I posted this analysis on another board on August 23rd, so it needs a little updating, but since Brinker is fully invested, the comparison to the S%P 500 should still be roughly valid.
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Brinker recommended that a maximum of 50% of his 62.5% cash reserves be put into QQQ in the first bulletin. The average price for the week after the bulletin was sent was about $82.
finance.yahoo.com
QQQ closed at about $24 on the day the second bulletin was issued, and again on the next day. Since Brinker's new P1 recommendations were all mutual funds, the closing price is the one he had to use in calculating his reported results.
finance.yahoo.com
P1 money market allocation on 9/30/2000: $95,359
Adjusted P1 money market allocation after QQQ buy: $47,969.50
Added P1 QQQ allocation: $47,969.50
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Reported P1 money market allocation on 2/28/2003: $102,716
Since the money market balance includes the accumulated interest, removing half of the ending balance automatically takes into account the loss in interest, thus eliminating the need to estimate it. This reduces the money market balance by $51,358.
The $47,969.50 in QQQ was reduced to $47,969.50 x 24/82 = $14,039.85.
The reported balance for P1 on 2/28/2003 was $126,712. We need to subtract the half of the money market fund that was gone, and replace it with what was left of the QQQ holding.
$126,712 - $51,358 + $14,039.85 = $89,393.85 "adjusted" P1 balance.
Percentage loss due to QQQ is 100% x ($126,712 - $89,383.85) / $126,712 = 29.5%.
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Note that the second bulletin recommended that 25% of P1 be placed in either a QQQ-equivalent fund or QQQ. Using the adjusted balance of $89,383.85, that amounts to $22,348, so it would have been necessary to buy more QQQ, or the fund, to get up to that level. Thus, the QQQ holdings would have been effectively incorporated into the published portfolio at that time. This means that the 29.5% balance reduction for March 2003 can also be used in adjusting later balances.
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SPY dividend-adjusted close on 7/31/2007: 145.72
finance.yahoo.com
SPY dividend-adjusted close on 9/29/2000: 129.79
finance.yahoo.com
SPY gain with dividends: 12.3%
(Note that the adjusted close numbers for any given date will change in the future, but the percentage change between any two dates should stay the same.)
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The reported balance for P1 for 7/31/2007 is shown as $274,858, for a gain of 97.1% over the $139,431 reported on 9/30/2000. These numbers were shown on Brinker's site when this post was originally written. They can be confirmed by consulting the August 2007 Marketimer.
Reducing the ending balance by 29.5% gives $193,775, for a QQQ-adjusted gain of 39.0% for the same time period.
This is a pretty hefty performance penalty, so it's no mystery why Brinker doesn't report numbers anything like this, even though it still represents 3.17 times the gain of the S&P 500 with dividends for the same time period.
So P1 with QQQ factored in provided more than three times the gain of the S&P 500 since the October 2000 buy. |
