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Saturday, November 28, 2009

Bob Brinker's Moneytalk: Summary, Discussion and Excerpts, November 28, 2009

Posted November 28, 2009....Bob Brinker is taking the holiday weekend off from hosting Moneytalk. Lynn Jimenez, who according to Bob Brinker is part of his "team" now, is his fill-in host. Ms. Jimenez has been the business reporter for KGO810 for many years.

Lynn Jimenez' opening comments paraphrase and excerpts:

Dow slid 154 points, S&P fell 19 points, trading was light….as of November 24th the market was near a 13 ½ month high….gold fell for the first time in 10 days…bonds rose….all sparked by Dubai…"Even small pebbles can make big ripples sometimes.”

Number of Americans joining jobless lines fell below ½ million for the first time in a year – down to 466,000…..four week moving average came in at 496,000…."Those getting long-term benefits fell mainly because people dropped off of rolls…” Consumer incomes up 1/10….spending up 7/10 in October….consumer sentiment up from the beginning of October.

New home sales
followed existing home sales higher….new home sales rose 6% in October, the highest level in the year…."Of course people were scrambling to take advantage of that home-buyer’s tax credit. It turns out that congress extended and expanded that. The median new home price was still 5% lower than last year, but it was up month to month. By the way, the average rate for a 30-year fixed mortgage fell to 4.78%, so if you have good credit and a 20% down payment, move.”

The S&P Case-Schiller home price index for the top 20 cities rose for a fourth straight month in September by 0.25%....prices dropped more than 9% from last year, the smallest drop in year-over-year home prices since the end of 2007…..we aren’t seeing expansion, but it’s a sign that we may have seen the worst of contraction.

“We also got a little sprinkle of bad news. Durable goods orders delivered a surprise by falling 6/10, and there’s word that bankruptcy filings in Federal Courts are up by 1/3 from last year. Actually, up 35% to 1.4 million. It has been a rough year......

.....Let’s go back to that news on jobs. Now what we saw was a drop in layoffs. We didn’t see a pick up in hiring. Our jobless rate is still at a 26 year high – that’s 10.2%. And it’s very likely to
take several more months for enough hiring to happen to stop it from rising, so I think you are going to appreciate this story.....

.....You know in
San Francisco, the jobless rate is also above 10%. And a local television station, KPIX, found that a Banana Republic Store on the cities Grant Avenue, hired 39 workers from overseas – South Africa, Brazil, Japan, to work as sales clerks – because? Well its PR person told the television station it couldn’t find any U.S. workers to fill those jobs, even though a retailer next to the store, West Coast Leathers, told KPIX it gets two or three people a day walking in looking for work.....

.....The overseas workers are making minimum wage
(San Francisco minimum wage is $9 per hour) and Banana Republic is putting them up at a downtown hotel. So while our nation’s jobless rate’s in double digit and the garment industry’s shipped nearly all of its manufacturing jobs overseas, a clothing retailer is now importing overseas workers to sell you imported clothes face to face. That’s the Banana Republic, which is owned by Gap, which is also Old Navy – go figure.”

[Honey EC: I will not be shopping at Banana Republic, Gap or
Old Navy and I'll inform all my shopping-buddies about this atrocity.]

“Back to the economy. Which direction is it likely to move? Charles Schwab’s chief market strategist, Liz Ann Sonders, is fairly optimistic. Earlier this year, she suggested that the recovery might be a “V” followed by a long flat line. That’s kinda like a square root sign, you know. And this month, she says it looks like just a plain old-fashioned V-shape recovery. ....

.....And jobs? Well, she called the end of the recession in June, earlier than most. Normally, hiring doesn’t start happening for six months after that. No sooner than January, I guess. Now most of the economists I talk to don’t expect hiring to happen until after March. They also caution that the word “normal” isn’t something we can use in this recession. No fooling? Nevertheless, Sonders has a decent track record so barring some unexpected hiccup, she may be right. We’ll keep our fingers crossed.....

.....I know we all looked back a year in October, and remember the big meltdown that cut off credit and revealed that hall of mirrors created by privately and secretly traded derivatives. It all also shed light on the practices at banks and weak and non-existent oversight. It also shed light on the debt we all carried, firms, individuals, nations. And yet a year later, we’re

looking up now and we are seeing some light, if not the edge of that hole we dug ourselves.....

.....You know, I was thinking about that Thursday, Thanksgiving. We seem to be poised to come out of the worst financial downturn since the
Great Depression. We have positive economic growth. We’re moving forward, in fits and starts true, but we’re not in free fall anymore. From its March low, the Dow has climbed nearly 63%. As we noted earlier, even residential real estate is off its back and struggling to its knees. I mean think back. We were worried about the collapse of the banking system, about bread lines. The Treasury Secretary then, Henry Paulson, worried that we’d have mobs in the street. Well times are tough and the path is still steep. We are going to be paying for this for many, many years. But still, we are a lot better off now than we were a year ago. If you put it into perspective, we do have a lot to be thankful for, a lot."

The Saturday Moneytalk guest-speaker was Henry Mintzberg. He wrote the book "Managing" about corporate executives and their leadership.

Honey's Market Report, November 27, 2009:
* Dow closed at 10,309.92 -- 0.08% loss for the week.
* Nasdaq Composite Index closed at 2138.44 -- 0.35% loss for the week.
* S&P 500 Index closed at 1091.49, a gain of 0.01 for the week.
* GLD reached an another all-time-high this week, closing at $115.06. (November 7th, when Lynn Jimenez last filled in for Brinker, she advised a caller (who had borrowed money to buy it with) to sell gold ASAP, it has made 9 new highs since then.)
* Treasury Bond rates, TIPS, munis [LINK],
* Fed Funds, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]

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, 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:

SJ_Al sent this early Christmas gift for Mr. Skiing-Pig. Al wrote: "This is about 50 miles from and a 1000’ lower than Lake Tahoe, where that famous pig has been known to frequent. Although this picture is a long way from a ski-able amount, this is a lot for this elevation at Thanksgiving. Soon enough, Pig will be able to painlessly drill down those slopes."

Well, we all saw a pig flying here recently, but here's one on skis that SJ_Al sent us. Could this be our own Mr. Pig?

Friday, November 27, 2009

The First Moneytalk Caller November 22, Planted, Drunk or Deceived?

November 27, 2009....Bob Brinker's first caller on Sunday, November 22, 2009. Was he a planted call? Was he drunk? Or did he actually BELIEVE what Bob Brinker said to Barbara on Saturday about year-2000?


Blogger Bluce said...

Oh fer crying out loud.

The first caller today (Sunday) HAS to be a paid shill.

This cannot be real. It was disgusting.

Caller Everett, in the first hour of the program, said: "I want to thank you for giving me the tools to, say what money that I have, I'm on disability through my company. But the year 2000 was incredible because that's when you said go to cash reserves and I did, and then people would sit there and look, geez do you listen to this guy, do you learn from this guy? And I'd say well you have to look at his track record. And then you're call back in March of 2003 was incredible because when people say you can't time the market. You study the market so much and you look for signs and when you see these signs coming up, you give a warning. It's incredible, I just want to thank you so much. I've saved some of my capital preservation. I'll be retiring next month and I'm transferring my funds from Fidelity to Vanguard. I'm going to be in that Active/passive portfolio. You're a great man and I really like listening to you. You take it easy. Have a good life."

Bob Brinker's replied: "Thank you, thank you very much for calling. I'm glad you're with us Everett. Thank you very much.......Let's get Greg on the line in San Francisco, California."

Honey EC: As you can see, Everett must have slept through the whole 2007-2009 mega-bear market that Brinker rode down fully invested, hollering buy, buy, buy all the way down. 8^)

It really stretches ALL CREDULITY to believe that after all these years have gone by with no mention of Brinker's year-2000 history, that Brinker would brag about having raising (65%) cash reserves in 2000, but never mention that he put up to half of that back into a QQQQ trade in October 2000. Then when it went south (total of -70%), he "decided" not to account for the trade at all in his "official record." His performance record has never been accurate since October 2000 because he took a mulligan on those cash reserves -- IOW: he used them two times. (But he pulled a very slick trick to cover up this trade, I will explain in a future post.)

Even Mark Hulbert, in Hulbert Financial Digest, uses an asterisk/footnote to account for Brinker's never-closed QQQQ-trade when he ranks Marketimer Model Portfolios. Regardless of the footnote:
In the November 2009 issue of Hulbert's Financial Digest, Bob Brinker's Marketimer is nowhere to be found on Mark Hulbert's "Total Return Ranking" or "Mutual Fund Letters" top 5 performers over the past 5 years.
What Brinker said to Barbara Saturday [LINK], and Everett said to Brinker Sunday, was so far from the whole truth that it is SHOCKING to think that a radio talk show host, who sells himself as "America's most trusted financial advisor" on a national program, would be so deceptive. In the first place, he took an incredible leap going back to 2000 to "brag" about a market-timing move after having remained fully invested for the most recent (and much worse) mega-bear market -- mind boggling. In my opinion, only a shark would swim this low in the chum.

Blogger Bluce said...

Jim wrote: After reading Brinker's response to caller Barbara, it sounds like it does not really matter to him that he missed the bear market.

Jim, what disgusts me -- and I suspect most others -- about BB is his dishonesty.

During the '08-'09 market crash he did not TALK about it, would NOT ALLOW any questions about it to be aired, he completely IGNORED the entire event, instead talking about oil, energy, politics, etc., anything BUT the stock market.

I would never expect him, me, or anyone else to be perfect at anything, but his dishonesty about the entire bear market is why he has zero credibility with me.

November 25, 2009 4:11 AM

Bluce is absolutely correct that Brinker did not talk about the stock market as it was falling like a rock in 2008. If you look back through my 2008 summaries, you will see that week after week, I wrote that Brinker did not mention the stock market. I even commented that if aliens from outer-space should only listen to Moneytalk, they would not know the stock market existed.

Perhaps Brinker didn't have the courage to talk about it as the market dropped since his long-touted "Marketimer Timing Model©" had him as a raging bull at the beginning of the bear -- and as he admitted (once) on the air, did not forecast the bear market.

*Point of interest: The last time Bob Brinker mentioned his "Marketimer Timing Model© in his newsletter was in October 2008 -- over a year ago.

Thanks to Kirk Lindstrom for this chart. Please click to enlarge:

Thursday, November 26, 2009

Bob Brinker's Moneytalk: Sunday Update, Discussion and Excerpts, November 22, 2009

November 26, 2009......Bob Brinker's Sunday Moneytalk program had a couple of interesting conversations in the first hour. Because of this being a holiday week, I'm a bit slow getting it posted.

Shirley in Albuquerque asked Brinker what he knew about Barclay's Global Investors.

Brinker replied that he didn't follow that particular investment, but that he could tell her that Barclays is a company that has a good reputation around the world.

Brinker added:
"As far as saving on fees, I'm all for it. I don't know anybody that has spoken out more frequently than I have -- for over 24 years about the importance of reducing your investment expenses to a minimal accepted level. And that's why we have talked on Moneytalk about including index funds in your investment portfolio. We do it in our investment letter portfolio, Model I, which is aggressive; Model II, which is long-term growth; Model III, which is a balanced portfolio. All of those portfolios have weightings within the index community. We use the Total Stock Market, for example as investment that we like in terms of the model portfolios, which is an indexed investment. And that gives you very low expenses, broad diversification within that one holding. It gives you a high level of tax efficiency if you are investing within a taxable account........"

Honeybee EC: Yes indeed, Brinker certainly does recommend the Vanguard Total Stock Market Fund [VTSMX] for 50% of Model Portfolios I and II, and 32.5% of the balanced Portfolio III.

Brinker allowed a moneytalk caller to reveal 40% of the bond portion of Portfolio III, which is 20% Vanguard GNMA Fund [VFIIX] and 20% Short-term Investment Grade Fund [VFSTX]. The other 10% of the fixed income portion is in Vanguard Inflation Protected Securities [VIPSX]. The vast majority of the equity holdings in this portfolio is Vanguard Total Stock Market Fund [VTSMX]. You may read the transcript of this call and Brinker's reply in my October 17th summary [LINK]

Here are the dollar values of Brinker's three Marketimer Model Portfolios which clearly show that even after a 65% stock market rise since March, they are still worth a lot less than they were three years ago. (And these figures in no way account for any money used for the "off-the-books" QQQQ-trade that is still down over 50% after nine years of holding -- Brinker's last advice on them. He never closed the trade.)

January 1, 2007:

Port I value = $260,032
Port II value = $210,074
Port III value = $ 197,794

October 31, 2009:

Port I value = 212,009
Port II value = 177,751
Port III value = 188,950

Brinker continued talking to Shirley
: "If you're not a Moneytalk listener, how would you know, HOW WOULD YOU KNOW about the importance of holding down your investment expenses. How would you know about the way to hold down your expenses. [Honey EC: Oh for crying out loud --do you ever listen to yourself, Mr. Brinker? ROFLOL!] Now you're a Moneytalk listener, if you are listening you are by definition, you know that you go for low expenses in your portfolio......

......Well if you don't know that what happens? Well then there you go, you are shark bait, shark bait by definition. Somebody calls you up and says hey, buy this fund. They have a 5 or 6% sales charge, what do you know? You put in $10,000, you wind up with $9400 invested and the rest in gone, good-bye, into the commission account. Doesn't help you any and this happens to people all the time......

......I mean it's sad to say if you're not listening to the Moneytalk broadcast, you are by definition, shark bait......We talk about it all the time, indexing, no-load funds, dealing with companies that hold down your expenses......Because all that money you save goes in your pocket. And that is what Moneytalk is all about, getting the money to wind up in YOUR pocket."

Honeybee EC: Wonder if it's SHARK BAIT to pay for an "investment letter" that when followed as written, loses 50% in one year, as Brinker's Marketimer Model Portfolio I did in 2008?

Brinker's Sunday guest- speaker was David DeLong. He talked about the job market. The Saturday guest was Peter Clarke, who talked about Keynesian economics. Both weekend programs will be available on KGO until Saturday, November 28th at 1pm Pacific Time. The guests are in the 3-4pm hour. To download the programs, just choose the day, then right click on the hour that you want and use "Save Link as." KGO Moneytalk Archives [Link]

Dixiegeezer took this wild parakeet full wingspan. Click pictures to enlarge:

Dixiegeezer says these are wild Black-Hooded Parakeets. He sent this for us this morning:


Sunday, November 22, 2009

Caller-Barbara, Here are the Facts About Bob Brinker and Bear Markets

November 22, 2009: Hi Barbara.....Beware of trusting Bob Brinker to accurately "market time a major bear market." And be warned that there are things he never mentions from his market-timing history that could make you long for some shark-repellent.

Barbara...Be aware that in spite of what he told you yesterday, Brinker has never completely side-stepped a bear market. And out of the last three major bear markets he only partially went to cash in one of them -- that would be the one he bragged about to you yesterday (see my November 21st summary).

Barbara...Brinker denigrated "buy and holders" to you, but be warned that he has been a total buy-and-holder for almost 6 years now. Following his model portfolios over the past three years would have left you with much greater losses than you have now. In 2008 alone, Brinker's Model Portfolio I lost 39.7%, and the "balanced" Portfolio III that he talked to you about, lost 23.9% in 2008. Both of them lost much more from the top to the bottom of the bear market. Here are the facts that Bob Brinker did NOT TELL YOU:

* Brinker was fully invested during the October, 1987 market crash.

* Brinker declared (what was) a non-existent bear market in January 1988 and went to 100% cash. He returned to 100% invested position in January 1990 AFTER the market had risen 50% from his sell level.

* Brinker raised 60% model portfolio cash reserves in January 2000 (he raised that to 65% in August 2000). So he remained 35% invested in equities throughout the entire 2000-2003 bear market. However, what he doesn't want you to know is that in October 2000, he sent out a special subscriber bulletin recommending that subscribers invest up to 50% of those model portfolio cash reserves in a QQQQ trade. That trade lost over 70% and has never been closed. Brinker kept this trade off the books and never took responsibility for it in his model portfolio performance numbers.

* Brinker returned the remaining model portfolio cash reserves to 100% invested in March 2003 and has been fully invested since then. His Timing Model© completely missed the 2007-2009 major bear market -- the worst since the 1930's!

* Brinker was a raging bull in October 2007 at the market highs, expecting the S&P 500 to reach 1650, and was fully invested as the major bear began in earnest in January 2008.

* Brinker remained a raging bull throughout 2008 and issued several "all new money in" buy signals as the market continued to drop: mid-1400's, mid-1300's, low-to-mid 1200's and finally in January 2009, mid-800's. (From his mid-800's buy level, the S&P dropped another 25% before turning up in March.)

Jeffchristie said: "Honeywell and Todd was the mythical investment firm that Margie's father worked for in the 1950's TV series My little Margie. Had she made this move to Brinker three years ago her $989.000 would be worth $807,000 today per Portfolio 1 losses instead of the 1.2 million."Delete
Blogger jeffchristie wrote:

Barbara continued: "So we are meeting with our guy on Monday to go over our portfolio and our thought is to hear what he has to say based on what we brought him 3 years ago, $989,000. Today we have $1.2, but out of that, we've paid him, out of that money has come $25,000 to pay him. So he hasn't done so well over three years."

I would love to be her advisor on Monday. Good morning Barbara what can I do for you today. I see you are not satisfied with our returns over the past three years and you are planning to follow the advice of some radio host and newsletter writer. Since you have been with us the past three years your account has appreciated by $211,000. That is an increase of 21%. We here at Honeywell and Todd are quit proud of those returns given the market conditions over the past three years. Are you sure you have done your homework here?

First of all lets look at a bench mark. The SPY which tracks the S&P 500 closed Friday at 109.43. On 31 Dec 2006 it stood at 141.63. That represents a loss of 32.2 or -22.7%. Now the way you have described Mr.Brinker he sounds like some kind of investment genius. You know that I could lie to you or he could be lying to you but numbers don't lie. When you go to Mr. Brinker's website you can find the value of his three investment portfolios. They are as follows: Port 1 $212,009 Port 2 $177,751 Port 3 $188,950.

The value of these portfolios on 31 Dec 2006 were: Port 1 $260,032 Port 2 $210,074 Port 3 $197.790

Here is how Mr. Brinker has done over the past three years: Port 1 -$48,023 (18.4%) Port 2 -$32,323 (15.3) Port 3 -$8,840 (4.5%)

As I stated earlier we here at Honeywell and Todd are quit proud of +21% we got for you over the last three years. Mr.Brinker is a marketimer. Did he tell you his record for doing that over the past 25 years? There were three major market sell offs in that time period. They were 1987, 2000 and 2008. Brinker was fully invested in 1987 and 2008. He got 60% out in 2000.

The real risk of being a market timer is selling into a bear market that does not occur. Brinker did just that around 1990. He got out sometime after the 1987 crash and the market kept going up.

Brinker was also a raging bull in May of 2008. He bashed other timers who got people out of the market. They were right he was wrong. He did the same thing he criticized me of doing to him.

Given all of this information I am going on the record that I advise you NOT to follow Bob Brinker's advice. You certainly have every right to be your own financial advisor but given what I have just presented to you today I regret to say it but you appear to me to be a woman of colossal ignorance when it comes to investing. We wish you luck Barbara, all the folks at Honeywell and Todd do.

November 22, 2009 7:03 AM [LINK] to Jeffchristie's comments

Detailed Summary of Brinker's QQQQ Advice Including Copy of Buy Bulletin

Detailed Summary of Brinker's Asset Allocation, 1982 to Present


Saturday, November 21, 2009

Bob Brinker's Moneytalk: Summary, Discussion and Excerpts November 21, 2009

November 21, 2009....Bob Brinker began by encouraging listeners to acquire the knowledge, strategies and tools to become their own personal financial managers so they can reach the "Land of Critical Mass." Bob Brinker said, "I mean there is always somebody out there trying to take a bite out of your wallet. The sharks are everywhere. Once you gain the knowledge to manage your money, you're on top of it. Instead of being a victim, you become a manager."


Brinker went over the closing stock market numbers. The S&P 500 Index total return year-to-date is 23.5%, including dividends. The Wilshire 5000 (total stock market index) total return is 24.8%, including dividends.

Brinker said: "Back in January of 2009, I had stated that in my opinion, 2009 would be a significant positive year for the stock market in the United States. It was considered a loony-tunes projection at the time....."

Honey editorial comment:
What a clever new marketing plan Brinker has come up with. He looked back over all of his disastrous calls in 2007, 2008 and 2009 and found one little sentence that fits well with what has happened in the market since March and makes him look good, and then he quotes it almost every week. I guarantee that within minutes, I could list at least 50 QUOTES that were ridiculously wrong, financially dangerous if followed, and have cost people who followed his advice a great deal of money.


Brinker called these are numbers "historic."

* Three-month Treasury Bill is paying just 1 basis point annually (there are 100 basis point in 1% point). If you invest $1000 for a year at 1/100 of 1%, you make 10 cents. It would take 7000 years to double your money.
* The six-month Treasury Bill is paying 1/8th of 1% annually.
* The one-year Treasury is yielding 1/4 of 1%.
* The two-year Treasury Note is yielding 0.72%.
* The Five-year Note is yielding 2.2%.
* The 10-year Note is yielding 3.37%.
* The 30-year Bond is yielding 4.3%

...annual for the next ten years is 2.2%, long-term = 2.5%.

AAA General Obligations Municipal
s... Ten-year are averaging 3.23, which is the taxable equivalent of 5% for those in the 35% federal bracket. Brinker said: "Obviously, we all know that the federal tax bracket is going higher, and we don't know how many are going to get tax increases. We only know that taxes are going up because the outgo has reached bizarre proportions in Washington."

....Year-over-year deflation through the end of October = 2/10 of 1%. Brinker said: "If you're a Moneytalk listener, you know that we have frequently said this number is going to go positive as we move into 2010. It could easily go positive for the year-over-year figure which would take through November or December.....But it still has to go up a little bit to get to the implied inflation rate."

Honey EC:
Even though it is lengthy, I transcribed the following conversation between Bob Brinker and caller Barbara verbatim. I believe that those who have followed Brinker over the past 13 years or longer (like myself), may find it utterly astonishing. For those who have not followed Brinker, I will write a commentary and post some documented facts about this tomorrow. It's quite late even on the left coast.
In the meantime, please do not take what Brinker said here at face value.

Caller Barbara in Walnut Creek, California said:
"We have listened to you for many years and we have had 3 different financial advisors over the last 13 years. And every one of them said to us, oh, we said well, maybe we should do the Bob Brinker, oh you don't want to do that. He's a market timer. ....That was their opinion.

In 1995, we started with $640,000. By 2000 we had $1.4 million. Then we lost about $300,000 in the 2000 debacle. It took us seven years to get that money back. Meanwhile, we changed advisors because nobody ever tells you to sell anything. They all want you to buy and hold. So we are now, since 1995 at $1.2 million, so we are still down, we almost doubled our original investment of $640,000 but we are now thinking, we have this advisor now who is saying, oh you've done so well this year, you're up 13%, 15%. But not really when you look at the total package. We had a lot more value that slipped through our hands.

Now we're retired and we need to start in January drawing from these funds. And we need about 5% a year which is more than we were hoping we'd have to take. So now we are wondering what are we paying this guy for -- $7,000 a year is what we are paying and why don't we just leave him -- and all of our money is in T.D. Ameritrade -- and follow your portfolio. I just don't know which one. Should we follow, I think it's Portfolio III which is more of a fixed income?"

Brinker said:
"We have a balanced Portfolio III which is essentially divided between the stock market and the bond market. Without question, in my mind that would be the appropriate portfolio for somebody like yourself.....Look, it's a personal preference. I certainly don't have respect for people who are out there in the business who disparage others. I especially would not have any respect for somebody disparaging someone for trying to sidestep a bear market.

You know, we're not always going to be successful in that, but we are always trying. And we were successful in a big way in the 2000 to 2002 bear market. We exited most of the model portfolio money out of the market in January of 2000, which was close to the highs, and we got back in on the successful retest around S&P 800 on March 11, 2003. That was a very successful market-timing experience for us. So you're not always going to be right. But when you are right, it can be a really big deal, and that was a really big deal for the investment letter and for the subscribers at that time to the investment letter. So to disparage somebody for from time to time doing something good in the market-timing arena, I personally think that is sour grapes.

You see, the problem that the buy-and-hold fraternity has is, they never have the chance of doing that. They never have the chance of side-stepping a major bear. And by the way, that was close to a 50% bear from the top to the bottom there in early 2000 decade. That was was a really major bear. The buy-and-hold fraternity, they never have the opportunity, or even the possibility of sidestepping a major bear because they are all in all the time. So every major bear that happens, they're going to ride it all the way. Now if somebody is trying to time a way from a major bear market, then from time to time, if they can call a major bear market, that's going to be a big deal.

They're not going to do it every time the time and that's where the dissatisfaction comes in. People say, well if you can't do it every single time, then why bother. Well I say, if you can do it some of the time, that's huge. Because when you compare it to the buy-and-hold mentality, you never have a chance. You're guaranteed in all the way for every bear all the way. I'm not willing to go down that rode. I'm going to try to sidestep as many major bear market as possible. And I'm not going to be able to do it all the time. But I'll tell you what, we had a great experience from January 2000 to March of 2003. We had most of our model portfolio money in cash reserves."

Barbara continued:
"And that's what most of these guys, like I said, we've had 3 over the last 13 years and they don't do that."

Brinker continued:
"Let me ask you a question about disparagement. What choice do you have? Put yourself in the shoes of that advisor. You went to that advisor, you mentioned, well what about following the investment letter that Bob Brinker writes? And the advisor says, oh no, that's no good. That's going to use market-timing. And suppose you came back and you said, now wait a minute, that investment letter put a sell signal out close to the highs in January of 2000 and then put a buy signal out almost at the precise low -- within 3% of the precise low, if you can believe it, on March 11, 2003 with the S&P at 800. Now what are they going to say back to you? They have to disparage that because they are all in."

Barbara agreed:
"That's correct, they're all in and they're not working for their money"

Brinker continued:
"The reason that people disparage that kind of an effort is because they can't do it themselves. And because they can't do it themselves, they have to disparage somebody that does it. This is nothing new to me. I can remember as far back as I can remember, anytime that you call a bear market, the buy-and-holders go nuts because they can't do it. So what they disparage trying to do it. They disparage anybody that tries to sidestep a bear market. And if you successfully sidestep a bear market and we were very successful from 2000 to March of 2003. So then, there is only one thing left to do, send out the attack dogs and they're good at that."

Barbara continued:
"So we are meeting with our guy on Monday to go over our portfolio and our thought is to hear what he has to say based on what we brought him 3 years ago, $989,000. Today we have $1.2, but out of that, we've paid him, out of that money has come $25,000 to pay him. So he hasn't done so well over three years."

Brinker replied:
"Well, I think you would have to do a comparison with the indexes and with the appropriate asset allocations. That's a time-consuming job which certainly is homework for you to try to give him a fair grade on his effort. I just react when anybody ever says, oh well, you should never try market-timing. (Barbara interjected: "They all say that.") Well, I'll tell you what, that's sour grapes because they are not ever able to do it. They are never able to do it. So they take that position of never being able to it, and then they say, well somebody that does it some of the time, but not every time, oh well there's no point. And that's not true because every time you sidestep a bear market, you put money in your account. Because you are cutting your losses every time you sidestep a bear. So even if you ride out a bear along the way, you're still way ahead, way ahead."

Barbara continued:
"Yes, and I agree and I appreciate you taking our call. We just sent for your newsletter so we're going to subscribe to it. And then I think we can do, through you, we can manage our own portfolio and just follow your guidelines and not take some risky bets here. We really can't afford to lose this money. This has got to last us a long, long time."

Brinker replied:
"One more thing. I would suggest to you Barbara that you think in terms of a 4% annual withdrawal rate on the portfolio. If you use the holdings in the balanced portfolio, you will find that most of that 4% will be generated from interest and dividends. For example, you take the dividends on the stock market portion and the interest on the fixed income portion, you should get a good chunk of that generated from the investment income. And if you want to take 4%, you can make it up by selling a small amount of equity shares to make up the difference. I do believe in the 4% withdrawal rate. And I certainly have never believed in this mentality, look you're not the first to say it, in this mentality out there from the sour grapes fraternity, that maintain oh no, it's buy and hold forever. Because I'll tell you what, I think that that kind of a mentality guarantees you that every bear market that ever happen, you're all in.

Barbara said:
"We're in it, we don't want to be in it again. We are pretty tired of it. We've done this for 13 years. We don't want to do this anymore."

Brinker said:
"You're in it. And I want you to remember Barbara, that anybody who is trying to sidestep a bear market, they're not going to do it every time....Good to hear from you, enjoyed the discussion very much. KGO country....."

Brinker's Saturday guest-speaker was Peter Clark "Keynes: The Rise, Fall and Return of the 20th Century's Most Influential Economist."

Chart is courtesy of Kirk Lindstrom:

Honey's Market Report:
* Dow closed at 10,318.6, gaining 0.5% for the week.
* Nasdaq Composite Index closed at 2146.04, a 1% loss for the week.
* S&P 500 Index closed at 1091.38, a loss of 0.3% for the week.
* GLD reached an another all-time-high this week and closed at $112.94. Last week it closed at $109.74. (Two weeks ago, when Lynn Jimenez (Brinker's fill-in host) advised a caller to sell gold ASAP, it was at $103.95.)
* Treasury Bond rates, TIPS, munis [LINK],
* Fed Funds, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]

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, 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 great picture of a wild parakeet and framed it for us:


Monday, November 16, 2009

David Korn's Summary of Moneytalk Guest-Speaker Jim Lebanthal

November 16, 2009....Bob Brinker's Saturday Moneytalk guest-speaker was Jim Lebanthal who wrote: "Lebanthal on Munis: Straight Talk About Tax-Free Municipal Bonds for the Troubled Investor Deciding "Yes or No!"

David Korn has written this complete summary (and editorial comments) of the interview. Posted with David Korn's permission:


On Saturday, Bob had on Jim Lebanthal a well known bond salesman and municipal bond educator.

Brinker: Bob prefaced the discussion by noting the distinction between two classes of municipal bonds. The first is the General Obligation Bonds which are backed by the full, faith and taxing power of the issuer which could be the State of California or the State of Illinois. They have a very low default rate. The second category are revenue bonds which are backed by the proceeds of a specific project, such as the Pennsylvania Turnpike.

[David Korn] EC: The web site, municipal has an article just published about default rates and risks of municipal bonds. Here is the link:

Jim Lebanthal: Only about 25% of bonds coming to market these days are General Obligation bonds which were always considered the top of the line bonds. Another bond has been invented that can be as good as a GO and some are even rated higher such as the "recovery" bonds in California which have an extra tax behind them that cannot be spent elsewhere until the bond is paid. Other states in the union also have these "asset backed bonds." The trust fund or gas tax or income or sales tax that secures these bonds cannot be diverted until those recovery bonds are paid off.

[Korn] EC: California's $8 billion of economic recovery bonds were actually upgraded by two rating agencies on Thursday after a refinancing lowered the state's debt-servicing costs. Read more about it at this url:

Jim Lebanthal: Bob asked Jim to discuss California's General Obligation Bonds which have come under fire with California¹s budget crises. Bob noted that the money to repay California General Obligations ranks only second to education. Jim said that is a big deal. And the great thing about the GO bond is that it is paid out of the state/city Treasuries. That is what made State General Obligations so attractive second only to USA Treasuries. Jim noted that most States in the union are similar to California in terms of their taking on debt. Jim said that the enormous borrowing power of States only works and can be sustained if what you are borrowing for adds to the economic well being of the community. Deficit financing, plugging holes in a budget is like feeding salt water to a man dying of thirst. Whether it is a first, second or third claim to pay, legislatures go looking to the GO bond to bail themselves out of this spending hole because they know that the bond will raise money plug the hole and postpone facing the music.

[Korn] EC: California's fiscal watchdog will be releasing a report soon which is expected to continue to show grim news in the State.

Jim Lebanthal: Jim said New York learned its lesson back in the 70s when NY City General Obligation Notes defaulted. What cured them was that there was no credit and they had to balance the budget. Bob said he remembers it well because he was on Wall Street working for the Bank of New York. Jim said the culture at the time was deficit financing and New York was just the first to get caught. They went into default for a year which gave the city one year to straighten up. After that, the Court said the notes had to be paid and hardship was no defense. New York got out of it because they had no choice.

[Korn] EC: Read the article Municipal Bonds and Defaults at this url:

Jim Lebanthal: Bob asked Jim his opinion on Build America Bonds. Jim said that he LOVES them! It is a chance for the municipal bond industry to relate to the people. The problem is that the bonds are being gobbled up by big institutions and when they return to the market they return at marked up prices. Jim suggested that individuals should have access to these bonds and not just the fat cats. You can get 5.5% on Build America Bonds (they are taxable), and they have safety similar to state General Obligations. They are wonderful instruments and should be available to the little guy.

[Korn] EC: Sales of Build America Bonds rose 28% in the third quarter. More than $51 billion have been issued since their inception. The federal government pays sellers 35% of their interest cost. Learn more about Build America Bonds at this url:

Jim Lebanthal: Bob asked Jim where the best place for individuals to buy municipal bonds would be. Jim said if you have the patience and fortitude and learn about bonds the best way is to buy individual bonds. That is a lot of work to get 4.5% even tax free. Most people are not willing to do the work. Another option is to go with a mutual fund you get the diversification and professional manager can do. However, if you do that make sure you read the prospectus because mutual funds may do some things that you wouldn't do. The SEC has required that the prospectus be readable in plain English!

[Korn] EC: Fidelity has a good web page exploring the differences and pros/cons on individual bonds vs. bond funds. Check it out at this url:

Jim Lebanthal: Anyone who gets a solicitation at home, usually a cold call at dinner time, to buy a municipal bond should ask for the CUSIP Number and say you will call them back. Then log on to the web site, Follow the steps to enter the CUSIP number and find out what that bond has been trading at. Find out the high/low, how many shares trade and make sure you find out what the right price for that bond is. There is the difference between the bid and ask but Lebanthal said that the average spread is about $15 per $1,000. If you can't figure out whether you are paying what others are paying, you can always buy a mutual fund where everyone pays the same price.

[Korn] EC: The CUSIP number is an identification number assigned to all stocks and registered bonds. The Committee on Uniform Securities Identification Procedures overseas the entire CUSIP system. Incidentally, foreign securities have a similar number called the "CINS number." I know, I know, yawn. But hey, someone out there might have been wondering.

Jim Lebanthal: Bob asked Jim to comment on purchasing new issues. Jim said new bonds and old bonds should be priced competitively. Bob told Jim that the seller pays the commission on new issues, but Jim seemed to question that premise. The issuer is the one who gets $99.25 and if you never sell the bond you will never feel that three quarters of a point if you hold to maturity. That is the beauty of yield-to-maturity. Bob said that narrow amount on a new issue would compare favorably compared to a principal trade. Jim said he wants a bond on the secondary market to be similar but usually the seller knows more than the individual investor buyer does.

EC: A good article on purchasing municipal bonds can be found at this url:

Caller: This caller is seeking safe tax exempt income. If you buy into a mutual fund of tax exempt mutual fund, won't the net asset value drop if and when interest rates rise? Jim said yes. The same thing will happen in your holdings of individual bonds. Bob said if you hold a quality bond to maturity, however, you will get your principle back. Jim acknowledged that, but noted that you can't always hold onto an individual bond until maturity. Jim recalled a time during the 1970s when most long term bonds lost 40% of their market value because of inflation and if you had to sell a bond you got 60 cents on the dollar.

Jim Lebanthal: Jim noted that if you buy bonds of inflationary expectations there is a tendency for the market to price that inflation into the bond. If inflation abates while you are holding that bond, then you will see that bond value go up ‹ just as they are today where you are seeing bonds trading at a premium to your purchase. Always remember that it is the "real" rate of return and after taxes. While municipal bonds can take taxes out of the equation, every investor must recognize and realize that they have to account for inflation. If we goof in the tightening of the money supply which right now is flooding the country and the globe, than the bond that I sell you today will reflect that bungling and depreciate in market value. Jim said he hopes Ben Bernanke has those qualities so that when he tightens, he does it right.

Caller: This caller has over a million to invest in General Obligations, particularly California. How does an individual investor buy those bonds without going through various people who are going to tack on commissions and fees. Where is the easiest and safest way. Jim said he goes through this in his book where he spells out who to deal with and who not to deal with. To avoid the fees is a tough question because you have to pay something. Even if you were an institution with hundreds of millions to invest, the fee would be 50 cents per thousand or even more. For the investor even with a few million to invest, you have to find someone you like and can trust.

Caller: Should a caller from one state compare a general obligation of another state? Jim said he thinks all people should diversify their bond holdings to other states, even though you might lose the state tax exemption. Bob said people tend not to do that because in a state like California where the top state income tax bracket is 10.5% it is hard to write those tax checks to other states. Jim added that he believes in preaching diversification even though it is hard to practice and 10.5% is hard to swallow but that is the price sometime for diversification.

Caller: This caller owns a closed-end mutual bond fund of common shares and it is insured and he is trying to understand what that means. Jim said the insurance is not worth that much anymore. Jim said he was on the board of a major bond insurer and was on the audit committee and he hangs his head in shame over what happened. It was a beautiful model that insured what didn't need insurance and tried to apply that model to credit default swaps and mortgage backed securities and all the leveraged junk that the culture loosed upon the world. Jim said overall he thinks the insurance is worthless because the liabilities have reduced their reserves so much that they are rated junk. That said the bonds that have insurance today are probably good enough to stand on their own two feet.

[Korn] EC: Wow. This guy is a trip! I like learning about municipal bonds. Generally it is not a topic that is covered too much and so this guest made some good points.

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 order a complimentary copy of David Korn's outstanding weekly newsletter and view a sample copy of The Retirement Advisor that David co-edits with Kirk Lindstrom at this [Link]

If you want to listen to the Jim Lebanthal interview, it will be available on KGO810 for downloading until next Saturday. It is in the 3-4pm time slot. Here is the [LINK]

Here is the last of SJ_Al's beautiful San Francisco photos. This is a lighthouse overlooking the Pacific Ocean (click photos to enlarge):

Dixiegeezer took this picture of wild parakeets. How beautiful, and how unusual (and nice) to see them free:

Saturday, November 14, 2009

Bob Brinker's Moneytalk: Summary, Discussion and Excerpts, November 14, 2009

Posted November 14, 2009....Bob Brinker's stock market commentary paraphrased.... the S&P 500 Index total return year-to-date, including a 2.1% dividend, is 23.7%. The Wilshire 5000 (which is the total stock market index) return is 25.1% including yield of about 2%. Brinker made no further comments about his current outlook for the market.
Honeybee's Editorial Comment: Bob Brinker didn't host Moneytalk last week, but the week before, he said the stock market had been "undergoing a correction in recent sessions." Brinker has repeatedly predicted that 2009 will be a "significantly positive" year for the stock market. That has not changed.
FIXED INCOME RATES....Brinker said: ".....exceedingly low as the Federal Reserve continues its policy of holding down rates."

"If you take the 10-year Treasury Note yield of 3.42 and compare it to the 10-year Treasury Inflation Protected base rate of 1.25, you get a difference between those two of 2.17. And that difference is the implied inflation rate over the next ten years. The annual implied inflation rate according to the Treasury market itself......In the long-term....the difference is 2.4%."

....Brinker said: "Held to maturity date, you are taking no risk to principal and you will collect interest.....There's enough money out there today..... including foreign sovereign investors like China, Japan, order to soak this up."

ECONOMY....Brinker continued:
"One of the reasons this demand is out there is because the economy has been soft. Even with the rebound we saw, the preliminary announcement of a 3 1/2 % real GDP number for the third quarter -- that will be revised -- but it's expected to remain in positive territory."

FEDERAL RESERVE UNPRECEDENTED LIQUIDITY.....Brinker continued: "But even with that, the economy has been lackluster, and as a consequence, there is money floating around out there. Tremendous liquidity has been created as a result of Federal Reserve policy over the past five quarters -- unprecedented liquidity that's been created. And so all of that contributes to that [Treasury purchases] demand."

CPI....Brinker said:
"If you look at the year-over-year CPI right now, it's slightly negative.... And it will go positive, I can guarantee you it will go positive as we move into 2010. But right now, on a year-over-year basis, it's still reflecting the fallout from the Lehman Brothers bankruptcy and the credit market freeze up of late 2008....."

INFLATION....Brinker said:
"I think an annual rate of inflation of 3.06 would not even be the end of the world....You're talking about the headline CPI number, and the Fed doesn't even talk much about that. They talk about the core number, and the core tolerance level is 1 to 2. Right now it's right in the middle -- it's around 1 1/2. But the core inflation rate, excluding food and energy which are so volatile, that's the one they focus on and that one is right in the middle right now......But when you move away from that and just base your calculation on the last six months, that gives you annual rate of inflation of 3.06.....

.....My opinion is inflation is going to stay low....I'm not one that is predicting right now that we have to look for hyper-inflation, runaway freight train inflation. I don't see that on the horizon right now. My inclination is that we are going to see inflation rates remain reasonably low going forward. We will see how all that plays out with Fed policy, with the economy and all the rest of it.....

......Are there inflation risks out there down the road? Absolutely. We've talked about that. There are definitely down the road inflation risks out there if things turn out a certain way.....Those who have been predicting a big jump in inflation right here have been disappointed because it has not materialized. And right now, I don't see anything on the horizon that's going to give us a hyper-inflation scenario......But we certainly can see year-over-year inflation move back into positive territory as we move into 2010."

GLASS STEAGALL ACT.... Brinker said: "The lobbyist in Wall Street are working overtime to prevent the resurrection of the Glass Steagall Act in the investment business....ten years ago this month, then President Clinton made the biggest mistake of his eight years in the White house when he signed the repeal of the Glass Steagall Act into only took several years and Wall Street dismantled, imploded -- and Glass Steagall was the heart of that implosion. It was created in the 1930's......"

CITIGROUP CEO AND PAUL VOLCKER....Brinker said: "I was interested in the past couple of weeks when I saw the comments, albeit way too late to do any good, from the former CEO of Citigroup, who now agrees with me, as I agree with Paul Volcker. And I was delighted to see Paul Volcker come aboard this recently..... And that is, that John S. Reed, the former Citigroup CEO has apologized for his role in creating Citigroup in the 1990's. And he says that lawmakers were wrong when they repealed Glass Steagall Act.....even though it is way too late for Citigroup. He's right to say this and I liked his analogy. He compared the repeal of the Act to the separation created on a ship with a compartments so that a single leak does not sink the entire vessel -- and the analogy is a good one." Later in the program, Brinker commented that Paul Volcker was the "best Fed Chair in 50 years."

Honeybee EC: Mr. Brinker, ever hear of the Titanic? It also had compartments and was unsinkable. There are those out there who disagree with you that the repeal of Glass Steagall caused the meltdown.

GNMA (VFIIX).... Brinker commented that this fund has had an outstanding return in price action but the yield is down to about 3.25% now. Brinker said: "There is no question in my mind that you will continue to see volatility and movement in the price in a Ginnie Mae Fund over periods of time. Now if you've been a Moneytalk listener, you are aware that in my opinion, that fund makes it highs in the 10's, first two digits being 10 and the fraction. And I think that the risk can be contained in the 9's, which would be $9 and a fraction per share. Right now it's trading at $10.84, which is a record high, so its been very strong."

GNMA [VFIIX] CALL * Caller Bill from Virginia Beach asked:
"I've read recently that at the end of March 2010 the Federal Government is going to stop the program of direct buying of mortgage backed securities. If this is true what kind of impact does that mean for Ginnie Mae Bond Funds."

Brinker replied: "Well we shall see....I think you have to expect, for a variety of reasons including potential economic activity, potential changes in rates going forward, potential changes in Fed policy over a period of time. I think you have to accept what I have said all along. When the Ginnie Maes are strong, they'll be trading in the 10's.....when they are weak, they'll be trading in the 9's....In a balanced portfolio, 50% in the stock market, 50% in quality bonds, that would be 100%. Out of that 100%, I would be easily comfortable with having a 20% weighting in something like the Vanguard Ginnie Mae Fund."

* Caller Betsy from Chicago said that her father had left her a $450,000 Charitable Remainder Trust and her son $50,000. The son's terminates in 20 years. She said they were both to receive the total income from their trusts or 6% annually, whichever was smaller. At her death the trust passes to an (unnamed) Foundation. She wanted advice on how to invest in the trusts.

Brinker immediately started asking her very personal questions and found out that her father had left $5 Million to (the unnamed) Foundation. Brinker said that unless his math was fuzzy, 90% of her father's money went directly to the Foundation, and he wanted to know how she felt about that.

Betsy said that she felt "hurt, betrayed, and angry." She said "He was not a good father, he was not a good grandfather and these are just little remnants that he left us reluctantly."

Brinker asked about her relationship with her father. Betsy told him that she could count on one hand the number of times her father had seen her 28 year old son. (Betsy's phone went dead here.)

Brinker immediately assumed that with only this much information, he could make a judgment call on this family and said that he understood "perfectly" why she feels "hurt, betrayed and angry."

He pointed out that she would be getting $27,000 annual income at most and should try to get as much income from the investments in the trust as possible. He advised her to put the money into a diversified portfolio of corporate bonds because that will get her close to the 6% yield that is the maximum she's allowed.

Brinker said that he thinks it is important for Moneytalk listeners to "hear what goes on out there" and that it will benefit from. He cautioned that 'You have to think long and hard when you put your will together" and advised that if you don't have a will, the state has already written one for you.

Honeybee EC: Two things come to my mind. Firstly, parents are not obligated to give anything to their children if they don't want to. Why would Brinker assume that he has the right to criticize a dead man (like the daughter did)? And second, why would Brinker assume that the father didn't do exactly what he wanted with his own money and that he might have had what he considered valid reasons for doing it. Brinker knows nothing about Betsy and how she handles money, and he certainly knows nothing about her son.

Oh, and thirdly, $27,000 a year isn't $5 million, but it sure "ain't" chopped liver either when it's just given to you because you happened to be born to someone with money..... Brinker wasn't satisfied with this criticism of Betsy's deceased father, he brought it up again with his guest-speaker.
....Mr. Brinker, are you aware that your heroes, Bill Gates and Warren Buffett, are not leaving the lion's share of their wealth to their children?

* Caller Chuck in Illinois said: "It's a great honor to talk to you. I'm a very happy subscriber to your Fixed Income Advisor....." Brinker replied: "Let me say the honor is all ours to have you on the broadcast. What's on your mind?"

Honeybee EC: That would have been a perfect opportunity for Brinker to have been forthright about the Fixed Income Advisor. He could have explained that his son and his son's wife publish that newsletter and are the editors of it -- not him. At least he used the word "ours" -- or maybe he just had a mouse in his pocket.

Today, Brinker talked about his recommended reading list and said: "If you don't want to buy the books, that's okay because they should be in any library worth its name. You should be able to go in, check the books out and read them on your schedule."
Honeybee EC: Bob Brinker's Marketimer used to be available in libraries, but no longer. Right after the disastrous QQQQ trade of October 2000, he had them pulled from the shelves of most libraries and will no longer allows libraries to subscribe to Marketimer.
Brinker's Saturday guest-speaker was Jim Lebanthal. "Lebanthal on Munis"Straight Talk About Tax-Free Municipal Bonds for the Troubled Investor Deciding "Yes or No!"

Brinker's Sunday guest-speaker was Leander Kahney. "Inside Steve's Brain: Expanded Edition."


In the second hour on Saturday, Brinker did a political monologue. Here are his comments paraphrased:

..... I (Brinker) don't know if anybody in Washington listens when "we" talk about the budget deficit and returning to fiscal responsibility......After all, Moneytalk is carried on WMAL in Washington DC..... There was an Associated Press story this weekend saying the Obama administration is considering a domestic spending freeze and possibly 5% budget cuts...... One of the ways this can happen is for them to get a handle on spending......

......It's no coincidence that this is being done in an election year....This is something that would be done in the 2011 budget -- made available in February of an election year..... It's not surprising.....the focus groups are probably getting back to Washington that voters are fed up with the runaway, reckless spending that has been authorized by this congress and its predecessors -- going back to earlier part of this decade.....

......China, the largest foreign holder of Treasury Securities (over $800 billion), has been vocal about expressing concern over the size of U.S. debt.....The president is visiting China as part of his Asian swing....We'll see where it all leads -- there are a few months before this will be shown to the public....I (Brinker) would be the first to applaud Congress and the White House if they would take steps toward getting fiscal responsibility......

Honeybee EC: I listened to the program on Sunday, but didn't hear anything that I thought was worth reporting in detail. Brinker did a run-down on economic calendar for next week. There is a link to that information in the right column of this blog under "Items of Interest to Investors."

There was more political talk. Brinker talked at length about big-spending again and made certain that he included the Bush administration in his dialogue by focusing on the Medicare Drug Plan -- like he has done so many times before. Brinker would do well to get informed on the drastic increase in spending in this past year under the Obama administration -- it is THREE TIMES MORE
and climbing [LINK]

Honey's Market Report:

* Dow closed at 10,270.47, gaining 2.5% for the week. Last week it gained 2.3%.
* Nasdaq Composite Index closed at 2167.88, gaining 2.6% for the week. Last week it gained 3.3%.
* S&P 500 Index closed at 1093.48, gaining 2.3% for the week. Last week it gained 3.2%.
* GLD reached an all-time-high this week and closed at $109.74. Last week it closed at $107.43 and the week before that at $102.53
* Treasury Bond rates, TIPS, munis [LINK],
* Fed Funds, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]
From Marketwatch: "U.S. stocks recorded another weekly gain as investors warmed to M&A activity, better-than-expected corporate earnings, a big run up in the price of gold and some lukewarm economic data."
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, 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 photo is from SJ_Al. This one is Alcatraz Island (foreground), Treasure Island, the new east section of the Bay Bridge and downtown Oakland in the background. Please click on photo to enlarge:

Tuesday, November 10, 2009

Bob Brinker on Stock Market Secular Trends

Posted November 10, 2009.... Here is a complete record of Bob Brinker's views on stock market secular trends that goes back to 1982.

Bob Brinker said that a secular bull market began in 1982 and ended in the first quarter of year 2000. Marketimer, April 5, 2002, Bob Brinker said: "We continue to believe that the weight of the evidence suggests the secular bull market that began on August 13, 1982 came to an end in the first quarter of the year 2000...However....the secular bull trend in early 2000 appears to have led to a new secular bear market, which is now into its third year."

In the August 8, 2002 Marketimer, Brinker stated unequivocally: "In our view, the U.S. stock market entered a secular bear market in the first quarter of the year 2000. The benchmark starting points for this secular bear are: Standard and Poor's 500 Index: 1527.46 on March 24, 2000. Dow Jones Industrial Average: 11722.98 on January 13, 2000."

September 2002 Marketimer, Brinker said: "We believe the ongoing secular megatrend we are now experiencing will see a succession of cyclical bull and bear markets lasting approximately one-to-three years each."

In the May 2006 Marketimer, Bob Brinker wrote his definition of what would signal the end of a secular bear market: "The current cyclical bull market, which in our view is unusual in terms of its length, has had to battle the headwinds of the secular bear megatrend that began in the first quarter of Year 2000. definition, the secular bear megatrend will continue as long as the S&P 500 Index is unable to achieve a significant breakthrough of its March, 2000 historic high. We estimate the likely duration of this secular bear megatrend within a broad range of eight to twenty years, and we are now into year seven."

Now history shows that Brinker's carefully laid out scenarios never happened. What did happen is that the cyclical bull market continued for five years (and then turned into the worst bear market since the 1930's).

Brinker made excuses to explain this and repeatedly cautioned subscribers and listeners that the cyclical bull was part of an ongoing secular bear market megatrend and would last 1-2 years. He later changed that to 1-3 years, and then he called the cyclical bull market "long-in-the-tooth," and finally he said it was an "outlier" within a secular bear megatrend.

By the time the market reached its high in October of 2007, Brinker was a raging bull and predicting the S&P 500 Index would reach mid-1600's. It must have looked to him like he would soon appear very foolish with his secular-bear stance because he made the choice to declare retroactively that it had ended the previous year.

In the June 2007 Marketimer, Bob Brinker claimed the secular bear megatrend had ended the PRIOR year -- in June, 2006! Brinker said: "In our view, the valuation based secular bear market that was established following the March, 2000 closing high for the S&P 500 index (1527.46) and following the January, 2000 closing high for the DJIA (11723), reached its conclusion on June 13, 2006 at the bottom of the mid-term off-presidential election year correction." [Note what he said in May, 2006 in the quote above -- one month earlier than the date he said the secular bear had ended.]

Brinker never informed Moneytalk listeners that in June 2007, he said the secular bear megatrend had ended in June 2006 -- in spite of the fact that he had talked at length about it on the air -- which explains why some listeners never knew that he had made any changes. And he never mentioned it again in Marketimer until May, 2009.

May 5, 2009 Marketimer, Bob Brinker wrote: "Although it appeared to us that the secular bear megatrend that began in Year 2000 had reach its conclusion, there is no question that the secular bear megatrend remains intact. We define a secular bear megatrend as one during which the major indexes make no material and sustainable progress above their historic highs. During such extended periods, a series of cyclical bull and cyclical bear market occur." [Does this have a familiar ring? Yes, these are exactly the same things Brinker said before.]

It's important to be aware that Brinker has remained fully invested since March 2003 and never recommended raising cash reserves during the 50%+ bear market which occurred between October, 2007 and March, 2009. Brinker remains bullish, and his latest advice for "new money" is to "buy on weakness."

Here are a couple more of the pictures that SJ_Al's wife took. This is the Golden Gate Bridge. If you ever visit San Francisco, it is a wonderful experience to walk across this breathtaking bridge.

Downtown San Francisco:

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