STOCK MARKET....Today, Bob Brinker indicated that there has been no change to his fully invested position in equities. He also recommends dollar-cost-averaging any new stock market money. He recommended Vanguard Total Stock Market Fund for long-term investing to a caller for his grandchildren's education. And he also repeated his recommendation for those in or near retirement to stay near a 50-50 (stock, fixed income) balanced portfolio.
Honey's Market Reports: The S&P 500 had three days of losses and two days of gains this week and ended down 0.88% from last week. The index is now up 2.19% YTD, and is 4.11% below its all-time-high record close......The 10-year Treasury Note is now at 2.90%.....
BOB BRINKER TALKED ABOUT STOCK INVESTING:
Caller Bill from Florida, who said he is heavy in stocks in his taxable funds, wanted to gradually reduce his stock holdings over time.
Brinker replied: "That's going to work as long as the market holds together, Bill. You mention you are a subscriber and I strongly recommend that you stay close to that because this thing has been going on for many years. We are way down the road and long in the tooth of this economic recovery. And there is a big time connection between what the stock market does and the economy does - and economy-wise growing.....
Brinker continued: …...This is not going to last forever......If that changes, there could be a lot of pain in the stock market down the road. In fact I think there will be a lot of pain in the stock market down the road. It's a question of when. I don't think that when is right now, and therefore, we are staying with it......At this time, I would not see that a person would have to go below a 50-50 balance (in retirement). There may come a time when a person would have to go below a 50-50 balance......
Brinker continued.....Anything is possible with this stock market going forward when the time comes......We've had a tremendous run in this stock market. I think sometimes complacency can bleed into the investment culture and can be very dangerous......Someone who has been in the business ten years now has never seen a bear market....One thing we have to be aware of is, nothing is forever in the stock market - not something we want to forget."
BRINKER "RECIEVED A COMMNUNIQUE".... Brinker read what he called a "communique" from a "Ms.M" in the San Francisco Bay Area. Thanks to ==> dRahme, you can hear Brinker read it in this Audio Clip: Hour 1 Ms M. from SanFran, Russell 2k Rebalancing
BOND FUNDS..... Brinker still recommends only very short duration bond funds - one year or less. He repeated that advice a couple of times today. He explained to a caller that he does not have any of Vanguard's balanced funds in Marketimer right now because the duration in them is too long. However, they have been included in the past (Vanguard Wellesley) and may be again in the future.
TARIFFS, $17 BILLION HERE - $17 BILLION THERE.....Brinker turned his monologues into political diatribes and name-calling sessions as he talked about possible tariffs on Canada. He made the claim that somehow the fact that Canadian soldiers have fought alongside Americans in various wars that we owed them something. (Honey will try to keep her lip-zipped about this.)
Jim said...
While discussing trade with Canada Brinker failed to mention the 270% tariff Canada charges the U.S. on dairy products. If he's going to discuss this topic he should give listeners ALL the facts, not selective facts.
June 24, 2018 at 2:00 PM
STOCKS THAT WENT UNDER YEARS AGO-INFLATION-THE WEEK AHEAD.....==>dRahme's Audio Clip: Hour 3 - Kind of Jumbled - Equity Funding and the Week Ahead
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY
Author Brad Stone made his
second appearance on the June 24, 2018 interview hour of MoneyTalk. Brad was on a while back discussing a book,
“The Everything Store,” a book about Jeff Bezos and Amazon.
I went back
through my archives, such as they are but could not find this write-up. I blame Russian hackers who must have deleted
it.
This new book is titled
“The Upstarts.” Like many books
published these days, it has an annoyingly long subtitle. Most of the interview concerned Uber and
Airbnb.
Cities are trying to figure
out how to cope with Airbnb. Short term
rentals in apartments, condos and houses are something new. Direct competition to the hotel
industry. New York City started discussing regulations
in 2010 and they’re still at it. Neighbors
don’t like Airbnb if the comings and goings of guests or their parties are
disruptive. The guest said that it is
not unknown for film crews to move in for a short time … and he made it clear
that these film crews are NOT necessarily filming G-rated, PG-rated stuff.
Not mentioned on the show, but pertinent: there was a lengthy article in today’s paper
on the disruption that Airbnb rentals have had on the community of Joshua Tree,
CA. This town is in eastern San
Bernardino, CA near Joshua Tree Nat’l Park.
Short term visitors running all over; home prices drive up by
speculators who buy and then start renting them out.
How do you list on
Airbnb? The guest said you go through a registration process, and upload
pictures you’ve taken. Airbnb advises
you to comply with local regulations. Airbnb collects from the tenant when they book
the place and the host gets paid only when the booking is over. The
“float.”
The guest said there was
little or no vetting. That was
contradicted by a caller who rented his Cape Cod place through Airbnb. He said the vetting is thorough on
hosts. And Airbnb encourages (requires?)
both tenants and hosts to post reviews of each other. Airbnb looks for valid phone numbers,
e-mails, and presence on social media in their vetting. John from Cape Cod said he gets his money
paid into his PayPal account.
Earlier Bob had asked the
guest what Airbnb’s fee was. The guest
stumbled all around and finally guessed 10% with Bob pushing him. With an actual Airbnb host on the line, Bob
asked John what the fee was, but the telecom gremlins intervened and we lost
John’s phone signal, so we await the answer.
Uber has hit some
speedbumps recently. In the fatal
accident that took place recently in Arizona, the Uber driver (of the self-driving
car) was watching an episode of The Voice on her cell phone. There have been incidents of drivers
assaulting passengers and vice versa. Uber got off to a fast start under an
aggressive CEO and they ended up with problems.
He was gone after the video came out showing him yelling at an Uber
driver who was complaining about reimbursement rates.
The guest thinks there is a
better management team in place, a new CEO came in from Expedia. He recently went to London to smooth over the
city officials who were ready to kick Uber out.
That’s about it, other than
Charlie’s call from Colorado Springs who asked about insurance with Lyft and
Uber. The gremlins struck again. The guest’s answer was, initially, neither
company gave it much thought (!) but states began to require minimums.
Bob wrapped up about 3:52
or so.
Brinker's guest-author Brad Stone: The Upstarts: Uber, Airbnb, The Battle for the New Silicon ValleyTALKOFCONNECTICUT;
77 comments:
The Scary Truth About Corporate Survival
Despite the name given by the Harvard Business Review, the summary article is a quick, fun and easy read. To fully appreciate the 6 page original study containing the three illustrative color graphs, simply click on the link at the bottom of the aforementioned article titled, ”Strategy When Creative Destruction Accelerates”.
“It’s one of those stats that’s constantly thrown around at conferences: 80% of the companies that existed before 1980 are no longer around – and another 17% probably won’t be here in 5 years.”
The authors of the study suggest 3 strategies for companies of all sizes to incorporate into their business plans to gain an edge. Of the 3 strategies suggested, I especially appreciated “the three-box model”, the subject of an earlier book.
As I read the study, I couldn’t help but reflect on the misfortunes of the ordinary folk who chose to hold onto individual shares of Eastman Kodak, Enron, General Electric and possibly Ford and IBM – until the bitter end. Also, it occurred to me that there are no original members remaining in the Dow 30 -- just in our lifetime!
Vijay Govindarajan
Coxe Distinguished Professor
Tuck School of Business
Marvin Bower Fellow at Harvard Business School
Anup Srivastava
Assistant Professor
Tuck School of Business, Dartmouth College
While discussing trade with Canada Brinker failed to mention the 270% tariff Canada charges the U.S. on dairy products. If he's going to discuss this topic he should give listeners ALL the facts, not selective facts.
RE: Posting from "Jester" ...
Pretty self-serving to come on this board and promote a piece of work one has written with not even a tangential relationship ... GE out of Dow!
Maybe others will have the same idea ....
Bob may have missed that last retest on the S&P. He sounds like he's starting to turn negative on the market. What do all the Honey Beehive Buzzers think?
Gabe the young newborn horses have been called colts and calves here. I thought they were called pups?
Angie,
On today's Brinker, I believe he was still short term cautiously optimistic. Sorry to be vague, but that is how I interpreted what few comments he made.
.
Angie....It looks to me like Brinker is worried about having missed that retest too.
However, he appears to be trying to talk the market down, and sell newsletters at the same time - to listeners who think he can predict market tops and bottoms.
.
Karl...I don't have time to figure out what you are talking about.
What is your problem anyway?
What amazed me was having a book author come on who wrote about Air B&B and didn't know what the service charged, which I would think would be on the top 5 things to know about a service. Perhaps a ghost writer?
What was the communique that was up for a short time referencing?
Honeybee said:
"However, he (Bob) appears to be trying to talk the market down, and sell newsletters at the same time - to listeners who think he can predict market tops and bottoms."
Honeybee, I think he could produce much better results if he used tarot cards.
Angie: Market timing only becomes crystal-clear when seen in the rear-view mirror, or so it seems.
Then the timers come out of the woodwork, explaining what happened and rationalizing why they missed it. Bobby had some bizarre word he used (began with an "e" I think) to explain why he missed the biggest bear in our lifetimes in 2008.
The "retest" this year, had it happened, would have been a minor event, so he will probably do his best to bury the whole thing. Except that he will crow about "those who took advantage of our correct calling of the dip should be in the catbird's seat."
I have an all-weather portfolio so I don't pay attention to this stuff, other than listen to Bobby's backpedaling, cover-ups, etc. for some humor.
All the great theories, chart-tweaking, and data juggling works until they don't.
John from SF said:
Thank you Honeybee for posting the link to http://www.talkofconnecticut.com I listened to that one today (okay I was kind of dozing off as well) and it seemed to be about the best link I've heard for Brinker's show. Sometimes the internet streams are horrible to listen to with mismatched sound levels or a single commercial that repeats multiple times every commercial break. Nothing jumped out at me as atrocious from talkofconnecticut today (well some of Brinker's content is atrocious but that's not the stations's fault),
Criptic inconclusive butt covering by our market timmer in chief the grand poobah BB. Stating the obvious. There's going to be h*ll to pay but not yet.
Translation the stock market needs a 10-19.9% cleansing before a out right buy with both hands call. I guess
Bluce:
Could have been "exogenous".
See 2a from Merriam-Webster:
"1: produced by growth from superficial tissue exogenous roots produced by leaves
2
a : caused by factors (such as food or a traumatic factor) or an agent (such as a disease-producing organism) from outside the organism or system - exogenous obesity - exogenous psychic depression - exogenous market fluctuations
b : introduced from or produced outside the organism or system; specifically : not synthesized within the organism or system"
Let me make some assumptions and jump to conclusions.
I know nothin' about Canada other than the English speakers sound funny, as if they are from Minnesooota. That being said, by me, the huge dairy tariff might make some sense.
Think about it. I'm often reminded of my unfortunate visit to Grand Forks, ND and marveled at the flatness and starkness of the surrounding ag (Calif. lingo) lands. My impression was, "We should just give this place to Canada and call it even."
The point is, in the "Great White North" where the growing season is about 3 weeks (between the 4th of July and the 28th, don't even flirt with Aug. 1st) it must be tough to make enough hay to feed the Holsteins their dinner during the other 49 weeks.
So the heavily subsidized, by Congress, American dairy products from sunny Fresno are, by definition, going to be cheaply available. Hell, we store mass quantities of cheese in underground caves just because it's so plentiful and we don't know what to do with the excess.
Which means (here's the meaning) that the dairy farmers in the Northern Tier can't compete in an open marketplace because their costs for everything to sustain their herd is so much higher (such as importing feed and Lagunitas) because they can't source enough of it locally.
So strategically, for Canadian homeland security, as the Frenchy Premier of Canada might say, "I don't want my farm bros going out of business because of that cheap Yankee stuff. You never know, we might not like each other some day. Never say never."
So there you have it, all wrapped up in a cow's teat, ready for squeezin'.
.
Barney Peters said...
"Let me make some assumptions and jump to conclusions."
Can I steal that line? ROFLOL!!!!!
.
John from SF... I have been using the Connecticut station ever since someone posted it here.
It's quick and reliable and doesn't require jumping through a lot of hoops.
.
For those wondering but missed it, the "communique" audio of it from dRahme is posted in the summary.
.
Bob (not That Bob)….I ran out of time and energy to transcribe the call from Rudy. (I may break down and invest in a new dictating software - but I digress.)
Rudy told Bob that he was a long-time listener and he knew how great Bob is about "pinpointing when to buy and sell stocks."
Brinker just jumped in and did a big sales pitch for his "investment letter." He explained how he only did this timing-thing in the "letter," and how it worked with the bulletins, etc.
I'd say that Brinker's contempt for the radio audience - without whom he would be just another newsletter huckster doing websites and blogs trying to sell his wares - is growing with the years.
Random thoughts:
Thanks for the write-up Honey, and to dRhame for the clips -- as I missed most of the first hour. I was at a picnic and it rained the ENTIRE time. Met some nice people, had good food but the weather certainly didn't cooperate.
Streaming: Can be a real PITA especially iHeart. John from SF made note of the SAME commercials EVERY break, sometimes playing more than once in the same break. I hate iHeart just for that reason. He didn't pinpoint the actual network, but I just did.
At any rate, I usually listen to WNTK (which is NOT part of the horrid iHeart network). A year or so ago the normal "Listen Live" links were not working well, not sure if it was me or them. But they had another link that I tried and it's great. It plays right in your browser (just like dRahme's clips here do) no gigantic pages full of ads, and no players to load, just click and listen.
"Bluce said... I have an all-weather portfolio so I don't pay attention to this stuff, other than listen to Bobby's backpedaling, cover-ups, etc. for some humor. "
What do you mean by all-weather? Thanks
Angie asked: What do you mean by an all-weather portfolio?
I will be 68 too soon, still running my business full-time because I enjoy it. I could retire if I wanted to, but will continue working until I'm physically unable.
Having said that, my portfolio is just in a holding pattern, fairly low-risk, chugging along waiting for me to retire.
My asset allocation is at about 33% stocks, the rest in bonds and CDs, very little cash. I don't make changes because of what the market is doing, I have just gradually cut back on equities as I've gotten older -- which is pretty much the textbook method of long-term portfolio tweaking. No market timing involved.
Hope that makes sense!
---------------------------------------------------------------------------
LOL, to my previous post: An article about iHate Radio! Don't forget to scan the comment section.
President Trump also know as Mr T is clamping down on thievery from countries who have been stealing for years. About time.
I pity the fool :)
Blogger Bluce said...
Angie asked: What do you mean by an all-weather portfolio?
"My asset allocation is at about 33% stocks, the rest in bonds and CDs, very little cash."
++++++++++++++++++++++++++++
Bluce, what bonds are you invested in?
What does the bond portion of your portfolio look like?
What specific mutual funds, etc......
Do you follow Brinker's bond advice, which is a Duration of less than 1.0, and his recommended funds of Doubleline Low Duration and Osterweis Strategic Income?
thanks very much
Robert
Triple bottom at under 2,600. Looking possible.
Of course he should also mention the $40 Billion taxpayers subsidies the dairy farmers receive.
Ben Gibson
Another wicked summary of the guest interview was submitted by Frankj. Thank you, on behalf of everyone, and I say wicked because it's Beantown vernacular for awesome, and the Airbnb caller from Cape Cod sure added an east coast feel to the proceedings.
Reminds me of the summer in '75 when we, with profuse thanks, crashed at the investment summer home of a fellow college student's parents in Barnstable for a night and probably messed up the sanitary and bucolic appeal of the white-picket-fence "Cape Cod-er".
Note to self: Never trust college students, especially if their friends ride Harleys or dig beers even more than the Harley riders.
After awakening mid-day and thinking, "I could handle living here forever", the reality set in and we headed to Provincetown. Yes, P-Town. There's a whole chapter on Wikipedia about its cred.
But it was 1975 and we'd heard a rumor of a nude beach at Truro so a minefield with barbed wire couldn't slow us down.
Ironically, after stopping at a surf shop and asking about the nudes and not purchasing any t-shirts nor renting any boards, we received a nebulous answer. So we pressed on and hit P-town at just the right time.
It was dusk in July in the quaint village and every eatery had nothing on the menu except disco and booze and a swinging clientele. Because who needs food when you're 18 and loaded for bear? (Drinkin' age in some swingin' states back then was 18, cuz if you could get drafted for VietNam, you were entitled to a drink at the bar.)
So we danced and all that other good stuff. Turns out that P-Town is legendary but not because of us.
We just went back to our lives and hoped for another shot.
Robert: I'll work on this tomorrow, but no, I don't follow Blinker's advice. And when I said "bonds," I meant bond funds. Sorry for the confusion.
Nando if your not a writer you should be. I'd read your books.
Nando, thanks for the thumbs up.
Robert: My bond holdings are GTO, PONAX, PTIAX, SCHO, SCHR, SPSB, VCIT, and two balanced funds, making bond holdings about 51% of my total portfolio, and CDs make up an additional 13.4%.
Allocation between the bond funds is somewhat even, except I hold more in PTIAX and SPSB than the others. PTIAX is mostly a mortgage-backed securities fund and is actually up a bit this year, + .46%, with an SEC yield of 4.89%. SPSB is a short-term corp with a yield of 3.03% (as good or better than many intermediates) down YTD only .03%. To get 3% in a CD you have to go out 3 years.
None of this principle is needed and all interest is re-invested so I don't care much about price erosion. Overall duration for the portfolio is about 4.2 years.
This is just my own mixture for where I am in life, not needing to withdraw anything, and not really needing any growth above inflation. YMMV.
Blogger Bluce said...
Robert: I'll work on this tomorrow, but no, I don't follow Blinker's advice. And when I said "bonds," I meant bond funds. Sorry for the confusion.
++++++++++++++++++++
OK, thanks Bluce
Robert
Is the blog broke again? ☺
Bob may have missed that last retest on the S&P. He sounds like he's starting to turn negative on the market. What do all the Honey Beehive Buzzers think?
I suggest anyone considering taking seriously anything Da Brink says related to market timing consult his actual record. Fortunately for readers of the blog, the ever vivacious and sultry Hottiebee keeps a record of his actual record here:
https://honeysbobbrinkerbeehivebuzz3.blogspot.com/search?q=allocation+record
Take a good look at it. You really need to study what happened circa 1987-1991. I suggest you plug some number in that reflects your portfolio (i.e. if you have taxable assets vs just tax deferred ) so you can viscerally feel the result and compare to buy and hold (especially if here are tax ramifications). Then look at what really happened in 2000-2003. Once again go through the exercise. What I do not think is posted in the many buy points Brinker saw as the market fell after 2000. In other words, which one of the many buying opportunities would you have acted on with your cash reserve and how much?
So digest his real record a bit, take very close look at what happened circa 1987-1991. It shows the dangers of market timing.
Where I think Da Brink may prove useful is in the situation where you are nearing retirement and are overexposed to equites due to market advances. In other words your asset allocation is not optimal for retirement. You might find a market timing sell signal as the impetus to rebalance your portfolio to a desired retirement suitable allocation.
tfb
Anyone own SJNK in lieu of stocks? Anyone have an opinion on it? Shorter duration than Vanguards high yield fund but maybe more credit risk?
tfb....
If you don't trust Brinker's calls why wait around for his time worn 50/50 retirement call? Sell when it feels right!
I do not own SJNK and I shed junk funds a good while back. They are correlated with stocks just when you don't want them to be ... when stocks are under pressure. And, when selling pressure ramps up, liquidity goes away and fund managers become price takers.
Does anyone have a feel gut or otherwise on the durability of the risk takers world that was created as a result of the banking/mortgage/bailout 10 years ago? It just seems like housing has gone up so much. When visiting urban areas there what appears to be more homeless people milling around than a what you'd expect in a booming economy. 4% unemployment sounds good unless the pay for those jobs is too low & housing is very high.
tfb posted:
"Where I think Da Brink may prove useful is in the situation where you are nearing retirement and are overexposed to equites due to market advances. In other words your asset allocation is not optimal for retirement. You might find a market timing sell signal as the impetus to rebalance your portfolio to a desired retirement suitable allocation."
+++++++++++++++++++++++
tfb, regarding "You might find a market timing sell signal as the impetus to rebalance your portfolio to a desired retirement suitable allocation"
As far as I know, Bob Brinker has only issued 2 sell signals, ever......
That's in more than 30 years!!......only two sell signals.
So I wouldn't be waiting around for one of those.....
Honeybee if I am not correct in thinking that Bob Brinker has only issued 2 sell signals in more that 30 years, please correct me....
Robert
.
Robert....I have followed Brinker since 1986 or 87, and yes, you are correct.
Shortly after the Black Monday crash in 1987 (he was fully in), he went to 100% cash. That was a very costly blunder because almost immediately, the market turned up. He didn't get back in 100% until the market had made significant gains:
"On October 19, 1987, the stock market collapsed. The Dow plunged an astonishing 22.6%, the biggest one-day percentage loss in history."
And the second time that he raised cash was in year-2000. He raised 65% cash, and went back to 100% invested with what cash was left after the QQQ buy signals in March 2003.
He has never raised cash again, and I will be more than shocked if he ever does.
tfb....
If you don't trust Brinker's calls why wait around for his time worn 50/50 retirement call? Sell when it feels right!
Bob, to be clear, Brinker could call me personally and tell me that he thought a correction was imminent and I would not even take the call. I don't believe he has any ability to successfully time the market. I don't believe he is even remotely honest or ethical.
I think Brinker is a B.S. artist from the get go, and frankly, I believe his economic knowledge is dated an plebeian at best and I don't think his investment knowledge is any better. i base that on his many comments over the years on trade, tariffs, globalization, and of course the real kicker the misguided advice he gave his own son which demo stared his lack of understanding of the effects of globalization.
In short, I keep my own counsel, I own my own mistakes and victories.
Buy and hold- the argument of this strategy claims, missing the 10 best days in the market will crush your returns. If missing all the best 1% days, the historical stock market average return of 4.86% drops to -7.08%. If you missed the worst, instead +19.09%. So, the financial advice will summarise, these rare few days are impossible to predict, so stay and hold is the best option.
Another stat is the best gains are during down markets.
What's going on here? First the volatility is higher in a bear market. So, the stock moves are larger. You will see more days with bigger gains. Also, more days with bigger losses. The bull market starts quietly and grows steadily, with less jumps. Note the market is gaining about 2/3 of the time within stock history.
So, it is best to be active and change investments during bull vs bear markets as defined by 200 day simple moving average. You should have more equities in a bull and more bonds in bear. This is tactical asset allocation.
Points-
1.The stock market historically has gone up about two-thirds of the time.
2.All of the stock market return occurs when the market is already uptrending.
3.The volatility is much higher when the market is declining.
4.Most of the best and worst days occur when the market is already declining. Reason: see #3.
5.Markets are much riskier than models that assume normal distributions can be used to predict.
6.The reason markets are more volatile when declining is because investors use a different part of their brain when making money than when losing money.
The declining market with increased volatility triggers human emotion of fight or flight. The bull market participant enjoys a pleasant experience. This phenomena occurs in all markets.
http://proactiveadvisormagazine.com/black-swan-events-10-best-days-myth-market-outliers/
Note: this is what most investors will do instinctively, but were misinformed that buy and hold is the only way. Strategic allocation could be described as market timing, but really you maintain the investments allocation in different percentages. Bumping up bond percentage in riskier times.
Bob Brinker suggests a allocation for investors. He judges this by age and net worth. Well, I will suggest the allocation should also be adjusted by risk/volatility of current state of markets. Currently, my guess most investors are quietly changing their buy and hold portfolio to more bonds or CDs.
Jwale
Natasha hère. You mentioned a cleansing of 10-19 percent early in these posts. So 10-19 percent
From what? All time high? Today’s (whatever day it is) 52 week all time high? The high since jan1 of whatever year we are in ? Please clarify thank you
Blogger Bluce asked...
"Is the blog broke again? ☺"
Bluce, this blog has never been broke.
Collectively, we hold financial assets in excess of $963,198,462,781,983,456,247,549,023,821,562,739.67 (give or take).
JC
It was just me pontifocating. More of a togue in cheek comment since were on a market timmer blog. Were speculating on the possibility of an all out but call from his holiness the the market timmer. From what I know of the radio man is it would take a 10%-19.9% correction woth a retest on low volume to get a biy call. The way I understand it if the market exceeds 20% from an all time high on the downside tjat would be a bear market on the S&P 500. Not a prediction. Just my interpretation of how Mr BB makes his few & far between buy calls. As mention by others the usefullness of market timming is not great. I'm getting old & I am not acting on any buy or sell calls. Just having fun.
JC, old buddy: Wow, I can't interpret that number but if memory serves (and it may not) I believe that is more than Uncle Scrooge's net worth from the days of reading Donald Duck comic books. I believe he had $17 septillion.
For the uninitiated, he had a big cube-like building that held all of his cash, and he had a diving board where he would dive into the money, lol. I tried that, but I only have two cents and I ended up breaking my neck on the floor.
"Too soon old, too late smart."
Expect recovery to extend into Friday. Earnings for the S&P continue to grow support higher index prices.
Blogger Bluce said...
"Robert: My bond holdings are GTO, PONAX, PTIAX, SCHO, SCHR, SPSB, VCIT, and two balanced funds, making bond holdings about 51% of my total portfolio, and CDs make up an additional 13.4%................."
+++++++++++++
Very nice Bluce.
Looks like a very good bond portfolio.
Some of those Schwab ETFs have incredibly low expense ratios, something like 0.06%
Very nice
Robert
There are lots of benchmarks for determining bear market. Really, it is a psychological event wherein investors grow wary and cautious. A bull market last for years a bear months. If the GNP is increasing, unemployment decreasing or low. If wages and profits increasing it is hard think of recession or bear. There is a wall of worry within a bull market and a steady increasing cost (p/e ratio) of stocks. Still the trend or bull could last for a good long time and most of the gains come from that increasing p/e ratio.
Good to push bonds into stocks if stocks have dropped within recession or correction territory. They are on sale. The continued down slide risk is less as opposed to up side gain. Even selling some low priced stocks for needs is not that risky since you bought them low.
Good to own bonds and stocks since the annual rebalancing ensures you will buy either on sale and cash out the one that is high priced. If the market gets jittery with increase volatility, 200 day moving average of S&P goes in negative direction, p/e ratios are decreasing, and basically you think the market is fighting to stay up it might be time to push more into bonds. If economics and general attitude of public sours the same. Everyone is guessing including Bob Brinker so your gut may just be as accurate. It's not precise and listening to investment news a waste of time. I read once that an investor that measured market in points do much better than those that use percentages. It's a psychological trick to be less emotional. I'm of the thinking that investors should always be in the market, but the bond portion for retirees can slide. Studies continue to indicate their is no magic in exact bond percentage. Above 70% bonds eat into life time withdrawals same with less than 10%. So, that is a wide range to work within high p/e, bear, bull, corrections, recessions, etc.
Bravo Trees. Another great post.
My conclusion is the fed governors have interests to protect with regard to the banking business. One fed governor came out yesterday & said there's a risk the fed could over tighten. The fact is these people are guessing muchbof the time. They call economics the dismal science. I think it's more art than science. Its more than numbers on spread sheets. Predicting peoples response to any given set of circumstances isn't possible I don't think. That's why BB has major setbacks. The last recession was self inflicted by the same group thats responding to the damage. The fed will chastise the govt for spending like drunken sailors as BB would say. But they also say stimulus has to be provided wlong with accomadative monetary policy. So my response is own a low expense balanced fund & keep a CD ladder with 3-5 years of cash. Then go have as much fun as you can before your # is called.
U.S. Inflation Hits 6-Year High in May
U.S. inflation posted its highest annual growth rate in six years last month as lower unemployment and faster output of goods and services reduce slack in the economy.
The personal-consumption expenditures price index, a broad measure that serves as the Federal Reserve's preferred inflation yardstick, rose 2.3% in May from a year earlier, its biggest annual rise since March 2012, the Commerce Department said Friday. The year-over-year increase in April was 2%.
In another important milestone for policy makers, the so-called core PCE index, which excludes volatile food and energy prices, hit 2% for the first time since April 2012. The Fed watches core PCE inflation closely as an indicator of longer-run inflation trends.
It was the first time since early 2017 that the overall PCE index surpassed the Fed's 2% target, underscoring most policy makers' belief that the chronically low inflation of recent years is a thing of the past and that higher interest rates will be needed to keep prices in check from rising too much.
At their most recent meeting earlier this month, Fed officials moved their median estimate for the necessary number of interest-rate increases in 2018 to four from three.
Source: Dow Jones Newswires
If oil keeps going up that might put the fed on the sidelines. Could be a head wind as they say.
Bobby's favorite books:
FWIW: I bought "The Black Edge" a couple of years ago, after listening to him rant and rave about how good the book was (corruption on Wall St.) I didn't find it that interesting, and stopped reading just a short ways into it.
I've heard him rant about "Against the Gods" numerous times over the years, and bought it after his latest rant a couple of months ago. I'm about 1/4 the way through it and find it tough going. It just isn't that interesting. Maybe I'll continue, maybe I won't. But if I find I'm forcing myself to read something, it's usually the death knell. Not quite there yet.
No big deal on either -- people have different interests and "bestsellers" aren't necessarily something everybody wants to read.
I just saw the Vanguard MM Fund has a yield now of 2.03%. If Brinker thinks he can time the bond market and is always worried about NAV loss due to duration perhaps he should think about investing all his fixed income in the MM or CD's right now and not even bother with low duration bond funds.
I do not expect him to be live on Sunday since he told listeners last Sunday about when the July Marketimer will be available online.
TEST TWO
As anyone noticed that international equities are moving nicely higher this past week or so...especially today. Mine went up nearly 1%!
Gabe
Thanks JW. What I post is my current thinking on markets. I'm evolving and learning.
May Brinker's knowledge of investing be missing the modern portfolio strategy? He never talks of this new thinking for buy and hold. Some common background info. As we know the market is constantly analysing economic conditions and making "bets" on market swings 3-6 months out or so. The reporting of vetted official economic data is 3 months old before the report airs, so we have a gap of questioning for 6 months. When we read of a recession, investors probably have traded 6 months ago on their forward leaning projections. If the investor waits for official word of recession they may have waited 6 months to long. Since the drawdown in modern times is usually quicker and shorter, the damage is done. The recession trough may last a long time, but that zone is slow to grow or drop. The recovery may be hiding and ever so gradual that much slippage can occur before ratcheting up stock investment.
Modern investment theory suggests that stocks and bonds are priced accurately, fully, or fairly based on risk. The market has efficient pricing and extremely few hidden gems to be had as compared to old days of trading. Analysis claim that even a small portion of trades can correct any market miss pricing. So, in a way it doesn't matter what you invest in, it is correctly priced per risk. Still their is business cycles and some economic sectors will do better, but that is hard core market timing. Something average investors should stay away from.
The modern portfolio is managed and rebalanced or shifting of assets depending on owners perception of overall risk. This activity is proving to be more important than picking investments. We notice the phenomenon that a rising tide floats all boats. My thinking is if we stay in the zone of approved bond percentages, what danger is there to shift bond within this zone? I read that safety exists from 70% to 10% bond ownership. Above or below these percentages will impact your lifetime safe withdrawals. The strategy is implemented by gut instinct and your risk tolerance. Best if not paying to much attention to the hype or daily news and best of all if you utilized a simple rules based formula for action. It's not rocket science and not accurate. Best if you do not go all in, but gradually shift gears at low percentages and do so within good trading days.
Bluce, I read both books. I liked the Black Edge but had to force myself to finish Against the Gods.
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The S&P 500 ended this week with three days of gains and two days of losses - down 0.88% from last week. The index is up 0.84% YTD, but is still 5.38% below its record close.
The U.S. Treasury closing yield on the 10-year note @ 2.85%.
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Yo, Mr. Bob Brinker, did you read this - from Fox Business:
American Money Flowing Back into America
- Fox Business
“America’s CEOs are not wasting anytime in taking advantage of [President Trump’s] tax reform plan. Over $300 billion was repatriated to the U.S. in the first quarter, according to the Bureau of Economic Analysis (BEA) — the most on record,” Suzanne O’Halloran writes. “This is why many economists are boosting their GDP forecasts to between 3% and 4%.”
frankj: Thanks for the comment. So you actually did finish "Against the Gods"?
Honeybee said...
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The S&P 500 ended this week with three days of gains and two days of losses - down 0.88% from last week. The index is up 0.84% YTD, but is still 5.38% below its record close.
CNN, Marketwatch and CNBC have the S&P500 +1.67% YTD
ANON #4957w77gy: Divvies re-invested?
FWIW: For some reason, most sites DO NOT TELL YOU if divvies have been re-invested. It's pretty damned important, especially in the long run, yet they don't seem to think so.
On a similar note, it is very difficult to find total return charts for funds, in percent gained. Everybody has price charts, which I rarely want.
"Pushing back the frontiers of ignorance."
FWIW -- to anybody following interest rates this isn't news, but: The ten-year Treasury has not been able to stay above 3%.
Schwab's highest-yielding one-year CDs have dropped from 2.500 to 2.450%.
I thought Bobby had this all figured out in 2013, and that rates would go up in a straight line?
Bluce: I probably did finish it since I tend to finish a book unless it is terrible. I didn't keep it though, donated it to the local library I think.
I liked Lowell Miller's book, "The Single Best Investment." It is devoted to the topic of dividend growth investing.
Howard Marks' "The Most Important Thing, Illuminated." He's a value investor and a managed fund guy. (Oakmark funds). This is an update of an earlier issue. "Illuminated" -- there is some commentary added by 3 different investment guys. Even if someone is an index investor, I think the book is worth reading.
Jeremy Siegel, "Stocks for the Long Run," and "The Future for Investors."
Who was complaining that most sites do not tell you if dividends have been re-invested?
On Vanguard when you buy a security the default I believe, is to re-invest. You can change that to plunk the dividend into money market. Next: Vanguard doesn't notify you when a dividend is re-invested, but the info is available in different places on the website.
The Recent Activity tab, the Transactions tab, and you can look at the Cost basis for a security to see the dividend re-investment history as well as Buys and Sells.
Supposedly, after the mid terms, the Market will go higher. So.....hold on to your britches.
Gabe
The trouble with pushing back the frontiers of ignorance is someone else is expanding those frontiers faster than you can push them back:)
Stocks go up after the election remove uncertainty?
Bluce, my frustration as well. Dividend reinvestment is huge and compounds. I've read and just read another example where this reinvestment can be up to 50% of the true investment return. All of the financial house data including charting is purely price charts. Not worth much. other than traders. I do not know, but suspect the measure of $1,000 growth does include reinvesting? We all have been trained in compound annual interest when borrowing money. Why the heck doesn't the investment business people use this measure? I remember Congress finally standardize on compound annual interest rate reporting for loans. You know the rectangle box. Before that they had all sorts of goofy rates to confuse the public.
My suggestion is to forget utilizing any financial house or yahoo. They all are different. Standardise on for instance on portfoliovisualizer.com its simple and straight forward and free. Look at the FAQ and know they reinvest dividends for the analysis. Also, they explain how the fund cost is subtracted from price growth.
Using tools like this was an eye opener. Wellesley and Wellington look to be not that impressive funds until you look at lets say 20 yr history within many corrections. One also can see the volatility and understand how important it is to minimize drawdown for long term earnings power. For example a $100k investment in VTI drops 50%. Next year you experience 50% growth. Unfortunately the investment is sitting at $75k. So, those financials that calculate average yearly growth rates are very misleading to measure financial gain.
Know that what were talking about is why I've read sitting out of the market for more than 6 months is a losing proposition. Most investors are only using price change for their investments.
Another very poor analysis of safe withdrawal percentage. These "experts" use some very basic calculations and wholly just a WAG. The bogleheads site has a community project that developed a spreadsheet for portfolio analysis. It's a year by year real data calculation. You can look up the performance of 60/40 for example, As part of the calculation safe withdrawal rates which they call perpetual. Interesting they have max withdrawal wherein you want to spend all your money. In the right fund you could achieve 2x what somebody like Bob Brinker suggests. Sorry, didn't get a chance to proof read the post, got to go.
Few (if any) stock charts list total return. This is not an omission, it is because of the many dividend scenarios available.
For instance:
- Investor A wants dividends reinvested.
- Investor B wants to receive his dividends by check.
- Investor C initially wants dividends reinvested. He does so for the first two years, but then decides he could really use some additional income and thus switches to dividend by check.
- Investor D initially wants his dividends by check. He does so for the first 6 months, but then decides to switch to having dividends reinvested.
- Investor E wants his dividends by check for Q1 and Q2. For Q3 and Q3 he switches to having dividends reinvested.
There are literally millions of combinations and permutations of the above. That being the case, non-total return charts will tend to understate performance of dividend-paying stocks. As the months and years click away understated performance can increase significantly.
There are charts available that may represent total return and are labeled as such (usually with notes, disclaimers, etc.) These are most often seen on the company's website and/or on a Financial Company website. They usually take the form of a "Growth of $1,000 Invested" chart or something similar - again with notes, disclaimers, etc.
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So, now that we have that problem "solved" what do we do about inflationary effects, corporate buyouts and spinoffs and a myriad of other issues?
JC
Thanks so much for enjoying the new WNTK stream. I updated it last summer for consistency and quality with a new provider. Always great to hear its being enjoyed. And thank you for the kind words on the website as well. I try to keep it as streamline as possible for our listeners.
Matt Cross
General Manager WNTK
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