August 26, 2018, Bob Brinker's Moneytalk: Summary, Commentary and Advice

August 26, 2018....Bob Brinker live on Moneytalk today.....(comments welcome)

HOW FAST TO DOLLAR-COST-AVERAGE INTO STOCK MARKET NOW

Caller Mike from Los Angeles said:  "You are not on live on KABC in LA....(BB claimed that it is live "sometimes" - he is wrong.) I have a large amount of funds ($350K) I want to invest in portfolio III. When you talk about dollar-cost-averaging...you typically suggest, four, five, six pieces.  A little background. We just passed this last week the longest bull market run backing up the '90's. I'm anticipating, based on your  newsletter (Marketimer) which was helpful - in your October letter a year ago, you said to anticipate a mid-term set-back this year so I took advantage of that. Thank you very much. That helped pay for the letter many times over. Anticipating the market topping say in the next year, year and half, how many pieces should I be breaking my money into?" 

Honey EC: Brinker didn't mention that when stocks had the 10% correction in February that he sent out a bulletin stating that he was looking for a retest of those lows before issuing a new "buy-signal." That is all water under the bridge and he has moved back to old buy signals - leaving out the repeated mistakes in 2008-2009.  Jim eloquently explained in the comment section today:

Jim Wrote: 
"If caller Mike took advantage of the mid-term "setback" this year then he wasn't paying attention to Brinker who advised to wait for a retest. It seemed Brinker didn't want to talk about the current year correction but instead chose to mention prior year buying opportunities that he was able to identify. I wonder why. LOL"

MARKETIMER'S FIXED INCOME HOLDINGS....Brinker's reply to Mike: "I would say on model three on the fixed income side, I don't regard a need for DCA....We have largely inoculated that fixed income side by selecting short-duration portfolio assets. In fact, our average duration is less than one year....and the current income on that portfolio stands at a little less than 3%...…"

INTO EQUITIES.... Brinker's continued reply to Mike: "On the equity side, that comes down to your tolerance for risk....The fact is, if you are going to DCA money in, you want to do it in a way where if something goes awry in the market, you are not going to panic and do something that's going to be counter-productive. So I'd move it in on a schedule that you are comfortable with in terms your tolerance for risk - and that would be the key."

IT MUST BE FUN TO BE A PAYING CUSTOMER SO YOU CAN SHARE SECRETS WITH NATIONAL RADIO TALK SHOW HOST.....Honey EC: IMO, it is really scummy to leave out the vast majority of the audience while sharing long calls with subscribers about Marketimer portfolios - in hopes of pulling in  a buck or two on the dangled carrot. Let me clarify:  Brinker's model III portfolio is roughly half equities and half fixed income. He holds only two bond mutual funds,  and as he has repeatedly said, Vanguard Prime Money Market on the fixed income side. Today Brinker described the duration and income from portfolio III fixed income holdings. The ONLY reason, he is getting 3% income on those two bond funds is because they contain high-yield junk bonds!  Where else would he get 3% on one year duration? 

CORRECTION IN 2018 LASTED NINE DAYS.... Brinker comments: The January/February 10% correction last a total of nine days.....We are looking at a market that is basically the longest cyclical bull market ever - we are at 9 1/2 years. ==> dRahme's Audio Clip: Brinker's stock market history comments, "Secondary Buy Signal" 

BRINKER'S NEW INVENTION: "SECONDARY BUY-SIGNAL"...==> dRahme's Audio Clip: Brinker EXPLAINS new term for giving buy-signals while fully invested.

Honey EC: While I understand his embarrassment at the illogical and obvious scam of selling "buy-signals" while he has all followers, and model portfolios, fully invested, this only makes him look more foolish and desperate (in my opinion). Brinker's newly-minted "Secondary Buy-Signal," which he explained means to invest new money while already fully-invested, makes almost no logical sense to anyone who thinks rationally. 

INTEREST RATES-INFLATION.....BB comments:   Fed Chair Powell not concerned about inflation, but will gradually keep raising interest rates. PCE Index is now at acceptable almost 2%...Fed fears deflation....deflation is the "worst thing that can happen." 

FED DUAL TRACK...BB comments: With the Fed on dual track right now, this has never occurred before: raising interest rates and Quantitative Tightening.

BRINKER READS FROM MARKETIMER: THE INVERTED YIELD CURVE.....Caller Marty from Kansas City asked Brinker to explain why he used the Fed Funds to diagnose a possible inverted yield curve. Marty cited the August issue of Marketimer. Brinker explained and read a WHOLE PARAGRAPH FROM MARKETIMER.  ==>dRahme Audio Clip.....

NEW HOME SALES.... BB comments: "We have seen some sluggishness come in to the   ….new home sales market still okay==>dRahme Audio Clip:  New home sales, inventories rose, existing supply steady; median new home sales price decline 1%; Year-over-year GDP 2.8%. 

KUDOS TO BRINKER FOR AN ACCURATE GDP REPORT….BB said: "The initial quarterly increase for second quarter GDP which was reported at 4.1%. The consensus revision is 4.0, and the range is 3.8 to 4.2.  "Right now, year-over-year rate of real growth in GDP is 2.8%. If this number comes in close to 4%, there shouldn't be any change in that critical year-over-year number, which is the actual annual growth rate of the economy - adjusted for inflation. Now standing at 2.8%. That will come out on Wednesday morning." 

SOCIAL SECURITY SUGGESTIONS... Caller Marty from Naperville has a suggestion for shoring up Social Security. BB reminds him of George Bush's suggestion to put some funds in the stock market - which clearly would have been profitable...…==>dRahme's Audio Clip (scroll half way).

NEXT WEEK IN THE CANYONS OF WALL STREET: ==> dRahme's Audio Clip

FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY

Bob’s third hour guest on August 26, 2018 was Professor Adam Tooze.  He is a professor at Columbia University but today he weighed in from Berlin.  The prof has written a number of books and his latest is titled: “Crashed: How A Decade of Financial Crises Changes the World.”   

Oh boy … regular readers know what comes next.  All together now, “ANOTHER BOOK ABOUT THE 2008 FINANCIAL MELTDOWN??”   Yes, unfortunately.  Adam Tooze joins the very long Conga line of third hour guests on this overworked, overanalyzed topic.   Who chooses these guests?   Does Bob think this topic is still of interest after nearly 10 years?

Thankfully they didn’t spend the whole interview rehashing the financial crisis. 

Bob said the Bear Stearns bailout in March of 2008 should have been a warning shot, but it did not accomplish any substantial protective measures.   No kidding.  Someone (who was that?) saw no major consequences for the stock market and kept recommending adding money as it declined.   There was some discussion of Lehman Bros.  The guest speculated that the head of Lehman might have seen the Bear Stearns bailout as a good omen but the rug was pulled out when the powers-that-be in government said “fuggetaboudit.” 

Bob asked if the Fed fulfill their role as the lender of last resort.  The prof said yes, the Fed lent trillions to US banks and to foreign ones as well.  These loans were collateralized.

So, why is the Fed demonized, asked Bob.   Answer: all this lending revealed a disconcerting fact:  Money has no tangible underpinning, i.e. gold backing, it can be created out of thin air as illustrated by the Fed granting credit where needed.    

The only caller was Dan from Des Moines who (I think) asked a question but it was hard to discern.  Fortunately the guest untangled it for us.   The Fed is focused on inflation, but in today’s economy where the internet and all the business associated with it enhance our ability to find out prices – inflationary pressures are eased.   The answer went on to describe how deflation hurts debtors, and the consequences of deflation on any equity one might have in their home.

There was some talk of reparations following World War I.  (This was the subject of a different book the guest wrote).  The US had loaned money to the UK and France, and they needed payback from Germany to pay the US.  The consequences were foretold by John Maynard Keynes who was an observer at the Versailles conference.  He wrote afterward that the harsh reparations would sow the seeds of another major conflict. 

Bob brought up tariffs by saying “My aim is not to get political in any way …”   The guest played off this and said he is surprised the current administration went after so many countries all at once.   There was good reason to try and deal with China, but not a good idea to “lash out” at everyone. 

How many more authors are out there in the weeds with a manuscript on the 2008 meltdown?  How many will get published and find themselves guests in the third hour?  We will know in the fullness of time.   As for me – what the heck,  these summaries all pay the same.

Bob wrapped up at 3:51.  

Honey here: Thanks Frankj. For me, the words "lashing out"  used by so much of the Trump-hating media, told me all I needed to know about that guest. As for Brinker claiming he wasn't "aiming to be political," how stupid does he think his audience really is? (Rhetorical question!)

As always, I bristle when I hear Brinker singing the praises of John Maynard Keynes - but that subject has been discussed in the past when he used to do it almost weekly. 

CHARLES SCHWAB MARKETS REPORTS AT CLOSE FRIDAY: 

U.S. stocks finished the week in strong fashion as market participants seemingly had a dovish take on Fed Chairman Jerome Powell's Jackson Hole speech and as business spending reportedly rose for the fourth-straight month. Treasury yields ticked to the downside, gold and crude oil prices advanced and the U.S. dollar declined...….

The Dow Jones Industrial Average (DJIA) advanced 133 points (0.5%) to 25,790, the S&P 500 Index increased 18 points (0.6%) to 2,875, and the Nasdaq Composite gained 68 points (0.9%) to 7,946. In moderate volume, 611 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.89 higher to $68.72 per barrel and wholesale gasoline was up $0.01 at $2.07 per gallon. Elsewhere, the Bloomberg gold spot price added $19.79 to $1,205.35 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.6% lower at 95.13.

Markets were higher for the week, as the DJIA increased 0.5%, the S&P 500 Index advanced 0.9%, and the Nasdaq Composite jumped 1.7%.

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August 19, 2018, Bob Brinker's Moneytalk: Summary, Commentary and Advice

August 19, 2018....Late today, but Bob Brinker was live on MONEYTALK.....(comments welcome)

STOCK MARKET.... Brinker made no comments about what the stock market did last week, or that we are not far away from reaching the all-time-high set in January. He's still looking (hoping?) for a correction this year.  He has made no changes to his fully invested equity allocation and continues to advise callers to do the same - balanced for those near or in retirement. 

HONEY'S FINANCIAL MARKET REPORT:  DJIA finished the week up 1.4% to 25,669, with the S&P 500 Index up to 2850.13 - and is now up about 6% YTD; Nasdaq dipped 0.3% to  7816. 

The 10-year Treasury Note flat at 2.86%;  the U.S. dollar traded lower; gold and crude oil prices were higher. More jobs available than qualified applicants. 

STOCK MARKET CALLERS:

==> Caller Mike from Illinois wanted to know if he should put $50,000 new money into his mortgage or into the stock market.  Brinker found out the mortgage was 4.65% and told Mike that paying it off would be a guaranteed return. (Honey EC: BB made no comment about stock market to Mike, but we all know he can't guarantee anything about it.) 

==> Caller Charles from Indiana and retired, said his allocation was about 70/30. After some more questioning, Brinker found out that he was more close to 50/50 and that was what he recommended for retirees.

==> Caller JoAnne from Chicago, a single, retired, 62 year old teacher with a pension of $71,000 per year, sold a house in Illinois and wondered if she should dollar-cost-average into the stock market with that money using Marketimer model portfolio III...... 

…...Brinker spent about 10 minutes  finding out all about JoAnne. He found out that she was going to be living part of the year in Florida in a new home she just bought there, and part of the year in Chgo using Airbnb. But right now, she is staying with her brother and is flying off to Europe.  Brinker also checked to see if she had plenty of "contingency money" but got so involved in talking to her, he never actually told her whether or not to dollar-cost-average, but he did recommend Vanguard Prime Money Market Fund to her. 

MARKETIMER MODEL PORTFOLIOS.... Brinker told Charles from Indiana that even though Marketimer model portfolios use mutual funds, with a large percent in the Vanguard Total Stock Market Fund,  he has no problem with using the ETF for it instead of the fund - symbol is VTI. 

BRINKER'S BOND DURATION ADVICE....Caller Nelson from Beaverton said he invested in Vanguard Total Bond Fund and wanted to know if the duration was too  long. Brinker said that the duration was 6 years, so if interest rates go up 1%, the fund would go down 6% - but adding back in the yield of 3%, that would equal a total of a 3% negative return.  Brinker ended by saying that "some don't care" about the net-asset-value because they are only interested in the dividends. 

Honey EC: Perhaps one of the BRT (Blog Research Team) knows how well that fund has done over the last five years. 

IN HONEY'S OPINION BRINKER BOTCHED BOND TIMING.... Honey EC: Brinker first moved to very short duration bond funds in 2013. That was a costly mistake for those who followed him down that path. He is still on that same path, but it looks like rates are finally going up.   However,  it is now too late for followers to ever regain the opportunity-costs loss of his short-duration moves. 

Here is an article that presents PROFESSIONAL analysis of why it is a mistake to keep duration too low: Charles Schwab: Are Your Bond Holdings Too Short

FEDERAL RESERVE....Brinker commented that it is "highly probable" that the FOMC will raise interest rates to 2.25 at the September meeting - rate increase number eight. 

NEW JOBLESS CLAIMS....BB commented that jobless claims (new) are the lowest in almost 50 years....Tight labor market - very strong. (Honey EC: We now have the lowest Black and Hispanic unemployment ever, and lowest women and young teens unemployment in over 50 years.)

HOME SALES.....BB commented that  home sales are expected to be up - new home sales contribute a lot to the economy. 

==> dRahme AUDIO CLIP: Home sales; FOMC meeting next week; Vanguard Prime Money Market recommendation; jobs market

ITEM: ILLINOIS DOESN'T TAX TEACHER PENSION....Don from Illinois, a retired teacher (who uses Marketimer model portfolio III)  asked about having fixed income investments in non-taxable accounts.  He made the statement that Illinois does not tax teacher's pensions. Brinker advised him to have fixed income investments in tax-sheltered accounts and equity investments in non-tax-sheltered accounts. 

FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY

Bob’s guest this Sunday August 19, 2018 was Olga Mizrhai, author of the book, “The Gig is Up, Thrive in the Gig Economy.”   (The subtitle is actually longer but I am continuing my boycott against annoying and overly long subtitles.)  She is an instructor at University of California at Irvine in digital something or other.   The book was issued in paperback in February 2018.

The “gig economy” is project-based, temporary (employment) and on-demand in nature.  She characterized it as 1099-type labor.  She referred to participants as “giggers, ”  and asserted that both “giggers” and traditional employees no longer feel comfortable with long term employment. 

In a short discussion of a chapter called, “Reviews, Rejection and Redemption,” the author said everybody is getting reviewed.  Uber drivers review their passengers.  (Probably not a bad idea given the number of nutcases out there.)  She cited an example of the burger chain 5 Guys which in the DC area uses a temporary employment place to get temp employees.  These temps review the manager they work for.   As a professor, she gets reviewed and she said anything other than a 5 star review is a “fail.”

Bob seemed skeptical about the veracity of reviews.  How many of them are legit and how many are postings by one business trying to trash another one?   As part of her answer she mentioned the internet review site, Yelp which she indicated needed to do a better job of screening reviews. 

Bob from San Francisco, who is a repeat caller I believe, asked what I thought was a good question:  “If you could turn back time to the period of long term employment, a pension and a gold watch vs. the gig economy… what would you do?”  

She ducked the question.  She said contract workers are no longer stigmatized as they once were.  They no longer get a broken chair to sit in and now get invited to meetings instead of getting ignored.  She ended up saying it wasn’t possible to turn the clock back. 

Toward the end of the interview there was a little talk about the safety net for contract employees.  An association of contract employees is trying to make disability insurance available.   As for what she would like readers to take away from the book, she said she’d like to hear from them on their experiences. 

Bob wrapped up at 3:50 pm which is a little earlier than usual.

Honey here: Thanks Frankj…..Great job of making a silk purse today. :) 

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August 12, 2018, Bob Brinker's Moneytalk: Pre-recorded Monologues and Repeated Old Calls

August 12, 2018....Bob Brinker was not live on Moneytalk....(comments welcome)

In Bob Brinker's absence today, here are some investing tips, ingenious analysis and great humor sent by top-notch gurus on this blog - for your enjoyment and entertainment:

TODAY'S "WORN-OUT RETREAD" PROGRAM, COPYRIGHTS AND BANANAS:

Vegas Vulcanizing has left a new comment on your post 

Could hear the deafening whine generated by those worn-out retreads on the greasy Clinker Highway today. Gosh, even the roadkill and the empty beer cans were stale leftovers from days of yore. Could feel a snooze or an oil change coming on rapidly, whichever arrived first.

But then my head jerked back, as if yanked into the present rudely by an audible screech, by a comment seemingly spliced and diced into the trailing entrails of the radio show's first hour. It was a pin prick heard 'round the world, "From the islands of... to the shores of... (you know the drill)"

The radio DJ said, with an intentional Hollywood dramatism (quoted loosely, haven't seen the instant replay yet) "...and our broadcasts are...(insert drama) copyright...(more drama) protected."

What's that supposed to mean? Is it that people can't discuss what he said because if someone didn't hear the original broadcast with its commercials then it's a copyright steal to tell them? That sounds like dumbass logic to me, as is his statement.

If he's not reading the latest M* thread and intentionally commenting on it, I'll be a monkey's uncle. Got a banana? 

LOOK AT PERCENTAGES, NOT NUMBERS:

birdbrain said...

I have informally advised more than a few folks over the years about investing and an saddened with the lack of basic mathematic knowledge that has been heard.

Investors may hear on the news "the Dow fell 100 points." Is this bad? Terrible? No big deal? As I say, you need to look at the percentage change. Had the Dow been at 1000, that would represent a ten percent decline, a financial earthquake for a market index. With the Dow currently over 25000 it would take a 250 point drop to represent only a one percent slip.

Unless you trade equities (as I did in a former life), and have a long term term outlook with your retirement account, look at market moves on a weekly or quarterly basis. Forget the day to day gyrations. More often than not after five days of wild swings the index you follow will be close to where it started.

Thank you for attending. Class dismissed.

July 31, 2018 at 11:49 AM

 

BOND INVESTING, BALANCED FUNDS AND THE ENERGIZER BUNNY:

Trees said:

I read of the benefits of pivoting from growth stocks when they are high priced to value and dividend paying stocks. This is the category wherein Wellington lies.

Also, we read that bonds may have a weaker future given the expected interest rate increase over long term future. It may be better to be 70% stocks with bonds reserved for safe money.

We know how hard the bond market or income producing investments are, given Bob's costly investment advice to stay ultra short duration for some years now. From my personal research, my faith in knowledge of the income investment market is weak, but my faith in the Wellington's expertise is high. An active managed fund has better return in this category. May be do to the knowledge of real risk vs return and not just some radio host's easy talking point.

Also, these balanced funds have return opportunity to increase the bond or stock percentage within appropriate time periods. The one referred to does typically have low a percentage of foreign stock for same purpose to increase yield and lower volatility. Rebalancing the funds investment occurs not upon some random year anniversary, but upon intelligent time frame. For example, best to let winning bets run. Yet, it is wise to pull money from winners to invest in value such as our lower priced bonds at some point that I'm clueless to know.

I've moved some investments and have 50% of portfolio in cash. There isn't much cost to be in cash, now, since markets are going sideways. Better for the short term to be in the low interest trading account. Not for the long term, but for some buying opportunity if such appears. I think a boatload of investors are doing likewise and as a result no opportunity will appear unless? No one knows. My retirement plan was to spend down taxable IRAs before Social Security and that is a 5 year span. Most will advise to stay in safe investments for this short time period.

I'm thinking that the economy could do extremely well during the Trump reign and if so could be another 8 yrs after that. So, many good things that know one could have thought were possible. This Energizer bunny is pushing hard to MAGA. Those aren't empty words, apparently. We'll see in the long term if he can be successful. IMHO, everything is spot on. Early in the political campaign I liked the guy after hearing his management philosophy. Get the best you can get to do a good job and empower them to do so. This is good management to delegate and hold these people accountable, Trump knows how to market and manage the Left and their press. Politicians in general can't delegate as they have crafted their popularity and career gains by grabbing all the credit.

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