STOCK MARKET....Brinker comments: S&P 500 all-time-closing high was 2395. It is now at 2328 = 2 3/4% decline.....Brinker told some callers today that he is still recommending dollar-cost-averaging for new money and he maintains a fully invested position. However, as always, he recommends a "balanced" asset allocation for those in or near retirement.
Honey EC: Brinker considers the stock market "fairly valued," but believes it has the "potential to make gains into the 2400s range."
EXCEPTION TO THE 50-50 IN RETIREMENT RULE....Caller Jeff from Chicago said he is 50 years old, and has achieved the Land of Critical Mass. He said he has an $85,000 yearly pension, buukuu bucks in investments, with 70% in stocks. He wanted to know if Brinker thought that was the correct stock allocation for him.
Brinker advised Jeff to lower his ratio to 65/35 "as long as the outlook for the economy and market is favorable."
Honey EC: Nope, Jeff didn't not say he had "buukuu bucks." That was my sarcasm. I wonder why Brinker no longer asks which branch of the government these "more equal" people retired from at age 50 to get a pension that would make most who worked longer in the private sector drool.
NON-DEDUCTIBLE IRA OR S&P 500 INDEX.....Caller Tony from Chicago that Brinker says he "loves - loves the Windy City," asked which is a better choice for investing a chunk of money tax-wise: is it better to put money in a non-deductible IRA or simply buy the S&P 500 Index Fund.
Honey EC: Is that clear as mud? I hope some of the BRT (Blog Research Team) will add to what I said. Unfortunately, my recording of that portion of the program was corrupted and I could not replay it.
==> BRT member dRahme came to my rescue and has made a short audio clip that contains lots of IRA info and also the call from Tony from Chicago. The call begins about half way in.PRODUCER PRICE INDEX....Down 0.1% for the month of March....First decline in seven months.
CONSUMER PRICE INDEX.... Declined in the month of March...."Don't lose sleep over the issue of inflation."
CONSUMER SENTIMENT.... "Continues to be strong....even though the economy looks really weak in first quarter.'
GROSS DOMESTIC PRODUCT....BB comments: There is nothing happening right now that suggests growth acceleration in the first quarter....."Last year, we had real GDP in the 2% area, which is where it has been on average for several years.....Motor vehicle sales slightly down - sluggish.
HOUSING.... on a upswing, but not overheating.
==> Thanks to dRahme a short audio clip of the opening monologue which contains a lot of information and data. As he said, one of the better Moneytalk shows.NATIONAL DEBT AND DEFICIT....Brinker comments: The national debt is very close to $20 trillion....There was a large increase in the annual deficit last year, ending September 30th....The budget deficit soared 35% to $588 Billion, which is added on to the National Debt....The budget deficit over the past 12 months is $653 billion. That's 3 1/2% of GDP, which is higher than almost anyone thinks it should be as a percentage of GDP. It's the largest....since the end of 2013.
DEFICIT NEXT YEAR. Brinker comments: The Office of Management and Budget is projecting a $600 billion deficit for the year ending September....That would anticipate some tax revenues coming in between now and September that will take it down from the current $653 billion......But even that would be higher than last year which was 35% higher than the prior year. went on to make some negative comments about this projection, claiming it does not include tax cuts, increases in defense spending, infrastructure etc.
Honey EC: Since President Trump took office, Brinker has been harping on the debt and deficit almost weekly. So much so that again today, he got confused between the deficit and the debt. He really needs to get a grip on that. During the 8 years of Obama Administration, the National Debt doubled what it was for ALL other presidents combined, but Brinker seldom brought it up. At least he gets credit for now pointing out what happened last year.
POLITICS... Brinker sang the praises of the Congressional "Freedom Caucus" as being the "only group standing up for fiscal responsibility." ....."on April 28th.....if they fail to extend government funding "we could be looking at a government shutdown." Congress is on a two-week recess until April 24th.....It's generally expected that they will pass a funding bill by the 28th.
Honey EC: I don't s'pose there is any political bias in Brinker. He told us a couple of weeks ago that he had no pony in the race, or was that a dog in the show, or.....? :)
NORTH KOREA.... BB comments: "North Korea is a hotspot, that could affect what we spend on military this next year."
Honey sez: Ya think? Too bad something wasn't done to take the nukes away from the madmen over there back when it would have been cheaper and SAFER.
Bob Brinker's guest-author today was Barbara Weltman - the tax lady. She recommended the website for JK Lasser. I took a look and see a lot of questions and answers there, or you can ask your own.
* Taxes due on April 18th this year because of weekend and holidays.
* You can apply for a federal six-month extension - check with your state if it has tax.
* No dramatic changes to tax code this year
* Some new numbers - don't carry over numbers without checking.
* Traditional IRA: $5500 individual maximum
* Traditional IRA = withdrawals start at 70 1/2
* Roth = tax free, no required distributions.
* Waltman holds hope that there will be some new tax simplification. Brinker is cynical about the possibility.
Bob Brinker highly recommends Sheela Kolhatkar's book "Black Edge." FrankJ read the book and has done a book review on it. Frankj. has generously shared his book review with us. Enjoy!
FRANKJ'S BOOK REVIEW OF "BLACK EDGE"
About two months ago, Sheela Kolhatkar was Bob Brinker’s third hour guest on MoneyTalk. Sheela is a former hedge fund analyst and is now a writer. Her book, “Black Edge” was published in January 2017 by Random House.
Bob was enthusiastic about the book during his February 26, 2017 interview with the author and for good reason. It is a compelling narrative of the federal government’s efforts to prosecute insider trading by hedge funds. The title, “Black Edge” is a reference to insight taken to the extreme, that is, “insight” that comes about as “research” in the form of illegally obtained inside information. Prior to the book’s publication, Bob made statements on the show reflecting his disdain for the hedge fund model and skepticism on how they could earn outsized profits without using inside information.
Having recently finished the book, I can say Bob’s take is right on and reading it was well worth my time. I’d go so far to say that anyone invested in stocks (or bonds) should consider reading the book. At about 300 pages it is not overly long. The author describes a multi-agency and multi-year investigation into a number of hedge funds in a way that keeps the reader’s interest and presents the right amount of background on the main players on both sides of the law.
The subjects of these investigations display a number of human traits, none of them admirable: greed, dishonesty, arrogance, jealousy, vindictiveness, fear, betrayal, and misplaced loyalty. Sure, there are the sometimes extravagant philanthropic acts, but they seem to be more of an insurance policy against bad press and a “buy in” to certain social circles than anything else.
The book opens with the investigation into Raj Rajaratnam, head of Galleon Capital, a hedge fund that was cracked by the FBI using phone taps. Raj was arrested in October 2009 and sentenced to eleven years in prison in 2011. This investigation alerted the FBI to various groups of insiders talking to one another and passing along inside information. The names SAC and Steve Cohen kept coming up, leading investigators to begin looking at the firm.
SAC Capital and its owner, Steven Cohen became the ultimate target of the investigators. Cohen is described in the book as a hub within a wheel. The spokes were traders and portfolio managers feeding him investment ideas with “conviction” ratings from 1 to 10, the highest. When an investment idea sported a 9-rating, the implication is that it was based on inside information. Employees at SAC were tasked with bringing in this “edge.” The firm’s profits depended on these advantaged trades and so did the compensation of the employees. Those garnering the information leading to profits were generously rewarded and those who did not were fired.
One of these was Matthew Martoma who was mentioned by the author in Bob’s interview and written about extensively in the book. Martoma was not a sympathetic character by any means; indeed he was one of the more slippery and duplicitous players in the story. He managed to get himself expelled from Harvard Law School in his second year. After that he “remade” himself, changing his name from Ajai Mathew Mariamdani Thomas to Matthew Martoma and enrolling in Stanford’s MBA program in 2001.
He started at SAC in 2006, in the pharmaceutical area, a favorite hunting ground of Cohen’s.
Martoma’s interest in Alzheimer’s research led him to a medical doctor named Sid Gilman. This “match” was made through a consulting firm (an expert network) used by SAC to connect its people with experts in various fields. Gilman, in his seventies but still very active, was part of a group following the trials of bapineuzumab, (“bapi”) a drug being jointly developed by Elan and Wyeth.
These experts were paid handsomely for their information. In each of three separate years, income from consultations easily outstripped Gilman’s university salary of $310,000. In theory, experts like Dr. Gilman don’t reveal non-public information but in fact, that is exactly what Gilman did when he showed Martoma the PowerPoint slides summarizing the results of bapi’s Phase II trials nine days before they were made public.
The results were mixed but Gilman believed the drug still had some promise. But Martoma knew how Wall Street would react. His black edge allowed SAC to unload all its shares in Elan and Wyeth (worth over $1 billion). Then they shorted $960 million worth of Elan – all before the public knew the outcome of the Phase II trial.
Martoma had maintained contact with Dr. Gilman over a two year period for one reason, to obtain the “black edge” he needed to succeed at SAC. The company avoided a catastrophic loss on the long end, and made $276 million on the short trade. His $9.38 million dollar bonus in 2008 put him at critical mass.
There were no laurels to rest on though. His next big pharma deal went south when the FDA pulled the plug on a drug under development by InterMune. SAC’s 4.5 million shares went from $45 to $9 per share. Cohen’s top guys wanted to fire him but Cohen gave him a reprieve which didn’t last long. In May of 2010 the “one trick pony” was out.
Martoma moved his family to Florida, bought a $1.9 million dollar house, and plunked $1 million into a foundation named after him and his wife. The foundation gave them a nice tax write off and a way to charge $22,000 in travel and expenses.
Karma caught up with Martoma in the driveway of his home when FBI agents confronted him and said “We want to talk about Elan and July 2008.” He was convicted in February 2014 and sentenced to 9 years in prison. The Feds confiscated the house, savings and investments and the foundation money. Stanford clawed back the MBA degree because his expulsion from Harvard came out during the trial -– a fact he neglected to mention on his application to Stanford.
The story is not without drama on the Fed’s side of the table. Two FBI agents B. J. Kang and David Makol were fiercely competitive, each wanting to get the “edge” on the other. The SEC was smarting for having let Bernie Madoff fly under the radar for so long. And, the SEC enforcement staff had been discouraged from chasing big cases by the chair, Christopher Cox who served until Mary Shapiro was appointed in 2009. Once these agencies started to turn over rocks and began seeing what was underneath, the investigation expanded.
The media conscious US Attorney for New York’s Southern District, Preet Bharara was eager to rack up some wins against Wall Street Wise Guys. Bob Brinker expressed his anger on a MoneyTalk broadcast after US Attorney Preet Bharara was fired. New administrations replace US Attorneys; it is a fact of political life. Bob probably figured there is much more work to be done and I agree. We’ll know if the new administration is up to the task in the fullness of time.
Despite pressure from the Feds, Martoma never “flipped.” Others caught in the Fed’s net turned in friends, college buddies and former co-workers to get themselves a better deal. The author explores the possible reasons why Martoma did not implicate Cohen.
I liked the fact that the author included a cast of characters at the end of the text. With so many people involved on both sides of the table, the reader will find this is helpful in keeping track of the good guys and the bad guys during the 10 year time span of the narrative. The book includes 30 pages on notes and sources and an index.
I recommend the book with a “sure thing” conviction rating of 10.
710KNUS Denver
WNTK KION 1460 Monterey
84 comments:
She just convinced me that she is a Trump person but Bob came right back and said something that leads me to believe he isn't.
Hello, Bob?... I'm 85 years old.......... Hello, Bob??
Mr. Pfizer
nice segue from "dog in the show" to N Korea. ;)
I must have no life. All afternoon and evening I've been thinking about caller Jeff -- who at 47 is planning to retire at 50 with an $85,000 a year pension and $1.1 million in the market and savings. Wow. Where are my tax dollars going again? Thanks for making me feel like an utter failure, Jeff.
Just like the Lynyrd Skynyrd song on the Street Survivors album, "You Got That Right."
Those callers who retire in their 50's with $85,000 pensions are definitely government employees, be it Fed, state, county or city. BB gets it right when he says the gov. contract negotiators cave too easy to union demands. Hell, their election campaigns are funded by the unions. True boiler room politics.
Granted, they may be law enforcement or fire, which is a tough job in any city. (Imagine dealing with negativity every work day. Every contact is a bad situation, not many laughs in the cubicle.) But the promised pensions are above and beyond normal.
Have a buddy who is retired enlisted military with a pension, and is working for another 20-yr fed. civil service pension. When he retires again, his wife's CALPERS pension from her clerk job at state disability office will be bigger than both of his combined. Of course, Calpers has to figure out a way to afford it (taxation).
But that's another dog in the hunt.
-J. Milner
Honey EC: "Since President Trump took office, Brinker has been harping on the debt and deficit almost weekly. So much so that again today, he got confused between the deficit and the debt. He really needs to get a grip on that. During the 8 years of Obama Administration, the National Debt doubled what it was for ALL other presidents combined, but Brinker seldom brought it up. At least he gets credit for now pointing out what happened last year."
Honeybee, I think the reason Bob Brinker seldom brought up the National Debt in the immediate wake of one of the deepest economic downturns in U.S. history is because it is the expected and unavoidable result of such a downturn. Despite massive job losses and business closures, the government's bill do still keep coming in and are still due. In fact, it is just as expected and unavoidable that the bills will be larger during such a time because major downturns produce more need for safety net and/or recovery spending in all directions. For the most part, griping about, resisting and springing into action to combat that inevitable shortfall is not really the most coherent or productive move to make while at the same time trying to stimulate the economy to pull us out of it.
It should be mentioned that much of the "addition" to the debt since the earliest days of Obama's presidency was not an addition at all but his wisely moving the cost of two then ongoing air and ground wars wars in Iraq and Afghanistan, Medicare reimbursements to physicians, the cost of disaster responses and so on into the general budget where they would and should be counted and not closeted in supplemental appropriations and other gimmicks employed extensively during the previous administration designed to hide the real cost of these expenses from the American people.
Lately though, while the Fed is currently raising and talking about further raising fed funds rates due to what they and most economists agree has been a much more stable and improving economy over the past couple of years, this is a much more appropriate time to address reducing the National Debt.
I agree with the sentiments regarding "Jeff," who I learned about from Honey's summary. There is "real" work and then there is government work.
FWIW, I was with my family most of the day and missed Moneytalk. Is anybody podcasting it anymore? TIA!
He is Risen!
I'm sorry to say I sort of agree with Brinker on the timing (but not based on his hand waving but real metrics). So I'm still mostly in (but individual undervalued stocks, not index funds, which are too rich). Metrics used:
DATE DowDiv%, Undervalue%, Overvalue/Undervalue.
LIMITS >2.2%, >17%, <2
15-Apr-17 UP: 2.37%, 16.2%, 58/37 = 1.57
1-Apr-17 UP: 2.36%, 15.3%, 61/35 = 1.74
1-Mar-17 UP: 2.32%, 14.8%, 68/35 = 1.94
1-Feb-17 UP: 2.40%, 17.8%, 65/42 = 1.55
Gawd: The only way the government can "stimulate the economy" is to get smaller.
"People who pride themselves on their 'complexity' and deride others for being 'simplistic' should realize that the truth is often not very complicated. What gets complex is evading the truth." -- Thomas Sowell
Perhaps it is because I am a CPA; I thought Brinker during the second hour said the tax deadline was April 17th, Monday. I listen to KSFO so I do not get the third hour of the broadcast in which according to Honebee's summary, Barbara Weltman apparently listed the correct deadline date as April 18th. I think our friend, Bob, is starting to feel his age.
Hope everybody has filed their tax returns or extensions. :-)
Don from Castro Valley
Village Dweller/4-16-17 "I must have no life" --- your profile tells me that you do have a good, interesting, and fruitful life. In the end, those are the things that matter. Keep family in your heart and friends on your mind. Be kind, gentle, and humble.
I'm in full agreement with the sentiment that the pension and accumulated savings are probably more than Jeff needs. But who are we to say? If we begin to envy a persons wealth and seek to equalize pay, compensation, and assets,well then, are we not falling into the Bernie Sanders trap.
I write this because your statement "I must have no life" , saddens me. Please take this as a kind, gentle and humble reminder. Build upon what you have, share with those that matter to you, ignore the urge to tear down.
VIGILANT
The Treasury should consider issuing 50 year bonds to remedy our debt woes!
Gabe
If the comments from caller Tony are accurate he was asking about a non-deductible (Roth)IRA where contributions and gains are withdrawn tax free at retirement.
"Brinker said it was more efficient to buy the index fund because it offers tax benefits." What tax benefits does an index fund itself offer, aside from lower annual distributions than an actively managed fund? And what difference would that make in a Roth?
I think Cap'n Starship is getting rusty spending time on the bench away from the mic. Perhaps some more at-bats will sharpen his investment guidance.
(2)Two winners this weekend!
Gabe
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Vigilant..... No one said anything about Jeff's "needs." Do not put words in people's mouths - especially if they are made-up and nasty.
The point is that TAXPAYERS have to pay for the extremely cushy and generous "pensions" and "benefits" that many government employees get.
It's not that they don't deserve fair compensation, but it should not so ridiculously higher, and perk-filled than those who pay for it are receiving.
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Don from Castro Valley....Yes, Barbara Weltman said the 18th because today is an official government holiday.
Honeybee said:
"Honey EC: Is that clear as mud? I hope some of the BRT (Blog Research Team) will add to what I said. Unfortunately, my recording of that portion of the program was corrupted and I could not replay it."
Honeybee,
I am glad you made that notation. I read the recap about 6 times and thought I was having a "Senior Moment".e
JC
Today, the 17th is celebrated as Emancipation Day in Washington DC only. It is a holiday there commemorating when Abraham Lincoln signed an order freeing slaves in Washington DC, 8 months before the broad Emancipation Proclamation. It became an official holiday in DC back in 2005.
The actual day he signed the thing was April 16th but hey... we can't "waste" a holiday by letting it fall on a weekend can we? So it gets pushed over to a work day.
Anonymous gabe said...
The Treasury should consider issuing 50 year bonds to remedy our debt woes!
I suggest a Federal Lotto that would make several people millionaires (depending on the pot size) and tax the crap out of them instead of us.
i.e. A 30 million pot would fund 30 winners. It would have to be an instant payoff, and not a 20 years amortization like the crooked states do it to inflate the pot.
Hey Village I feel like crap too when I look at fat public pensions. Who ever gets all philosophical about it & says ignore it is probably on the tit. Don't worry be happy. "The trouble with socialism is eventually you run out of other people's money" Margaret Thatcher circa 1976.
This Market is acting in a schizophrenic manner. Hold on to your bootstraps; there is more crazy stuff out there!
Gabe
Re California public employee pensions:
Even the summary of this article was too lengthy to post here! So, I will show only the first two summary paragraphs, and a link to the complete summary and article.
I would highly recommend reading the complete summary (but probably skipping the full article unless you have a lot of time available).
Long story short - we are getting completely screwed in California. Of course that is nothing new - its been going on for decades now and it gets worse each year. Also, it makes me Mad as HELL!
What is the Average Pension for a Retired Government Worker in California?
Ed Ring
SUMMARY
The average full career (30 years work) pension for a retired public employee in California was $68,673 in 2015, not including benefits. This is in comparison to the average pay (not including benefits) for an active full-time worker in the private sector in California, which in 2015 was $54,326, and to the maximum Social Security Benefit for a high wage earner retiring at age 66, which in 2015 was $32,244. Put another way, the average public employee retiree with 30 years of service collects a pension (not including benefits) that is 26% greater than the average pay for a non-retired full time private sector worker, and more than twice the maximum Social Security benefit.
There is ongoing public debate over the financial sustainability of public sector pensions. In California, significant work has already been done to evaluate how required contributions fluctuate according to market conditions, and incremental progress has begun towards reforms to improve the resiliency of the system. At the same time, while there is a great deal of anecdotal reporting on how much of a pension benefit, on average, California’s state and local workers can expect to receive when they retire, there remains substantial disagreement over the accurate number. This study is focused on that specific question.
Link to complete Summary and Article:
http://californiapolicycenter.org/what-is-the-average-pension-for-a-retired-government-worker-in-california/
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Mad....thank you for that information. Yes, we Californians have been "screwed" for years and it will likely get worse as the funds for paying for all the promises dry up.
We will be taxed more and more in ways we can't even imagine now.
Already, Jerry Brown has raised our vehicle license fees, which are probably already the highest in the nation right now.
And he has added MORE tax on our gasoline. Supposedly this money is supposed to go for our roads. If you believe that, you may believe that all the lottery money went to schools AND they didn't just spend other money they were getting for schools on something else.
MAD: Someday those pulling the cart will kick the people out of the cart, who have ridden for free all their lives. I kinda thought we might see the beginnings of it after 2008, but it didn't happen. Someday it will -- everything reverts to the mean given enough time.
A bit of humor: I was watching a Johnny Carson re-run the other night (from around 1980, I think) and he was doing his "Carnaq the Magnificent." As the "older" (cough) readers here will recall, he would take a sealed envelope from Ed which had a question inside, and he would answer the question before opening the envelope.
So Johnny takes one of the sealed envelopes, holds it to his head, and says "Somewhere over the rainbow."
He opens the envelope and reads the question: "Where did Jerry Brown go to school?"
Haha.
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Good news for all who are interested in Tony from Chicago's question about.....errr....I will not try to explain what it is about and confuse you and myself more.
Here is an audio clip that our friend dRahme had made for us. Ira info in the first half and Tony's call in the second half. If anyone can explain it to me in "dumb blonde" language, it would be appreciated. :)
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Here is another dRahme audio clip of all the financial data that Brinker reported.
(I have also added these clips to the summary.)
Geopolitical relief is what drove the Market!
Gabe
CA pensions
I went to a high school reunion about 5 years ago (I was about 59). I was shocked how many old classmates were retired with CALPERS pension and had already been retired for many years.
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Bluce and all.....Here is a short clip of Carnac the Magnificent. Some of the answers are so current to the time back then that they are not really understandable to us now, but still very funny.
Johnny Carson, Carnac
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Moe...I know lots of people on Calper's retirement.
Honey: Thanks for the Johnny clip! He was the best, for a lot of reasons. The modern late-nighters are less than worthless.
And thanks for the Moneytalk clips too, as I missed the whole show. But between them and your summary I'm probably up to speed.
MAD: I love this "30 years" as being a "full career." (which is quite common, actually -- even 20 in some civil service jobs.)
I'm in my 49th year as a toolmaker, self-employed for the last 32. I suppose I am semi-retired, but no plans for full retirement on the horizon. It helps when you enjoy your work.
I'll take a stab at explaining Bob's answer to Tony. Tony earned too much to contribute to a deductible IRA and to a Roth-IRA so his question was whether an index fund like the SP in a personal account was better than a non-deductible IRA.
Bob seemed to be saying yes and his reasoning was the index fund in a personal account although taxable, gets favored tax treatment because the income is in the form of dividends and virtually no capital gains because they do little trading.
Unsaid by Bob were other advantages. If you need the money from a personal account you can take it before age 59.5 without penalties although you will pay capital gains on anything you take out.
And, there are no required minimum distributions like in a Traditional IRA account. Also, distributions from a Traditional IRA go into the ordinary income column on your tax form, that's something to consider too.
Concerning heirs, if they inherit your personal account, I believe they do so at a stepped up basis and unlike an inherited Trad IRA there are no tricky rules to follow regarding the mandatory withdrawals if these heirs are not your spouse.
So some people who are in Tony's situation might see an advantage to doing it this way.
Adding to the public pension discussion. The state of Oregon is seriously behind the 8 ball due to the public pension promises. The legislature in Oregon is a wholly-owned subsidiary of the public employee unions. And Oregon does not have as strong an economy as California.
HB said (regarding audio clip): "Ira info in the first half and Tony's call in the second half. If anyone can explain it to me in "dumb blonde" language, it would be appreciated. :)"
OK, I'll give this a try. Tony was talking about nondeductible IRA contributions. This may be an unfamiliar concept to some of us low earners. Traditional IRA contribution limits are explained here:
http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/traditional_ira/contribution_limits
Different from a Roth IRA, Traditional IRA contributions are not limited by how much you make annually, meaning that anyone with an earned income is eligible to participate. However, there are Traditional IRA contribution limits to how much you can put in. The maximum total annual contribution per individual for all your IRAs combined is:
•$5,500 if you're under age 50
•$6,500 if you're age 50 or older
For most of us, Traditional IRA contributions are tax deductible. If your income is under a certain level or if you (or your spouse) don't have an employer-sponsored retirement plan, your Traditional IRA contribution is fully deductible. If you (or your spouse) do have a 401(k) or pension plan and high income, the tax-deductible portion of your IRA contribution may be limited. IRA contribution limit charts are given in the link above to show how much you can deduct.
Roth IRA contribution limits are explained here:
http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/roth_ira/contribution_limits
The amount you can contribute phases out to zip for high earners.
Presumably Tony is a high earner with a 401(k) or pension plan, who makes too much income to qualify to make either Roth IRA contributions or deductible Traditional IRA contributions. So he was left with the option of putting any additional savings into a nondeductible Traditional IRA or a personal taxable account. Hence his question to BB as to which would be the best way to save for retirement considering differing tax rates on capital gains (if the personal account is invested in stocks) vs. ordinary income tax rates upon withdrawal of earnings from the traditional IRA (nondeductible contributions are not taxed on withdrawal).
Another possible option for Tony would be the backdoor Roth contribution.
https://thefinancebuff.com/the-backdoor-roth-ira-a-complete-how-to.html
Basically Tony might be able to make the nondeductible traditional IRA contribution and then convert the nondeductible contribution to a Roth IRA (following various rules described in the link above). (He wouldn't have to pay any additional tax on the conversion of the contributed money, since it was already taxed before it went into the traditional IRA.) I didn't hear BB suggest the backdoor Roth, but I think maybe I did hear Barbara Weltman punt on a question on that subject.
HB: The point is that TAXPAYERS have to pay for the extremely cushy and generous "pensions" and "benefits" that many government employees get.
Thank you for saying this. What is really terrible? Many poor people (who don't get vacations or perks) are the ones paying government worker's rich retirements.
It's not that they don't deserve fair compensation, but it should not so ridiculously higher, and perk-filled than those who pay for it are receiving.
The only way we can even know what is "fair" compensation for a job? If it was privatized and had fair competition.
Why are the contribution limits for an IRA so low? $5500 is a fourth of what you can push into a 401k. Whas the rational behind keeping contribution limits so low on IRAs?
To add insult to injury, CA wants to limit the state pension's investment portfolio to so-called socially responsible companies, the ones THEY consider responsible. They don't care if this investment limitation further reduces their pathetic average annual returns. The taxpayers will pick up the difference. So far, the investment managers are resisting this stupidity. They'd be better off by making the management committee smaller & just buying VTI.
The Market is giving back its gains of yesterday!
Gabe
Activists in the city of Portland pressured the city council to be more socially responsible and divest or avoid investing the city's portfolio in companies like CAT, Wells Fargo, JP Morgan and others. The geniuses on the council deliberated and voted to put a temporary halt on new corporate investments. The activists turned up the heat and the geniuses voted to end all corporate investments and put their chips on corporate bonds and securities.
File this with the other "You Can't Make This Up" material.
The 10 year is at 2.17%! Wow!
Gabe
The 10 year will get under 2% before it is over.
Best performing bond funds YTD are Long-Term bond funds, both Government and Corporate. They are even beating junk bonds. Bob (the REAL Bob) please explain.
Honeybee and concerned residents of CA:
Re: Assemblywoman Melissa Melendez: R-Lake Elsinore, represents the 67th Assembly District
Ive been out most of the day, but just found out that this lady is speaking about Crazy Jerry's gas and registration hikes - possibly they are against the CA Constitution!
She will be on KFI radio after the 4:00 PM news. (Sorry for the late notice, but I just found out).
https://www.iheart.com/live/kfi-177/?autoplay=true&pname=616&campid=header&cid=%2Fonair%2Fjohn-and-ken-37487%2F
Jack Bogle on how to invest in a time of Trump
Jim: "Bob the Stock and Bond Market Timer" has been working his interest-rate magic since around the proverbial "Taper Tantrum" in the spring of 2013.
He's been wrong for four years, lol.
Ha, regarding the Bogle link:
Quoting Bogle, from the left-wing Marketwatch: “My feeling is that anything that increases the gap in wealth in the U.S. is bad for our society and bad for markets. Anything that increases racial division here is bad for our economy,” he said.
Cogitating over the "wealth gap" is a 150 year old Marxist-inspired idea. The only way of correcting that is with the use of force -- confiscating wealth and giving it to the poor. Washington has been doing that since FDR. How's it working? Do we have "equality" yet? Do we need more force?
"Anything that increases racial division" . . . ? Who's advocating that? Certainly not Trump, not if you've been paying attention to what he's been saying for the past year. Obama, the professional agitator, did more to divide the races than any prez in my lifetime.
Re: Mad as HELL! said yesterday...
Honeybee and concerned residents of CA:
Re: Assemblywoman Melissa Melendez: R-Lake Elsinore, represents the 67th Assembly District
Here (link below) is an update on what action Assemblywoman Melissa Melendez has taken thus far.
Frankly, I think sending a letter to CA Attorney General Xavier Becerra has zero-to-no chance of bringing about any positive change. But we must keep in mind that this is only a first step. She is taking positive action and "going through the ropes". I hope that this is the first of possibly many legal initiatives and think that it would be a wonderful case to ultimately be heard by the US Supreme Court.
It would also be wonderful if those involved in this illegal scheme would get to model those fashionable bright orange jumpsuits for the rest of their lives. No chance of that, but it is therapeutic to dream about.
Melissa Melendez wants an investigation of SB 1 side deals
http://www.pe.com/2017/04/18/melissa-melendez-wants-an-investigation-of-sb-1-side-deals/
Bluce,
I don't understand the ever-growing hatred for "the wealthy" in this nation. Most wealthy people should be applauded not cursed. By their success, most have given the opportunity to many others to become wealthy. Is that BAD?
I find it difficult to believe Bogle said that. Buffett, Gates et al I can believe would say that...but Bogle I can't believe would say that. I wonder if MSM Marketwatch has their facts right?
If Bogle indeed DID say that, I certainly need to reevaluate my "People I Admire List"!
JC
.
Note to "Doodle": Please send your comments to this current thread. No one reads the old thread once the new one starts.
No, I don't post podcasts. ABC is just too unreliable and they are the only ones who do it at all.
Not worth my time.
JC: I agree fully!
Gabe
Jim said... Best performing bond funds YTD are Long-Term bond funds, both Government and Corporate. They are even beating junk bonds. Bob (the REAL Bob) please explain
The last time somebody asked a great question like that, all the MarkeTimers disappeared from the public libraries. No more written links. POOF!!!
Greetings.
I have a question about some data Bob often references in his news letter and was wondering if anyone can give me information on where he gets or how he calculates it.
Bob often refers to the SP500 PE ration and in the April 4th edition, he quotes it at about 17 - 18.
Anywhere else I look such as the WSJ tables, the concensus seems to be that it is currently about 25 - 27.
What is the cause of this conflict and which is accurate?
Thanks.
M. Gillotti said:
Greetings.
I have a question about some data Bob often references in his news letter and was wondering if anyone can give me information on where he gets or how he calculates it.
Bob often refers to the SP500 PE ration and in the April 4th edition, he quotes it at about 17 - 18.
Anywhere else I look such as the WSJ tables, the concensus seems to be that it is currently about 25 - 27.
What is the cause of this conflict and which is accurate?
Thanks.
Brinker uses a forward P/E while publications such as WSJ use a trailing P/E.
Actively Managed U.S. Equity Funds
It would appear that the 1.34 ER fund BB recommends in all 3 model portfolios is on the bubble.
Honeybee,
Third / Last Try!
Having some site and/or computer "issues".
This might be a duplicate (or triplicate) post.
M. Gillotti said...
Greetings.
I have a question about some data Bob often references in his news letter and was wondering if anyone can give me information on where he gets or how he calculates it.
Bob often refers to the SP500 PE ration and in the April 4th edition, he quotes it at about 17 - 18.
JC here...
Hello M. Gillotti,
First let me say that I am not a M/T subscriber, and I rarely listen to BB's radio program.
That said, I suspect that Bob might be referring to Forward P/E, i.e. current projected P/E ratio ending Q4, 2017. This is only a guess on my part, but (@ 18.25 F P/E) it does seem to fit nicely with the ratios you cited.
https://ycharts.com/indicators/sandp_500_pe_ratio_forward_estimate
JC
.
Jester....You have to be referring to AKREX because it is the only managed mutual fund in the three model portfolios.
Someone recently did some comparison work on that, and if I recall correctly, it was not earning it "keep" so to speak with that high expense ratio.
.
Jim...I'm sure that Brinker saw your comparison work back from when he first went to low-duration, and has now made enough changes (actually increased duration in the DoubleLine Fund for awhile) so that it is now almost impossible to show how much money it cost to follow him into that Land of Low-Duration three years early.
He only has 3 bond funds now and he is pushing Brinker Jr's largely redundant newsletter in Marketimer like the (40+) kid's life depended on it. Of course, the fact that it is edited and published by Jr and Jr's wife is not revealed in Marketimer ads.
Yes, I said that right - ads in Marketimer.
To Help You,
People always quote the P/E of the S&P500 Index based upon a "forward-looking" earnings estimate which is, frankly, just a goofy guess.
Therefore, when real data from earnings paid to investors comes in, it's usually lower than the "forward-looking" P/E number.
I'll buy you a beer.
Antone
JC and M. Gillotti:
I suspect another factor is that with respect to PE ratio (forward or not), BB typically refers to Operating Earnings, NOT Reported Earnings.
https://www.briefing.com/investor/Learning-Center/Ask-An-Analyst/what-is-difference-bewteen-reported/
**Note to "Doodle": Please send your comments to this current thread. No one reads the old thread once the new one starts. **
I thought I did....my mistake.
Antone: People always quote the P/E of the S&P500 Index based upon a "forward-looking" earnings estimate which is, frankly, just a goofy guess. Therefore, when real data from earnings paid to investors comes in, it's usually lower than the "forward-looking" P/E number.
Yep. Well said Antone. So it's not surprising BB uses earning estimates. Just like his MT methods, it's all a goofy guess, indeed. Which is cool I guess as long as it's open and on the table. But transparent if not BB middle name.
Myself, I don't even trust reported "earnings", which are often just a manager's fantasy he works out with his accountants. A lot of stuff is in the footnotes, so their ass is covered, but the numbers are total BS. The only thing I trust? Dividends. That's real money, paid to real people, and managers won't pay dividends unless they know they have the cash.
Thanks guys for the input on the P/E ratio
I have to believe that BB is trying to recover from what has to be a mistaken sell order on PRNHX when it closed to new investors on 12-31-2013.
To this day, PRNHX continues to outperform on both a total return and risk adjusted basis. Had there been a manager shake-up, a sell order would have seemed logical – but there wasn’t.
On the other hand, maybe he is just 3+ years early <<>> Learned that one from Pig… Thanks
To BB’s credit when VDIGX closed to new investors more recently, he didn’t issue a sell order but rather advised new investors use VDAIX.
Don’t get me wrong. I actually appreciate BB’s attempt to beat the market. But when he recommends Buy/Sell maneuvers, I have to step back and consider the tax consequences and begin my due diligence.
Lost a smidge at the close!
Gabe
rasputin here. Gabe let me know if you want the " Gabe correction watch" started up again.
Rasputin: Hey guy! Nope, not at this time. The NAS finished at an all time high today.
Thanks, for asking!
Take care,
Gabe
Honeybee posted, April 17, 2017 at 8:24 AM
"Vigilant..... No one said anything about Jeff's "needs." Do not put words in people's mouths - especially if they are made-up and nasty."
It was not my intent to offend anyone or mislead. Never even thought about being nasty. Can we chalk this up to badly written -----Mea culpa
Vigilant
.
Vigilant....Of course - all is well.
Thanks for explaining that you did not intend to offend.
I'm sorry I misunderstood you.....
that was such a great show sun and really great advice there is no body better in the money game bob BRINKER RULES FOR 30+ yrs
Anonymous Anonymous said...
that was such a great show sun and really great advice there is no body better in the money game bob BRINKER RULES FOR 30+ yrs
Which side of the family are you from? Or.....are you an old PAID shill? (Brinkershill???)
Market dies at the end. Awaiting results from France!
Gabe
Kudos to ETF1 Robert for his brilliant and articulate June 27 2014 post:
Balanced Investing Versus 100% Stocks
where he illustrated how both sides of the same coin needed to be understood. BB reported the 50/50 investor’s annualized 54 calendar year return at approximately 84% of the 100% S&P investor’s return.
However, ETF1 Robert pointed out that investors who used this balanced approach for the entire 54 calendar years captured only 48% of the total return of the 100% S&P 500 cumulative total return.
84% return versus 48% return. Watch out for those wooden nickels!
+1 to Beloved Bacon Boy! :)
.
Jester...I made a mistake one day when cleaning house here at the blog and deleted posts from 2014. Do you happen to have a copy of ETF1 Robert's post?
I have reason to believe that he is no longer with us on planet Earth - sorry to say.
Jester: ETF1 Robert! I forgot about him, he hasn't posted in a long time. Anyone know where he is?
Regarding the rest of your post: Returns matter, but at what volatility? -- which is also important to most people.
VG's Wellesley fund has returned essentially the same as the S&P (9.84%) since 1970 -- but with much less volatility.
.
Bluce.....As I said, I do not think that ETF1 Robert is still living. He used to email me regularly to talk about Marketimer since he was a subscriber.
He posted here as well as at Silicon Investor - that all stopped a few months ago. I have written him to ask if he okay - no answer whatsoever.
I believe he was a single man, so not really anyone that I know of to contact.
Thanks Honey. Sad, I enjoyed his posts.
Honeybee,
I hope you are wrong about ETF1 Robert. But based on your comments, yes it would be reasonable to conclude that he may have passed.
Now, if ETF1 Robert indeed is up there with all the other good folks, I hope he puts a bug in God's ear to please send a message to Pope Francis informing him that he has veered way off the path and has some "splainin" to do.
JC
MSFT up 1% today.
Gabe
Will the boB be on today or is he in France voting for Le Pen? Maybe his relative brinkershill knows?
LOL @ Bobby voting for Le Pen! He voted for P. Trump, too . . . ? But we will never know because he is an "independent." Hahahaha.
Honey: really enjoy your summary and comments. Sometimes miss the show and rather than go back to listen I come to you. Great work.
The Market will swing tomorrow! Hold on to your suspenders and boot straps.
Gabe
looks like Bob mailed in his French ballot - he's on live today~
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