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.)
41 comments:
When Bob Brinker is off, does your quantity of filthy scum sucking freak notes increase or decrease?
How about the quality of the filth? :--)
I'm gonna take a wild guess here, and go out on the limb......but I'm gonna say that filth mouth was absent today, just like Bobbie the Brinker.
Is I right?
My goodness, a Prescient Pig. No filth at all yesterday or today.
It sure looks like whoever sends it it otherwise occupied -- possibly vacationing with Brinker?
Frankj:
2:10 pm and is she on only 3rd caller, Don from Washington? Real estate stories -- boring.
FrankJ.
Beyond boring.... I am having trouble staying awake. Yaawwwnnnn.....
I think when she gets a real live caller, she milks them for as much time as she can.
Hey Honey,
It wasn't so long ago (maybe a couple of months) Bob was so sure something would be done about the "financial cliff". He actually seemed sanguine (one of his words) about it. Now he's freaking out. Why the change? And he puts all the blame on Congress. No blame placed on our dear Prez? And he's still in love with Bernanke. I just don't know.
(sorry honey, the "financial cliff" comment was mine)
rasputin
Yep, you are absolutely right about Bob Brinker being positive that something would be done about the fiscal cliff.
The past couple of weeks, he's changed his tune. The best he hopes for is that after the election, something will be done.
As for Brinker putting blame on the prez, that almost never happens. He doesn't blame him for the economy or the debt. I've often wondered what that's about over the past four years.
Hi Ras! I knew that note was from a friend, but couldn't quite guess which one. Thanks for clarifying.
We definitely live in interesting times, huh?
ras
Someone needs to really tell Neale that according to her hero Obama, she did not write those books alone! How dare she take credit for herself. What about that teacher who taught her 3rd grade English?
It takes a village to raise a talk show host.
tfb
Uh, sounds like old Neale has the hots for the author of the 3rd hour!
Geez Neal, get a room!
tfb
Maybe the caller from Panama City can assist her with a student loan and she can get in the line of students wanting to take his class.
Sometimes a class is very popular because the topic matter is easy and it fills the need for an elective course in what might otherwise be a rigorous degree program.
-- Frankj
wow ,, old neale really kissing the backends of all the callers because she knows that she is lucky to be in bobs spot for a sunday,, boring show ,, and she always has to tell about herself and her success... boring,, get off the radio lady,,, the professor was somewhat boring but smart ,, hope it improves next week ,, come back bob you are losing your audience...
Interesting chart. A good book on the depression is "The Forgotten Man" which goes through the market too. The only stocks I own in NASDAQ is Google, Apple, and Facebook
Mark
Newark, CA
I use BB's marketimer to manage funds in my mother's retirement account, I have POA, and to manage my retirement accounts. I'm still working cause I like what I do most days and have a wife that likes me to work. I used to be a faithful listener every Sat and Sunday now I can hardly bring myself to listen. The show has become so boring. Bob rarely talks about financial stuff anymore and his guest are jokers. Here's my question. I am pretty savvy with finances but the older I get and the more money I have I am less interested in managing it. I just need to make sure I don't lose it or spend like the Donald. Question coming... If I drop the markettimerwhat other newsletter should I use? Other than this guy Kirk what sources do your readers use?
Thanks
Depending on your assets I would consider a Dimensional Funds adviser. This will be a fee only financial adviser. Carefully consider the costs. If the cost is prohibitive you might want to set up your own. Essentially you will be engaging in the only form of market timing that I know of that works to the implementers benefit, also known as re-balancing.
The reality is once you set up an asset allocation, if you set up automatic rebalance you can just forget your portfolio and get on with living your life.
For many people the investment game is just that a game or a past time, but other people chose to spend their time doing other things that bring value to their lives. In the end I have yet to see any tangible benefit over time to anything other than an asset allocation strategy with periodic rebalance using index funds with a value tilt (John Bogle would argue the later point).
If you wish to do it yourself I would recommend Larry Swedroe's books.
tfb
Hi Honey thanks for the update on Neale you gave a good summary on apparently a boring show. I used to live in a large house when I moved to florida I got a smaller house and taxes are much less than up north. The downside move worked for me anyways but for whatever reasons not everybody wants to make that move.I did notice Bob sounded more conservative perhaps he will change his tone after election. Very close election to tough to call. I am glad that earthquake did'nt bother you it sounds like you live near the fault line.. Thanks again John
For example: Neale recommended downsizing your home "early" and putting the money into IRAs or 401Ks.
I don't think you can even do that. Contributions to your IRA must come from earned income.
TP
To Bobs Victim: I've subscribed to "The No Load Fund Investor" since 1990. I don't follow it exactly, but it has served me well. It has all sorts of model portfolios, one to fit anyone I would think. It's around $130 per year.
To TP: You are quite right about IRAs (probably ALL tax-deferred retirement accounts?) being funded only with earned income. Also the annual contribution is limited, depending on your situation. So you can't sell your $300,000 house and put it all into your IRA as apparently Neale seems to think.
Frankj:
Neale was on the horn with Glen from Oregon for approx 14 minutes, from 1:35 to approx 1:49 when she took a break.
She advised "downsizing" the home, "think about retiring earlier," and making "catch-up" contributions to a 401K and/or IRA.
As others pointed out, you need earned income to contribute to either a traditional or a Roth IRA. Your contribution cannot be more than you earn. To my knowledge, you cannot retire from the employer where your 401K is, and continue to make contributions.
You can contribute $5000 per year to an IRA and the catch up provision is an extra 1,000. So if you retire AND downsize your house, you can make contributions from the house proceeds, sure, but you would need a job of some sort to produce the earned income needed to qualify for the contribution.
With the discretion one has over the timing and amount of withdrawals from retirement funds, (including SocSec), and the interplay of taxes, it makes for an interesting set of calculations -- some people might be able to do it on their own, others might need outside assistance.
@Bobsvictim - I subscribe to Morningstar StockInvestor which I have found to be very good over the years. They have several newsletters. This one had two portfolios called the Hare and the Tortoise. One portfolio deals with conservative stocks. The other more aggressive. They have done quit well. They also have ETF newsletters etc if you don't like individual stocks and others. I also subscribe to their service on stock analysis. Sure beats Bob to whom I subscribed many moons ago and then dropped after his UTEX and QQQ disaster. I only did a small portion with the QQQ because it didn't feel right to me.
Mark
Newark, CA
@TP - you only have to have earned income. If you have earned income, you can contribute from any source, but 401k come from salary. I suppose in that case it is suppose to free up money, but it's a ridiculous assertion anyway because 401ks and IRAs are capped, and if you have any sizeable equity it certainly will be more than you are allowed to contribute. Most people find they don't want to move anyway. That is where all their memories are, where their kids grew up, etc.
Mark
K, CA
Neale went way out of her way to say she didn't want to talk about politics. I wonder if someone told her that her political comments were turning off listeners. Maybe the federal election commission called and said if she kept doing what she was doing Moneytalk would have to end with "I am Barrack Obama and I approve this ad".
OK, non-market-timers. Watch this! Truck backed up and now loaded with DDMs! Yeah, I know market timing doesn't work, but I just keep on tryin'...and truckin'!
Good morning, Dan.
So you expect this market to turn up in the short term?
Oh, you betcha, Ms Bee! I wouldn't have a truckload of DDMs if I didn't!
- Dow is near support level of 13,000
- It's also at uptrending 200-day MA
- And it's now in oversold territory
What could possibly go wrong??? :)
What Dan is doing is NOT market timing. It is a short term trade designed for a relatively quick pop...not an allocation of his total portfolio.
Dan is waiting for Sy Harding to issue his all clear high sign to get back into the market.
THAT is market timing and a bust this year. Buy and hold out performed hands down.
TP
OK, non-market-timers. Watch this! Truck backed up and now loaded with DDMs! Yeah, I know market timing doesn't work, but I just keep on tryin'...and truckin'!
With what percentage of your total financial assets do you do this with?
tfb
Dan G:
Any reason you use DDM for trades instead of SSO (2X S&P 500)?
tfb, I trade with about 10 percent of my total assets. The other 90 is now in cash, but is normally in a diversified mutual fund. I'll put the cash back into the fund when the Dow's MACD turns positive, as per Sy Harding's "seasons in the sun".
As for DDMs vs SSOs, no particular reason. I try to use whatever has the best chart pattern and is closer to support. Sometimes I just flip a coin!
what is the reason brinker had us sell off the rydex fund?? it made money// does anyone know ?? the meridian fund was a dog,, never went anywhere,,, brinker never tells you the reason he is changing funds,, honey bee help ....
BTW, the "rally" didn't stick today and we finished down 243. So my $200+ profit melted into only $61. Oh well, maybe tomorrow!
Thanks for the answer Dan - much appreciated.
So does this mean you are following Sy Harding for you timing on the major portion of your portfolio and then doing your own thing with your 10%, I guess trading portfolio?
Just trying to figure out what folks are doing, no other agenda here.
tfb
I think two of the best financial radio shows on are Gary Kaultbaum and Mo Ansari. They are on KFNN.com. Gary at 6pm EST. and Mo at 8pm EST. They are the best that I have found. They also have other financial shows as well.
Mike
"So does this mean you are following Sy Harding for you timing on the major portion of your portfolio"
Well, I did that last May, putting my fund money into cash on Sy's signal. But I'd have been better off just leaving it where it was. So far that Sy sell signal cost me over $10K! Now that's a mighty big YUK! No, I don't blame him. He didn't hold a gun to my head. I done did it to myself!
But an old saw is "if you buy on Smith's tip, you should also sell on Smith's tip". So when Sy's seasonal signal goes bullish, so will I.
But from now on I'll do my own timing! Mainly watching Monthly MACD of the averages, along with a couple of other longer term indicators, such as 200 day moving averages.
Dan,
Thank you.
Your fluffy friend,
tfb
Any time, fluffy friend! Always enjoy talking to you.
- Dan
Brinker Blog. Submission by A. U. Ric
Dan G., tell me it ain't so. I thought you were a market timer in your own right. Now I see it differently. Your comment: " I went to cash on Sy's signal", tells me that you are not sure of your own strategy.
I'm guessing that you made the move to cash around 1400 S&P. You were probably grinin' like an ole hound dog with a squirrel, as you watched the index shed 100 points. But common man, you're still in cash?
Your market timing strategy going forward? What is it? Hope the market returns to 1300, buy back in? Wait for the market to reach 1500, realize you missed a move?
Dan G., you would have done better to follow Bob's advise, " stay fully invested and DCA new money during pull backs on weakness.
A. U. Ric
stay fully invested and DCA new money during pull backs on weakness.
I'll point out this is sage advice as long as your economy has a inflationary bias. Hence Bernanke's horror at the thought of deflation.
tfb
Brinker is trolling for clients on the Redyeye Radio show. The hosts have swallowed Brinker's B.S. hook line and sinker and are promoting him as credible.
tfb
DanG wrote:
"Dan G., tell me it ain't so. I thought you were a market timer in your own right. Now I see it differently. Your comment: " I went to cash on Sy's signal", tells me that you are not sure of your own strategy."
Duly noted, A.U. Ric. And totally ignored!
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