July 30, 2017, Bob Brinker's Moneytalk, Stocks, Bonds, Economy and Investing

July 30, 2017...Bob Brinker's Moneytalk JabberFest was live today.....(comments welcome)

STOCK MARKET   Bob Brinker quotes today:  "For someone who is near retirement, I'd be near the 50 to 60% in the stock market at this time."  "Those who have used index funds over the years, have benefited great because they are very efficient."

BOB BRINKER'S STOCK MARKET VIEWS TODAY.....BB said:  "Remember, my views are subject to change and they have changed  in the past.  But for a long time, we have taken a fully invested position for many, many years in the stock market. And we have maintained that position with the knowledge that we have the option of making a change in our stock market allocation if we believe it is necessary to do so. We certainly did that back in January of 2000, and we certainly can do it again.  But we are not going to do it in a market that has favorable characteristics - and we've had favorable characteristics in the market especially since 2009 where we have seen the market more than triple during that time."

Honey EC: It seems incredible that Brinker hearkens back SEVENTEEN years to find a time when he actually raised cash from the market (65%).  The only other time that he ever raised cash was in 1988-89 and that was a disaster because he missed out on huuge gains before getting his subscribers fully invested again.  And that's it folks. He has never again raised case. Marketimer just rode that 2008 bear down until it bottomed 57% lower.  It took a few years to recover losses - beginning in 2009. 

INTERNATIONAL INVESTMENTS VEU AND VEA....BB said: "There is a slight difference between them.....we matched that up with the holding in the model portfolios. If you take a look at the underlying fund in portfolios I, II and III (Vanguard FTSE ll-World, VFWIX), and the active/passive, you will find that that international fund now matches up with the VEU recommendation on page 7 in the individual issues section identically now. The difference between that and VEA.....is a developed ex-North America Fund following the FTSE Index....Whereas VEU is an all world ex-US.,,,,The most obvious difference is that if you X-out North America, you X-out Mexico and Canada....along with the United States....Also if you're using developed countries, you're not using non-developed countries.....The All-World X-US would include Mexico and Canada and all the other country markets.....It's not a dramatic difference, but it is a difference."

VTI COMPARED TO TOTAL STOCK MARKET INDEX.... BB said: "If you take the total stock market index no-load fund and compare it to VTI, you will see that the performance is close to identical....The major difference is that the exchange-traded-fund (ETF) is traded during the day, whereas the no-load fund is priced at the close and that's the only time it is priced."

WHAT IS SHORT SELLING....BB said:  "For the uninitiated on short-selling, what happens you sell a stock short because you think it is going to go down in price, and you will be able to buy it back at a lower price and make the difference. If you sell a stock short at $20 and you buy it back (which is called covering the short) at $10, then you just made $10 a share - or 50% on your money.....But in order to sell it short, you have to borrow the stock....."

INTEREST RATES....BB expects higher rates going forward and is maintaining low duration bond funds in Marketimer......FOMC did not change interest rates or Fed policies this week.

MARKETIMER BOND FUND INVESTMENTS... BB said: "If you check the investment letter, you will see this - what we've done on the bond side of the portfolio, we have managed our interest rate risk by keeping our durations down,  The bond portfolio has done very well without taking interest rat risk....Our average duration in our bond fund is close to the 1 1/2 year area....Why take that interest rate risk when you can sidestep a large part of that by keeping durations down and by having some credit risk in the portfolio. And the credit risk has worked out extremely well for us in the portfolios."

Honey EC: Here are Brinker's Marketimer bond funds that he explained so extensively: (DLSNX, MWCRX, OSTIX)

INFLATION....BB comments: "...inflation is very, very low."

FOOTBALL IS GOING AWAY, HE SEZ.... Brinker  called football a "game of insanity," and said that "it is going away." In essence, he recommended now as a good time to sell any football teams you own - while you can still make some money.  Here is a Forbes article published yesterday: "The Study that Could Kill Football"

NO POLITICS, HE SEZ.... Brinker said:  "Here on Moneytalk, we do not have anybody's talking points - Democrat or Republican."

Honey EC: That was Brinker's laugher of the day! 

FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY:

Here is the third hour guest summary: " ."


Radio Station 

710KNUS Denver
WNTK

KKOB770

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July 23, 2017, Bob Brinker's Moneytalk, Stocks, Bonds, Economy and Investing

July 23, 2017....Bob Brinker's Moneytalk is  a live broadcast today - second this month. (comments welcome)

STOCK MARKET.....A couple of times  today, Brinker pointed out that the stock market has tripled over the past 8 years.

Honey here: I'm no mathematician and don't have time right now to do the math, but a large percentage of that gain has happened since January 20th, 2017. 

• January 20th, the Dow closed at 19,827 - Friday, it closed at 21,575. 
• January 20th, the S&P 500 Index closed at 2271.31 - Friday, it closed at 2471.70.

VTI EASIEST AND BEST STOCK MARKET INVESTMENT..... Brinker explained to Tracy in St. Louis that instead of having a whole passel of bonds and ETF's to keep track of, the best way to go is just buy VTI - which is the total stock market ETF.

NO VANGUARD WELLESLEY FUND IN MARKETIMER PORTFOLIOS.... Caller Cathy in Ventura made the statement that Brinker has Wellesley Fund in Marketimer, and she wanted to know his opinion of it.

Brinker emphatically replied that he did not have any Wellesley in his Marketimer portfolios anymore because he felt the duration was too long at this time. 

Honey EC: However, Brinker does continue to list Wellesley in the very long and repetitious list of "recommended mutual funds" -  in Marketimer. 

A FIRST TIME MARKET PROMISE FROM BOB BRINKER:

IS IT TIME TO SELL STOCKS....Caller Marcus in Virginia Beach asked Brinker if it was time to rebalance model portfolio III which is about 55% stocks now because of the market run-up.

Brinker said: "If I get to the point where I believe we are going into a bear market, or I believe we are going into a major correction, then I would consider that possibility. If I got to that point. Today, I am not at that point. 

Honey EC: I believe that is a first for Brinker to say that he would raise cash if he believed "we are going into a major correction."  Note that Brinker considers declines of more than 20% a bear market. So he is actually saying that he would raise cash for declines under 20% - which he has never before done. 

DO NOT BORROW MONEY TO INVEST.... Caller Larry from Boston asked about his 40 year-old son's plans to borrow money on his home and invest in stock market.

Brinker became a bit agitated and exclaimed that he never recommends doing that - and especially not right now with the market having gone up so much "since his buy signal in February 2016."

Honey EC: So which is it Mr. Brinker - a nine year triple, or  just a climb since your useless buy signal February 2016?  You know, the last one you made where there was no cash raised to take advantage of it.  

==> Thanks to dRahme, here is an audio clip about borrowing to invest in stock market.

WEAK DOLLAR SINCE FIRST OF YEAR.....Brinker talked about the fact that the value of the dollar vs the Euro has declined this year.  He explained how that is a good thing for US merchandise sellers, but not a good thing for those buying goods out of the country.  In other words, it's good for US exports.

==> Thanks to dRahme, an audio clip about the weak dollar.

ALL REQUIRED MINIMUM WITHDRAWALS FROM IRAS, ETC..... have to come from IRAs,, ETC....It cannot be made from any other source.

FRANKJ'S MONEYTALK SUPER-STAR GUEST SUMMARY

Investment Icon Charles Ellis was Bob’s guest today on the July 23, 2017 edition of MoneyTalk.  Mr. Ellis’ book “Winning the Loser’s Game is in its 7^th edition and the guest’s latest book is “The Index Revolution,” published last year.   Mr. Ellis has been a guest before, according to the Blog Research Staff, his last appearance was March 1, 2015.

After Bob gave a glowing introduction, there were a few tense moments while Ravi cleared the gremlins out of the wires, then the guest came through 5 X 5.

“Winning the Loser’s Game,” was published in 1975. Bob asked if Charles was gratified that his messages in the book turned out to be correct. He said he was very gratified that he didn’t turn out to be wrong. From here, they moved onto hedge fund performance, a drum Bob has been beating for some time now.

Bob’s thesis is, with the Federal regulatory authorities looking closer, hedge funds are having a harder time posting great numbers. The implication being that the hedgies can’t use inside info like they have in the past. Charles Ellis pointed out the fees are high and that contributes to mediocre (or worse) performance.

What has changed over the years in the fund business besides the highest front end loads going from 8.25% to about 5%?

The guest said the assets held by financial firms increased dramatically. Investment styles haven’t changed that much. The amount of information out there is massive compared to 1975 and it available almost instantaneously.

Don’t call it Passive. 

Bob used this term in contrast to “active” investment and Mr. Ellis seemed to object. Passive implies sitting back doing nothing, going with the flow, etc. I guess he doesn’t want to characterize indexing this way. Bob has had an “Active/Passive” portfolio for quite a while. Active management has to overcome costs and fees that index funds don’t have. These can be 1.5% to 2.5% (costs) and 0.5% or higher expense ratios according to Mr. Ellis.

Everyone wants to be above average.

Charles Ellis said you can be an above average investor by simply investing in index funds. He quoted a study that found on 16% of active funds beat their self-imposed benchmark over a 10 year period! Index funds for the ten year period were consistently in the top 25% in performance. And the results were similar in the UK, so it is not a US market phenomenon.

The interview touched on Bernie Madoff.

Again, Bob had a thesis he seemed to want Charles Ellis to back, which was the people sucked in to Madoff’s scheme should have been more conscious of diversification. Ellis said (not in Madoff’s defense) that the investors felt they were being admitted to a special club. You had to be recommended by someone already in. You had to accept the fact that Madoff was NOT going to explain the investment process. They were told “if we tell you what we’re doing and it gets out, others will do it and our returns will decline.”

Bob’s idea of an excellent return is 7%.

He pointed out this would consist of about a 2% dividend plus 5% price appreciation. Charles Ellis disagreed. Then Bob pointed out that he was comparing that return in equities to the current 2% (or so) yield on a risk free, 10 year Treasury. Mr. Ellis agreed that Bob’s 7% would be “excellent” compared to that. This led to a discussion of international diversification. Bob uses 20%, Ellis uses 40% in his portfolios.

Ellis is a partner (advisor?) in a company called Rebalance IRA. They offer 4 investment programs from conservative to moderately aggressive. Burton Malkiel is a partner too. Here is their website if you’re curious: https://www.rebalance-ira.com/. The guest gave 4 ideas for improving 401K programs:

• · Auto enrollment: you can opt out if you want to.

• · Auto match: I didn’t get this completely, it sounded like he was saying you would automatically match the employer’s maximum match.

• · Include target date funds and make them the default choice. Again, you could opt out. 

• · Auto escalation feature. You get a raise, a percentage of that raise automatically gets diverted to your 401K. 

Wrap up: Education? Yes. Start saving when the child is born. “Thoughts for the Wealthy” is a chapter in his book. Mr. Ellis pointed out the benefits of each parent giving the maximum gift of $14,000 to each child. Over a 10, 20 or 30 year period this would be substantial. No kidding.

Bob ended the interview at 3:52.

Honey here: Thank you for that (according to Brinker) Super Star Guest summary. Brinker really thinks highly of Ellis and his books. I was fascinated by Brinker's rather hard attitude of the Madoff victims. It would not surprise me if he was thinking that if all of them had listened to Moneytalk, they would not have been sucked in..... I will zip my lip now because I could easily document a lot of victim's who got sucked into some of Brinker's really bad advice.

==> Thanks to dRahme,  audio clip of what's coming out on Wall Street.next week.

Radio Station with live streaming:

710KNUS Denver
WNTK

KKOB770

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July 16, 2017 Bob Brinker's Moneytalk: Summary of Last Week's Live Show

July 16, 2017....Bob Brinker's Moneytalk is NOT LIVE today....(comments welcome) This is the second time Brinker has played re-runs in July.

Honey here: Last week, Brinker was live but I was on a "vacation" in the hospital. Frankj covered the show and wrote summaries of all three hours. 

Here is Frankj's outstanding summary from Moneytalk last week:


Sustainability was the watchword during Bob’s opening statements today, July 9, 2017 on MoneyTalk. To him, that is the most important thing in this economy.

Wage growth for June was about 2/10ths of one percent which equates to about 2.5% per year. Inflation is running 1.4%, not high enough to warrant action by the Fed. Bob speculated there might be one more Fed rate increase in September and then they’ll announce the beginning of the normalization of their balance sheet.

The job scene looks good. Bob threw out a lot of numbers. Overall jobs are up 222,000 in June. 35,000 of these were government jobs, mostly state and local and 187,000 were in the private sector. Of the private sector jobs, 162,000 were in the service sector.

Len from Tucson is in the catbird seat with $3.6 million in cash and invested assets and another 800K in real estate. Len is 63 and his wife is 9 years younger. Should he move from his current 70/30 allocation? Bob advised yes, as all regular listeners knew he would.

Gene weighed in from Newport News, VA. He came into some money back in the 90’s and socked it away in a total market fund for his kids’ (grandkids’) college education. Now that it is needed soon, what should he do? Bob congratulated him and advised him to move $60K out of the $78K to money market and get ready to start writing checks. Interestingly, Bob did not ask, and Gene did not mention whether he used a 529 program for the money. Could be some tax ramifications.

Kyle from Pinehurst NC wanted to know “who owns your house” if everything goes belly up. If a bank holds Kyle’s mortgage and it flops, the FDIC will arrange a takeover and the new entity will own Kyle’s mortgage.

“Move to a 50-50 allocation.” That was Bob’s advice to Joe from OK who is 67 and sitting on an IRA that’s 100% in stocks. Bob pointed out the stocks have done very well but the SP 500 is within 1% of its all time high so this is a good time to re-allocate. This was the second mention of this statistic today.

Bob devoted the start of the second hour to the sorry state of affairs in Illinois. “Financial train wreck, fiscal mismanagement on steroids.” Illinois’ trifecta: years of budget deficits that prompted borrowing; public employee unions having their way with public employers for years; no reform in the way the state conducts itself.

The legislature recently increased the state personal income tax from 3.75% to 4.95%. Corporate rates went up to 7% from 5.25%. This $5 billion increase in taxes won’t make any difference when you consider the state owes $9 billion this year as a payment into the pension funds, they have $15 billion in unpaid bills, and the unfunded public pension liability is $251 billion!

Bob must have told Ravi to move callers from Illinois up to the front of the line because most of the callers in the second hour were from there.

Don called in from IL wanting to know if he should pay off a 5.375 % mortgage using money from his traditional IRA. Bob suggested he look into refinancing. Don said he’s a state retiree and as such he won’t be hit with state income tax on anything he takes out of the IRA.

The next caller was Tino who decamped from Illinois in 1987 and is now in Connecticut (the Nutmeg State), a state that is also circling the fiscal drain. Tino said when he worked in IL as a college professor, he put 8% of his salary into the pension plan. The state did not put anything in and they did not let employees take part in SocSec. Fearing what might happen, he began taking his pension at age 55, at a much reduced amount. Still it has a 3% COLA. He mentioned his pension income is taxed in CT. (It would not be taxed if he was still in IL).

I didn’t get the name of the next caller but his point was teachers in Illinois don’t teach the students properly and keeping the populace ignorant has helped create the problem. The caller brought up the term “bail out.” Bob reminded him that when New York City was close to bankruptcy, and Gerald Ford was President, he told NYC to “drop dead.”

Brad from DeKalb, IL changed employers and wanted to know if he should move his 401K money from Vanguard’s target retirement 2030 fund to Fidelity, the 401K outfit for the new employer. Bob just told him to monitor the Vanguard 2030 fund. (Brad sounded intelligent enough that he could have figured this out on his own.)

Dan in San Diego has 50% in stocks and 50% in cash equivalents, guaranteed investment funds. Should he consider his cash equivalents like bonds? Bob’s answer was “yeah, more or less.”

Larry from SC posed a complex problem for Bob: His traditional IRA has $1 million in it. If he leaves it to his son, he’ll have to begin taking RMDs and his son is in the 33% federal bracket and 5% state income tax so he’ll get hammered. Larry is in the 15% federal bracket with 7% state tax in SC (!!) so he proposes to take out enough to bump him into the 25% bracket, pay taxes on it, and plunk what’s left into a Roth-IRA. Let Sonny inherit the Roth-IRA and it will be tax free.

Bob did not jump on board this train, he advised Larry to wait and see what Washington, DC does with the personal income tax rates.

The last call of the 2nd hour came from Matt in Brookfield, IL. He praised Bob to the skies, telling him if there was a Nobel prize for humanitarianism, Bob should get it. Matt was on a cell phone I think and the connection was poor. I didn’t listen to the call.

Bob’s Third Hour Guest

Today’s third hour guest was Malcolm Frank, one of the 3 authors of the book, “What To Do When Machines Do Everything.” Paul Roehrig and Ben Pring are the other two authors.

Artificial Intelligence is widely used now by Amazon, Netflix, Facebook etc. Netflix tries to figure out what movies you might like based on how you rated one’s you’ve already seen. The guest said most jobs will be affected by 2030. This could mean, enhanced or done away with – that’s my interpretation because he said 12% of jobs will be negatively affected, while 75% will be “protected,” and there will be a net new creation of 13% of jobs… whatever.

What would a discussion of AI and the future be without speculation about driverless cars? The guest was optimistic about the future of driverless trucks and cars. Long haul truck drivers better watch out. 94% of vehicle accidents are the result of user error.

College training: forget Medieval English Literature and get into Computer Science, Data Science and Cyber Security.

The rest of the interview wasn’t that interesting in my opinion so I only half listened to it and found not much to summarize except the long haul truck driver who called in to tell them not so fast, there’s all kinds of stuff that can go wrong that an automated vehicle can’t deal with. Later the guest extolled the virtues of AI’s abilities to avoid hitting a deer that jumps in front of your car on wet pavement and at night in Oregon.

Not only would the software make the instant decisions needed to avoid hitting the deer, it would share the “solution” will millions of other self-driving cars.

(Share the solution, or sell the solution? Just askin’.)

Earth to programmers: remember to program in the following: When one deer (or elk) cross the road ahead of you, don’t assume you’re home free. Often, two, three or more animals will follow and sometimes they’re the ones you hit.

Honey here:  Thank you so much for that great summary, Frankj! 

JULY MARKETIMER COMMENTS FROM HONEY AND JIM (originally posted here):

Honeybee wrote:

As usual, I have read the July issue of Marketimer. The only thing that jumped out at me was that Bob Brinker keeps raising his S&P 500 target range projection.

This month, he has raised it to: ".....potential upside into the S*P 500 Index 2500s range going forward, as investors discount improved operating earnings prospects."

This is the first time ever that I recall him making the range a full 100 points. Usually, he will narrow it to low, mid or high....

July 15, 2017 at 10:53 AM

 

 Jim said...

One thing I found interesting in the July Marketimer was that Brinker suggested he might take defensive action if he anticipates a correction. I take his meaning of "correction" as something less than a 20% decline. I don't recall anytime in the past where he has moved money to cash unless he expected an actual bear market with a 20% or greater decline.

July 15, 2017 at 11:28 AM

 

 Honeybee said...

.
Jim...I found that statement very interesting too. As you said, he has never raised cash to take advantage of a correction.

And if he waits for a 20%+ decline, he certainly won't raise cash! He never "sells into weakness."

I said to the person who was visiting with me that all that sentence was for was to remind everyone that they need to be sure and renew their subscriptions and wait for him to make the "big call."

July 15, 2017 at 11:38 AM

 

RADIO STATIONS (Live streaming is getting more difficult all the time.) Here's a new one, thanks to FrankJ:  http://www.kkoh.com/

And this is the only other one I can find that starts at 1pm PDT: 710KNUS Denver

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Honey's Vacation

Honey is taking a week, but notice it is announced.

July 2, 2017, Bob Brinker's Moneytalk: Pre-recorded and Reruns

July 2, 2017....Bob Brinker's Moneytalk all rerun monologues and old spliced together calls....(comments welcome)

Brinker never announces - before, after or during - the re-run shows, that they are not  live. In my opinion, that is deception - period.

He does this at least monthly sometimes more. This is for 2017 only - so far:

• 2017
• January 1st: Re-Runs
• January 15th: Re-Runs
• February 5th: Two Hours Live; Re-run calls 3rd hour
• February 19th: Re-runs
• March 5th: Re-Runs
• April 9: Re-Runs
• May 14: Re-Runs
• May 28: Re-Runs
• July 2: Re-Runs 

Radio Stations:

710KNUS Denver

WNTK  
KION 1460  Monterey

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