May 6, 2012, Bob Brinker's Moneytalk, Summary, Excerpts and Commentary

May 6, 2012................................................................(comments welcome)

 For the first hour and 20 minutes, Bob Brinker's Moneytalk Show was spliced together re-runs of very old programs going back to 2010. But as usual, there was no disclosure from him or the station.   And there was no  disclaimer stating that some of the information was no longer reliable or accurate.

For example, in the recorded opening segment, Brinker said: "Another thing we've talked about on Moneytalk over the years is Inflation Protected Securities....We include a portion of our balanced portfolio in our investment letter and our fixed income portfolio in my investment letter, we include Inflation Protected Securities in that portfolio."

Brinker sold all Inflation Protected Securities from all Marketimer portfolios in January 2011. Also note that portions of today's recordings were from back when he still used the term "fixed income portfolio." He changed that to "income portfolio" after it was pointed out on this blog that the Wellesley Income Fund added in January 2011 contained about 35% equities. 

Why the cloak and dagger?  This is the only radio talk show program I have ever heard that doesn't announce "best of, please do not call."  Maybe I'm just nosy, but I think it would have been nice for Brinker to have told listeners why he suddenly broke into the program twenty minutes into the SECOND hour and proceeded as though he had been there all along.


FROM THE LIVE PORTION OF MONEYTALK WITH BOB BRINKER:

KEEP MINIMUM OF 30% ALLOCATED TO STOCK MARKET....Caller Dave said that he and his wife were 75 years old and only 14% in stocks, the rest was in bonds and cash. Brinker replied:  "I think you're light in the equity market.....14% is a very small number.....Obviously, at your point in life, you're going to be a balanced investor....Are you going to be a balanced investor that has at least some appreciable participation in the equity market. The bottom number I would use is 30%....Here in May 2012, if I was in your shoes, I would have 30% of your money in the equity market. You can do this easily by including balanced fund.....Vanguard has a fund called Vanguard Balanced Fund that's a very simple and low-cost way to include that kind of thing inside of your portfolio."

Honey EC: Brinker does not include the Vanguard Balanced Fund in any of his model portfolios. Instead, Vanguard Wellesley Income Fund is in his income portfolio and his model portfolio III.

 It's apparent from Brinker's comments to Dave that he is still very bullish on the stock market, which he confirmed in the April, 2012 Marketimer when he raised his S&P 500 target range to "upper 1400s to low-1500s."   In the  May 3, 2012 issue of  Marketimer, Brinker extended the time frame on this projection from "going forward" to "within the next 12 months." 

IT'S FICTION: SELL IN MAY GO AWAY - SEASONALITY   Brinker said "One of the things you're going to be hearing about going forward is about the seasonality of the market. This is one of the great myths of Wall Street....The facts do not bear it out and yet people continue to promote it as though it were true even though it is not true. The seasonality that I speak of is the seasonality that the market goes down from May to October every year. Of course, this is nonsense. I wanted to share some statistics with you on this. To prove the point. If you go back about six decades plus...to middle of last century and check the S&P 500 from the beginning of May to the beginning of October, and  here's what you will find. On 60% of the occasions -- 6 out of 10 basically the market is either up -- usually up or else it is even. And in only 4 out of 10 cases was it down during that time. So you see, fiction is fiction is fiction."

WILL STOCK MARKET REACT NEGATIVELY TO FRANCE GOING SOCIALIST? Caller Stan from California asked Brinker: "I was wondering what you thought the markets will do in reaction to the election today in France and Greece." 

Brinker replied: "I think Greece is a lost cause, a bankrupt nation. When you are paying 20% a year on your ten year sovereign debt, you're bankrupt nation.....I am dumbfounded by the early results of the election in France.....They show that the Socialist candidate, Francois Hollande, is going to win.....For me personally, I think they have made a big mistake for their country.....I will say this so that everyone hears it clearly: This is a great day NOT to be a Frenchmen."  

Honey EC: So the French want their goodies, never mind their country is going down the tubes like Greece. There are already reports that "the rich" are leaving France. Are Socialists evil or just plain stupid?  Are you listening Washington and Sacramento?  

Brinker then answered Stan's market question: "The US market is a function of  the corporate earning power of the companies that are primarily based in the United States....The present value of today's common stocks in the United States are dependent on the future estimates of their earnings and their dividends. They are not based on who the president of France is, Stan. That would be an absurd notion to say. What you are suggesting is that the US stock market depended on who's in the president's office in France. That's ridiculous....The stability of Europe is already in doubt. This is nothing new here....Believe me, the notion that the United States stock market is going to rise or fall depending on who the president of France is -- that is not what powers the US stock market." 

Honey EC: Was Brinker blowing smoke? Stock market futures can turn on a dime, but tonight they are down BIG TIME.  

FED DOESN'T CARE ABOUT SAVERS....Brinker said: "The priority at the Fed is to keep the interest rates down to stimulate the economy and create jobs.....I have to tell you straight out. They are not worrying about the savers. Those  of you that are trying to get the most you can safely out of the income portfolio. They're really not focusing on you. That's the reality......They have a dual mandate that congress has presented to them -- to maximize employment consistent with low inflation." 

Honey EC: It's amazing how little concern there is for those who work, save and pay their bills, including mortgages. Those are the people who pay most of the freight for all the free lunches that are growing by leaps and bounds. 

 Brinker's guest author was Lori Andrews:  I Know Who You Are and I Saw What You Did: Social Networks and the Death of Privacy

Moneytalk on Demand is available for FREE at KSFO 560 for seven days after broadcast.  
 

Jeffchristie's Moneytalk Final Exam Question of the day:

Bob Brinker thinks the absolute worst investment is:

A)  Commodity futures.
B)  Greek bonds.
C)  Whole life insurance.
D)  Nevada real estate.

 

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