Moneytalk Bob Brinker Summaries - Information ONLY

» DellaO - Perfect Summary of Dishonesty

Author: Will_L
Date: June 8, 2003 7:19 AM
Subject: Re: Re: QQQ
In response to message posted by dija:

"pbradford, regardless of anything the anti-brinker contingent tells you, brinker has not "ignored" the QQQ issue. Admittedly, he could have handled it much better. However, it is not true that he has ignored it. He came right out and admitted to one caller on the radio: "We were wrong."

More importantly, he advised his subscribers to HOLD the QQQs "for eventual recovery." If you advise someone to buy a stock, and it goes down, and then you advise them to "hold" it, you are not exactly ignoring it.
"

LOL Dija, I see Pbrad wasn't buying your characterization of Brinker's handling of the QQQ trade. You even had to soften your apology for Brinker after the response.

One thing everybody should know about Brinker first and foremost....You cannot trust a damn thing he says.

If something Brinker, says or does goes right, you will hear about it forever. If it goes wrong Brinker will lie or spin or change or simply hide the information. He has proven this over and over.

What Brinker did with the QQQs was send a letter telling people to buy them that did not contain a price or date while exhorting people to use from 12% to 33% of a portfolio to ACT IMMEDIATELY to buy them. They were trading in the 80s upon reciept of the letter. At the time he claimed to have identified a counter trend rally lasting 2 to 4 months. When the QQQs sunk, the next month he chose not to put them in the portfolios but claimed they should have been purchased from 70 to 74--the former a price that was not available at any time near his bulletin. Thus within a few weeks he was spinning the price lower and although he based the amount put into the QQQs on money taken out of the portfolios, he chose after the fact not to put the QQQs in his portfolios. Had the QQQs been going up, rest assured the QQQs would have went into the portfolios just as Hulbert had placed them upon reciept of the bulletin.

Later in what Dija didn't tell you, Brinker kept lenghtening the call finally calling for the CTR to begin up to 8 months after his original CTR and acting like it was the same event.

At one point Brinker dishonestly left out any mention of the Oct 2000 call and said this:
"We predict a CTR in the QQQs of "up to 50% or more" off the "benchmark low of 52 set on Jan 3, 2001"

I found that particularly dishonest. You see Brinker by not mentioning his October buy with a third of a portfolio at 83 for many, was angling to make another call at 52. Notice the weasel words in the "announcement" . "up to 50% or more"--only a crook would use such crap. Notice also the hubris of the "benchmark low" of 52? Only think benchmark about it, is that the qQQs happened to be there on Jan 3, 2001 on their way to 19 and a fraction from Brinker's initial call.

Alma needs to know that Brinker uses words like "benchmark low" loosely. He described a big buying point in 98 at dow 8650 as a "benchmark low". He claimed his "model" called such benchmark lows within 3%. The market then plumetted into the low 7,000s and You never heard about that "benchmark low 8650" stuff again.

While Dija says that Brinker gave great information with having a "hold" on the QQQ trade, that is slightly deceptive. You see with Brinker the verbs "Hold" and "Hide" are synonomous.

TEFQX was a buy from 12.00 to 18.00 and back down to 4.00, from intial coverage in Jan 2000 through about March 2001. At that time Brinker at 4.00 Brinker moved tEFQX to a "hold". It has never been mentioned again in the newsletter. It became a "hide".

With the QQQ trade Brinker promised in that bulletin to give"guidance" in the monthly newsletter on the trade. He has not done so. As I predicted he would use the re-entry into the market to get rid of the QQQ TRADE.

He did exactly that. He dishonestly placed QQQs in each portfolio at 24.00 and stopped giving any commentary about the QQQ trade that he entered the same security at 82.00.

Now his word was that he would give guidance on the trade in the monthly newsletter until closed out. Hiding the trade and never closing it out, is the way of a charlatan. For those who trusted the guy, ask yourself if they can simply pretend the QQQs didn't happen with up to a third of a their portfolio.

Trust is a necessity in a finanical advisor. What else matters if it has been shown that an advisor cannot be trusted?

-- posted by DellaO

» Kirk - Re: Perfect Summary of Dishonesty

Good summary of the situation from Will. Thanks for posting that info Della.

One of the reasons I thought the original "Act Immediately Memo" was a hoax was I'd never before seen Brinker recommend an investment in something HE THOUGHT was "crappy." It was clear TO ME that he thought QQQ was crappy but BRINKER THOUGHT QQQ would go up in value in the short term. To me, this is more gambling than investing as no investor should buy something they don't think will go up in value over the long term. Traders do it for a living but not the type of folks who listen to Brinker on the radio as they do housework.

I spoke to someone in the medical profession at the time who listened to Brinker and she thought Brinker had suffered a stroke to do something so reckless with other people's money!

BJ Group Nasdaq100 Memo: http://www.suite101.com/files/topics/270...
Brinker MT Act Immediately Bulletin: http://www.suite101.com/files/topics/270...

Many people forgive Brinker for his recklessness with the QQQ trade because they didn't follow his advice. They,probably only put a small amount, not what Brinker recommended, into the QQQ trade and they "chickened out" and sold once they lost a certain amount of money. This turned out well for them overall so they have no sympathy for the poor suckers who actually believed in Brinker and took all of his advice and were let down by how he handled it.

I actually think Brinker did a good job of risk management in that the overall effect of QQQ on his portfolios was to lower his good market timing returns to those of the buy and holders. This is "not bad" just it is also "not what is advertised."

This difficulty getting back into the market is what some of us predicted would happen when he made a good call near the top to lighten up on asset allocation. I remember saying here that Brinker might have made a great "call" to sell 60% but then getting back in could be a problem. Sure enough, he got back in with QQQ for up to half taken out and lost 75% of that money before he put the rest in.

You can subscribe to the group with this URL http://www.suite101.com/subscribe_discus...

Then all you need to do is click "What's New" under "Member Central" on the left of most screens here. The discussions you subscribe to will be listed so you can easily check your favorites without having to bookmark each of them.

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  Date       Kirk    S&P500   Delta
2003 YTD    +26.4%   13.1%    13.6%  as of 6/8/2003 
 
                              Kirk   S&P500+   NASDAQ 
4+ Yrs 12/31/98 to 06/8/03    93.8%  (15.2%)  (25.8%) 

+with dividends reinvested.

Click for a free issue of my newsletter .

-- posted by Kirk

» David_Korn - Aaron Task Summarizes Bob Brinker

Aaron Task did a nice summary of Bob Brinker's current market outlook in an article today on theStreet.com. This link brings you to the article:

http://www.thestreet.com/markets/aaronta...

I also got a nice plug!

- David Korn

Editor of http://www.BeginInvesting.com

-- posted by David_Korn

» Kirk - How to save Money on Moneytalk via Internet

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-- posted by Kirk

» Kirk - QQQ under performs the Nasdaq Composite

Nice job in this weeks newsletter David.

You wrote in your newsletter:

"Finally, the relative trend of under performance of the QQQ vis-a-vis the Nasdaq continues. Notice that the Nasdaq is up 30.05% from the March lows, whereas the QQQ is only up 28.78% during the same time frame. You rarely if ever would have seen that in prior years."

I believe the QQQ index is a "beauty pageant" of stocks that were put together by folks wanting to make the index attractive to shorts. Their goal is to put the most popular stocks in QQQ at their tops and take them out at the bottom and replace with new favorite stocks.

What happens is QQQ is always, in effect, buying high and selling low. The QQQ will do great in a mania where folks don’t pay attention to valuation but as an investment it is one of the last things folks should consider.

Other than MSFT, is there any stock in QQQ that Bob Brinker would recommend for outright purchase when the S&P500 is at 800? I doubt it as he'd say they are all over valued if you could pin him down. Thus, you should ask yourself "why does he recommend buying QQQ?" we know he recommended it three times now in his newsletter. First in the mid $80's, then again in the mid $60's and finally in the mid $20's where he officially put it in his portfolio (We alerted to World to his game so he couldn't get away with it any more I think). Someone should call his show and ask him if this means he thinks QQQ is a great value in the mid $20's or if he is only recommending purchase now to sell later before it goes even lower than its current low of $19+.

Brinker MT Act Immediately Bulletin: http://www.suite101.com/files/topics/270...

BJ Group Nasdaq100 Memo: http://www.suite101.com/files/topics/270...

2003 0311: Hulbert: Interpreting Brinker's latest signal http://tinyurl.com/7b86

-- posted by Kirk

» David_Korn - Bob Brinker on Creating Laddered Bond Portfolio

Excerpt from David Korn's newsletter dated June 14-15, 2003

CREATING A LADDERED BOND PORTFOLIO WITH I-BONDS

Brinker Comment: Bob noted that some of his listeners have come up with very creative strategies for creating a laddered bond portfolio utilizing the Series I Savings Bond. Bob gave an illustration of how this might work. Assume that you had $50,000 to invest. You could invest $10,000 in a 1-year CD; $10,000 in a 2-year CD; $10,000 into a 3-year CD; $10,000 into a 4-year CD; and invest the remaining $10,000 in a 5-year Series I Savings Bond. Bob noted that Series I Bonds have a 30-year maturity, but after 5 years, you can close it out without paying a penalty. Each year when your CD comes due for that year, you could buy another Series I Savings Bond. After 5 years goes by, you will have a ladder of Series I Savings Bonds, and you can continue this ladder for an indefinite period of time. This creates a rolling ladder of bonds that have guaranteed principal interest and inflation protection combined with preferred tax treatment. Bob said as far as he is concerned, this is one of the most intelligent ways of building a conservative, inflation-protected, tax advantages bond portfolio. Bob thinks this is a great strategy!

Editorial Comment (EC): Very interesting comment and good illustration by Bob. I like this strategy, but of course it is designed for conservative investors and has nothing to do with investing in stocks. If you want to adopt this strategy, keep in mind as Bob said that if you do cash in the I-Bond within the first five years after you purchase it, you will pay a penalty. That penalty requires you to forfeit three months' worth of earnings in the I-Bonds.

EC#2: Did you know you can follow this entire strategy online? You can purchase the Series I-Savings Bonds directly from the Government at this link:

http://www.savingsbond.gov/ols/olshome.h...

EC#3: Now, all you need is to purchase your Certificates of Deposit. I have previously recommended ING Direct, which was actually recommended to me by one of my subscribers. I have an account with them, find them easy to use and their rates are very competitive. You can do everything online, and their CDs are insured by FDIC up to $100,000 per account. They also offer a promotion whereby if you open an account with them through a referral of an existing member, you get a free $25. Even if you aren't interested in purchasing a CD from them, their savings account is yielding 2% which is higher than even the Vanguard Money Market Account, and there are no fees, expenses or minimums. I am happy to be that person to refer you so that you get the free $25, and I even get a $10 for referring you! If you are interested, just e-mail me and I will send you the link which will get you the $25 promotion.

If you would like to learn more about my newsletter service, simply e-mail me at:

mailto:davidk555@earthlink.net

-- posted by David_Korn

» DellaO - Brinker's Contradictions--Totally Opposite BS

-- posted by DellaO

» Kirk - Moneytalk on Demand for FREE

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-- posted by Kirk

» David_Korn - Bob Brinker's Moneytalk

WHY DID BOB BRINKER'S 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."

Editorial Comment "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.

SEMICONDUCTOR CHIP SECTOR

Caller: This caller recalls that in 1998, Bob hit a "grand slam" when he recommended the large semiconductor capital equipment stocks such as Applied Materials, Novellus, and KLA-Tencore. Do you see any potential for that sector in this market climate? Bob said he has a policy of not recommending individuals stocks. Bob noted that if he says something about an individual stock, people will think he has ulterior motives. Bob noted that he made "comments" about the stocks the caller mentioned back in 1998, but he never told anyone to go out and buy them. Bob noted that with respect to these stocks, they have already started to have a nice run, but you want to try and buy them close to the bottom. Bob noted that some of these stocks have tripled already from their bottoms. The more you pay for a stock, the less potential you have for returns, and the increase risk you face. Due diligence is essential.

EC#1: Long-time listeners to the program should recall Bob's frequent discussions of KLA-Tencore (Nasdaq: KLAC), Novellus (Nasdaq: NVLS) and Applied Materials (AMAT). SG Cohen upgraded all of these stocks on Thursday from a "market perform," to a "market outperform." In my opinion, these stocks should perform in line with the Nasdaq or better on the upside. For example, this past week, the Philadelphia Semiconductor Index (Ticker: ^SOXX), rose about 10%! These stocks can be great trading vehicles, but to profit from them, you really have to resist fear and buy them low, and then overcome greed and sell them when they are high. Sounds easy, right? Trust me, if it were that easy, we would all be rich!

EC#2: Bob's reference to people accusing him of having ulterior motives most certainly relates to his previous recommendation of Ultra-Tech Stepper. Bob still gets criticism on the Internet message boards for recommending that stock in his newsletter, but not disclosing his relationship to the company when he made the recommendation. In short, the UTEK employees had the option to use the services of Bob's financial advisory group (called the BJ Group at the time), to administer their 401(k) Plan. In fact, Bob never discussed that relationship in his Marketimer newsletter, and the first I ever heard of it, was when someone caught him off guard and asked him about it on Television during the Nightly Business Report. I don't think Bob wasn't too happy about that, and he hasn't recommended a new stock since.

WHAT WILL CAUSE BOB TO ISSUE THE NEXT SELL SIGNAL?

Caller: This caller wanted to know if Bob anticipated staying in the market for a certain length of time, or whether he would automatically go to a sell signal once the market gained a certain percentage above the level where Bob issued his buy signal. Bob gave a very careful and measured response. Bob said he has no doubt that at "some point down the road", his timing model will revert back to negative territory and he will issue a sell signal. Bob noted that he issued a sell signal in January, 2000, and then issued a buy signal on March 11th of this year. (Bob forgot to mention the QQQ recommendation).

Bob then noted cyclical bull markets have the potential to run 1-3 years, and produce gains in excess of 25% in the S&P 500 Index. If everything works well, that is exactly what will happen. Would Bob make a change before that? Only if it became "absolutely apparent" that his timing model indicators had changed. Bob noted that if he choose a number to get out of the market -- such as a 25% gain measured from when he issued his buy signal -- he would be betting against his model if it were still in positive territory. If the market continued to rise, he would miss capturing those gains. Bob said his objective is to have as much accuracy as possible in what is a very inexact science. As long as his timing model is favorable, he will stay with the market, no matter what percentage gain the market has sustained.

EC: It will be interesting to see how Bob handles his next sell signal. For starters, will he go to 100% cash, rather than 65% cash as he did in 2000? In hindsight, that would have been a great idea. I am fairly certain he will avoid any trading experiments. Another possibility would be the use of bear market mutual funds, a topic raised by the next caller.

MAKING MONEY IN THE NEXT BEAR MARKET

Caller: This caller wanted to know if at the end of this bear market rally, it would be possible to buy a hedge fund to make some money when the market goes down. Bob didn't particularly like that question, as it assumed that this was a bear market rally, and not the start of a cyclical bull market. Bob pointed out to the caller that it was his belief that we were at the start of a cyclical bull market, not a bear market rally, and then noted that it should last a considerable period of time, and have a considerable rise off of the March 10th closing lows. The caller then modified his question to ask whether it was possible to purchase a hedge fund in his IRA account at the end of a cyclical bull market to make money when the market declined. Bob noted that you need a large net worth to take advantage of hedge funds. The caller had about $100,000, to which the Bob said he probably wouldn't be a good candidate for a hedge fund. Bob wasn't too keen on the idea, noting that hedge funds don't always do well and simply because they are a hedge fund is no guarantee of success.

EC: There really is no need to go into a hedge fund just to capture downside in the market. There are plenty of "bear market" mutual funds. The Rydex Fund family has a slew of them, with the most widely known bear mutual fund being the Rydex Ursa Fund (Ticker: RYURX). This fund attempts to have a one-to-one INVERSE relationship with the S&P500 Index. In other words, if the S&P 500 declines, that fund will make you money.

E-mail me if you want a recent newsletter:

mailto:davidk555@earthlink.net

- David Korn, editor of David Korn's Stock Market Commentary, Interpretation of Moneytalk, Financial Education, Helpful Links, Guest Editorials and Special Alert E-mail Service.

Website: http://www.BeginInvesting.com/

-- posted by David_Korn

» David_Korn - Some Recent Moneytalk (Bob Brinker host) calls

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.

BOB BRINKER DISCUSSES LOW INTEREST RATE ENVIRONMENT

Brinker Comment: Bob opened the weekend cheerily noting that we now have the lowest interest rates since August 5, 1958 - almost 45 years ago. The Federal Funds rate is now down to 1%. As amazing as this is, it gets even nuttier. The 1-year Treasury Bill is only yielding 0.94%. A 6-month Treasury Bill is yielding 0.93%. Even the longest of the Treasury notes are at historic lows. The 10-year Treasury, now generally viewed as the "benchmark," is coming in with an unprecedented yield of 3.5%.

Bob noted that some investors seemed surprised that interest rates rose immediately following the announcement by the Federal Reserve that they were lowering interest rates by 25 basis points. Why did that happen? Well, a lot of people were expecting the Fed to lower interest rates by 50 basis points. When they only lowered them by 25 basis points, many interpreted that decision as meaning that the Fed is more optimistic about the economy and we should sell our bonds. Going forward, Bob expects bonds to be extremely sensitive to any economic data - sensitivity like we have never seen before.

Caller: Do you think longer term interest rates using the 10-year bond as a proxy will retest its lows before heading higher? Bob noted that the 10-year bond is basically near its lows in terms of yield. Whether rates go up will be tied to the direction of the economy. Once investors become convinced that a sustainable economic recovery is probable, that is when you will see a rise in rates. The caller asked Bob when he thought that might occur, to which Bob replied that the "consensus" right now is that the economy can improve in the second half of the year, but that remains to be seen. Bob did add that he expects the economy to show some "better action in 2004."

EC: Bob's view toward the U.S. economy was shared by Central Bankers meeting in Switzerland for an annual meeting of the Bank for International Settlements. The Central Bankers see a "gradual sluggish pickup across the world moving into next year":

http://tinyurl.com/flyc

1958 v. 2003

Caller: This caller wanted to know if Bob thought today's stock market would mirror the stock market action in 1958 given that there are so many similarities between what happened with interest rates in 1958 versus now. Bob didn't think it was a good comparison mainly due to the global situation. Back then, we had the cold war, but now we have the war on terrorism.

EC: Check out this chart showing the weekly S&P 500 Composite starting in June 1058 versus the current market trend. It will make you smile if you believe the market is basically going straight up from here!

http://mrci.com/special/wspi58.asp

1998 v. 2003

Caller: This caller sees some similarities between the market now and the end of 1998 when Bob had a buy signal and the Dow was around 8900. Bob noted that it seems similar because the total stock market index is down to around the same level it was 5 years ago. Bob added that there are actually a lot of differences between the current situation and 1998. In 1998, we were many years into a protracted economic recovery which still had a bit to go. Presently, we have come through recession and have been in an extended period of economic malaise.

EC: In 1998, Bob was fully invested in the stock market. I think the caller was referring to Bob's recommendation in the fall of 1998 to lump sum new money into the market in what Bob sometimes referred to as a "gift horse" buying opportunity.

MONEY MARKET FUNDS

Brinker Comment: One of the unfortunate situations created by low interest rates, are the paltry yields being given by money market funds. Bob took off the gloves and went after money market funds that charge too much money to run their funds calling it disgraceful that they can't provide a fair rate of return because they charge such high fees. Bob noted that money market funds can earn the rates that are offered by Treasuries and other short term instruments. However, if they are charging high fees and expenses, you won't see much of a rate of return. Bob said there is no excuse for a money market fund to charge you more than 25 to 35 basis points to run the fund. Any funds that are charging more than that, are "gauging" their shareholders and fund managers should be ashamed of themselves if they are doing that. If they don't change their practices, Bob said he would hope that you would take your money out of those funds, and put them in a fund family that charges more reasonable fees.

Caller: This caller wanted to know if Bob had heard that certain money market funds are "breaking the buck." Bob said the only reason a money market fund would have to go below $1 per share is because they are charging too much in expenses.

EC: Bob has traditionally recommend the Vanguard Prime Money Market Fund (Ticker: VMMXX). It only has a 0.33% expense ratio. Here is a link to a listing of some of the highest yielding money market funds. Don't get too excited though, the yields are still very low even in the best funds:

http://tinyurl.com/flgc

Brinker Comment: Bob noted that the taxable money market fund that he recommends (Vanguard) is yielding about 85 basis points, and the tax-exempt money market fund is actually yielding 90 basis points! The reason Vanguard is able to offer good yields is because their expenses are low. Money market funds that have high fees and expenses have to go!

EC: Interesting that the Vanguard Tax-Exempt Money Market Fund (Ticker: VMSXX) is yielding 0.94%. This week I am going to research various alternatives to Vanguard's Money Market fund for my cash reserves given the low yield. I should have done this sooner, but better late than never. Look for a change in next week's newsletter.

Brinker Comment: Bob noted that in his earlier life, he managed a bank portfolio in Philadelphia. One of his responsibilities was to invest short term money. This didn't require a degree in rocket science and it is actually pretty straightforward. You buy quality commercial paper, treasury bills, certificates of deposit, and other quality instruments with short-term maturities. That's all you do. You do not need to charge an arm and a leg in expenses to do this. Bob got quite animated about the subject and suggested that any money market funds that are charging 80 basis points or more should go out of business!

EC: That was actually one of Bob's first Wall Street jobs -- managing a bond portfolio for a bank in Philadelphia. Bob also worked as the U.S. portfolio manager for the London-based Guardian Royal Exchange Group and also as a vice-president for the Bank of New York.

E-mail me if you want a recent newsletter:

mailto:davidk555@earthlink.net

- David Korn, editor of David Korn's Stock Market Commentary, Interpretation of Moneytalk, Financial Education, Helpful Links, Guest Editorials and Special Alert E-mail Service.

Website: http://www.BeginInvesting.com/