Sunday, May 21, 2017

May 21, 2017, Bob Brinker's Moneytalk, Stocks, Bonds, Economy

May 21, 2017....Bob Brinker hosted Moneytalk live today....(comments welcome)

OPENING MONOLOGUE....Brinker comments:  It's "political fiction" to claim the middle class has shrunk...a recent Federal Reserve Study says that 70% say they are living comfortably........It depends on education - most lower-class have only high school or less.......It's hard to find the middle class in Mexico.....Artificial Intelligence (robots, etc.) will replace between 11 - 25% workers in the next ten years...Washington DC is not working on this problem......

THANKS TO dRahme, here is the clip of excerpts from the opening monologue above. 

STOCK MARKET....Brinker's didn't talk about the current stock market action from last week. (It was up slightly after recovering from a one-day correction.)   

Honey EC: According to the May 2017 Marketimer, BB is still fully invested and thinks any correction will be contained and "health restoring."  He  does not believe the market is over-valued and still recommends dollar-cost-averaging - and predicts the S&P 500 can trade "well into the 2400s."   He talked about his year-2000 move to 65% cash and said the market at that time was "grossly overvalued,"  and (paraphrase) said it's different this time. :)

VTI  VS VTSMX......BB explained to a caller that VTI is the exchange-traded-fund for the total stock market.

Honey here: Brinker did not explain  to Brian from  Illinois,  who recently graduated from college and was going to become a "professional" loan writer, that the only important difference between a total stock market mutual fund and VTI is that exchange-traded-funds can be traded in real time, and regular mutual funds transact at the closing price of the day.

INTEREST RATES.....BB comments: Interest rates are up 1% off of the all-time-lows....The FOMC is having a two-day meeting in June (he did not say if he thought they would raise rates or not).

BOND FUNDS.... Caller Connie from Kansas City asked about T.Rowe Price bond funds. BB responded that he had no recommendations for their funds in his Marketimer investment letter. He then warned her to  look for funds that have a two-year or less duration.

Honey EC: It's been FOUR YEARS since Brinker made his big move to very low duration bond funds in his income portfolio and his balanced model 3 portfolio. At that time, he sold all GNMA, (and for good measure, sold all NASDAQ holdings). In my opinion, very costly mistakes for anyone who followed the advice - especially if they paid taxes on their gains. 

WEEK AHEAD....New home sales report...Jobless claims have been very low for a couple of years....estimate 237,000 - record low levels....GDP: Q1 is expected to come in revised up to 0.8%.... Looking for a  rebound in Q2.  Thanks to dRahme, more details of next week's expected reports.


Alexandra Wolfe, author of Valley of the Gods – a Silicon Valley Story, stepped aboard the StarShip today for a quick spin on this Sunday, May 21, 2017. Ms. Wolfe is a contributor to the Wall Street Journal with a column called Weekend Confidential. She is also the daughter of the well-known writer Tom Wolfe.

I thought the interview was a bore. I don’t really care whether the monetary success leads to hubris. I don’t care that some of these Silicon Valley zillionaires are investing in “longevity projects,” i.e., technology to prolong life. The “Gods” in the title refers to Silicon Valley big shots that things seem to revolve around.

Bob asked her twice why she wrote the book. She gave basically the same answer each time which was she got interested in Peter Thiel’s challenge to university students to leave school and do something else, develop software or whatever. He gave $100K to each former student.

Bob brought up Steve Jobs of course. He and the guest agreed he was an innovative genius.

Reaction to the book: She ended up describing “Cougar Night,” in Menlo Park where older women chase after younger men at a weekly event. The reaction was some people didn’t like being included in that part of the book.

I tuned out before the interview was over.

Honey here: Thanks for listening as long as you could, Frankj. It became more ridiculous at the end when she started talking about researching the field of freezing people when they die and bringing them back to life hundreds of years from now. She did make the statement that so far, none of the super rich have done it. Really Alexandra? And why not? Duh! 

I took a look at her book ratings on Amazon, and they are extremely low - don't see that often on "financial" books. 

HONEY'S FUN FACTS:  Today there were only two self-proclaimed multi-millionaires, but several who have reached the Land of Critical Mass - thanks to Bob Brinker.   :) 

Radio Stations:
710KNUS Denver
KION 1460  Monterey

Brinker's guest-author was Alexandra Wolfe: Valley of the Gods: A Silicon Valley Story

Sunday, May 7, 2017

May 7, 2017, Bob Brinker's Moneytalk: Stocks, Bonds, Economy and Commentary

May 7, 2017....Bob Brinker hosted Moneytalk live today....(comments welcome)

STOCK MARKET....Brinker still recommends fully invested positions and dollar-cost averaging new money into the stock market. Today he talked about "The Bogle Rule" for deciding what your stock allocation should be. Here it is: Take the number the 120 and subtract your age. In other words, if you are 55, like caller David from Albuquerque, your stock allocation would be 65% of your investment portfolio in stocks and 55% in fixed income. That would be your "balance."

BOND MARKET TWO RISKS....There are two risks in bond funds: credit risk and interest-rate risk. Right now Brinker is concerned about interest rate risk and NOT concerned about credit risk.  Brinker told caller Bob in Florida that when he recommends "fixed income" investments, he means low duration bond funds like the ones in Marketimer. Marketimer balanced portfolio III has three bond funds:
DoubleLine Low Duration Bond
MetroWest Unconstrained Bond
Osterweiss Strategic Income Fund
BIPS....Brinker gave the definition of BIPS after caller John from Columbus used it in a sentence: Basis point. In the bond market, the smallest measure used for quoting yields is a basis point.100=1%=100 BIPS.

ROTH IRA QUESTIONS....There was a question about taking money out of a Roth Ira before reaching age 55. Brinker basically recommended he see a CPA.  BRT (Blog Research Team) member, Jerrod Clarkson sent this Schwab link that explains Roth IRA Withdrawal Rules.

JOBS MARKET....Good jobs report - 211,000 new jobs in April. Brinker had some negative points he tried to make about the "quality" of the new jobs. Don't expect unemployment to drop any more because 4.4% is considered full employment.  He also gave the racial and educational demographic breakdowns. As we all know, there is much less unemployment among the more highly educated - Bachelor's Degree, 2.4%.

Thanks to dRahme, here is a short clip of Brinker's jobs market comments.

TAX REFORM: Brinker expects the debate on tax reform to continue into the second half of 2017.  He talked about how they are going to need to get rid of a lot of deductions. He also talked about how they are getting rid of the "onerous"  tax on high-earners that is part of Obamacare. Thanks to dRahme for this short clip of Brinker's comments about possible deduction rule changes. 

MALLS....Brinker made the comment that he thinks traditional "big store" malls are on their way out. He thinks new ones may different perhaps "open air and family oriented."  Honey Sez: Of course they are. I used to shop in them every week, but never go in them anymore - unless I absolutely have to....

ARREN BUFFET POLITICS = FOURTH RICHEST MAN IN THE WORLD.... Brinker seems to put a lot of store  in the "Sage of Omaha's" political opinions. Thank to dRahme, we have a clip of Buffett leftist politically punditry.

Honey EC: My opinion is that Brinker's politics are right in line with Buffett's but he will never say so and risk losing subscribers. So in lieu of that, he presents Buffett's opinions as though they carry more weight because of his vast wealth. I think you might know my opinion of that. :)


Tyler Cowen was Bob Brinker’s guest during the third hour of the May 7, 2017 edition of MoneyTalk. The guest is a professor of economics at George Mason University located in the Washington D.C. area. Dr. Cowen’s latest book is “The Complacent Class, the Self-defeating Quest for the American Dream. A previous book by him is “The Great Stagnation.”

Editorial comment: In listening to Bob’s interviews and summarizing them for a while now, I cannot remember a guest who was more direct and succinct in his answers. Bob asked more questions than I can ever remember him asking. I formed a mental image of an older pitcher tasked with pitching batting practice to a hot hitter. The guest dealt with Bob’s “pitches” quite easily and toward the end of the interview I got the impression that Bob was breathing heavily and running out of stuff to “pitch.” 

We move less, we are starting fewer businesses, we medicate more, we are paranoid about child raising, we seek safer portfolios …. These are the things the guest says characterizes society today, leading us to complacency or perhaps as a result of it.

The rate at which people relocate has dropped by 50% since the post-WW2 years. The guest implied people are more accepting of poor employment opportunities or even unemployment. When people do move sometimes they have influences that limit opportunities for others. He cited the city of San Francisco where people moved in and pushed for rules to limit development. (The old “pull up the drawbridge” scenario.)

A new segregation has arrived on the scene: economic segregation. The rich associate with the rich and the poor associated with one another. The guest said mixed neighborhoods were better for mobility. I don’t think he’s onto anything new here. There has been economic segregation concerning where people lived since this nation was founded. 

One example of the guest’s directness came when Bob tried to draw him out on technical innovation as a source of economic growth. Dr. Cowen said media streaming services like Netflix as an example, simply made it easier for people to sit home and be more complacent. Another of Bob’s themes, driverless cars was brushed aside as “several decades away.”

The guest agreed with Bob that government can be an instigator of innovation. He believed it should spend more and pointed out the research and development in the corporate world is flat or declining. “We can do better.”

Another theme of Bob’s is the repatriation of corporate money that is currently held overseas. Bob laid out several results which the guest mostly ignored: more buybacks, better dividends, more mergers and acquisitions…. The guest merely said that an electronic shuffling of the capital on a bank’s computer won’t affect economic growth.

Bob made another try, citing the notion that new factories will spring up if only the overseas money is repatriated. He (rightly) has said there has to be demand for what the factory will produce. The guest more or less agreed and said there is demand for new iPhones and new restaurants. Huh?

As the interview wrapped up Bob and Tyler discussed what rate of economic growth might be possible. Tyler said slashing the corporate tax rate might a modest improvement but not a game changer. Bob tried to pin him down on what rate of wage growth might be acceptable without leading to too much inflation. Bob finally got him to say that 2% inflation might co-exist with 2-3% real annual growth in wages.

China’s economy was their last topic. The guest has been there a number of times and is impressed with their can-do spirit. He said China is how a dynamic society “looks and feels.” There is a sense of possibility there and a mentality toward economic growth. Bob sounded like he wasn’t buying it and asked if it was fair to compare China to the US. The guest shot back that China has beaten all the emerging countries and “I think we can learn…”

At this point the “P” word was mentioned, “pollution.” Bob said, “I see a lot of them wearing masks because they can’t breathe the air ---.”

No answer from the guest. Did he hang up or was he accidentally cut off? Inquiring minds want to know. In any event, that was the end of the interview.

Honey here:  Thank you so much for that interesting summary, FrankJ.   Here is the audio of the "hang-up".....scroll forward to 8 minutes to hear it - everyone can draw their own conclusions.  Here is dRahme's clip that contains the guest apparently hanging up the phone

My conclusion is that Professor Tyler did not like to be disagreed with while singing the praises of China and bringing their economics to America. 

HONEY'S JUST FOR FUN BYLINE:  This was another flight for Multi-Millionaire's aboard the Starship Moneytalk today.  Every week several multi-millionaire's need Brinker's advice. Today  there were three: 
**Al in Wisconsin with $8 million 
**Paul in Santa Cruz with $4 million (not my son-in-law, darn it)  
**Joe in Columbus with $3.3 million. 
Radio Stations:
710KNUS Denver
KION 1460  Monterey