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Monday, March 31, 2008

Discussion: Bob Brinker's Stock Market Party

What if Bob Brinker Threw a Stock Market Party and NOONE came? 8^)

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According to CNBC, the S&P 500 Index had its worst quarter since the summer of 2002 and just ended its fifth straight month of drops.

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Let’s investigate what Brinker has been saying about the stock market over the past 8 months -- five months, plus the three months prior:

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August 3, 2007 (S&P 1455.27) Bob Brinker said: “We rate the stock market as attractive for purchase on any weakness that occurs in the area of the S&P 500 Index mid-1400’s."

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September 6, 2007 (S&P 1473.99) Bob Brinker said: “The Marketimer stock market timing model is currently in highly favorable territory as the health restoring summer correction has significantly enhanced our market outlook into 2008.”

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October 3, 2007
(S&P 1526.75) Bob Brinker said: “….we see the potential for the S&P 500 Index to rise at least into the mid-1600’s range next year.”

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November 5, 2007
(S&P 1549.38) Bob Brinker said: “The Marketimer stock market timing model remains in decidedly favorable territory as we move closer to the winter season….the S&P 500 Index should rise at least into the mid-1600’s range next year, in our view….We expect the stock market to set a series of new record highs into next year…….attractive for purchase in the area of the S&P 500 Index mid-1400’s….”

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December 5, 2007
(S&P 1481.16) Bob Brinker said: “….We expect the bull market to continue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs……attractive for purchase….mid-1400’s range…….any additional weakness below this range is regarded as a gift horse buying opportunity.”

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January 4, 2008
(S&P 1468.36) Bob Brinker said: “We expect the S&P 500 Index to achieve new record highs this year and to reach the 1600’s range…….attractive for purchase on any weakness in the S&P 500 Index mid-1400’s range.”

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February 4, 2008
(S&P 1378.55): Brinker did away with the mid-1400’s "gift-horse buying opportunity" (as of January 20, 2008), and he changed the time-frame on his long-time prediction of new S&P highs and the 1600’s (lowered from mid-1600's) S&P target. Brinker said: “As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S&P 500 Index to work its way into record new high ground by late this year or in 2009…….potential to carry the index into the 1600’s by late this year or in 2009.....we recommend a dollar-cost-average approach for new stock market investing at this time.”

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February 10, 2008, Brinker issued a special bulletin saying that he believed the market was bottoming and he issued a new attractive for purchase gift-horse buy-level of “low 1300’s.” Here are some excerpts from Brimelow’s February 21, 2008 article quoting Bob Brinker’s February 10th special bulletin which shows Brinker’s NEW BUY LEVEL and NEW MARKET BOTTOM. Peter Brimelow wrote:

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“All of them (“Bold Bulls”) seem shaken by the economy's deterioration, but still positive long-term. Brinker said recently: "Marketimer views the establishment of a correction bottom as a process which unfolds over a given period of time. This process involves the initial establishment of a closing S&P 500 Index low, followed by a short rally, followed by a test of the area of the previously established low on reduced trading volume. The initial closing low in the current stock market correction process occurred on Jan. 22, when the S&P 500 Index closed at 1310.50. The market subsequently rallied for eight days, at which point it began the process of testing the area of the Jan. 22 closing low."
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"In our view, the correction bottoming process has proceeded with a high degree of historical consistency to date. We have witnessed a decided reduction in selling pressure during the testing process, which is essential to a successful outcome. We now rate the stock market attractive for purchase on any weakness that occurs in the current area of the S&P 500 Index low 1,300s, or any minor weakness that occurs below that level."

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http://www.marketwatch.com/news/story/bold-bulls-bloody-unbowed/story.aspx?guid=%7BEC77C4E7%2D96CB%2D4BDC%2DAD15%2D2DC81C4ECB51%7D
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March 4, 2008 (S&P 1330.63) Brinker reiterated what he had said in the February 10, 2008 special bulletin and said that the market was establishing a bottom in “textbook fashion over the past two months.”

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RECAP:

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Bob Brinker is 100% bullish, 100% invested, and has stated on Moneytalk, that we are not in a bear market.

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June, 2007, Brinker said that the "secular bear megatrend" (which he claimed was running concurrently with a "cyclical bull" market), had ended the prior year (as of June, 2006).

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Brinker originally said this current cyclical bull market would last 1-2 years -- that was back in March, 2003.

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So if he truly believes in "secular trends," as logic would dictate (because how can he claim something ended unless he believed it had started), then the only conclusion one can make is that he now believes we are in a "secular BULL megatrend."



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Saturday, March 29, 2008

Summary: Bob Brinker's Moneytalk

Discussions, Commentary and Excerpts, March 29, 2008
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Bob Brinker’s Moneytalk was pre-empted on KGO for their yearly Leukemia Cure-a-thon, which has raised $millions for cancer research. You can make a donation by going to the website.
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http://www.kgoam810.com/

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STOCK MARKET Bob Brinker only mentioned the stock market once today. In his opening monologue he said: “The S&P 500 standing in at 1315. The Dow Jones Industrial Average standing in at 12,216 and the Nasdaq Composite Index standing in at 2261."

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Honeybee EC: This is the first time that Brinker has given the data on the Nasdaq Index since the correction began in January. However he did not give the percentage of the correction on any of the indexes. (Those percentages are available in Kirk's article just previous to this one.) While Brinker uses the S&P as a monitoring gauge for the stock market, the Nasdaq is important because his Model Portfolios I and II are holding a small percentage of RYOCX. More importantly, Brinker has never closed the 2000-QQQQ trade. So for those still holding Q’s purchased at $83, as per Brinker's recommendation, this correction has to be especially painful.

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TREASURY YIELD Bob Brinker said: “The 3-month Treasury Bill yield which was down as low as .39, a 50-year low, has rebounded and stands at 1.37. The 10-year Note at 3.46, and the 30-year Treasury Bond at 4.34. Notice there’s almost a full 3% positive slope between the 91-day Treasury Bill and the 30-year Treasury Bond. Now obviously, when we saw the Treasury Bills down there below ½ of 1%, we had to view that as a short-term aberration as the flight to quality was going on in Wall Street, but things have settled down a bit now. As a matter of fact, the primary dealers offered only $86billion of bids at Thursday Fed auction of Treasuries. They auctioned off $75billion of Treasuries for 28 days. So that was actually less than expected. The Fed now has direct loans to security firms through the discount window at about 28% week over week. And all in all, there are considerable write-downs going on, as you know, in the financial sector.”

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ECONOMY Bob Brinker said: “We did get news on the economy this week about consumer spending. It rose 1/10 of 1% in February after rising 4/10 of 1% in January. All of this is consistent, as we have been talking about on Moneytalk, with a real possibility that we could see a negative first quarter real GDP. We certainly know that even if the real GDP number in the first quarter does not drop, it’s not going up very much, that there’s a real possibility we could see a negative real GDP number in the first quarter. And as for the second quarter, that will depend on how much impact those stimulus package checks have on consumer spending in the second quarter. I think that will probably be the key determinate of whether we get an official recession, defined historically as two consecutive quarters of negative GDP.”

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Brinker explained that he prefers to stick to the “historical definition” of a recession -- that he’d rather not change the rules. Because if slowdowns are defined as recessions, we could look back and say there had been hundreds of recessions and it becomes completely subjective.

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2008 ECONOMIC STIMULUS PACKAGE Legislation that will result in checks being sent to over 130 million American households. This is one of the most massive infusing of capital in the history of the U.S. The checks are expected to go out in May. Many taxpayers will get $600 ($1200 per married couple), and each qualified child $300 (no limit on number of children). All you need to do is “qualify” and file a tax return (even if you don’t normally file a tax return) to get your check in the mail. This is not connected to refunds and refunds will be made separately.

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Brinker is convinced that this money will all be spent, even if people use it to pay down credit cards, he believes they will just run the cards back up.

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Caller: Opposed to any kind of government bail-out, such as with Bear Stearns. Brinker explained that the government did not bail out Bear Stearns with tax money – rather, the Bear Stearns stock holders will be receiving J.P. Morgan stock. Brinker again touted the use of Keynesian economics and the advantages of government intervention when it is needed to help the economy. Brinker also said that he had heard Hillary Clinton mistakenly refer to Bear Stearns as a government bailout.

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Caller: Asked about the $5,000 limit on buying I-Bonds. Brinker said that he had been critical of the Treasury for reducing the limit from $30,000 to $5,000 in order to accommodate the small investor, and he thinks it was just another mistake on their part. He also talked about the high-yielding non-callable Treasuries that are still out there – another “bizarre” mistake by the U.S. Treasury.

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Caller: Wanted to know if she could give $12,000 to her son and another $12,000 to her daughter-in-law in the same year with no taxes. Brinker explained that the answer is yes, she could give $12,000 tax to anyone she wants to – a relative or a stranger -- with no income tax consequences.
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Caller: IRA question. Brinker told the caller if he qualified, he would recommend the Roth over the traditional IRA.
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Caller: Question about TIPS. Brinker said that real yields on TIPS (which you are stuck with for the entire duration of the ownership) are at record lows now – but he is okay with up to 10% weighting in TIPS for established positions.
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Caller: Where to buy new issue bonds? Brinker said to go to Treasury Direct (no commission). http://www.treasurydirect.gov/ For munis, you need to go through a broker who is involved directly in bringing out new issues. Seller pays commission on new muni issues.
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Caller: Retiring in a couple of years, and wanted detailed help with his portfolio. Brinker advised him to do a “top-down” analysis and then work toward a “balanced portfolio.”

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At the beginning of the second hour, Brinker talked at length about the candidates and the election. He asked, “Are the Democrats snatching defeat from the jaws of victory?.......when you look at the polls right now, it certainly looks like they’re on their way to doing that. It’s kind like Democrats fight while Republicans unite.......” Brinker said that Hillary has a 10 point lead in Pennsylvania and may be headed for victory there. Brinker gave a lot of tracking poll results. In the general election, “Cactus John McCain” is leading Obama by a 7 point lead and the figures are very similar against Hillary.

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Brinker commented that the Swift Boat Campaign may look like “child’s play” when it comes time for the 527 political organization advertising. Brinker said to just wait until you see what they do to Obama with the “reverend” Wright speeches.

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Brinker announced that there are big differences opening up between “Cactus John” and the democrat contenders. Brinker said: “Cactus John now supports extending the George Bush tax cuts, including the 35% cap on top earners. John McCain opposed that tax cut when it went in, now he’s for it.......On the Democrat side, in both cases.......they want to raise taxes on those making above $250,000 a year. And the most rumored number is 39.6, when it comes to the top bracket. Capital gains, qualified dividends, same thing. John McCain wants to extend the 15% top Federal capital gains tax. He wants to extend the top qualified dividends tax. In both cases, the democrat nominees would like to see those taxes go up. Now it’s presumed that 20% would be the number, but that hasn’t really been addressed........the amount of money they want to spend – these democrats – they want to spend money on health care. And to get the money they want to spend, they want to jack up the tax rates, so whether they will stop at 20% or not is conjecture.......right now Cactus John is in a pretty strong place going into the general election, even though many Republicans can’t stand the guy.”

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Caller: Second time today a caller referred to the “government bail-out of Bear Stearns.” It would have been understandable it Brinker felt some exasperation as he explained again that Bear Stearns shareholders are being paid with J.P. Morgan common stock and it was NOT a government bail-out. He also repeated that Hillary Clinton had made the same mistake this week.

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Caller: Asked about FDIC coverage. Brinker cautioned listeners never to have a “penny” in the bank unless it has complete FDIC coverage. Brinker issued a warning about Fremont General Investment and Loan in California. It has been given a notice to take “prompt corrective action” by the FDIC. They were given the directive to raise capital or find a buyer in the next two months – by May 26th. Brinker commented that this has happened 14 times in the past 15 years – about once a year. In 6 cases the targets of these directives have failed very soon thereafter. He also noted that the stock is down to 52 cents from over $20 a couple of years ago.

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http://www.fremontgeneral.com/phoenix.zhtml?c=106265&p=irol-fremontHome

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Caller: Wanted to know if he should sell his shares of Bear Stearns. Brinker commented that the only reason why Bear Stearns might sell higher than $10 a share would be if someone came in with a better offer -- but he sees no reason why anyone would do that, or why J.P.Morgan would raise its offer. Brinker said: “Bear Stearns is a stock that has had consequences to the shareholders. It traded at $170 a share last year. It’s $10.78, and as that caller noted, it’s worth even less in terms J.P.Morgan shares which is a fixed number of shares time the price of J.P.Morgan. J.P.Morgan stock, after having an initial bounce has been weak – has come down to $42.71. So taking the specific share offering for Bear Stearns, actually comes out to less than $10 a share now. And this is how it works out there in a situation like this – highly volatile situation.”

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Caller: Asked about SIPC insurance at brokerage houses. Brinker said that SIPC covers up to $500,000, of which up to $100,000 can be in cash.

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In Brinker’s third hour monologue, he made some comments about the national debt (which is the accumulation of all of the money that has been borrowed by the Federal government from day one). Right now that is over $9Trillion and taxpayers have to pay interest on it to the tune of $100's of Billion a year. The national debt is mostly represented by Treasury Bills, Treasury Notes, Treasury Bonds, Saving Bonds, etc. The deficit (how much we are in the red every year) is in the $100s of Billions. This is added onto the national debt.

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Brinker’s guest speaker today was Charles Konigsberg, author of “American Priorities.” Website:
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http://www.washingtonbudgetreport.com/


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Stock Market Update

Weekly Market Statistics

It looks like the NASDAQ remains in bear market territory while the others major markets are off their lows and down less than 20%, but still painfully down.

Corrections are regular parts of the market. I see them as great opportunities to accelerate your dollar cost average plans if you are below your target asset allocation and are on a DCA program to get to your target asset allocation. If you are like me and take profits as the market goes up to keep a fairly constant asset allocation, then corrections are great opportunities to get some shares back at cheaper levels to regain your target asset allocation.

Correction Statistics for 03/29/08

S&P 500 Chart
(Using Intraday prices):
Last Market High 10/11/07 at 1,576.09
Last Market low 03/17/08 at 1,256.98
Current S&P500 Price 1,315.22
Decline in Pts 260.87
Decline in % 16.6%
Max Decline 20.2%

This means the correction from intraday high to intraday low is 20.2% and we are currently 16.6% off the peak.

The decline from the high to the low on a closing basis is 18.6%
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DJIA Chart
(Using Intraday prices):
Last Market High 10/11/07 at 14,279.96
Last Market Low 01/22/08 at 11,508.74
Current DJIA Price 12,216.40
Decline in Pts 2063.56
Decline in % 14.5%
Max Decline 19.4%

This means the correction from high to low has been 19.4% and we are currently 14.5% off the peak.

The decline off the high on a closing basis has been 17.1%

NASDAQ Chart
(Using Intraday prices):
Last Market High 10/31/07 at 2,861.51
Last Market Low 03/17/08 at 2,155.42
Current NASDAQ Price 2,261.18
Decline in Pts 600.33
Decline in % 21.0%
Max Decline 24.7%

This means the correction from high to low has been 24.7% and we are currently 21.0% off the peak.

The decline off the high on a closing basis has been 24.1%

Congratulations to anyone who "market timed" from equities to Gold (GLD on this graph) last October!

For more of my recent articles, see:
BTW, if anyone wants to see what my monthly newsletter sentiment update looks like, then check out this PDF file: "Take Profits & Sell Sentiment Indicators from The Market Top." The page of my newsletter is from last year with the markets near an all time high at 1540.

The S&P500 was at 1540 when I said take profits in my monthly newsletter shortly after we had all five of the indicators say BUY on a correction.

Unlike on October 19, 2007, I am NOT saying to sell or take profits now!!!

Subscribe to my newsletter NOW to see what I recommend today!
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Tuesday, March 25, 2008

Bob Brinker Calling Bottoms Early and Often

Many in the Bob Brinker-entourage are shouting that Brinker correctly called the market bottom in January. Well, as someone once said, if you call a bottom often enough, then eventually you nail one! But it is not good to put new wine in old skins -- you can’t make a silk purse out of a sow’s ear -- and you can’t un-ring a bell. Brinker spilled the milk and that’s the name of that tune. 8^)
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But let’s get serious because trusting Brinker's market-timing can be dangerous to your financial health. One could even ask what good it does to call a bottom at 1331 if you were 100% invested since 1565 and have watched the market drop to 1251. Is it logical to then say "we were right" when it recovers to 1331?
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This correction has been a complete wipe-out of everything Brinker has been asserting for months (except the S&P has not broken into his 20% bear rule yet -- some like Larry Swedroe, argue that rule is just plain silly). So how is it possible for him to be “right” after the fact, no matter what he says? Looks to me like all he can do is damage-control.

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He admits that he didn’t see this 15%+ (Nasdaq 25%) correction coming. He’s had his subscribers 100% invested since the top. He lowered his all-new-money-in buy-level (after it had been in place for five months) from “mid-1400’s” to “low-1300’s.” Does anyone think those who sunk a chunk of new money in the market at S&P 1470, and watched it drop to a low of 1251, think Brinker’s bottom call in “low-1300’s” is “right?”

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Now let’s do something that Brinker will NEVER DO. Let’s take a look at the whole picture from June 2007 until now.

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In June, 2007, Brinker claimed that a "secular bear megatrend" had ended the previous year -- in June 2006. (Wrong again...there was no "secular bear megatrend" as Brinker touted for over six years -- not even by HIS OWN definition!) Brinker then became a raging bull!

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In August 2007, Brinker began recommending "mid-1400's" as "attractive for purchase" for all new money. He bragged that “Several excellent buying opportunities occurred….” He repeated this advice each month through January 4, 2008 Marketimer.

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In October/November 2007, Brinker was predicting S&P "mid-1600's," and almost zero chance of a recession.

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In December 2007 and January 2008, Brinker was predicting (he removed the "mid") S&P in the “1600’s range” in 2008.

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December 2007, Marketimer, Brinker said: “We continue to rate the market attractive for purchase on any weakness in the area of the mid-1400’s range of the S&P 500 Index. Any additional weakness below this range is regarded as a gift horse buying opportunity. We prefer a dollar-cost-average approach for new purchases when the S&P 500 Index is aboe the mid-1400’s range.”

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January 6th 2008, Brinker said the stock market conditions were "favorable as we enter 2008” and he took a whack at the “bad news bears.” He repeated his prediction of new highs reaching into the “1600’s range.”

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Then the market began its fall! Brinker was absent from Moneytalk on January 12-13, 2008.

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January 19-20th, when Brinker returned to Moneytalk, he said that the correction was more than he "expected." The truth is, Brinker did not "expect" any correction at all (beyond the usual 10% maximum that he says can happen any time).

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January 20, 2008, Brinker issued a special bulletin retracting his “mid-1400’s” buy-in level and replacing it with dollar-cost-average ONLY.

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February, 2008, Brinker told Moneytalk guest, Larry Swedroe, that we have not had a “bear market.”

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February 10, 2008, Brinker said that the correction bottom had unfolded on January 22 with the S&P 500 Index at 1310.50. Brinker issued a new “all-new-money-in” buy level at th S&P 500 level of “low-1300’s.”

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Here is an excerpt from Peter Brimelow's published quote from February Marketimer. Brimelow wrote:

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“All of them (“Bold Bulls”) seem shaken by the economy's deterioration, but still positive long-term. Brinker said recently: "Marketimer views the establishment of a correction bottom as a process which unfolds over a given period of time. This process involves the initial establishment of a closing S&P 500 Index low, followed by a short rally, followed by a test of the area of the previously established low on reduced trading volume. The initial closing low in the current stock market correction process occurred on Jan. 22, when the S&P 500 Index closed at 1310.50. The market subsequently rallied for eight days, at which point it began the process of testing the area of the Jan. 22 closing low."As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S$P 500 Index to work its way into record new high ground by late this year or in 2009."

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http://www.marketwatch.com/news/story/bold-bulls-bloody-unbowed/story.aspx?guid=%7BEC77C4E7%2D96CB%2D4BDC%2DAD15%2D2DC81C4ECB51%7D

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March 4, 2008 Marketimer, Brinker said: "The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."

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Here are some comments on the subject from other readers:
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Pen-name tamworth wrote:
"Well, looks like Bob may have nailed another one...I really don't care if the correction went farther than he thought..just gives me a chance to load up even more..."

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Jeffchristie replied: "Nailed another one? Now that's a joke. Bob told his subscribers to lump sum into the market at S&P 1450. The markets recent low was was in the high 1200's. This morning it sits at 1352 with the futures pointing to a lower opening. Good to see you didn't follow his advice and shoot your wad at 1450 as he recommended. I think Bob has egg all over his face on this one.
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I am glad I don't invest the way Brinker does."

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Pen-name Quis wrote: “Anyhoo, Bob says it's no big deal the market is down 15%; we're not in a bear market. But what happens if the market goes sideways for the next two or three years and stays down between 1 and 19% from its high.”


Saturday, March 22, 2008

Bill Flanagan on Moneytalk

Bob Brinker's Moneytalk guest host Bill Flanagan, Saturday, March 22, 2008

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STOCK MARKET
In general, Flanagan does not recommend that long-term investors sell out of the stock market at this time. In the opening monologue, Flanagan announced the latest stock market statistics.
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Here are the statistics as written by Kirk L:

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"Market Statistics for 03/22/08
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Year to date, the S&P500, DJIA and NASDAQ Composite are down 15.6%, 13.4% and 21.1% from their all time highs made in late 2007.
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On an intraday basis, the S&P500 and the NASDAQ Composite have been down as much as 20.2% and 24.7% while the DJIA has "only" been down 19.4%, just shy of the 20% decline required for an "official" bear market definition some use."

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http://kirklindstrom.blogspot.com/2008/03/market-update-for-march-22-2008.html

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Flanagan pointed out that the recent drop in interest rates has been very difficulty for those who depend on risk-free investments for income. He made the following remarks:
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"Without a sound market, without a dollar, without sound trade, without a sound economy, we're nowhere. And those are obviously the priorities that we have to keep in mind. We've been there before. Interest rates were as low as 1% in 2005, so hopefully the economy gets righted and rates will begin climbing again to an acceptable level but one that will make the risk-free retiree a lot happier than he is right now."
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IMO, the remainder of the program did not add anything that would be new information for readers.

HAPPY EASTER TO ALL___Honeybee

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Bob Brinker on Moneytalk Today?

Bob Brinker usually takes holiday weekends off from Moneytalk, so I do not expect to hear him on the air today.
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I wanted to call your attention to an outstanding market update that Kirk L. has written here:
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http://kirklindstrom.blogspot.com/2008/03/market-update-for-march-22-2008.html

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Kirk also wrote the following about Bob Brinker's performance record and Mark Hulbert's assessment:
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"......Since October 15, 2000 when Bob Recommended QQQQ to his investors for up to half their cash reserves, my newsletter explore portfolio is up 41.7% while his QQQQ is down (46.4%) You can see why I recommended and continue to recommend my Explore Portfolio over Bob's QQQQ.

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From Hulbert:
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"Brinker’s fund selections on average have lagged the market. The HFD reports an 11.5% annualized gain for his “Aggressive” portfolio, which is 0.9 percentage points per year less than what this portfolio would have made if each of its funds were invested in the DJ Wilshire 5000 during the times they were owned.
__ March 2008 by Mark Hulbert on Pg 3 of the March 2008 issue of "The Hulbert Financial Digest"
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"Please note: In late 2000, Brinker forecasted a several-month bear market rally and recommended an investment in the NASDAQ 100 Index—a trade that turned out quite unprofitably. However, because Brinker at the time of making this forecast chose not to make this trade part of his model portfolios, his HFD record has not suffered as a result."
__ March 2008 by Mark Hulbert on Pg 3 of the March 2008 issue of "The Hulbert Financial Digest"
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Add the QQQ trade and he loses another 30% from his Aggressive portfolio!"
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http://home.netcom.com/%7Efanclubs/BobBrinker/Kirk/QQQQEffectOnPortfolios.html
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Monday, March 17, 2008

Feedback About Bob Brinker's Market-timing

Bob Brinker's unwillingness to talk about the stock market and allow callers on the air to ask questions about it, may not be the wisest way for him to handle this correction. Back in 1998 when we had an intermediate-term correction, he would usually offer on-air guidance and reassurance. This time, he is acting as though it's no big deal.
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Here are some very recent comments:
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Pen-name, Newslettercheat said:
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"Ok, Brinker was bullish at the top and he has been bullish all the way down. Brinker nearly guaranteed there would be no recession, making fun of those who saw bad times coming "The bad news bears are betting there will be a recession; I'll take the other side of that bet" the cocky Bob Brinker who specializes in being certain with OPM (other people's money).
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When the market hit 1450, Brinker gave another one of his famous "go all in" calls.
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When the market hit 1330, he gave another one of those go all in calls.
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Now the S&P is at 1259 and that is with unprecedented moves by the Fed who is throwing money at the problem like a drunken sailor--yet still there is a big problem.

Do you diehard Brinker alibi folks truly believe that Brinker and his claimed "model" had the proper view of this market?
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If not why do you think that he was so badly wrong with this amazing model? To me it seems that the model's performance seems to result in calls to change allocations that are wrong as often as they are right. "
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Pen-name InvesTing said:
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"Besides being dishonest in it's premise--Bob Brinker had called for 1450 being a great buying opportunity as the market dropped like a rock right through it--to give Brinker credit for making any call of a bottom after a series of failures in this market is beyond stupid. We know that somewhere before zero he will have to be right, but simply calling a new price as the market dips is not something a person of normal intelligence would pay for."
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Pen-name, Jeffchristie said:
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"It Looks like Mr Bowtie is sitting in the catbird seat with that watermelon smile while Bob Brinker has egg all over his face."
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Pen-name, Pig said:
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"NOOWAY is brinker going to show up and get calls on a mid-1450 buy.............zapped
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NOOWAY is brinker going to show up and get calls on a low 1300 buy.............zapped
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Hello.............1275.....................want to try again Bob?
(Roar)
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Newsletter sales ain't going to be so hot this quarter...................."
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Pen-name, Princepro110 said:
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"The Bear Sterns meltdown and sale that was consummated before Brinker went off the air yesterday showed again how little "inside" handle Brinker has on the "street".( I think he said the price would be a little under $18 a share>) I don't think I am being too critical of Brinker but his followers claim that he has foresight to anticipate the economy and markets. Why then has he completely missed this current meltdown in the financials and their new instruments while seeing all these BUY opportunities while the market seeks a bottom?" March 17, 2008 6:39 AM

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Pen-name, "absolutereturns" said:
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"I wonder how many people have canceled their Market Timer newsletters ? I can't bring myself to listen too much any more.....it's alomst sad. Many people agree that BB provides a nice radio serice to offer information and generalized suggestions on investments....but a market timer or just being dialed into the current, market, economic, global world of investments he's not. Not even close. It seems like whatever formal training and education BB had back in the day is all he has to rely on....he hasn't evolved or changed with the times.... his models don't work, his taking govt stats on cpi for example don't work and are naive....as is his only looking as measaures like M1 to determine money supply....sad. he should hang 'em up, write a going away book and retire. He should also appologize to every 65 yr old who has followed his advice over the past 5 months while riding their portfolios down with the market." March 15, 2008 2:14 PM

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Pen-name, "youdidnthinkthisthrough" said:
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"Here is how it works for Bob Brinker. If he recommends a stock that goes up or a fund that goes up, brag about it as much as possible and take calls about it. If the fund goes down such as TEFQX, take it off the books, and never talk about it again.
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Now with the timing, the model is similar. Make a buy signal, say 1450. If it sticks and the market goes up significantly, you can brag about how great an opportunity it presented and take calls thanking you for it. If the market goes down a lot, issue a new buy signal, say in low 1300s. If that sticks, you can brag about it and get great press about it. If it goes lower, just issue a new buy signal! Remember, he did that with the QQQQin January 2001.
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One more point about the business model, when Bob Brinker is just completely wrong about things, such as gold, try not to talk about it but if a caller insists that he wants to own gold, say only own it as a small percentage of your portfolio and then if gold goes up he can brag that he recommended it, even though he was bearish on it.
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Last point on the business model, when Bob is wrong about secular moves in general such as being wrong about the rise in commodities, or wrong about the declining dollar, just spin it so you seem like you called it all along.
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This post may be copied and posted anywhere on the Internet, on any blog or web site as the more people that find the truth about Bob Brinker's business model the better."
March 15, 2008 12:53 PM
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Jack Swanson said:
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"....Hey Bob, I know, pal...you "didn't see it coming!"
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I call again on ABC radio to remove this clown from the airwaves...he is a CLEAR AND PRESENT DANGER!!!!!!!!!"
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Pen-name, James wrote:

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"Brinker is clearly wrong about this market. This time, he's wrong about the whole market, not just QQQ. I heard him give the advice to one of his guests, though, that I think he follows: "If you must predict, predict often." He'll most likely come out with a DCA recommendation, hoping that the market will wipe the egg off his face before he has to go outright bearish. He will be no better than any of the other financial advisors who come out with recommendations after its too late to benefit, aka Moody's Rating Agency on the banks."

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And James said:
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"Did you hear the man who called Brinker's show two weekends ago and said he had sold out when the S&P 500 was in the 1500's and was looking to buy back in at Brinker's new 1300 buy signal? In my mind, it raised the question of why Bob had not been as astute as this man, and why would the caller trust Brinker for any future recommendations?"

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Saturday, March 15, 2008

Commentary: Bob Brinker's Moneytalk

Brief Summary, Commentary and Moneytalk Excerpts, March 15-16, 2008

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STOCK MARKET Brinker’s only comments about the stock market on Saturday: “Lots going on in Wall Street. The Standard and Poor’s 500 Index, with a lot of volatility along the way, closed out the week 5 points lower than it was a week ago at 1288.14. That represents a 17.7% decline from its all-time-high of 1565. The Dow Jones Industrial Average for the week closed with a small gain of 58 points. Closing out at 11,951 and that index is 15.2% below its all-time-record-high.

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(Honeybee EC: Brinker did not give the stats for the Nasdaq even though two of his model portfolios include holdings in the Nasdaq Index Fund, RYOCX.) The Nasdaq has lost 693 points from its 52-week closing high of 2861 on 10/31/07, to its closing low on 3/10/08 of 2168. That is approximately 25%. It closed Friday at 2212.)

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Brinker continued: "Plenty going on in the financial markets – driving the markets. In fact, Friday was an amazing day in the sense that it started out so positively. When the market went into Friday trading, coming off Thursday’s close, it closed around the 1315 level for the S&P 500, which at that point represented a gain of about 22 points for the week – a little better than 1 ½%. And then the market was poised to add to those gains because of the exceedingly favorable news that we got on the Consumer Price Index......"

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INFLATION Brinker said: “.......The Consumer Price Index came through for the month of February with the best possible outcome – zero inflation for headline inflation, including everything.......and zero inflation for the Core Index, which excludes food and energy, for the month of February. And as a result of zero inflation reports for the month of February, the market was poised on Friday morning to go sharply higher. And that’s when the news broke in Wall Street.......”

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BEAR STEARNS Brinker said: “.......And it was news that created a tempestuous trading pattern all day long on Friday. And that of course was the news that the 85 year-old Wall Street firm, Bear Stearns.......was forced to hold a call with J.P. Morgan’s CEO on Thursday night to set up emergency funding for Bear Stearns. And the way it was established was that the Federal Reserve is channeling the money to Bear Stearns through J.P. Morgan. And this is now on record as the largest government bail-out of a United States investment firm in history.......shares declined about 47% in one day, down to about $30 per share.......stock was trading at $160 share early last year.”

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Bear Stearns Monday, March 17 update (from Charles Schwab):
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JPMorgan (JPM $37 1) has acquired the fifth largest US investment bank Bear Stearns (BSC $31) for a dramatically low price of $2.00 per share, or about $236 million. According to the Wall Street Journal, Bear Stearns had a stock market value of $3.5 billion on Friday and was worth $20 billion in January 2007. The fire-sale price of the deal is related to the massive decrease in BSC's client confidence, which prompted a liquidity scare, forcing the brokerage firm to make a decision to sell the firm at any price or face bankruptcy. The Federal Reserve will also assume management of $30 billion of BSC's debt to help JPM finance the deal.

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This weekend, not one caller asked Brinker anything about the stock market. (Honeybee EC: It defies logic to believe that “noone” would make an effort to get on the program and ask about the stock market during this wild ride and almost 20% drop -- over 20% in the Nasdaq. IMO, stock market calls are screened and not accepted. Brinker’s subscribers who are fully invested with their equity-allocation (as per his advice) have lost a sizeable amount of money since January. In the past, Brinker would often allow questions about his model portfolios -- especially Portfolio III. Why none recently? Today, one caller mentioned that he was in Portfolio III, but Brinker did not respond to what he said, or offer a detailed explanation about the portfolio, like he has done at every opportunity in the past. What is Brinker afraid of?)

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A caller asked, with the market being the “way it is now,” would it be a good time to take money out and put it in GNMA’s. Brinker did not answer the question. Instead, he told the caller the current NAV of Vanguard’s GNMA Fund and explained that the NAV usually fluctuated between $9.50 and $10.50. He also explained that if the economy recovers, interest rates may rise and that would affect their NAV.

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A caller did not know what a money market was. Brinker patiently explained.

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A caller gave Brinker credit for having sold commercial real estate in California last fall. (Honeybee EC: I do not recall ever hearing Brinker recommend selling real estate unless it was on an individual basis and based on a “spreadsheet” analysis of a particular property. Perhaps that is what happened.)

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A caller thanked Brinker for recommending I-bonds in 2001. She had invested $10,000 in them. Brinker said that she had “sunk the battle ship” with this purchase and should hold them until maturity.

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Several callers, some with $multi-millions, were concerned about FDIC and/or SIPC insurance. Brinker recommended that they not exceed the limits of the insurance, and to have it in writing.

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Bob Brinker’s Moneytalk guest on Saturday was Stephen McClelland, who wrote: “Full of Bull: Do What Wall Street Does, Not What It Say, To Make Money in the Market.”

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Stephen McClelland said: “I think we are in a severe, difficult economic scenario over the next two or three years. Probably the worst economic period we’ve had in 30 years or so – since the early ‘70’s. I think you are going to see some companies go bankrupt. We are already talking about companies in the financial sector and maybe homebuilding other sectors like that.......I think this is going to be a somewhat extended bear market. It’s not a six-month wonder. We’re not looking for second half of this year everything to turn up nice and rosy and so forth.......it’s going to take a long time to work out.”

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Brinker asked: “Are you actually expecting the market to go down 50%?”

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Stephen said: “Well, I don’t know about 50%, but 18% is relatively mild in my view. I think there’s a long way to go yet, both in direction downward and in time spent. And these bear markets are always tricky…….I just think this market has a ways to go yet before we are out of the woods – quite a ways……..I have been cautious a long time. I didn’t get cautious a month ago……..Maybe I got cautious a little early, but better early than late…….My sound investment philosophy is all about preserving capital – even in a good times, but now especially. And now I think the first thing to do, you need to recognize that we are in a bear market. And the evidence is pretty obvious if you talk about the sub-prime loans, the financial sector, the bank problems, the mortgage problems, the real estate home problems, the consumer spending, the recession. Now corporate profits rolling over, even, I suspect inflation is there. Maybe we’ll call if stagflation. It’s…. the deficits, it’s unbelievable. So, you have to open up your eyes and admit that we are in a bear market…..You have to really look at your portfolio to preserve your capital, you have to focus on value stocks, low-multiple stocks, dividend – high yielding stocks, cash, other things……..”

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Brinker replied: "Why do you think that the brokerage firm recommendations over the long term have failed to keep up with the indexes?"

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Stephen said: “…….Analysts are notorious bad stock pickers.”

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Brinker made this disclaimer after the interview ended: “I want to thank our guest, Steve McClelland for joining us. Let me also comment to our Moneytalk listeners that we like to have guests on the program to give their opinions. They give their own opinions and their opinions are theirs and theirs alone. Anybody who knows my views, know that they differ significantly in many, many cases – just like today. So I exposed you the various views out there, and you make your own judgment as you hear them along the way."

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Today, Brinker’s politic-talk was lengthy and frequent. He bashed the White House for not “getting involved” in bailing out bad mortgage holders. He gave the latest Rasmussen poll which has swung decidedly away from Barack Hussein Obama and toward Hillary Rodham Clinton. Brinker called it a “sea change,” which he attributed to Obama’s connection to the racist “minister” of the church that Obama has attended for 20 years. Brinker said some of the comments by this “minister” were the most “hateful” he had ever heard toward the United States. (Honeybee EC: I agree and then some!!)

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Sunday, March 16, 2008

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Brinker said: "I am not a seller of stocks. I'm not going to recommend sale of stocks."

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Brinker does not recommend high yield bond funds. Even though -- as he explained Sunday -- his Marketimer fixed-income portfolio, which does not include any stocks, is weighted 15% in the Vanguard High Yield Corporate Fund.

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Of course, we all know he likes Vanguard GNMA Fund too. And he does not recommend going long-term on investment grade bond funds.

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Friday, March 14, 2008

Bob Brinker's Market and Recession Predictions

For those looking for information about Bob Brinker's current market views, I will do a synopsis. ( Some of the following data was published by Peter Brimelow on Marketwatch. Please see my previous articles for Brimelow's excerpts of Brinker quotes.)
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Bob Brinker did not expect this correction -- as he clearly stated on Moneytalk. It took him totally by surprise. In the January 4, 2008 Marketimer, he was still recommending mid-1400's as "attractive for purchase" for new money. After the correction took the market down well below 1400, Brinker removed it on January 20th.
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Bob Brinker's latest stock market views:
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February 4, 2008 Marketimer. Bob Brinker said: "As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S$P 500 Index to work its way into record new high ground by late this year or in 2009."
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February 10, 2008 special bulletin. Bob Brinker said: "We now rate the stock market attractive for purchase on any weakness that occurs in the current area of the S&P 500 Index low 1,300s, or any minor weakness that occurs below that level."
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March 4, 2008 Marketimer, Brinker said: "The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."
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1) Brinker's portfolios are 100% invested.
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2) Brinker is not bearish and does not expect a bear market.
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3) Brinker recommends "low 1300s, or any minor weakness" as "attractive for purchase." (This recommendation would apply to new money only for those who follow his advice and are fully invested.)
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RECESSION PREDICTIONS
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March 6, 2008, Moneytalk, Bob Brinker said:
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Now as I have said, there is an even-steven chance that the first 6 months of 2008 will see negative GDP growth in real terms. If that were to happen, and I’m only putting the odds of that at 50-50, but if that were to happen, that would mean we would get a first quarter negative GDP report which does look likely, right now. And then in the second quarter of the year, that remains to be seen because that is when that rebate check, stimulus package kicks in with the checks arriving for the most part in May. A lot of that will be spent in May and June, and some of it could be spent in anticipation in April. So the second quarter get some sort of a lift out of the stimulus package and so we don’t know yet. And if it does not, those who are guaranteeing a recession won’t have their recession because the traditional and historic definition of a recession is two straight quarters of negative real Gross Domestic Product. Right now we think there’s a pretty good chance we will get a negative first quarter, but the second quarter is very hard to call and that’s why I’m leaving the odds of a recession……at 50-50…………..”
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March 4, 2008 Marketimer, Brinker said: "We continue to believe that the door is open to the possibility of a brief and mild recession during the first two quarters of 2008."

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Thursday, March 13, 2008

Bob Brinker and Hulbert's Conclusions

According to Mark Hulbert, Bob Brinker's newsletter has "one of the best" market-timing records over the past two decades. Hulbert wrote this in his Marketwatch article March 12, 2008:
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"Technical support for the idea that the correction's bottom has been seen comes from the market's diminished trading volume in recent weeks. Bob Brinker, editor of Bob Brinker's Marketimer, the newsletter with one of the best market-timing records over the last two decades, explained why in the March issue of his newsletter, published earlier this month:
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"The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test.""
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Honeybee wonders why Mark Hulbert is so willing to overlook several important facts in order to exaggerate Brinker's performance record. For example:

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1) In the February, 2008 issue of Hulbert’s Financial Digest, Brinker did not make it into the top 5 “Performers on Unadjusted Basis” for the last 20 years (or 5, 10, 15, or 25 years). Even with Hulbert ignoring the QQQQ-trades and averaging Brinker’s three model portfolios – one of which contains about 50% bonds.
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2) Brinker's "off-the-books" QQQQ-trades of 2000, 2001. Here is the copy of the footnote that Hulbert used to justify giving Brinker a mulligan on the trades. Please note that even the footnote is based on false information. Brinker DID NOT choose to make the trade part of his model portfolios AT THE TIME OF MAKING THE FORECAST. Hulbert's footnote:

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"PLEASE NOTE: In late 2000, Brinker forecasted a several-month bear market rally and recommended an investment in the NASDAQ 100-Index--a trade that turned out quite unprofitably. However, because Brinker, at the time of making this forecast, chose not to make this trade part of his model portfolios, his HFD record has not suffered as a result."

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In order for Hulbert to overlook the fact that Brinker recommended using model portfolio "available cash reserves" for his QQQ-trade (Brinker even gave exact percentages), Hulbert has to basically make a false claim about when Brinker pulled the unbelievable double-cross of "choosing" to keep the trade off of his "official" record.


Here is a copy of the original bulletin. It does not say that the trade is not part of the model portfolios. Indeed, it says just the opposite. It gives the exact percentage of cash reserves that Brinker had his subscribers raise from the model portfolios in August 2000:
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  • SUBSCRIBER BULLETIN
    FROM MARKETIMER
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    MARKETIMER is projecting a significant countertrend rally which is expected to be led by the Nasdaq 100 Index. We expect this rally to persist over a period of approximately 2-4 months, and to generate Nasdaq gains in excess of 20% from the vicinity of the recently established Nasdaq closing low point.
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    We view this projected Nasdaq rally as a significant trading opportunity for MARKETIMER subscribers seeking potential short-term capital gains. Our clear vehicle of choice for this opportunity is the Nasdaq 100, which is traded on the American Stock Exchange under the ticker symbol QQQ.
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    We recommend MARKETIMER subscribers with aggressive objectives invest 30% to 50% of existing CASH RESERVES in the QQQ shares in order to exploit this opportunity. Also, we recommend subscribers with conservative investment objectives invest 20% to 30% of CASH RESERVES in the QQQ shares in order to take advantage of this opportunity.
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    MARKETIMER will provide follow up guidance for this short-term opportunity in regular monthly editions, and, if necessary, in follow up bulletins.
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    We recommend subscribers interested in taking advantage of this recommendation act immediately.
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    P.O. Box XXX/ Irvington, NY 10533/ phone: 914-XXX-2655/ Editor: Robert J. Brinker"
Here are Brinker's instructions from November 2000 Marketimer:
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"Marketimer subscribers with aggressive objectives can invest up to 30% to 50% of cash reserves in either the QQQ shares or Rydex OTC Fund in order to participate in this recommendations. That translates into potential exposure of 19.5% to 32.5% of a TOTAL AGGRESSIVE PORTFOLIO. (30% of 65% CASH RESERVES equals 19.5%. 50% of 65% cash reserves equals 32.4%). The balance of reserves remain in money market funds."

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Wednesday, March 12, 2008

Bob Brinker According to Mark Hulbert

Bob Brinker's bottom according to what Mark Hulbert wrote in his article this morning. Here is an excerpt:
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"Technical support for the idea that the correction's bottom has been seen comes from the market's diminished trading volume in recent weeks. Bob Brinker, editor of Bob Brinker's Marketimer, the newsletter with one of the best market-timing records over the last two decades, explained why in the March issue of his newsletter, published earlier this month:
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"The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test.""
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http://www.marketwatch.com/news/story/did-monday-mark-low/story.aspx?guid=%7B54502584%2D96C2%2D472D%2DBA1E%2DC8877BF40609%7D&siteid=yhoof

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Honeybee adds this perspective:

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January 4, 2008 Marketimer, Page 3; Paragraph 1; Brinker said: “In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008” …….we continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range."

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February 4, 2008 Marketimer, Page 3; Paragraph Brinker said: "We recommend a dollar-cost-average approach for new stock market investing at this time. There are no changes to our model portfolios." (Honeybee EC: model portfolios 100% invested.)

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March 4, 2008 Marketimer, Page 3; Paragraph 5; Brinker said: “We rate the stock market attractive for purchase on any weakness that occurs in the area of the S&P 500 Index low 1300’s, or any minor weakness that occurs below that level.”




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Sunday, March 9, 2008

Commentary: Bob Brinker's Moneytalk

Brief Summary, Commentary and Moneytalk Excerpts, March 8-9, 2008
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STOCK MARKET Bob Brinker’s ONLY Stock Market comments from this weekend are in the first paragraph of these Saturday opening monologue excerpts:
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Brinker said: “Here on Moneytalk of course we talk about all subjects related to money and that includes the stock market. S&P 500 closing at 1293 for the week. That’s a 17.4% decline from the all time high which is 1565, S&P close. Dow Jones Industrial Average closing just a little below the 11,900 level and that is a 15.6% decline from its all time closing high close to the 14,100 level."
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(Honeybee EC: Brinker did not give Nasdaq statistics. The Nasdaq closed Friday at 2212. That is very close to a 23% decline.) Here are Kirk's statistics as of March 6th:
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NASDAQ Closing
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Date of last high 10/31/07
Last Market High 2,859.12
Date of last low 03/06/08
Correction Low 2,220.50
Decline in Pts 638.62
Decline in % 22.3%
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Brinker continued: "And certainly there’s been plenty going on in terms of financial news that has been driving all of the financial markets. As a matter of fact, speaking of financial markets, the Federal Open Market Committee is going to be back in session on March 18th at the Federal Reserve Building in Washington D.C. And at that meeting, they are expected to lower short-term interest rates. Now of course, they have already done some of that. They’ve taken the rate from 5 1/4, down to 3%.
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However, according to the futures markets in Chicago-land, at the Chicago Mercantile Exchange, the contracts that trade on Federal Funds are predicting a 100% probability that the Federal Open Market Committee will lower the Federal Funds target rate by at least 75 basis points on March 18th. Now that would take it, if that happened, from 3% down to 2 ¼%. Now there is a very, very small contingent in the futures market – only 6%, saying that it could be a 1% decline………Federal Funds target rate – that’s the rate that banks excess reserves to one another on a daily basis………….
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……Another interesting thing that is coming out of the Federal Reserve is talk that they may do away with earlier comments saying they would take rates right back up. They are not talking about that anymore. They are really now talking about keeping rates down for awhile. And that’s because of what we are seeing with the economy. Now as I have said, there is an even-steven chance that the first 6 months of 2008 will see negative GDP growth in real terms. If that were to happen, and I’m only putting the odds of that at 50-50, but if that were to happen, that would mean we would get a first quarter negative GDP report which does look likely, right now. And then in the second quarter of the year, that remains to be seen because that is when that rebate check, stimulus package kicks in with the checks arriving for the most part in May. A lot of that will be spent in May and June, and some of it could be spent in anticipation in April. So the second quarter get some sort of a lift out of the stimulus package and so we don’t know yet. And if it does not, those who are guaranteeing a recession won’t have their recession because the traditional and historic definition of a recession is two straight quarters of negative real Gross Domestic Product. Right now we think there’s a pretty good chance we will get a negative first quarter, but the second quarter is very hard to call and that’s why I’m leaving the odds of a recession……at 50-50…………..”
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POLITICS Brinker used a sizeable portion of the program again this weekend reporting the latest presidential campaign activity and expounding his political views. Brinker said that he is a registered Independent.

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ENERGY INDEPENDENCE Brinker talked at length about our dependence on imported oil (mostly repetition from earlier programs).
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FRIDAY EMPLOYMENT REPORT In the month of February—63,000 jobs lost, on top of the 22,000 jobs lost in January -- a total of 85,000 jobs lost in the first two months of 2008 -- this helps show what is going on in the economy.
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ECONOMY “…flat on its back, and may be headed toward recession…” The soft economy is a problem for incumbent presidential candidate, but the out-of-office Party can use it as an opportunity by focusing on it.
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INFLATION Brinker said that the weak economy and/or recession is “counter-inflationary.”
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RECESSION Brinker said that recessions are always “confirmed in the rearview mirror,” but if one develops, he is inclined to think it will be “brief and mild.”
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HOUSING MARKET "….is a debacle,” and is the engine driving economic weakness because it is spilling over into the labor market -- leading to the declining new jobs figures -- and has led to a credit market situation.

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TIME TO BUY? A caller asked Brinker if now is a reasonable time to buy a home or should he wait six months or so. Brinker said: “I think you are okay either way, but I think you are okay right now if you are low-balling and that’s been my recommendation on the program. We had a caller yesterday purchased a house in Nevada that was on the market for a $million-two, made the purchase of $950,000. That’s the kind of discount I like. That’s almost a 25% discount from asking price. But you don’t even make bid until you’ve done your comparables, and make sure you have done all your due-diligence on your comparables in the neighborhood, giving maximum weighting to recent sales, looking at the past year – I don’t think I’d even go back past the past year to get current market…….and then after you do all that, you low-ball bid. You go in with a low bid – way below, to try to catch motivated seller.”
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HOUSING FORECLOSURES California is the number one state in foreclosures. “In general foreclosures went up to a record level in the 4th quarter according to the Mortgage Bankers Association.” Some people are just walking away from their homes. In some cases people owe more on their homes than it is worth, so in some cases they just send in the keys and say “see you later Mr. mortgage-lender.”

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Regarding Brinker’s “spinning” what he previously said about the housing recession, David Korn wrote the following:
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FORECASTING RECESSION?
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Caller: This caller said he called Moneytalk a 4-5 months ago to bring up how the weakness in the housing market could bring about a serious recession and it seems his forecast is coming true. Bob said he has spoken many many times on Moneytalk talking about how housing prices declined for five consecutive years and how it is absurd to make assumptions that housing prices would go up every year. Housing prices are cyclical and they always will be. The caller said one of the problems are the exotic loans made by the lenders. Bob said we are seeing write-downs at Wall Street banks and mortgage companies like Countrywide. Bob said Trekkies should not be surprised by the developments. Bob referred to a caller a few years ago who wanted to take out a second mortgage on her home to speculate in the real estate market. That call came at the top of the housing cycle. Bob said he was stunned by that call. And at that time, there were real estate markets which had gone up 50% in one year. Bob said his advice was to go the opposite way. At the top of the bubble, Bob said he recommended to "minimize your leverage." Now, a few years later, we see the reality of the housing market.
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EC: I am going to have to take Bob to task on this call. (what a shock coming from me eh?) Bob sort of took the caller's initial point and spun it into a way such that the casual listener would think Bob was the forecasting genius. The reality is that Bob was pshawing (is that a word?) Robert Shiller's forecast that the real estate market was in a bubble. I remember this call from 4-5 months ago and the caller talking about recession. Bob pretty much scoffed at the notion. Now, 4-5 months later with the housing market in the dumps, the economy slowing to a halt, Bob seems to be laying the groundwork that somehow he was prescient in all of this by telling a caller a few yeas ago not to speculate in real estate by leveraging. That's my take on it anyhow. I am curious to know if any of you agree or disagree on this analysis. Incidentally, Robert Schiller, the author of "Irrational Exuberance" discussed his view that the housing bubble in 2005. You can read a summary of his comments he gave at the time on NPR at the following url:

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http://calculatedrisk.blogspot.com/2005/04/talk-of-nation-schiller-on-real-estate.html

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For free issues of David Korn's newletters: http://david-korn.blogspot.com/

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Honeybee EC: Brinker seems to have also changed his tune about the reason for bad loans. December 8, 2007 Brinker said: “A liar loan is a loan where the borrower provides little or no documentation of their income stream. Therefore, they can lie as much as they want since there’s no verification of the information. One thing we don’t know is how many of the loans are liar loans. But there’s no question that over 50% of the borrowers who have sub-prime adjustable rate mortgages for 2006, the ones that got them last year, and they’re in this group that is eligible for help – over 50% of them provided basically liar loan backgrounds. So if you’re saying that this is a moral hazard – we are rewarding the liars –you’re absolutely right.”
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March 9, 2008, a caller said: “The blame is not all on the person because there are a lot of people out there that are a little bit ignorant when it comes to……” Bob Brinker answered: “No….Oh Helen, let me tell you, you are understating the case. There are a lot of people out there that are clueless when they go in and sit down with a mortgage lender. And that’s one of the things we’ve seen here…..people have been taken advantage of…..but you’re right, there are a lot things going on where the mortgage officer has the lead over the borrower because he knows so much more.”

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CREDIT MARKET “…is in shambles.” This does not apply to AAA securities. There has never been a better time to have a top credit rating -- direct Treasury guarantees like you get with GNMA Funds, Treasury Bills, Notes, and Bonds, I-Bonds, EE-Bonds and FDIC. These vehicles have held their value.
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MORTGAGES: WHAT SHOULD THE GOVERNMENT DO & HENRY PAULSEN Bob Brinker said: “Well, the Treasury Secretary of the United States of America, Henry Paulson, he has an opinion on this. He says that the administration is getting close to an agreement with congress on legislation that would increase the amount of money in Federal Housing Administration loans to borrowers who are looking at the possibility of foreclosure. Now this is a bill that is in process in the House of Representatives. You may recall in December, there was a bill passed in the Senate that was similar to the one passed by the House back in the autumn – the one about lowering the down payment requirement for low and middle-income home-buyers on Federally insured loans and also allowing them to borrow more money. Also, home-owners with adjustable rate mortgages setting into the re-set period would have an easier time qualifying for loans backed by the FHA. ….the negotiations are continuing to go on. According to Henry Paulsen this is a modernization bill for the FHA which would help 300,000 home owners.”
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U.S. DOLLAR AND HENRY PAULSEN Brinker said: “Something else that Henry Paulsen said in a speech last night at Stanford University in Palo Alto, California – up there in KGO country – he said something else that I thought was amusing, and that was, he expressed confidence that the U.S. dollar reflect the fundamentals of the economy. Well, one would say that the U.S. dollar is already reflecting the fundamentals of an economy that has a large trade deficit. An economy that has an irresponsible congress that spends more than they take in – and spends on pork and earmarks. ……..Here is a quote that I find so amusing that it’s comical. Someday, I think that Jay Leno or David Letterman will be able to get a laugh with this line. Henry Paulsen saying for the umpteenth time. Quote: ‘ I know how important a strong dollar is’ unquote. Do you believe this? Henry Paulsen, Treasury Secretary, last night talking to some relatively well-educated people, wouldn’t you say -- at Stanford University? …….I would think they would laugh him out of the room at Stanford University for saying something as bizarre as that while the government has been standing by the government has been standing by watching the dollar fade and fade, year after year against a policy of fiscal irresponsibility in Washington. How does he come off saying something like that without getting laughed out of the building? Defies belief…….Do they think we are all stupid?”

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FDIC INSURANCE FOR YOUR MONEY A caller told Brinker that he had money with Washington Mutual Bond beyond what the FDIC insurance would cover. Brinker thinks the FDIC amount is okay, but he would not be comfortable beyond that amount. Caller asked where he should put “7 figures at this point in time” and said that he would rather be in fixed income and not in the market. Brinker recommended Treasury Bills, but would not have a penny of money in WAMU that was not covered by FDIC.
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NLY This stock, which is supported by Freddie Mac and Fannie Mae, dropped 5% Friday. Brinker said: “Freddie Mac and Fannie Mae do not have a direct Treasury guarantee, as we have said on this program ad nauseam. GNMA’s do…….people are now wondering about Freddie Mac and Fannie Mae……last time I checked they had a few $billion lines of credit. That’s not the same as a direct Treasury guarantee.”

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ANNUAL TAXLESS GIFT You can give up to $12,000 per year to anyone you choose.
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STIMULUS PKG, WHO DOESN’T GET IT? Those who get their income from dividends, or from pension and dividends will not get a rebate unless they receive at least $3,000 income from Social Security or earned income. (Honeybee EC: Whoever said our government was fair? And who says that dividends and pensions are not earned income?) 8^)

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BRINKER, SWEDROE AND THE STIMULUS PACKAGE (Honeybee EC: Last weekend, Larry Swedroe stated that he thought the stimulus package was the wrong thing to do. Brinker did NOT CRITICIZE Larry Swedroe at that time. But today, without naming names, Brinker, IMO, ranted about people who do not agree with his point of view.) Please see my summary:
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http://honeysbobbrinkerbeehivebuzz2.blogspot.com/2008/03/brinkers-stock-market-comments.html
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Firstly, here are some excerpts of what Larry Swedroe said on Moneytalk last weekend:
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Larry said: “Well, I think it’s a very bad package. There’s nothing long term. People are not going to react to this in the way people expect. That’s what the historical evidence on similar packages. If you want to stimulate the economy, the best way to do that is to give an immediate write-off to corporations on investments that they would make……" (Brinker interrupted and said that is included in the package.)
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Larry continued: “It’s a tiny amount, they could do more. And a better way to do it would we to cut the corporate tax rate significantly here, which would create more jobs in the U.S. rather pushing them overseas. I’m not a big fan of this package. They probably would have been better off doing nothing in my opinion. I think the stock market might have taken it better."
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Brinker said: “So even though they are trying to do something to be helpful to the economy, you don’t like it?”
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Larry said: “I don’t like this particular one……….it’s spending oriented instead of incentive oriented. And being a free market economist, I think they ought to rely on the market to do the job, not spending by the government. They’ll spend it in the wrong ways here…..I think you want to create incentives for growth. That will stimulate the economy and actually end probably increasing revenues, rather than creating a bigger deficit which is all they’ve done here, I think. Most people will get the $300 and it will be put in their pockets. It’s not going to get spent, cause people spend, all the evidence shows, on long-term expected income, not based on another $300 check. I think this is a mistake.”
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Here are some excerpts of what Brinker said this weekend: “……I have such criticism for those who, including some of the guests on this broadcast that I’ve criticized many times when I’ve spoken about this subject….whether it’s a guest on this program or whether it’s a caller – either way, I don’t care. The reality is the people who express disdain for the Federal government trying to use a page out of John Maynard Keynes textbook, Keynesian economics, stimulative (sic) economics – the people who attack the government – I don’t care who they are…..I think they are wrong. I think they are completely misguided in their opinion – I don’t care who they are. ……..it’s all good, so when I hear people attack the Federal Government for putting a stimulus package together, I think it is just completely off-base, completely off-base, and for that reason, I think we have to mention that. We have to mention, when you have an economy that’s flat on its back, it’s probably growing backwards this quarter, it may grow backwards next quarter, depending on how the stimulus packaged affects it next quarter…..you have to respond. That’s all they doing, they are responding."
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INTERESTING CALL A caller said: “I just wanted to say something about you -- 2000, your call, March 11th, I believe, of 2003. And then the little short-term call, you said ride the course, in I think it was May of 06 -- going go down 8 to 9%, you said. It went down 7.7 to 1223 on the S&P, and just ride it out. I’ve been stunned, if a person has patience, I’ve been stunned, and I have quite a bit of knowledge in this area, at the hard work you do and just requiring patience. On every one of those calls -- great timing, but you had to be patient even during those great calls.”
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BRINKER INTERRUPTED AND REPLIED: “Yeah, well, I appreciate those comments Phil, but let me say that the type of work I do, I regard as the most – most people don’t even try it -- it’s the most challenging work I know. We’ve discussed it on the program in detail, which is anticipatory stock market timing decisions on trying to make major moves. And let me tell you, we know going that sometimes we are going to be right, sometimes we are going to be very right, and sometimes we are going to be wrong. And that’s the nature of the business and that’s the way it is.”
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Honeybee EC: The caller left out a lot of information about Brinker’s market-timing history since “2000,” I won’t go into it now, but I did check to see what Brinker was saying in May, 2006 -- which the caller referred to… Here are the facts: The S&P 500 Index was higher than it is now. The day the May Marketimer was issued, the S&P was at 1305. Brinker was fully invested, as he had been since March 2003. Nowhere in the May Marketimer (or any other issue that I can find) did Brinker say the market was “going to go down 8 to 9%.” Instead, this is an excerpt of what Brinker said in that issue of Marketimer: “The Marketimer stock market timing model remains in favorable territory……” The market kept dropping, and In July, 2006, Brinker told subscribers that S&P 1250 was “attractive for purchase” for new money.
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MONEYTALK CALLS Most of the calls this weekend did not add any new information worth reporting. Some of the subjects were: Mortgage pay-off; Roth IRA or 401K; Cost Basis on Zero Coupon Bond; Retiring on a $1million – half in fixed income; Energy; Company retirement plan offers specific to one person.
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BOULDER CITY, NEVADA Brinker said, “I know it well, I was there yesterday. It’s right by Lake Mead, you know…. one of the great wonders of the world….for people who like hiking…..for people who like outdoor life.”
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http://maps.google.com/maps?hl=en&ie=UTF8&ll=36.116696,-114.909053&spn=0.007714,0.014462&t=k&z=16


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