STOCK MARKET: Brinker reported that the stock market closed at another record all-time-high. He goes back 50 months to report that Friday's close represents a capital gain of 146% -- not counting the dividends.
Honey EC: Brinker misleads every time he arbitrarily goes back to the start of this bull market without mentioning the prior two years where he rode the market down over 57%. And every time he brags about being fully invested like he did today, but fails to mention that he has been fully invested since 2003, he is misleading the audience by omission.
NAY-SAYERS AND ARMAGEDDON CROWD....Brinker said: "Isn't it ironic that these numbers have occurred with all the naysayers out there. You hear them every day pounding away at the USA, pounding away at the government. If the stock market has a total return of 155% over the past four years and two months, that tells you something about the earning power of corporate America which is what ultimately dictates the level of the stock market.....When you consider the relentless naysaying that goes on every day and then you look at the stock market and you say....is this country as bad as those people are saying or are they wrong? I think the answer is obvious myself."
Honey EC: Surprisingly, Brinker's guest speaker/author today would easily fit into Brinker's "nay-sayers and Armageddon crowd. David Stockman did not credit Corporate earnings for the recent growth in the stock market. He credited Bernanke and said it would end disastrously. See FrankJ's summary of the third-hour interview HERE.
CPI (INFLATION) FOR PAST YEAR: "slid down to 1.1%...Inflation has fallen out of bed."
WHAT ABOUT BERNANKE'S $85 BILLION EACH MONTH? There were some callers who disagreed with Brinker's inflation numbers. Jim in Omaha mentioned the $85 billion that Bernanke "prints" each month. Brinker seemed to take offense with Jim and argued him down by saying that Bernanke may "simply let securities mature" and that wouldn't create inflation. Brinker said he thought that Jim volunteered to be put in the "Armageddon crowd."
PPI (WHOLESALE PRICES): "....biggest decline in three years announced this past week....declined at an annual rate of 7.8%."
DOLLAR: "Had a really firm year. Doing quite well."
UNEMPLOYMENT: "Too high."
GOLD BUGS IN ARMAGEDDON CROWD: Brinker said: "I understand why the people who bet on gold are upset....Because the stock market is at an all-time-historic record high and they aren't in it. They are betting on Armageddon. Unfortunately, for the Armageddon Crowd, that includes gold. We know what happened to that."
Honey EC: We know how he quietly removed GLD from his off-the-books list of stocks and ETFs last month. He recently bragged about having Microsoft on that list for over a decade, but nary a word about removing GLD after it's been dropping. Not nice, Mr. Most Trusted Financial Advisor.
MORE GOLD SCHADENFREUDE...After the break, Brinker continued: "I understand there are listeners that are up to their ears in gold....They are getting creamed. They are miserable, they are unhappy. They open the financial pages and oh no, the Dow and S&P are at all-time-highs and here I am getting creamed in precious metals.....When you bet on Armegeddon and on runaway inflation and the collapse of the dollar, that a bet against the United States....It make sense that anybody who made that losing bet would be miserable."
Honey EC: Brinker is riding high now because the stock market is going up and gold is going down. When the market was going down and gold was going up, he wouldn't even mention the stock market and he tried to give the impression that he had recommended gold over the years. Which was simply not true.
HIGH-YIELD BONDS FUNDS OR JUNK BONDS...Mark from Mountain View said he had done well over the past few years in Fidelity High-Yield Bond Fund, and asked if Brinker thought it was still attractive.
Brinker said: "I don't have a two year forecast on interest rates that I can share, but I can tell you that as far junk bonds are concerned. The yields on junk bonds for my taste are too low. So the reason that I am not interested at this time in investing in junk bonds is because the yields have come down so much that I don't the investor is being compensated for the credit risk in junk bonds....That is sufficient for me to say I don't want to be in junk bonds at this time."
Honey EC: I counted five times that Brinker used the words "junk bonds" in that paragraph. Not one word about funds or "high-yield. It was a subtle, but very clear way of disparaging high-yield funds by calling them "junk bonds." When he first added Vanguard High-Yield Fund to his fixed income portfolio in May 2009, when the topic came up, he carefully referred to them as high-yield funds. Now that he sold all Marketimer holdings in VWEHX, he is back to spitting out the words "junk bonds."
Brinker sold VWEHX from Marketimer on October 9, 2012. At that time, the fund was selling for $6.05. Friday it closed at $6.21 -- and it is still paying a hefty monthly dividend (almost 6%). I still have mine and have done well with them. If the market rolls over and dies, that will be the time to sell high-yield bond funds.
VANGUARD GINNIE MAE FUND (VFIIX)....Call Claude from Fortworth said he had about 55% of his portfolio in Ginnie Mae Funds. Brinker replied: "I think is way too much. We have allocations in Ginnie Maes ranging from 20 to 25% in a couple of our portfolios that include fixed income securities."
Honey EC: That would be exactly two (out of four) portfolios that Brinker has in Marketimer that include fixed income securities -- model portfolio III and his fixed income portfolio that is off-the-books and never contributes to his performance timing record on his website or with Mark Hulbert (Hulbert Financial Digest).
IS SIDEWAYS MOVE CONSIDERED NEW MONEY? Caller Scott from Chicago wanted to know if he should dollar-cost-average some money that is being moved from one tax-sheltered account to another one.
Brinker replied: "In the case of a sideways move, we don't consider that new money. New money is defined as cash that you come into in the form of cash. If you're already in the market in one portfolio and then you decide to switch over to another portfolio....and it's all presumably at the same level of risk in terms of the stock market, I regard that as a sideways move. And you do that as close to simultaneously as possible."
CALLERS ARE FOOLED TWICE....Caller Andrew from Sunnyvale said: "I heard you last month recommending TIPS. I think it was your Easter Sunday broadcast. Is that your current recommendation or was it...."
BRINKER'S BLUNDER OF THE DAY....Brinker emphatically replied: "IT WASN'T ME. IT WASN'T ME, ANDREW. I don't know what you were listening to. I have not recommended Treasury Inflation-Protected Securities in quite a while. In fact, we took profits on those securities in the model portfolios and eliminated them. And I'll tell you why, because they now have negative base rates in many of their maturities. So you lock in a negative return and you have to make it up on inflation. It's pretty hard to make it up on inflation when year-over-year consumer price inflation is 1.1%. For newly purchased TIPS, I think TIPS right now they are a lousy investment. I don't own 'em. I don't recommend them. And I have not for a long time and I do not now have them in any Marketimer portfolios.
Honey EC: Andrew was exactly right. Brinker did say that he recommended TIPS on Easter Sunday. What Andrew (and other callers) didn't know was that it was spliced re-runs of old calls and monologues that went back over two years. He sold all Marketimer TIPS in January 2011.
Jim spells it out for Brinker this afternoon after he heard Andrew's call:
Honey, could you tell me if I heard this call correctly? I think I just heard a caller named Andrew ask Bob about a recent recommendation to own TIPS.
Brinker's response: "That was not me!" explaining that he sold his TIPS long ago. I think Andrew actually heard a recent re-broadcast of an old Moneytalk program from years ago where he said he owns TIPS. I wondered if that old program would ever come back and "bite" Bob Brinker.If I am right then the only thing more I can say "Bob, it WAS you!"
Honey here: You are absolutely right Jim. And shame on Bob Brinker for not announcing when his programs are re-runs of or "the best of" like all other talk show hosts do so as not to mislead audiences.
Jeffchristie's Moneytalk Final Exam Question of the Week:
Every week Bob says: "From the beaches of Waikiki to the shores of Block island sound...." Block island sound is off the coast of;
A) The land of critical mass.
B) Rhode Island.
C) La La land.
D) New York.
Read FrankJ's fascinating summary of David Stockman's appearance on Moneytalk today: LINK