August 7, 2011, Bob Brinker's Moneytalk, Summary, Commentary, Excerpts and Discussions

August 7, 2011..............................(post or read comments)


Bob Brinker was not on the air today.  Lynn Jimenez was the fill-in host. She is a business reporter for KGO810 radio.  Lynn mentioned that she was getting emails during the program today. Here is her address: lynnjimenez@kgoradio.com

WHERE IS BOB BRINKER TODAY?  

Caller Larry asked: "Where's Bob? Like I'm a Marketimer subscriber. I would have liked to talk to him today."  

Lynn replied: "Oh, you know what. It never fails, doesn't it. I really hear what you are saying. Umm, Bob had this day off scheduled for a very long time. And it just never fails that the minute you get a break, boom, everything pops. I think that we were all hoping that there would be a better resolution to the debt limit issue and that this wouldn't have happened."

Honey EC: Over the years, there have been numerous times when "boom, everything pops" that Brinker has  conveniently been gone that weekend, especially if he had dug a hole for himself and there was no way for him to save face. I'm betting that he's hoping for some change by next week so that when he returns the market will look better.

POLITICAL VIEWS ON MONEYTALK:  

Caller Mike from Little, Colorado (Home of Marketimer) said: "The show you and Bob run is like the show for the independent, progressive voter,  for us normal people. That is why I like it so much."

Lynn giggled and exclaimed:  "Progressive? Oh Wow!  I've never been....okay."


Mike continued:  "There's Fox on the one wing and I don't know what's on the other, but you are right down the middle for normal people. A breath of fresh air, I love it."

Lynn with great joy said: "Thank you!"

Honey EC: Mike thinks Independents and Progressives are the same?  And Progressives are right down the middle, normal people? LOL!  My goodness,  Lynn was almost beside herself with joy over this caller from the home of Marketimer and  BB Jr's fixed income newsletter.   However, it's interesting that he graded  Moneytalk  as a political program. I thought it was supposed to be "all about the money."  I won't be covering Lynn's  progressive political points of view.


VANGUARD GINNIE MAE FUND (VFIIX) AND VANGUARD INFLATION-PROTECTED (VIPSX):


Caller Mike from Littleton (above) asked:  "I like TIPS and GNMA's. How safe are they going forward?"

Lynn's answer: "I don't know. I think Ginnie Mae's can be downgraded too. We are going to learn more from Standard and Poors tomorrow.  First of all, I would say that almost any US debt is safe, even with what's going on, money pours here, not in Europe. And we are much more transparent than any Asian bond. So I think we're okay on those. I just don't know what effect it's going to have on Ginnie Maes."

Honey EC: Brinker has sold all of the TIPS Fund from his Marketimer model portfolios.  And he has sold the Ginnie Mae weightings down to 15% in the off-the-books fixed income portfolio that now contains some stocks. And he sold the Ginnie Mae weighting in the Marketimer balanced - portfolio III down to 20% and added Vanguard Wellesley Income (VWINX), which contains about 38% stocks.

 VANGUARD HIGH YIELD BOND FUND (VWEHX) 

Caller Jack said: "I have about $90,000 in Vanguard high yield bonds....So far the high-yield has performed pretty well over the last few years.....I was told that the high-yield bonds act more like a stock, but I'm still nervous about the high-yield part of it." 

Lynn asked: "Let me ask you something. It would seem to me that since it's ahigh-yield bonds that it's primarily corporate bonds. Is that correct? (caller: "That's correct.") Alright. Corporations right now have an awful lot of cash on their balance sheets. And because of what they went through during the meltdown and the threat to the bottom line for so many of them, they had to clean up their acts.....So I would say that corporate bonds may continue to be very solid investments. What has been downgraded here is the federal debt.....I would think that your high-yields should be okay....but I'm not an expert.....I think you should take a deep breath and I think you're going to be okay."

Honey EC: I was astonished at Lynn's total lack of knowledge about the high-yield bond funds. 

DOUBLE LINE TOTAL RETURN  BOND (DLTNX)

Mike added another question: "How about the total bond market." 

Lynn replied: "I think the same thing. I'm not sure, I don't know.  If the intermediate is more tied to federal debt, there you may see something change. But you know, yields are going to go up, and that can only be good for you, right?"

Honey EC: First let me say that if yields go up, then net-asset-values go down on bond funds. So for Lynn to make the statement that it "can only be good" is beyond ignorant, in my opinion.   

Also, Mike had to be referring to the 20% weighting of Double Line Total Bond Fund that Brinker added to his Marketimer off-the-books income portfolio back in May, 2011. There are no other total bond fund holdings in any of Brinker's portfolios.

GOLD and SILVER: 

Caller Jason said: "I bought nothing but silver, I like silver over for the last ten years and I'm up over 800%. Gold and silver always was real money."

Lynn interrupted: "Jason, I'm going to cut you off here, I'm not one of those people who talks about religion on the radio......To me that's an ideology."

Jason replied:  "Please Lynn, one second.  If a person in the 1970's started working and bought one ounce of gold a month at $30 a month when Nixon took it off the gold standard, and put it in their retirement account, they would be sitting as multi-millionaires. They would be able to touch their assets whenever they wanted to without any penalties -- without any onerous tax burden. And they would be in a much better position, my parent's generation, because I'm 35 (unintelligible)....."

Lynn interrupted: "And where would they have stored it with no taxes. I mean, please....."

Honey EC: Wow! If Jason is right (I didn't check his numbers), that it a huge deal. Brinker has always been negative on buying gold for an investment even though he added it to his off-the-books list of individual issues back in May 2009 -- with no comment whatsoever about how much to buy.

At least three times today, Lynn said that talking about gold was "talking about religion." I guess her foray into gold timing back-fired on her. In February she made the statement that it was too late to buy gold.  Oops...

STOCK MARKET: IF YOU GOT OUT OF THE MARKET TWO WEEKS AGO, YOU ARE DOING FINE:

Lynn said: "Don't panic. That's the key. If you panic, you are totally out of luck. If you got out of the market two weeks ago, you are doing fine. If you are in it right now and you don't need that money for two years, stay in and let it recover."

Honey EC: July 17th on Moneytalk,  when asked this: "Given this debt ceiling crisis and what I see as a potential stock market drop for who knows how long, should we move that money into money market accounts for a little while?"  

  Brinker answered:  "We had this same question two weeks ago when the S&P was around 1270. And now the debt ceiling debate has heated up dramatically in the last two weeks and the S&P is up to 1316. Showing a total return year-to-date of close to  6%.  So I will repeat what I said to that caller at 1270, asked virtually identical question....I said to that caller, you need to be prepared, if you do that,  to re-enter the market at a higher level. Now if that caller re-entered today, he would be re-entering about 46 S&P  500 points higher than he exited the market two weeks ago....I have not exited the market until I see a resolution of the debt ceiling issue because I already know....what's going to happen...."

And in the August 2011, Marketimer, Brinker said: "We are maintaining our fully invested position in our model portfolios in anticipation that our S&P 500 target in the low-to-mid 1400s range can be achieved going forward." 

IS BRINKER CORRECT NOT TO RAISE ANY CASH THIS TIME? 

Caller Steve from Mountain View, who also called Lynn on February 13, 2011 (Thank you Jeffchristie, for tracking that down), talked about the S&P downgrade and ended his comments by saying this: "Well, Bob Brinker still thinks we should stay fully invested in the market, so I hope he's right this time."

Honey EC:  Indeed, let's join Steve in hoping that Brinker is "right THIS time."  Last Sunday, Brinker  was bragging that he had told callers not to sell stocks because of the debt ceiling issue unless they were prepared to buy back in at higher levels or stay out altogether.    He also  said that he had been buying stocks.  

Lynn's guest-speaker was Ken Rogoff, co-author:  "This Time is Different: Eight Centuries of  Financial Folly" 

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

[In Edit, August 8, 2011]  Bob Brinker said this two weeks ago:  "I said to that caller, you need to be prepared if you do that, [sell stock] to re-enter the market at a higher level. Now if that caller re-entered today, he would be re-entering about 46 S&P  500 points higher than he exited the market two weeks ago....I have not exited the market until I see a resolution of the debt ceiling issue because I already know....what's going to happen...."
 

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