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Saturday, December 6, 2008

Summary: Bob Brinker's Moneytalk December 6-7, 2008

Bob Brinker's Moneytalk: Excerpts, Summary and Commentary, December 6-7, 2008. Dow: 8635.42 (Down 2.2% for the week); S&P 500 Index: 876.07 (down 2.3% for the week); Nasdaq: 1509.31 (down 1.7% for the week) Oil: $41.66 (down a whopping 26% for the week).


Caller Kent asked: “At what date did you recommend that those in your fund sell out. I remember the date, I think it was in March, when you said go for it, get fully invested…….”

Brinker interrupted and said:
“What we recommended, Kent, was, we recommended in January of 2000 that people take most of their money out of the stock market, and on March 11th of 2003, we reversed that and we reinvested all of our model portfolio cash reserves at that time. 1-800-xxx-xxxx”

Honeybee EC: Brinker did not answer Kent's question. The truthful and honest answer to Kent's question is that since the March 11, 2003 "get fully invested" buy signal, Brinker has NOT ISSUED ANY SELL SIGNALS! Brinker's "fund" did a five-year ROUND TRIP from 807 to a low (so far) of 752 on November 20, 2008.

In his response to Kent, Brinker walked as close as one can get between lying and telling the truth. Where it comes down is probably a matter of personal interpretation. Can one be technically correct, but still not have enough integrity to be honest?

Brinker told Kent that he had people "take most of their money out of the stock market" in January, 2000. The truth is, he told people to take 60% of their money out of the stock market. Is that most? Well, it's more than half, but why not say 60%, rather than "most." I think "most" people would assume he meant more than 60%.

January 8, 2000 Marketimer, Bob Brinker said: The Marketimer stock market timing model has turned unfavorable.....We recommend raising a 60% cash reserve at this time......This leaves us with a 25% U.S. equity weighting and a 15% non-U.S. equity weighting."

Saturday, Bob Brinker began the program talking politics. He hearkened back to the 1950's when President Dwight Eisenhower, whom Brinker called one the greatest presidents of all time, had the ingenious idea to build the Interstate Highway system.


Brinker said (paraphrase) that in his weekly radio address today, President-elect Obama said he will "make the single largest" new investment in roads, bridges and public buildings since Eisenhower. Obama said he will create or preserve 2.5 million jobs and make public buildings more energy efficient, repair school-buildings across America, modernize health care with electronic records and more. Brinker believes that these are Obama's plans and that when he is sworn into office in January, 2009, he "will be free to act." Brinker went on at length about Obama's plans....

......Later in the program, Brinker slammed the United States because there are people who do not have a college education "because of money," and praised Obama for saying he will provide a program to "get people into college" in exchange for "public service."

Then Brinker moved on to the subject of a possible taxpayer bailout of the "big-three." Brinker is very much against these companies getting assistance from taxpayers unless there are concessions by the UAW and changes to employee wages and benefits. He said that the total compensation for big-three employees is $72 an hour -- 63% more than Toyota, Honda and Nissan. Toyota, Honda and Nissan pay only a total average compensation of $44 an hour.

November = 533,000 lost jobs -- added to the revised October and September numbers, it is minus 732,000. Total job losses this year: 1.9 million. Brinker said: "When you look at job losses so far, they've already eclipsed many of the recessions we've had since the end of World War II." Brinker gets all of his information on this subject at the Department of Labor website.

Brinker gave a lengthy breakdown of unemployment demographics. This information is all available at the Bureau of Labor Statistics.

Brinker said he expects the 4th quarter real GDP "to be down as much as several percentage points.....this is a major league recession that we are in here."

Brinker said that the one year CPI is at 3.7% -- falling rapidly. The one-year Personal Consumption Expenditure is lower than that.


Caller Ron said: "The day that you went to buy in at 800, I actually was a little ahead of you so it was a wonderful experience. Then I violated your rule and have been short on the way down, so that's worked out very well. My question is this, is there any way to understand things like the huge employment decrease on Friday and the stock market going up......"

(Honeybee EC: Brinker began talking faster and his voice took on a sarcastic edge during much of his long and clipped answers to Ron's questions. I wonder if Brinker may not be a bit sensitive about a caller mentioning his March 2003 buy-in. The market has taken a complete ROUND-TRIP since then with Brinker's model portfolios 100% fully invested for the whole ride.....

.....In November, the S&P closed BELOW Brinker's March 11, 2003 buy-in level of 807 two times. It must be embarrassing for him since he has bragged about that call so many times on Moneytalk -- even to the point of embarrassing callers that missed out on it. An old saying comes to mind -- now what was it? Something about "payback being a .......")

Brinker said to Ron: "Well, I'm sure that as a student of the market, I'm sure you are well aware that the market is a discounting mechanism and it generally, it may for a few hours or a day, but it generally is not reacting to what happened in the past."

Brinker (paraphrased) pointed out to Ron that we lost jobs in September, October and November, and that we will continue to lose jobs for awhile, but it still reflected what happened in the past.....and that even though we had a rally on Friday, the market has been down 4 out of the last 5 weeks. He opined that the trigger for the Friday rally was the good news about Hartford Financial, which actually doubled in price, but is still down 87% from its 52-week high. Brinker continued at length talking about several financial stocks that also rallied along with Hartford Financial.

Ron, interjecting another question, asked Brinker how he could "get a feel" for any bad news that might affect the market.

Brinker said: "Yeah, I'll give you a feel. If you were to have an unexpected event that would affect the economy, that would certainly be bad news and that would be reflected as bad news. Now I'll give you an example of that, the events surrounding 9-11......"Brinker continued along this line for some time, explaining how "shocking" developments like 9-11 could affect the market.....(Honeybee EC: This must have been very enlightening to Ron, it certainly was to me.) 8-)

....Brinker continued talking to Ron (excerpts):
"As a general rule, you can start to see an improving stock market trend six months before the economy turns. Now that's a variable figure, it could be six, five, four, three, but typically it's six months.....And that's the reason when the stock market starts to improve, nobody is going to understand it -- nobody is going to believe it. Because they are going to say, look at the news. We know we are losing jobs, we know we're losing cash flow, we know consumer spending will be under pressure.....And the news is going continue to come out and be negative, but the stock market is going to have already started an uptrend. Why?.....

.....Because the stock market will already be discounting the next recovery. That's the way it always works. And every time happens -- every time the stock market starts to show a better turn -- I'm not talking about one day here -- but over a period of time......Then what happens is, people look at that and wonder why is the stock market acting better when all this bad news is coming out......Because that's the way it works. It's a discounting mechanism. It's way out in front of the news flow."

Brinker said it looks like Al Franken has lost the Minnesota race to Coleman, which means that the democrats do not have a filibuster-proof Senate.

The remainder of the program and most of the calls were on the subject of the General Motors bailout. Brinker's opinion is very clear -- he is totally against it.

If you missed Moneytalk this weekend, I highly recommend that you go to KGO810 Archives. You can either listen or download programs and take them with you and listen at your leisure. KGO810 has Moneytalk programs available for seven days after they are broadcast. (Note: Saturday, Moneytalk was preempted by a ball game, but they broadcasted it beginning at 4:30pm. Sunday, it was on at the regular time -- 1-4pm.) IT IS FREE!

SJ Al took this picture on a recent vacation in Montana

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