STOCK MARKET....Brinker did not discuss market action this week. The Dow, S&P and Nasdaq all ended up on a four day week - still recovering from the 10% correction. The S&P is at 2747.30 again and the Dow is at 25,309.99 - perhaps on it's way to $26K again.
BRINKER EXPLAINS STOCK MARKET TUMBLE......"Tailwind for inflation is the declining dollar, which has been dropping for over a years... We pay more for imports when the dollar drops. Key ingredient to Fed policy is inflation. Beginning February 2nd, the market tumbled because of possible wage increase and inflation fears."
Honey EC: 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.
HOW TO DO A CD LADDER RIGHT NOW....In response to caller Don from Chicago, Brinker explained how to do a CD ladder:
Brinker said: "I would have four steps on the ladder....I would have a three-month CD maturity. I would have a six-month maturity, also a nine-month, also a twelve month. What you would be able to do then, is as interest rates increase, as they already have been increasing, then you can take advantage of higher rates as each of the ladder steps matures......
BB continued.....For example, when the three month matures, you can roll that over at that time into a one year CD - because your others in three months will be three, six and nine months.....In that way, you are able to take advantage of an increase in the short term rates, which the Fed is committed to. As long as the economy is growing, you can be assured that the Federal Reserve is going to be on watch against inflation. And they are fully aware that we are at full employment and that we already have a tight labor market. And we already have signs of wage pressure that showed up in the January labor report which came out on February 2nd and drove the market bonkers at that time."
HEADWINDS FOR REITS AND OTHER INTEREST PAYING INVESTMENT.....In response to Clark from Baton Rouge, Brinker said: "It's competition for the money. In other words - yield competition. As rates go up, there is more competition from the bond market. Because you can buy bonds, even Treasury bonds and get higher yields. And those higher yields compete with the higher yields on REITS, and that's the reason it's a headwind.
CRITCAL MASS.....Brinker commented that "Critical Mass equates to "Financial freedom."
FOMC MEETS MARCH 20 AND 21st.....Brinker expects a rate increase at that time. We have had five already, but if we have 6 more, the Federal Funds rate will get close to 3%....That means higher money market and CD rates. New Fed Chair Jerome Powell goes to Capitol Hill first time in March....and may have to answer questions about Quantitative Tightening.
NO INFLATION SURPRISES PLEASE....BB said: "What you don't want to see is any surprises on the inflation front. If there is one thing that can upset the bond market really fast, it's surprises on the inflation front......The Federal Reserve would have to respond by quickening the pace of their rate hikes and their tightening. So the one thing you do not want to see is any surprises on the inflation front. Now we had a small surprise on February 2nd when the supervisory and employee wage increase numbers came in at 3.9%. .....Totally unexpected, and we saw what happened after that......" With 2% inflation, purchasing power is cut in half in 36 years.
NATIONAL DEBT AND DEFICIT and BRINKER'S ONE-SIDED WEEKLY POLITICAL HIT-JOB..... ==> dRahme Audio Clip
Honey EC: I am willing to post the audio of Brinker's political musings but I won't spend time typing them out.
BRINKER'S GOTCHA CALL TODAY
SWISS CHANCELOR, MEXICAN PESOS AND SWISS FRANCS....Caller Cornelius from Sioux Falls, South Dakota, told Brinker that his Credit Union offered to pay him 18% on a money market deposit, if it was made in Mexican Pesos. When Cornelius withdrew his money, he was given Swiss Francs and made more money than he expected.
==> Thanks to dRahme: audio clip of the call ...Honey EC: No laughing aloud allowed. :)
FRANKJ'S MONEYTALK GUEST SPEAKER SUMMARY
Well, Bob had another in a
long line of futurists on the show today, February 25, 2018. Andrew McAfee co-author of a 2014 book, The
Second Machine Age and co-author of the 2017 book, Machine, Platform, Crowd: Harnessing Our Digital Future. Andrew is a principal research scientist at
MIT’s Sloan School. His co-author on
both books is Erik Brynjolfsson.
There was slight puckering
at the beginning of the interview when Bob greeted the guest and was met with
silence. Bob handled it as the broadcast
professional he is, while Ravi scrambled to get Andrew on the line.
Here’s what we learned
before the half-hour break:
·
Amazing
technology does not benefit everyone equally.
·
There are
winners, stars and superstars in the tech galaxy.
·
He does not see
the creation of tech superstars (super rich) as a problem.
·
Both skill and
luck play a role: he doesn’t know any
successful tech stars who didn’t enjoy some luck.
·
The development
of artificial intelligence is progressing faster than experts predicted it
would.
·
The second book
mentioned above, discusses “the hardest things to accept about ourselves,” one
of which is overconfidence bias.
·
Bob said
“robots don’t get sick, don’t ask for raises, and don’t talk back.” The guest said there is a difference between
robots doing automated tasks that involve physical repetition and robots taking
over the cognitive tasks of humans.
After the break Bob brought
up the notion of a guaranteed income or Universal Basic Income as the guest
called it. The guest said we have a
problem with job quality, not job quantity.
Three million truck drivers in the US are not going to lose their jobs
anytime soon. He is in favor of
expanding the Earned Income Tax Credit program instead of just handing money
out to everyone. (The EITC program gives
money to people who work.) The guest
said he does not believe UBI is appropriate for today’s world.
Caller Bob from Naperville,
IL had a question but I was distracted.
John from Avon, CT asked
about the potential for self-awareness by the machines. The guest is not worried, and neither am I,
having watched the Terminator series of movies where the humans manage to get
by on their wits and with a little help from “Ahhnold.”
Eric from Bend, OR wanted
to know when medical doctors are going to be replaced by AI. The guest said doctoring won’t go away. Diagnosing, working with medical peers,
patient communications are all things that have to be done, human to
human. AI however can help a lot with
diagnosis which is a form of pattern recognition, something humans are good at
but machines can help with.
The US education system is
doing a great job of educating young people …. for the work environment that
existed 70 years ago. It encourages
obedience and orderly behavior. (Has he been in a high school lately?) Schooling today needs to emphasize creativity
and the ability to work in groups.
James from Springfield
wanted to know what computer language a millennial should learn. The guest didn’t know. Then he had a question about which
cryptocurrency someone should invest in.
The guest said he thinks these currencies are dangerous right now. Bob agreed pointing out that those who paid
$19,000 for one bitcoin are not happy right now.
A caller listening on KNUS
asked if computers are leading us to dehumanization. The guest said in so many words, only if we
let them. He said phones and screens are
a temptation that we need to rise above.
Parents need to step in on behalf of children. He said, often, when we are using a phone or
screen, we are actually interacting with another human, but it is no substitute
for a face-to-face interaction with someone.
Bob wrapped up at the usual
time, about 3:52.
I am convinced that these futurists, as I’ll call
them, are on so frequently for a couple reasons. One is that Bob really enjoys this topic
because the future may guide us toward successful areas for investments. A second reason is that these futurist
guests, for the most part, are “safe” guests who aren’t going to challenge
Bob’s views on the markets, investments, etc.
Honey EC: Note to all who listened to Moneytalk. I was told that at the very end of the show, as Brinker was signing off, he said something that indicated that he had been told that the Pesos-call was a joke. Did anyone hear it? If so, please let us know what was said. Thanks...
98 comments:
Have not listened so much lately- station in Myrtle Beach WRNN dropped MoneyTalk. Listening on line today. Still puzzled that so many callers claim listening since the beginning of time and yet there questions seem to indicate they have not paid much attention to what Bob has said week after week, month after month. Would like to learn something new. Wish someone would call and ask or challenge Bob on bonds. Saw were Buffett said people with long term goals should not invest in bonds- prodding ordinary investors to stay invested in U.S. stocks, ignoring price swings, guidance from people with fancy credentials and the temptation to load up on bonds.
It sounded like Bob took full possession of a prank call in the first hour. A gentleman caller claimed that a native-sounding credit union in Sioux Falls had allowed him to invest $600,000 in pesos at a rate of 18%, then refunded him in Swiss francs. Then he told Bob he was a "Swiss chancellor," whatever that means. I was fully expecting "and Baba Booey to y'all!" at the end!
Wish Richard and Sal would dial in!!!
Who was the guy, rolling in money, who said he and his wife were "educators."
And then Bobby wonders why there is so much national/state/local gov't debt?
That was a totally farcical call.
Still puzzled that so many callers claim listening since the beginning of time and yet there questions seem to indicate they have not paid much attention to what Bob has said week after week, month after month.
Da Brink has his calls carefully screened. The purpose of Moneytalk is to hawk a newsletter to the financially ignorant by creating an artificial environment where callers are carefully screened and selected to make the host seem like a sage, who possess the magical power to protect you from the very boogeymen the host artfully paints into your psyche.
Moneytalk is a fully staged production. Brinker will just ramble on if they do not get callers who fit his narrowly defined criteria he has laid out for his call screener.
Well....The Day at the Races......5 (five) horses entered.....Results: One horse came in the money (2nd place) One horse scratched,
Three (3) horses out of the money. A losing day at the Track.
My CD ladder is 1 toi 5 years.
Gabe
It was thus written;
Saw were Buffett said people with long term goals should not invest in bonds- prodding ordinary investors to stay invested in U.S. stocks, ignoring price swings, guidance from people with fancy credentials and the temptation to load up on bonds.
My comment;
Here is Uncle Warrren's comment in context for those so interested:
I want to quickly acknowledge that in any upcoming day, week or even year, stocks will be riskier – far riskier – than short-term U.S. bonds. As an investor’s investment horizon lengthens, however, a diversified portfolio of U.S. equities becomes progressively less risky than bonds, assuming that the stocks are purchased at a sensible multiple of earnings relative to then-prevailing interest rates.
It is a terrible mistake for investors with long-term horizons – among them, pension funds, college endowments and savings-minded individuals – to measure their investment “risk” by their portfolio’s ratio of bonds to stocks. Often, high-grade bonds in an investment portfolio increase its risk.
A few things of additional note. In the same address he notes he is holding a great deal in short term Treasuries as he find little a compelling buy at these valuations (my interpretation).
I can buy that explanation. Nonetheless, it helps people like me whose minds are sieves to hear things repeated before they get transferred from short term to long term memory storage.
MK
Since money market & savings accounts are now yielding 1.3%-1.5%, does it make any sense to be in short bond funds now? Isn't it a mistake to still be in DLSNX (yield 2.18%, with expense ratio of .67%), or did he pull that fund from his recommendation?
The prank call may have been made by Longmont Potion Castle. He's a terrific satirist and has spoofed many well-known people, like Alex Trebek, Eddie Money, and Dick Dale. The call to Alex Trebek (an attempt to deliver sod from Thailand) is quite funny. Longmont's hook is to present something that's wholly absurd but wrapped with a couple of "sounds-good-enough" elements to get the mark to respond. Plus a few LPC-like sound effects are audible...
tfb said: "Da Brink has his calls carefully screened. The purpose of Moneytalk is to hawk a newsletter to the financially ignorant by creating an artificial environment where callers are carefully screened and selected to make the host seem like a sage, who possess the magical power to protect you from the very boogeymen the host artfully paints into your psyche.
Moneytalk is a fully staged production. Brinker will just ramble on if they do not get callers who fit his narrowly defined criteria he has laid out for his call screener."
____________________________
This is reassuring to know given that we had a call today regarding Mexico Peso money market investments in the Kemosabe Credit Union paying 18% plus in Swiss Francs to a Swiss Chancellor domiciled in Sioux Falls SD. Will we hear that call again in a future program of spliced calls?
Here's my summary. It was another love-fest on Monotalk today.
Ol' Brink, being an ol' bond trader, is so flabbergasted and flummoxed (a word not defined in the 1974 Merriam-Webster Pocket Dictionary, 800+ pages, although I'd heard it used many times by my dad since the 1960's in the context of being a southern U.S. colloquialism) regarding the Fed's downloading of it's "balance sheet" full of bonds as it collides with the ongoing federal budget deficit.
You can literally hear his hand-wringing as he intones his concerns about the potential explosion of bond market interest rates and inflation.
He says the whole Armageddon starts in October when QT reaches its fevered pitch as the new fiscal federal budget begins with its huge over-spending allocations, per normal.
But he doesn't suggest what course of action that workin' stiffs like me should undertake. It seems like he's just spreading undefined, foggy, unclear, hazy and spittle-laden fear.
Therefore, I've prepaid for my cremation.
Dickie, Mason City IA
PS- the Swiss Franks guy with the Pesos investment at Kemosabe Credit Union in Sioux Falls is a full-blown stoner joker. You can hear his nasally stoner speech and his weakening thought process as he aimlessly drifts from his premise within a minute. Poor Bob.
.
Hope no one misses hearing that all. dRahme made a clip and it is posted in the Summary.
I say that Brinker did not catch on during the call.
Anyone disagree?
Yes, I heard the sound effects. Sounds like wacky pirate stolen phone service, or an ancient cordless phone from 1972. Thanks for the heads-up.
Dickie
.
Dickie from Mason City, IA...
I'm starting to look forward to your "summaries." You are spoiling me.
I'm considering adding a byline for your comments and to my Moneytalk Summaries.
What's your thoughts on that?
Cornelius made heap big wampum. LMAO, ROTF😂😂😂!
Pavlov’s Cat
Thank you, dRahme for the audio clips.
I don't think Bob suspected anything on the "Peso" call, even after the caller mentioned the Kemosabe Credit Union.
Kemosabe Credit Union ???
Indeed, it appears that THAT Bob was pranked.
LMAO!
Hi-Ho Blinker..awayyy !!!
https://goo.gl/W444zf
https://goo.gl/3zQMAh
JC
With today's rally the S&P is within five percent of its Jan high. At this point it is a contest between higher interest rates down the road vs the headwind of lower corporate taxes boosting earnings further still.
Reading Honey's summary Mr B acknowledged wage increase numbers at 3.9%. "Small surprise, totally unexpected" not words you want to hear from a market timer/forecaster.
In this frothy environment one enterprise I've discovered attractive for investment is Honey's Bob Brinker Beehive Buzz. After four weeks of 481 comments, last week's entry gathered 84, or a 30% decline for a thirty day moving average. I declare this a buying opportunity, on the stipulation that CFO Frankj curtails his lavish expense account submissions.
A lunch for four at a "Gentlemen's club" for $530? I trust this is a fraudulent charge, yes?
I have called the show and been on the air several times. Screener only asked my name, where from and what I wanted to ask about......IRWIN in Skokie
.
Birdbrain....Yes, Frankj can be a bit expensive sometimes, but I do think he's worth it.
As long as he doesn't ask for a couple of hundred million to build his own library, we'll be fine. :)
HB: My note replying to JC did not get published! Thanks.
Gabe
I can assure all here that the expense in question, brought up by Birdbrain, was misdirected to Honeybee's organization, a clerical error by someone in my organization. That said, it was a legitimate expense on behalf of a different organization I am associated with. It was indeed a business lunch, albeit conducted in a somewhat relaxing venue.
.
Sorry, Gabe...It contains things that might be offensive to a segment of readers here.
.
Is that our Mr. Pig getting on a ski boat on his special island?
Honeybee,
Gabe? Offensive comments?
Wow! I hope it wasn't something I said.
JC
LOL @ Pig Island! That was interesting, Honey. The video was so fascinating I never even noticed the young ladies in bikinis!
Bluce,
Thanks for mentioning that. (I did not play the video yesterday). Indeed, it shines a bright new light on the island!
Gotta go now. Need to buy a pig costume and plane ticket.
Am I missing something here? Was Gabe offended by the Indian references?
.
Basel Fawlty....Please do not concern yourself with what is not your business.
I stated to Gabe exactly why I did not publish his ONE comment.
If he took offense to that, I'm sorry, but I won't say more, and neither will he.
Thanks for nothing J. Powell - I think you are overstating growth which again raised the question of inflation even though the PCE price deflator is tame with the price index below 2% YOY (1.52% to be exact).
In your opening statement you said INFLATION adjusted gdp grew at a rate of about 3% for the second half of the year 2017. Wrong!
You don't have to be a math wiz to know that statement was not true. You of all people should know not to take the quarterly annualized headline GDP figure and use it to reflect actual growth.
YOu pledged transparency yet he flubbed the actual gdp growth rate.
I guess the bond market is too dumb to calculate the numbers to realize what you said was not true as yields shot up at the long end.
One positive thing I will give Powell is at least listening to you was easy on the ears and brain, cause I could not listen to Yellen for more than two minutes with that Brooklyn twang accent. Don't get me wrong Brooklyn twang accents are generally tolerable but for some reason Yellen's just grated me the wrong way. Sorry misplaced anger just venting a bit as we were on our way to getting back to recent highs when Powell injected his slanted twist on GDP growth.
no way Fed should tighten 4 times this year - productivity not there although the world is recovering. In the words of one Republican Congressman - "don't blow it"
Hensarling (R-Texas) has no room to talk since he repeats the same error Powell made.
smile
p.s. I would love to crunch the numbers on Bob's actual Portfolio's I II & III performance so if anyone has old issues of these reports see the last blog entry of mine for what I need (but wait for the latest report coming I think March 1, so we can crunch the most up to date numbers):
my smile post dated: February 25, 2018 at 10:50 AM
https://www.blogger.com/comment.g?blogID=8158799431925324931&postID=3473430575211997635&bpli=1
.
Here is the full transcript of the new Federal Reserve Chair's speech before congress today.
Something in it sent the stock market into a tailspin:
Full Text of Fed Chair Powell
.
Smile....Sometime in the next few days, I will get the info you are looking for to crunch the numbers.
I have every issue of Marketimer back to January 2000.
smile
p.s. I would love to crunch the numbers on Bob's actual Portfolio's I II & III performance so if anyone has old issues of these reports see the last blog entry of mine for what I need (but wait for the latest report coming I think March 1, so we can crunch the most up to date numbers)
Just as an fyi, you can do an overt comparison, but the proper thign would be to do a risk adjusted return. You could do that crudely by looking at the betas Brinker publishes.
Which is to say, from an academic viewpoint the total stock market is less risky (in terms of expected deviation from - guess what, the total stock market (really tracking error) than a sector, actively managed, or factored ETF or mutual fund (unless it is a low volatility index).
So for example if a mutual fund has a beta of 1.2 and returns 20% more than the total stock market it is considered to have performed the same as the total stock market on a risk adjusted basis.
In other words one need to compensated fro the risk ensued. In large part that is why comparing Da Brink's portfolio to the S&P500 or total stock market is with limited merit.
But as I mentioned, you can crudely adjust by factoring in beta when you do your calculations.
I hope that is helpful.
tfb
Market should be helped by more positive money flow later in the week.
Great HB,
It will be interesting to see Bob's performance comparison relative to major index funds, etf's and/or indices.
smile
MAD: Be sure to send us some pix of the little piggies!
Hey, especially Gabe, my cd ladder is also 1 to 5 years. How are we supposed to change that to 3 mo, 6 mo, 9 mo, and 12 months without paying big ole prepayment penalties ? My penalties are generally 18 months. One is 6 months plus I think 50 percent of all interest made since the time the cd was opened.
So is there any way to make this switch from a 5 year ladder with one year steps to a 1 year ladder with 3 month steps?
To those who queried about my comment being deleted by HB......no concern! I disagree with her decision, however, she is the moderator and has the last word.
It seems to me that each time the Fed Chief goes before congress and presents his assessment of the economy and or market, the market retreats. Four interest rates this year apparently spooked the market. I believe Bob felt at least 3 or possibly four rate hikes were in the offing depending upon how the economy is functioning. In the early going, the market is "recovering" from yesterday.
Four horses going this weekend. Hopefully, we do better this weekend.
Gabe
Gabe,
I would welcome your comment if it is possible to revise/resubmit it with respect to guidelines agreeable to Honeybee.
JC
tfb said: "Just as an fyi, you can do an overt comparison, but the proper thing would be to do a risk adjusted return. You could do that crudely by looking at the betas Brinker publishes."
________________
smile responds saying:
tfb, Good point. two questions and then a comment.
1) What are the betas of each of his portfolios?
2) How does he express this overtime 3yr 5yr 10yr or does he just present the current beta for each portfolio?
==== smile Comment ====
The individual benchmarks used should reflect the respective 3 portfolio classifications and conceptually should be close enough in beta which is more a measure of volatility than risk for this exercise and I will print the betas for the benchmarks used:
aggressive (maybe a diversified aggressive growth fund or etf or nasdaq composite index type fund or... ha ha ha QQQ e.g., 3yr 5yr & 10yr Beta 1.22, 1.14, 1.07)
moderately aggressive maybe (50:50 blend of DIA and SPY)
conservative (maybe VWELX)
Also I am thinking the benchmarks used become less important once a more meaningful measure of Bob's performance is used other than total return. The theory is when the market goes down significantly (actual risk of loss) they all pretty much go down together, I understand there are differences in degree so maybe using something like Treynor ratio might be in order but I want to keep this simple.
By using portfolio values and associated dates and an appropriate measure, performance should become evident to whomever views the data. Choosing an appropriate benchmark and providing beta info. can offer some measure of relative volatility assessment.
If I am correct the question of "compared to what" will be for the end user to decide based on their own risk assessment once we have a measure such as annualized return which can be used to measure performance across any asset classification and across time (apples to apples comparison).
In other words the question answered by the home gamer will be does the subscription cost (if that is important) justify the relative performance if... one understands and accepts the premise of Bob's "model" for "market timing" and whatever that brings vs. reading HB's summaries and or listening to the show or a set and forget strategy. If one does not care about the subscription cost and inherent value of Bob's "work" then none of this will matter other than confirmation of what they already knew.
I think most that travel in these circles already know the answer for them but it will be nice to see a valid measure of Bob's performance and one that can be easily compared to other investments across a standardized time frame.
smile
.
JC...I know you were trying to be nice in your last post to Gabe, but please drop the subject.
Anyone who is interested in Brinker's Portfolio performance needs to keep a couple of things in mind. As was pointed out long ago Brinker seldom rebalanced Portfolio III so that portfolio frequently had more of a 60/40 balance than a 50/50 balance so it would tend to outperform. Also, with Portfolios I and II if the money was in a taxable account Capital Gains taxes had to be paid along the way whenever Brinker made a change which lowered performance to a certain degree. Someone just holding the Total Stock Market for 20 years didn't have that issue.
.
Jim...You are correct.
Additionally, Brinker took a mulligan on the "up to 1/2 of cash reserves" raised in year-2000 that went back into QQQ just before it dropped by over 3/4th.
IOW: That was money that was technically credited twice to all three of his model portfolios.
(65% - up to 1/2.)
Honeybee said...
JC...I know you were trying to be nice in your last post to Gabe, but please drop the subject.
Honeybee,
Done!
JC
News release this morning:
Quote:
"Real gross domestic product (GDP) increased at an annual rate of 2.5 percent in the fourth quarter of 2017, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.
The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With this second estimate for the fourth quarter, the general picture of economic growth remains the same."
https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
________________________
Smile:
In the April 4, 2016 Marketimer (latest copy I have) the betas for the three portfolios are listed as:
Model Portfolio I beta = 1.01
Model Portfolio II beta = 1.00
Model Portfolio III beta = 0.49
I'm not sure what to make of Brinker's beta numbers, for example the listed beta for Portfolio I changed from 1.26 to 1.07 on Sept 3, 2009, while the makeup of the portfolio did not change.
.
Whoever is sending the harassing comments about my moderating choice, please stop.
Unless you enjoy wasting your time and mine.
Smile said:
I'm not sure what to make of Brinker's beta numbers, for example the listed beta for Portfolio I changed from 1.26 to 1.07 on Sept 3, 2009, while the makeup of the portfolio did not change.
Smile,
I think I understand your question, but I'm not positive. Anyway, here goes:
As of the reporting date (Sept 3, 2009) one of these occurred:
1. Portfolio I volatility decreased substantially while market volatility remained unchanged during the measurement period.
2. Portfolio I volatility decreased while market volatility increased during the measurement period.
https://www.investopedia.com/terms/b/beta.asp
JC
Biker wrote, regarding Bobby's ports:
Model Portfolio I beta = 1.01 <<
Model Portfolio II beta = 1.00 << ?
------------------------------------------------------
That's not a typo?
JC:
Thanks for your reply to my post directed to Smile. Your explanations make sense but the fact that Brinker does not update his reported betas monthly probably contributed to the large, sudden change in beta when he made the update on Sept 3, 2009. I just looked back further and he did not change the Portfolio I beta between Mar 6, 2007 and Sept 3, 2009. So there was a large "pent-up" error that resulted in the big jump reported in Sept 2009.
Bluce:
I stand by what I posted. No typos. As I stated, the data is a couple of years old as I am not a current subscriber.
The reason the beta of Portfolio I was so close to 1.0 is because the beta of the actively managed high-ER fund is less than 1.0.
Biker
Regarding Beta, I suppose the beta of a fund or portfolio could change quite frequently. If a mutual fund manager was in 100% stocks but then turned somewhat bearish and thereby reducing his funds holdings to only 80% stocks/20% cash his beta would be reduced. I don't know if that would explain the change in Brinker's portfolio beta or not. It depends how often Brinker calculates this. If he calculates beta based on the past 12 months for example which would have included part of 2008 then some of those managers could have had a large cash position, but like I said, I don't know what time frame he uses.
Biker: My point, which maybe I didn't make clear, is what is the sense of having two separate portfolios with essentially the same beta?
I'm not, nor ever have been, a subscriber to his rag (so I can't see his ports) but I'm assuming the three are at three different risk levels -- one for most anybody. What is the point of having two out of the three at the same risk level?
Good point, Bluce. As can be seen here: http://www.bobbrinker.com/portfolio.asp, the two stock portfolios (aggressive and growth) have remarkably similar performance over the last 15 years. Prior to that the two had performance numbers very different from each other.
Looking for some input on retirement income: If a person has enough income to meet their retirement needs from social security, pension, & cd's; is their a need to still invest in equities? With cd rates at a near low, as interest rates rise, so will the cd's. Am I missing something, or will inflation out pace the fixed income rates?
dj
Is that our Mr. Pig getting on a ski boat on his special island?
Not me! That water is disgustingly clean. Somebody could get sick in it or even worse get clean. It has to be unsafe and/or dangerous.
Give me a filthy mud pit anyday. (and a couple of Trump haters to roll around with)
DJ: Is your pension indexed to inflation? Income from nominal bonds and cds will likely keep pace with expected inflation. But will fall behind if unexpected inflation appears. (The energy shocks of the late 1970's, early 1980's was such a time.) If your pension isn't inflation indexed, it will slowly lose ground and you may have liabilities in the future you aren't covering today.
One approach is to divide your portfolio into a Liability Matching Portfolio and a Risk Portfolio. The Liability Matching Portfolio is used to generate inflation-indexed income that matches your basic income needs not already met by social security and pension. The Risk Matching Portfolio can be invested more aggressively, including a portion in equities, and will be used for additional supplemental income, travel, luxuries, gifts, bequests, legacy giving, etc.
The investment vehicles used for a Liability Matching Portfolio include inflation-indexed annuities, TIPS bond ladders, or duration-matched short and long-term TIPS bond funds. By investing this portion of your portfolio in inflation protected securities, you assure that there is a base level of income that will not be eroded away if unexpected inflation occurs again. If you are interested in learning about such an approach, google "Liability Matching Portfolio" and do some reading and ask more questions. The Bogleheads forum is a great resource. See, for example:
https://www.bogleheads.org/forum/viewtopic.php?t=136613
Blogger Biker said...
JC:
Thanks for your reply to my post directed to Smile.
OOPS...my apologies!
I was having a bad day - more bad days so far in 2018. :- )
JC
I just read that the US / present administration is planning on adding what were described as steep tariffs on steel and aluminum imported into the US. Although I disagree with many here that Brinker is too politically slanted in one direction, if he does keep up with the weekly news, it seems hard to believe that he won't be on live 3-4-18. That is because (not a newsflash) he is virulently anti tariff and getting up on his live soapbox will be all too tempting for him to resist .. I could be wrong , but who at least sometimes is not ?
The market is on a downward trend again. Still possible we might eventually retest that prior low.
.
Jim...It looks like President TRump's tariff announcement may bail out Bob Brinker.
Brinker is often lucky with these exogenous events.
One wonders how much time can go by before the next drop can no longer be declared a "re-test."
Tariffs don't work, I thought we learned this back in 1930's with Smoot-Hawley Tariff's during the Great Depression.
Tax on US consumers.
Talk about inflationary spiral stag-flation.
smile
Bacon Boy wrote: "Not me! That water is disgustingly clean. Somebody could get sick in it or even worse get clean. It has to be unsafe and/or dangerous.
Give me a filthy mud pit anyday. (and a couple of Trump haters to roll around with)"
-----------------------------------------------------------------
What about those "other" piggies there? Are they too clean for you also?
I do know the unfair trade that Whirlpool has to endure. You realize the government controlled economies such as China target susceptible economic sectors. Their government business arrangement is a long term strategy.
U.S. may have just been for too long, just a juicy and naive target for such nations. We have a history of very poor business knowledgeable chiefs that only concern themselves for politics within their short tenure at the helm. These foreign powers can utilize political money and social media to manage our electorate. Trump many be shrewd and informed and knows better than our competition how to play this game. My money is on this guys abilities and navigation.
Very disappointed in the tariffs. I support the President but this is wrong. It will cost us all in the wallet and mid term election.
.
"anonymous" ....I feel bad when someone writes good comments and then doesn't bother to even sign them.
I often do not publish anonymous comments, so word to the wise. Don't always count on it - just use a handle of your choice and save both of us time.
Just paging thru the latest "investment letter" as he calls it, and it seems as if he tried to address some of the comments made within this blog. So I salute him and the blog spot blogger and the contributing bloggers and the various bloggees, whomever they may be.
Speaking of comments, does anyone remember back in year 2000 when the BB.com website also contained a comments section? Very nice, but when the QQQ fiasco hit the fan during that "hit the fan" point in time, the comments section lit up like a Christmas tree in an abandoned rental house in July. You can guess what happened next.
The comments section went away "faster than a fart out a flea's ass" (the phrase uttered by the character portrayed by Jack Nicholson in Roman Polanski's classic Chinatown.)
Was all new to me. Wondered, "It seems like a nice forum, why is it gone?"
Mr. Gittes
HI Honeybee,
I listened to New Focus on Wealth with Chad Burton tonight....he's based out of San Mateo so you may be familiar with him....back in 2001 when he was 24 I attended one of his seminars and have been following him all these years....I find his investment advice to be str8forward, middle of the road-- not one of these radicals, stay within your principles and don't try to 2nd guess the market. Anyway, on tonights podcast he talked about bonds in a raising interest rate market--he discusses Tips, floating bonds but his recommendation it to have an unconstrained bond fund--and he shares their value in a rising interest rate market--he can't recommend any but in general discuss what to look for.
Markjon
.
Mr. Gittes....
It's interesting that you would mention the Brinker message boards that ended in year 2000.
That was the very first message board that I ever posted on. I used my real name and info there, so the Brinker's (who banned me along with dozens of other posters) have all my personal information. I could tell some stories about the grief that has caused me, but not today.
Bob Jr. was the webmaster of those boards, but Sr. was involved too. When Brinker made that disastrous buy-QQQ call at $83 and watched it drop to low-$20's, people started asking questions.
The Brinker's do not like any questions, criticisms or comments, so Jr. started banning posters right and left.
At the same time, Kirk Lindstrom set up some Brinker message boards of his own on Suite 101 (those are also long gone). I had posted my email on the Brinker message boards because I did not know where all my friends were going when they were banned.
Kirk sent me an email inviting me to post at Suite101. That is where a short time later, I started writing summaries of Moneytalk - because the scales were dropping from my eyes real fast about the honesty of one Bob Brinker and I wanted documentation of the truth.
Here is the personal story of my history with Brinker which explains in some detail how and why I have this blog:
How I Became a Brinker Follower
.
And BTW, Mr. Gittes...
I have long been aware that Bob Brinker addresses things he reads here in Marketimer - occasionally.
And he will also "set the record straight" (LOL) on Moneytalk if I or anyone here, writes something he finds "offensive."
Honey: I just read your story. Interesting, and I never knew that it was out there. As I read it, a lot of it was familiar because of comments you've made here from time to time.
And I get how you came to trust him; I did too. That is, until 2008. That was the end for me. And I used to get upset when he was preempted for sports, which happened way too often, and internet streaming was in its infancy. I remember trying to stream his show when I was still on dial-up; it didn't work very well.
You should post that link on your summary page every week, so newcomers have some idea of his history -- and yours with him.
Hi Honey,
My latest comment got in put the Feb 18 blog, It was meant for Feb 25.
Could you move or just post it to Feb 25? Thank You
"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?"
I was in on the 2000 QQQ disaster. As I recall Bob suggested putting 35% into QQQ.
I made an even bigger mistake and put in more than he suggested.
I've been writing off the Capital loss $3000 a year since, and still have another $43,000 to write off.
I missed the Brinker Message board, but I did start as a listener in the late 80's or very early 90s. Even with Bob's miscue's, I credit his advice for my families ability to retire with critical mass. I followed his Portfolio 1, for years, but about 10 years ago, I got tired of all the monthly paper work coming from 5 or 6 companies. I moved everything to Vanguard mostly in VTSAX. I listen regularly and over the years have gained a good education via his monologues and caller advice. Although, there are many times when I think Bob missed the point of the question, other times I think the called didn't get what Bob said and Bob misses it or avoids going over it again.
I still get his newsletter, and get a chuckle out of the bragging he seems to do as he reviews what he said previously. I think that Marketimer is a misnomer for his letter and there could have been a better name.
Overall, I am grateful to have had Bob as my mentor, because he was all I had in my early years until the internet and I found Bogleheads and MrMoneyMustache.
The tariff move is bad. The market reacted yesterday. Will Brinker criticize it? Of course. Will he be on this weekend? We will know in the fullness of time. My guess is, he schedules his weekends off well in advance and if this was a scheduled day off he won't change it.
"US / present administration is planning on adding what were described as steep tariffs on steel and aluminum imported into the US"
Analysts said that prices in the United States will be pushed up as many American-made products require steel and aluminum, Hershey Kisses teardrop chocolates in foil packs, beer in aluminum cans, and Apple MacBooks in aluminum, To cars and airplanes, there are plenty of products that can hike prices.
.
Without a lot explanation, I want to go on record saying that I think that this tariff move toward fair trade for America is a good thing.
.
Lamont Cranston....
Brinker's QQQ buy was 35% for CONSERVATIVE INVESTORS and 50% for aggressive investors (cash raised from model portfolios).
And yes, many made the mistake of going beyond his recommendation because he did a great job of selling it by telling his subscribers to "act immediately."
He even touted the trade on Moneytalk.....(the last time he ever did that)....
.
Copying as per Lamont's instructions:
Lamont Cranston said...
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?
I thought Brinker said about a year ago that the highest tariff a President can impose without Congress is 15% for a limited time. If Trump can immediately impose a 25% tariff then Brinker may have been wrong. George W. Bush imposed a tariff on steel from 2002-2003 so this is not something new. We didn't have an economic disaster after that move so I think the market is overreacting like it always does.
To address Lamont's question about what is a successful retest I think the ideal thing Brinker wants to see is a close just a fraction lower than the initial low on light volume.
Someone mentioned bogleheads up above. I was prowling around there yesterday and there was a link to this booklet by William Bernstein from 2014.
Do you know someone who is starting out in investing, a millennial or otherwise? One of the best gifts you could give them is a copy of this 16 page paper. If you're really cheap just send them the link. If you're not and you don't mind using some of your own ink and paper, download it and print it out.
https://www.etf.com/docs/IfYouCan.pdf
.
Silicon Investor poster, Woody Nickels, wrote an excellent commentary on the President's proposed tariffs. He wrote:
Pres. Trump is trying to lower our huge trade deficit
and create jobs in USA, by using tariffs equal to those
imposed on our goods exported to foreign countries.
The Pres. uses Harley-Davidson as an example.
Apparently, China puts a 90% import tariff on Harleys,
which prices them out of the middle class market in China.
But China and other countries count on our ZERO import
tariffs to undercut US producers of steel, solar panels, etc.
This drives US businesses into bankruptcy and allows
China to have an $800B trade surplus with USA.
If the Pres. can cut our trade deficit with China in half,
that means $400B stays in the US, for use here.
frankj said...
My guess is, he schedules his weekends off well in advance and if this was a scheduled day off he won't change it.
Frankj,
Are you sure about that? It seems to me that Bob would schedule his weekends on. That would take much less time and effort.
JC
Is the trade war over or does the market just not care about it today?
To Bluce: What other pigs? I'm married and can't see them.
HB---Just finished reading the first part of your 'Brinker Follower' piece and it brought back a lot of memories including names like Rande S, David K, Jen L, Phish, etc. I've got whiplashed over the years (starting about '93) following Brinker at the wrong times & then getting discouraged & not following him at other times when I should have. Then there was UTEK & the Q's which did real damage. BUT, I still tune in---crazy! Thanks again for providing this blog!
dj
.
DJ...It's great to hear from someone who remembers all those people and times. (Pig does too, but won't admit it.) :)
Rande Spegielmann is working as a VIP with Charles Schwab. I always wondered if that contributed to Brinker's obvious bias against Schwab. Rande, always the professional telling just the facts, was not high on Brinker's lists.
A few from those days still follow me on Facebook, and occasionally will post comments here. Jeffchristie from Suite101 is still dealing with a health issue, but I hope he will be back someday.
One of my favorite and probably the most eloquent Brinker-critics decided to spend more of his time enjoying his place in the Virgin Islands and overseeing his veterinarian business. I still miss "my sidekick" Will L. - and writing the blog has never been the same for me since he left. I'll post an example of his outstandingly effective writing.
Not only was there UTEK and QQQ, there was TEFQX - Firsthand Funds, managed by Kevin Landis. Brinker did a several page spread on that in Marketimer, and tried to sell it in more than one issue - just before it dropped about as much as QQQ.
Like all blunders, it was covered up, never to be mentioned again.
.
DJ and all....Here is an example of Will L's critical commentaries about Bob Brinker. He's right on target - I was there:
Jul 31, 2000 11:26 AM » Will_L - Much Better Off Like many who dropped by BB's site to find out what was up with the January sell signal, I found myself soon in the middle of a firestorm. Although not sucking up and asking very pointed questions, I treated everyone there with at least more respect than accorded me.
After a while I became not just concerned about the wisdom of his call but rather seeing a side of Brinker that I didn't know existed. I began to suspect his motives in many of the things he was saying on the radio and doing on his website.
My respect for someone I thought to be a straight shooter albeit an egotistical one eroded. His shinnanigans around his website in trying to smear the reputation of those who disagree with him including falsly posting or allowing others to do so without interference under their name and taking on aliases to attack and generally be a jerk on his own thread certainly demonstrated to me he was neither a straight shooter or someone I would trust at all.
As such I was excluded from the site--along with about anyone who has disagreed with him. The way it happened I did object to. The fact that it happened, I really am thankful for.
I wish I would have left a little sooner and just posted here. In some respects it is not right once you are no longer just differing on his market calls but think that he is quite the snakeoil salesman that I came to believe to post on his site.
Although he pounces on posters, callers and other analysts who have the gall to disagree with him, he has the thinnist skin I have ever seen for someone in his role. So it is just better to talk about him and his calls --just like he loves to do others in the freedom that an environment like this offers. It's much better all the way around.
Honeybee said...
.
DJ...It's great to hear from someone who remembers all those people and times. (Pig does too, but won't admit it.) :)
My shrink says it's "protective selective amnesia" and it's the only mechanism keeping me a little bit sane. I even remember Mr Fish and that he made a profit on TEFQX, and Liberty "I called the bottom to the decimal point" Pilgrim and GinnieMae Allan Coleman from Homer AK. There were some good arguments in those great days at the Yahoo sewer (Utek) and Sweet Suite 101. All gone now, except for Impy/brinkershill and Junior who still show up here, and of course gawd.(any relation to queenofquibble?) I even remember the BOT club where the kool-ade drinking brinkerbots all sat in a circle and......well....never mind.
AAR, What ever happened to Dan G?
.
Pig....LOL! Hey, I was forgetting a lot of very important people. One of these days, I may drop and email to Mr. Fish/Walkerman - the man most hated by Kirk Lindstrom. Kirk found it intolerable that, in spite of Fishes' foibles, I thought there was a rather nice guy lurking behind the Karmann Ghias and fishing poles.
I don't know what happened to Libertypi - he just disappeared. And last time I checked, Allan Coleman was still faithfully posting a link to this blog on his own message board. He may have still been waiting for Brinker to sue me for claiming Brinker posted as Don Lane/Mistertopes. He never understood that in order to sue, one has to be able to prove what is being said is false - and what I was saying was provably true.
Sadly, one of Brinker's most determined defenders passed a few years ago. He lived near Brinker in Las Vegas. He posted with several names, including Dija and Octavian.
Yep, and my determination have mellowed the queen and "haterbot." LOL!
I have not heard from Dan G. in a very long time - I may try an email to him and see if he is okay.
Market made a disjointed unconvincing recovery today. A retest or new lows are still a distict possibility.
J Wales,
I see it that way too. Half Farted attempt today. Next week
will be very interesting.
Pavlov’s Cat
Jerrod, you might be right about the scheduling!
Were at the point where if stocks are going to go higher weak hands must be flushed out. Some violent intraday action is likely ahead. 9 years of zirp has created a comfort level with risk assets that departs from reality. In my opinion.
You notice a pattern or tapestry of influences that tug at the collective consciousness of what a market really is. Seemingly individial threats such as Putins missle or inflation or intetest rates & now a trade war rumor. Its all almost like an engineered process to break people & their confidence or will to take risk. The hair on the back of my neck stands up & I start feeling like I'm being manipulated to make a decision based on a false or manufactured perception.
Quote:
"There is no greater cause of mischief to the small investor than the confusion between the health of the economy and stock returns. It's natural for people to assume that when the economy is in good shape, future stock returns will be high, and vice versa.
The exact opposite is in fact true: market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high; it is a truism in the market that the best fishing is done in the most stormy waters."
-William Bernstein
https://www.etf.com/docs/IfYouCan.pdf
(as recommended by frankj above)
Strong chance that Bob will not be live today as the Las Vegas NASCAR race will be going on. I think he usually takes his grandson to the race.
I don't know about that Mike. Brinker said on Moneytalk a year ago that he is not a fan of NASCAR. He even got confused about which week they were in Vegas. Here's something from the summary a year ago:
"It's a big day here in La Vegas, Nevada. The big Nascar race at the Motor Speedway, which is under way as we speak. I am not a fan. Lots of people in town for March madness.....We don't care."
HONEY EC: Maybe someone can explain why BB would say that Nascar is in Las Vegas today when it was actually last week.
Could be Jim, but he did take his grandson to the race before and he may do it again. I hope he is on live though.
"The exact opposite is in fact true: market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high; it is a truism in the market that the best fishing is done in the most stormy waters."
-William Bernstein "
Very true, for those that in the accumulation stage. No better time to double down on investing in the stock market when p/e ratio's in the tank. Given the history of fed actions upon a recession... probably an opportune time to refinance and invest in stock market. Only if you have stable and secure employment. Also, a good time to sell your bonds and invest in stocks. Good to have minimal cost of living at this period that may last some years.
Post a Comment