| To: adad69 who wrote (19954) | 12/15/2003 8:48:00 PM |
| From: stockalot | of 42809 |
| |
"For a guy who does not believe in this trading method because it is too "risky", why the heck did he recommend the QQQ's at a major high? "
That is a question that many have asked but his actions when viewed critically (meaning dispassionately) make some sense....FOR HIM. :)
1) Bob Brinker gets paid to sell newsletters that claim to tell you the future movement in the market
If you believe as I do that Bob Brinker knows he cannot accurately do so then you have to fake it.
As you may or may not recall in Jan 2000 Brinker was adamant that he was not bearish when he moved to his "tactical asset allocation" after years of telling the public that his model was either bullish or bearish and that if bearish he would go 100% cash. Many months later Brinker began claiming that he was bearish in January 2000, but hardly moved his asset allocation.
If you subscribe to my belief which is a fact hard to refute in #1 then:
2) People don't pay for advice to stay out of the market.
Brinker became increasingly bearish as the market fell. He then began I believe to realize that bearish stance is not good for newsletter sales or renewals for a marketimer. So he stated probably 100 times (ad naseum) beginning in late May 2000, "The way you make money in a bear market is to play the counter trend rallies". As you know he called a "radio QQQ trade". He announced his entry after the fact and after the trade was 10% in the black. If it had not gone well, you would never have heard about the trade. He told people not to chase the trade and to wait until the QQQs fell back to the low 70s. People bought in the mid 80s and Brinker bragged on them for having "done the math". he spent almost all of every show talking about "the way you make money in a bear market is playing the CTRs" and claimed that he could tell people when to sell on the radio. The fed stopped raising rates during this time and the market was volatile, mostly to the upside. Unfortunately, Brinker blew it and in a panic sold out at 84 between twin peaks over 100. Many though thought with his smooth jive talk that he knew what he was doing and couldn't wait for him to try that again. It was indeed good for newsletter sales.
Many people that once posted here as Brinker's believers, also posted on his website discussion boards literally begging Brinker to do more trading and do it for those subsribers. Those of us who pointed out his very amateur approach were attacked and Brinker posting on his own site would stir interest by saying that the public didn't deserve Brinker's expertise and he should keep his trading advice to himself. It stoked the fires of people wanting to "do something". The cash was buring a hole in their pocket.
Brinker gave it a shot in that ACT IMMEDIATELY bulletin, committing large sums of the portfolio to the plan. He left out date and price in the bulletin so it could be lowballed later, as he did the radio trade. It lit up the scoreboard of his fans and generated a lot of excitement and I'm sure a lot of newsletter sales. That first weekend after the bulletin Brinker took a call at the beginning of each program about the trade, telling people it would only be followed in the newsletter and was only for subscribers. He didn't have to take those calls, unless he wanted to sell newsletters. He did. Anyone who knows anything about Brinker knows that had the trade have worked, you would have heard about it nearly every program and would be hearing about his great 2000 QQQ CTR trade with a third of a portfolio to this very day.
3) Brinker was a bull market genius. His timing calls have been a mixed bag - nobody knows if he was ever 100% out of the market before 82. Nobody knows for sure what he did between 82 and 87. Everybody knows that he blew it, by not going to cash before the 87 drop, then going to cash after the recovery in early 88 and wandering around looking for a bear that never came until 91. He rarely talked about that episode.
He made his name by staying in the market through the 90s and had a parlor trick of calling "gift horse buying opportunities" or "benchmark low buying opportunities" (the guy is always quite the wordsmith). What this was, is simply another way of saying "buy the dips" during a bull market. This I believe is very important in understanding Brinker's confidence in getting bailed out of the QQQ fiasco. In addition Abby Cohen who Brinker as Don Lane on this thread seemed to follow like a hawk, pretending a couple times that she was a marketimer subscriber and using his ideas, was calling for a big end of the year rally that if it happened would surely take the QQQs up a long way. She was wrong. :)
Everytime Brinker called a 'gifthorse opportunity", the market didn't respond as he would have you believe, in fact sometimes it went down considerably more than his 'benchmark lows'--but due to the greatest bull in history, anytime you bought was a good time and when such parlor tricks worked, he would brag on himself and create a mystique. When they didn't he simply wouldn't talk about that one.
He watched the QQQ trade in the summer and knew that if he would not sold in a panic, and simply held, the market just like in the bull would have bailed him out. He had to be very upset ego wise about that goof and probably resulted in his tenacity in holding the QQQs all the way down.
So if you have followed along, you can see that Brinker had never met a bear like this one. He had never timed a bear successfully I would guess. The market had always bailed him out.
Now as we know, the subscribers are the ones who suffered by their trust. When you look in Bob's newsletter you can see that if something goes wrong it simply is dropped from coverage without closing the position. TEFQX he bought at up to 18.00 and when it went under 4.00 he called it a "hold" and it has never been mentioned again. You can find no mention of the QQQ trade in his newsletter which he claimed was totally separate after the fact from his model portfolios, yet he never closed out that ACT IMMEDIATELY trade.
I think I can understand his game. It just is not pretty and doesn't work nearly as well for the investor who believed in the guy. |
