Though Brinker remains bullish and advises full investment and
dollar cost averaging at these lofty levels, he raised the subject of
an "intermediate term correction" on at least two occasions today,
to recall it. An intermediate term correction is defined by Brinker
as a correction of greater than 10% and less than 20%. Of course, the
obvious problem, as noted on the broadcast, is that an intermediate
term correction is a normal precursor to an all out bear market,
should a bear market follow suit. As I have it, since it is impos-
sible to distinguish between the advent of an intermediate term
correction and the beginnings of a true bear market, Brinker would
advise a zero equity position should he issue a call for said inter-
mediate term correction. To be sure, Brinker, to date, has not called
for such a correction, but the discussion of same on MoneyTalk might
be deemed a notable event per se for those who are wont to search between Brinker's lines for items of interest.
In response to caller who was toying with the idea of putting
money into the stock market rather than real estate because the
market has moved up so smartly, Brinker noted that this extra-
ordinary bull has run from Dow 777 in 1982 to 8500 odd presently,
and, in his view, "the big money has already been made." Indeed,
as noted on this thread prior and on the broadcast proper, Brinker
is on record as calling for a momentous bull market in 1982 at
that historic inflection point. Parenthetically, at the same time,
the New York Times was trumpeting in business headlines,
"Wall Street is a Basket Case" or similar.
That being said, the question I pose academically is the following:
Let us assume, per Brinker, that the big money has been made. By
inference, then, the market should thus be expected to revert to
its mean, i.e., its historical average of 10% gains per year over
the very long term. Does not this argument in itself make a compel-
ling case for stockpicking versus index investing going forward?
After all, Brinker himself has no illusions that these enormous
yearly gains will continue for the major markets indefinitely.
Should individual issues become the focus now given Brinker's
inferred major market slowdown? |
