STOCKS....Brinker did not discuss or even mention the stock market today.
Honey EC: Brinker is fully-invested and basically bullish, but still looking for a retest of S&P lows so he can declare a new-money buy-signal. In the meantime, he is recommending dollar-cost-averaging on weakness.
Honey EC: According to the May 2018 Marketimer, Brinker is maintaining a conservative $163 operating earnings for now, but moving toward 2019 and higher projections, believes the S&P can trade into the 2900s.
Honey's market report: The S&P 500 Index dropped on Monday but recovered slightly by Friday, to a loss of 0.54% from the prior Friday. It is up 0.64% YTD and is 5.57% below its record close in January.
TREASURIES....The yield on the 10-year note ended Friday at 3.06% and the 30-year bond closed at 3.20%. The 2-10 yield spread is now at 0.51%.
FEDERAL RESERVE'S POWERFUL NEW HEAD.... Brinker said: "The Federal Reserve has a new head chief right now. His name is Jerome Powell, also known as J. Powell. J.Powell is going to stick to his guns. And his guns are that as long as this economy is growing and at full employment - we are lower than that now at 3.9 - then he is going to stick to his game plan.....His game plan is firstly, to continue to increase the Federal Funds short-term interest rate....until it gets to a level considered normalized....A normalized FF's rate right now would probably be between 3 and 4%.....based on what we know right now......So we will continue to get rate hike after rate hike after rate hike into next year if the economy continues to expand. .....By doing that, they will basically be providing a headwind to the economy.....They don't want the economy to grow too fast, they don't want to much inflation......"
Honey EC: I sometimes wonder why we have a government at all if the Federal Reserve has all the power....
VANGUARD PRIME MONEY MARKET FUND....Caller Gus from LA asked about putting a $million into the Fidelity Prime Money Market Fund. Brinker danced a bit and then recommended that Gus check out the money market fund he has in Marketimer's fixed income portfolio and Marketimer balanced portfolio III, which is the Vanguard's Prime Money Market Fund, VMMXX.
MARKETIMER'S DOUBLELINE BOND FUND (DLSNX).....a caller from Oregon said he was going to inherit $430,000 and wanted to follow Marketimer's balanced model portfolio III, but had a question about the DoubleLine Low Duration Bond Fund. This caller asked why there was a $100,000 limit on purchases. Brinker immediately set the record straight and told him that the $100,000 was not a limit but a minimum to qualify for lower expenses.
MARKETIMER'S LOW DURATION APPROACH.... Brinker said: "We take a portfolio average approach to duration. For example right now, we have an average duration in our fixed income portfolio of roughly 9/10 of 1%, which is less than a year. As part of that we have some high yield bonds in the portfolio which enhance the yield. Our average yield right now is over 3%.
Honey's EC: The high yield bond fund that Brinker said is in the Marketimer fixed income portfolio is: Osterweiss Strategic Income Fund (OSTIX).
RISING DOLLAR....Brinker comments: "In recent weeks we have seen some strength come into the U.S. dollar in foreign exchange dealings....The dollar has been gaining ground against other currencies. When that happens, our exports become more expensive in foreign markets and less competitive. Meanwhile, the products pouring flowing into the country become more price competitive in the U.S. marketplace.....This places pressure on corporate profit margins......The dollar has rallied about 3% after having a decline of about 10% last year....."
TARIFF ON CHINA.... Brinker waxed eloquent about tariffs, but only later must have been informed that a tentative deal has been made between China and the U.S. Here are the latest headlines:
Mnuchin Says US Has Deal With China to Cut Trade Deficit, Will Hold Off on Tariffs: Treasury Secretary Steve Mnuchin said Sunday that the U.S. and China -- the world’s two biggest economies -- have reached a tentative deal to cut trade deficits that includes the U.S. putting China tariffs on hold, an agreement that potentially averts an economic standoff that would have global impact.
CORPORATE TAX CUT STOCK BUYBACKS.... Brinker railed against how corporations are using money from their large tax cuts to buy back stock. Somehow he missed ever mentioning all of the money many corporations have already shared with their employees.
Honey EC: When corporations buy back their own stock, isn't that a good thing for the price of shares - consequently for shareholders?
UTILITIES.... Caller Bill from San Rafael asked about utility stocks. Brinker replied: "I think utility stocks can be considered conservative investments. They are slow growers....But there is one other factor in play right now..... the interest rate environment for a variety of reasons.....Federal Reserve monetary policy and fiscal policy which has bounded higher with deficit spending and has to be funded with Treasury sales.....That's a stiff headwind because of higher interest rates."
REITS.... Caller Dennis in Pa asked about REITS....Brinker applied the same principles of higher interest rates competing with dividends that he did to utilities.
ECONOMY......Looking for a growing economy to continue in 2018.....
INFLATION....The CPI is currently at 2.5%.... wage growth is up to 2.5%
HOUSING PRICES.... There is a shortage of housing..... Prices going up about 6 or 7% in one year.
DUTCH AUCTION Abbevie ABBV).... A caller from Oregon asked about the Abbevie Dutch Auction. Brinker commented, but Frankj's explanation is more comprehensive:
"The call about the Dutch auction being conducted by Abbevie (ABBV), a pharma company. It is a share buyback. I got a letter from them with a number to call if I wanted to sell shares. The range in price was 104 to 114 per share if I remember. I'm going to hold onto my shares."
Princeton professor Alan
Blinder was Bob’s third hour guest on May 20, 2018. The occasion was to discuss his latest book,
“Advice and Dissent, Why America Suffers When Economics and Politics Collide.” (Published March 2018). I looked at the Amazon website, so far there
is one review rating the book 5 stars.
The professor is like Bob’s designated hitter it
seems. His last book was discussed on
Feb. 17, 2013. Then he was a third hour
guest in May 2015, Dec 2015, and Apr 2016.
Did we go the whole of 2017 without him as a guest? I looked through my “archive” such as it is,
and didn’t find an interview. They seem like two peas in the same political
pod and could probably fill out each other’s ballots with no problems.
Economists would make lousy
politicians and politicians don’t know enough about the dismal science: economics.
The guest’s notion is not to convert either profession, but to nudge
them a little closer in understanding.
Bob posited that “most US economic policies rank between bad and
disgraceful.” Dr. Blinder agreed to an
extent, using the bank bailout as an example.
He indicated that was OK but the government didn’t do enough to help
families hurt by the Great Recession.
On the topic of campaigning
for president, Walter Mondale’s name came up – the candidate who said he would
raise taxes. Bob and Alan shared a
moment guessing whether he won only one state or two. He won
his home state and the District of Columbia in the 1984 presidential election against
the incumbent, President Ronald Reagan.
The professor said that
“Republicans cut taxes, …. and then leave a budget mess for the Democrats to
clean up.” Echoing what Bob said earlier in the show, he
said we should avoid cutting taxes when the budget can’t bear it. He was alluding to the tax reforms of 2017 –
not needed he said, given that the economy was growing.
On trade, he disagreed with
the current administration’s efforts to seek bi-lateral trade parity. He said he doesn’t maintain bi-lateral trade
with his grocery store. Instead, we all
(the US included) maintain multi-lateral trade.
International trade does not create or destroy net jobs in the US, he
said.
Bob asked the rhetorical
question, “Is it asking too much for us to elect a president with some economic
background?” Blinder’s answer, “Yes it
is.” Voters are not astute
economists. “A politician who runs for
office and talks like an economist would lose.” Voter yell that they want things fixed but
when pressed for specifics they fall apart.
Foreign aid is something the Great Unwashed want reduced for
example. It could be reduced to zero and
it would make little difference.
Marian from South Bend,
Indiana came in hot over the lines as a taxpayer who is fed up with government
inefficiency and she started in on Medicaid.
There was some crosstalk as she and Bob tried to talk at the same
time. Bob got the upper hand and passed
along to Alan that she was calling for an end to Medicaid. We’ll probably not know if that’s what she
said but Alan said that would mean that the poor people who receive Medicaid
benefits would just be showing up, sick, in hospital emergency rooms. Overall, though, he agreed with her point
that government or any big organization is inefficient.
Paul from Connecticut said
society is so complex today, how can we expect any president to solve the
problems we face? He said paying off the
debt is mathematically impossible. Alan
Blinder commented that we could get rid of the deficit.
For those of you in Toutle, WA, the deficit
is how much more the Federal gov’t spends in ONE year over what it takes
in. The debt is the accumulated
amount of previous deficits and it stands at about $21 trillion dollars
now.
Tax Reform as
Quicksand: There is a chapter in his
book on this. Everyone agrees we need
tax reform but not everyone agrees on what to do. We end up with making some changes but the
result is an even more complicated tax code.
Obviously the professor is not a fan of the Dec 2017 tax legislation.
Mike from Nevada City, CA
said he was 60 and asked when we’ll pay the price for mortgaging our children’s
future. He’s been hearing this for a
long time now. The guest said we’re able
to run up our debt because people are will to lend us money, i.e., buy our
government bonds. I didn’t hear him say
when we’ll pay the price.
Here’s a website for those
interested in the debt.
After you’ve looked at the
graph on the above website, you might need some cheering up, so here’s a
website with some economist jokes.
Scroll down.
Honey here: Thank you Frankj. Brinker knows exactly what he is going to get when he has Alan Brinker on, doesn't he? To me, the problem is political bias and simplistic thinking - and neither ever saw a tax they didn't love.
770KKOB;
http://710knus.com/;
TALKSTREAMLIVE
66 comments:
Ha, well Honey, tough call, pretty generic.
It's break time and I didn't hear the 800 number, did you?
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Bluce, he gave the number AFTER the first commercial break - after I posted that there were doubts.
Yup, I heard it as soon as he came back. Has he ever waited that long before? Is he messing with your head and this blog?
.
He's done it once before. He gave out the number after I posted that he was not live. I had to go in and change it.
I think he tried it again, but I had stayed with the "it's possible" theme instead of being definite and looking like a fool.
Is he messing with my head? IMO: YEP!
I felt Brinker was live because he was on vacation last Sunday and will be most likely next Sunday so it was doubtful he would take 3 weeks in a row.
Brinker reported that the tariffs with China are now on hold. It appears Trump may have successfully used the threat of a trade war to get China to make concessions. I wonder if Brinker will ever give him credit.
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Jim...I did not hear Brinker give any credit whatsoever to President Trump. I doubt that ever happens over the next seven years.
He also never mentions that most of the increased national spending is going to bring our military back from the impotency it was sent to by sequestration.
And at the same time, welfare and food stamp use is down, and more people are working, thus paying taxes.
So this money is now being used to MAGA.
The call about the Dutch auction being conducted by Abbevie (ABBV), a pharma company. It is a share buyback. I got a letter from them with a number to call if I wanted to sell shares. The range in price was 104 to 114 per share if I remember. I'm going to hold onto my shares.
If that's the case, I wish he would focus on just doing a financially oriented talk show instead of playing sophmoric games with people.
The Professor thinks all this talk of trade deficits is foolish. He brings in the terrible analogy of one way trade with your grocer and thinking it's fine. How would it be to destroy our auto industry per China import dumping? The tire industry has been protected by regulations. Food, energy, and materials provide an economic foundation. Would this trade be good if the trading country has an alternative motive to weaken our economic strength and destroy our industry? Maybe we should lose our defense companies per the grocery store analogy?
Actually, the one economic sector that would be good to hurt is government. We have an oversupply of government. It's to expensive and ruining our budget. We should offload as much as possible the government employee burden to offshore. Subcontract this costly workforce and eliminate their high wages and benefits. Put some competition within the walls of defense department and public ed as well. Within our high tech world probably an easy task. My daughter teaches English to Chinese grade school class. She lives in Kansas City.
Jim- Brinker describes Trump's action within the context, "the trade war with China is off with news of a deal". Do you think the Brink was hyping fear per his political bias? Characterising negotiations as war mongering. Something dangerous, irresponsible, and reckless. Listeners would go away with the feeling- "I guess we dodged the bullet this time. We don't want to go through that again".
Notice, also, the special guest described modern political use of economics by the lampost and a drunk analogy. His analysis implied the Left utilized the lampost of economics to shed the light to guide ones path while the Right utilized the lampost as a drunk would to hold up bad economics for their own benefit. The Professor was saying National Debt is not bad and we all have a miss understanding of it. Also, the debt should be lowered by raising taxes. Actually, the only way he gave. Listening to this guy, why should we pay the debt off? Is it free money until no one will give us more? So, did Obama do us a favor and why is his debt good and the last straw to put on the debt pile? It appears inefficient government political spending is good. Efficient private sector and citizen spending is bad use of fed money. My guess this tenured Professor walking the halls of Princeton has a distorted view of economics. He should have worked in a Burger King to gain some actual understanding.
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FJButter....To everything you wrote, I say: HEAR! HEAR!!!
Who said something like, "We keep economists around so weathermen look good" -- ?
Economics is just plain common sense. You don't need a degree to figure it out and like most things, the higher one's education goes the more clueless one becomes to the real world.
If you understand human nature, then you're well on your way to understanding economics.
Honeybee,
I have truly missed my "Blinker fix" here. Is it OK to post? I do hope so!
JC
Honey, to imply the recent tax cuts as the cause of a balloning deficit flies in the face of reality, and Bob knows it. Revenue was up 12% year over year this April. Federal revenue in 2018 will exceed 2017. Simply put, the US government continues to prove there is no amount of money that can't be spent on a day by day basis.
How does Brinker announce the buy or sell signals? Is it sent separately to news letter subscribers, posted on his web site, or something else?
.
Unknown...He usually posts a special bulletin on his website for subscribers to log in and get.
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Yes indeed, Team Recom.... You are absolutely correct.
And Brinker in all of his political propaganda always gives his opinion, but like he never announces when the show is a rerun, he never says it's his opinion.
He simply tries to influence by making it all appear to be objective financial talk.
I am very aware that he does that, but this blog would turn into a political blog if I posted all of his opinions, and then showed the facts - or even just the other side of the story.
So I spend time trying to find educational investing tidbits in the show.
Honey EC: I sometimes wonder why we have a government at all if the Federal Reserve has all the power....
If you are interested in the topic, there is a book called:
The Creature from Jekyll Island: A Second Look at the Federal Reserve
I interviewed the host for some radio or tv show some years back.
The author knew his stuff. You can probably get it on inter-library loan.
tfb
Is Bob a Liberal? Does anyone know for sure?
Honey EC: When corporations buy back their own stock, isn't that a good thing for the price of shares - consequently for shareholders?
If the shares are retired and not allowed to buy back reissues, yes; it can be...but the reality is a lot of the shares end up redistributed to management, the CEOs and the Board of Directors. Take a look at IBM for example. Ginni is one of the highest compensated CEOs and yet is among the worst performing. If you look at what IBM has done, between dividends and massive share buybacks IBM basally bought IBM. By that I mean they actually have spent enough on the combination of the two (IBM spent about $150 billion: 45 billion dividends and 105 billion in stock buybacks. Note IBM is worth about 137 billion) to essentially buy IBM, yet it was all for naught. But take a look at the rewards in terms of stock that have been bestowed on management. It is disgusting. As an IBM shareholder I took my dividends and reinvested them in the Total Stock Market. I wish they did not do share buybacks, I would have preferred the dividends and the chance to diversify out of a dog. Moreover the reality is, instead of using their cash surplus to buy new tech companies so they be a competitive in emerging technologies they took the Kodak approach and bought stock back rather than combat the threat to their future. Who did that benefit: the CEO, Board of Directors, and senior management.
Instead of share buy backs I would prefer to see them pushed out as dividends, so the owners of the company, the shareholders can decide if they want to reinvest in additional shares or diversify. When you look at history, you see we are at a very low overall divided rate on the total stock market, at less than 2% vs 4% in the past.
Food for thought…
tfb
Unknown - Brinker does post the occasional "buy" sell signal.
But his last "sell" signal was posted in the year 2000. He totally missed the 2008 downturn, and didn't raise any cash at that time. So don't hold your breath for a "sell".
Thank you again for a concise, accurate summary of the program.
Hey Jerrod! Good to "see" you.
Unknown: Below, see what Jack Bogle thinks of all this, as opposed to what Blinker would like you to believe. Of course, with a newsletter named "Marketimer," Blinker needs a lot of people to believe he really is a guru.
As Honey has documented numerous times, the only time he raised cash was in 2000.
Bogle: “The idea that a bell rings to signal when investors should get into or out of the market is simply not credible,” he once said. “After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently.”
Bob has talked about higher duration bonds tanking due to higher interest rates for what like 4 years now? The 10 year has gone close to 3 and down to 2 multiple times during this period.Seems now the consensus is this time they'll keep rising and Bob will finally be right.
I have balanced and target funds with vti clones and managed bond positions with higher durations than Bob advises. Didn't hurt me until this year. Now with vti down 2.7% I'm feeling it some.
Anyone reshuffling their portfolios to lower duration? Vanguard almost welcomes higher bond rates in bond funds to later recoop in future years buying and selling in their many multi bonds bond fund portfolios.
I could reshuffle my non taxable to lower durations but is it really worth it? Better off riding out the storm and recouping in future years on higher duration bond funds?
Curious to what most of you are doing?
As Honey has documented numerous times, the only time he raised cash was in 2000.
Naw....Da brink went to 100% cash after thee market tanked in 1987...and only got back in years later, after the market had substantially risen over his sell point. So to clarify, the market tanks, Da brink sells into weakness, he misses the recovery and tepidly steps into a strength rally over a period of time, with each buy over his initial sell...thus forever destroying the wealth of anyone who thought they were at critical mass. Which is of course why he now starts his record after that period of time. This remains Da Brinks largest cover-up.
tfb
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TFB,
You are correct, but I think that Bluce meant to say that year-2000 was the LAST TIME that Brinker raised cash.
.
KUDOS to Stinky and Jimbo180! Your posts on the Morningstar Brinker-Bot Forum are FABULOUS. I am going to copy them here where we can be certain they won't be deleted:
Originally Posted on Morningstar:
Jimbo180 wrote:
While Bob Brinker has given many people good advice over the years I do think he did something very dishonest during the 2000-2003 bear market. After telling subscribers to take a 65% cash position in 2000 he later advised aggressive investors to take up to 50% of their cash reserves and buy the QQQ shares for a short-term trade, which then took a nosedive. Although this recommendation was to use Model Portfolio cash reserves he never included the decline of the QQQ shares in the Model Portfolio performance numbers he publishes. On March 11 2003 he advised subscribers to reinvest their 65% cash reserves back into the market, which of course was impossible for the QQQ investors who really only had 32.5% cash reserves remaining to invest.
Stinky wrote:
I did some research about this QQQ trade. I found a fascinating analysis of it at this website -
http://honeysbobbrinkerbeehivebuzz3.blogspot.com/2011/12/december-27-2011-bob-brinkers-worst.html
The title of the webpage is "Bob Brinker's Worst Stock Market-Timing Call", and I agree that it was disastrous, losing about 70% for those who followed the advice. However, equally bad if not worse, is the deception and cover-up of the trade mentioned at the website. I quote:
* Brinker never took responsibility for the trade in his own model portfolios, even though he advised subscribers to use a percentage model portfolio cash reserves previously raised from theirs.
* Brinker never closed the trade and actually covered it up by repurchasing the same investment after a 70%+ drop and THEN adding it to his model portfolios
* Brinker's Marketimer official performance record is skewed in his favor to this day, because the trade was never accounted for. It has been estimated that if this trade was included in his model portfolios, it would have dropped his performance numbers by 2% a year.
* Mark Hulbert knows this but has never accounted for it in Hulbert Financial Digest, so his Marketimer performance ranking is exaggerated. (Hulbert recently added Marketimer to his Honor Roll, in spite of the fact that he uses a footnote to explain HIS reason for not accounting for the QQQ trade in HFD).
I agree with Jimbo that this QQQ trade, and the way it was reported and accounted for, sounds totally dishonest. Seems like it fits in well with the other Brinker deceptions mentioned in this thread.
Terri asked:
"Anyone reshuffling their portfolios to lower duration? Vanguard almost welcomes higher bond rates in bond funds to later recoop in future years buying and selling in their many multi bonds bond fund portfolios.
I could reshuffle my non taxable to lower durations but is it really worth it? Better off riding out the storm and recouping in future years on higher duration bond funds?
Curious to what most of you are doing?"
For what it is worth, I went to a short duration bond fund back when BB recommended doing it because I got a second opinion from an unbiased source. I asked if it was likely that bond fund NAVs would decrease in relation to their duration? His answer:
"It is not only likely, it is a mathematical certainty."
This is happening and one can see it in the price charts of various bond funds.
I realize I sacrificed some income in the interim. The next stage was to go to Ultra short term for an even lower duration and the final phase, recently, was to construct a bond ladder. I had been mulling this for a while. A while back, I posted some reasons why on this blog. Fewer headwinds than even an ultra short term bond fund.
What anyone does with their portfolio depends on their unique situation. I view the fixed income part of things as a necessary evil of sorts. It is not going to exhibit much growth. That's the "evil" part. The necessary part is it lends stability and income, which depending on your age is important. So as to the stability part, if I can peer into the future, with the help of experts, and see that increases in interest rates will negatively affect the NAVs of bond funds, why not side step this risk of loss?
Hottiebee,
I know Bluce knows his stuff...I just used it as an opportunity to smack Da Brink...
Love,
tfb
Terri: Bob has been on short bonds since the "Taper Tantrum" in early 2013 I believe, maybe Honey can verify.
Check the 10-year Treasury rates here. Click the "5Y" on the top and see if you can figure out from the chart when to get in or out in the future. Nothing ever goes in a straight line.
FWIW: I have skimmed some of my bond holdings in recent weeks, but I've gotten all that intermediate-term interest in the past five years that Bob missed out on because he has been short, and thought he could time interest rates. He's as lousy at that as he is at timing the stock market.
Also FWIW: All bonds don't all move in lockstep with published rates; different bonds act differently, some more sensitive to rate swings than others. If memory serves (but it can be shaky) during the financial crisis the total bond market was down 10% (?? not sure, but somewhere there), but Treasuries were actually up.
My best BF is PTIAX, which holds mostly mortgages and munis. It is only down .29% YTD, with an SEC yield of 5.22%.
The Fluffy Bunny and Honey: Bunny, you are quite correct. But to hedge my position a bit, I didn't start listening to Blinker until 1990 so I can do a left-wing (or Brinker) sidestep here and say that my post was correct, lol. But as soon as I read your '87 thing I remembered Honey mentioning it numerous times here. So we're ALL correct. Well almost . . .
Speaking of fuzzy little animals, where has our Beloved Bacon Boy been lately? Is he still counting the piles of money he made from following Blinker's QQQ call?
Smack away tfb. He asks for it with his smug attitude. He has a microphone and (obviously) knowledge. So often it seems he uses those opportunities to tear down others.
Does Alan Blinder drink during his Brinker interviews? He always sounds
like he's swishing liquid:)
.
Great report crediting the almost 300 point gain in the Dow today to the latest on the China trade agreement. Charles Payne video with commentary also at this link
FoxBusiness
Dow back to 25,000 again - S&P at 2733.
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TFB and Bluce:
You are both right! You will both pass the Honey's Blog Final Exam with flying colors! :)
I might just post this GIF over at the Morningstar brinkerbot thread. Those folks are easily entertained.
https://twitter.com/MorningstarInc/status/998673035623354368
JC
Thanks Honey!
Angie: I noticed something amiss whenever Blinder was speaking also. I assumed he was eating, didn't even think about drinking. Either way, it sounds gross and I think is Rule #1 for being on the radio: DON'T DO IT.
Your guest summarizer gave the radio host a pass by not calling out Blob for being the bomb thrower that he really is.
The factual account of Marian from South Bend's call is that she asked the rhetorical question, "Why give government more money to waste?"
She DID NOT propose the end to Medicaid as the selectively deaf radio host interjected, smugly, as if to impress Dr. Blinder of Princeton with his Bach. of Arts faded paper.
And of course the band played on with Boob's premise as the chorus, with Doc. and Boob attempting a firsts, thirds and fifths harmony with only two boobs.
To paraphrase, "If the agenda doesn't fit, you must acquit." Or in this case dump the caller.
Honeybee,
Thank you for your kind words about my postings about Brinker on the Morningstar website. It's been kind of fun watching the Brinker-lovers come out of the woodwork to tout his praises, and to see them try and shout down those who tell the truth.
The best post in the Morningstar thread suggested that Brinker could be replaced by artificial intelligence; that is, a "Brinker-bot" who could live-host his show. And the AI Brinker-bot would be more interesting and informative than Brinker himself.
My investing education to date is diverging from Brinkers. I agree stock picking is a tough route and fraught with risk. We hear of only the winning picks. Current day markets are full of experts guiding some portfolio or fund. The market is expert analytical staff competing with another. So, markets are efficient and prices are almost always true to value. This is primary reason for Bogle brilliance of investment advice. Sure, there is allowance for higher risk and more volatility, but again this is already factored into price of share. Value stock over the long run should do better, but this is why they are cheaper. You have to be patient. Your market investments are highly impacted by tax law, so for this post I'm only concerned with the tax advantaged accounts.
I've come to value the financial advisor experts and do prefer they make changes to my account on a timely matter. It's just easier and I feel more secure as I've vetted their expenses and long term track record.
Stats have stocks outperforming bonds 85% of the time within 15 yr over yr intervals. So, for long time investment, bonds are usually a drag. It's not that bonds can beat stocks it's just when that happens it's marginal as compared to the huge beating bonds take within that 85%. So, even a retiree should be invested in stocks to gain over inflation, especially if they are just retiring. A VTI or S&P 500 should do great over most time periods.
The problem with today's stock history, is the data is polluted with a very abnormal 8 year bull run. An historical abnormality. Looking at 10 year periods VTI looks great and worry free. Vanguard has the 15 year period when looking up stocks. A big difference to capture part of the Bubble Bust. VTI ten year 9.26%, 15 year 6.6%. If you look at the historical data '85-'17 for real CAGR (above inflation):
60/40 6.9%
That is good. Lower risk and less volatility. So, how about utilizing the experts to pick bonds and stocks. Know that Wellesley and Wellington have been in the business longer than all and have tons of historical real data. Also, know the Ulcer Index is a good measure for what retirees fear most. Prolonged down values.
60/40 6.9% 1.53% Ulcer index
Wellington 7.8% 1.85%
Wellesley 6.8% 3.18% bigger percentage is less ulcers
Also, know or beware of book sales, radio hosts, and web advice as they all need to sell you something new. They make their money impressing and communicating the golden nuggets that will make your rich or they will present the tidbits to make you think so. In this case the less you pay, probably the more unbiased the info. I know "The Land of Critical Mass" show is free, but it is basically an infomercial. The less spent on confidence building, meaning money they spend to instill confidence in their serves, the more impartial, objective, and valuable. IMHO.
OT (well, maybe somewhat related because it cites Steve Jobs and Steve Wozniak).
I know - it's a reach - but you might find their initial careers "interesting".
Early Hackers Used Whistles From Cap’n Crunch Cereal Boxes
You can draw a line from the tiny toys to Apple Inc.
by Anne Ewbank May 18, 2018
https://goo.gl/anPFRM
JC
FJ Butter said:
"I know "The Land of Critical Mass" show is free, but it is basically an infomercial. The less spent on confidence building, meaning money they spend to instill confidence in their serves, the more impartial, objective, and valuable. IMHO."
-------------------------------
Hmmm..It reminds of the lyrics from Steely Dan's "Babylon Sisters"
We'll jog with show folk on the sand
Drink Kirschwasser from a shell
San Francisco show and tell
Well I should know by now
That it's just a spasm
Like a Sunday in T.J.
That it's cheap but it's not free
Just something I found amusing: On the bottom of page 3 of the May Marketimer Newsletter it says Bob is maintaining a fully invested position in the equity portion of all his model portfolios.
You are always fully invested in the equity portion (if any equity portion) of ANY portfolio. Otherwise it isn't an equity portion.
For some reason that reminded me of an encounter I had a couple weeks back. I said to a wiseguy "Can I ask you a question?" To which he responded "You mean another question?"
Okay, it dawned on me that Bob isn't necessarily fully invested in the equity portion of any of his model portfolios. Maybe he's just saying that he is. But surely Bob wouldn't do such a thing.
When was the last time you heard Bob say? "trees don't grow to the sky"
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MK,
In general, when Brinker (or I) say fully invested, that refers ONLY to equities - not bonds or bond funds.
You are making this too complicated. He made that statement in Marketimer about the "equity portion of all Marketimer porfolios" for a good reason.
The bond portion of balanced portfolio III now holds 20% of it's bond holdings in cash - VMMXX, money market.
Stock buybacks,dividends paid or reinvested, CEO comp and board actions.......still disenfranchising shareholders with "internet only" SEC approved access to proxys and voting
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Jerrod,
Not a good day much of anywhere in the stock market, but Dow seemed to get harder than the other indexes.
This is how Fox Business saw it:
Stocks retreated on Tuesday as President Donald Trump reignited trade jitters when he said he was unhappy with the recent discussions with China
Hmmm..It reminds of the lyrics from Steely Dan's "Babylon Sisters"
Actually Brinker remands me of a song by Cher:
Gypsies, tramps and thieves
tfb
Will the stock market have a tariff tantrum?
Folks, what am I missing?
Why stay in bond funds? In a rising-interest-rate environment, aren't they guaranteed to lose money?
My Vanguard bond funds have durations of 2.6 to 6 years.
Is the John Bogle interview in BARRON's on the BB recommended reading list? critical and defensive Q & A with J.B
Lawrence, you're not missing anything.
can not buy the Vanguard prime money market fund thru fidelity
they offer a lower paying FZDXX
no explanations
Natasha here
Terri
About short duraction. I have had a five year cd ladder for years. But starting in2018, as cd’s matured I have started a one year ladder of treasuries. I also took a couple of somewhat longer duration cds that did not have enormous early withdrawal penalties and cashed them in. I am going to wait out the rest of the long duration cds because the early withdrawal penalties are horrible.
Natasha here
Hey guys
Does Brinker say a bear is twenty percent down from
A) all time high
B) most recent 52 week high
C) highest since the beginning of the year
D) most recent two month high
What does B.B. day?
Also what do you say?
Lawrence wrote: Why stay in bond funds? In a rising-interest-rate environment, aren't they guaranteed to lose money?
The short answers:
- Nothing moves in a straight line, including interest rates, and all bonds do not necessarily react the same to rate changes. Generally, if you hold a bond fund for the published duration (years) of the fund and re-invest the income, the value of your holdings will balance out once you reach the stated duration in years.
- If one only needs the income, then the value of the underlying bonds in the fund don't matter that much. Just take the income and don't check your portfolio value. Or buy individual bonds and hold them to maturity. *
- Bond prices, being generally more stable than stocks (especially short duration bonds) are a good buffer for stock market volatility. **
- If you can't stand any volatility from holding bonds, then use cash to buffer stock prices.
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* FWIW: Something I just recently noticed, not sure if this is usually the case or not: FDIC CDs pay more interest than equivalent-maturity Treasurys (neither have any real-world credit risk).
** By memory, not sure of the exact numbers: During '07-'09 the overall stock market fell about 55%; the bond market fell about 10% -- but Treasurys (the proverbial "Flight to Safety") were actually in the plus column.
Lawrence asked: "Why stay in bond funds? In a rising-interest-rate environment, aren't they guaranteed to lose money? My Vanguard bond funds have durations of 2.6 to 6 years."
This is a personal decision and there is no right or wrong answer. The problem is that getting in and out of bond funds requires two market timing decisions. In 20-20 hind sight, a good time to get out might have been around September 2017, or the year before. Brinker moved too early, mistiming his move to short duration back in 2013 just before intermediate term bond funds regained their NAV after losses during the taper tantrum.
Is getting out now too late? Intermediate term interest rates may or may not rise much more from this point onward. If you get out now, how will you know when is the best time to get back in?
Studies show that the impact of interest rate fluctuations tend to average out (so that you earn just as much as if there had been no interest rate change) as long as the fund is held for a period of time somewhat longer than its duration. Some, with a long-term investing outlook, would say they don't mind losing money in the short-term in order to either (a) make money in the long-term or (b) avoid losing more money in the short-term. We know that from time to time bond funds can lose money, but certainly less than our equity funds. Thus, some just do not worry about it and rebalance as needed.
What should you do? No one can know what would be the optimal course of action.
Hi Honeybee,
I sent a posting message yesterday (Fri). I'm not sure if you received it?
natasha here to lawrence
Yes, I think the idea from BB is that bond funds with a duration of 2.6 to 6 years would be likely to lose money.
honeybee, I hope I am checking the right boxes to be posted. I do have a gmail account. But hopefull just marking Name and entering something there does the trick?
Honey . . . ? Anybody home?
Can't wait until Cletus and some futurist get on the radio Sunday afternoon, no doubt from the tippy east of the east coast (Yale-Harvard-NJ Gaming Commission).
Wait, hopefully the guest reports from even further east, across the pond, munching on biscuits in the UK so Clem can claim "He's burning the midnight oil just for us."
Not Likely? Ok, but where's the big shindig in Henderson, NV that a fading shyster needs to appear at, other than for the free drinks?
Testing 1-2-3.
Anybody home?
Laerence, given that medium and long term bond funds are likely to decrease in value with expected interest rate increases I am not compelled to invest much in them.
I'm only about 20% in bonds and cash right now. A third of that is from the bond portion of the Vanguard Wellington fund. Another third is in THOPX.
Will BB be live today? Here's recent history ....
May 27, 2018 ????? Live Today ???
May 28, 2017 Taped Calls
May 29, 2016 Live; although following week (6/5) Tom Vacar
May 24, 2015 Live
May 25, 2014 Live
May 26, 2013 Neal Godfrey Live
"Honey EC: When corporations buy back their own stock, isn't that a good thing for the price of shares - consequently for shareholders?"
I am with Bob on buybacks...derived mostly from observations of my companies and those of fellow financial executives. Buybacks are almost certain money for recipients of significant stock options and "occasionally" stock holders. The most recent performances of buyback timing and prices demonstrate how uncertain this strategy is for long term holders of a stock subject to significant buyback activity. GIS would be a poster child for this conundrum...I believe management teams avoid risk of their decision making for deployment of funds through buybacks. I would prefer that if they cannot identify reasonable risk investment that they would allow me to make the decision of when/if to purchase stock in the entity...
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