BOB BRINKER'S MARKETIMER LAND OF CRITICAL MASS....It's where you reside when you are able to live off of your investment income. Brinker said: "I'm a strong believer, if you're a Moneytalk listener and you gathering knowledge over time, this can help you become your own personal financial manager. It can help you someday reach, if you're not already hanging out there, reach that Land of Critical Mass where you can live off your investment income."
SHOULD YOU BAIL OUT OF THE STOCK MARKET IF OBAMA GET RE-ELECTED asked Andy from Texas. Brinker replied: "I have not at this time, in April of 2012, I have not predicted a crash in the market."
ASSET ALLOCATION....Brinker said: "Asset allocation is important because it has to do with having your money in different types of investments. You might have asset allocation the stock market. You might have fixed income securities. You might include real estate....So you're allocating your assets across a spectrum of investments... so you don't have all your eggs in one basket. So you don't have all your money in one stock."
VANGUARD HIGH YIELD FUND (VWEHX) AND BRINKER'S MARKETIMER INCOME PORTFOLIO...Caller John from Texas, who said he had listened to Brinker for twenty years and was living in the Land of Critical Mass, said: "Mutual funds are losing their attraction because of high expenses and what little they add, but a junk bond funds is one of the few areas where you can really reduce risk by pulling a bunch of bond funds and with the huge spread right now with low interest rates -- yields are attractive 6-7%. But what's going to happen in the future....Should you worry about duration.....Should you worry about inflation."
Brinker replied: "You should worry about everything, I worry about everything, because things are always changing. But your point is right on.... This is the reason we have used junk bond fund investing to a certain percentage....For example, in our income portfolio that I publish on page 7 of the investment letter, we do use a high-yield fund in there....I don't have a five or ten year opinion on that, but I can tell you right now, we are maintaining our position, here in the month of April, we are maintaining our position in the high yield fund in the income portfolio. And my anticipation is we will maintain that position in May."
Honey EC: Obviously, Brinker was being sarcastic when he said he "anticipated" maintaining his
position in the Vanguard High Yield Fund in his "off-the-books" income
portfolio on page 7 of Marketimer. He has "maintained" that position
since April 2003. He has even increased the holding to a pretty hefty 25%, while dropping his GNMA weighting to only 15% in that
portfolio.
Along with the stock market, the high yield funds took a
precipitous ride down in the 2008 megabear market. Personally, I had
sold most of my high-yield holdings, so it wasn't as scary for me as it
was for some of the retired people that wrote to me and asked for my
advice. My advice was to stay the course if they had
already ridden them down. I hope they did.... Bob Brinker never mentioned high yield funds on the air during
those hard times, and he gave no guidance in Marketimer.
VANGUARD GINNIE MAE FUND (VFIIX) AND BRINKER'S MARKETIMER MODEL PORTFOLIO III.....Caller John from Texas also said: "I think you know the Vanguard Ginnie Mae Fund has been worth keeping for twenty years. Brinker replied: "It's been a great fund. And we have also invested in that fund in the investment letter in model III for balanced investors and also in our income portfolio and people are very happy with it."
Honey EC: Brinker's Marketimer model portfolio III (which is part of his "official performance record) has a 20% weighting in Ginnie Maes and no Vanguard's High Yield Fund. The only other fixed income mutual fund that is in this portfolio is a 10% weighting in Vanguard's Short Term Investment Grade (VFSTX). Consequently, the portfolio is now closer to 70% in equities. The last time it became this heavily weighted in equities, the 2008 megabear market arrived. That quickly returned the balance because the portfolio lost over 23% that year.
WILL THE UNITED STATES FALL OFF THE FISCAL CLIFF...Brinker said: "We've talked on the program about the importance of getting fiscal matters together in the USA, and it's going to be a challenge because of what is now commonly being referred to in the financial media as the "fiscal cliff....It comes to fruition when the ball comes down on New Years Eve in Time Square at the end of 2012. Because a lot taxes go up, a lot of tax breaks come to an end and a lot of spending reductions go into effect. Remember the failure of the super committee earlier this year to agree upon a new budget plan and the automatic triggers that came into play? Those will be triggered at the beginning of next year.....Probably it will be dealt with in a lame duck manner at the end of the year."
Honey EC: Bernanke warned: Fiscal Cliff Threatens Economy on December 31.
SLOW GROWING ECONOMY....Brinker
said: "The economy is an issue. We have a slow growing economy, we saw
that again this week. Gross Domestic Product (total goods and services
adjusted for inflation) was announced for the first quarter of this year
at 2.2%."8.2% UNEMPLOYMENT TOO HIGH FOR FEDERAL RESERVE....Brinker said: "Unemployment at 8.2%, way too high for the Federal Reserve."
FEDERAL RESERVE SEZ INTEREST RATES TO STAY LOW: Brinker said: "They met again this week and said what everybody expected them to say, which is that they are going to remain easy in our monetary policy. And we're not going to raise rates at this time, and we're going to continue to do everything that we can to stimulate job growth."
Honey EC: Brinker is still maintaining his April 2012 Marketimer GDP prediction for this year at 1.5% to 2.5%. This confirms his belief that the economy will not sink into recession as Lakshmann Achuthan, CEO of ECRI has predicted.
UNDEREMPLOYED AT LEAST 14.9%....Brinker said: "You will always have people....that have been out of work more than 26 weeks. Those people are consistently excluded from the unemployment rates...You deal with that....and those who are part-time because they can't find full-time.....in what the Labor Department defines the U-6 sector....I refer to it as the underemployment rate...it is 14.9%."
UNEMPLOYMENT IN SPAIN AND OTHER EUROPEAN COUNTRIES.... Brinker said that he considers Spain at 24%, the weakest link among the major European markets. Brinker addressed the comparability of the U.S. unemployment stats with those of foreign countries and said that he does not see how such stats could be comparable as there are no international rules requiring a uniformity in the computation methodology.
INDIA AND CHINA NOT LIKELY TO START USING GOLD INSTEAD OF THE DOLLAR.....Brinker said: "There is so much volatility in the price of gold, you could legitimately ask who would want to be paid in gold. If you received in payment for something a few months ago at $1900 an ounce, you've already lost 15% of your money....it's down to $1600 an ounce."
Honey EC: Brinker added GLD, the gold bullion
ETF, to his individual issue list back in May 2009. He also added
Suncor at the same time. This is a list that he repeats every month, but
seldom gives any advice with it. He has never given any
instructions on price or amount on GLD. The only stock on the list that he gives advice on regularly is Suncor --
he rates it a buy under $33.
BRINKER'S BALANCED PORTFOLIO AND TOO MUCH EXXON-MOBIL....Caller Dave said 90 % of his 80 year-old mother's million dollar net worth was in Exxon-Mobil. Brinker told Dave that he thinks she should diversify and spread her risk over many companies. Then Brinker addressed the age issue: "There's another problem with this investor and that is concentration in the stock market relative to her age. For somebody in that age class, I would have about 30% in the stock market which is the low end of what I use for a balanced portfolio. For a balanced portfolio, I use from 30% to 70% in the stock market, with a mid-point of 50%."
FUNNY QUESTION OF THE DAY....Caller Dan from Illinois, who said he was self-employed contractor, wanted to know if he was included in unemployment rate if he couldn't find work. Bob had a good laugh and said he would Dan credit for a funny question. Dan concluded that he was not included included in the unemployment stats and couldn't get unemployment because he never paid into it. Bob said, "Well you're definitely not included as a self-employed person because you're working."
Honey EC: Confused? So am I. LOL! I suspect that Bob really had a good laugh off the air.
BOB'S RANT OF THE DAY: "ROTTEN MISCONCEPTION" ABOUT WORKING WOMEN....Dan said that in the "old days" when women didn't work, unemployment would have been about 30%. Brinker replied: "That's a rotten misconception, a rotten misconception, this is the poisonous...I hate this Dan. This is poisonous misconception that was recently spread by Hilary Rosen about Ann Romney, who raise five boys, never worked a day in her life. I hate that stuff. Some of the hardest working people in the country are mothers raising children. So that stuff is poison."
Honey EC: It sure seemed like Bob was just aching for an excuse to unload about that subject. I totally agree with him. It's not in my nature to be mean, but if it was, I'd ask Hilary Rosen how she would like to deal with five sons, MS and breast cancer.
Brinker's comical quote interspersed between Marketimer ads and his son's ads: "One advice we don't give on the program that you often hear is, aww, just call the office and send in your money."
Bob Brinker's guest author today was Ken Segall: Insanely Simple: The Obsession That Drives Apple's Success
ON A LIGHTER NOTE
Jeffchristie's Moneytalk Final Exam Question for this week:
Today's Moneytalk final exam question was discussed twice in the first hour.San Francisco, Ca. KSFO 560: 1-4pm (KSFO offers FREE Moneytalk on Demand for seven days after broadcast.)
Bob Brinker's goal is to help his listeners reach:
A) Terminal Velocity
B) Critical Mass
C) Perfect Pitch
D) Regularity
23 comments:
Brinker just said he considers a "balanced" portfolio to be anywhere between 30% to 70% bonds to stock with a mid-point of 50%.
unbal
Good summary Honeybee.Like it or not you are a good financial manager.When you listen to Bob you increase your knowledge and your critiicising Bob allows you to become a better mgr. Both you and I know that we always need gas for car,toothpaste, milk bread and clothes. If you invest and become part owner of good companies in a mutual fund you will make money and reach your critical mass. The idea is to pick the right no load funds and not to go overboard and be critical and lessen up or sell if you think it is time to. All these ideas are from Bob and his shows over the years. Keep up the good work if you dont invest and take a chance there is no reward...
One of Sunday's most interesting calls was Dave whose mother had 90% of her stock holdings in Exxon Mobil. I don't follow EOM closely but I have owned Chevron Texaco for the last 18 years and it has out performed the market. I suspected EOM may have as well. In the last 10 years EOM has gone from $31 to $86 for a return of 178%. The S&P 500 (SPY) went from $88 to $140 for a return of 59%. All this being said, I agree with Brinker's advice that she should diversify and reduce her allocation in stocks.
Frankj:
Good luck to Dave, getting his mother to diversify out of the one stock. After the end of this year, capital gains rates may go up.
Third hour guest: When the subject was introduced, Hobbes, (the Market Indicator Cat) asked me "How many books HAVE been written about Apple?"
Turning off the radio, I said, "We will only know this in the fullness of time."
"Good luck to Dave, getting his mother to diversify out of the one stock. After the end of this year, capital gains rates may go up."
Maybe the old lady will die and then Dave will get the stock with a stepped up basis.
Then he can sell it and pay ZERO taxes.
All's he has to do is hope the stock doesn't crash before she dies.
Stock Heir
Frankj said:
"Third hour guest: When the subject was introduced, Hobbes, (the Market Indicator Cat) asked me "How many books HAVE been written about Apple?"
I don't know but I bet there are more books written on the 2008 financial crisis. How many authors has Bob had on with books on that subject?
Well Stock Heir....Aren't you the kind, sensitive one.
I suppose if you had a a 99 year old father who you had to take care of 24/7, you'd be hoping he'd die and leave you his pennies.
I wonder how much family you have left. I know you have no wife or kids. Any sisters?
"Well Stock Heir....Aren't you the kind, sensitive one."
Just being realistic. I don't think Dave will have any luck getting the old woman to sell anything. She's probably set in her ways.
If that's the case, Dave could sell a put to protect himself until she dies. And then he gets the stock proceeds tax free.
I think Brinker should have told him of that possibility.
Stock Heir
Mr BOB BRINKER, THE LAMEDUCK
market timer....HAHAHA!!!
Stock Heir,
Your contempt for "old" people is appalling.
Were you abused by your grandparents?
Also, I suspect you are in your mid-50s. I also suspect that you are living in denial believing that you cannot die before your 99 year old father.
Frankj --
Jeff, you're right about more author interviews on the 2008 meltdown. Some were good, and some not so good in my opinion. I think some of his listeners in the Bay area may be more interested in Apple, given the company's presence there.
And, he seems to like the company, given his stock ownership. Bottom line, it's his show.
On another subject, of Dave and his mother's Exxon holdings: yeah, during the call,I thought of what Stock Heir had to say.
I think Bob had a guest on some weeks ago, Roberton, (I should remember, I did a review of the show!) who mentioned the untaxed capital gains as revenue the gummint was missing out on.
First Prudential, now Lincoln Financial! Then during the show, he made comments about low cost, no-load investing, and made the comment that "insurance salesmen hate me" because of his term life insurance advice. What a hypocrite and a whore!!!
StoxNBondz
StoxNBonds,
You are absolutely correct. I did not put that together. Thank you for pointing that out.
He did exactly what you said during the program and both of those companies were advertisers.
He also commiserated with the guest about how some people are "jealous" of those who are successful. It certainly seemed to me like he had himself in mind.
Stock Heir said:
"Just being realistic. I don't think Dave will have any luck getting the old woman to sell anything. She's probably set in her ways.
If that's the case, Dave could sell a put to protect himself until she dies. And then he gets the stock proceeds tax free.
I think Brinker should have told him of that possibility.
Stock Heir"
I am afraid I don't understand you strategy of selling a put. I don't think that is a very good idea.
In answer to Jeff's quiz this week I will answer (D) Regularity. I know at least that would have been the answer during 2008.
Not related to any discussion going on here but, finviz.com useful website.
-- Frankj
Thank you, FrankJ. I took a peek at it and it looks great. Here's a link:
Finviz.com
When I do any research on Bob Brinker, I read a lot of Bob Brinker Hate that I never quite understood.
You either like his investing and personality temperment and style.....or you don't! Move on!
However, one of my oen criticisms of Bob was evident this past weekend.
My criticism is this....he doesn't listen or always understand the question that a caller will pose.
And then he goes on to answer what he THOUGHT was the question!
A couple of callers asked him questions about how the unemployment rate is calculated...i.e...who is counted, who is not.
He could have answered that the unemployment rate is calculated based on people receiving and applying for unemployment benefits.
Instead, he got into it with a self-employed guy as to whether he was counted or not.
The caller asked in stay-at-home moms are counted...and he went off into a tirade about whether homemakers are really working, Ann Romney, etc.
He doesn't seem to bother to make sure he understands the question...and then gets irritated when someone tries to tell him he's not getting their question right.
I suppose as a financial guy, he is better with the numbers questions.....but he does not do a good job of listening to someone's verbal question.
$.02
Regardless of how the unemployment rate is calculated, what's important is consistency so a trend can be identified, (if one begins) without having to sort out noise in the underlying data.
-- Frankj
Just curious....does the Finviz.com web site allow you to do multiple model portfolios?
I am looking for a website that allows me to set up a few different models. Most of the financial web sites allow you ONE "portfolio"..I am looking to run a few different models.
Any suggestions?
This WSJ article explains why the "fiscal cliff" that Bob Brinker talked about could spell doom for the stock market.
Donald Luskin: The 2013 Fiscal Cliff Could Crush Stocks
SeekingAlpha.com allows you to do more than one portfolio. You simply give them different names. It handles stocks and ETFs, but not mutual funds.
I don't know if FinViz does the same, haven't monkeyed with it yet.
--Frankj
Frankj --
I read Luskin's column in the WSJ this morning. All I can say is ... it's always something!
Maybe BB will have some thoughts on this tomorrow, unless it is Lynn's turn.
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