March 24, 2013....Bob Brinker's Moneytalk Summary: Part One (comments welcome)
STOCK MARKET: Caller Dave from Illinois asked Brinker if the Federal
Reserve pumping money into the economy was driving the stock market
going up.
Honey EC: Brinker gave a long answer to Dave's question that includes a lot of other information about what the Fed is doing, it's affect on money supply, inflation, interest rates, unemployment and the stock market:
Brinker
replied: "It's called Quantitative Easing....The Federal Reserve is
buying under the current round, which is technically, the fourth
rounds....is purchasing $85 billion a month in U.S. Treasury and Mortgage-Back Securities.....And
that put the money into circulation....No question that has flooded the
market with money...And that is one main reason that rates are so low
is there's money everywhere....Why did they do it? They started to do it
in 2008 to avoid a collapse of the banking system."
Brinker continued: "Why have they
continued to do it? They operate under a congressional order that says
they have to maximize employment while maintaining the stability of the
dollar. Now that's measured in inflation terms.....That's defined right
now as Core Inflation of less than 2% as measured by the Personal
Consumption Expenditure Index. And that's where inflation is. It's 1
and a fraction using that Core Index. Therefore they're trying to create
conditions favorable for job creation to get down the unemployment rate
which is way to high at 7.7%. They want to get it down to 6.5% or
less.....That money is out there in the financial system. Does some
of that money find its way into the stock market? Of course it does.
That's one of the reasons you're looking at record or near record prices
on major stock indexes. Because of the fact that there has been so much
liquidity created under this monetary policy."
Model Portfolio I and Akre
Focus Retail Fund (AKREX).....Caller Dan from Illinois told Brinker
that he tried to buy AKREX to go in model portfolio I, and found that the fund
was closed. Brinker replied: "That is not true. For anybody listening
to Dan and mislead by Dan's observations, that is not true."
Honey
EC: I have not checked whether or not AKREX is closed, but I'm sure Brinker would know if it was......In January 2012, Brinker sold the 15% Baron Partner (BPTRX)
holdings and bought AKRE in portfolio I -- as he indicated to the
caller. All three of the model portfolios contain small holdings in AKRE.
GOLD NOT IN MODEL PORTFOLIOS....Caller Dan okay and asked about buying gold. Brinker replied:
"Whether or not you wish to have a hedge in something like gold bullion,
which you can easily do through the Exchange-Traded Fund,
GLD....depends on whether you personally choose to have it. Now I have
not chosen to have it. Consequently, we don't even have it in our model
portfolios. But we do have GLD on our list of Exchange Traded Funds. As a
consequence anybody who wishes to have a hedge in that fund, can do
it. The reality is, it hasn't been doing very well. GLD has really been
doing quite poorly.....It does not pay a dividend....So the only thing
you have in the fund is price change and price in that fund is down from
a year ago."
Honey EC: This is the first time that
Brinker has given any reason whatsoever to explain why he added GLD to
his off-the-books short list of (all most-well known) ETFs in 2009. The
list also includes three individual stocks: Suncor, Microsoft and
Vodafone.
VANGUARD GINNIE MAE FUND (VFIIX)
Caller Paul said his parents had all of their money in Ginnie Maes.
Brinker replied: "We've had a tremendous run with that fund. And that fund
has done so well. It's had a lot of payouts of distributions in the last
year and a quarter. If you go back to December 2011, they've paid out
something in the area of 26 or 27 cents a share. So if you add that to
the current share price, you'd be at $11.10 a share. The actual price is
$10.83 because the distributions were paid out to the
shareholders......Having said that, remember Paul, in our portfolios,
we diversify....Although that fund is represented in our portfolios in
certain places, we don't recommend concentrating all of your money in
one fund.....If you look in our model portfolio III where a lot of
retired investments are concentrated for subscribers in retirement or
approaching retirement, you will see that fund represented there. We
also have it represented in our income portfolio on page 7, but in all
cases, we have a widely diversified portfolio."
Honey EC: I
strongly question how "well-diversified" the two portfolios are that
Brinker talked about today. He used to include Vanguard Short-Term
Investment Grade Fund (VFSTX) and Wellesley Income Fund (VWINX) in both
portfolios. Wellesley is now gone altogether and in its place are
higher-expense managed fund. Matter of fact, the only Vanguard Bond
Fund in the fixed-income portfolio is a 25% weighting in Vanguard Ginnie
Mae Fund -- even the Vanguard High-Yield Fund is gone. The other three
replacement components of that portfolio seem quite a lot more risky to
me, especially Double Line Total Return (DLNTX)
and Metro West Total Return (MWTRX). Dodge and Cox Income Fund (DODIX)
is an old fund and may be more reliable, but is it as diversified? I
certainly doubt it.
MONEY SUPPLY....Brinker said:
"The money supply has gone up hugely over the last few years at record
historic rates -- because I track it in my investment letter.
FRIEDMAN AND KEYNES....Brinker said: "I think Milton Friedman, who I was lucky enough to catch in a number of speeches in the Big Apple....is a absolutely brilliant guy.....If there's one topic that people are ignorant about it's John Maynard Keynes. They don't understand what the man stood for.....Keynes
was adamant about countries building up excess funds in the good times
so that they would be in a position to stimulate the economy in bad
times. He was not favor of what the United States has done for decades
which is running deficits every year in good times and bad....That is
not Keynesian economics."
BEN BENANKE'S EXIT DOOR
MAY BE OPEN....Brinker said: "He gave us some hints that the door to his
exit from the Federal Reserve Chairmanship may be open....He said that
he has 'spoken to the president' a bit. He says he does not feel
personal responsibility to stay as Fed Chair as the Fed winds down it
stimulative monetary policies. In fact he went on to say, 'I don't think
I'm the only person in the world who can manage the exit.'.....If you
ask me, during my lifetime, the two Super-Star Fed Chairs, they're Paul
Volcker and Ben Bernanke. No hesitation at all about saying that...Does
it matter whether he stays on or not? That's a question that cannot
be answered because it depends on who replaces him when he leaves. If
you get somebody as good, then it doesn't matter. If you come up with a
turkey, then it matters....I'd rather see Bernanke in the chair during
the withdrawal process, but he's going to do what he's going to do."
CYPRUS.....Brinker said: "Cyprus is hanging in the balance as the
European Bank deadline on the table as we speak to see whether or not
Cyprus is going to remain in the Euro."
Honey EC: Brinker covered this subject thoroughly last week,
so I am not going to report much about it today. And clearly, the story
has changed since last week and has even changed since Brinker spoke
about it early in the program. Here is a LINK to a very good BBC update on the latest news on Cyprus.
THE NATIONAL DEBT WILL NEVER BE PAID....Brinker said: "I don't think it will ever
happen.....Anybody that thinks they are going to pay off the national
debt is dreaming....I don't see a major pay down of the National Debt.
It's moving up toward 17 Trillion dollars and will cross 17 trillion
this year.....When it comes to the National Debt, Party affiliation has
meant very little. We've been running huge deficits in good times and
bad times."
Honey EC: Hey Bob, maybe you should check
into what's happened to the National Debt in the past four years and
compare that to all that went before. It might surprise you.
THE WEEK AHEAD, Brinker comments: Housing prices starting to improve. Tuesday Case-Schiller Housing Price Index comes out - median forecast is a year-over-year gain of close to 8%. Last month it was almost 7%.....4th quarter revision expected to be 1/2 of 1% growth. The earlier revision was 0.1%. Total real GDP growth for 2012 looks like about 2.2%. Year before it was 1.8%....That's slow growth.
Initial unemployment claims estimated at 340,000....Last week they
were 336,000....They are well under 400,000 and that is where we want to
see them.
Jeffchristie's Moneytalk Final Exam Question:
Bob
Brinker once again sang the praises of Ben Bernanke. He ask if it
would be a problem if he didn't stay around to unwind the expansion of
the FED's balance sheet. He said it would be a problem if his successor
was a:
A) A Dodo bird.
B) A Chicken hawk.
C) A Turkey.
D) A Vulture.
Answer
Bob Brinker's guest-speaker was Charlie Maxwell. Guest-writer, FrankJ has written a summary of the Maxwell interview. See Part Two article above this one.
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.)
Sunday, March 24, 2013
Saturday, March 23, 2013
March 23, 2013, Bob Brinker's Marketimer Model Portfolios Profiled in Latest Hulbert Financial Digest
March 23, 2013.....Mark Hulbert periodically profiles various newsletters that he includes in the Hulbert Financial Digest performance ranking each month. He profiled Bob Brinker's Marketimer this month.
Hulbert explained that even though he tracks the performance of Bob Brinker's fixed-income portfolio, it is not used to calculate Brinker's official Marketimer performance. Instead, Hulbert uses an average of Brinker's three model portfolios. Model portfolio I and II are 100% equities and portfolio III is about half bonds and half stocks.
Now let's take a look at what Hulbert Financial Digest says about Bob Brinker's Marketimer:
So there you have it, even though Mark Hulbert gave Bob Brinker a BIG MULLIGAN in year-2000 by not including his QQQ disaster-trade in his performance ranking, Marketimer still ranks 10th place over the past 25 years, and it did not beat the Wilshire 5000.
BTW: At the end of Brinker's profile, Hulbert always shows a footnote about Brinker's "quite unprofitable trade" and gives an excuse for ignoring it. Hulbert knows that Brinker told subscribers to use cash reserves raised from model portfolios for that trade, but he gives Brinker a pass anyway. It's certain that Brinker's "official" performance would be a lot less if he accounted for that trade. Shady business for both of them? I report, you decide. (25 X $185 = $4625)
Hulbert explained that even though he tracks the performance of Bob Brinker's fixed-income portfolio, it is not used to calculate Brinker's official Marketimer performance. Instead, Hulbert uses an average of Brinker's three model portfolios. Model portfolio I and II are 100% equities and portfolio III is about half bonds and half stocks.
Now let's take a look at what Hulbert Financial Digest says about Bob Brinker's Marketimer:
Mark Hulbert said: ".....Brinker's portfolio average as of 2/23/13 is ranked in the 10th place over the last 25 years (among the 35 newsletters the HFD tracked over this period)......Honey here: Hulbert also shows that the "Lifetime" performance of Marketimer (time that HFD has tracked it) is slightly less than the Wilshire 5000 and index funds would have beaten his mutual fund picks.
Over the 25+ years that the HFD has tracked his letter, for example, only twice has he deviated from being fully invested. The first was after the 1987 crash, a move that ended up costing his portfolios. His second deviation, a profitable one, lasted from January 2000 until March 2003. Despite this mixed timing record, these deviations from being fully invested have, on balance, ended up helping his performance......
In contrast, Brinker's mutual fund selection on average have not beaten the market. For example, his "Aggressive" portfolio would have performed a half percentage point per year better since 1986 if, instead of investing in the mutual funds Brinker actually picked, it had allocated the same amounts to an index fund."
So there you have it, even though Mark Hulbert gave Bob Brinker a BIG MULLIGAN in year-2000 by not including his QQQ disaster-trade in his performance ranking, Marketimer still ranks 10th place over the past 25 years, and it did not beat the Wilshire 5000.
BTW: At the end of Brinker's profile, Hulbert always shows a footnote about Brinker's "quite unprofitable trade" and gives an excuse for ignoring it. Hulbert knows that Brinker told subscribers to use cash reserves raised from model portfolios for that trade, but he gives Brinker a pass anyway. It's certain that Brinker's "official" performance would be a lot less if he accounted for that trade. Shady business for both of them? I report, you decide. (25 X $185 = $4625)
Sunday, March 17, 2013
March 17, 2013...Bob Brinker's Moneytalk: Summary, Excerpts, Commentary and Discussion
March 17, 2013....Bob Brinker hosted Moneytalk today............. (comments welcome)
STOCK MARKET....Brinker only mentioned the stock market one time today when he was talking to Ludwig from Connecticut. Brinker said: "Look at the tripe that people have been sold in recent years.....They were sold a bill of goods about putting more money into gold. Gold was going to go to whatever. Actually more recently, gold's been heading south off its highs in recent months.They were told to beware of the stock market. The stock market was a Ponzi scheme. That turned out to be untrue as we see. There have been so many false premises laid upon the public in the past few years, it's absolutely stunning."
US NOT DEBASING CURRENCY....Caller Ludwig from Connecticut asked what Brinker thought about those who claim that the United States is debasing its currency. Brinker replied: "I think that anybody that tells you that the United States is debasing its currency is full of soup. The US dollar is one of the strongest currencies on the planet."
GOLD....Caller Paul from Florida thought people in Cyprus might put there money into gold bars so "it couldn't be taken away from them." Brinker said: "I understand what you're saying but that doesn't necessarily mean that they're going to rush to a speculative item like gold which is based on supply and demand around the world."
Honey EC: Brinker still has GLD on his short off-the-books list of "individual issues" on Page 7 of Marketimer. Last February, Brinker added a new item to that list: Vanguard FTSE All-World ex-USA (VEU). Like with GLD, he has not given any reason for adding it -- or guidance.
Brinker's entire opening monologue was devoted to the Cyprus bank levy. Here are transcribed excerpts from it:
EURO LEADERS PLACE LEVY ON CYPRUS BANK DEPOSITORS....Brinker said: "Boys and girls, this weekend, we have seen one of the most bizarre developments in the history of finance....I speak of the bank deposit tax that has been announced this weekend in Cyprus....It turns out that the banks in Cyprus are basically insolvent...So the Euro area finance ministers got together this weekend to decide what to do about the de facto insolvency of Cypriot banks. And what they decided is a rescue plan that can only be described as bizarro to the nth degree....As part of the bailout....Cyprus is going to impose a tax on deposits. I know most of you are accustomed to receiving interest on their deposits....Cyprus is going to tax money already in the bank, as of Friday, 6.75% up to 100,000 euros....and that is the ceiling for account insurance for the European Union....For deposits about 100,000 euros, Cyprus is going to tax 9.9%....Now these taxes, if they happen.....There is a banking holiday on Monday....will raise $5.8 billion....There is no problem collecting the tax. They froze the accounts over the weekend...they are going to extract the tax from the balances."
(BRINKER CONTINUED) "There is a lot of Russian money in Cyprus banks....Thirty percent of the deposits in Cyprus banks are non-euro nation deposits.....This is uncharted territory....When you start confiscating, let's use real words here.... When they begin to confiscate deposits in banks, what kind of a precedent does that set?......You can't avoid this....All of the accounts were frozen while the banks were closed....The deposit tax will be assessed before the banks open on Tuesday....They are going to limit electronic transfers until the banks re-opening. There's not going to be any opportunity to get around this.....And one of the politicians said quote, 'as it is a contribution -- that's the word I want to focus on -- to the financial stability of Cyprus, it seems just -- that's another good one -- to ask a contribution... of all deposit holders. Is that the sentence from Hel...sinki or what?"
(BRINKER CONTINUED) "It's amazing to me that something like this would be...or proposed....Now there's concern that they could re-ignite the financial crisis with this kind of an effort.....Another of the observers said that tapping deposit holders -- there's another semantical exercise -- was needed to expand the tax base in Cyprus. Is that a tap on the shoulders when you wake up and find 6.7% of your hard-earned money is gone?....Will people in other countries start wondering about their deposits in banks in places like Greece, Portugal, and Ireland and even Italy.....Could we see re-circulation of money to get away from that risk?"
MORE BRINKER COMMENTS SCATTERED THROUGHOUT THE SHOW: Brinker said: "This precedent is beyond ugly....It's an outrage. It's outlandish....In my opinion, the people in Cyprus have been robbed.....It's not really a tax. It's an outright confiscation.When you think about the fact that they are doing it to somebody who managed to save 1000 or 10,000 euros over a period of years by scrimping and saving and denying themselves...It's unconscionable."
WILL IT HAPPEN IN UNITED STATES BANKS? ....Brinker said: "I expect that here in the US, people will recognize that it's not going to happen in US banks."
IN EDIT MONDAY: Honey EC: Several have pointed out in comments (LINK) that this kind of "confiscation" has already happened in the US.
from CNBC: "The arrangement, structured as a bail-in, would give depositors shares in the banks in return for the levy."
Here are a couple links to read more about the subject. This one seems to be keeping it updated regularly: Telegraph UK News/Cyprus And this from the BBC.
PEOPLE ARE LINING UP AT CYPRUS BANKS.....Caller Martin from Virgina Beach said if he had money on deposit, he'd take what was left out of the bank as soon as possible. Brinker correctly said that people are already lining up, but the banks have frozen the accounts, limited what can be taken out. Martin ended his call by saying: "They must not have Second Amendment rights over there."
BE SURE YOU HAVE FDIC INSURANCE...Brinker said: "When people lose money by doing it (not having FDIC insurance on all deposits), they are literally asking for it. They're saying, okay, I know it's not insured and I lose it if you go under, but I'm going to do it anyway. What can you do to help a person with that mind set. Nothing, they are walking off a cliff if the bank fails. That does happen when these banks that are not too big to fail, go under....We have too big fail banks in our system right now....And we have executives of those banks, in some cases, that are too big to jail. The Attorney General has told us that, so we know that.....But that makes it harder on the smaller banks."
REITS AND VQN: Caller Clark from Baton Rouge asked Bob about non-traded REITS. Brinker said he didn't "like them." He said the only REITS he would invest in is Vanguard REIT Index (VQN) -- an ETF.
REVERSE MORTGAGES....Brinker said: "I don't like them. I don't recommend them."
Honey EC: The hot topic of the day was Cyprus. Most of the callers talked about it, except for a couple that were very esoteric like "should I take a lump sum or not" and "which account should I draw down first when I retire."
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.)
STOCK MARKET....Brinker only mentioned the stock market one time today when he was talking to Ludwig from Connecticut. Brinker said: "Look at the tripe that people have been sold in recent years.....They were sold a bill of goods about putting more money into gold. Gold was going to go to whatever. Actually more recently, gold's been heading south off its highs in recent months.They were told to beware of the stock market. The stock market was a Ponzi scheme. That turned out to be untrue as we see. There have been so many false premises laid upon the public in the past few years, it's absolutely stunning."
US NOT DEBASING CURRENCY....Caller Ludwig from Connecticut asked what Brinker thought about those who claim that the United States is debasing its currency. Brinker replied: "I think that anybody that tells you that the United States is debasing its currency is full of soup. The US dollar is one of the strongest currencies on the planet."
GOLD....Caller Paul from Florida thought people in Cyprus might put there money into gold bars so "it couldn't be taken away from them." Brinker said: "I understand what you're saying but that doesn't necessarily mean that they're going to rush to a speculative item like gold which is based on supply and demand around the world."
Honey EC: Brinker still has GLD on his short off-the-books list of "individual issues" on Page 7 of Marketimer. Last February, Brinker added a new item to that list: Vanguard FTSE All-World ex-USA (VEU). Like with GLD, he has not given any reason for adding it -- or guidance.
Brinker's entire opening monologue was devoted to the Cyprus bank levy. Here are transcribed excerpts from it:
EURO LEADERS PLACE LEVY ON CYPRUS BANK DEPOSITORS....Brinker said: "Boys and girls, this weekend, we have seen one of the most bizarre developments in the history of finance....I speak of the bank deposit tax that has been announced this weekend in Cyprus....It turns out that the banks in Cyprus are basically insolvent...So the Euro area finance ministers got together this weekend to decide what to do about the de facto insolvency of Cypriot banks. And what they decided is a rescue plan that can only be described as bizarro to the nth degree....As part of the bailout....Cyprus is going to impose a tax on deposits. I know most of you are accustomed to receiving interest on their deposits....Cyprus is going to tax money already in the bank, as of Friday, 6.75% up to 100,000 euros....and that is the ceiling for account insurance for the European Union....For deposits about 100,000 euros, Cyprus is going to tax 9.9%....Now these taxes, if they happen.....There is a banking holiday on Monday....will raise $5.8 billion....There is no problem collecting the tax. They froze the accounts over the weekend...they are going to extract the tax from the balances."
(BRINKER CONTINUED) "There is a lot of Russian money in Cyprus banks....Thirty percent of the deposits in Cyprus banks are non-euro nation deposits.....This is uncharted territory....When you start confiscating, let's use real words here.... When they begin to confiscate deposits in banks, what kind of a precedent does that set?......You can't avoid this....All of the accounts were frozen while the banks were closed....The deposit tax will be assessed before the banks open on Tuesday....They are going to limit electronic transfers until the banks re-opening. There's not going to be any opportunity to get around this.....And one of the politicians said quote, 'as it is a contribution -- that's the word I want to focus on -- to the financial stability of Cyprus, it seems just -- that's another good one -- to ask a contribution... of all deposit holders. Is that the sentence from Hel...sinki or what?"
(BRINKER CONTINUED) "It's amazing to me that something like this would be...or proposed....Now there's concern that they could re-ignite the financial crisis with this kind of an effort.....Another of the observers said that tapping deposit holders -- there's another semantical exercise -- was needed to expand the tax base in Cyprus. Is that a tap on the shoulders when you wake up and find 6.7% of your hard-earned money is gone?....Will people in other countries start wondering about their deposits in banks in places like Greece, Portugal, and Ireland and even Italy.....Could we see re-circulation of money to get away from that risk?"
MORE BRINKER COMMENTS SCATTERED THROUGHOUT THE SHOW: Brinker said: "This precedent is beyond ugly....It's an outrage. It's outlandish....In my opinion, the people in Cyprus have been robbed.....It's not really a tax. It's an outright confiscation.When you think about the fact that they are doing it to somebody who managed to save 1000 or 10,000 euros over a period of years by scrimping and saving and denying themselves...It's unconscionable."
WILL IT HAPPEN IN UNITED STATES BANKS? ....Brinker said: "I expect that here in the US, people will recognize that it's not going to happen in US banks."
IN EDIT MONDAY: Honey EC: Several have pointed out in comments (LINK) that this kind of "confiscation" has already happened in the US.
from CNBC: "The arrangement, structured as a bail-in, would give depositors shares in the banks in return for the levy."
Here are a couple links to read more about the subject. This one seems to be keeping it updated regularly: Telegraph UK News/Cyprus And this from the BBC.
PEOPLE ARE LINING UP AT CYPRUS BANKS.....Caller Martin from Virgina Beach said if he had money on deposit, he'd take what was left out of the bank as soon as possible. Brinker correctly said that people are already lining up, but the banks have frozen the accounts, limited what can be taken out. Martin ended his call by saying: "They must not have Second Amendment rights over there."
BE SURE YOU HAVE FDIC INSURANCE...Brinker said: "When people lose money by doing it (not having FDIC insurance on all deposits), they are literally asking for it. They're saying, okay, I know it's not insured and I lose it if you go under, but I'm going to do it anyway. What can you do to help a person with that mind set. Nothing, they are walking off a cliff if the bank fails. That does happen when these banks that are not too big to fail, go under....We have too big fail banks in our system right now....And we have executives of those banks, in some cases, that are too big to jail. The Attorney General has told us that, so we know that.....But that makes it harder on the smaller banks."
REITS AND VQN: Caller Clark from Baton Rouge asked Bob about non-traded REITS. Brinker said he didn't "like them." He said the only REITS he would invest in is Vanguard REIT Index (VQN) -- an ETF.
REVERSE MORTGAGES....Brinker said: "I don't like them. I don't recommend them."
Honey EC: The hot topic of the day was Cyprus. Most of the callers talked about it, except for a couple that were very esoteric like "should I take a lump sum or not" and "which account should I draw down first when I retire."
Jeffchristie's Moneytalk Final Exam Question:Brinker's third-hour guest was Anat Admani who wrote "The Bankers New Clothes." (I do not advertise for Amazon anymore.) Here's a LINK to read more about her background.
What does Bob Brinker think of the new tax on bank deposits in Cyprus?
A) It is the most bizarre development in the history of finance.
B) It's more confiscation than a tax.
C) It is bazarro to the "N"th degree.
D) All of the above.
Answer: D All of the above.
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.)
Thursday, March 14, 2013
March 14, 2013, Bob Brinker's Current Views on Junk Bond Funds
March 14, 2013....Back on October 9, 2012, Bob Brinker sold all Marketimer fixed income portfolio high-yield bond fund holdings. However, Brinker did not raise cash in his portfolios; they are ALL still fully invested)
Here's the buy history:
On the day that Brinker advised selling all Vanguard High-Yield Fund (October 9, 2012), it closed at $6.05. It is now selling at $6.13 -- about 1.5% higher. It pays a higher monthly dividend and has a much lower expense ratio than Double Line Total Return Bond Fund (DLTNX). At the same time, Double Line has gone from $11.39 down to $11.13 -- about 2%.
So far, this is not looking like a good move -- especially for those who paid capital gains tax to sell their Vanguard Fund.
Here's the buy history:
After years of bashing "junk bond" funds on Moneytalk, Brinker added Vanguard High-Yield Fund (VWEHX) to the Marketimer fixed-income portfolio on April 11, 2003. In order to do that, he reduced holdings in Vanguard Ginnie Mae Fund from 50% to 35% (Ginnie Mae holdings are currently at 25%).Here's the reason he sold:
Moneytalk, November 11, 2012....Caller Bob from New York asked: "From your newsletter, you eliminated the Vanguard High Yield. Was that a call on the fund or on high yield?Here's the outcome -- so far:
Brinker replied: "What happened with that fund when we took it out of the portfolio was this, we saw the yield on the fund drop below 5%. That's very unusual for that fund historically....As a result of that decline in the yield, the net-asset-value of that fund rose so much that I regarded it as an opportunity to take profits. I'm glad you asked that Bob. That decision had nothing to do with the fact that that fund had closed to new investors....It was not related to that. In other words, what I'm saying is, if that fund had remained open to new investors, the exact same decision would have been made."
On the day that Brinker advised selling all Vanguard High-Yield Fund (October 9, 2012), it closed at $6.05. It is now selling at $6.13 -- about 1.5% higher. It pays a higher monthly dividend and has a much lower expense ratio than Double Line Total Return Bond Fund (DLTNX). At the same time, Double Line has gone from $11.39 down to $11.13 -- about 2%.
So far, this is not looking like a good move -- especially for those who paid capital gains tax to sell their Vanguard Fund.
Sunday, March 10, 2013
March 10, 2013...Bob Brinker's Moneytalk: Lynn Jimenez Fill-in Host
March 10, 2013....Bob Brinker took this Sunday off from Moneytalk. Lynn Jimenez was guest-host.
Honey EC: It's no surprise that Brinker was gone today. He has worked THREE weeks in a row now. He always takes off (at least) one week per month. The February 10th Moneytalk show was old calls spliced together and old monologues. That fact was never revealed on that show or mentioned on later shows.
Lynn Jimenez is a business reporter for KGO 810, which is San Francisco's most powerful radio station. KGO dropped Moneytalk a couple of years ago, but the show was picked up by KSFO 560, KGO's much less powerful sister station.
Jimenez is a great business reporter and gave a great business report in the opening monologue of Moneytalk. She quoted CNN, CBS Marketwatch and other news sources.
A long time Brinker listener sent these comments during the program today:
Honey EC: The following is the only call that I think you might find entertaining. I promise you that I rewound the tape several times as I transcribed it because I wanted to be sure that I got every word right. It's an accurate transcription of exactly what Jimenez said to Chris from Arizona.
Chris in Arizona, who said he was a Marketimer subscriber and had been listening to Bob Brinker since about1999, told Jimenez that he had taken $400,000 out of the stock market last December. He now wants to know the best way to reinvest it back in.
Jimenez replied: "You should be dollar-cost-averaging in. You should not invest a lump sum. I think weekly, maybe a little bit more like a lump sum investment than dollar-cost-averaging, but a lot of it depends upon the market. I mean, if you have the time to monitor it and can be opportunistic about it, that might work. But usually, dollar-cost-averaging would suggest at least a month, to a couple of months. But again if you can monitor the market. What are you going to invest in? Are you going to invest in index funds? Are you going to invest in individual stocks?
Chris answered: "Yes, ma'am. I follow pretty much Bob Brinker's portfolio one. I'm a newsletter (Marketimer) subscriber. So I just follow that."
Jimenez continued: "Okay, alright, dollar-cost-averaging is great. I think every week might be a little aggressive. However as I said, you know, if you do monitor the market closely and you can be opportunistic so you have a significant pullback for a day or two, well that's great. But then exercise discipline, you know. I think we still have maybe as much as 20% more to run up here. Don't forget, you know, we haven't felt the effects of sequestration in the budget battle yet. But we will later this year and in 2014. Nevertheless, the housing market, which is a multiplier, which means that it multiplies its impact, is only at the beginning of the recovering and that is huge. It's going to be very important. I do think you're on the right track. Do dollar-cost-average."
Honey EC: I've noticed that Jimenez sometimes talks so fast that it's not easy to catch exactly what she is saying. I think that answer shows the depth of her lack of expertise.
On the other hand, it also shows that she never reads Marketimer or even listens to Brinker's Moneytalk. The fact is, Brinker STOPPED advising subscribers to dollar-cost-average last October! October 2012 was the last month that Bob Brinker's Marketimer recommended dollar-cost-averaging for "new" money. (Of course, all of his Marketimer model portfolios are still fully invested.)
One of Lynn's guests today was real estate expert Vince Malta. While discussing how to get top dollar for your property Lynn suggested:
A) Remodel your kitchen.
B) Stage the property.
C) Put lipstick on a pig.
D) Advertise on the internet.
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.)
Honey EC: It's no surprise that Brinker was gone today. He has worked THREE weeks in a row now. He always takes off (at least) one week per month. The February 10th Moneytalk show was old calls spliced together and old monologues. That fact was never revealed on that show or mentioned on later shows.
Lynn Jimenez is a business reporter for KGO 810, which is San Francisco's most powerful radio station. KGO dropped Moneytalk a couple of years ago, but the show was picked up by KSFO 560, KGO's much less powerful sister station.
Jimenez is a great business reporter and gave a great business report in the opening monologue of Moneytalk. She quoted CNN, CBS Marketwatch and other news sources.
A long time Brinker listener sent these comments during the program today:
ras here: Early in the show, kind of embarrassing that Lynn didn't know if Bernanke was pumping $85 million or $85 billion into the economy. Not the most sophisticated explanation of the process either. Yikes!Ras is right! Vincent in NY asked: "I think the Fed is buying something like a trillion dollars a year in bonds. Is that correct?" Lynn Jimenez answered: "I think it's 85, what is it, million or billion, a month."
Honey EC: The following is the only call that I think you might find entertaining. I promise you that I rewound the tape several times as I transcribed it because I wanted to be sure that I got every word right. It's an accurate transcription of exactly what Jimenez said to Chris from Arizona.
Chris in Arizona, who said he was a Marketimer subscriber and had been listening to Bob Brinker since about1999, told Jimenez that he had taken $400,000 out of the stock market last December. He now wants to know the best way to reinvest it back in.
Jimenez replied: "You should be dollar-cost-averaging in. You should not invest a lump sum. I think weekly, maybe a little bit more like a lump sum investment than dollar-cost-averaging, but a lot of it depends upon the market. I mean, if you have the time to monitor it and can be opportunistic about it, that might work. But usually, dollar-cost-averaging would suggest at least a month, to a couple of months. But again if you can monitor the market. What are you going to invest in? Are you going to invest in index funds? Are you going to invest in individual stocks?
Chris answered: "Yes, ma'am. I follow pretty much Bob Brinker's portfolio one. I'm a newsletter (Marketimer) subscriber. So I just follow that."
Jimenez continued: "Okay, alright, dollar-cost-averaging is great. I think every week might be a little aggressive. However as I said, you know, if you do monitor the market closely and you can be opportunistic so you have a significant pullback for a day or two, well that's great. But then exercise discipline, you know. I think we still have maybe as much as 20% more to run up here. Don't forget, you know, we haven't felt the effects of sequestration in the budget battle yet. But we will later this year and in 2014. Nevertheless, the housing market, which is a multiplier, which means that it multiplies its impact, is only at the beginning of the recovering and that is huge. It's going to be very important. I do think you're on the right track. Do dollar-cost-average."
Honey EC: I've noticed that Jimenez sometimes talks so fast that it's not easy to catch exactly what she is saying. I think that answer shows the depth of her lack of expertise.
On the other hand, it also shows that she never reads Marketimer or even listens to Brinker's Moneytalk. The fact is, Brinker STOPPED advising subscribers to dollar-cost-average last October! October 2012 was the last month that Bob Brinker's Marketimer recommended dollar-cost-averaging for "new" money. (Of course, all of his Marketimer model portfolios are still fully invested.)
One of Lynn Jimenez' guests was Ed Whitacre: American Turnaround: Reinventing AT&T and GM and the Way We Do Business in the USA
* Whitacre made the claim that GM had repaid all of the money that the government gave them. I question that. I think that the GM stock that we taxpayers were given as collateral is still underwater.
Jimenez' third-hour guest was Vince Malta, a San Francisco realtor:
* Malta said that in some areas, like San Francisco and Arizona, the real estate market is becoming over-heated again, and is now a seller's market with multiple offers -- and offers for more than the asking price.Jeffchristie's Moneytalk Final Exam Question:
One of Lynn's guests today was real estate expert Vince Malta. While discussing how to get top dollar for your property Lynn suggested:
A) Remodel your kitchen.
B) Stage the property.
C) Put lipstick on a pig.
D) Advertise on the internet.
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.)
Friday, March 8, 2013
March 8, 2013, No Change in Bob Brinker's Stock Market Projections
March 8,2013....The S&P 500 Index closed today at 1551.18.....As of right now, Bob Brinker has made no change to his economic forecast or his S&P 500 target-range of mid-1500s.
As Brinker has repeatedly said on Moneytalk, he expects GDP growth between 1.5 and 2.5% this year.
Bob Brinker is closely monitoring his "timing indicators" which includes the five root causes of a bear market. Most of those indicators have been covered extensively on Moneytalk as recently as last week.
Brinker repeatedly points out that the Fed is expansive (no tight money) and determined to keep rates low indefinitely (no high interest). He says there is no inflation, and growth is slow. So that leaves valuation to take a look at:
Brinker's earning projections remain at $105, which provides for a forward P/E ratio of 14.4 based on the closing price in February. Based on those facts and projections, Brinker's S&P 500 Index target range is still at mid-1500s. The S&P closed today at 1551.18.
Here are my questions and they may be yours:
As Brinker has repeatedly said on Moneytalk, he expects GDP growth between 1.5 and 2.5% this year.
Bob Brinker is closely monitoring his "timing indicators" which includes the five root causes of a bear market. Most of those indicators have been covered extensively on Moneytalk as recently as last week.
Brinker repeatedly points out that the Fed is expansive (no tight money) and determined to keep rates low indefinitely (no high interest). He says there is no inflation, and growth is slow. So that leaves valuation to take a look at:
Brinker's earning projections remain at $105, which provides for a forward P/E ratio of 14.4 based on the closing price in February. Based on those facts and projections, Brinker's S&P 500 Index target range is still at mid-1500s. The S&P closed today at 1551.18.
Here are my questions and they may be yours:
* Will Brinker now raise that forecast since it has been reached?Brinker gave a clue to his outlook in the latest issue of Marketimer with this warning to subscribers:
* Or will he call a top and raise cash?
* Will he flip-flop again on his secular bear in a cyclical bull stance?
* Or will he simply wait for another 20% correction and ride it out like he did in 2010, 2011 (and 19.5 in 2012)?
* Will his timing model entirely miss the next mega-bear market like it did in 2008-9?
Page 2, Brinker said: "We encourage subscribers to remain objective about the stock market and to be wary of those who become overly enthusiastic about the stock prices after the S&P 500 Index has more than doubled in the past 48 months."
Sunday, March 3, 2013
March 3, 2013, Bob Brinker's Moneytalk: Summary, Excerpts, Commentary and Advice
March 3, 2013....Bob Brinker hosted Moneytalk today. (comments welcome)
STOCK MARKET....Brinker did not talk about the stock market today. He only mentioned it in passing to an elderly caller who needed to re-balance his portfolio by moving money from stocks to bonds. Brinker pointed out that this was a good time because the market had rallied.
Honey EC: Several times today, Brinker mentioned that the March issue of Marketimer had just been published. I've noticed that he usually avoids making any comments about the stock market near the publish date even when there are no changes to his stock market advice -- like this month.
INVESTING IN JAPANESE MARKETS: Caller Rick from Chicago asked about investing in EWJ and DXJ. He wanted to know if Brinker would recommend investing in them in hopes that there would be no Black Swan events, such as Godzilla or tsunamis, hitting Japan. Honey EC: I laughed out loud at the caller's bit of Black Swan drama.
INFLATION PREDICTION.....Brinker said: "On the subject of inflation, I can say this. I would say that it's a reasonable guess that inflation will average 2 to 3% going forward. I can't take it out ten years. That's too long."
SEQUESTER....Brinker said: "The spending cut process is something that will be unwinding, unless there's a change going forward. President Barack Obama has instructed federal agencies to implement across the board spending cuts.....The mandatory cuts to spending that result from the failure to reach a long-term deficit reduction program in Washington....That's what really matters. But without getting into entitlements, that's not going to happen.
MEDICARE OFF THE TABLE = NO PROGRESS ON DEFICIT PROBLEM....Brinker continued: "Medicare is off the table on this deal so there will not be cuts in Medicare entitlements. And therefore, there will be no major progress on the long-term deficit problem. In the interim, there will be slashes to spending in the military sector and also on social programs and education."
STAN DRUCKENMILLER'S SENIORS STEALING FROM CHILDREN....Brinker said: "Stan Druckenmiller is a very famous name in the canyons of Wall Street. And he pointed out this week that the increased cost of Medicare and other programs along with the unfunded liabilities which are estimated over 200 trillion dollars on a long-term basis. He claims that these programs will bankrupt the young people in the United States, and that they pose a much greater danger to the countries' future than the national debt and the annual deficits that are the focus of the current attention, especially with reference to the sequester."
Brinker read this quote by Druckenmiller: “While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit. I am not against seniors. What I am against is current seniors stealing from future seniors.” Here's a link to the Bloomberg write-up that Brinker was talking about.
CHILDREN DON'T VOTE OR LOBBY SO SENIORS RIP THEM OFF....Brinker continued: "So what Druckenmiller is saying is that the seniors today who get $3 back for every dollar they pay in over their lifetime in the program.....are stealing from....today's young people. Now the reason I found this fascinating is this comes against a backdrop where we've recently learned that studies show that for every dollar that the United States spends on its children, it spends about $7 on its senior population. We all know that people under 18 are not allowed to vote.....The seniors have extraordinary lobby power and they also have voting power.....Really a fascinating situation when you look at it."
Honey EC: Later on after the first caller brought up the fact that Druckenmiller was a hedge-fund manager so was being hypocritical, Brinker defended him by saying he was a "former" hedge-fund manager. Speaking of Druckenmiller once again, Brinker said: "I think that the comments stand on their own. Are today's seniors stealing from future seniors by taking 3 to 1 -- for example -- $3 to every one dollar premium paid in on the Medicare system?"
BEN BERNANKE'S SPEECH (LINK): WHEN INTEREST RATES NORMALIZE.....Brinker talked about Bernanke's speech and then said: "If over the next several years we see interest rates get to normalized levels, the Treasury could be paying an average of 5.7% on the national debt, which is considerable at $16.5 trillion and growing.....That would be a big deal because if we see a normalization of rates over a period of time, you are going to see the Treasury having to pay out to all types of U.S. government bond holders hundreds of billions of dollars additionally every year, which would be added to the deficit, because of interest rates. Not because we were able to build anything, or buy anything or to change anything.....And I think this was a roundabout way for the Fed Chair to address this. I think he was saying we better get our house in order from a fiscal perspective, because when rates normalize down the road, we are going to face an enormous additional annual expense to taxpayers....And we won't get anything for it."
MEDICAL BILLS: BRINKER HIGHLY RECOMMENDED Steve Brill's Time Magazine article about health care. Look for Steve Brill to make an appearance on Moneytalk soon. Read the article here: Bitter Pill: Why Medical Bills Are Killing Us
CARRIED-INTEREST LOOPHOLE....Brinker said: "For years, I have spoken out on the carried interest loophole. It is amazing to me that it has survived as long as it has....Frankly, it is a disgrace, probably the most overt example of bad policy." New York Times Article about why carried interest is not fair."
BRINKER'S HUMOROUS SARCASM - SEQUESTER MEANS DYSFUNCTIONAL IN LATIN....Brinker said: "It turns out that the word sequester or so it is said -- I haven't looked it up even though I did study Latin as a secondary school student. I have to be honest with you, I'm not familiar with the word in the Latin vocabulary. But it was said this week that the word sequester is Latin for dysfunction. If it turns out to be true, that certainly would make sense because I have never seen the likes of what we have at the federal level making policy in Washington These people, frankly, to put a smiley face on it, they should be ashamed of themselves."
NEXT CRISIS DU JOUR.....Brinker said: "The next crisis moment, and we have these crisis du jour is the way it works with a dysfunctional government, will be the March 27th crisis which has to do with the so-called Continuing-Resolution to fund government spending....Congress is scheduled to go on Easter recess several days prior to March 27th."
DON'T BE MISLED ABOUT BRINKER'S YEAR-2000 SELL SIGNAL... Honey here: In the latest Marketimer, Brinker writes about his "historic stock market sell signal in January, 2000." The market then declined 49%. Brinker continues: "Marketimer reinvested all of our model portfolio cash reserves on our March 11, 2003 buy signal...." Now for the rest of the story: Firstly, Brinker does not mention that his 2000 sell signal was for only 65%. Second, he does not mention that he repeatedly advised subscribers to sink up to half of those 65% cash reserves into QQQ (in October 2000), and QQQ lost almost 70% of value. So all those cash reserves could have been as little as 30 - 35%....
REMEMBER THE 2008-2009 BEAR MARKET THAT BRINKER MISSED...Honey here: While Brinker bragged about making an "historic sell signal" in 2000, he neglected to mention that there was a worse bear market five years LATER that he rode down fully invested. And shockingly, he gave subscribers buy-signals all the way to the bottom.
Brinker's third-hour guest was Jeff Connaughton: The Payoff: Why Wall Street Always Wins
Jeffchristie's Moneytalk Final Exam Question:
Today Bob Brinker said the word sequester meant dysfunctional in a language he studied in secondary school. That language is:
A) Swahili.
B) Greek.
C) Latin.
D) Klingon.
STOCK MARKET....Brinker did not talk about the stock market today. He only mentioned it in passing to an elderly caller who needed to re-balance his portfolio by moving money from stocks to bonds. Brinker pointed out that this was a good time because the market had rallied.
Honey EC: Several times today, Brinker mentioned that the March issue of Marketimer had just been published. I've noticed that he usually avoids making any comments about the stock market near the publish date even when there are no changes to his stock market advice -- like this month.
INVESTING IN JAPANESE MARKETS: Caller Rick from Chicago asked about investing in EWJ and DXJ. He wanted to know if Brinker would recommend investing in them in hopes that there would be no Black Swan events, such as Godzilla or tsunamis, hitting Japan. Honey EC: I laughed out loud at the caller's bit of Black Swan drama.
INFLATION PREDICTION.....Brinker said: "On the subject of inflation, I can say this. I would say that it's a reasonable guess that inflation will average 2 to 3% going forward. I can't take it out ten years. That's too long."
SEQUESTER....Brinker said: "The spending cut process is something that will be unwinding, unless there's a change going forward. President Barack Obama has instructed federal agencies to implement across the board spending cuts.....The mandatory cuts to spending that result from the failure to reach a long-term deficit reduction program in Washington....That's what really matters. But without getting into entitlements, that's not going to happen.
MEDICARE OFF THE TABLE = NO PROGRESS ON DEFICIT PROBLEM....Brinker continued: "Medicare is off the table on this deal so there will not be cuts in Medicare entitlements. And therefore, there will be no major progress on the long-term deficit problem. In the interim, there will be slashes to spending in the military sector and also on social programs and education."
STAN DRUCKENMILLER'S SENIORS STEALING FROM CHILDREN....Brinker said: "Stan Druckenmiller is a very famous name in the canyons of Wall Street. And he pointed out this week that the increased cost of Medicare and other programs along with the unfunded liabilities which are estimated over 200 trillion dollars on a long-term basis. He claims that these programs will bankrupt the young people in the United States, and that they pose a much greater danger to the countries' future than the national debt and the annual deficits that are the focus of the current attention, especially with reference to the sequester."
Brinker read this quote by Druckenmiller: “While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit. I am not against seniors. What I am against is current seniors stealing from future seniors.” Here's a link to the Bloomberg write-up that Brinker was talking about.
CHILDREN DON'T VOTE OR LOBBY SO SENIORS RIP THEM OFF....Brinker continued: "So what Druckenmiller is saying is that the seniors today who get $3 back for every dollar they pay in over their lifetime in the program.....are stealing from....today's young people. Now the reason I found this fascinating is this comes against a backdrop where we've recently learned that studies show that for every dollar that the United States spends on its children, it spends about $7 on its senior population. We all know that people under 18 are not allowed to vote.....The seniors have extraordinary lobby power and they also have voting power.....Really a fascinating situation when you look at it."
Honey EC: Later on after the first caller brought up the fact that Druckenmiller was a hedge-fund manager so was being hypocritical, Brinker defended him by saying he was a "former" hedge-fund manager. Speaking of Druckenmiller once again, Brinker said: "I think that the comments stand on their own. Are today's seniors stealing from future seniors by taking 3 to 1 -- for example -- $3 to every one dollar premium paid in on the Medicare system?"
The following hour, in announcement fashion, Brinker said that he wanted to make it clear that he did not agree with Druckenmiller's claim that seniors were stealing from future seniors. It was clear to me that he had received calls from some outraged seniors.SEQUESTER NUMBERS....Brinker continued: "Remember relative to the numbers that I just spoke of, the sequester amount through September 30th, this fiscal year, are relatively small. The Congressional Budget Office recommends that they be viewed as $44 billion, not $85 billion....About half of the number that is getting the publicity."
BEN BERNANKE'S SPEECH (LINK): WHEN INTEREST RATES NORMALIZE.....Brinker talked about Bernanke's speech and then said: "If over the next several years we see interest rates get to normalized levels, the Treasury could be paying an average of 5.7% on the national debt, which is considerable at $16.5 trillion and growing.....That would be a big deal because if we see a normalization of rates over a period of time, you are going to see the Treasury having to pay out to all types of U.S. government bond holders hundreds of billions of dollars additionally every year, which would be added to the deficit, because of interest rates. Not because we were able to build anything, or buy anything or to change anything.....And I think this was a roundabout way for the Fed Chair to address this. I think he was saying we better get our house in order from a fiscal perspective, because when rates normalize down the road, we are going to face an enormous additional annual expense to taxpayers....And we won't get anything for it."
MEDICAL BILLS: BRINKER HIGHLY RECOMMENDED Steve Brill's Time Magazine article about health care. Look for Steve Brill to make an appearance on Moneytalk soon. Read the article here: Bitter Pill: Why Medical Bills Are Killing Us
CARRIED-INTEREST LOOPHOLE....Brinker said: "For years, I have spoken out on the carried interest loophole. It is amazing to me that it has survived as long as it has....Frankly, it is a disgrace, probably the most overt example of bad policy." New York Times Article about why carried interest is not fair."
BRINKER'S HUMOROUS SARCASM - SEQUESTER MEANS DYSFUNCTIONAL IN LATIN....Brinker said: "It turns out that the word sequester or so it is said -- I haven't looked it up even though I did study Latin as a secondary school student. I have to be honest with you, I'm not familiar with the word in the Latin vocabulary. But it was said this week that the word sequester is Latin for dysfunction. If it turns out to be true, that certainly would make sense because I have never seen the likes of what we have at the federal level making policy in Washington These people, frankly, to put a smiley face on it, they should be ashamed of themselves."
NEXT CRISIS DU JOUR.....Brinker said: "The next crisis moment, and we have these crisis du jour is the way it works with a dysfunctional government, will be the March 27th crisis which has to do with the so-called Continuing-Resolution to fund government spending....Congress is scheduled to go on Easter recess several days prior to March 27th."
DON'T BE MISLED ABOUT BRINKER'S YEAR-2000 SELL SIGNAL... Honey here: In the latest Marketimer, Brinker writes about his "historic stock market sell signal in January, 2000." The market then declined 49%. Brinker continues: "Marketimer reinvested all of our model portfolio cash reserves on our March 11, 2003 buy signal...." Now for the rest of the story: Firstly, Brinker does not mention that his 2000 sell signal was for only 65%. Second, he does not mention that he repeatedly advised subscribers to sink up to half of those 65% cash reserves into QQQ (in October 2000), and QQQ lost almost 70% of value. So all those cash reserves could have been as little as 30 - 35%....
REMEMBER THE 2008-2009 BEAR MARKET THAT BRINKER MISSED...Honey here: While Brinker bragged about making an "historic sell signal" in 2000, he neglected to mention that there was a worse bear market five years LATER that he rode down fully invested. And shockingly, he gave subscribers buy-signals all the way to the bottom.
Brinker's third-hour guest was Jeff Connaughton: The Payoff: Why Wall Street Always Wins
Jeffchristie's Moneytalk Final Exam Question:
Today Bob Brinker said the word sequester meant dysfunctional in a language he studied in secondary school. That language is:
A) Swahili.
B) Greek.
C) Latin.
D) Klingon.
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.)
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.)
Tuesday, February 26, 2013
February 26, 2013, Bob Brinker's Moneytalk Guest Summary
February 26, 2013....Bob Brinker's Moneytalk guest Sunday was Dean Clancy. Brinker seemed less than enthused about the interview. He gave Clancy no build up whatsoever and he was only on the air for 14 minutes. Maybe there's a clue about Brinker's view of Dean Clancy in this summary.
Guest-writer, Frank J. wrote this summary of Brinker's third-hour Clancy interview:
Feb 24, Moneytalk third hour interview with Dean Clancy, VP of Public Policy, Freedom Works.
Honey here: Many thanks to Frank J! Please scroll down to read my show summary.
Guest-writer, Frank J. wrote this summary of Brinker's third-hour Clancy interview:
Feb 24, Moneytalk third hour interview with Dean Clancy, VP of Public Policy, Freedom Works.
The third hour interview was with Dean Clancy, VP of
Public Policy with Freedom Works. The
interview finally got underway at 3:38 pm and ended abruptly at 3:53. Speculating here, maybe there was a mix up
on when the guest was expected. This
might explain the filibustering Bob did during the first half of the final
hour. I began to suspect something was
amiss when his review of housing prices went from thorough to exhaustive!
In any event, here is a link to Freedom Works’
website. Freedomworks
Bob started off by asking the guest about the sequester
and the $44 billion in cuts that would affect the final 6 months of the federal
government’s fiscal year. Mr. Clancy
said it only represents a small trimming of federal spending and if plotted on
a graph showing projected spending, both with and without the reductions, you’d
need a magnifying glass to see the difference.
There was a little back and forth about the
predictions swirling around about the dire consequences of cutting government
spending, Bob mentioned a 57 item list put out earlier this week. Here is a link to an article that lists all
57 items, in case anyone would like to see them. 57 Terrible Consequences of the Sequester
A short sampling:
#6. Nationwide Meat and Poultry Shortage.
#28. An Even More Porous Border.
#51. Slower Reporting on Economic Data, Less Analysis of It
#55. Fewer Air-Quality Forecasts
To
the list of 57, I would like to add one I read today: bears in Yosemite National Park will be
frequenting the campgrounds in greater numbers, raiding the garbage cans
because trash pickup will be cut back.
The guest sounded like he had seen the list, and
said modest reductions can and should be done.
There was agreement that politicians and others with a vested interest
in government spending are afraid if the cuts go through, people will actually
see that we can cut spending without the sky falling -- and they will
want MORE cuts.
Clancy said if we get some relief it will be an
important milestone for the fiscal conservative movement. He is hopeful it will show we can do more to
slow down government growth.
Bob said that government spending has been
essentially flat since 2009 at about $3.5 trillion and the deficit has come
down. There was some discussion of spending as a
percent of GDP, as to what would be acceptable.
Clancy made the point that reducing spending may have a negative short
term effect on the economy but this is outweighed by the positive long term
effect of lower government spending.
Discussion then turned to income taxes. Bob had asked what level of spending is
appropriate. Mr. Clancy answered by
talking about the income tax and said if 10% is good enough for God, then it should
be good enough for Uncle Sam. Bob asked
him if the income tax should be progressive and Clancy was emphatic in his
answer that he did not think the government should levy an income tax, but if
we are going to have one, it should be flat.
Clancy said graduated income taxes are bad
because they lead to corruption and income redistribution.
He recommended that the tax be as close to 10% as possible,
mentioning that Sen. Rand Paul (R. Kentucky) calls for 17%; the Heritage Foundation proposed 28% payroll tax
and income combined. Clancy said we
should get rid of the income tax and fund government tariffs and excise
taxes. Government would then focus on only
the powers given to it by the founders.
Bob pointed out that private sector jobs are growing and public sector ones are declining. Is this the trend you want to see? Yes, said Clancy. Grow the private sector and shrink the public
sector because dollars that go out of the private sector into the public sector
are used less productively. There has
been growth both in government jobs and in pay rates.
Bob quoted Sen. Coburn from Oklahoma who said 10%
could be cut from the Defense budget.
The USA spends $740 billion on defense and the Chinese spend about $90
billion. How much should we spend on
defense? Clancy said conservatives are
divided on defense but Freedom Works thinks the Pentagon is like any other
bureaucracy and reductions are possible.
Then he said, the people best qualified to tell you the needs are the
generals and senior officers. Defense
is projected to grow by 16% over the next 10 years vs. 20% so the cuts under
discussion are really about cutting the rate of growth.
Bob commented that he has difficulty with the “Armageddon
cloak” they’re putting over these tiny cuts.
And he mentioned he has a hard time trusting the generals on what to
spend.
Bob said that Medicare recipients get $3 in benefits
for every $1 they paid in … what kind of reductions in benefits can we look
forward to? Clancy mentioned that
Medicare is projected to be cut to help pay for the people under 65 who will be
receiving health care benefits under the newly passed Affordable Health Care
Act. (Obamacare). The Democrats want to ratchet down on
payments, not realizing that this simply leads to rationing. The Republicans want to get more choices out
there, bring in more competition and get savings. Clancy said that Medicare is a “giant check
writing system” and the program contains 10% fraud, possibly up to 20%. Only after the payments are already made,
does any policing take place.
Honey here: Many thanks to Frank J! Please scroll down to read my show summary.
Sunday, February 24, 2013
February 24, 2013, Bob Brinker's Moneytalk: Summary, Excerpts, Commentary and Discussion
February 24, 2013....Bob Brinker hosted Moneytalk today. (comments welcome)
STOCK MARKET...The only time that Brinker mentioned the stock market today was in answer to a caller who asked what "runaway inflation" would do to the stock and bond market. Brinker said that historically, the stock market did not like runaway inflation -- that it would be very challenging situation....The worst case outcome for investors is runaway inflation....That generally leads to chaos when you have a situation like that.
SYSTEM TO PROTECT AGAINST RUNAWAY INFLATION....Brinker said: "This is one of the reasons that you really want to have a system that does not encourage runaway inflation. I think it's a very important thing to protect the integrity of the dollar. The charter of the Federal Reserve requires them -- they are under orders from congress....that's why you see Ben up on Capital Hill answering questions....The Federal Reserve has received orders from congress on what their mission is, and their mission is a dual mission -- stable inflation, which defined right now as less than 2%, which where we are, and maximum employment. Boy,they are having a hard time on that. We are at 7.9 unemployment as we speak."
HOUSING MARKET....Improving all the time. Case Schiller Index comes out again next Tuesday.....Prices are up, up and away....San Francisco up 28% year-over-year. Brinker said: "Wow, that is a huge year-over-year increase."
Honey EC: Friday, I was talking to a realtor in the Santa Cruz area and he is actually getting worried that we are headed for another real estate bubble. In this area, and in San Jose, buyers are bidding up the buying prices on homes.
SEQUESTRATION.....Brinker said: "The thing about this story that is hard to understand is why such a small amount of spending reduction would cause such a reaction.....The actual amount of spending reduction through September 30th, starting on March 1st, comes to 44 billion dollars....In terms of government spending it is a little bit more than 1%....And it's 1/4 of 1% of GDP.....For several years, we've been running deficits in excess of 1 trillion dollars a year.....The $44 billion dollar number is dwarfed by the big picture....Both sides reacting as though this is one of the worst things that ever happened.....How are we ever going to get closed to a balanced budget with this kind of rhetoric."
WHITE HOUSE WANTS MORE TAXES....Brinker said: "The policy that's come forth from the White House is to raise revenue sufficiently to pay for the sequester cuts by changing the deductions on income tax returns.....The White House wants to raise revenue to pay for the proposed problem....And so then we don't have to have spending cuts....So you see this is really a proposal out of the White House to continue the spending at the same level as now but to pay for it with increased taxes....How are we ever going to get a handle on our spending problem if the only way that anybody can up with to resolve it is to raise taxes....We already discussed what the deductions are that are at risk if the deductions are changed."
Honey EC: Here is Brinker's list from last week's summary where he thinks high-earner will see tax increases caused by these reduced deductions. 1. Reduce mortgage interest $million cap or means test (second home deduction). 2. Remove deductions for state and local taxes (They've already done it for AMT victims.). 3. Set income cap on charity deductions (president already proposed cap). 4. Tax employer health care benefits. 5. Change rules on municipal income taxes.
WHITE HOUSE REALLY LIKES TO GO AFTER HIGH-EARNERS....Brinker continued: "The White House really likes to go after high-earners. That's their favorite thing to do when they raise revenue. They just did it at the first of the year when they raised the rates on high-earners to 39.6% federal. Which means if you're in California.....you're in the 53% bracket right away and if you own your own business you're closer to 57% because you pay both sides of the uncapped Medicare."
NEW GOVERNMENT PROBLEM WORSE THAN WE THOUGHT....Brinker said: "Now we have a new problem which worse than the problem we thought we had.....We have a government that right now is raising Cain in the media as you know. You've heard the drill, planes aren't going to be able to fly. We have a government that is so dysfunctional that they can't trim a little bit out of the budget without declaring Armageddon. And that's a new problem that's worse than we thought we had."
BRINKER'S SOLUTION TO DEBT PROBLEM: Brinker said: "Now I know you want a solution, let me give it to you. Until our dysfunctional federal government stands up to the need for entitlement reform, you're not going to see a solution to the problem you are observing. They must reform entitlements. They can do it with adjustment for today's younger people, not current recipients. They can do it with subtle changes in the Medicare program. They can do it, but until they are willing to tackle entitlements, you're not going to see any significant progress."
CONTINUING RESOLUTION....Brinker said: "In addition to the spending cuts starting next Friday, we have the continuing resolution issue in the last week of March."
ECONOMY...Brinker said: "The GDP will be revised Thursday. The median estimate is for 1/2 of 1% annual and that is called slow.....About the annual deficit as a percent of Gross Domestic Product....The economic community will tell it's about 3% and that as long as you have an economy that is growing at a reasonable pace, you can tolerate about 3% figure on the annual deficit divided by GDP. Right now, we are at roughly 6%. We've come down from 10, but we were coming out of an economic travesty there in 2008 with the banking system teetering. We have to get it down to at least 3% in order to feel better."
ITALIAN POLITICS....Brinker talked about the elections in Italy next week. (Honey EC: I'm not going to cover this topic, but here's an interesting take on it from the Guardian. Italy Elections: an end to sleaze and cronyism?
WHERE TO FIND DIVIDEND HISTORY OF AN INDIVIDUAL STOCK: Caller Ken from Albuquerque asked how to find the dividend history of an individual stock. Brinker told Ken to to go to the library there in Albuquerque and look in the Robert D. Fisher Manual of Valuable and Worthless Securities. Honey EC: FrankJ sent this website that might save Ken a trip: Tesselation Also, Jeffchristie said you can get it at Yahoo Finance.
BRINKER'S FAVORITE MONEYTALK LISTENERS ARE NOT HUMAN....To caller Gordon from Santa Barbara, whose poodle, Sophie, went "woof, woof," Brinker said: "We have a lot of listeners in the canine community. We have shown nothing but respect for them. Tell me about your canine. (Gordon replied: "This is Sophie, the standard poodle.") Sophie has just been on radio in 50 states and part of Canada and online worldwide. By the way, did you get a chance to see the 137 edition of the Westminster Kennel Show? Was it fantastic or was it fantastic? That big sheepdog got the runner-up. I think the judge had to throw that bone out because the audience had gone bonkers for it. What did you think of that affenpinscher that walked away with all the Kewpie dolls?.....Please give my very best to Sophie and tell Sophie that she is one of many in the canine world that are regulars on Moneytalk and we love everyone of them -- Santa Barbara Sophie, that's great."
HOW BRINKER BUYS HIS OWN TAX-FREE BONDS.....Brinker said: "I think the best way to own municipal bonds is to own them in a date-certain way. That's the way I own them. I own municipal bonds of several states, also New York City.....I have no concern about credit risk in any of my holdings. My plan is to hold them to maturity and be paid off at maturity and collect the interest in the interim. This way, I don't have all of this other risk that these people that are out there in the long-term municipal bond funds, they have all kinds of interest rates risk in those funds. I don't have that because my plan is to hold to maturity."
Honey EC: How interesting that Brinker is totally against owning tax-free bond funds, but Bob Jr. has a whole portfolio full of them in his Fixed Income Advisor -- at least he did according to the October 2012 complimentary issue on his website. The portfolio includes Vanguard High-Yield Tax-Exempt Fund (VWAHX). The other funds in it are VWITX, VMLTX, VWLTX and VWSTX -- pretty evenly divided.
CHASING JUNK BOND YIELDS.... Brinker made the comment that the Federal Reserve is concerned about investors "chasing junk bond yields." Honey EC: My question is, why is it any of the Fed's business if people buy junk bonds? Is he going to bail them out if they need it?
MARKETIMER MODEL PORTFOLIOS AND INCOME PORTFOLIO....Brinker said: "We have the Vanguard Short-Term Investment Grade Fund (VFSTX) in our balanced portfolio. At this time, we do not have that fund in the page 7 income portfolio. That fund is not part of the page 7 income portfolio as we speak, but it does still have a small allocation in the model portfolio III which is on page eight."
Honey EC: Brinker is right, VFSTX is only 10% of his Marketimer "balanced" model portfolio III, "as we speak." The other bond funds he has in that portfolio are Vanguard Ginnie Mae Fund (VFIIX) and Double Line Total Return Bond Fund (DLTNX) -- these two funds are also in the page 7 "income portfolio" in equal proportions with Dodge and Cox Income Fund (DODIX) and Metro West Total Return Bond (MWTRX).
Brinker's guest-speaker was Dean Clancy.
Jeffchristie's Moneytalk Final Exam Question:
STOCK MARKET...The only time that Brinker mentioned the stock market today was in answer to a caller who asked what "runaway inflation" would do to the stock and bond market. Brinker said that historically, the stock market did not like runaway inflation -- that it would be very challenging situation....The worst case outcome for investors is runaway inflation....That generally leads to chaos when you have a situation like that.
SYSTEM TO PROTECT AGAINST RUNAWAY INFLATION....Brinker said: "This is one of the reasons that you really want to have a system that does not encourage runaway inflation. I think it's a very important thing to protect the integrity of the dollar. The charter of the Federal Reserve requires them -- they are under orders from congress....that's why you see Ben up on Capital Hill answering questions....The Federal Reserve has received orders from congress on what their mission is, and their mission is a dual mission -- stable inflation, which defined right now as less than 2%, which where we are, and maximum employment. Boy,they are having a hard time on that. We are at 7.9 unemployment as we speak."
HOUSING MARKET....Improving all the time. Case Schiller Index comes out again next Tuesday.....Prices are up, up and away....San Francisco up 28% year-over-year. Brinker said: "Wow, that is a huge year-over-year increase."
Honey EC: Friday, I was talking to a realtor in the Santa Cruz area and he is actually getting worried that we are headed for another real estate bubble. In this area, and in San Jose, buyers are bidding up the buying prices on homes.
SEQUESTRATION.....Brinker said: "The thing about this story that is hard to understand is why such a small amount of spending reduction would cause such a reaction.....The actual amount of spending reduction through September 30th, starting on March 1st, comes to 44 billion dollars....In terms of government spending it is a little bit more than 1%....And it's 1/4 of 1% of GDP.....For several years, we've been running deficits in excess of 1 trillion dollars a year.....The $44 billion dollar number is dwarfed by the big picture....Both sides reacting as though this is one of the worst things that ever happened.....How are we ever going to get closed to a balanced budget with this kind of rhetoric."
WHITE HOUSE WANTS MORE TAXES....Brinker said: "The policy that's come forth from the White House is to raise revenue sufficiently to pay for the sequester cuts by changing the deductions on income tax returns.....The White House wants to raise revenue to pay for the proposed problem....And so then we don't have to have spending cuts....So you see this is really a proposal out of the White House to continue the spending at the same level as now but to pay for it with increased taxes....How are we ever going to get a handle on our spending problem if the only way that anybody can up with to resolve it is to raise taxes....We already discussed what the deductions are that are at risk if the deductions are changed."
Honey EC: Here is Brinker's list from last week's summary where he thinks high-earner will see tax increases caused by these reduced deductions. 1. Reduce mortgage interest $million cap or means test (second home deduction). 2. Remove deductions for state and local taxes (They've already done it for AMT victims.). 3. Set income cap on charity deductions (president already proposed cap). 4. Tax employer health care benefits. 5. Change rules on municipal income taxes.
WHITE HOUSE REALLY LIKES TO GO AFTER HIGH-EARNERS....Brinker continued: "The White House really likes to go after high-earners. That's their favorite thing to do when they raise revenue. They just did it at the first of the year when they raised the rates on high-earners to 39.6% federal. Which means if you're in California.....you're in the 53% bracket right away and if you own your own business you're closer to 57% because you pay both sides of the uncapped Medicare."
NEW GOVERNMENT PROBLEM WORSE THAN WE THOUGHT....Brinker said: "Now we have a new problem which worse than the problem we thought we had.....We have a government that right now is raising Cain in the media as you know. You've heard the drill, planes aren't going to be able to fly. We have a government that is so dysfunctional that they can't trim a little bit out of the budget without declaring Armageddon. And that's a new problem that's worse than we thought we had."
BRINKER'S SOLUTION TO DEBT PROBLEM: Brinker said: "Now I know you want a solution, let me give it to you. Until our dysfunctional federal government stands up to the need for entitlement reform, you're not going to see a solution to the problem you are observing. They must reform entitlements. They can do it with adjustment for today's younger people, not current recipients. They can do it with subtle changes in the Medicare program. They can do it, but until they are willing to tackle entitlements, you're not going to see any significant progress."
CONTINUING RESOLUTION....Brinker said: "In addition to the spending cuts starting next Friday, we have the continuing resolution issue in the last week of March."
ECONOMY...Brinker said: "The GDP will be revised Thursday. The median estimate is for 1/2 of 1% annual and that is called slow.....About the annual deficit as a percent of Gross Domestic Product....The economic community will tell it's about 3% and that as long as you have an economy that is growing at a reasonable pace, you can tolerate about 3% figure on the annual deficit divided by GDP. Right now, we are at roughly 6%. We've come down from 10, but we were coming out of an economic travesty there in 2008 with the banking system teetering. We have to get it down to at least 3% in order to feel better."
ITALIAN POLITICS....Brinker talked about the elections in Italy next week. (Honey EC: I'm not going to cover this topic, but here's an interesting take on it from the Guardian. Italy Elections: an end to sleaze and cronyism?
WHERE TO FIND DIVIDEND HISTORY OF AN INDIVIDUAL STOCK: Caller Ken from Albuquerque asked how to find the dividend history of an individual stock. Brinker told Ken to to go to the library there in Albuquerque and look in the Robert D. Fisher Manual of Valuable and Worthless Securities. Honey EC: FrankJ sent this website that might save Ken a trip: Tesselation Also, Jeffchristie said you can get it at Yahoo Finance.
BRINKER'S FAVORITE MONEYTALK LISTENERS ARE NOT HUMAN....To caller Gordon from Santa Barbara, whose poodle, Sophie, went "woof, woof," Brinker said: "We have a lot of listeners in the canine community. We have shown nothing but respect for them. Tell me about your canine. (Gordon replied: "This is Sophie, the standard poodle.") Sophie has just been on radio in 50 states and part of Canada and online worldwide. By the way, did you get a chance to see the 137 edition of the Westminster Kennel Show? Was it fantastic or was it fantastic? That big sheepdog got the runner-up. I think the judge had to throw that bone out because the audience had gone bonkers for it. What did you think of that affenpinscher that walked away with all the Kewpie dolls?.....Please give my very best to Sophie and tell Sophie that she is one of many in the canine world that are regulars on Moneytalk and we love everyone of them -- Santa Barbara Sophie, that's great."
HOW BRINKER BUYS HIS OWN TAX-FREE BONDS.....Brinker said: "I think the best way to own municipal bonds is to own them in a date-certain way. That's the way I own them. I own municipal bonds of several states, also New York City.....I have no concern about credit risk in any of my holdings. My plan is to hold them to maturity and be paid off at maturity and collect the interest in the interim. This way, I don't have all of this other risk that these people that are out there in the long-term municipal bond funds, they have all kinds of interest rates risk in those funds. I don't have that because my plan is to hold to maturity."
Honey EC: How interesting that Brinker is totally against owning tax-free bond funds, but Bob Jr. has a whole portfolio full of them in his Fixed Income Advisor -- at least he did according to the October 2012 complimentary issue on his website. The portfolio includes Vanguard High-Yield Tax-Exempt Fund (VWAHX). The other funds in it are VWITX, VMLTX, VWLTX and VWSTX -- pretty evenly divided.
CHASING JUNK BOND YIELDS.... Brinker made the comment that the Federal Reserve is concerned about investors "chasing junk bond yields." Honey EC: My question is, why is it any of the Fed's business if people buy junk bonds? Is he going to bail them out if they need it?
MARKETIMER MODEL PORTFOLIOS AND INCOME PORTFOLIO....Brinker said: "We have the Vanguard Short-Term Investment Grade Fund (VFSTX) in our balanced portfolio. At this time, we do not have that fund in the page 7 income portfolio. That fund is not part of the page 7 income portfolio as we speak, but it does still have a small allocation in the model portfolio III which is on page eight."
Honey EC: Brinker is right, VFSTX is only 10% of his Marketimer "balanced" model portfolio III, "as we speak." The other bond funds he has in that portfolio are Vanguard Ginnie Mae Fund (VFIIX) and Double Line Total Return Bond Fund (DLTNX) -- these two funds are also in the page 7 "income portfolio" in equal proportions with Dodge and Cox Income Fund (DODIX) and Metro West Total Return Bond (MWTRX).
Brinker's guest-speaker was Dean Clancy.
Jeffchristie's Moneytalk Final Exam Question:
Today on Moneytalk Bob took a call from Gordon. During that call Bob acknowledged a K-9 listener who we could hear in the background. The name of this pooch is:
A) Bailey, the Black Lab from San Jose.
B) Sophie, the Black Poodle from Santa Barbara.
C) Bo, the Portuguese water dog from Chicago.
D) Barney, the Scottish Terrier from Dallas
Answer: B) Sophie, the Black Poodle from Santa Barbara.
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.)
Sunday, February 17, 2013
February 17, 2013, Bob Brinker's Moneytalk: Summary, Excerpts, Commentary and Discussion
February 17, 2013....Bob Brinker hosted Moneytalk today. (comments welcome)
STOCK MARKET....Brinker said: "As we look forward to the week, we see a market that has had an incredible, almost straight up run. And now sits at 1519 in the S&P 500 and very close to 14,000 on the Dow.
STOCK MARKET WARNING....Brinker said: "Those indexes (Dow, S&P and Nasdaq) are all at or close to their 2013 year-to-date highs. And also at or near their highest levels in several years. There is a lot, there a lot of bullish sentiment out there right now. If you look at the sentiment indicators, a lot of the indicators are showing that there is a very high level of bullishness out there. Whenever you see that, you always have to recognize that, usually, at some point, those levels of over-enthusiasm, of over-zealous participation are very frequently cause for profit-taking. So if you see some profit-taking coming into the market, you should not be surprised when you consider the fact that there is such a very high level of bullish sentiment in a number of indicators out there right now."
Honey EC: It's been a very long time since I have heard Brinker actually give a cautionary warning like that on the air. Kudos to you, Bob! You sounded like the Bob Brinker that made me a fan twenty-six years ago. NOTE: Brinker has NOT raised any cash and is still fully invested.
INFLATION BEHAVING WELL... Brinker said: "We get the Consumer Price Index data on Thursday... prices have been behaving well. CPI estimated for the month to go up a tenth of a percent. It was flat last month. The core number is expected to go up 2/10 of 1%. If that comes in, then the headline number would be 1.6 and the core number would be 1.8, so inflation continuing to behave very well."
UNEMPLOYMENT...Brinker said: "Initial claims for unemployment insurance on Thursday estimated at 355,000. Big drop last week down to 341,000....We want to see this number under 400,000. It's been there and its been staying there. That's why we have seen the jobs growth that you have seen. We've seen decent jobs growth for the past two years."
INCREASE TAX BY CHANGING DEDUCTIONS FOR HIGH EARNERS: Brinker said that the president's so-called "balanced approach" will include tax increase aimed at high earners. There are five areas where taxes will be increased with reductions in deductions. 1. Reduce mortgage interest $million cap or means test (second home deduction). Remove deductions for state and local taxes (They've already done it for AMT victims.). 3. Set income cap on charity deductions (president already proposed cap). 4. Tax employer health care benefits. 5. Change rules on municipal income taxes.
Honey EC: Brinker seemed convinced that this would only hit the wealthy and high-earners. I don't agree. I think that many of these deductions are enjoyed by the middle-class.
WHEN TO KNOW INTEREST RATES WILL RISE: Caller Ned from Ohio wanted to know what signals to look for in order to know when interest rates would rise.
INTEREST RATE WARNING.....Brinker replied: "I think it's very important for all Moneytalk listeners to take note of the fact that the high risk in the bond market now is in the high-duration investing......My recommendation is to keep those durations on the shorter end.....The indicators that I follow on interest rates are far too numerous to mention. But let me highlight a couple that I think are very important. One of them is Federal Reserve Monetary policy." (Brinker explained how the low rates have helped unemployment and the housing market.) There's one more that I want to touch on and that's the economic growth rate. If you're looking at the economic growth rate above trend, and trend is still thought to be in the area of 3%, then chances are you're going to see some inflation and interest rate activity."
DON'T BUY TREASURY INFLATION PROTECTED SECURITIES (TIPS)....Brinker said: "I would not be using TIPS in here. My personal view is they are over-priced, over-valued."
SEQUESTRATION CUTS DROP IN THE BUCKET....Brinker said: "The Sequestration that we are talking about now is the $85 billion scheduled to take affect in less than two weeks on March 1st....The amazing thing about this is that this is a drop in the bucket."
TAKING IRA RMD FROM ONE ACCOUNT INSTEAD OF EACH ACCOUNT: Caller Dale from Denver asked a question like this: "Can an account owner just take a RMD from one account instead of separately from each account?"
Alan Blinder was Bob’s guest in this Sunday’s third hour. Mr. Blinder is a Professor of Economics at Princeton, a contributor to the editorial pages of the Wall Street Journal, and a former member of the Federal Reserve. Blinder’s book, After the Music Stopped, is an examination of the economic meltdown and the reaction to it. The book is now on Bob Brinker’s reading list on his website.
Mr. Blinder said that the book came about as a result of the economic meltdown, which was a big, complicated mess that few Americans understand. He delayed writing the book because he “wanted to see how this play ends.” As to what happened, Blinder said we built a fragile financial system, and there was a desire to build complicated derivatives on top of mortgages. All this activity was predicated on the housing bubble continuing. People should have known that home prices would not continue upwards, and it didn’t help that regulators were looking the other way.
Blinder pointed out that there were “$200 – 300 billion of bad mortgages, … $600 billion at most.” The problem was that “trillions” in investments were built on top of these mortgages and institutions were too heavily leveraged. The topic of March 2009 market bottom came up and Bob Brinker asked if the fear that the banking system was going to go under was legitimate. Mr. Blinder’s answer was yes – however, he cited some actions by the federal government that he thought helped prop up the banking system: 1) the stimulus bill had been passed a few weeks earlier, 2) Treasury Sec. Tim Geithner had announced the need for stress tests on banks, 3) and the TARP program was operating, having been put in place in late 2008.
Bob asked if we have learned anything? Mr. Blinder’s answer was probably not enough, and he wondered out loud whether we would actually remember what we learned. Blinder pointed out a few things that we already knew: being excessively rich can be hazardous to your financial health. We knew that any unregulated financial system tends to go to excess; people get irrationally exuberant and begin doing things they shouldn’t. He said when this happens, the regulator’s role is to mitigate. The Federal Reserve “missed” all this because a lot of the worst mortgages were coming from outside the banking system. But, Blinder added that there were “disgraceful lending standards” and the Fed should have taken action against.
Bob hypothesized that the federal government made a conscious decision NOT to save Lehmann brothers. The guest agreed and said the decision by the government to let Lehmann go bankrupt was a mistake. He believed it could have been saved like Bear Stearns. The resulting confusion over the “rules of the game” led to a freezing of worldwide credit markets. When it came to AIG, the Fed and the Treasury found ways to stretch the law and help that company.
Bob asked if the “too big to fail” concept was the same as a license to do harm (by large financial institutions and traders). Blinder said the Dodd-Frank legislation in 2010 did away with the “TBTF” notion because if a bank looks like it is failing, the legislation calls for an orderly liquidation by the FDIC. Bob mentioned Republican presidential primary candidates who called for Dodd-Frank to be abolished, citing government actions as the cause of the meltdown. Mr. Blinder dismissed this and said the cause of the meltdown was government INACTION, and the notion of repealing Dodd-Frank was “beyond the Pale.”
Editorial comment: Not mentioned with regard to government actions in the form of the Community Reinvestment Act, and the activities of those quasi-government agencies, Fannie Mae and Freddy Mac.
Carl, calling from WLS country asked a two part question, had Glass Steagall been in place would it have made a difference? And, if the original uptick rule was in place would that have slowed the downturn?
Editorial comment: At this point, MoneyTalk regulars might have listened a little closer because Bob has commented many, many times on the folly of repealing Glass Steagal and the lack of enforcement of the uptick rule.
Mr. Blinder said that there were many bad practices and “zero” would have been prevented by Glass-Steagall. Only the Citigroup merger would have been stopped. He said that the repeal of Glass Steagall played “a very, very small role if any.” He dismissed the uptick rule as “speed bump” (to those who would short a security).
Honey EC: Thank you for that great summary, Frank. I can't believe that Brinker actually let those comments about Glass-Steagall go by unchallenged. As you said, he has repeatedly talked about how its repeal by "both Parties" was responsible for the housing-banking crises of 2008.
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.)
STOCK MARKET....Brinker said: "As we look forward to the week, we see a market that has had an incredible, almost straight up run. And now sits at 1519 in the S&P 500 and very close to 14,000 on the Dow.
STOCK MARKET WARNING....Brinker said: "Those indexes (Dow, S&P and Nasdaq) are all at or close to their 2013 year-to-date highs. And also at or near their highest levels in several years. There is a lot, there a lot of bullish sentiment out there right now. If you look at the sentiment indicators, a lot of the indicators are showing that there is a very high level of bullishness out there. Whenever you see that, you always have to recognize that, usually, at some point, those levels of over-enthusiasm, of over-zealous participation are very frequently cause for profit-taking. So if you see some profit-taking coming into the market, you should not be surprised when you consider the fact that there is such a very high level of bullish sentiment in a number of indicators out there right now."
Honey EC: It's been a very long time since I have heard Brinker actually give a cautionary warning like that on the air. Kudos to you, Bob! You sounded like the Bob Brinker that made me a fan twenty-six years ago. NOTE: Brinker has NOT raised any cash and is still fully invested.
INFLATION BEHAVING WELL... Brinker said: "We get the Consumer Price Index data on Thursday... prices have been behaving well. CPI estimated for the month to go up a tenth of a percent. It was flat last month. The core number is expected to go up 2/10 of 1%. If that comes in, then the headline number would be 1.6 and the core number would be 1.8, so inflation continuing to behave very well."
UNEMPLOYMENT...Brinker said: "Initial claims for unemployment insurance on Thursday estimated at 355,000. Big drop last week down to 341,000....We want to see this number under 400,000. It's been there and its been staying there. That's why we have seen the jobs growth that you have seen. We've seen decent jobs growth for the past two years."
INCREASE TAX BY CHANGING DEDUCTIONS FOR HIGH EARNERS: Brinker said that the president's so-called "balanced approach" will include tax increase aimed at high earners. There are five areas where taxes will be increased with reductions in deductions. 1. Reduce mortgage interest $million cap or means test (second home deduction). Remove deductions for state and local taxes (They've already done it for AMT victims.). 3. Set income cap on charity deductions (president already proposed cap). 4. Tax employer health care benefits. 5. Change rules on municipal income taxes.
Honey EC: Brinker seemed convinced that this would only hit the wealthy and high-earners. I don't agree. I think that many of these deductions are enjoyed by the middle-class.
WHEN TO KNOW INTEREST RATES WILL RISE: Caller Ned from Ohio wanted to know what signals to look for in order to know when interest rates would rise.
INTEREST RATE WARNING.....Brinker replied: "I think it's very important for all Moneytalk listeners to take note of the fact that the high risk in the bond market now is in the high-duration investing......My recommendation is to keep those durations on the shorter end.....The indicators that I follow on interest rates are far too numerous to mention. But let me highlight a couple that I think are very important. One of them is Federal Reserve Monetary policy." (Brinker explained how the low rates have helped unemployment and the housing market.) There's one more that I want to touch on and that's the economic growth rate. If you're looking at the economic growth rate above trend, and trend is still thought to be in the area of 3%, then chances are you're going to see some inflation and interest rate activity."
DON'T BUY TREASURY INFLATION PROTECTED SECURITIES (TIPS)....Brinker said: "I would not be using TIPS in here. My personal view is they are over-priced, over-valued."
SEQUESTRATION CUTS DROP IN THE BUCKET....Brinker said: "The Sequestration that we are talking about now is the $85 billion scheduled to take affect in less than two weeks on March 1st....The amazing thing about this is that this is a drop in the bucket."
TAKING IRA RMD FROM ONE ACCOUNT INSTEAD OF EACH ACCOUNT: Caller Dale from Denver asked a question like this: "Can an account owner just take a RMD from one account instead of separately from each account?"
THE IRS ANSWER: "An IRA owner must calculate the RMD separately for each IRA that he or she owns, but can withdraw the total amount from one or more of the IRAs. Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract that he or she owns, but can take the total amount from one or more of the 403(b) contracts. However, RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans have to be taken separately from each of those plan accounts."
HOW TO BUY BRINKER'S NON-VANGUARD RECOMMENDED MUTUAL FUNDS: Caller Brad from New Orleans, who said he follows Brinker's model portfolio III, asked about the best way to buy mutual funds that Brinker recommends that are not Vanguard.
Brinker replied: "If you buy it directly from the mutual fund, that's usually the least expensive way to buy it.....If you going to use a third party, whether it be Vanguard or Fidelity (Honey EC: or Charles Schwab) brokerage, very frequently, you are going to have to pay a fee....That's an additional transaction expense."
WARREN BUFFET FORCES TAX INCREASE ON HEINZ CO. SHAREHOLDERS: Caller Bob from San Francisco said he was long-term Heinz stock holder and wanted to hold it much longer. He was really ticked off about Warren Buffett's purchase because it meant he (Bob) had to sell for cash if the deal went through and then pay big capital gains tax on it. He said that the same thing happened because of Buffett when Mars purchased Wrigley.
Brinker agreed with the caller that he was going to have to pay a large amount of taxes since he was a high-earner in California. Brinker said: "There is a real irony here....The same person who perpretrated this takeover, the Sage of Omaha, has been out there for the past couple of years, campaigning, beating the drums, on increasing the tax rates. Then he comes in with this bid, and in Bob's case, he could lose 35% overnight on the tax bill....Amazing stuff, huh?"
HEINZ CO. SUSPICIOUS INSIDE TRADE: Brinker's comments summarized: Right after it was announced that H. J. Heinz Co. was being taken private at almost $72.5 billion in an offer by Warren Buffet, we learned that the SEC is suing some traders for suspicious trading activities. No wonder some investors have left the stock market when this kind of thing happens. The SEC complaint alleges that traders earned $1.7 million by purchasing out-of-the-money call options just before the announcement was made. The trades took place in Zurich. They will probably find the people involved and go after them.
The following summary and editorial comments written by guest-writer, Frank J:
A summary of the interview with Alan Blinder on MoneyTalk, February 17, 2013.
Alan Blinder was Bob’s guest in this Sunday’s third hour. Mr. Blinder is a Professor of Economics at Princeton, a contributor to the editorial pages of the Wall Street Journal, and a former member of the Federal Reserve. Blinder’s book, After the Music Stopped, is an examination of the economic meltdown and the reaction to it. The book is now on Bob Brinker’s reading list on his website.
Mr. Blinder said that the book came about as a result of the economic meltdown, which was a big, complicated mess that few Americans understand. He delayed writing the book because he “wanted to see how this play ends.” As to what happened, Blinder said we built a fragile financial system, and there was a desire to build complicated derivatives on top of mortgages. All this activity was predicated on the housing bubble continuing. People should have known that home prices would not continue upwards, and it didn’t help that regulators were looking the other way.
Blinder pointed out that there were “$200 – 300 billion of bad mortgages, … $600 billion at most.” The problem was that “trillions” in investments were built on top of these mortgages and institutions were too heavily leveraged. The topic of March 2009 market bottom came up and Bob Brinker asked if the fear that the banking system was going to go under was legitimate. Mr. Blinder’s answer was yes – however, he cited some actions by the federal government that he thought helped prop up the banking system: 1) the stimulus bill had been passed a few weeks earlier, 2) Treasury Sec. Tim Geithner had announced the need for stress tests on banks, 3) and the TARP program was operating, having been put in place in late 2008.
Bob asked if we have learned anything? Mr. Blinder’s answer was probably not enough, and he wondered out loud whether we would actually remember what we learned. Blinder pointed out a few things that we already knew: being excessively rich can be hazardous to your financial health. We knew that any unregulated financial system tends to go to excess; people get irrationally exuberant and begin doing things they shouldn’t. He said when this happens, the regulator’s role is to mitigate. The Federal Reserve “missed” all this because a lot of the worst mortgages were coming from outside the banking system. But, Blinder added that there were “disgraceful lending standards” and the Fed should have taken action against.
Bob hypothesized that the federal government made a conscious decision NOT to save Lehmann brothers. The guest agreed and said the decision by the government to let Lehmann go bankrupt was a mistake. He believed it could have been saved like Bear Stearns. The resulting confusion over the “rules of the game” led to a freezing of worldwide credit markets. When it came to AIG, the Fed and the Treasury found ways to stretch the law and help that company.
Bob asked if the “too big to fail” concept was the same as a license to do harm (by large financial institutions and traders). Blinder said the Dodd-Frank legislation in 2010 did away with the “TBTF” notion because if a bank looks like it is failing, the legislation calls for an orderly liquidation by the FDIC. Bob mentioned Republican presidential primary candidates who called for Dodd-Frank to be abolished, citing government actions as the cause of the meltdown. Mr. Blinder dismissed this and said the cause of the meltdown was government INACTION, and the notion of repealing Dodd-Frank was “beyond the Pale.”
Editorial comment: Not mentioned with regard to government actions in the form of the Community Reinvestment Act, and the activities of those quasi-government agencies, Fannie Mae and Freddy Mac.
Carl, calling from WLS country asked a two part question, had Glass Steagall been in place would it have made a difference? And, if the original uptick rule was in place would that have slowed the downturn?
Editorial comment: At this point, MoneyTalk regulars might have listened a little closer because Bob has commented many, many times on the folly of repealing Glass Steagal and the lack of enforcement of the uptick rule.
Mr. Blinder said that there were many bad practices and “zero” would have been prevented by Glass-Steagall. Only the Citigroup merger would have been stopped. He said that the repeal of Glass Steagall played “a very, very small role if any.” He dismissed the uptick rule as “speed bump” (to those who would short a security).
Honey EC: Thank you for that great summary, Frank. I can't believe that Brinker actually let those comments about Glass-Steagall go by unchallenged. As you said, he has repeatedly talked about how its repeal by "both Parties" was responsible for the housing-banking crises of 2008.
Jeffchristie's Moneytalk Final Exam Question:
When Bob Brinker takes calls from people listening on the great KNUS radio he frequently says they are calling from:
A) The emerald city.
B) The windy city.
C) The mile high city.
D) They city that never sleeps.
Answer: 710knusBrinker said he will be adding Blinder's new book to his recommended reading list: After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead
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.)
Thursday, February 14, 2013
February 14, 2013, Bob Brinker's Fixed Income Advisor: Summary, Update and Commentary
February 14, 2013....Bob Brinker's (the host of Moneytalk) son posts on the internet as Bob Brinker. Bobby Jr. left the field of computer technology about five years ago and began to follow in Daddy's bootstraps -- selling a newsletter. He and Lisa Brinker edit and publish The Brinker Fixed Income Advisor. Lisa's degrees are in English, German and Linguistics.
The latest complimentary issue of the Brinker Fixed Income Advisor (October 2012) is now on the website. That's only four months old, so I will review it.
The first thing I did was look at my last summary of Jr's prior complimentary newsletter which I wrote last year on March 13th: LINK and make comparisons.
ITEM: Firstly, I noted that Bobby Jr's economic forecast is identical to Brinker Sr's is in Marketimer and on Moneytalk: Fixed Income Advisor, Page one, Paragraph one, Jr wrote: "The economic indicators we monitor suggest subdued economic growth ahead. We project real GDP growth will be near the bottom of our range of 1.5% to 2.5% this year. The economy grew at an annual rate of 1.65% during the first half of the year and we estimate third quarter GDP growth to be around that level. Looking ahead to 2013, the GDP growth estimate is more difficult. Our initial estimate of 1.5% to 2.5% GDP growth in 2013 is based on Congress taking action to limit the negative effect from the fiscal cliff during the lame duck session which follows the November 6th election....."
ITEM: I noticed that like Brinker Sr.'s income portfolio, Bobby Jr. removed all stock holdings from all of his portfolios. Fixed Income Advisor, Page one, Paragraph two, Jr. wrote: "In light of the recent rally in both credit and equity markets, and diminishing prospects for accelerating growth in 2013, we are making a number of changes to our Model Portfolios this month....We are going to eliminate our exposure to equity prices by selling our holdings of convertible bonds and dividend yielding stocks. The proceed of these sales will be reinvested in safer fixed income securities."
ITEM: I noticed that several of the holdings that Bobby Jr. sold, and bought, were identical to Brinker Sr's. E.g., sell Vanguard Wellesley Fund (VWINX), buy DoubleLine Total Return Bond Fund (DLTNX); increase Vanguard Ginnie Mae Fund (VFIIX) holdings; buy Metropolitan West Total Return Fund (MWTRX)
ITEM: I noticed that like Brinker Sr., Bobby Jr. had sold all Vanguard High-Yield Fund (VWEHX).
Conclusion: Bobby Jr's Fixed Income Advisor and Bob Brinker's Marketimer might be viewed as the "Red and Black" pair of newsletters. Is it planned that way? I don't know. I report, you decide. I can tell you this, Jr. refuses to let me subscribe to his newsletter. Why? What is he afraid of? Surely he has nothing to hide, or does he?
Brinker Sr. keeps his Marketimer fixed income portfolio "off-the-books" -- and while Mark Hulbert does report its returns, he never includes it in Brinker's Hulbert Financial Digest performance ranking. While at the same time, Hulbert has covered Jr's Fixed Income Advisor from the first month it was published. (Based on what? the name? What else?)
Moneytalk callers often tell Bob Brinker on the air that they subscribe to "both of his newsletter," and he rarely corrects the misconception. Here is some commentary that was sent to this blog:
The latest complimentary issue of the Brinker Fixed Income Advisor (October 2012) is now on the website. That's only four months old, so I will review it.
The first thing I did was look at my last summary of Jr's prior complimentary newsletter which I wrote last year on March 13th: LINK and make comparisons.
ITEM: Firstly, I noted that Bobby Jr's economic forecast is identical to Brinker Sr's is in Marketimer and on Moneytalk: Fixed Income Advisor, Page one, Paragraph one, Jr wrote: "The economic indicators we monitor suggest subdued economic growth ahead. We project real GDP growth will be near the bottom of our range of 1.5% to 2.5% this year. The economy grew at an annual rate of 1.65% during the first half of the year and we estimate third quarter GDP growth to be around that level. Looking ahead to 2013, the GDP growth estimate is more difficult. Our initial estimate of 1.5% to 2.5% GDP growth in 2013 is based on Congress taking action to limit the negative effect from the fiscal cliff during the lame duck session which follows the November 6th election....."
ITEM: I noticed that like Brinker Sr.'s income portfolio, Bobby Jr. removed all stock holdings from all of his portfolios. Fixed Income Advisor, Page one, Paragraph two, Jr. wrote: "In light of the recent rally in both credit and equity markets, and diminishing prospects for accelerating growth in 2013, we are making a number of changes to our Model Portfolios this month....We are going to eliminate our exposure to equity prices by selling our holdings of convertible bonds and dividend yielding stocks. The proceed of these sales will be reinvested in safer fixed income securities."
ITEM: I noticed that several of the holdings that Bobby Jr. sold, and bought, were identical to Brinker Sr's. E.g., sell Vanguard Wellesley Fund (VWINX), buy DoubleLine Total Return Bond Fund (DLTNX); increase Vanguard Ginnie Mae Fund (VFIIX) holdings; buy Metropolitan West Total Return Fund (MWTRX)
ITEM: I noticed that like Brinker Sr., Bobby Jr. had sold all Vanguard High-Yield Fund (VWEHX).
Conclusion: Bobby Jr's Fixed Income Advisor and Bob Brinker's Marketimer might be viewed as the "Red and Black" pair of newsletters. Is it planned that way? I don't know. I report, you decide. I can tell you this, Jr. refuses to let me subscribe to his newsletter. Why? What is he afraid of? Surely he has nothing to hide, or does he?
Brinker Sr. keeps his Marketimer fixed income portfolio "off-the-books" -- and while Mark Hulbert does report its returns, he never includes it in Brinker's Hulbert Financial Digest performance ranking. While at the same time, Hulbert has covered Jr's Fixed Income Advisor from the first month it was published. (Based on what? the name? What else?)
Moneytalk callers often tell Bob Brinker on the air that they subscribe to "both of his newsletter," and he rarely corrects the misconception. Here is some commentary that was sent to this blog:
FrankC said...Honey, I never knew that there were two Bob Brinkers, father and son. Thank you so much for shedding light on this sham of a newsletter. Back when I was a subscriber (sucker) to his father’s Marketimer, I received several solicitations for this Fixed Income Advisor in the mail. I always thought that they were part of the senior Brinker’s newsletter because they both listed similar Colorado addresses. The formatting of the pages was nearly identical to make it appear to have come from the same organization. Now I’m wondering how the junior Brinker obtained my mailing address to solicit this rag of a newsletter? Perhaps his father gave him the addresses of Marketimer subscribers? Or did he blatantly steal the addresses from his father? Either scenario speaks volumes for the unethical business practices of the Brinker clan!
Sunday, February 10, 2013
February 10, 2013, Bob Brinker's Moneytalk, Summary, Excerpts, Discussion and Commentary
February 10, 2013....Bob Brinker's Moneytalk was not a live broadcast today. The whole three-hour show was made up of spliced together old re-run calls and canned monologues.
Why does Brinker allow his re-runs to air without letting the audience know that the program is not live and not to call.
Jeffchristie's Moneytalk Final Exam Question:
Why does Brinker allow his re-runs to air without letting the audience know that the program is not live and not to call.
Jeffchristie's Moneytalk Final Exam Question:
Today's final exam question is a repeat. Unlike Bob Brinker I am announcing it in advance.
The most frequent caller to Moneytalk is:
A) Lynda Belinda from Yorbalinda
B) Andy from Redwood city
C) Donna Donna the Prima Donna
D) Tony from Brooklyn
Answer
Moneytalk on Demand is free for seven days after broadcast here: San Francisco, Ca. KSFO 560: 1-4pm You can download and listen on the go.
Please see my article just below this one for a discussion on Brinker's current market forecasts.
Please see my article just below this one for a discussion on Brinker's current market forecasts.
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Every so often, when she got some money ahead she would go to the bank. In those days, dollars were convertible to gold. You could exchange a 5 dollar bll for a 5 dollar gold coin. She would do this and put the 5 dollar coin into her safety deposit box. She couldn't keep the coins at home due to the lodgers and crime.
Then came FDRs order. Her bank was closed late on a friday. And stayed closed for a week. When she finally got in, her box had been opened and all her gold taken. She got NO recompense. There was no one to complain to. Ordinary accts were lost too. No FDIC.
Prior to FDRs order, gold was a bit over $20/ounce. Once the govt owned all the gold, they raised it to $35. Instant inflation.
There are a lot of lessons from history. Cyprus learned the same one again - banks take orders from the govt, not its customers.