Sunday, November 13, 2011

November 13, 2011, Bob Brinker's Moneytalk: Summary, Excerpts, Commentary and Discussions

November 13, 2011...Bob Brinker hosted Moneytalk today...................(comments)

TWO 800-POUND GORILLAS IN THE ROOM....First, Bob did not make any comments about what the stock market did last week.

And, for the first time in several weeks, Bob  did not slam those who are predicting a recession. Bob's main target has been Economic Cycle Research Institute’s Lakshman Achuthan who said that the economy is "tipping into recession."  Lakshman is still forecasting a recession as of November 7th.  Here's a LINK to his latest CNBC video interview.

 SUPER COMMITTEE....Bob commented that there was word today that the Super Committee in Congress is trying to find some common ground to bypass their partisan impasse....they have ten days before automatic cuts are due.  Bob called the proposed cuts  a "drop in the bucket" spread over ten years.

US BUDGET DEFICIT....is over a trillion  dollars a year. (And the National Debt is about $14 1/2 trillion and rising fast.)

BUY TREASURIES AND HOLD-TO-MATURITY....Caller Scott from Chicago said he had been listening to Moneytalk since 1991 and  is "hopefully on his way to the Land of Critical Mass."  Scott told Bob that he was concerned about owning Treasuries because of the nation's high debt and  deficits. He was looking for a way to diversify from Treasuries and dollars.

Bob replied: "I think if you're going to be invested in Treasuries at this juncture, you have to have a hold-to-maturity approach....If you go out and buy a Treasury today at these historically low yields....If you buy a ten year Treasury at 2.06 and at any point down the line, rates normally, then rates would not be 2%....If you were to see higher yields you would see a reduction in the value of the principal that you paid for the Treasury....I think you do run the risk of seeing these securities go under water sometime in the next ten years."
 
BOB BRINKER'S MARKETIMER INCOME PORTFOLIO....Scott from Chicago was allowed to ask a  follow up question. He said that he was about 80% invested in Bob Brinker's Marketimer balanced portfolio and the rest in cash and was concerned about the devaluation of the dollar.

Bob resplied: "I have an idea for you. You mentioned the investment letter and you might want to  consider the income portfolio on page 7 of the investment letter. Past results are not a guarantee of future results, but this portfolio has been doing exceptionally well....The total return for 2010 was 7% on this portfolio and so far this year, the total return was 5.7%.......The current yield on that portfolio is close to 5%."

Honey EC: Bob's selective reporting looks mighty suspicious to me. This is the second week that Bob has talked in detail about what used to be sort of a "throw-away" portfolio "on page 7 of the investment letter."  Never, to my knowledge, has there been an official year-end report on it.  And Hulbert Financial Digest does not use it in their Marketimer ranking. (Read what Bob said about this portfolio last week: HERE)

And note that  Bob has NOT mentioned the year-to-date total return on  his "official" portfolios that are lagging the Total Stock Market.  Mebbe this is why -- as of November 2nd:
Model portfolio I: YTD = down 2.3% 
Model portfolio II: YTD = down 2.4%
Compare to: Vanguard Total Stock Market Fund YTD = up 0.4%
HIGH YIELD FUNDS....Bob from Virginia asked Bob about them. Bob Brinker said: "I have included those bonds in my income portfolio, which is the portfolio on page 7 of the investment letter....and it's done exceedingly well in there....Yes, I'm okay with having a reasonable amount percentage in junk bonds.....But keep in mind we focus in the investment letter in using this type of security for income portfolio purposes. ....We don't  have junk bonds in model portfolios one, two and three, which include significant percentages in the stock market. We only have the junk bonds in our income portfolio, which is the page 7 portfolio."

Honey EC: LOL again!! Everyone who doesn't know what page Bob's income portfolio in on, please stand up!   Ginnie Mae (VFIIX)  = 15%; Short-Term Investment Grade (VFSTX) = 15%;  High-Yield Corporate (VWEHX) = 25%;  Wellesley (VWINX) = 25%; Double LIne Total Return Bond (DLTNX) = 20%.

COST BASIS on DOUBLELINE TOTAL RETURN FUND (DLTNX)....Caller Fred from Colorado said he "recently took a position in the total return fund that you recently added to the income portfolio" (Honey EC: that would be on page 7 LOL!) and they had asked him to  pick a cost basis.

Bob replied: "I think you are going to be choosing from three possibilities when you are looking at this.  You can take an average cost basis where you take all the shares that you purchased and that might include re-investment shares. You can take a FIFO, first-in first-out approach, or a LIFO, last-in, first-out...You would have to make a decision what works for you. Most people choose the average basis just because it's easy....And if the company is going to figure the average basis for you, that's an added bonus." 

Honey EC: Brinker added DoubleLine to his income portfolio (on page 7) back in May, 2011 at a cost basis of $11.08. It closed Friday at $11.13.  However, it pays a tidy dividend that is in the high-yield bond fund territory of about 8%.

VANGUARD GINNIE MAE FUND CAPITAL GAINS DISTRIBUTION....Bob said that the Vanguard Ginnie Mae Fund has estimated a 13-cent capital gains distribution to be paid in late December.

MONEY FUNDS INVESTED IN EUROPE....Bob from Virginia asked about money market funds that are invested in Europe. Bob Brinker said: "It wouldn't surprise me, I think you have to be real careful in selecting a money market fund.....Here's the thing, money market funds usually have very  average maturity - no more than a few months.  There has been so much warning time for money fund managers to get their European holdings into places where they are confident, like Germany. And get them away from places where they are feeling a lot of heat....If your money fund is overly exposed in Europe as of now, then this is just my opinion, he should be fired."

SKIRT-CHASERS AND THE EUROZONE....Bob said that  people are glad to see Italy's Berlusconi resign because he had a reputation as a "skirt-chaser, and when you have a "skirt-chaser at the top of your government, you have a credibility problem -- doesn't matter what country it is."

Honey EC: Wonder who Bob was thinking about? Was it Herman Cain, who has been  figuratively lynched by the media? Or was it John F. Kennedy and William Jefferson Clinton? 

WHAT IT WILL TAKE FOR COMPANIES TO BEGIN HIRING...Bob said: "What we need in terms of hiring is sustainable demand for companies to hire. Companies are not going to hire because the president says, we want you to hire. That's not going to do it.....Companies are only to hire because they see that demand curve going in the right direction on a sustainable basis because that's the way the system works." 

BOB IS NOT FOR GETTING RID OF DODD-FRANK....After repeating his same old mantra about what caused the meltdown in 2008  and how there was no regulation and no oversight, Bob said that he was against "throwing out Dodd-Frank" and doesn't "understand" why  some of the GOP candidates are for doing that.  

KEYSTONE XL PIPELINE....After a lengthy talk about the US oil prices and energy needs, (old territory he's covered before) Bob said: "Bottom line, I'm in favor of the Keystone XL Pipeline." 

Honey EC: Looks like the Obama Administration may have shot the US energy supply down again by delaying a decision on this. News just out from Reuters:
HONOLULU (Reuters / November 13) - Canada will try to sell more of its energy products to Asia after Washington delayed a decision on whether to approve the Keystone XL Canada-to-Texas oil pipeline project, Prime Minister Stephen Harper said
END OF YEAR TAX PLANNING....Now is the time to make year end tax adjustments, such as deferring income into 2012. Bob said: "In terms of the Federal income tax brackets, the way things stand right now, things appear to be in place....for 2012, just the same as for 2011. There is nothing going on right now that would suggest that there will be a different set of tax rates for federal taxable income in 2012 when compared to 2011. Now obviously, there are questions remaining as to what the employee portion of the payroll tax will be in 2012. Under current law, there would be a 2% tax  increase on New Year's Day because the employee portion of the payroll tax would go up 2%.....You have an opportunity here to make charitable gifts before year end and get the deduction in 2011.....Are you properly withheld for your earnings for your federal income tax? The ideal way to do this.... is to get as close as possible to the proper level of withholding -- that should be your goal....This is something you can take a look at too."

STOCK MARKET $3000 QUALIFIED LOSS....Bob said: "If you wind up the year with a $3000 qualified loss on a stock portfolio, you can deduct $3000 against your taxable income.....So you could reduce your taxable income by that amount."


Bob Brinker quote of the day: "Stay away from those shark attacks forever. Take charge of your financial future, that's what I believe in." 

Bob's guest speaker was Peter Hoflick, "Banks at Risk: Global Best Practices in an Age of Turbulence"

IT'S FREE! Download it from KGO810 radio archives within seven days and  listen to  Moneytalk on demand.

17 comments:

john said...

THANKS HONEY FOR THE BOB bRINKER POST.It looks like things are not much changed in Bob's view. I think things are changing quickly and I do believe this super committee will come out with something and get it passed. My reasoning is that people are sick of the same old politics and are ready to change the whole system if nothing is done Thanks John

jeffchristie said...

johnsaid...

"I think things are changing quickly and I do believe this super committee will come out with something and get it passed."

I agree with you. Bob also mentioned the size of the cuts they were targeting. He said it was $120 billion a year for ten years. The total level of annual federal spending is around $3.6 trillion. We would be talking about a cut of 3.3%. I could support that kind of cut across the board. Isn't that what is supposed to happen if they can't reach agreement?

Honeybee said...

Bob Brinker said he is for Keystone XL Pipeline. But the Obama Administration is all about getting re-elected:


How President Obama Killed Thousands of Jobs

Mike Brownfield__November 14, 2011 at 9:11 am

If Americans needed any further proof that the Obama Administration is one of the most political on record, or that, for all the recent demagoguing, it really cares only about re-election, not about job creation, then you need look no further than its cynical Keystone XL oil pipeline decision last week.

Over the last several months, radical environmentalists along with Hollywood celebrity activists descended on the White House in protest, urging President Barack Obama to block the construction of the $7 billion pipeline that would bring in more than 700,000 barrels of oil per day from Alberta, Canada, to the Texas Gulf coast. Last week, they got their wish.

The Obama Administration on Thursday announced that it would delay a decision on the pipeline until after the 2012 election. In siding with his leftist environmentalist, big Hollywood base, President Obama's ambition is nakedly apparent, as is his total disregard for the 14 million unemployed Americans sitting on the sidelines, waiting for Washington to get out of the way so they can get back to work. And it also shows that for him, politics is more important than achieving true energy independence for the United States.

And here's why: The Keystone pipeline would have done what the President's hundreds of billions of dollars in stimulus spending failed to do. It would have created thousands of jobs (tens of thousands, by some predictions), while generating $5.2 billion in property tax revenue for Montana, South Dakota, Kansas, Oklahoma, Nebraska, and Texas. And it would have done it all with private dollars--not taxpayer dollars.

The kicker is that despite all the hoopla from the enviro-celebrity protests, this pipeline should have been anything but controversial, even by the Obama Administration's own findings. Heritage's Nicolas Loris explains:

Continued below...

Honeybee said...

Continued:


Radical environmentalists act as if this is the first oil pipeline being built in the United States. We have 50,000 miles of oil pipeline in this country that have provided massive economic benefits with minimal environmental harm.

In short, building the Keystone XL pipeline is nothing new, and it’s one of the most environmentally sensible ways to transport oil. Even the Obama Administration determined it to be safe when the State Department’s recent Environmental Impact Statement found that the pipeline would pose few environmental risks.


Another important point is that even if the Keystone pipeline isn't constructed in the United States, the resource will still be tapped, and it's going to head elsewhere. Heritage's David Kreutzer explains that the development of Canada's oil sands will be slowed (thereby increasing its cost), and it will be diverted to non-U.S. consumers, meaning that the Canadian oil will be shipped across thousands of miles of ocean to Chinese refineries. Kreutzer's admonition to the Obama Administration?

So, block the XL pipeline if you think the environment will be better served by shipping Canadian oil an extra 6,000 miles across the Pacific in oil-consuming super tankers and then refining it in less-regulated Chinese refineries. In addition, be aware that replacing the Canadian oil means the U.S. also must import more oil by tankers, which are less efficient than pipelines.


The facts, though, don't matter to environmentalist activists. They don't matter to certain celebrities, and now they apparently don't matter to the Obama Administration, either. Evidently, neither do jobs or energy independence. Following the President's decision, actor Robert Redford applauded Obama and said, "This is American democracy at its best: a president who listens to the voice of the people and shows the courage to do what's right for the country." No, Mr. Redford, you're wrong. When the President puts his job over those of tens of thousands Americans, that is politics and a presidency at its worst.

The Foundry

Anonymous said...

Those politician aren't going to let the "automatic" cuts kick in without a fight.

"Appearing on Fox News Sunday, Sen. Pat Toomey, R-Pa., insisted he is not giving up on the chances that the Joint Select Committee on Deficit Reduction can make its Nov. 23 deadline for agreement on a plan to give to the rest of Congress to consider. That hopeful sentiment was echoed by the committee’s co-chairman, Rep. Jeb Hensarling, R-Texas., speaking Sunday on CNN's State of the Union—although his panel’s deadline is just 10 days away.


But Toomey said that if agreement is not reached on how to cut at least $1.2 trillion from the nation’s deficit over the next decade, “I think a lively debate will occur” over whether to allow the automatic cuts take place—so-called sequestration—despite President Obama’s insistence on Friday he would not go along with any attempt to turn them off."

Taxpayer

http://news.yahoo.com/super-committee-fails-members-suggest-congress-rethink-sequestration-124318585.html

sivbum said...

Like John, I thank you for the transcript. Interesting that BB is reminding listeners of the $3K annua tax loss FIT deductions. Market is flat YTD and may fall into the red before year end.

Honeybee said...

Thanks Sivbum...I didn't think of it, but you are absolutely right about Bob Brinker mentioning the $3000 deduction for losses.

Even though he will never admit it on the air, his two stock model portfolios are in the red for this year -- as of November 2nd.

Was he giving his subscribers a little inside hint? :)

Honeybee said...

Taxpayer...Here is the link to the article you cited.

Anonymous said...

Frankj:

On the pipeline deal, what else would we expect from someone with a history of voting "present?"

Thanks for the show summary.

birdbrain said...

Has Mr B ever recommended taking a loss on one of his investments for tax purposes?

Yes.

Back to the QQQ debacle in 2000 when his pick fell 60% in under a year he advised swapping into XLK "solely for the purpose of realizing short term tax losses."

Of course this move didn't violate his "long standing policy of not selling into weakness." Swapping into weakness? No problem.

Depending on the amount invested during those eleven dreadful months, at $3000 a year some subscribers are still taking that annual loss.

I've always found that policy unfair. Capital gain? Pay up, pal.
Capital loss? Take it over time.

Honeybee said...

Birdbrain,

Thanks for refreshing my memory on Bob Brinker's tax loss recommendation. I had forgotten about that.

It was all documented at Suite101. But of course, those posts were all vaporized, including the ones that had been archived for a couple of years -- literally tens of thousands of them.

We know there was pressure put on S101 to stop all dialogue about Bob Brinker. After Kirk left as moderator of his forums, I was told if I ever made another post about Bob Brinker, my account would be terminated.

Then they did away with what was my original Bob Brinker Beehive Buzz, that in my naivity at the time, I did not completely back up. I never made another post there - period.

Perhaps I can find out more in the old Marketimers. It would sure be interesting to read eleven years later.

I agree about with you about the unfair way the losses are handled by the tax code.

Anonymous said...

Birdbrain: you are right about the disparity between capital gains and losses tax treatments.

I think it is because Congress decides on tax policy changes and judging from recent stuff, like Pelosi's investments, and the paper by Ziobrowski, it doesn't sound like they book many losses!

-- Frankj

Pig said...

Model portfolio I: YTD = down 2.3%
Model portfolio II: YTD = down 2.4%
Compare to: Vanguard Total Stock Market Fund YTD = up 0.4%


Is this a misprint? People pay this guy for advice on how to lose money? Kinda stooopid if one were to aks me.

A NO-BRAINER index fund beats the talk show guru.........NOOPE, NOOBODY can make this stuff up......NOOBODY.

Honeybee said...

Mr Pig asked: "Is this a misprint? People pay this guy for advice on how to lose money? Kinda stooopid if one were to aks me."

It most certainly is not a misprint. I aksed our resident math-genius to run the numbers for me.

This explains why Bob Brinker's Marketimer has not been one the Hulbert Financial Digest top-seven performers for many years.

Honeybee said...

Has everyone got their order in for their Turbo Encabulator?

Honeybee said...

I hope you all watch this video, but most of all, I hope Mr. Bob Brinker watches it.

Mebbe next time he feels inclined to whine about cuts in public sector jobs, he'll think twice.

At 50% it's game over! And when government jobs are combined with those who pay no tax at all (47%) we are way over 50%.

Government Gone Wild

Honeybee said...

I think that Mark Hulbert could say the same thing about Bob Brinker:

Legg Mason’s Miller should have quit while he was ahead

November 17, 2011, 10:45 AM

Perhaps legendary fund manager Bill Miller should have stopped while he was ahead.

In waiting until now to announce that he will be stepping down as manager of the Legg Mason Value Trust, he is leaving at a time when his fund is behind the S&P 500 index for each of the 1-, 3-, 5-, 10- and 15-year periods. In fact, according to Morningstar, it is behind that benchmark over the entire 21 years since 1990 when Miller took over the fund.

If he had instead stepped down at the end of 2005, of course, the news stories announcing it would have highlighted Miller’s unprecedented feat of outperforming the S&P 500 index in each of the previous 15 calendar years.

Six years later, and with a long-term return below that of buying and holding, that 15-year streak looks a lot less worth bragging about.

Indeed, Miller’s record will now go down in history as yet another illustration of how difficult it is to beat the market. At the end of the 2005, at the peak of Miller’s reputation for beating the market every year, skeptical statisticians had pointed out that if you had enough monkeys flipping coins, you’d also expect one of them to flip 15 heads in a row.

At the time, those statisticians looked like sore losers, since they had been saying the same thing when Miller’s streak reached 13 years, and then 14 years.

Now they get the last laugh.

- Mark Hulbert

Marketwatch_Mark Hulbert