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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (5)	8/14/1998 10:24:00 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 15132

I2: What people fail to understand about Brinker is that he has kept people invested throughout this bull market. Not an easy accomplishment despite what many people would have you believe. There are plenty of advisers who have, at one time or another, gone bearish at least once during this great bull run. Not Brinker. But people hold that fact against him. They continue to ask (last weekend, for example) if his model has ever gone bearish as if they think his model is no good if it has not gone bearish. But to have been bearish is to have been wrong. I guess people are looking for some in-and-out of the market model. So Brinker is a victim of the great bull run and the fact that he has been on the right side of this market every step of the way more or less. And I know that one of the things that keeps him going is his desire to call the next bear market. BTW, here is Ralphie's fan club on SI <GGG>: Subject 22518

To: Investor2 who wrote (5)	8/15/1998 7:22:00 AM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

Brinker on Interest Rates and Small Caps I2 and All: The next FOMC meeting is August 18, 1998. Brinker has said there is no way the Fed is going to raise interest rates notably because of the Asian crisis. He also has stated that Greenspan wants no part of an interest rate hike prior to the midterm elections this November. I believe this is the main reason Brinker sees no bear market anytime soon. He has said on numerous occasions that FRB intervention is the primary cause of a bear market. Given the most recent GDP report, I think the more interesting question is whether Greenspan and Company will lower rates. Brinker has said on a previous shows that the FRB would be "quick" to lower interest rates in the face of, for example, unfavorable employment numbers, retail numbers or industrial production numbers. What I find most interesting is the market's reaction some weak earnings numbers and the SEA crisis and the flat yield curve. If one is to look at the small caps, I believe part of the reason for this correction is that investors are starting to price in a recession, especially in the small cap sector. Not that I see this on the horizon and nor does Brinker for that matter. But some investors are obviously concerned. Clinton does not help the flow of foreign capital into US equity markets either as they will be the first to abandon the market in the face of leadership questions and they are certainly not going to small caps in this atmosphere. Of course, small cap weakness is also due to liquidity concerns by the big boys as Brinker has often stated. Nonetheless, as Brinker has said recently, small caps are the most inexpensive now they have ever been when compared to the large caps on a fundamental basis. Last weekend, he commented on the fact that they are the most oversold they have ever been when measured on a technical basis as well. Club listeners will remember in the early 90s when Brinker was adamant about small cap outperformance during those years. I think small caps did outperform from 1990 to 1993 as the country came out of a recession. But Brinker has slowly changed his mind on this outperformance idea. I believe one can see the portfolio adjustments over the past few years where small cap exposure has been trimmed from 35% (CGA) in 1991 or so down to about 15% or so as late as last month in Portfolio I. Brinker's position on small caps currently is one of market weighting essentially. He is in a show me mood on overweighting now. He is looking for the signs of outperformance in small caps before considering portfolio reallocation in my opinion. But when when these recessionary and liquidity fears are removed, small cap outperformance will not doubt return given for a stretch because of their dirt cheap valuations. Here is Ralphie's fan club link that I screwed up in a previous post: Subject 22382