March 25, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

March 25, 2012...Bob Brinker hosted Moneytalk today...........(comments welcome)

Bob Brinker's comments paraphrased, excerpted or summarized

STOCK MARKET - STAY FULLY INVESTED:   Bob said that there is only one way to be during a market like this one and that is fully invested........We are starting the final week of first quarter and  the  S&P 500 Index is setting at 1397. The first quarter 12-week total return is 11 1/2% -- and from the beginning of the 4th quarter, a total return of 28%.

Honey EC: Bob's current projection is for the S&P to trade in the mid-to-high 1400s this year. 

DOLLAR-COST-AVERAGE AT THIS TIME: Bob said: "We've had an incredible run in the stock market. The only word that works is a melt-up, since the beginning of October.....We have a dollar-cost-average approach recommended at this time." 

INTEREST RATES: Rates remain very low. There had been  a blip up after rates dipped below 2%, but have receded this week.  Ten year Treasury at 2.23%,  an historically low rate. Two-year at 35 basis points.

GOLD IN IRAs....Bob said that gold is speculative and should never be put in an IRA.

Honey EC: Bob still has gold (GLD) on his individual issues list, but he gives no advice on how much to buy or how much to pay for it.  This list is never part of his performance record.  It's just a list that actually only contains three individual stocks -- Microsoft and Vodafone that have been on it for over a decade, and Suncor.

LAKSHMAN ACHUTHAN - ECRI RECESSION PREDICTION...Caller Julio from North Carolina asked Bob about the recession prediction made by the Economic Cycle Research Institute in 2011. He pointed out the fact that very recently, Lakshman was interviewed by CNN and CNBC and said that they are standing by their call for a recession.

Bob replied: "Yeah, I'm familiar with the call. I think the call was an unmitigated disaster. And I think it resulted in the fact that the market got all the way down to the 1100 area in September of 2011. I think that without that call the market would not have gone all the way down to the 1100 area. I think it would have found support higher... But I'll tell what, I think that call was part of the reason that the market went down that low. I'm very happy to say that on September 22nd, through my investment letter, I issued a buy-signal on the market....at the 1129 level."

Honey EC:  Bob basically missed a 20% bear market in September 2011, but he doesn't admit to missing a bear because on a closing basis, the S&P bottomed with a 19.4% decline. Even so, it's clear that, no matter what, Bob always has his perennial "exogenous event" to fall back on. By the way:  Even though Julio said that ECRI  was founded by Geoffrey Moore, its co-founder and CEO is Lakshman Achuthan. Achuthan is also their  public spokesman. * Figuring Out the ECRI Recession Call    

LOCAL FISCAL PROBLEMS: The latest entry is a reported audit on Long Beach, New York. -- a credit rating train-wreck because the credit rating was cut five levels in December -- related to questionable practices in terms of the receipt of funds according to a city councilman. A couple of years ago, Vallejo, California declared bankruptcy.  News about Stockton, California came out this month. Stockton is on track to become the largest American city to go bankrupt.  Stockton pays 30 million dollars in annual pension expense, but they have less than 70-cents on the dollar set aside for this annual expense. We should know by the end of June whether Stockton will file for Chapter 9 bankruptcy.

UNEVEN UNION NEGOTIATIONS.....Bob said: "If Stockton, California decides to file for Chapter 9 bankruptcy, that would allow the city to negotiate reductions in court in its outstanding obligations.....As I've said on the broadcast, if you want to look at an uneven negotiation, look at a negotiation that involves union representatives for public workers sitting across the table from municipal representatives....Invariably, you will see a dramatic imbalance in favor of the union representatives of the public workers and that is why the situation is the way it is today.....You have the union representatives coming in armed with demands for benefits. And you have the municipal representatives not really caring that much because in a lot of ways, they don't have any reason to bring passion to the table -- they're not looking to make enemies. It's easy to just give away the store." 

WILL PUBLIC EMPLOYEE PENSIONS AND BENEFITS FULLY PAY OFF? Bob said: "We've had callers on the program, you've heard many of them over the years, talk about their pension income guaranteed for the rest of their lives. Well I wonder about that because I wonder how many of those pensions are going to fully pay off 100-cents on the dollar. I have to wonder about that when I look at this situation that is unfolding." 

AMERICAN AIRLINES: They are planning to start a bankruptcy court process for voiding union contracts. They are trying to cut labor costs by  1 1/4 billion dollars a year and reduce headcount by 13,000.

STAY CAREFULLY TUNED IN TO THE MUNICIPAL MARKET....Bob said: "If you are in the municipal market, you want to be very carefully tuned to fiscal situations. Firstly, you don't want to own any fiscally troubled municipal debt. And secondly, you do not want to move into a locale that has fiscal problems outstanding because they are going to come to you and raise your local taxes to solve their problems. There is every reason to get out of those locations."

BUCKET SHOPS AND JESSE LIVERMORE....A topic from the 1920s, but of interest to some. Bucket Shops were places you could go to trade stocks and make margin deals.  They are now illegal. Bob recommended Jesse Livermore books if you want to read up on them. Bob suggested you could find investing books from his reading list at the library, and "put your tax dollars to work."

Honey EC: Bob never hesitates to recommend using the library rather than buy the books that he talks about on the show.  However, what's good for other authors is not good enough for Bob Brinker. He pulled all the subscriptions to Marketimer from libraries over ten years ago -- right after his tragic QQQ trade went south. There may be some exceptions where you can find Marketimer in a library because sometimes librarians get subscriptions through some avenue not affiliated with the library and provide them for patrons.

 Data coming out next week:
ECONOMY  - GDP:  Final figure for 4th quarter this coming Thursday.  Expected to be close current 3%.

INFLATION- PRICE LEVELS:  Personal Consumption Expenditure price index is expected to be at 2.3% year-over-year, and the core rate 1.9%.

DURABLE GOODS:  Report on Wednesday, expected to be 3% higher.

HOUSING: Case Shiller Survey of Housing comes out on Tuesday and expected to show a monthly change in housing prices of -3/10 of 1%. If so, that would bring the year-over-year change to -3.8%. There is some modest deterioration in housing prices, but certainly have leveled off.

UNEMPLOYMENT INSURANCE CLAIMS:  Estimate 350,000 -- well under the critical 400,000 for months.

  Link to full economic calendar for next week


A CALL FROM THE FILE OF "YOU CAN'T MAKE THIS STUFF UP": HUSBAND GIVES WIFE DYING INSTRUCTIONS TO DO WHATEVER BOB BRINKER SAYS:  Caller Dee from Pennsylvania said: "My recently passed and left me one million dollars to invest and he told do every (sic)  the Marketimer that receive and to also listen to your program. And my question is, I'm torn towards the portfolio III or the income portfolio. Which one would you suggest that I go to?"

Bob replied: "That's a very interesting question. How old are you, Dee? (63) I think I would be going to the balanced portfolio which is model III.....Now  you certainly down the road may skew yourself toward the income portfolio. But for right now I'd go with the balanced portfolio, that's going to include income securities as well as investments in the stock market. As for the stock market investments, at this point, I would recommend a dollar-cost-average approach in terms of putting new money into the market."

Honey EC: Aside from the absurdity of a dying husband telling his wife to trust a radio talk show host who hawks a newsletter on the air that at times has given risky and costly advice, incredibly, Bob did not ask Dee about her net worth, sources of income, expenses or anything else. I have quoted everything she said to Bob.  Bob just eagerly jumped on another opportunity to talk about his wares. 

BEST BRINKER QUOTE OF THE DAY....Bob said: "Your best chance of getting taken out today is by a texter -- and boy, you are gone. I think that texters are the major menace on the highways. I see them all the time. It drives me nuts."

Honey EC: Right on, Bob. Same goes for talking on cell phones while driving. People think they are in their living room. 

THE MONEYTALK-FINAL QUESTION OF THE DAY: What seven states have no state income tax?

Bob's guest author in the third hour was Carmine Gallo: The Apple Experience: Secrets to Building Insanely Great Customer Loyalty

Here are excerpts from the books introduction:

 Apple's 5 Core Principles'Now in the Palm of Your Hand!
Revealing the methods behind Apple's unparalleled retail success, bestselling author Carmine Gallo explains how business leaders can use them to drive growth and profits

Rounding out his Steve Jobs/Apple trilogy, Carmine Gallo reveals the iconic brand's five steps of service that all customer-facing employees follow to engage customers in a retail setting: Approach, Probe, Present, Listen, End with a fond farewell. 

 Moneytalk on Demand and to go is available for free. You can listen and download this week's Moneytalk broadcast at KSFO 560. They archive the program for seven day.  

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