STOCK MARKET....Bob Brinker said he was broadcasting today from warm Las Vegas after having spent the previous night at a baseball game with his grandchildren at Coors Field in Denver, Colorado. Bob must have had jet-lag because he didn't notice the 800 pound elephant in the room -- the stock market had its worst week this year, and the S&P dropped two weeks in a row. He only mentioned the stock market once, said it had been a "roller coaster" over the past five years.
(Marketwatch) The Dow Jones Industrial Average fell 136.99 points, or 1.1%, to close at 12,849.59, its largest weekly hit since the middle of December. The S&P 500 dropped 17.31 points, or 1.3%, to 1,370.26, off 2% from the week ago close. The Nasdaq Composite retreated by 44.22 points, or 1.5%, to 3,011.33, leaving it down 2.3% from last Friday's close. The indexes also fell last week, the first back-to-back weekly losses for the S&P 500 and the Nasdaq of the year.BOB SEZ HE MAKES INVESTMENT RECOMMENDATIONS MONTHLY NOW: Caller Bill from Illinois asked Bob what investments he would recommend if the next election brings gridlock in Washington. Bob replied: "I don't make my investment recommendations six-months in advance. I make them in real time....They are not investment recommendations for 2018 or 2015 or November of 2012. We'll deal with that in real time."
Honey EC: That "real time" statement makes no sense to me. He's always had S&P 500 Index price targets out as far as a year. For example, in the October 2007 Marketimer, Bob Brinker wrote: ".....based on our estimate of $99.50, we see the potential for the S&P 500 Index to rise at least into the mid-1600s range next year." (See my April 10th article if you want to know what Bob is projecting for the remainder of 2012.)
Honey EC: Bob has sold down more than half the weightings in both the (off-the-books) income portfolio and the balanced model portfolio III. How strange that he never mentions that fact.
SLOW GROWTH ECONOMY = LOW INFLATION AND INTEREST RATES: Bob continued: "As long as you are looking at an economy that is growing gradually, as this one is growing, and it is below trend. You know, the long-term sustainable, supposed trend is 3 - 3 1/2% for real Gross Domestic Product. We have not been able to get there....We've been perking along below that level, and I expect we are going to continue to see that for awhile. So what that means is that you are not seeing pressure on interest rates. You're not seeing pressure on inflation. Therefore, you not seeing pressure on interest rates. As long as that situation is in place, it's unlikely you are going to see a dramatic move in interest rates. When you will see a dramatic move in interest rate -- it may be gradual but still dramatic in its totality, that would occur when you see the economy reach a point of full trend growth -- 3, 3 1/2%+ a year in real terms. Then you could see what we call a normalization of interest rates. That would have consequences for net-asset-values (of Ginnie Maes)."
SLOW GROWTH ECONOMY = LOW INFLATION AND INTEREST RATES: Bob continued: "As long as you are looking at an economy that is growing gradually, as this one is growing, and it is below trend. You know, the long-term sustainable, supposed trend is 3 - 3 1/2% for real Gross Domestic Product. We have not been able to get there....We've been perking along below that level, and I expect we are going to continue to see that for awhile. So what that means is that you are not seeing pressure on interest rates. You're not seeing pressure on inflation. Therefore, you not seeing pressure on interest rates. As long as that situation is in place, it's unlikely you are going to see a dramatic move in interest rates. When you will see a dramatic move in interest rate -- it may be gradual but still dramatic in its totality, that would occur when you see the economy reach a point of full trend growth -- 3, 3 1/2%+ a year in real terms. Then you could see what we call a normalization of interest rates. That would have consequences for net-asset-values (of Ginnie Maes)."
Honey EC: Bob's model portfolio III is now over 60% in equities, about where it was when the megabear market started in 2008 when it lost over 20%..... That took care of the re-balancing for him. :)
EC2: It was a big surprise when Bob added the Vanguard High Yield Fund to the "fixed income fund" in March 2003. Up until that point, he had been consistently negative about "junk bonds." As one would expect, this fund did well until the bear market hit in 2008, then it got clobbered right along with equities. So the income portfolio that Bob is now touting every single week, lost money in 2008 even though that year Vanguard's GNMA Fund was up 7.22% and the Total Bond Fund was up 5.24%. Fortunately for Bob (as well as myself since I own them) high-yield bond funds are doing well now.
VANGUARD WELLESLEY INCOME FUND (VFINX) IN MARKETIMER.... Caller Diane from Chicago asked Bob about the Vanguard Wellesley Income Fund. Bob still highly recommends it as he did on Moneytalk last September: "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......"
VANGUARD WELLESLEY INCOME FUND (VFINX) IN MARKETIMER.... Caller Diane from Chicago asked Bob about the Vanguard Wellesley Income Fund. Bob still highly recommends it as he did on Moneytalk last September: "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: Bob first added the Wellesley Fund to Marketimer portfolios in January 2011. The income portfolio weighting is 25%, and the balanced model portfolio III is 20%.
WHAT IF YOU ONLY HAD $100 A MONTH TO INVEST? Bob told caller Neal from Utah, who said he was a beginner investor, that he should start by getting together the $3,000 minimum, then dollar-cost-average the $100 into the Vanguard Total Stock Market Fund (VTSMX).
CONVERT FROM IRA TO ROTH IRA? Caller Joe from Chicago wanted to know if it was a good idea to convert from a traditional IRA to a Roth IRA at age 64. Bob was not for it. He said that it would trigger both state and federal taxes and that money would be gone forever.
Honey EC: If one believes that taxes will be going up in the future, that might be something to consider. And of course, the younger you are the better. Here is a LINK to a Roth IRA calculator.
WHICH TO WITHDRAW FROM FIRST, ROTH OR TRADITIONAL IRA? Caller Mark from Omaha has both a traditional and a Roth IRA and wanted to know which to withdraw from first. Bob said that it was better to withdraw from the Roth IRA first because there are no taxes on withdrawals.
Honey EC: I had a different thought on this. If taxes are going up, and most of us think they are, wouldn't it be better to withdraw from the traditional IRA first and pay lower taxes sooner rather than higher taxes later? Here is a LINK that discusses which retirement assets to use first.
Honey EC: Yes, good old Bob has always said that rising oil prices were not inflationary. All I know is that it sure is inflating my credit card more when I fill up with gasoline! And in the past when a caller has challenged Bob to go grocery shopping if he wants to witness inflation first hand, he has claimed that he does shop for groceries. Well, I usually shop at Safeway, Nob Hill or Costco, and I see prices going up, so sure don't know where Bob shops that he isn't seeing it. Here is a LINK to a complete report on inflation.
TAX CHANGES COMING AT THE END OF 2012.....Bob said: "We have things coming up at the end of 2012 that are monumental changes in the tax code unless a program is put together to resolve the whole mess. And I use that word mess advisedly. We have tax cuts expiring at year end. We have new taxes scheduled to go on the books next year. .....We have the 2% individual payroll tax cut expiring at the end of this year.....All of these things are triggered when the ball comes down at Times Square in the Big Apple this coming New Years Eve."
Honey EC: Here's a LINK to a detailed description of Obama's 2013 budget and tax provisions.
ECONOMY: Bob continued: "And there are issues here. The health of the U.S. economy in 2013, for example....Now we all hope that the economy continues its gradual recovery. And we certainly hope that it becomes a self-sustaining event, without any government intervention like the 2% payroll tax cut.....So the economy going forward is certainly one of the factors under consideration with this tax policy...."
ILL-NAMED SUPER-COMMITTEE..... Bob continued: "Aside from all the humongous tax increases scheduled to take effect New Years Day, we are looking at about 600 billion dollars in spending cuts in defense and discretionary programs as a result of the failure of the Super Committee. Probably one of the most ill-named committee in the history of the USA -- was that committee they put together to resolve this mess.....It collapsed in total failure. In fact, the collapse was so total that they had to go back to the default outcome which was mandatory cuts -- $600 billion in 2013 those cuts begin."
POLITICS: Honey EC: Several times today Bob put on callers who talked politics. Bob used those opportunities to slam 'partisan politics" and blamed "both parties" for budget problems.It's mostly repetition of his same views that he has expressed for some time. A couple of interesting points:
THE BUFFET RULE....Bob said: "The Buffet rule, a complete distraction from reality....A rule that would affect one in 1250 taxpayers. Such a rule does not even deserve the light of day on the campaign trail, but they will go out and they will campaign on such distractions....I would say this, the Buffett Rule is basically a populist measure aimed at winning votes in a presidential election year. That's why it's been embraced by the White House. That is why it's being promoted by the White House....."
POLITICAL QUOTE OF THE DAY: Bob said: "Until Barney Rubble recently announced that he was not going to run for re-election, he was one of these long, long, forever serving members of the House with the star-power, the celebrity powers, showing up on TV shows -- even showing up on comedy TV shows. Nobody would believe this stuff in another country. But here we have it in the grand USA political system. Six figure salaries, putting to shame the average worker. Great benefits, star-power -- I'm a celebrity. Of course they want to stay in office. And let me tell you, it beats working for a living. It beats getting a real job. And the astounding fact is that no matter how dysfunctional congress is....they still get re-elected at over 90% for incumbents seeking office."
AMERICA'S LONGEST-RUNNING INVESTMENT RADIO SHOW....Today Bob Brinker reminded listeners that he has been doing Moneytalk for 27 years and is the longest running investment program in the USA.
KSFO 560: 1-4pm (KSFO offers FREE Moneytalk on Demand for seven days after broadcast.)
Bob's guest speaker was Mike Mayo: Exile on Wall Street: One Analyst's Fight to Save the Big Banks from Themselves
ON A LIGHTER NOTE:
Here is Jeffchristie's Moneytalk Final Exam Question for this week. Jeff wrote:
Today on Moneytalk Bob Brinker mentioned twice that the first broadcast of Moneytalk was in 1986 on:
A) Black Friday
B) Earth day
C) Super bowl Sunday
D) Cinco de Mayo day
21 comments:
CONGRATULATIONS TO BOB BRINKER!
HE SAID HE HAD THE LONGEST RUNNING FINANCIAL SHOW IN AMERICA!
Tony
I just heard Brinker say once again that his "investment" letter does not predict what will happen 6 months from now. Yet when he gives a target range for the S&P he usually gives a number he thinks it can reach over the next 12 months, so I don't understand it when he makes such a statement.
Jim,
Do you suppose that he says that on the program so that listeners will be led to believe that they "can't afford to miss even one issue of Marketimer"? LOL!
Honey said:
Do you suppose that he says that on the program so that listeners will be led to believe that they "can't afford to miss even one issue of Marketimer"? LOL
As Brinker would say: "You said it, I didn't!"
I only listen for a few minutes today and caught the section where he was talking about John Bogel. Then suddenly something clicked in my mind. Can Da Brink’s attitude be as simple and congruent as this. I tell people to be their own advisor, I give them a recommended reading list and even tell them to get the books at the library rather than waste money on them. The is filled with giants of the financial community such as John Bogel who is crystal clear in his advice that that market timing simply does not work you should minimize your expenses. So what more do people want me to do for them.. I spelled it out. After that, if they are stupid enough to send me 185 a year for a list of actively managed funds some market timing voodoo screw ‘em, they deserve what they get. If I don’t fleece them someone else simply will.
So can it be as simple as all that?
tfb
Mr B opened with his usual spiel how Moneytalk helps you learn the strategies and tools to become your own financial manager, which was immediately followed in his own words:
"Moneytalk is brought to you by Prudential, providing retirement solutions. Talk to your financial professional today."
Say what? Bob Brinker Sr is steering his audience to invest in load funds and whole life insurance policies? The folks who should be their own advisors from the knowledge gained on Sunday afternoons? While attempting to sell his Marketholder letter to same?
AMERICA'S LONGEST-RUNNING INVESTMENT RADIO SHOW....Today Bob Brinker reminded listeners that he has been doing Moneytalk for 27 years and is the longest running investment program in the USA.
I am dubious of that claim. One thing is defining what an investment is. I believe the honor of this title actually belongs to Bruce Williams who has been dispensing sound financial advice for generations now.
I first heard Bruce in 1981. He sent me down the path of making monthly contributions to no load mutual funds as well as saving money for an investment my own business.
tfb
"John Bogel who is crystal clear in his advice that that market timing simply does not work"
I see this old information repeated over and over again.
Of course Bogle is against market timing because he wants you to be invested in Vanguard funds ALL the time.
That's how he made his fortune and he doesn't want you to be selling Vanguard funds for ANY reason.
He was against ETFs for the same reason, they weren't profitable to him. Finally, they booted Jack Bogle out of Vanguard for his old fashioned stubbornness.
We have Dan a poster right here on this board who says market timing does work for him for the past 40 years. How much more time do you need?
We have Dan a poster right here on this board who says market timing does work for him for the past 40 years. How much more time do you need?
Then I suggest you turn your account management over to Dan, because Brinker has DEMONSTRATED with his own record that he is incapable of actually timing the market in a way that benefits subscribers who actually implement his advice.
At this point in time how is that "attractive for purchase" S&P 1450 buy level working out for you?
Better yet, I have copy of Da Brinker's June 4th 2008 MarketTimer in front of me as I type this. Here is a quote:
"In summary, Markettimer, expects the S&P 500 Index to achieve historic record highs in the 1600 range by next year..."
And my favorite line in this issue from Da Brink:
"...we have high level of confidence in our market forecast."
Now how did that work for ya all?
tfb
Frankj:
Birdbrain mentioned the Prudential sponsor -- on the station I listen to, there are ads from a guy who offers to teach you how to make money trading S&P futures.
"Then I suggest you turn your account management over to Dan, because Brinker has DEMONSTRATED with his own record that he is incapable of actually timing the market..."
Well you might be right about Brinker's record but that is a totally different statement that NOBODY can time the market.
Brinker called one bear market that I know off and Dan says he called them all.
So it can be done I guess.
Chuckle....
"Today Bob Brinker reminded listeners that he has been doing Moneytalk for 27 years and is the longest running investment program in the USA."
We knew he couldn't resist after reading he has been on the radio for "over 15 years." Good to know he is still reading.... 8)
"on the station I listen to, there are ads from a guy who offers to teach you how to make money trading S&P futures."
I heard that ad. I think what he meant is that he can teach you to make money FOR HIM!
Actually I paid off my house years back because I had a managed futures account. I was extremely lucky! 3 of my friends tried that manager and promptly lost half their money!
I don't offer advice very often, but in this case I think I can safely say, avoid futures trading like the plague! You can not only lose the money you put up, but if you get caught in a limit move that goes on for days, you can lose your home and all your possessions!
Or you could get lucky like I did. There's always a chance...albeit a very small one! I haven't touched a futures contract in years! Nor do I intend to!
Kirk,
I laughed out loud when I heard Bob say that yesterday. It was a "Zing this, Kirk" message from Brinker. :)
You are of course, referring to your latest Seeking Alpha article about AAPL where you mentioned Brinker and said he'd been on the radio for 15 years.
He should have been flattered. Time flies when you're having fun, so 27 years just seems like 15. LOL!
Hi Honeybee,
Sorry, I don't know HTML, so I didn't get the formatting nice for the tables.
Thanks, Les
"He said that it would trigger both state and federal taxes and that money would be gone forever."
I disagree with the typical advice about the compounding advantages of the Roth IRA.
To me, it's what % total tax now vs when you withdraw, assuming you invest the same to get the same return.
And would you want to contribute additional money to a Roth, if allowed?
Let's consider converting $1000 to a Roth IRA, your incremental total tax would be 25%, and you have an additional $250 you would like to conribute to a Roth IRA.
Let's say you invest in the same investments in each for a 900% gain.
Let's says your total tax rate at withdrawal is also 25%.
If I treat this as 2 separate comparisons, it's easier to see my point.
Cash IRA Cash Roth IRA
250 1000 0 250+750
Comparison 1:
$250 after tax moved to Roth.
Income is taxed annualy in Cash account vs not taxed in Roth IRA.
Comparison 2:
IRA Roth
1000 750 (start)
9000 6750 (900% gain)
10000 7500 (total)
2500 0 (tax at withdrawal)
7500 7500 (after tax total)
Please let me know what I'm missing.
I say the biggest difference between a pre-tax and a Roth IRA is the tax rates at contribution and withdrawal.
I agree that you need to consider if there are tax benefits to lose because of the extra taxable income from the conversion.
I'm ignoring the difference from fixed costs to the total return on invenstment.
You will want to make sure you have enough taxable income in retirement to take full advantage of the lower tax brackets without losing other benefits.
Hi Les,
Thank you so much for that IRA vs Roth IRA comparison.
Perhaps if anyone wants more clarification, they will ask.
tfb asks:
Now how did that work for ya all?
I'm not giving up on brinker yet. I'm sending him all the money that I made on TEFQX and the QQQQ trades so that he can wisely invest it for me in the other brinker's fixed income funds that invest in high volatile stocks.
They (brinker and brinker) even dumped the TIPS and GNMA's with perfect market timing.
I ain't STOOPID
Since the nuclear disater in Fukushima has anybody heard Mr. Brinker advacate the building of plants in the USA. I don't listen to Moneytalk like I once did so he may still discuss the nuclear issue. I remember for a long time that if I randomly tuned in to Bob he would be going off for what seems the majorty of his broadcast praising nuclear power. Just wondering if this is another strong passion that has become mum after going horribly in the wrong direction.
Richard in Santa Fe
charted outmy assets since I have been with brinker since 2004.. boy what a plunge in the assets in 2008,, butI bought alot of I bonds and they soared ,, yeah ms bee is right,, bob bases his portfolios on 1988 until now ,, not counting the losses inbetween,, so if you have time,, yo ho ho ,, to wait,, then you will probably be even ,,but some do not have time,, and live on the edge,, of nickels and dimes,, a long haul with brinker,,
The big deception goes on and on. Just a couple of days ago, the topic of Bob Brinker's TWO newsletters came up on Boggleheads. No one seems to know that there are TWO Bob Brinker's -- the talk show host and his son, who makes every effort to be mistaken for his famous father.
I wrote this on March 13, 2012:
Bob Brinker, the host of Moneytalk, has a son who uses the same name when he posts on the internet. The Jr-Brinker publishes The Brinker Fixed Income Advisor. Many times, Moneytalk callers have indicated that they mistakenly assume that the editor of this newsletter is the famous talk show host.
Jr-Brinker's educational background was in the computer and internet-technology field. At one time, he said he was not interested in following in his famous father's footprints. However, in 2005, that changed and he began to publish the Brinker Fixed Income Advisor. Jr-Brinker's wife, Lisa Brinker, is also an editor of this newsletter. Her degrees are in English, German and Linguistics.
Here is the link to the Bogglehead conversation, which starts out with this:
Postby coldav » Wed Apr 18, 2012 3:42 pm
Hello! Does anyone have an opinion on the Bob Brinker investment letters? He has these model portfolios that are made up of mutual funds that lean heavy on Vanguard products. I subscribe to his fixed income letter which is made up of bond funds. I haven't invested in them yet and was curious what others thought of his advice. He appears to be a Boglehead type.
FrankJ's cat, Hobbes, looks like this brilliant can't-stand-to-be-alone cat.
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