STOCK MARKET.....Today, Brinker made a few comments about the volatility in the stock market. He pointed out that it corrected 10%, and has now recovered about half of that.
Honey EC: Brinker did not raise any cash for the "volatility" that he bragged about predicting today. He has not issued any buy signals either. In my opinion, he is hoping the stock market will drop again and test the "lows" of the correction.
If that happens, he may change his current "dollar-cost-average" advice to a buy-signal. Will that happen? It sounded to me like Brinker was trying his best to talk it down today. We shall see what happens on Tuesday. The market is closed tomorrow for President's Day.
==> dRahme Audio Clip - Brinker's Stock Market Comments Included
STOCK MARKET VOLATILITY SPECULATORS.... Brinker said that some speculators lost all their money betting on low-volatility derivatives.
MARKETIMER PREDICTED VOLATILITY....BB said that in the February issue of Marketimer, he wrote: "We expected increased market volatility this year."
Honey EC: I looked to see if Brinker had quoted Marketimer accurately, and he did. It is on Page 3; Paragraph 5; of the February Marketimer. He wrote:
"In the absence of a recession threat, we are not concerned with bear market risk at this time. All Marketimer model portfolios remain fully invested and we recommend a dollar-cost-average approach for new investing, especially during period of market weakness. We expect increased market volatility this year."
EXPECT 3 OR 4 FEDERAL FUND RATE HIKES THIS YEAR AND WHY ==> Audio clip thanks to dRhame
QUANTITATIVE EASING AND TIGHTENING: DID YOU KNOW:
- Several years ago, the Federal Reserve invented Quantitative Easing in order to create money to add to the money supply.
- The Federal Reserve has now decided it's time to remove that money by flooding the open market with Treasuries and Mortgage-backed securities - this is called Quantitative Tightening.
- By the end of the year, the Fed will be throwing $600 billion annually into the open market.
EXISTING HOME SALES AND OTHER REPORTS NEXT WEEK: dRahme Audio Clip
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY
Today, Sunday February 18,
2018 Bob interviewed Guy Spier a value investor and money manager from
Switzerland. Guy is the author of “The
Education of a Value Investor,” published in 2014. Something bubbled up from my gray matter telling
me this was a repeat interview. I
checked and Guy was interviewed (and summarized) on Dec. 6, 2016.
As it turns out, this was not
a repeat interview, although the first 15 minutes merely covered ground
discussed in 2016. So, here is the 2016
summary, and below that, the new material, most of which came in after the half
hour break.
From 2016:
It was Guy Spier whose 2014
book, “The Education of a Value Investor,” looks like more of an autobiography
than an investing advice book. They
spent a lot of the interview talking about Mr. Spier’s lunch with Warren
Buffett. He and a friend, Monish Pabrai
were the winning bidders for lunch with Warren. Monish kicked in 2/3rds of the
winning bid.
Mr. Buffett was very
approachable according to Guy and the lunch lasted 3 ½ hours and included a
tour of the Sage’s office.
Included in the book is a
checklist for investors. Bob tried to
get the guest to discuss this some but all that came out of it was “don’t
repeat your old mistakes,” and “look at the mistakes others make.”
A rehash of 2008: The guest said capitalism runs in cycles and
swings which we are simply not going to avoid.
The 2008 swing was more egregious than most. He said by the summer of 2009 “the worst was
over.” I think he must have been
thinking about the market and its recovery which began in 2009. The worst was certainly NOT over for people
who lost homes and jobs, or were about to.
Bob teed up his usual
globalization question asking the guest if things were going to change and can
the US bring back manufacturing jobs. The
guest didn’t answer directly but wandered off into a long answer about how
everyone in the US deserves to live with a sense of security and if we can put
a man on the moon we can make a commitment to citizens. (He was speaking from Zurich, Switzerland
where he lives.)
Bob dug again for some info
asking him about the chapter in the book called The Quest for True Value. The guest said that investing is a journey
that should lead inward. We should learn more about who we are and we learn
what parts of our personality we should shed in order to become a better
investor. As for himself he said he
learned that he needed to be loved by the whole world and (I guess) he has now
shed himself of this belief.
The take-away messages are
to have confidence, understand that the professionals struggle and have
difficulties, and investing can be a journey to becoming a better person.
And … “stay in equities for
the compounding effect.”
========== Below is new material from the Feb. 18 2018
interview. ======
The guest said you don’t
have to be a crook and cheat people in the investment business to be
successful. He also mentioned that the secrecy associated
with Swiss banks gives them an excuse to rip people off. He implied that’s all they really have to
offer, but pointed out it does not extend to non-Swiss depositors. He praised Charles Schwab and John Bogle and
mentioned he has an account a Schwab.
After the break Bob brought
up Robert Schiller’s 10 year lookback at valuations and asked the guests
opinion. The guest more or less agreed
with Bob that valuations have to be forward looking and now Schiller has
started a survey of investment pros asking them if they have confidence in
valuations. His rationale (or theory) is
that market downturns occur when confidence in valuations wanes.
Chrysler: The guest really likes this company and seems
currently invested. He thinks they might
have the means to transform the auto industry.
One thing he mentioned was the coming together of all auto companies to
design engines that would be in common among all vehicles.
(Sounds great but the regulators will probably get a
hand in. We recently had a loaner car, a
2016 Dodge Charger with a 5.7 litre Hemi engine. It gave off a very impressive roar when
started and had a nice muscle bound sounding exhaust. Pair those sound effects with some regulator-approved,
puny 4 cylinder engine to satisfy future car owners!)
He cited the beer industry
as one that has consolidated, mentioning there are only 4 major brewers. This
is the reason for so many good microbrews.
He looks for publicly
traded companies with market caps less than $500 million who he thinks may have
the ability to transform the business they’re in but he did not reveal any
names.
Bob brought up checklists
again as he did in the 2016 interview.
This time the guest showed us a little ankle, revealing there are 75
items on the checklist. They include
whether the CEO is getting a divorce, what is the regulatory risk, is there
excess debt.
Well, that’s 3 out of 75, I guess we either buy the
book or wait for 24 more interviews.
Once you own a stock, don’t forget the checklist, use it to keep up on happenings within the company.
Bob asked, “Why do people like to buy when stock prices are high? “ The guest gave a long, rambling answer that included humans as hunter-gatherers and lactose tolerance …. Finally he said buying high is normal behavior and it is hard not to do. They agreed the market is highly valued now and FOMO, or Fear Of Missing Out drives people’s purchasing decisions in this current market.
He mentioned his investment in McDonalds, (MCD). He said the overall market hated the business and was predicting the worst. Meanwhile he was eating there nearly every day and his investment in MCD fattened his portfolio while the food fattened him.
As Bob wrapped up at 3:52 the guest left us with some parting words: “Keep your standards high, there are honest people out there.”
It made me think about Bob’s failure to let listeners know when he runs a repeat broadcast.
Honey here: Frankj.....Thank you for another fabulous summary of the Moneytalk guest. I'm not sure of the exact time difference between Nevada and Switzerland, but I'd guess it was in the middle of the night for Mr. Spier. Yes, I too thought about the "parting words" of the guest and wondered how Mr. Brinker justified that deception in his own mind.
Bob asked, “Why do people like to buy when stock prices are high? “ The guest gave a long, rambling answer that included humans as hunter-gatherers and lactose tolerance …. Finally he said buying high is normal behavior and it is hard not to do. They agreed the market is highly valued now and FOMO, or Fear Of Missing Out drives people’s purchasing decisions in this current market.
He mentioned his investment in McDonalds, (MCD). He said the overall market hated the business and was predicting the worst. Meanwhile he was eating there nearly every day and his investment in MCD fattened his portfolio while the food fattened him.
As Bob wrapped up at 3:52 the guest left us with some parting words: “Keep your standards high, there are honest people out there.”
It made me think about Bob’s failure to let listeners know when he runs a repeat broadcast.
Honey here: Frankj.....Thank you for another fabulous summary of the Moneytalk guest. I'm not sure of the exact time difference between Nevada and Switzerland, but I'd guess it was in the middle of the night for Mr. Spier. Yes, I too thought about the "parting words" of the guest and wondered how Mr. Brinker justified that deception in his own mind.
86 comments:
Honeybee, looks like "my intern" made several mistakes on my prior post. If it's not a lot of trouble, would you mind replacing it with this version? Thanks!
---
Re: Customer Disservice Department
There can be many, many reasons for poor customer service. Here are but a few:
1. Lack of a physical office. Inquiries are answered on a home phone and/or overseas.
2. The person(s) answering the phone have not been trained well (if at all) and are not monitored, coached and reviewed by management.
3. The person(s) answering the phone are NOT "working stiffs". At most they are making minimum wage. Frequently they receive no compensation at all. A few examples:
- A low paid (or non-paid) relative of the owner/proprietor
- An unpaid intern
- A parolee on a work-release program
- Etc.
JC
From 33 years of being self-employed, my philosophy has been: "Give your customers what they want, when they want it."
It has served me well, and I think might be a universal guide no matter what kind of business one happens to be running.
Even a shyster "market timing" newsletter, lol.
Did I just hear Bobby mention a book, "The Education of a Value Investor."
I thought it was "The Education of the Young Sprouts"??????? Did he move on to a new cliche?
Anyone have any experience with ETF money market funds as an alternative to VMMXX?
Thankfully Bob Brinkhead is still alive. Would hate to see the subscription money going to un-trained office staff.
Thus, how many subscribers will cancel upon reading his obit? As a gambler, I'd bet hugely that the un-trained office staff will disconnect the phones and claim, "We didn't receive your cancellation."
Not a problem. Just dollar cost average, especially upon weakness. Brink made millions from that idea.
Hondo, Paradise NV
Stan,
There are no money market ETF's per se.
There are however "ETF Alternatives" to VMMXX as listed in the link below. Please know that I have never purchased any of these ETFs, nor do I have any familiarity with them. I do see that some of them have high expense ratios. And, just based on their descriptions I seriously doubt that any of them would be closely aligned with the current holdings of VMMXX.
http://etfdb.com/mutualfund/VMMXX/
Stan, have you considered possibly setting up an online savings account? I have had one at Barclays for several years and am very pleased with it. They have increased rates 3 or 4 times in the past several months on their "Online Savings Account". Their current APY is 1.50%. You will find other companies at the same rate, (as well as others with higher and lower rates). Be wary of "teaser rates" however!
Bankrate.com has a great site for further information:
https://www.bankrate.com/banking/money-market/rates/
Good luck!
JC
Brinker again attacked Shiller CAPE (cyclically adjusted price-to-earnings ratio) as a measure of market valuation for market-timing purposes.
Here is an article by Michael Kitces discussing Shiller CAPE, including an interesting chart showing the Inverse Correlation between CAPE and Nominal and Real Returns, by Time Horizon. There is poor correlation between nominal historical returns over short (<2 yr) and long (>20 yr) time horizons. Hence CAPE is of no value for short-term market timing, as stated by Brinker.
However, Shiller CAPE as a measure of market valuation actually exhibits a remarkably high correlation with subsequent compounded market returns over intermediate time periods, particularly looking 6 - 10 yrs out. Kitces concludes that the impact of present market valuation implies that expectations should be for a ~15 yr period of lower returns, followed by a subsequent period of higher returns, in a manner better accounts for the sequence-of-return risk along the way. You can read the article and decide for yourself...
https://www.kitces.com/blog/should-equity-return-assumptions-in-retirement-projections-be-reduced-for-todays-high-shiller-cape-valuation/
Two horses ran out of the money on Sunday.
Volatility will be in the forecast from here forward.
Gabe
Kitces has good material on his site.
Biker’s post on high evaluations and 15 year cycle. Some of these long term cycles really raised havoc on retirement funding. Those who had the misfortune to retire on low market gains and prolonged low growth rate. We might be entering a slow grow period? High stock values that gradually work down over years. Not a good time to be accumulating phase given the high price tag of stocks. Bogle calculates low returns for extended time on this very principle.
Opposing viewpoint is the financial environment is good enough to rally a 4% growth rate. It looks like this could occur if profits raise, the valuations drop and stock appreciation continues. It still is good to be in the stock market. It's proven to be better for the future wealth. Your odds are better when investing in a company that makes money. At least in the long run.
The data on retirement needs looks to point to more stock than 60%. Stats I've reviewed had 60% as the low limit. Below that your going to waste income and suffer more insecurity. Conversely, you could go up to 85% and be as safe. I'm thinking 70% to 75% is best. BTW bogleheads has a huge spreadsheet on portfolios and safe withdrawal rate. Interesting how well Wellington did (70%). Right on top. Wellesley (30%) did good but 1% less. They typical 60/40 index was about in the middle.
Trees: I own and prefer Wellesley. Wellesley has a lower expense ratio and is right up there with Wellington .
Gabe
Discover Bank has some pretty good rates. I have been using their online bank and CD's for a few years now. Nothing but positive things to say.
12 Months rate 1.74% apy1.76%
https://www.discover.com/online-banking/cd/?ICMPGN=PUB_HNAV_BANK_CD
.
Trees....I agree that Wellington is a great fund.
MOF, I did something I haven't done for many years, I sold my Vanguard High Yield Fund and switched into Wellington.
It was hard because VWEHX has been very good to me over the years - for my purposes.
They Blew It To Smithereens!
“By the 4th quarter of this year the Federal Reserve is going to be literally throwing, at an annual rate of 600 billion dollars… Now we’re looking at a national deficit that is estimated in the next fiscal year, which starts this October, to exceed a trillion dollars. Now there is no economist, anywhere that I know, that would even believe, that a country like the United States, would run an annual deficit of over a trillion dollars, when we have full employment, economic growth, 9 years into a recovery.
If there was ever a time for a balanced budget – its now. We have the opposite…
Because of this recent spending bill, that was passed by congress, [they] blew the lid off everything the Freedom Caucus ever believed in, blew the lid off everything the Tee Party ever believed in about fiscal responsibility…. They blew it to smithereens!
Adding in all the additional deficit activity that’s going on – you can throw in the tax cut… because the estimate right now is the’re going to about 1.2 trillion dollars in the next fiscal year starting October 1st.
In the 4th quarter of this year we will be needing to finance, in the open market, close to 2 trillion dollars annual in new financing… the marketplace will have to finance this supply… because you’re going to have this 600 billion annual rate of QT…, accompanied by an annual deficit rate of about 1.2 trillion based on current numbers starting in the 4th quarter of this year… 1.8 trillion dollars thrown onto the bond market.
Do you think interest rates will go down with that supply… with the economy at full employment, with inflation concerns on the radar screen?... I don’t think so.” --- partial transcript of BB commentary this Sunday, February 18, 2018.
We are in a schizophrenic economic environment. We first want to create inflation.......now we are fearful of inflation. What is an investor supposed to do? Well the gurus say that we want a bit of inflation which will suggest that the economy is growing but no too much. Now the gurus tell us that the economy cannot handle the creation of too much debt and deficit etc so.......we are in store for a bunch of interest rate hikes to dampen the potential of a hot economy. The confused investor attempts to make something of this dynamic in terms of investing. This is worse than attempting to do well in the horse game. At least in the horse game we are told we are gambling while in the stock/bond world we are more sophisticated and they call us investors. And so, life goes on.
Gabe
Hi..
I understand BB suggested moving money out of Metrowest to VPMMA but I'm not sure I want to do that...I follow 65% equities and 35%B and I"m 59...will work for hopefully another 10 years in high tech sales....with that said maybe I should put the Metrowest $$'s into Wellington to get a little more of equities plus you get the bonds overall a better return than Metrowest albeit more risk... also have Osterweiss Bond and I know it has Junk in there but it's getting a decent return so I was going to leave it at least through 1st half of 2018....appreciate feedback.
markjon, You asked for feedback, so here's mine FWIW:
If you're with a major brokerage, using their portfolio tools, you should be able to analyze your holdings and see exactly what your portfolio beta is, and its bond duration average. Also, the quality of the bond holdings. If the risk level isn't comfortable for you, tweak it around.
Another thing: Plans as to when you retire can go awry if medical problems pop up; this happened to me several years ago. I thought I would have to retire, but got lucky and pulled through, so at 67 I'm still working full-time (because I enjoy it, not because I have to). But it was scary there for a while.
Although this didn't happen to me, imagine having to suddenly retire in the middle of a bear market, and you have a fair amount of stock holdings.
The generic thinking is to reduce your risk level (less stocks, more fixed) as you get older to protect your asset base. You seem to be leaning the other way.
Yes, any track you jump upon is good if it helps your self-image.
That's why they force highschoolers to read "Catcher In The Rye." It forces them to consider lifestyles that are not commonly discussed at home.
Saw the esteemed actor Don Knotts at Caesars Palace today, drinkin' at the bar. We exchanged hellos.
Hondo
Jester's post on Brinker's commentary- This is what I will call a Brinkerism. To retell the known data in a way to dress it up, spin, and overlay a politics. He offers the advice after hyping deficit budget, "Do you think interests rates will go down, I don't think so". Doesn't that sound like an ominous call? Actually, he said nothing. All expectations are currently directed to higher interest rates. They have been for some time. Brinker makes it sound like he is the lone wolf shepherding the thought. The data is already baked into the cake. Nothing new here.
Also, he attempts to smear current progress of legislation as inept and focus all on a single factor that every holds as not very productive. Meaning he not serving his public by fixating on a single negative aspect. Investors need to look at the basics and overall economic dynamics.
Economic growth is the 200# gorilla to be concerned with. A high percentage of financial analysis 2/3rds are not concerned with inflation threat. Yes, there is a large volume of bonds coming to market both in U.S. and international. This will push bond interest higher, but this market place is difficult to judge for non expert. Just having that info means little to threat of markets. It's a factor, but by how much? This is the essence that financial people are attempting to distill and adjust to. It will shake out over time. The info I'm getting is the threat is overblown if looking at history. The threat to be concerned with is dollar weakness.
Also, Brinker did the same with fed Chair. First praising the past Chairman work and then retelling the current facts as if some ominous events are occurring. He is attempting to work his listeners into the belief that Yellen did it right and this new guy is hapless since he is not doing exactly as Yellen. This is simple manipulation of the less informed. Sad he exploits his public per his personal desire probably driven by bias.
Was curious what Bob Brinkers Alert was in Feb, since it was not a buy signal?
Honey, my thoughts for investments as well. Moving Contra fund to it.
Brinker is moving money to shorter and shorter duration as he is playing to the safety first crowd. He will forgive his own bad calls per safety. He has a variety of portfolios for investors to chose. The offerings differ in strategies and will result in winners and no so much. Is this different? Most investors want help on making good decisions to maximize income at less risk on average. The money ship mainly just utilizes time value of money conventional wisdom spiced up like your on inside track with an expert. Be concerned with those that offer such promotion w/o any overall annual track record of after load growth as compared to averages. A track record that can be easily verified.
Brinker is basically loading up on cash and will pop out of cash in a particular deep correction. This call may or may not be good for your wealth, but it will provide an excellent selling point on the talk show. The problem is always the timing and loss of income in the meantime. These cash out times may cost your dearly overall. We have all heard and experienced the holding cash (or low duration bonds) is a losing proposition. Yes, time in the market is a big factor of wealth accumulation.
Conversely, this last down turn had S&P 500 investors jumping ship in a tidal wave. Financial advisers take this as yet another of the false premises of buy and hold. Nobody does it. Selling in a down run or buying in a strong gain day is expensive. If you think this will be your MO, then probably better to average in.
We know that any fraction of higher return will have dramatic improvement to compounding effect wealth. If the improvement is stable and long term such as reducing investment expenses, the better. So, basically we know investments in businesses that are currently working for profits are riskier, but provide better return. This phenomena is pushing more financial advisers to adjust risk to this side. Especially retirees that need money down the road for 20-30yr time span. Safety comes with a cost.
Also, to my thinking the value of bonds is stability, but may the true value be to cash out a chuck in down turn and go to stocks? Exploit the character of bonds. Of course a managed stock bond fund does this at a more informed scale. I did read that institutional investment managers are upping their percentages to managed funds.
Buy on weakness? What does that mean? Is weakness anything less than all time record highs? Or is there a specific number assigned to weakness? Like a correction is 5-10% or a bear market it 20% or more.
.
Trees:
I have concluded that your are not reading this blog - certainly not what I have written on it, and you are not listening to Moneytalk or reading Marketimer.
You said: "Brinker is basically loading up on cash and will pop out of cash in a particular deep correction."
Normally, I try not to publish such utterly FALSE statements, but instead choose to try to set you straight.
BRINKER HAS RAISED NO CASH FROM THE STOCK MARKET AND HAS NO PLANS ON THE TABLE TO DO SO.
Please read the Marketimer quotes in my summary of Sunday's Moneytalk - I hope that you will not be making any more FALSE statements about Brinker.
This blog is not here to re-write history - even in advance for Bob Brinker!
We have a MLB baseball manager here in Chicago named Joe Maddon. He has openly said a maneuver he makes that doesn't work he doesn't consider it a failure.
He'll say the game maneuver was predetermined at an earlier date or it was consensus braintrust or his statistics geeks decision
Kinda like Bobby boy not ever defining weakness.
They've got the system rigged they're never at fault.
Oh, I listen to most of the show and read the review. Also, all the posts. Yes I read the review of Brinker's fully invested and average in status.
I met to imply on this paragraph, "Brinker is basically loading up on cash and will pop out of cash in a particular deep correction". I should have said my guess was this was Brinker was up to. It makes little sense to me for him to be in low duration bonds an investment device akin to cash with so little return. I've read that financial people do rate such as cash as well as a savings account.
But, yes he is in the stock market to. However, in my opinion it would be natural to conclude what he is up to on the bond side. I don't receive his investment advice. My independent investment thinking would rate long term hold on short duration bonds as losing proposition given inflation. One would hold assets in such an account only short term and only to exploit some timing event. Also, since we think that he would love to talk the market down...doesn't that also suggest he is holding bonds for such an event? Sure, to provide security during a deep correction and to eliminate bond value loss per increasing rates, but in the end what would he do with his safe money? Yes, buy stock per market timing practices that he sells. I still think he will gladly lose investor money in low duration bonds over extended period to finally obtain a market timing event. This would look good for his market timer, but at what cost to investors? That's my question and concern. If he doesn't get a crash or steep correction and the markets just continually improve with 2x-4x the return as compared to ultra low duration bonds, Brinker will look bad. He talks of speculating a very poor idea, but I've read that speculation does include interest rates. He concluded with such high bond sales the interest rates will go up, but that is just a direction and not particularly accurate measure of risk.
WLS Chicago dropping sports and infomercial shows (bankruptcy filing fallout?) has the station airing Kudlow and MONEYTALK twice. 3 p.m and 6 p.m central Sat & Sun IRWIN in Skokie
Thank you so much for your review/summary. In 1990 ish I lost all my investment in something (was it TEQFX, that had been recommended by b.b.) I guess the company went bankrupt. I still like to listen, but will proceed with caution. I appreciate your second viewpoint to keep me on my toes.
Wales,
Weakness is in the ear of the beholder when it comes to Bob’s crystal ball.
Pavlov’s Cat
WLS Chicago dropping sports and infomercial shows (bankruptcy filing fallout?) has the station airing Kudlow and MONEYTALK twice. 3 p.m and 6 p.m central Sat & Sun IRWIN in Skokie
So you don't see Moneytalk as an infomercial?
Since Da Brink is a lib, I'll use the lib's favorite reference tool, Wikipedia to make my selective point:
While the term "infomercial" was originally applied only to television advertising, it is now sometimes used to refer to any presentation (often on video) which presents a significant amount of information in an actual, or perceived, attempt to promote a point of view. When used this way, the term may be meant to carry an implication that the party making the communication is exaggerating truths or hiding important facts
Sounds like Da Brink to me, especially the part about hiding important facts...
source:
https://en.wikipedia.org/wiki/Infomercial
The Fluffy Bunny: Are you saying that Our Beloved Bobby can be less than honest?
Say it ain't so!
I can hear it now. You had your chance to buy 10% off all time record highs. Theres absolutlely no real guidence as to the length or the likelyhood of a retest. I mean it is called market timer. But really there's not any data or anything you could hang your hat on. Its really just a nothing burger publication. I would think riding out the great recession fully invested would convince most that market timming is not going to produce any value. But people need something to read & its just another $185 that in 100 years no one will miss.
Weakness is in the ear of the beholder when it comes to Bob’s crystal ball.
Good grief. I never thought Brinker had a pair, but to hear he only has one and it is made of crystal...sheesh...
LOL!
tfb
HB: I noticed that my entry about two days ago on inflation was not posted.
Gabe
.
It's there now, Gabe.
HB: Gracias! (Thank you)!
Gabe
BREAKING Stock Market Timing ALERT
Don't listen to bob brinker.
Brought to you as a public service by Pig. You're welcome.
Now back to our scheduled afternoon snooze.............
excerpt of Jester post from February 19, 2018 at 3:28 PM:
"If there was ever a time for a balanced budget – its now. We have the opposite…
Because of this recent spending bill, that was passed by congress, [they] blew the lid off everything the Freedom Caucus ever believed in, blew the lid off everything the Tee Party ever believed in about fiscal responsibility…. They blew it to smithereens!
Adding in all the additional deficit activity that’s going on – you can throw in the tax cut… because the estimate right now is the’re going to about 1.2 trillion dollars in the next fiscal year starting October 1st...
Do you think interest rates will go down with that supply… with the economy at full employment, with inflation concerns on the radar screen?... I don’t think so.” --- partial transcript of BB commentary this Sunday, February 18, 2018."
===============
Thanks for posting this Jester, I missed this part of the program.
Just as a follow-up we discussed this here at HB's blog 4 days before the program on February 14, 2018 at 1:54 PM where I posted:
no crystal ball just simple math:
add to deficit:
1) tax cut bill: 1.5 trillion over ten years
2) 2 yr spending caps lifted: defense 165 billion and non defense spending 131 billion
add above to growing base deficit and you get over 1 trillion starting in 2019.
GDP gtrowth in 2017 was 2.5% and will not blunt deficit projection.
booming stock market added as much as half % to GDP (wealth effect).
you might be able to see it better here (top left corner ticking deficit bomb in the US National Debt box): http://www.usdebtclock.org/
simple math: expect 850 billion deficit in 2018 and over a trillion going forward starting 2019.
The 2k point DOW decline was nothing when/if house of cards begins to crumble.
If Bob is on this Sunday I "imagine" he will address this starting with the 2.9% pop in wage growth from the unemployment report, then a little bit on inverse vix etn's, as prelude to discussion of deficits and possible historical tipping point for debt and deficits. Now that is a crystal ball vis a vis to aforementioned simple math.
====
smile adds commentary to above: That was a "no brainer" crystal ball prognostication.
One of the best things out of that blog discussion for me was the website showing real time what is happening:
http://www.usdebtclock.org/
Also I suggest those who care about their wealth preservation to watch that quarterly GDP figure we discussed here in depth cause that (faster growth) is supposed to be the ante-dote to what I believe will be the next big crisis - servicing the interest on the debt and deficits going forward as interest rates climb higher.
but... as seattledoc posted February 15, 2018 at 1:59 PM
No one cares about the deficit just yet.
I agree until it has an impact on your wealth. Eye on the exit, just waiting for my wave...
smile
p.s. interesting action today in the market looking like it wants to fizzle from the highs must be some news out there causing or maybe it is smart money taking profits looking for that retest of the recent lows.
Well, today was a very interesting 180° day.
Almost without fail Fed Minutes market days are highly volatile and a bad day to trade.
A different view:
QE and Its Apologists
By Brian S. Wesbury, Chief Economist; Robert Stein, CFA, Dep. Chief Economist; and Strider Elass, Economist, First Trust Advisors LP
On March 9, 2018, the bull market in U.S. stocks will celebrate its ninth anniversary. And, what we find most amazing is how few people truly understand it. To this day, in spite of massive increases in corporate earnings, many still think the market is one big “sugar high” – a bubble built on a sea of Quantitative Easing and government spending.
While passing mention is given to earnings (because they are impossible to ignore), conventional wisdom has clung to the mistaken story that QE, TARP, and government spending saved the economy from the abyss back in 2008-09.
A review of the facts shows the narrative that “Wall Street” – meaning capitalism and free markets – failed and government came to the rescue is simply not true.
Wall Street was not the driving force behind subprime mortgages. In his fabulous book, Hidden in Plain Sight, Peter Wallison showed that by 2008 Fannie Mae, Freddie Mac and other government programs had sponsored 76% of all subprime debt – not “Wall Street.” Everyone was playing with rattlesnakes and government was telling them it was OK to do so. But, when the snakes started biting, government blamed the private sector, capitalism and free markets.
I loved this
At the same time, Wall Street did not cause the market and economy to collapse; it was overly strict mark-to-market accounting. Yes, leverage in the financial system was high, but mark-to-market accounting forced banks to write down many performing assets to illiquid market prices that had zero relationship to true value. Mark-to-market destroyed capital.
QE started in September 2008, TARP in October 2008, but the market didn’t bottom until March 9, 2009, five months later. On that day in March, former U.S. Representative Barney Frank, of all people, promised to hold a hearing with the accounting board and SEC to force a change to the ill-advised accounting rule. The rule was changed and the stock market reversed course, with a return to economic growth not far behind.
Yes, the Fed did QE and, yes, the stock market went up while bond yields fell, but correlation is not causation. Stock markets fell after QE started, and rose after QE ended. Bond yields often rose during QE, fell when the Fed wasn’t buying, and have increased since the Fed tapered and ended QE.
A preponderance of QE ended up as “excess reserves” in the banking system, which means it never turned into real money growth. That’s why inflation never took off. Long-term bond yields fell, but this wasn’t because the Fed was buying. Bond yields fell because the Fed promised to hold short-term rates down for a very long time. And as long-term rates are just a series of short-term rates, long term rates were pushed lower as well.
We know this is a very short explanation of what happened, but we bring it up because there are many who are now trying to use the stock market “correction” to revisit the wrongly-held narrative that the economy is one big QE-driven bubble. Or, they use the correction to cover their past support of QE and TARP. If the unwinding of QE actually hurts, then they can argue that QE helped in the first place.
So, they argue that rising bond yields are due to the Fed now selling bonds. But the Fed began its QE-unwind strategy months ago, and sticking to its plans hasn’t changed a thing.
The key inflection point for bond yields wasn’t when the Fed announced the unwinding of QE; it was Election Day 2016, when the 10-year yield ended the day at 1.9% while assuming the status quo, which meant more years of Plow Horse growth ahead. Since then, we’ve seen a series of policy changes, including tax cuts and deregulation, which have raised expectations for economic growth and inflation. As a result, yields have moved up.
Corporate earnings are rising rapidly, too, and the S&P 500 is now trading at roughly 17.5 times 2018 expected earnings. This is not a bubble, not even close. Earnings are up because technology is booming in a more politically-friendly environment for capitalism. And while it is hard to see productivity rising in the overall macro data, it is clear that profits and margins are up because productivity is rising rapidly in the private sector.
The sad thing about the story that QE saved the economy is that it undermines faith in free markets. Those who argue that unwinding QE is hurting the economy are, in unwitting fashion, supporting the view that capitalism is fragile, prone to bubbles and mistakes, and in need of government’s guiding hand. This argument is now being made by both those who believe in big government and those who supposedly believe in free markets. No wonder investors are confused and fearful.
The good news is that QE did not lift the economy. Markets, technology and innovation did. And this realization is the key to understanding why unwinding QE is not a threat to the bull market.
I remember when the USA had a budget surplus with a target to pay off the debt in 5 years.
With interest rates headed up, just the service on the out of control debt will equal defense spending.
It’s not looking pretty.
Physical gold allocation should be at least 10% (or more since fixed income returns are so poor).
The next major correction may take decades to recover.
I’ve stocked up my dry powder, locked in 70% of my gains with cash and gold - tight stops on the remaining 30% equities.
Regards,
Kilgore
Billy that info is good. I read an analysis of debt and stock market performance. Within the cycle leading up to recession. The economy and stock market gained when consumer debt increased up to the point when their personal debt payback stalled the growth. Then government stepped in with its' debt as no one else would spend foolishly. This is the historical failed Keynesian economics method that was long thought obsolete per modern economic theory. Wouldn't you know the last executive and politics revived the theory as it was the Great Depression way to maximize political power for generations. This selfish strategy doubled national debt and hid the fact that the costly adventure only delayed recovery. Thank God we have a competent leader that is a take charge guy that is results driven.
Funny, the study indicated when government stepped in with taxpayer low efficiency government spending the economy just went sideways. No up or down, just stagnation until the effort fizzled out. Does that sound familiar?
We must realize the private sector has a magnitude more power as compared to central control spending. Government can't do much other than screw up progress and in that endeavor that are mighty. The best central control is to do is to standardize and require good consumer info.. Sure, do the policing and most of all maximize the open markets.
Kilgore posted:
"With interest rates headed up, just the service on the out of control debt will equal defense spending."
===
smile commented: Exactly Kilgore. The market's 180° turn today was due to reaction of the 10 yr. T-bond yield bumping up past 2.94% in reaction to fed minutes release.
net interest on the debt with half yr left in the fiscal year is closing in on 300 Billion (284B) per here: http://www.usdebtclock.org/
YOY GDP and Yield curve are important clues.
smile
The Bobster says no recession in 18. But that doesn't mean the stock market can't start discounting a recession in 19 at any time right?
Pig: I'm sure you're aware that stocks, bonds, and even gold is down. Nowhere to put one's money except into pork bellies -- and they are going through the roof. I just bought another $50k today while they're still "cheap."
Doesn't this make you a bit nervous?
A terrible turnaround!
Gabe
Of you trust the markettimer all is well. If rising rates lots of debt & a near record expansion matter then it seems like stocks might be pretty risky. Its also true that the fed is coming out of a big hole so maybe all the rate drama is to be ignored.
Seems to be a lot of hype on national debt yesterday? Why all the fear and during the best financial times in last 25 years? Doesn't make sense when business profits and business investments at all time high. Business bullish attitude survey at all time high as well. The market is now in normal fluctuation. Historically 10 dips of greater than 10% draw down in periods other than recession since '67. These dips go down fast and up fast. Best to stay away from stop loss selling as the ploy will just result in losing more on the quick way up. Buying the dip does have a good track record if 2-3 days of -2% drop. That will make you money if were not heading into recession. Where to get the money? Sell bonds as they go up (supposedly) when stocks go down. Think of it as a flash re-balance.
This infrastructure spending is just getting legs. Both parties like the idea except the far Left basically demands loyalty to obstruct no matter. Much anger as they had their path all planned out and got surprised. When the last administration spent heavily on shovel jobs it was ineffective. Our beloved government bureaucrats over many years feather bedded to put themselves in the way of progress. Every building project goes through a maze for approval. For example one our shipping ports needs to be dredged five feet deeper for commerce. Nineteen year approval process. We can't regulate our way to success. It was $ one trillion spent on infrastructure during the Great Recession with no bang for the buck. The old Davis Bacon prevailing wage requirement ensured taxpayer waste on such projects. This is slated for the trash bin. The private public cost sharing has good support for efficient taxpayer money expenditures. So many projects held hostage by fed control/regulations that have hurt the economy. Sad, this continued so long.
My info still says to buy the dip and hold long. We do have an adjusting period with higher interest rates. Not much concern on inflation. We are achieving real rates because economy is doing good. Four percent GDP growth rate could be in the cross hairs. Tax overhaul impact will benefit the economy for a long time. Lots of good fundamentals. Concentrate on the fundamentals. There may be another opportunity to buy the dip? Watch the dollar for concern. Additional -10% would slow up all the good fundamentals.
Senator Perdue from GA was talking of the history of U.S. budgeting and how the House has lost control. The process for years has become useless and ineffective. He is on a committee that has long been established to do something. There work is getting attention as both sides are concerned of the problem and want to do something. Perdue thinks we will see legislation to put teeth into budgets. This is long overdue and we are getting the attention of DC apparatchik.
At the end of the day...the market will do what the market will do.
Gabe
Bluce said...
Pig: I'm sure you're aware that stocks, bonds, and even gold is down. Nowhere to put one's money except into pork bellies -- and they are going through the roof. I just bought another $50k today while they're still "cheap." Doesn't this make you a bit nervous?
Good choice. After cleaning up with the pork bellies you can run for president just like Hillary did. She's smarter than everybody except boB. You can make more money with dopey newsletters that don't predict anything then (sic) with pork bellies.
(that's for you gawd....and you're welcome)
Anonymous gabe said...
At the end of the day...the market will do what the market will do.
Gabe, after studying this for close to 50 years, I discovered that the market will do this at the beginning of the trading day too. HTH
The Kylie Kurse?
------------------
A redesign of Snapchat is continuing to pile up negativity, with longtime bear MoffettNathanson reiterating a Sell rating and Kylie Jenner tweeting: "Sooo does anyone else not open Snapchat anymore?" Shares of the messaging app tumbled over 6% yesterday in response, erasing $1.7B in market value.
Meanwhile, Evan Spiegel got $637.8M in total compensation after Snapchat (NYSE:SNAP) went public last year, marking the third-highest payout ever received by a CEO.
(Source: SeekingAlpha)
JC
I requested and received my sample issue of Marketimer. I have followed Bob on the radio on and off over the years and generally like his low risk approach to investing. I'm tempted to subscribe but I have two issues maybe someone can comment on.
1. The reason I'm posting here is because I searched all over his website and could not find anyway to contact them. No email, phone numbers, contact us, nothing. I would have liked to ask my second question to them directly.
2. This is my biggest issue. I see no way to tell what the performance of his portfolios are recently or historically. I can't tell anything from 2200% since 1988. It sounds impressive, but what have you done recently? Why doesn't he list his portfolio performance the same way mutual funds do? YTD, 1 yr, 5 yr, 10 yr, etc. While I generally like the portfolios this omission may be a deal breaker for me.
I suspect both of these issues are very much by design, but wanted to see if anyone had answers or comments.
Thanks
An excellent day in the equity and bond market.
Five horses going this weekend.
Gabe
for #2 you are on the right track in sniffing out the problem with Bob's presentation of performance using total return and then expressing it as a percentage to give it that wow factor.
Total Return = (Value Now - Original Value) / Original Value
As you stated he should post his annualized return for YTD, 1 yr, 5 yr, 10 yr, but he doesn't so that is your first warning or red flag.
So to better see what Bob's actual performance based on the numbers presented on his page here:
http://www.bobbrinker.com/portfolio.asp
all you have to do is use annualized return formula or get an online calculator which does the same you will find the annualized performance of each of his portfolios from 1/1/88 to 1/31/18 over this time is:
portfolio I = 12.24%
portfolio II = 11.48%
portfolio III = 7.91%
Annualized Return = (Value Now / Original Value) ^ (1 /Years) - 1
annualized return calculator: https://financial-calculators.com/roi-calculator
The value of using annualized return to measure is it takes time into consideration in the performance and you can compare annualized returns for any class of assets and compare apples to apples performance.
A simple index like the S&P 500 or total stock market should be able to match or better this performance with dividends reinvested.
Use the radio program and other sources for concepts of asset allocation, rebalancing, dip buying and economic indicators (recession / no recession indicators) to give you clues as to when to take risk off the table and you should do fine.
Growth is the elixir of stock market success. Also remember Buffet's concept of being fearful when others are greedy and greedy when others are fearful.
smile
p.s. HB let your post slide not having a handle and letting it thru to her blog, she might not be so kind in the future.
.
Well, when I read Bob Brinker's February 12th Marketimer bulletin, and listened to Moneyalk last Sunday, it looked to me like he was hoping for a re-test of the lows of the correction.
He indicated that if it did re-test, he would be issuing another "buy-signal" because he did not expect a bear market.
Are those hopes fading now? This from Fox Business:
"Investors bid up stocks to wrap up the week, with concerns over higher interest rates moving to the back burner."
The last major correction period (Sept 2015 - February 2016) took 5 months until BB issued a buy-signal. In between the initial low and the final retest the market climbed back to near the original high. Sometimes these things take time. But nobody knows nothin'.
https://www.youtube.com/watch?v=6xDd-BvClH8
http://www.lyricshall.com/lyrics/Billy+Bragg/No+One+Knows+Nothing+Anymore/
Honeybee said: Are those hopes fading now?
It appears that way, doesn't it.
I think 4 years ago the pullback was only around 7% and I don't remember if it retested that low again or not. I think Brinker will only mention the February 12 bulletin on Moneytalk if we get the retest but not mention it if we don't. I guess it's possible once the 10-tear Treasury hits 3% it could trigger a new wave of selling but I'm not betting on it. I guess as long as we don't reach a record high before another drop it could be considered a retest but once it reaches record highs any drop after that should be considered a new correction because he always talks about "failed rallies" and I would think a failed rally should fall short of a new record high.
GOOGL and AMZN did exceptionally well today. The drinks were on me at the Clubhouse.
Gabe
Fed backing off on rate hikes. I really doubt we see 4 raye hikes in 18. Might see one. I doubt you get an outright buy call from Brink. We are late into a record long expansion. He will probably ride out the next bear.
Dow 30,000?
Gabe
Gabe: You have horses named GOOGL and AMZN? Oh, wait ...
On a more serious note, a few tech stocks are responsible for much of the performance of the SP 500. Lack of breadth?
Way to go Gabe enjoy your good call!
.
Smile....Now that makes me nervous....You know me well. That is exactly what I did with "anonymous"' post. And as you said, may not give him/her another freebie.
I have been getting more and more willing to not publish anonymous, no signature posts - my patience with giving reminders is fast running out. :)
Honey, don't you have any control over posting rules, like as for "Anon," etc.? I mean as for filtering them out before you even see them?
frankj: Lack of breadth......I agree! However, the way this market is performing------anything goes and is possible.
Speaking of horses........It is why long-shots win. The racing form does not show why-----the horse stats do not suggest but long shots do win.
As an investor and a horse owner, I have come to accept that anything is possible.
Gabe
Ruyfa: Thanks!
So, to be sure, Brinker is currently 100% in to his portfolios for timing purposes? When he says "buying opportunity" what exactly does that mean? When he offers the sell signal where does he suggest investment money goes. May this info be copyrighted?
Converting Brinker's I,II,III to annual returns. Knowing his total returns I just inflated $10,000 to match total such as portfolio I having a total return of 116% over last 10 years = $21,600.
I = 8% annual
II = 8.1%
III = 6%
vwinx = 7.1%
vwelx = 8.1%
vtsmx = 9.9%
fcnkx = 11.2%
So, what am I missing? I like the last ten years because the period is most up to date and includes the big recession. Binker's portfollio's may do better outside of historic bull runs? But that goes double for vwinx and that fund did well as compared to III.
.
Forrest and Jan....
I just want to remind you and all readers that the last time Bob Brinker issued a sell-signal was in year 2000.
The ONLY other time he has issued a sell signal was when he disastrously went to cash AFTER the 1987 stock market crash. Right after he issued that sell-signal, the market started climbing and he missed out on huge gains before getting his followers back in.
So again: In Year-2000, Brinker raised 65% cash and stayed 35% in the market during that bear.
He remained fully invested during the 2008-2009 bear that bottomed in March of 2009.
.
Bluce....
No, I have to do all the filtering.
And the name of the newsletter is ..... “Market Timer”????
Doesn’t sound like a whole lot of “market timing” to me. A
Gabe could you or someone post a history of your market moves.
Seems like you're nailing it a phenomenal rate.
Again and again a few days after a market swing you've previously positioned yourself in a perfect spot.
Absolutely amazing! Congratulations!
My fellow Anonymous, this is regarding your difficulty finding the telephone number to the Marketimer command bunker. Isn't the number printed on the bottom of your sample newsletter? I see it on the bottom of the front page of the February issue: (303) 660-8686. But it looks like other people here have provided you information regarding the annual returns.
I have subscribed to Marketimer for the last year. I like reading Brinker's take on the leading economic indicators. Perhaps I could get this info for free elsewhere but have so far been too lazy to investigate that. I might otherwise discontinue my Marketimer subscription.
Brinker talks out of both sides of his mouth at times. On the one hand he is a Jack Bogle advocate who preaches the futility of trying to consistently time the market. On the other hand, the very title of Brinker's newsletter and his verbal claims suggest he can time the market. Okay, so Brinker is a bit of a snake oil salesman. He certainly isn't as bad a some other financial gurus I can think of. When it comes to all these people my rule of thumb is caveat emptor.
I am not invested in any of the funds of Brinker's model portfolios. He has however been one of the influences that have guided me in composing my portfolio. I have followed his advice on percentage of portfolio allocation for foreign stocks and on sticking with short duration bonds
Sincerely,
MK
Anonymous Stinky said...
And the name of the newsletter is ..... “Market Timer”???? Doesn’t sound like a whole lot of “market timing” to me.
That's because it's spelled with one "T" as in MarkeTimer. What the hell do you want for only one T ?
. . . and Bobby's "timing model" is called the Model T-timer.
LOL!
MK
Anonymous said...
...
2. This is my biggest issue. I see no way to tell what the performance of his portfolios are recently or historically. I can't tell anything from 2200% since 1988. It sounds impressive, but what have you done recently? Why doesn't he list his portfolio performance the same way mutual funds do? YTD, 1 yr, 5 yr, 10 yr, etc. While I generally like the portfolios this omission may be a deal breaker for me.
What you really ought to ask is why Brinker only starts reporting on his record in 1988...here is a hint, he gave horrific advice in 1987, amounting to sell low and buy high...
tfb
Market Timer or however it is spelled is Bob's "brand." Established a long time ago and now it is too late to change it, in my opinion. I think whenever the newsletter was established, there really was a belief among subscribers and newsletter writers that it was possible to time the market.
Over the years the evidence shows that it was difficult, if not nearly impossible, to do it consistently and be successful each time.
Frankj,
When you first subscribed to Marketimer, was your mindset believing the Brinker's newsletter had a good chance of getting you out of the market so as to avoid severe downturns or bear markets? I know I personally had that believe when I signed up for Marketimer.
Bob Brinker's Old Timer, popularizing the discredited methods of money management of yesteryear today.
Learn how to lose money the same way your parents did, by being mislead by the pied piper of market timing, a long ago discredited practice that has long been academically proven not to work. You too can waste thousands of dollars over your investment lifetime by building a portfolio that is inferior to dozens that you can find on the Internet for free.
Subscribe to Bob Brinker's Old Timer, because nostalgia is beautiful.
tfb
Almost starting to feel sorry for Bob here. He’s getting beat up pretty good..........I said almost!
Pavlov’s Cat
If Bob keeps up with this blog, he will probably skip the live show today and put on replays to let the annualized stats of his record fall back into the recesses of memory.
Point well taken by tfb with this pointed post:
"What you really ought to ask is why Brinker only starts reporting on his record in 1988...here is a hint, he gave horrific advice in 1987, amounting to sell low and buy high..."
While getting ready for bed last night this same thought occurred to me.
I also thought of a way to get the accurate measure of Bob's portfolio performance YTD, 1 yr, 3 yr, 5 yr, 10 yr if the right data is available.
Not sure if this information is available so if anyone has the monthly MTs going back 10 yrs. please post the end portfolio values and respective 6 dates for the 3 portfolios for the following categories:
1) YTD need:
a) current MT portfolios end $ values and date of those value:
b) the December 2017 values for the portfolios and the respectie date
==========
2) for 1 yr need:
a) same month a year ago from 1a above MT portfolios $ values
==========
3) for 3 yr need:
a) same month 3 yrs ago from 1a above MT portfolio $ values
==========
4) for 5 yr need:
a) same month 5 yrs ago from 1a above MT portfolio $ values
==========
5) for 10 yr need:
a) same month 10 yrs ago from 1a above MT portfolio $ values
My hope is Bob posted in each monthly MT the current values of the portfolios and dates and that someone kept these. If this is not the case then never mind.
But if so then if someone will post these values and dates I will crunch the numbers and post the appropriate measure to evaluate the specific period in question.
smile
Thank you for the info.
"Don't expect Brinker to sing the market's praise for awhile if it keeps going up rather than dropping down and retesting those lows. According to his February 12th bulletin, he's looking for a retest in order to put out another buy-signal. In the meantime, if you have new money, he recommends dollar-cost-average."
I think Bob is wring at least short term.
Probably see a retest of the lows in the first 3 weeks of March. But who knows.
Well we are 95 points from the recent S&P correction low of 2,581.
How close to the previous low does it need to get for Bob consider it a restest of the correction low?
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