have read that in October before HE added it to the Hulbert Financial Digest record?
If that was true, why did he have to remove it from HFD records in November -- the records he uses to rank Marketimer performance?
I personally wrote to Mark about this topic, but he refuses to make any changes that might harm Brinker's record.
Mark Hulbert is a sycophant for both "Bob Brinker's." He instantly started covering Bobby Jr's "income advisor" while it was first hot of the press. Why? I think the answer is obvious.
Another thing, Kirk:
As you might imagine, "someone" is very upset about this article.
Amazing how they whine about this being 12 years old, and why would I write about it.
But nary a word about the fact that it was twelve years, almost to the day that Bob Brinker came out from under the bunker long enough make a pathetic close to it.
Of course, even his closure in Marketimer was so obscure and filled with double entendres that not one single new subscriber since March 2003 will understand a word of it.
Amazing how they whine about this being 12 years old, and why would I write about it..
My guess is it is the fact you used the phrase 12 years old> that drew them to this site in the first place. I understand they Google that phrase frequently.
tfb
For those who loved and will miss the most lovable SOB on TV:
Don't Mess with J.R.
ras here: I lost 30k on the QQQ thing. But to be honest, I more than made up for that by bailing out of the market in 2000 per Brinker's recommendaton. Way more.
Looking forward to the show and your comments, Honeybee.
I continue to worry about the market. I'm fully invested in the Vanguard Target Retirement 2015 Fund (VTXVX). https://personal.vanguard.com/us/funds/snapshot?FundId=0303&FundIntExt=INT
40.3% Total Bond Market, 38.1% Total Stock Market, 16.6 Total International, 5% Inflation Protected Securities.
We'll see about the fiscal cliff and the recession that is likely to occur with or without the cliff dive.
"ras here: I lost 30k on the QQQ thing. But to be honest, I more than made up for that by bailing out of the market in 2000 per Brinker's recommendaton. Way more."
Thanks ras. That just shows those critics are wrong who claim you have to be right twice, you have to catch the tops and the bottoms, and Brinker only made one call, etc etc etc.
Ras is proof that if you sidestep just ONE bear market you are ahead of the game.
Hi Ras,
Sorry to hear you lost $30,000 on Brinker's QQQ debacle.
To some people, that would be an enormous amount of money. Knowing that you are a successful professional, I doubt it was life-changing to you.
So did you actually follow Bob Brinker's advice in 2000 and raise 65% cash or did you get completely out of the market?
What did you do in 2008 when the biggest bear of our lifetimes hit the market and Brinker kept saying buy, buy, buy all the way down?
Hi Thurgood,
Here is dose of reality for you:
Bob Brinker has never completely side-stepped a bear market!
Brinker went to 100% cash only one time -- in 1988, almost immediately AFTER the October 1987 crash. That cost him and subscribers money, because he lost out on a lot gains before returning to fully invested.
The only other time Brinker EVER raised cash was in 2000 and that was exactly 65%. Being 65% in cash was a good thing, but certainly not "sidestepping" the bear that some give him credit for -- including himself.
BTW Thurgood,
We deal with facts on this blog -- not myths, folklore or exaggerations.
"ras here: I lost 30k on the QQQ thing. But to be honest, I more than made up for that by bailing out of the market in 2000 per Brinker's recommendaton. Way more."
Did you Follow Brinker's advice to sell 65% then put 50% back into QQQ or did you do better because you took more out of the market than Brinker recommended and you did not follow his advice to put about half back into QQQ?
I remember reading someone said they didn't take money out of the market when Brinker recommended so they were more aggressive with the QQQ to try and make back what they lost. Of course, they were crushed and had very unflattering things to say.
For everyone who flipped the coin and did better following SOME of Brinker's advice, there are those who did worse. That is why I like reading actual calculations of portfolio returns like Kirk posted above.
I remember the old 101 boards where trolls ran around saying they did well with Brinker but every time they were pressed, it turns out they were smarter than Brinker and didn't take the advice he gave. just saying....
I guess ras is a lucky one who bailed out of the market in 2000 and if he missed the 2008 bear market wouldn't he still be better off?
I remember Dan on this board said he took a small loss on that QQQ trade too because he put in a stop loss order I think. But he got out in 2000 when Brinker said to.
grimly23
"I remember the old 101 boards where trolls ran around saying they did well with Brinker but every time they were pressed, it turns out they were smarter than Brinker and didn't take the advice he gave. just saying...."
LOL! I too remember those old boards and there were a lot of people who said they didn't follow Brinker's advice to sell because it would cost them so much money in capital gains taxes.
If I recall, the market rallied for a short time before it tanked and then they stopped doing those calculations.
Whatever happened to all of those people?
pstack
grimly23...You do not speak for DanG, but I published your comments so that he can address them himself.
Pstack,
There was a poster on the Suite101 message boards that was named PJStack....Not sure that is you. If it is, welcome to my blog.
As to what happened to all the Suite101 gang:
Will L. devotes his time to being his vet business, horses, yacht and Virgin Islands. I lost my right arm when he got a belly full of Bob Brinker -- it almost sunk me. :)
Kirk Lindstrom has his own business and websites.
David Korn still sells a weekly newsletter, which includes a summary of Moneytalk.
Rande Spegeilman is now a Vice-president at Schwab.
Chgo Bob is sking, traveling and making mischief.
Jeffchristie is still here.
Walkerman stopped posting on message boards altogether.
Dija suddenly passed away a few years ago.
Acousins disappeared, maybe died.
Rasputin is still here.
Math Junkie disappeared at the same time that Dija died.
SteveT is still on my Facebook friend list, but seldom writes about Brinker.
As I think of others, I will add them.
Something that may be of interest. There is actually more academic acceptance of the potential for BigFoot to exist than there is of as of academic acceptance of market timing being a successful strategy of investing. And there is a reason for that.
On the other hand the academic acceptance for The Loch Ness Monster is similar to that of academic acceptance for successful market timing and there is a reason for that.
In stark contrast there is strong academic acceptance that you can build a system that beats the odds in Las Vegas(and several have).
So in summary there is more evidence that supports the potential for the existence of BigFoot than there is for a successful market timing system. And on the other hand there is the same level of confidence from the academic community for the existence of The Loch Ness Monster as there is for the existence of a successful market timing system. And there is wide academic acceptance that you can build a system to beat the house in Las Vegas.
Food for thought.
tfb
TFB,
Very interesting! So I guess the fact that Bob Brinker has been very successful in selling his market-timing ability (even though the facts prove he can't) is a great testament to his genius.
LOL! I too remember those old boards and there were a lot of people who said they didn't follow Brinker's advice to sell because it would cost them so much money in capital gains taxes.
I remember in 2000 Brinker said he kept 40% in the market so those who had MSFT could keep it along with the new internet fund, TEFQX, he recommended his subs buy.
What was MSFT back then, $60?
How did that TEFQX internet fund work out?
I think Boobie is lucky Honeybee doesn't get someone to add in 5% in TEFQX and 4% in MSFT ... and Luuuuuucent to his returns.
Very interesting! So I guess the fact that Bob Brinker has been very successful in selling his market-timing ability (even though the facts prove he can't) is a great testament to his genius.
Well his genius or the overall laziness, ineptitude, ignorance and stupidity of some of his subscribers.
Let's face it, Brinker targets the ignorant with this market timing hocus pocus. On the other hand, his recommended reading list pretty much discredits his own work – hence one of the reasons I characterize his subscribers, on the whole, as lazy, inept, ignorant or stupid. If you would simply read the books on his recommended reading list you would not fall for his BS.
I mean look at some of those books written by Bogel, Gibson, Malkiel – all delivering the same message, market timing does not work.
In the past I have suggested this is why Bob as no problem fleecing people; Brinker recommends being your own personal adviser after reading his recommended reading list and recommends using no-load funds. If you are foolish enough to then subscribe to a newsletter dedicated to economic voodoo and use mutual funds with high expense ratios then he probably figures you are a fool and a fool and their money are soon parted, so it might as well part his way.
I really hate dishonest financial advisers, but to Brinker’s credit you cannot claim he did not give you every opportunity to make a more intelligent choice.
tfb
So what ever happened to that crazy guy, libertypi?
Did he die?
So what ever happened to that crazy guy, libertypi?
I think he is the president now.
Honey here: So in my opinion, Brinker's official market-timing model portfolio performance record is exaggerated by a sizable amount.
Hmmmm...why "in your opinion" - it is a fact. Brinker's record is exaggerated.
tfb
I only lost a little in the qqq trade before I knew better because I felt uneasy about it - too risky. I don't give him Much credit for exiting the dot com Market before the crash. He actually did it three months early, and it was no secret the market was highly over valued. I would have gotten out anyway. Any Market Timer is bound to be right 50% of the time. It's like flipping a coin. No one can effectively time the markets, otherwise we would all be rich and Brinker wouldn't have gotten clobbered in the 2007-08 decline. What is troubling are his lies and the way he deceives people to sell his rags he calls newsletters.
Mark
Newark, CA
Oh and let's not forget his disastrous UTEK position. I lost money there too. I think he had a conflict of interest
Mark
Newark, CA
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