8.19.2008

ON THE BRINKER


Was at the library yesterday reading the August issue of Brinker's Market Timer and just a bit surprised by his commentary.


According to Bob, oil is the key to the markets and not the financials- I definitely do not agree- guess I have facts on my side now as oil has fallen from $147 to $112 and the markets have barely moved off the 1216 closing low in mid July.


Bob says the following in his letter:


The July 31 closing SPX price of 1267.38 represents a P/E ratio of 14.6 X our 2008

operating earnings estimate of $87. Investors are increasingly looking at 2009 earnings prospects at this time of year, and our 2009 estimate is currently $97. Based on this estimate, a price earnings ratio of 16 is required in order for the SPX to challenge its historic record closing high of 1565. The SPX now trades at a P/E of 13.1 X our 2009 estimate. We regard the price of oil as the critical variable in determining whether the SPX can challenge its record high next year. In any case, we expect significant upside market progress into next year relative to current market price levels.


In summary, we continue to regard oil prices as the key variable for stock prices. Lower oil prices combined with low interest rates would provide the basis for an improving economy next year. We believe such a scenario would be embraced enthusiastically by investors. We rate the market attractive for purchase on any weakness below the SPX 1240 level. Above that level we recommend a dollar cost average approach for new stock market money.


Not sure how the financials are going to get anywhere near their old highs as their earnings power has been severely impaired - and since they are still a big part of the SPX - just don't follow Bob's logic that it is all about oil- I think its all about housing and until that shows a believable bottom we don't move much higher.

3 Comments:

Anonymous Bob Brinker's Asset Allocation History said...

Thanks for your comments. Given Brinker was 100% invested at the market top and said

Dec 2007 at 1481: “Marketimer subscribers have been able to add to position on this short-term correction based on our recommendation to view the stock market as attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range. Any minor weakness below that level has been contained in the area of the August 15 correction bottom in the low-1400’s. Several excellent buying opportunities occurred during the month of November."

and

"We continue to believe that a bear market (S&P Index decline in excess of 20%) is not on the radar screen at this time. We expect the bull market to continue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs.
"

Then in Jan 2008 at S&P1468 the following "In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008. We expect the S&P Index to achieve new record highs this year and to reach the 1600’s rang in the process. We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range. Above this range we prefer a dollar-cost-average approach for new purchases. All Marketimer model portfolios remain fully invested as we enter 2008."


I don't see how what he says about this bear market is that important. He's been clueless for a year so why would this change?

4:14 PM  
Blogger DAVID said...

The only reason I mention him is that he sold the top in 2000 and bought the bottom in 2002/2003- that was very good- he has now clearly missed and as far as I am concerned - lowered his stop -not sure what he will say if we break the 1200 level.

4:30 PM  
Blogger tamworth said...

He'll just wait a while and issue another buy point...

Ha...yes, he missed a major qqqq call back in Oct. of 2001, also, that cost his subscribers a lot of money...never did say what to "do" with that miss.

He's entertaining and insightful...but just goes to show, it's difficult to time the market...

6:37 PM  

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