Bob Brinker Update June 2007 Part1
Examine Bob's 5 Root Causes of a Bear Market from his timing model
Jun 6, 2007
June 6, 2007: In Bob Brinker's January 2000 Marketimer he published his "Five Root Causes for a Bear Market."
I believe not enough of Bob Brinker's "5 Root Causes of a bear market" are present today so Brinker will remain bullish. Before I examine the causes in detail, lets look at them in an historical perspective.
All five of his root causes were BEARISH in January 2000. On the radio program at the time, he said he was not bearish, but the odds favored a decline over the market going up more than 5%.
Brinker recommended reducing the equity allocation from 100% to 40% in his model portfolio numbers one and two. He also lowered his Model Portfolio III (which is a balanced portfolio) equity allocation from 50% to 20%.
Here are some newsletter quotes from early 2000:
- January 8, 2000 Marketimer: "The Marketimer stock market timing model has turned unfavorable....We recommend raising a 60% cash reserve at this time."(S&P500 = 1402.13; DJIA = 11122.65, QQQQ=86.25)
- More quotes from 2000 here. (space is limited here)
In August of 2000, when the market was a bit higher, Brinker recommended taking another 5% out of equities for a 65:35 Equities-to-Cash asset allocation.
Had Brinker remained at 65% cash reserves until returning to fully invested in March 2003, he would have looked brilliant. Unfortunately, in October 2000 Brinker recommended putting 20 to 50% of cash reserves back into the market via the NASDAQ100 (QQQQ Bulletin ) for a counter trend rally despite saying his model had not given a buy signal. The QQQQ trade was a disaster, but his long term model was correct to predict further weakness because 2001 and 2002 were both down years for the markets.
The markets bottomed in October 2002 and his model correctly gave him a bullish buy signal within 5% of the S&P500 bottom in early 2003. Since returning to 100% invested in March 2003, Bob Brinker has correctly remained fully invested with no QQQQ-like side trips to hurt his performance.
Get more details about his January 2000 bear market asset call here.
Part 2 looks at the 5 Root Causes of a Bear Market as of June 6, 2007
DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.
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