Bob Brinker did not host Moneytalk today. Lynn Jimenez filled in for him. She is a business reporter for KGO810 radio.
Honey's STOCK MARKET CORRECTION DATA:
* Dow = down 6.71% from April 29th closing high.
* S&P 500 Index = down 6.8% from April 29th closing high.
* Nasdaq = down 8% from April 29th closing high.
Jimenez reported the latest market closing numbers and a brief rundown of some of the latest news. She devoted portions of the program to marriage counseling for soon-to-be-weds, being sure that one of your parents doesn't give away your inheritance to a new "significant other," and looking out for your parent's finances as they get "older."
JIMENEZ INVESTING PRINCIPLES: Jimenez said: "I have my own principles of investing. Keep it simple, keep it cheap, keep it balanced, keep it invested."
Honey EC: Bob Brinker's latest market-timing fiasco was exposed by a caller on the radio show today. Jimenez made a giant effort to control the caller and cover-up (make excuses) for Bob Brinker. It was a very interesting conversation. I present it here in its entirety:
Caller Mark from Mountain View, CA said: "I have a question about financial advise. If you had followed someone's recommendations over the past four years who completely missed the bear market of 2008, '09, would you be inclined to stay with that person or perhaps move on?"
Jimenez replied: "That is a good question, it really is, because just about everybody got blindsided by the big sell-off. In hindsight, it's easy to say, that, how could you miss. But I don't think that many advisors understood what was happening in the mortgage securities, or really got what was happening in the mortgage market. Dishonesty was rampant through the homeowners, the mortgage brokers, real estate lenders, assessors, the banks that bundled securities, the banks that made the loans. I mean it was just a mess. Then we have MERS, which is kinda the bank's ad hoc, hey we don't want to go through the county appraisers and assessors or county offices to file deeds. We're just gonna handle them all ourselves and who really owns them. It was a hidden mess. Then when Bear Stearns went and Lehman went, it took the whole house of cards with them. So when you talk about bad advice, maybe you should be a little more specific with me because if they simply had you invested and you lost a lot of money, I'd say you had a lot of company. But Mark, was there specific bad advice that really hurt you?"
Mark replied: "Sadly, I'm talking about Mr. Brinker, who advised buying the market at S&P 1400 just before the huge sell-off. And being down about 16% still."
Jimenez said: "The S&P has regained about 88%, so you're about right in there...I don't think that the depth of the sell-off in the market was something that anyone anticipated. And that's what usually happens when you have a crisis, Mark....I don't know what you did, did you hang on during the sell-off or did you sell at the low?
Mark said: "I sold some, but I still followed Mr. Brinker's advice to hold on. In fact, he recommended to buy more as the market was going down, 1400, 1200 and that didn't work out too well."
Jimenez interrupted: "But you're back up, as I said, 88% on the S&P."
Mark said: "No....."
Jimenez interrupted again: "Awright. So my question for you is this, when you have a sell-off as deep as you did, if you sell at the low you're never going to make it back. If you hang on, you have to be really, really patient. I just read something that was in the New York Times.....There was a study that showed that over the last 40 years.....that people made money only when they held ubber long, meaning 20 years. You don't make money on the market if you hold for five years. You can, but it's not guaranteed."
After the break, Jimenez asked Mark: "What do you want?"
Mark replied: "I understand Mr. Brinker is still recommending to stay fully invested of course, to recoup the previous losses that he was blindsided by. But myself, I'm currently 20% stock, 80% fixed income because I think a double-dip at this point is unavoidable. High unemployment......"
Jimenez interrupted again: "Mark, Mark, Mark.....If that's what you're comfortable with, then that's what you have to do. You are the one who has to sleep at night. Now I'll tell you. I was always diversified. I always had cash, bonds, stocks, and I left it that way.....Because I was diversified enough, where I didn't have really heavily weighted one way or the other. Perhaps I was a little underweight in stocks by what I should have been. As a business reporter, I try not to do too much with anything. I just kinda put it in there and let it go. I don't want to have it influence my reporting. Yes, I lost a lot too when the market went down. I've been sitting tight and waiting and it does come back up. If your opinion is that we are going into a double-dip - mine is that we are not. Mine is that we are in a soft patch...."
Honey EC: If you take Lynn Jimenez at face value, you would have to conclude that she does not know that Bob Brinker is a MARKET-TIMER. She seems to have no clue that Bob Brinker's claim-to-fame is "market-timing," or that he sells a newsletter titled "Marketimer." She may not even know that he is currently bragging about his LATEST buy signal, while hiding all the others he issued during the bear market. As Mark said, Brinker's advice was to buy at S&P mid-1400's at the October 2007 all-time-high and in January 2008. Here are Brinker's ever-lower Marketimer buy-signals:
As for Jimenez excusing Bob Brinker for missing the 2008-2009 mega-bear by claiming that "just about everybody got blind-sided," that is RIDICULOUS! There were many that don't even claim to be market-timers who did not get blind-sided. A few come to mind: Larry Swedroe (as documented in my archived Brinker Blog). And Elaine Garzarelli, as documented on NBR by Paul Kangas who said: "On your last visit with us in early August, you were correctly bearish on the stock market..." (transcript documented at Kirk Lindstrom's website). And here are several as reported by Mark Hulbert, Barron's in October, 2008:January 4, 2008, S&P @ 1411: Mid-1400'sFeb 10, 2008 S&P @ 1331: Low-1300'sAug 5, 2008 S&P @ 1285: 1240 or lessSept 2, 2008 S&P @ 1282: Low-to-mid 1200'sSeptember 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.February 1, 2009 S&P @ 825 “low-to-mid 800’s" (S&P dropped another 25% to 677 in March before hitting bottom)July 1, 2010: S&P @ 1078: "1030."
- Cabot Market Letter: Bearish. Editor Timothy Lutts currently has some 92% of this letter's model portfolio invested in cash.
- Chartist. Bearish: Editor Dan Sullivan turned bearish on the stock market in mid January of this year, and has remained so ever since. He continues to recommend a 100% money market fund position.
- Growth Fund Guide. Bearish: Editor Walter Rouleau continues to believe that the investment markets over the next several years will be dominated by a trend away from financial assets such as stocks and towards inflation hedges such as gold and other hard assets. Rouleau's model portfolios currently have an average equity allocation that is 33% long.
- Timer Digest: Bearish: Editor Jim Schmidt bases this newsletter's market timing model on a consensus of the top market timers. His consensus of the top ten based on performance over the last 52 weeks is bearish, with 1 bull, 7 bears, and 2 neutral. His consensus of the top ten for performance over the last two years is bearish, with all ten newsletters bearish. However, in his latest issue, dated October 6, Schmidt wrote: "The deeper the financial markets fall, the greater the inevitable rally will be and the longer the new bull market will last. Meanwhile, it has been said that the average investor is currently behaving like a deer in the head lights during this crisis." The newsletter's model portfolios currently are about 90% invested in stocks, on average.
- Vantage Point: Bearish: Editor John Harris wrote in his October issue, published earlier this week: "On balance, the economy and earnings growth are expected to be weak for the foreseeable future. On the plus side, the price of energy has fallen substantially and inflation has become less of a threat. The long-term moving averages, which define the long-term trend, are bearish for the major averages. Risk levels are such that a defensive 50% to 70% cash allocation is warranted." (However, Hulbert reported Bob Brinker as bullish)
- Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early October, editor Bob Brinker wrote: "We believe the stock market will return to an uptrend within six months of the start of the next economic recovery. Although the timing of the recovery is uncertain, our view is that it could be underway by next spring. If that scenario unfolds, we could be looking at a stock market turnaround beginning in this year's fourth quarter. This bear market decline has been accompanied by an extraordinary flow of negative financial news, but we are focused on stock market recovery in 2009 as investors go through the process of discounting economic recovery prospects in advance of an improved economic outlook." Brinker is recommending that subscribers' stock portfolios be fully invested.
Jimenez' guest-speaker was Allen Holdsworth, a former farmer who now teaches investing. Jimenez said that he wasn't there to sell anything, but the website she mentioned seemed to have plenty for sale. I'm not going to put the link here because as I was checking it out, my anti-virus program sounded an alarm. If you want it, just Google his name and "better investing."
Holdsworth and Jimenez discussed day trading vs investing. Holdsworth does not use technical analysis and does not trade stocks. Jimenez said she did not consider stock trading as investing.
Jimenez asked Holdworth if there was ever a time when he advocates getting out of the market entirely.
Holdsworth replied: "I never have. I know listening earlier, one of your other callers (referring to Mark's call) said, you know, he (Bob Brinker) can't time the market. You don't know what the market is going to do short-term. And that's the problem.
Jimenez said: "That's right."
Honey EC: So Holdsworth joined the ranks of many others who say no one can time the market, and he actually seemed to use that to justify Brinker's blunder. You can't make this stuff up!!! LOL!
Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast. I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives
If you want to listen to Mark's call, he is the first caller of the day, about 1:20pm. Mark, if you read this blog, please send some comments. We'd love to hear from you.
