STOCK MARKET....Brinker told a couple of callers that he was "comfortable" with them having their full stock allocations invested. Several callers today asked questions pertaining to the stock market -- which I have covered below. Brinker's answers indicate that he is still fully invested and bullish.
STOCK MARKET FLASH CRASH..... Brinker comments: Big news this week about the 2010 flash crash.....It was a big deal because it had a big impact on many retail investors.....It was basically an event where about $1 trillion in stock market value was erased in a matter of minutes.… There was a 36 minute period, starting at 232 Eastern time in which the market had a collapse and rebound the likes of which has never been seen in such a short period of time. The velocity of price action was mind-boggling....At its intraday low point, the Dow was down 998 1/2 points, or at that time was about 9% of its value in a matter of a few minutes. Now much of that loss was subsequently recovered but it was the second largest point swing of all long time.
Here is the link to the article that I posted in comments last week: Trader Arrested in Manipulation That Contributed to 2010 Flash Crash
STOCK MARKET FALLOUT FROM FLASH CRASH....Brinker continued: And a lot of fallout came after this and was unfortunate because there were people who looked at the flash crash and said, you know what, that's not for me.… And that's why stock market investors pulled out about $25 billion from the market right after the flash crash. And that's why mutual investors pulled out almost $100 billion from US stock funds over a period of about eight months – week after week....And when the investigation was held as to what had happened, well people were not satisfied.…
HIGH-FREQUENCY TRADER ARRESTED.... Brinker continued: As of this week we have a new explanation because the Commodities Futures Trading Corporation, along with the Justice Department, claim claim that a 36-year-old London high frequency trader made $40 million from 2009 on by programming and illegally manipulating the futures market – specifically what is known as the E-mini futures market. He's accused of doing this by making it appear that there were more sell orders than by orders. There's a Wall Street term for this and that term is layering. But in the case of this individual, the layering was a little different because he had the ability through his computer set up to cancel old orders and add new orders so fast that the sell side pressure went on and on and on.…
PANIC STOCK MARKET SELLING FOR WEEKS.... Brinker continued: Following this catalyst there was a selling panic on the stock exchanges. So this is the latest twist, if you will, on the flash crash....For all of that money, over $100 billion, to get subsequently withdrawn from the market.
STOCK MARKET SUBSEQUENTLY WENT STRAIGHT UP.... Brinker continued: It's a shame because look what the market is done since then… Since that time of the flash crash the market has soared – it's skyrocketed. And from that point on, with an exception of a correction in the summer of 2010, and a correction in the autumn of 2011, the market has almost been straight up. Yes there have been correction but not big corrections. The biggest correction cents the autumn of 2011 on a closing basis in the S&P 500 has been 9.9%. And we only had one of those.
WHATTA SHAME INVESTORS GOT SCARED OUT.... Brinker continued: So it's very unfortunate that this happened, because a lot of people left the market as a result of it and never came back. And therefore have missed out on gargantuan stock market gains in recent years. And that's a shame because you don't like to see people missing out on giant stock market gains – especially for a reason like this.… This is not a good reason – because somebody is playing computer games and manipulating prices. That is not a good reason to get shaken out of the market. But it happened to a lot of people and that's most unfortunate.
Honey EC: Brinker needs to take some of the blame for people getting scared out, and being afraid to get back in. For a couple of years now, he has been very been negative because of the lack of corrections -- issuing warnings and cautioning listeners and subscribers about being "vigilant," only dollar-cost-averaging "on weakness," which never came.
SOLID PENSION AS FIXED INCOME PORTION OF PORTFOLIO....Caller Frank from Michigan said: "I get a pension, like a regular pension that people used to get in America. And I was wondering, can I count that as, I have a 401(k), and I have almost 100% in the S&P. Can I say that my pension is balancing my risk?"
AT 100% STOCKS EXPECT VOLATILITY..... Brinker replied: If you're going to stay invested all the time, the one thing you have to accept is a lot of volatility. It's not always going to be like the last six years which is been pretty rosy for the stock market. It's not always good to be like that so if you're going to maintain that regardless you're going to have to accept the volatility.
COUNTING ON BRINKER FOR STOCK MARKET WARNING.....Frank followed up: "I was hoping I'd get a news bulletin from you like I did – not the last bubble, but the one before that, the tech bubble."
Brinker replied: "That would be wonderful. That would be wonderful. I agree with that."
Honey EC: It's shocking that so many people believe that Brinker called "a tech bubble" in 2000. Just the opposite, he was advising buying with cash reserves that he had raised from model portfolios as the Nasdaq dropped about 70%. I have covered this before, but he only raised 65% cash from equities in 2000 and put much of those cash reserves back into QQQ and lost 70% of it -- with a special bulletin that Frank mentioned.
COUNT PENSION AS FIXED INCOME.....(after finding out Frank's pension was secure Brinker continued): If you would count that $50,000 a year as $1,000,000 dollars in the bond market yielding that, you would have an equity ratio of less than 25%.… I mean if you look at the where yields are today.… You could do it in a diversified way with high grade bonds. You'd have to be way out on the maturity scale so you'd have to hold them to maturity because rates being as low as they are now. They're not going to stay here forever.… If you want to look at it that way, now, you could do it. Some people would say, you have $400,000 in the stock market and you have nothing in bonds. But you could say, I have $50,000 in annual solid, annual pension income.… If you woke up tomorrow and your 400,000 was worth 200,000 because people thought the world was coming to an end, it wouldn't really change anything for you – you'd still have your pension so that's why I think you can get away with it.
HOW WILL THE STOCK MARKET REACT WHEN FED RAISES INTEREST RATES.... Karl from Chicago wanted to know when the fed would and how the Fed would interest rates and would it shock the stock market.
Brinker replied: I think that the markets understand that the Federal Reserve eventually will move in the direction of normalizing rates. I think that the markets are learning that the Federal Reserve, as you said, are very nervous about the notion of raising interest rates. And the reason that they are nervous is because they realize that the economy is growing very slowly. We are going to get a lousy, with a capital L, report on first-quarter Gross Domestic Product next week.… The Fed knows all of this. The theory is that the economy is going to do better the next to the year – and I think that is a reasonable assumption at this point.
25 BASIS POINT INCREASE WON'T CHANGE ANYTHING...Brinker continued: But let's face it, a 25 basis point increase in the federal funds rate is not going to change anything. It's not going to slow down the economy. It's not going to have a dramatic impact on intermediate and long-term rates. It's the first baby step toward normalization.
FEDERAL RESERVE HAS A STOP AND START POLICY...Brinker continued: And now we also know that the Federal Reserve has a stop and start policy that they are willing to implement, which means that if they raise rates 25 basis point at a meeting, that does not mean that they are going to do it every meeting. They are willing to stop and start – monitoring the economy is. Also remember that the Fed knows if and when they increase rates in the current environment, they are doing the opposite of what other countries are doing. The European Union is easing. Japan is easing.…
FEDERAL RESERVE IN A TOUGH SPOT...Brinker continued: I think that they are caught in a tough spot because I think they really would like to increase rates very very much. There's no question in my mind that they would be much happier if they could increase rates – get toward normalization because they believe that it gives them more flexibility than having a zero rate policy. They have this zero rate policy that when an in December 2008 and they been stuck with it every sense because they haven't been able to do anything about it. So they had to invent a new easing policy known as quantitative easing – which they did. So they feel like they would like to have rates go up so that they could bring rates down if they had to – but they're afraid to put rates up because the economy's been fragile and now we're going to see a lousy first-quarter number.… On the other side of the coin, is the fact that the Federal Reserve has the ability to keep rates down because there is no inflation. The year-over-year CPI is negative – 0.1.…
NO CHANCE OF FED RAISING RATES NEXT WEEK....Brinker said: "I would say there is no chance that the Federal Reserve will raise rates at this week's upcoming meeting and they are going to remain data dependent – just as they have said."
$18 TRILLION NATIONAL DEBT ....Caller Bruce from Milwaukee said: "The United States has $18 trillion in debt now and we keep electing politicians that don't balance a budget. How much more debt in the US handle?"
NATIONAL DEBT NO PROBLEM WITH 3% GDP.....Brinker replied: I think the answer to your question is, I think the country can handle debt that is less than 3% of Gross Domestic Product in annual interest serviced, which is where we are now. We are at two and a fraction.… As long as the economy is growing. But I think that when the debt service becomes more than 3%, then I think we have a growing problem.
POLITICIANS DON'T ADDRESS PROBLEMS.... Brinker continued: You are correct, we do have politicians in Washington that are not addressing the future. They have failed to address the infrastructure in our country… They have failed to address the problems with Social Security and worst of all, they have failed to address the Medicare problem – the imbalance in future Medicare expenses and income.… They're not addressing it because it's unpopular politics… It's not a good way to get elected. And politicians like to get elected – they don't like to spend money and time losing. Why do the voters let them get away with it? That's a very good question.… I don't see any prospect right now of balancing the budget… Especially with the slow growth that we have.… Were already controlling spending quite tightly on a year-over-year basis. So I would say with moderate growth even, I don't see that we're going to balance the budget. Do I think it's important? No. As long as we keep the interest service below 3% of GDP on a annual basis.… But I think the bigger problem is, as we go forward the deficit is going to increase.
Honey EC: Brinker's choice about what needs to be addressed in Washington D.C. is very subjective. I can think of several things that are much more critical to the national debt.
ECONOMY....Brinker said: "We are going to get a lousy, with a capital L, report on first-quarter Gross Domestic Product next week.…"
THERE IS NO INFLATION...Brinker said: "On the other side of the coin, is the fact that the Federal Reserve has the ability to keep rates down because there is no inflation. The year-over-year CPI is negative – 0.1" and he commented that inflation is very low everywhere except San Francisco where it is 2 1/2%.
NASTY CALL OF THE DAY....Caller Joe from Florida said that brokers and fund managers were just below child molesters. Brinker replied that there was no hope for him if he believed that.
Frankj's Third-Hour Guest Summary:
Bob interviewed Paul Sullivan a New York Times columnist and author of the book, The Thin Green Line: The Money Secrets of the Super Wealthy
The Thin Green Line, The Money Secrets of the Super Wealthy. Paul said he wrote the book because he wanted to see how he and his family could get on the “wealthy” side of life.
He lunched with a group of wealthy people who meet once a month. To be part of this elite group you need at least $10 million in assets and you also have to be willing to pungle up $30,000 a year to pay for lunch. Paul said they don’t trade stock tips or estate strategies, they talk about more weighty issues like how wealth will affect their kids and grandkids, how to deal with charities.
With regard to charities, the guest said the very wealthy grapple with problems on how to give money away so their giving is effective. An eBay co-founder worth 8-9 billion is trying to give money to educational causes but wants to know his giving will have a measurable effect. He cited John Huntsman Sr., a multi-billionaire who regularly tips with $100 bills. Mr. Huntsman supports cancer research.
Bullet points:
· Don’t fret over taxes. Don’t cheat. Taxes are what we pay to live in a free society. He cited an example of a rich guy who put money offshore and ended up paying much more when caught, and, the financial guy who facilitated it got jail time too.
· If you have young sprouts, age 3 to 8 that is the time to teach them perseverance and resilience two traits that will serve them well.
Tim in Honolulu asked whether the wealthy subjects of the book had opinions about the student loan bubble. Sullivan said this was not a topic but Tim’s question opened the door to discussion. Paul said at age 17 – 18 students are not in position to understand the implications of how student loans can affect one’s life. Bob weighed in with his mantra that college should be free in the US. The guest said something that I think was very important (paraphrasing): Four years of college will not determine what type of person you become intellectually, but the debt you incur can determine a great deal about your life after college.
Bob and the guest proceeded to beat up on institutions that seem to build up endowments just for the sake of doing so. Sullivan said that colleges will sometimes pay the tuition for a top student whose family is below some income level but they still want students who pay the full ride, either from Mom and Dad’s bank account, or from loans. Some with huge endowments could give everyone a free ride if they chose to.
Bill in Omaha asked whether Dems or Repubs give more to charity. Paul Sullivan didn’t deal with that in the book, he said they give to different charities.
Paul Sullivan went to Kansas State and got wired up with some electrodes to take a stress test on money. He learned he is “money vigilant,” meaning he is aware of incoming and outgoing, and this can sometimes affect decisions and you end up depriving yourself of something you can actually afford.
Other categories include money avoidance (don’t want to think about it); money worship, money status (your self worth = money).
Here is a link to this work, it is a scientific paper but you can read about these “money scripts” starting about 14 pages in.
Psychology Today:money-beliefs-and-financial-behaviors-development-the-klontz-money-script-inventory-jft-2011.pdf
Bob wound things up at about 3:50.
Jeffchristie's Moneytalk Final Exam Question of the Day.....
Bob Brinker said that the 2010 flash crash was caused by:
A) The Koch brothers.
B) A trade entered by the money manager of the Clinton foundation.
C) A 36 year old Indian trading in London.
D) A sell signal issued by a newsletter writer.
ANSWER
Summary posted at 7:05pm PDT
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READ OR POST COMMENTS
52 comments:
Thanks to Jim for sending this link: "Meaningless Market Phrases That Will Make You Sound Like a Stock-Market Wizard
Does Bob Brinker use any "phrases" that are really meaningless in order to make himself sound like a "wizard?"
Here are Jim's contributions. Can anyone add any more?
* 1."The easy money has been made"
* 2."We're constructive on the market"
* 3."Stocks are down on profit taking"- Brinker sometimes says that when we have a minor pullback.
* 4."We're in a bottoming process"
* 5."Buy on Weakness"
Possibly #6 would be "I'm cautiously optimistic" if you think that is the same as being "vigilant."
Bob says to folks who are saving too much... SPEND!
Gabe
Gabe....Brinker wants to be right this time that the economy is doing well. :)
I notice that Mr. Brinker studiously avoids those who ask about his posture during the 2008 bear market.
Any comments?
Although this doesn't have anything to do directly with the stock market, I am *SO TIRED* of hearing him say, " . . . the reality is . . . "
It's an empty phrase. It means nothing except to maybe replace "You're wrong, I'm right, and here's why . . . "
You need a new cliche, Bobby.
Good one Bluce.
I think that fits under the heading of "meaningless phrases" quite nicely.
Dr. Strangelove....Last week, I covered that because of Brinker's response to a caller which may have been the most blatant "avoiding" his 2008 bear market miss:
The following is a transcription of Brinker's 2008 "volatility" and "dollar-cost-averaging opportunities" in 2008. The call was 45 minutes into the second hour:
Caller Carey said: "My question is with the weaker jobs creation the last time they reported it, and the lower long-term rates which I think in the past you have said where significant, and now that China has eased further, what are your thoughts about the markets going forward. Is it time to add additional money or are you becoming a little more cautious at this point."
Brinker replied: "We are already fully invested. We have been fully invested since the S&P 500 was basically at the 800 level. We took the money out early in the last decade and put it back in March 2003, we put it all back in – the S&P was around 800. Now the S&P is over 2000 and we've been fully invested during that entire period. Obviously, it's been an incredibly rewarding run. Yet it was a lot of volatility in 2008, but it came and it went. In fact it provided additional dollar cost average opportunities throughout that period.
Honey EC: For those of you who have been following Brinker since 2000, please bear with me while I review the FACTS that Brinker either FORGOT or? You be the judge.
1. Brinker SAID: "We took the money out early in the last decade and put it back in March 2003. The S&P was around 800. Now the S&P is over 2000 and we've been fully invested during that entire period. Obviously, it's been an incredibly rewarding run."
Truth: Brinker took out a total of 65% from equities in his model portfolios in year 2000 and put it back in March 2003 -- where it has been ever since.
2. Brinker SAID: "Yet it was a lot volatility in 2008, but it came and it went. In fact it provided additional dollar cost average opportunities throughout that period."
Truth: SAY WHAT? Did Brinker really ignore the fact that the S&P did another complete round-trip to BELOW 800 in 2008-2009? The S&P was at 800 in March 2003, but it had climbed to over 1500 in October 2007, then dropped to a low of 677 in March 2009!
3. Brinker said: "In fact it provided additional dollar cost average opportunities throughout that period."
Truth: I'm just suuurree that Brinker simply forgot all the gift-horse buying opportunities that he put out during 2008 as the market dropped.
In 2008-early 2009 Brinker called several "buying opportunity" bottoms. Yep, that's it, he just forgot. Here's the list of them:
January 4, 2008, S&P @ 1411: "Mid-1400's"
Feb 10, 2008 S&P @ 1331: "Low-1300's" (delivered via "special bulletin" - no mention of January Marketimer mid-1400's buying opportunity)
Aug 5, 2008 S&P @ 1285: "1240 or less"
Sept 2, 2008 S&P @ 1282: "Low-to-mid 1200's"
September 16th -- rescinded low-to-mid 1200's (recommended dollar cost-average only)
January 2009 S&P @ 931: “bear market bottom range of 750 to 850."
Feb. 2009 S&P @ 826: “low-to-mid 800’s"
March 5, 2009, S&P @ 696: said waiting for a "bottom and a test of that low." NO DOLLAR-COST AVERAGE IN MARKETIMER or buy levels.
Originally posted here
Dr. Strangelove....Here are Jim's addition:
Jim said...
I was so shocked hearing Brinker describe 2008 as merely "volatility" that I missed the lie about putting ALL of his money back in during 2003. You can't put ALL the money back in unless you had already taken ALL the money out. As we know after taking only 65% out he told aggressive investors to put half back into QQQ shares. So those people only had 32.5% left to put back in during 2003. 32.5% is far from being ALL the money.
Honeybee said (referring to what Jim posted): "Does Bob Brinker use any "phrases" that are really meaningless in order to make himself sound like a "wizard?"
"Buy on weakness."
[In almost every issue of the 2014 Marketimer, Bob Brinker said to "dollar cost average ON WEAKNESS"....but never defined how much WEAKNESS he meant!! 1%? 3%? 4%? 6%? 10%? 15%? no one knew]
"Buy on weakness."
When to use it: Any time you don't actually have the balls to say "buy" but want to be able to say later that you told everyone to buy if the stock should happen to go up.
Why it's smart-sounding: It sounds highly informed. It sounds prudent (Don't be stupid and chase the stock here). It sounds like common sense. It allows you to take credit for predicting any bullish move in the stock, while also being able to say "I said buy on weakness" if it crashes. It hedges all outcomes.
Why it's meaningless: It's too vague to be interesting or helpful. It can be applied to almost any stock or market at almost any time. It reveals that the speaker has little or no conviction about what he or she is saying and just wants to have it both ways.
see above for the link to:
"Meaningless Market Phrases That Will Make You Sound Like a Stock-Market Wizard"
Excellent addition, Robert!
Continuation of the above......
To me, "Take a wait-and-see approach" is similar to when Bob Brinker says he is being "vigilant", and keeping a watchful eye on the Marketimer Stock Market Timing Indicators.......
+++++++++
"Take a wait-and-see approach."
General: A perennial favorite.
When to use it: Any time you don't know — which is to say, always.
Why it's smart-sounding: It sounds prudent and cautious. It sounds appropriately skeptical.
It plays to the viewer's sense that, somehow, things are more uncertain now than they usually are. (Absurd — the future is always uncertain.)
It sounds like there's a specific event or events that you're waiting for that will suddenly turn you into the Donald Trump of Conviction, instead of suggesting that you're just perpetually wishy-washy.
But it doesn't specify what this event or events are.
Why it's meaningless: It means nothing. How long are you going to wait? What are you waiting for? Why, when what you're waiting for finally arrives, won't everyone else see it at the same time and bid prices up or down?
Why will the future be any less uncertain tomorrow, or next week, or next year, or whenever it is you're planning to "wait and see" until? What are you waiting for?
+++++++
further comment:
Bob Brinker can be as "vigilant" as he wants, and keep a watchful eye on all the Marketimer Stock Market Timing Indicators
That still won't stop him from totally missing the mega-bear market of October 2007-March 9, 2009
Or taking all the money out of the market in January 1988 after the October 1987 stock market "crash", which caused him to subsequently underperform the stock market as it went up
Saying he is being "vigilant" and keeping an eye on the "indicators" gives subscribers and listeners a false sense of security, as if Bob Brinker will know just when to get out of the market to keep us safe
How about that call to purchase the internet "business to business" mutual fund in January 2000.....how safe did that keep subscribers? p.s. it went down -75% to -90% after his recommendations
Continuation of the above......
To me, "Take a wait-and-see approach" is similar to when Bob Brinker says he is being "vigilant", and keeping a watchful eye on the Marketimer Stock Market Timing Indicators.......
+++++++++
"Take a wait-and-see approach."
General: A perennial favorite.
When to use it: Any time you don't know — which is to say, always.
Why it's smart-sounding: It sounds prudent and cautious. It sounds appropriately skeptical.
It plays to the viewer's sense that, somehow, things are more uncertain now than they usually are. (Absurd — the future is always uncertain.)
It sounds like there's a specific event or events that you're waiting for that will suddenly turn you into the Donald Trump of Conviction, instead of suggesting that you're just perpetually wishy-washy.
But it doesn't specify what this event or events are.
Why it's meaningless: It means nothing. How long are you going to wait? What are you waiting for? Why, when what you're waiting for finally arrives, won't everyone else see it at the same time and bid prices up or down?
Why will the future be any less uncertain tomorrow, or next week, or next year, or whenever it is you're planning to "wait and see" until? What are you waiting for?
+++++++
further comment:
Bob Brinker can be as "vigilant" as he wants, and keep a watchful eye on all the Marketimer Stock Market Timing Indicators
That still won't stop him from totally missing the mega-bear market of October 2007-March 9, 2009
Or taking all the money out of the market in January 1988 after the October 1987 stock market "crash", which caused him to subsequently underperform the stock market as it went up
Saying he is being "vigilant" and keeping an eye on the "indicators" gives subscribers and listeners a false sense of security, as if Bob Brinker will know just when to get out of the market to keep us safe
How about that call to purchase the internet "business to business" mutual fund in January 2000.....how safe did that keep subscribers? p.s. it went down -75% to -90% after his recommendations
Finally, Brinker may have reluctantly reached the 21st century..That is in apparently realizing that,in general, college education in the US should be essentially free to all citizen students who can cut it academically.
I only listed for a few minutes, as I drove to the park in the first hour and coming back for the third hour guest.
IMNTBMFHO, Brinker once again gave horrible advice to a young chap who wanted to plan for an early retirement. The part I agreed with was taking a look and see attitude, but even mentioning the 4% rule was very inappropriate, very, very, very inappropriate, to the point it was inexcusable. Brinker’s ignorance on this topic or his willful disregard for the findings of actual retirement professionals is appalling.
The third hour guest disgusted me, so much I turned the radio off. He was an over the top liberal who referred to people who do not want to pay taxes as gyping the Government You would think an effeminate liberal such a himself would at least know that the term “gyp” is offensive to certain ethnic groups. That aside, the government is not owed one thin dime of anyone’s income – not a penny. All income tax is theft – period. And should be TOLERATED only for basic services and those should be scrutinized. Walking into the door I turned the radio on with the intent to dial to another station, only to hear him whining about student debt that people voluntarily go into and the liberal Brinker chiming in about how great it was in other countries. One of the points of wealth is so that you can leverage it to leave your offspring in a superior position relative to the rest of society. You don’t owe other people’s children a damn thing, not food, clothing, shelter, medical care nor education. That is 100% the responsibility of the parents who willingly engaged in procreative activities. This confiscation of wealth thing is truly sickening. And people just sitting by acting if it is okay is equally sickening.
And that is my review of the socialist statist-ship moneytalk.
tfb: I agree with all of your points.
William T: College should be "free"? Will all the professors donate their time, taking no salary? What about the cost of all the buildings?
What about the people (and materials) needed to maintain all the buildings? All Free?
Do you think the utility companies will, or should, donate electric, gas, telephone service, etc.?
If you think the cost of college is too high, well I can understand that. The best way to reduce it is to get government totally out of education.
I rather enjoyed the 2 hour segment!
Gabe
notice that Mr. Brinker studiously avoids those who ask about his posture during the 2008 bear market.
I am sure Brinker's posture was reclining poolside in a lounge chair sipping champagne in the Nevada sunlight laughing his rear off.
On the other hand I am even more sure his average subscriber was bent over at the waist, pants on the ground, with light shining though their orifice after the greatest bear of modern times got through booty jabbing their portfolio. Because anyone who followed Brinker's advice was badly mauled in 2008.
What has happened to the 7 day archive sponsored by KFSO (in San Fran) that formally could be used to listen to Bob B "on demand?"
John Kennedy - Ohio
jjk@zigmail.com
Hi John Kennedy...KSFO is not podcasting right now. I do not know if they will resume -- or not.
Also, they are only playing two hours of Moneytalk.
Maybe some complaint letters might help....
Sadly, the only station that we have found that podcasts is KABC in LA, and I think it may only be one hour -- not sure.
Here is the LINK
Honeybee said (front page of blog):
Honey EC: Brinker needs to take some of the blame for people getting scare out, and being afraid to get back in. For a couple of years now, he has been very been negative because of the lack of corrections -- issuing warnings and cautioning listeners and subscribers about being "vigilant," only dollar-cost-averaging "on weakness," which never came.
++++++++++++++++++++++++
Agree with that 100%
Bob Brinker scares people out [or if they are not in, keeps them out] of the stock market on a regular basis, whenever he talks about being "vigilant"........or only dollar cost averaging "ON WEAKNESS".......or that he is keeping a very close eye on the Marketimer Stock Market Timing Indicators......or in the Marketimer, saying he is NOT ENTHUSIASTIC about putting new money into the market, which he so frequently said in 2014......he kept people out of the stock market the way he talked about the Fiscal Cliff towards the end of 2012......and other things he said in 2013.
He regularly keeps people out of the stock market by scaring them.
And for the past couple of years, he has scared people out of the bond market too.........or at least made them afraid or very uncomfortable with the bond market.
We hear callers to Moneytalk saying they have been out of the stock market for a very long time. Who wouldn't be, when your chief cheerleader is so often NOT ENTHUSIASTIC about putting money in.
We also hear callers who are afraid of the bond market, because their chief cheerleader is too
On the COUNT PENSION AS FIXED INCOME...subject, Bob's position on this sounds new to me. Did I miss his evolution on this? Now he says "you could do it (look at it that way)" and "you could get away with it." But in the past he has tended to discourage listeners from counting income streams like pensions, Social Security and rent income as the fixed income portion of a balanced portfolio in retirement, no?
Brinker welcomed the several advisory services that have sprung up recently suggesting it is good for competition. I wonder its impact on his newsletter.
I particularly like the Vanguard Program. Very low fees. $500,000 gets you your own advisor. I guess it is a great idea for those who are too busy with other ventures. My son, who is a medical doctor, is looking seriously at this program. He would be typical since his time is very limited for financial literature. He is a marketimer subscriber but wants a more comprehensive program. The advisory is tax deductible
So much discussion around the 4% rule. My RMD covers a good portion of the requirement. With social security and a pension plan, I well exceed the amount. Other income streams just gets re-invested to my racing barn.
Can't complain.
Gabe
Re: the observations on Bob's guest's airhead belief that college should be free. I've worked in American higher ed for over 20 years and would point out to the guest that running a residential college is sort of like running a small town: infrastructure, food, etc. are all essential to the teaching function. Also, most colleges have libraries and even museums that require funds. That said, it's all to the good that more young Americans are opting for non-college career tracks if they aren't motivated to attend college. The higher ed model that needs to be altered is that of giving faculty lifetime jobs, working 2-3 days per week, 8 months per year.
University of California used to be free for residents many years ago.
Free education is, of course, really tax payer supported. It every bit as much an investment in our future just as much as the space program or any other tax based scientific program.
To say that education should be privatized and only available to those who can afford it is shortsighted to the max.
Tex....In fairness to the guest, it was not him that wants free college for everyone -- that is none other than Mr. "fiscal conservative" himself --- Bob Brinker!
And unbelievably, he actually slams the U.S. for not offering "free" college to "qualified" students" just like (he says) other countries do!
He's done this on prior Moneytalk shows and I was so disgusted, I haven't covered it. This time, I am going to transcribe his words, immortalize them, and hope he reads them and thinks about them.
I'm sure that all of us will be happy to pay teacher's salaries, (and all the things you listed) for "everyone" including all "qualified" illegals.
In California, we already give illegals in-state tuition.
To Smith....Perhaps if the employees for ALL California school systems didn't get huge retirement perks, gigantic pensions and other things that the private sector only dreams about, it would cost students and taxpayers a whole lot less.
Now even the Junior Colleges are not cheap.
Perhaps if Sacramento wasn't so eager to give so many other freebies to all comers, education could be more reasonable again.
California is one of 17 states that grant in-state tuition to undocumented kids...
To qualify, the states that have such laws generally require the students to have:
attended a school in the state for a certain number of years;
graduated from high school in the state; and
signed an affidavit stating that they have either applied to legalize their status or will do so as soon as eligible.
It's only fair. If the child has lived in the state his entire life, graduated high school in that state and will legalize their status as soon as eligible....why not?
These people are not going to be deported. Wouldn't you rather they be educated than drawing welfare?
Tex and all,
Here is the transcription of Bob Brinker's TWO efforts Sunday to get the guest to slam the US for not giving "free" educations to all that want it -- "like in Britain."
I will post the first attempt and the guest, Paul Sullivan's rambling deflection:
Brinker said: “We’ve talked on this program for years about the fact that the United States is unique in that it does not provide an assured path to college degree for everyone who’s qualified to go there. It is related to money in Many cases. As you know there are countries that will make sure that you get a college degree if you merit a college degree and is not about the money.”
Paul Sullivan replied: "I'll give you my view about it.… I've written a lot about it in the New York Times… It comes back to what I was saying earlier about choices and decisions being so key to getting on the right side of that thin green line. And I think too often people are making these decisions and 17 or 18 years old and they're not fully informed decisions. And you go to some of these private colleges and they are fantastic – great facilities, great athletic facilities – they are wonderful. But not all of them are top-ranked. And I think it is certain point, people are going to have to say, you know what, do I go for the private school that isn't one of the top 50 private schools in the country or do I look at my State University and go there – do a cost benefit analysis. Do I do a couple years of community college – save some money, and then transferred to the college I want to finish up."
Here is Brinker's second effort to get Paul Sullivan to agree with him. It happened immediately after Paul stopped talking on the first try.
Again, Sullivan is having none of it and dissembles and rambles on, and LIKE BRINKER OFTEN DOES, answered different questions:
Brinker sai9d: "I just find it fascinating, for example in Great Britain, in Great Britain, if you are qualified to get a college degree, you are going to get that college degree. You are assured that opportunity. It's not just about the money. That's not the case in the United States."
Sullivan replied: "No it's not. And there are certain colleges now that they've gone away from pure merit or need based financial aid and they are trying to lure in that kid who perhaps has higher SAT scores and to get them at a college that he might not go to otherwise. That's fine. That's their choice – they can do that. But they got a get that full pay kid somewhere. And they're going to get people on the hook for $50,000 a year and parents are complicit in this. Parents will say okay we don't want to say no. We had a normal job, say parents make $100,000 a year – good living but now one year of college costs $40,000, $50,000 $60,000. People have to make hard choices. At the end of the day, for use of college is probably not going to determine who you become in life, intellectually, careerwise, but it certainly can determine the amount of debt you have and where you start financially in life. I think people need to start looking at it in that more rational way."
I wonder if one of the reasons we're hearing so much chatter about free college is because of the number of people who have come out with large amounts owing on loans. Add to this poor employment prospects for people with certain degrees and we may be looking at a knee-jerk reaction.
Moishe...If I may ask: how do you know those are the rules for in-state tuition in those 17 states?
Also, Do you live in California?
http://www.nilc.org/basic-facts-instate.html
Here is the link re: in-state tuition for the 17 states. Also addresses many other concerns about undocumented folks.
Well, not everyone needs to attend a 4 yr university. There are other alternatives, to include a local junior college, part time evening college and possibly a trade school.
These are less expensive alternatives. Individuals who are not college material can use stepping stones until they are capable to afford a University and or to see if they in fact have the ability to benefit from higher education. Scholarship opportunities and internships should also be on the drawing board.
My two cents.
Gabe
For various reasons I was given access to two of the big industry names in terms of mutual funds robo advisory service. Neither recommended any changes to my portfolio other than that which I would achieve if I rebalanced to my target allocations (I usually do that in May).
That aside there are number of features of these advisers. they will tell you if you are on track for retirement, able to retire and the amount of income they expect your portfolio to generate a year and withdraw rates.
While all looked good on the surface, a strong look under the covers revealed a house of cards. They make a lot of assumptions, and you may have to big to find them. In my case they assumed I was retiring at the unusual age of 55??? I am yet not sure where they came up with that figure. But it strongly effected the analysis. For one, the assumed I would suddenly shift my assets to a more conservative posture after age of 55. Another is they factored in SS at full benefit later on, which assumes there would not be a reduction in benefit. They also assume I would require 70% of my last few years earnings in retirement in order to determine when I could retire (which I believe is how the got to the age of 55 thing).
Another assumption is that I wish to leave no estate. Any financial planner knows that is an anomaly. And most parents want to leave a legacy to their children.
All in all this is a very useful application of technology. Somethings are really nice, but the devil is truly in the details. And I caution anyone using any of these services to fully understand the assumptions they are predicated upon.
"In my case they assumed I was retiring at the unusual age of 55??? I am yet not sure where they came up with that figure."
Didn't you have to fill out a questionnaire for the robo advisor telling it, among other things, when you planned to retire?
I can't imagine any advisor, robo or real, that would arbitrarily assign your retirement age. That would make the whole exercise useless.
Seesawing!
Gabe
It was thus queried:
Didn't you have to fill out a questionnaire for the robo advisor telling it, among other things, when you planned to retire?
My reply:
Nope I did nothing. The only thing they asked is if I wanted them to include assets that I had at other institutions (in which case I would have to give them userids and passwords to the accounts). They pulled all the information from their system and did not ask questions. They do have an option where you can provide additional details to them and they will recalculate things, but that was not readily apparent.
As I said I really had to dig in to find out what their assumptions were.
I do have a couple of e-mails into them about the process, but so far no response.
All in all, it was interesting.
I don't agree with two different prices for college tuition. When we charge out of state students more we are discriminating against Americans. As for foreign students I would not admit any of them without a student visa.
"I don't agree with two different prices for college tuition. When we charge out of state students more we are discriminating against Americans"
What about states rights Jeff? It's only state run schools who charge out of staters more ...and why not?
Residents of a state have lived there, paid state, local, sales and property taxes. Non-residents are carpetbaggers who have paid nothing yet come into a state solely to get an education. Let them pay for it.
Private schools don't charge out of state tuition...let them go there then.
Awaiting The Fed!
Gabe
Bob Brinker was right. Q-1 GDP came in "lousy" at 0.2%.
Brinker never gave any numbers to his prediction, but economists were predicting 1%.
Bloomberg excerpts:
The world’s largest economy sputtered to a near-halt in the first quarter, choked by slumping U.S. business investment and exports.
Gross domestic product, the volume of all goods and services produced, rose at a 0.2 percent annualized rate after advancing 2.2 percent the prior quarter, Commerce Department data showed Wednesday in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1 percent gain. Consumer spending, the biggest part of the economy, rose 1.9 percent, a little better than projected.
Household purchases were probably held back by the harsh winter weather, pointing to a rebound as temperatures warm and employment and income pick up. Other drags, including the drop in capital spending and exports caused by the plunge in fuel prices and jump in the dollar, may be longer-lasting, indicating Federal Reserve officials after their meeting today will signal they’re in no rush to raise interest rates.
With GDP at its bottom range, why is the 10 year interest rate up today?
Gabe
Well, the Market wanted to sell off in spite of a dovish statement from the Fed. Yes, GDP was lower than expected but that should have been baked into the cake!
Gabe
Time to not renew the newsletter.
He was late to get out of GNMA and the switch to the Fidelity Fund from the GNMA was a $1500 loss for me as he was late getting out of that too, staying in GNMA would have been better. He said more than 4% in one stock was a bad idea so I sold some Berkshire, than he said he didn't mean Berkshire. He is fraudulent by patching old shows together and presenting them as new.
April 30, 2015 at 3:25 AM
Honey here: Burt's comments copied from April 19th program summary HERE
The Market is bent on selling off in spite of early good economic news
Gabe
Sad news for those who follow Sy Harding -- I know that Allan Coleman does. Harding passed away a few days ago.
One of his last market analysis
I think Dan G uses the Sy Harding seasonal system too. Where is Dan lately?
There's a Sucker Born Every Minute!
This is hard to believe:
Apple Watch has lowest hardware cost to price - IHS
2:54pm ET, 04/30/2015 - Reuters
April 30 (Reuters) - Apple Inc's Watch has the lowest ratio of hardware costs to retail price across any Apple product, according to a preliminary estimate by research firm IHS after a teardown study.
The hardware cost of an Apple Watch Sport model was about 24 percent of the suggested retail price compared with 29-38 percent for the iPhone maker's other products, IHS said on Thursday. (http://bit.ly/1zuOZMq)
The Apple Watch Sport 38 mm costs $349 and the teardown shows a bill of materials of $81.20 with the cost of production rising to $83.70 when $2.50 in manufacturing expense is added, IHS said. (Reporting by Supantha Mukherjee in Bengaluru; Editing by Kirti Pandey)
(0413-2246)
Jerrod Clarkson
No rate hike in June.
The Fed is singing this song,
https://www.youtube.com/watch?v=iu-7DXBiVsA
"See you in September," by the Happenings, a #1 in 1966.
Frankj...Here is your link live:
"See you in September," by the Happenings, a #1 in 1966
Honey & Frank:
Eh, "See You in September," I remember that song like it was yesterday. Kind of a sad song.
A productive day for the bulls!
Gabe
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