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Saturday, September 6, 2008

Summary: Bob Brinker's Moneytalk September 6, 2008

Summary, Commentary and Moneytalk Excerpts: September 6, 2008

Bob Brinker began Moneytalk today with an opening monologue devoted entirely to Fannie Mae and Freddie Mac. He said that there will be a big announcement within 24 hours about a Treasury take-over.

From the Washington Post Sunday morning:

The Bush administration yesterday prepared to take over the troubled housing finance companies Fannie Mae and Freddie Mac, after concluding the companies don't have enough capital to continue to play their crucial role funding home mortgages.

Under the plan, engineered by Treasury Secretary Henry M. Paulson Jr., the government would place the two companies under "conservatorship," a legal status akin to Chapter 11 bankruptcy. Their boards and chief executives would be fired and a government agency, the Federal Housing Finance Agency, would appoint new chief executives....."

Washington Post Article


The first caller today, asked why GNMA isn’t in the news along with FNM and FRE. Brinker explained that GNMA is not in the same "context." Brinker pointed out that GNMA'S are the only mortgage-backed security entity with a full faith and credit U.S. Government guarantee for the full and timely payment of all principle and interest payments on the securities in their portfolio.

The caller continued by saying that he had followed Brinker’s advice, owned GNMA's, and was happy about it. (Honeybee EC: Brinker recommends 20% GNMA holdings in his balanced portfolio, and 40% in his fixed income portfolio.)

Caller Sean, asked Brinker if it was possible that the Federal Reserve is controlled by private families. Brinker emphatically tried to "de-bunk" this view. He explained that the Fed was created by an Act of Congress in 1913 and is accountable to congress. He said that any conspiracy story about the Fed is "rubbish," "complete poppycock," and "complete nonsense."

At the end of the first hour, caller Dave from Buffalo asserted that the Federal Reserve shares that the regional banks hold are indeed owned by "families." Brinker disagreed strongly.

(Altogether today, there were three callers who did not agree with Brinker about who owns and ultimately controls the Federal Reserve.)

Brinker told a caller that he had previously discussed in his investment letter that a “good case” could be made for the price of oil going down, and now that the price of oil is down over $40 a barrel, we may get some economic relief. (Honeybee EC: Brinker did not mention that he also recently said that only a "fool" would try to predict the direction of oil prices. And he did not mention that he has been saying there was an "inverse correlation" between the price of oil and the stock market.)

June 28, 2008, Moneytalk, Bob Brinker said: "--we see it with a direct correlation. We saw just this week between rising oil prices and the stock market, with the S&P 500 trading at 1278 at this juncture. And we look at what’s happened to oil prices and they spiked to a new all-time-historic-record on Thursday and Friday, closing on Friday a little above $140 per barrel."

  • S&P 500 close September 5th: 1242.31
  • $Oil close September 5th: $106.52

August 5, 2008, Marketimer, Bob Brinker said: “In our view, the road to significantly higher stock market prices is linked to oil prices………The Marketimer stock market timing model suggests that the conditions are in place for higher stock prices into next year.”

This week:

  • The S&P 500 Index declined 3.2%
  • The price of Oil declined......9%

A caller said that he had his retirement account invested in Brinker's "Active/Passive" portfolio (Honeybee EC: That portfolio contains Vanguard Total Stock Market Index (VTSMX) or VTI = 90%). The caller then said he had read a couple of Larry Swedroes' books, and that according to his advice, if you have your money in the Total Stock Market Index, you are not fully diversified because of the market weighting of the stocks in it -- and that even though it was okay, Swedroe recommended diversifying into small cap, mid-cap, etc.

Brinker reminded the caller that Larry Swedroe had been a guest-speaker on his program and that he did not agree with everything that Larry says. (Honeybee EC: Please see my March 1, 2008 Summary of the Larry Swedroe interview which includes some of his excerpts.) Brinker said he disagreed with Swedroe on this because the Total Stock Market Index includes "all caps" -- small, mid and large -- but that Larry did a fine job of expressing his own opinions.

Brinker's second monologue was devoted to politics, the presidential election and the polls.

The third hour monologue was devoted to the Boeing strike.

Twice today, Brinker said that Charlie Maxwell was on Moneytalk two weeks ago. That is not so, it was three weeks ago today. I have posted some excerpts and commentary in my August 16th Summary.

David Korn did a great Summary of the Charlie Maxwell interview.

Bob Brinker's very interesting guest-speaker on Saturday was David Vise, author of an updated version of “The Google Story.” Here is an excerpt from his book at Random House.

David Vise was a fascinating guest speaker. I would recommend that you go to the KGO website, where you can, at no cost, download Moneytalk for one week after the program airs, but unfortunately, KGO preempted the third hour of Moneytalk for the ball game. However, the first two hours are there for you to download and listen to at your leisure. KGO Program Archives.

Honeybee Ponders: If the Moneytalk Spaceship was orbiting a distant inhabited planet today, any being that listened to the program would not be made aware that Earth has a stock market. Brinker did not even give the market closing numbers as he usually does, and certainly never discussed the market in his monologues.

Additionally, not one caller asked about the stock market today, even though the S&P 500 dropped back down into bear territory last week. I wonder if Brinker has instructed his call screener not to accept calls about the stock market.

Sunday update:
The subject of the day was the Fannie and Freddie bailout. Brinker discussed at length what has been in all the news today for all to read.

The only time he referred to "Wall Street" Sunday was when he made a comment in his opening monologue. Brinker said: "Well I know it's a Sunday, and I know it's a day when normally the news in Wall Street is either absent or very, very hard to find, but not today -- not today. As we indicated on our Saturday broadcast, we expected an announcement from the Treasury within 24-hours of our Saturday program, and we got it this morning, on Sunday morning. The statement issued by Secretary of Treasury, Hank Paulsen......."

Honeybee ponders some more: 8~) That's it for this weekend, no mention of the bear market. No mention of the discarded buy-level (low-1300's) that he was bragging about on Moneytalk a just a of months ago -- or the higher buy level that he was bragging about on Moneytalk prior to that (mid-1400's). No mention that the market went through both of them like a knife through hot butter. No mention that he issued another, lower one (low-1200's) in August. Not even any mention that the price of Oil and the S&P have been moving in tandem -- not inversely. Hmmmmmmm......

Bob Brinker's guest speaker Sunday was Leander Kahney, author of: Inside Steve's Brain

SeaBiscuit has written a Brinker-Shave for us about the Moneytalk callers this weekend:

If a caller did get through to ask

"Mr Brinker, what about the current bear?"

Pat would come the reply -

"What are you saying? I just can't hear!"

Brinker Shave!


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