"BEST MARKET TIMERS REMAIN BULLISH SEPT 2007 !!!

Wednesday, September 5, 2007 (yes folks...so what do we need "experts TIMERS FOR?)

Many investors still fear a bear market, but almost all top market-timing newsletters recommend a heavy weighting of stocks.

NOW WHAT?

The stock market appears to be settling down a bit from the extraordinary volatility that characterized the market in the last half of July and much of August.

This relative calm provides a good opportunity to step back and review the stock-market forecasts of those stock-market timing newsletters that have the best long-term records.

I focus, as I have in prior columns, on a select group of top stock-market timing newsletters. Specifically, my group included the 10 services with the best risk-adjusted market-timing returns over the last decade, according to the Hulbert Financial Digest.
I
have focused on risk-adjusted performance because I didn't want to give undue credit to a newsletter whose raw return was caused by nothing more than a willingness to incur inordinate amounts of risk.

By the way, I went through a similar exercise just over a year ago for Barron's Online. I found at that time that there were no bears among the top market timers, and that the average recommended equity exposure among them was 84%. Since then, needless to say, the stock market has handsomely acquitted these top timers' bullishness: the Dow Jones Industrial Average is 20% higher today than then.

And I again went through this exercise in early May, discovering then that their average recommended equity exposure was 83%. The DJIA is today about two percentage points higher than where it stood then.

As I did last August and in May, I eliminated one of the 10 top performers because it is a purely mechanical model based on the calendar.

What follows is a brief synopsis of the current stock-market forecasts of the nine remaining newsletters with the best risk-adjusted performances over the last decade. (The newsletters are listed alphabetically.)

• Blue Chip Investor: Bullish. Editor Steven Check's model portfolio is currently 91% invested in equities. Check's equity-valuation model is based on the stock market's earnings yield relative to the yield on corporate bonds; that model now classifies stocks to be slightly undervalued. In his most recent issue (published in late August), Check wrote "the best buying opportunities arise when investors panic. When the market drops 10%, you can be assured bargains will exist."
• Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early September, Editor Bob Brinker writes: "A number of market pundits claim that the correction that began in late July was the start of a bear market. We totally disagree with this view. On the contrary, we do not believe a bear market ([defined as an] S&P 500 index decline in excess of 20%) is on the radar screen anytime this year. *(was this a f'ing idiot or what?)We are forecasting the continuation of the ongoing bull market at least into next year, and we anticipate significant stock-market gains going forward." His model portfolios are fully invested.

• Chartist and Chartist Mutual Fund Timer. Bullish. Editor Dan Sullivan believes that there is a good possibility that the intraday lows established on Aug. 16 "represented an effective bottom" of the correction that began in July. Sullivan's model stock portfolio is around 74% invested currently, and his model mutual-fund portfolio is close to 100% invested.

• Investors Guide to Closed-End Funds: Moderately bullish. Editor Thomas Herzfeld's "U.S. Equity Funds" model portfolio is around 49% invested.

• Medical Technology Stock Letter: Bullish. It may seem odd to include in this list a newsletter that is oriented more toward the medical technology and biotech sectors than to the overall market. But this letter, edited by John McCamant, deserves to be included for the simple reason that its track record places it in the top 10 for risk-adjusted timing-only performance over the last decade. McCamant's model portfolio currently is close to being fully invested, while his "Trader's" portfolio is aggressively bullish, with 200% invested and 100% on margin. Don't try this approach at home.

• No-Load Fund Investor: Neutral. Editor Mark Salzinger suspects that the stock-market correction that began in mid-July has longer to run. But, he hastens to add, "I do not expect the corrective period to result in double-digit losses for the market at large….A true bear market continues to seem unlikely for the time being. The underlying positives of strong global growth, mild inflation and interest rates, low unemployment and formidable corporate-cash cushions make a sustained double-digit percentage drop unlikely." Salzinger is currently allocating 70% of his "Wealth Builder" portfolio (his most aggressive) to U.S. equities.

• Timer Digest: Bullish. Editor Jim Schmidt bases this newsletter's market-timing model on a consensus of the top market timers. His consensus of the top 10 based on performance over the last 52 weeks is bullish, with eight bulls and two bears. His consensus of the top 10 for performance over the last two years is also bullish, with 10 bulls and no bears. The newsletter's model portfolios currently are about 91% invested in stocks, on average.

• Vantage Point: Moderately Bullish. Editor John Harris wrote in his early-September issue: "It has certainly been a gut-wrenching roller-coaster ride. But history shows that sharp, short-lived corrections are buying opportunities the majority of the time. They're also among the worst times to sell." Harris continues to rate the intermediate and major trends of the stock market as positive. His model stock portfolios are fully invested.

The bottom line? None of these nine top timers are bearish. The average equity allocation among all nine is 92%. This is higher than where this average stood a year ago, as well as where it was in early May.

This 92% average is good news for the stock market in its own right, of course. But it's particularly bullish relative to the average forecast of the 10 stock-market timing newsletters with the very worst risk-adjusted performances over the last decade. The average recommended equity exposure among these worst performers right now is 0%.

In other words, the worst market timers are quite bearish right now, while the best timers are quite bullish. Rarely are we presented with a contrast this stark.

There are no guarantees. But to bet on a new bear market right now, you have to bet against the timers with the best long-term records and with those whose records have been awful.

Mark Hulbert is founder of The Hulbert Financial Digest. He is a senior columnist for MarketWatch.

*** Today.....well my loyal lurkers......we know how this turned out......and you know what I was saying in 2007..

Duratek