From the (very wet this afternoon) "Redwood Forest to the Gulf Stream Waters," The Starship Moneytalk had Captain Bob Brinker aboard today.
STOCK MARKET..... Brinker said: 'The S&P 500 has more than tripled in value in the past 7 1/2 years. That is a gargantuan increase in value and has created enormous profits."
Honey EC: Brinker completely ignored the fact that his subscriber's didn't get back to even from riding down that 2008 megabear until FIVE YEARS LATER, as he joyously ranted several times today about how the market has "tripled over the past 7.5 years." So the clock only started ticking for them in 2012.
There were a couple of hapless callers who wanted help because their investments had lost money over recent years. Brinker advised them to fire their investment advisors.
So Bob, would you fire this investment advisor? (Excerpts from Honey's article written in January 2013):
Brinker's Marketimer model portfolios I and II, both fully invested,100% equity holdings, crashed about 57% from top to the market bottom in March, 2009. Model portfolio III, which at the market high was about 40% bonds, lost slightly less.
Five years later, in 2012, all three of Brinker's model portfolios have finally regained their horrific losses and are slightly ahead of where they were on October 31, 2007. This has been a good year for the stock market and you can see here where the portfolios ended 2011. They still had a ways to go in 2012 to recover back to 2007 levels:And Bob, would you fire the advisor who wrote these comments that I know for a fact scared many investors out of the market over the last 4 years?
Marketimer, August 2012....Brinker wrote: "....we remain concerned that the 2012 S&P 500 Index correction of 9.9% did not produce the level of health restoration that we saw in July 2010 and September 2011.....Markeketimer model portfolios remain fully invested for now."
Marketimer, September 2013....Brinker wrote: "....we are taking a vigilant stance with regard to the market outlook."
Marketimer, May, 2014....Brinker wrote: "....It is difficult to ignore the fact that a mid-term off-presidential election year decline has occurred in 13 of the past 13 mid-term election years......expectation that three is an historical probability of a mid-term election year correction."
Marketimer, October, 2015, Brinker wrote: "In the event that the stock market completes a successful test of the area of the August 25 closing.......closing low... that would provide the basis for us to upgrade the market to "attractive for purchase....."CARRIED INTEREST, FOR IT OR AGIN' IT....BB said: I've expressed my view on this on a number of occasions and it has not changed. The carried interest loop hole has to do with (mostly) hedge fund managers, who are in the investment management business.....If they have a realized capital gain, then they they pay 23.8% (20% long-term, plus 3.8 healthcare tax),....Most business people, like Fortune 500 managers, pay 43.4% (39.6 top rate, plus 3.8% healthcare). This may be the biggest loophole in the tax code, and I have long been on the side of it. ending......Why has it lasted this long? One reason - the people at the top making laws are in the tank for Wall Street money, including hedge fund manager money. When it come to contributing to their campaigns, they give it back to them as a gift....In the USA, we have the best government money can buy.
Honey EC: Take a close look at both candidates and decide who owes money to lobbyists and who doesn't.
CAPITAL GAINS DISTRIBUTIONS COMING UP SOON....BB comments: We are now in the fourth quarter, and closer to the mutual fund capital gains distribution season.....vast majority made in December.....In a taxable account, when you receive a distribution of any kind, it is taxable.....However, a long-term distribution is subject to lower than short-term, or investment income distribution. Short-term cap gains are taxed at ordinary income...For example, if you live in a state with a 10% state income tax, that is on top of the 43.4% top federal bracket, which includes the unaffordable healthcare tax, which was placed on top of the other taxes recently...that puts it in the 50% area....
Thanks to dRahme, short clip of Brinker's opening monologue Capital gains discussion.
BETTER SELL YOUR FOOTBALL TEAM ASAP....BB commented that last year he said that if you own a football team, sell it. And he still says he would not want to own on. Football game ratings are dropping like a rock.
TV TIMES THEY ARE A-CHANGING.....BB comments: 2010, television watching has dropped, especially by young people. Here is a great article that is probably where Brinker got his info from. It includes some very interesting charts.
HUH, SELL OCEAN FRONT PROPERTY.... BB said that along with football teams, he'd sell ocean-front property. Unfortunately, the caller interrupted and Brinker never explained why he said that.
SIPC, HOW MUCH AND ON WHAT.... BB comments: SIPC insurance, TOTAL $500,000 - half can be in cash = $250,000 applies to brokerage accounts, not to mutual funds
ARE GOVERNMENT PENSIONS REALLY SAFE.....In answer to a caller's question about the safety of government pensions in light of the National Debt approaching $20 Trillion, with no end in sight. BB replied....Federal, and state pensions are probably safe. Local - be careful because they depend on local taxpayers. There have already been bankruptcies in local areas.
SO CANDIDATES, WHAT ABOUT THAT DEFICIT ADDED TO NATIONAL DEBT.... BB comments.....Fiscal year numbers for national deficit....went up $588 Billion - a 35% increase! That is added to National Debt....but there is no political talk about lowering the deficit or national debt.
BUT IT'S THE CURRENT POLITICIANS WHO DID THIS.....BB comments: Government spending is up 4.4%, but inflation is very low.....blame Social Security, Medicare and Medical.
Thanks to dRahme, short clip of Brinker's discussion of the national debt in hour two.
RAISING INCOME CAP ON SOCIAL SECURITY.... BB comments.... The cap on paying Social Security tax will rise to $126,000.
BUY BONDS FOR THE NEXT CENTURY....BB commented that he didn't understand why the Treasury didn't start issuing 50 and 100-year bonds in order to turn the National Debt into long-term debt.
LOOKING AT THE DATA COMING OUT IN THE WEEK AHEAD: Thanks to drahme, a short clip of Brinker's 3rd hour opening monologue
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY
Bob’s third hour guest on the October 16, 2016 edition of MoneyTalk was Sebastian Mallaby, author of a book about former Fed chair Alan Greenspan. The title is The Man Who Knew: The Life and Times of Alan Greenspan
The guest said he spent 5 years writing this book which included 70 hours of interviews with Alan Greenspan (AG) before he stopped keeping track. The interview with Bob was largely a gossip session in my opinion. Bob probably enjoyed it, fascinated as he is with “The Maestro.”
=>· Greenspan made a lot of money before becoming Chair of the Fed. He was into a number of activities including a financial advisory service.
=>· He was married twice, early in life followed by divorce. Then he married his current wife Andrea Mitchell must later in life.
=>· He dated Barbara Walters for a while.
=>· As a young man he owned a very flashy Buick Electra Convertible, one of the Blog Research Team may have an image for us.
=>· A caller brought up the Ayn Rand thing. Yes, he was pals with her and influenced by her ideas. The author pointed out that people usually encounter her writings in high school or college. AG was older, around 30 years of age.
=>· AG’s doctorate thesis had a long section on how Central Banks must attack economic bubbles – but he did not do so when he was in charge of the Fed.
=>· While he gets a failing grade on transparency, the author rated him an 8 or 9 out of 10 overall. But, he should have raised rates before leaving his post.
=>· The author’s research took him to Pat Buchanan’s basement where he found a wealth of written material on Buchanan’s and Greenspan’s roles as political advisors to Richard Nixon in the 1968 campaign.
Another Alan, (that would be Alan Blinder) was the topic of the discussion for a while. MoneyTalk regulars will recognize the name because he has been a frequent guest and one of Bob’s favorites. Mr. Blinder became Vice Chair of the Fed a few years into Mr. Greenspan’s tenure. The author said it was rumored that Blinder was moved into position to succeed Greenspan.
AG was determined NOT to be replaced by Blinder so when a newspaper published a story critical of Blinder (that he did not care about inflation), AG did nothing to correct the record. Bob was very excited by this revelation which was news to him. The guest pointed out he had a whole chapter in his book on the subject, titled Alan vs. Alan. It was apparent that Bob had not read the book in its entirety. He recovered though and said he’d ask Alan Blinder about this the next time he’s on the show.
Carl from Chicago is a regular Starship passenger in the third hour. He supplied another nugget on Mr. Greenspan, that he was paid $50,000 to write a letter in support of Charles Keating, head of Lincoln Savings, one of the S&Ls that crashed and burned. Mr. Mallaby had this covered too. It was before AG was appointed to the Fed and regretted doing it.
Bob wrapped up around 3:52 pm.
Honey here: Thanks FrankJ....Interesting guest, and some juicy gossip too. :)
JEFFCHRISTIE'S MONEYTALK FINAL EXAM QUESTION
Before marrying Andrea Mitchell Alan Greenspan dated:
A. Candice Bergan.
B. Jill St. John.
C. Barbara Walters.
D. Diane Sawyer.
Note Henry Kissinger dated all four of these women.
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