Market Timing: Should You Attempt It?

» Rande - Re: Re: Barrons article on Market Timing

Actually, there is some value there for those selling newsletters or magazines that rely on investors taking action more frequently than is good for them. Hard to keep those subscriptions up by quoting Bogle, Ellis and Malkiel. How many times can you say "stay the course," before greedy/fearful investors get bored?

-- posted by Rande

» Kirk - Re: Barrons article on Market Timing

How many times can you say "stay the course," before greedy/fearful investors get bored?

Who would buy Barrons if they just had a portfolio that was say 80:20 or 50:50 TotalStock:TotalBond and played with grandkids rather than wait by the mailbox for secrets on how to try to beat the market?

I used to wonder why the WJS had two publications for stock market investors. Then I figured it out. There are two types of investors that will spend for a newspaper about investing and they have their bases pretty well covered:

The WSJ investor is the type that wants to be part of the inside crowd. Many will subscribe as they feel it gives them an "inside edge" and makes them part of the action. Much good investment info presented in a nononsense way. Still, those that believe in an efficient market will say it is all useless (but most of us still try to beat the market!).

The Barrons investor is more of the type that thinks "they are smarter" and so the articles tend to be slanted to their egos... Talk of all the dumb investors that buy Amazon.com after Amazon is off huge. They don't explore WHY people were buying Amazon and how to profit from the mania. Instead they use the editorial slant that Amazon investors are idiots and Barrons will help you to not be an idiot.

-- posted by Kirk

» Kirk - Re: Re: Barrons article on Market Timing

Kirk, can you go over the percentages of those holdings you mention in Bob's model portfolios?

Sure Mark. This is the last calculation I have but hopefully someone here will post updated numbers monthly which are due out soon.

I decided to do a 1 yr update calculation to see the true effect of Brinker's advice of 10/16/00 to buy QQQs with up to 32.5% of your total portfolio.

As of 12/31/00 P1 was $135,038
As of 9/30/01 P1 was $127,515
Down 5.6%
Cash as of 9/30/01 is $100,250 or 78.6%

It has been roughly one year since the "QQQ Act Immediately at $83 " advice was given.

Brinker had cash in Money funds, not bonds so he would be up 3.7% YTD if held in Vanguard Prime MM Fund. We need to adjust back to "QQQ Day" of 10/16/00 so lets call it 5%. Cash then would be about:
$100,250/(1+.05) = $95,476

Now throw half that into QQQ at $83 ($47,738) and half keep in cash ($47,738).
QQQ on 9/29/01 was $28.98, down 65% since QQQ day.
Thus
QQQs now worth $47,738 x (1.0 - 0.65) = $16,708
Cash now worth $47,738 x (1.0 + 0.05) = $50,125
Total Adjusted now at 66,833

Cash reduction is $100,250-$66,833=$33,417
So, reduce the listed P1 total of $127,515 by $33,417 to get $94,098

That STILL doesn't give you the YTD numbers. You still need to calculate what P1 would be adjusted for QQQ between 10/16/00 and 12/31/00 to get a new staring number.

What you CAN do is see how P1 had done since the QQQ advice was given.

As of September 30, 2000, P1 was at $139,411. This was just before the QQQ advice was given.
As of Sept. 30, 2001, P1 adjusted for 50% QQQ advice yields $94,098
Loss is ($94,098-$139,411)/ $139,411= -32.5%
Brinker reports -8.5% for that portfolio over the 1 yr period so the QQQs cost him 24% for P1 by my calculations

12/31/99 P1= $136,620
09/30/01 P1|wQQQ = $94,098, down 31.1%

12/31/99 VTSMX = $33.22
09/30/01 VTSMX = $23.00, down 30.8%

12/31/99 SPY = $144.058
09/30/01 SPY = 104.44, down 27.5%

Hope this helps. Perhaps you can update the calculations for us when he issues the tally for October in a few days?

Perhaps you can check my math? Sometimes I make errors and it would be good to have someone go over my calculations as I didn't check these.

-- posted by Kirk

» Mark_J - Re: Re: Re: Barrons article on Market Timing

Kirk, in what issue of Marketimer are you referring to? I've looked at mine, and I can't see either QQQ or TEFQX in any of the model portfolios. Can you point me out to the specific issue of Marketimer, and the page that shows the model portfolios? I just can't find QQQ or TEFQX in any of them myself. Help me out!

-- posted by Mark_J

» Kirk - Re: Mark Advertising For Brinker

Mark

You will note that I did not MODIFY your posts but I did append information on to the end of them. I will continue to do this as long as you present what I feel is a distorted record here of the facts.

None of your words have been changed, I just put my reply in at the end of your post. I will continue to do so as I don't want newcomers that stumble on to your blatant advertising for the Market Timer Bob Brinker to be seen as something I approve of. IF you don't like it, then don't post here any more.

-- posted by Kirk

» Rande - Re: Re: Barrons article on Market Timing

Kirk,

The WSJ is more than a financial newspaper. In my opinion, it's one of the best general newspapers in the country (world), particularly for those who are sick of the liberal bias. You can get more information on the front page of the WSJ than you can in the entire front section and business section of most city newspapers (NY Times, Washington Post and LA Times being exceptions, if you can wade through the slant). Barron's is another story. Once upon a time, it was useful for its raw data content if nothing else. In this day of Internet access to more real-time information and data than anyone can possibly (or profitably) handle, it's superfluous.

As for the market timing article, the point to remember is that promoting a speculative and unsettled state of mind, exploiting the natural tendencies toward greed an fear, is advantageous for those who are more interested in selling their wares than in what's best for individual investors. And here's the key: You would think that it would be enough that "The Five Best Days" would be the greed angle and "The Five Worst Days" would be the fear angle, never mind the impossibility of identifying either five days and acting perfectly in advance to take advantage. Here's the sick part -- Brinker and his ilk are out to equate "Buy And Hold" with a losing strategy. They seek to make "Stay the course" seem perilous and trying to time the market seem prudent, thus, turning the world upside down and creating a fear that shouldn't exist in order to exploit it. Insidious and cynical, and all to promote a failed strategy for personal profit. At least those on the sell side have the rational, if unethical and deplorable, motive of making a profit off ignorant fear. What of those who join in this harmful promotion without even the promise of personal gain? What motivates such misfits? Hurting people for profit is at least understandable, seeking to hurt people without even the hope of a dime for the effort is downright sociopathic.

-- posted by Rande

» Mark_J - Re: Re: Re: Barrons article on Market Timing

Certainly, the buy-n-hold 'em mania gets more and more popular the longer a secular bull market rages on. Seems like it peaked right there in early 2000, just as it had in 1966. You wonder, if the conviction is to "buy and hold" then why is there a "peaking" at all? Shouldn't folks just always be of that mentality? Well, they're not. Life gets in the way of "buy and hold forever."

I heard somebody in the office say the other day, that she was told just to buy and hold and ignore the fluctuations, but she said that she doesn't have time to make up the losses and can't afford to lose anymore money.

Isn't that the issue? I think if we lived for 200 years, buy and hold would be fine. Or if one wanted to invest today for their grandkids or great-grandkids, then too. But if one has 20-30 years of investing ahead of them, a secular bear market IS DEVASTATING.

Personal choice, of course.

Kirk's replies to Mark http://www.suite101.com/discussion.cfm/i... and http://www.suite101.com/discussion.cfm/i...

[EC: The Facts Follow:]
Brinker did well to advise going to 60% cash in January 2000.
Then he gave it ALL back and then some with his advice since Jan 2000.
What a disservice to others to say otherwise:

-- posted by Mark_J

» SteveT - Re: Re: Re: Barrons article on Market Timing

"If photography were to become a difficult mechanical medium and if it
were possible to explain the actual lack of need for most materials and
gadgets, many publications would have no reason to exist and believe
pictures, on the whole, would be better"

"Photographers have been lead to make a fetish of equipment and are
falsely encouraged in superficial concepts and methods, resulting in
unfortunate misconceptions of the basic potentialities of photography"

The con game is not just limited to the investment world. BTW Mark that little note you are including at the end of your posts is in very poor taste. I would think much more of you if you would discontinue it.

-- posted by SteveT

» SteveT - The Answer

-- posted by SteveT

» Kirk - Re: Barrons article on Market Timing

"This is why market timing can be used during times of secular bear markets," says Bob Brinker, publisher of Bob Brinker's Marketimer, a newsletter that advises investors on when they should jump in and out of the market.

Can ANYONE identify ANY time that Brinker has advised investors to jump out and then back into the market for a profit?

My data says he failed in the 1988 to 1991 period and the only other time he tried is the present one where he gave all his advantage back by advising buying QQQ:

Days prior to Jan 1988, Brinker was 100% invested. I have no record of his allocation before Aug 21, 1987.

DATE          % IN      DJIA
.            EQUITIES 
 
Aug 21, 1987  100       2710
Oct 19        100       1841  Down 695 pts or 25.6% from top. Notice he
                              was still 100% invested clearly missing the
                              bear decline
 
Jan 1988        0       2015  Went to 100% cash & Told listeners he was 
                              Bearish after market was 9.5% above bottom. 
                              2nd failure of the Model in that it signaled
                              bear at the start of new a bull.
 
Feb 1989       50       2342  Market up 27% from the bottom.
                              Up 16.2% from Jan 1988
 
Nov            75       2650
Feb 1990       40       2559
Mar            50       2635  Fine tuning here???
Apr            65       2687
May            75       2656
July           85       2840  Local Peak, up 21% from Feb 1989
Oct 12                  2398  Should have stayed at 50% until here!
                              Down 16% from July 1990
Dec            95       2565
Jan 1991      100       2550  Fully invested 
                               Up 26.7% since going to 0% equities
 
Jan 2000       40      11122  Keeps large cap stocks & Intl.
 
Aug             35    10688   65% now in "cash reserves"
  

Oct 16,2000    QQQ=$83      Told subscribers to put up to 50% of
                            Cash reserves into QQQ at $83
 
Jan.  8,2001   QQQ=62.44    Again suggests up to 50% of cash reserves 
                            Into QQQ for "up to 50% of more" gain.  
                            Got a 20% rally then QQQ crashed again.
 
April 3,2001  QQQ=33.60     Said recent Nasdaq100 weakness exceeded our
                            expectations. Hold QQQ. Have Patience.
 
Sept 23,2001   QQQ=$27.20   Did not issue a buy 
Sept 23,2001           8062   DJIA hit 7926 intraday 
 
Oct. 02,2001   21.4%   8950   Says to be at 35% but P1 in newsletter
              QQQ=28.82     is 78.6% cash and 21.4% equities!?!?!
 
Nov. 07, 2001  QQQ=38.14      up 40.2% from their low of $27.20
Nov. 08, 2001           9586  up 18.9% on a closing basis!
 

QQQ advice sent via special bulletin between newsletters and subscribers were told to "Act Immediately". They rallied to $87 then went down. Did NOT report QQQ advice in newsletter portfolios the following month.

Above data Compiled with help from Dan Gibbons through 12/20/00

-- posted by Kirk