December 30, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

December 30, 2012....Bob Brinker hosted Moneytalk today.......(comments welcome)

STOCK MARKET... The last time that Brinker made any comments about current stock market activity was in September. But....

At various times in the program today, Brinker made these comments in answer to questions: "2012 has been a great year and we are very thankful to the investment gods for the excellent returns this year.....The stock market is very, very sensitive to what is going on in the sentiment ring. We've seen that from the market in terms of the fiscal cliff. Every utterance coming out has resulted in a swing one way or the other in the stock market....And also the stock market is fully aware at this point that we are dealing with a dysfunctional government."

From Marketwatch: The Dow Jones Industrial Average DJIA -1.21% fell 158.20 points, or 1.2%, to 12,938.11, leaving it off 1.9% from the week-ago close. The S&P 500 index SPX -1.10% declined 15.67 points, or 1.1%, to 1,402.43, also down 1.9% for the week. The Nasdaq Composite COMP -0.86% shed 25.59 points, or 0.9%, to 2,960.31, with the index tallying a 2% weekly decline. 

(From September 23, 2012 Moneytalk) STOCK MARKET SELL-OFF AHEAD? Curt in San Rafael said: "If President Obama gets re-elected in November, and the stock significantly increasing over the years, do you see a sell-off in the month of December?" Brinker replied: "Well, we are going to have to wait until we get further down the line to answer that question. I certainly don't have forecast changes that I would make months in advance. In other words, I operate in real time so that whenever things change, they change. Doesn't matter who the president is, I can tell you that. The biggest mistake that I have seen investors make is to allow politics to interfere with their investment decisions."

Honey EC: Brinker's Marketimer model portfolios are still fully invested. He is recommending "buy on weakness" for new stock market money. My guess is that if this fiscal cliff thing is not settled and the market tanks, Brinker will call it an "exogenous event" that his Timing Model© had no way to detect. Never mind that he has been talking about it for months now. Of course, he is on record saying he thought it would be resolved "after the election" -- or at least before the end of the year.  

FDIC GO BACK TO $100K? Caller Jamie from Santa Clara asked Brinker if he thought the FDIC insurance would revert back to the former $100,000 or stay at the current $250,000. Brinker replied that he thought it would stay at $250,000. 

FISCAL CLIFF....This was the main topic of the day for Brinker and most callers.  Brinker spent a great deal of time reporting the latest news that is on all the major TV and radio channels.

ALTERNATIVE MINIMUM TAX....Without a patch/fix "it will pick up about 26 to 28 million addition taxpayers in 2013."

MAJOR CUTS IN MEDICARE PAYMENT TO DOCTORS...."Scheduled to drop 26 1/2% in January which means some doctors will no longer take Medicare patients. That's the way it works."

MILK CLIFF: Brinker said: "This has to do with a forecast of a spike in dairy prices due to the absence of a farm bill. Congress has failed to renew farm programs, so there is an underlying 1949 law that they would go back to -- can you believe we run the country this way?....That law forces the federal government to buy up American milk at inflated prices. And the prices are expected to double on a quart of milk because....you are going to have this tremendous government demand by law and it is going to dry up the supply of milk....and create a scarcity."

UNEMPLOYMENT BENEFITS ENDING...."About 2,100,000 unemployment insurance beneficiaries will lose their benefits starting on Tuesday unless that's resolved."

AUTOMATIC SEQUESTRATION CUTS....Includes: "Big hit to the military budget. Defense would take a 12% hit next year."

Honey EC: November 11th, Brinker went on the record as saying that he thought Washington would make a deal and these cuts would not take place. Brinker said:  "They have these across the board cuts in defense spending, in discretionary spending...that are scheduled to go into affect next year. My expectation is that we will see some negotiation, horse trading....on these cuts and some kind of deal handed out."

CHAINED CONSUMER PRICE INDEX....This was called for by Mitch McConnell. Brinker said:  "The chained Consumer Price Index reduces the payments for inflation by about 1/2 of 1%. ...It may not sound like a lot, but when you apply it to entitlements, it is a tremendous amount of money, billions and billions over time."

PAYROLL TAX CUT ENDS.....Brinker said: "And there's one more item that we should note which appears to be a slam dunk at this hour.  And that is, everybody in the country is going to take a 2% pay cut on Tuesday because the tax holiday for the employee portion of the payroll tax si going to expire Monday night. And at this hour, there is no effort to extend that  that is surfacing."

IN EDIT, Honey EC: This morning, I heard that this tax break that targets wage-earners only, will end regardless of what happens with the fiscal cliff. 

LARGEST TAX INCREASE OF ALL TIME.....Brinker said: "So here we are less than 32 hours from the expiration of the current law. We don't know what the new tax law will be, but if nothing is done, then we do know what the new tax law will be until they change it -- which they will in January. The new tax law will be higher brackets across the board. A roughly 500 billion tax increase. The biggest tax increase of all time."

Honey EC: Right now, it looks like Brinker misjudged this whole fiscal cliff fiasco. Here is what Brinker said on  November 11th: "Let me tell you what I don't think is going to happen. I don't think you're going to see this 300 billion dollar income tax increase across all brackets....This is the biggest single piece of the fiscal cliff. I don't see it happening, but if it does happen, I think they'll roll it back and make it retroactive."

TREASURY DEFAULT WOULD BE TREASON....Brinker said: "I don't think anybody believes that the Treasury would default on its obligation.....If you are a politician and you take action to default on the Treasury sovereign debt, then basically, you are guilty of an act of treason. So it's very dangerous territory to go into.....What would happen if you had a Treasury default. You would have a depression. And it would probably be worse than the depression in the 1930's, so that would result in chaos....If you don't believe the Treasury actually will default, it's unlikely that you would make a (bond) transaction based on that."

UNITED STATES IS FISCAL LAUGHINGSTOCK OF THE WORLD....Brinker did a lot of ranting about what is going on in Washington today. Brinker said: "We are the fiscal laughingstock of the world right now."

Jeffchristie's Final Exam Question:

Bob Brinker told a caller that president Obama was:

A) A flying squirrel

B) A jackass

C) A lame duck

D) A blood sucking leach

Answer:

Brinker's guest was Carol Loomis. She has been a Warren Buffett fan club since 1966: Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012: A Fortune Magazine Book

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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December 23, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

December 23, 2012....Bob Brinker hosted Moneytalk today.....(comments welcome)

STOCK MARKET: It's been months now since Brinker has talked about the stock market. Of course, he is still fully invested and is still forecasting an S&P 500 Index target range of "upper 1400s to lower 1500's."

YOU CAN STILL SELL STOCK THIS YEAR TO PAY LOWER CAPITAL GAINS RATE....Brinker said: "If you have a long-term capital gain, and you're in the top bracket....up until the 31st inclusive, you are able to take that capital gain at the current federal 15% maximum rate.....Under current law, that rate is going up in January. And the top bracket, including the new health care tax, it will be 23.8 federal. That is a 56% increase in the long-term capital gains federal rate.....why pay it?....There are no wash sale rules on capital gains....You can buy it back the next second."

MARKETIMER INCOME PORTFOLIO NOT THE SAME AS FDIC CERTIFICATES OF DEPOSIT: Caller Larry from Arizona asked about moving money out of CD's into Brinker's fixed-income portfolio.

Brinker reminded Larry that they are very different investments because CD's have FDIC insurance guaranteed to get principal back. Then he said: "Our page seven income portfolio has had an absolutely great year. With only a few days to go, our total return is over 8% year to date. That is outstanding and we're very proud of it, but it very different from CDs....You're right, until something changes in the economy, it's very unlikely that you are going to see a run up in rates."

Honey EC: "Danger, Will Robinson!" Here's a warning to Larry and everyone: Brinker's income portfolio "on page seven" may have done well like most bond funds this past year, but it has been changed drastically over the past three months. Brinker sold all Vanguard High-Yield Fund, Vanguard Short-Term Investment Grade and Vanguard Wellesley Income Fund holdings in that portfolio. I believe that those three funds (that had made up 50% of that portfolio) were much more conservative than the new funds that he has added. (DoubleLine Total Return Fund; Metro West; Dodge and Cox Income Fund (DODIX). 

INTEREST RATES ARE WAY DOWN BUT WON'T STAY THERE FOREVER....Brinker said: "A lot of rates are down. Things like the prime rate is down....That includes the rates that are paid by the Treasury on the sovereign debt. Those are way down....They are so low it's kinda ridiculous.....The good side is that people can borrow money, not pay a lot of interest, buy a car, get a mortgage. But there's a dark side to this.....Who wants to issue a 15 year mortgage at 2.66 -- that's the national average. Here's the problem and I think the big-time spenders in Washington have taken advantage of this. The fact that the Treasury is able to raise this money with these trillion dollar annual deficits, and to finance the sixteen plus trillion dollar national debt that we've accumulated at very low rates. And they say this isn't so bad, look at these low rates we're getting. Here's the flaw that these fools that believe in that don't get. There's no guarantee that rates will stay here forever....

They don't want to hear about fiscal responsibility, moving to a balanced budget.....If rates ever normalize, this national debt is going to cost us a lot. And it's going to hurt our growth, and it's going to hurt our country.....There is no way of knowing what this debt will cost us over the long-term....I'd be surprised if two-year Treasury Notes can be marketed forever at one quarter of one percent a year...That's dangerous thinking. These people that are addicted to the big-time spending habits are going to have to get real, and until they do, it's a good idea to call attention to the importance of moving to a balanced budget."

WILL MUNI-BONDS BE TAXED IN 2013? Brinker said: "We don't know what any of the tax policies will actually be, but I would  speculate that they will not pass a law to make municipal bonds taxable in 2013. That's just an opinion...I own municipal bonds so I care about this also."

REQUIRED MINIMUM  (IRA) DISTRIBUTIONS....Be sure make required withdrawals before the end of the year. If you miss the deadline, the penalty is 50% of the amount you needed to take out.

WHEN SHOULD YOU TAKE RMDs....You can take them anytime, lump sum or monthly.

BALANCE OUT TAX GAINS AND LOSSES....It's possible to take up to $3000 deduction against income. If you have more than that, you can carry it forward.

GIFTING MONEY TAX FREE....This year you can give up to $13,000 to an unlimited number of individuals. They don't have to be relatives and pay no gift tax. That will go to $14,000 next year.

POLITICS/FISCAL CLIFF/TAXES (Brinker's opinions quoted or synopsized): "Who let the dogs out? It's definitely X-rated governance or lack thereof." ......A couple of things the president really wants to get done by the end of the year -- holding the tax rates where they are for 98% of taxpayers....and an extension of unemployment benefits for the 2 million that will lose them....Obama is also trying to "avoid a 2% pay cut for everybody in the country" on New Year's Day.....Congress is a ship of masquerading fools....The tax increase turned down by the House this week would have protected 99.8% of taxpayers. X-rated government.

Honey EC: The fiscal cliff, politics and taxes were the main topic of the day. Most of it was repetition from earlier shows. 

OPPOSING BRINKER'S POLITICAL VIEWS....Caller Bob from Indiana said: "With all due respect, I understand you can't be partisan....but I can be as a listener. When one side in congress believes that wealth comes from borrowing money, taking from producers and printing money, and the other side says, we have to stop the bleeding, we have to stop the spending, I'm grateful.  Because if one side backed down, the other side would willy-nilly take money, borrow money and spend money, and take from productive people, destroy our economy even worse than it's already been destroyed. I'm happy for the fight  and I'm happy that there's an opposition to that side. If I walk up on two people and they're fighting, I don't automatically assume they are both wrong."

Brinker replied: "I'm glad you had a chance to step on that soapbox and tell America what you think. As you see, I gave you an opportunity to do so....I don't think it's that much one-sided. I can be as partisan as I wish to be. On this issue, I'd much rather be reasonable."

Honey EC:  Later on, Brinker slammed Bob by calling him an "absolutist," while denying that he was criticizing him.  Well, I'm not being critical either,  Brinker, but why do you completely ignore the fact that the president and fellow democrats have refused to make any meaningful spending cuts in exchange for John Boehner's offer to allow tax increases for the top 2%?

DEBT CEILING....Brinker said: "We are getting close. The Treasury Secretary is going to alert congress that he has run out of borrowing capacity, because borrowing capacity is roughly $16.4 trillion......The rating agencies are watching all of this stuff like a hawk."

BRINKER'S FAVORITE CHARITY = UNICEF (United Nations Children's Fund): Brinker has a link on his website for making donations here.  Several times today, Brinker praised this charity and said he was proud to contribute to it.  However, there was a caller who claimed that the CEO of UNICEF was paid  a million dollars a year. Later Brinker said that was not true, that he only made a half million dollars a year.

 Honey EC: That's the first time I've ever seen a link to a charity on Brinker's website. I did a quick search and it looks like the CEO of Unicef does make about a half million a year. Bear in mind that the leader of the Salvation Army makes $13,000 a year.  AND they are not part of the United Nations....

Guest-writer, FrankJ's third hour summary:

Bob’s 3^rd hour guest on Sunday’s MoneyTalk program was Barbara Weltman, a contributing editor to J.K. Lasser’s, Your Income Tax.   Barbara has been a guest on MoneyTalk in past years, and Bob described her as a walking compendium of the tax code, which indeed, she is.

Bob lamented that because of Congress’s inaction, we won’t know what tax policy will be in 2013 (for taxes payable in 2014).  Barbara “saw his bet and raised him”  by pointing out that 50 or so provisions expired at the end of 2011 and we still don’t know for 2012, which of these, if any might be brought back to life, retroactively, for the 2012 tax returns. 

One expired provision that needs revisiting is the annual “patch” for the Alternative Minimum Tax.  Without a fix, this extra tax could snag 26 million taxpayers, whereas normally “only” 3-4 million taxpayers get hit.  Barbara described a few of the things that trigger the need to calculate one’s liability for the AMT:    a large number of personal and dependency exemptions; and large deductions for state income taxes and/or medical deductions. 

This reference discusses some of the expired tax provisions Barbara alluded to.  

Complete tax guide

 People in states that do not have a state income tax have been able to deduct their state sales tax.  This provision went away in 2012 and unless Congress restores it, they are out of luck.  At one point in the program, Washington state was mentioned and Bob commented on its beauty.  (A good question for the MoneyTalk final exam might be what city did Bob live in when he lived in Washington?  -- Hint, it ain’t Seattle.)  Washington is also one of the few states without a state income tax, so unless Congress reinstates the sales tax deduction, Washingtonians who itemize will get hosed.  

Two other “above the line” deductions that Barbara mentioned are education related.  These are reductions to gross income, and a taxpayer does not need to itemize on Schedule A to take advantage of these.  One is the educator expenses deduction whereby a teacher can deduct up to $250 for classroom materials they bought out of their own pocket.  ($500 if both spouses are teachers.) 

The other one is the “tuition and fees” deduction of up to $4000, thus reducing the amount of your income subject to tax by this amount.  This deduction is available to people who may be pursuing higher education but not enrolled in a degree program.   For example, it can impact people taking a course here and there to improve job skills.  From the J.K. Lasser website:

On 2010 returns filed in 2011, millions of taxpayers claimed various tax breaks:

• More than 12 million claimed education credits worth $12.5 billion ($6 billion of which was refundable).
• More than 2 million claimed the tuition and fees deduction worth $4 billion.
• More than 10.2 million claimed a deduction for student loan interest worth $9.3 billion.

Source: Statistics of Income Bulletin, Winter 2012

Another topic that came up on the program had to do with proof of having made a charitable contribution.  The IRS has some specific, but easily understood rules on this.  The caller asked about contributions above $250.   Barbara’s answer was that you need some backup, regardless of the size of the contribution.   This backup comes into play if you itemize deductions using Schedule A.   Only if you “itemize” do you get to make charitable deductions.

In brief,  the rules say that a canceled check showing the name of the organization, date and amount is adequate backup.   A bank statement, credit union statement also work.  Payroll deductions are documented with pay stubs or a W-2.  And, a receipt from the charity will work, too. 

When you get to $250 or more, you need something in writing from the charity. 

 

As to when you actually make the contribution, the IRS looks at when it was “unconditionally delivered” to the charity.   So, a check you mail to the charity is considered  “delivered” on the date you mailed it.   A charge to your credit card is “delivered” and deductible in the year you made the charge.  A pay-by-phone charge is deductible in the year the financial institution actually pays the amount. 

Non Cash contributions have their own set of rules, which were not discussed on the show.

 Barbara also mentioned a few things that people might do in the waning days of 2012. 

·       Reset a basis.  Sell a security and repurchase it and thereby establish a higher basis.  If there is a capital gain, it will be at current rates, which are scheduled to go up from 15% now, to 20% in 2013.

·       There was the usual advice about booking capital losses.  Capital losses offset capital gains dollar for dollar.  If your capital losses exceed your gains, they do not go to waste, you can use up to $3000 to offset ordinary income, and if you still have capital losses, you can carry them forward to the next tax year. 

·       Bob pointed out there are 5 trading days left in the year. 

(FrankJ) Editorial Comment:  I like listening to Barbara because she is so knowledgeable in a complex field of endeavor, the US tax code, and she can explain things well.  Barbara is to taxes as Charlie Maxwell is to energy.  However, given that some listeners might actually act on the advice she renders, I think it would  have been more useful for her to on the program earlier than Dec 23.  

Jeffchristie's Moneytalk Final Exam Question:

Bob Brinker's special quest today was Barbara Weltman from the J K Lasser tax service.  J K Lasser was the father in law of which Hollywood star?

A) Jane Fonda

B) Woody Allen

C) Wesley Snipes

D) Lindsey Lohan

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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December 21, 2012, Bob Brinker's Views on AAPL

December 21, 2012....Wow! Apple Stock seems to have turned into applesauce. Let's review what we know Bob Brinker has said about AAPL on Moneytalk.

Firstly, it's important to know that Brinker has never recommended AAPL in his newsletter, Marketimer. And he has never recommended it on Moneytalk, but he has talked about the stock a few times.

We were all shocked when on March 18, 2012, Brinker told the Moneytalk audience that he has owned AAPL for a "decade" and "it had been his best performers."

Bob replied: "You won't hear any complaints about Apple from me because Apple has been extremely good to me over the last decade or so....It's been a magnificent performer. It's a company that I'm invested in, and for the last ten years it's probably been the number one performer over that ten year period that I've owned. As to when you make a decision to sell Apple? Well, I think that's a decision at some point will have to be made. But I think those who have stayed with it are very, very glad that they have stayed with it....."

I was flabbergasted when Brinker said that because clearly, he has never mentioned owning this stock over the last decade. One has to wonder why not because the individual stocks he has had in Marketimer (MSFT and VOD) for the same time period are jokes by comparison. (They are still there along with Suncor.) Here are Birdbrain's excellent comments:

birdbrain said...
"When Mr B said that he personally manages every portfolio and writes every word in his investment letter, he was speaking directly to the host and readers of this blog. 

He claims that he has owned Apple stock for a decade or so and it has probably been the number one performer that he has owned. A rise of over 4500% in ten years is PROBABLY one of his top investments? The inclusion of that one word raises doubt. As Honey brought up, why no mention of this great success in print or on air?"

Back in January 29, 2012, Brinker had devoted the opening monologue to praising Apple, but never mentioned owning the stock or recommended it at that time.  Read my summary here. 

I searched this blog and the first time that I can find that Brinker mentioned AAPL was a year ago, December 2011. From my summary of that program: 

APPLE BEAT INFLATION OVER THE PAST 20 YEARS: Caller Ralph told Bob that he had made about $100,000 over the past 20 years out of his gold mine in Montana. He said that his gold had outpaced inflation, but he wanted to know what Bob thought would outpace inflation going forward. Bob said the question was unanswerable, but that Apple stock had made "much more money" than gold.

Now that AAPL has gotten smashed, on December 9, 20112, Brinker spun his answer when responding to a  caller.  Here are Frank J's comments:

 Frequent caller Joe took a short ride on the MoneyTalk trolley today at 13 minutes into the 2nd hour. Joe wanted to know if Apple was a good buy at $532. 

Bob professed to have "no opinion" on the stock. But he "wished all shareholders the best." He was quick to point out that his portfolios sold all NASDAQ holdings in early October, "fortunately, very near the highs..." He added, as a consequence, he has no opinion on the stock.

When Brinker added the word "consequence" after saying he had sold all Nasdaq holdings, he was deliberately trying to convince the audience of  a lie. The lie is that he made money on AAPL in his newsletter and just recently sold it because he sold the Nasdaq Index and the Nasdaq Index contains AAPL. What is that old saying? GIVE US A BREAK!

It is true that he sold all RYOCX in Marketimer (and he also told those who were holding QQQ from his twelve year old botched trade to sell), however, he never once mentioned AAPL over the past twelve years as influencing his Nasdaq advice. 

There are three classes of men; lovers of wisdom, lovers of honor, and lovers of gain___Plato

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December 16, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

December 16, 2012.....Bob Brinker hosted Moneytalk today.....(comments welcome)

STOCK MARKET: Brinker never said a word about the stock market today and no callers mentioned it either.

Honey EC: Why Brinker's long silence about the stock market? My personal opinion is that Brinker is playing the carrot-on-a-stick game to the hilt right now. The carrot he is dangling is the possibility that he may sell some or all of his equity holdings. He's been hinting for a couple of months now that he is "keeping an eye on" his so-called Marketimer timing model©. The Marketimer timing model consists of four components: Economic Outlook; Monetary Policy; Equity Valuation; Investor Sentiment.  (Bob talked about his timing model at a public Leukemia event in San Jose a few years back.  I double-checked in Marketimer -- it has not changed.)

In the December 2012 Marketimer, Brinker reviewed the history of secular/cyclical markets like he has done so many times in the past.  He said that while studying secular markets is fun, he focuses on cyclical trends,  and depends on his Marketimer timing model for his forecasts. It's been a while since Brinker reviewed the "5-root causes of a bear market," but you may want to read what he was saying last year. 

GOLD...Caller Bob from Oregon said he was largely in cash and wanted to know if he should buy gold. Brinker told him that would depend on how much he was willing to speculate since gold is a speculative investment.  Brinker also told him that if he decided he wanted a "hedge" in gold, he should buy GLD and stay away from numismatic coins. Brinker said: "I would keep it small. That means I would keep it at 5% or less." 

Honey EC: Since May 2009, Brinker has included GLD on his short list of recommended individual issues, along with MSFT, VOD, Suncor and several large index ETFs. Brinker has never given any Marketimer guidance on how much  to buy or what price to pay. Today he said 5% or less but made no comment on price. 

FISCAL CLIFF...The only thing NEW that Brinker reported on this subject is that Boehner has offered tax increase for entitlement cuts.

BRINKER FIXED INCOME PORTFOLIO AND BALANCE PORTFOLIO....Caller Ronnie from Alabama said he had been listening to Moneytalk since 1986. He said that he had gone from negative net worth to "critical mass" of about $1 million. Brinker asked him how he did it. Ronnie said that, in addition to "paying himself first" out of a largely six figure income,  he took more risk than Brinker advised and had bought gold when it was about $1200 an ounce. Ronnie said that he was working toward a goal of 50-50% asset allocation and asked:  "What I've done on my asset allocation right now is 70% stocks as mirrored by your Marketimer portfolio #2 on page eight. And then my 30% in bonds is mirrored by your Marketimer income portfolio on page 7. Is that the correct way to do it?"

Brinker replied: "You can do that. I've talked about hybrid portfolios a number of times. You may have heard it on the broadcast....Now we publish a balanced portfolio on page 8, the model portfolio III....We publish fixed income as part of that portfolio  but we also publish a separate income portfolio on page 7.  If someone wants to substitute the income portfolio on page 7 for the income portion of the balanced portfolio, they can do that. That would be a hybrid.....Right now, we don't have any money in the stock in the income portfolio on page 7.  There have been times this year when we have had up to 10% in the stock market in the portfolio......"

Honey EC: Did you get all of that? The fixed income portion of the balanced portfolio III "on page 8" are also in the fixed-income portfolio "on page 7."  Was Ronnie a plant? I don't know, but he sure knew the jargon Brinker uses to hawk his wares. :)

Brinker sold all the Vanguard Wellesley Income Fund holdings in October from both portfolios.  It seems odd to me that Brinker has now sold all of the Vanguard funds in the fixed-income portfolio, except Vanguard Ginnie Mae Fund, and replaced them with funds that have much greater expenses. 

The "new" funds in the income portfolio are all higher expenses. DoubleLine Total Return Fund charges three times more than Vanguard funds. Metro West Total Return Bond Fund, which basically replaced Vanguard High-Yield Fund, charges almost three times as much. Dodge and Cox Income Fund (DODIX) is about twice the price of Vanguard's funds. I compared the performance of all three of those funds with Vanguard's High-Yield Fund and it's astonishing to see that the high-yield fund has outperformed all of them over the past year. 

IRA BENEFICIARIES AND WITHDRAWALS FOR CHARITY:  FrankJ, who knows taxes, covered this call for us:

Caller William from Oregon asked about making a charitable contribution with a distribution from an IRA. He also asked whether he should will his IRA "to an old person or a young person?" 

Bob advised that age should not be so much of a consideration as simply who do you want the money to go to? He also advised William to consult a CPA or enrolled agent for advice. 

Expanding on BB's answers a little: with regard to the charitable contribution, you can direct your IRA trustee to make a direct payment to a charity. You do not get to deduct this as a charitable contribution, but you do not have to count the contribution as part of your taxable income. Oddly, (and I looked this up on the IRS's site,) you must be 70 1/2 or older to do this. 

On willing your IRA to someone else, William and his adviser will no doubt review the rules surrounding an IRA willed to someone other than a spouse. The recipient is obligated to take minimum distributions and these are governed by the recipient's age and the value of the IRA. If there are multiple recipients, they should consider splitting the inherited IRA into separate accounts because the required minimum distribution will be set by the age of the oldest recipient. There is a time limit on splitting the account, so if you snooze, you lose. 

If you don't go the req'd minimum distribution route, then you have to distribute the entire IRA in the 5th year following death. So if death occurs in 2011, the IRA must be distributed by the end of 2016.

Guest-writer FrankJ has done a summary of  the third hour speaker for us:

Today’s MoneyTalk guest was William L. Silber, author of Volcker: the Triumph of Persistence. Mr. Silber is a professor at NYU’s Stern School of Business and has been an advisor to the Federal Reserve.

FrankJ's (Editorial comments are in italics). 

BB asked Silber his reaction to what is going on in Washington, DC right now?

The guest said that the credibility of the Fed is at stake, that monetary integrity is affected by fiscal integrity (or lack of it). Bob asked a follow-up question about how our debt affects the long term integrity of the dollar. Mr. Silber said the rest of the world still uses the dollar as an exchange medium, citing for example, China paying Japan in dollars. But he was not sanguine about how much longer the world will continue viewing our dollar in the same way as they have in the past.

Bob asked about entitlement programs, specifically Medicare – pointing out that, by a 2:1 margin, people do not want any reductions in benefits. Mr. Silber said at some point, Congress will have to face reality and pointed out that one way to make Social Security more sustainable is to raise the retirement age.

Bob then turned the topic to Paul Volcker, the subject of the guest’s recent book.

Mr. Silber pointed out that most people know that Alan Greenspan was the Fed Chair before Ben Bernanke but very few know that Paul Volcker was the Fed Chair before Greenspan. Those who do remember Paul Volcker probably also remember the soaring interest rates, out-of-control inflation and the persistence he demonstrated in bringing inflation down to 4% from 12%. In so doing, he restored the purchasing power of the dollar, and the credibility of the Federal Reserve.

Bob asked the guest what he thought about Obama bringing in Paul Volcker for advice early in his administration.

The guest said his reactions were mixed. The world reacted with enthusiasm because he is still viewed today, as the most trusted man in the world of finance. Mr. Silber’s view was there might have been a quicker response to the crisis we faced if Mr. Volcker had been brought in as Secretary of the Treasury, but he speculated that Mr. Volcker’s independent streak may have given the administration pause.

Bob turned the subject to the current Fed Chair, Ben Bernanke. In an assessment of Bernanke’s performance, Mr. Silber said he would have graded him an “A” or “A+” for opening the credit floodgates in 2008. Then he quoted Mr. Volcker, who once said, there will be fallout “for remaining too easy for too long.” And, “you can’t wait until you see inflation,” (before tightening).

This mild criticism did not upset Bob, who is usually very quick to put down any criticism of the Fed Chair’s job. 

Bob did ask about risk to the economy by tightening credit in the face of an economy that is barely growing. The guest agreed, and said OK to not tighten right now, just don’t ease anymore. He alluded to the thin line the Fed Chair walks, by pointing out that the Fed Chair knows that Congress can pass legislation to abolish the Federal Reserve.

MoneyTalk regulars would at this point, recognize that Bob could have launched into his oft-heard (and correct) rant about the danger of Congress being in charge of monetary policy. 

Bob asked about the Fed’s recent announcement to keep buying debt and the guest did not address this directly, but pointed out the need to return to long term fiscal integrity and he mentioned Medicare and Social Security once again. (Fiscal policy is the responsibility of Congress).

The guest pointed out that if we had followed the recommendations of the Simpson-Bowles committee, we would be on the road to fiscal integrity.

Caller John from Pierre, South Dakota made a short speech and then asked if welfare recipients should pay back their benefits at some point. The guest said the real problem was Social Security and Medicare.

Bob asked about the debt limit and Mr. Silber said that we are one of the few nations in the world with a debt limit. He said having a debt limit has helped in the past because it acts like a “speed bump” and forces Congress to think about what they’re doing with regard to spending.

(FrankJ) EC: The federal budget includes discretionary and non-discretionary spending. Defense, education and agriculture are examples of discretionary spending, appropriations for discretionary spending are made in Congress each year. The elephants in the room are the non-discretionary components: Social Security, Medicare, interest on the debt and federal pensions. These non-discretionary programs, whose spending was set by their enabling legislation, are simply on auto-pilot. For the 2012 budget of $3.57 trillion dollars (about $1 trillion of which is borrowed), these programs constitute 63% of the budget. So Mr. Silber was correct in his several references to SocSec and Medicare as the keys to re-establishing the nation’s fiscal integrity.

Brinker's guest-speaker was William Silber: Volcker: The Triumph of Persistence

Jeffchristie's Moneytalk Final Exam Question:

Because of the current situation with the fiscal cliff, Bob Brinker said that we are all passengers on:

A) The Soul train.
B) The good ship Lollipop.
C) The ship of Fools.
D) The Orient express.

ANSWER

Moneytalk Free on Demand for seven days after broadcast. You can download, save and listen on the go:  KSFO 560 Radio -- Seven Day Archives

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December 12, 2012, Bob Brinker's Bond Fund Recommendations

December 12, 2012....For over a decade, Bob Brinker has recommended Vanguard Ginnie Mae Fund (VFIIX) in his Marketimer newsletter and on Moneytalk.  Earlier this year, he seemed to become more cautious about the fund. He would often took calls from listeners (who expected interest rates to rise soon) asking for alternatives. He would advise those who were worried about losing net-asset-value to use FDIC insured laddered certificates of deposit instead.

As David Korn pointed out in his newsletter summary of last Sunday's show, Brinker had lowered Marketimer Ginnie Mae holdings significantly in his income portfolio, but has now increased the weighting to 25% once again. David Korn wrote:

Caller: This caller has held GNMAs for a long time. A while back, the caller pointed out that Bob advised reducing the holdings in the Vanguard GNMA fund. If he is ok with a fluctuation in the GNMA of 10%, what¹s wrong with continuing to hold a significant position in GNMAs? Bob said he didn't see anything wrong with holding a significant position in GNMA as long as you are ok with the fluctuations in the net asset value that the caller described. Bob said he still recommends a holding in GNMA and has a significant investment in the fund in his recommended Balanced Portfolio and Income Portfolio, so he is invested in them and has nothing bad to say about them. 

(Korn) EC: Bob's enthusiasm toward the Vanguard GNMA had eased a bit earlier this year when he sold some of his holdings in the income portfolio and replaced it with the DoubleLine Total Return Fund back in May of this year. But these days, the GNMA fund seems to be back in Bob's good graces. The Vanguard GMA Fund (VFIIX) closed Friday at $11.02.

Honey here: David is right that Brinker replaced part of  the weighting in the Ginnie Mae with DoubleLine Total Return Fund (DLTNX) last May -- and that was a good move.  DoubleLine has outperformed Ginnie Mae this year.  However, Brinker sold all holdings in Vanguard Wellesley Income Fund (VWINX) when he increased the weighting in Ginnie Mae fund again.

In October, Brinker also sold all of the Vanguard High-Yield Fund (VWEHX) holdings in his income portfolio and replaced it with Metro West Total Return Bond Fund (MWTRX). Perhaps because VWEHX was closed to new investors a few months ago. 

When you compare these bond funds,  you see that VWEHX has outperformed all of them. I still hold mine, and as long as the economy is growing slowly, I won't sell it. 

One word about Brinker's stock market outlook. David Korn made these comments from Sunday's show:

(David Korn)  EC: Bob is making it very clear to the listening Moneytalk audience that although on any given broadcast he might be bullish, that doesn¹t mean that during the week he might not change his position on the market. As a practical matter, Bob has said that he updates his long-term stock market timing model on each Monday. I don¹t see him changing his views tomorrow, but I think he is on high alert these days in an effort to identify the end of the cyclical bull market (as am I!).....Bob then made a big deal out of saying that all of the advice he gives with regard to the stock market is in the context of today's date....and that his advice can change.

Honey here: Brinker is now using the ploy of only making forecasts in "real time." This is new for daBrink. He has been making projections out as far as a year for a very long time. For example: In the January 2012 issue of Marketimer, Brinker said: ".....we expect the S&P 500 Index to rally into the low-to-mid 1400s range this year."  By June, Brinker had raised his target range to "upper-1400s to low-1500s" -- where it is now. 

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December 9, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

December 9,  2012....Bob Brinker hosted Moneytalk today....(comments welcome)

I was not able to listen to Moneytalk today because I was busy this afternoon.  The Handbell Choir that I belong to was performing a Christmas program -- along with a Chorale Group.

But lucky for us, Jeffchristie listened to the program and compiled a brief summary. I spoke to Jeff, who lives on the opposite coast from me,  just before posting this  and he told me that Brinker did not say anything that would indicate any change in his market-timing outlook.

Jeffchristie's Moneytalk summary:

Bob started the program talking about Friday's jobs report. He said it was a decent number but not a fantastic number. It is big enough to keep unemployment from going lower. Bob gave the unemployment numbers for racial groups and by education level.

Bob also said that a soap opera about the fiscal cliff was going on in Washington. He praised the efforts by Ben Bernanke to improve the economy.

The first caller was Steve in Colorado. He was worried about going over the fiscal cliff. He is 55 years old and in a 35% federal tax bracket. He wanted to take early withdrawal from his 401k and use the money to pay his mortgage. Bob said he would be losing 50% of his money to penalties and taxes and advised him against doing it.

Bill called in from Wichita Kansas. He wanted to know if it was a good idea to buy stocks before they go ex-dividend. Bob explained to him that the stock is adjusted downward by the cost of the dividend and that there was no advantage by doing what he ask about.

Bob mentioned that California has the highest state income tax at 13.3% and Hawaii is second at 11%.

Don from Chicago was next. He had an idea to free up some money to help the economy. He suggested allowing people under 59 1/2 to take tax free withdrawals from their retirement accounts. Bob said it would be OK if they used the money to buy a first time house but didn't like the idea if the money was used for other purposes.

Pete called in from Seattle. He was a long time subscriber and thanked Bob. He still had significant holdings in a Ginnie mae fund and said he was willing to accept a 10% drop in NAV. He knew that Bob had reduced his allocation and ask if he should also do the same. Bob said it was OK to maintain his position.

Bonnie from Birmingham said she has 85% of her 401K in stocks and thought she should lower her exposure. She told Bob she was 63 years old. He recommended she sell on strength and go to 50/50.

Martin called in from Fairbanks. He is semi retired and has 40% in stocks, 50% in bonds and 10% in cash. Bob said he was comfortable with that allocation.

Mike from Colorado said the problem with the federal budget deficit was spending. Bob agreed with him.

Burt in Gulfport, Mississippi wanted to withdraw money from his 401k to build a new home for his retirement. Bob ask if he would be subject to any penalties. He said no and Bob said he didn't have a problem with him doing it.

Joe in California wanted to know if Apple was a good buy since he has dropped from its all time high. Bob said he didn't have an opinion on the stock. He mentioned that he sold all of his NASDAQ holdings in October.

Joyce in Iowa ask about the wash sale rule. Bob told her that she had to wait 31 days to buy back a stock that has a loss. If she books a gain it can be bought back at any time.

Charlie in Albuquerque is nervous about the fiscal cliff. He is worried that his taxes will be going up. He has an annual income of 80K and Bob told him that he doesn't think there will be any change when all is said and done. Charlie is also thinking about selling his stocks. Bob said it depended on Charlie's risk tolerance.

Dan in Washington a long time listener said he would be receiving 42K a year in pension benefits and he had 470k in equities in retirement accounts. Bob said he was OK with that asset allocation.

Jamie in Santa Clara was worried about inheritance taxes. She said her house was worth about $1,000,000. Her total net worth is around $3,000,000. Bob thought she would be OK after everything gets worked out. One proposal currently being considered was for the tax to start at $3.5 million.

Jim in Henderson is thinking about selling stock to lock in capital gains at the current 15% rate.

Tom in Virginia beach pointed out that raising taxes on the top earners will do little to reduce the annual deficit.

Edward in Cheyenne Wyoming said he recently read an article on Bloomberg that talked about making municipal bonds taxable. Bob thought that this would be a bad idea.

FrankJ sent a few comments about the Apple Stock call today:

Frequent caller Joe took a short ride on the MoneyTalk trolley today at 13 minutes into the 2nd hour. Joe wanted to know if Apple was a good buy at $532.

Bob professed to have "no opinion" on the stock. But he "wished all shareholders the best." He was quick to point out that his portfolios sold all NASDAQ holdings in early October, "fortunately, very near the highs..." He added, as a consequence, he has no opinion on the stock.

FrankJ also sent some of his great humor:

We came very close to losing BB today, just before the end of the 2nd hour. BB was already under duress from a caller who brought up the notion of gov't taking over people's 401Ks.  

Late in the 2nd hour a caller asked whether the government might decide to tax municipal bonds.

Bob lost it and began shouting repeatedly, with regard to these rumors, "It's coming out of the woodwork!!" 

At this stage Bob went to the break which was fortunate because all it would have taken to drive him off the cliff would have been a caller asserting the need to do away with the Federal Reserve!

Honey here: Regarding Brinker's re-iteration that he sold all Nasdaq holdings in Marketimer in response to Joe's question about Apple Stock:   Brinker said he "had no opinion" on the stock. He must have forgotten that on March 18, 2012, he told the audience that he had owned this stock for over a decade and it was a "magnificent performer."  Here are the excerpts of Brinker's words: 

Bob replied:  ".......You won't hear any complaints about Apple from me because Apple has been extremely good to me over the last decade or so....It's been a magnificent performer. It's a company that I'm invested in, and for the last ten years it's probably been the number one performer over that ten year period that I've owned.  As to when you make a decision to sell Apple? Well, I think that's a decision at some point will have to be made. But I think those who have stayed with it are very, very glad that they have stayed with it....."

It's clear from the paragraph above that Brinker is talking about personal holdings and not Marketimer holdings in QQQ or RYOCX. Brinker has NEVER recommended Apple stock in Marketimer, and has never before said he had invested in Apple on Moneytalk. 

Don't be deceived into thinking otherwise in spite of how it might have sounded. A man of integrity would have made it clear that this was a personal choice that he made for himself but never shared with listeners OR subscribers.

Now today, we have another example of Brinker's lack of integrity in REVERSE when he inferred that his only holdings in Apple were in the Nasdaq holdings in Marketimer.  He may have indeed sold those "decade" old shares of Apple. But if he has, why didn't he just say so? Pathetic lack of character, IMO....

Brinker's guest-speaker was David Wessel: Red Ink: Inside the High-Stakes Politics of the Federal Budget

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December 8, 2012, Bob Brinker's Views About the End of the Cyclical Bull Market

December 8, 2012....Bob Brinker's views on stock market secular and cyclical trends has not changed as of last week.  He is sticking to his belief that there is an ongoing "long-in-the-tooth" cyclical bull market that began in 2009 inside a secular bear market that began in year-2000,   (Here is a complete history of Bob Brinker's market-trends calls.)

At this time, Brinker has not raised any cash, but as he said recently on Red Eye Radio, he is "watching it closely."  His biggest concern is that there was no 10% "health-restoring correction" in 2012 like there was in 2010 and 2011.  This could possibly indicate another severe cyclical bear market is in the cards.

Regarding the stock market going forward, Brinker has told listeners to watch for "economic malaise," and to be aware that the Federal Reserve has largely exhausted its monetary arsenal (see my summary from last Sunday). During the first nine months of this year, the economy grew at a sluggish annual 2%.  Brinker clearly believes that the government should use more stimulus -- otherwise, the economy and the stock market will suffer.

Brinker totally missed the 2008-2009 megabear market (which he now considers a cyclical bear), and he remained fully invested.  Fortunately for his subscribers/followers, Marketimer model portfolios have finally regained all of their losses and are now a little higher than they were at the October 2007 stock market high.

Brinker is using fear in Marketimer now, and holding out the carrot for all those wabbits who think he will get them out of the market before the next major bear. Brinker's actual record at calling bear markets is abysmal. The one time he went to all cash (see his asset allocation history back to 1987), it was a costly mistake.  He knows that and will be very cautious about ever doing it again.

If  Brinker does raise cash in the future, that will mean he expects a more than 20% correction because he has 10-20% corrections for breakfast.  He's ridden down several 19+ corrections which he doesn't call bear markets because he insists corrections have to exceed 20% to be an "official bear market."  IMO, that is just plain silly.

As of the December Marketimer, Brinker  has not changed his S&P 500 Index "upper-1400s to lower-1500s" target range.

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December 2, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

December 2, 2012...Bob Brinker hosted Moneytalk today.......(comments welcome)

STOCK MARKET: Bob Brinker's comments today did not include any discussion of the current stock market.

Honey EC: It's been several weeks since Brinker  talked about "how great the market is doing this year." Perhaps he is silent because he doesn't want to mention that the  Nasdaq had its best November in three years -- he sold all Nasdaq holdings in Marketimer.  Here is what Brinker said on Moneytalk on November 18th:

Brinker said: "In early October, we sold all of our Nasdaq direct exposure. So that meant that we sold our mutual fund that was invested in the Nasdaq 100....That came out of model I and model II and we also extended that to QQQ shares, which are also invested in the Nasdaq 100. We also sold any QQQ shares that subscribers held. All of those share in the Nasdaq 100, whether they be in the mutual fund or in the Exchange Traded Fund were sold in early October. So they're out of there. There's no more direct Nasdaq exposure anywhere in model I or in model II or anywhere within newsletter subscriber positions. We sold them out in early October. I felt at that time, based on all that I had seen in the Nasdaq that that was an opportunity to sell that index and that's what we did." 

ECONOMY IN DUMPSTER AND INTEREST RATES....Brinker said: "Even more important than the operation twist effect is the economy.....If for any reason, the economy were to take off, that would put upside pressure on rates. Period. If the economy stays as it's been, which is slow, then the economy does not put pressure on rates......As long as the economy is in the dumpster, I don't think you are going to see much movement in rates....major movement. What's the dumpster? We're in the dumpster."

ECONOMY AND UNEMPLOYMENT.....Brinker said: "The economy is so low that we can't get unemployment down.  It's so low that under-employment is on the moon -- in the mid-teens."

BRINKER'S MARKETIMER PORTFOLIOS AND NET ASSET VALUE OF BOND FUNDS...Brinker said: "So as we speak, I'm not that concerned about the net-asset-value of a bond fund. Especially the kind of bond funds I recommend in the investment letter where we have very reasonable durations. Especially in the aggregate. When you take for example the income portfolio or you take the duration of the fixed income portion of the balanced portfolio....you will see they are very reasonable. So I'm not that concerned about that aspect....But if you thought the economy was going to pick up, or was picking up, then you might see some pressure on rates......That is not what we are looking at right now."

Honey EC: Brinker is right about his income portfolio. The weighted average duration of the five holdings is 2.8% and the average maturity is 4.9 years. The average yield is 3%.  He has sold all Vanguard High Yield Fund and replaced it with 25% weighting of Metro West Total Return (MWTRX).  The portfolio also contains a 25% weighting of DoubleLine Total Return Bond Fund (DLTNX).

 So in my opinion, the only possible conservative fund in this portfolio is the Vanguard Ginnie Mae Fund (VFIIX).  If you check a comparison chart between the high-yield fund, DoubleLine and Metro, you will see that the high-yield fund has outperformed over the past year and six months.

INFLATION AND THE HOUSING MARKET....Brinker said: "You can't call what's going on in housing now inflation. All you're seeing in housing so far is a partial recovery of the losses of the last few years.....It's just in its early stages....If you see the economy grow rapidly, then you could start to look for inflation pressures....I think one of the reasons that you have not seen inflation pressures so far is that the economy has been so lackluster....I've been very surprise at the number of people who came out and forecast high inflation...It's been complete fiction up until this point."

NATIONAL DEBT AND DEFICIT...Brinker said: "We now owe over 16 trillion dollars in national debt and we continue to accumulate national debt at an annual rate of a trillion dollars."

FISCAL CLIFF TAX  INCREASE PREDICTIONS...Brinker said: "There are so many tax increases on the table right  now, it's hard to keep track. Let's talk about current law since nobody has any idea what's going to happen. The only thing I'm sure of is one thing -- that if all the rates go up on New Year's Day, congress will vote to lower the rates on all but the high earners in the first quarter retroactive to the beginning of the year. That's the one thing that I am certain of -- that all of the people that earn less than $200,000 taxable as individuals....$250,000 as joint filers.....all of those people, I am certain of this, my opinion, that their rates will not change....The top 2%.....I think they're going to see a tax increase above the 35% current level, up to a maximum of 39.6......It's going up. No question about that. Just like the capital gains rate is going up from 15 to 20% and then the 3.8 is added on for the high earners making it 23.8 capital gains long-term.....For high earners, get out your wallet."

Honey EC:  Two weeks ago, Brinker did a thorough review of the impending January 1st tax increases and what deductions are on the table for elimination. I transcribed what he said in the November 18th Moneytalk Summary HERE 

ESTATE TAXES... Brinker said: "We have this bizarre situation through the end of this month only....where the lifetime exemption is $5,120,000 per person. That's $10,240,000 for a married couple. But that exemption drops to $1 million on New Year's Day, and the rate above $1 million per person goes to 55% under current law."

(SOCIAL SECURITY) PAYCHECK  CUTS ....Brinker said: "There's the question, do you give everybody in the country that works a 2% pay cut up to $113,700 in taxable income next year.....by allowing the payroll tax holiday to expire on the employee portion of that tax? This is roughly 10 billion dollars a month. Almost all of that money goes into the consumer economy. What do you do about that in this type of an economy.....There is no way of prediction what will happen with that."

ALTERNATIVE MINIMUM TAX.....Brinker said: "About 30 million additional taxpayers will be hit by the alternative minimum tax if it is not changed as part of any deal that occurs. My intention is not to cover every nook and cranny of the tax law -- it's just too much. These are the major items in my opinion subject to this discussion in Washington."

OPERATION TWIST.....Brinker said: "Operation twist is scheduled to end at the end of December, so what is the Fed going to do about it? That we will learn at the conclusion of the two day meeting this month."

FED GETS ALL THE CREDIT FOR ECONOMIC GROWTH SINCE 2008....Brinker said: "It's only because the Federal Reserve has been active that we have any growth at all in the economy. If the Federal Reserve would have taken a hike back in 2008, it would have been Teddy Ballgame right there. The Federal Reserve is the only operation in Washington doing its job.....If the fed would have checked out in 2008, it would have been Katy bar the door."

ONLY A "CERTIFIED, DOCUMENTED FOOL" CRITICIZES BEN BERNANKE...Brinker said: "The only person that would criticize Ben Bernanke would be a person who is so clueless about monetary policy and role of the Federal Reserve as to have nothing better than the lowest possible of education on the subject of economics....Anybody going after Ben Bernanke is a certified, documented fool....It's more like a comedy team if you're criticizing Ben Bernanke....If your not a comedian, you are totally ignorant and a complete fool....This is Moneytalk. "

ALL MAJOR CURRENCIES PRINTING MONEY....Brinker said: "The reality is, all of the major vendors are printing money....They're printing Euros, they're printing Yen and dollars.....It can go on until it can't go on."

WARREN RUDMAN: Brinker gave a glowing eulogy to Warren Rudman, the former Senator from New Hampshire,  claiming that he gave warnings before the 9-11 murders. He said that even though Rudman was a Republican, he was not just a "party hack for either side."  Brinker said Rudman was a war hero and actually "earned the kudo of a great American."

LAND OF CRITICAL MASS? Caller Jean from Florida asked what it means. Brinker told her the land of critical mass is when you can generate enough income from all sources, including your investments that you don't have to work -- whether or not you want to work.

TIME TO BUY MUNICIPAL BOND FUND?  Brinker said: "If rates stay the same or slide a little bit, you will do alright. But if rates go up in a municipal fund, you're going to see the net asset value depreciate.

TAKING LONG-TERM CAPITAL GAINS IN 2012.... Brinker said: "A lot of people are looking at their long-term capital gains in 2012 and wondering whether they should take them. Suppose they want to continue with a given position in a company, well there's no law against that. You are allowed to take long-term capital gain before the end of the year and pay the 15% maximum federal long-term capital gain tax rate that remains in the law books through the end of this year -- right through Monday, the 31st at the market close. You could pay that 15% and if you wanted to,  recreate your position.....The point would be if you think those tax savings are worth realizing. Because the fact is, starting in January, if you are a high-earner, you are going to pay a 23.8%....Here's the rub, do you want to make the new capital gains tax rate retroactive to all the money that you made on  a long-term gain? That's the issue.....Do you want to give the government 23.8 when you can give them 15....And you can recreate the position."

BOB BRINKER GETS POUNDED AND TRASHED FOR BEING FISCAL CONSERVATIVE: Brinker said: "I am roundly criticized for being so conservative on fiscal matters. And that is what this program is. This is a money program. We talk about fiscal issues and money. And I've always been balanced budget oriented. Let's get toward a balanced budget if we can....We've always maintained that for 27 years on the broadcast. And I get pounded and trashed for being so conservative."

Honey EC: Does anyone know how or where Brinker is getting "pounded and trashed" for being fiscally conservative? I'd like to ask him a few questions about why he no longer talks about the stock market on Moneytalk. 

NAMES BRINKER CALLED CONGRESS TODAY: "Dysfunctional...outstandingly incompetent....fools.... joke....unbearable."

Jeffchristie's Moneytalk Final Exam Question:

Bob Brinker's position on the Federal Reserve printing money is:

A) It will stop when Ben Bernanke is replaced as Fed chairman.
B) It will stop when they run out of ink.
C) It will go on until it can't go on.
D) If something can't go on forever it will stop.

Answer: C...It can go on until it can't go on.

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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