On Moneytalk last Sunday, Bob Brinker made the pronouncement that he would be surprised if the market corrected another 20% off of the April high. In light of today's action, so would I. But this call also addresses the "risk" involved in our national debt.
RISK OF INFLATION AND/OR MARKET CRASH:
Moneytalk June 3, 2012.......Steve from Indiana said: "A lot of people worry about interest rates going up and we owe $16 trillion, that they admit to, and if interest rates go to 10% that would be $1.6 trillion a year. That would be half our total budget. What would cause the government not to just inflate our way out of all this debt?"
Brinker replied: "It's a risk, and investors have to always be aware of that risk."
Steve: "What chance do you think the stock market is going to go down a lot from here."
Brinker: "Define a lot"
Steve: "Down to 1100 on the S&P 500."
Brinker: "Boy, Steve, that would surprise me. A 20% decline from here, which would be close to a 30% decline from the April high. That would surprise me, that were to happen. Good to hear from you. Let's get Joe on the line from Carmel."
BRINKER'S SON'S NEWSLETTER AND MARK HULBERT FINANCIAL DIGEST:
"Caller Mark from Mountain View said: "I downloaded a sample of the Brinker Fixed Income Advisor and was quite impressed, so pass on a good word to your son. You must be proud of his achievements."Honey here: To my knowledge, this is the first time Brinker has ever let it be clarified on the air that the Brinker Fixed Income Advisor is published by his son. Many people have been mislead to believe that Brinker has two newsletters. Both men use the same name on the internet that was made famous on Moneytalk. Brinker neglected to say that his son's wife is co-editor (Lisa, who is a linguist).
Brinker replied: "I think the thing I am most proud of, not only his achievements with the newsletter.....As you know, I'm a consultant on the newsletter. He writes the newsletter. The thing I'm most proud of is that it is the number one ranked newsletter in the country for the past five years by the Hulbert Financial Digest, which is an independent rating service. That's what I'm really proud of, Mark."
* Brinker made the claim that the Brinker Fixed Income Advisor is the number one newsletter "in the country." That is a ridiculous claim. Hulbert Financial Digest does not track every newsletter in the country.
* Brinker called Mark Hulbert's Financial Digest an "independent rating service." I suppose it is independent in the same way the Marketimer is independent because many conclusions are based on personal opinions. Hulbert has no one to answer to -- no unbiased agency oversees or verifies the validity and truthfulness of what he publishes.
* Hulbert alone chooses which portfolios and holdings from each newsletter he will track. For example, he chose to not include Brinker's disastrous year-2000 QQQ trade that has never been closed, but was covered up and dropped from Marketimer.
* Hulbert makes up his own criteria for "risk adjustment."
* Hulbert decides how long he will make his list of newsletters in each category. For example, he used to only rank the "top-5," now he ranks the "top-7."
* Hulbert created his "Honor Roll" based on criteria that he thinks is important, and wrote in his newsletter that it was NOT based on performance. Marketimer is usually chosen.
* It is a known fact that Hulbert makes arbitrary choices on WHICH newsletters he will track. . He began tracking Brinker Jr's newsletter in 2005, the first year it was published. But he refuses to track a letter that outperforms Brinker Jr's newsletter -- The Retirement Advisor.
* And finally, Brinker said that his son's newsletter was ranked number one by Hulbert. That is not entirely true. In the "non-adjusted" for risk column, it is ranked number 12 in the Overall Performance Category.
Here is one of Jr's three portfolios from his November 2011 free sample issue:
Jim's excellent comments on this subject:
If you are interested in newsletters that are geared for retirees, I recommend that you get free issues of Brinker Fixed Income Advisor and The Retirement Advisor and compare them. PS: I do not make any commission on either newsletter.
but as the saying goes "It's harder to stay Number 1 than it is to get there".
We have had a bull market in bonds for quite some time. Certainly since Jr.s newsletter was created. Almost ANY portfolio of bond funds would make money. The real test of course is what happens when interest rates rise and bonds suffer. That is when we find out how good or bad the newsletter is.
Will the Brinker's correctly anticipate rising interest rates? Have they set their own "mental stop losses"? What vehicles would they use in such an environment? These are all questions with no answer at this point.
During a favorable time for stocks (the 1990's) Marketimer was a top ranked newsletter, but when things got tough for the stock market, things got tough for Marketimer.
So will The Fixed Income Advisor continue to excel even in a tough bond environment or will it as Brinker says "regress to the mean? We shall know in the fullness of time.