October 31, 2012, Bob Brinker's 105% Marketimer Model Portfolio II

October 31, 2012....It's difficult to believe but Marketimer model portfolio II now contains 105% weighting in mutual funds.

I received this in an email from someone who I'll call SC:

1. The latest issue of the Marketimer deletes the RYOCX, 15% and add to the position in the VTSMX which increases to 50%.  The only problem is it totals to 105% for everything.

SC is correct that the portfolio based on Bob Brinker's instructions (as stated above) totals 105%. Brinker makes those changes as of October 9th.  However, I checked the October 3, 2012 Marketimer to see what the portfolio adds up  to before these changes. It also adds up to 105%.  Add the percentage numbers for yourself from October Marketimer: 

Here is the total dollar value for P-II  that is showing on Bob Brinker's website tonight: 

Portfolio II..... $254,732

So are the dollar amounts based on a 105% portfolio? If so, it's a new way to make great returns. :)

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October 28, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

October 28, 2012....Bob Brinker hosted Moneytalk today.....(comments welcome)

HURRICANE SANDY: Brinker called this 900 mile wide storm "the biggest ever,"  the "mother of all coastal storms."  The New York stock exchange was closed Monday and  Tuesday.

In Brinker's opening monologue he covered all of the stimulus packages over the past four years that have failed to bring the GDP up enough to increase employment. He repeated what he had said on his Red Eye Radio guest appearance:

Brinker said: "There have been about seven programs going back to 2008. Most of them by the Fed -- a couple of them by the federal authorities. But if go back to it, the first would have been the Fed taking rates to zero in 2008. Then you had the Fed announcing QE1, followed by the big stimulus package --$787 billion -- and some of that was good stuff like the tax cuts that were thrown into it. Then you had QE2 coming in there, and then you had the second stimulus. That's the one that expires at year end, Gary and Eric. That's the one that gave you the 2% payroll tax deduction. Then you had the Operation Twist and now you have the QE3.....Will all of this stuff thrown against the wall -- traditional stimulus such as monetary and fiscal -- look at the rate of growth in GDP in 2012. We're running just a little bit south of 2% annual, which is too slow to get the unemployment rate down."

STOCK MARKET: Brinker did not talk about what it has been doing or what he thinks it might do going forward. However, based on his comments on Red Eye Radio Thursday (see summary here), Brinker is becoming more cautious than he has been for some time:

Gary asked: "Should we expect a correction in the market over the next 15 to 18 months, you think?"
Brinker replied:  "I think we're going to have to keep a close eye on it. .....I think that, you know, here's the thing. We make projections in real time. We are subject to change our view at any time.  As we speak here, we've been fully invested in 2012. We've enjoyed the fruits of this market. But as I said at the outset, right now, we are in what I would characterize a highly vigilant state of mind with reference to going forward." 

Honey EC: Brinker is still recommending "dollar-cost-average on weakness," but at the same time, he has sold all Nasdaq holdings from his Marketimer portfolios and even closed the 12 year-old trade for those who were still holding shares of QQQ he recommended buying in October 2000. He moved most of that money into Vanguard Total Return Fund (VTSMX). 

BOB BRINKER'S FIXED INCOME ADVICE: In the October Marketimer, Brinker  said he has now returned it to 100% fixed income holdings, but that isn't true. There is still a 10% holding in Vanguard Wellesley Income Fund (VWINX).

Honey EC: I had family obligations today so this summary is short.  However, I downloaded the program from KSFO Archives and have listened to the first two hours to see if anything new was said pertaining to investing, the stock market or other points that you would want to know.  Brinker's main subjects today were:

• National Debt (will never be paid)
• Simpson Bowles (Brinker likes it)
• Will Storm affect energy prices? (no, because energy is global)
• Japanese banks in trouble (not surprised)
• House of Representatives after election (Republicans will keep it)
• California tax increases (if Jerry Brown's propositions pass, top brackets will be over 60%)

Brinker's guest-speaker was Jonathon Fenby: Tiger Head, Snake Tails: China Today, How It Got There, and Where It Is Heading

Jeffchristie's Final Exam Question for the day:

Moneytalk on demand is available:
A) at Wal-Mart.
B) on EBay.
C) at Bob Brinker.com.
D) at the public library.

Answer

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.)  

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October 26, 2012, Bob Brinker Talks About Stock Market and Economy on Red Eye Radio

October 26, 2012....Yesterday, Bob Brinker made another after-midnight guest appearance on Red Eye Radio hosted by Gary and Eric.  Gary asked Brinker very pointed questions about the economy and the stock market. I think you will find Brinker's answers interesting.

CONCERNED ABOUT STOCK MARKET? 

Gary: "We've seen a couple of bad days in the stock market here recently.....How concerned should we be with this earning season the way it's going?"

Brinker: "I think we're going to have to keep a close eye on it. The reality is that the world is growing very slowly at this point. China is slowing down. Europe of course is in the doldrums as a result of their fiscal difficulties. Certainly we have continued slow growth in the U.S.  You will a Gross Domestic Product release on Friday morning and it's going to be more slow growth. We're talking about an economy here in the U.S. that is growing a little bit shy of 2% in real terms in an annual basis. And this is the reason that you have not seen a measurable drop in unemployment.  We're just not adding jobs fast enough to get that unemployment rate where the Fed would like to get it, which is frankly below 6%, which is a long way off."

WHAT ABOUT THE ECONOMY? 

Gary: "Is the true number that we should always be looking at the GDP growth?"

Brinker: "I would say in terms of the track that the economy is on that the key number is real GDP growth adjusted for inflation. You'll see that number Friday morning. We're anticipating a number just shy of 2% which is really the track we're on. In the first half we grew at an annual rate of 1.65%.....That's the reality. The U.S. economy is becoming more of a mature economy. And we're functioning in a highly competitive world. We're competing out there on the export account with China, with Europe with Latin America in the world markets. Globalized competition is here to stay."

FEDERAL RESERVE'S MULTIPLE STIMULUS PACKAGES

Gary: "If you look at these earnings reports, it's kinda hard to see how the Dow is maintaining above 13,000 here. So how much of this is the Fed's involvement? How much is QE3?"

Brinker:  "There have been about seven programs going back to 2008. Most of them by the Fed -- a couple of them by the federal authorities. But if go back to it, the first would have been the Fed taking rates to zero in 2008. Then you had the Fed announcing QE1, followed by the big stimulus package --$787 billion -- and some of that was good stuff like the tax cuts that were thrown into it. Then you had QE2 coming in there, and then you had the second stimulus. That's the one that expires at year end, Gary and Eric. That's the one that gave you the 2% payroll tax deduction. Then you had the Operation Twist and now you have the QE3.....Will all of this stuff thrown against the wall -- traditional stimulus such as monetary and fiscal -- look at the rate of growth in GDP in 2012. We're running just a little bit south of 2% annual, which is too slow to get the unemployment rate down."

THE DEFICIT AND NATIONAL DEBT NATIONAL DISGRACE

Gary: "One of the things that I have always said is that since government can't create wealth, the only thing that they can do is make the problem worse, but stretch it out over a longer period of time. Am I accurate when I say that?" 

Brinker: "We are doing job at that. I'll tell you why. We have a fiscal problem that we as a nation are ignoring......by electing people that are dysfunctional and that certainly includes congress. Here are the numbers. Read 'em and weep. Right now our revenues are 17.8% of our GDP. Our expenditures are 23.3%. That's a 5 1/2% red ink annual gap. That's where we're getting these trillion dollar deficits. That where we've piled up the national debt to $16.2 trillion. Frankly guys, it's a national disgrace." 

MARK FABER PREDICTS 20% MARKET CORRECTION - IS CASH KING?

Gary: "Marc Faber made some comments recently -- some strong advice. He said we need 50% cuts with the federal government which of course is not going to happen. But he also we are going to see a 20% correction in the coming months on the market. He is now said he has a lot of cash. Earlier this year, he actually was getting in and he said the market is going to see a bit of an uptick here. Now he is saying just the opposite -- it's time to hold on to more cash. Is cash king right now? What should we be doing in our 401K and our investment portfolios?" 

Brinker: "Cash has certainly been trash in 2012. We know that. We know what the yields on cash is about close to zero as you can get. Whereas, the Standard and Poors 500 Index this year-to-date has chalked up a double-digit return. So anybody sitting in cash this year is probably in tears." 

DOES BRINKER EXPECT MARKET CORRECTION? 

Gary: "Should we expect a correction in the market over the next 15 to 18 months, you think?"

Brinker: "I think that, you know, here's the thing. We make projections in real time.  (Gary: "Um") We are subject to change our view at any time. (Gary: "Um") As we speak here, we've been fully invested in 2012. We've enjoyed the fruits of this market. But as I said at the outset,  right now, we are in what I would characterize a highly vigilant state of mind with reference to going forward."

Gary and Brinker then discussed the price of energy, the Keystone Pipeline, Bakken, fracking and natural gas.  

WHAT DOES BRINKER PREDICT FOR 2013?

Gary's final question: "Alright Bob, what do you see for 2013 with the end payroll tax cut that we've had, with the fiscal cliff. I think there's a great possibility of that happening. I don't know if anything will get done in the lame duck session or President Obama wins, what do you see next year for growth?"

Brinker: "We are using 1 1/2 to 2 1/2% for real GDP, total goods and services for 2013. That's the same number we're using this year. We've been right on because the economy has been in a malaise, growing at such a slow rate. I think that's likely to continue at this point, but we are constantly monitoring this because giving the global slowdown environment we're in, we have to keep a close eye on this. 

Gary:  "Bob Brinker.com. You can get the Bob Brinker Marketimer investment newsletter and Moneytalk radio information there.....Thank you Bob, appreciate it. 

Honey EC: I was very impressed at  Brinker's ability to not answer stock market questions and still make Gary think he had. LOL!  Gary made two clear attempts to get him to voice his view of the stock market going forward.  Brinker used each one as an opportunity to snag some subscribers with his "real time" and "keeping an eye on it" schtick. 

Listen to the interview here: Red Eye Radio

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October 21, 2012, Bob Brinker's Moneytalk: Neale Godfrey Fill-in

October 21, 2012....Bob Brinker did not host Moneytalk today. Neale Godfrey was fill-in hostess.

Even though I listened to the program today, there was very little in it that was worth my time to cover or your time to read.  And frankly, much of her advice was extremely questionable.  For example: Neale recommended downsizing your home "early" and putting the money into IRAs or 401Ks.

She made several assumptions, including that as people retire, they automatically want to live in small homes. She also assumed that it's a given that stock market prices will rise faster than homes in the future.  This is certainly not guaranteed.

IN EDIT MONDAY AM: Readers, Bluce and TP,  have written that IRA contributions must come from earned income. It cannot come from home-sale proceeds.

Neale made some comments about the 1929 stock market crash: She said: "Even in the crash of 1929, and that obviously ushered in the Great Depression, if you were an investor and you had bought the equivalent of the S&P 500, at the end of 1931....you would have seen an annual gain where the market was decimated, of 3% for the next five years."

In my opinion, that isn't possible.  The market continued to drop after  October 1929 until July 1932, when it finally bottomed.  It didn't get back to even until 1954.

(About History) Over the next two years, the stock market continued to drop. It reached its low point on July 8, 1932 when the Dow Jones Industrial Average closed at 41.22. 

(Time.com) While World War II helped pull the country out of a Depression by the early 1940s, the stock market wouldn't recover to its pre-crash numbers until 1954.

Here's a LINK to a chart that shows the Dow levels from 1920 to 1940. You can clearly see that five years after the 1929 crash, it had only regained a small portion of its losses. The only way you could have had gains with Neale's brand of buying-and-holding is if you bought at the very bottom. Obviously, the reason Neale made that assertion was to back up her buy-and-hold philosophy.

This will be of interest to Bob Brinker fans because if everyone agreed with Neale, Brinker couldn't sell his market-timing business plan:

Neale said: "As far as I'm concerned that our stock market kinda remains on solid footing. I am not predicting doom and gloom. I don't predict because if we were all that smart. I really want to see us get back to basics. I don't want to people to consider the market the place for gambling or day-trading. I believe in the philosophy of buying and holding....."

BOB BRINKER FIX: Brinker is still fully invested but has taken a slightly more conservative stance in all of his model portfolios and also his fixed-income portfolio.  As I wrote about HERE, he has removed all Nasdaq holdings.

Another move he made which might be considered more conservative, was to sell all of the income portfolio holdings in Vanguard High Yield Fund (VWEHX), and move the cash into Metro West Total Return Bond Fund (MWTRX).

I think the reason that he made that move is because VWEHX is now closed to new investors -- and MWTRX was the fund that he told new subscribers to use in its place. Therefore, if he decides to publicize the returns of his income fund at the end of the year, it would be a problem to have some subscribers in one fund and some in the other one.

Regardless of his reasoning, it seems like a slightly questionable move. VWEHX has always outperformed MWTRX by several percentage points.

Jeffchristie's Final Exam Question of the Day: 

Neale Godfrey is the founder of which one of the following types of banks:
A) Blood bank.
B) Sperm bank.
C) Children's bank.
D) Soil bank.

Answer

The guest-speaker today was Michael Sandel: What Money Can't Buy: The Moral Limits of Markets

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.)  

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October 19, 2012, Bob Brinker's Advice on Black Monday in 1987 as the Stock Market Crashed

October 19, 2012...Bob Brinker's Moneytalk has been on the air for over 26 years. Brinker, like all of us, was 25 years younger when Black Monday hit the stock market October 19, 1987.

That day, investors panicked as the Dow lost almost a quarter of its value of the day. It was its worst one-day percentage drop ever.  If one had nerves of steel and cash on hand, the next day was a perfect time to buy. (Brinker's followers had no cash on hand.) From Marketwatch:

In fact, the day after Black Monday was a terrific time to buy stocks. A $10,000 stake in the 30 Dow stocks on Oct. 20, 1987 would be worth more than $137,000 now, according to investment researcher Morningstar Inc. That’s an 11% annualized return, including dividends, and even factoring in shareholders’ “lost decade” between 2000 and 2010.

Mark Hulbert says that another crash like 1987 is "inevitable. That would be disastrous because the Dow would have to drop over 3000 points in one day. Hulbert says "don't kid yourself" into thinking that circuit breakers will prevent it.

Hulbert said: Repeat after me: Another stock market crash as big as 1987’s is going to happen. Period.

On that frightening day in October 1987, I had been a fan of Bob Brinker's Moneytalk for about  a year -- wouldn't miss the program. I also subscribed to Marketimer. 

I believed that whatever Brinker said about the market could be totally trusted. I believed that his bullish stance both in Marketimer and on Moneytalk meant that my stock market investments were in good hands -- that he would "get me out of the market" before any big drops. 

Here is what happened: He was completely blindsided like every one else (except Elaine Garzarelli). He was fully invested throughout the crash.

Not only that, but he made a guest appearance on KGO radio that day --  during one of the business reports that I was anxiously listening to. He very confidently and calmly advised "don't panic" and "don't sell stock."  Of course, the market just kept crashing. 

Unfortunately, Brinker did sell all stock just three months after the crash -- in January 1988. That was a very bad move because it caused his portfolios to miss huge gains over the next three years before he finally got back to fully invested in 1990. See Brinker's complete market-timing history here.

The only other time in Brinker's timing history that he actually raised cash was in year-2000. He raised 65% during the 2000-2003 bear market. 

Since then, he has remained fully invested, including throughout the 2008-2009 megabear market. 

Will there be another Black Monday crash, like Hulbert says is going to happen? Will there be another 57% megabear market?  Bob Brinker's "timing model" didn't see either coming. Will he see the next one? 

October 1929. THE stock market crash. Highly leveraged investors saw fortunes melt in minutes as the roaring 20s gave way to the Great Depression. The crash of October 1987 conjured fears of another Great Depression, but instead stocks recovered. Marketwatch

Right now, Brinker is bullish and his latest advice is to "dollar-cost-average" on weakness....

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October 14, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

October 14, 2012....Bob Brinker hosted Moneytalk today......(comments welcome)

STOCK MARKET: Brinker did not discuss the stock market today, and no callers got on the air and mentioned it.

Honey EC:  Last Friday, the S&P 500 Index was at 1461. It closed this Friday at 1425. Not a major drop, but was it enough to cool Brinker's bullish-ardor jets for the week? Brinker is still bullish but is advising dollar-cost-averaging new money "on weakness." He explained this last week:

Caller Barbara said she wanted to be sure if she was interpreting Marketimer correctly when it says to "dollar-cost-average on weakness."

Brinker replied: "Let me explain that Barbara....You know how much the market has gone up. It's more than doubled in the last year....There is a tendency...to get more bullish on the market as prices go up....People get more excited after they have seen, in this case, literally skyrocket. So the reason that I make the observation that I'd rather see people dollar-cost-average on periods weakness is in order to underscore the importance of that notion of not waiting to chase rally, not getting caught up in the hype of rising prices....That is why we have been encouraging subscribers recently to take advantage of periods of weakness."

FISCAL CLIFF....Brinker's comments: The phrase "fiscal cliff" was coined by Obi Wan Ben Bernanke.  This may become a "really big" story, but right now it is being crowded out by the presidential debates -- where they don't discuss it because they don't know what to do about it. Most congress people are asking you to re-elect them even after they have failed to do their jobs.

TAX INCREASES COMING JANUARY 1ST....Brinker's comments: In 2001 and 2003, President George W. Bush proposed tax cuts that passed the congress that set the rates where they are right now. They will remain in place under current law until the first of the year, then they will expires. Marginal tax brackets will go up across the board for almost all taxpayers. The top bracket goes to 39.6%, -- and all down the line, brackets go up as these tax cuts expire.  Federal long-term capital gains tax increases from 15% to 20%. Qualified dividend rate will be taxed as ordinary income. The exemption for the Alternative Minimum Tax will expire. Estate taxes go to 55%, and the exemption goes down to $1 million. That adds up to a lot of money -- almost $300 billion. Brinker said: "We presume that something will be done by the first half of next year, at least some time in 2013."

SLOW-GROWTH ECONOMY CAN'T STAND TAX INCREASES....Brinker said: "This economy cannot afford to see taxes go up like this in January. This slow-growth economy that we have cannot withstand this kind of tax increase pressure. So something is going to have to be done.....After the election is over....this could become a really big story....."

LAME DUCK CONGRESS MAY NOT ACT THIS YEAR....Brinker continued: "And what about the possibility that the lame duck congress will just kick the can down the road and say we will let the next congress take care of this....We can't rule this out."

EMPLOYEE PAYROLL TAX HOLIDAY....Brinker comments:  The payroll tax holiday of 2% has been in place the past two years. the rate for employees has been 4.2 as opposed to 6.2....This is likely to be gone....It's $126 billion dollars -- $10 1/2 a month, front-end loaded because it applies to everyone in January. This is money that almost gets entirely spent. Okay, Bill Gates, Larry Ellison, Ross Perot are spending theirs, but this is in the almost 100% propensity to spend category. This tax break expires at the end of the year.

DYSFUNCTIONAL CONGRESS WANTS TO BE RE-ELECTED....Brinker said:  "My expectation is when the election is finished, you will hear more about this situation. It is an amazing thing that this congress after completely failing to govern on this fiscal issue, showing that they are dysfunctional on a level never before imagined. And now most of them are out there asking you to re-elect them."

MORTGAGES HAVE NOTHING TO DO WITH CAPITAL GAINS WHEN SELLING A HOUSE: Brinker replied to Joe from Albany: “I want Moneytalk listeners listen closely. The amount you owe on a mortgage has nothing to do with capital gains or capital losses.  (Brinker asked Joe the purchase price and how much he had spent on documented improvements on the property.) It sounds like you might have a long-term capital gain of a few thousand dollars.....So if you have a long-term capital gains of $3,000 and you sell this year, the maximum federal capital gains tax is 15%, which would be $450 federal, and small amount to the State of New York. So that's the way it works Joe. It's going to be a tiny amount, if anything at all....Now notice that when Joe and I talked about figuring the capital gain liability on the property, there was no discussion of the mortgage."

Honey EC: Brinker also didn't discuss the $250,000 individual, $500,000 per couple, exemption on PERSONAL RESIDENCES that has been law since 1997. Brinker often tells callers to seek the advice of a CPA, but failed to do that with Joe. I sure hope Joe reads this blog.  The exemption explained at  Fox Business:

When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes.....If you used pre-1997 rules for residential sales, don't worry. That doesn't disqualify you from claiming the exclusion on any residential sales now. The law change applies to all sales since it took effect.....there's no limit on the number of times you can use the home-sale exemption. In most cases, you can make tax-free profits of $250,000, or $500,000 depending on your filing status, every time you sell a home.

CALLER LEONARD FROM HOOSIERLAND.... Leonard and Brinker talked politics and how sometimes politicians change their minds after they get elected. Brinker asked Leonard about where he lived in Indiana then said: "At one time I lived in Jasper, Indiana....I love Hoosierland and I always will. I actually was a Hoosier and enjoyed every minute of it." 

VANGUARD'S NEW INDEX BENCHMARK...Caller Julius mentioned that Vanguard is changing its benchmark on some of its index funds and wondered if there would really be long-term savings. Brinker commented that this is not anything he is concerned about, and expects that over the long-term, there will be some very small savings.  He told Julius if he was concerned he could go to Fidelity or buy other index funds or ETFs like SPY.  You can read more at Vanguard's website.

Over a number of months, 22 Vanguard index funds will change the benchmarks used to measure their performance. Six international stock funds will transition to established FTSE benchmarks, while 16 U.S. stock funds will move to new benchmarks developed by the University of Chicago's Center for Research in Security Prices (CRSP). These changes apply to all the funds' share classes, including exchange-traded funds (ETFs).

SOCIAL SECURITY INCREASE IN BENEFITS....Brinker said: "We have some preliminary numbers that indicate the benefit increase should be between 1% and 2%. There ya go. We'll know the answer by Tuesday....By the way, there are 56 million people across the USA that are currently receiving Social Security benefits....There was a decent increase last year of 3.6, but no increase in 2010 or 2011." 

NO "FAIR SHARE OF TAXES"....Brinker said: "It's amazing to me when you look at the tax situation. The unfairness in the tax code. I always hear about this fair share rhetoric. When I look at the tax code, I don't see a whole lot of fairness there. I just don't. And when you look at all the special interest legislation that is in the tax code. I mean, it really is mind-boggling.....How much input did you or your family have in putting together the US tax code. I suspect little or no input. All I hear about is fairness, then I look at the figures. Forty-six percent  (46%) of US households paid zero in federal income tax in 2011. This is according to the tax policy center....The top 20% of US households, by income, paid over 2/3 of all of the taxes in 2009. This is an analysis done by the CBO....Isn't that amazing? To get into the top 20% in 2009, you had to make more that $131,700....You don't hear about this much."

IS THE TAX CODE COMPLICATED?....Brinker said: "Right now, the tax code has 72,536 pages. Can you picture a document like this?....Back in 1939, the tax code had 504 pages, so it's up 150 times in length. Even since 1984, it's tripled in size from 24,000 to over 72,000 pages...." 

Honey EC: This was not a very interesting program, in my opinion.  There was just too much political talk and very little added value for investors. Brinker bragged a couple of times about his financial show being the longest running on radio -- over 26 years. 

I've listened to Moneytalk since 1986 and can tell you that over the years, he has used politics more and more as a time filler. Of course, he already fills 1/3 of the program with guests who have books to sell, so he only has two hours a week to fill.

Jeffchristie's Moneytalk Final Exam Question: 

Today Bob Brinker revealed that for a short period of time he was:
A) A redneck.
B) A Hoosier.
C) A wetback.
D) A Razorback.

Answer: Bob Brinker lived in Jasper Indiana.

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.)  

Brinker's guest-speaker was Joseph Hurley: The Best Way to Save for College: A Complete Guide to 529 Plans 2011-12

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October 12, 2012: Bob Brinker Closes Twelve-Year Trade

October 12, 2012....Exactly twelve years ago, Bob Brinker told subscribers (and recommended on Moneytalk) using a large portion of previously raised cash reserves to buy QQQ.  (At the time of this first trade in October 2000, QQQ was trading in the low-to-mid $80 range.)

He repeated these buy-QQQ trades two more times, once in January 2001, and again in March 2001.  Commentary that I wrote several years ago:

The March 2001 Marketimer begins with Bob Brinker admitting that "we were wrong in our earlier expectations that a countertrend rally would develop late last year...." He then admitted that his call for a new bear-market rally beginning on January 3, "was unable to sustain upward progress in February."  In spite of these admissions of being "wrong," in the same issue of Marketimer, Bob Brinker again made the following recommendation to subscribers: "In our view, the probabilities favor a three to six month bear market rally phase beginning shortly. Such a rally has the potential to carry the Nasdaq composite Index above the 3000 level by spring or summer as measured from the closing lows." (March 1, 2001, QQQQ closed at $39.15)

Brinker gave followup guidance to hold in each of the next  Marketimers until May 2001 when he actually predicted a rally in the Nasdaq -- even if the stock market,  which was crashing, didn't rally:

• Month 7) April 6, 2001, Marketimer, Page 2; Paragraph 5: Bob Brinker said, "Recent weakness in the Nasdaq 100 Index (QQQ) shares has far exceeded our expectations. However, we believe subscribers holding a position in these shares will eventually be rewarded, although this holding will require both time and patience. With or without a buy signal from our long-term model, we expect the Nasdaq Composite and Nasdaq 100 Index to stage a significant recovery over the next several months." (April 1, 2001, QQQQ closed at $46.15)

• Month 8) May 7, 2001, Marketimer: Bob Brinker said, "As we stated last month, 'with or without a buy signal from our long-term model, we expect the Nasdaq Composite and Nasdaq 100 Index to stage a significant recovery over the next several months.'" (May 1, 2001, QQQQ closed at $44.73)

• Month 9) June 2001, Marketimer,  Bob Brinker said: "....we recommend holding these shares for future recovery within our earlier percentage guidelines." (June 1, 2001, QQQQ closed at $45.70)

Brinker repeated the advice to "hold for recovery" each month for the next two years.  However, when September 2001 arrived, Brinker recommended exchanging QQQ for XLK as a way  to take tax losses and continue to hold the trades. That was another bad move because right now, XLK has greatly under-performed QQQ.

March 2003 was the final time that Brinker mentioned the trade. That was just  four days before his "famous" buy-signal:

March 2003, Marketimer, Bob Brinker said: "For subscribers holding Nasdaq 100 (QQQ) shares, we recommend holding for a significant recovery in the shares in the next cyclical bull market." (October 15, 2000, a few days after Brinker's "Act Immediately" Bulletin, QQQ closed at $81.70; March 7, 2003--after 30 months of "guidance" to "hold", QQQ closed at $24.54)

The next month, April 2003, Brinker effectively covered up the trade forever when he added RYOCX  (a proxy for QQQ)  to  model portfolios I and II. Of course, this was after the QQQs had declined over 70%.

So for twelve years there was no mention of the trades in Marketimer or on Moneytalk -- until October 2012, when he COMPLETELY removed all trace of QQQ and RYOCX from Marketimer.

Here is the cryptic and cold way that Brinker closed these twelve year trades that cost so many followers so much money.

October 3, 2012, Marketimer, Bob Brinker said: "In addition to our recommendation to eliminate Rydex Nasdaq-100 Fund from model portfolios I and II, we also recommend the sale of any QQQ shares that are held by subscribers...." (October 9, 2000, QQQ $82.62 -- October 9, 2012, QQQ $67.26)

Go here to read the special bulletin that Brinker sent out to make the original QQQ-trade and brief excerpts of thirty months of follow-up guidance -- before the big disguise.

I did not believe that Brinker would ever close these trades. "We were wrong" because I failed to consider that he might actually get complaints from old-time subscribers. Easy way to get an answer for any questions -- although, the timing seems  really ironic, doesn't it?

This is what QQQ has done over the past twelve years:

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October 7, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

October 7, 2012....Bob Brinker hosted Moneytalk today........(comments welcome)

MARKETIMER PORTFOLIO CHANGES:  Caller Russell from Charlotte said: "In your latest Marketimer, you made some recommendations to sell some Vanguard and buy some DoubleLine. And my question is, if the Vanguard has increased so that it exceeds the 20% recommended weighting, would you put that entire amount in DoubleLine or would you use some of that excess to re-balance the portfolio?" 

Brinker replied: "I would have no problem with you using an opportunity like that to do some re-balancing. After all, you're liquidating the position anyway in concert with the recommendation. So of course, you could take the stipulated percentage and put it in the recommended fund. But if you have moneys left over as you indicate, you certainly could feel free to apportion those across the portfolio. I wouldn't have any problem like that. Again, I would  follow that percentage column when you are doing that kind of an exercise. Good question."

Honey EC: I'm  glad that Brinker let Russell on the air to ask about the October changes to the Marketimer "income portfolio." Now I can talk about it and speculate why he made the changes.  

Firstly, Brinker misled the audience by letting Russell's statement about DoubleLine Total Return Bond Fund (DLTNX) stand, so here are the facts:  He sold all of the 25% holdings in Vanguard High-Yield Fund and put that money into the fund that he recommended as a substitute when they closed the High-Yield Fund -- that is Metro West Total Return Bond Fund (MWTRX). Only 5% went into DoubleLine and that came out of Vanguard Wellesley Income Fund (VWINX).  That brings DoubleLine up to a total of 20%.

Be aware that even though Brinker makes the statement that the income portfolio is now 100% in fixed income securities, it still holds a 10% weighting in Vanguard Wellesley  which if about 37% in equities. 

Will I sell my Vanguard High-yield Fund? Not based on this latest Brinker move. I think he did it because of the confusion that he would have had to deal with at year-end when (if) he reports his performance for the year.  Unless, he is expecting a big recession soon or a stock market crash, high-yield funds will do as well or better than any bond fund with treasuries in it. 

One more caution to readers.  If you  sell all of your Vanguard High-Yield Fund, you will not be able to buy back into it as long as it is closed. 

MARKETIMER DOLLAR-COST-AVERAGE ADVICE:  Caller Barbara said she wanted to be sure if she was interpreting Marketimer correctly when it says to "dollar-cost-average on weakness."

Brinker replied: "Let me explain that Barbara....You know how much the market has gone up. It's more than doubled in the last year....There is a tendency...to get more bullish on the market as prices go up....People get more excited after they have seen, in this case, literally skyrocket. So the reason that I make the observation that I'd rather see people dollar-cost-average on periods weakness is in order to underscore the importance of that notion of not waiting to chase rally, not getting caught up in the hype of rising prices....That is why we have been encouraging subscribers recently to take advantage of periods of weakness."

MARKETIMER BUY-SIGNALS....Brinker continued answering Barbara: "Now you know that our last couple of buy-signals were way lower. We had a buy-signal in the autumn of 2011 in the low-1100s....We are at 1460 in the S&P 500..... We said sure, fine. Year before that, it was at 1030 that we were willing to be a buyer....One of the things that I have always tried to shy away from is encouraging people to get more bullish about the market after they have seen a skyrocketing market, because the reality is that as prices go up, risks increase."

Honey EC: Brinker's Marketimer Timing Model© totally missed the bear market of 2008.  Just before the bottom started dropping out in January 2008, here is what Brinker was saying:  

October 3, 2007 Marketimer (S&P@ 1526.75)  “In August and September editions of Marketimer, we rated the stock market attractive for purchase on any weakness in the area of the S&P 500 Index mid-1400’s range. During August and September there were 18 buying opportunities, consisting of 15 market days on which the S&P 500 Index closed within the 1430 to 1470 range, and three market days on which the index closed slightly below that range. Although we do not believe further weakness into the mid 1400’s range must occur, we remain comfortable with rating the market attractive for purchase should any such additional weakness occur.”

GOLD IN IRA.....Brinker comments: I would never even consider putting gold in an IRA....It is a speculative play....For those that want to have a hedge in gold, the easiest and cheapest way is with GLD.

Honey EC: Brinker still maintains GLD in his list of Individual Stocks list, along with a few of the biggest  index ETFs, and Suncor. He has had Microsoft and Vodafone on that list for eons. He presently  rates them all hold.

HOW TO RE-BALANCE MARKETIMER MODEL PORTFOLIOS:  Caller Bonnie from Chicago  said that because of the run-up in stocks, her investments were heavily weighted in stocks. She wanted to know how to re-balance and when to do it. Brinker told her to simply sell portions of her holding so that the dollar value was in line with the percentages Brinker recommends.

Honey EC: Brinker does recommend certain percentages of each holding, but be aware that if you have been following model portfolio III -- the so-called balanced portfolio -- for the past three years or so, you have about 67% in equities now. This also happened in 2007. The portfolio had about the same weighting in equities as now, but the bear market took care of that in short order -- bringing it back down. 

WHEN TO REBALANCE OR TAKE CAPITAL GAINS.....Brinker comments: Usually it's better to take capital gains after the first of the year in order to shift tax liabilities into the next calendar year. However, we are facing a substantial capital gains tax increase on January 1st.  They are scheduled to go to 20% (high earners to 23.8%)  but  this year they are capped at 15%, so  it might be better to take them this year --  especially if you are going to make changes anyway.  

Honey EC: I'm surprised that Brinker outright advised  Bonnie to take capital gains. The past few weeks on Moneytalk, he has clearly stated that he fully expects congress to act on the fiscal cliff after the election. Just recently, he advised a caller to at least wait until closer to year end before taking capital gains. 

JOBS REPORT AND UNEMPLOYMENT...Brinker comments:  The underemployment number (U6) was unchanged at 14.7%...The official unemployment rate at 7.8%....new private sector jobs at 104,000 -- certainly nothing to get excited about. We haven't even come close to replacing all the jobs that were lost in the 2008 recession....Disregard the upward revisions of July and August because it did not involve private sector jobs....Lot of part time jobs picked up in the September report....That's why no improvement in under-employed rate....It was patently obvious that this was not in any way an excellent jobs report...We need at least 150,000 private sector jobs monthly in order to impact the unemployment numbers.....Last winter, we were adding over 200,000 monthly....So when  you boil it on down, "it was totally pedestrian." 

WILL MUNI-BONDS BE MADE TAXABLE?...Caller David from Ohio asked if there was a move "afoot" to make muni-bonds taxable. Brinker replied that he didn't see any indication right now that there is any push under way to make muni-bond interest taxable. It is one of the few things that the new health care tax has exempted, but it covers most everything else -- capital gains, dividends, rents, royalties  dividends, income from annuities.

TAXES, WHAT'S FAIR?.....Brinker comments: What is this "fair share" number that you hear so much about all the time? Is it fair that in France, high-earners will now pay 75%.  Is it fair that in California the top brackets will be paying in excess of  60% -- including Obama's new health care tax? Is it fair that 40% in this country pay zero income tax?

Honey EC: In California, when you consider the extreme cost of living and include property taxes, sales taxes and a myriad other taxes, the 50% of us who DO pay taxes are paying much more than 60% right now. And Moonbeam Brown has some more goodies for Sacramento lined up on the November ballot.  (Gas is selling for over $5 per gallon right now because we can't import from other states to help out with a refinery and pipeline problem.)   

Brinker's best quote of the day:  "All over the world governments want more of the private sector money." 

Jeffchristie's Moneytalk Final Exam Question:

Bob Brinker Jr. is also in the newsletter business.  He prepared himself for this in college where he majored in:
A) Animal Husbandry
B) Greek Philosophy
C) Computer Science
D) Rocket Science
Answer: Bob Brinker's Biography Part One

    Brinker's guest today was Jay Elliott: Leading Apple With Steve Jobs: Management Lessons From a Controversial Genius

KSFO preempted Moneytalk today for sports. KSFO 560: 1-4pm (KSFO archives Moneytalk Free on Demand for seven days after broadcast. You can download and listen on the go.)  

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