Sunday, December 4, 2016

December 4, 2016, Bob Brinker's Moneytalk: Stock, Bond, Economy Comments Summary

December 4, 2016....Bob Brinker hosted Moneytalk live today....(comments welcome)

STOCK MARKET......Brinker comments:  The market is aware  that the Fed will raise rates on the 14th and has already adjusted.... Market near all-time-high.... Dollar-cost-average  on weakness and at a pace that fits your tolerance for risk.

Honey EC:  After reading the latest issue of Marketimer, I can say that Brinker is expecting more new market highs as we go into winter.   But on the program today, he started laying the groundwork to begin looking for some corrections. Last time he said he was being "vigilant," the market kept going up for so long that he finally dropped that ploy, but I see it on the horizon again.

INTEREST RATES GOING UP....Brinker comments:   If the FOMC does not raise rates on December 14th, they will shock the world....Rates are not even close to where they need to be for normalization....This is no where near the last time the Fed will raise rates....chances of interest rates staying near zero forever are zero....

LONG-TERM BONDS TURNED INTO DEATH VALLEY..... BB continued:  We've already seen huge losses in the long-term bond market.. The long-term bond market has turned into Death Valley....

LOW DURATION THEORY AND MARKETIMER FIXED INCOME PORTFOLIO......Brinker said: "For every percentage point of a rate hike, you subtract the duration on an annual basis from the principal. Then you add back in the income that you would receive from that fund.....I believe that those in the long and intermediate duration sector are going to be pounded if we are in what appears to be a major cycle of interest rate normalization. We have seen a huge increase in the 10-year Treasury yield in the past several months. It's gone up 1%......I recommend to all my Moneytalk listeners - we've already done it in the Marketimer Investment Letter - taking the duration down to a very low level. By the way, we are having a very good year in our income portfolio in the investment letter....because we took the duration down before the debacle started in the bond market several months ago. And as a result, we are showing an excellent rate of return in our income portfolio in 2016.....

Honey EC:  Brinker did not quite tell the truth about when he "took the duration down," Unless he consider 3 1/2 years "several months." That is when he made the changes in his income portfolio in Marketimer - in July 2013! 

Jim sent these comments during the program today:
Brinker has been saying during the entire program about long term bond fund holders having been taken to the woodshed. What he didn't say is that for the year long term funds still have a positive return with the Vanguard long Term Bond Index (VBLTX) +5.63% YTD. Brinker's Income Portfolio performance which he described as "excellent" is +4.33% YTD. If things are as dire as Brinker describes it for long term funds then I don't know how ANY long term bond fund could be beating his Income portfolio.

On another matter Brinker has been talking all day about globalization and the continued loss of manufacturing jobs while not mentioning the 1100+ Carrier manufacturing jobs that Trump was able to keep in the U.S. without even taking office yet. Could he be ignoring it because it doesn't fit in with his view on globalization and makes him look wrong?
Honey here: Bingo Jim! Brinker would rather hide behind a post and throw rocks "surreptitiously" at President-elect, Donald Trump. 

HOW FAST WILL THEY RAISE RATES.....BB continued: How fast and high rates go is unknowable at this time because it depends on what happens to inflation, and economy. If the economy grows and creates inflation, we are looking at a more rapid rate of interest rate increases.....

VANGUARD GINNIE MAE FUND..... There a couple of calls today about selling GNMAs. Brinker sold all Marketimer Ginnie Maes in 2013 at $10.37.   Now VIIFX sells for $10.64, plus dividends,  so he avoids talking about them except to point out that they are subject to interest rate risk. 

Honey EC:  I recall hearing Brinker praise how Ginnie Maes were guaranteed by the "full faith and credit of the U.S. Treasury" during the long years he had them in Marketimer.  He would say that if you owned them for the income,  you could expect the NAV of VIIFX to fluctuate between $9.50 - $10.50. 

ECONOMY GROWING SLOWLY.... BB continued: Economy continues to grow at a modest pace in the general ballpark of 2%, but not much else has changed.

JOBS, UNEMPLOYMENT......BB continued:   178,000 new jobs created for jobs since 2010 to  15,600 million. Unemployment rate down to 4.6%....that is full employment. Odds of Fed raising interest rates on December 14th are 100%.....

MANUFACTURING JOBS STILL GOING OUT OF THE COUNTRY.....BB continued: We are not seeing a resurgence of manufacturing jobs in the data - due to globalization where jobs move to other countries where employees make 20 to 30 cents on the dollar - often with no benefits....

TOO MANY PART-TIME JOBS AND TOO FEW QUALIFIED WORKERS.....BB continued: There are still too many working part-time that would rather work full-time, and still a tremendous disparity in employment versus education. College-graduate unemployment is less than half the national rate....We are a service economy - about 80%.....However, recruiting in skilled industries remains very difficult...

LEGAL MARIJUANA STATES = MAJORITY OF JOB APPLICANTS FAILING DRUG-SCREENING TEST... BB continued:  In Washington State where Marijuana is legal, 70% of job candidates failed the drug-screening test. What do we do about that?

WHILE QUALITY JOBS CAN'T BE FILLED.....BB continued: There are 5 1/2 million job openings in the United States that cannot be filled because employers cannot find qualified workers.....


INFLATION....Inflation is getting very close to FOMC target.

WATCH AND WORRY TROUBLES ARE POPPING OUT OF THE CLOSET......Brinker said: "No question  about it. We are going to have to be watching things that we didn't have to worry about for many, many years. We are going to have to watch the labor pool. We are going to have to watch increases in wages. That means we have to watch inflation. That means we have to watch interest rates.  So many of the items that were hidden away in the closet for years because we didn't have to worry about them, are now popping out and they are going to become potentially a big story.

DEFICIT UP - NATIONAL DEBT NEARS $20 TRILLION...... BB comments: Federal Fiscal year ends in September- the budget deficit rose 35% - 435 bill to 588 bill in 2016. added to debt.


CALLER CHALLENGES BRINKER'S JOBS REPORT AND ASKED HIM TO "PLEASE BE MORE TRANSPARENT." ....The caller of the day was Andre in El Dorado Hills, CA. Andre told Brinker that his glowing jobs report was "deceptive" and explained why. Brinker, as usual contradicted, nitpicked, and insulted the caller. When Andre asked Brinker to please just be more transparent, Brinker replied: "Nobody is more transparent than me."


Honey EC: Yes, Brinker is certainly transparent to some of us, but that is not his intention.

DECEMBER MARKETIMER.....Honey here: Brinker announced several times that the December issue of Marketimer is now available. I have seen a copy of it and was shocked to see that he attached a full page ad for his son's newsletter (Brinker Fixed Income Advisor).  Brinker does not include any kind of disclaimer to say that it is not his own newsletter.

For those who subscribe to Marketimer and are interested in ANOTHER fixed income portfolio by Brinker, I will tell you the truth:  It is edited and published by  Brinker's son and wife.  His son, who is also known as Bob Brinker now, was originally a computer technician - and his son's wife is a linguist. Adding to the deception is the fact that they both use the same address under "Brinker Advisory Services."
There is no way to know who wrote the ad, but I guess they didn't get the word that Hulbert's Financial Digest no longer exists:  ‘A loss for all investors’: The Hulbert Financial Digest says goodbye


Before the third hour Bob touted his interview guest today, December 4, 2016 was a terrific one.

It was Guy Spier whose 2014 book, “The Education of a Value Investor,” looks like more of an autobiography than an investing advice book. They spent a lot of the interview talking about Mr. Spier’s lunch with Warren Buffett. He and a friend, Monish Pabrai were the winning bidders for lunch with Warren. Monish kicked in 2/3rds of the winning bid of $650,100.

Mr. Buffett was very approachable according to Guy and the lunch lasted 3 ½ hours and included a tour of the Sage’s office.

Included in the book is a checklist for investors. Bob tried to get the guest to discuss this some but all that came out of it was “don’t repeat your old mistakes,” and “look at the mistakes others make.”

A rehash of 2008: The guest said capitalism runs in cycles and swings which we are simply not going to avoid. The 2008 swing was more egregious than most. He said by the summer of 2009 “the worst was over.” I think he must have been thinking about the market and its recovery which began in 2009. The worst was certainly NOT over for people who lost homes and jobs, or were about to.

Bob teed up his usual globalization question asking the guest if things were going to change and can the US bring back manufacturing jobs. The guest didn’t answer directly but wandered off into a long answer about how everyone in the US deserves to live with a sense of security and if we can put a man on the moon we can make a commitment to citizens. (He was speaking from Zurich, Switzerland where he lives.)

Bob dug again for some info asking him about the chapter in the book called The Quest for True Value. The guest said that investing is a journey that should lead inward. We should learn more about who we are and we learn what parts of our personality we should shed in order to become a better investor. As for himself he said he learned that he needed to be loved by the whole world and (I guess) he has now shed himself of this belief.

The take-away messages are to have confidence, understand that the professionals struggle and have difficulties, and investing can be a journey to becoming a better person.
And … “stay in equities for the compounding effect.”  


Bob told a caller that nobody is more transparent than:

A. President Obama.
B. President elect Trump.
C. Himself.
D. Hillary Clinton.
Brinker's guest author today was Guy Spier: "Education of a Value Investor: My Transformation Quest for Wealth, Wisdom and Enlightenment"

Radio Stations:
710KNUS Denver
KION 1460  Monterey 

Los Angeles. KABC 790. Moneytalk plays two hours later in the evening. They podcast and ARCHIVE podcasts

Sunday, November 27, 2016

November 27, 2016 Bob Brinker ReRuns Today

November 27, 2016....Bob Brinker is not live today.  The program is prerecorded monologues and spliced old calls....(comments welcome)


Bob said that the most frequent ask question on Moneytalk is:

A) Is today's show live or is it old calls spliced together?

B) Does Bob still like Ginnie Mae's?

C) What is critical mass?

D) Does Bob write two newsletters?

Honey here: All pertinent questions, Jeff. Wonder how many know the questions that go with all of them.... :)

Radio Stations:
710KNUS Denver
KION 1460  Monterey