Bob Brinker's infamous and costly QQQ-trade:
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The QQQQ-debacle was most likely Bob Brinker's biggest double-cross of his subscribers.
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Here is a copy of the "Act Immediately" Bulletin that Bob Brinker sent to subscribers in October, 2000:
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SUBSCRIBER BULLETIN
FROM MARKETIMER
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MARKETIMER is projecting a significant countertrend rally which is expected to be led by the Nasdaq 100 Index. We expect this rally to persist over a period of approximately 2-4 months, and to generate Nasdaq gains in excess of 20% from the vicinity of the recently established Nasdaq closing low point.
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We view this projected Nasdaq rally as a significant trading opportunity for MARKETIMER subscribers seeking potential short term capital gains. Our clear vehicle of choice for this opportunity is the Nasdaq 100, which is traded on the American Stock Exchange under the ticker symbol QQQ.
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We recommend MARKETIMER subscribers with aggressive objectives invest 30% to 50% of existing CASH RESERVES in the QQQ shares in order to exploit this opportunity. Also, we recommend subscribers with conservative investment objectives invest 20% to 30% of CASH RESERVES in the QQQ shares in order to take advantage of this opportunity.
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MARKETIMER will provide follow up guidance for this short-term
opportunity in regular monthly editions, and, if necessary, in follow up bulletins.
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We recommend subscribers interested in taking advantage of this recommendation act immediately.
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P.O. Box XXX/ Irvington, NY 10533/ phone: 914-XXX-2655/ Editor: Robert J. Brinker"
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(Please keep in mind that we are ONLY talking about what Bob Brinker recommended to those who actually follow his advice in Marketimer. If subscribers used other money, that is of no consequence.)
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In November 2000, Bob Brinker used the first TWO PAGES of Marketimer to convince subscribers to buy QQQ with up to 50% of the 65% cash reserves that he recommended to be raised from model portfolio equity holdings. He gave the percentage breakdown for aggressive as well as conservative investors.
Then on Page 2, Paragraph 3, after selling this trade to his subscribers, specifically recommending the use of model portfolio "cash reserves" and promising "follow up advice" via newsletter or special bulletin, Brinker unbelievably said this: "Since this represents a short-term opportunity, and is not part of our long-term investment approach, we will not include this recommendation in our long term model portfolios on page eight..........." (Which in essence meant that he was vigorously encouraging his subscribers to take a huge risk on the trade, but he was not going to risk his model portfolio performance record.)
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However, he didn't stop there! He repeated the buy QQQQ recommendation the following January, 2001 and again in March 2001, along with an explanation of the exact percentage of model portfolio cash reserves that conservative and aggressive investors should use.
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So there you have it, the trade that damaged many of his subscriber's financial health. Now it's SEVEN years later, the trade was NEVER closed and the promised "follow up advice" ended in March 2003, when the trade was effectively covered up. This was accomplished because Brinker issued a new buy signal after the QQQQs dropped over 70%--AND, he added this buy (RYOCX) to his model portfolios. Adding insult to injury, he has since claimed to have made a profit on RYOCX.
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Did someone say something about honesty?
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