August 18, 2011, Review of Bob Brinker's Stock Market Advice

Posted August 18, 2011....................................(post and read comments)

Will Bob Brinker's Marketimer stock model portfolios ever get back to where they were four years ago?  Will they ever regain the 57%+  losses suffered during the 2008-2009 mega-bear market?

Brinker's model  portfolios I and II are still worth less than they were at the stock market all-time-high in October, 2007.

As of October 31, 2007, portfolio I was worth $302,561. According to the  Brinker's Marketimer website, portfolio I was worth $286,390 on 7/31/2011.

As of October 31, 2007, portfolio II was worth $241,994. According to Brinker's Marketimer website, portfolio II was worth $235,517 on 7/31/2011.

(Brinker's balanced portfolio III is $11,000 higher than it was October 31, 2007.)

Brinker likes to hearken back to his 1030 buy-signal in July, 2010, and brag about how much the S&P has gained since then.

For awhile, when the market was making great gains in 2011, he would talk about that. Then as the S&P gave back its year-to-date returns, Brinker started gauging the "correction" from the highs of 2011. I can't remember the last time he mentioned the S&P 2007 all-time-high at 1565.

While his model portfolios are fully invested (since 2003!), Bob Brinker has been recommending dollar-cost-averaging "on weakness" all along. So I guess if someone robs a bank or his great Aunt Tillie dies, he might have some new money for the market. Otherwise, how ridiculous for Brinker to now be dangling the carrot of a "new money buy signal." 

Three weeks ago on Moneytalk (S&P at 1290) he bragged that he had been buying. But remember that he never advised his subscribers to raise cash. Indeed, the last time he told Marketimer subscribers to raise cash was year-2000, and that was only 65%. So how can any intelligent person take the man's market-timing seriously anymore? The mind boggles.

In the August 2011 issue of Hulbert Financial Digest, in the "Overall Performance Scoreboard," Bob Brinker's Marketimer is not in the top-7 over 5-years or over 1-year.  

In order to find Bob Brinker's Marketimer, you have to go to the 20-year time slot where he ranks 6th. (Is that why Hulbert lengthened his list to include 7 instead of 5, like it was for so many years?)

(Brinker Fixed Income Advisor ranks 25th in the 5-year time slot - before Hulbert "adjusts for risk.") 

So to summarize where Brinker stands on the stock market right now:  All model portfolios remain fully invested.  He forecasts S&P 1400's "going forward," and  recommends dollar-cost-averaging for  new money. 

POST AND READ COMMENTS

June 22, 2011, Hulbert Financial Digest and Bob Brinker's Market Timing

[Please bookmark this new Honey's Bob Brinker Beehive Buzz location]

Posted June 22, 2011............................[Post and Read Comments]

Bob Brinker's Marketimer  did not make it on to the  latest Hulbert Financial Digest  "Overall Performance Scoreboard""  for  the 5-year  or 10-year top-7 newsletters.  [These rankings are what Hulbert calls  "The newsletter's total return (annualized) before adjusting for risk."] However, Bob Brinker's Marketimer is number 6  in the 20-year ranking.

In the June 2011 issue of Hulbert Financial Digest, Mark Hulbert writes  about  how well market-timers  weathered "the worst bear market since the Great Depression."  He does not make any excuses for them  or blame  any exogenous events. He deals with hard, cold data.

Hulbert lays it out in plain English:

"There is at least one silver lining to the extraordinary swings in the stock market over the last 3½ years: They create the perfect testing environment for stock market timers. After all, this period encompasses the worst bear market since the Great Depression and one of the most impressive subsequent recoveries. If a market timer wasn’t able to sidestep much of that bear market’s carnage, and then able to participate in much of the bull market’s recovery, then serious questions can be asked about why we should even consider following his advice in the future."

Hulbert continued to write that he had  calculated how many market-timing strategies were able to weather the past 3 1/2  year carnage if he relaxed standards to within one month of the top and bottom, rather than using a more unrealistic true top and bottom. 

Unfortunately,  Hulbert found that only 10 out of  160 newsletters  were able to meet even "very modest expectations" by correctly side-stepping the mega-bear and then benefiting from the recovery. 

Hulbert said when he presents these dismal results to clients, he finds that they often shift focus over  to average exposure levels instead of worrying about who can brag that they called the top and bottom.

Hulbert wrote about his clients:

  ".......they want a market timer whose average equity exposure level throughout the bear market was markedly less than in the recent bull market—and not by just a little bit, either. It’s not clear how to define “markedly less,” but 50 percentage points seems typical of what my subscribers have as their minimum expectation. But only 25 of the 160 strategies tracked by the HFD, or 16%, satisfied this expectation."

Hulbert did not say who this very small group of market-timers were that "sidestepped" the bear and then participated in the recovery, but we know for a fact that Bob Brinker was not one of them. All of  Brinker's  model portfolios  have been  100% invested since March, 2003.  And he has  always advised his subscribers to remain fully invested,  and put all  new equity money into the market by dollar-cost-averaging (and several outright buys).

On Moneytalk, Brinker often ignores this very recent bear market and harkens back to year 2000 which was the last time he raised 65%  cash from his model portfolios. That would have been a very good call if he hadn't called for a short-term counter-trend rally in October 2000 and advised putting a large percentage of those  cash into QQQ. Up to 50% of that money was lost, but never accounted for in his model portfolios.

Throughout this recent  bear market that Hulbert wrote about, Brinker remained bullish and fully invested. And amazingly, he was bashing the "bad news bears"  in May 2008, just before the market got down to the serious business of dropping all the way to S&P 500 Index 677!

Moneytalk May 31, 2008:   Brinker said: “So what we have here basically, is an example of false prophets and it’s sad. And the reason it’s sad is the damage done. Think of the people that are looking today at the market, S&P at 1400 and they’ve been scared out of the market in the first quarter by these bears………It’s just amazing and yet these people are out there, and these people are not happy, I’m sure, to find themselves out of a rising market since March. To find themselves looking for ever lower prices when in fact we’ve had the opposite..

..So it’s fair for you to say to the Cassandras, where is that recession, where are those millions of lost jobs, where are the two quarters of negative real GDP growth? Where’s the bear market? …………The answer is, they blew it! That is the answer, they blew it. They got caught up in their own negativity and they pronounced that it was all over, it was going to spiral downward and there was no end in sight – and they got it completely backwards. Truly amazing to see, and sad to see the people that are harmed by such unjustified negativity.” 

POST AND READ COMMENTS

May 26, 2011, Mark Hulbert's Most Current Bob Brinker Marketimer Ranking

At Bob Brinker's Land of Critical Mass website, they use carefully selected portions from Mark Hulbert's Financial Digest to advertise the Marketimer investment letter. So how does Bob Brinker's investment letter really stack up against other newsletters in HFD? And how objective is Hulbert when he ranks newsletter performances. A few facts that may surprise you.

In the March 2011 issue of Hulbert's Financial Digest, Mark did a full page summary of Brinker's Marketimer.

Mark said: "Bob Brinker's newsletter is primarily intended to help mutual fund investors time the domestic and international stock and bond market as well as select individual funds. His approach involves a combination of both technical and fundamental analysis."

* Say what? Mark claims Brinker uses Technical Analysis?  That  surprised me. Brinker usually claims that it's all about his "timing model."

* For Mark to give Brinker credit for timing the bond market is a bit of a stretch. Although, Brinker recently lowered the Vanguard Ginnie Mae Fund holdings in balanced portfolio III and the off-the-books fixed income portfolio. (AKA: "income portfolio" since Wellesley Income Fund was added.) And as he mentioned last week on Moneytalk, he sold all Vanguard TIPS holdings.

* Brinker owns no international bonds in any portfolios. He does have a minuscule (total 7.5%) international stock fund weighting in portfolio III -- Vanguard Funds. More importantly, Mark does not include Brinker's fixed-income portfolio in his performance rankings.

* Another thing about Mark's analysis, Brinker has made no "timing" changes in his portfolios since March 2003. Since then, Brinker seems to have joined his infamous, "church of buy and hold." Wonder why that fact doesn't appear in Mark's Brinker analysis? As you saw, he simply mentioned that Brinker "focuses on longer-term trends." Wow I guess so, eight years is a rather long time to remain fully invested for a newsletter named "Marketimer," especially when the worst bear market in our lives happened during those years....

In my opinion, the facts never get between Mark Hulbert and his typewriter when it comes to Bob Brinker or Bob Brinker. He seems to go to great lengths to promote both of them.

Mark ends his Bob Brinker analysis with a footnote. He's done that for over a decade now because he was bombarded by outraged Marketimer subscribers when they noticed that Mark was giving Brinker a mulligan on the QQQ trade.

Here is Mark's footnote from the bottom of the Brinker-analysis page:

"Brinker's bear market bet on QQQQ

Please Note: In late 2000, Brinker forecasted a several-month bear market rally and recommended an investment in the NASDAQ 100-Index--a trade that turned out quite unprofitably. However, because Brinker at the time of making this forecast chose not to make this trade part of his model portfolios, his HFD record did not suffer as a result."

The footnote contains a known falsehood. Brinker decided well after he sent the "Act Immediately" Bulletin not to include it in his official record. I personally know that Mark is aware of that - I wrote and told him. He denied the documented facts. And even if Brinker did "choose" to not hold his record accountable for the trade, does that make it right? Do two wrongs ever equal a right? Hardly, but that is exactly what's going on to this day.

It's apparent that due to the fact that HFD does not allow Brinker's "record to suffer as a result" of the double-dip usage of a large percentage of Brinker's model portfolio cash reserves, all HFD performance numbers for Marketimer are suspect (I would call them highly exaggerated). There is no way that those gigantic losses can be ignored without drastically affecting Brinker's performance since October 2000. That is when he recommended using up to 50% of the 65% model portfolio cash reserves to buy QQQQ with -- then the Q's lost over 70%....

Even with all that, in the April 2011 HFD, Brinker's Marketimer did not make it into the top-7 Mutual Fund letters over the past 5-year time frame. And it did not make it into the "Overall Performance Scoreboard" top-7 over the past five or ten year time frames. Marketimer squeaked into 7th place over the 20-year time frame in Hulbert's "unadjusted" column.