STOCK MARKET....Bob said: "I do not have a sell recommendation on the stock market at this time."
Honey EC: Last time Bob discussed the stock market was on April 1st when he reported that the first quarter this year was the best since 1998. At that time, he gave no inkling whether or not he expected a correction. He hasn't talked about the market since then, even though it dipped approximately 4%. That's to be expected because he typically doesn't talk about the market unless it's going up.
FULLY INVESTED DOES NOT INCLUDE CONTINGENCY MONEY....Bob said: "I think your contingency money, your emergency money, should be outside your investment portfolio. I don't view it as permanent investment capital....If I'm fully invested, I don't consider contingency reserves part of my investment."
HOW MUCH EMERGENCY MONEY ON HAND? Caller Janet, who said all of her money was in Bob's active-passive portfolio, asked if she should have any cash on hand. Bob said that certainly there is a category of money that he calls "contingency reserves" or "emergency money" which is not part of investment portfolios. It should be kept liquid in something like a money market fund. Three to six months worth is reasonable -- depending on your cash flow.
MARKETIMER ACTIVE-PASSIVE VS BALANCED PORTFOLIOS....In her follow up question, Janet wanted to know if it was okay to have all of her retirement money in Bob's active-passive portfolio. Bob told her that as she neared retirement she might want to think about moving some money into fixed income investments.
Bob continued: "I don't have any problem having the active-passive portfolio, which we publish on page 7 of the investment letter each month.....for the stock market portion for your portfolio. But aside from that, you could develop a fixed income portion....And initially, you might want to do that with certificates of deposit. Now we also have a balanced portfolio on page 8 for those who are approaching retirement."
Honey EC: Bob is always talking about his Marketimer portfolios. For listeners who aren't subscribers, it must sound very confusing. It's not -- it's very simple: On page 7, there are the two portfolios that Bob always talks about. One is the income portfolio which consists of 5 mutual funds (I've listed them in previous summaries), and the active passive portfolio.
Previously, the active-passive portfolio was 90% Vanguard Total Stock Market Fund (VTSMX) and 10% Vanguard International Growth Fund (VWIGX). As of April 2012 Marketimer, it is 80% Vanguard Total Stock market Index, 10% Vanguard International Growth and 10% Vanguard All-World ex-U.S. (VFWIX).
On page 8, are the three model portfolios, including the balanced portfolio that Bob talked about which consists of both stock and bond funds. Right now, it is about 66% stock. That is the complete rundown on Bob's Marketimer portfolios. The other two model portfolios I and II are all equity mutual funds.
DOUBLELINE VS VANGUARD GINNIE MAE FUND (VFIIX)....Caller John from Texas said his investments were 60% in stocks, 40% in bonds. He said that the 60% stock is in Bob's model portfolio II. John told Bob that the 40% in bonds was split half in DoubleLine Total Return Bond Fund and half in Ginnie Maes. He asked if that sounded reasonable to Bob. (Honey EC: What a coincidence! I just wrote about DoubleLine and Ginnie Maes yesterday. LOL!)
Bob replied: "That's in line with the model portfolio that's balanced....That sounds different than the portfolio I have recommended in terms of the income side of the portfolio because yes, in the balanced portfolio that I publish on page 8, we do have some Ginnie Mae exposure in there. And you're too far away from that. Sounds like you're about 20% in there in the Ginnie Maes and that's quite close to the percentage allocation we have in the balanced portfolio."
You're using model II in a hybrid sense developing a fixed income component. So we currently have no recommendation in the other fund you mentioned in model III. However we do have that fund in the income portfolio on page 7 on the investment letter. But keep in mind that portfolio is designed for those who want very little stock market exposure. That portfolio has less than 10%, and all of that exposure is in dividend paying stocks held in one of the funds. (Vanguard Wellesley Income Fund VFINX)....In terms of that one fund that you mentioned (DoubleLine Total Return Fund DLTNX), you have a different configuration than I have recommended."
Honey EC: Bob is quite a dancer, and wanted to be absolutely certain he didn't get hoisted on his own petard, so he made a point of confirming three times that John was 20% in Ginnie Maes, then he told John that he was "quite close" to the same amount he recommends in the balanced model portfolio III. LOL! John was precisely on the target!
So to make it more simple, Bob said he has DoubleLine in his off-the-books income portfolio on page 7, but he does not have it in any of his official model portfolios I, II or III (balanced) that Mark Hulbert uses to rank Brinker's performance record.
MULI-MILLIONAIRE SHOULD SELL SOME APPLE STOCK (AAPL)...Ken from Los Gatos (net worth $6.1 million) needed to raise $550,000 cash to buy a house. He listed several of his options. One of his options was to sell some of his $3 1/2 million dollar holdings in Apple Shares. He asked Bob what he thought he should do.
Bob replied: "This is a no-brainer, Ken, this is a no-brainer. Apple is your source of funds, in my opinion -- full stop....I would sell a thousand shares of Apple. You will still have 5,100 shares. You will still be incredibly over-weighted in one stock. You will have millions and millions still in the stock after you sell a thousand shares to pay for the house.....For me, this one is a no-brainer."
CORPORATE EARNINGS.....Bob said: "Corporate earnings have been good, especially relative to expectations. There's not much doubt that the analysts had the expectations ratcheted down. That made it easier for corporate reports to be excellent relative to expectations. I'm expecting a double-digit percentage gain in corporate earnings when all of the first quarter numbers are in for the S&P 500 reporting companies. So far over 80%...... are beating expectations."
LARGEST TAX INCREASE IN HISTORY COMING....Bob said: "Just 36 weeks to go until the United States faces the largest tax increase in history, coupled with a mandatory reduction in federal expenditures of 600 billion dollars. Now the tax cuts enacted under President Bush are scheduled to expire at the end of this year. The 2% employee payroll tax cut is also scheduled to expire at year end. And the emergency unemployment benefits now being paid are also scheduled to expire at the end of the year.....There are also those healthcare reform new taxes that are scheduled to go into place at the beginning of next year.....There is a solution to this mess and that is to extend the current tax rates for 2013.....To provide more time for the economy to get on a self-sustaining growth tax.....They may not be paying real attention to this until after the election.....They may pay lip-service to it."
ESTATE AND GIFT TAXES: Bob explained that those taxes are also up in the air for next year. Right now, the gift tax is the most generous it has ever been.
CALIFORNIA TAXES UP TO 60%....Bob said: "The tax policy for a Californian, starting in January, could be looking at a federal rate of 39.6%, a top state rate at about 10.5, so right now you right around 50%. On unearned income, you could hammer out another 3.8% on the healthcare tax....A self-employed Californian....could be looking at a 2.9 uncapped Medicare. Now you're up around 57%. Can you believe that? I tell you, there is no limit, other than 100%, to how high they can take taxes if they get the votes to do it. There's no limit....There are those out there who are trying to run the table on taxes."
Honey EC: Yep.... I live in California, so I can believe it. But you haven't told the whole story. In addition to all of the taxed you listed, we have extremely high sales taxes. Statewide it's over 7%, and good old quintuple-dipper, Jerry Brown, wants them raised again at the next election along with some other taxes. But it doesn't stop on the state level. Some local area sales tax can be as high as 9.25%. Shall we try for 70% taxation on items bought with earned money?
Also, Californians pay higher tax on gasoline. And we pay higher prices for the gasoline than the rest of the country because of radical refining rules in the state. But the pocket-picking doesn't stop there. It continues to property taxes where they are constantly adding new "fees and bonds" to pay for stuff that could be paid for locally if the state didn't help themselves to our local money.
VICKY CRISTINA BUENOS AIRES....Bob said: "You may have heard the story out of Argentina about Vicky Cristina Buenos Aires. Not to be confused with Vicky Christina Barcelona, of course. It seems as though Christina is at it again. This week she has announced that she is going to seize most of oil producer (YPF) holdings in Argentina.....There you go, 50% of the company confiscated by Vicky Cristina Buenos Aires.....Any company with an investment in Argentina right now must be wondering what in the world the second coming of Evita Perone is going to bring as time goes by. And that really is the way to view Vicky Cristina. She is a Peronist in every sense of the word.....She was a senator from the province of Buenos Aires, now she is el presidente, or whatever. She can wake up in the morning and decide she is going to take the company."
Honey EC: I don't know where Bob came up with the "Vicky" name, maybe someone else does. Please let me know. However, you can read more about this here: Argentinian president, Cristina Fernández de Kirchner, rejects criticism over YPF nationalisation Nationalisation of oil company YPF has been criticised as 'unjustifiable' but the takeover has support in Argentina
KSFO 560: 1-4pm (KSFO offers FREE Moneytalk on Demand for seven days after broadcast.)
Bob Brinker's guest today was John Quiggin: Zombie Economics: How Dead Ideas Still Walk among Us (New in Paper)
ON A LIGHTER NOTE:
Jeffchristie's Final Exam Question from today's show:
This week's Moneytalk final exam question.
Bob Brinker calls Secretary of State Hillary Clinton:
A) The Wicked Witch of the West Wing.
B) Evita
C) Madonna
D) The Queen of Mean
Hint: The answer to this question was mentioned at the beginning of the second hour of Moneytalk today.
34 comments:
Honey,
I strongly believe Cali is uping state income taxes so people put money into Calif tax free munis. That way people don't invest in the stock market and fund the Cali goverment. Back door funding source. Does that make sense? My economically it is a great idea for Cali.
Joey
It is not in my nature to bash - Brinker.
Bob Brinker calls Secretary of State Hillary Clinton:
A) The Wicked Witch of the West Wing.
B) Evita
C) Madona
D) The Queen of Mean
By the way c) is spelled with two "n"s.
Joey
"The tax policy for a Californian, starting in January, could be looking at a federal rate of 39.6%, a top state rate at about 10.5, so right now you right around 50%."
I don't even know anybody who pays those kind of taxes. You have to have a pretty high income to be in the 39.6% bracket.
Even Mitt Romney only pays 13.2% on many millions of income so those figures are really misleading.
Joey,
So you will be voting to give Jerry Brown all of the tax increases he wants to help sell munis?
Are you aware that productive people and businesses are leaving California in droves?
UHaul rentals coming to California are half as much as those leaving for other states.
There is a limit to how much thievery one will put up with to live here. I would be long gone, even though I love where I live, if I could round up all my family to go with me.
Joey,
You are correct. Bob Brinker has said several times that it is not in his nature to bash.
However, when it comes to women's names, he just can't he'p himself. :)
Jimbo,
I will let your snide comment about Mitt Romney pass this time, but like Bob Brinker said about a caller yesterday, it was a late April Fool's joke.
So next time you feel inclined to post what amounts to a lie by omission about Romney, think twice if you want the rest of your comments to get published.
"So you will be voting to give Jerry Brown all of the tax increases he wants to help sell munis?"
Do you get to vote on income tax increases in California? And the idea that increasing taxes so people buy California muni bonds is just plain silly IMO.
Wall Street Journal:
Joel Kotkin: The Great California Exodus
A leading U.S. demographer and 'Truman Democrat' talks about what is driving the middle class out of the Golden State.
'California is God's best moment," says Joel Kotkin. "It's the best place in the world to live." Or at least it used to be.
Mr. Kotkin, one of the nation's premier demographers, left his native New York City in 1971 to enroll at the University of California, Berkeley. The state was a far-out paradise for hipsters who had grown up listening to the Mamas & the Papas' iconic "California Dreamin'" and the Beach Boys' "California Girls." But it also attracted young, ambitious people "who had a lot of dreams, wanted to build big companies." Think Intel, Apple and Hewlett-Packard.
Now, however, the Golden State's fastest-growing entity is government and its biggest product is red tape. The first thing that comes to many American minds when you mention California isn't Hollywood or tanned girls on a beach, but Greece. Many progressives in California take that as a compliment since Greeks are ostensibly happier. But as Mr. Kotkin notes, Californians are increasingly pursuing happiness elsewhere.
Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving.
According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.
Read article
Wall Street Journal:
Joel Kotkin: The Great California Exodus
A leading U.S. demographer and 'Truman Democrat' talks about what is driving the middle class out of the Golden State.
'California is God's best moment," says Joel Kotkin. "It's the best place in the world to live." Or at least it used to be.
Mr. Kotkin, one of the nation's premier demographers, left his native New York City in 1971 to enroll at the University of California, Berkeley. The state was a far-out paradise for hipsters who had grown up listening to the Mamas & the Papas' iconic "California Dreamin'" and the Beach Boys' "California Girls." But it also attracted young, ambitious people "who had a lot of dreams, wanted to build big companies." Think Intel, Apple and Hewlett-Packard.
Now, however, the Golden State's fastest-growing entity is government and its biggest product is red tape. The first thing that comes to many American minds when you mention California isn't Hollywood or tanned girls on a beach, but Greece. Many progressives in California take that as a compliment since Greeks are ostensibly happier. But as Mr. Kotkin notes, Californians are increasingly pursuing happiness elsewhere.
Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving.
According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.
Read article
It's too bad that caller John did not ask Brinker why he does not have Doubleline in his balanced portfolio. The obvious answer of course is that Doubleline is a risky bond fund and a balanced investor is already taking risk in the stock market so they should stick to only high quality bonds. The question would have forced Brinker to admit this though.
I liked Jeff's quiz about Hillary Clinton. I know the answer but I like the other choices he gave.
Here a question from me for others to ponder about:
Apple stock started to drop because...
A. Analyst Brian White gave it a $1001 price target.
B. Jim Cramer said it was cheap and a strong buy.
C. Bob Brinker admitted a few weeks ago he was a shareholder.
If you listen to Financial Sense (based in San Diego) - their bond guy says that demand for Cali muni bonds is on the uptick.
Because they are tax free. Which means they will not have to pay 13%+ on the income.
Joey
Some of you might enjoy reading a recent discussion about Bob Brinker on Boggleheads.
I was made part of it when someone posted a link to this blog.
It's interesting to watch the same old pattern develop. When the truth about Bob Brinker is posted, without fail, the sycophants (or?) come in to do damage control.
And as it has been for a dozen years now, when I post facts that can't be disputed, they immediately try to make ME the topic and start demeaning me.
Here's the LINK Enjoy and feel free to comment about it here.
More Families Moving to California Than Leaving
For the first time in 11 years, the four major moving companies that release data agree: More families are moving to California than are leaving it.
For a decade, high housing prices made it hard for people to stay in the state, even if they wanted to. But falling house prices and increased hiring are enticing former Californians to come home, moving company officials said.
“I think the people realize that when we move back to California, we’re never going to have interest rates or (house) prices this low,” said Linda Oakley, owner of Atlas Transfer and Storage Co. in Poway, affiliated with Allied Van Lines. “We want to live in California, where it’s warm and sunny and happy.”
Indeed, 2,926 more families moved into California than moved out of it, the third-highest figure of any state or Washington, D.C., according to the combined data of Atlas Van Lines Inc., United Van Lines LLC and Allied Van Lines Inc. For years, California had seen more households moving out than in. In 2007, Atlas’ data indicated that trend had reversed, but it didn’t turn around in Allied’s data until 2011.
U-Haul International Inc., which doesn’t provide the same type of data, said it helped move 5.6 percent more people into California than out of it, according to spokeswoman Ashleigh Wagner.
http://www.harvestteamrealestate.com/uncategorized/more-families-moving-to-california-than-leaving/
4392T
Jim...May I guess?
Is it "C"? :)
439T,
That's good news. Maybe you should tell the U-Haul company.
Unfortunately, I have misplaced the document I had that showed the price comparisons for U-Haul between California and Texas or Nevada -- non state-tax states.
It's about half as much moving into CA as moving into those states.
Oops....Bob might have spoken too soon about the great corporate earnings. From Schwab:
"After snapping a two-week losing streak last week, the US equity markets are finding some pressure in early action of a new week, bogged down by some disappointing domestic corporate news...."
Brinker is wrong about selling AAPL.
BUY, BUY, BUY
Izzy said:
Brinker is wrong about selling AAPL.
Sorry Izzy, I used the wrong word.
It is not that Brinker WAS a shareholder. Brinker still IS a shareholder.
Brinker told someone to sell 1000 shares of AAPL. Never sell it only
BUY, BUY, BUY
It's becoming increasingly irritating listening to the Sunday infomercial, with even more newsletter references and model portfolio mentions, if that's possible.
Anyone else notice the decline of callers from the Bay Area since the switch to KSFO? It seemed Mr B used to take a few callers each show from "KGO Country."
Hi Birdbrain,
Yes, as I listened to all those callers yesterday who claimed they were subscribers, I wondered why NOONE ever gets on the air that says they are former subscribers.
Did you hear Bob when he did that hilariously praise-fest for his "wonderful callers"?
He waxed so eloquent and sincere about how his Moneytalk callers were the "most wonderful people in the world," right after the first two callers in the second hour kissed his ring and said they were subscribers. LOL!
Ms Honey Noticed:
It's interesting to watch the same old pattern develop. When the truth about Bob Brinker is posted, without fail, the sycophants (or?) come in to do damage control.
And as it has been for a dozen years now, when I post facts that can't be disputed, they immediately try to make ME the topic and start demeaning me.
OH DEAR ME!
Who would be so ignorant to do something like that? I betcha is some worthless kid who never held a REAL job his entire life and still has the silver spoon in his dribbling mouth, doncha agree?
Why don't you ask your best friend Allan if he would know who could be so rude and worried about bad publicity for his inheritance?
Honey said:
Jim...May I guess?
Is it "C"? :)
You chose the one I would have picked. However I think any of the three would be right. They are all contrary indicators. In recent weeks there has sort of been an "Applemania" with almost every guru extremely bullish.
If the earnings are disappointing expect another 10% drop.
Regarding the Ken from Los Gatos call asking advice about raising cash for a home purchase, let us listen in to the conversation with his wife concerning this important decision:
Mrs Ken: Shouldn't you consult your personal banker and enrolled agent about this matter? Mr Six Million Dollar Man?
Ken: No, dear. I'm going to trust the opinion of a financial talk show host.
People in Cali are pretty much trapped because they are so underwater on their mortgages.
I think that is a factor we are missing here. How many can afford to write a check for giant check to sell their house to make up the difference at closing?
"How many can afford to write a check for giant check to sell their house to make up the difference at closing?"
Why bother even selling your house? Just walk away and let the bank worry about it. They got bailed out by the taxpayer so it's only fair.
If the bank won't renegotiate your loan, to hell with them.
SBA
Well, "someone" posting as "Ruebin" turned the Bogglehead Bob Brinker discussion into an attack on me and this blog. Desperately trying to discredit the facts I was posting about Brinker's record.
First Bogglehead administrator responded to complaints and deleted some of his posts. Then "Ruebin" posted what was basically a threat against them. It was also libelous against me.
Now they have "LOCKED" down the thread so that Bob Brinker cannot be discussed there anymore.
So Brinker censorship wins again. Kirk Lindstrom is the only one, besides myself, who has ever stood up to Bob Brinker censorship.
Here is "Ruebin's" threatening and libelous post that Boggleheads deleted -- I suspected they would and made a copy of it:
by Reubin » Mon Apr 23, 2012 10:04 pm
"he spins, covers up and deceives his audience -- as well as his newsletter subscribers."
Moderator, if we are censoring offensive posts, the above quote is offensive and untrue and should be removed according to the rules of this forum. Quotes such as these could lead to legal implications which might cause this great forum harm.
Reubin
So do you think Reubin is one of the Brinkers? I went over there to look but it looks like they locked up the board.
Candy
Hi Candy,
Yes, as I said, they locked up the board so no one can post on it anymore.
They gave no reason. I wrote and asked them why they did that, but haven't hear yet.
Do I think it is a Brinker? I don't know. What do you think?
I think you WON (AGAIN) and the dopey kid LOST (again).
Shutting it down means "defeat" and submission. He cannot handle you, never could handle you, and never will be able to handle the TRUTH and FACTS.
CONGRATULATIONS!!
FNSR...$16.50
LOS ANGELES (MarketWatch) — Apple Inc. shares rallied after hours Tuesday, with strong iPhones sales helping the technology-sector heavyweight’s quarterly earnings nearly double from a year ago. Meanwhile, Baidu Inc. shares tumbled after the Chinese search firm issued an in-line sales outlook.
Shares of Apple AAPL +7.05% jumped 7.2% to $600.40 as the company said its second-quarter profit was $11.6 billion, or $12.30 a share, compared with $6 billion, or $6.40 a share, for the same period last year. Revenue jumped 59% to $39.2 billion. Apple shipped 35.1 million iPhones and 11.8 million iPads in the period.
Brinker calls her "Vicky Cristina Buenos Aires" because there was a movie starring Penelope Cruz called "Vicky Cristina Barcelona."
http://en.wikipedia.org/wiki/Vicky_Cristina_Barcelona
Apple is on fire today, UP OVER $53. Brinker caught a winner with that one for sure. FNSR is unchanged
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