Bob Brinker hosted-live the first two hours of Moneytalk this Super Bowl Sunday.
STOCK MARKET....Bob said that the stock market is off to a happy start in 2012. The S&P is already up close to 7%. Five consecutive weekly gains...The Dow at its highest closing level since May 2008 and ".....the Nasdaq at its highest level since December of the year 2000."
Honey EC: It was in October 2000, when the Nasdaq was much higher, that Brinker's Marketimer sent out a special bulletin advising subscribers to use cash reserves raised from model portfolios to "immediately buy QQQQ." The Q's lost over 70% over the next couple of years. Bob put the trade on hold and never clsoed it. See the whole history of this trade and read the bulletin HERE.
FACTORS LEADING TO STOCK MARKET REBOUND.....Caller Rick wanted to know why the European sovereign debt problems did not affect Bob's positive forecasts for the U.S. stock market.
Bob replied: "Rick, I think that the main impact that Europe has had on my stock market view is that it helped to create a tremendous buying opportunity in 2011. Now you may recall we had that correction that started in August and ran into September to the first of the month in October. We saw the market make a major 2011 bottom down in the low 1100's of the S&P 500 Index."
Honey EC: Many people, including Mark Hulbert at Marketwatch, called the 2011 "correction" a bear market. Indeed, the S&P declined to within a fraction of 20% bear territory on a closing basis (19.6%), and 21.6% intraday. Does a fraction matter? To Bob it does. He won't round up, and therefore, claims that he did not miss another bear market. This isn't the first time it's happened that way. (Bob defines a bear market as a decline in excess of 20% on a closing basis.)
Bob continued: "On the 22nd of September, as I have alluded to earlier on the broadcast....we made available to our Marketimer subscribers on our website that we had upgraded the market to attractive for purchase....We thought that those who were looking for a buying opportunity.... Well there it was....We did that at 1129, the market was making a bottom in the lower 1100s....Within ten days the market had turned around and now it's setting at the mid-1300s as we speak- at 1344.9. And then we were looking at the technical aspect of the market that I also analyze, and we made that decision to upgrade the market to attractive for purchase......We are about 22% higher off the October low in the market."
Honey EC: If only the caller had been reading this blog, he could have asked Bob how many times he had "upgraded the market to attractive for purchase" between September 22, 2008 and September 22, 2011 (each higher than 1129) while Marketimer model portfolios remained 100% fully invested. I know the answer, and I think all of my regular readers know the answer. If you don't, just drop a note in the comments section, and I'll tell you....I guarantee you that Bob will NEVER mention any of those losing "buying-opportunities" on the air, and new Marketimer subscribers are NEVER told about them either....
Bob continued: "But I think one of those factors that contributed was concern about sovereign debt. Even concern about U.S. debt. That was about the time where the S&P had made the downgrade of the triple-A in the U.S. The triple-A ratings remain with Moodys and with Fitch. And also there was another factor that really helped us...There was a forecast by a private economic group right about that time that the economy was going into recession. I said the forecast was wrong at the time, on the broadcast. But what was good about that incorrect forecast that that outfit made was that it created a lot of angst in the stock market. People were selling because of that forecast and it created a terrific buying opportunity that we were able to identify there at the end of September 2011.....You know, sometimes you just get the perfect storm....There are a lot of factors that go into these kinds of decisions and obviously that is something I focus on a great deal in my investment letter....More to come. Stay with us on Moneytalk."
Honey EC: I have zero doubt that Bob was talking about Lakshman Achuthan, CEO of ECRI when he referred to a "private economic group." Bob has indeed talked about this before, and I have reported about it on this blog. Bob even said he expects an apology from them. However, I don't think that Achuthan has changed his mind.
VANGUARD HIGH-YIELD FUND (VWEHX): Bob told caller Wallace for Joliet that when buying high-yield bonds, he recommends using a diversified fund like the Vanguard Fund he has in the Marketimer income portfolio.
WELLESLEY INCOME FUND (VFINX) IN MARKETIMER.....Caller Ray in Illinois asked Bob about moving money from CDs into Wellesley Income Fund. Ray said: "We're wondering if the Wellesley Fund, which I've heard you mention before over the air, in your fixed income, if we have $200,00 in the market now.....what percentage would you put in the Wellesley Fund."
Bob replied: "First of all you are talking about apples and oranges when you talk about moving from CDs into a balanced mutual fund...Yes, it has a great record. And yes, I have used that as a recommended fund in my investment letter.....I have the Wellesley Income Fund included, which is mostly a fixed income fund -- we've used it in the income portfolio, which we publish on page 7 of the investment letter. And we also have used the Wellesley Income Fund as one of our selections in the balanced fund -- model portfolio III on page 8....So we continue to use that fund. It's done extremely well, had a great year in 2011......"
Honey EC: Yes, Marketimer is only eight pages long. The model portfolio III did not do too well last year, but it did better than model portfolios I and II that lost money. From Bob Brinker's Marketimer Land of Critical Mass website:
1 year ended 12-31-2011 for all Model Portfolios:
Portfolio I: (3%)
Portfolio II: (3%)
Portfolio III: 1% (balanced portfolio of equity and fixed-income securities)
Active/Passive: (2%)
MSCI Broad Market Index: 1% (VTSMX)
TREASURYS.. .Ten-year notes annual yield 1.93%.
JOBS REPORT.....Bob said: "It was an outstanding jobs report -- 260,000 new jobs created in the private sector....That's where the growth is....17,000 lost in the public sector...243,000 net....It is the best jobs report in nine months....The unemployment rate sitting at 8.3 -- that's too high. We want to see it down closer to 5 or 5 1/2. That will take time. Of course the under-employed (rate) is sitting in above 15%."
Honey EC: Bob was all atwitter about this jobs report, but he didn't mention the people who have dropped out of the job market for various reasons -- many have simply given up looking for work.
INFLATION....Bob said: "Average hourly earnings were up 2/10 of 1% -- $23.29 an hour on an average work week, holding steady at 34 1/2 hours. Notice how that average hourly number doesn't go up very much. That's cause we have very, very low inflation across America right now and that is good. We want low inflation because that helps retain your purchasing power."
FEDERAL RESERVE MEETING AND INTEREST RATES.....Bob said: "The Fed just completed a two day meeting on the 25th of January. They say they are going to hold that rate down there at low levels possibly through 2014. But always remember that's a movable feast. They are going to check this on a monthly basis and if they have to make a change, they are going to make a change. What they're saying is if unemployment remains high and inflation remains low, they're going to keep rates down...."
SPENDING AND DEFICITS....Bob said: "We still have this extraordinary propensity to spend more than we earn, at the federal level in particular. And we still have these annual deficits in excess of a trillion dollars....And it can't possibly be ignored."
BOB BROADCASTING FROM LAS VEGAS....Bob said that he is broadcasting from the "city that never sleeps," where Mitt Romney prevailed in the state GOP candidate selection.
Most of the calls today were so esoteric in nature that they were of no interest to anyone but the caller. such as, refinancing mortgages, inherited IRAs, opinions about Greece and deciding to sell extra homes.
FUNNY SKIT OF THE DAY: Once again, Bob told the story about how they changed the time of the Super Bowl after going up against Moneytalk that first day 26 years ago -- back in 1986. It really is one of his best jokes and he out-did himself telling it today on Super Bowl Sunday. It's in the first hour if you want to hear it.
Honey EC: I've written about this before and decided it needs to be heard in order to really appreciate it. Bob really tickled his own funny bone today. I've never heard such sincere laughter from him before.
Without any announcement whatsoever, the third hour was made up of pieces of old programs spliced together. Our friend, Jim, predicted this five days ago:
Jim said...
- There might not be a guest segment this coming weekend. This Sunday is Super Bowl Sunday. I'm sure many of you remember a year ago when Bob Brinker, after doing the first two hours of Moneytalk, skipped out on the final hour so he could watch the game. Listeners were left with a taped "Best of" Moneytalk segment. It seems incredible from a man who loves to joke that the NFL can't compete with Moneytalk.
