June 28, 2011....Bob Brinker's Oil Stock Recommendation (And Gold and Silver)

June 28, 2011....In May, 2009, Bob Brinker added Suncor (SU) to his Marketimer list of individual issues recommendations.

There are only three individual company stocks on this off-the-books  list and the other two stocks have been on the list for over a decade.  All of the other items on the list are ETFs including GLD,  the gold ETF.  Brinker added GLD at  the same time that he added Suncor, but he gave no buy price for it at the time and no follow-up advice since then.  (At least two times, on Moneytalk, Brinker has said that  SLV, the silver ETF, can be used as a hedge against a falling dollar as well as GLD.)

Marketimer, May, 2009, Bob Brinker wrote: "This month we have added Suncor (SU) to our coverage. Suncor is a leading Canadian oil sands producer with vast reserves in the Athabasca Tar Sands of Alberta. We rate Suncor attractive for purchase in the mid-20's price range. We view Suncor as an excellent way to protect portfolios against rising oil prices in the future.......Individual company holdings should not exceed four percent of equities in order to manage specific company risk."

Business Summary

Suncor Energy Inc., together with its subsidiaries, operates as an integrated energy company. The company involves in the development of petroleum resource basins in Canada's Athabasca oil sands; acquisition, exploration, development, production, and marketing of crude oil and natural gas in Canada and internationally; transportation and refining of crude oil; and marketing of petroleum and petrochemical products primarily in Canada.

 The first day that Marketimer subscribers could buy SU on Brinker's recommendation, it closed at $27.30.  A few months later, Brinker raised the buy-price to the low-$30 range.   However, since March 2011,  Suncor has been listed as a  hold.

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June 26, 2011, Bob Brinker's Moneytalk: Summary, Commentary, Excerpts and Discussion

Posted June 26, 2011....Bob Brinker hosted Moneytalk today.

STOCK MARKET:  Bob Brinker did not talk about the stock market or recite closing numbers or year-to-date returns like he was doing  before the market began to drop. The last time he made any comments about the stock market was on May 1st when he said that the market had closed at its 2011 closing high.

BOND MARKET....Brinker didn't talk about it today. 

LAND OF CRITICAL MASS: Brinker said: "When you are in the land of critical mass, you are the master of your finances and your life because you don't have to go out and work for da man. Now as you know,  there are people who are clearly residing in the land of critical mass and they go to work every day. Warren Buffett is probably the best example out there. Here's a guy, who despite his  80th birthday, is out there working pretty much every day. Why? Because he likes it. He wants to do it. 

Hey, it's his life.  If he wants to work into his 80's, so be it.  It's his decision. It's a personal decision. It's not for you or for me to make any comments about what somebody wants to do in terms of continuing to work.....He's working for sport. He's working for personal gratification....And that's what  critical mass is all  about. It gives you the personal freedom so that you can choose how you wish to spend your time......I admire people who get themselves in a position - through hard work - that they can do what they want to do......What's the most precious  asset out there?  It's not money.  Time is the most precious asset out there....You can't buy it. It's not for sale."  

BRINKER IS DOING WHAT HE LOVES....Caller Bruce from LA said:  "Thank you for hanging in there all these years in what can't always be an easy job." Brinker replied:  "I'm doing what I love Bruce, so don't give me too much credit for that. I love radio."  

Honey EC:   The odds are pretty good that  Brinker  reached  "The Land of Critical Mass" long ago.  About a year ago, Brinker claimed that he had requested that  the Saturday Moneytalk program  be dropped altogether and only  broadcast on Sundays.  Since then, Brinker has averaged doing the program about 3 time per month and there has been fill-in hosts the other times. 

However, Brinker has continued to use  the  short time that he is on the air quite  effectively  to promote Marketimer. This is also advantageous to his son (also known as Bob Brinker), who sells a newsletter of his own. Callers often mistakenly think that the Fixed Income Advisor is Brinker's. It's not, but I have never heard Brinker correct that misconception. 

  The past couple of weeks, Brinker has done several, (what appears to be paid)  ads for Marketimer -- it's been awhile since he did that. So he may "love radio" but one has to wonder how much because it looks like one more cut back  and he may as well phone it in and  buy ads. LOL! 

Methinks what Brinker loves is keeping his and his son's name (which NOW happens to be indistinguishable)  in the public eye via a national radio program.  That is where the  Land of Critical Mass resides for both Bob Brinkers. They both have the name, but only one has the voice and experience to be on the air. 

IS IT TIME TO TRANSFER ALL STOCKS AND BONDS TO A MONEY MARKET FUND?  Caller David asked:  "Assuming that Congress and the president stalemate on the debt ceiling and we face a crisis of high interest rates or plunging stocks or both, would it be smart to protect against that now by transferring all bonds and stock funds to a money market fund?"

Brinker replied: "I would say the answer to that would be as long as you are willing to run the risk that if it doesn't turn out you're way, which would be a de facto default by the US Treasury, which would be an event of enormous historical significance. If we don't  have a de facto default, which can only occur if the debt ceiling is not raised, then you have to be prepared if you exit now to do one of two things. Either to stay out indefinitely or whatever, or to re-enter at a higher level......

.If you are going to exit now on the theory that you're exiting because they won't raise the debt ceiling. And if you turn out to be wrong, and they do raise the debt ceiling, I think that the probabilities would be unfavorable that you would re-enter at a lower level. Of course, it would be always possible to re-enter at whatever level you were looking at .......but you might be really unhappy if you made a move like that and then  you had to re-enter at a higher level.  And there's another factor. You would lose all of your timeline toward long-term capital gains on any positions held for less than a year in a taxable account.......Meanwhile you've got people like me saying they are going to raise the debt ceiling......... because they don't have any choice. And guess what,  they know it.....What you are looking at in Washington is political theater of the absurd."

100% CHANCE THEY WILL RAISE THE DEBT CEILING.... Brinker said: "There is a 100% chance that they will raise the debt ceiling. I don't know for how long  or how much  they will raise it, but they are not going to allow the United States Treasury to go into a default position this summer because they failed to act on the debt ceiling in time to avoid a default position, which right  now would be sometime in the month of August based on calculations coming out of the Treasury Department.....And if they set up a default, all of the Credit Default Insurance contracts around the world  that are out there, that have been underwritten on the probability of US Treasury default,  would be called in.....If you have no debt ceiling raise, then you have no ability of the Treasury to pay its debts.......This is a big deal....."

EUROLAND FINANCIAL TROUBLES....Brinker spent quite a lot  time discussing "Euroland" and the three countries that are in  financial distress, namely, Greece, Ireland and Portugal. He called Greece a "fiscal welfare state."  Brinker had great praise for Germany and said that "we can only dream" of the day when we could manage our fiscal situation like Germany is managing theirs right now.  Brinker said:  "The good news is.....in the United States, only about $9 or 10 billion  is sitting in the banks  in the United States, which represents sovereign debt of Greece."   

GREEK BONDS.... Yielding close to 17% annual for ten-year Greek bonds... 

RAISE INTEREST RATES: Caller Bruce asked Brinker about Jim Grant, who compared the Depression to what is happening now.   Brinker  told Bruce that he had great respect for Jim Grant and he was entitled to his opinion, but  it's difficult to compare today with the 1930's.   There were three major items that happened  back then that have not happened now.   1. The Federal Reserve tightened the money supply. 2. The stock market was operating on a 10% margin rule so when the market dropped, everyone on margin was out of business --  and the brokerage houses ended up holding the bag.. 3. The creation of the Smoot-Hawley Tariff Act, which created international trade wars.


IS THE MONETARY/FISCAL STIMULUS WORKING?   Brinker said: "The talking heads have no idea what they are talking about because they  miss this  point all the time.   Where would the economy be today without the stimulus, fiscal and monetary?.....It would be shrinking....They  are thinking about the next vote....That is why I have said many times, Bruce, in Washington DC today, we have a dysfunctional United States Government. And I mean it when I say it."  

Brinker's guest-speaker was Dave Kansas "Wall Street Journal Guide to the New Rules of Personal Finance." 

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast.  I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

Dixiegeezer took this Florida sunset. How did he do it? I don't know.

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June 22, 2011, Hulbert Financial Digest and Bob Brinker's Market Timing

[Please bookmark this new Honey's Bob Brinker Beehive Buzz location]

Posted June 22, 2011............................[Post and Read Comments]

Bob Brinker's Marketimer  did not make it on to the  latest Hulbert Financial Digest  "Overall Performance Scoreboard""  for  the 5-year  or 10-year top-7 newsletters.  [These rankings are what Hulbert calls  "The newsletter's total return (annualized) before adjusting for risk."] However, Bob Brinker's Marketimer is number 6  in the 20-year ranking.

In the June 2011 issue of Hulbert Financial Digest, Mark Hulbert writes  about  how well market-timers  weathered "the worst bear market since the Great Depression."  He does not make any excuses for them  or blame  any exogenous events. He deals with hard, cold data.

Hulbert lays it out in plain English:

"There is at least one silver lining to the extraordinary swings in the stock market over the last 3½ years: They create the perfect testing environment for stock market timers. After all, this period encompasses the worst bear market since the Great Depression and one of the most impressive subsequent recoveries. If a market timer wasn’t able to sidestep much of that bear market’s carnage, and then able to participate in much of the bull market’s recovery, then serious questions can be asked about why we should even consider following his advice in the future."

Hulbert continued to write that he had  calculated how many market-timing strategies were able to weather the past 3 1/2  year carnage if he relaxed standards to within one month of the top and bottom, rather than using a more unrealistic true top and bottom. 

Unfortunately,  Hulbert found that only 10 out of  160 newsletters  were able to meet even "very modest expectations" by correctly side-stepping the mega-bear and then benefiting from the recovery. 

Hulbert said when he presents these dismal results to clients, he finds that they often shift focus over  to average exposure levels instead of worrying about who can brag that they called the top and bottom.

Hulbert wrote about his clients:

  ".......they want a market timer whose average equity exposure level throughout the bear market was markedly less than in the recent bull market—and not by just a little bit, either. It’s not clear how to define “markedly less,” but 50 percentage points seems typical of what my subscribers have as their minimum expectation. But only 25 of the 160 strategies tracked by the HFD, or 16%, satisfied this expectation."

Hulbert did not say who this very small group of market-timers were that "sidestepped" the bear and then participated in the recovery, but we know for a fact that Bob Brinker was not one of them. All of  Brinker's  model portfolios  have been  100% invested since March, 2003.  And he has  always advised his subscribers to remain fully invested,  and put all  new equity money into the market by dollar-cost-averaging (and several outright buys).

On Moneytalk, Brinker often ignores this very recent bear market and harkens back to year 2000 which was the last time he raised 65%  cash from his model portfolios. That would have been a very good call if he hadn't called for a short-term counter-trend rally in October 2000 and advised putting a large percentage of those  cash into QQQ. Up to 50% of that money was lost, but never accounted for in his model portfolios.

Throughout this recent  bear market that Hulbert wrote about, Brinker remained bullish and fully invested. And amazingly, he was bashing the "bad news bears"  in May 2008, just before the market got down to the serious business of dropping all the way to S&P 500 Index 677!

Moneytalk May 31, 2008:   Brinker said: “So what we have here basically, is an example of false prophets and it’s sad. And the reason it’s sad is the damage done. Think of the people that are looking today at the market, S&P at 1400 and they’ve been scared out of the market in the first quarter by these bears………It’s just amazing and yet these people are out there, and these people are not happy, I’m sure, to find themselves out of a rising market since March. To find themselves looking for ever lower prices when in fact we’ve had the opposite..

..So it’s fair for you to say to the Cassandras, where is that recession, where are those millions of lost jobs, where are the two quarters of negative real GDP growth? Where’s the bear market? …………The answer is, they blew it! That is the answer, they blew it. They got caught up in their own negativity and they pronounced that it was all over, it was going to spiral downward and there was no end in sight – and they got it completely backwards. Truly amazing to see, and sad to see the people that are harmed by such unjustified negativity.” 

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June 19, 2011, Bob Brinker's Moneytalk: Summary, Commentary and Excerpts

Posted June 19, 2011..........................[Post and Read Comments]

Brinker hosted Moneytalk today.  Bob Brinker did not host the program last week, June 12th.  Lynn Jimenez filled in last week..... 

STOCK MARKET: Bob Brinker did not mention the stock market today. The last time Brinker commented on the stock market was May 1st,  which was the last week  before the six week drop began.   At that time,  he reported that the Dow Jones Industrial Average had  closed the previous Friday at its 2011 high of 12,810, and that the  S&P 500 was  at its 2011 high of 1363.63 and was up 9% for the year.

Since then, the Dow has lost 810 points and the S&P 500 has lost close to 100 points and Brinker has said nothing about it.

BOND MARKET: No mention of  bond markets  today.     

FED MEETING THIS WEEK:  Brinker does not expect any change in interest rates. He expects the Fed Fund rate to remain zero to 0.25%. 

HOUSING MARKET:  Brinker thinks the best we can hope for is some leveling out. There needs to be a reduction in foreclosures and lower unemployment rates before there can be much improvement

WILL THE GOVERNMENT RAISE THE DEBT CEILING?  Brinker says they will because they do not have any choice. The only question is whether or not they will  have a temporary shut-down. It happened in 1994 and nobody lost any money on Treasuries.

* Caller Mark from Santa Cruz asked Brinker if there was any way to measure the lost opportunity cost of a failed investment. Brinker said that it could be measured against the "risk-free" 90-day Treasury Bill.  

Caller Mark from Santa Cruz followed up with this question:  "To be specific when you recommended buy the market in late 2007 before the financial collapse, I've held on since then and I'm still down about 14%. What's most frustrating to me, in this instance was  the inability to buy the market at S&P 900-950 as it went down there."  

Honey EC: Mark is absolutely right that Brinker recommended "buying the market" in  late 2007. He also recommended buying the market throughout the whole year of 2008!

Mark's "lost opportunity" based on his following Bob Brinker's advice is ENORMOUS. Mark made his point well that he was frustrated because he  did not have money available to buy after the market dropped because he had invested at the top on  Brinker's recommendations. 

Mr. Brinker may  have  a steady stream of "new money"  coming in,   but  that doesn't mean everyone does.  Mark clearly did not!  Brinker's  master word-smithing and clever double-talk behind that microphone can  certainly  fool most of the people most of the time,  but hopefully, some of the audience are informed enough to know the truth.   In my opinion, only a  two-bit snake oil salesman would insult Mark with this  answer instead of giving him an apology: 

Brinker's answer to Mark:  "The key here Mark, that in a situation like that, and certainly your buy level was most unfortunate, in a situation like that where you're making one buy and then  the market is 14% lower, you should have collected cash dividends along the way, I would say of about 7 or 8% along the way against that change in principle value. The key is that you did not make the mistake of selling out after the investment went down in value. Assuming it was a broad based investment, for example, like the S&P 500, there was no mistake by you in selling out. You've held the position it's come back and should be a few percentage points of break even.....So given what happened in 2008, looking at a finacial calamity where people thought the banking system was going under, when you look at the totality of what was going on out there, you held your position and came out of the situation and it's come back a long way, and I think you've done the right thing."

Honey EC: Brinker sold Mark the "investment letter" that contained what Brinker called "your buy level" which was "most unfortunate." Sickening response!  Mark actually lost over 57% in the bear that Brinker missed,  and now Brinker has the gall to tell him he's only down 14% four years later and should be happy with the dividends?! (Actually,  it's 18% as of Friday's close.)

  Brinker refuses to take any responsibility for the losses subscribers incurred because of his disastrous market-timing advice. And he adds insult to injury with his red-herring garbage about doing  "the right thing" by not selling at the bottom.

* Caller Kevin from Danville said: "Long time subscriber and I'm hoping Bob, that that S&P gets up into the 1450 range that you keep on talking about, but I'm a little concerned with this European crisis.....that this austerity programs that are going take place in Europe that they are going to impact mult-national companies and a lot of them are in the S&P, what do you think about that."   Brinker ignored Kevin's comment about the S&P 1450 range, and repeated his take on the Greece crisis, saying that its effect on the US will be small.  He thinks a Spain and Italy crisis would be much more important.

Honey EC: Kevin was right that for several months now, Brinker  has been predicting the S&P 500 Index will reach the 1400-1450 range, but he has changed the time frame each month -- moving it out. As of June, the time frame could be infinity.  See my quotes below.

And what irony that S&P mid-1400s is the exact number that Brinker called a gift-horse buying opportunity in 2007 and January 2008 (that Mark bought at then).......You can't make this stuff up. :)

February, 2011, Marketimer, Brinker said: "Since we expect the S&P 500 Index to trade into the 1350 to 1400 range later this year, all of our stock market model portfolios remain fully invested." 

In May, 2011, Marketimer, Brinker slightly revised that prediction to read "....low-to-mid 1400's range over the next 12 months."  

In June, Brinker did not mention any time frame, but instead said ".....1400s range as part of the ongoing cyclical bull marker trend."

WHAT IS ALAN GREENSPAN SMOKING?  Brinker said: "Let me say something about Alan Greenspan who was up late this week on his soapbox arguing that a default in Greece, which he seems thinks is pretty much inevitable, has the potential to cause a recession in the United States......When Alan Greenspan has occasionally done  something right, we've tried to give him credit for it. That doesn't happen much anymore because he has been blamed widely for contributing to the financial crisis of 2008 by keeping interest rates too low for too long......but when he got on his soapbox and started talking about a default in Greece causing a recession in the US, I really started to wonder what he is smoking."  

Bloomberg: "Greenspan Says Greece Default Almost Certain, May Trigger US Recession"

BOB BRINKER IN EUROPE FOR TWO WEEKS, JUST RETURNED HOME (Jimenez filled in for him on June 12th)  Brinker said: "I just returned from an extended stay in Europe the past couple of weeks and I can tell you, it's the only thing that anybody is talking about over there. It dominates the news coverage. It's dominates the conversation, and that is, the fiscal problems over there." 

BILDERBERG MEETING JUNE 9-12 IN SWITZERLAND:  What are Bilderbergs?  The meetings are conducted in secret. The world is expected to take their word about what is discussed  and even who  really attends. Their website contains a  of list participants, but it is suspected  that it is not complete.  The Guardian  reported that over 300 attended the 2011 meeting this year.

Honey EC: I highly recommend this article from the Guardian.  "Bilderberg 2011: The Tipping Point".  Here are some excerpts:  "The global policy concerning the transparency of our social life is being thrashed out in an untransparent forum by people whose "social network" includes people like Henry Kissinger and the chairman of Goldman Sachs International. It also includes people we don't even know are there (this happens every year, names emerge that were never admitted to).

EUROPEAN UNION MEETING SUNDAY ABOUT GREEK DEBT CRISIS....Basically, Greece was  Brinker's  biggest  topic of the day.  (Everything he reported is readily available on the news.) Brinker said:  "Greece has become the poster boy for a welfare state. If you have any doubt about that, just look at those public sector union workers rioting in the streets of Athens as they protest these possible changes in their benefits."

IT'S NOT JUST GREECE:  Brinker said: "Right now it's Greece and certainly they're rioting in the streets in Greece. The workers who don't want to participate in this haircut have been rioting and they're very ugly scenes. But you know it's not just Greece. For example in Great Britain, they are going to have a strike with 750,000 participants. These are public sector workers.....Lot of public sector unions in Europe. That's one of the problems they have. They've developed huge public sector union situation, which gives people the power, basically, to take over the country -- shutting down schools, shutting down transit. You name it...... 

Wall Street Online: "Thousands of UK Public Sector Workers to Strike June 30th"

Brinker's guest-speaker today was Robert Kolb,  "Sovereign Debt: From Safety to Default"

Dixiegeezer has photographed parrots before, but I think this is spectacular. Click to enlarge:

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast. I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

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June 17, 2011, Bob Brinker's Individual Issues Stock Picks

Posted June 17, 2011.............................................. (Post or Read Comments)

Bob Brinker's short list of individual stock picks goes back over 23 years with very little change.  The two oldest stocks on this list of off-the-books picks  are Microsoft and Vodafone.  The two latest additions are Suncor and GLD (gold ETF). Both were added in May 2009. 

Let's review how well those who have followed Bob Brinker's  advice on Microsoft have done.

I do not know Brinker's  original buy price for Microsoft.  I am told by some that they  remember one of Brinker's appearances on  Nightly Business Report in 1998 when Kirk Lindstrom called in and asked Brinker a question about his Microsoft pick.  (I cannot find documentation of that call.)

June 17th, IN EDIT: Good news! The resident Bob Brinker Super-Sleuth, Jeffchristie,  sent the location of this transcript.

Guest Appearance - The Nightly Business Report, July 23, 1999

KANGAS: My guest market monitor this week is Bob Brinker, editor of "Bob Brinker's Marketimer" letter, and Bob of course is also the popular host of ABC radio's weekend program "Money Talk." Welcome back, Bob. 

BOB BRINKER, EDITOR, "BOB BRINKER'S MARKETIMER": Thanks, Paul. Great to be here.

KANGAS: You know, you have been one of the most unwavering bulls of this entire decade as far as your market letter is concerned, but am I noticing a little addition of a more a cautionary tone to your recent letters? 

BRINKER: Well, Paul, it's been a tremendous run, as you know, for nine years. We're up about 400 percent in the major indexes since 1990, and valuations have skyrocketed. We're up around 27, 28 times S&P earnings for 1999. This has been the "mother of all bull markets." 

KANGAS: So, overvaluation is a problem with you? 

BRINKER: Valuation is something we have a great deal of respect for. There are a number of factors we're looking at right now, the Federal Reserve, in our view, has been tightening monetary policy in recent months. There is a possibility we could be looking at a synchronized global economic recovery going forward. That could give rise to inflation concerns at the Federal Reserve. They're already preoccupied at the Fed, as you know, about the very tight labor markets. So, we're watching that. Obviously, interest rates have backed up in the last nine months, and investor complacency is amazing today. It seems as though many investors think 20, 30 percent a year is a national birth right. 

KANGAS: So, what do you see ahead now, Bob? 

BRINKER: We're watching all of these factors very carefully, and we're not making a change at this point. But if we have to change our investment policy, we will change it. 

KANGAS: Well, we've gotten to 11,200 on the Dow, and do you see maybe that's about it for a while? 

BRINKER: Well, I think that the 11,000s could be real difficult to climb through. I think there's a lot of stock for sale in the 11,000s. 

KANGAS: All right. Now, in tonight's "ask the market monitor" segment for our viewers, Kirk Lindstrom of Los Altos, California, who watches us on KQED, asks, "why have you had Microsoft as a 'hold' for so may years in your newsletter rather that a 'buy on pullbacks?'" You recommended (msft) on this program in the early 90's. 

BRINKER: Well, we certainly should thank the viewer for reminding us of Microsoft. You're right, Paul. Right here on the NIGHTLY BUSINESS REPORT, also in "Marketimer" we initially recommended purchase of Microsoft in 1990 at a split adjusted $2 a share. And in the newsletter we called it the technology stock for the 90's. Now we're up over 4,500 percent on that recommendation. 

KANGAS: So, are you taking money off the table now, Bob? 

BRINKER: Well, we're holding the stock. We did maintain, to answer the viewer, we did maintain "buy" points for several years. But now we're at 60 times next year's earnings on Microsoft, so we're going to stay with a "hold" for now. That's a rich stock."
[See the comments section for the remainder of this Kangas/Brinker transcript.]

Honey here: Now that we know Brinker's original buy price and know for certain he never sold the stock to take his sizable profits, let's just go back five years to when we have proof that Brinker issued a new buy price on Microsoft, and see if history repeated itself:

April 5, 2003, Marketimer, Bob Brinker said: "On March 11, we upgraded Microsoft to "buy" at a price of $23, and we upgraded Vodafone to "buy" at a price of $17 on that date."

So how has Microsoft done for those subscribers who bought five years ago at $23 and held it ever since on Brinker's recommendation? Let's check it out:

*  Firstly, there have been no Microsoft stock splits in the last five years (the last split was in February 2003).

*Microsoft has been as high as  $37 in 2008 (what a great time that would have been to sell). It then dropped to $15 in March 2009.  So in one year investors lost  nearly 70% of their money.

* Today, it closed at $24.  So after  a roller coaster ride up and then down, the NAV is currently up ONE DOLLAR  since Brinker upgraded it to "buy" in 2003.  

* Right now, Microsoft  is currently  paying a moderate dividend of 2.60%, so basically the only value added in the past five years was the  dividends received. 

* Why does Brinker, a "market-timer,"  continue to hold this stock?  Perhaps he simply doesn't care what it does because he never has to report on this list of  stock picks unless they make him look good.   And none of them are included in his official performance record or reported on by Mark Hulbert of Hulberts Financial Digest.

Jim nailed it couple of years ago when he wrote:

Jim said......

I think Brinker said many times that an investor should not fall in love with a stock. Too bad he fell in love with Microsoft.

January 23, 2009 9:50 PM

As for Brinker's other picks, it looks like Vodafone may have done  slightly better than Microsoft and right now is paying a 7% dividend. Suncor is up from Brinker's latest buy price of  $33, but has taken a hit recently with the drop in oil prices.

The gold ETF (GLD) is up from the price it was in May 2009 when Brinker added it to the list of picks, but Brinker has never indicated a buy price on it.

Brinker has always said that  "individual stock holdings should be limited to 4% of equities in order to manage stock risk,"  but he has never said  whether or not  this  rule  applies to GLD even though it is an ETF.

Matter of fact, Brinker has never given any reason why he added GLD to Marketimer, but it might have something to do with having bragging rights, as he has often done on Moneytalk since gold has done well the last couple of years.   At the same time,  he has the option of saying nothing if it doesn't do well.  That's what's called being in the "Cat Bird Seat."  :)

Microsoft,  five years:

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June 12, 2011, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

Posted June 12, 2011...................................[Read or Post Comments]

Bob Brinker did not  host Moneytalk today.  Lynn Jimenez filled in for him. She is a  business reporter for KGO810 radio.

Honey's STOCK MARKET CORRECTION DATA:
* Dow = down  6.71% from April 29th closing high.
* S&P 500 Index = down 6.8% from April 29th closing high.
* Nasdaq = down 8% from April 29th closing high.

Jimenez reported the latest market closing numbers and a brief rundown of some of the latest news.  She  devoted portions of the program to marriage counseling for soon-to-be-weds, being sure that one of your parents doesn't give away your inheritance to a new "significant other," and looking out for your parent's finances as they get "older."

JIMENEZ INVESTING PRINCIPLES: Jimenez said:  "I have my own principles of investing. Keep it simple, keep it cheap, keep it balanced, keep it invested."  

Honey EC: Bob Brinker's latest market-timing fiasco was exposed  by a caller on the radio show today. Jimenez made a giant effort to control the caller and  cover-up (make excuses) for Bob Brinker. It was a very interesting conversation. I present it here in its entirety:

Caller Mark from Mountain View, CA said:  "I have a question about financial advise. If you had followed someone's recommendations over the past four years who completely missed the bear market of 2008, '09, would you be inclined to stay with that person or  perhaps move on?"

Jimenez replied: "That is a good question, it really is, because just about everybody got blindsided by the big sell-off. In hindsight, it's easy to say,  that,  how could  you miss. But I don't think that many advisors understood what was happening in the mortgage securities, or really got what was happening in the mortgage market.  Dishonesty was rampant through the homeowners,  the mortgage brokers, real estate lenders, assessors, the banks that bundled securities, the banks that made the loans. I mean it was just a mess. Then we have MERS, which is kinda the bank's ad hoc, hey we don't want to go through the county appraisers and assessors or  county offices to file deeds. We're just gonna handle them all ourselves and who really owns them. It was a hidden mess.  Then when Bear Stearns went and Lehman went, it took the whole house of cards with them. So when you talk about bad advice, maybe you should be a little more specific with me because if they simply had you invested and you lost a lot of money, I'd say you had a lot of company. But Mark, was there specific bad advice that really hurt you?"

Mark replied: "Sadly, I'm talking about Mr. Brinker, who advised buying the market at S&P 1400 just before the huge sell-off. And being down about 16% still."   

Jimenez said: "The S&P has regained about 88%, so you're about right in there...I don't think that the depth of the sell-off in the market was something that anyone anticipated. And that's what usually happens when you have a crisis, Mark....I don't know what you did, did you hang on during the sell-off or did you sell at the low?

Mark said: "I sold some, but I still followed Mr. Brinker's advice to hold on.  In fact, he recommended to buy more as the market was going down, 1400, 1200 and that didn't work out too well."   

Jimenez interrupted:  "But you're back up, as I said, 88% on the S&P." 

Mark said: "No....."

Jimenez interrupted again: "Awright. So my question for you is this, when you have a sell-off as deep as you did, if you sell at the low you're never going to make it back. If you hang on, you have to be really, really patient. I just read something that was in the New York Times.....There was a study that showed that over the last 40 years.....that people made money only when they held ubber long,  meaning 20 years. You don't make money on the market if you hold for five years.  You can, but it's not guaranteed."  

After the break, Jimenez asked Mark: "What do you want?" 

Mark replied:  "I understand Mr. Brinker is still recommending to stay fully invested of course, to recoup the previous losses that he was blindsided by.  But myself,  I'm currently 20% stock, 80% fixed income because I think a double-dip at this point is unavoidable. High unemployment......" 

Jimenez interrupted again: "Mark, Mark, Mark.....If that's what you're comfortable with, then that's what you have to do. You are the one who has to sleep at night.  Now I'll tell you. I was always diversified. I always had cash, bonds, stocks,  and I left it that way.....Because I was diversified enough,  where I didn't have really heavily  weighted one way or the other. Perhaps I was a little underweight in stocks by what I should have been. As a business reporter, I try not to do too much with anything. I just kinda put it in there and let it go. I don't want to have it influence my reporting. Yes, I lost a lot too when the market went down. I've been sitting tight and waiting and it does come back up. If your opinion is that we are going into a double-dip - mine is that we are not. Mine is that we are in a soft patch...."

Honey EC:  If you take Lynn Jimenez at face value, you would have to conclude that she does not know that Bob Brinker is a MARKET-TIMER.    She seems to have  no clue that Bob Brinker's  claim-to-fame is  "market-timing," or that he sells  a newsletter titled  "Marketimer."  She may  not even know that he is currently bragging about his LATEST buy signal, while hiding all the others he issued during the bear market. As Mark said, Brinker's advice  was to buy at S&P  mid-1400's at the October 2007  all-time-high  and in January 2008.  Here are  Brinker's ever-lower Marketimer buy-signals:

January 4, 2008, S&P @ 1411: Mid-1400's

Feb 10, 2008 S&P @ 1331: Low-1300's

Aug 5, 2008 S&P @ 1285: 1240 or less

Sept 2, 2008 S&P @ 1282: Low-to-mid 1200's

September 16th -- rescinded low-to-mid 1200's (recommended dollar cost-average only) 

January 2009 S&P @ 931: “ bear market bottom range of 750 to 850. 

February 1, 2009 S&P @ 825  “low-to-mid 800’s" (S&P dropped another 25% to 677 in March before hitting bottom)

July 1, 2010: S&P @ 1078:   "1030."

As for Jimenez excusing Bob Brinker for missing the 2008-2009  mega-bear by claiming that "just about everybody got blind-sided,"  that is RIDICULOUS!   There were many that don't even claim to be market-timers who did not get blind-sided. A few come to mind: Larry Swedroe (as documented in my archived Brinker Blog). And Elaine Garzarelli, as documented on NBR by Paul Kangas who said: "On your last visit with us in early August, you were correctly bearish on the stock market..."  (transcript documented at Kirk Lindstrom's website). And here are several as reported by  Mark Hulbert,  Barron's in  October, 2008:

• Cabot Market Letter: Bearish. Editor Timothy Lutts currently has some 92% of this letter's model portfolio invested in cash.
• Chartist. Bearish: Editor Dan Sullivan turned bearish on the stock market in mid January of this year, and has remained so ever since. He continues to recommend a 100% money market fund position.
• Growth Fund Guide. Bearish: Editor Walter Rouleau continues to believe that the investment markets over the next several years will be dominated by a trend away from financial assets such as stocks and towards inflation hedges such as gold and other hard assets. Rouleau's model portfolios currently have an average equity allocation that is 33% long.
• Timer Digest: Bearish: Editor Jim Schmidt bases this newsletter's market timing model on a consensus of the top market timers. His consensus of the top ten based on performance over the last 52 weeks is bearish, with 1 bull, 7 bears, and 2 neutral. His consensus of the top ten for performance over the last two years is bearish, with all ten newsletters bearish. However, in his latest issue, dated October 6, Schmidt wrote: "The deeper the financial markets fall, the greater the inevitable rally will be and the longer the new bull market will last. Meanwhile, it has been said that the average investor is currently behaving like a deer in the head lights during this crisis." The newsletter's model portfolios currently are about 90% invested in stocks, on average.
• Vantage Point: Bearish: Editor John Harris wrote in his October issue, published earlier this week: "On balance, the economy and earnings growth are expected to be weak for the foreseeable future. On the plus side, the price of energy has fallen substantially and inflation has become less of a threat. The long-term moving averages, which define the long-term trend, are bearish for the major averages. Risk levels are such that a defensive 50% to 70% cash allocation is warranted." (However, Hulbert reported Bob Brinker as bullish)
• Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early October, editor Bob Brinker wrote: "We believe the stock market will return to an uptrend within six months of the start of the next economic recovery. Although the timing of the recovery is uncertain, our view is that it could be underway by next spring. If that scenario unfolds, we could be looking at a stock market turnaround beginning in this year's fourth quarter. This bear market decline has been accompanied by an extraordinary flow of negative financial news, but we are focused on stock market recovery in 2009 as investors go through the process of discounting economic recovery prospects in advance of an improved economic outlook." Brinker is recommending that subscribers' stock portfolios be fully invested.

Jimenez' guest-speaker was Allen Holdsworth, a former farmer who now teaches investing.   Jimenez  said that he wasn't there to sell anything, but the  website  she mentioned seemed to have plenty for sale. I'm not going to put the link here because as I was checking it out, my anti-virus program sounded an alarm. If you want it, just Google his name and "better investing."

Holdsworth and Jimenez discussed day trading vs investing. Holdsworth does not use technical analysis and does not trade stocks. Jimenez said she did not consider stock trading as investing. 

Jimenez asked Holdworth if there was ever a time when he advocates getting out of the market entirely.

Holdsworth replied:  "I never have. I know listening earlier, one of your other callers  (referring to Mark's call) said, you know, he (Bob Brinker) can't time the market. You don't know what the market is going to do short-term. And that's the problem. 

Jimenez said: "That's right." 

Honey EC: So Holdsworth joined  the ranks of many others who say no one can time the market,  and  he actually seemed to use that to justify Brinker's blunder. You can't make this stuff up!!! LOL!

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast. I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

If you want to listen to Mark's call, he is the first caller of the day, about 1:20pm. Mark, if you read this blog, please send some comments. We'd love to hear from you. 

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June 11, 2011 Bob Brinker Has Never Totally Predicted a Bear Market

Posted June 11, 2011.............................................[Post or Read Comments]

Bob Brinker fans look to Brinker to warn them ahead of time of an impending bear market so they can  sidestep it.   Some Bob Brinker fans even  believe that Brinker has done this in the past. Has he?   When the next bear market arrives, what will Bob Brinker do?

The documented truth is that in his 26 year Moneytalk and Marketimer history,  Brinker  has raised cash  only ONE TIME  ahead of  a bear market.  That was  in the  2000-2003 bear market and it was only  65% of equities, including model portfolios.

However,  soon after raising cash in Y-2000,  Brinker called  a counter-trend rally  and issued  a special buy signal on QQQ.  He told  subscribers to use 20 to 50% of those cash reserves to purchase QQQ.  That trade went very badly; QQQ lost over 70% of  value.  A few months later, Brinker put the trade on hold and has never mentioned it again in Marketimer or on Moneytalk. See documents at Brinker Fan Club QQQQ History.

The only other time that Brinker has raised cash  (100%)  was soon after the 1987 crash,  but that was a costly mistake because the market  started climbing at the same time and his portfolios missed out on gains before he got  back to fully invested.  See Bob Brinker's asset allocations since 1987 at Bob Brinker Fan Club Asset Allocation History.

Writer Jim has an outstanding recollection of Bob Brinker's bear market calls. Jim wrote this in November 2009, AFTER Brinker totally missed the 2008 bear market drop of 57%+: 

Jim said...

After reading Brinker's response to caller Barbara, it sounds like it does not really matter to him that he missed the bear market. He seems to be saying that all a marketimer must do to be successful is correctly call one bear market. He seems to think that if he misses 3 or 4 bear markets, it does not matter,as long as he calls one of them correctly, since a "buy and holder" is fully invested in all of them. However in Brinker's case he had people in cash from 1988 to 1990. A buy and holder would have done better during that 2 year period. So the bottom line is that Brinker partially side-stepped a bear in 2000-2003, but missed a bull from 1988-1990. So over time Brinker's marketiming has done nothing to help people who followed him since 1988, since he was partially right once(2000-2003), and wrong once (1988-1990). Any outperformance of his portfolios over time is probably due to fund selection, and not marketiming skills.

* Brinker denigrates  "buy and holders"  but be warned that he has been a total buy-and-holder for almost 8 years now. In 2008,   Brinker's Model Portfolio I lost 39.7%, and the "balanced" Portfolio III  lost 23.9%. Both  portfolios lost much more from the top to the bottom of the bear market.

* Brinker remained a raging bull throughout 2008 and issued several "all new money in" buy signals as the market continued to drop. He called bottoms at S&P 500 mid-1400's, mid-1300's, low-to-mid 1200's and finally in January 2009, mid-800's. (From his mid-800's buy level, the S&P dropped another 25% before turning up in March 2009.)

So  right now we have a stock market that has been down for the past six weeks.  The Nasdaq is in negative for the year. The Dow  had its longest weekly decline since 2004,  and the S&P  had the biggest 5 week decline since 2002.  What are Brinker's market-timing views right now?

Moneytalk,  March 20, 2011 Bob Brinker said: The generally accepted language for a correction is that the market is down over 10% but less than 20%.....I think anything in the single digits is a minor pullbacks. Some people would call it noise. That's really what we've had here.....And my forecast, as I've given it on this broadcast has been very consistent on this point......And that is, and we started saying this earlier this year, and that was that we thought that pullbacks would be in the single digit category..... So you can always see short-term corrections in a cyclical bull market, which is what I believe we are in right now.......From my point of view, it's just provided those looking for an opportunity to dollar-cost new money into the market, to do so."

April 2011, Marketimer, Bob Brinker said: "We expect the S&P 500 Index to make additional progress into the low-to-mid 1400's range within the next 12 months based on our earnings and P/E multiple expectations."

As of the  June 4, 2011, Marketimer,  Brinker's model portfolios continue to be  fully invested and he still  recommends dollar-cost-averaging new money into the market.  Brinker forecasts  "...new recovery highs in the S&P 500 Index 1400s range as part of the ongoing cyclical bull market trend." 

Questions we are all looking to have answered now: Is the stock market headed lower? If so, will Brinker do what he did in 2008, e.g., issue ever-lower buy signals while remaining fully invested? We shall know in fullness of time.

Dixiegeezer took this picture. Anyone know what kind of bird this is?  :)

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June 5, 2011, Bob Brinker's Moneytalk: Summary, Commentary and Excerpts

 Posted June 5, 2011........................................................[Post or read comments]

Bob Brinker hosted Moneytalk today.  Two weeks ago, when Brinker was last on  the air, he was hyping  Andrew Ross Sorkin's book, "Too Big to Fail" and the HBO movie, "Too Big to Fail,"  which aired on May 23rd.  Surprisingly, Brinker did not mention the movie on the program today.

Honey EC: I for one, was very disappointed that Brinker did not say what he thought about the movie after having hyped it for several weeks. I saw the movie and so have several others. Most of us think that it was very well done and educational -- with a great cast. Wonder if there was something in it that Brinker did not approve of -- like the fact that it clearly showed that every effort was made to save Lehman Brothers, but that  it was simply not possible.

Brinker's comments summarized, paraphrased or excerpted: 

STOCK MARKET....No "Ground Hog Day" today.....Brinker made no mention of the stock market and did not recite the closing numbers.   Stocks have  been down every week  for the last five weeks.  The Dow  was down 2.3% for the week;  S&P 500 Index was down 2.3%;  Nasdaq down 2.2%.   The Dow has had its longest weekly decline since 2004 and the S&P has had the biggest 5 week decline since 2002.

Honey EC: ==> As of the  June 4, 2011, Marketimer,  Brinker's model portfolios continue to be  fully invested and he still  recommends dollar-cost-averaging new money into the market.  Brinker forecasts  "...new recovery highs in the S&P 500 Index 1400s range as part of the ongoing cyclical bull market trend." 

MAY UNEMPLOYMENT REPORT.... Brinker said  that private payroll rose by 83,000,  and government jobs continued to shrink, losing 29,000.  Net non-farm payroll was 52,000.  The national unemployment rate is 9.1%.

Brinker recited unemployment by racial  demographics: White = 8.0%;  Black = 16.2%;  Hispanic = 11.9%;  Asian = 7.0%;  Teens 16-19 years = 24.2%.  

Brinker recited unemployment educational demographics: College graduate = 4.5%; some college = 8.0%; high school = 9.5%; less than high school = 14.7%.

 BLAME COMMODITY FUTURES MODERNIZATION ACT OF 2000 FOR LOSS OF 8 MILLION JOBS... Brinker said:  "I think if you had to put something at the top of the list of the culprits that brought about the loss of 8 millions jobs, back there in 2008-2009 when the economy went into free fall, you would have to put it at the top of your list.  Because this diabolical legislation, and we all know we have the best government money can buy, and that's why Washington policians vote on these ridiculous policies that they come up with. Policies like doing away with Glass Steagall legislation at the end of 1999, a bi-partisan effort, of course. And so was the Commodity Futures Modernization Act of 2000. ......Bill Clinton....the Maestro.....the former Fed Chair. This was the act that deregulating derivatives....and credit default swaps.....I contend both parties are messing up the country...In effect the Federal government created legalized gambling on Wall Street in the form of derivatives and credit default swaps....

There was no meaningful reserve established for the paying for the credit default swap  insurance contracts.....When the credit markets collapsed, which happened instantly when Lehman went under in mid-September of '08......The inevitable happened, the government had to step into the black hole which was called AIG, and provide the money.  Otherwise the counter-party risk spreading across the financial system would have taken it down......It cost the taxpayers over 100,000 billion dollars to bail out AIG.....AIG was deemed to big to fail because it had its insurance tentacles all over the globe....

So even though in March of -08, the Federal Reserve had stepped in with its 29 billion dollar de facto backstop of the J.P. Morgan takeover.....agreed to take over Bear Stearns which was under extreme duress.....on the terms that were agreed upon, which were that Bear Stearns first billion dollars in losses would be eaten by J.P. Morgan....a lead pipe cinch....call it the cost of the takeover. But the next 29 billion was backstopped by the Federal Reserve.....Then we got to September and Lehman Brothers was unable to put together anything and they were gone in mid-September of 2008....

And almost immediately the AIG, within hours, problem became front and center.....Then people realized, whoa.....look at these Lehman books, there are almost no reserves... All this money has to be paid out as all these companies go belly up. And AIG did not have the money. And taxpayers had to step up.....And in the process, they made firms like Goldman Sachs whole at a 100 cents on the dollar, believe it or not.....So what we had here is casino capitalism. I'm all for capitalism, not for casino capitalism on Wall Street, no way....Of course, Wall Street lobbied for this legislation, they paid for it.....And as  happened with the Glass Steagall situation, it was a bi-partisan effort to change the law.

But they really had to push on this deal. They had to go the extra mile to push the states from regulating the derivatives and the credit default swaps.They had to grant immunity from the state gambling laws. With an almost unbelievable foundation for what was to follow within not that many years later, and I think it's a big piece of the puzzle."  

Honey EC: Here is a June 3, 2011 Bloomberg article that says,  "Lehman May Never Face Court Reckoning as SEC Enforcers Lean Toward Rebuke."  

Also from Bloomberg, what are they preparing for?   Volcker Named to Panel That Will Advise on Too-Big-to-Fail   "Former Federal Reserve Chairman Paul Volcker and former Citigroup Inc. (C) co-chairman John Reed have been named to a Federal Deposit Insurance Corp. panel that will help the agency map strategy for unwinding too-big-to-fail financial firms when they collapse."

WILL THE GOVERNMENT MAKE BUDGET  CUTS OR KEEP PRINTING MONEY....  Brinker commented that he is waiting to see some  evidence of  Washington  getting serious about balancing expenditures with revenues -- at least within 3% of Gross Domestic Product  instead of the  9 and 10% that there is  right now.  It's  a real national disgrace.  There's been lots of demagoguery, but  no serious efforts.  

Brinker said:  "If they don't get serious about moving toward a balanced budget, in the long term, then we do run the risk that they could print their way out.....They would inflate their way out. And the way you print your way out of a major debt problem is you let inflation run high and that reduces the real cost of what you have to repay because you are paying it back in inflated dollars. And obviously, that also reduces the value of everybody's money in terms of what you can buy.....It's a 100% chance they are going to print more money because they have to accommodate Gross Domestic Product expansion. If they don't, the economy will go into a nose-dive.....The question is, will they do it responsibly and I think the jury is out."

HOW TO BUY GOLD....Caller John from St. Louis said he is  worried  about the dollar possibly losing much  of its value,  and that he had contacted a gold dealer because he is  thinking of  moving half of his model portfolio III holdings into gold coins.  Now the gold coin dealer is pressuring him to buy.    Brinker  responded by quoting from "Mack the Knife,"   Bobby Darin's old  song:   "When the shark bites with his teeth dear, scarlet billows start to spread."    Brinker told John that  he had warned against buying numismatic coins many times on the program.   Because of the mark ups, coins  may be worth half what is paid for them.  Brinker recommends GLD for those who want to own gold for a hedge.

GOVERNMENT COULD INTERFERE WITH GOLD AND SILVER MARKET....Caller Jack from San Diego said buyers should beware when it comes to buying gold and silver because the government could interfere  as they have done in the past  and that could dramatically change values.   For example, the margin requirements were changed on silver future contracts  recently and silver collapsed about 30% in a week.  Jack also  pointed out that since the  Federal Reserve alone decides when to print money,  they will make  the decision whether or not to print our way out of this debt problem.    He also said pointed out  that the Federal Reserve makes profits.  Brinker commented that the Fed has  to turn all  profits over to the US Treasury every year and  then  he ended the call.

SHOULD INVESTORS WORRY ABOUT MONEY MARKET FUNDS....Caller Ron asked Brinker if one should worry about money funds. Brinker replied that he thinks one should "worry about everything" and that only a fool doesn't worry.  He then explained that  money market funds are short-term portfolios of Treasuries, commercial paper and bank deposits.  It's   always  best to deal with quality companies -- such as Schwab or Fidelity. 

WHOLE LIFE INSURANCE POLICY.....Caller Ted from San Jose said that his in-laws invested in whole life insurance policies to save for his two kids college educations. He  asked Brinker what he thought of that method of investing. Brinker responded that it was not a method he would recommend "even for his worst enemy,"  however,  it would make a life insurance salesman really happy.  He recommended paying an hourly fee to a Certified Public Accountant to find out how to shut it down.

BI-PARTISAN EFFORT TO SELL U.S. DOWN THE RIVER...Caller Andy from Redwood City said he agreed with Brinker's monologue about the Commodity Futures Modernization Act.  Brinker said:  "I know I'm correct.....This is what drives me nuts, so many people out there are missing the point I made earlier. This is a bi-partisan effort to sell the United States down the river. It's not one party or the other. It's both of them." 

Andy continued: "They are both against us. Phil Graham,  Robert Rubin, Bill Clinton  and Alan Greenspan did us in."  Brinker replied: "There you go, you have two Democrats and two Republicans right there." 

OIL AND GASOLINE PRICES....Brinker said:  "I'm completely opposed to any manipulation whatsoever in the commodities market..... I get upset when oil goes to $115 a barrel, as it did a few weeks ago and people yell manipulation. But then it goes back down to $100 a barrel, where it is now and nobody says they manipulated the price down. It has to be a two-way street....Let me say this.....it has been amazing to see oil come off its speculative $115 very recent high and come back down to $100 and see pump prices go down so little." 

WHO (OR WHAT)  COULD GET HIT WITH NEW TAXES?   Caller Mark in Carson City wanted to know if the internet was getting a free ride on taxes and  then asked about taxes on stock transactions.   After pointing out that the internet had been around since Al Gore invented it,  Brinker said:  "I don't think that the financial markets would celebrate any new tax on transactions.....But everything is at risk. We are running annual deficits of 1 1/2 trillion. I can't believe I just said that.....Mind boggling numbers. That's how the national debt get over 14 trillion so quickly.....There's such a massive gap between expenditures and revenues that nothing would surprise me. It would not surprise me to see tax on high-earners, if you see on transactions on Wall Street, if somebody decides to tax internet activity because the level of dysfunctionality in Washington has never been this high."  

BIGGEST POLITICAL NEWS FOR THE MONTH OF JUNE....Brinker said: "The big news for  the month of June, this is laughable, is that President Obama and Speaker Boehner are going to play golf on June 18th. I mean they must be laughing at us all over the world right now. Who cares whether they play golf? How about getting the green eye shade down and getting to work? It's comical." 

Brinker's third-hour guest-speaker was Michael Hirsh,  "Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street"

Moneytalk on demand  with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast. I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.)    Bob Brinker also offers it by paid subscription at  bobbrinker.com  -   free for seven day archives at   KGO Radio Sunday Archives  

SteveT did a photographic study of "the Bench." Here is one  of his great shots:

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June 3, 2011, Bob Brinker: Stock Market Decline is "Noise" and "Hill of Beans"

Posted June 3, 2011.........[Post or Read Comments]

After dropping for the last five weeks, the S&P 500 Index closed  this  Friday (June 3rd) at 1300.  The Dow closed at 12,151  and the Nasdaq closed at 2732. 

For the past month on Moneytalk, Bob Brinker  limited  his stock market comments to  reciting closing numbers. In my last couple of Moneytalk summaries, I even started calling it  "Brinker's stock market Groundhog Days." (Thank you, Jeffchristie.)  :)

Perhaps the reason that Brinker has been reluctant to say much about the stock market this past month  is because it has been down every week  for the last five weeks. The Dow average has had its longest weekly decline since 2004.

It was on the May 1, 2011 Moneytalk program that  Brinker enthusiatically reported that the Dow Jones Industrial Average traded at the 2011 high of 12,810 on Friday's close and the S&P 500 at  the 2011 high of 1363.63.  Brinker  commented:

"If you go back over the past couple of decades, the annual total return on the S&P 500 is very close to 10%, which by the way, is a pretty outstanding return when you look at the world we are in today and the interest rates.....As you know, we've had a couple of great years here, 2009 was an extraordinary year and 2010 was a very good year. And now 2011, with 4 months in the books, has a 9% rate of return. So it's off to a very good start. Nasdaq Index doing alright itself, 2873. The Nasdaq 100, which is the basis for the triple-Q ETF stock price, 2404.....Of course, the bear stories have been out there. The people with their bearish forecasts have been out there this year. So far, what they're left with, at least as we complete the month of April, they're left with the 2011 stock market highs on the close on Friday."

==> The May decline still  fits into the categories that Brinker called "noise" and not even a "hill of beans" on Moneytalk  in March. 

March 20, 2011 Bob Brinker said: The generally accepted language for a correction is that the market is down over 10% but less than 20%.....I think anything in the single digits is a minor pullbacks. Some people would call it noise. That's really what we've had here.....And my forecast, as I've given it on this broadcast has been very consistent on this point......And that is, and we started saying this earlier this year, and that was that we thought that pullbacks would be in the single digit category..... So you can always see short-term corrections in a cyclical bull market, which is what I believe we are in right now.......From my point of view, it's just provided those looking for an opportunity to dollar-cost new money into the market, to do so.

Now we've had outright buy signals on the market over the past couple of years for those sitting with some money to invest. We have had a buy signal that we gave in the beginning of July last year when the S&P was around 1030........ And we upgraded the market at the beginning of July last year to attractive for purchase and we're glad that we did it.....

When we look at the correction, if you want to call it that. Some people call it noise and it certainly is noise at this point, the market is setting just 4 3/4% below the high year-to-date in 2011......
 
When you look at what's going on around the world.....it's pretty amazing when you look at the resilience in this market.....We have war in Libya. We very high tension in the Mid-East. We have Saudi Arabian military forces moving into Bahrain to protect against protesters. We have protests going on at a number of other countries in the mid-east......We have the virtual elimination of oil supplies from Libya. We have the earthquake and tsunami in north eastern Japan, and the Fukushima nuclear situation......When you take a look at all of them, including the continuing sovereign wealth problems in Europe, you say how is it possible that the S&P 500 is only 4 3/4% below it's 2011 high mark. There is only one word and that 
is resilience.

You need about 120 on the Dow to get up to 1%. You need 240 points on the Dow to get to 2%. 360 points on the Dow still only 3%. J. P. Morgan told us long ago that stocks tend to fluctuate.....So a move 100, 150 or 200 points doesn't really amount to a hill of beans.....as we speak the Dow is 11,858. By the way, I don't think the Dow is the best average to use when a gauging market activity. I think the best index to use when gauging day to day activity in the market is the S&P 500....it's currently at 1279. Now the index has been as high as 1343 on a closing basis back in February."

==> NOT TO WORRY (if you trust Bob Brinker's market-timing skills). 

April 2011, Marketimer, Bob Brinker said: "We expect the S&P 500 Index to make additional progress into the low-to-mid 1400's range within the next 12 months based on our earnings and P/E multiple expectations."

==> As of June 4, 2011, Brinker's model portfolios are  still fully invested and he still  recommends dollar-cost-averaging new money into the market. He predicts that the S&P 500 Index will reach the low-to-mid 1400's range over the next 12 months.

 Dixiegeezer's Osprey and fish (Please click to enlarge):

 

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June 2, 2011, Bob Brinker Discussed "Too Big To Fail" History as it Happened

Posted June 2, 2011 .....................................................[Post or read comments] 

Bob Brinker gave this remarkable monologue the week that Lehman Brothers found out they were not too big to fail.   Here are excerpts from the September 20, 2008 Moneytalk program.

Bob Brinker's take on the historic time that Andrew Ross Sorkin wrote about in his book/movie "Too Big to Fail."  

Bob Brinker said: "It was amazing.......And we certainly have been blessed by the investment gods to have the opportunity to talk directly with you on the weekend during all of this ongoing news breaking, quick developing times that we’ve seen.......Lehman Brothers went down the tube on Sunday night.......the company was run into the ground, in my opinion. In the last six months, once the Bear Stearns news broke, it should have been zero tolerance for bankruptcy at Lehman. They should have done everything in their power to find somebody to take them over, but they didn’t and they’re gone. As far as the stock market is concerned, it’s pennies a share – forget about it. 

And then we had what I regard as a shotgun wedding.......We haven’t seen too many shotgun weddings on Wall street, but I think we saw one last Sunday night when Bank of America took over Merrill Lynch.......Merrill Lynch was getting extremely vulnerable.......And think the fact Bank of America came in there and took them over is probably a really good thing for Merrill Lynch.......Maybe it will work out long-term for Bank of America. I think they have a really impressive Chief Executive Officer at Bank of America, and it wouldn’t surprise me at all if he’s able to make that work.

And then we had the saga…..of AIG Group, the giant insurance company. The situation there was one where counter-party risk was so great that the government really had no choice but to.......come up with a package. And the package is an interesting package – 80% equity stake in the company. They own 4/5ths of the company.......And a $85billion line of credit at a very high interest rate.......8 ½ points over Libor. Libor is roughly 3%........8 ½ and 3 is 11 ½ is the cost of the money – roughly.......not a day at the beach.......And it wasn’t surprising we heard AIG talking this week about trying to come up with a plan to get that loan paid as fast as possible.......that’s expensive money.......not to mention giving up 85% ownership.......It would not surprise me that the United State Government can come out of that with a profit someday.

We had the markets jumping around, gyrating as rarely they have.......We had the situation where Sunday night – remember you heard me say this last Sunday on our broadcast, that government says no taxpayer money to bail out Lehman Brothers. And by the way, they never did bail out Lehman Brothers, they went down.......Well, that government policy lasted about 48 hours. It certainly did apply to Lehman Brothers, but about 48 later they had to do something with AIG. So by Tuesday night they the AIG rescue package together – the $85billion line of credit.

So then we get to Wednesday – markets are jumping around and at this point, we get to a new phase. And I really think we have to look at it this way, as we progressed during the week – very valuable to take a look at what was going on at various time stations during the week. We get to Wednesday, and at this point, we’ve already had the news that one of the very first money market funds of all, this goes all the way back to the 1970s, the Reserve Fund, which is a money market fund of many stripes, including an institutional money market fund had broken the buck.......In other words, it wasn’t going to return a dollar – it was down to about 97 cents on the dollar. That’s a 3% principal loss to the money market fund shareholders.

That’s only the second time in history of money market investing that a fund has broken the buck. Now there have been times when the managing company has thrown money in to keep it at a buck, but this time it broke the buck.......In addition to that, after Reserve made this announcement, during the time there were rumors about the Reserve Fund, money was coming out of the Reserve Fund like water going down the drain. It was fast – tremendous amounts of money, billions and billions and billions going out of the fund.

And that creates problem in the commercial paper market. It creates problem in the short-term financing arena. Commercial paper is a promissory unsecured note issued by a company for up to 270 days. It’s only backed by a promise to pay.......I remember in my early days working on the commercial paper desk at the Provident National Bank, and actually we issued commercial paper for the bank holding company, we also acted as an agency for other commercial paper. And you have to have confidence in the market to have a viable commercial paper market place – without that, you have nothing. So all of this is starting to feed into the commercial paper market.......

Now we get to Thursday and the situation deteriorates further.......Look at it as of Wednesday night: Bear Stearns is gone – went to J.P.Morgan in a takeover which should be described as a shotgun wedding in March.......Fannie, Freddie Mac is gone mostly to the government in a shotgun takeover a few weeks ago. Lehman’s gone Sunday night. Merrill Lynch taken over by Bank of America in what I regard as a de facto shotgun wedding last Sunday night. AIG taken over mostly by the government on Tuesday night in certainly a shotgun arrangement. All of these things are going on. And that gets us to Wednesday night, and we have these money fund rumors out there. This is a whole new chapter. Money Funds? Yeah.......

Then we get to Thursday, and the situation deteriorates further because Bank of New York Institutional Cash Reserve Fund, we find out, has investments in Lehman Brothers paper. Don’t ask me why any money market fund at this late date would have anything in their portfolio from Lehman Brothers. Lehman Brothers has been rumored to be the next to go after Bear Stearns since March. Lehman Brothers stock was bouncing around like a tennis ball last March when Bear Stearns went down. Money market funds invest for the short term. Typical average maturity is a few weeks.......It’s absolutely infuriating to me that any money fund manager would have Lehman paper when six months ago this company became the next to go…….in the rumor mill. And yet, despite all I just said and I’ve said this on Moneytalk just about every weekend for month after month.......that a money market manager should know how to run his or her fund without stepping in a black hole like this.

Anyway, we find out Thursday, just two day ago, that Bank of New York Mellon Institutional Cash Reserve is down about a penny a share in principal value because of holdings of Lehman……And then on Thursday, we get some more news coming out of Boston, Massachusetts – coming out of the Putnam Funds. Putnam Investments, one of the old names in the mutual fund business, they announce on Thursday, during the day, they are closing and liquidating their Putnam Prime Money Market Fund – this is a $12billion fund for professional investors………because there is a run on assets. People want their money. Well, in a money market fund, you are supposed to be able to get your money every day……Well, they had maturities, they didn’t have all the money in one day…….it was not a default issue, it was a liquidity issue. 

So on Thursday, we have something that we’ve never seen before. We don’t have a run on the banks because we have the FDIC. We have a run on the money market funds. And then Thursday afternoon, shortly after the Putnam announcement – no coincidence here – shortly after the Putnam announcement threatened to create a run on the $3 ½ Trillion money market industry, that we get word from Washington that a package is going to come in to hypothetically resolve the mortgage situation. And also provide insurance for money market funds. That’s a brand new item. And also, prohibit selling short financial

stocks, at least until October 2^nd. And you can take it to the bank; they are likely to extend that time line – probably until after the election.  

And there you have it. And once it came from Washington they were going to put a package together, no matter what the cost, and that was part of it, then the markets were calmed. And by the way, at the end of the week, it’s almost comical when you consider the volatility, I mean truly, when you look at the volatility this week, what I am about to tell you is borderline comedy and yet it’s reality, it’s true. The S&P 500 for the week was up 3 ½ points…….It’s ridiculous when you look at the volatility…….The volatility in and of itself is just bizarre."  

Dixiegeezer took these pictures that could easily be  metaphors for what happened in 2008 to the banking system: