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Saturday, October 10, 2009

Bob Brinker's Moneytalk: Summary, Discussion, Excerpts, October 10, 2009

Posted October 10, 2009....Bob Brinker began the program with the stock market closing numbers, Treasury yields, Treasury "implied inflation rate" (1.5%), and municipal bond rates. Bob Brinker commented that the S&P 500 Index (including dividends) has returned 21% year-to-date, and the Total Market Index has returned 23.4%.

[Honey EC: Bob Brinker never mentions the fact that the S&P 500 has risen almost 40% from the March 9th low of 677. Perhaps because in February (one month earlier) he issued an all-new-money-in buy-signal at "low-to-mid 800's."

In the February 4, 2009 Marketimer, Page 2, Paragraph 3, Brinker wrote: "....and we continue to regard the S&P Index 750 to 850 price range as the bottom area for the entire bear market."
That was the final time that Brinker issued a buy signal or called a market bottom. Anyone who bought at 850, rode the S&P down almost another 200 points. Then the Spaceship put on its cloaking mechanism, called everything off and went into waiting mode. Oops!! Five days later, the market bottomed and never looked back:
In the March 5, 2009, Marketimer, Bob Brinker said: “Due to the fact that the November 20, 2008 S&P 500 Index 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."
So having done a course correction in the Spaceship Moneytalk in APRIL, when it became obvious the market had turned, Brinker never again talked about market lows, instead he relentlessly hearkens back to January and acts as though he never said anything after January.]

Brinker continued his opening monologue by repeating a lot of things he has previously said about the irresponsible fiscal policy of the government, and their "laissez faire" attitude about the soundness of the dollar -- and the horrific national debt.

I thought it would be interesting to read a brief summary of ALL of the calls today, and make note of the subjects covered and where the callers were from:

* Caller Charles from Boston said he was worried about hyperinflation and the possibility of rising interest rates. Brinker said that the economy would have to make a comeback before that would become a concern. Brinker then launched into another rant about the "cushy" life of politicians, how they get "life-time jobs with six-figures salaries, perks and benefits to die for -- and become celebrities." And after they leave office, many become lobbyists -- much like having the "foxes in the hen house."

* Caller Garry from Baton Rouge asked how long this out-of-control spending could go on without causing serious damage to our system, and what about a Federal Reserve audit? Brinker said an audit is not likely even though Ron Paul is working for one..... and that we are already suffering lower growth potential. Brinker thinks that GDP may reach a range of 2-3% and unemployment may peak at 10%.

Caller Penny,
listening to KGO wanted to discuss Daylight Savings Time. Brinker said that it saved about 1/2 of 1% on energy use.

Caller Joyce from New York
asked what effect insider-buying has on stocks. Brinker said it can be good for a stock if it shows they have faith in their company.

Caller Mark from California
wanted to give his opinion of Daylight Savings Time. Brinker said he likes it because he can play more golf in the evenings, but that energy consumption savings are minor.

Caller Bruce from San Francisco
asked Brinker how long he thinks interest rates will stay so low in light of the difficulties it causes for retired people. Brinker said that "nobody cares about that or they wouldn't be as low as they are now"....the ONLY thing that could pressure the Fed into raising rates is the "dollar." Brinker went on to say that if retirees have been following a 50-50 approach to investing, their "losses have been moderate." [Honey EC: Brinker ignored the caller's point about retirees' investments so that he could plug his "balanced portfolio." Bruce was referring to people who depend on Treasuries, CD's and Money Market Funds for income. Not all retirees invest in the stock and bond market through mutual funds.]

Caller Dan from Virginia
asked about the "wash sale." Brinker said that it only applied to losses in taxable accounts. He said there is a perfectly legal way to get around it -- and that is to purchase a double position, hold it for one month, and then sell the old shares.

Caller Glen from New York
wanted to talk about some trades he had made with a stock but he didn't name the stock (call was too esoteric to be interesting).

Caller Mary from Chicago
seemed to want to brag a bit about having some of her kid's college money "left over." (Don't think Brinker got her point either.)

Caller Eddie said he had just used some of his retirement money to buy Bill Gross' Bond Fund and Vanguard Bond Fund. He asked Brinker if he thought he had done the right thing. Brinker told him to check the duration of the funds -- that if the duration was five years and rates went up 1%, then the net-asset-value would drop 5%.....Vanguard GNMA Fund (VFIIX) has a 2% duration, so if rates go up 1%, it will drop 2%. So it depends on one's tolerance for volatility.

Caller Mary from New England asked about buying gold. Brinker said go for the "gold content" -- not numismatics..... to look at the U.S. Eagle, which has a 4 1/2% premium, the Maple Leaf -- 4% premium, and the Australian Crown with a 1% premium.

Caller Doug from Wichita asked if the net-asset-value of GNMA Funds is safe, or if it might collapse like Fannie Mae and Freddie Mac. Brinker said that he doesn't see that happening because GNMA's carry a direct U.S. government guarantee on the principal and interest -- but...the U.S. Government might have to "pony up."

Caller David form Alexandria asked how one would go about "betting against the dollar." Brinker (for the fourth time) mentioned T. Rowe Price International Bond Fund (RPIBX) as a hedge for the dollar. And for the second time, he mentioned the exchange-traded-fund, FXE (Euro vs. dollar).

Brinker's Saturday guest-speaker was Richard L. Brandt, "Inside Larry and Sergey's Brain" (Thanks, Joe)

Brinker's Sunday guest-speaker was John Mullin, "Getting to Plan B: Breaking Through to a Better Business Model"

Honey's Market Report:

* Dow closed at 9864.94, a 4% gain for the week.
* Nasdaq Composite Index closed at 2139.28, a 4.5% gain for the week.
* S&P 500 Index closed at 1071.49, a 4.5% gain for the week.
* GLD closed at $102.84...Last week it closed at $98.37.

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:

This chart is courtesy of Kirk Lindstrom:

Dixiegeezer took this picture of a Sandhill Crane N.E. of Tampa this morning:


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