Bob Brinker and Bear Markets
Bob Brinker has never (in the past 21 years) actually side-stepped a bear market with all of his model portfolio equity allocation in cash reserves.
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* He completely missed the October 1987 bear market crash.
* He missed the 1998 correction that was fractional less than 20%
* He (admittedly) completely missed the latest 15-20% (and it could get worse) correction.
* He did not see the 2000-bear until it was well under way.
* His "work" didn't see the 53% (top to bottom) bear market crash of 2008.
In January 2000, he said the market was "unfavorable" and raised 60% cash reserves. By August 2000, he said the market was bearish and he raised another 5% cash reserves. (He never raised any other cash reserves throughout the 2000-2002 bear market, so he rode it down 35%+ invested.)
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During those years, Brinker predicted THREE stock market counter-trend rallies (which he believed would be led by the Nasdaq) that never materialized.
* One in October 2000, when he recommended QQQ at $83.
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* One in January 2001, when he recommended QQQ at $62.
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* One in March 2001 when he said: "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." (March 1, 2001, QQQQ closed at $39.15)
Brinker made no further portfolio changes until March, 2003, when he predicted a 1-2 year "cyclical bull market" WITHIN A SECULAR BEAR MEGATREND and returned "all available cash reserves" to the stock market.
Obviously, he was incorrect on the secular trend because the market remained in bullish territory for the ensuing four years+. Brinker finally did away with the "secular bear megatrend" and became 100% bullish in June, 2007, just months before the beginning of the 2008 crash.
While Brinker has recommended investors have 100% of their equity allocation in the stock market since March 2003, he often touts his latest "buying opportunity" to callers on Moneytalk and points it out if they missed them -- so it is very apropos to discuss them.
Let's take a look at Brinker's "attractive for purchase" levels since January 2008:
January 4, 2008 (S&P 1468.36) Bob Brinker said: “In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008. We expect the S&P 500 Index to achieve new record highs this year and to reach the 1600’s range…….attractive for purchase on any weakness in the S&P 500 Index mid-1400’s range.”
* January 20th -- rescinded mid-1400's which began in August 2007 (recommended dollar-cost-average only).
* Feb 10, 2008 all-in @ low-1300's.
* March 2008 -- called a market bottom.
March 2008 Marketimer, Bob Brinker said: "The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."
* June/July as market hit bear territory: Brinker claimed the price of oil was "inversely correlated" to the stock market.
* Aug 5, 2008 all-in @ 1240 or less.
* Sept 3, 2008 Called a market bottom: all-in @ low-to-mid 1200's
September 3, 2008 Marketimer, Page 1; Paragraph 3; Bob Brinker said: "Although additional testing of the area of the July 15 closing low may occur, we view the S&P 500 low-to-mid 1200's range as an attractive area for equity purchases."
* September 16th, rescinded low-to-mid 1200's; still recommended dollar-cost-average into market.
* September 30th -- (on Moneytalks said) "Do NOT sell stock"
* October 4th -- (on Moneytalk said) Brinker said that new highs impossible in 2008
* November 4th -- In Marketimer, Brinker admitted he was wrong in his "view that the stock market would achieve a level of equilibrium at higher levels." He blamed it on the "panic atmosphere" in the credit markets and the stock market. In other words, this is the famous "exogenous event" that has always been waiting in the wings all these years.
January 2009 -- looking for a NEW bottom and another buy-level for new money while remaining fully invested.
January 2009 Marketimer, Bob Brinker said: " In our view, the conditions are now in place for a successful test of the area of the November lows as we move into the first quarter. We believe the most likely area for a successful test to occur is within the low to mid 880’s S&P Index price range.”
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