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Saturday, September 19, 2009

Bob Brinker's Moneytalk: Summary, Discussion and Excerpts September 19, 2009

[Sunday update added below.]

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 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: " 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."

* 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."
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:

Dixiegeezer took this at sunset last night:

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