Let me first say that I think Bob Brinker is a great source for investment information, knowledge and philosophy. I absolutely agree with his view that indexing is the most profitable, most cost-efficient, and most tax-efficient method of investing. I also agree with Bob that mutual fund managers are in denial when they think that they can consistently outperform the market. I contend that Bob, himself, is in denial when it comes to believing that he can outperform the market. I also contend that, as part of his denial, Bob finds the need to be a spin doctor whenever he finds himself having made a mistake.
As a follow-up to my post yesterday (#3740), I'd like to address Bob's recommendation of T Rowe Price New Asia. If you listen to Brinker, lately, he makes it sound like he had the astuteness to side-step the Asian meltdown. He pats himself on the back constantly for issuing a sell on New Asia before the meltdown.
The following are posts that I made on Brinkers' AOL board along with Bob's responses. I believe I have concrete evidence to show that Bob has not only used his spinning techniques to make himself look like a market timing guru, but he has flat out lied to me and to everybody that listens to him.
Post #1, titled "New Asia", dated 12/18/97 and authored by Rillinois:
"What was the reason for the sale of New Asia? Was it underperformance?
Thanks"
Post #2 titled "Re: New Asia", dated 12/18/97 and authored by Brinkerbob:
"Marketimer subscribers sold their entire ten percent position in New Asia on July 11 based on concerns expressed in the newsletter regarding Asia performance.
At the time of the New Asia sale the fund was unchanged for calendar year 1997 through July 11. However, following the completion of our sale of New Asia, the fund melted down and has dropped about forty percent from August through December."
Post #3 titled "New Asia Part II", dated 12/19/97 and authored by Rillinois:
"You said "Marketimer subscribers sold their entire ten percent position in New Asia on July 11 based on concerns expressed in the newsletter regarding Asia performance."
Were the concerns expressed in the newsletter a result of the poor underperformance of the fund since 1994 or was it foresight into the future meltdown of the region?
Thanks again."
Post #4 titled "Re: Waiting for Bob's response...", dated 12/29/97, and authored by Brinkerbob:
"New Asia was eliminated from all Model Portfolios and the Recommended List effective July 11, 1997 at a price of $9.15 per share due to concerns about performance prospects in the Asian Theatre.
We reinvested the monies in international growth. We did not reinvest the monies in another Asian fund because we were not bullish on the Asian outlook. Since July 11, New Asia fund has declined 38% through December 29 inclusive. So far, it appears the decision to pull out of New Asia is a good one!"
My contention is that Bob sold New Asia because of lagging performance and not because of any foresight into the Asian meltdown or because he was not bullish on the Asian outlook. Bob focuses repeatedly on what New Asia did after he dropped it, but he doesn't tell us often enough what New Asia did the last few years. Here are the numbers:
1/97-7/11/97 = - .2%
1996 = + 13%
1995 = + 3%
1994 = - 19%
I am aware that the fund did exceptionally well in 1993, but my contention is that Bob's reason for the sale was because of underperformance and not because of any "concerns about performance prospects in the Asian Theatre".
Furthermore, I decided to go to the library and check out Bob's newsletter where he made the official announcement. There was no mention of any pending Asian crisis/meltdown about to come. Here is the actual text of the recommendation as it appeared in the July '97 issue.
"Rowe Price New Asia will be deleted from coverage effective July 11 due to lagging performance."
In sum, I think Bob got lucky when he sold New Asia and he is trying to spin the situation to make it look like he had the foresight to side-step the Asian meltdown.
Furthermore, I'd like to pose these two questions to Bob. First, if you did have foresight into the Asian crisis, then why did you reinvest the monies into International Growth? Why not park the money in a money market fund or in an international fund that excludes Asia? I know that with respect to the US market, you always ask people why they would purposely ride out a bear market if they new it was coming. Well, if you knew about the Asian meltdown, why would you ride it out in International Growth? Furthermore, you are quoted in the September '97 issue of your newsletter as saying, "Each of our foreign market selections is rated as attractive for purchase at current prices". Why would you purposely recommend International Growth, even with it's limited exposure to Asia, if you knew an Asian crisis was coming? My contention is that you didn't have any foresight into the Asian meltdown!
Second, if you did have foresight into the Asian crisis, then why did you continue to recommend UTEK when the chip-equipment group was one of the most exposed and worst hit groups because of the meltdown? Again, my contention is that you didn't know it was coming.
Brinker should stick to his own philosophy and stop trying to time and outperform the market. Not even you, Bob, can time the market.
Rillinois |
