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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Justa Werkenstiff who wrote (12782)3/26/2000 10:18:00 AM
From: Investor2  Read Replies (2) of 15132
 
Nice post.

Re: "Brinker made a bearish call. He said there was 5% upside with 20% downside potential given market conditions."

Yes, I believe that's the truth. Bob recommended selling the majority (i.e., 60%) of one's US equities. That is clearly bearish, especially given Bob's fully-invested position for so long. To say that it wasn't a bearish call is silly semantics.

I also agree with you that the move to 40%/60% was meant to be a "risk management" tool. He "hedged" his equity position in a high-risk time period by reducing his equity exposure. His new position is "bearish," but not as bearish as a 0% equity allocation would be. He has hedged his bearish view.

As I stated above, I believe it is simply silly semantics to say that it wasn't a bearish call. IMO, it is also silly semantics to say that it wasn't a "sell signal," as I have seen claimed on various threads. How else could one raise his cash level from 0% to 60% but by selling?

I understand Bob's general position. I agree with the notion that the risk level in the US equity market is historically high. I believe that the chances of a major decline in equity prices is now higher than it has been anytime in the past 10 years.

Best wishes,

I2
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