How I Became a Brinker Follower

 I was a very devoted fan of Brinker's from the late 1980's to late 1999. I remember getting very upset when Moneytalk was preempted for a ball game.   I called the station many times, demanding that they put the program on (I don't know why it never helped). I bought a radio from the C.Crane Company that could be programmed to record the show (high-tech for those days). Yes, I admit, I was addicted to Bob.

How did I become addicted? It might have been a lot of things that happened in my life back then, but in spite of all that, I believe that Brinker’s voice has a confident (some say arrogant) mystique about it that inspires trust. More importantly, I believe that he is very clever at disguising his mistakes so that they are  not discernible to radio listeners.

I first began listening to Bob in late 1986 or early 1987; I subscribed to Marketimer soon after. At that time, I knew almost nothing about investing -- other than CD’s and money market funds. Even so, my dear, late husband turned the job of managing our finances over to me. He was a busy man and had bigger fish to fry. 8^)

I remember the day the market crashed on October 19, 1987 – it dropped 695 points or 25.6% from the top (Black Monday). I was listening to KGO810-radio that day when they brought Brinker on for a short guest-appearance during their stock market report. Brinker was very calm, and reassuringly said that all would be well – just do not sell any stocks or mutual funds. Ironically, it was only a few months later that Brinker sold all equities (in January, 1988) and started recommending Treasuries almost exclusively. That was when the market began to make gains. Brinker missed out on much much of those gains before getting back to fully invested.

Did this cause me to wise up? Only a little bit. When I got my renewal application, I sent it back to Brinker and said that I would not be renewing (then) because he had missed the bear market. But….oops…yes, I kept listening to him faithfully throughout all of the 1990’s. I found reassurance in his bullishness, and as history shows, he was correct to be bullish in the 1990’s (he returned to 100% invested in January 1991).

Because there was no internet back then where one could get information, once again I bought into Brinker’s spin. I actually did not learn that Brinker had sold out in January 1988 and had only returned AFTER the market had made sizable gains, until 1999/2000 when I found it posted on the  Suite101 message boards (now closed).

So I understand why, even when the facts about Brinker are staring them in the face, people continue to trust him. Wouldn’t you have thought that since I knew Brinker was bullish right up and through a bear market crash, that would have been enough of a dose of reality to wise me up? I had lost a bundle thanks to following him back then and yet over the years bought right back into Brinker’s on-air “mystique” all over again. So as I continued to listen to him and  with no one to compare notes with, my addiction solidified. I believed he had integrity and was completely honest with his audience. Ironically, my (now CPA) daughter was catching on to him and told me about it, but I thought she was mistaken – she was just a kid, after all. 8) (I’m sure people who handed their money over to Maddoff felt the same way about him.)

Over the years, I've heard many people actually give Brinker credit for the 1990’s bull market. LOL! I shake my head, but I understand. Even now, after Brinker missed this 2008/2009 absolute disastrous bear market, I totally understand why people feel the need to know what his “next call” is, no matter how many times his calls have  been  totally WRONG.

Let’s fast forward to late 1999 and early 2000 when I discovered Brinker's message boards (now closed) on his website. Sadly, I began to see firsthand that Brinker and his son, the webmaster, were arbitrarily deleting posts and banishing posters unless their posts were  flattering to Brinker. Additionally,  someone on the inside was imping another poster’s name and posting personal insults with it – that was confirmed.

I had made only a few posts on the site but enjoyed reading what others wrote. There were some who were posting general market statistics (Rande Spiegelman). I don’t remember Rande making any comments, but the statistics he posted made Brinker’s latest market forecast look iffy and there were others who were asking questions that Brinker obviously did not want to answer. I think that Rande was the first to go, and others followed. If anyone asked questions about the disappearances or what was happening to other posters, they were immediately terminated.

The banished ones were gradually finding their way to the Suite 101 Brinker Forums, but the connections had to be made via personal email because no one was allowed to even say the words “Suite101” on Brinker’s forums. MOF: many words were forbidden on the website. I got lucky because just before they stopped allowing people to post their email addresses, I posted mine and received an  invitation and a link to the new "speak freely" Brinker discussion forums.

I joined the Suite 101  site and posted  an introduction and a hello. I said that I was upset to see that mass, selective censorship was taking place on the Brinker boards. I was almost immediately terminated from Brinker’s message boards. Yes, they were monitoring Suite 101 forums.

At Suite101, someone started a Testimonial Thread for “Refugees” who got “Booted From Brinkerdom.” Here are a few of them, including testimonies by Will L., Rande and myself from Y-2000:

30. Jul 30, 2000 10:48 PM » JenL_2 - Send us your sick, your homeless, your weary and your poor.

Send us your sick, your homeless, your weary and your poor. Suite101 has become the ultimate refuge for Stage IV Brinkerbots who were kicked off of bobbrinker.com for any number of reasons. I thought we should start a tally of the number of people who were given daBoot by daBrink and wound up posting over here. I will start the BFB List. Simply give your name or alias and the reason for the boot. Booted From Brinkerdom.

1). Jonathon. This goes back some months when Rande all of sudden stop posting. I simply typed in what happened to Rande Spiegelman and ZAP! My post was gone. I tried it one more time, and ZAP! I was gone. Subsequent attempts to log onto bobbrinker.com were for naught. I wound up here, scared and afraid. Anyone else out there like me?

2) Thruhiker. "Where's Rande?" followed by a brief reference to the Saturday Night Massacre.

3) Della O. I was kicked off because I posted on THIS site how I believe the censorship on the BB site is contemptible!

4)UTEK Thread Hello, My name is Ultra and I am a "tech Stepper" It has been 1 year, 47 days and 12 minutes since my name was last mentioned, and not immediately deleted, on the brinker.bot site. Can you imagine what that site would be like if they could start their own threads without JR/SR's approval? Someone might actually start another UTEK thread and I'd fall off the wagon for sure!

5) Steve T. For linking to Ask Rande on Suite101

6) David K. Someone told me that you can't type in the word "Korn" without getting the boot. I guess Bob doesn't like that new hardcore grunge band known as KORN.

7) Phish. me too. I was booted a while back when it wasn't so easy, even before Rande. I posted s u i t e 1 0 1 . c o m and got a warning, but the boot came when I called jr a chickens___! I used a $ for the s, but that was the proverbial straw. The whole situation is hilarious. Bob is gonna self destruct as his image morphs from astute advisor to greedy bitter old prune. I wouldn't be surprised if this is his last year on the radio. Perhaps he's smart enough to get out before it deteriorates into a bigger farce than it already has become. Sad situation - it could have been very different. -Randy

8) Karin. The Reason.....Here is the reason I got kicked out permanently: (link) ( my home-page had the S101 link in it!!!) Karin

9) Wendell. BOOTED. Well, for a simple old fence sitter, I have gotten the boot from both the discussion site and chat room. I was reading the messages at BB.com and someone asked about that "other" site. Well, being such a nice guy I thought I would slip one in. I wrote, please go to: sweetoneohonedotcom and that should get you there. Soon after I joined the land of the banishees. Can't remember what I said in the chat room before Mak gave me the old heave ho. Woe is me. I feel so terrible not being able to post and chat with that elite circle. Wendell D. Semore

10) Will_L. I was a very bad boy and typed exactly what I saw happening in the market vs Brinker's call. I happened to also mention his omissions of things happening in the market. It was a very bad combination. I'm sure the devil made me do it.

11) Steven_Russell. I killed the Town Hall. Great thread. It would be nice if we could re-arrange them in order, with near dates of banishment. Steven Russell here. I killed Town Hall. My post on Town Hall, June 23 2000, 4:09 am, listed and explained the relevant chronological remaining Town Hall posts, by number and time, which were real-time responses to the Will Lxxxxx Imposter, and to the Real Will's immediate subsequent banishment. I also explained how to substitute the Win95 Edit Find function for the earlier-assassinated Search Tool. My post ended with, "This post will self-destruct in 5 seconds." (Kirk said "Not here it won't", and re-posted it here right away, at 6:51 am, on the Brinker Free thread) My original post lasted on Town Hall about another 2 hours, before Town Hall itself was taken out and shot, after the responses that my post generated provoked a wave of new Brinker banishments that morning.

Steven Russell part 2. Banished and purged Monday, June 26, 2000. After the Town Hall execution, I lasted another couple days on other threads, with some moderate continuing respectful criticism of the Brinkers' banishment tactics. I think the final straw was when I posted that the Brinkers were showing great disrespect for the entire community of posters by their overzealous censorship.

12) Suite101.com. Jen here - I used to read BB.com discussion everyday and if there were questions that could be answered by information already posted at Suite 101 I would post a link to the Suite 101 thread or message. I'd also follow up with an email and send along an invitation to join in the discussion at Suite 101. I was always polite and got many Thank you notes from BB.com members. The purpose was never to "steal" members away from BB.com but to share like sites with like-minded people. But the Brinkers apparently took it as "promotion of a competing site" and blocked all links to Suite101.com without warning sometime around June '99......Jen

13) Jack Swanson here... I got kicked off the Brinker site for...well...for just being Jack Swanson!! Jack jackswanson00@yahoo.com

14) martin_lowe - I got booted twice... from my home ISP as "Martin Lowe," for criticizing the Brinkers for the censorship. Also on my work ISP I had set up an alias, "Bobby Charlton," the England soccer great from world cup '66. In response to a poster as to where Will and Russell had vanished, I posted to "They have gone to Cyberheaven and have be re-born to a site of higher conscious." Martin

15) matttheduck - i wasn't fired, i quit! i quit posting/visiting the brinker site when rande got the boot. outrageous

16) Chris3 - I Quit, Too Like Matttheduck, I quit when Rande got booted. I posted a defense of Rande (name: Chris Fleur) immediately after the booting, about the same time Karin did (at least, I thought she was "our" Karin), and it amazingly stayed there (wouldn't happen now, and I don't know if it is still there. Don't even go back to see what's going on. Who cares? I had very much respected Bob and his investing education advice for years. My eyes were opened that day. I continue to be amazed at what I hear coming out of his mouth on the radio when I listen (I'm not even a little bit as faithful of a listener as I was before), and also amazed at what I read here that is going on over there. I am so disappointed in the man behind the curtain!!!!

17) Kirk (Kirk Lindstrom) - I Quit too! Jr told me via email that it was OK for Jen to keep posting links to our site. He also said that the link to us was accidentally deleted and he would put it back. Both were lies as two hours after the email he had his site deforming Jen's links changing  "suite101.com" to just  "suite101" and so they would fail. I stopped posting there as I don't like to support people that have been proven to  "make alterations to the truth".
Business wise, it is great to point out the snakeoil mixed with the good advice Brinker dispenses. He has mostly good stuff to say so it is hard to detect the snakeoil and so I feel we do a service pointing the snakeoil out. Even better that the  "Buzz" this creates makes our site fun rather than just educational. Of course, he hates us as we point out the snakeoil he is selling which makes it less attractive. Kirk Lindstrom - Editor: Investing and Personal Finance
 
18) Dave_K (David Kimball) - I Quit Also. Had listened to Bob for a long long time. His treatment of some callers was beginning to wear on me. Plus the fact that the education value had seemed to reach a plateau. Used to visit the BB site occasionally to see how informative it might be. Ironically began to see a new level of education coming from posts of people like Rande and Kirk. Visited site more often just to pick out their posts and learn something more advanced. They suffered an undue amount of criticism from good advice/comments even then. Their banning left no attraction to that site. Haven't lurked over there in several months. In addition, the effects of Bob's January call on my portfolio has reduced his credibility. His advice ranks pretty far down below a lot of notable market analysts and commentators these days. I still listen to the radio program when convenient but don't go out of my way to plan around it like I used to.

19) oneputt - me too -1st time was a long time ago, I might have been one of the first. I thought it odd that he would play a taped show and not identify it as one. I posted "Why would he decieve.....". After that I could not log on. I got a new name and password and then was kicked off for finally having enough of poobutt. I asked him bluntly why he intentionally lies when talking about this site. I no longer even read the posts over there. That site is banished from my browser's list.

Top 31. Jul 31, 2000 11:26 AM » Will_L - Much Better Off Like many who dropped by BB's site to find out what was up with the January sell signal, I found myself soon in the middle of a firestorm. Although not sucking up and asking very pointed questions, I treated everyone there with at least more respect than accorded me. After a while I became not just concerned about the wisdom of his call but rather seeing a side of Brinker that I didn't know existed. I began to suspect his motives in many of the things he was saying on the radio and doing on his website. My respect for someone I thought to be a straight shooter albeit an egotistical one eroded. His shinnanigans around his website in trying to smear the reputation of those who disagree with him including falsly posting or allowing others to do so without interference under their name and taking on aliases to attack and generally be a jerk on his own thread certainly demonstrated to me he was neither a straight shooter or someone I would trust at all. As such I was excluded from the site--along with about anyone who has disagreed with him. The way it happened I did object to. The fact that it happened, I really am thankful for. I wish I would have left a little sooner and just posted here. In some respects it is not right once you are no longer just differing on his market calls but think that he is quite the snakeoil salesman that I came to believe to post on his site. Although he pounces on posters, callers and other analysts who have the gall to disagree with him, he has the thinnist skin I have ever seen for someone in his role. So it is just better to talk about him and his calls --just like he loves to do others in the freedom that an environment like this offers. It's much better all the way around.
Aug 3, 2000 10:58 PM » Happy - I thought I should copy this over from the BB site before it get I thought I should copy this over from the BB site before it gets erased:

To: A Lackey (148898) Date: Aug 3 2000 11:50PM From: A Lackey Msg #: 148898 -------------------------------------------------------------------------------- Bob Brinker really blew this QQQ call. He did a perfect call on the botton in May, but he never called the sell, even when it went to 103. People called in and asked, but he put them down, saying he would call it. Today it went to 83.5, so people sold, on his advise to sell at 84. That is a wash since most people bought at 82. He made such a big deal about making a mental stop, not a limit sell, thinking that just because Bob Brinker thinks once the QQQ hits 84, it will just keep on dropping. The stock market does not take orders from the Great Bob Brinker! If you had a sell limit order, and it did not get activated, how lucky you were!! It closed up almost 7 points from your sell!! I THINK HIS ADVICE IS GENERALLY GOOD, BUT HE COMPLETELY MISSED THE CORRECT SELL AT 100. IF HIS CHARTS ARE SO GOOD, WHY DIDN'T HE CALL A SELL AT 100??? I listened to every program, and like a stupid simpleton, waited for his big sell order. NOW HE HAS EGG ALL OVER HIS FACE!!! I WILL USE MY OWN JUDGEMENT ABOUT THESE MOVES, AND NOT BE BOB'S SUCKER!! -- posted by Happy ________________________________________

. Aug 4, 2000 5:51 AM » Rande - It's a ROUND TRIP folks How many times have we said that you have to be right TWICE in order to be a successful market timer -- and even then you have to do it over, over, and over, and over, and over once you get addicted to the trading. Getting lucky once or twice only makes it worse, since that only increases the chance that you will delude yourself into thinking it actually has something to do with knowledge and experience. Nothing short of near-perfection will do when it comes to the round trip. Otherwise, transaction costs and taxes will deliver a minimum wage for all your effort and anxiety....IF you're lucky. -- posted by Rande

Honeybee here: The Suite 101 Brinker forums thrived for several years (but no longer includes discussion forums).    There were literally tens of thousands of posts and all viewpoints were welcome. Brinker could no longer completely get away with changing his stories or burying off-the-books trades. There was always someone who remembered what he had really previously said and when he said it, and they recorded it there.

It was in October, 2005 that I started my own thread at Suite 101 called: “Honey’s Brinker Beehive." I kept a record of what Brinker was saying and what others were saying about what he was saying. Later, I started writing brief weekly summaries of Moneytalk.

When I found out that Brinker had posted under an alias for years at a different site, I decided that those posts should be saved. There are now archives of all of those posts. Of course, it was not illegal at the time, but  some believe that Brinker used his alias to pump a stock (UTEK) that he had inside connections with. In any case, reading those posts is a big eye-opener and shows the true measure of the man. (If anyone wants to see copies of some of them, just let me know and I will post them.)

It was during this time that the personal attacks began. I won’t bore you with details, but suffice to say that any way a woman can be insulted, I’ve been insulted. Someone imped my real name (which I was posting with), and posted filth and sacrilege. I was horrified to think that anyone would mistakenly believe it was me, so I became “Honey.” The personal attacks go on to this day. Someone anonymously sends them to my blog. There are other things that have happened over the years – like having my bank accounts threatened “because junior is a computer genius," but I don't know who did that. However, I have made it clear to this person/people that all this sort of thing does is inspire me -- because they cannot silence me......

.....but that is not necessarily true. They have "silenced" me in different locations. They got over 3500 of my Beehive posts deleted (and thousands from other Brinker forums) at Suite101 just before they closed their message boards. The moderator of Fundalarm said he was afraid to allow Brinker to be discussed at all because of "letters" he had recieved.

I despise censorship and think it should only be used to enforce a site’s Terms of Use rules and common civility. I think that “book burning” in order to hide the truth is reprehensible.

As long as Brinker is spinning his web on the national airwaves each weekend, I intend to be the Honeybee that buzzes around the spider and reports the TRUTH -- to the best of my ability. So now you know a lot about what inspires me to keep a written record for those who are looking for it – and I am not bashful about throwing in a few EC’s along the way.

May 7, 2012, Bob Brinker's Moneytalk Summary Part Two

May 7, 2012..................................................................(comments welcome)

Yesterday, Bob Brinker commented on the subject of "seasonality" in the stock market. He called it "fiction" (read his comments in my show summary part one).  David Korn covered this subject in his weekly newsletter that includes a summary of Bob Brinker's Moneytalk. David has generously  given me permission to share this with you: 

David Korn wrote:

A SIX MONTH STOCK MARKET TIMING STRATEGY - A DAVID KORN PRIMER

************************************************************

"Those who study market history are bound to profit from it."

- Jeffrey A. Hirsch, Co-Editor of Stock Trader's Almanac

"In the stock market, those who expect history to repeat itself exactly are
doomed to failure."

- Yale Hirsch, Co-Editor of Stock Trader's Almanac

************************************************************

Introduction:  May marks the beginning of what some investors view as the
seasonally weak part of the year for stock market returns.  I have updated
my research on this market phenomenon and include it below as a David Korn
primer on the subject.  Charter subscribers will be familiar with the
tenants, but there is always something new to consider and I learn a new
fact every time I re-write this piece.  There are a couple of newsletters
and advisors that make a living off of this particular strategy, so they may
have an interest in the data.  Not me.  I am my own show and just try to
tell it like I see it.

Much of the data was originally collected by Yale Hirsch, editor of the
Stock Trader's Almanac, but the phenomenon actually has much older roots.
Like most David K. Primers, I like to utilize a Q&A format in an effort to
anticipate the questions you might have about the strategy.

Question:  David, what the heck are you talking about?

Answer:  I will forgive your informality if you will forgive mine.
Essentially, there is a fascinating historical pattern showing that most of
the stock market's gains occur during the time frame that begins November
1st and ends April 30th of each year.  Conversely, the time period between
May 1st and October 31st have generally not produced favorable returns in
the equity markets.

Question:  Isn't this referred to by another name?

Answer:  Not just one other name, several.  The first I ever heard of it,
was a reference to the "Seasons in the Sun" strategy, presumably because it
refers to the fact that you rotate out of stocks during the summer months
when the sun is shining bright.  Another popular phrase for this strategy is
the "Halloween Indicator" for the obvious reason that the strategy turns on
Halloween each year, at least as celebrated in the United States.  The Stock
Trader's Almanac refers to it as the "Best Six Month's Strategy" and Sy
Harding, another well-known follower of its tenants, calls it the "Seasonal
Timing Strategy." 

Some use an idiom to remind them what to do  -- "Sell in May and Go Away."
Indeed, investors have coupled the "Sell in May and Go Away" phrase with
"but buy back on St. Leger Day."  St. Leger Day refers to the date of a
classic horse race that has been run every September since 1776.   Even our
northern neighbors in Canada have a saying for this phenomenon -- "Buy when
it snows, sell when it goes."

Question:  Do you have any statistics to show if this strategy works?

Answer:  I knew would ask that -- probably because I wrote the question.
According to the Stock Trader's Almanac, if you invested in the stock market
from November through April, and switched to fixed-income investments from
May to October, over a 62-year period (1950-2009), your returns would have
been quite dramatic.  Using this strategy, a $10,000 investment in the Dow
Jones Industrial Average produced a compounded annual return of $619,071
gain in the November - April period, versus a loss of $9,621 for the
May-October period.   That is pretty amazing.

Source, Stock Trader's Almanac.  Yale Hirsch & Jeffrey A. Hirsch, Editors.

http://www.StockTradersAlmanac.com/

A little less biased source, Standard & Poor¹s Equity Research did research
and found that the market has returned 1.3% on average during the
April-September time frame versus the October ­ March time frame when the
U.S. stock market has a 6.7% average return.  Note that their time frame
modifies the sell and buy points by about a month.

Question:  David, has anyone looked at the data for the United States market
beyond the 54-year period referenced by the Hirsch Organization?

Answer:  Yes.  In 1991, Michael O'Higgins looked at data from 1925 through
1989 and observed that 85% of the capital gains, excluding dividends, was
earned in the Dow during the October 31st through April 30th time frame.
Higgins came up with some inventive strategies to optimize it by using
various proxies, such as the five highest yielding Dow stocks.  Mr.
O'Higgins' data was included in his book, "Beating the Dow" which was
updated in 2000. To learn more about it, this url brings you to the book's
profile on Amazon.com:

http://tinyurl.com/b6ssg

Question:  But David, isn't this risky business?

Answer:  I'll answer this as any good Hollywood Scientologist might.  Any
type of market timing involves risk of under performing a fully invested
position.  This particular strategy, however, involves taking half of the
normal market risk since you are only invested in the stock market six
months of the year.  That said, recent years have been a perfect example of
how this strategy can be fantastic but also make you miss out on the good
stuff. 

Recall that the ultimate high of the market ever was October 9, 2007.  That
was just a few weeks before the ³best six months² started.  On the other
hand, if you got out of the market in May 2008 and stayed out through the
end of October 2008, you missed out on a lot of carnage during the
May-November 2008 timeframe.  But then the May-October 2009 was a fantastic
period for the market.  You see how this works huh?

Question:  Has this seasonal strategy produced similar results in other
countries? 

Answer:  It actually has. In fact, there is a study that examined monthly
returns for the U.K. stock market back to 1693 ‹ that¹s 317 years of data!.
Turns out this strategy beat the market 71% of the time over all two year
periods and 82% over five year periods.  Pretty impressive.  Here is a link
to the article entitled, ³Are Monthly Seasons Real? A Three Century
Perspective²

http://tinyurl.com/26soyog

Question:  Any other serious academic research done into this phenomenon?

Answer:  In one fascinating academic study I found on this issue, the
research showed that stock market returns were higher in the November -
April period versus the May - October period in 36 of 37 countries studied.
Did you hear me right?  Or perhaps I should say, did you read me right?  In
36 of 37 countries!  This study concluded that the effect seemed to be
strongly related to the length and timing of vacations, especially in
Europe.  This study was written by Ben Jacobsen from the Rotterdam School of
Management, and AEGON Asset Management and is entitled, "The Halloween
Indicator, 'Sell in May and Go Away': Another Puzzle."  This link will bring
you to an abstract of the article:

http://tinyurl.com/6e4tl

It does bear noting that this study was based on data beginning in 1970
because that is when much of the data for worldwide stock markets became
readily accessible and more importantly reliable.

Question:  David, what do you think could be causing this phenomenon?

Answer:  I have seen many explanations for the phenomenon.  Here are some of
the reasons that are offered:

1)  As noted in the study I previously cited, during the summer months which
occupy the worst 6 months for investing, everyone is on vacation, hence the
lack of "buying" interest in the market.

2) Investors tend to come into extra cash in the time frame between November
1st and April 30th due to year-end bonuses and distributions, income tax
refunds, company contributions to retirements and profit sharing plans.  Of
course, this wouldn't explain why the phenomenon seems to work in other
countries.

3) The Infernal Revenue Code encourages retirement contributions between
January 1st and April 30th.

4) Mutual fund inflows tend to be less during the summer months.  As
reported on theStreetcom, since 1984, 62% of all mutual fund inflows have
occurred between November and April.  In the secular bear market that
occurred during 1966 to 1982, monies invested solely in the May though
October time frame fell nearly 85% on an inflation adjusted basis:

http://tinyurl.com/apq6

5)  Several entities have suggested that seasonal factors that influence
economic data might help explain the seasonal cycles in stocks.  Here is a
link to one such article entitled, aptly, ³Seasonality²:

http://tinyurl.com/nhapbr

6)  The Hirsch organization suggests this seasonality is based on the
"habitual behavior of society, which extends to stocks."  With respect to
the poor performance during the May-November time frame, Jeffrey Hirsch
notes that the second quarter tends to be weaker as the positive effects of
holiday bonuses and the holiday retail sales period fade out, and a "spring
cleaning mentality kicks in."

7)  A final explanation offered is a seemingly obvious one.  This is a
pattern that is widely recognized, and people have decided to follow it.
There have been many publications (including yours truly) that regularly
report on this strategy.

Question:  David, has anyone ever used a combination of technical analysis
and market timing to improve on this strategy?

Answer:  Funny you should ask, I was just preparing a response to that very
question.  It appears that editor and subscriber have reached a symbiotic
relationship.

Sy Harding, editor of Street Smart Report, and author of the book, Riding
the Bear, uses the Moving Average Convergence/Divergence indicator (MACD) to
try and enhance the Six Months Strategy by picking a better entry and exit
point, instead of simply relying on the rigid May 1st and October 31st buy
and sell dates.  Using the MACD, the sell signal could come a day or even
several weeks before or after May 1st, and the buy signal could come in the
days or weeks before or after October 31st.  Mr. Harding's system has been
so successful, that he has calls it, the "Best Mechanical System Ever."
Mr. Harding calls his strategy the Seasonal Timing Strategy or "STS
Portfolio" and he uses the DJIA Index for the model's measurement.  Over the
last 13 years, through the end of December, 2011, Sy claims that his STS
Portfolio has produced compound returns of 190.6% versus 64.4% gain for the
S&P 500 and a 18.8% gain for the Nasdaq.  Sy Harding has a fairly in depth
discussion of this system on his web site which you can access at the
following link:

http://www.streetsmartreport.com/sts.html

The Hirsch Organization over at the Stock Trader's Almanac are well aware
that Sy Harding is marketing the Best Six Months strategy using the MACD
indicator.  In fact, they even reference his use of it on their web site at
this link: 

http://tinyurl.com/yzepqs

Since they know a good marketing tool when they see it, STA now offers their
own market timing newsletter based on their version of the MACD indicator
using the Six Month Strategy.  So, we have competing newsletter writers, all
of whom are desperate to have the better timing on the Best Six Months.  Now
we have some drama and competition.

Question:  David, has the application of the MACD enhanced the Best Six
Months strategy over the long haul?

Answer:  The Hirsch Organization back-tested this method from 1950-2010.
According to their research, applying the MACD signal produced what can only
be characterized as astounding results.  Check it out at this url:

http://tinyurl.com/yfqb8ep

Question:  David, whose system is better, Sy Harding or the Hirsch
Organization?

Answer:  Mark Hulbert actually took up that question and concluded that Sy
Harding's system is superior due to his better timing of the exit and entry
points.  Read his article entitled, "Selling in May and not going away?" at
this url:

http://tinyurl.com/6nr853

Question:  Does anyone find fault in the best six months timing strategy?

Answer:  Yes.  The Schwab Center for Investment Research (SCIR) looked at
this strategy and found that the S&P 500's average MONTHLY return was higher
(1.2%) for the November to April period, and lower (0.8%) for the May to
October period.  Moreover, SCIR concluded that simply remaining fully
invested in the S&P 500 outperformed a seasonal portfolio more than half of
the time.  SCIR concluded that "time in the market" is much more important
than "timing the market" especially when you consider the transaction costs
and tax consequences.  The article used to be available online, but it is
gone now.  And you heard Bob Brinker this weekend on Moneytalk say that the
system is nonsense.  There are definitely skeptics out there.

Question:  If you follow this strategy, and sell your stocks at the
beginning of May, is there any place you should put it other than cash?

EC:  The original advice was cash or Treasuries.  However, there are many
things you can do.  If you really thought the stock market was going down,
you could purchase put options on the market or buy a contra-fund ­ both
very risky if the market moves up.  Here is a good article just recently
published entitled, ³Sell in May and Do This Instead²:

http://tinyurl.com/7tqxabj

Question: How has this strategy done lately?

Answer:  It¹s performed great recently.  Selling in May last year was almost
perfect timing as April 30th marked a high and the market plunged for almost
five months.  Even after huge 10% move up in October, the Dow lost about 7%
form May-November and has gained over 10% since then when the calendar
switched over to a buy signal.  2010 was also a great year for the system.
Stocks gained only 1% from May to November but then took off in the six
months that followed.  The Dow gained 15.2% from the end of October 2010
through the end of April, and then while safely in cash from April 30th on
-- well, you saw how the market performed.  Of course, past performance is
not a guarantee of future results.

Question:  David, what do YOU think about this strategy?

Answer and Conclusion:  Frankly, I believe that there is some merit to this
phenomenon.  Of course, it could just be a statistical anomaly, but if it
is, that's one heck of an anomaly.  There is also a bit of trying to
outguess each other as to when the trigger points to enter/exit the market
will take place.  You should also keep in mind that this timing strategy is
actually pretty conservative on a risk-adjusted basis given that you are out
of the market for half the year.   Finally, like all timing systems, there
is no "Holy Grail" when it comes to investing.  I firmly believe that you
should never rely on one single factor when analyzing any stock, timing
system, or investment strategy in general.  Nevertheless, I also think you
can never have too many tools in your investment arsenal.  All in all, I
think the Best Six Months strategy is worthy of being aware of, and warrants
consideration if you are adopting a timing approach to investing.

David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob
Brinker Host), Financial Education, Helpful Links, Guest Editorials, and
Special Alert E-Mail Service.  Copyright David Korn, L.L.C. 2012

Honey here:  You can request complimentary issues of David's weekly newsletter and The Retirement Advisor published by Kirk Lindstrom and David Korn.

Bob Brinker was late arriving at the studio yesterday so Jeffchristie has a new Moneytalk Final Exam question: 

 * Bob Brinker was over an hour late for work Sunday.  Some people have suggested that his car broke down on the way to the studio.  Bob  drives:

A) AMC Gremlin

B) Prius

C) Edsel

D) Ford F-150 complete with gun rack

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