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 Bob Brinker's 5 Root Causes of a Bear Market
June 28, 2010
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 This article by Kirk Lindstrom examines Bob Brinker's 5 root causes for a bear market.

 Please post your questions in the comments section for the article HERE at the Bob Brinker Fan Club Blog

Bob Brinker remains bullish on the stock market and views any short-term weakness as a health-restoring event. Brinker's advice for new stock market money is to dollar cost average into the market and, if possible, to take advantage of the volatility that brings lower prices.

Brinker says none of his "five root causes of a bear Market" are present at this time. He elaborated on his "five root causes for a bear market" in detail during the May 22 Moneytalk show.

What are the root causes of a bear market?
  1. Tight Money:  "That is when the Federal Reserve pulls in their horns, takes away the punch bowl, restricts the growth of the money supply. And money is harder to get, and as a result money price of money goes up....Do we have that now? No. Do we have the prospect of having that now? No."
  2. Rising Interest Rates:  "I'm not talking about the federal funds rate going from 1 to 2. I'm talking about a meaningful rise in interest rates.....When we look at the rates today, they are low, low, low. Rising rates are not a problem as we look at the market place right now....... 
  3. Hyperinflation, rising inflation. Do we have that? No... We don't have an inflation problem right now.
  4. Rapid Economic Growth.   Do we have that? Not on your life. Not even close......Some people are worried about a double dip.
  5. Over-valuation:  "When stock prices are so high relative to valuations they're on the moon like they were in January of 2000. Well, not true. We don't have over-valuation right now. We have good valuation right now."
Brinker concluded:  
"So all five of those are no's. We don't have tight money. We don't have rising rates problems. We don't have rising inflation problems. We don't have rapid growth in the economy and we certainly don't have over-valuation in the stock market......Out of five possible root causes of a bear market, we have zero. That is why I am of the opinion that we are not in a bear market."
June 28th 2010 Update:  Brinker only did three shows in June (6, 20 and 27th) as his show was cut to Sunday's only and he took some days off.  See   Bob Brinker Sunday's Only Moneytalk


I believe Brinker was told to give more clear guidance on what he believes on his show to try and get ratings up or they will cancel Moneytalk completely   Why?  Because he has been far more generous with his market views ever since it was announced his air time was going to be cut in half.  

From Honey's Bob Brinker Beehive Buzz June 27, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

"....So from my point of view, I think it's a correction. I don't think we are going into a bear market, defined as a decline of more than 20% of the S&P 500 Index. And I also believe that when the correction is over, we are going to see new recovery highs in the S&P 500 Index. That's what I think. I'm Bob Brinker."
What do you think?  Please post your questions in the comments section for the article HERE at the Bob Brinker Fan Club Blog

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If you want updates on what Brinker is saying on Moneytalk delivered to your email box, often within 24 hours after Sunday's show, then send us a note at TalkAboutMoney@gmail.com

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