Honey's Brinker Beehive--Not a Fan Club: What Is the QQQQ History?

» Kirk - What Is the QQQQ History?

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This is a repost. I've kept the answer on file because stories often evolve over time so it is good to have a baseline reply on file that corrects misconceptions.

In response to message posted by Will_L:

Brinker's biggest bet ever was to put one third of a portfolio into QQQs when they were trading at 83 bucks. They are now trading in the low 30s but the dishonest shmuck claims to have purchased the only QQQs in his portfolios in the mid 20s. It's a SCAM

Before someone asks if what you posted is true, I’ll repost my answer to Della that explained this in detail. Thus, anyone new to this forum via search engines will be up to speed on the full story.

Kirk

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Is It True about Brinker & QQQ?
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In response to message posted by DellaO:

One point needs to be made.. The “QQQ disaster” was a whopper but it was not Brinker’s biggest mistake by a long shot. Brinker’s “biggest bet” was to go to 100% cash in 1988 after the 1987 market crash. He did not get back to fully invested until 1991. Unless you use margin or buy leveraged funds, it is impossible to make a larger “bet” than to go from 100% invested to 100% cash. He also gets positive credit for moving 60% out of the market in 2000, a larger move, that worked out well until the QQQ fiasco. See MathJunkie’s Brinker Allocation History for full details.

Now to your question:

Is it true that Brinker effectively covered up his recommendation to buy QQQ "Immediately" in the $83 range?

Yes. Here is a copy of the letter he mailed to subscribers in October of 2000.
Brinker MT Act Immediately Bulletin
Followed a few days later by a letter to his “BJ Group” managed accounts with the date of the letter, October 19, 2000, corresponding to the date when QQQ hit $87:
BJ Group Nasdaq100 Memo

Is it true that after QQQ dropped over 70% he relegated them to a hold and the trade disappeared from his newsletter?

Yes. Here is a summary of the details: QQQ update

Note QQQ remains below his “Hold” level even after huge gains from the bottom.

Is it true that he never included this huge loss in any of his three portfolios?

Yes, Mark Hulbert was fooled by the advice as explained by Peter Brimelow.
2002 0815 Brimelow - Bugging Bob Brinker http://tinyurl.com/4kb1

In a special bulletin, he suggested Nasdaq 100 Trust (QQQ: news, chart, profile), the Nasdaq 100 exchange-trade fund on the American Stock Exchange.

But it did not appear in the detailed model portfolio published, as always, in the next month's letter. So Mark promptly sold out the QQQ position and no longer counted it.

Hulbert explains it in his footnote #9

Hulbert Footnote #9 "In late 2000, Brinker forecasted a several-month bear market rally and recommended an investment in the NASDAQ 100 Index—a trade that has proven to be quite unprofitable. However, because Brinker at the time of making this forecast chose not to make this trade part of his model portfolios, his HFD record has not suffered as a result."

The QQQ update shows how Bob Brinker told his subscribers to buy, month after month after month, for the rally that was yet to come from November 2000 in the $80s until June 2001 at $46 where he put QQQ on HOLD for "future recovery". His risky advice was “off the books” hence the terrible results are not reflected in his official records.

<img src=http://stockcharts.com/def/servlet/Sharp... width=520 height=301>
Brinker on QQQ: Buy at $83 ; Hold at $46 ;
He later added them to his model portfolios in March 2003
But Still well below the “Hide at $46” level

One more article worth reading: The Bob Brinker brawl: Round 2 which concludes with good advice:

Do not, repeat -- NOT -- gamble the rent money, much less the retirement money, on any market timer's recommendations. Only speculate with money you can afford to lose.

and this comment about someone who took the QQQ advice:

If there are many more stories like my poor friend from Rochester, we're going to see massive re-regulation of the financial markets -- a repeat of the 1930s.

If you have any doubts of what I’ve posted, then feel free to ask questions in our NEW Bob Brinker Free Discussion Forum.

We ALL have bad stock picks. The problem for Brinker is he gave the advice for a "counter trend rally" then he let it turn into a long term investment for a huge loss that is not recorded on his official newsletter record.

Fortunately for us practitioners of due diligence, there is a record of his results at the money management company Brinker advertises in his newsletter. Bob Brinker and Sheldon Jacobs used to own the “BJ Group.” They sold it and now Brinker advises them on asset allocation. More info on BJ Group - GE Private Asset Management.

These results

Click for a full sized image
<img src=http://www.suite101.com/files/mysites/Brinker/BJG_P1.jpg width=520 height=486>

clearly show the effects of his QQQ advice on his portfolio. Measured from the start of 2000, it did no better than the appropriate buy and hold index benchmarks!

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"If all else fails, immortality can always be assured by spectacular error."
--John Kenneth Galbraith, American economist, diplomat & author

"Yes, we could do that. But it would be wrong."."
-- Richard Nixon, on covering up Watergate

If you have any questions, contributions to add or whatever about what I’ve posted, then feel free to ask questions in our NEW Bob Brinker Free Discussion Forum.

-- posted by Kirk