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Bob Brinker’s Market Timing

| Last Updated: February 1, 2012 | Posted in: Individual Gurus

Guru Accuracy Rating
This is above average. Current guru average is 47%

As suggested by a reader, we evaluate here the stock market forecasts of Bob Brinker, mostly since August 2002. Evaluated predictions/recommendations come indirectly via MarketWatch columns, augmented separately by a few items from other sources. Mr. Brinker is editor of the Marketimer newsletter, which “covers stock market timing, federal reserve policy, specific mutual fund recommendations, and model portfolios for various objectives.” He also hosts the widely syndicated MoneyTalk radio program, during which he “answers investment questions from around the country and discusses current issues…” The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:

  • Bob Brinker’s market timing model is based on: state of the economic cycle, monetary policy, valuations and investor sentiment.
  • His web site offers little insight regarding forecasting methodology or record, but does include a self-assessment of model portfolio performance.
  • Since he is mostly a long-term investor, we replace our usual 5-trading day test of his forecasts with a 6-month (126-trading day) test. We consider all four performance intervals shown in judging specific forecasts.
  • Bob Brinker’s forecast sample is modest, as is therefore confidence in the measurement of his accuracy.

Here are a few additional notes to augment the tabular summary:

From Mark Hulbert in MarketWatch (4/2/10): “Even though he failed to anticipate the recent bear market, his market timing record over the long-term remains one of the best of any tracked by the Hulbert Financial Digest.”

From Mark Hulbert in MarketWatch (3/3/05): “Which newsletters have done the best according to the HFD’s tracking over the last 10 years? The table below lists the top five performers on a risk-adjusted basis over the 10 years through Feb. 28. Bob Brinker’s Marketimer: [annual return] 13% [with lower than market risk].”

From Steven Goldberg in Kiplinger’s (2/22/05): “[Among] the top newsletter[s] of the past ten years (through the end of 2004), Bob Brinker’s Marketimer is in fourth place. Although Brinker’s fund picks have slightly lagged the market on average, his timing moves have put him ahead of the market. Over the past ten years, he’s gained an annualized 13.2%, with 19% less volatility than the market.”

From Steven Goldberg in Kiplinger’s (4/10/03): “Data compiled over the 1980s and 1990s by the Hulbert Financial Digest show most timers badly lagged the market averages. According to Hulbert, however, Brinker’s average portfolio is ahead of the broad-based Wilshire 5000 stock index over the last one, three, five, eight and ten years. But Brinker trails the Wilshire over the full 16½ years Hulbert has tracked him because of a money-losing sell signal after the 1987 crash. Hulbert’s most recent results are through the end of January of this year.”

From Mark Hulbert in MarketWatch (3/12/03): ” Here is how I sum up Brinker’s market timing record over the 15 years the Hulbert Financial Digest has tracked it:

  • Buy signals: Prior to this week’s, and counting the QQQ trade as a half signal rather than a full signal, Brinker has been successful once (1991) and unsuccessful a half time (October 2000).
  • Sell signals: He has been successful once (January 2000) and unsuccessful once (January 1988).

By this count, Brinker’s timing signals have been slightly more successful than not, though not by a lot.”

From James Glassman in Capitalism Magazine (11/20/01): “[Brinker’s] long-term record is nothing spectacular. According to the Hulbert Financial Digest, for the 10 years ending Dec. 31, 2000, Brinker’s long-term growth portfolio rose an annual average of 13.7% while the S&P rose at 15.1%. I won’t deny that Brinker is good compared with other timers, but why go to the trouble of jumping in and out of the market if you can’t beat the averages?” [This comment does not address risk-adjustment of returns.]

From the Index Fund Advisors web site: “Jeffrey Lauderman wrote a BusinessWeek article dispelling the myth of market timing, which he called a perilous ploy and a guessing game. His 1998 analysis included an interview with Mark Hulbert, who monitors the time pickers recommendations. Hulbert’s conclusion provided a knockout blow to all 25 newsletters he tracked. None of the newsletter timers beat the market. For the 10 year period ending 1988 to 1997, the time pickers’ average return was 11.06% annually, while the S&P 500 stock index earned 18.06% annually and the Wilshire 5000 earned 17.57% annually. The figure below tells the story.” [The chart shows that Mr. Brinker did well compared to other market timers, but that he underperformed the S&P 500 index over this decade.]

See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.

After our initial review of Bob Brinker’s stock market forecasting record, Kirk Lindstrom of Kirk’s Market Thoughts wrote (on 7/26/05) to offer the following additional information:

There is a”Detailed Summary of Bob Brinker’s QQQQ Advice” at “Bob Brinker Fan Club” providing additional information on Mr. Brinker’s call for a significant countertrend rally in late 2000, referenced in the 8/22/02, 12/19/02, 3/12/03 and 4/19/04 entries of the table below. The summary is very specific regarding follow-up advice through early 2003. Note that Mark Hulbert did not include the consequences of this advice in his evaluation of Mr. Brinker’s performance (see 12/19/02 entry below). Images of documents show the clarity of Mr. Brinker’s: (1) advice to pull back from the stock market in early 2000; and, (2) forecast for a significant countertrend rally in October 2000.

The “Fan Club” also presents a long-term “Brinker Recommendation History” covering major recommendations during 8/82-4/03.


    S&P 500 Index  
Date Comments re:  Bob Brinker at MarketWatch 21-Day Return 63-Day Return 126-Day Return 254-Day Return  
2/1/12 …Bullish. Brinker’s model equity portfolios are 100% invested. 3.4% 6.2% 4.2% 14.2% +
4/2/10  …his target level for the S&P 500 index  is just the mid-to-upper 1200s, which represents an increase over current levels in just the high single digits. Still, he is recommending that his clients maintain a fully invested allocation in their equity portfolios.  -1.2% -13.5% -3.9% 12.2%
2/1/10 …his market timing model is bullish and his model portfolios are fully invested… “Our indicators suggest that a new cyclical bear market decline in excess of 20% is not likely to begin during the winter season. While…cyclical bull market corrections can occur at any time, we would regard any such pullback as a health restoring event…” 2.7% 9.0% 1.1% 19.7% +
12/22/09 “…we estimate upside potential for the S&P 500 index into next year in the 1170 to 1240 range.” That upside potential represents a gain from current levels of between 6% and 13%; his model portfolios are fully invested. -1.9% 4.4% -2.3% 12.5% +
5/20/09 “…the final bottom for the cyclical bear market was registered…in early March… Since that time, we have been in the early stages of a cyclical bull market which should carry into next year and generate large percentage gains for the major indexes.” Brinker is recommending that subscribers’ stock portfolios be fully invested. 2.0% 9.5% 22.8% 18.8% +
12/18/08 Brinker currently believes the stock market is in a perhaps extended bottoming process… “We are aware that there is widespread fear that financial Armageddon is the likely outcome of the global financial crisis. We take the opposite view, and expect the stock market to record significant gains during the next major market uptrend…” -5.1% -13.2% 4.1% 26.3% +
6/2/08 …his market timing model “remains in favorable territory as we approach the start of the summer season. We continue to expect stock prices to work higher and to achieve new historic highs in the market indexes.” Brinker’s model portfolios are fully invested. -7.3% -6.1% -35.9% -32.0%
3/12/08 “The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months.” 1.8% 3.8% -6.4% -42.4%
2/22/08 “As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S&P 500 Index to work its way into record new high ground by late this year or in 2009.” 0.0% 2.8% -5.8% -43.5%
1/23/08 “…the risk of a cyclical bear market decline in excess of 20% is not likely to materialize any time soon… We expect the S&P 500 index  to achieve new record highs this year and to reach the 1600’s range…” Brinker’s model portfolios are fully invested. 1.1% 2.8% -4.6% -37.5%
12/14/07 “…his model portfolios remain fully invested… “The short-term correction that began in October and continued into November has served as a health-restoring pullback and has paved the way for new record highs in the S&P 500 index…” -6.5% -13.0% -7.3% -38.4%
11/15/07 “…there is no risk of a cyclical bear market (a decline of 20% or more as measured by the S&P 500 index) in the months ahead … We expect the stock market to set a series of new record highs into next year.” His model portfolios are fully invested. -0.4% -7.0% -1.8% -40.8%
10/5/07 “…expect significant additional stock market progress into next year as investors discount growing corporate earnings in an environment of low inflation and benign interest rates.” His model portfolios are fully invested. -3.6% -9.4% -11.9% -36.8%
8/1/07 “Marketimer regards the current stock market weakness as a short-term correction.” His timing model continues to call for equity portfolios being fully invested. -0.6% 5.1% -7.5% -14.8% 0
7/27/07 “A strong case can be made for a move into the S&P 500 index   1600’s range as we move forward and investors begin to discount operating earnings growth potential into 2008 … We do not expect to see a cyclical bear market anytime soon.” 0.5% 3.9% -8.8% -12.0%
6/8/07 …he believes that there is “no risk” of a bear market occurring this year (defined as a decline in the S&P 500 Index  of more than 20%). His model stock portfolios remain fully invested. 0.2% -1.9% -1.5% -11.4%
4/27/07 …he continues to be bullish on the U.S. stock market… “potential exists for the S&P 500 index to challenge its previous record high of 1527.46…” 1.6% -0.8% 1.5% -5.7% +
2/5/07 Bullish. “…the risk of a cyclical bear market decline in excess of 20% is not on the radar screen at this time.” …he continues to recommend that subscribers allocate 100% of their equity portfolios to the market. -3.8% 4.1% -1.0% -7.6%
12/12/06 …he is sticking with his longstanding target for this bull market in the “low to mid 1400’s range…” 1.4% -1.4% 7.9% 2.4%
8/28/06 …any further weakness in the 1,200-1,250 range will present an attractive entry point…the S&P 500 Index will resume its uptrend following the completion of the 2006 correction process. Our minimum target range for the S&P 500 is 1,350 to 1,400, within a timeline of fourth-quarter 2006 to mid-2007. 2.7% 7.6% 8.1% 13.2% +
6/1/06 Bob Brinker’s Marketimer: Bullish. In his most recent issue, which was published in early May, editor Bob Brinker anticipated a market correction and wrote that “subscribers looking to add new money to the market could be well served by a cautious approach at this time.” However, by no means was he giving up on his longer-term bullish stance. Should a correction unfold, he added, it would be healthy: “Clearly, the stock market has come a long way with little or no weakness, and therefore we would regard any short-term correction that develops as a health restoring event.” His recommended allocation to the stock market remains 100%. -1.2% 1.4% 7.9% 18.0% +
3/1/06 Bob Brinker’s Marketimer: Bullish. In his most recent issue, editor Bob Brinker writes “We remain positive on the stock market outlook. Our minimum target price level for the S&P 500 index is the mid 1300s range, and the door remains open to the possibility that a higher price target may develop going forward.” Brinker recommends that equity portfolios be fully invested. 0.7% -2.4% 0.8% 8.1%
2/23/06 Bob Brinker’s Marketimer, also a mutual fund letter that both times the market and selects individual funds, has been the most reliably bullish of the three bold bulls. And it still is. 1.2% -2.4% 0.4% 9.2% +
12/23/05 [Among the] six newsletters that rank highest on the Hulbert Financial Digest’s Newsletter Honor Roll for 2006 [is] Bob Brinker’s Marketimer. Editor Bob Brinker is bullish. In his most recent issue, he wrote: “We anticipate additional stock market gains as this cyclical bull market continues. Our minimum target price level for the S&P 500 index is the mid-1300’s range.” 0.4% 2.6% -1.4% 12.3% +
8/31/05 [Among] the five newsletters on the Hulbert Financial Digest’s monitored list whose market timing advice has produced the best risk-adjusted performance over the past decade [is] Bob Brinker’s Marketimer… Brinker’s recommendation is for subscribers to be fully invested in stocks. His bottom line advice from his most recent issue: “Stay the course, and ignore the bad news bears.” 0.7% 3.0% 5.6% 7.6% +
8/19/05 “We recommend that Marketimer subscribers remain fully invested. Our model portfolios have been fully invested since our March 2003 buy signal. Subscribers looking to add money … can use a dollar-cost-average approach [i.e., invest in small amounts at regular intervals without regard to timing or price]. In the event the S&P 500 Index dips below the 1,160 level, we rate the market attractive for purchase. [The S&P stood at 1,219 on Thursday night.] 0.1% 0.9% 5.5% 6.0% +
8/1/05 Bob Brinker believes that the bull market that began a couple of years ago “has a significant distance to go both in terms of time and percentage gains.” -2.2% -4.6% 4.0% 3.6%
6/29/05 In his most recent issue, editor Bob Brinker writes “A review of our ‘five root causes of a bear market’ convincingly concludes that the bears remain out in the cold. We anticipate further gains going forward… (T)his cyclical bull market has ample room to roam higher.” 2.9% 1.3% 4.7% 6.7% +
4/29/05 Bob Brinker’s Marketimer, edited by Bob Brinker. Brinker’s market timing model is based on four factors: Where we stand in the economic cycle, monetary policy, valuations, and investor sentiment. This model currently “suggest[s] that the cyclical bull market remains intact. Although we believe a new cyclical bear market is inevitable at some point, we do not expect the current cyclical bull market trend to end until our stock market timing model turns bearish. We do not expect to see that happen anytime soon.” 3.0% 7.5% 3.0% 13.1% +
1/27/05 In early January, Brinker wrote serenely: “The Marketimer stock market timing model remains in a moderately favorable territory as Year 2005 commences. Although short-term pullbacks are inevitable at this stage of a cyclical bull market, we believe the market will likely trade with an upward bias going forward…” 2.5% -1.5% 5.3% 9.0% +
12/29/04 …while he believes the stock market during 2005 will have an upside bias, “the longevity of this cyclical bull market will remain an area of intense focus.” -3.5% -2.6% -1.0% 2.9%
10/4/04 …he continues to recommend that stock portfolios be 100 percent invested. -0.4% 6.8% 3.6% 5.4% +
8/2/04 Bob Brinker, editor of Bob Brinker’s Marketimer, says that “the risks in the stock market, in our view, are primarily related to exogenous geopolitical events that remain beyond the control of investors.” Brinker believes that we shouldn’t let those risks keep us out of the stock market right now. -0.2% 1.9% 5.9% 12.5% +
6/10/04 Right now, he says, “we view the market as attractive for purchase on dips below the 1,100 level on the S&P 500.” -1.9% -1.6% 4.1% 5.9% +
4/19/04 Bob Brinker of Marketimer is bellowingly bullish without even these qualms. Recently, the service said flatly: “We believe the fundamentals that have been supporting this cyclical bull market remain in place. These include low inflation, high productivity, and rising corporate profits.” But, the service argued, the stock market could absorb them… Brinker is an intensely controversial figure…from an unsuccessful late-2000 trade involving the QQQ that was not counted by the Hulbert Financial Digest monitoring system because it did not appear in Brinker’s model portfolio. But the fact is that Brinker’s record since then, by Hulbert Financial Digest count has continued to be strong. Over the past year, an average of his portfolios was up 35 percent vs. 31.6 percent for the dividend-reinvested Wilshire 5000. Over the past three years, Brinker is up a total of 28.7 percent vs. negative 7.3 percent for the Wilshire.  -3.9% -3.1% -2.4% 2.1%
3/1/04 Brinker remains on his March 12, 2003, buy signal. He regards “the risk of a recession this year as essentially zero,” because of which “corporate earnings prospects remain excellent.” Brinker acknowledges, however, that bullish sentiment among investors is very high right now. He therefore suggests “that subscribers… avoid chasing stock market rallies when adding new monies to equity positions… We believe the best strategy for those seeking to add to equity holdings is to take a dollar-cost-average approach.”  -2.5% -3.0% -4.2% 4.7%
12/18/03 Bob Brinker’s Markettimer: This is the fifth-place newsletter for 10-year risk-adjusted performance. Brinker turned bullish on the stock market in March, and though he doesn’t believe the market to be as undervalued today as it was then, he is recommending that subscribers with investable cash to re-enter the stock market using a dollar-cost-averaging approach. 5.4% 1.9% 3.8% 11.1% +
11/13/03 After being bullish on stocks since March, he writes, “the market is no longer on the bargain counter in our view.” 0.9% 8.3% 3.5% 11.7%
10/24/03 Marketimer’s Brinker maintains his fully invested stance. But in his most recent letter, he complains that “the current business cycle is not following the historical pattern of post-recession economic improvement… there has been very little reason to be excited about the stock market since mid-June… we continue to discourage subscribers from chasing period of stock market strength…use a gradual dollar-cost-averaging approach.”  2.3% 12.3% 10.4% 9.6% +
3/13/03 “The Marketimer long-term stock market timing model has returned to bullish territory for the first time since January of Year 2000,” said Brinker on Monday night. It is rare for Brinker to make such a major move. And his overall record (excluding his notorious disputed QQQ call in late 2000) is at least respectable. 4.4% 19.9% 21.5% 33.5% +
12/19/02 Among the many things editor Bob Brinker did right to earn a place on the Honor Roll, perhaps the two most important were staying fully invested throughout the bull market during the 1990s, and issuing a sell signal in January 2000 — about six weeks prior to the beginning of this bear market. Bear in mind that Brinker’s model portfolios, on which his Hulbert Financial Digest rating is based, have not suffered from a disastrous recommendation Brinker made in October 2000… Brinker is still bearish. …Finally, a word about Bob Brinker, who made it onto the Honor Roll despite a disastrous recommendation in October 2000 to invest in the QQQ — a trade he continues to recommend, by the way. However, because Brinker, beginning with his November 2000 issue, chose not to include the QQQ  in his model portfolios, from that date onwards this trade has not affected his Hulbert Financial Digest rating.  2.9% -14.1% -6.3% -11.1%
8/22/02 Shortly after I retired I got Bob’s bulletin to put up to half my stock market funds into QQQ ‘immediately.’ I followed Bob’s advice and it has ruined what should have been a wonderful retirement for me and my wife. We bought in at 82. What REALLY is unforgivable is that Brinker had NO EXIT STRATEGY for this horrendous trade. Even today he is still telling us to hold the QQQ (even though down 75 percent). Does he realize how many lives he’s ruined? -3.3% -8.7% -16.2% -20.9%
8/15/02 Bob Brinker’s Marketimer investment letter is one of the few letters to have beaten the stock market over the past 10 years, by Mark Hulbert’s count. …Moral for Brinkerbuffs: do what he does, not what he says. …Right now, Brinker still sees a primary bear market. He’s only 35 percent in stocks… -0.2% -8.0% -11.2% -21.7% +
1/13/00 …Bob Brinker’s Marketimer, just switched to a 60% cash reserve. “We are struck by the higher level of risk now present in the stock market on the heels of the most awesome five-year market period in history,” Brinker’s newsletter said. -4.1% 1.2% 3.2% -8.3% +
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