THREAD IS CLOSED! --- Bob Brinker Free Discussion Site 11K+

Top 3433. Dec 17, 2000 4:46 PM

» Rande - Re: Cute

In response to message posted by Fahrenheit451:

Fahr,

I get the impression you're more interested in arguing and defending Brinker than in learning, and to be honest I barely have the energy when the motives are sincere. But, this is the Jerry Springer thread, so I guess anything goes.

With respect to small caps, perhaps you didn't read the original post too carefully, so I'll repost it below. Note the small cap returns. For the twenty-year period a 75/25 "Total Market" mix of large and small returned 10.3% on a compound annual basis, beating bonds, cash, and inflation by a substantial margin. Now, you can focus on the S&P only, with or without dividends, or whatever you want. These are just numbers, open to interpretation. I wouldn't even blame someone if they thought that a great market timer like Brinker would have had his followers completely in small caps during this period, making it less the "secular bear" that he now portrays it in retrospect. Wouldn't be reasonable, but I wouldn't blame them. The only point I care about is that trying to time the market is foolish while a long-term, stay the course approach is prudent -- even during an adverse period such as the one surrounding the 73-74 bear market. It takes patience and discipline, which includes ignoring scare-mongering gurus who are trying to sell you something. Anyway, here you go:

Have never heard such a load of minsinformation and outright fear mongering (read: buy my newsletter to be safe) as in today's monolgue. All masquerading as fact. What a load of sheist. History Lesson: don't forget dividends. Let's take a REAL look at both large caps and small caps (total market) during Brinker's "secular bear market"....

15-year compound annual returns:

1966-1980
S&P 500 -- 6.71%
Small Caps -- 14.09%

1967-1981
S&P 500 -- 7.11%
Small Caps -- 15.64%

1968-1982
S&P 500 -- 6.96%
Small Caps -- 12.89%

20-year compound annual returns:

1966-1985
S&P 500 -- 8.66%
Small Caps -- 15.25%

In all these periods, stocks beat the heck out of bonds and cash. Focus on the numbers. Focus on the long term. Ignore what amounts to entertainment newsletter hype posing as serious investment advice.

-- posted by Rande

Top 3434. Dec 17, 2000 4:47 PM

» David_Korn - Fahrenheit451

Fahrenheit is clearly missing the well balanced threads over on bb.com and wants to see some pro Brinker statements. As a courtesy to you Farenheit, and in celebration of Bob's anniversary show coming up, I will post my Interpretation from last week. Enjoy!!!

-- posted by David_Korn

Top 3435. Dec 17, 2000 4:48 PM

» Rande - Re: Re: Re: Cute!

In response to message posted by Rob_Larsen:

Rob,

Like I said, I've got nothing against people using an alias. It's a personal choice. And I've got nothing against heated debate, even though it can get out of hand. What I have no tolerance for are the cowards who hide behind an alias while attacking others. It's pathetic.

-- posted by Rande

Top 3436. Dec 17, 2000 4:51 PM

» joe_fabitz - Hey, hot stuff ---> (451 deg. F)

In response to message posted by Fahrenheit451:

You sound familiar..Ever heard of a guy by the name of Tom Swyers?? (I knew that you could.)

-- posted by joe_fabitz

mailto:davidk555@earthlink.net

Top 3437. Dec 17, 2000 4:51 PM

» David_Korn - David K's Interpretation of Moneytalk, et al. Part I

PART I OF II

David K's Interpretation of Moneytalk, Financial Education, Helpful Links, Guest Editorials and Special Alerts. December 9-10, 2000 Edition

To Subscribe, Click on the Following Link and Drop Me a Line:

Preliminary Disclaimer: This e-mail is not a substitute for listening to Moneytalk. It is only my interpretation and commentary of some of what is discussed on Moneytalk, along with additional educational information that I include, editorial comments about the market, helpful financial links, guest contributors and even humorous remarks. I also provide special alerts from time to time. If you want to know what was actually said verbatim on Moneytalk, listen to the show live. You can even listen to a re-broadcast of past Moneytalk shows on the Internet via the archives. The web site www.bobbrinker.com has all the links to the ABC Radio Network Stations that broadcast the show live and via the Internet. There are even free summaries of the Moneytalk shows on that web site. There is an additional disclaimer at the end of this e-mail.

Market Numbers and Key Economic Data as of the Close of the Market on Friday, December 8, 2000

Dow: 10712.91
Nasdaq: 2917.43
S&P500: 1369.89
30-Yr Bond: 5.548%
QQQ: $72 at the market's close, down to $68 after Florida Supreme Court ruling in after-hours trading. (But the stock market futures are up big after the U.S. Supreme Court agreed to the Stay).

*********************************
TACTICAL ASSET ALLOCATION WATCH
*********************************
Editorial Comment ("EC"): Here is how the major market indexes have played out since Bob Brinker's timing model turned bearish based on the S&P500 Index's close on December 31, 1999:

S&P500 Index: Down 6.76%
Dow Jones Industrial Average: Down 6.82%
Wilshire 5000: Down 7.07%
Nasdaq Composite: Down 28.31%
Russell 2000: Down 5.09%

**************************************************************
QUOTE OF THE DAY

"Money is better than poverty, if only for financial reasons."

- Woody Allen
**************************************************************
Opening Monologue: Bob began the show by discussing the latest developments in the Presidential race. As opposed to previous shows, Bob flat out acknowledged that the market is reacting to every single piece of election news that comes out. During the week, the Nasdaq started its recovery the more it looked like Bush would win, culminating in Friday's rise up until the close. Immediately after the close on Friday, the Florida Supreme Court announced its decision and stocks sold off in after-hours trading. However, the after hours trading on Friday didn't reflect the U.S. Supreme Court's decision to intervene (and as of late night Sunday, the futures are up huge!). Bob also mentioned Alan Greenspan's speech as a market driver, but concluded that much of the market's action has been election driven.

EC: Recall that during the beginning of this election debacle, Bob thought the election news was not going to move the markets relying on his belief that the old Wall street bromide "the stock market does not discount the same news twice" would apply yet again. Well, if you have been listening to Bob for as long as I have, you know that Bob doesn't like to admit he is wrong too often - however, if you have your Little Orphan Annie Moneytalk secret decoder ring, you got the secret message.

*********
Ask David K
*********
Question: David, when the market closed on Friday, the Nasdaq was up 164 points and QQQ shares were up to $72. Why were they at $68 just a few minutes later?

Answer: According to the Nasdaq-100 Index Tracking Stock Prospectus, QQQ shares trade on the American Stock Exchange until 3:15 p.m. -- 15 minutes after the regular market close. Those shares were reacting negatively to the Florida Supreme Court's ruling ordering a recount in the Florida counties. Incidentally, here is a link to a nice chart showing daily volume and price movement of the QQQ shares. Thanks to subscribers Deanna and Ryan for sending me the link:

http://www.stockmaster.com/exe/sm/chart?...

Opening Monologue Continued: Bob spent the remainder of the opening monologue on Saturday and part of Sunday discussing the various scenarios that could occur if the U.S. Supreme Court does not reverse the Florida Supreme Court's ruling. Bob said he was not going to even try to predict what would happen.

EC: Oh, what the heck, I will make a prediction. When I read the Florida Supreme Court's opinion and saw that Chief Justice Wells had written a dissenting opinion that pointed out how the majority decision (that's his buddies on the court remember) was unfounded in law and could lead to a "constitutional crises" that "will do substantial damage to our country, our state, and to this Court as an institution," I thought the U.S. Supreme Court would definitely step in. Now, when I read that the U.S. Supreme Court had granted Bush's motion to stay by a 5-4 majority, that tells me the gig is up - the Supreme Court is going to rule in favor of Bush. Why? Well just to issue the stay, they Justices have to believe there is a substantial likelihood that the moving party will prevail on the merits. Add to that, Justice Scalia's little preview of what's to come when he wrote an accompanying statement that reads: "It suffices to say that the issuance of the stay suggests that a majority of the court, while not deciding the issues presented, believe that the petitioner has a substantial probability of success." Also, why would they make all those vote counters who had to get up early on Saturday to count votes, stop in the middle of what they were doing, if they thought there was a chance of making them start back up again later. These judges, though powerful, also don't want to appear like jerks to the average person.

Now, you gotta figure that you definitely have the votes of Justices, Rehnquist, Scalia, and Thomas on board. So, Justices O'Connor and Kennedy are potential swing votes, but O'Connor was pretty harsh on Gore's attorneys during oral argument. Frankly, I can't get a good read on Justice Kennedy. On the other side, Justices Souter, Breyer and Bader are not too happy with the decision. Justice Stevens might be persuaded to join a majority opinion, but there will have to be some deal making if that is too occur, and more likely he will probably join Souter in the dissent. The biggest problem facing Chief Justice Rehnquist is his desire to have a unanimous ruling. It is said that a unanimous ruling from the Supreme Court has the largest moral impact of any governmental body in the United States. We shall see. Bottom line David K's prediction: A ruling in favor of Bush by the U.S. Supreme Court next week.

EC: Prediction could be modified by "exogenous" events. ha ha.

Caller Tangent: Bob, you sometimes refer to Ralph Acampora, as "Ralph Inagain Outagain Finnegan." Did you pick up that nickname from Les Kiter? Yup. Bob was friends with and used to travel with Les Kiter, who was one of the top college basketball broadcasters for the TVS network in the late 1960s. Les Kiter did the play-by-play before Bob.

Tangent EC: Over the years, Bob developed a lot of pet nicknames for analysts who were bearish while he was bullish in the 1990s. Bob also referred to Ralph Acampora as "Ralph Flip-Flop Acampora" and "King Ralph." Like any devoted Trekkie, I have the list of all of Bob's nicknames tucked away in my Moneytalk hope chest.

Tangent EC#2: Incidentally, Les Kiter used the phrase "In again, out again Finnegan" to describe a basketball shot that rattled around the rim a couple of times and then fell out. I actually never heard of Led Kiter and had to look that up on the net. I realize it has no relation to finances, but I like to be thorough in my research. Or maybe I am just obsessed, take your pick.

*****************************************************
COFFERS - Countertrend Opportunity For Frankly Everybody Real Savy
*****************************************************

Caller: This Marketimer subscriber told Bob that he is following Bob's advice on the "trade" very closely and was wondering whether any delay caused by the election would impact any intermediate or long term action in the market. Bob believes that the election is simply a "delaying mechanism" and the longer this lasts, the longer it pushes out a final bottom and the "mother of all buying opportunities." Bob reiterated comments from last week, that "MOABO" would not occur until late next year, and maybe 2002. Bob slid in one more phrase saying, "and maybe after that" but not according to what Bob sees right now.

EC: We will have to keep an eye on that "maybe after that" time frame.

Caller: Another Marketimer subscriber wanted to know what Bob thought would drive the counter-trend rallies, particularly, the next one -- especially given the high price-to-earnings multiples in tech stocks including the QQQ shares. Bob pointed out that the same questions could have been asked back in May when the Nasdaq kept going down and down. The rally in the Nasdaq that ensued brought it up about 40% from its lows. Bob said then, and still believes, that counter-trend rallies are driven by "market internals" not market fundamentals. Bob reiterated that the presidential elections are definitely impacting the market right now, but that is merely a short term event that will resolve itself. Conversely, in bull markets, market internals are what cause corrections.

EC: I got a stack of papers about 2 feet high of market internals calculations over the past month. Combined with the insight from my subscriber Robert, the wiz kid, it certainly seems as if the Nasdaq put in its near term bottom on November 30th when it closed at 2597 - just six trading days ago! (on the other hand, I will never say never out of respect for possible "exogenous" events that we haven't even considered, e.g. war, aliens or heaven forbid, Greenspan resigning!) I will share with you my conclusions in a separate Special Alert once I get them organized.

EC: I strongly suggest all my subscribers go check out this week's Barron's and read the interview of Melville Strauss and Robert Buettner on page 50. According to these two money managers they are predicting a bear- market rally in the Nasdaq. Don't underestimate these guys, they went short in anticipation of the Nasdaq bubble this year. As stated by Strauss, "The Nasdaq short term is oversold and still due for some sort of bounce. We're in a seasonally strong period, we've had the election results almost affirmed, and the Fed effectively went to a neutral bias..." As stated by Buettner, "We will get a reasonably good bear-market rally" You're coming to the end of the preannoucement period, and to an extent, the pre announcements are beginning to lose impact. You saw that with Motorola, which preannounced, fell and rallied." With respect to the longer trend, Strauss compares this bear market to 1973-1974.

EC: Deja Vu. Could it be that dream that I once new?

Brinker Comment: Bob believes that on December 19th, when the Federal Reserve Open Market Committee meets, Greenspan is "likely" to announce that the Fed is going to a neutral bias. Later in the weekend, Bob referred to the chances of the Fed moving to a neutral bias as almost "assured." One of the reasons Bob gave for this, is his belief that Greenspan may fear that this election process is going to negatively impact consumer confidence.

EC: Along the issue of consumer confidence, the University of Michigan's preliminary consumer sentiment index for December fell sharply to 97.4 from a final reading in November of 107.6. This is a significant decrease in consumer sentiment. Historically, consumer sentiment is mainly affected by inflation and employment; however, sharp changes in stock prices have moved this index's readings in the past as they did in mid-1988. For more info, check out this link:

http://mam.econoday.com/reports/US/EN/Ne...

Caller: If the Federal Reserve starts lowering interest rates in January, do you think the market will take off? Bob thinks it is too early to guess if and when they will lower interest rates. Later in the weekend, another caller asked Bob if he might change his views on MOABO if Greenspan lowered interest rates twice in the spring. Bob didn't answer the question saying he wasn't going to speculate since we aren't there yet.

EC: This question was asked in a different way later in the show during my "caller of the day" section below. Certainly, if Greenspan starts lowering interest rates, one of the main components of Bob's timing model will be impacted; namely, the indicator that looks at monetary supply. I guess Bob doesn't want to speculate on what his model will do until the new data is actually factored into the model.

Brinker Comment: Bob mentioned very briefly that Greenspan would be considering the retail sales report out next week.

EC: Economists are predicting retail sales will edge up 0.1 percent in November dampened by a drop in motor vehicle sales. Excluding the auto sales, retail sales are expected to increase 0.4 percent. equal to last month's numbers, but relatively slow for this time of the year. I found a great calendar of year 2000 economic activity that you may want to bookmark for your own use at the following link:

http://mam.econoday.com/calendar/US/EN/N...

Caller/Brinker Comment: One caller asked Bob if he thought there was a secret government society that made sure stock prices didn't fall too much. Bob scoffed at the idea. The discussion then led to how Greenspan views the stock market. Bob made some interesting comments about Greenspan's view on the market. First, Bob said if there was an "orderly" decline over a long period of time in the stock market, it wouldn't bother Greenspan. Then, came the kicker! Bob said he was told from a "reliable authority" that Greenspan basically has never cared about the stock market and is not interested in the stock market.

EC: Say what? Surely you jest! I am not kidding, that's what Bob said -- and don't call me Surely. It certainly seems weird to think that Dr. Greenshades has never cared about the stock market. I certainly wouldn't have believed that, but then again, I don't know Bob's source. Hmm, Bob must have some powerful friends on Wall Street. I wonder if it is Maria Bartoroma?

Caller: It seems like every time there is news favoring Bush's chance of getting elected, the market reacts positively. Does that mean investors should be routing for Bush at least so far as their stock market portfolios are concerned? Bob acknowledged that the stock market is reacting favorably to Bush in the way that the caller described. Why? Bob speculated that there is a lot of fear in the market that if Gore was President, he would institute an aggressive Justice Department, perhaps even under the leadership of David Boies. Look how the Justice Department attacked Microsoft. If Gore and Boies went after big companies, look out. Bob then added a few other Bush Presidency attributes that Wall Street would favor, including: being friendly to tobacco companies, less likely to hurt pharmaceuticals; energy stocks, and overall not having a "proactive" justice department. Conversely, Bob did note that the bond market seems to react favorably to Al Gore probably in response to his commitment to pay off the national debt.

EC: I found a nice series of articles addressing the impact of Gore v. Bush presidency on the stock market and the economy at the following link:

http://www.geocities.com/gore_in_context...

Caller: In Chicago, people are paying a lot for home heating bills, what effect will that have? Bob noted that oil prices will benefit from a cold winter, especially if it is colder than usual. On the other hand, oil prices have gone to extremely high levels recently, so supply & demand of oil will dictate prices. The caller said that many people are paying double for their heating bills than last year and wanted to know if this could effect inflation. Bob noted that if consumers demand higher wages to compensate for their increased costs of living, that could create inflationary pressures. The caller also asked Bob his opinion on the jobs report that came out on Friday. Bob observed that the slight slowdown in jobs and rise in unemployment rate wasn't surprising now that the Federal Reserve's rate hikes are making their way through the system. However, Bob pointed out that the unemployment rate has fluctuated between 3.9% and 4.1% for 14 consecutive months -- "the tightest labor market in 30 years." Bob concluded his comments by saying that he doesn't see any relief in the labor market and it is still too soon to predict a "soft landing" in the economy.

EC: The nation's unemployment rate had been at a three-decade low for the last two months. During November, the rate rose to 4 percent, evidencing some slowing in the growth of the economy. The jobless rate rose 0.1 percent from 3.9 percent where it had been in September and October. In addition to the rise in the jobless rate, growth in payroll jobs significantly slowed to just 94,000 new jobs being created. One of the factors to blame in the lack of new jobs, was the drop of 54,000 government jobs which analysts believe was partially the result of local schools not being able to find enough qualified teachers to fill positions. Now that's sad. You can find the Employment Situation Summary for November, 2000 at the following link:

http://stats.bls.gov/news.release/empsit...

Part II of this week's Interpretation continued On Next Post

-- posted by David_Korn

http://www.suite101.com/article.cfm/inve...

Top 3438. Dec 17, 2000 4:53 PM

» David_Korn - Part II of David K's Interpretation

PART II OF II

David K's Interpretation of Moneytalk, Financial Education, Helpful Links, Guest Editorials and Special Alerts. December 9-10, 2000 Edition

**************
Caller of the Day
**************

EC: I haven't had a caller of the day section in a few weeks. This one was easy. I had to divide it up into paragraphs since it was such a long call. Also, remember that I am simply interpreting the call in my own fashion adding my own characterizations and comments. If you missed the show live, I again encourage you to listen to the show on the archives if you want to hear what was said verbatim.

Caller (Matt): Matt was a very soft-spoken but focused caller who asked Bob many pointed questions. The call started off friendly enough with Matt asking Bob to justify his position that there will be a final bottom or "MOABO" late next year or 2002 -- especially in view of the fact that Bob couldn't determine yet if the economy would undergo a soft landing or recession. I imagine Bob's left eyebrow raised slightly at such a pointed question, but Bob remained cool as a cucumber and provided some valuable information. First, Bob said point blank that we are currently in a long-term bear market that started in the first quarter of the year as measured by the closing high in the Dow at 11722 which occurred on January 14, 2000, the closing high for the S&P500 at 1527 which occurred on March 24, 2000, and the closing high for the Nasdaq was 5048 on March 10, 2000. Bob noted that he predicted that the S&P500 would not exceed 5% from its closing basis of 1469 on December 31st, and it didn't, closing only about 3.9% on 1527. Looking forward, Bob believes that this market is going to be historically viewed as a bear market as measured from those highs. Bob noted that bear markets are measured from their "closing highs", not on an annual basis such as from New Years eve of one year to New Years eve of the next year. Bob gave a concrete example saying that suppose the S&P500 was at 2000 in March, and a year later in March, it closes at 1500, that would be a 20% decline and constitutes a bear market -- even if at calendar year end (December 31st), it was unchanged, that would have nothing to do with it.

Matt responded by noting that we clearly have bear market in the Nasdaq now, however, before he got any further, Bob's left nostril twitched a little as he cut him off, pointing out that we have come close to a bear market in the Wilshire5000 where it closed down approximately 18% from the March 18th high, but not the traditional bear market measurement of 20%. Still Bob predicts that it will breach that 20% level if not in 2001, then in 2002.

Matt said the point he was going to make was that the valuations in the S&P500 have come down significantly as of late. Bob edged a little closer to the microphone and asked Matt if he was actually happy with the year-to-date performance of the S&P500. Matt said he wasn't looking backwords, and was trying to figure out where we would be in the next 12-18 months. Matt stated that if we don't go into a recession, it seems to him that the price-to-earnings multiple in the S&P500 might be justified in view of low inflation and he is simply trying to understand why Bob's timing model would still forecast a bear market, and subsequent MOABO next year or the year after under those circumstances. Although that might seem like a very reasonable question to you, all of a sudden I think little beads of sweat started forming around the Moneytalk bandana that I often picture Bob wearing during the broadcast. Bob firmly noted that HIS opinion is based on the work that HE does, and if Matt wants to listen to someone else's opinion, than by all means go out and believe whatever you like. Bob's Silky Smooth voice Sounded Suspiciously Sarcastic as he told the caller that he respects Matt even if he thinks the market is going to the moon next year!

Whoa. Matt extended the peace-pipe to Bob saying he agreed "completely" with Bob's forecast earlier this year that the Nasdaq was overvalued. Matt then clarified that he never said nor believes that the market is going to the moon, but does wonder whether the S&P500 could go up 10%, 15%, or even 20% in the next 1-2 years, and thus, outperform cash. Matt said he just wondered whether we shouldn't be more careful in having people fear the market's downturn simply waiting for MOABO when they might miss a run up when the broader market outperforms cash or Ginnie Maes. It seemed to me that Bob played dumb here, saying that he didn't understand why anyone would fear MOABO which is a buying opportunity, when I think it was clear that Matt was saying the fear was that they would miss a run up in the index, and there would be no MOABO. Matt started to return to his main point which is that the valuation of the S&P500 had come down significantly, and, therefore......

Whoa, Bobus Interuptus. I think Bob slid open his mahogany desk and pulled out his secret weapon - yup, I'm talking about the Moneytalk play book! Now armed and dangerous, Bob started quoting facts and figures. Bob noted that the S&P500 reached its peak valuation in the summer, 1999, when it traded at 28 times earnings. Matt started to say that the high p/e was in part due to the compositional change in the S&P500, but Bob interjected "not since 1999" and then proceeded to state that the current p/e multiple of the S&P500 based on this year's earnings is about 24 times earnings, which didn't seem to be that much of a dramatic change to Bob since last summer when the p/e was 28.

Matt tried one more time, pointing out that if we have low inflation, we can justify higher stock market multiples and a p/e muliple for the S&P500 in the low 20s wouldn't seem unreasonable, and if we don't have a recession, than predicting a MOABO, or a 20% decline in that index, seems suspect. Bob quickly pointed out that it wouldn't be a 20% decline from this level, but rather a 20% or more decline from the closing high in March. Matt understood and said that he was just concerned because his investments were on the line and he was just trying to understand the reasoning behind Bob's recommendation. At this juncture, Bob got a little defensive, and said if Matt thinks Bob's views make no sense, then Matt should go his own way, and disregard Bob's outlook.

EC#1: Bob is going to have to ask the Chicago White Sox for a new shirt after that call. I thought that Matt had valid points and questions about Bob's prediction of MOABO. When you listen to the audio of this call, you can tell that Matt had no axe to grind and seemed sincerely interested in trying to understand how Bob was still maintaining a long-term bear market forecast in the S&P500 given the lower valuations, combined with low inflation and no forecast of recession at this time. In response to the valuation comment, Bob referred to a 24 p/e in the S&P500 based on this year's earnings. Frankly, I think that Bob used this year's operating earnings simply to justify his point, when according to my notes, Bob typically uses next year's operating earnings when analyzing the market when we get into the later months of the year -- especially December.

EC#2: When Bob was giving us examples of how you measure a bear market, I think he may have indirectly been bracing us for one potential outcome this year. For example, did you see how he pointed out that even if an index closes at the same level it did at the end of the calendar year as it did at the beginning, that wouldn't matter for purposes of measuring a bear if the peak of that index occurred in March. Well, given that Bob has been talking about counter-trend rallies, suppose the S&P500 goes up nicely in an end-of the year run and closes near 1469. It would then close at the same level it did last December 31st -- which was when Bob's timing model turned negative. Bob would say the more important measure is the time frame from when the S&P500 hit its high on March 24th.

EC: After calls like this, Bob usually takes the commercial break to settle down. Then, he comes out after the break and usually says something like individuals should gather all of the financial information they can find to make their own decisions and ignore the information they don't like.

Brinker Comment: Individuals should gather all of the financial information they can find to make their own decisions and ignore the information they don't like.

EC: Oh my gosh. I am psychic.

Brinker Comment: Bob reported that the Nasdaq has already fell 50% from its high on a closing basis, its second greatest decline versus the 1974-1974 bear market when that index declined 60%. Bob stands by his prediction that this could be one of the worst bear market declines in history. With respect to the Nasdaq, it is already 5/6ths of the way there. In the beginning of a bear market, you need to be patient. Bob projected that as measured from the March highs of this year, the bear market time frame will last 12-24 months, or anytime within 2002.

EC: Ok, Bob cleared up something I felt was a little ambiguous from last week. Bob now includes the probable time frame as occurring in 12-24 months from March, but also that it could very well occur within the March-December 31st time frame of 2002.

Brinker Comment: Bob referred to his projection from a long time ago when he said that the risk of the Nasdaq was a 40% to 70% decline in the Nasdaq on a closing basis. We now have had a 50% decline. It is too early to tell how low it will go, but Bob still thinks that range is valid.

EC: Now I like to give Bob credit where credit is due. Heck, I have gotten all of my family and friends listening to Bob on Moneytalk. However, I need to be objective as possible because Bob's record is how we measure his market timing ability. Bob keeps referring to his prior prediction that there would be a 40% to 70% decline in the Nasdaq. Well, that would be phenomenal if he had done it BEFORE the Nasdaq declined. You may recall that Bob has referred to his projection from a "long time ago" when he said that the risk in the Nasdaq was a decline of 40% to 70% as measured from the Nasdaq's March highs. Ok, let me try to evaluate that call objectively.

In reviewing my past Interpretations, the first time that I can find where Bob mentioned his prediction of a decline of 40% to 70% in the Nasdaq as measured from the Nasdaq's March highs was on the July 29th show. Now, by July 29th, the Nasdaq had already hit a closing high for the year of 5048 on March 10th. It had also already declined to 3205 on a closing basis on May 26th. That means that Bob predicted the Nasdaq would decline 40% to 70%, from its highs, but only after it had already fallen 36.5% from its high.

Evaluation of Call:

1) Certainly, Bob should not take credit for predicting the Nasdaq would decline 40% from its high before it happened. However, he should take credit for the additional 13.5% lower the Nasdaq fell from his original prediction since the Nasdaq has since declined 50% from its high.

2) Bob should get some credit for warning of the Nasdaq valuations and getting out of the market early on in January with 60% in cash reserves. However, he also recommended a high beta b2b fund in the spring and the Nasdaq did rise a substantial amount from when he issued his sell signal which he did not predict (the mania phase).

3) The rest of the story can not be judged yet. If the Nasdaq declines below the 50% mark within the next year or two, Bob should be given additional credit for warning of further excesses in the 40% to 70% range.

Caller: This caller is wants to set up a college fund for his granddaughter and has $1,000 to start. Bob likes dollar cost averaging into the total stock market index since it is an extended time frame before she will need the money and it is relatively small amounts.

EC: Interesting how Bob didn't recommend his current long term asset allocation to this caller (65% cash). I imagine it was due to the purpose of the investment, combined with the time frame, and the small dollar amounts involved.

Caller: Bob what's your outlook on the semiconductor capital equipment stocks? Bob noted they were growth cyclical stocks with incredible growth from fall, 1998 until the first half of this year. Bob thinks that was the time to make the big bucks in these stocks. The caller specifically asked Bob to give a 2 year forecast, but Bob thought that was too long a time frame to predict in that sector. Bob added that the stocks will probably follow the general direction of the Nasdaq.

EC: Nothing new here from Bob, other than his acknowledgement that these stocks will rise if the Nasdaq rises. Bob also said he has no money invested in the large cap semiconductor capital equipment stocks. Note: no mention of Utek - a small cap stock, which by the way, is looking much healthier these days closing above $22 per share on Friday.

Caller: This caller had a very interesting question. He wanted a recommendation from Bob on a book, text or some type of primer that discusses market timing. Bob didn't give any guidance to the caller because he said his timing model was the only one he trusted. The caller tried to engage Bob, but Bob simply said he didn't know anyone that had consistently done well timing the market (except himself of course!).

EC: I felt Bob copped out on answering this caller's question. I am sure that Bob didn't create his timing model in a vacuum. Also, the issue of market timing to me is one of the most fascinating aspects of listening to Brinker. For those of you that follow his advice, the single most important question should be, does his market timing model work? Now, timing models are a dime a dozen. I searched Yahoo using the words "stock market timing model" and pulled up a ton! Here are samples of just a few:

The Mojena Timing Model
http://members.aol.com/smartlet/model.htm

Timing.Net
http://www.timing.net/

Prudent Timing Model:
http://members.aol.com/pmd10/index/

Investment Models Inc.
http://www.investment-models.com/

The ASP Stock Market Timing Model
http://www.angelfire.com/fl/modeltiming/

Walker Timing Model:
http://www.timing.net/

EC: Even Bob acknowledges that timing the market is the single hardest thing to do in the financial industry. Although he doesn't talk about it much, the academic community, including some of the greats that Bob references (e.g. Bogle), shun market timing. One of my favorite articles on this issue is found on Suite101 and is entitled, "Market Timing: Should You Attempt it?" There is even a discussion thread where people debate the issue. You can access the article at the following link:

Brinker Comment/EC: Bob reported on the electricity crises in California, but didn't really add any particular insight as it relates to the market. Here is a link to the latest news report on the crises:

http://dailynews.yahoo.com/h/ap/20001210...

Brinker Comment: One of the callers to the show asked Bob about obtaining back issues of the Marketimer newsletter. Bob took the opportunity to point out that there has been such a huge demand for his Marketimer newsletter, that they have sold out of all back issues, and have even sold out of every issue this year.

EC: Congratulations Bob! By the way, here is a free tip from David K. It is called a "copy machine." I think you can buy them from a company called "Xerox." Tell the nice folks over at the Marketimer headquarters to invest in one of those, and you probably wouldn't sell out of Marketimers each month!

EC: Bob has changed the format of his website so that only Marketimer subscribers can read and post messages on his website's message boards. He may have done this because someone was posting some nasty profanity all over his website last week. Some people are speculating that Bob has done this to entice more people to subscribe to his newsletter. Others suggest that he doesn't like the public message boards which allow people to openly criticize him. Whatever the reason, it was Bob's decision since he runs the website. The rest of the website is still accessible to non-Marketimer subscribers.

Brinker Comment: Bob was asked about secular bear markets. Bob noted that you don't know whether you are in a secular bear market, until you are already in it - and it is too early to make the call as to whether we are at the beginning stages of one now or not. Bob mentioned that there are cyclical bull markets within a secular bear trend, but they are limited.

EC: The term "secular" means "long term" when applied to the finance world. Thus, there can be secular bear markets and secular bull markets. Here is a link to an article entitled Secular (Long-Term) Cycles in the Market:

http://cpcug.org/user/invest/secular.html

EC: I found a good discussion from one of my older Interpretations on secular markets which I thought I would include here for your reference:

EXCERPT FROM PREVIOUS INTERPRETATION:

From 1966 to 1982, the United States was in a negative secular market. During this time frame, there were four cyclical bear markets. The S&P500 Index on February 9, 1966, traded at 94.72. Over 16 years later on August 9, 1982, the S&P500 Index was trading at 102.2. That is absolutely unbelievable!!! In 16 + years, the overall market as reflected in the S&P500 Index gained only 8% total. During those four bear markets, the market declined as follows:

February 1966 - October 1966: Down 23%
December 1968 - May, 1970: Down 37%
January 1973 - October 1974: Down over 40%
November 1980 - August 1982: Down 28%

In August 1982, at Dow 777 and S&P500 Index 102, the market turned into a secular bull market. Measuring the Dow from its 777 mark to its all time high recorded on January 14th when it closed at 11722, the Dow is up 1408%. Measuring the S&P500 Index from its 102 mark in 1982, to its close on December 31st at 1469, it is up 1340%. Secular markets tend to last around 17 years.

**********************
David K's Sentiment Research
**********************

EC: Nothing too dramatic in the numbers as compared to last week. Some good news and bad news on the sentiment front.

Investor's Intelligence Survey: According to the latest numbers, the bullish sentiment was 64.08% (bulls/bulls+bears), but the 4-week moving average actually increased to 64.4%.

Put/Call Ratio: When I crunched the 10-day put/call ratio, it came to .67 down from .70 last week.

Consumer Confidence: As noted earlier in this Interpretation, the University of Michigan's preliminary consumer sentiment index for December fell sharply to 97.4 from a final reading in November of 107.6.

Final Thoughts from David K: My compliments to the Starship Moneytalk for two great shows this weekend! I haven't had time to complete the HTML v. NON HTML lists, so for now, you will still get both. Sorry for any inconvenience, just delete the one you don't like. I should have that list finished soon.

That's it for this week. Check out this link to see how the futures are trading right at this moment:

http://www.cme.com/cgi-bin/gflash.cgi

To Subscribe to David K's Interpretation service, Click on the Following Link and Drop Me a Line:

mailto:davidk555@earthlink.net

Disclaimer: I am just a listener to Moneytalk and provide this service on my own volition. I am not associated with ABC Radio Networks, Moneytalk or Bob Brinker and this service is neither sanctioned by, nor written under the auspices of ABC Radio Networks, Moneytalk or Bob Brinker. This e-mail is simply my own interpretation and commentary of some of what is discussed on the show, along with educational information I provide that I think is useful to help better understand financial issues. There are also editorial comments, useful links and contributing editors and even special alerts. I am also a frustrated writer and comic and try to weave humor throughout. You should not rely on any statement made in David K's Interpretation of Moneytalk, Educational Links and Other Financial Information or Special Alerts as constituting financial advice. Also, under no circumstances does the information in any of my e-mails represent a recommendation to buy or sell stocks.

-- posted by David_Korn

Top 3439. Dec 17, 2000 5:08 PM

» Fahrenheit451 - Re: Re: Re: Re: Cute!

In response to message posted by Felipe:

Felipe, thanks for your reply. I would tentatively say that it does seem to speak to the point, but the one remaining question is, have the S&P dividends actually declined relative to earnings as opposed to stock price, and if so, by how much? If the ratio of dividends to earnings has gone down, then I could see how that could represent increased investment, but if they only went down relative to stock price, then that would only be a side effect of the multiple expansion of the secular bull.

I should point out that this is not really a "worry". To put it back in context, Rande posted what the indexes did with dividends compounded from the late sixties to the early eighties, apparently in response to something which had been said about the market not performing well during that period. Perhaps I misread him, but I thought he was implying that we should not worry about the possibility of a bear market because then our returns would be bouyed up by dividends. That is why I was bringing up the subject of low current dividends.

-- posted by Fahrenheit451

Top 3440. Dec 17, 2000 5:14 PM

» Kirk - Re: Re: True or BS?

In response to message posted by DeepThroat:

You all should have listened to me way back when I said I wrote ABC and asked if Bob was canceled. THey wrote back and said no. Then I wrote again saying that the chat rumor was he was leaving Dec 17th and they wrote back that Bob was just taking his scheduled vacation.

JustaFitToBeTied and some of the other hangers on that need to lick butt to get an identity got all upset at me and accused me of stalking and tricking the poor ABC publicist by not telling her that I wrote for an internet company and that I would publish what she told me.... boo hooo hooo... yadda yadda yadda. If you didn't believe me, then they had the exPrince of Disinformation, poohba, keep saying Bob was retiring and they dropped the attack on me as it was silly being it admitted they gave out some information that Bob didn't want out.

Thanks Bob. Your show sure does give people much to talk about and we will PROUDLY continue to do so! That, in and of itself, is very valuable.

My guess is now someone can take a pot shot at me and say my Brinker-Retirement-Model is just luck! Then again, I'll remind you he does this often, ESPECIALLY when things are not going his way. This year, Bob didn't like the fact that someone was selling interpretations of his show so he tried to use it to force the guy out of business. I think he just got a foot full of led shot from the attempt.

The party this afternoon was sure fun. Met some new neighbors... and some old ones and had a great time. The hosts work for MSDW and I got to talk investing with many. Not a one even brought up tv and radio guru's... Like Will says "they don't care" as there is "show business" and there is "investing".

-- posted by Kirk

Top 3441. Dec 17, 2000 5:20 PM

» Felipe - Fahrenheit

In response to message posted by Fahrenheit451:

You pose a good question. I know both ratios have declined--including dividends to earnings--but I don't have the figures at hand. I recall that the decline in the dividend/earnings ratio is significant, but whether "significant" is closer to 30%, 50% or 70%--I honestly don't remember.

As to what Rande had in mind in his original post, I'm sure we'll hear sometime soon smile

-- posted by Felipe