Sunday, January 27, 2013

January 27, 2013, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

January 27, 2013....Bob Brinker hosted Moneytalk today......(comments welcome)


STOCK MARKET: Brinker gave the Friday closing numbers. But he didn't report that the Dow is still 1.9%  below its all-time closing high, the S&P 500 Index is still -4% from all-time high, and the Nasdaq is 37.6% under its all-time high.

Brinker said:  "The Nasdaq has been lagging for months now partially due to the weakness in the Apple Common Stock which has been marked down about 37% since the autumn of 2012."

INTEREST RATES: Brinker said: "If you look back through history, they are very, very low. They are a little bit higher than they were at their very low."

INFLATION....Brinker said: "Overall, the price trend in terms of inflation remains very low. We've received various inflation indicators in recent weeks and we really haven't seen much in the way of changes on inflation."

BRINKER STILL COMFORTABLE WITH INDEX FUNDS....Caller Bill from Illinois wanted to know what to invest in for his young granddaughter's future. Brinker said: "I'm comfortable using the S&P 500 Index or the Total Stock Market Index Fund. You could go to Fidelity and Vanguard, they both have low-cost no-load that invest in both." (So does Schwab.)

WORLD'S SIMPLEST PORTFOLIO.....Brinker said: "About 27 years ago on Super Bowl Sunday 1986, we first started talking about this concept of a portfolio that would be the world's simplest portfolio. And that would consist of two holdings. For example, a Total Stock Market Index, no-load fund. And that would be the equity component of this simple portfolio. And the income portfolio portion of that, you could use something like a Ginnie Mae Fund, for example. Or Vanguard has a Total Bond Market Index Fund that I also think would also be appropriate for that type of portfolio. So that's it. Now understand that if you adopted this simple portfolio and you were a buy and hold investor as part of this simple approach, you would have to ride out all the ups and downs along the way. And you would accept that going in because you're looking for the ultimate simplicity."

Honey EC: Why would you have to ride out all the ups and downs just because you used that portfolio? That makes no sense to me. Of course, if you are following Brinker's advice, you have been "riding out the ups and downs" since March 2003 -- no matter what portfolio you're in. 

BRINKER'S VIEW ON GOLD....Brinker said: "My view on gold has not changed...And my view is very straightforward. Those that want to have a small hedge in gold, then the  recommendation that I have given is the Exchange Traded Fund is GLD. Now that ETF has a reasonable expenses. It will give you exposure to gold bullion. It is the least expensive way to invest in gold."

Honey EC: Brinker's Marketimer still has GLD on the  recommended "Individual Issues" list -- and still no guidance for price or amount. 

BOB, WHAT'S YOUR PERSONAL ASSET ALLOCATION? Jim in Alaska asked: "I was  wondering if you could share with us percentage wise, roughly, of how you break up investing in your own personal money?" 

Honey EC: Brinker ignored Jim's question and immediately started talking about asset allocation in general. IMO, if Brinker did not want to answer Jim's question about his own personal money, he could have just said so. His  reply to Jim's question will clearly show you what a master Brinker is at spinning, evasion and double-talk:   

Brinker replied: "Well you make that decision, Jim, based on the way that you look at a situation from a standpoint of what your personal objectives are. What objectives you have down the line...Everybody is responsible for a personal asset allocation.....If you are approaching or in retirement, I think it makes good sense to think seriously about adopting a balanced investment portfolio....So I think that's the approach I would take, Jim, when you're trying to determine how do you make this personal decision about what your asset allocation is going to be.

Honey EC: Let me guess at the answer to Jim's question:  Brinker does NOT  eat his own cooking -- and never has.

VANGUARD GINNIE MAE FUND (VFIIX)....Dallas from Illinois asked Brinker for his current "assessment on the Ginnie Mae Fund."

Brinker replied: "Taking a look at it right now, the Ginnie Mae Fund has a duration of 3.6 and an average maturity of 5 1/2 years, which means a 1% increase in the the five-year rate would give you about a 3.6% decrease in the net-asset-value. The fund has a current yield of a little bit over 2%. I would view it as a conservative holding within an income portfolio....."

MONITOR INCOME HOLDINGS....Brinker continued: "As is the case with all income holdings, my recommendation is to monitor the income situation...assess the risk of changes in the interest rate landscape. I don't mean small changes as we have seen from time to time in recent years. But I mean major changes that could be very important to the net-asset-value of these types of funds.....the interest rate situation which relates to the economy, which relates to Federal Reserve policy, which relates to inflationary forces -- all of that, on an ongoing basis."

CALLER NERVOUS ABOUT STOCK MKT AND AAPL....Caller David from Virginia said: "I'm  getting a little nervous with the stock market being up near 14,000, and in particular with Apple.....Although I follow your diversify rules, I have no more that 4% of my holdings in Apple.  But nonetheless, do you envision that we might be near a top because everybody is talking about how the market can take off and I know that's the time to be wary....."

Honey EC: Again, Brinker did not answer the caller's question.  And this is the second time that Brinker has mislead the audience  in regard to AAPL.  Brinker's Marketimer recommendations have never included Apple. 

BRINKER'S LATEST ON AAPL....Brinker replied to David: "I'm simply repeating myself here. I've already said this on the broadcast. We recommended in the Marketimer investment letter in early October the sale of Nasdaq holdings that involved the Rydex Fund that invests in the Nasdaq 100. That involved the QQQ shares. And for me that involved my Nasdaq holdings including Apple. I also sold my Nasdaq holdings at that time, including Apple...And it was near its high for 2012 at that time. Nothing has changed that would change my mind on that. I was very happy with decision in early October and I stand by that decision. I published it in my investment letter and recommended to my subscribers that they sell their Nasdaq 100 holdings. And that was it. They went out of the model portfolios...."
IN EDIT WEDNESDAY: I received a private email from a man who doesn't believe that Bob Brinker ever said he owned Apple as an individual stock. He believes Brinker was only talking about Apple as part of the Nasdaq. 
On March 18, 2012, Brinker was not talking about Marketimer when he said this:  "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 it."  
           Originally posted HERE

Honey EC: Brinker may be happy about selling all Nasdaq holdings in October, but as of Friday, it is about 100 points higher than when he sold it. (BTW: The reason Brinker makes such a big deal of  announcing on air that he sold ALL Nasdaq holdings, including QQQ,  is to finally completely bury his year-2000 disastrous trade that was never closed. Subscribers were told in March 2003 to  "hold for recovery.") 

As for Apple, Brinker now says he sold his own holdings in that in October. Was he lying today, or was he lying on December 9th when he said he had "no opinion on the stock?  From my show summary on December 9, 2012: 
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." 
Honey EC: What a nice guy to withhold from listeners that he had sold all of his own Apple holding in October and in December tell the audience he had "no opinion." 

HERBALIFE DOGFIGHT ON CNBC....Brinker said: "This is unprecedented ...This was on CNBC....There was a battle between a couple of Wall Street muckity-mucks. One of them Carl Ichan and the other Bill Ackman....They talked about their conflicting views of Herbalife....It turned into a donny-brook....It was amazing.... All on CNBC live on Friday afternoon.....This was definitely entertainment."    Read about it and watch video here.

OREGON MUNIS: Brinker says Oregon's newly released GOs have a good credit rating, but the yields are the lowest for munis that he has ever seen. 

SUBSTITUTE SUB-SECTION OF EQUITY INDEX FOR BONDS?....Jim in Illinois wondered what could be used in place of low-paying bonds...."something with regular dividends or water works or partnerships"?  Brinker told him that he could do that, but it should be counted in the equity ratio. 

MARKETIMER FIXED INCOME PORTFOLIO....Brinker replied to Jim: "What we've done in the investment letter.... We have a income portfolio, which is at this time, entirely representing fixed income investments. You are right the yields are not high, but that's the world we live in. Remember we have a slow-growing economy." 

Honey EC: Brinker talked about the Marketimer income portfolio several times today, and he made a special point of saying that it is entirely in fixed income investments again.  That is so because in December, he sold all of the Vanguard Wellesley Income Fund which is about 40% in equities. Now he only has four funds in that portfolio: Double Line Total Return Fund (DLTNX); Dodge and Cox Income Fund (DODIX); Metro West Total Return Bond (MWTRX); Vanguard Ginnie Mae Fund (VFIIX) -- evenly divided. 

FEDERAL RESERVE IS IN ALL TO KEEP RATES LOW....Brinker continued with Jim: "We have a slow-growing economy. We have a Fed that is all in.  I mean, like totally dedicated, for the time being, to keeping rates near historic lows." 

RISKS AND DIFFICULTIES OF GETTING FIXED INCOME YIELD UP... Brinker continued with Jim: "There are ways to get your investment yield up, but always keep in mind when you increase your investment yield, with that goes an element of risk -- you can diversify, but there is always an element of risk. For example, let me give you an area that is very difficult to diversify, which is interest rate risk. If you are holding fixed income securities, and interest rates move against you, that is a negative. That's a very difficult thing to fully diversify if you want to try to generate yield in a quality investment, and you pick a maturity area that you are comfortable with -- and a duration area -- the reality is if the rates go against you in a typical fixed income portfolio, that's going to be difficult. And that's the world we live in today." 

Jeffchristie's Moneytalk Final Exam Question:
Anonymous (whose writing style reminds me of our old friend allen coleman) asked:  
"i do not recall bob ever mentioning the end of the secular bear mkt. when di he announce that? thanks" 
That is a great question for the Moneytalk final exam. Here are the choices:
A) Brinker has yet to declare the end of the secular bear market.
B) Brinker said it was over before he said it wasn't over.
C) Brinker said it was over in the June 2007 edition of Marketimer.
D) Brinker said it isn't over till it's over in the May 2009 edition of Marketimer.
Answer

Brinker's guest today is Pankaj Ghemawat (speaking from Spain): World 3.0: Global Prosperity and How to Achieve It

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.)  

37 comments:

Honeybee said...

Which Stocks Look Ready to Sink and Surge with Earnings Next Week?

Honeybee said...

Where the market is now:

NEW YORK (Reuters) - The Standard & Poor's 500 index closed above 1,500 for the first time in more than five years on Friday as strong earnings reports, including Procter & Gamble's, helped the benchmark extend its rally to eight days.

The winning streak is the longest in eight years and left the S&P 500 about 4.1 percent away from its all-time closing high of 1,565.15 on October 9, 2007.

The equity market's strong start this year has been attributed to solid corporate results, an agreement in Washington to extend the government's borrowing power, encouraging signs from the global economy and seasonal inflows into stocks.


Read more:

S&P 500 vaults 1,500 as Wall Street extends rally

Is it Time To Sell Apple Bob? said...

Bob Brinker said for the first time that he owned Apple (March 18, Moneytalk Show Summary) and that there will be a time to sell Apple, but Bob said he is not selling now. " There will be a time to sell Apple, but Bob said he is not selling now. "

This is too funny:
"The caller said he was trying to pick another technology stock that had a similar tremendous run-up, but than cratered, such as a company like Cisco to provide a road map of how Apple might do. Bob said it was a bad stock to use for those purposes because Cisco had its huge run-up during the high tech bubble in the late 1990s that ran into the first quarter 2000. Cisco’s shares were highly valued in terms of their price-to-earnings multiple when they were trading in their $70s. That is not at all the case when you are looking at the P/E ratio of Apple. "

Hope someone asks Brinker about Apple. It still cratered.

Anonymous said...

Since Apple is the largest holding in several index funds such as SPY and VTI, I would give serious consideration to selling or taking large profits in these funds if I thought Apple was significantly overvalued. I have not done so.

solo

john said...

The market is high now but I think it is due to fall soon.The 500lb guerilla in the room is the sequester which begins in march. Unless congress makes a deal you are going to see a big cut in government across the board. Billions of dollars each month which will eventually cost thousands of jobs and hurt the economy.I am starting to ease up on equities now while the market is high. Just my opinion I could be wrong but interested if brinker picks up on it today

Anonymous said...

Billions of dollars each month which will eventually cost thousands of jobs and hurt the economy.

I would say you would be correct in the short term, but long term that is exactly the tonic needed.

Just an observation on a well reasoned commentary by John.

tfb


Bluce said...

By definition, government jobs are a drain on the economy; cutting them can only be a good thing overall.

Mark said...

I do not think Apple is overvalued today. The two problems I see Apple having right now is 1) Steve Jobs is not there and 2) Samsung but I think Apple is a long way from ring dead. High tech is by nature volatile. If you failed to get out before earnings release. My opinion is to hold on

Mark

Mark said...

I agree I too am raising cash in case of a downturn to buy if a dip occurs

Mark

ROAR! said...

What a comedian!

Boinker says he sold his Nasdaq100 holdings and that includes Apple.

What he didn't say on the radio is he IMMEDIATELY bought another fund that also had Apple as its largest holding, it was just a somewhat lower percentage.

At best he could say he "took profits" in Apple just as Cramer claims he sold half his position in Apple last year.

ROAR!

Anonymous said...

I laugh out loud every time I hear Bob recommend gold as a small hedge. Back when gold was trading at $300, Bob made fun of callers who questioned if they should have a position in gold. He laughed at them and called them “gold bugs”. Bob said he would never recommend buying gold. Now that it’s at an all-time high, he says it’s fine to hold a small position. What a joke.

Anonymous said...

"Honey EC: Why would you have to ride out all the ups and downs just because you used that portfolio? That makes no sense to me."

That assumes that somebody can actually successfully time the market. Brinker has proven he can't do it and I haven't seen anybody else who can do it. Have you?

MKT

Kirk Lindstrom's Investment Letter Service said...

This doesn't make sense to me:
We recommended in the Marketimer investment letter in early October the sale of Nasdaq holdings that involved the Rydex Fund that invests in the Nasdaq 100. That involved the QQQ shares. And for me that involved my Nasdaq holdings including Apple. I also sold my Nasdaq holdings at that time, including Apple...

If he sold has NASDAQ holdings, then why is MSFT listed at a HOLD in the January 2013 Marketimer?

Way back when he recommended QQQ (my QQQ charts) in the $80s in 2000, I believe MSFT (my MSFT charts) was the largest holding in that fund. Today MSFT is the second largest holding in QQQ, after AAPL. See QQQ Holdings to see at least I speak the truth even if the one on the radio has issues with it.

Why would Brinker NEVER mention Apple as an investment in the newsletter, take credit for it near the top on the radio saying he owned it as an individual stock and only now tell us he sold it when he moved money from one mutual fund into another yet kept his HOLD rating on MSFT?

It doesn't make sense for someone honest to behave this way.

Kirk Lindstrom's Investment Letter Service said...

Correction. This is a better link for current QQQ holdings.

AAPL APPLE INC 13.15%
MSFT MICROSOFT CORP 7.46%
GOOG GOOGLE INC CL A 6.34%
ORCL ORACLE CORPORATION 5.42%
CSCO CISCO SYSTEMS INC 3.57%

gabe said...

Throughout the years (since 1986), Brinker has had difficulty accepting criticism from his callers and seems always to attempt to get other callers after to agree with him and be critical of the "offender". At times, he gets into shouting matches!

I believe that the investor needs to take Brinker's advice and portfolio choices as only his opinion and always compare and contrast them with other information available such as Vanguard who sends out their outlook of the market, etc.As far as fund choices is concerned I am very careful in evaluating them with other information out there in the investment world.

I have done very well with his choices although his last move in the fixed income portfolio I am doubtful of and will not follow. I am not in the portfolio but use these funds as a "hybrid" at times in portfolio 3.

Anonymous said...

It doesn't make sense for someone honest to behave this way.

Has anyone ever claimed Brinker was honest? He is devoid of scruples.

tfb

Core said...
This comment has been removed by a blog administrator.
Unknown said...

Thank you Honey for doing these reviews and exposing what a fraud Bob Brinker is.

Near the tail-end of the first hour, a caller specifically asked Bob for his opinion on the Permanent Portfolio. Bob knew exactly what it was and side-stepped it.

The Permanent Portfolio was invented by Harry Browne in the 1970’s. It’s a SIMPLE and PASSIVE portfolio which consists of:

25% stock market (VTI),
25% short term treasuries (SHY),
25% long term treasuries (TLT),
25% gold (IAU),

The Permanent Portfolio has produced a 9% average annual return since its inception, and only had 4 negative years. It's worst year was 1981 where it lost only 5%! Now compare that with ANY OTHER PORTFOLIO!

I keep all my retirement money in the Permanent Portfolio. Do your own research and you’ll see for yourself.

Take care.

Unknown said...

Harry Browne's Permanent Portfolio, returns per year:
1972 18.90
1973 14.50
1974 14.50
1975 7.00
1976 10.50
1977 4.30
1978 10.50
1979 36.70
1980 17.60
1981 -4.90
1982 20.20
1983 4.90
1984 3.50
1985 17.80
1986 17.70
1987 8.10
1988 4.70
1989 14.00
1990 0.80
1991 12.70
1992 3.00
1993 11.40
1994 -0.90
1995 19.20
1996 5.60
1997 8.20
1998 11.90
1999 3.50
2000 3.50
2001 -0.70
2002 4.50
2003 13.40
2004 7.20
2005 7.80
2006 11.30
2007 11.90
2008 -2.00
2009 12.70
2010 12.00
2011 13.30
2012 6.80
AVERAGE 9.70

Do you own research. This data comes right out of the 2012 book called "Permanent Portfolio" by Criag Rowland.

Anonymous said...

Yeah honey, thanks for the review and the blog. (ras)

jeffchristie said...

Hi Bob. Thanks for taking my call. You mentioned earlier that congress passed a law regarding their pay that you feel is unconstitutional. Is there some reason why you didn't mention that a federal appeals court found that the president of the United States violated the constitution with two appointments to the national labor relations board. The court ruled that the senate was still in session when he made these recess appointments so the appointments are invalid. This seems like a bigger deal to me for two reasons. First this president claims to be a constitutional law professor and he violate the constitution. Second these two men were government officials who made decisions that have ramifications on companies and could effect the price of their stock. The decision with respect to Boeing opening a new factory in North Carolina is one example. I think any decisions that these two men made can be challenged in court if someone has the time and money to do so. Since their appointments were invalid any decisions they made would be vacated.

Dan G said...

Thanks, Andy D. I have read some of Harry Browne's work and found him quite interesting. But I have not heard of his "Permanent Portfolio". Very, very interesting! One could do much, much worse! And it would be hard to do much better! Or so it seems to me.

- Dan

Jim said...

Looks like Bob Brinker has an important decision to make with the February Marketimer. For months he has been predicting the S&P to reach the upper 1400's to low 1500's. We have now reached that range, so he must either a)raise his target range or b)take profits. If he raises his target he must basically predict new historic highs. That however conflicts with his opinion that we are still in a secular bear. He really cannot take profits as long as his timing model is bullish however, which creates a bit of a dilemma for him. Even though he seems to be cautious recently I expect him to raise his target in the February newsletter.

Pig said...

GREAT POST, Mr Christie

Is there some reason why you didn't mention that a federal appeals court found that the president of the United States violated the constitution with two appointments to the national labor relations board.

Of course there is a reason. The bobs are flaming liberals (both of them), and hypocritical to the MAX.

Besides, neither can time the market any better than they choose politicians.

Dan G said...

I was wondering if the "Permanent Portfolio" advocated occasional re-balancing. That would probably have a dramatic effect on total results since gold and the stock market have rallied much more than the fixed income portions. Re-balancing would probably decrease the net results. Or so it seems to me.

JamesT said...

" If he raises his target he must basically predict new historic highs. That however conflicts with his opinion that we are still in a secular bear."

I thought Brinker said the secular bear market ended? I can't keep track of things like that.

Honeybee said...

JamesT:

You just flunked Jeffchristie's Moneytalk Final Exam Question.

If you had read it and looked at the answer, you would know that Bob Brinker HAS NOT SAID THE SECULAR BEAR MARKET ENDED.

Or more accurately, he did say it ended in 2007 retroactively to 2006, but then in 2009, he said it obviously had not ended. (No change since then.)

May, 2009 Marketimer, Bob Brinker said:

"Although it appeared to us that the secular bear megatrend that began in year-2000 had reached its conclusion, there is no question that the secular bear megatrend remains intact...."


Read about it here

Unknown said...

Dan G, the Permanent Portfolio is rebalanced yearly, like any other portfolio. Like I mentioned you should do you own research. There are books written about Permanent Portfolio as well as a dedicated forum: http://gyroscopicinvesting.com/forum/

My point is that Bob Brinker claims to be a market timer. He claims his ACTIVE investment portfolio is superior to a PASSIVE portfolio, but it’s not. Bob made his fortune selling his newsletter, but no newsletter can predict the future. He knows this. The crash of 2008 proves this.

Bob is a big phony. A simple 50/50 Boglehead stock/bond portfolio beats Bob anyday.

Bob deflected the caller's question by saying the Permanent Portfolio was a "simple" Portfolio. He's right. It is simple. But its 9% average returns beat him, which is why he quickly moved on.

Bob does not want people to know that a simple passive portfolio beat him. Bob is unneeded. In fact anyone selling an investment newsletter is unneeded, because nobody knows the future, which is why you should not guess.

Tex said...

Regarding Bob's recommendation of GLD, can any of you confirm that this is the fund traded under the auspices of SPDR (State Street Global Advisors)? I'm also interested in a mutual fund or ETF that's backed by silver but SPDR doesn't seem to have one. Thanks.

Dan G said...

Thanks, Andy D. I agree timing is not necessary to be successful in the market.

But I still remain an un-repentant "timer". Certain long-term indicators (monthly MACD of the S&P, for one) allowed me to sidestep the 2008 debacle. As long as it continues to work for me, I'll continue to do it. If/when it ceases, I'll go the diversification/asset allocation route. Meanwhile I'm having to much fun to quit!

- Dan

Anonymous said...

Andy D said...

I like this guy.

tfb

Honeybee said...

Tex asked:

"Regarding Bob's recommendation of GLD, can any of you confirm that this is the fund traded under the auspices of SPDR (State Street Global Advisors)? I'm also interested in a mutual fund or ETF that's backed by silver but SPDR doesn't seem to have one...."

Yes, I can confirm that GLD is a SPDR ETF. And you can buy a silver ETF. This is the one that Bob Brinker is on record saying that it can be used like GLD is if you want to hedge with silver. Here it is:

SLV

Honeybee said...

Tex,

Look in the right column of this page under Fund Basics

Mark said...

Correction - any timing newsletter is not needed. I subscribe to Morningstock stock investor which looks for undervalued stocks, but does not participate in market timing of any sort. I am always somewhat invested, but I will raise cash when I think the market is ready for a correction (like now)

Mark said...

Correction - any timing newsletter is not needed. I subscribe to Morningstock stock investor which looks for undervalued stocks, but does not participate in market timing of any sort. I am always somewhat invested, but I will raise cash when I think the market is ready for a correction (like now)

Tex said...

Honeybee,
Many thanks for your guidance; that's exactly what I wanted to know.

Anonymous said...

some years ago, I stopped my subscription to Brinker's newsletter when I lost big time on his recommendation to buy. For several years thereafter, he never acknowleged what a costly blunder he made and when confronted by a caller, He sidestepped by calling the caller's question an " ambush ". Very thin skinned egotist.
After being a complacent Vanguard gnma investor, I just realized that all of my 2012 gains were wiped out since Sept. 2012 to present. Soo much for short duration!