Moneytalk Bob Brinker Summaries - Information ONLY

» David_Korn - Summary and commentary of Bob Brinker on Moneytalk

Excerpt from David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials and Special Alert E-mail Service. (March 22-23, 2003)

TACTICAL ASSET ALLOCATION WATCH*

Editorial Comment ("EC"): Here is how the major market indexes have played out since Bob Brinker's timing model turned "favorable" based on the S&P 500 Index's close on March 10, 2003 and he recommended investors redeploy their cash reserves into a fully invested position by bulletin issued at 2:00 a.m. on March 11, 2003:

S&P 500 Index: Up 10.95%
Dow Jones Industrial Average: Up 12.6%
Nasdaq Composite: Up 11.2%

NOTE: In October, 2000, Bob Brinker recommended to his subscribers with aggressive objectives that they invest 30% to 50% of their cash reserves in the Nasdaq 100 (QQQ shares). He also recommended to his subscribers with conservative investment objectives that they invest 20% to 30% of their cash reserves in the QQQ shares. That recommendation was repeated in January, 2001. He has maintained a hold on the QQQ shares ever since and now allocates a percentage of his fully invested position to the Nasdaq 100.

********************************************

IF YOU MISSED THE BUY SIGNAL, WHAT SHOULD YOU DO NOW?

Caller: This caller has plenty of cash reserves and wants to become fully invested again. Her financial planner has advised her to be cautious about going back into the market, and suggested that she dollar cost average back into the market. Bob first pointed out that his subscribers had ample opportunity to lump sum back into the market at the time he issued his buy signal on the morning of March 11, 2003. Even the following day, and the rest of that week, the market was very low. Bob said that anyone who went fully invested during the week he issued his buy signal was able to get very good prices. This week, however, the market took off with the biggest up week in the market in 20 years. For people who are looking to get back into the market now, Bob thinks dollar cost averaging back into the market is a good idea. Later on in the broadcast, Bob reiterated that in terms of new money going into the market at this juncture, Bob thinks it makes sense to take a dollar cost average approach, using periods of weakness to do so. Bob doesn't like to chase rallies.

EC: Bob's view makes sense, although in practice it doesn't always work out. For example, one of my subscribers pointed out that during last weekend's broadcast, Bob said the same thing -- don't chase rallies, and buy on weakness. Well, if you heeded that advice, you would have missed the rally this past week. This is an issue that Bob is obviously aware of, because he took several calls from people who did not get back into the market yet and are anxious to do so. Read on.

NOTE: If you would like to read the rest of this newsletter, and/or find out how to subscribe to my service, drop me a line at:

Davidk555@earthlink.net

or visit my website:

http://www.BeginInvesting.com/

-- posted by David_Korn

» David_Korn - Summary and commentary of Bob Brinker on Moneytalk

Excerpt from David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials and Special Alert E-mail Service. (March 22-23, 2003)

FACTORS GIVING RISE THE MARKET RISE

Bob Brinker Comment: Bob, the Valley Guy, started the broadcast off noting that the market action last week was "totally awesome." Indeed, it was the greatest week of stock market gains for the Dow since 1982. Stocks went up every day during the week. Bob addressed three factors that he believes are contributing to the recent gains on Wall Street.

First, Bob thinks that investors last week were responding to the collapse in the price of a barrel of oil. Just two weeks ago, oil was almost $40 per barrel and the "bad news bears" were predicting that oil prices could go to $100 per barrel. In the three words made famous by daBrink, "they were wrong!" Today, oil prices are closer to $27 per barrel as prices collapsed in the wake of the developments over the past week. The widely anticipated demolition of Iraqi oil wells did not occur, and instead an amazingly small number of wells have been set ablaze. The drop in oil prices has been one of the major contributors to the buying frenzy on Wall Street. Investors recognize that a drop in oil prices is the equivalent of a massive tax cut to the U.S. consumer who will now have more money to spend on other items, rather than devoting their income to energy costs.

Bob then noted the recent positive action of the U.S. Dollar. Bob patted himself on the back for pointing out a few weeks ago that the dollar had firmed up and was looking better after being in free-fall for so long. Over the last few weeks, the dollar has been gaining against the euro and the yen. A strengthening dollar is another factor that has been contributing to the bullish behavior of U.S. stock market investors. In response to a caller later in the weekend, Bob won the award for modestly calling himself the "voice in the wilderness" in his so-called "discussion" of the direction of the dollar. Bob told the caller that he continues to believe the trend in the dollar will remain strong.

Finally, investors are encouraged by the Federal Reserve's stance on monetary policy. The Federal Reserve is more accommodative than at any point in time during Bob's entire life. This means easy money in terms of lower interest rates. Likewise, the current fiscal policy is also beneficial to the stock market. Our government is running a deficit in the $300-$400 billion range and this spending should have a stimulative effect.

EC: The Federal Open Market Committee decided to keep its target for the federal funds rate unchanged at 1-1/4%. In its press release announcing its decision to leave interest rates unchanged, the FOMC left some market watchers scratching their heads when they decided to forego their usual risk assessment statement. Does it mean the Fed is clueless about the direction of the economy? Either that, or they don't want to look foolish if the war puts a damper in their predictions. Specifically, here is what they said or didn't say as it were:

"In light of the unusually large uncertainties clouding the geopolitical situation in the short run and their apparent effects on economic decision making, the Committee does not believe it can usefully characterize the current balance of risks with respect to the prospects for its long-run goals of price stability and sustainable economic growth."

The FOMC did issue one positive statement -- a statement that I think daBrink finds support in his economic indicator; namely, the prospects for the growth in the economy given the abatement of oil prices:

"While incoming economic data since the January meeting have been mixed, recent labor market indicators have proven disappointing. However, the hesitancy of the economic expansion appears to owe importantly to oil price premiums and other aspects of geopolitical uncertainties. The Committee believes that as those uncertainties lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to economic activity sufficient to engender an improving economic climate over time."

http://tinyurl.com/80y7

NOTE: If you would like to read the rest of this newsletter, and/or find out how to subscribe to my service, drop me a line at:

mailto:davidk555@earthlink.net

or visit my website:

http://www.BeginInvesting.com/

-- posted by David_Korn

» Kirk - Re: Summary and commentary of Bob Brinker on Moneytalk

Thanks David. I think you do a great job keeping your subscribers up to date on Bob Brinker information. Your own results, being nearly 100% in cash for most of the decline except for when you were in QQQs and used stops to exit, add even more value.

Disclaimer: I sell a newsletter myself. I try to be unbiased as best I can when evaluating others.

I am not threatened by other newsletters who give honest returns and results as there are many styles to investing and making money. I know full well that there are many "newsletter junkies" who subscribe to ten or more newsletters to get varied opinions that they don't get elsewhere. It is in my best interests for all of these to be above board and trusted so these folks don't get turned off to all newsletter writers!

I don't make fantastic claims of huge returns like some, but I do have a documented newsletter portfolio that has done well over the bull and bear market.

Kirk's Newsletter performance vs the S&P500

  Date       Kirk    S&P500    Delta
2003 YTD     9.6%     1.8%     7.8% as of 3/21/03

                                 Kirk    S&P500 
3 Yrs. 1/1/99 through 12/31/01   94.6%   (5.1%)
4 Yrs. 1/1/99 through 12/31/02   53.4%  (24.5%)

As to Brinker:

Summary: Since 1/1/00, Brinker's model portfolio #1 with QQQ applied lost 30.4% while the S&P500 lost 42.8% (not counting dividends). With dividends applied, I think Brinker's P1 beat the S&P500 by about 10% which is a good result. Even if a P1 person bought the 5% in TEFQX as recommended by Bob Brinker which lost about 90%, they would still be ahead of the S&P500 by 5% or so. Click for a Full Report

-- posted by Kirk

» ktymrk - Zero Messages?

-- posted by ktymrk

» Kirk - Re: Zero Messages?

We are always looking for volunteers to listen and post free summaries.

We do have a Brinker Discussion Forum here that most talk about the daily ins and outs. Here is a URL
http://www.suite101.com/discussion.cfm/i...

It actually fell off the top 20!

-- posted by Kirk

» David_Korn - Re: Summary and commentary of Bob Brinker on Moneytalk

Excerpt from David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials and Special Alert E-mail Service. March 22-23, 2003 Edition

THE BRINKER EFFECT?

Caller: This caller noted that the talking heads attribute the stock market's rise to the war with Iraq, but he thinks its due to the "Brinker effect." Bob down played the effect his buy signal had on the market, noting that he issued the buy signal after the close on March 10, 2003. The next day, the market declined and the market stayed in a relatively narrow range even through the remainder of the week.

EC: If I was to play devil's advocate, I would argue that the market really took off after the weekend Bob first announced his change in asset allocation on the radio which was to a much larger audience than his newsletter base. However, I don't believe there is a "Brinker effect." Now, there might be a cumulative effect if a number of advisors turn bullish at the same time. And indeed, several financial "gurus" turned bullish on the same date as Brinker. In addition, many of the momentum players, and other talking heads were jumping on the bandwagon as the war got started. Even my favorite contrarian, James Cramer, seemed to be calling for a bottom, when he opined that an "exquisite" opportunity presented itself around S&P 500 823. (Of course, he has been calling for a bottom a fair amount lately). There is simply too many participants for one person, such as Brinker, to have that great an impact on the stock market, even though he has a significant following. After all, when Bob gave his sell signal in January of 2000, the market rallied significantly to all-time new highs two months later. Similarly, the QQQs crumbled even after Bob issued his buy on the QQQs in October, 2000 and January, 2001. The point I am trying to make, is that I agree with Bob that I don't think he can have a very significant effect on the market. There were many advisors who were calling for a bullish move in the market. Moreover, even in the absence of all of these buy recommendations, the market was already in an oversold position and the resolution of the uncertainty surrounding the war would have probably also have kicked the market into high gear. Speaking of which...

IS THE WAR CAUSING THIS RALLY?

Caller: How much of this rally is directly related to the war? Bob asked rhetorically if anyone didn't know that this war was going to happen, or believed Iraq had a chance of winning? Of course not. Every investor in the world knew exactly what was going to happen. What investors have reacted to this week, is that oil prices collapsed, and the dollar firmed up.

EC: I think Bob's answer was a little simplistic. I think that the resolution of the uncertainties surrounding the pre-war negotiations, followed by the reports all week that the military action was moving smoothly helped boost equities. Moreover, there is historical precedent showing that markets react favorably in the wake of war. Check out this chart showing the performance of the Dow 60 trading days before and after the Korean, Vietnam War and Gulf War:

http://www.chartoftheday.com/20030129.ht...

DID THE MEDIA CAUSE THIS RALLY?

Caller: This caller read an article by Peter Brimelow on Thursday on CBS Marketwatch that Bob and two other individuals had become bullish on Tuesday and wondered if that helped get the rally off to a start. Bob said he didn't know how much of a following Peter Brimelow has, but Bob said he did not speak with Brimelow, and in fact had instituted a 72-hour media blackout, and did not speak with anyone in the media during the entire week the buy signal was issued.

EC: Peter Brimelow reported on Bob Brinker's bullish call, as well as the bullish calls on March 12th by Richard Band, of "Profitable Investing" and Index RX's Dr. Lawrence Czelusta at this link:

http://tinyurl.com/7ds8

EC#2: Even though Mr. Brinker didn't speak with anyone in the media, in addition to Peter Brimelow, both Aaron Task and Mark Hulbert reported on Bob Brinker's buy signal within 24 hours after it occurred. I referenced those articles in my Special Alert e-mails on the days they went out. If you would like me to resend you the links, just let me know.

NOTE: If you would like to read the rest of this newsletter, and/or find out how to subscribe to my service, drop me a line at:

mailto:davidk555@earthlink.net

or visit my website:

http://www.BeginInvesting.com/

-- posted by David_Korn

» David_Korn - Summary and Commentary of Bob Brinker's Moneytalk

WHY DID THE TIMING MODEL TURN BULLISH?

Caller: What caused your stock market timing model indicators to turn bullish after the close of the market on Monday, March 10th? Bob said he didn't want to go into detail, but he did say that there had been some improvement in his timing model over a period of time. The things that Bob was looking for fell into place on the night of Monday, March 10th when the S&P500 Index closed at 807, which was within roughly 3% of the October, 2002 lows. The caller asked if it was possible that the sentiment indicator in Bob's timing model finally turned bullish, because the caller had read that on Monday there was significant disparity between the up volume and down volume of about 9-to-1. Bob choose not to address the caller's comment, and instead said that he tries to keep some of his indicators proprietary because he is convinced that once you put your indicators into the public domain, they don't work anymore. Bob said one of his "key sentiment" indicators that he doesn't see widely followed on Wall Street, was really giving off some dramatic readings and the prices after the close of Monday was a "gift."

EC: I am 90% sure that the "secret indicator" Bob is talking about was in fact the "90% downside day" which is characterized by 90% downside volume and 90% downside price action. This occurred on Monday, and if you notice, Bob didn't dispute the caller's suggestion that this was the indicator, and instead simply choose not to address it directly.

EC#2: I do believe, however, that there was a second reason his sentiment indicator turned bullish Monday night. On Monday, the market posted its third-highest ever recorded Arms Index of 5.92. The only other times the Arms Index exceeded that was during the panic of October 19, 1987 (13.89), and the Asian crises on October 27, 1997 (8.84). This incredibly high reading in the ARMS index, combined with the 90% downside day, I believe were two of the primary reasons Bob pulled the trigger. The final factor was that the market was close enough to the October 9, 2002 all-time bear market closing low, that Bob didn't want to miss another opportunity and potentially miss out on the next bull run.

HOW LOW WILL THE MARKET GO IF THERE IS A TERRORIST ATTACK?

Caller: If there was another terrorist attack on the United States on the magnitude of what happened on 9/11, how low could the QQQ shares and SPY shares go? Bob noted that the QQQs have gone as low as $20 per share, and the SPY shares fell into the $70s. Bob then said, however, that it is impossible to predict the scope of terrorist attacks. When you invest in the stock market, you automatically accept all of the risks inherent in the world today. To try and forecast the impact of terrorism is impossible. The important thing to remember, is that there is a risk premium to being in the market today because of the fact that the post 9/11 world is different than the pre-9/11 world for the time being.

EC: The all-time bear market closing lows of the QQQ occurred on October 9, 2002, when they closed at $20.06. The intra-day low occurred on October 8th, when they traded as low as $19.76. The all-time bear market closing lows of the SPY shares (which track the S&P500 Index) also occurred on October 9, 2002, when they closed at $78.10. The intra-day low occurred on October 10th, when they traded as low as $77.01.

NOTE: If you would like to read the rest of this newsletter, and/or find out how to subscribe to my service, drop me a line at:

mailto:davidk555@earthlink.net

or visit my website:

http://www.BeginInvesting.com/

-- posted by David_Korn

» David_Korn - Summary and Commentary of Bob Brinker's Moneytalk

Bob Brinker certainly has taken a firm position on his opinion that the economy is headed for a significant improvement during the next six months. Here is an excerpt from my newsletter:

Excerpt from David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials and Special Alert E-mail Service.

THE ECONOMIC FUNDAMENTALS ARE IMPROVING

Consumer Spending

Bob Brinker Comment: Bob noted that consumer spending was flat for the months of January and February holding at an annual rate of $7.49 trillion. Spending continues to "bounce along" with little change. Americans' income, on the other hand, rose 0.3% in February which would project to a 3.6% annual rate of increase (if it continued). Bob noted that the American consumer has done a great job of continuing to spend despite the geopolitical concerns and the layoffs. Consumers have also been "reliquifying" by paying down some of their debt and hesitant about taking on new debt. Bob noted that reliquification is one of the necessary precursors for a better economy. If you are looking for the economy to improve sometime within the next six months or so, you would want to see a reliquification of the American consumer. That would also show up in an improvement in the savings rate, which we have seen lately.

Editorial Comment ("EC"): I think Bob is starting to lay down the case for his view that the economy is going to recover in the next six months which, in turn, supports his thesis that a new cyclical bull market has begun. Remember, the stock market is a discounting mechanism that historically reacts to what it perceives will occur six months down the road. Hence, I don't think it was any coincidence that Bob used that six month time frame when discussing the economic recovery. I suspect that in an upcoming Marketimer newsletter, and in the months ahead on the broadcast, Bob will become more specific in discussing the positive aspects of the economy, which would support the "Economic Indicator" of his timing model turning positive.

EC#2: The one thing that I think needs to be monitored, is whether Bob is looking for data to back up his position, rather than objectively analyzing the reality of the situation. Bob tends to focus on the data and news that supports his position, while ignoring the data that is contrary to what he has predicted. That can be very dangerous if you are in the prediction game. Part of my goal is to try and objectively analyze the data as well, and give you another perspective on investing-related matters.

Consumer Sentiment

Brinker Comment: Bob noted that the University of Michigan's sentiment index for March came in at 77.6 down from 79.9 in February. Bob downplayed the decline in March pointing out that you would expect a decline in consumer sentiment at the start of military operations.

EC: The March sentiment index of 77.6 was actually viewed positively as it was smaller than expected by economists, and smaller than indicated by the preliminary March figures reported two weeks ago. Still, this is the lowest level since September 1993 and the third month in a row that confidence sank, so there really is nothing to cheer about in this sentiment gauge.

Durable Goods

Brinker Comment: Sales of big ticket durable goods -- products defined as having a shelf life of 3 years or more -- declined 1.2% in February. In the non-durable area, sales of products such as food, clothing, etc., were unchanged. With respect to service spending (i.e. utilities, gas, etc.), that was up .5% in February, but some of that could be related to the weather.

Income

Brinker Comment: There was a 0.3% increase in American's disposable income for the month of February versus an increase of 0.4% for January. Income growth is outpacing spending. That means that the personal savings rate increased again, and is now up 4% from 3.8% in January. Last year, the savings rate was 0% which Bob said was not a favorable indicator for a possible economic recovery in the next six months.

Conclusion

Bob concluded this segment noting that if you are looking for the possibility of an economic recovery in the next six months, you need better savings rates (which we are seeing now), and you need reliquification (which we are seeing now). All of this is exactly what we want to see. Economic fundamentals always develop favorably in advance of any follow through in the actual economic data. You can have an extended period of lackluster economic data while the underlying conditions are improving. That is why it is so important to look beneath the surface of the reports in order to analyze the condition of the consumer to determine how it is changing.

EC: Bob's comments here confirm what I thought. Bob apparently sees an improvement in the underlying fundamentals of the consumer, and hence the prospects for a turn-around in the economy. Bob didn't address some of the negative economic reports last week, such as the decline in new and existing home sales in February. There was also some disheartening news that nondefense capital goods orders -- a barometer of capital spending -- fell 5.2% in February which wiped out the two previous months' gains and reversed an upward trend in total new orders. Still, the most important economic report is not due out until next Friday, when we get the employment report for March which will include data covering the average work week, hourly earnings, nonfarm payrolls and the unemployment rate. I will certainly cover this report in next weekend's newsletter.

If you would like to read the rest of this newsletter and/or learn how to subscribe to my service, drop me a line at:

mailto:davidk555@earthlink.net

or visit my website at

http://www.BeginInvesting.com

-- posted by David_Korn

» Katrina75 - Re: Summary and Commentary of Bob Brinker's Moneytalk

Does anyone remember the study that Brinker cited as compiled by a large Mutual Fund showing the results of 50% invested in the Index 500 and 50% in Treasuries as compared to an agressive portfolio over many years ? T. Rowe Price rings a bell. Bob has mentioned this study more than once in the past year and it was quite favorable for a low risk/reward portfolio

-- posted by Katrina75

» SteveT - Re: Re: Summary and Commentary of Bob Brinker's Moneytalk

I believe it was a study done by Neuberger & Berman. I got it some where if I can find it. Oh here it is.
http://www.suite101.com/discussion.cfm/i...

-- posted by SteveT