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. :)
Listen Talk Radio:TALKOFCONNECTICUT
99 comments:
LOL, how many times have we heard this monologue? I think I know it word-for-word.
Of course, as always, no notation that it is a re-run, leaving the duped listener to think it is live -- and any advice forthcoming is timely.
Good God, Bob Brinker, just quit already. You are off and defrauding your audience by not announcing you’re recorded yet again more than you are behind the mic in your home office in Henderson, NV. You don’t even have to drive to the station, just walk to the room in your own home. I guess that’s too much to ask. Please resign and retire so that Cumulus Radio can replace you with someone that doesn’t mind working one day a week, gives live, timely advice and is transparent. Please, Please, Please, Bob.
Jason
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Bluce, Brinker just arrived and went live at 20 minutes into the first hour - gave numbers and went to commercial.
Anyway, that's my take right this minute.
Thanks, it is unfortunate Brinker is no longer trying to be relevant. Do you have any recommendations on other current market commentators, that take what used to be Brinker's approach - a data based analysis of what the market is doing seasoned with personal experience and insight.
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Irishcajun...Nope, Brinker is unique. He's live right now - with a subscriber, of course.
He was late.
Brian Wesbury. First Trust. My Guy.
Pavlov’s Cat
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I agree, Jason. If he can't show on time and do anything besides sell newsletters, he's becoming an informercial - and not a very good one.
Caller toward the end of the first hour, retired Illinois teacher with $71,000 pension. Wow.
Mz. Bee: Have you checked your email lately?
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Thanks Bluce….No worries. Same old threats for two decades.....
They are the ones committing the crime by libeling me.
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FrankJ…. Illinois and California will some day need to have a Federal bailout because of public employees high-on-the-hog pensions and perks.
Notice that when Brinker tried to get her to say how many years she had worked to get that much, she wouldn't say. So even she can be embarrassed a little bit.
Teachers who have taught their whole working careers in Illinois may get what appear to be overly generous pensions. While teaching they also must self contribute to their pension fund but don't pay FICA taxes. The result is that at retirement they get pension benefits but do not receive social security benefits.
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Tab....Do you have any idea how many of us non-public employees would love the option of NOT paying into FICA all of our working life and simply adding that money to our "pension funds."
That is not an option for most peons not in gubmint.
How do you fix a debt problem? Borrow more money! That is Chicago's plan. The mayor's CFO cohort plans to borrow money at 5% and get a 7.5% return in the stock market. What can possibly go wrong with that brilliant plan? ;)
http://www.chicagobusiness.com/opinion/fiscal-storm-clouds-gather-chicago-seeks-questionable-shelter
"Chicago’s latest fiscal scheme is already making headlines at home and in municipal-finance circles. Late last week, Chicago’s chief financial officer and a financier close to Mayor Rahm Emanuel proposed the idea that the city would borrow $10 billion through a bond offering to shore up its pension system, using a dedicated revenue stream in order to persuade investors to come on board ..."
"Chicago’s bond offering would raise money for the pension system, where the money can then be deposited in financial markets to earn returns. The idea sounds simple. Chicago could borrow the cash, officials predict, by issuing bonds that pay between 5 percent and 5.5 percent annually. The city’s pension system, meanwhile, projects that it will earn between 7 percent and 7.5 percent annually in the market over the long term. By simple math, earning 7 percent on money that costs you just 5 percent is a winner. “It would be irresponsible for me not to look at it,” Chicago CFO Carole Brown told Crain's political columnist Greg Hinz last week."
FrankJ Two of my three pensions are from the Golden State. So...don't jinx me!
Take Care.
Gabe
I think a lot of us would prefer the type of pension that caller had from being a teacher in IL, vs. the puny "returns" of SocSec. Do the public school/public employee retirees in IL get a nice deal on healthcare? I don't know the answer to that but if they do then it makes the state pension all the more attractive. Finally, I don't think they pay IL state income tax on those pensions.
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FrankJ….I know for a fact that Teachers, and even school janitors, get full health care for themselves and "spouse" (or in CA anything else-in-the-house that passes for one) for life.
So Gabe, how are your taxpayer-funded race horses doing?
Here's one to sit up and take notice:
Before becoming LAPD chief, Moore retired, collected a $1.27-million payout, then was rehired
https://goo.gl/QFu6Xv
Can a person w/ self directed 401k buy call options. ie go long call options in the account ? Do 401k rules allow this ?
About the claim that teachers get lifetime health insurance benefits:
https://ed100.org/lessons/benefits
"At one time, many teachers received lifetime health insurance for themselves and even for their families as part of their compensation. Such benefits are now uncommon - by 2012 just 80 of California's ~1,000 districts provided any teachers with lifetime health benefits."
So that's about 8% in 2012. I doubt that's increased in the last 6 years.
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Unknown....So six years ago, many districts cut back. That is good news.
But they certainly didn't cut anyone who had retired before 2012.
Interesting conclusion...I don't have a graph available, but I doubt that they did a massive cut in 2012, this statement doesn't imply that to me. It's just common sense that the number of teachers not getting lifetime health care would have been tapering off over the years as various school districts dropped it. Can't say that for sure, but I'd be VERY surprised if 920 districts just cut this benefit in one particular year.
I'll look into and find how this changed...maybe I can find a graphic illustrating that.
Yes, these are contractural benefits. There are, I believe, some conditions where past benefits can be modified, such as bankruptcy, but it wouldn't be easy.
Bluce: Sure I'm using the system to optimize my just rewards. Who wouldn't in my position? I've paid taxes for sixty years to Sacramento right out of high school. I've been collecting two state pensions for 25+ years and proud of it!
Gabe
No pension here, but I am truly thankful for the "puny returns" of Social Security. Reviewing the SS statements for my wife and I, the lifetime payroll taxes paid into Social Security by ourselves and our employers over 48 years is approximately $200K. (I suppose that is in dollars of yesteryear; I will not attempt to convert to today's dollars.)
We are now at normal SS full retirement age 66. Assuming we each live to our normal actuarial life expectancy of 85-87, the expected combined lifetime SS benefit for our family (including SSDI payments to our disabled adult son based on our combined earnings records) is about $1.1M.
Would we have done better if the $200K had been invested privately over the years and used to buy an inflation-adjusted annuity at age 66 (if such a thing can even be found on the private market)? I don't know. The SS payout seems generous to me and we are grateful to have it coming.
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Plight....Something doesn't sound right in your numbers. Your "paid in" number is quite low unless you are saying you each paid in $200,000.
A friend just retired at 62 and paid in over $161,000 over less than 25 years - some of it part time.
Yes, this person is a professional CPA who knows how to invest and could have tripled the money she paid in - AND would now have a lump sum to invest!
To Illinois residents pretty much all retiree non-earned income including SS benefits are not subject to State of Illinois income tax.
HB: The numbers are what they are. As the high earner, my lifetime "paid in" number was $186K. Part of the reason that number is so low is that my high earning years were 1976 - 2003. (So taking into account many years of inflation, the present value of my "paid in" amount is much greater that $186K.) My earnings since 2003 have been very low. My wife has paid in little over her lifetime as she did not work much and has been the primary caregiver for our disabled son.
P.S. In my original post I should have stated that the expected payout of about $1.1M is in today's dollars, as calculated by MaximizeMySocialSecurity.com.
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Plight....I still do not see how your new numbers match with your first numbers unless your wife only paid it $14,000.
But I am writing summary now and don't have time to focus on it, so reserve the right to have read them wrong.
The strategic move for a couple is for the high earner(husband) to collect at 70 and the low earner(wife) take SS st 62.
The wife can later step up to her husbands maximum payout when he passes.
Nick the Mook
Gabe: If you "worked" for government all your life then you never paid any taxes.
You are a net tax consumer. It's just simple math.
One thing about SS is that the employer matches all employee taxes. It is widely assumed that the employees “pay”’ for the employer match through reduced wages.
So maybe eveybody on his thread who have quoted a lifetime SS tax should double it.
Caller toward the end of the first hour, retired Illinois teacher with $71,000 pension. Wow.
That is nothing in Illinois, nothing at all. As of 2017 the average teacher pension, according to IL TRS is 82,906, that number is annual increased by 3% or the rate of inflation, whichever is greater.
Another tidbit:
The average career pensioner will get back his or her employee contributions after just two years in retirement. In all, pensioners’ direct employee contributions will only equal 6 percent of what they will receive in benefits over the course of their retirements.
Source Illinois Policy Institute.
FrankJ,
The retired employee and spouse both get healthcare. They pay and average of 18% (2015 numbers) of the cost.
tfb
Bluce: I turned the racing barn over to my son who is now expanding the business to include breeding! I'm too old for the game and its nuances and so it was time to hand over the reins.
Gabe
Stinky said: "One thing about SS is that the employer matches all employee taxes... So maybe eveybody on his thread who have quoted a lifetime SS tax should double it."
In my case there is no need to double anything. The lifetime payroll tax I quoted included the employer match, as I so stated in my original post.
The Total Bond Market Fund was +2.17 for the last 5 years. YTD it is (-1.10%). Not great, but far from the disaster Brinker was predicting 5 years ago. I wouldn't hold my breath waiting for the 10 Treasury yield to go to 4.7% where Brinker thinks it should be.
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Thanks Jim! We know that Brinker has made so many changes in his fixed income portfolio since 2013 that it has become virtually impossible to make comparisons with funds that were in it when the changes were made.
Now he has 35% of it in the Vanguard Prime Money Market, so even if it was part of his performance record (it isn't), he would have an excuse for lower returns.
Jim: Ha, thanks for reminding me -- I heard Binky backpedaling today about interest rates too. It was quite amusing.
To get a one-year subscription to Binky's Egg Timer, click here and send $250 (cash only) to:
Binky's Stock, Interest Rates, and Egg Timing Secrets
P.O. Box 666
Skid Row, NV
Yes, Mr. FritzZener, quote everyone else's work in your "posts". Too chicken to take a stand either way.
HB, this is an example of goofs who are even weaker than me. I never use my real handle, but these guys are so lame they hijack someone else's handle when they lame-post.
I posted under "Fritz" and "Zener" before, so the goofball hijacks both. The term Zener is obscure because it's an electronics component lingo that nobody ever mentions, so he did a Russian on it.
Notice his posts. they're always inflammatory news reports, nothing that he claims credit for. At least Putin claims, "I'm the boss."
In regard to Social Security, folks tend to think of the SS program as only a retirement plan. If we are lucky enough not to become disabled or die when working SS will provide us with some retirement income. However, it also protects us in other ways as listed below.
1) Retirement benefits
2) Disability Benefits
If you haven't reached retirement age but have met the work requirements and are considered disabled under the Social Security program's medical guidelines, you can receive benefits roughly equal to what your full retirement benefits would be.
3) Dependents Benefits
If you are the spouse of a retired or disabled worker who qualifies for Social Security retirement or disability benefits, you and your minor or disabled children may be entitled to benefits based on the worker's earning record. This is true whether or not you actually depend on your spouse for your support.
4) Survivors Benefits
If you are the surviving spouse of a worker who qualified for Social Security retirement or disability benefits, you and your minor or disabled children may be entitled to benefits based on your deceased spouse's earnings record.
The M* battle is re-joined.
“Jerry” needs to get a life.
Right, so Social Security is a massive welfare program that was designed to replaced the useful function that the private great Fraternal programs, that use to be the cohesive, multi-generational fabric of society use to fulfill. And the SS and the government stepped in to deliberately obliterate these organizations by eliminating their crucial purpose.
tfb
Yay Stinky!
Bluce: I don't know what you mean. I have paid taxes while employed years ago. Continue to do so presently. In thinking further, you may mean that the benefits outweigh the taxes I paid. If so, the individual namely myself, should not be held "responsible" since the benefit came along with the salary package.
Perhaps, you should have gone to work for the "government". During the time I worked and received those benefits, the wages were far less than the private sector was offering for my qualifications. Don't forget that......that is quite important.
Gabe
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Gabe...if you want more comments posted, please email me and let me know when you send them.
Otherwise, I will assume they are not yours.
Reading these Social Security observations I will chirp in with what I feel was a blown opportunity by this government. It is obvious that the sustainability of the program must be addressed with gradual early and full retirement age increases, means testing, higher payroll cap limits, etc.
The lowering of the US corporate tax rate from 35 to 21% has increased GDP but the drop in revenue along with the lack of spending restraint by this administration has forecasted annual trillion dollar deficits.
The missed opportunity was to not include with the corporate tax decrease an immediate one percent employer payroll tax increase from 6.2 to 7.2%, which would have had to been raised eventually. Employee contributions could be raised ten basis points annually to make a 14.4% total rate by 2030. This, along with other tweaks listed above would expand the longevity of the program.
To Frankj, thank you thank you. I was thrilled to hear of your hard fought victory on my behalf. Having reached my self-imposed two comments per month limit, I will let you know in September when I collect my windfall.
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Birdbrain said: "Having reached my self-imposed two comments per month limit, I will let you know in September when I collect my windfall."
Oh dear, Mr. Birdbrain! Is that a new rule that I did not get the memo about?
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Thank you, Stinky...
You are the kind of honest Brinker critique who the Brinker's (and bots) may start threatening too, based on my observations from past history.
Bob BrinkerSr has even gone so far as to (under an proven-anonymous alias) wish for the death of a critic who wouldn't shut up when threatened with copyright violations - because he simply didn't allow blunders (legal and illegal) to be covered up.
(Yep, I can prove that statement above with documentation. And I can tell you that I have been personally threatened, harassed and demeaned.)
"Jerry" on M* is just getting warmed up - but I will never respond to him, which makes him think he's hot "stuff."
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WhooHoo! Most of us like this headline from Fox Business:
Stocks hover near record highs
The S&P 500 finished the day at 2,857.05, a stone's throw from its record close of 2,872.87.
The blue-chip Dow Jones Industrial Average ended the session at 25,758.69, up 0.35 percent.
The tech-heavy Nasdaq Composite climbed 4.68 to finish at 7,821.01.
If we break through that SnP all-time-high, will Brinker then say he was wrong about a possible re-test of the lows that he is waiting for so he can send out one of those often-costly-for-followers "buying opportunity" bulletins?
Oh, well. There's always next year to "be vigilant" again. LOL!
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Linkless and listless....Why do you want that link so bad, yet you couldn't bookmark it?
Honeybee,
I'm not sure which post you are referring to (I've sent 3 previously).
On the 3rd/last post I believe I explained that I did bookmark it, but the bookmark is gone. (Maybe it is a glitch, maybe I mistakenly deleted it - I don't know).
As to "WHY" I am interested, it is because of this post from Stinky:
Blogger Stinky said...
The M* battle is re-joined.
“Jerry” needs to get a life.
August 20, 2018 at 5:19 AM
Honeybee, all I want to do is look at the Morningstar Brinker Forum for new messages. But, between (3 and now 4) posts here, Morningstar searches, Google searches, etc., I have now invested over an hour to no avail.
I have tried multiple Google search screens, for instance:socialize.morningstar.com › Forums › Personal Finance › Bob Brinker, but I keep getting error messages from Morningstar when I try to open the resulting URL.
My intentions are pure, but my heart, my will and my mind are becoming weak.
Things can't (or at least shouldn't) be this burdensome, can they?
If a Top Secret clearance is required, please advise and I will see if I can obtain one. I understand one or more are (or will be) available.
Thank you!
Long time lurker here.
Ran across an article talking about the performance of investing newsletters over time. Really good read:
https://www.aaii.com/journal/article/observations-from-decades-of-tracking-investment-newsletters
Hope this isn't a problem putting a link here.
Love the summaries, since I rarely can listen to the radio show.
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Linkless and Listless....Okay, I believe you are sincere. I have been getting a lot of harassing comments from what appears to be new trolls, and thought that you might be one. :)
Here is the link to Morningstar's Bob Brinker Forum. I am not sure what page it will land on. I tried for the last one - page 7.
I have been getting a lot of harassing comments from what appears to be new trolls
And sexual harassment from rabbits who attracted to Hottiebees...LOL
PARTY LIKE IT’S 1999
“Well we have the new numbers now in the federal government budget deficit widened in the month of July. The federal government posted a budget deficit of $76 billion, 900 million and that was even higher than the projection of the CBO. So, the fiscal year to date gap is now is $684 billion. We still have August and September to add to that, and for the first 10 months of the fiscal year, the federal deficit is up 20.8% on a y-o-y basis. The OMB is now projecting a budget deficit for the fiscal year ending September of $849 billion dollars.
Yes, this is during an economic recovery. Yes, this is what is normally called good times for the economy. This will be the largest fiscal year deficit since 2012, and if you look at the last 12 months, the last 12 months deficit of $784 billion is 3.9% of GDP.
We talked for many, many years about deficits and sustainability of deficits and the generally agreed upon number in the economic community is 3.0%. That it’s O.K. to finance a deficit up to 3.0% of GDP. We are higher than that, we are right now at 3.9% and rising. By the way, that’s the biggest number since 2013.
Over the past 12 months, federal spending has risen 4.0% while income has risen 4 tenths of 1%, federal income, revenue, whatever you want to call it. So, we are now outspending the increase in revenue by a multiple of 10. Increase in spending 4.0 -- increase in revenue 0.4 on a y-o-y basis.
Where is this coming from? Well, net interest payments are a big factor here, something that the government can not control. Net interest payments on the National Debt rose 21% y-o-y. That’s the fastest increase since 2006.
Defense spending, which certainly can be allocated by the government rose 5.5% y-o-y. That’s the biggest gain since 2011. Social Security spending was up 4.2% y-o-y and you know the problem there. We have fewer and fewer workers paying into Social Security relative to the number of beneficiaries and that is not something that has a happy ending unless changes are made to Social Security. No changes of significance have been made for a long time and the same goes for Medicare. We have the same problem with Medicare where the expense of Medicare continues to increase with adequate changes not made.
Most of the politicians don’t want to touch these issues, they consider them the “third rail of politics”. We’re in the mid-term election year and for the most part politicians are not going to go near these items prior to the mid-terms and who knows what happens after that. They’ve so far been pretty comfortable just ignoring them.
By the way, what’s going on with revenues? Why have revenues only risen by 4 tenths of 1%? Well it’s mainly the corporate tax cut because corporate tax collections are down 19.6% on a y-o-y basis. That’s the biggest drop since 2010 and that should be chalked-up to the reduction in the corporate income tax rate. The maximum went from 35 to 21. And as far as individual income tax receipts are concerned, they’re up 7.4 but that’s not enough to flow through because of the corporate reduction. Corporate reduction has pretty much eaten up that increase. Employment tax receipts on a y-o-y basis are down 1.1% which is a six-year low.
So why is that? It’s because wage growth in real terms is zero. We have 2.9% wage growth minus 2.9% CPI price inflation. 2.9 minus 2.9 equals real wage growth equals zero, and so that’s the reason for that.
So, all of that is going on out there and obviously mid-term election year elections coming up. You don’t want to hear politicians… You don’t hear politicians wanting to talk about this subject. They really don’t have much to say.”
Interesting review, thanks JJP. The author had a interesting thought at end of article. Nothing is to say the our country will do as good in the next 200 years as the last. I often think of this if looking at the historic S&P graph. The thought was to always be vigilant in our investment and to adjust with the times. There is no permanent portfolio that will continually work. Think of robo funds such as mtum, or tax harvest robos. Did you read of a new fund concept 90/50. The 90% side is safe income (bonds) leveraged 40% to stocks. The leverage is low risk and most think this type of fund could become popular. Not sure on setup.
One needs only to ask the question if indeed a financial business has the magic sauce, why on earth would they sell it to general public? This really gets funny when reviewing the get rich gurus selling easy ways to make money in real estate. By the way I read a piece on value of home investment. Just about the worst, yet realtors hype the benefit and public is fully buying the concept. A graph on percentage of net worth had middle class way over 50% something like 75% of assets in home ownership. They are buying way over their needs and speculating. Really, the financial markets can be had with much less risk and much better above inflation return. Yet the neighbors and friends not impressed with your statement as compared to expensive neighborhood or a new BMW. LOL, just met a retired couple of school teachers that are building a new house. They couldn't find one to buy. A expensive subdivision with large houses. They want to down size. The husband continues to drive school bus for income.
Read some interesting stuff- Vanguard Wellington or Fidelity Puritan? Paul Merriman had 8 benefits of Vanguard over the older Fidelity and a list of why Wellington was a better investment.
Honeybee, kindly check to see if my most recent post to your site has come through from yesterday Monday, August 20, 2018. I can resubmit the post if it failed to come through. Thanks
Honeybee,
I regret to hear of the hassles you are undergoing from the idjits out there and I apologize for the frustrations I vented about yesterday.
Thank you very much for the link you gave me which worked immediately!
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Brinker would say that only the close counts, but Fox News doesn't agree. This just out:
The S&P 500 index returned to an intraday record on Tuesday, surpassing its previous high of 2,872.87 points reached in January.
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Troll, GET A LIFE and GET LOST!
Stop spamming me with your low IQ garbage.
Binky, Hulbert, permission, fair use, newsletters, Stinky, etc.
Jerry on M* is a tiresome bore. Not worth engaging with.
.
Stinky....I agree. Not worth reading that repetitious tripe anymore. If I had a dollar for every time I have been threatened by whoever is posting for Bob Brinker now, I'd be rich.
Of course, I could guess REAL CLOSE to who exactly it is, but he's been doing it for many years, that I don't respond anymore. I used to tell him bring it on because getting discovery will be a bitch for him.
However, I did read the latest excellent commentary by someone who said he was involved in "setting type" for Hulbert's old Digest. That was very interesting.
Another thing. Most of you may not know that I have been doing this blog since 2007 and before that I wrote for Suite101 - Kirk Lindstrom.
I moved this blog from two prior locations for personal reasons, and if anyone wants the links to read them, just send an email and I will give them to you.
I'm told I have mellowed considerable - no doubt true. I used to call out Bob Brinker for all of his various shady and HIGHLY questionable activities.
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I hope that Gerry Camerond will not mind if I copy his great M* post about market timing over here where it will be read by more people who can benefit from it. Gerry really knows his Brinker history - just as Stinky does:
Re: Bob Brinker
08-20-2018, 8:17 PM | Post #3954350
As for Bob Brinker and his market timing blather, study after study has demonstrated that market timing is a fool's strategy.
Brinker himself demonstrated the fallacy after Black Monday when he permanently harmed everyone's portfolio who followed his market timing advice. Note that he only start's his portfolio tracking after that fiasco. A fiasco where he essentially sold out on weakness and then repeatedly bought back in at ever higher market valuations, thus getting both sides of the trade wrong.
Bravo, all hail market timing and the king of the lemmings, Bob Brinker. Those who were duped into the foolishness known as market timing could never make up for those losses. That is yet another problem with market timing. It is very punitive early on in your investing lifetime. Miss a few days out of the market and you can miss a major move from which you can never recover because you are forever deprived of the compound gains from that initial move.
I said my peace. I have little tolerance or sympathy for anyone ignorant enough to time the stock market given there is a wide body of academic evidence that refutes the very notion.
Now it would make for an interesting study to see if the same people who think market timing is a viable investment strategy also think Amelia Earhart ended up as a castaway on Gardner Island, believe in the Loch Ness monster, don’t think we landed on the moon, and listen to Jerry Springer. I am not saying there is a correlation, but it would not surprise me.
Using p/e ratio for market timing. Analysis of the return for this strategy usually calculates return by either in the market or out based on some p/e ratio of value. That is a bad comparison since most investors will go to bonds if out of the market. We need to calculate the total portfolio return utilizing this strategy. If utilizing a 20 p/e ratio to get out of U.S. stocks, the bond/market p/e timing does well, but not great. Investing in 10 year bonds did better since that term does better in down turns. This timing method did better than buy and hold. What was more lucrative was investing in low p/e international markets when U.S. markets overpriced. Very impressive returns to just move to stocks to geographical zone with lower p/e ratio.
Compare p/e market timing to what is being said by the current forecast for next 7-10 year returns. Given the economic fundamentals are fine, but this good news is already priced in. The experts predict muted returns for the next decade because of the long bull market, high priced stocks, and increase interest rates. Like it or not we need to forecast expected returns to adjust our financial goals/plan. This is most relevant to recent retirees given the next 10 years are critical.
Brinker-?
Bogle- 4% stocks 3% bonds returns for next 10 years. He expects 4% growth of stock with 2% dividend yield but cuts the total per an expected contraction to better priced stocks
GMO- 4.4% loss per year over next 7 years inflation adjusted (2.5%). Cash does well .9% and the firm said EM only bright spot with value EM advantage to be the biggest seen in two decades 7%. Know that this firm has a history of bearish returns, but did call the 2000 and financial recession correctly with the 2009 call to reinvest. Their current prediction would be typically accompanied by some of the worst economic regime and market crash imaginable. This occurs only 4.8% of the time in our financial history. The Great Depression, 1973-74 crash and the latest.
Morningstar- 1.8% nominal returns, 2.5% bonds. They expect international developed to do better at 5% same for EM 5%.
Research Affiliates- .3% inflation adjusted return, .8% bonds. A 60/40 portfolio just breaks even after inflation for next 10 years. Developed foreign MSCI EAFE 4.5% with EM going to 6%
Schwab- 6.7% U.S. large cap, 3.1% bonds. Foreign no better.
Vanguard- U.S. 3%-5%, 5.5%-7.5% non U.S. and 2%-3% global fixed income. Past 2018 expect higher risks and lower returns per high evaluations, low volatility, and low bond yields. Prospect for foreign equities are better.
So, what the experts are saying- Time the market per p/e ratio?
Trees: Are you not aware that there are mountains of real evidence -- academic and otherwise -- proving that market timing* is a fool's game?
* Jumping in and out of the market, favoring this sector over that sector because of what the gurus think, etc.
I'll just point out, again, that if you can get your portfolio to where you require a withdraw rate in the 1.6 to 2.2% range, essentially the volatility of the markets should be of little concern.
If you start out being disciplined early in adulthood it is very doable and at that point the various market voodoo forecasts are irrelevant to your finances.
You can do the math on it ans see why, but it isn't complicated.
tfb
My investment philosophy has always been to enjoy the game. I believe that one should avoid timing the market. Too, I believe in the 4% rule with inflation adjustments or to live on less that 4% if necessary. I follow John Bogle's method of investment for the long term and to rebalance your portfolio. HOWEVER, I deviate somewhat in that I also enjoy speculating with a small percentage of your portfolio in order to avoid becoming bored. Market timing by investors, I believe, occurs, at times. when folks get bored with their holdings. So that they will tilt a bit and make silly decisions with their investments. A lot of duplication of assets or over diversification.... which i call tilting.
So what I attempt to do is to carve out a small single digit percentage of my portfolio for speculation...money I can lose and not get upset.$100K is a good number for me for the year. I'll use it to buy and or sell stocks or funds or ETF's during the year. At the end of the year I'll see how I have done and either add to or subtract from that $100K for the following year. In sum, 95% is in serious investments and 5% in gambling money.
Return forecasts basically utilize the p/e ratio to foretell of lower returns. Then they factor in a possible hair cut. As I understand the higher p/e will always increase risk and lower returns as a general rule. Also, as a general rule stocks will outperform bonds 2x. I've read often that investors claim to hold during drawdown, but reality has it that few do. Also, factor in the 30 year investor vs 10 year. They must invest differently. Same for savers vs spender cycle. So, we time our personal need of capital with investments. The higher the need the lower risk tolerance. Would you temper your advice in a high p/e stock market with long bull cycle for those entering retirement given the first ten years are critical?
This is interesting http://mebfaber.com/2016/12/02/missed-780-gains-using-cape-ratio-thats-good-thing/
I think market timing evaluations can be misleading per the given assumptions. Surely, prudent investors would have changed portfolio given the dot com bubble. Currently, the advice is to put more in international and EM value small cap. You know these options for index funds were not available years ago. The Wellington/Wellesley team has concluded the international market is reliable enough to make global offerings. That and I think what a lot of these financial people think of U.S. mega trends. Meaning keep your portfolio up to date. National debt load including corp, personal, and state. Birthrate and immigration is a big one. Changing political dynamics such as national cohesiveness, good governance, morality, education, and personal faith in system. Funny, we think morality isn't relative, but a historical evaluation of strength of nation and even corporate culture are correlated to basically Christian principles. I have a inlaw that makes a living training corporate managers upon the wisdom of the elements. Bogle describes early years of investing where upon the financial people had their way exploiting investors. Things changed with Vanguard/Bogle intro of index funds. Now ETFs. How about smart beta, robos, tax harvesting, tools? I read of a 90/40 leveraged fund that may become popular.
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Kilgore Trout:
YOU ARE DONE HERE FOREVER! Get lost!
Uh, the kittens you say????
Just received this form one of th ebroekrs I use"
What could be better than a low-cost commission for trades? How about no-cost at all?
Starting today, we are pleased to announce that we have eliminated commissions for all stocks, exchange-traded funds (ETFs), options and mutual funds. Firstrade customers will now be able to trade for free with no time restrictions, no limits on the number of trades allowed and no minimum account requirements.
So Fidelity launches zero ER index funds, Schwab offered me 12 years of free trades, and now FirstTrade says no commission? What the furry kittens...not sure why, but it makes me nervous. More consolidation must be coming.
My preference in Balance funds at Vanguard is VBIAX over VWELX because of the following ...Al lower expense ratio, greater tax efficiency and performance over 10 years. similar to Wellington. 60% Stocks and 40% bonds...very similar to Wellington. I have at it for years and have done well.
gabe a very good portfolio. My thinking, correct or not is the bond side is not as advantageous in index fund. The income side is more predictable albeit complicated. As a result more advantage in active. Has anyone read an evaluation on the index advantage with bonds as the same as index stocks? I haven't. I don't think Brinker has a clue either.
I have read a good time to invest in value and dividend stocks is when the stock market has high evaluation. This is the zone of VWELX. Your investment.
I read more and more of need to invest in internationally. This is diversification and stability even at the cost of higher return. It's may be just a safety move? Bogle says it not necessary as U.S. equities are a proxy for international investments. Wellington says it is time to offer the opportunity and that is good enough for me.
Bye the way, don't you have a tad more money than you need given your age? It is none of my business, but you post as an aged investor. If so, your main concern is utilization of you earned income for end of life max enjoyment. You have way passed the need for good return.
Honeybee said...
Kilgore Trout:
YOU ARE DONE HERE FOREVER! Get lost!
August 23, 2018 at 7:47 AM
Hmmm...
Looks like no more fishin' for the trout-boy. He will be missed...NOT.
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Dear Fluffy Bunny....I have had enough of the political garbage, etc., from cowards to skeered to post politics on Silicon Investor. So I no longer even open anything that comes as "anonymous." I just go down the line and click delete.
I only open comments from those I recognize the "name," and even then, if I don't know it's them in the first sentence - out they go.
I may sometimes throw out legitimate posts, but if I do, I have given my email address, so a quick email is all it takes to remedy.
Trees: You're over-thinking all of this. Figure out an asset allocation for yourself -- considering age, goals, and risk tolerance -- and let it run.
Different "experts" will have different opinions on allocations and which secondary asset classes to hold or not, but read a bunch of opinions and come up with something you're comfortable with. There is plenty of info online on how to do this.
Trying to time the market, or selecting "hot" sectors, is like trying to hit a moving target -- your odds of coming out ahead are less than a coin toss.
As for Gabe, yes he is loaded and he likes to rub it in the taxpayers' faces. But he has been sucking off them all his life, so to think he's something special is like thinking a successful bank robber is virtuous because he has a lot of money.
Bluce I disagree with your comment. Frankly, I expected much more from you.
Trees I am not interested in bonds from this fund since I have the Total Bond at Vanguard. Not interested in bonds in the international sphere. I do own the Total Int. Fund at Vanguard which substitutes for the llack of international equity holdings absent from the Balanced Fund over at Vanguard.
Gabe
…But I Want a BIGGER Yacht!
This week has marked the longest period of uninterrupted gains in the stock market in U.S. history. There are a variety of reasons, including a steady economic recovery that is 9 years old. But one of the drivers for the stock market rise has been the increase in what’s known as stock buybacks, or companies purchasing their own shares. The benefits of that for the larger economy are very much in question, as our economics correspondent, Paul Solman, explains, part of his weekly series, Making Sense.
When President Trump signed the Tax Cut and Jobs Act last December, a key provision was cutting the corporate tax rate from 35 to 21 percent. Republicans argued the savings would be used to create more and better-paying jobs.
Stock buybacks are expected to hit a record $1 trillion this year, an almost 50 percent increase over 2017. It’s the appearance of better financials, which insiders can and do take advantage of, says Republican economist Douglas Holtz-Eakin. But if stock buybacks are sometimes connected to short-term stock manipulation for the benefit of corporate insiders, that’s concerning.
And, in fact, it’s why buybacks were illegal from after the crash of ’29 right up to the Reagan administration. But what if the shareholders who are getting the money from the buybacks are simply using it to buy, I don’t know, yachts or bigger yachts? OK, maybe some yacht workers benefit, maybe some smaller firms, but what about the average American? Right now, overall wage growth in the U.S. isn’t even keeping up with inflation.
Irene Tung looked at buybacks in the restaurant, retail and food industries in the three years before the tax cut was enacted. If they took all of the money that they spent on stock buybacks, and instead invested it in raises, McDonald’s, they could have given each of their workers $4,000 more each year, Starbucks $7,000. In retail, Home Depot, Lowe’s and CVS could all give their workers at least $18,000 a year more.
But, instead, the money went to shareholders, who make up barely half the American public. Moreover, 84 percent of the value of stock market wealth is held by the richest 10 percent of us.
What part of the economy do share buybacks boost? That precise part. So, they’re lifting the more unequal side of the economy, at the expense of the more equal or the wage share of the economy.
We will judge the Tax Cuts and Jobs Act and other things based on whether the final use of those funds has been effective in raising wages and productivity. That’s going to be the ultimate test.
As of July, however, more than half the corporate savings from the tax cut have gone to shareholders as either stock buybacks or dividends, compared to 18 percent going to job creation commitments, and just 7 percent going to employees in the form of wage increases, bonuses, or benefits.
So, the bottom line, as with so many policies, you have to wait for a verdict.
Trees: To clarify a bit, IMO whatever percentage of your total portfolio you decide to have in equities, it should all be in some balance between the TOTAL U.S. market and TOTAL foreign markets. No betting on "hot" sectors.
I have about 38% of my port in equities and of that 38%, about one quarter of it is in a foreign index (VXUS). But this split is something you'll have to decide on yourself because the "experts" opinion on the balance will be all over the map.
That's my story and I'm sticking to it. YMMV.
Dear Fluffy Bunny....I have had enough of the political garbage, etc., from cowards to skeered to post politics on Silicon Investor. So I no longer even open anything that comes as "anonymous." I just go down the line and click delete.
Dearest Hottibee,
It is most unfortunate that these cads pick on a delectable lady, it offends me. I would so enjoy giving them an introduction to the manly arts. A good thrashing always seems to alter their perspective.
Time was,wen a man might jeopardize his very life if he abused a lady.
Your loyal servant,
tfb
As for Gabe, yes he is loaded and he likes to rub it in the taxpayers' faces. But he has been sucking off them all his life
LOL...OMG. you are killing me here. ROTFLMAO. You can read that quote in various ways - LOL.
I never met a government employee who had an iota of shame. And I, regretfully, work with them every week still. The entitlement mentality is pervasive at all levels.
Gabe, you should not be surprised by Bluce's comments. Many people wish each and every one of you public pensioners ill. The simple truth is the taxpayers benefits with each one of you that dies prematurely. The attitude you, and others, display make you easy to hate. You bring it on yourself with your words and attitude.
tfb
Bluce: Agree. I post on what the experts are talking about, but my actual portfolio will and is simple. I have avoided international, but rethinking from the consensus of investor opinion and prediction of 10 years out. Actually, just within last year my first fund with any bond allocation. So, guess I'm going more conservative in old age.
I heard Kudlow explain his investing. He said "I keep it simple, just a U.S. total stock index fund". He lives with the bumps, but a buy and hold guy. No bonds or international stocks. That's pretty simple.
The stock buyback is maligned to instill conspiracy theories to public whom is eager to think the money guys have a plan to gorge themselves on tax cuts. From what I read it's a common thing for corporations to do when receiving extra income. They rightfully decide to delay expenditures until determining the best roi investments and that may take some time. No company would just willy nilly spend or give away as some general feel good. Sure the stock is less diluted and this will raise the price per share. All investors will have a small benefit from this. Buy back is a store of value for corporations in the short run. It's a smart and cost efficient way to store money for future use. Shazam.
Market correction now over by any measure.
https://www.cnbc.com/2018/08/24/the-associated-press-markets-right-now-sp-500-nasdaq-close-at-record-highs.html
quote:
"The S&P 500 index is closing at a record high, just two days after the current bull market in stocks became the longest in history.
The Nasdaq composite and the Russell 2000 indexes also closed at all-time highs Friday.
The Dow Jones Industrial Average is still below the high it set in January.
Technology companies, the best-performing sector in the market this year, led the gains.
The S&P 500 rose 17 points, or 0.6 percent, to 2,874, beating the record it set in January by two points."
TFB is likely going long 1000 more shares of M0 and 500 more shares of PM.
Just sayin', not that anyone cares. Transferring the money on Monday...then it has to clear, if they don't rebound from current levels I am buying.
Last three years I dumpster dived with COA, TIF, MAT, and TUP. The only knack I seem to have is in terms of dumpster diving.
My big loss is the pig known as TEF but I ought it as a very long term holding. I am still holding that for a very long term recovery.
TUP is starting to peak my interest again too.
My strategy, low cost index funds and then dumpster diving for dividend plays with strong brands. I vacillate on if this is worth it,my brains tell me no, my guts want to gamble. But I like the cashflow at the dividend rate vs ordinary income rates. I started 3 or so years ago with 1.65% of my portfolio. It has now grown to 10% of my portfolio in 3 years, all of which sounds nice, but easily attributed to luck. A major motivating factor is my need to control distributions, however it is far less a salient point now that etfs are so readily available.
Realistically a dividend ETF like DGRO is likely a much more intelligent move. I own DRGO in my HSA but it is small potatoes(30K or so).
tfb wrote: I never met a government employee who had an iota of shame.
Me neither. The vast majority of them don't even know what the source of the government's money is. They really don't.
A scattering of them may have some vague idea, but it never seems to be in their conscious mind.
Anyone reading this who is confused by this topic, here it is stripped bare: There are two pools of money -- that which "the people" hold, and that which the government has taken from them.
Yes you can buy and sell options. I sell puts and calls often.
Anyone reading this who is confused by this topic, here it is stripped bare: There are two pools of money -- that which "the people" hold, and that which the government has taken from them.
That is exactly why I relocated my primary business interest outside of Illinois. I got out before they public sector could rape my wallet any more. My "employees" were very glad also.
Last year my payroll for my consulting company was $2,520,000, that money use to flow to Illinois tax coffers, plus the property taxes on the employees homes and associated sales tax revenue from people earnings at least 2x the median household income from Illinois. Now that money is bolstering the economy in an income tax and low property tax state.
My point is, more and more people are fleeing the pension induced hellholes like CA and IL. Paying those pensions is essentially a voluntary activity; moving is a thing.
My hopes to benefit from cash position is fading fast. Economic factors are very positive. Only political and hype to worry about. My take on Trump is he loves and knows how to play the hype. His timing instincts very good. IOWs give them enough rope to hang themselves. Knowing what is important and what to focus on is the target. So, it's the economy stupid. The swamp will be a powerful opponent, but in the end I'm betting they will do themself in.
It may prove the best for the country and markets if the extreme Left does push their electorate to file impeachment. The current Executive knows the public is concerned of a vibrant wage paying economy. How will the politics play out?
Trees: I hope your political predictions are right, but this week has been pretty depressing.
Something has to snap at some point.
Trees,
Not that I recommend it, necessarily, but there are some suspects that look attractive enough to consider for holdings, I mentioned a couple above, and today I looked at several more. I have noticed since momentum became identified as a factor more diversion from the mean in what once was a companies normal trading range. My interpretation is we are seeing longer runs to the upside an downside than usual. I personally believe,now and then, that may created an attractive entry point for securities purchased with an eye toward the long term.
The point being there may be individual buys vs broad market buys even at these levels. But some are simply wired different than most folks. I am blinded by sunk cost thinking, not easily swayed by popular opinion, and am very comfortable in my own skin and head, therefore I am able to hold for the very long term without losing sleep over it.
tfb mentioned fleeing states. I'd love to flee NYS. King Cuomo has made it very clear, and actually came out and said that he doesn't want people like me in this state.
The conundrum: I live on a dirt road in the boonies and I like it here. I was born about 35 miles away in Rochester. My mother's ancestors came from New England and settled about 100 miles from here in 1802. My immediate family (two sisters) and their descendants are all in the area. I have many good friends that I see nearly every day.
I can't leave.
But if Cuomo comes for my guns, I will be forced to leave at that point. Hopefully, I'll croak before that happens.
John McCain has passed away.
tfb
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Bob Brinker is likely working on how to neutralize this headline:
Atlanta Fed Releases Latest 3rd Quarter GDP Estimate – a Whopping 4.6%!!
Honey: I'm betting on Binky's classic technique: Don't mention it and bury it along with all of his timing blunders.
But will he be live or will it be Memorex?
I did not listen last week (8/19) after the first few minutes because it sounded like the same-old-same-old. Thank goodness you and your contributers have this blog and I can catchup.
Bruce where do you look to find treasury rates. I want them because then I will not have to pay state tax of 9 percent on the interest I earn.
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