STOCK MARKET: Brinker is still bullish on the stock market even though he only made one passing reference to it today in the first hour......He said: "The market made its high for the year in April and now it's back very close to its high for the year."
INTEREST RATES.....Brinker: "at or near historic lows."
BRINKER'S MARKETIMER MODEL PORTFOLIO III: In hour one, caller Tom in Boston wondered if it was still okay to use a 4% portfolio withdrawal rate since interest rates are so low.
Brinker replied: "We use that withdrawal rate in concert with our balanced model portfolio III in the investment letter (Marketimer). We have stock market holdings and we also have income holdings in that account. So we are able generate a decent cash return out of that portfolio.....And we can liquidate shares at year-end as necessary because we're having appreciation. We are seeing double-digit gains in our equity portfolios year-to-date, and excellent returns in our balanced portfolio -- high single-digit."
In hour two, caller Bob from Tinley Park said that he is a subscriber who follows Marketimer model portfolio III. Brinker replied: "I'm happy to say, Bob, that model portfolio III is having a very good year so you should be a happy camper."
Later in hour two, Caller Carl from Springfield, who said he was in his 80's and was managing a trust account worth $600,000, asked for Brinker's advice. Brinker replied: "I would suggest thinking about a balanced portfolio. We publish one in the investment letter which is the balanced model III. It has both stock market and income objectives."
Honey EC: Brinker chose to focus on his balanced model portfolio III today for his newsletter snake-oil pitches. Previously, his focus has been on the "income portfolio" which is officially "off the books" in regard to his market-timing performance record.
He bragged about this year's performance, but be aware that Brinker's equity model portfolio I has not yet returned to the same level it was before the 2008-09 megabear market crash. And equity model portfolio II is barely back to even. Both of those portfolios lost 57% from the October 2007 high to the March 2009 low.
The balanced model portfolio III did a bit better but still lost almost 24% in the bear -- even though it was about 40% bond funds. So Brinker's advice to count on "stock appreciation" to make up a 4% yearly withdrawal may not work on those down years. Especially if he stays fully invested through all the bear markets, like he has for the past nine years.
MODEL PORTFOLIO III DANGEROUSLY OUT OF BALANCE
IN EDIT: Jeffchristie has done the math for me to show the actual "balance" of Brinker's model portfolio III. Right now, the portfolio is 32% bonds and 68% equities. That is not good news for those in or near retirement who believe it is balanced 50-50 stocks and bonds.
The total dollar amount of that portfolio that shows on Bob Brinker's Land of Critical Mass website = $241,395. Here are Jeffchristie's numbers:
VFIIX $40,327 (bonds)VFSTX $17,818 (bonds)
VWINX (63% bonds) =s $26,290 _________$84,435 total in bonds.......$84,345 is 32% of $241,395.
VANGUARD GINNIE MAE FUND SMALL PART OF BRINKER'S MARKETIMER....Caller Tom from Boston, who said he followed Marketimer model portfolio III, made the comment that Ginnie Mae yields are low now. Brinker replied: "Ginnie Maes are only a small part of that portfolio. Most of that portfolio is not in Ginnie Maes. It's in stock market funds and other holdings."
Honey EC: Brinker is right. He has sold a sizable percentage of the Ginnie Mae holdings in both the income and balanced portfolios. The income portfolio is down to 15% in the Ginnie Mae Fund and model portfolio III has 20%. Additionally, model portfolio III has a 10% weighting in Vanguard Short Term Investment Grade (VFSTX) and 20% in Vanguard Wellesley Income Fund (VWINX), which is 63% stock and 37% bonds. The remainder is invested in stock funds -- mostly Vanguard Total Stock Market Fund (VTSMX).
TRADING ETFS AND CHARLES SCHWAB.....Caller Kyle from Carolina said he traded ETFs through a Schwab account and asked Brinker for some tips.
Brinker said: "I can't give you a trading strategy because trading is a movable feast. An active trader can have different points of view daily or weekly. Certainly from a long-term perspective, I think my favorite vehicles for someone 24 years of age would be SPY or VTI. Those types of indexes are a good way to invest.....The market made its high for the year in April and now it's back very close to its high for the year......"
When Kyle followed up by asking Brinker's opinion about Schwab, saying he made trades for free there, Brinker replied: "I don't know what's better than free. I don't know any way to tell you to beat free." (Then Brinker abruptly hung up.)
Honey EC: Brinker clearly has a bias against Schwab. I have speculated that it had to do with something that happened back when he was using them exclusively for his BJ Group accounts.
HOUSING MARKET: Brinker comments: Housing is looking up after declining by about 1/3. The median existing home price on a year-over-year basis is up about 9.4% -- the best year since 2006. On a $200,000 property, that is about $19,000 in price appreciation. It is now helping the economy instead of being a drag on it.
HOUSING PRICES AND INFLATION....Caller Mark from Atlanta said that he thought rising home prices were inflationary and a "horrible thing." Brinker disagreed, he said it's a good thing, especially for those people who are underwater on their loans. Inflation is only 2% right now.
"WHAT BROUGHT DOWN THE HOUSING MARKET? Brinker said: "The housing market was not brought down by interest that was being charged on Libor related mortgages. It was brought down by the irresponsible lending that occurred in the mortgage lending business."
BRINKER: PRESIDENTS DON'T DETERMINE LEVEL OF UNEMPLOYMENT IN U.S.....Brinker said: "I question the notion that the president, doesn't matter who it is, whether it's George W. Bush, whether it's Barack Obama, determines the level of unemployment....Do any of these presidents really have a major impact on that outcome. I think it is highly questionable...."
FISCAL CLIFF TAX INCREASES....Brinker said: "The capital gains rate, estate tax, tax on dividends are all set to go up in January and all of the Brackets are scheduled to increase if nothing is done before the end of the year."
WAIT UNTIL CLOSER TO YEAR END TO TAKE EXTRA CAPITAL GAINS: Caller John from Illinois asked if he should sell $100,000 worth of stock now to take advantage of lower capital gain taxes. Brinker advised him to wait until later in the year. He also asked John about his income. John told him that he made about $200,000 a year. Brinker then said that he didn't think John would be affected by the possible Medicare 3.8% increase anyway.
POLITICIANS AND THE FISCAL CLIFF: During the first hour, Brinker said: "This is the most amazing thing. Both Parties will find anything that they can think of that they will talk about other than the fiscal cliff. How much discussion have you heard out of either party and the top candidates about the fiscal cliff. I would bet that you have heard almost no discussion. Now this is like the 800 pound parakeet sitting over in the corner chirping away and everybody pretending there is no 800 pound parakeet in the room. If it wasn't so pathetic it would be funny to see the Parties ignore the obvious."
BRINKER AND NEWS MEDIA BIASED REPORTING: In the second hour, Tom from Kansas City said he wanted to take issue with Brinker for saying that no politicians were talking about the fiscal cliff. Tom said: "I wanted to take issue with you about what you said about politicians not wanting to talk about the fiscal cliff. For example, Romney, this past week was in Michigan hammering away on the economy and talking about the fiscal cliff for a good half hour. All the news media covered was a 10 second throw away joke line about the birth deal."
Brinker replied: "Actually I did see coverage of that speech...."
Honey EC: Brinker abruptly cut Tom off the air. That was a prime example of how Brinker gets away with demagoguery, spouting off about "both Parties" even when it's a lie and he knows it. He admitted that he heard Mitt Romney talking about the subject, but still chose to spread the trash in all directions with no exceptions.
Bob, you knew what you were saying wasn't entirely true, so why didn't you say so until Tom called you on it? You spent a great deal of the program blasting all politicians for not talking about the economy and fiscal cliff but never mentioned that you knew Mitt Romney had talked about it at length.
Brinker again pointed out that he's not a radical partisan -- that's he's an Independent. I don't believe him.
PROSPECTOR HAS 19 POUNDS OF GOLD: Caller Matt from Utah said that he had about 19 pounds of gold in his possession. He said he had found the gold himself over the years -- gold dust and nuggets. Brinker said that would equal about half a million dollars, but Matt needed to know if it was pure gold. He told Matt that he needed to take it to a trusted assayer and find out. Brinker also cautioned him about having so much money in gold.
OWNING 15,000 SHARES OF J.P. MORGAN: Caller Andy called himself a gambler and told Brinker that he owned 15,000 shares of J.P. Morgan and had about a dollar profit per share. He wanted to know Brinker's opinion of the stock going forward.
Brinker replied: "You have to know when to hold 'em and know when to fold'em." (That's a line from an old song, "The Gambler.") Brinker said that he had no opinion on the stock but cautioned Andy about having so much of his net worth in one stock -- he recommends no more than 4% in any one stock.
HURRICANE ISAAC: Brinker gave updates on Hurricane Isaac several times during the program today.
Honey EC: There is no need to cover in depth what Brinker reported on the hurricane. It's all over the news and constantly changing.
HURRICANE'S AFFECT ON OIL PRICES.....Brinker comments: The path of Isaac seems to have moved to the western Gulf of Mexico which increases the possibility that we could see impact on offshore energy rates -- short term degradation of supply....Generally the disruption to the oil infrastructure are minor on a hurricane one or a category two.
Brinker said: "There's no question that a category two hurricane is going to have regional impact.....The question is, is it going to result in a dramatic run-up in national gasoline prices. My guess it that it will not. It can have a spike in the regional area -- and shortage, but nationally, I don't see it."
BRINKER RODE OUT A NO-BIG-DEAL CATEGORY ONE HURRICANE..... Brinker said: "I rode out a category one hurricane which is not that far from a category two. I rode it out on the east Florida coast years ago. And I can tell you right now, it wasn't that big a deal."
COMEDY CALL OF THE DAY: After Brinker spent almost the whole second hour opening segment talking about the hurricane, Andy from Alabama came on the air and said: "Hey Bob, you're doing a good job with all the issues from the Weather Channel."
Brinker replied: "Well, my application has not been responded to but I'm ready."
Andy replied: "Ah well, it will be now."
BRINKER'S MOST ENTERTAINING COMMENT OF THE DAY: Charlie from Nevada said that he hopes we do go off the fiscal cliff because it will take pain to bring down the debt and he'd like to get it over with.
Brinker emphatically replied: "Charlie, you're on record. We'll put you down as 'Let it all go down.'"
Honey EC: I laughed out loud at Brinker's reply to Charlie. Brinker really has a dry sense of humor that I find very entertaining. If you want to hear Brinker's voice inflections on this call, it's about 35 - 40 minutes into the second hour. Some day, I hope to be able to make short clips of the program and post them for you.
Brinker's guest today was Cleve Stevens: The Best in Us: People, Profit, and the Remaking of Modern Leadership
San Francisco, Ca. KSFO 560: 1-4pm (KSFO archives Moneytalk Free on Demand for seven days after broadcast. You can download and listen on the go.)
Here's why there is no final exam question. Jeffchristie, who lives in Florida, sent this picture earlier this morning. He says the water is even deeper now (about 3:30). He's standing in front of his home:
32 comments:
That radio link wouldn't work for me.
Here is a link to WLS in Chicago which works for me.
http://www.wlsam.com/article.asp?id=152352
Thank you...But it works now. It was down at the beginning of the program. That is why I did not say "listen live" when I made the post.
Darn....I'm having a horrible time getting Moneytalk today. KION in Monterey has a football game and now KSFO has pre-empted the 3rd hour for real estate talk.
So now I'm listening to and recording WLS in Chicago.
Thank you for you diligence in following Bob Brinker's every word.
His information is most important to those who want to enter the land of critical mass. What a treasure - both you and Bob. Keep up the good work.
-- a loyal Brinker listener for 26 years and proud of it!
Again thanks for the Brinker info as you mentioned he is very entertaining. I always liked Bob and now that your able to provide this service the feeling is the same to you honey. I feel like I am talking to my wife but really I appreciate all your efforts. I am going to try and get a free monthly newsletter as I used to be a subscriber. The last time I tried they would not give me one only extend the membership for one month. If I do get one I will let you know. Again thanks for your valuable post... John
Mr B must think that "Schwab" is one of those words he is not allowed to say on air. Does anyone remember the last time he mentioned the name of that firm? It's always Vanguard and Fidelity, never CS.
The hurricane updates yesterday were a sneak peek of Bob Sr's new supplement to each Marketholder issue. "Weathertalk" will include long-range forecasts, timetables for low and high tides, moon phases, solar energy updates (probably not) and much more. Watch for it soon.
Bluce here.
Streaming: I always use WNTK -- http://www.wntk.com/listen.php
They rarely pre-empt shows.
FTR, signing in to Google accounts IS A ROYAL PAIN IN THE ASS.
BRINKER: PRESIDENTS DON'T DETERMINE LEVEL OF UNEMPLOYMENT IN U.S.....Brinker said: "I question the notion that the president, doesn't matter who it is, whether it's George W. Bush, whether it's Barack Obama, determines the level of unemployment....Do any of these presidents really have a major impact on that outcome. I think it is highly questionable...."
Brinker is 100% wrong.
There is about 1.5M in the armed forces.
http://en.wikipedia.org/wiki/United_States_Armed_Forces#Personnel_in_each_service
If Obama had kept his promise to end the wars rather than starting new ones, then many of these would have been added to unemployment list.
Bluce here.
Dove said: If Obama had kept his promise to end the wars rather than starting new ones, then many of these would have been added to unemployment list.
Government employees do not really count. They may as well be drawing unemployment, because their paychecks come from the same place that unemployment checks come from: the taxpayers. Both are a drag on the overall economy.
As always, the productive wealth-producers support the non-productive. And government jobs, by definition, are non-productive. Government spending for ANYTHING destroys wealth.
If the gov't could reduce unemployment by hiring more people, then why don't they ELIMINATE unemployment by hiring everyone who isn't working?
Why don't we all just work for government, even those who already have jobs in the private sector? Who wouldn't mind a 100% raise? Who wouldn't like a more or less guarantee that you can't be fired? Who wouldn't like a cushy retirement -- funded by someone else?
The answers should be obvious.
He says the water is even deeper now (about 3:30).
If it gets any deeper, a shark might swim by and bite him in the @$$. (((ROAR)))
Well at least JeffChristie won't need to water his lawn
Mark
Newark, CA
Don't know abut sharks, but I heard there's alligators nearby. :)
Bluce here.
Honey, you mentioned BB's dry humor and how you like it. I do too.
Some things he's used over the years that I liked and I find myself using also:
-- An old one that you don't hear much anymore, but a goodie: " . . . they'll be all over you like a cheap suit."
-- "Your chances are somewhere between slim and none, and I saw Slim headin' outta town at sundown."
-- " . . . the rubber chicken circuit."
-- there are more, but that's all I can think of right now.
Bluce,
Thank you for the station link. I had missed it. What city is that in?
WNTK Talk Radio
And I get a chuckle when he refers to the Fed's two day meetings as "sleep overs" and "pajama parties."
-- Frankj
Bluce,
Yes, some of Brinker's "sayings" are good. How about "we shall know in the fullness of time"?
And one of his favorites that's like fingernails on a chalk board to me, "young sprouts." LOL!
GM to suspend Volt production. General Motors ( GM) is reportedly set to halt the manufacturing of the Chevrolet Volt, at least temporarily, following disappointing sales. The plant that manufactures the hybrid sedan is slated to stop production for about four weeks in September and October.
Sales of the Volt haven't met management expectations, reaching just over 10,000 in the U.S. versus expectations of 45,000 through the year-end.
Priusfan
Honey: WNTK is somewhere in Vermont or New Hampshire, I believe.
Yes! Keep those other "Brinker-isms" coming!
Too bad he got caught up in trying to time the stock market, he might have had more success as a stand-up comedian.
Bluce
Haha, the "Volt," another failed government program.
Who could have predicted that?
Bluce
I listen to Brinker on WTMA out of Charleston SC.
Mike
From Honey's outline of Brinker's show:
"the level of unemployment....Do any of these presidents really have a major impact on that outcome. I think it is highly questionable."
Brinker feigns being an independent. My read on him is that he has a strong preference forObama. Bob's statement is his way of shielding his chosen one from the major criticism that will fall on him this election season. Mr. Pres., Where are the jobs?
Like Bob, when you take a position that the pres. is powerless to impact the job picture you don't need to spend time defending him. You just pretend that it's not in the realm of his powers. C'est la vie.
I think that POTUS has a major impact on the national job picture. He must set a tone of confidence. Like a coach or manager of a team, he can influence the psyche of the players.
On the practical side. Look at B. H. O's record for the first two years. His party of Demon-crats controlled the house and senate. He and his handlers, (the string pullers), Nancy, Harry, and Barney chose to use their power and influence to push through an anti-business agenda of reforms and restrictions. Topping the list of ill advised anti-business, growth killing, and job killing laws, well; that has to be Obama Care.
Today's employers are expected to look after the welfare of their workers to an unprecedented extent. Today it isn't good enough to provide just a paycheck. The work place and the boss must provide for the health, happiness, and welfare of the workers. No longer is it adequate to be employed, today's workers expect to be adopted by the company.
The bad planning and ill timing of the job killer agenda of the Demon-crats has spilled over beyond the initial two years of insanity and arrogance. Even now, potential employers feel hand-cuffed and burdened when it comes to hiring anyone. POTUS has a lot to do with that. His influence on the party and the party's selling out to his liberal agenda makes the Nation's bad job picture look bleak for now, and more so in the future, if he is re-elected.
No way do I agree with Bob.
A U Ric
I love "Dirty Harry," just like a lot of red-blooded Americans.
I thought he was brilliant.
Mr. Pig said...
"He says the water is even deeper now (about 3:30).
If it gets any deeper, a shark might swim by and bite him in the @$$. (((ROAR)))"
I hate to rain on your parade but the storm is now in your area. Enjoy a wet labor day weekend.
Note to the person who is obsessed with me at Silicon Investor:
STOP SENDING YOUR ANONYMOUS RESPONSES TO ME HERE! This is a Bob Brinker blog. I do not talk politics here.
Now stay the heck away from this blog, and if you want to respond to what I write at Silicon Investor, do it there. Got it COWARD?
This is a Bob Brinker blog.
That would explain the disgust, vulgarity, lies, spin, distrust, and outright scummy, childish responses that often slip by.
It all makes sense now...............
That's two people that NEVER EVER had a job..............2 scoop Obama and the filthboy that is supported by daddy.
It looks like the New York Times forgot to scrub this bit of news from their website. Someone just found it. I would like to hear Bob Brinker talk about it Sunday:
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
That is what brought down the housing market. And we all have suffered as a consequence.
Will Bob Brinker be on this Sunday? Don't know, but if he is, I hope he talks about Ben Bernanke's latest:
Yesterday, Fed Chairman Ben Bernanke said that the Fed would probably engage in another quantitative ease. This is the third time since 2009 that the Fed has engaged in a radical maneuver to stimulate growth in the economy.
Except it never works. All it does is devalue the money that you have, and artificially inflate the prices of hard assets you own.
Chump reporters yesterday parroted the, “Dow Jones Industrial Average was up on the news yesterday by 90 points.”, without thinking about why. The reality is the Fed is out of bullets and yesterday’s announcement will do nothing to stimulate the economy. If you haven’t been watching, Japan has engaged in continuous quantitative easing since the 1990′s. They call it the lost decade over there but it’s more like the lost economy.
In a quantitative ease, the Fed buys US Treasury Debt of different expirations and injects actual cash into the economy. Banks that hold the treasuries sell them to the Fed, and receive the cash. Ideally, the banks will turn and lend that money out to businesses at a low interest rate.
The problem with the strategy is there is no economic growth in the broad economy. The Fed is fighting massive headwinds out of its control. China is in trouble and we all know about the European situation. So businesses don’t demand the cash from the banks, and the banks simply reinvest the cash in the US Treasury market. There is no velocity of money turning over through the economy.
(SNIP)
Quantitative ease will do nothing to help anyone in the US without a job. No business is going to hire because the Fed is buying back debt and creating excess cash. Without real prospects for growth, business doesn’t have an incentive to expand.
Bernanke is quoted as saying that “the benefits of QE outweigh the costs”. He is wrong. He also made the observation that there hasn’t been any inflation caused because of previous QE’s. He is right about that. The reason there is no inflation in the US economy today after all the monetary stimulus the Fed has engaged in over the past three years is that there is no economic growth. GDP is flatlining. If we had real growth, we’d have inflation because the velocity of money would flow through the economy.
Read more and see graphs: Why QE3? Because Bernanke Says 25 Million Unemployed is a Tragedy
Posted by Jeff Carter on September 1st, 2012
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