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Saturday, January 2, 2010

January 2, 2010, Bob Brinker's Moneytalk: Summary, Commentary and Excerpts

January 2, 2010....Bob Brinker hosted Moneytalk live Saturday. In edit: Lynn Jimenez filled in for Brinker on Sunday. (Lynn believes in "staying invested.")

STOCK MARKET: Bob Brinker said that "we got a great year in the stock market," then he recited the closing numbers and yearly gains. He pointed out that the Dow gave a "lagging performance," but that was not a surprise because it is such a narrow index.

MARKETIMER RETURNS: Two times today, Brinker did an infomercial about his newsletter during the program. He said: "For those of you interested in tracking the returns of my investment letter, you can do so by going to Bob Brinker. com..." That is a huge change from what Brinker did last year. Last year, as Brinker was a buy-and-holder during the worst bear market since the Great Depression, he NEVER posted 2008 model portfolio returns on his website. And he never talked about the stock market on Moneytalk during the whole month of January 2009.

Here are Bob Brinker's one year returns for 2008:

Model Portfolio 1 = down 39.7%
Model Portfolio 2 = down 37.4%
Model Portfolio 3 ("balanced") = down 23.9%
Total Market Index = down 37

Bob Brinker's two-year (2008-2009) returns:

Portfolio 1 = down 18.5%
Portfolio 2 = down 15.5%
Portfolio 3 = down 6.5%

How does this fit with the returns Brinker is showing on his website? From the October 2007 all-time-high to the February, 2009 (almost the low), Brinker's model portfolios 1&2 lost more than 50%.
Here are the dollar values:

Model Portfolio I: Oct 2007 ATH = $302,561 - February 28, 2009 = $143,938

Model Portfolio II: October 2007 ATH = $241,99 - February 28, 2009 = $119, 105

Model Portfolio III: October 2007 ATH = $219,263 - February 28, 2009 = $147,013 (balanced)

Chart courtesy of Kirk Lindstrom (click to enlarge):

FIXED INCOME/IMPLIED INFLATION RATE: Brinker also discussed the fixed income market and recited all of the yields. He pointed out that it had been a good year for fixed income and that investors are "happy campers" with what they made in 2009. Treasuries are at historical lows. Brinker said: "The market is saying the implied inflation rate over the next ten years is 2.4% annual. You can compare that with the current year-over-year consumer price inflation rate, that's 1.8. So you see these things are getting pretty close now. Remember we went through a period of deflation where there was a pretty big gap between the implied inflation rate and the actual deflation rate. Well that's now coming very close....."

The top federal bracket of 35% will remain in place until a year from now, then rates will go up. The 35% will go up to 39.6%.....Brinker said: "Several tax increases have been put on the table in the last few weeks. None of them have yet been signed into law, but the only direction for taxes to go is up.....Because the overspending in Washington has reached epidemic proportions.....The Senate health care proposal is talking about raising the uncapped Medicare tax from the current 2.9 to 4.7.....

.....The House is proposing a surtax on high earners of about 5.4%....That would be added on top of the 39.6 that goes into effect next year. Right away, you're in 45. So if you are California....right away, you're in 55, plus what you're paying in uncapped Medicare....could be very close to 60% taxation.....This is what you need to be aware of....There is an income tax tsunami that is heading for the people of the United States.....The out of control spending is forcing the hand of the politicians to raise these revenues and that is why they are coming up with all these ideas.....Carl Levin came up with another new tax -- a war tax."

Dave in San Francisco asked about Health Savings Accounts. Brinker said he likes them, and that you could still fund for 2009 up until April 15th -- if you are in a position to do so. Singles can put in $3000 -- age 55 or older can put in an additional $1,000.

Most all of the callers asked personal IRA/credit card debt/lump sum versus annuity retirement questions -- far too esoteric to be of interest here. Brinker is still against rolling money from a regular IRA into a Roth IRA and paying tax on it, unless you are in a zero or very low bracket.

Scattered throughout the program, Brinker did some rather severe bashing of the U.S. Congress. He said that taxpayers have become Congress' "ATM machine." [Honeybee EC: I did not hear Brinker mention Barack Obama by name or even infer that Obama had any responsibility whatsoever for the
"runaway freight train spending" in Washington.]

Brinker's Saturday guest-speaker was Joseph Hurley:

Honey's Market Report, January 1, 2010:

* Dow closed at 10,428 -- 19% higher in 2009; losing 9% over a decade.
* Nasdaq Composite Index closed at 2269 -- gaining 44% in 2009; losing 44% over a decade.
* S&P 500 Index closed at 1115, gaining 26.5% in 2009; losing 24% over a decade.
* Gold closed at $1095.70 -- up 24% in 2009 and gaining 280% over a decade.
* Light Crude: $79.62.
* U.S. Dollar: $77.86 -- Jan. 1 (Bloomberg) -- The dollar posted its first monthly gain since June versus the currencies of major U.S. trading partners as the Federal Reserve moved closer to withdrawing stimulus measures that helped cause the greenback to fall 4.2 percent for the year.
* Treasury Bond rates, TIPS, munis [LINK],
* Fed Funds, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]

Moneytalk Available on Demand totally free at KGO810 radio for seven days after broadcast. The three hours of the programs are archived Saturday and Sunday 1-4pm. To download the programs and listen later, just choose the day, right click on each 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:

A couple of days ago, I posted a picture of a Florida sunrise that Dixiegeezer sent to us that is very similar to this one. This one does not have the birds in it and I think it is spectacular because it seems to have been taken just a moment or two later -- the sun is a bit brighter. Click to enlarge:


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