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Bob Brinker did not talk about the stock market this weekend.
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Brinker’s opening monologue on Saturday was devoted to politics. He began by singing the praises of Paul Volcker, who has now endorsed Barack Obama. Brinker said this is the first time that a member of the “modern” Federal Reserve fraternity has endorsed a presidential candidate. Brinker quoted Paul Volcker’s reasons for making this endorsement. Brinker doubts that the “maestro” will make an endorsement -- and certainly Ben Bernanke won’t.
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After touting Obama by praising Volcker’s brilliance and then quoting Volcker's reasons for endorsing Obama, Brinker took aim at Hillary Clinton. Brinker said: “....Barack Obama distributing flyers about her support of NAFTA and she is reacting very, very violently in her language -- saying things about Barack Obama that she has not said before. Here’s one of her quotes, ‘Shame on you, Barack Obama.’ War has broken out in Ohio between Evita and the Junior Senator from the Land of Lincoln.”
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(Honeybee EC: IMO, Brinker isn’t even subtle about his political biases and he unashamedly uses his program to promote his own views, and almost never allows opposing opinions.)
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Caller question: What happens if several banks fail and how long does it take to retrieve funds? Brinker Feedback: A time-table has never been published. “It will take some time and you will not earn on your money if you have a CD that has matured.”
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Caller question: Why did the Fed change the limit on purchasing I-bonds from $30,000 to $5,000 a year? Brinker Feedback: Most are purchased in small quantities and the Fed is interested in serving the small buyer. Recommended website: http://www.savingsbond.org/
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Caller comments: This caller said she had been a Moneytalk listener since 1986 and had bought 100 shares of Jacob’s Engineering (JEC) at $8 and 200 at $6, and held them since 1986 – thanks to Bob she has a huge capital gain. She put $2000 into the stock and now owns 5280 shares worth over $400,000. The stock closed at $81 yesterday. She said her total net worth was $700,000.
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Brinker Feedback: “God bless America. What a great country.” He advised her to sell at least half of the stock and put into a balanced portfolio. (Honeybee EC: this caller’s holding in one stock is well over half of her net worth according to what she said. Brinker did not berate her for breaking his 4% in-one-stock rule, and he did not mention that she had ignored his sell 65% of equities recommendation in 2000. IOW: she completely ignored all of Brinker’s major recommendations. Question: If Brinker had JEC as a buy in his newsletter in 1986, did he put a hold on it or a sell on it. Anybody know? It is not in his newsletter now.)
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Follow Up to JEC Call, Brinker said: “This reminds me of some of the stories that I hear from some of our newsletter subscribers who bought Vodafone back in 1989 for very, very little money, a couple of dollars a share or less. Or who bought Microsoft back in 1990 when we first recommended. I recently looked at the split-history on that one, and once again, humongous in those positions. And this story from this caller reminds me of those stories……I should add that our current recommendation on those two stocks – Vodaphone and Microsoft, is a hold rating. We do not have a purchase rating……”
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Caller question: What about CD’s with Countrywide? Brinker Feedback: What you really invest in is the FDIC guarantee. Plus, Bank of America announced last month that they are purchasing Countrywide Financial for $4Billion.
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A Caller made some very unflattering comments about Volcker and Obama. Brinker disagreed with the him and hung up.
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Caller said: “……I subscribe both to Marketimer and the Fixed Income right now,” and then asked Brinker’s opinion about Obama’s stand on globalization. (Honeybee EC: The “Fixed Income” that she referred to is not published by Bob Brinker, the radio talk-show host. He acts as a consultant to his son, Bob Brinker -- however Brinker has yet to clarify that fact on the air. I’d like to recommend the Retirement Advisor as a far superior newsletter about fixed income investing and much more.)
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The Retirement Advisor: Info Performance
Free Issue: http://www.investorhives.com/msgd.php?msg_id=611
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Brinker Feedback: Globalization is here and it’s real. No different than “tomorrow’s sunrise” and the candidates may as well accept it. Brinker then talked about Hillary Clinton again, saying that she had said “terribly nasty things about her opponent.”
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The next caller thought there might have been misinformation put out earlier on the program and wanted to make it clear that FDIC is backed by the full faith and credit of the United States Government.
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Brinker Replied: “It’s not; it’s not full faith and credit. It’s the FDIC guarantee -- that’s not the U.S. Treasury, no. In terms of practically, the Federal Deposit Insurance Corporation has dependably been there when banks have gone under to meet the obligation. And I would fully expect if you have a FDIC insured obligation that you would receive payment in due course if your bank went under.”
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Caller replied to Brinker: “So on the FDIC website it says that banks are supposed to display something saying that it is full faith and credit of the Federal Government.”
Brinker answered: “Well in any case, it’s an FDIC guarantee. Semantics aside, if a bank goes under, you are going to get your money back up to the insured limit…..Now if we talk about direct guarantees, we generally talk in terms of a number of instruments, and I’ve named them a number of time – U.S. Treasury Bills, Notes and Bonds, Savings Bonds…..GNMAs….all of those are in the direct guarantee category.”
The following is found under “common questions and answers” on the FDIC website:
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“What is the FDIC? The FDIC - short for the Federal Deposit Insurance Corporation - is an independent agency of the United States government. The FDIC was created by Congress in 1933 to make the savings of millions of Americans secure. The FDIC protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.”http://www.fdic.gov/deposit/deposits/deposit/faqs/index.html.
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Sunday, without mentioning what he said on Saturday, Bob Brinker corrected his error, Brinker said: “You are not going to lose money in and FDIC insured Certificate of Deposit. Just be sure that you have the insurance. Because, once again, an FDIC insured deposit, which carries the full faith and credit of the U.S. Treasury is going to be safe……” (Honeybee EC: perhaps a tad of prevaricating?) Brinker went on to explain that interest on CDs and GNMAS are taxed at the state level, unlike Treasury Notes, Treasury Bonds, Treasury Bills, TIPS or savings bonds which are not taxed at the state level.
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Caller question: How can Volcker endorse someone like Obama who will raise taxes and increase spending in a weak economy?
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Brinker immediately started talking about Hillary again, saying that Obama rallies seem to bother Hillary immensely and that she complained today about his speeches and big turn-outs. Brinker said: “…there is really a lot of anger coming out of Evita today in her press conference attacking Barack Obama on these flyers.” Brinker then opined that he has been wondering where all the money was going to come from in order to fulfill the campaign promises that add up to about $1Trillion.
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HOUR TWO
Brinker opened the second hour of the program by talking about the audacious demand by the President of Iran for an apology from the United States for accusing him of having a nuclear program. Brinker rightfully, found it outrageous and railed against U.S. dependency on importing so much foreign oil.
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Brinker commented: that we import about 12 million barrels a day (of our 20 million daily consumption) -- paid for in dollars – which goes into our trade deficit. We get some oil from our friends, Canada and Mexico. Unfortunately, we buy some 1,250,000 barrels a day from Venezuela – and Hugo Chavez is no friend of the U.S. It is sad that we are not working toward becoming more oil-independent and wonders why the candidates do not talk about this very important subject more than they do.
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Caller question: Does Brinker it’s time to drill in Alaska. Brinker responded that he did think we should drill in the “Alaska National Wildlife Preserve.”
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Caller read that when rates are cut as much as they have been, the economy picks up very strongly and wondered why people are so pessimistic now.
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Brinker said: “It’s not uncommon for people to get overly pessimistic. I mean this is an historical fact……” Brinker praised the stimulus package…said it was the proper role of government to institute Keynesian economics and the “right things are being done." Brinker reminded the caller that Bernanke only began doing the right thing last August, and that before that the Fed was up in an “ivory tower’ and they had “double locks on their ivory tower doors and they did not even come out of their ivory towers… until August of 2007 when they started to act. And they didn’t even descend the stairs of the ivory tower until January when they sharply reduced the Federal Funds rate. I think the reason they made this mistake is they thought that rising oil prices were the problem. Rising oil prices certainly are a problem for the economy but that’s all they are…..the Fed thought that rising oil prices were some kind of a gigantic inflationary threat, and what they failed to realize was that rising oil prices take money out of the pockets of consumers and make it harder for them to make ends meet……and that is what we have seen…..and at the same time, they did all of this at a time when they under estimated the impact of the housing recession……I think that the Fed was lollygagging and asleep at the switch for too long and now I think they are getting in step”
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RECESSION: Brinker did not make any predictions, but said that by historical, traditional, academic definition of a recession, which is two consecutive quarter of negative real GDP growth, you need the data on the first quarter and second quarter to determine if we are in one.
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Woman caller made an effort to defend Hillary and pointed out that Obama was simply giving people what they wanted to hear. She quoted from “Man of La Mancha: “When you fall for a man with moonbeams in his hands, it’s prudent to recall there’s nothing there at all.”
Brinker replied: “So Barbara, which position is it that you have which position is it that you have in Hillary’s campaign. Tell us about that?” The caller nicely said that she has no position, that she is a volunteer. Brinker said to her: “You are a Hillary volunteer. I appreciate your candor….that’s exactly why I was asking so listeners would know where you are coming from.” (Honeybee EC: So what, Mr. Brinker? Now tell us where you are coming from. You are the one with the carefully guarded microphone.)
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Brinker went on to claim that he had “no brief” for any candidate, but that Obama is really talking about making changes to NAFTA, and the one he talks about the most is the idea of giving tax benefits for taking jobs overseas – telling voters that he does not favor doing it. Then he used this call as another opportunity to bash Hillary again. He said that in the debates, Hillary has been doing something that he has difficulty understanding -- she keeps trashing George Bush. Brinker said: “Has anybody told Hillary Clinton that George W. Bush is not running for anything?”
Caller said that he had been listening to Brinker for 12 years, was a Marketimer subscriber and also gets his email alerts and appreciated everything he had done for him and his family.
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Brinker immediately said: “What’s on your mind.” Caller replied: "Well, recently, you had a buying opportunity that would occur in the low-1300s for the S&P 500, and we were thinking about moving some money from the GNMA fund….and moving it into the S&P 500 fund and obviously, I would do that based on the opportunity with the S&P 500….” Brinker interrupted and told him to look at asset allocation first. (Honeybee EC: The caller, who had just gotten through thanking Brinker for his advice, in essence said that he had not been following Brinker’s advice. Brinker recommends 100% of equity allocation invested, while the caller said most of his money is in fixed income, because he had sold equities when the market was in the 1500s. That is almost comical in light of the fact that Brinker raised no cash when the S&P was in the 1500s.)
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Brinker third hour guest speaker was Barton Biggs. I will write more about the interview later.
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Sunday, Most all of the program, including the opening monologue was devoted to Brinker talking politics. In general, Brinker spoke of Barack Obama in a positive manner. Even the fact that Obama has promised to raise taxes seems like it is okay with Brinker. Brinker’s only concern seems to be where the money is going to come from to pay for all the proposed new programs.
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Brinker repeatedly slammed Hillary again on Sunday, repeating much of what he said yesterday and saying that she spoke “viciously and violently” about Obama, had“called him out,” and insulted him by saying “Shame on you.”
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Nothing new in any of the calls on Sunday, but there was one that piqued my interest. Rick called and said: "I wanted to ask something about taxes. I do a lot of work in that area and I’m also an entrepreneur and I think a lot of people misunderstand the tax system and it was reflected in some of your comments today. For example……. " (Honeybee EC: several seconds of absolute silence followed Rick’s last word.) Brinker came on the air and said: “Hello, Rick. Rick, I think that’s two strikes and you’re out….”
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