Sunday, October 22, 2017

October 22, 2017, Bob Brinker's Moneytalk: Not Live Today - All Re-Runs

October 22, 1017...Bob Brinker did NOT host Moneytalk live today.

The show was previously broadcasted monologues and calls. I do  not cover re-run programs.

Review of Bob Brinker's Current Views:

STOCK MARKET CORRECTIONS:

1. Brinker still considers a 10% decline to be a correction, but said in the latest Marketimer that 20% is a major correction.

2. Brinker has been saying for some time now that a correction would be "health-restoring" for the market but is not predicting a bear market. 

3. His Marketimer model portfolios are fully invested, and he is still recommending dollar-cost-averaging new money into the market.

RECESSION....Brinker believes that the risk of recession is "very low."

INTEREST RATES AND QUANTITATIVE TIGHTENING:

On Moneytalk recently, Brinker has talked at length about the FOMC (which you will find in my summaries). He thinks the Fed may raise interest rates again in December - and they have begun "Quantitative Tightening" of the money supply.

Radio Station 
710KNUS Denver
WNTK
KKOB770

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69 comments:

MikeE said...

I listen to Bob every Sunday but I never remember hearing any of the repeated calls on his "not live" show. Looks like I would remember at least one of the old calls. I guess my memory is no good.
Does anyone else remember any of the old calls when his show is being repeated?

Honeybee said...

.
MikeE...I do.... Remember all of them so far....

gabe said...

2 second place finishes this weekend. Picked up some change.

AMZN is reported to make a decision around Thanksgiving re: Pharma business. Hopefully, in the affirmative.

Historically, next week will be a real downer for the market. Hold on!

Gabe

Warden Gorden Borden said...

Maybe Moneytalk could get a ratings boost this fall with many NFL viewers and listeners boycotting.

Jerrod Clarkson said...

gabe said...
"Historically, next week will be a real downer for the market".


I'm planning on picking up some husky stock and ETF positions next week, but probably not until Friday. I like to shop the bargain tables.

As for AMZN, their only objective is to put ALL retail businesses OUT of business. That is a very, very sad mission statement in my opinion. And frankly, while it is more convenient to shop there there aren't many prices that are lower than retail stores. In fact, frequently prices are higher. So, the only "charm" is convenience.

And remember the HUGE price reductions promised when AMZN took over Whole Foods? The result is in - average store prices have been reduced by 1%. Yawn...BIG YAWN...

Lately I have been doing a bit of online shopping at Costco. I bought a large quantity of Peet's coffee pods. (Peet's is ABSOLUTELY THE BEST coffee in my opinion). So, if you buy it in the grocery store (which I usually do), plan on spending about a buck a pod. My Costco price was less that $ .30 a pod. I feel good when I get a 70% discount!

JC

Jerrod Clarkson said...

Warden Gorden Borden said...
"Maybe Moneytalk could get a ratings boost this fall with many NFL viewers and listeners boycotting."


Warden Gorden Borden,

An interesting hypothesis, and anything is possible - but I think (at minimum) THAT Bob would need to cease boycotting Moneytalk before any appreciable ratings boost could be realized.

JC

Irishcajun said...

Thank you for the update on his current views.

gabe said...

JC: I agree, though there are web sites that compare prices of AMZN to other retail stores so that one can compare if one so chooses.

RX prices would definitely benefit the consumer if AMZN decides to go that route. Too, as an owner of AMZN, it will benefit my bottom line.

Gabe

Anonymous said...

Really? Bob is not live today? But yet the mutual admiration society love-fest continues unabated, in all its glory?

Gosh, how does he do it? He must be a magician, like Svengali. Or better yet, like Houdini or The Amazing Jonathan or (insert Vegas showroom act here). Now there's some talented peers.

Got a kick out of the old lady who asked about asset allocation and Bob was beside himself, "Really? At your age?"

Definitely the call of the day. Even set aside my vibro-sander for a minute to listen in.
Duke Santos

Trees said...

I was listening Kudlow's guest Peter Skocic on the air before BB. He is conservative investment advisor with 37 years experience. He doesn't see much problems with economy out some 3-6 months. Basically, no problems to middle of '18. The biggest threats being over zealous QT or North Korea. Tax reform will pass in some form. This will unleash $1T of capital on our economy. Earnings look good. The talk and comparisons of '87 crash not appropriate and no chance. Financials should do the best going forward. Reduced regulation burdens already in effect and having positive results. Growth stocks still should be in the mix. Buying index funds may be covering up the large market of better value stocks.

The suggestion of growth stock investments especially financials will earn respectful growth and the markets are somewhat protected by "crash" by the better value stocks. If that is what is meant?

What I've learned of tax reform is this is a big thing for economy. My knowledge base of this reform for the corp world alone is, what the heck was the country attempting to accomplish for the last some decades? Have the get the rich mentality of politics so potent that we desire to shoot ourselves for satisfaction? It really is dumb what the country has endured and did so for decades. Also, I'm understanding the QE boost to economy held wage earners and income to standstill at the same time boosting wealthy financials. The wage earners have much indignation on U.S. wealth spread. This is a function of corp wealth overseas and fed actions that work mightily to raise the selling price of equities. Throw into the subject the overhead of over regulation that works to keep labor down. You want to raise minimum wage, be prepared for drop in employment and loss of job training. Over regulation is just a wet blanket for job and economic growth. Just a burden, but a perk for central control wealth and their power. The latter being horrible for efficient market decision making including the ways and means to improve the environment. Nonetheless the efficient operation of economics upon creating wealth for low income citizens other that crumbs handed out per political opportunity of central control. This also is a burden to finance our government operations as well. Meaning the economy supports the burden. The more robust the economy, the more income available. Having ever more tax conformance regulation does not make the economy behave in some superior or moral way. That is just naive thinking that some how are politicians have omniscient ability. Contrary to this thinking is the reality the talent that got them in office is not good for running the economy.


gabe said...

The off week begins today! Perhaps, a 3% correction!

Gabe

Unknown said...

The market fell today perhaps reflecting the -6.3% drop in GE. GE, one of the original 12 DOW stocks back in 1896 and part of a group of "Just put it in a draw and forget it." stocks fell over -6% today and is now down -29% for the year. And also down since the year 2000. It was a wonderful run but times change. It is an example for not buying individual stock and blindly holding on. You always need to know more about the transaction than the guy on the other side of the trade. And you need to keep that edge for as long as you hold your side of the trade. This is very difficult in stocks, and when it isn't difficult it is called "insider trading". The market continues to move slowly and we are holding our partial positive position........ I was in NYC last week which is now near 100% gentrified. monthly parking was $600.xx, while the 24 hr cost was about $63. A "black label burger with fries" was $33. This was in the West Village area. You could still get Two Brothers $1 a slice pizza in the East Village or just enjoy walking past the vast variety of unique shops for free. No recession there, but high failure rate on the restaurants especially at lease renewal time. I saw a decrease in the number of police and probably a lower cost to the city to maintain services with the decrease in poor people and the drop in crime. Unfortunately many ethnic groups and elderly got caught in the change over. And for better or worse the city lost some of its charm. With all the change or because of it there are still homeless and winter is coming.

Anonymous said...

Hey Gabe,
Maybe the 3% correction will be the "market" telling Yellin to back off.

Pavlov's Cat

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

HB, please delete my post October 24, 2017 at 10:20 AM I need to make some corrections and I will resubmit.

Sorry about that and Thank You.

smile

Trees said...

It is a thorough spread sheet. I'm not a fan of reverse mortgage or annuities. Companies spend so much money on promotion and financial advisors always push these instruments. So, that is a big indicator that they are very profitable to them. I've run the numbers and prefer to do the work and risk myself.

My complaint with these packaged analysis products is they don't really offer advice on best practices. Like input your risk tolerance, your expected return, your income tax rate, home value, etc. I want to know how to maximize my financial wealth, decrease cost of living, maximise enjoyment of retirement with less concerns, lower tax burden, have a strategy for bad health, and be able to enjoy the stages of retirement i.e. go/go, slow/go, and no/go.

I do have a strategy. First I do know my cost of living as have been keeping track of expenses for years. Since income is taxed I made sure my expenses or cost of living is low. This makes more income available for fun and reserve. My observation of most retirees with a plan is they fail to spend enough. They fear running out. They can't enjoy themselves because of some unknow possible expense. They avoid vacations, adventures, travel, boating, snowmobiling, cycling, etc. and leave a hefty inheritance wherein their kids do take advantage of the money and do the same thing the retiree was dreaming about. Sad. I see a lot of youth with expensive RVs and sailboats.

An guaranteed income annuity is a great thing. Even better than more risky pension. The best one is SS. So, one always needs to maximize that annuity, even for both spouses. It calculates better given tax load to spend retirement money in the go/go years and leave SS until 70. You have low income in this period, thus low tax rate for your IRA spending. SS is tax privileged income, so do your best to take advantage of it by keep your cost of living LOW.

Our household has always been more self sufficient and diy. We enjoy the bargain and do not care to spend top dollar. I have invested in things that make us self sufficient given the possibility of major financial correction or emergency plan. Things such as wood for supplemental or primary heating and cooking. Small efficient generator used for camping and powering household at a comfortable existence, yet not close to grid power capability. One way is expensive another way provides almost equal security for five cents on the dollar. We also enjoy gardening, canning, drying, cooking, etc, for food storage of healthy organic type supplies. Just a lot of activities to keep costs down and enjoyment up. We do invest in toys, but purchase bargains.

Our travel trailer is playing a big role in go/go years as we like all the out door activities and travel. We only go for shorter lengths of stay as even TT get boring or cramped. It's best to take 2-4 weeks to increase sunny warm fall and spring. Winter is not a problem then. We plan on traveling all parts of U.S. and Alaska. Will just store the TT in the distant parts and either fly or drive to continue TT trip. We will travel in off peak seasons only.

The rental property does play into retirement finances. It's a good activity in which to keep busy and productive. Our best property will stay with us for life. We will exchange the others for one or two homes and eventually claim for residence. It may be land the children and myself both enjoy for the timber business. A very good investment for you retirement is forest land. If you enjoy the activity you can beat the stock market returns. If managed properly a good income for life and it will grow to max value if tendered properly. We probably would just build a small log cabin in that choice. Probably sell hunting rights and AirBNB the cabin. Maybe a Park Model home in RV park down south for slow/go years winter domain. Sell the house for tax free cash if that option is still available.

Anyways, you get the flavor of my thinking and retirement.

MikeE said...

I have worked myself into a situation where I have no money problems and no business problems; my wife spends my money and my neighbors tend to my business.

gabe said...

The market came off its highs!

Gabe

gabe said...

MikeE: It is obvious that you do not take life too seriously perhaps, because, you recognize that you never get out of it alive! (joke)

Gabe

Anonymous said...

For those like myself nearing or in retirement who carry a seemingly high allocation to stocks relative to age, I went through a little exercise this weekend to find an online calculator which computes the imputed value of pension and social security income for the purpose of asset allocation in retirement based on consumption $ level.

Here it is: Asset Allocation Retirement Calculator Imputed Value of Pension and Social Security Income & Retirement Consumption $ level considered

This calculator helped me corroborate or at least lend support to the concept of imputed value and asset allocation in or near retirement.

For those interested there are a few+ tweaks to using this calculator:

1) Leave other assets and liabilities alone at zero (this will give you a good look at your liquid asset allocation)
2) Retirement $ consumption level - is a very important number and you will see why when you run the calculator
3) uncheck the 3 boxes under Financial Goals
4) adjust your Risk tolerance if 20% decline is too much go to 10% (this will allocate more to bonds in the analysis for asset allocation). I left mine at 20%.

Note: Input your data, press submit and the calculator will tell you at the end summary for your input of Retirement $ consumption level how much you need today excluding defined benefits of pension, social security, and other annuities if applicable. You can play with the consumption level variable and increase it to see what impact it has.

The calculator will also tell you the recommended asset allocation for your input.

For the tech geeks this calculator is open sourced here and includes lots of notable features (monte-carlo simulation, stochastics, 4% rule etc.)

Also it has been cross validated

========

side bar: Listening to Brinker on the radio from way back got me on to this concept of imputed value. Not sure if he came up with this simple formula or whether I did (it's just math):

(sum pension social security income)/interest rate = imputed value of pension and social security income

This simple formula is what I have been using and will continue to use for this imputed value purpose (prior to finding the above corroborating calculator).

The imputed value reflects the asset base required to replace the income stream from social security and or pension.


I was using an interest rate of 3.5% but because of the above calculator it made me more conservative to consider a higher interest rate e.g., 5.5% which results in a lower imputed value which is closer to the results of the above calculator from aacalc.com

To sum up, for those still awake, and interested my current allocation is an unconventional 85% stocks, etfs, mutual funds, and about 15% cash at age 62. If I include the imputed value of expected pensions and social security and add to my existing portfolio, my allocation shifts from 85:15 to 50:50 using a 5.5% interest rate ; or 40:60 if I use the lower interest rate of 3.5% for imputed value calculation.

As I enter retirement I may bring my stock allocation down to maybe 75% from 85% or so for added sleep comfort but bringing in the imputed value of the pensions and ss helps provide a different perspective. Lots of Eggs in the basket so Watch that basket.

Among other important worries in retirement is the impact of inflation and outlasting your assets. The stock market exposure is a good answer to this problem given the correct perspective. Not for everyone.


smile

Biker said...

Smile: I tried playing around with the calculator you suggested but didn't learn anything new. It tells me that a 40K stream of income from Social Security (for a couple) is equivalent to having about a million dollars (plus or minus) in fixed income at a Safe Withdrawal Rate of ~4%. It also tells me that if I'm risk averse, my investment portfolio should be allocated approximately 50/50. If I'm tolerant of risk I could invest more heavily in stocks and maybe I could get by retiring with a little less net worth by stretching the Withdrawal Rate a bit. But aren't these things obvious to anyone who listens regularly to Brinker and thinks in terms of Safe Withdrawal Rate in retirement?

I found http://www.i-orp.com useful for actually planning cash flow through the retirement years, including the effect of taxes. For example, during the early retirement years it can be helpful to spend down taxable money while making Roth Conversions at low marginal tax rates, thus minimizing the impact of RMDs later in life. I never learned that from Brinker.

Anonymous said...

Biker: I'll take a peak at your link tomorrow.

On the calculator I referenced it should have told you based on your "Annual desired retirement consumption level" whether your income stream from Social Security was sufficient to support that consumption level based on actuarial data and if not how much in today's dollars you would need in addition to the income stream from Social Security.

If the answer to that was zero then what it is telling you is based on your risk tolerance level for a 10% probability of what ever figure you put in that slot for portfolio loss (default was 20% but you may have entered 10% or less) that your allocation should be 50:50. So any assets you would have beyond your Social Security should be allocated 50:50.

Or at least that is what I think it was telling you off the top of my head.

Sounds like good info. to me if my interpretation is correct.

As a simple check, did you use the simple math formula I provided to impute your SS income and add that to your Portfolio balance as a cash entry and if so did that figure come out 50:50. If it did sounds like you are good. If not depending on your risk aversion it might be telling you something else.


smile

MikeE said...

Gabe, I do take life seriously but I try not to worry too much about things, especially things that I can't control. I play golf two or three times a week and I am in the doctor's office on the other days(joke).

Trees said...

Good posts. I will use imputed values to ascertain financial risk. The financial guys that I talk to are only interested in stocks and bonds as they understand these instruments. As a result they are way to conservative. If you throw into the mix real estate these financial experts are lost. Same with timber or side businesses. I'm starting to read more articles, that retirees should not attempt to avoid risk.

Also, the natural motivations of investors will play into the 4% rule. Meaning most will conserve upon financial down swing and spend more upon good times. This is good. Some early retirees will attempt maximum savings and job earnings to increase this effect upon downturn. Also, most retirees that I know will stay active in investments. Meaning they enjoy picking up projects to make good cash.

The 4% rule is bogus in my opinion. You should project to run out of money at around death actuaries. In last stage of life it may be best to have no savings. If you have to much money the medical community will keep you on the ventilator longer. I will check out i-orp.

Trees said...

The i-orp spread sheet suffers the usual assumptions. One has to understand that these attempts to calculate retirement savings needs are fraught with inaccuracy. That is the nature of the beast. To have high level math and exceedingly complex spread sheets is futile exercise. The problem is dynamic for one. Engineering has a axiom that the one should not infer accuracy by unattainable margins. Meaning to run your calculator out six places may be no better than zero places as the inputs are not that accurate and the result should have +/- range or error. To wit my assessment would be to have gross calculations of approximate needs with plenty of safety margin and back plans if things go wrong. Concentrate on the most important factors or gross factors and include that risk will always be present. I like to error on the side of early as what Gabe said our prognosis is we will die.

Also, our spending will by much higher in go/go years. Less in go/slow years and just about stagnant in no/go years excluding health costs. O.K., since health costs is the 200# gorilla in the room how does the spread sheet handle the expense? Buy long term health care? That option is wholly challenged with options and gotchas per legal ramblings and excuses. Health cost are usually a problem only in last stages of life unless you have family health issues. My strategy led me to HSA account. To let this account ride the stock market in premium growth funds. It is my insurance some twenty years out for expensive care or inheritance.

These spread sheets always assume consistent spending needs. This doesn't happen in reality. Do you buy a new car or keep the old? Downsize home need or rent since you travel a lot and wish zero maintenance. I would assume investors would push more into bonds upon nearing worsening financials and do the opposite.

My philosophy of finance was impacted at collage when taking financial investment classes. I had a TI calculator with BA functions. That was a fun exercise. My early engineering job took me to Canada one time. It was fun to live in another country and to understand different mindsets. I was impressed with how resourceful these people were. Tricks they used and I have adapted to make cars run almost forever. One Scottsmen retiree I worked next to impressed me. He was frugal and never bought vending machine items as compared to my regular habit. I asked him about it and he basically brought my thinking back to time value of money and wasteful habits that are unhealthy and rob future wealth. IOWs one need to do time value of money on even the small purchases. Especially, if they are routine. People would be shocked on their spending habits if projecting the value to early retirement. Groceries, transportation, health habits, housing, and all of it has a tremendous impact. Smoking habit a double wammie. Cable TV is horrible and the habit of over buying car needs.

I posted the blog of MrmoneyMustache wherein the Canadian engineer now living in U.S. had this epiphany. What a life transformation. His cost of living is $12k, but he has an excellent home and life style. He works hard to eliminate monthly costs and no debt.

Biker said...

Smile: Yes, the model told me what additional assets I need in addition to Social Security to support a given spending level.

Yes, the model gives a different asset allocation (and required asset amount) for investments outside social security, depending on risk tolerance. For my projected spend rate and a 10% to 0% "Risk Tolerance" entry (probability), it suggested a 50/50 level of equities to fixed income, outside social security. For 16% or greater probability it suggested 100% equities. (A rather sharp transition.)

If I take the (very conservative) imputed value of social security (as defined by the model) and add it to the portfolio value the model says I need, the imputed asset allocations range between 20/80 and 40/60. That is because I have a low cost of living (as described so eloquently by @Trees), and don't really need a lot more than Social Security.

If I put in a higher spend rate then the imputed asset allocation goes up to 50/50 or more for the 20% Risk Tolerance entry. So yes, I agree the model is performing as you describe.

Honeybee said...

.
Mr. Brinker may want to mention this next Sunday - or not:

New home sales surge 18.9 percent in September, highest level in 10 years

gabe said...

Market breadth has been faltering this past week or so and it might explain the market's early performance today. So far, market's worst performance in 2 months.

Gabe

Three (3) horses going this weekend.

Anonymous said...

Biker, on second thought I think we might be after two different questions.

I think your question which is a good one to get an answer to is actually planning cash flow through the retirement years. Given the assumptions of the i-orp.com calculator it appears useful for that purpose.

However my question which was an entirely different one was with an 85% allocation to stock going into or in retirement if you take into account the cash flow from pensions and social security is that allocation to stock 85% too high and if so what should the allocation be.

The most important number provided by the calculator Asset Allocation Retirement Calculator Imputed Value of Pension and Social Security Income & Consumption $ level considered is the valuation it derives of the pension, social security and or annuity income stream.

This valuation is important in answering my question of asset allocation because if you treat that valuation as cash on the ledger of your net asset worth and recalculate what your allocation is it will tell you how close to the ideal allocation of 50:50 you are. Or at least that is how it worked for answering my question of is my allocation at 85% too high when you consider the annuity income stream.

Again the double check against the calculator was my simple formula for imputed value of pension and social security:

(sum pension social security income)/interest rate = imputed value of pension and social security income

As stated the calculator acted as corroboration for the concept of imputed value of the annuities of pension income and social security. It also helped me see that in using my simple formula it was more conservative to use a higher interest rate which in effect produced a lower valuation in determining my actual adjusted allocation.

Clear as mud. But hopefully explains the difference between the calculator I referenced vs the one you referenced. The final answer is it depends on what question you are attempting to answer.

One final thing that my referenced calculator Asset Allocation Retirement Calculator Imputed Value of Pension and Social Security Income & Consumption $ level considered forces you to do is to come up with a budget for retirement spending since a primary input for this calculator is your "Annual desired retirement consumption level". In order to get this number it forced me to project a budget the categories of spending I attached below and are specific to my situation (home and autos are paid for).

budget expenditure categories:

Food/Groceries
Entertainment/Travel
Home utility expenses
Charitable
Medical (including premiums for Medicare, Medigap and supplemental coverage)
Insurance (Home & Auto)
Property Tax
Federal Tax (on pension income, social security)
Home Maintenance expenses
Car Maintenance expenses

I probably missed some categories of expenses like Long term care insurance which I need to look at but was as comprehensive as possible and intended to capture projected recurring expenses and not extraordinary purchases like a new car.


smile

Jerrod Clarkson said...

I tried to warn everyone last week.

On Monday, 10/23: I sold all positions and went 100% cash.

On Tuesday, 10/24: I looked in the mirror and yelled YOU ARE A DUMB ASS!!!. That said, I had several Broad-market ETF's and the money left on the table was minimal.

On Wednesday, 10/25: Today,(so far) is a completely different story as the decline is broad-based affecting a wide swath of indices, sectors and industries. If that continues into the close, I would have been hurting a lot today.

Thursday, 10/25: No plans...Stand still...Watch and wait.

Friday, 10/25: Might pick up a few positions going into the close.

Next Week: Will consider more buying if the charts and numbers whisper the right words to me. ;-)

JC

Biker said...

Smile: I think we should agree to agree and call it good.

Your simple formula for imputed value of pension and social security:

(sum pension social security income)/interest rate = imputed value of pension and social security income

My simple formula:

(sum pension social security income)/safe withdrawal rate = imputed value of pension and social security income

Same result. (SWR = 3-5%)

Of course, by choosing an 85% equity allocation going into retirement you are accepting much higher sequence-of-return risk (http://www.investopedia.com/terms/s/sequence-risk.asp)than someone going in with a balanced portfolio.

You could evaluate whether or not you are comfortable with sequence risk by plugging your numbers into the i-orp.com monte carlo calculator. You will find that the standard deviation of results is much higher with 85% equity allocation than with 50%. Actually I'm planning a ramped equity allocation (30% age 65 increasing toward 50% age 90), as that gives similar performance as a constant 50% equity allocation. but with lower standard deviation of results.


gabe said...

The 10 year approaching 2.50%

Gabe

gabe said...

Smile/Biker: It all comes out in the wash!

Gabe

Anonymous said...

Biker, I think we can agree to agree.

My prior long winded post attempted to further clarify what I got from the calculators in question and was more for me than anyone else. When I write things down it helps me focus and glean central facts from the exercise.

I will be weighing the risk of exposure to stocks against the issue of asset depletion and inflation offset. That calculator was so conservative on the imputed value that to get the equivalent number for the simple math formulas the interest rate had to go to 7.1% which for me was an interesting fact changing my perspective in favor of the calculator result.

The risk is if you have to access your equity portfolio to cover current expenses which may occur in a downturn. Well if your income stream covers your expenditures then this risk goes away. The only question I will wrestle with is how much is enough to cause reduction to zero for equities. The answer TBD.

Thanks for the interesting discussion.


smile

Warden Gordon Borden said...

JC the broad US stock market is only .77% off it's Fri close. After such tiny movement you're considering re-entry on this Friday?




Pig said...

Will Brinker recommend GOP or MAGA on Sunday? I think he'll recommend not being out of those funds for the next 7 years and to sell all DEMS and all bonds and support this market. No more dry powder. BUY NOW!!

David A. said...

The Total Stock Market Index has some catching up to do.
The yearly return on the Dow is 28.83% but the S&P 500 and Total Stock Market Index are lagging. Up 19.92%

gabe said...

Volatility!

Gabe

Trees said...

Read an array of interesting investment articles. Still out there, the opinion for 4% annual return for the next ten years for stocks. I do think the analysis includes a heavy correction or crash. So, with high evaluations good returns will be a heavier lift and risk for the gain will increase.

My thinking on the discipline to maintain a cash, bond, stock ratio is why? That there is some magic to maintaining the ratio in bear or bull markets. Or in high or low evaluations? Yes, we can't be certain of stock market or economy moves, but we do have a sliding scale of risk vs reward. When indicators are all leaning to a better economy and low risk of recession. When the political world is attuned to better the open market operation of our economy. The national attitude is rated more positive for better future, so in my opinion all of this should flex investments to the higher stock percentage. Sure, the safety net should be tempered on your timeline of need, but mostly the percentage should be gauged on risk reward possibilities.

I've read quite often that those investors that are experienced understand that returns are earned by avoiding risky markets and the eventual hard correction or crash. That all boats will rise on a good bull run. So, I have learned the advice to not over react upon the market noise, but do have a plan of action to hold onto gains. Just by sliding that ratio a bit can dramatically improve gains.

BB is recommending to be fully invested. My personal move is after Oct to continue the transfer to Wellesley and keep Contra fund k. I have to much cash sitting due to the transition, but will hold on until end of Oct. Since I need $$ as in retirement without SS. My final ratio will be 53% W and 47% C with some cash in savings account. The Wellesley is the safe account that actually has 60%-70% income investments. This side of investment is my weakness to understand and my preference is to go with active management with long track record. This fund also reviewed by the Quant team at Vanguard. Both of my investments are funds that are active managed with good track records. If things get shaky I would have no qualms in packing it up and going 100% Wellesly. This fund is my safe deposit box. I can live with 20% volatility for decent return. The 1-2% return investments, after inflation, earn nothing. I'm not going there. Cash holdings usually a loser.

gabe said...

Annuity podcast...Vanguard tonight!

Gabe

gabe said...

Thank you, Amazon!

Word has it that AMZN has gotten approval in 12 states for its possible entry into the Phama world. (CNBC)

Gabe

Honeybee said...

.
Gabe...Do know which 12 states?

gabe said...

HB: The article at CNBC did not mention.

Gabe

gabe said...

HB: The States: Nevada, Arizona, North Dakota, Louisiana, New Jersey, Tenn, Oregon, Michigan, Idaho, New Hampshire, Conn-----I missed one !

Gabe

DJ said...

Trees or others----Any thoughts on the new VG Global Wellington & Wellesly funds opening in Nov. Since I missed out on much of this market upswing, this may be a good way to purchase more equities/income, with a slight advantage since they will be starting from scratch to build their portfolios. dj

Honeybee said...

.
Thanks Gabe....I was hoping California would be on that list. :)

Trees said...

A lot of talk on the recent offering. Some are thinking that global may do better as compared to classic domestic model. Emerging markets and the experience of international economies lagging U.S. swings offer more opportunity to diversify. Its kind of a third rail instead of only the stocks vs bond. However, it took some time for Wellington to work the bugs out of their Quant and Bogle himself had to take the helm to straighten out investments. So, my guess these funds will have some problems? Being new will not offer you any benefit. It's not like an IPO.

Right now investors are pushing more money to foreign stock as they have better deals and growth than U.S.. Emerging markets like INDA are supposed to have tremendous growth over the long haul and usually lose less upon a deep U.S. recession.

gabe said...

HB: The other State is Alabama. Maine is pending. California is NOT on the list.

Gabe

gabe said...

3rd Q =3%! Not shabby!

Gabe

Warden Gordon Borden said...

Gabe how long are the Vanguard podcasts? I get 2 minute snipets on my podcast app.

Anonymous said...

Unadjusted 85:15 going to Unadjusted 90:10 hopefully before the music stops. Imputed says I can go to Unadjusted 100:0 but treading lightly. Watching that basket.

Yellen may not make the cut for renewal.

EPS beats in tech - thank you

Amazon is a monster.

smile

ATI said...

All the Brinker bashing aside, I am damned glad that I regularly listened and followed BB's general investment advice. I am now, as I see it, in the land of critical mass.
This would not have been so looking back at some of my own blunders pre Brinker advice adherence.
BTW... I am not Bobby B. , am not his employee or related to him and have often taken issue with a number of his on air, non-personal investment related ramblings over the years.

gabe said...

AAPL 3.58%,MSFT 6.41%,AMAZ 13.22% and GOOGL 426%...........what a day!


Gabe

gabe said...

Warden: One (1) hour!

Thanks,

Gabe

Honeybee said...

.
New economic report - 3% growth again for the 3rd quarter. This makes 6 months of 3% growth - something that never happened during the previous 8 years.

Will Bob Brinker use weasel words again to keep from reporting this, like he did last quarter?

Anonymous said...

Getting a second confirmation in a row of a Hindenburg signal which clicked on 10/25/17 probably nothing at this point in the cycle, but ever vigilant.


smile

Jim said...

Nothing seems to slow this market down. Those who followed the late Sy Harding's seasonality model this year must have been disappointed. We have a high level of bullishness but it still goes up. Even the prospect of a new Fed chair has not spooked the market. It makes me wonder if the string of off-presidential year corrections that Brinker always mentions may not even happen next year.

AndrewJacksonFan said...

New economic report - 3% growth again for the 3rd quarter. This makes 6 months of 3% growth - something that never happened during the previous 8 years.

God bless Donald Trump. Besides Reagan, the greatest President of my lifetime. And God Bless America.

Trees said...

Most, probably (as HBBBB) have picked up on political bias working its' way into financial shows. To this point I sighed up for a free investment letter and have been routinely reading the long analysis email with all sorts of graphs and history. It usually a gloom and doom outlook. He is always diligent to discount any Trump factor as either foolish community of investors thinking this guy is competent or that he is reactionary and unstable. Basically, he puts the CIC into the category of what will soon happen in the stock market. He once said that it were his money he would pull all money out of the market, but since he runs an investment service he has to keep his clients invested or he would be driven out of business. So, is this guy saying he has no money of his own or skin in the game? If this is so, then one could certainly delegitimize the advice and probably chuck up all the saber rattling as in bad or scary news sells better.

I've noticed like BB this guy will always insert some disclaimer or advice to the contrary. This is utilized as with BB when markets prove their sage advice wrong. IOWs a cya to convince customers they are always right.

The stock market represents the decisions of millions of investors across the globe upon the state of affairs within the company or country. The quick disruptions being more of a psychological event. So, it should be VERY important to count the positivity factor. This guy caulks this factor as greed factor. Greed, again, is a psychological event. It is so, if there is no legitimate financial news or data to impact the investment. There is just greedy investors selling a chain letter. If when making easy money becomes a sensation and uninformed people start to throw money into the bucket for no reason other than it worked yesterday, well, that is greed and an emotional decision. The emotions are very powerful influence and the reason why this advice guy is scaring for sales growth. Scaring is much different than warning. He is conflicted as his scare routine advice is not being taken by himself. He needs to be fully invested as economic indicators tell him so. This is the classic investor quandary. One that is still connected to emotions. This is the reason rule based investing is so powerful. The quantitative analysis and rule based investor decision making approach. This approach is popular with experts and a proven method to increase returns. This is the system investment companies should be using for customers. Same for active stock funds and some very capable stock pickers.

Pig said...

ATI said...

All the Brinker bashing aside, I am damned glad that I regularly listened and followed BB's general investment advice. I am now, as I see it, in the land of critical mass.


Congratulations! Who asked?

gabe said...

Gas prices going up next week in Ca. by about 12 cents per gallon.

Gabe

gabe said...

Next week will play a pivotal role in the market's performance. Economic data, earnings and Fed pick all extremely important.

Two (2) horses finished in the money.....third place. The third goes tomorrow.

Gabe

Biker said...

Cali gas Tax to increase 12 cents. Actual price increase may be muted by lower cost of winter blend fuel.

gabe said...

Biker: Good luck!

Gabe

Trees said...

The mention of the free newsletter that I've been reading. I do think his information is good to better understand more of historical risk and methods to minimize. Also, I've been reading for some years another blog that I value more. Perhaps it's because the guy was learning the ropes and the articles were written to bring readership along for the ride. Also, he was retired electrical engineer with masters in financial. The guy is personal and discusses freely with comments. He is living off his investments, so has max skin in the game. He is investing as a retiree and is attuned to that life cycle need.

Also, I read some troubling independent analysis of active funds and the biases/contamination that will lower returns. This is above just the common gross expenses. Some of it from tricks of the Wall Street trade that Bob Brinker's guest author was talking about. Also, problems with the buy and hold approach or just giving up and investing in low return investments for security.

Anyway his learning path is now firmly in the expert category. The guy utilize asset allocation quantitative methodology with economic triggers to be in 10 year government bonds or equities. He personal favorite system utilizes SPY index fund. This approach will prevent more mistakes per noise filter. He tries to simplify the the approach as human behavior will adapt better. It's not to simple as to compromise returns, but simple enough. It does sound much like one of HBBBB's regular commenters that had a simple system from financial advisory. I remember his incredible simple system and his experience with improved returns. This blog author said the same and had simulations of past market history, His post was of improved returns with just a simple rule based trigger.

I've mentions the website once on HBBBB's, but not something to advertise here. This approach will afford an impressive 7% withdrawal rate. He has teamed up with fellow coworker who was a statistical analysis guy from the firm. Both are about late 50s of age and wicked smart. They have tested and hold dozens of quant test portfolios. This is a system type investment in which one must be faithful to follow. He had a post on the ramifications of changing directions for emotional recourse and the loss of returns.

I have fallen into many of the potholes the author warned. Also, made some money per dumb luck. To my thinking there is so much competing information to gain attention and sales of financial investments that one has to pick an expert to trust. This approach can lead to financial advisor cost, but we know the risk and pitfall of that approach. Most here have self educated by listening to BB and posting on HBBBB site. I like this guy as he has his money on the line and posts historical results. It's not a popular/commercial site, but the experience and learning path of a competent life long investor who is in early retirement with max motivation to make money on the market and even more so to minimize loss as all retirees. The information is higher level than BB, but what BB talks of is worthy and fruitful.

gabe said...

Trees: Over these many, many years, I have learned and appreciated the fact that regardless of the sophisticated nature of any investment product produced to provide the investor a leg up in the selection process of equity and fixed income strategies, the importance of good fortune or luck is invaluable. Handicapping the Market is similar to handicapping thoroughbred horse racing both the wagering and ownership. My observation is that an investor is better off resisting a timing model but choosing to spread the risk and using the long term model recommended by Bogle amongst others. In order to maintain a sense of "enjoyment", the investor might use a relatively small portion of his capital dictated by his risk tolerance, to "gamble". The Market should be part of an investor's spectrum choosing other modalities such as real estate for example. Equity ownership is paramount and depending upon one's experience and interest should be what drives the motivation for acquisition of equity. Obviously fixed income accumulation should be part of this equation as well.

Just a thought.

Gabe

Tom in Vallejo said...

Honey, why the heck is this ?

http://www.bobbrinker.com


Tom in Vallejo

Trees said...

Gabe sage advice and well communicated. Will add that the fixed income protection a concern of those such as retirees that need more certainty on a short time line. Probably not so good for the younger. Those that are into careers and have good understanding of the future technology and know best what companies have forward leaning future. My experience with employment in larger companies when enjoying some of the brightest minds thoughts really impressed me. If I would have realized the asset at this point in my life, well.

Real estate has been the most common path to fortune from those in my experience. I don't think these folks ever calculated the cost to hold and time period as a comparison of making good investments. Especially, maxing out their 401k as an alternative. Many of these folks I'm talking about spent a lifetime of being house broke only to sell and retire with fortunes. I remember one foreman in Newark that just got married for second time and bought a $1m home back in the 80's they had no money left. Couldn't afford furniture. I loss track of him, but he could have made a fortune or lost it all?

My rental property has been a good investment to stabilize income, but not particularly a magic wealth machine. I bought one for $18,500 and now worth $150,000, but if I hadn't done the research myself and relied on Realtor advice, back then, would have missed all the good investment properties. But, that purchase was in '79 and a real unusual winner for both rent and appreciation. That is very lucky and unusual. People talk of stock market risk, everything is risky and per my experience stock market has some of the least. So much of what we have been taught is bias. It's funny to hear the public ed stories of the Great Depression. Being an adult now and reading open market literature and opposing viewpoints including real data. I think the Public ed version was indoctrination that we all need government to safeguard us from the pillaging of private sector.

`Also, what I've learned on the quantitative analysis systems being developed they are worthy. It will move the bar to better decision making. From what I read this analysis will become or already is the only way to beat the averages over time. It's not a strict formula, but a systematic method to evaluate and create rules. They are continually time tested per recent data, and checked per history. The best minds in finance sit on these quant teams. Vanguard has one of the best. The are not perfect, but can push the bar higher which over long time periods is very valuable. No magic but taking emotion out of the decision making process and utilizing indicators to help. This is the stuff to use when you decide to either leave equities or slide in at bigger percentages. Having to decide on lower returns forever per some BB approved age related formula is a waste and has proven to not increase safety as compared to this method if applied properly.

Unknown said...

I follow the alt liberal Bob,Jr on twitter. He seemed to imply that there would be a guest host this week on Moneytalk. Anyone else get that vibe?
Sam