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Saturday, October 25, 2008

Summary: Bob Brinker's Moneytalk, October 25, 2008

Bob Brinker's Moneytalk: Summary, Commentary and Excerpts, October 25, 2008. Dow: 8378.95 (down 473 for week); S&P 500 Index: 876.77 (down 74 for week); Nasdaq: 1552.03 (down 159 for week); Oil: 64.69 (down $8.00 for week).

Opening monologue, Bob Brinker’s said:
"Well the markets of course continued to remain extremely volatile all over the world and here in the United States as well. And of course we've talked about the two-pronged effort that could be made to deal with the underlying cause of the unrest in the financial markets which gets back to the bad mortgage loans that are out there and there are plenty of them. .............."

Brinker explained his "two-pronged effort" again. See the Summary from last week. Brinker really wants something done to help individual homeowners. He said that for the first time, he saw a glimmer of hope for that happening when FDIC Chairwoman Sheila Bair announced that the government may use its new emergency authority to help struggling homeowners overhaul their mortgages. Brinker pointed out that he had talked about this situation for the past several weeks and he's glad to know that "someone in Washington D.C. might be paying attention." Brinker also wants a government mortgage guarantee program.

Honeybee EC: I think it will be interesting to make note of the subjects that were allowed on the air today, so this Summary will include a synopsis of every call during the first two hours of the program.

First Hour Callers:


Caller one -- Mary told Brinker that she was a long-time listener and a Marketimer subscriber and has really appreciated his advice through the years. She asked Brinker if she should lump sum or dollar-cost-average some funds into a GNMA Fund. Brinker said that GNMA's continue to be the "stellar choice" in terms of taxable fixed income investment. He reminded the caller that there is NAV fluctuation, but that it would be "hard to build a case for rising interest rates at this time."

Caller two -- John asked Brinker if he had heard Greenspan's testimony last week and what he thought about it. Brinker said: "It was rather amazing........ I think Alan Greenspan is in a state of shock.....in some quarters he is being blamed for creating the underlying conditions that led to the collapse of the mortgage market......he's not accustomed to this.....after all this is a man that has been held up as a legend.....he's been known as the Maestro due to his excellence......He called this a once in a century tsunami........the fact that it is occurring almost immediately after he stepped down shows that he had his hands all over it....He is also the Fed Chair that held to the myth that you don't need regulation..........it was the lack of regulation and oversight that led to the Fannie Mae and Freddie Mac debacle.....here's a Maestro quote, he said the financial debacle 'has turned out to be much broader than anything I could have imagined.'"

Caller three -- Gordon said that he is 64 years old, 3 years from retirement and had lost about 20% of his nest egg. He told Brinker that he is about 42% invested in stock and 58% bonds. He wanted to know if Brinker thought he should consider re-allocating to 70% bonds/cash and 25% stocks.

Brinker congratulated Gordon for being in a balanced portfolio as he neared retirement. Brinker said "The reason you go to a balanced portfolio when you're within a few years of retirement, is because you want to insulate yourself -- it's a portfolio inoculation...........against extraordinary market swings. Something like this which has been essentially been unforeseen in the Wall Street community. You insulate yourself against the unforeseen, the Black Swan, if you want to use Taleb's approach, by having a balanced approach. And the reason you want a balanced approach in the years approaching, as well as in retirement, is you really don't want that kind of volatility. Twenty percent volatility, yes, you can accept that in an extraordinary situation like this which Alan Greenspan calls a once in a century event -- his words this week.......

.......And as long as there is uncertainty out there, as long as there is extreme difficulty in getting a handle on the future as there has been recently in these chaotic times all over the world, as long as that situation prevails, I would stay where you are. Now if you get down the road to a point where you say we've seen some stabilization develop -- and in the ideal world we've seen a successful test of a market bottom area develop on reduced volume, reduced emotion, if you get to a position like that, then I would consider returning yourself to 50-50. You're at 42-58. I'd stay there right now. But if you could identify a position like that -- and I'm certainly working to identify a position like that -- then I think you could think about the possibility to returning to a 50-50 situation.......


........ Believe it or not, 'This too shall pass,' this is not the end for the United States of America. There is no way that I can believe this is the end of the United States --'This too shall pass'. This economy will eventually right itself. It will return to a growth track, and it will do so without all these excesses we've been seeing. And when that happens, I think we'll be back in period where the stock market will make good returns. But I think we are in a period right now where I'd be patient and allow things to work themselves out and get to a point where you can say now it makes sense, maybe I'll return to 50-50."


Honeybee EC: Throughout this almost 50% bear market decline, Bob Brinker has consistently advised keeping all stock market money invested. He did this by either repeatedly issuing outright buy levels at much higher prices or consistent dollar-cost-averaging. Conclusion: Everyone who has followed his advice has had at least 50% of their total investment money in the stock market for the whole decline. And it is worth noting that Gordon did not actually follow Bob Brinker's recommendations.

Caller four -- Matt told Brinker that these times would be "much scarier" if "we didn't have you." Then he asked about TIPS and how to compute the implied inflation rate (Brinker has covered this before). Brinker reminded Matt that he didn't have a crystal ball.

Caller five -- Nicole made comments on the tax ramifications of a real estate "short sale." Brinker said that he is not a CPA and that it's best to check with one for answers to tax questions.

In the second-hour monologue,
Bob Brinker commented at length about the "Troubled Asset Relief Program." He said that part of this program may now include putting money into the insurance industry. Brinker thinks that the government might be concerned about "credit default swap contracts." Brinker said when the uptick rule was done away with it was "Katy bar the door on bear raids."

Second hour callers:

Caller one -- Norman asked about insurance company contracts in 403B program. Brinker told him that they were as good as the credit rating of the company that issued them -- there are no federal guarantees.

Caller two -- Rudy asked how to find information about "credit default swaps." Brinker said there is not much information available, but that some settlements had already gone through reasonable well. The thing to watch for is major bankruptcies. Brinker said that he thinks the Federal Government will step in and try to avert the big bankruptcies. He wonders what will happen to Detroit.

Caller three
-- Doug asked about SIPC insurance and also a question about a personal stock holding.

Caller four
-- Joseph remarked that unlike other "experts," Brinker never treated Greenspan like he was a "god in the field." He said he believed the insurance industry is a "black hole in the market we haven't even addressed," and then he asked if Brinker thinks we will have a V-shaped recovery from "this bear market."

Brinker replied to Joseph: "V-shaped theories are wanting.......When you look at the true value of stock prices, and it is very difficult to do right now, but the way they are quantified is by discounting the present value of their future earnings or the present value of their future dividend stream to the present.........Obviously there is a lot of uncertainty in the market and that has contributed to the volatility, along with the forced selling we've seen. Obviously, the hedge funds are going through a catharsis in here. So I think that the V-shaped is a hard sell for that reason that we have to have a visible earnings stream growth track that we can point to. And if you're talking V-shaped then you are talking about all the earnings just soaring right back up again right away. That's what's required for a V-shape recovery. That's a hard sell right now.......

....... I think it's a lot easier sell to think in terms of a healing process, which is a process that takes time. I actually do believe that over time the market will come back. But I think first it has to go through a healing process and that in itself is going to take some time. And then the process of recovering the economy and the recovering the earnings streams, I think that will take some additional time."


Caller five -- Bob asked about Obama's possible plan to take over existing 401K accounts. Brinker said it was impossible to comment on something that "has not been out there" for longer than one day. (Honeybee EC: It surprised me to hear Brinker say that. Recently on other programs, he has praised the fact that he could be on the air to bring us "breaking news." And this news isn't really THAT new because Rush Limbaugh and others were commenting about it Friday.)


Brinker's Saturday guest speaker was Timothy Sinclair: The New Masters of Capital: American Bond Rating Agencies and the Politics of Credit Worthiness

Honeybee Wonders: In the first two hours of the program (I didn't listen to the last hour), I heard Bob Brinker do five commercials. He did two for Quickbooks, two for Bose headphones and one for Retina Specialists(?). Doesn't this seem to be a big change for him?

Some comments about Saturday's Moneytalk program:

Blogger Quis said...

I gotta hand it to Blinker and his call screeners. How he can go on national radio week after week and continue his charade is unbelievable.

And Mark Hulbert continues to quote newsletter publishers like Blinker who completely missed this disaster and say the best are more bullish than the rest so that's a good sign for the market!

Dingbert has been saying that rubbish for a year!

It's disgusting that these charlatans have any credibility but apparently they still do.

The fact that Blinker still has a national radio show is just unbelievable. This is the plot of a comic book!

October 25, 2008 1:20 PM


Blogger Quis said...

HAH! Blinker says, "Alan Greenspan is in a state of shock."

Bob, what state do you think your newsletter subscribers and listeners are in?

October 25, 2008 1:36 PM


Anonymous draffted said...

Yes his actions are very unbelievable.

They must screen 100 calls just to find that 1 caller who Bob Brinker will let on the air....

I am so tired of hearing Bob Brinker mention the "black swan" or Greenspans comment about "once in 100 year event" as an excuse for his ignorance.

I do not know about were you are at, but I am hearing a lot of commercials during his show which Bob is reading the commercial and endorsing the product unlike in the past. I guess he needs the money from doing commercials since his newsletter is worthless to most people.

Nothing but old people again on the show today. I wonder why they do not let anyone who is following his Portfolio I or II

October 25, 2008 1:50 PM


Blogger Bluce said...

Oh boy, a groveling caller just said something to the effect of: "These times would be much tougher without you being on the air . . . "

I think that must be Mr. NOONE that called.

Or this is really 1984, or maybe Bizarro World.

October 25, 2008 1:52 PM


If you missed Moneytalk this weekend, I highly recommend that you go to KGO810 Archives. You can either listen or download it to your MP3 players or Ipods and listen at your leisure. They will have both programs available for seven day and best of all, IT IS FREE.


In response to DanG's classic Cadillac, Mustang Ed sent a picture of another classic Cadillac. 8)


17 comments:

Anonymous said...

we appreciate your recap since we can't follow him every weekend

your comments are right on the mark!

Jim said...

If Brinker could not protect his subscribers from the worst bear market of a lifetime, then one must wonder how he can protect them from ANY bear market.

By the way, the car pictures were nice. First DanG showed us the car that many Brinker subscribers now own, followed by Mustang Ed showing us the nice car that the cassandras and false prophets own.

Anonymous said...

Honeybee your are wrong wrong wrong in saying "And it is worth noting that Gordon did not actually follow Bob Brinker's recommendations."

Where do you find that Bob recommends someone nearing retirement (and Gordon is just a short three years away) have ALL of his investment assets in stocks?

It is the BALANCED APPROACH that Mr. Brinker has been preaching for over 25 years that will protect Gordon and those like him that you have totally disregarded in your Bob bashing.

Gordon could live off his earnings and withdrawals from his bond portfolio for the next coming years while the stock market recovers. He still has a good 30-40 years of life left to see his stock portion grow.

Honeybee said...

mr anonymous,

Please read the transcript again.

I was not wrong, wrong, wrong, because Gordon was not at 50-50 like Brinker recommends for those near or in retirement -- just one of the deceptive items that Brinker always fails to point out.

Gordon was at 42% stock - 58% bonds, and he was asking Brinker if he should go to 75% bonds -25% stock.

Brinker did not answer that question at all, but simply spun the call to make himself look good. (Just like with the GNMA calls.) Brinker simply told him WHEN he should look to get back up to the 50-50 that he has always recommended.

Obviously, Gordon has done BETTER than Brinker in this ravenous bear market. He only lost 20% -- so far.

.

Dr. Doom said...

Nouriel Roubini predicted the meltdown and now he says:

I fear the worst is yet to come

Dubbed Dr Doom for his gloomy views, this lugubrious disciple of the “dismal science” is now the world’s most in-demand economist.

princepro110 said...

That '49 Caddi looks better than the crap GM has been trying to stuff down our gullet for the past 20 years!

Most people who get Bobs newsletter could have money to buy a one at a Barrett Jackson Auction in mint condition with all the loss they have taken thanks to Bob this year.

My guess a reconditioned '49 Caddi convertible would fetch between 175 to 300 grand! Am I close??????????????

Honeybee said...

Brinker had a caller today who said something that Brinker didn't approve of about Obama.

Based on Obama'a own words, it was a true statement. Brinker got very nasty with the caller and cut him off.

Then Brinker made the mind-boggling statement that he "didn't like" what the caller had said because it was "violent." And since we had "fought" for freedom of speech, we should also have responsibility.

As I said, it was a true statement, and there was not anything violent about it whatsoever..........

So Bob Brinker, let me see if I have this straight: YOU, AND YOU ALONE WILL DECIDE WHICH "FREE SPEECH" WILL BE ALLOWED?

Bob Brinkers, what shameless hypocrites you are there behind your bully pulpit and on every website you control!

You both have been silencing free speech and using censorship to control speech, as far back as I can remember.

.

drafted said...

Hi Honeybee,

There is no one who dislikes Bob Brinker more then me, but on the call that Bob cut off when the caller was starting to talk about Obama, the caller mentioned something about getting his "GUN" and then the call went dead.

I really do not think Bob had a choice on this call, it had to be terminated immediately. You have to stop this type of ranting against a Presidential candidate.

I think this is the call you may of heard.

Thanks for the update this weekend.

Honeybee said...

drafted,

I didn't hear anything about a gun. But if you think you heard it, I will see if I can find it on my recording and listen again.

Do you remember if it was in the first or second hour?

.

drafted said...

HoneyBee,

I believe it was the second hour where the old guy mentioned he was getting his gun in the same sentence as he mentioned Obama.

Nowadays you have to be very careful.... I will look for it also

drafted said...

The caller was Bill from St Joe Michigan and was during the first hour at 23:40.

Bob was talking about the government taking 401-K's and Bill said "they will do that at the point of a gun once Obama get there..He is a devout Marxism"

Then Bob stopped to call.... the caller was going off the deep end

Honeybee said...

Thank you for finding that, drafted.

So this is the quote? " Bob was talking about the government taking 401-K's and Bill said "they will do that at the point of a gun once Obama get there..He is a devout Marxism"

I do remember that now, but it's a real stretch to consider that a threat against Obama.... it seems to me what the man was trying to metaphorically say is that "if Obama is elected, they will take away choice and forcible take our 401K's.

Brinker naively keeps saying "if it is voluntary"... yep, if Pigs could fly....

I still think it was wrong to cut him off and hammer him the way Brinker did. Sure, he got emotional. So are a lot of other people at the thought of having your life savings "shared" with whomever the government chooses.

.

Anonymous said...

I have to agree with you Honeybee. If Obama gets in with no checks and balances in the House and Senate, be ready to witness the end of the Republic.

That is why I am 15% in equities and 85% cash and will hold that position until I see the results of the election. Yes, I am very scared.

drafted said...

I was busy doing something outside and I wasn't listening to carefully to that caller but yes after I heard it again I thought it wasn't that bad.

Also I was too upset with the woman before that call when she thanked Bob for all his years of great advice... I would love just one weekend where they would let people on the radio program who are sitting on at 50% loss from Bob's so called great advice.

Anonymous said...

Honeybee thank you for your website and for exposing Brinker.

BOB BRINKER IS A FRAUD. Plain and simple. Anyone who calls his product "Marketimer" and has advised so badly that his readers have lost at least 50% of their investments should do the right thing and close up shop.

He is arrogant, condescending and a coward for not taking calls that deal with his failure or for admitting to them in the first place

jerry said...

Thank you for your fine reporting on Mr. Brinker. I do not get a chance to hear him that often. I appreciate your input as well as others. I have used Mr. Brinker's recommendation on GNMA's and have been well rewarded.

TaxMan said...

About the 401k caller who Brinker cut off. Isn't there a delay of something like seven seconds? I don't think we necessarily heard the entire conversation. There may have been a more specific threat which we didn't hear before the caller was cut off.

Notes



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