There
are 2 financial gurus that I particularly respect. The first is Bob Brinker, because I learned
the basics of financial management from his radio show. In the old days, from the ‘80’s to 2000, Bob
Brinker’s “Money Talk” was not to be missed.
The first 15-minutes of the show were a weekly run-down of market action
and the implication to investors. He
simplified his show after the dot-com crash of 2001 because there were people who
were re-selling his commentary and ideas.
I stopped listening, but I subscribed to his timing newsletter.
Bob
Brinker called the Top of the dot-com market boom almost to the day. The only other person to do that was a man
who had called the ‘87 crash and he was quoted in a short unnoticed column
titled, “Time to Sell?” in Barons. Sorry,
I don’t recall his name and probably can’t find the article, though I did save
it. My point is that Brinker deserves
respect. Unfortunately, he missed the
Crash of 2008 since he never issued a sell signal.
The
second guru I thoroughly enjoy reading is, of course, John Hussman, PhD. Those who read this Blog regularly know that
I include short quotes of his whenever they are noteworthy.
I
mention this now because these 2-gurus are now on opposite sides of the
fence. Bob Brinker has written that he
is not changing his portfolio recommendations.
Essentially, he is not issuing a sell signal and remains in a bullishly
invested position.
On
the other hand John Hussman wrote recently: “The economic evidence now suggests
that the U.S. and the global economy are again entering recession…. the composite of economic and
financial evidence we presently observe has always
and only been
associated with ongoing or immediately impending recessions. This is not an
opinion or a viewpoint, but a fact of the data. – excerpts from the 8 Aug
2011 Weekly Market Comment by John Hussman, PhD. from http://www.hussman.net/wmc/wmc110808.htm
Mr.
Hussman, PhD, doesn’t issue buy/sell recommendations; he runs Hussman Funds and
publishes a weekly market comment, primarily for his shareholders. However, if he is right and we are entering
recession, it is clearly time to sell.
So
whom do we believe?
I
lean toward John Hussman’s view because I think his analysis may be more analytically
rigorous and also based on my review of the past history of bear markets. There are many who will agree with Bob
Brinker, though, and he certainly could be right. In conclusion, we won’t know the answer for
several months, perhaps when the earnings come out next quarter or possibly
when GDP numbers are issued. We'll also get regular employment numbers that may give hints about the directioin of the economy.
Since
our Navigate the Stock Market analysis is based on S&P 500 and its
gyrations, we needn’t try to guess how the economy will turn out. I will BUY when NTSM issues the next buy
signal based on analysis of Sentiment, Price, Volume, and VIX…or…when volume
analysis gives us a buy signal.
Today
the NTSM analysis indicates Hold so we remain out of the market per our last
Sell signal.
I sold on the 27 July sell signal at S&P 500 1301 and I am
defensively positioned with only a small amount of my portfolio invested in
stocks. (Zero stocks in the 401k.)
