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Saturday, August 8, 2009

Bob Brinker's Moneytalk: Discussion, Commentary and Excerpts, August 8, 2009

Sunday, August 9, 2009, Update: Lynn Jimenez took Bob Brinker's role as host of Moneytalk today. She did a good job and was very patient and kind to callers. But based on a couple of things she told callers, she does not know much about the stock market. She recommends dollar-cost-averaging. She thinks that inflation is a couple of years away.

There were a few "beginning-investor" callers, and some who are in trouble with their mortgages and credit lines , asked for advice. She told one caller to hire a fee-based "Certified Financial Planner." Brinker would have advised him to learn to be his own "financial planner." Lynn told one down-and-outer to call "Acorn" for help. This is me with my hair standing straight up when I heard that. ==8O LOL
Posted August 8, 2009....Bob Brinker discussed only the Federal Reserve in his very short opening monologue. Bob Brinker's comments paraphrased:

* The Federal Reserve is very powerful because they are responsible for establishing monetary policy, and have direct, total control over short-term interest rates.
* Federal Funds rate is set by the Federal Reserve.
* Prime Rates are different and set by banks.


1. Royce in Rochester said that he believes low interest rates are better because banks can make more money. Brinker agreed with him, and said that there have been dramatic improvements in the credit markets.....banks are in the best possible position now to make money.

2. Bob in San Francisco talked about California's Prop 13, re-affirming that with it, property taxes can be increased a maximum of 2% annually. What he didn't explain is that limit applies to ALL properties, regardless of how recently they were purchased.....

.....Caller Bob said: "What we as California home-owners do experience is a situation where when you get your annual property tax bill, because of the passage of local bond measures, that 2% maximum can easily be banged up to 4 or 6% when you do include the passage of those local bond measures.....

.....For a California resident, the taxation picture is so ugly out here that I believe many, many people would flee the state if Proposition 13 is reversed, amended, whatever. One pays 9.3% in state income tax without even earning much in the state. Top rate's over 10% as you well know the highest in the country. Sales tax where I live is now 9.25%. It's just too much.....

..... Services have been slashed. Roads are in poor shape. State offices are closed most Fridays -- like DMV, etc., right now. So I can speak personally because I will have the flexibility to do so. If anything ever happens to Prop 13, that will be the last straw that broke the camel's back, at least for my family. We'll leave the state immediately."

Honey EC: The caller made the assumption that California education has suffered since the passage of Prop 13. I submit that is a quite simply FALSE and that there are multiple other reasons why education has suffered over the past 30 years. Some of the reasons have been covered here previously in the comments from reader's section.....

..... I just perused my property tax bill and counted the "school bond measures" that are added on to my property taxes every year. There are EIGHT of them. I won't give dollar amounts, but it adds up to a sizable sum of money and is actually greater than the 2% increase that they automatically add on every year because Prop 13 allows them to.

3. Ralph in Oregon asked how to transfer an IRA into a brokerage house without incurring any penalties. Brinker said it was relatively simple and recommended a "no-load fund family" such as Vanguard or Fidelity.

4. Rick in California
asked about FDIC coverage -- and the safety of money market accounts. Brinker said to stay within the FDIC $250,000 limit.....And for money market funds, be sure the brokerage house has SIPC insurance, which covers up to $500,000.

5. Chuck in Arizona
asked about a "structured note." Brinker said that he finds "these products expensive." He does not recommend them....and said that commissions are the motivation for selling them.

6. Don in Nebraska
said he had been a "subscriber" for about 10 years, and talked about his laddered CD portfolio. BTW: Don got that laddered CD suggestion from Moneytalk, not Marketimer. Brinker's fixed income portfolios do not contain CD's. Don added that he was a bit worried about inflation. Brinker said there is always risk of inflation, but we have deflation right now.

7. Casey in Illinois asked about Point and Figure Charting.
Brinker said that Point and Figure Charting is quite efficient at telling you what happened in the's highly questionable whether it adds any value for knowing the future, and is very much like using astrology for market forecasting. Brinker said he wouldn't put any money on either method, and never uses Point and Figure Charts to make his forecasts.

8. Frank in Salinas
asked if mutual funds and ETFs are regulated so that if a company goes bankrupt the stocks in the funds have to be sold and the money paid to shareholders. Brinker answered by explaining the difference between mutual funds and ETF's. He said that an ETF is a mutual fund, and the main difference is that it is traded throughout the market day much like a stock -- SPY is an ETF.

9. Ron in Houston
said that federal government spending is completely out of control because of one-party rule. He asked Brinker if he thought that if the United States dollar ceased being the world's reserve currency would that be some kind of "external break that would end the madness." Brinker, as he does every week, explained that it didn't matter which side of the aisle was in power, spending was still out of control....

..... Brinker said: "As a result, it calls into question whether the dollar should be the world's reserve currency or whether there should be a new currency, a global currency based on the economies of the entire world that would not be subject to just irresponsibility in Washington, which is where we are right now. So I am open to the development of thinking on the possibility of a global currency. And to be perfectly honest with you, if I had my choice today between owning a global currency -- a well-constructed, well-thought out global currency and owning the U.S. Dollar, I would definitely have some money in the global currency if that option were available, so I think it's something worth exploring."

Caller Ron replied, "I'm agreeing with you. The only way to constrain the United States from spending is a global currency." [Honey EC: I was shocked, stunned and dismayed when I heard this conversation, especially Brinker's willingness to hand the control of our currency over to a "one world government." Let's see, he would trust the likes of Communists Wen Jiabao, Putin, Chavez, and Castro, Socialist European leaders and Middle-eastern dictators more than the congress of the United States? Did I understand him correctly? What am I missing?]

10. Chris in California
asked if Brinker had heard the rumor about a plan for banks to take a holiday in September in order for the government to take action that would devalue the dollar by 40%. Brinker said there is no reason for them to do that because the dollar trades freely in high volume every day on the foreign exchange market, and that such talk is unfounded.

11. Patrick in Jacksonville
said he is retiring from the railroad after 40 years and asked about equity index annuities. Brinker said he is not a fan of equity index annuities because they tend to be too expensive. He recommended a balanced portfolio of total stock market index [VTSMX] and GNMA [VFIIX] Funds.

12. Woman (name inaudible) in Pennsylvania
asked if there a rule that said you don't have to pay capital gains when you sell a home after age 55 if you have lived in the home at least 5 years. Brinker said there is no tax on sales that fit those criteria.

13. Gregory in Burbank
asked what are the best bank rating-services, and said that he is concerned about the FDIC running out of money. Brinker said he looks at the major services like Standard and Poor's, Moodys and Fitch, and said that he had absolutely no concern about the FDIC running out of money.

14. Matt in Chicago said:
"I absolutely love how you destroy these people with just common sense, and with their own words and how you kind of tie it around their neck and let them hang themselves." [Honey EC: Wow! That seems very aggressive to me. Is everyone in Chicago that violently inclined? (teehee) I wonder who it is that Matt thinks Brinker "destroys."]

15. Nathan in Los Angeles
asked about Ginnie Mae individual issues. Brinker said he does not recommend buying individual Ginnie Mae Bonds because of the commissions. He recommends VFIIX.

Brinker's funniest line of the day:
Speaking of the Obama health-care takeover, Brinker said: "They are trying to generate an insurance program for most of the people that don't have any insurance. That's their objective." [Honey EC: ROFLOL! Surely you jest Bob, if you think that is their "objective." And for 15 million out of 300 million Americans, they are willing to destroy the best health care system IN THE WORLD? Brinker is either being deliberately obtuse or he's so far in the tank for the Obama administration he can't get his head into the light of day. Please read: "The Fuzzy Math of 47 Million"]

Brinker did not have a guest-speaker in the third hour
. He talked about buying no-load fund versus ETFs. He explained that there is a commission each time you buy an ETF, but no-load funds can be purchased free of charge. [Honey EC: if you use a discount broker, the charge is very low.]

Some Brinker comments from hour-three paraphrased:

* Interest rates are low because of the economy and the current Fed policy.
* Single party rule is killing us.
* Converting from a traditional IRA to a Roth IRA incurs taxes that otherwise might not have to be paid for many years.
* Under the changes to the Uniform Gift to Minors Act, the first $950 is not taxed if the child has no income. [Honey EC: I think the actual number is $900.]
* Estate tax: In 2009, you can leave your heirs $3 1/2 million tax free -- $7 million per couple.

Brinker did not mention the stock market today, and there were no callers who mentioned it or asked anything about it.

Honey's Markets Report:

* Dow closed at 9370.07 up 2.2% for the week.
* Nasdaq Composite Index closed at 2000.25, up 1.1% for the week.
* S&P 500 Index closed at 1010.48, up 2.3% for the week.
* GLD closed at $93.75.

Moneytalk programs are available free on "demand" at KGO810 radio for seven days after broadcast. You can download and save Bob Brinker's Moneytalk programs (owned by ABC) and listen whenever you choose at no cost whatsoever. To download the programs to your MP3 player or flash drive, just choose the day, then right click on the hour that you want and use "Save Link as." KGO Moneytalk Archives
[Link] If you want to call KGO and complain about or praise Bob Brinker's Moneytalk, here are the numbers: Comments line: 415-216-1052....Listener services: 415-216-1050

I promised Bluce that I would post this picture of a De Soto (not sure what year it is) that I took on my way into church last Sunday. It's a beauty. Cars and men, both get better with age - usually. 8^)

Here's a picture of the Boardwalk's 85 year old Giant Dipper from the street side that I took Wednesday evening as a friend and I drove by after dinner on the Wharf:


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