March 11, 2012 Bob Brinker's Moneytalk Show: Summary and Commentary

March 11, 2012.... Bob Brinker took the day off and his regular replacement, Lynn Jimenez, did the program. Lynn is a business reporter for KGO 810 radio. She wrote a bi-lingual book: ¿Se Habla Dinero? The Everyday Guide to Financial Success (English and Spanish Edition) Lynn opened with a report on the latest stock market, economic and employment numbers and a review of Greece's bailout.

Lynn made a point about the stock market that Bob Brinker has never talked about. She said: "In March 2009, the S&P 500 closed down 57%. It was at a twelve year low. And today, three years later, it's up 103%."

Honey EC: Those stats are correct, but the fact remains that the S&P is still a long ways below its October 2007 all-time-high of 1565.26.  Bob Brinker's two equity model portfolios are still underwater from that high because he was fully invested for the whole wild ride.

Lynn said: "Profits in the S&P 500 are going up faster than the indexes price. Corporate profits have topped analysts targets twelve straight quarters. And projections are that earnings are going to average about $104 a share. That's the highest ever for the S&P. It's a gain of 69% from 2009....Price to earnings ratio of publicly owned companies.....is just over 14%. That makes stocks cheaper now than at all the market peaks since 1989.....The five decade average is 16.4%.....And yet, we're all nervous about getting into the market."

Bob Brinker's projections don't entirely match with some of Lynn's. In the March Marketimer, Bob said that the historical S&P price/earnings average is 15 to 15.5 -- $103 earnings estimate. On that basis, Brinker wrote: "We are projecting a rise in the S&P 500 Index into the mid-to-upper 1400s within the next 12 months. This represents a slight increase from our prior target range in the low-to-mid 1400s range."

The topic for the first hour was about a study done by the University of California at Berkeley  that claims  "the wealthier you are, the more likely you are to lie and cheat." You can read about it here.

Honey EC: Personally, I think one should consider the source of the study, and also the lack of variables and  tiny number of people involved. I did find it comical that Prius drivers feel "entitled" to break the law -- according to the study. :)

Lynn's topic for the second hour covered how to get help if you are in trouble with your mortgage/home, etc. She gave a couple of websites for more info:
Nationalmortgagesettlement and makinghomeaffordable

Lynn's third hour guest was Roberton Williams, who offered his philosophical opinions about how Americans should and should not be taxed. Please see the next post for a complete summary written by FrankJ.

I will also write a complete summary and commentary about the Brinker Fixed Income Advisor Monday or Tuesday.

POST AND READ COMMENTS

August 7, 2011, Bob Brinker's Moneytalk, Summary, Commentary, Excerpts and Discussions

August 7, 2011..............................(post or read comments)


Bob Brinker was not on the air today.  Lynn Jimenez was the fill-in host. She is a business reporter for KGO810 radio.  Lynn mentioned that she was getting emails during the program today. Here is her address: lynnjimenez@kgoradio.com

WHERE IS BOB BRINKER TODAY?  

Caller Larry asked: "Where's Bob? Like I'm a Marketimer subscriber. I would have liked to talk to him today."  

Lynn replied: "Oh, you know what. It never fails, doesn't it. I really hear what you are saying. Umm, Bob had this day off scheduled for a very long time. And it just never fails that the minute you get a break, boom, everything pops. I think that we were all hoping that there would be a better resolution to the debt limit issue and that this wouldn't have happened."

Honey EC: Over the years, there have been numerous times when "boom, everything pops" that Brinker has  conveniently been gone that weekend, especially if he had dug a hole for himself and there was no way for him to save face. I'm betting that he's hoping for some change by next week so that when he returns the market will look better.

POLITICAL VIEWS ON MONEYTALK:  

Caller Mike from Little, Colorado (Home of Marketimer) said: "The show you and Bob run is like the show for the independent, progressive voter,  for us normal people. That is why I like it so much."

Lynn giggled and exclaimed:  "Progressive? Oh Wow!  I've never been....okay."


Mike continued:  "There's Fox on the one wing and I don't know what's on the other, but you are right down the middle for normal people. A breath of fresh air, I love it."

Lynn with great joy said: "Thank you!"

Honey EC: Mike thinks Independents and Progressives are the same?  And Progressives are right down the middle, normal people? LOL!  My goodness,  Lynn was almost beside herself with joy over this caller from the home of Marketimer and  BB Jr's fixed income newsletter.   However, it's interesting that he graded  Moneytalk  as a political program. I thought it was supposed to be "all about the money."  I won't be covering Lynn's  progressive political points of view.


VANGUARD GINNIE MAE FUND (VFIIX) AND VANGUARD INFLATION-PROTECTED (VIPSX):


Caller Mike from Littleton (above) asked:  "I like TIPS and GNMA's. How safe are they going forward?"

Lynn's answer: "I don't know. I think Ginnie Mae's can be downgraded too. We are going to learn more from Standard and Poors tomorrow.  First of all, I would say that almost any US debt is safe, even with what's going on, money pours here, not in Europe. And we are much more transparent than any Asian bond. So I think we're okay on those. I just don't know what effect it's going to have on Ginnie Maes."

Honey EC: Brinker has sold all of the TIPS Fund from his Marketimer model portfolios.  And he has sold the Ginnie Mae weightings down to 15% in the off-the-books fixed income portfolio that now contains some stocks. And he sold the Ginnie Mae weighting in the Marketimer balanced - portfolio III down to 20% and added Vanguard Wellesley Income (VWINX), which contains about 38% stocks.

 VANGUARD HIGH YIELD BOND FUND (VWEHX) 

Caller Jack said: "I have about $90,000 in Vanguard high yield bonds....So far the high-yield has performed pretty well over the last few years.....I was told that the high-yield bonds act more like a stock, but I'm still nervous about the high-yield part of it." 

Lynn asked: "Let me ask you something. It would seem to me that since it's ahigh-yield bonds that it's primarily corporate bonds. Is that correct? (caller: "That's correct.") Alright. Corporations right now have an awful lot of cash on their balance sheets. And because of what they went through during the meltdown and the threat to the bottom line for so many of them, they had to clean up their acts.....So I would say that corporate bonds may continue to be very solid investments. What has been downgraded here is the federal debt.....I would think that your high-yields should be okay....but I'm not an expert.....I think you should take a deep breath and I think you're going to be okay."

Honey EC: I was astonished at Lynn's total lack of knowledge about the high-yield bond funds. 

DOUBLE LINE TOTAL RETURN  BOND (DLTNX)

Mike added another question: "How about the total bond market." 

Lynn replied: "I think the same thing. I'm not sure, I don't know.  If the intermediate is more tied to federal debt, there you may see something change. But you know, yields are going to go up, and that can only be good for you, right?"

Honey EC: First let me say that if yields go up, then net-asset-values go down on bond funds. So for Lynn to make the statement that it "can only be good" is beyond ignorant, in my opinion.   

Also, Mike had to be referring to the 20% weighting of Double Line Total Bond Fund that Brinker added to his Marketimer off-the-books income portfolio back in May, 2011. There are no other total bond fund holdings in any of Brinker's portfolios.

GOLD and SILVER: 

Caller Jason said: "I bought nothing but silver, I like silver over for the last ten years and I'm up over 800%. Gold and silver always was real money."

Lynn interrupted: "Jason, I'm going to cut you off here, I'm not one of those people who talks about religion on the radio......To me that's an ideology."

Jason replied:  "Please Lynn, one second.  If a person in the 1970's started working and bought one ounce of gold a month at $30 a month when Nixon took it off the gold standard, and put it in their retirement account, they would be sitting as multi-millionaires. They would be able to touch their assets whenever they wanted to without any penalties -- without any onerous tax burden. And they would be in a much better position, my parent's generation, because I'm 35 (unintelligible)....."

Lynn interrupted: "And where would they have stored it with no taxes. I mean, please....."

Honey EC: Wow! If Jason is right (I didn't check his numbers), that it a huge deal. Brinker has always been negative on buying gold for an investment even though he added it to his off-the-books list of individual issues back in May 2009 -- with no comment whatsoever about how much to buy.

At least three times today, Lynn said that talking about gold was "talking about religion." I guess her foray into gold timing back-fired on her. In February she made the statement that it was too late to buy gold.  Oops...

STOCK MARKET: IF YOU GOT OUT OF THE MARKET TWO WEEKS AGO, YOU ARE DOING FINE:

Lynn said: "Don't panic. That's the key. If you panic, you are totally out of luck. If you got out of the market two weeks ago, you are doing fine. If you are in it right now and you don't need that money for two years, stay in and let it recover."

Honey EC: July 17th on Moneytalk,  when asked this: "Given this debt ceiling crisis and what I see as a potential stock market drop for who knows how long, should we move that money into money market accounts for a little while?"  

  Brinker answered:  "We had this same question two weeks ago when the S&P was around 1270. And now the debt ceiling debate has heated up dramatically in the last two weeks and the S&P is up to 1316. Showing a total return year-to-date of close to  6%.  So I will repeat what I said to that caller at 1270, asked virtually identical question....I said to that caller, you need to be prepared, if you do that,  to re-enter the market at a higher level. Now if that caller re-entered today, he would be re-entering about 46 S&P  500 points higher than he exited the market two weeks ago....I have not exited the market until I see a resolution of the debt ceiling issue because I already know....what's going to happen...."

And in the August 2011, Marketimer, Brinker said: "We are maintaining our fully invested position in our model portfolios in anticipation that our S&P 500 target in the low-to-mid 1400s range can be achieved going forward." 

IS BRINKER CORRECT NOT TO RAISE ANY CASH THIS TIME? 

Caller Steve from Mountain View, who also called Lynn on February 13, 2011 (Thank you Jeffchristie, for tracking that down), talked about the S&P downgrade and ended his comments by saying this: "Well, Bob Brinker still thinks we should stay fully invested in the market, so I hope he's right this time."

Honey EC:  Indeed, let's join Steve in hoping that Brinker is "right THIS time."  Last Sunday, Brinker  was bragging that he had told callers not to sell stocks because of the debt ceiling issue unless they were prepared to buy back in at higher levels or stay out altogether.    He also  said that he had been buying stocks.  

Lynn's guest-speaker was Ken Rogoff, co-author:  "This Time is Different: Eight Centuries of  Financial Folly" 

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast.  I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

[In Edit, August 8, 2011]  Bob Brinker said this two weeks ago:  "I said to that caller, you need to be prepared if you do that, [sell stock] to re-enter the market at a higher level. Now if that caller re-entered today, he would be re-entering about 46 S&P  500 points higher than he exited the market two weeks ago....I have not exited the market until I see a resolution of the debt ceiling issue because I already know....what's going to happen...."
 

POST AND READ COMMENTS

July 3, 2011, Bob Brinker's Moneytalk: Summary, Commentary, Excerpts and Discussion

July 3, 2011..................................................................[Post or read comments]

(Please bookmark this new blog address - I promise I won't be moving again.)  

Bob Brinker took the 4th of July holiday off and Lynn Jimenez filled in for him. Jimenez is a business reporter for KGO810 radio.

I did not listen to the first two hours of the program so if anyone  wants to comment about it, please feel free.    Jeffchristie told me that he thought a major portion of the program was simply a "platform to bash U.S. corporations."  

jeffchristie said...

 .

If someone started listening to Moneytalk five weeks ago they might have the impression that Lynn is the regular host and Bob Brinker is the fill in. Lynn has been on 3 out of the last 5 weeks. At the end of her monologue Lynn said: "We are all capitalists here". Yes but some are European style socialists like you. 

 .

A first hour caller Rita in Martin Grove ILL said Lynn was a breath of fresh air. She felt that corporations have an ethical and moral responsibility to citizens. I wonder what she may have been thinking over and above what is in the US Constitution and the rule of law.

 .

Another caller David in Chicago complained that companies who have brought cash back into the country and used it to purchase their stock rather than hire. He cited several news articles to back up his position. I say so what. If the stock buy back causes the share price to go up, wealth is being created for the shareholders. This is a positive for individuals and pension funds. 

 .

Another caller whose name I didn't catch claimed to be a libertarian who votes Republican. He said he will never buy another stock. He is in portfolio 6 which is 100% invested in silver.

 .

Lynn talked about the debt ceiling. She doesn't think we have a crisis yet. She is worried they will make big cuts to Medicare and  Social Security that will have unintended consequences. 

 .

I found it ironic that Moneytalk has turned into a platform where people bash corporate America and explain why they don't want to buy stocks. It seems to go against everything Bob Brinker has been teaching over the past 25 years.

July 4, 2011 7:17 AM

jeffchristie said...

Lynn also claimed that US corporations are paying too low of a rate when it comes to taxes. She bashed Cisco systems. She didn't however mention GE and GM which had profits and paid NO corporate income tax. Lynn also said Warren Buffet pays at a lower rate than his secretary. I wonder how many jobs this secretary has created? According to Yahoo Finance, Warren Buffet's company employs 260,000 people.

July 4, 2011 8:16 AM

Honey here again: However, Jeffchristie suggested that I  download and listen to the third hour. The guest was  Marilyn Cohen "Surviving the Bond Bear Market."

In general, Marilyn is bearish on the Treasury Bond market and she is strongly opposed to buying bond funds.  She also said that TIPS are fully priced.   Bob Brinker agrees and  has told Moneytalk listeners that he no longer has any positions in  TIPS (Vanguard Inflation Protected Securities). Indeed, he has removed  all weightings from the Marketimer balanced model  portfolio III and income portfolio.

Marilyn made several individual bond recommendations which sounded very much like high-yield. I have not researched these and would never even consider buying individual high-yield bonds, but here is the list that she recommended:

* Wynn First Mortgage
* CIT Financial (she said they had already declared bankruptcy and was now "in good shape."
* Conenterprises Inc.

 Bob Brinker has never recommended buying individual issue high-yield bonds. However, beginning in April 2003, Brinker added a 15% weighting of Vanguard High Yield Corporate Bond Fund (VWEHX)  to his fixed income portfolio. He increased that weighting to 25% in January  2011.

The last call of the day was surprising because Jimenez did not know about Annaly Mortgage Reit (NLY). And I wondered if  Marilyn  had done a quick Google search then  bluffed her (IMO) convoluted  answer. :)  I have transcribed the call for you:

Caller Jim said: "I own bond funds and got the impression that she didn't particularly recommend them." 

Cohen replied: "Your impression is absolutely correct. I don't particularly like them right now. Now what kind of bond funds do you own?"

Jim said: "They are taxable. NLY is one, it's paying me like 14%."   

Jimenez exclaims: "WHOA!" 

Cohen said: "Let me tell you, that's Annaly. Annaly isn't like a regular bond fund. You own that particular security and can get out any day, interday. A bond fund is a mutual fund....The long term bond fund is what I don't like right now because they have just been overwhelmed with investors. We've never seen such a stampede into taxable bond funds as we have since the credit crisis of 2008. Everybody got out of equities.  Remember how Lynn started out the program, about how all the baby boomers went into gold in the '80s and then  they went into housing and then they went into tech?  Well they went into bond funds in 2008 with abandon.  You know you're not locked into the yield that you are going to earn. You have other people that you have to worry about when their money flows out like we saw for 29 consecutive weeks with municipal bond funds. So your Annally is not anything like that." 

Jimenez asked: "What is the Annaly?" 

Cohen replied: "It's listed on the stock exchange. It is a stock, but they buy mortgages. They leverage the mortgages. It's a real estate investment  trust that owns and manages all different kinds of assets on behalf of individuals and institutions. And the portfolio consists of mortgage-backed securities and sometimes pass-through securities - collateralized mortgage obligations. This particular security will do very well as long as short-term interest rates stay low. And remember, short-term interest rates are the only interest rate that the Federal Reserve can and does control. They can't control any intermediate or long-term rates. So he is getting the spread, the  differential  between what all these securities are earning versus what kind of cost of financing that Annaly is having to pay. And that's why he has such a large yield." 

Jimenez asked: "What do you recommend that he do with those? Are those  something that he should hang on to right now?" 

Cohen replied: "Absolutely. Hang on to them. Continue to harvest your dividend. And as soon as short-term rates start moving up, which will eventually happen, but it isn't happening right now,  this type of security is going to get hurt. No question about it. But for now, it's not broken; don't try to fix it. It's been a really good investment for the past few years." 

I don't know what Cohen considers a "few years" but NLY took a beating in 2008. However, not as much as the stock market, and it never missed paying dividends. NLY went ex-dividend June 28th and will pay out  65-cents per share on July 28th.   I own NLY -- right now, anyway. :)

Business Summary

Annaly Capital Management, Inc., a real estate investment trust, engages in the ownership, management, and financing of a portfolio of investment securities. The company invests primarily in mortgage pass-through certificates, collateralized mortgage obligations, agency callable debentures, and other mortgage-backed securities representing interests in or obligations backed by pools of mortgage loans. Annaly Capital also invests in Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association debentures. The company has elected to be taxed as a real estate investment trust (REIT).

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast.  I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

This is a family member who is training for Ironman Canada (in August) for the Leukemia and Lymphoma Society at the top of Mt. Hamilton after a 17 mile ride.  Her husband, who is a leg amputee because of a high school soccer accident, is also training. He wrote: "75 cents of every dollar you donate to LLS goes directly to blood cancer research. Thousands of people are alive today because of the research LLS has done! Whether it's $5 or $5000, every little bit counts!  Let's find a cure to blood cancers!......you can support Jenny and I in our effort to complete Ironman Canada and fight blood cancers by going to http://pages.teamintraining.org/sj/ironca11/jerkyleg and clicking on "Donate.

 

POST AND READ COMMENTS