STOCK MARKET....In EDIT: Brinker made only one statement about the stock market today. He said that he did not know how the stock market would react to the upcoming "deal" with Iran -- or even if it would react.
BOND/INTEREST RATES....Brinker did not talk about interest rates or the bond market today.
Honey EC: Brinker said that the next issue of Marketimer will be available online on April 1st, and that it's no April Fools joke -- of course, he was joking. :)
I think that he's hoping that he will get a good crop of new subscribers after today's show who really want to know where he stands on the stock market -- so he sure didn't want to give anything away for free so near the next issue. However, he did mention that moving money within the stock market was just a "sideways move."
ECONOMY: REAL GROSS DOMESTIC PRODUCT (GDP) ....Brinker comments: This was the final reading on fourth-quarter real GDP -- Gross Domestic Product for new listeners, is total goods and services. Kind of like the whole ball of wax of what's going on in the economy. In the fourth quarter, the final version came in unrevised -- that is revised, but unchanged.… And that figure is an annual rate of real growth of 2.2% -- real growth is growth adjusted for inflation. And right now year-over-year inflation is gone, goodbye for the month. What I'm saying is it zeroed out – zero city is what we call it.
FIRST QUARTER SOFT BECAUSE OF EXOGENOUS FACTORS....Brinker continued: The first quarter is looking soft. What we mean is, not a lot of growth in the first quarter on an annual basis. There are various estimates out there. One of the estimates from one of the Federal Reserve banks in Atlanta has the first quarter growing at a fraction of 1% on an annual rate in the first quarter. There are others that are closer to the area of 2%. But whatever comes out, it's not expected to be a gonzo number… As things have gone in the first couple of months of this quarter, it's fair to say the weather – in certain areas like the North East – the weather has not been conducive to economic growth.… I think it's fair to call it severe winter weather in some areas… And let's not forget we had that port shutdown in Long Beach which created a lot of disruption in the supply chain – and that was going on for much of the first quarter as well. We're going to call these exogenous factors… Which the Federal Reserve likes to call transitory events. The implication being, here today and gone tomorrow.
EXOGENOUS EVENTS TRANSITORY AND NEXT QUARTER WILL BE BETTER.... Brinker continued: Well we know the weather is gone because spring has sprung and we won't have another port shutdown.… So it's reasonable to say that we will see better numbers coming out in the second quarter.… That is my opinion and I'm sticking to it.
INFLATION ZERO CITY....Brinker continued: And right now year-over-year inflation is gone, goodbye for the month. What I'm saying is it zeroed out – zero city is what we call it.
CONSUMERS HAVE A BETTER MINDSET....Brinker said: We've have seen pretty good consumer sentiment figures indicating that consumers have a better mindset about what's going on out there. And that's good to see.
UNEMPLOYMENT DOWN/JOBS UP....Brinker continued: And jobless claims are down. Just flat out down. Initial claims for unemployment insurance dropped another 9000 last week. They are down to 282,000 and the four-week average is also down now to 297,000. Getting that below 300,000 number is pretty healthy number for jobs.…
Honey EC: One of the people who incorrectly said a recession was imminent is ECRI. DShort wrote a complete update about Lakshmann Achuthan's ECRI (Economic Cycle Research Institute) report HERE
SO MANY PUNDITS HAVE BEEN WRONG: DOLLAR UP, GOLD DOWN, ECONOMY AND JOBS GROWING... Brinker continued: The dollar has reached multi-year highs, gold is falling out of bed, the economy is continued to grow moderately, new job have been excellent. The exact opposite of what some of the so-called pundits -- and I think much of that was based on political agenda forecasting – but the reality is, the economy has been growing at a gradual pace, new jobs have been coming in. Is it a perfect jobs picture… No it's not, but we are getting a lot of new jobs.
SO MANY WRONG AGAIN: QE WAS NOT A DISASTER....Brinker continued: And we certainly have seen inflation stay down. That was another make it up as you go along forecasts – oh, inflation is going through the roof, oh, QE that's going to be another disaster. None of those things happened. QE kept rates down to help the housing market, which needed help. Inflation has stayed down despite QE. You didn't hear it here, you didn't hear it from me, but it's been out there, been all over the place and it's all been wrong.
FREE MARKET GUY SAYS WHY REWARD WRONG-DOING....Caller Dave from Kansas City said: "I'm kind of a free-market guy. Some things have to fail. If you do something wrong, and you deserve to fail but you don't deserve to be bailed out by the US government."
FEDERAL RESERVE SAVED COUNTRY FROM DIRE STRAITS AND 1930 SOUP LINES....Brinker replied: I think that the Federal Reserve views its mandate as a lender of last resort. … And I'm not pardoning any of the bad behavior that we saw in the financial sector in 2008, including the liar loans, and the negative amortization loans, and all of the rest of it. It was hideous… But it is their job to come to the rescue when they are in dire straits. And I'll tell you what, in 2008 this country was in dire straits.… The record shows in 2008, we were losing over 600,000 jobs a month. We were taken the pain.… Hundreds of thousands out of work… Recollections of the 1930s with 25% unemployment and the soup lines were fresh enough. Yes we could have gone there to 25% unemployment, soup lines, selling apples. We could've gone there but the Federal Reserve stepped in and and we did not go there.… Suppose we had just let the whole thing go – let it all go. Let the companies go bankrupt, let the banks go bankrupt, let the unemployment rate go up to 25% or wherever wood of crested – it crested at 10.1 by the way.… Now it's in the fives.… We could've done all of that. I just can't make a case for that.
Honey EC: Brinker said he wasn't pardoning any of the bad behavior, but he was obviously for rewarding it. Fortunes were made coming and going, and then those same people were handed government money. In my opinion, the free market would have made the recovery much faster.
CRITICAL MASS....According to Brinker, Critical Mass is where everybody sits in the Cat-Bird Seat.
WHEN TO SWITCH TO A ROTH IRA....Brinker said: "Here is a guideline that I would use. If you think that your tax rate is higher now than it will be down the road, then you should not go to a Roth IRA -- because the value of the tax deduction now is going to be greater than the benefit you're going to get in retirement."
YOU CAN GIVE YOUR $MILLIONS AWAY TAX-FREE....Brinker said: You can give money away to anybody you like – relative, non-relative every year up to $14,000 per person with no taxes for you – no taxes for the recipient to pay.… If you have a spouse, you and your spouse can give $14,000 each and that would be $28,000 – tax-free.
YEAH, GIVE AWAY $10,860,000 EVERY YEAR IF YOU WANT.....Brinker continued: In terms of a lifetime gifting benefit, there's an exemption there too.. That has risen this year by $90,000. Now 90,000 may not sound like a whole lot, but how about $5,430,000? That's a lot of money, and that is the lifetime federal estate tax exemption which also applies to gifting – per person. If you have a spouse, it's $10,860,000 that you and your spouse can give away under the 2015 estate and gift tax limits, and you don't have to pay any tax on that gift.Will keep in mind, the estate tax rate peaks out of 40%. So that 40% would be a big dollar amount as a percentage of $5.43 million.…
ANOTHER TAX LOOPHOLE.... Brinker continued: There's another loophole and that is that you can play for your grandchild's education directly to the institution and it will not count against the gift. So if you give your grandchild $14,000, you'd also be permitted under the law to write a tuition check directly to his or her institution to pay the tuition.… And that amount would double if you had a spouse.
Honey EC: Did Brinker hear himself say that $90,000 doesn't sound like much money? Right, Bob -- selling newsletters must be very lucrative.
NEW TAX LAWS FOR TAX-SHELTERED ACCOUNTS...Brinker comments; We have expanded contribution limits for your 401(k), 403B and most of the 457 plans out there.… They have increased the basic amount you're allowed to place into these plans for this year by $500 – it's now up to $18,000. $18,000 is $1500 a month. The money comes off the top, you don't have to pay state and federal income taxes on the money – they place it into the plan and it's tax privileged all the way out to retirement.… In addition to the $18,000, if you're 50 or more, you can add $6000 to the kitty and then you're up to $24,000. A pretty amazing amount of money to be able to put aside..... And in addition to that, you have your IRA contribution limits which are up to $5500 this year, or 50 or over, $6500 this year..
TOTAL STOCK MARKET/S&P AND AAPL.....Rick from Albuquerque asked: "I heard that Apple had become about 4% of the S&P 500, so if I own some S&P 500 funds, should I take that into consideration in the amount of the individuals Apple stock that I own?"
Brinker replied: One way to dilute that exposure is to go with the total Stock market Index. Because if you go with the total Stock market Index, instead of owning – and the numbers are ballpark – instead of owning 500 stocks, you are going to own thousands of stocks by going to the total Stock market Index which is going to trade off something like the Wilshire 5000 or similar broad index. In that kind of index you're going to include the mid-cap companies in the small-cap companies, so there is no reason to limit yourself that way when you can broadly invest in the total market.
REMEMBER 4% RULE FOR OWNING INDIVIDUAL ISSUES....Brinker continued: I think Rick is referring to the 4% guideline that we've talked about on Moneytalk for about 30 years, and that has to do with limiting your direct investment in any one company to about 4%. Now the purpose of that is to avoid putting all of your eggs in one basket… The purpose is to avoid concentration of assets in a handful of stocks. I think that is a risky way to invest. Look, if you're down in the area of about 4% of an index in one stock, that would even be consistent with the guideline that I have spoken of – of having no more than about 4% in one company stock and that's all it aimed at risk management. That's all aimed at controlling the specific company risk in your investment portfolio.
Several callers asked for specific tax and rental properties advice:
=> Brinker told an 86 year old to pay off his 4 3/8 mortgage since he had the extra money to do it with.FrankJ was not available today to summarize the third hour guest. The most important point that came out of the interview was that we should be very sure that we do not exceed the FDIC limits on money that is in banks. Some people who exceeded the limit at that time, lost money. The current insured limit is $250,000.
=> After spending a lot time drawing out details from him, Brinker told another caller who wanted to sell his property that he shouldn't sell because he was making about 7% a year on it.
=> Brinker told a woman that she shouldn't pay off her mortgage that was connected to fed rates unless it started to go up.
=> Brinker told Roger from Sebastopol who was coming into a "large amount" of money from a "tech patent" to contact a CPA for tax advice.
(In my opinion, other than some entertainment value these kinds of calls mean nothing to anyone except the caller.)
Brinker's guest-speaker was John Bovenzi: Inside the FDIC: Thirty Years of Bank Failures, Bailouts, and Regulatory Battles
Jeffchristie's Moneytalk Final Exam Question:
The next edition of Marketimer will come out on:
A) Cinco De Mayo day.
B) Earth day.
C) Arbor day.
D) April fools day.
ANSWER
(Summary posted at 7:35 PDT)
READ AND POST COMMENTS
READ AND POST COMMENTS
77 comments:
Rasputin here - Geez, do you think Bob could spit out his gum or whatever the heck he has in his mouth?
Ras...He does sound a little funny today. Almost like he's been spending some time in the mile-high state with BobbyJr.
Here we are at the start of hour-two and Brinker is giving out the expected reports for next week. He usually does that at the start of hour-three. What's up with that?
missed him today..appears KSFO has not yet loaded show in 7 day files...?
Anonymous...try this station and see if they have the program archived. I was told that they are archiving all 3 hours of Moneytalk.
KABC
Honeybee, I just wanted to say thank you for providing these summaries. I used to listen to online archives of the show wherever they might be available, but this is much better. I can skip past the umpteenth caller with, "Hi, Bob. I have been a listener for 10 years. Could you explain the 4% rule and what the "Land of Critical Mass" means? Thanks."
:)
Gawk..... LOL.... And that is what happened several times today.
Also Brinker did his usual attack on "the dysfunctional congress." But the catbird got his tongue when it comes to mentioning that the NEW congress passed the Keystone Pipeline and the old president vetoed it.
Maybe he's afraid to say anything since he once said it was a no-brainer to pass it, so how dumb does one have to be to veto it?
I found caller Bert from Lumber town interesting. He will be getting a $75k a year pension, and his wife who works at the same place will be getting $65k a year. They may have the option to take a lump sum but no details are available as of now. Bob ask what he had in addition to that. He said $3,000,000. I know what I would do. Go down to the Mercedes dealer and order a new AMG GT.
Mercedes All New 2016
Bob Brinker's former business partner has died. Sheldon Jacobs and Brinker owned a fee-based investment-advisor company called the BJ Group. They sold it over a decade ago.
PARADISE VALLEY | Sheldon Jacobs, 84, of Paradise Valley, AZ, passed away Friday, March 20, 2015.
Sheldon was born in Milwaukee, WI, but grew up in his father's hometown, Deadwood, SD. He ran track and played football at Deadwood High. He traveled to London to see the 1948 Olympic Games, then attended the University of South Dakota for one year before transferring to the University of Nebraska/Lincoln where he earned his BS in business. After graduating from Nebraska he entered the Army as a 2nd Lieutenant during the Korean War. He served in the Military Police in Times Square and then Korea. After the war, he used his GI bill benefits to learn to fly and to get his masters in statistics/retailing from New York University. He continued to serve in the reserves and reached the rank of captain.
In July 1973, a front page Wall Street Journal article highlighted his parents, Ruth and Bert Jacobs' need to sell their five clothing stores when neither Mr. Jacobs nor his brother, Doran, opted to return to Deadwood to run the stores. Mr. Jacobs had worked in retailing for a short time before taking a job in the research department at the American Broadcasting Company (ABC) in 1961. He later worked at NBC as a director analyzing viewership statistics and, from this, developing sales strategies.
While he was working at NBC he appeared on The Today Show to discuss his first book, "Put Money in Your Pocket," the first self-help book ever on no-load mutual funds. Published in 1974 by Simon and Schuster, "Put Money in Your Pocket" was influential in fostering the subsequent huge growth of no-load funds. It launched a notable career that enabled him to found a popular investment newsletter, "The No-Load Fund Investor," which he published for 25 years with more than 30,000 subscribers. The Investor went on to become the number one financial newsletter in America for risk-adjusted performance for the 15 years, ending June 2006. Additionally he co-founded the BJ Group with nationally syndicated radio host Bob Brinker. The firm was a Register Investment advisor that managed money on a discretionary basis for over 1000 clients
Read more
Bob Brinker's BJ Group charged a hefty percentage of assets, put his clients into the disastrous 2000 QQQ trade. Here is a copy of the letter that the BJ Group sent to clients:
The BJ Group
A Division of
Centurion Capital Management's
Private Client Group
Robert J Brinker
Sheldon Jacobs
.
October 19, 2000
.
Dear Client:
.
I am pleased to inform you that the BJ Group has executed a significant trade for you under the guidance and supervision of Bob Brinker.
.
Bob Brinker advised us of a short-term trading opportunity (countertrend rally) in the Nasdaq 100 Index. In response, we have purchased for your BJ account(s) a position in the Rydex OTC fund--a proxy for the Nasdaq 100 Index. Aggressive accounts will receive a more significant position; conservative acounts will have exposure to a lesser degree given the risk profile of the technology-laden Nasdaq 100.
.
It is important to note: we have not sold any existing funds. This purchase reduces your money market reserves or cash position for the duration of the trade. As of this writing, it does not imply a change in Bob's longer term outlook for the market.
.
We are committed to the Brinker investment strategy and look forward to the exciting prospects of this recent development.
.
Sincerely,
.
(Signed by President and the Managing Director, BJ Group.)
HA! I often wonder if the catbird himself believed his own prognostication and put any of his greasy cash into that trade. Doesn't seem to show any remorse. Maybe he went short.( Like my patience for his self-serving drivel )
A nice bounce to the upside today but for how long!
Gabe
Fedup and all...If you want to see photo copies of Bob Brinker's QQQ bulletin and his letter to BJ Group, please go HERE to my archived, original Brinker blog (that now belongs to Kirk Lindstrom).
gabe said...
"A nice bounce to the upside today but for how long!"
Jerrod says:
Well, tomorrow is the close of the month and quarter. I think "Da Boys" will be buying at least that long.
Jerrod Clarkson
It's painful, but thanks. Another reality check...
Futures down! We give back the gains of yesterday...today.
Gabe
Is the newsletter coming out tomorrow ( at least on his website)? is that what he implied on his radio show?
I wonder if he is going to change his target for the S&P.
Yes, Marketimer is due on April 1st, as was twice reported in the summary.
Only Brinker knows if he will change his target range. He said he was in the process of putting the final touches on this issue.
The way this Market is performing, "expert" predictions are not worth the paper they are written on!
My two cents.
Gabe
Yesterday Jerrod said:
"Well, tomorrow is the close of the month and quarter. I think "Da Boys" will be buying at least that long."
Today Jerrod apologizes to all and accepts the well deserved demerits bestowed on him by the Forecasting Institute of Shame.
Jerrod vows to do better next time.
Jerrod Clarkson
Who listens to market forecasters?
It has been documented that they aren't any more accurate than you, me, or anybody else (including Bob Brinker).
Handicapping this market takes a little knowledge and a whole lot of luck!
Gabe
Losing Quarter! The predicters are out forcasting
JM posted this on the "secular trends thread from last week:
Honeybee,
After doing some considerable digging today, I've decided your representation that BB in 2007 called an end to the secular bear in June 2006 retroactively is completely correct after all, despite my misgivings about the phrase "valuation based secular bear market".
Apparently in the June 2007 issue of the Marketimer Newsletter there is this important but overlooked additional color:
"The total loss for the 6.3 year secular bear market in the S&P 500 Index was 20% (excluding dividends), and the total loss for the 6.4 year secular bear market in the DJIA was 9% (exluding dividends)...In our view, the secular bear trend that ended in June 2006 served an important purpose s it provided the market with the opportunity to consolidate the unprecedented gains of close to 1400% that occurred in both the S&P 500 Index and the DJIA during the robust suclar bull market from August 1982 to the first quarterof Year 2000."
I'll leave it to you to vouch for that since I am not a subscriber, but the math checks out on top of the explicit references to the end of the secular bear.
From the March 24 2000 S&P 500 high to the so-called low on June 13 2006 you get a secular bear, don't laugh now, down 19.88%.
Like you, I respect the use of words even though no one is perfect in their use of them all the time. I think Kirk Lindstrom, however, was correct to detect some quite deliberate BS in the use of the term "valuation" at the time in a thread I found when he spoke of BB "morphing" his position. But the language of the added color leaves no doubt: Bob called an end to the secular bear in 2007 retroactively to June 13, 2006.
jm
JM...I dug out my copy of the June 2007 Marketimer to compare it to your quote from Kirk.
Yes, it is correct, but it looks like Kirk did splice it together a bit. So I then dug out my dragon speaker and transcribed 3 paragraphs from the June 2007 Marketimer. It's a bit more than I usually quote, but since it is 8 years old and the subject is important, I wanted to show all of what he said at the time that he retroactively declare the secular bear market ended in June 2006.
June 2007, Marketimer, Bob Brinker wrote: In our view, the valuation-based secular bear market that was established following the March, 2000 closing highs for the S&P 500 Index (1527.46), and following the January, 2000 closing high for the DJIA (11723), reached its conclusion on June 13 parentheses 2006 at the bottom of the 2006 mid-term off-presidential election year correction. On that date, the S&P 500 Index closed at 1223.69, and the DJIA closed that 10,706.14. The total loss for the 6.3 year secular bear market in the S&P 500 index was 20% (excluding dividends), and the total loss for the 6.4 year secular bear in the DJIA was 9% excluding dividends.
When the secular downtrend began in the first quarter of year 2000, the PE racial for the S&P 500 index was at an all-time record level approaching 30 times earnings. Over six years later in June, 2006, the PE racial for the S&P 500 index had returned to its 50 year average level of 16. This represented a very sharp decline in stock market valuation as measured by the operating earnings PE racial. This provided the basis for the end of the valuation-based secular downtrend that began in the first quarter of the year 2000. Since June 13, 2006, the Dow Jones Industrial Average has rallied to a level that is more than 10% above its January 2000 closing high. Furthermore, we expect the S&P 500 index to achieve significant new record highs going forward.
Over the past century there has been only one other secular trend that has lasted less than 10 years. That was the 1921 – 1929 secular bull market that saw the DJIA gain 497% over that eight year period, excluding dividends. In our view, the secular bear trend that ended in June 2006 served an important purpose as it provided the market with the opportunity to consolidate the unprecedented gains of close to 1400% that occurred in both the S&P 500 index and the DJIA during the robust secular bull market from August, 1982 to the first quarter of the year 2000.
"October 19, 2000
.
Dear Client:
.
I am pleased to inform you that the BJ Group has executed a significant trade for you under the guidance and supervision of Bob Brinker.
.
Bob Brinker advised us of a short-term trading opportunity (countertrend rally) in the Nasdaq 100 Index. In response, we have purchased for your BJ account(s) a position in the Rydex OTC fund--a proxy for the Nasdaq 100 Index. Aggressive accounts will receive a more significant position; conservative acounts will have exposure to a lesser degree given the risk profile of the technology-laden Nasdaq 100."
++++++++++++++++++++++++++++++
As a Marketimer subscriber, I received the "Special Subscriber's Bulletin" detailing the trade.
It seems like Bob Brinker had more confidence in this QQQ purchase than in any other timing move he has ever made.....and than in any other purchase he has ever made.
The emotion and confidence surrounding this trade were very high. It was like a big event.....
Not only did Brinker recommend it for all subscribers......including Conservative investors......
but subscribers were told to
Act Immediately !!
No time to waste.....just do it
Honeybee,
Those excerpts settle it for me. Incidentally, I found the Kirk Lindstrom comment in a thread from YOU at SiliconInvestor, here:
http://www.siliconinvestor.com/readmsgs.aspx?subjectid=57142&msgnum=176&batchsize=10&batchtype=Next
People should read it, because you also demonstrated clearly already at that time that BB's calling the bear in January 2000 had grown into a myth. He never used the term until October 2000.
Good stuff!
Now if only we could figure out where we are now in this market. Ghost of Bob will doubtless feel that he is right about this secular moment, but I remain skeptical for many reasons, not the least of which is return since 2000, the relatively shallow character of the 2009 low compared to previous lows, and overall valuation. Rock bottom low interest rates continue to underpin the bull argument.
jm
Equity futures down once again this AM.
Gabe
The current issue of Marketimer is online.
There is nothing new or different.
Gabe
Regarding Bobby's QQQ:
Bluce's investing rule #3: Never make sudden moves involving a significant percentage of your portfolio.
I've never 'scribed to Marketimer, and am glad for it.
If any of you get this bear/bull/cyclical/secular/trending up-down/counter-trend/correction/rally thing figured out let me know, and I'll retract my rule #3.
Meanwhile, I'm comfortable with a 45/55 AA and am enjoying the circus.
JM...I had forgotten that was on one of Kirk Lindstom's Silicon Investor threads. That was back when we were very good friends and all of my writing benefited him financially. Unfortunately, things changed when I started this blog independently.
Thanks so much for finding it and refreshing my memory.
I was also very happy to read one of my old friend's posts there. He posted as Stockalot at that time.
Very few could match his ability to hit the Captain of the Starship Moneytalk right between the eyes every time.
Here is the live link to the post you talked about:
Silicon Investor: Bob Brinker's Moneytalk and Marketimer
Actually, I need to correct what I said in my last post about the thread that JM cited belonged to Kirk Lindstrom. Kirk has another Brinker thread on Silicon Investor. This particular thread belonged to David Korn, but he no longer monitors it, so it has gone defunct.
Honeybee,
Since it's the 15th anniversary of the close of the first quarter of 2000 when the S&P 500 made its memorable high, I thought readers might want to reflect on how Morningstar says three popular Vanguard funds have done since then through 3/31/15:
VFINX (S&P 500 index) 4.04% per annum
VTSMX (total stock market index) 4.61%
VBMFX (total bond market index) 5.39%.
From March 1947 to March 2000 the S&P 500 returned an average nominal 13.2% per annum.
Ouch.
jm
Secular Bull and Bear Markets
April 1, 2015
by Doug Short
http://www.advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets.php
Jerrod (If you will send an email to me: honeybee.roses@gimail.com, I will give you the HTML for posting links here.)
DShort's article and graphs about secular trends is about the best I have ever read.
Here is his link live:
Excerpts:
"Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, over five-and-a-half years later, the S&P 500 has set an inflation-adjusted record high based on monthly averages of daily closes.
Let's examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between up-and down-trends. Market historians call these "secular" bull and bear markets from the Latin word saeculum "long period of time" (in contrast to aeternus "eternal" — the type of bull market we fantasize about).
Be sure to take a look at DShort's charts.
Thanks for providing that link to Silicon Investor. That was a fun read. That board certainly had some talented writers.
I just read the April Marketimer. Brinker reviews the 5 "primary cause of a bear market."
To refresh your memory, they are:
Tight Money
Rising Rates
High Inflation
Rapid Growth
Overvaluation
Please note that Brinker covered most of these elements on Moneytalk on last Sunday, and covered the rest previously. Just read my summaries....
Overvaluation is my chief concern!
Gabe
"Brinker reviews the 5 "primary cause of a bear market."
Ah, but he forgot the most important one. The one that accompanies EVERY bear market that he has missed. And that is all of them 'cept maybe one.
EXOGENOUS EVENTS
A small bounce today. I agree with Bob 11:11 AM!
Gabe
Jim, most of those people were also posting on Kirk's Suite 101 message boards. And before that on the Brinker message boards -- until the two Brinker's kicked everyone off who dared even ask a question that might be considered critical of The Brinker.
Some of them still post comments here, but if I said who they are here, I'd have to kill the blog. LOL!
Bob...Now you know that Brinker only talks about those pesky Exogenous-Events from the rear-view mirror. :)
Definition of Exogenous Events:
"I screwed up and I don't want to admit it!"
Gabe...You said you are concerned about over-valuation. Looks like Doug Short agrees with you. This is his article about it today. He goes much more in-depth than Bob Brinker does:
The Market Remains High in Overvaluation Territory
Posted: 02 Apr 2015 08:52 AM PDT
Click to view
Here is a summary of the four market valuation indicators updated at the beginning of the month.
The Crestmont Research P/E Ratio
The cyclical P/E ratio using the trailing 10-year earnings as the divisor
The Q Ratio, which is the total price of the market divided by its replacement cost
The relationship of the S&P Composite price to a regression trendline
Read More and see his graphs
Another definition of exogenous event:
"The dog ate my sell order".
jm
HB: My thought is that when earnings reach valuation levels, then we can witness a rise in equity prices that is "prolonged" more than, let's say a day.
Thanks, HB!
My two cents.
Gabe
Bluce said....
I've never 'scribed to Marketimer, and am glad for it.
Meanwhile, I'm comfortable with a 45/55 AA
Bluce, what are you investing in with respect to fixed income?
I take it you are not following Brinker's fixed income advice
thanks!
ETF Bob (not THAT ETF Bob):
My non-equity 55% consists of:
- Janus short-term bond JASBX
- Janus Flexible Income JAFIX
- Met West Unconstrained MWCRX
- PIMCO Income PONDX
- Double Line Total Return DLTNX
- The 60% bond allocation within Van. Wellesley VWIAX
- CASH
I have no idea what THAT Bob recommends, other than the occasional reference to it in this blog.
the woman know as the HottieBee writes:
That was back when we were very good friends and all of my writing benefited him financially.
Very good friends? Maybe on friendly terms, shared camaraderie, but I really don't think true friendships are dissolved over money.
Real friends often drift apart over the years,as they mature,viewpoints,family change the areas of commonality but the memories are fond and the feelings are simply latent.
what you are describing seems to be something else that occurred.
the rodent
Hi TFB, a true friend. :)
I really don't feel comfortable saying anything more than the bare bones facts which I stated earlier.
But based on what you pointed out (which I agree with), I will re-word what I said:
I THOUGHT that Kirk and I were very good friends for many years. Nuff said. :)
Bluce said...
ETF Bob (not THAT ETF Bob):
My non-equity 55% consists of:
- Janus short-term bond JASBX
- Janus Flexible Income JAFIX
- Met West Unconstrained MWCRX
- PIMCO Income PONDX
- Double Line Total Return DLTNX
- The 60% bond allocation within Van. Wellesley VWIAX
- CASH
I have no idea what THAT Bob recommends, other than the occasional reference to it in this blog.
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Thanks a lot Bluce.
Very nice of you to share that.
You might be interested to know what THAT Bob recommends.....and since HB has discussed it, perhaps it will be OK to post
THAT Bob......also recommends a couple that you are in.
Namely, Met West Unconstrained; and, Double Line Total Return
Are you sure you are not a secret subscriber? Just kidding......
He also likes DoubleLine Low Duration Bond Fund.....and Osterweis Strategic Income
That's it....just four......
He's really into the low duration thing....but not as severely as last year
I'm seriously looking into the Dodge & Cox Income fund.......the Metropolitan West Total Return Bond Fund......the DoubleLine fund you are in.....the DoubleLine Core Fixed Income Fund.....Baird Core Plus Bond....and some others....
take care
ETF1 Robert (or am I supposed to say THAT ETF1 ? I'm a bit confused with all this THAT stuff!!)
Just a note on some of these DoubleLine Bond Funds.......
The Institutional share classes have lower expense ratios......
but many have $100K minimums....
UNLESS you invest in them in your IRA, in which case many of the institutional share classes have only a $5K minimum investment
Something perhaps THAT Bob could have mentioned to subscribers?
jm said "Ghost of Bob will doubtless feel that he is right about this secular movement" and you disagree that 3/9/09 wasn't the end of the secular bear (MOABO).
jm, how do you see this market?
If 3/9/09 was not the end of the secular bear,do you see the market returning to levels below S&P 667?
Is this the first time a cyclical bear went above the the old highs by more that 10% (much more)?
I find this subject (cyclical mega trends )so interesting but I am not sure how useful it all is.
Perhaps it would have been better if Bob would have never brought up MOABO and cyclical markets... but he did.. and I got sucked in.
ETF, you shouldn't worry so much about fixed income investments. You've been stewing over the "right" investment now for months and in the meantime you have been losing a nice comfy income source.
The nice thing about bond funds over individual issues is that you can hop in and if it doesn't work for you .... you can change it tomorrow.
Rates aren't chaning overnight and who cares anyway? Higher rates mean more income for the long term investor.
Oops, this doesn't fit into Bob Brinker's brave new world scenario:
The sputtering U.S. economy created just 126,000 jobs in March as bad weather, weak consumer spending and flailing corporate profits resulted in the worst report since December 2013.
Read more
The poor job report may suggest that interest rate hike could be put off until September.
Gabe
So will Brinker host Moneytalk on Easter Sunday or won't he? My crystal ball is a bit cloudy on that one.
Honeybee,
Sputtering jobs is right. Digging deep into the Household Survey, I found that the previous peak in total employed in March was in 2007 at 145.3 million, usually part-time (25.684 million) and usually full-time (119.640 million) combined, not-seasonally-adjusted.
In the month just ended, total employment is up 2.3 million since March 2007, to 147.6 million. The part-time portion of that, however, is 27.655 million, up 1.97 million. Full-time is up just 341,000 from eight long years ago, to 119.981 million.
85% of the jobs gained over the period are part-time.
jm
With this schizophrenic market, Brinker's guidance may be irrelevant.
My two cents.
Gabe
Ghost of Bob said:
"I find this subject (cyclical mega trends )so interesting but I am not sure how useful it all is."
Like you I find myself strangely compelled by megatrends. It is important for the study of macroeconomics.
I'm deeply suspicious of this market because of the way policy and rules have been manipulated since 9/11 to prevent capitalism from operating as it should. But at this point it is difficult to imagine a reset to the area of 675 apart from an exogenous event like China retaking Taiwan or something similar to undo the current bullish sentiment. Meanwhile the pervasive underlying economic weakness has actually been applauded by market players because it means the Federal Reserve Put. These are therefore uncharted waters through which I'm not at all confident that past bulls and bears provide much guidance.
One thing about which I am fairly confident is that broad measures of valuation at extreme levels such as now correlate well with very poor subsequent long term returns. There is a school of value investing which adjusts asset allocations accordingly. That's the subject of my current study, and why I'm (still) not in the market. Nominal returns over the next ten years are likely to be less than 2%.
jm
For Ghost of Bob on why March 2009 was not the end of the bear:
http://www.realclearmarkets.com/articles/2015/03/13/stocks_directly_contradicting_fundamentally_placed_markets_101579.html
'What arrested the slide in liquidity and thus stocks and everything else was not QE or TARP, but FAS 157. The ability of banks to move otherwise denoted "trading assets" to their "bank book" allowed them to shield them from mark-to-market restrictions and all the continued haywire pricing. Relieved of the requirement to post losses due to market prices, there was thus no need for further hedging under the worst conditions, and so the self-reinforcing circle was broken. I make no value judgment about undertaking such a measure, as there is clearly a downside to doing so, only offering my opinion that this was the key ending the illiquidity.
'There had been rumors of mark-to-market alterations as far back as November 2008, but on March 9, 2009, it was "announced" that the House Financial Services Committee would be questioning FASB chief Robert Herz about that specific topic. FAS 157 was altered on April 2, applied retroactively to March 15 bank decisions on specific securities. ...
'Nothing was ever done about the collateral problem, as FAS 157 only removed the pricing and hedging pressure and did nothing to address temporarily or permanently collateral shortages that have been a constant part of the wholesale landscape. Indeed, QE in all its forms has made the problem worse by extracting usable quantities and locking them away as useless as the "reserves" that are created as a byproduct from all this monetary busywork. The FOMC knows this well, but has judged it to be a workable cost in the effort to influence "market" psychology.'
jm
Bob II said:
ETF, you shouldn't worry so much about fixed income investments. You've been stewing over the "right" investment now for months and in the meantime you have been losing a nice comfy income source.
Yes. As I see it there is no "right" investment for anybody. There *IS* a right AA, depending on one's age, risk tolerance, goals, etc.
Rates aren't chaning overnight and who cares anyway? Higher rates mean more income for the long term investor.
Yup. It's about building an asset base for use later on to generate income. Assuming one buys at a fair price, what the market value of those assets are at some particular point later on -- especially during the accumulation stage -- isn't that important.
Gabe: When was Bob's timing advice relevant?
Bluce: Not lately!
Gabe.
Very easy for the retail investor to get whipsawed in this choppy market.
Gabe
Oops....this is from Drudgereport:
RECORD 93,175,000 AMERICANS NOT WORKING...
Record 12,202,000 Blacks Not In Labor Force...
Record 56,131,000 Women...
January, February jobs numbers revised down dramatically...
Fed Cuts Growth Forecast to ZERO...
With this schizophrenic market, Brinker's guidance may be irrelevant.
Brinker has always been irrelevant. Successful market timing like the Yeti and the Loch Ness monster will never be relevant to anyone because it does not exist. And yet discussion continues about all three for much the same reason.
I'm with The Fluffy Bunny.
"January, February jobs numbers revised down dramatically...
Fed Cuts Growth Forecast to ZERO.."
Remember Bob Brinker said last year he was certain the interest rate "normalization" process would begin in 2015. So could it be possible the Fed will not raise rates at all in 2015? Could Brinker be wrong one more time? Could his low duration strategy backfire again?
Stay tuned...
The Fed says it is "data dependent" and so time will tell re: interest rates.
Gabe
Jim: I think Bobby was "sure" that rates would go up in 2013. So he's two years off.
"The investing world is scattered with the skeletons of market timers."
...Jim: I think Bobby was "sure" that rates would go up in 2013. So he's two years off...
One online newsletter writer, and sometime poster here, has been out of the bond market for over five years now. He now says he might have been a little early. Lol
Bob (not THAT Bob):
Ha, re - out of the bond market for five years.
I hear about people (I don't know any personally) who have been out of stocks since 2008.
I wonder if they, and the bond-o-phobes, have been in cash all this time?
They need a reality check: Yes, the value of your stock/bond portfolio is going to fluctuate.
My Barn had a winning horse today!
Gabe
Bluce writes:
Yes, the value of your stock/bond portfolio is going to fluctuate.
Nonsense, I pay some guy 185 a year and he publishes a newsletter and will send me special bulletins that will allow me to avoid the negative gyrations of the market with the adroitness of a fencing dualist.
You see there was that time when...huh...well okay that one did not work out, but then there was that time when – no wait, hmmm....okay, then there was that time...well no that did not workout either.
The reality for most is, in their heart of hearts, most rational people understand that no one who can actually time the stock market successfully is going to reveal their secrets for $185 a year. And yet people gladly fork over their $185 for what they know to be Tom-foolery; taking responsibility for your own finances in a world of perpetual market uncertainty is a daunting challenge, so it is psychologically easier to day some huckster $185 a year so you absolve yourself of blame avoid taking responsibility.
tfb: Only $185 per year to guarantee that my portfolio only goes up and never down???
Sign me up! Who is this mystery guru?
A Morningstar video: Bond Market Continues to Surprise Naysayers.
Bob (yes, THAT Bob): If you show up for work today, will you please comment on this clip, as it regards your bond position in the past two+ years? TIA!
Those who seek a bond fund that has done remarkably over the past 15 years, I suggest the Total Bond fund at Vanguard.
My two cents.
Happy Easter and Passover.
Gabe
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