|Bob Brinker's QQQ Advice History
Bob Brinker's horrible QQQ advice that
he doesn't count on his official record
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Disclaimer: At the time Brinker recommended QQQ, I recommend my newsletter EXPLORE portfolio as a better ALTERNATIVE. Bob Brinker fans can TURBO CHARGE their returns with the securities in my newsletter portfolio.
8/24/08: Detailed summary of Bob Brinker’s QQQQ Advice
I am a big fan of the radio show, Moneytalk, hosted by Bob Brinker. Over the last twenty years, Bob Brinker has dispensed mostly excellent advice to callers about how to manage their money for the long term.
My only major disagreement with Bob Brinker is his belief he can time the market. If you examine some of his advice that he doesn’t let callers discuss on the radio, you find his advertised performance is far more “average” than he lets on. His infamous “QQQQ advice” is not the only blunder he has made, but the cover-up is one of his best given the percentage of his subscribers’ portfolios that was involved and the poor performance that resulted.
Below is a detailed summary of the QQQQ controversy. What do you think? Discuss it HERE. Isn't it odd how he kept them out of the model portfolios on the way down and only added QQQs at the bottom? Some have said it is only because he recommends mutual funds for his accounts, but it is clear in his bulletin that you can use a Rydex OTC fund and QQQ interchangeably. (Since the bulletin, the ticker has changed from QQQ to QQQQ but all else remains the same.)
Brinker's NASDAQ 100 - QQQQ Counter trend Rally Advice
ACousins wrote a summary of what Bob Brinker wrote in his newsletter,
Marketimer, month by month as the NASDAQ crashed here. After verification, I created this recap (with enhancements
for clarity) for my files and our record here.
In Jan 2000 Brinker moved 60% of his equity portfolios to cash. In August
2000 he moved another 5% to cash for a total of 65% in cash reserves. He told
subscribers to wait for instructions on how to use these cash reserves. If
he had stayed there, this move would have looked brilliant. But, the story is
October 16, 2000: Brinker’s subscribers got a special bulletin vial USPS mail advising them to "Act Immediately" and buy QQQ in anticipation of a 2 to 4 months "counter trend rally" for a 20% or more gain. Confused callers to the Marketimer office were told "Bob is comfortable with QQQ at $86" by office staff.
Copies of Bulletins sent in the mail below
The advice in the bulletin was:
Copies of Bulletins sent in the mail
(Detailed summary of Bob Brinker’s QQQQ Advice Continued)
This is what happened to QQQ between the advice to buy and when Brinker added the cash reserves to his own model portfolios. It shows the managed accounts at the BJ Group were not so lucky to not buy QQQ until they crashed.
Clearly the Aggressive portfolio with QQQ suffered greatly giving back gains to 1998! This is not the performance Bob Brinker advertises for his Marketimer newsletter... Documents I've seen say they were paying a 1.75% management fee for the first $250,000 under management.
The image above shows Brinker's managed aggressive portfolio was still below its 2000 peak value in January 2004 while this chart shows Kirk's Explore Portfolio was higher than it was at its 2000peak.
Brinker's Follow up guidance:
Next follows a summary of Bob Brinker’s “follow-up advice given in his Marketimer Newsletter. I show the date given on each monthly Marketimer newsletter along with the price of QQQ(Q):
November 6, 2000 MT: QQQ=$81.00 "Subscribers seeking to establish positions at optimum price levels [editor highlight] should, if possible, accumulate QQQ shares at prices in the range between the low-70's and mid-70's as opportunities arise in the near-term. In our view, gains off the closing Nasdaq lowpoint have the potential to exceed 20% by a wide margin. This is especially true if recent Nasdaq lows are retested during the month of November.
December 3, 2000 MT: QQQ=$64.00 Talks about 1990 and how Nasdaq bottomed, then went 9.7% lower before a big rally. Says "In our view, the exceptional oversold [I thought he didn't use TA?] readings registered in the Nasdaq indexes in late-November are a very positive development. … the counter trend rally phase has the potential to carry the Nasdaq indexes as much as 40% to 50% above their late-November closing levels over the next three to six months. This rally has the potential to extend well into the first quarter, and possibly the second quarter of 2001. [snip] Short-term price weakness in the Nasdaq-100... in the 2800's or lower is viewed as an attractive buying opportunity…
January's 2001 MT; QQQ=$62.44; "We continue to view short-term price weakness in Nasdaq 100 shares...Clearly, the Nasdaq indexes have moved lower than we anticipated in recent weeks. However, this has not altered our expectation that a major bear market rally will develop going forward....gains for Nasdaq100 index of up to 50% or more measured from Jan 2 low. Recommended within guidelines listed on pages one and two (20 to 50% of cash reserves)."
February 2001 MT; QQQ=$61.55; The timeline for the Nasdaq led countertrend rally remains three to six months as measured from the starting point on January 3.
March2001 MT; QQQ=$46.70; In our view, the probabilities favor a three to six month bear market rally phase beginning shortly.
April 2001 MT; QQQ=$37.40; "We expect the Nasdaq Composite and Nasdaq 100 index to stage a significant recovery over the next several months."
May 2001 MT; QQQ=$48.05; "We continue to believe the Nasdaq has the potential to recover in the months ahead." This is the LAST TIME he said the Nasdaq would rally in the months ahead.
June 2001 MT; QQQ=$46.05; For subscribers with a position in Nasdaq 100 Index (QQQ) shares, we recommend holding these shares for future recovery... ... He NOW says to hold until the next cyclical bull market
July 2001 MT; QQQ=$46.00; We also recommend subscribers with a position in Nasdaq 100 Index (QQQ) shares hold for price recovery.
August 2001 MT; QQQ=$43; "We also recommend subscribers with a position in Nasdaq 100 Index (QQQ) shares hold for recovery...
September 2001 MT; QQQ=$35.47; XLK-QQQ Swap: "Making this transaction in taxable accounts for tax purposes is consistent with our recommendation to hold QQQ shares for price recovery over time...The switch into XLK...is solely for the purpose of realizing short-term tax losses for current or future use..."
October 2001 MT; QQQ=$28.82 "We continue our long-standing policy of not selling into weakness and we recommend subscribers with a position in Nasdaq 100 (QQQ) shares hold these shares as we expect them to trade at much higher levels..."
November 2001; QQQ=$35; "long standing policy of not selling into weakness… (QQQ) hold these shares as we expect them to trade at much higher levels during the next cyclical bull market.
December 01; QQQ=$40.83; "...we recommend holding in anticipation of higher price levels during the next cyclical bull market..."
January 02; QQQ=$41.67; "we prefer to hold existing positions in the expectation that the next cyclical bull..." [Note that QQQs now up 44% from Oct. 2001 MT! We finally got a 4 month CT rally.]
February 02; QQQ=$36.92; "..hold these shares for recovery during the next cyclical bull..."
March 02; QQQ=$35.74; "...can hold these shares in anticipation of much higher prices in the next cyclical bull..."
April 02; QQQ=$36.06: "We are also retaining our hold rating..."
May '02; QQQ=$31.56: "We are also retaining our hold rating."
June '02; QQQ=$30.04: "We are maintaining a hold rating."
July 5, '02; QQQ=$26.34: "We continue our policy of not selling into weakness, and recommend those with a position in Nasdaq 100 (QQQ) shares hold for higher prices during the next cyclical bull market."
August 8, '02 QQQ=$22.25 : "We are maintaining our hold rating on Nasdaq 100 (QQQ) shares…"
September 2, '02; QQQ=$23.49; "We are maintaining our hold rating on Nasdaq 100 (QQQ) shares in anticipation of much higher prices for the shares in the next cyclical bull market.
October 5, '02; QQQ=20.75; hold. No commentary. [A new low for QQQs, down 75% since first recommended for up to 1/3rd of the portfolio.]
Nov 2002 MT; QQQ=$25.90; hold. We recommend holding existing stock market positions at current levels, along with ... QQQ."
Dec 2002 MT; QQQ=$28.00; hold; " Marketimer recommends retaining existing equity market holdings at this time. This includes … QQQ."
Jan 2003 MT: QQQ=$25.68; hold. No commentary.
Feb 2003 MT: QQQ=$24.49; hold. No commentary.
March 2003 MT: QQQ=$24.49; hold. Showing good relative strength vs S&P500 so far this year.
March 11, 2003 Bulletin; QQQ=$24.06; BUY QQQ or ROYCX. Advises subscribers to become fully invested. Makes no mention of previous QQQ buys. Recommended increasing weighting of QQQ in P1 to 25%, P2 to xx% & P3 to yy%. Active/Passive portfolio doesn't get any QQQ. NOW he puts QQQs into the model portfolios. Simply amazing that he gets away with advertising his performance without the QQQs included on the way down from $83 to $24.
SummaryBetween 1/1/00 and April 20, 2003, 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 less than 10%. This is decent results but not what he advertises by a long shot. If you add in the recommendation for up to 5% of P1 into TEFQX which remains down by 80%, then his P1 is about equal to buying and holding the S&P500 since January 1, 2000. If you had to pay any taxes on gains from selling in January 2000, then you are behind.
8/24/08 Performance Update:
Full Disclosure: At the time Brinker recommended QQQ, I recommend Kirk's Investment Newsletter EXPLORE portfolio as an ALTERNATIVE to the QQQQs that Bob Brinker recommends for his model portfolios. My portfolio is significantly higher today while the QQQ is still down significantly ( as of August 2008) Send for a FREE SAMPLE ISSUE today!
Detailed summary of the QQQ Advice was originally posted on March
16, 2006 at Suite101.com but for "some reason" after I left the
company, they deleted the documentation.
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I recommend my newsletter EXPLORE portfolio as an ALTERNATIVE to the QQQQs that Bob Brinker recommends for his model portfolios. Bob Brinker can TURBO CHARGE their returns with the securities in my newsletter portfolio. Send for a FREE SAMPLE ISSUE today!
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Last Updated 8/24/08