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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 335.80+0.1%Nov 3 4:00 PM EST
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To: Boca_PETE who wrote (818)8/28/2001 1:14:43 PM
From: Math Junkie  Read Replies (4) of 10065
 
"On the radio locally in New York City (WMCA 570am) on the second Saturday of August 1982 at DOW 777, Bob went long-term bullish advising listeners to become fully invested. I heard it with my own ears. Started listening to Bob in October 1981 at 6AM."

Here is a must-read article giving insights into the environment in which Brinker made that call:

nytimes.com

My favorite part is this:

Many bulls - while they concede that a sharp decline is likely - are acting on the longer-term assumption that a boom is coming on the other side. They are determined "to tough it out," said Robert J. Farrell, chief market analyst at Merrill Lynch, Pierce, Fenner & Smith Inc.

It is just that group of optimists, Mr. Farrell said, that must be driven to sell before the market hits bottom. Mr. Farrell calls it a "capitulation" phase - a time when everybody simply gives up. "It doesn't have to be a lot of screaming and 100-million-share days," he said. "It can be a disinterest in stocks and a preference for something else."

Note that this article was published at the bottom - on the same weekend when you heard Brinker make his bullish statement. So it's clear that we must beware of viewing any single indicator as a "must have" before a turning point can occur. I've lost count of how many posts I've seen where people say, in effect, that we MUST have capitulation before the bottom will be in.

I also found the following to be eerily similar to what we have been hearing lately:

The most recent example of expectations betrayed has been the market's failure to react to declining interest rates. Throughout the spring and the first part of the summer, the prevailing wisdom was that once rates began to come down stock prices would shoot up. Short-term rates did begin to come down in late July, and since then yields on three-month Treasury bills have dropped to 9.35 percent from 12.5 percent. But the market has continued its slide.

This has utterly confounded the theorists. The more agile among them quickly concocted two explanations. One is that they meant longterm rates, which have not declined yet. The other explanation is that credit is actually tighter now because the jittery banks do not want to make any more bad loans.

BTW, there are two things I've been wanting to ask you:

1. Was Brinker bearish leading up to that call on the second weekend of August, 1982?

2. Was he bullish and fully invested all the way from then until the beginning of 1988?
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