Bob Brinker Free Discussion Site 59,820+

Top 799. Dec 2, 2005 8:57 AM

» bob90245 - Re: Re: Brinker's sell call

In response to Re: Brinker's sell call posted by allancoleman:

bob brinker should be interesting this weekend

I assume you mean Brinker's comments on the market will be interesting. Correct me if I am wrong. But I recall that during the first week of the month, Brinker sends out his newsletter to subscribers. And thus, he usually doesn't talk about the market during the first weekend of the month. This is in order for his subscribers to get "first crack" at Brinker's market commentary.

One or two weeks back with the market up strong (during that time), I was also interested whether Brinker would have any commentary on the market's direction. Yet, Brinker did not make one mention about the market.

-- posted by bob90245

Top 800. Dec 2, 2005 11:58 AM

» allancoleman - Re: Brinker's sell call

In response to Re: Re: Brinker's sell call posted by bob90245:

hello bob ,

you're absolutely correct that bob brinker doesn't like to discuss the market so close to his newsletter release . but occassionally a caller gets through on another question the screener liked and sneaks in a question on the market .

i also don't think bob will let go by an opportunity to mention his ' buy ' signal of 1180 and to remind callers ' not to chase ' the market in here . usually i listen to bob as much as listen to his callers questions and concerns .

-- posted by allancoleman

Top 801. Dec 3, 2005 8:21 AM

» dirwin00 - Re: Please Stay On Topic

In response to Please Stay On Topic posted by Kirk:

For government employees there is a fund which invests in the average of the 3mo to 30yr treasuries. The NAV does not change. It's like buying a 12yr US bond with no price fluctuation.

In 401Ks there are insurance products which yield about 4.5%. Fidelity has one called Fidelity Money Management(?) for it's 401k plans. That's all I know about them.

-- posted by dirwin00

Top 802. Dec 4, 2005 2:01 PM

» jbking - TIPS vs I-bonds....

Time once again for learning about bonds, inflation and some special thingies...

One of the differences that Bob missed with TIPS compared to I bonds is that with TIPS, the principal gets adjusted which isn't the case with an I bond. I would think this is a major difference though somehow this got by Bob.

On the I bonds compared to a TIPS fund, Bob left out that the fund has fluctuations that may well be beyond what a GNMA fund has as in the case of longer term TIPS they may be sensitive to rate changes.

Just a couple of minor points,
JB

-- posted by jbking

Top 803. Dec 5, 2005 6:58 AM

» jamesj24 - Re: TIPS vs I-bonds....

In response to TIPS vs I-bonds.... posted by jbking:

On the I bonds compared to a TIPS fund, Bob left out that the fund has fluctuations that may well be beyond what a GNMA fund has ...:

I'm happy to say that I didn't listen to a single word of Bob's program this weekend, I forewent listening to Terry Savage last weekend, and I honestly feel I didn't miss anything but droning babble. How many times can one go over these same mundane topics without going berserk?

Thanks to whomever for the tip about Bob's not discussing the market until his subscribers have received their newsletters. Well, I'd allow 3.999 weeks for that. The truth is, he gives very little info on the market, and when he does, he couches it in riddles. Who needs those games? I have better ways to spend my weekend.

I tend to agree with Kirk, that the bull market is solidly intact and that no sell signal is in sight. The overall trend of the market is definitely upward. The channel formed by the past two years of price activity is upwards sloping and has not yet been broken on the downside. As long as this channel is not broken, the bull market remains intact, despite all the fundamental problems of this economy. Cheap oil from the other countries that hate us and cheap money from China who most likely hates us, except for our willingness to invest in, and buy their goods en masse have managed to keep our economy growing. We depend completely on the generosity of our enemies! Ironic, isn't it? Maybe some of our Christian values have rubbed off on them.

-- posted by jamesj24

Top 804. Dec 5, 2005 8:12 AM

» oldtown4 - Re: GNMA's vs TIPS vs I-bonds

In response to GNMA's vs TIPS vs I-bonds posted by Kirk:

Bonds: The guy that I subscribe to (not Bobbie) has been pushing strips and 20 year Treasuries like mad for a month, in anticipation that rates are destined to decline in early 2006.

For some reason the newsletter guy never mentions GNMA and TIPS. Everyone plays the market differently.

I listened for most of the WE and anytime callers brought up specific market questions, Bobbie repeated that he was working on the newsletter and dropped the caller.

-- posted by oldtown4

Top 805. Dec 5, 2005 6:59 PM

» SteveT - Dec. 05 model update

It has been sometime since I attempted to interpret brinker’s model and since some of you are considering going to cash I thought I might take this opportunity to share what I think bob sees in his model as of early December 2005.

Some of you new to this forum might not realize I’ve been following brinker in some capacity since the early 1990s. I started by doing free summaries of his Saturday radio broadcasts right here at suite 101 in early 1999. http://www.suite101.com/discussion.cfm/i... For some of you veteran brinker followers I apologize if parts of this are repetitive but feel this is warranted for those newer folks to this forum.

brinker’s model has four basic components they are Valuation, Economic, Monetary, and Sentiment. These are approximately equally weighted. I have listed them in this order because I believe that is the order bob evaluates them every Monday. Let’s see what they individually are saying this week.

Valuation I believe is the single most important indicator for brinker. The primary Valuation factor is the P/E of the S&P 500. This can be somewhat more complicated that it might seem on the surface. The price is easy to determine, simply see what the most recent close of the S&P 500 is. The earnings figure to choose is what gets tricky. I am certain bob uses operating earnings. He has the habit of using earnings estimates about 10% less than those published by S&P early in the year, then if things look good later in the year he often increases his estimate. I believe bob has such respect for the Valuation indicator he deliberately understates earnings to protect from missing on this important component. One other key point, in the later half of the fourth Quarter bob starts using earnings estimates for the coming year. As of today S&P is estimating 2006 operating earnings north of $85. That is quite a jump from bob’s 2005 estimate of $70 and from S&P’s 2005 estimate of about $76.74. I can certainly see bob using $77 or $78 for 2006 earnings. Remember in early 2000 earnings were $56.13 and interest rates were higher and climbing. Using Mondays S&P 500 closing value of 1262.09 and $77 as earnings we get a P/E of 16.4 and earlier this year bob thought P/E of 18 or 19 was reasonable if inflation remains in check and so far it seems the case. I feel bob looks at Valuation as bullish.

The main Economic indicator is GDP. I think bob also looks at the direction too. The 3% to 4% range is what many, including Alan Greenspan, consider the sweet spot for strong sustained economic growth without inflation. We are a tad above the top of that range. The indications are that GDP is starting to trend upward and so are earnings. The Economic indicator could turn next year if GDP growth stays above 4% long and we see the rapid growth bob refers to as one of the root causes of bear markets. As of now most think next year GDP will dip below 4%. This all seems to confirm this indicator is bullish in bob’s model.

Looking at what the Federal Reserve is doing with the money supply and short-term interest rates can sum up the Monetary indicator. I am looking forward to hearing what bob has to say about the FED no longer reporting M-3 money supply. It is possible bob may not even comment on it since he tracks M-1 and M-2 plus the Monetary base. A growing money supply is important as it acts as fuel to a growing economy. He looks at these in real or inflation adjusted and in nominal growth percentages. The key to look for is a growing money supply and we are doing nicely so that is bullish. I think like all of us bob is waiting for the FED to stop increasing short-term rates. In September bob would have applauded a pause in hiking rates in the post Katrina and oil spike period. They didn’t pause then and didn’t on November 1. It is always hard to know for sure what the FED will do, many are expecting a couple more .25% increases before Alan Greenspan retires at the end of January 2006. I suspect bob will look at Monetary policy closely until we see how Ben Bernanke handles his first meeting as Chairman of the FOMC, which won’t be until March 28, 2006. By the way Money supply data can be found here. http://www.federalreserve.gov/Releases/H... For now I would think bob is still viewing Monetary as accommodative or to say it another way bullish.

Up to now I’ve been discussing items considered various types of fundamental analysis. The remaining 25% of the model is more along the lines of technical analysis or relying on market history to help predict market future. In a sense the entire concept of market timing could be considered technical analysis or relying on history to repeat itself and signal times to raise and lower your asset allocation. If all of this leaves you scratching your head and saying “What did he say?” Don’t feel bad. I don’t think any group of people can look at the same data and agree what it means, or if it is even relevant. I don’t know that bob understands this stuff any better than anyone else but, hey, you got to give credit to someone that is willing to learn new things and look to improve their work.

The Sentiment indicator is perhaps the most elusive of all model indicators. It was not included in bob’s original model but was reportedly added after he incorrectly exited a bull market following the Stock market crash of 1987. From what I can gather bob rode the market down with so many others and finally threw in the towel within 10% of the bottom and went to 100% cash in January 1988. Over the next three years bob adjusted his allocation several times in both directions before becoming fully invested in January 1991. The index he was using as a benchmark, the DOW, was some 25% higher than when he went to all cash. It was during this time frame bob added the Sentiment indicator. I recall him saying on the radio once that he had back tested his revised model and the Sentiment indicator would have prevented him from making the 1987-91 error. Some months later he also said on the radio when asked about back testing his model he doesn’t do back testing because it would serve no purpose. It would leave him open to ridicule since he couldn’t prove himself without revealing how his proprietary model works. So I leave it up to you which story to believe regarding back testing. That being said I find the Sentiment indicator fascinating. When I first heard bob mention this indicator he exclusively mentioned the weekly poll done by Investors Intelligence, which he is a participant. He went on to explain how he looks at the percentage of Bull/ (Bulls + Bears). He ignores the correction number. When the percentage is between 50% and 70% bob feels this is neutral and the market is more than likely not in for any drastic moves. When it is below 50% this means a majority are on the sidelines and can only have an influence on market direction by buying. This is bullish and is often a signal of pending buying opportunities. When the percentage comes in over 70% this is a sign to stop and take a cautionary look at the other indicators and be ready to lower your equity allocation. Should it get into the 80% range plus I would think bob would find it hard to remain fully invested. I should add that bob uses a four week moving average to avoid a sudden swings of emotion.

In late 1998 bob started talking about other technical indicators amid the Long term Capital Management panic. It was then bob mention the Put/Call ratio and when the ten-day moving average is near 1.00 it is bullish, he recently has been throwing in the 60 day Put/Call ratio too. As I recall the ten-day Put/Call was about 1.2 when bob declared in October 1998 “You can’t afford to be out of the market for a single day”. VIX is another sub indicator that can be helpful but I did hear bob say it hasn’t been of much use lately. I believe direction is key for VIX rather than an absolute number. He from time to time also has mentioned testing lows on around 25% lower volume as a sign of bottoms and buying opportunities. For a time he seemed enamored with TRIN but as of late hasn’t mentioned it. bob often looks at market internals such as new highs vs. new lows and the advance/decline line to help identify inflection points in the market. I think he noted the 90% down day in March 2003 and decided to become fully invest then in large part to that one data point. Keep in mind these all seem to be secondary and are used to confirm what the other major indicators are saying. I am very sure bob places no value in charts other than to see what has happened in the past. I don’t think he finds any predictive value in charting. I feel bob has limited understanding of these so called technical analysis measures but realizes they are worth looking at if it can help prevent an error like he made in 1988-91. I don’t think bob uses any consistent set indictors but looks at them all and focuses in on those that are changing rapidly and then deciding if this component is bullish neutral or bearish. I think this portion of the model has evolved with time as bob himself has learned more about these fascinating data points. One thing to keep in mind, the entire sentiment indicator is the most volatile and capable of making a major shift in direction the quickest so it is worth reviewing on a weekly basis should you decide to interpret bob’s model yourself. The other indicators really only need be looked at monthly unless something unexpectedly happens. I would think bob would today say Sentiment is neutral.

So there you have it. For now I tally one neutral and three bullish. Enough for bob to remain fully invested.

-- posted by SteveT

Top 806. Dec 5, 2005 10:10 PM

» Rob_Larsen - Re: Dec. 05 model update

Steve,

I have been reading and posting here for years and always find your input very interesting. Thanks for taking the time to share it with me.

Rob

In response to Dec. 05 model update posted by SteveT:

-- posted by Rob_Larsen

Top 807. Dec 6, 2005 4:25 AM

» noggin - Re: Dec. 05 model update

In response to Dec. 05 model update posted by SteveT:

.
Steve - Thanks for taking the time to post that info. I've listen to Brinker for many years and all your judgements are correct in my opinion.

-- posted by noggin