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Monday, September 28, 2009
David Korn wrote the following analysis of the stock market in his September 26-27, 2009 newsletter -- hot off the press and posted with David's permission:
HISTORICAL CYCLICAL BULL MARKET ANALYSIS
As I am sure all of you all know by now, I am of the opinion that we are currently in a cyclical bull market, within the context of a longer-term or "secular" bear market.
The last secular (long-term) bear market occurred over a 16-1/2 year period of time which lasted from 1966 all the way through August of 1982. During this secular trend, there were four mini-bull markets, or "cyclical" bull markets as many like to refer to them which were of a shorter duration.
I wanted to review with subscribers the first bull market of the 1929-1949 secular bear market. It provides some interesting insight into how the stock market behaved 80 years ago and reveals that investor behavior hasn't changed much at all during that time.
SECULAR BEAR MARKET (September 1929 - June 1949)
Let me take you back in time for a few minutes to set the stage for this analysis. If you like, pretend your are Christopher Reeve, pick up a penny and transport yourself Somewhere in Time.
Its the roaring 20s. And they don't call it "roaring" for nothing. Stocks were the place to be, and borrowing was plentiful. For every dollar you invested, you could borrow $9 worth of stock on margin. And trust me, people were not afraid of using margin back then. Who would be? From August 24, 1921, through September 3, 1929, the Dow rose from 63.90 to 381.19 in a glorious secular bull market producing gains of 497%!
Consider how much press there was when the Dow hit 10,000 a few years back. Now, picture how it must have been when the Dow topped 100 in 1922, doubled that and broke through 200 in 1927 and then just a year later hit the 300 level on December 31, 1928. Talk about a Happy New Year!
"Stocks have reached what looks like a permanently high plateau."
- Irving Fisher, Professor of Economics, Yale University, October 17, 1929
That's a fishy quote from Fisher eh? On September 3, 1929, the day after Labor Day, the Dow hit its pre-crash closing high of 381.17. Are you sitting down? It wouldn't reach that mark again for almost 25 years!
Its hard to believe, but in just over two months, many investors saw their entire portfolio cut in half. Can you imagine that? You have probably heard about "Black Thursday" October 24, 1929, when panic selling took place amongst a frenzy on Wall Street. Indeed, eleven well known speculators had committed suicide before Richard Whitney, then vice-president of the NYSE stepped in, and announced that he was buying stock. This helped alleviate the fear and stop the bleeding.
"The worst has passed."
- Joint statement by representatives of 35 of the largest wire houses on Wall Street at the close of trading, October 24, 1929
"We feel fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
- Goodbody and Company, market letter to customers, quoted in the New YorkTimes on October 25, 1929
The following two days, Friday and Saturday (the market was open back then on Saturdays), saw steady sessions with investor confidence being restored. However, investors' hopes were dashed the following week when the market suffered a record one-day loss of about 13% on Black Monday, October 28, 1929, and another 12% loss on Black Tuesday, October 29, 1929.
(You would think market historians could come up with a more creative color scheme to name the days -- perhaps Charcoal Monday or Slate Tuesday, for example).
About two weeks later, the market bottomed (although not its ultimate bottom for this secular bear market). On November 13, 1929, the Dow closed at 198.69 -- a decline of 47.9% in just over two months! Coincidentally, in our most recent bear market, if you look at the S&P 500, it declined about 47% from its peak in March 2000, to its closing low in March 2003. The percentage decline was pretty much the same as in 1929, but the time frame over which it happened, is far different. In 1929, if you had lost half of your net worth in just over two months, the last thing you would be thinking about would be investing in stocks again. If that had been the case, you would have missed a relatively short, yet very profitable cyclical bull market run.
With that introduction, let's take a look at...
CYCLICAL BULL MARKET NUMBER 1 (November 13, 1929-April 17, 1930)
Date: Dow Jones Price (All based on closing numbers)
As the foregoing numbers show, the Dow began the first cyclical bull market of the 1929-1949 secular bear market at a price level of 198.69. Hard to imagine now that the Dow is in the 10,000s. Anyhow, the Dow began its bull journey with a hefty 25% gain in just six trading days. Holy smokes! Talk about volatility. That must have been a relief for many investors.
With gains like 25% in just over a week, you should expect a pullback and that is exactly what happened. From November 21, to November 26, 1929, the Dow made its first correction, pulling back to 235.35 - a decline of 5.29%.
A couple of weeks later, the market had recovered all of its correction declines, and broken through its prior high to close at 262.20 on December 9th. This marked an 11.4% move off of the correction low, and now the Dow was up 31.9% from the bear market lows.
Just 11 days later, the Dow "tested" its previous correction level. This "second correction" as I call it, marked the low that this cyclical bull would fall to. This was an 11.95% correction off of the high.
After correcting the second time to 230.89, the Dow rose slowly but steadily. It took about seven weeks before the Dow hit a new closing high for this cyclical bull market on January 20, 1930. The Dow continued rising with no significant pull back until closing at 272.27 on February 13, 1930. The Dow was now up 37% from its lows.
On February 24th, the Dow corrected 3.6% from its cyclical bull market high. This was an important inflection point for this bull market, because it marked the last correction of any significance which for purposes of my analysis, is a correction over 3.0%.
Ok, stick with me for a moment here before you look at the last set of numbers. This cyclical bull market peaked almost two months later on April 17, 2004, when the Dow closed at 294.07. Once the Dow broke into the 290s, you can see how the market churned before it topped on April 17th. You will see that number in the data below, but I want you to notice how the market spent a lot of days right around that level.
4/17/1930: 294.07 * *Cyclical bull market closing high
4/22/1930: 290.01 * *Last day Dow was in the 290s
As you can see, the Dow stayed within about 6 points from its closing high for about 2 weeks in April. One interesting thing that you can't see from the closing numbers, is that on an intra-day basis, the Dow rose above 293 on seven of those trading days. In my opinion, this is an important point from the "technical analysis" perspective, as it shows that the sellers always came in by the end of the day to prevent it from closing above 294. A sign of distribution, and a flag that the end may have arrived.
All in all, the Dow gained 48.00% during this cyclical bull market which lasted only about five months. Kind of similar to the action we saw since the March lows. The question is whether this bull market is going to have more legs. I personally think it will.
Studying past bull markets, can give you the ability to gain a perspective on how the market moves. Too often, we are unable to see the forest through the trees; or, we follow so closely, that we only see the trees without being conscious of the forest. What can we discern from this analysis? Well, first of all we can learn the obvious. Even in a cyclical bull market, the market doesn't move in a straight line, and there can be several significant pull backs. On the other hand, the largest pull back was only on the magnitude of 11.95%. This fits within the pattern that I observed in the cyclical bull markets during the 1966-1982 secular bear market. Certainly, there can be merit in waiting for buying opportunities, but as you can see, the moves up can be ferocious at times. Moreover, there really were not many "buying opportunities" during this cyclical bull market, so if you are going to try and lump sum in, you better hope you don't miss it.
David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2009
Honey here: You can request a free issue of David Korn's weekly newsletter. David co-edits the Retirement Advisor. You can download a free issue here [LINK]
I wrote: "Dixiegeezer took this picture of a wind-surfer this morning." Now it looks like I have insulted some people. I promise it was not intentional.... LOL!
Kirk said: "PLEASE change the title of the picture as it is a MAJOR insult to windsurfers... Kiteboarding is easy to learn compared to windsurfing. A friend of mine has a bumper sticker on her van that tells her kiteboarding husband: "if windsurfing was easy, it would be called kiteboarding!""
Friday, September 25, 2009
I will not be available to listen to the program or write my usual summary this weekend. However, if anyone hears anything that you think is interesting or noteworthy, please send comments to this post. I will read and publish them when I return.
Sunday morning update:
Jeffchristie reported that Lynn Jimenez filled in for Bob Brinker this weekend.
Saturday, Moneytalk was entirely eliminated from the KGO810 programming. It was replaced by a program called "Consumer Talk" after the Cal Bears Game on Saturday.
I took this just after sunset from the Santa Cruz Wharf looking west toward Lighthouse Point [LINK] Click to enlarge:
Monday, September 21, 2009
Jim said: “I heard your comment about booms and I agree with you, booms lead to busts. And I know that the S&P is up 20% or so. But from the bottom in early March, the S&P is up 60%. It’s the fastest gain that I’ve ever seen. I’m 60 years old, I’ve never seen anything like it. And I’m getting concerned that we are getting to a boom period with the market and just wanted your opinion on what if this thing continues? At some point, aren’t we getting to a technical scary place?”
Brinker sarcastically replied: “Well, obviously we are for you, Jim. But speaking for myself, I think the market overshot on the downside. I thought the market could make a stand in the mid-700’s. Matter of fact, back at the time, I wrote that. I thought the market could make a stand in the . Went a little bit lower for a short time and snapped right back. I think that was an overshooting on the downside, as temporary as it was. And so for that reason, I don’t share your pessimism, but I do appreciate your call on Moneytalk."
"At the end of the 2nd hour, BB had a quite reasonable question (paraphrasing) "Hasn't the market come too far, too fast since March?"
BB was saved by the end of the hour. All he had time to do was insult the caller, and criticize the market for daring to go lower in March than he thought it should have.
No comment from BB when his Sunday guest criticized gold as an investment. If BB suspects that his radio audience thinks his guest is smarter than he is, he keeps mum." [LINK]
"Congrats now honey that you are second on the list when you search for BOB
bob spinning agian today about the s&P hitting 600. He thought it was overshot going down. It should have hold at 700. LOL" Pete from FB [LINK]
Honey here: Jim made a good point about this meteoric rise in the stock market since the 677 low on March 9, 2009. It's nice for all of us, but it's especially helpful to Bob Brinker because it has given him a much needed "game plan" so he can resume perpetrating the myth that he is able to time the stock market accurately. But wouldn't an honest man admit he threw in the towel on March 5th? And wouldn't an honest man admit that in March, he had no buy signal or dollar-cost-average advice in his "investment letter" and was looking for a retest of the lows?
August 5, 2008: Buy S&P 500 at 1240 or less. , 2008: Buy S&P 500 in low-to-mid 1200's , 2008: Prior buy signal rescinded, recommended
January 15, 2009: Buy S&P 500 low-to-mid 800's
March 5, 2009 Marketimer: (Waiting for retest of the lows -- S&P @ 696.33) said: “Due to the fact that the November 20, 2008 closing low failed to hold during the testing process, we believe a new bottoming process will be necessary for a sustainable market advance, we need to see a sequence of events consisting of (a) the establishment of an initial closing low; (b) a short-term rally; (c) a test of the area of the initial closing low on reduced selling pressure."
Chart courtesy of Kirk Lindstrom [LINK].
Dixiegeezer took this picture of a VA Cemetary near St. Petersburg, Florida:
Saturday, September 19, 2009
Posted September 19, 2009....Bob Brinker talked about the big-spenders in Washington DC in the opening monologue. I'm not going to report on what he said because there was nothing new. He seems to be very concerned about the rising deficit and that no one in DC seems to want to do anything about it.
During the program today, Bob Brinker made the following points:
* Dollar cost average into the stock market
* If you want to buy gold as a hedge, buy the ETF GLD rather than numismatic coins because the markup is too great -- exceptions: the Austrian Crown and the Mexican Peso have low premiums.
* In the May issue of Marketimer, Brinker added GLD to his Individual Issues list. [Honey EC: along with SU. His two other individual stock picks are MSFT and VOD.]
* Don't put annuities or other tax-sheltered investments into IRA's
* Deflation is at 1.5%
Bob Brinker's Moneytalk was preempted on KGO during the first hour and part of the second hour. No doubt he was aware of that because when the game ended, he made a comment about the Cal Bears winning another game. So it's interesting to note that he spent much of the second hour hawking his newsletter and his model portfolios.
I have transcribed some excerpts and inserted my own comments along with some facts that Brinker left out. I know "it's not in his nature" to deliberately mislead his audience in order to sell newsletters. And by the way, I'm accepting offers on a gorgeous orange bridge that is for sale.
Here's a preface for what follows: While I don't claim any prescience, I do know Bob Brinker. On November 18, 2008, I wrote this in my Moneytalk Summary. This was BEFORE Brinker's latest mid-800's buy signal:
"Will Brinker bury all of this year's failed bottom calls and only brag about the latest one -- whatever that might be when it arrives? What about the people that believed he was correct at 1400, 1300, 1200? Too bad, so sad for them?"
Bob Brinker said: "For those who are regular listeners to Moneytalk, let bring you up to date. Back in January of this year, I issued a special subscriber message in mid-January to the investment letter subscribers."
[EC: There were weeks and months that went by in 2008 that Brinker never mentioned the stock market. Think about why he now speaks so profusely about it. I wrote this in my November 1, 2008 Summary: "Brinker did not make any comments about the stock market today. Brinker did not mention that the S&P 500 Index just finished its WORST MONTH SINCE 1987." What a shame that he didn't offer any guidance to his listeners during the scary times -- but that would have taken character and courage.]
Brinker continued: "And in that message, we did a couple of things. First of all, we issued a buy-signal on the market on any weakness in the S&P 500 in the low-to-mid 800's. Actually, it went lower than that for a very short period of time into early March and then snapped back right away. But that was the buy signal that we issued in mid-January to buy into the market on any weakness in the S&P 500 into the low-to-mid 800's. Now that has served us very well. We are sitting in here right now at 1068 in the S&P 500....."
[EC: So how did the prior "buy-signals" serve us, Mr. Brinker? You remember them don't you? There was mid-1400's up until January 2008, then there were mid-1300's, low-1300's low-to-mid 1200's. You issued ever-lower buy-signals during the 50%+ mega-bear market, and your last one was mid-800's. But even that one gets no cigar, because the market dropped another 25% before turning up at 677 -- at which time, you clearly said you had to look for a new market bottom to develop. Pen-name "lower than a sewer hole" said it well: "It is amazing that he neglects to tell his listeners that he GAVE UP on calling a bottom and saying dollar cost average when the market was at its lows. I wonder if anyone gave up on him then and threw in the towel."
Brinker continued: "The other thing that we did in that special message was we said that 2009 would be a significant positive year for the stock market. Now what we are looking at right now is a total rate of return in the S&P 500, year-to-date of a little over 20%....in the Total stock market index of 22.6%. Certainly that qualifies year-to-date as a significant positive year in the stock market. Certainly been a lot of volatility early in the year, but the situation in the stock market, really I would say, going back to early in the spring season, going back particularly to April of this year and on, really the market has been following the script just about perfectly. It has been anticipating some economic recovery into 2010 and investors have been responding to that and we have seen exactly what we expected to see, particularly since April of this year....."
[EC: It looks to me like the same script Brinker laid out in April of 2008. How lucky for him that what he said actually came true the second year round. Statistically, that's equal to a coin toss.]
Here is what Brinker said when the S&P was at 1390 in April 2008: "......you should be feeling pretty good about your stock market portfolio. Because not only has it shown a very nice advance since the correction lows in March...............but in addition to that, I think it has a lot further to go. And I continue to expect, as I have said, that we will see new all-time-historic-record highs in the S&P 500 Index."Brinker continued: "No doubt there was more volatility than I expected there would be going into early March. Without any question of a doubt, this has been to-date a significant positive year for the stock market. It's the bottom line that counts. The important thing is that in 2009 after a very rough 2008, that you have been fully invested in your stock market portfolio and that you are benefiting from what we're seeing in the market...."
[EC: Bottom line? The bottom line is your model portfolio subscribers lost almost 40% in 2008 -- but you do not report that information on your website. They lost even more from the top to the bottom that you had them ride "fully invested."]
Brinker continued: "And I'm very happy to report that looking at the figures year-to-date that we have been able to outperform the total stock market index in all of our equity model portfolios -- the aggressive portfolio number one, the long-term portfolio number two, the equity portion of the balanced portfolio number three, and the active/passive portfolio as well. All of those have outperformed the total stock market index, which in and of itself is up 22.5 % year-to-date....."
[EC: Brinker's "active/passive" portfolio is 90% Vanguard Total Stock Market Index Fund and 10% Vanguard International Fund. So clearly it hasn't "outperformed" the total stock market index by much. The other two portfolios he mentioned are 50% Vanguard Total Stock Market Index Fund.]
Brinker continued: "Now I'll admit when we made that prediction in mid-January, there certainly was a case that could be made, that at that point I could be committed because pessimism and negative thinking was pervasive at that time. But here we are now in September of 2009 and we've seen what a summer rally can do to the stock market, as it has driven the S&P 500 to the 1068 level. Even though for a number of people this was not possible. We were told by some that it was not possible for the market to drive to this level because it's summer....."
[EC: I disagree that you should have been "committed" for what you said in January, Mr. Brinker. But I do wonder how much sleep you are getting at night now. I wonder if your conscience might bother you even a tiny smidgen because of the way you are spinning the truth and lying by omission. Yep, I said it, "lying by omission."]
Brinker continued: "The reality is when you go through a rough year like 2008, it is imperative that you take advantage of the recovery period that is given to you. And so far this year, we have seen such a recovery period. An opportunity for people to regain a good portion of what happened in 2008, and that's a unique opportunity that has to be taken advantage of. The only way to take advantage of is to be in the market. .....Sitting on the sidelines doesn't work. In this interest rate structure it doesn't recoup much of anything....No doubt about it, 2009 has been a terrific year and we deserve it."
[EC: Finally something Mr. Brinker and I can wholeheartedly agree on.]
Brinker's Saturday guest-speaker was Patricia Langohr: "The Rating Agencies and Their Credit Ratings: What are They, How They Work and Why They are Relevant"
Brinker's Sunday guest-speaker was David Marsh: "The Euro: The Politics of the New Global Currency."
Honey's Market Report:
* Dow closed at 9820, up 2.2% for the week.
* Nasdaq Composite Index closed at 2132.86, up 2.5% for the week.
* S&P 500 Index closed at 1068, a 2.5% gain for the week.
* GLD closed at $98.67 -- it 98.78 last week.
Some points that Brinker made today:
* "I do not have a sell on the stock market at this time."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. Here is the KGO email address -- cut-and-paste it into your email compose window: firstname.lastname@example.org
* Most of the damage to the housing market has already been done.
* California has a legislature that is unqualified to serve. "The citizens of California have elected a legislature of incompetents."
* "We're seeing an official U.S government policy......even though they won't admit to it, this is de facto what we are seeing, and what we're planning is, they're debasing the U.S. dollar. We have an official policy, even though we say the opposite when asked what we think about the dollar, oh, we support a firm dollar, blah, blah....The reality is, the official U.S. Government policy is to de-base the U.S. dollar.....Our generation will be known as the generation that sold the United States down the river."
* To ameliorate the de-valuing of the dollar/hedge dollar-risk, buy international bond funds (T. Rowe Price International Bond Fund is up 9% year-to-date -- 26% in the past 3 years).
* "If down the road, if we saw an hyper-inflationary outlook, that could have an impact on the level we'd be willing to place at risk in the stock market.....It's possible that could result in a defensive move." [EC: Unbelievably, Brinker is back to shamelessly inferring that he can time the stock market.]
* Ginnie Mae rates will remain in the range where it's traded for a long time. That is: In the $9's when rates are up -- in the $10's when rates are down.
* It's unfortunate that the dollar is the world reserve currency when the "stewards of the U.S. in Washington are doing everything in their power to debase the currency."
* The Treasury gross public debt has risen over $2 trillion just in the past year. It will rise over $20 trillion over the next ten years. "The unthinkable is happening right before our eyes......It's a runaway train......Now you tell me, who do you see in Washington today who has power to change this? A bunch of celebrity politicians who want to go on Bill Maher and tell jokes? I don't think that's going to happen......It's certainly is a cause for great shame across the United States of America."
Dixiegeezer took this at sunset last night:
Dixiegeezer's acrobatic friend 8^)
Friday, September 18, 2009
We know that it was dropped from XM Satelite radio several months back.
Now it has been completely dropped from New York WABC. That's a biggee for Brinker because the "canyons of Wall Street" are his old stomping grounds.
KABC has dropped 2 hours of the program on Saturday -- playing only 1 hour at 3pm. And almost more insulting, they have moved the Sunday program to the 12am-3am slot.
Chicago WLS has dropped the program from Saturday, but plays it on Sunday.
Tuesday, September 15, 2009
Last weekend on Moneytalk, a caller asked Brinker about the "The Elliott Wave Financial Forecast." Brinker's response was less than flattering and he actually ridiculed it.
One has to wonder if Brinker had read Mark Hulbert's Marketwatch article posted on September 11th (see the link below). In it, Hulbert said this: "Consider, for example, the newsletter that I suspect came closest a year ago to forecasting what was about to take place: The Elliott Wave Financial Forecast, published by Robert Prechter and edited by Steve Hochberg and Pete Kendall."
In the article, Hulbert also listed Bob Brinker's Marketimer as one of the newsletters that was "depressingly" bullish in September 2008 -- a year ago.
Mark Hulbert wrote:
"I spent a depressing day earlier this week reading through what newsletter editors were saying exactly one year ago..... .....the vast majority of the newsletters on the Hulbert Financial Digest's monitored list seemed, at least in retrospect, strangely complacent. Here's a sampling of what they were saying in early September of a year ago:In the latest issue (September) of Hulbert Financial Digest, Marketimer is not in the "Top-5 Performers" for the past five years in any category.
The bottom line: Warren Buffett was right when he famously said that one of the primary purposes of stock market forecasters is to make fortune tellers look good."
Bob Brinker, Bob Brinker's Marketimer: "We expect the S&P 500 index to challenge its previous record closing high of 1565 next year as investors move beyond the current economic malaise and look forward to improving corporate earnings prospects as the economy moves into its recovery phrase."
So Brinker's track record since he assumed a 100% invested position with his Model Portfolios in March, 2003 (at S&P 811) is not good. He rode it all the way up to 1565, then rode it back down to 677.
Currently, Brinker is bragging about his market-timing prowess again because he made the statement in January that 2009 would be a positive year for the stock market. He said the same thing in 2008. I think we all are happy that he was right this time. 8~)
Marketwatch: "Let's do the timing warp again on the markets" [LINK]
Dixiegeezer sent this picture of a "field of waterlilies" this morning (Wednesday). Enlarge it...it's spectacular. Monet tried to capture them, but he couldn't quite match this.
Dixiegeezer took this near La Conner, Washington:
Monday, September 14, 2009
Poster Permabear wrote:
"I listened to a bit of Moneytalk today. Agree that on the surface the decision to slap tariff on tires appears to be a mistaken policy. But there may be a lot more to the story than what appears on the surface. Yes Obama may be paying back the unions for their support. But perhaps he is also sending a message to China about their frequent openly expressed concerns about the dollar being the world's reserve currency. Also I've seen reports of China not buying as much treasury bonds as they were previously. And of course we all know that China has strict trade rules limiting foreign imports while at the same time flooding the U.S. and other countries with cheap exports, contributing to many of the imbalances that blew up into one massive bubble that popped last year. In sum, there may be much more to the story than what we heard on Moneytalk today."
Poster George J. wrote:
"There is lots of evidence that goes way back about the total Brinker record. It is a mixed record. If you study the evidence it is obvious he can't time the market any better than anyone else. All the experts say you can't consistently time the market. Brinker can't either. What he is doing is making a lot of money promoting a newsletter and radio program. He will not admit any mistakes. His method of operation seems to be to say what ever is necessary to maximise his listeners and readers. He is a snake oil salesman of the worse kind and can't be trusted. He provides some good conservative advice but coming from someone you can't trust, I can't be sure he is right or knows what he is talking about. It is a shame that so many people are following him like the pied piper. A lot of them including many retired people must have lost their shirt over the latest bear market.
There were people on these sites such as I believe Will L who said he would not call the next bear. Will L had a great analysis of why he would not try to call the next bear. I agreed with him and concluded that if he couldn't or wouldn't call the next bear he was worthless to me and quit listening or paying attention to him several years ago. His only value to anyone would be to call a bear and he failed miserably. This didn't surprise me and it doesn't surprise me now that he is not admitting any mistakes. I would be shocked if he said he was wrong and provided an analysis of why he missed the bear. In fact if he did that he might perk up my interest at least a little again."
Eddy StL. wrote:
Yes, I agree. An honest man admits he was wrong and attempts to explain why( at least partially). And this would give a person their integrity, respectability back. It is like Watergate. The biggest crime in life isn't in making a mistake. The biggest mistake is trying to cover up or blame others for our own mistakes. There is the rub. Even Albert Pujols strikes out occasionally. No one gets a hit every time they come to bat in life. We are not perfect.
The best we can do is to study the market history thoroughly. Take a disciplined, and somewhat conservative bias, depending on our age of course. And to re-balance our portfolios every 1 to 3 years as the asset allocation changes. This insures we take some profits where we have them. Maintain a safe risk profile. And compound our gains many , many times over a long period of time. Being in a more balanced asset allocation helps us to stay the course when the bear in active. And it provides the assurity that we have cash to BUY stocks when the markets dive. Warren Buffett always says that the first rule about investing is : 1. "Don't lose money," and that the 2nd rule is: "Don't forget rule # 1." Staying in balance helps us to do just those things."
Dixiegeezer's "Civil War" pictures. This is how the battlefields were laid out:
Saturday, September 12, 2009
Then Brinker said: "Many of you know I said back in January of this year that 2009 would be a significant positive year for the stock market and that is what we are looking at."
Honey EC: Brinker has never told Moneytalk listeners that he predicted the same thing in the January 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 expect the S&P 500 Index to achieve new record highs this year to reach the 1600's range in the process. We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400's range. Above this range we prefer a dollar-cost-average approach for new purchases. All Marketimer model portfolios remain fully invested as we enter 2008."
Continuing with his monologue, Brinker introduced the main topic of the day. He said it was one of the big news stories of this weekend. China has voiced objections to the tire import protectionist tariffs that were announced by the White House.
Brinker said: "This decision made by President Barack Obama....is an effort, and I think it is a very big mistake by this president, to introduce tariffs on Chinese tire imports.....China will refer this to the World Trade Organization and we'll see where it goes.....Typically, this of thing leads to retaliation.....
.....We saw a similar mistake....under the last George W. Bush. We criticized him at the time for imposing tariffs on steel imports. That was a mistake, just as this is a mistake.....Herbert Hoover made protectionism real famous back in 1930...He signed the Smoot-Hawley Act....And that is why he gets much of the blame for the Great Depression.....
....By the way, these tariffs are very high..... starting at 35% on tire imports from China.....Why are they doing this? The reason they are doing this is because the United Steel Worker's Union has complained that tire imports could cost jobs at their factories. In response to this complaint by union officials, the White House has place this tariff on the board.....a huge policy mistake....
....The American companies that make tires in China and sell them around the world, did not ask for these tariffs. This is something that is being done in response to union pressure. And of course, when you're elected by the union membership then you do what the union tells you to do. And that's the only explanation for why such a highly controversial and misguided decision by the White House.....
....What you don't want to see is a trade war....They have fired the first shot in a potential trade war....Retaliation is the most predictable outcome......Now you will have protectionists that will stand by these tariffs, they'd like to see another Smoot-Hawley......and just try to protect jobs here. That would be a global economic disaster if that were to happen.....
......A major tariff policy where it's going to be effecting a wide spectrum of products, in trade terms, that's the same as sending in the troops......It's an act of economic war to go into the tariff business....Here's my prediction, the United States will lose more jobs as a result of this mistake made by the White House this week......in any sector affected by the tariffs...
.....It was a surprising decision, not because it came at the bequest of a union, that part is easy to understand, but because this administration, during the campaign, had made public statements about refraining from increasing tariffs. So if you voted for this administration on economic policy on this issue, you were voting based on public statements that they would refrain from increasing tariffs. And then they are in office for just a few months and they turn around and they come up with a gigantic tariff in this particular case.....
[Honey EC: What do you mean "they," Bob? Do you think Obama has a mouse in his pocket?]
......There are four companies in the United States that have factories that produce tires in China. And in terms China tire exports, they account for about 2/3 of exports to the United States. And these tariffs will have a direct effect on these four companies, in my opinion....These companies did not ask for these tariffs. Obviously, they did not ask to put tariffs on their own tires that they are manufacturing in China and exporting to the United States. If this is the policy that this administration is going to endorse in order to, quote, unquote, save jobs in the United States, then I am very comfortable right now pronouncing this policy a failure......The White House has made a very unfortunate mistake. They will live to regret it."
GINNIE MAE: Brinker told a caller that there was no change in his views about GNMA Funds. He recommends, VFIIX. He said that the NAV could range into the "nines."
NATIONAL DEBT: Brinker said: "When you run up the national debt, and you run up the interest cost on the national debt, which is the official policy of the United States right now, you drain your future growth potential....The reason is you are using more and more of your capital just to pay the interest on the national debt."
In the second hour monologue, Brinker talked about what was going on during this same weekend last year with Lehman Brothers, Bank of America takeover of Merrill Lynch, etc. He said that investment banking stocks were in free-fall at that time.
[Honey EC: As an excuse for being caught completely unawares by the mega-bear market, Brinker is on record saying that he had no way of predicting the global banking crises. But he certainly knew about it a year ago because today he talked about how he was reporting the "breaking news" as it happened in September 2008.
Regardless, in the October 2008 Marketimer (S&P @1164) Brinker wrote: "We recommend a dollar-cost-averaging approach for new stock market investing at this time. We expect to see a period of stock market price stability develop in the fourth quarter...." Brinker's model portfolios were fully invested. I'm sure he regrets not having raised cash reserves even then. If he had done that, his subscribers could have sidestepped a drop from 1164 to the March 2009 bottom of 677. I'm sure he's happy that his subscribers have regained some of those horrific losses in their portfolios. At one time, Portfolio I was down over 40%.
Most of the callers today wanted to talk about the pros and cons of tariffs. Here are some excerpts from Brinker's replies to various callers: "There is no question that this is an anti-business out of the White House, therefore, I don't see how this helps the economy.....The bottom line is, this is a payback to the unions for their election support, let's call it what it is.....I think the White House blew it on this one."
Today, Brinker carefully pointed out that there was no racism involved in his criticisms of Obama about the Chinese tire tariffs. He explained that he had also complained about George W. Bushs' steel tariffs. [Honey EC: Someone please get my smelling salts. Is this what our country has come to? If you criticize Obama, you have to explain that you are not a racist and "prove" it by saying that you had criticized a white man for something similar? Someone needs to back up this truck and unload the #@%*&, it's getting way too offensive.]
Brinker's Saturday guest-speaker was Ron Shelp, co-author: "Fallen Giant, the Amazing Story of Hank Greenberg and the History of AIG"
Sunday, September 13th update: The only thing new to report from the program today is that the U.S. Treasury guarantee on Money Market Funds will expire next week -- on September 18.
This guarantee which was quickly put in place last year, probably served an invaluable purpose in that it stopped an impending run on Money Market Funds after the demise of the Primary Reserve Fund, and provided a safety net for investors. This program earned the government a cool $1 billion....Read more about it at American Banking News [LINK]
Additionally, I should mention that a caller asked Brinker if the banks loading up on Ginnie Maes would have any adverse affect them. Brinker said he didn't think so... This from Wall Street Journal:
Banks have been silent partners in the meteoric rise of the Federal Housing Administration.Brinker's Sunday guest-speaker was Erin Arvedlund. She wrote, "Too Good to be True, the Rise and Fall of Bernard Maddoff." In 2001, Erin wrote an article about Maddoff for Barrons titled "Don't Ask, Don't Tell." You can read about what she wrote in this 2008 Barrons [LINK]. You can read more about Erin's Maddoff investigation in this August 2009 NPR article [LINK]
In the past year, the nation's financial institutions have snapped up securities backed by Ginnie Mae, a government-owned agency that guarantees payments on mortgages backed by the FHA. That helped drive demand for Ginnie securities and created an outlet for billions of dollars of FHA-backed loans made to borrowers who in many cases couldn't afford big down payments.As of June 30, the roughly 8,500 federally insured banks and thrifts were holding $113.5 billion of Ginnie securities, compared with just $41 billion a year earlier,
Honey's Market Report:
* Dow closed at 9605, a gain of 1.7% for the week.
* Nasdaq Composite Index closed at 2081, a 3.1% gain for the week.
* S&P 500 Index closed at 1043, a 2.6% gain for the week.
* GLD closed at $98.78, up from $93.87 last week.
Interest bit of market trivia from the Drudge Report today: September 10, 2001, Dow Jones 9605/September 11, 2009, Dow Jones 9605
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. Here is the KGO email address -- cut-and-paste it into your email compose window: email@example.com
This is Lama at one of his favorite pastimes. Watching Scarlett the Betta Fish. My daughter made the beautiful quilted table-topper for me.
Scarlett just wants to know if Lama wants to fight. 8^)
Saturday, September 5, 2009
Let's take a look at a couple of Moneytalk conversations that Brinker didn't allow on the air. 8^)
Friday, September 4, 2009
Going back years, Brinker has promoted and relied on this timing model to get him (and his subscribers) out of the stock market before a 20% bear market.
I checked back through year-2007 Marketimers. In every issue, Brinker wrote about what the "The Marketimer stock market timing model" was forecasting. It was very bullish, predicting new market highs and zero chance of a bear market. Many Marketimers began similar to these examples:
January 4, 2007, Marketimer: "As we enter our 22nd year publishing the Marketimer Investment Letter, the Marketimer stock market timing model...."In 2008, Brinker continued writing about the "Marketimer stock market timing model" each month until October. October, 2008 was the last time that Brinker ever mentioned the timing model in Marketimer. (And he has never written about it in 2009.)
June 5, 2007: "The Marketimer stock market timing model indicates there is a very high probability that the ......"
Currently, Brinker uses new language when writing about his market-timing views. In the June, 2009 Marketimer, he used these words, "Our stock market indicators...." However, he has not identified what those "indicators" are.
In September, 2009, instead of writing about the "5 root causes for a bear market" like he has done for years, he used these words: "We are monitoring several key factors......"
Kirk Lindstrom wrote an article about Brinker's "5 root causes for a bear market" (which Brinker in now calling "key factors"). Here is an excerpt of Kirk's article that shows the 5 factors:
"The 5 root causes of a bear market, according to Bob Brinker, are:So Brinker's new and improved 1987 timing model seems to have disappeared from his "investment letter" just like so many, many other things over the years. Will he bring it back? Is that why he hasn't said a word about it in the newsletter or on Moneytalk for ten months? We shall know in the fullness of time.
Another big change that Brinker made in April, 2009, is that he stopped issuing "buying opportunities" defined by S&P 500 Index levels. Since April, he simply says "buy on weakness." He has never defined what he means by "weakness." He must have decided it was just too embarrassing to continue giving actual numbers since he had said the market was "attractive for purchase" at four different levels in 2008, and the market continued to drop each time. Then almost unbelievably, he missed the real bottom.
Chart courtesy of Kirk Lindstrom: