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Saturday, March 27, 2010

March 27, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

Posted March 27, 2010...Bob Brinker hosted Moneytalk this weekend.

STOCK MARKET: These were Brinker's only stock market comments Saturday:
"The total rate of return on the S&P 500 Index.....essentially the 500 largest companies in the USA.....year to date -- that would be the price appreciation -- remember, we started the year at 1115....up now around 1166 1/2. So now you also add in the cash dividends year to date and you get up around 5%. Nasdaq setting in at 2395. The Nasdaq 100 at 1952 1/2."

"Rates remain extremely low because the Federal Reserve is keeping them there. It is the Federal Reserve that through its policy machinations determines that short-term rates. And the Federal Reserve has held the federal funds rate, which is the daily rate that banks charge one another when lending out their excess reserves at the Central Bank......has been held between zero and 25 basis points all the way going back into last year.....Three-month Treasury Bills annualized rate of return 1/8 of 1 %.....Now how much would you make at 1/8 of 1% on a $1,000 for one year? You would make $1.25......"

TAXES GOING UP: Brinker said:
"I am on record saying that taxes can only go up. Now we're starting to see this come to fruition and there may be more ahead. There are so many debts being piled up at the federal level, in addition to state the form of the annual deficit which is handed off to the national debt at the end of every fiscal year, in September......I really don't see any alternative other than increasing revenues. Now some cynics will say....and I suspect they are right, that those who drive up spending in Washington, do so on purpose because they know that revenue will have to be provided for that spending.......May be premeditated efforts aimed at forcing people to pay higher taxes into the system. That's the way it looks based on what I am seeing right now.....

...... Now there are a couple of areas for you to put on your radar screen as we move forward in the tax area. Two especially to note --now obviously you know they can raise rates, they do that all the time -- they just did it with the health care bill with the new higher rate for the Medicare payroll rate and the new tax on unearned income. A health care tax on capital gains. A health care tax on interest and dividends. A health care tax on rents and royalties. That's what they just put on that will become effective down the road. That's the 3.8% new tax for high earners to pay for health care, we are told....

......One tax to keep an eye on is the Social Security Payroll tax.....There has already been talk in Washington, even the president of the United States about lifting the cap on Social Security.......We are starting to talk about tax rates that are so confiscatory that they are unreasonable.

......One other one to watch is value added tax. Now they are talking in Washington about the possibility of a value added tax, and that would added to the current tax structure. It would be a new tax, just like this 3.8 on unearned income......

......So the bottom line in all this is, it looks like tax rates are in an uptrend. And I don't see it changing until our spending habits change, and our spending habits won't change until somebody in Washington does something about it. Right now, it's going the opposite way. It's government gone wild in Washington, and this is definitely an X-rated production.....You are witnessing it. It's government gone wild."

DOCTOR'S VIEW OF HEALTH CARE BILL: Brinker said: "There have been many opinions expressed with reference to so-called health care reform, but the views that I've respected the most are the views of those in the medical profession......Who is in a better position to know what is going on out there? Certainly not the politicians in Washington that are making policy decisions. I would go with the views of the collective fraternity of doctors when it comes to what it is really like to be on the front line....

..... And I received a communique from a doctor in New York and this particular doctor did an excellent job of describing what's going on out there in the real world. This particular individual happens to be an orthopedic surgeon in New York......He talks about so-called health care reform and how it relates to him from the perspective of a practicing physician. He talks about the fact that he's going to be directly impacted as a result of this legislation. One area he focuses on is the patient care and how that will change in the future. And in his view....doctors are going to have to jump through hoops in order to get their patients the care that they need. And he speaks as a surgeon in his communique to me, and I thank you Doctor, for this, so that I could share it with Moneytalk listeners as a first-hand look at the reality of what has happened. Your reality, and I'm sure the reality of doctors across the United States.....

......It's going to be necessary for him to request authorization from a government board as to whether he is granted permission to perform elective surgery. Now elective surgery could be one of many different operations. It could be a hip replacement or a knee replacement, or one of many others. And he says that when he makes the request for authorization from the government board as to whether he can be granted permission to go ahead with the elective procedure, that he expects the decision to be based on age and life-expectancy. Now this is a dramatic change in health care in the United States. Because in the past, as he points out, these decisions have been made in consultations involving the doctor, the patient and the patient's family......You haven't heard people talking much about this so I think you should be aware of it. It's really important.....

.....So government is in a position to decide whether it's cost effective to repair your grandmom's hip fracture, for example -- just one aspect of this plan -- one aspect. And in this doctor's opinion, he believes every person in the United States should oppose this plan, which was just passed and signed into law -- just based on this one aspect. And of course that doesn't even begin to address the expense involved in the plan. And of course as you know, we have other fiscal problems, unfunded liabilities, Medicare, Social Security, prescription drugs -- part of the Medicare program, that have given us government gone wild fiscally. With nobody at the helm -- out of control. And of course, medical malpractice reform was not addressed in this bill."

Honey EC: KUDOS to
Bob Brinker for fair reporting on Saturday:

At the end of the first hour of the program, Brinker announced that there are "10s of thousands" of protesters in Searchlight, Nevada right now, who are "mad as hell and they aren't going to take it anymore."

Brinker said there are about 50,000 Tea Partiers who are against the big spending going on in DC -- and the Obamacare bill in particular. Brinker said that there was only about 200 who are for it.

Brinker pointed out that Searchlight is not far from where he is broadcasting and that the road going into Searchlight has traffic backed up 5 to 8 miles and people are walking miles to get to the gathering to voice their outrage. (Fox News also reported that the small road leading into the town was deadlocked with traffic.)

Brinker's Saturday guest-speaker was Stephen Roach:

To Go is 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:


Monday, March 22, 2010

For All Those American Patriots Who Are Grieving Today

The author of this is a long time internet friend. I'm sure that many of you who are actually aware of the full extent of what happened to America yesterday (and how and why it happened), will agree with what "The Fluffy Bunny" wrote. I certainly do.

The Fluffy Bunny wrote:

"In 1776, the American Republic boldly announced its birth with the Declaration of Independence. In 2010, it quietly expired with a declaration of dependence --"

My son inherited a rich legacy on both sides of his family in terms of the Founding of this country.

A descendant of the passengers on the Angel Gabriel in 1635 both sides of his family helped build this nation.

That being said, he comes from a long line of fighters, men of action, men passionate and all too ready to die for their beliefs. The thing that saddens me the most, is there are no trumpets sounding, no Pickett's charge, no battle of Little Big Horn, no Alamo, no Battle of New Orleans, no charge up San Juan Hill no...we are denied that. We, us, my family is watching this great nation succumb to an insidious freedom destroying cancer, rotting out from within. There will be no battle to mark the passing of this country, no last heroic charge, America shining beacon of hope simply will grow dimmer an dimmer and this country succumbs as easily as an old man slipping in a warm bath.

Today, I actually shed a tear for my country. I remember as a child looking at my father’s scarred body from his service in WWII, the burns inflicted by heated bayonets, the scars as he was rolled up in barb wire that was then heated with a blow torch and now I wonder what exactly did he suffer so for? His sacrifice bought us what, 60 years? Better to die on the battlefield in glory then to let the flame of liberty be extinguished without a fight. Today I weep for my nation. It has faded into the night without so much as a whisper.

The fluffy bunny

March 22, 2010 12:29 PM [Originally posted here]



Saturday, March 20, 2010

March 20-21, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

Bob Brinker hosted Moneytalk this weekend. Brinker spent both opening monologues talking about the Obama/Pelosi/Reid/democrat-only health-care takeover -- 17% of our GDP -- and the "sea change" in the U.S. taxing policy.

Sunday edit: The "government gone wild" will now be taxing capital gains on unearned income to pay for health care for those whom the government chooses to give it to.... Brinker calls it the HEALTHCARE TAX ON CAPITAL GAINS."

Honey EC: The next step for Obama and Pelosi? Put multi-millions of ILLEGAL ALIENS inside the U.S. now on the path to citizenship which, according to laws already on the books, would give them the right to bring all of their extended families into the country -- even those who are too old, sick or lazy to ever work a day in their life! Free health care for the world courtesy of your investment profits and your payroll tax that you have paid for years!

Altogether this weekend, Brinker spent a lot of time talking about the tax increases that are coming down the pike as a result of Obamacare and other tax increases he expects. He spelled out some of the future brackets and how ridiculous it is for the government to keep going after the same people for more taxes.

Brinker talked about the new 3.8% tax on unearned-income (IF OBAMACARE IS PASSED) for most of the first two hours. Brinker said this new tax will apply to ALL dividends, interest, annuities, royalties and rent and capital gains -- even on the sale of real estate.

The second caller in hour-one (Mitch, who is a veterinarian), took Brinker to task because Brinker has never talked about this health care bill over the past year. He was absolutely correct! Brinker has almost never talked about this bill on Moneytalk until today!

Brinker became very angry at Mitch! But as usual, he thinks very fast and is an expert at dissembling and basically using words in such a way that most listeners would never suspect he is not being truthful! When that happens, he makes sure that he never lets the caller back on to set the record straight. However, Brinker never hesitates to hammer a caller later in the program, as he did Mitch today -- telling another caller that Mitch was "off the rails."

[Honey EC: No Bob, it is YOU who are "off the rails." I know for a fact that you never talked about this health care bill before today, other than perhaps in the most general way. Shame on you for not only misleading listeners, but embarrassing a caller. One of the few that ever gets on the air to give you a dose of reality!]

Basically, Brinker contradicted Mitch and claimed that he HAD talked about the "health care SYSTEM" over the past year. It's true that he talked about some aspects of the "system," but he has never talked about the bill like he did today.

The reason? It's very clear. He admitted today that the 3.8% tax increase on unearned income was entirely the idea of one Barack Hussein Obama! Since his election, Brinker has avoided mentioning Obama as much as possible, and vigorously avoided putting blame on him for anything. Today that changed! Brinker said this tax increase was Obama's "worst idea," and that Obama has "no concept of economics." A caller went a bit further and said "Obama speaks with forked tongue."

Here is an excellent analysis of the Medicare tax increase written by poster "dew-diligence":
"The Healthcare Bill and Investment Income

Inasmuch as this is an investment board, it ought to be noted that the healthcare bill as current constructed includes the first-ever Medicare tax applied to investment income in the form of dividends, interest, and capital gains. The bill calls for a 3.8% Medicare tax on investment income for individuals and couples whose adjusted gross income exceeds a certain threshold.

Why is a new 3.8% tax on rich people a big deal? Because the new tax breaches the conceptual wall that has always existed between employment income and investment income whereby it was implicitly acknowledged that the
capital one invests to generate investment income was taxed when it was originally earned.

If the provision to levy a Medicare tax on investment income becomes law, what’s next? Applying the
Social Security tax to dividends and capital gains would seem to be a likely successor. In due course, the lion’s share of investment income in all forms may end up belonging to the government."

Saturday, Brinker did not say anything about the stock market or the bond market. However, there was a caller in hour-one who asked Brinker a question about "portfolio III." Brinker said that he was very sure that his listeners "had no idea" what she was talking about. So for the umpteenth time, he explained that it is the balanced portfolio that he publishes in his "monthly investment letter" for those in or near retirement.

[Honey EC: That was a good one, Bob! Not a weekend goes by that you don't accept a call on this subject and explain portfolio III in detail. You have even divulged most of what's in it: You say it's about 50-50 stocks/bonds. You have even talked about which stocks and bonds. For example, VTSMX is the major stock holding. It also has a couple of managed funds, but the percent of each is infinitesimal. You recently added a very small percentage of Vanguard International Growth. On the bond side, you have 20% Vanguard Ginnie Mae, and the other 30% divided between Vanguard TIPS and VFSTX.

BTW: That fund is still about 10% underwater from the market all-time-high to February 28th -- last month. Retiree's lost 23.9% riding the 2008-2009 mega-bear market fully invested as Brinker advised them to do. That was during a time that the bond market did exceptionally well. OUCH!]

Brinker's most ridiculous quote of the day: A caller was concerned about the government taking over student loans (if Obamacare passes) -- he reminded Brinker about Fannie and Freddie. Brinker said: "There is no evidence they will use bad judgment giving out student loans." [Honey EC: "ROAR"!!]

Brinker's Saturday guest-speaker was William Cohan. (Be sure to download hour 3 of the program from KGO if you want to save this interview for free.)

Brinker's Sunday guest-speaker was Mark Gilbert: "Complicit: How Greed & Collusion Made the Credit Crisis Unstoppable"

To Go is 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:


Tuesday, March 16, 2010

Famous Market Timing Quotes

It is a mark of prudence never to place our complete trust in those who have deceived us even once.
__ Descartes’ first meditation
Note: This is another guest article by Kirk Lindstrom

The above is wise advice, especially for anyone who pays for investment information.

I like to collect quotes about Market Timing from people in the investment world. If you have any to add or know the original date and source of any of these quotes, then please post this in the comments section.
"I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two." Warren Buffet

"If I have noticed anything over these 60 years on Wall Street, is that people do not succeed in forecasting that’s going to happen to the stock market." Benjamin Graham

"Market-timing is bunk." Pat Dorsey, Director of M* Fund Analysis.

"The market timer’s Hall of Fame is an empty room." Jane Bryant Quinn, Author, Columnist

"Market Timing is a poor substitute for a long-term investment plan." Jonathan Clements, Wall Street Journal

"No, I don’t believe in market timing. I’ve been around this business darn near a half-century, and I know I can’t do it successfully.– In fact, I don’t even know anyone who knows anyone who has ever successfully timed the market over the long term." Jack Bogle

"Market timing is an ineffective strategy for mutual Fund Investors." CDA/Wiesenberger

"Nobody but nobody, has consistently guessed the direction of the bond or stock market over any meaningful length of time." John Markese, President, AAII Journal

"I’ve learned that market timing can ruin you." Elaine Garzarelli

"Among the 160 or so newsletters the HFD monitors, the market timing recommendations of only 10 have beaten the stock market over the last decade on a risk-adjusted basis." Mark Hulbert 1-18-01

"As you can probably sense, we’re not keen on market-timing. It just doesn’t work." Morningstar’s Course 106

"Over a 12.5 year period, 224 of 237 market timing newsletters went out of business."

"I’m a strong advocate of buying and holding." Charles Schwab

"Buy and hold is a very dull strategy. It lacks pizzazz and doesn’t inspire much admiration at cocktail parties. It has only one little advantage: It works, very profitably and very consistently." Frank Armstrong, Author

"For most investors the odds favor a buy-and-hold strategy." Carol Gould, New York Times

"There is absolutely no evidence that anyone can time the market." Bill Bernstein

"Some people in the popular press talk about ‘getting into’ a bull market and ‘getting out of’ a bear market, but it is all marketing hype." Rick Ferri, Author

"Only liars manage to always be ‘out’ during bad times and ‘in’ during good times." Bernard Baruch

"There is an overwhelming body of evidence to support the view that believing in the ability of market timers is the equivalent of believing astrologers can predict the future." Larry Swedroe, author

"Don’t trade in and out of funds. Stay invested.– Not only does buy-and-hold investing offer better returns, but it’s also less work." Eric Tyson, author Mutual Funds for Dummies

"Timing the market is for losers. Time IN the market will get you to the winner’s circle, and you’ll sleep better at night." Michael Leboeuf, author, "The Millionaire in You"

The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike.
[John C. Bogle in Common Sense on Mutual Funds: , pg 20]
Bob Brinker still takes calls complimenting him on his advice to "get out of the market" in 2000 yet this quote shows he did not "get out" but lowered his asset allocation to equities then shortly thereafter, told his PAYING subscribers to put up to half it back into the NASDAQ which is still down about 50% as of today.
"The Marketimer stock market timing model has turned unfavorable… We recommend raising a 60% cash reserves at this time."
Robert Brinker - January 2000 issue of “Marketimer
My all time favorite:
"We recommend subscribers with aggressive investment objectives invest 30% to 50% of existing CASH RESERVES in the QQQ shares in order to take advantage of this opportunity".
"We recommend subscribers with conservative investment objectives invest 20% to 30% of existing CASH RESERVES in the QQQ shares in order to take advantage of this opportunity".
Bob Brinker - 10/16/2000 “Marketimer” Subscriber Bulletin when QQQ was at $82 just before falling to a low of $20 in the next two years. CASH RESERVES were 65% of his recommended total portfolio at the time and he never issued a sell as it lost 75%!
Brinker's advice to buy QQQ in 2000 was terrible but his recommending it in his newsletter while not adding it to the model portfolios two weeks after the advice was given while urging subscribers to buy, buy, buy was brilliant in a Madoff sort of way. If the markets soared 20% as he kept predicting, the he could take credit for participating. If the markets continued lower, as they did, then his model portfolios were mostly safe with 65% of the equity portion earning good interest in money funds.
Bob Brinker's
=> Asset Allocation History
=> Bob Brinker's QQQ Advice
=> Effect of QQQ advice on reported results
Do you have a favorite market timing quote? If you have any to add or know the original date and source of any of these quotes, then please post this in the comments section.

Saturday, March 13, 2010

Bob Brinker's Moneytalk, March 13, 2010

Posted March 13, 2010....Bob Brinker did not host Moneytalk Saturday. Bob Brinker's fill-in host is Lynn Jimenez. She is the business reporter for KGO 810 radio. I won't be writing a summary of Jimenez programs.

Since last week marked the one-year anniversary of the stock market's slide to a 12-year closing low, I'd like to very briefly review Bob Brinker's market-timing forecasts and allocations during that time-frame.

1998: Brinker, who had been fully invested during the 1990's, rode down a short bear market -- remaining fully invested.

2000: In January, raised 60% cash reserves -- August, increased to 65% cash reserves -- October, told subscribers to use 20-50% of the 65% cash reserves to buy QQQ because he expected the market to have a counter-trend rally led by the Nasdaq. This trade lost over 70% and was never closed. [See complete details here]

2003: March 11 at S&P 807, Brinker returned to 100% invested and has never changed that allocation.

2007: As the stock market topped at S&P 500 Index 1565, Brinker was expecting it to go to mid-1600's and was recommending mid-1400's as a gift-horse buying opportunity.

2008: January Marketimer, Brinker said: “In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008. We expect the S&P Index to achieve new record highs this year and to reach the 1600’s rang in the process. We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range. Above this range we prefer a dollar-cost-average approach for new purchases. All Marketimer model portfolios remain fully invested as we enter 2008."

2008: As the market dropped to its November low, Brinker issued these "all new money in" recommendations
* January 20th -- rescinded mid-1400's (recommended dollar-cost-average only)
* Feb 10, 2008 @ 1331: Low-1300's
* Aug 5, 2008 @ 1285: 1240 or less
* Sept 2, 2008 @ 1282: Low-to-mid 1200's
* September 16th -- rescinded low-to-mid 1200's (recommends dollar cost-average only)

2009: Brinker issued his final "all new money in" recommendation in February at S&P 500 Index low-to-mid-800's. March: No buy level and no DCA recommendations. Later, he claimed to have predicted 2009 would be a positive year for the stock market.

2010: Brinker has now returned to using the term "cyclical bull market." His prior secular/cyclical forecasts were all proven incorrect. See my complete analysis here [LINK] In the January 2010 Marketimer, Brinker said that he did not foresee any cyclical bull market corrections in excess of 20% on the radar and regarded any pullbacks in the area of 5 to 10% to be health-restoring and should be regarded as buying opportunities.

Brinker's fully invested (from March, 2003) model portfolios lost over 50% from the market top in 2007 to the market bottom in March 2009. This seems to have caused him to change some of his "market-timing-speak." He no longer talks about his "timing model" and he no longer issues "all new money in" buying levels. Now he simply recommends "buy on weakness."


Thursday, March 11, 2010

Mark Hulbert: "Fools R Us"

Posted March 11, 2010....First let me point out that Bob Brinker is not in Hulbert Financial Digest top-5 performers (in any category) as ranked over the past five or ten year time frames. Bob Brinker has not been ranked in the top-5 performers in the five or ten year time frames for many years.

Mark Hulbert's latest Marketwatch column titled "Fools R Us" verifies what we here on the Beehive have known for a very long time: Market-timing is a crap-shoot at best!

Mark Hulbert asked these questions:
"How many stock market timers, of the several hundred monitored by the Hulbert Financial Digest, called the bottom of the bear market a year ago?

And a follow-up: Of those that did, how many also called the top of the bull market in March 2000 -- or, for that matter, the major market turning points in October 2002 and October 2007?"

Mark went on to point out that many are "rewriting history" on this 10-year anniversary.

Then Mark Hulbert said:

"It's one thing to say now, with the benefit of hindsight, that the stock market in March 2000 was wildly inflated and ready to plunge. It's quite another to have predicted it at the time. The same goes for the end of the bear market one year ago........

.....It turns out that none of the markets timers I monitor were able to call the last decade's market's major turning points.

To be sure, there is no exact definition of what "calling" a market top or bottom involves. In the case of the March 2009 bear market bottom, for example, does "calling" it mean the adviser's portfolio needs to have moved from being all cash to 100% invested in stocks on the exact day of the bottom?

If my analysis had relied on a definition as demanding as this, then it wouldn't be surprising that no timers called recent market turning points.

But my analysis actually relied on a far more relaxed definition: Instead of moving 100% from cash to stocks in the case of a bottom, or 100% the other way in the case of a top, I allowed exposure changes of just ten percentage points to qualify.

Furthermore, rather than requiring the change in exposure to occur on the exact day of the market's top or bottom, I looked at a month-long trading window that began before the market's juncture and extending a couple of weeks thereafter.

Even with these relaxed criteria, however, none of the market timers that the Hulbert Financial Digest has tracked over the last decade were able to call the market tops and bottoms since March 2000."

Notice that Mark said that NONE of the market timers he has tracked over the last decade called the tops or bottoms over the past 10 years.

Mark wrapped up his column by saying that we should conclude that: "Predicting turns in the market is incredibly difficult to do consistently well. That means that, if your investment strategy going forward is dependent on your anticipating major market turning points, your chances of success are extremely low."

What an understatement! According to Mark's own words, it's IMPOSSIBLE. So one has to wonder why anyone would pay someone who has never been able to call a market top or bottom. And why would anyone pay for someone to rank what can't be done?

Mark Hulbert's Marketwatch article


Saturday, March 6, 2010

March 6, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

Posted March 6, 2010....Bob Brinker hosted Moneytalk today. In Brinker's Saturday opening monologue, he talked about the national debt which is projected by the CBO [LINK] to be in excess of $20Trillion within ten years.

Brinker said:
"If that number turns out to be accurate, that would mean that ten years from now the national debt would equal about 90% of that year's Gross Domestic Product. A number that is getting up into a very uncomfortable range once it gets up into that area. In addition to that, the Congressional Budget Office is estimating that interest payments on the national debt will quadruple to about $900Billion per year within ten years based on the projections contained in the budget which was put forth by the White House within the last week. And if you total up all of the deficits from 2011 to 2020, a ten-year period, you would get close to $10Trillion in additional national debt that would be piled on......

......What is sustainable? If you take a pool of economists, they will tell you that basically you can get by if you run a deficit of 3% of Gross Domestic Product.....That's not the forecast. The forecast is that the deficit is going to remain in excess of 4%.......for the foreseeable future. So this is where the problem comes in. We have the expenses at the federal level and then we have the revenues......We have a mismatch between the spending side at the government level and the revenue side. And based on the budget presentation that was made in the past week, this continues to be a long-term systematic problem in terms of the budgeting of U.S. expenses and revenues.....

.....The deficit for this fiscal year ending in September is estimated to be an all-time United States record of $1.6Trillon.....Both parties in the last decade have been responsible for building up the National Debt by running deficits.
[Honey EC: Mr. Brinker, while that may be a true statement, it is VERY disingenuous of you to not point out that the Obama Administration has QUADRUPLED the National Debt.] And certainly with the recession we've had, starting in 2008, we've seen a ballooning of these numbers. But the reality is most politicians don't want to talk about this....They'd like to make you some more promises -- maybe some more goodies from Uncle Sam."

No stock market talk today, but Brinker did take a call about GNMAs. Brinker advised the caller to expect volatility, but that it should be contained between the mid-$9.00 to the mid-$10 range. He pointed out that GNMAs have returned about 6% over the past decade while the stock market has basically gone sideways. [Honey EC: When Brinker points out that the stock market has gone nowhere over the past ten years, he is basically proving that he has no ability whatsoever to forecast what the stock market is going to do, short-term, mid-term or long-term (even though, I doubt that is his intention). Brinker has not given up on promoting himself as a market-timer, even though he has never successfully called a bear market and has been a "buy-and-holder" since March 2003.]

* Caller Jeff from New York
asked if Brinker was familiar with a new tax proposal to standardize rates at 15, 25, and 35% and lowering corporate tax rates. Brinker said he had no problem with those brackets and he was for lowering Corporate tax rates, but he didn't think it "would fly" with the current congress.

* Caller Irene from Wisconsin
asked what would happen to U.S. Savings Bonds if the country went bankrupt. Brinker said that he did not think that was likely and was not worried about it "now" because several things would have to happen first. The first step would be the downgrade of AAA Treasuries. However, if in the unlikely event that the U.S. did stop printing money, all government bonds and government checks would be worthless.

Brinker said: "If I had the president's ear -- which I do not -- I would tell him to make absolutely certain that we had a fiscally sound policy to protect our credit rating." [Honey EC: Mr. Brinker...Your cheap-shot at Sarah Palin today was beneath contempt. What's the matter? Don't have the guts to take any shots at the guy whose ear you don't have? I could give you plenty of really worthwhile fodder, but you already have it, I'm sure. Just wait, you may get Hilary back and you can cheap-shot her again. Women of all stripes seem to be fair game for your insults. I remember when you called Elaine Garzarelli contemptible names and several other women, too.]

Caller Robert from Massachusetts
asked if American Funds could be used as a substitute for the funds in Brinker's model portfolio III. Brinker explained that he recommended using no-load funds. Brinker said that Model Portfolio III is balanced at about 1/2 stock funds and 1/2 in bond funds. Three times today, Brinker talked about Model Portfolio III. [Honey EC: Portfolio III largely contains Vanguard Funds that Brinker regularly talks about on Moneytalk. He recently added a VERY small percentage increase in his Vanguard international diversification in all three of his portfolios.]

To Go is 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:

Brinker's Saturday guest-speaker was Harry Markopolis:

Brinker's Sunday guest-speaker was Matthew Bishop, who co-authored: "The Road from Ruin: How to Revive Capitalism and Put America Back on Top"


Wednesday, March 3, 2010

Bob Brinker Market Timer Subscribers: How Were You Investing A Year Ago?

Bob Brinker likes to talk about how he said he was bullish in January 2009 just before the markets posted double digit gains. Please post what you did a year ago in the comments section. I am especially interested to hear what "long time Marketimer subscribers" did a year ago.
Note: This is "guest blogger" Kirk Lindstrom filling in with an article as Honeybee continues her recovery. She appreciates all the kind comments and words of encouragement but is still not up to writing long articles.
Please post in the comments section how you were investing last year.

What Bob Brinker doesn't tell you or post on his web site is he was so bullish at the start of 2008 that he called for a "gift horse buying opportunity" when the S&P500 was only down a few percent to the mid 1400s! Brinker called many "all in" buys as the market crashed to the 600s with the last buy in the 800s. Anyone following Brinker had nothing to put in from taking profits when the market was higher as I advised when the market was near the peak. See 2007 Profit Taking Alert.

Brinker also doesn't tell you that he bashed anyone like me who warned that a recession was unavoidable. See my March 2008 article (with ECRI) titled:
ECRI Calls it "A Recession of Choice"
Bob Brinker actually called us "Cassandras!" See Honeybees 5/31/08 article:
Cassandra Bashing
Tell us how you were investing a year ago as the market was making a bottom in the 600s. I followed my own advice and was putting cash I took out near the top back into the market into stocks like FNSR at 24¢ ($1.92 split adjusted) and GE at $6.76. See
I know of two big fans of Bob Brinker that gave up on him at the worst time and switched to a different advisor near the bottom and that advisor missed the turn. I see that as the major danger of following market timers for anything but the "mad money" part of your "explore portfolio."

See Bob Brinker's Asset Allocation History for a full accounting of Brinker's official advice to the 1980s.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09)

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%

Learn the "Core and Explore" approach to investing
with "Kirk Lindstrom's Investment Letter"

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Monday, March 1, 2010

Bob Brinker Gets Peeved at Hank Paulson

March 1, 2010...Bob Brinker had a real peeve on this weekend because Henry Paulson refused his invitation to appear on Moneytalk. Bob Brinker seemed very insulted and appeared to make a dogged effort to extract a pint of Paulson's blood as revenge served hot (figuratively speaking, of course)!

Brinker hammered Paulson repeatedly on both Moneytalk programs over the weekend. He took opportunities to ask callers what they thought of Paulson's "tax break." He even encouraged the Sunday guest-speaker to agree with him that the reason Paulson didn't come on Moneytalk was because he only wanted to go where he would likely get "softball" questions to sell his book.

I transcribed a few excerpts from some of Brinker's tirades about Paulson's "tax break":

Bob Brinker said: "I pointed out earlier this hour and earlier this weekend with our weekend guest, Andrew Sorkin.....We pointed out, he pointed out and now I'm pointing out that Henry Paulson sold an estimated $500 million worth of Goldman Sachs stock to take a job that basically lasted two years as Treasury Secretary. And in the process saved, perhaps $200million in taxes. That's a $100million per year served as Treasury Secretary.......

[Brinker asked a caller] "I'm asking you what you think of that tax-break. You sell your company stock, maybe you save $200million in taxes for taking a government job for what turned out to be two years -- that's a specific case that we know about and we have estimates on what he saved in taxes based on the survey done by The Economist. My question to you is, how do you feel about that?.....I think that the vast majority, I'm going to say 99% of American taxpayers, did not know about that tax break. Now they know....."

Brinker accused Paulson of avoiding some hard questions, but didn't say anything about having done that himself on more than on occasion:

Blogger jeffchristie said...

"Brinker speculated that Paulson probably refused because he did not want to face the "hard questions" that he might get from Brinker and the callers"

A few years ago I had the pleasure of talking to Paul Kangas. I ask him why we hadn't seen Bob Brinker on the Nightly Business Report as a guest market monitor. Mr. Kangas told me that they had extended several invitations to Mr. Brinker but Bob had refused them. This made me wonder if Brinker did not want to face the "hard questions" that he might get from Paul and the listeners. I remember that on his last appearance he got tough questions from Steve T and a guy named Kirk.

February 27, 2010 6:49 PM

Kirk said:

Honeybee reported:

Several time during the program Saturday, Brinker hammered Henry Paulson because he turned down Brinker's invitation to be a guest on Moneytalk. Brinker said he was very "annoyed with the Treasury" because Paulson had refused his invitation and considered it "stupid" since Paulson was trying to promote his book.

Brinker speculated that Paulson probably refused because he did not want to face the "hard questions" that he might get from Brinker and the callers -- that Paulson had instead chosen to face "softball questions" from Charlie Rose.

At the risk of insulting some of the elderly, Brinker must have Alzheimer's disease or he is simply TERRIBLY uninformed. I saw Hank Paulson on TV twice recently taking questions from people far, far more brilliant than Brinker (Buffett) and more powerful (Congress).

In that "seldom read" financial publication I get called "Forbes" there is a decent article also online called Buffett Hosts Hank Paulson in Omaha
In a tete-a-tete broadcast over the internet, billionaire investor Warren Buffett sat down with Hank Paulson on Tuesday to discuss the former Treasury secretary's new book, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.

Buffett used the forum to highlight Washington’s hypocrisy in assigning blame for the financial crisis, asking Paulson if he ever had the urge, during his congressional testimony, to chide his inquisitors for letting Fannie Mae and Freddie Mac become two of “the most levered” financial institutions in the world.


Buffett also pressed Paulson—unsuccessfully at first—for details on his personal investments. “I’m not looking to make more. I’m trying to keep what I have,” said Paulson, who has stated repeatedly that he plans to devote the rest of his career to funding programs geared toward environmental conservation.

After some prodding, Paulson revealed that he holds a portion of his money in cash, bonds, and money-market funds while also investing in "growth equities" because, as he explained, “I still believe the economy can go down and side-ways but outstanding companies that know how to operate globally will prosper over a long period of time.”

Now who is a better, more credible investor? Warren Buffett who uses real money to make billions or Bob Brinker who has to use a show as an informercial to pretend he can time the market? My guess is Hank didn't want to be a party to the fake market timing scam... but that is just my opinion.

or this story from earlier this month where Hank was called a liar... Paulson testimony at House hearing on AIG
The following are highlights from a House Oversight and Government Reform Committee hearing on Wednesday with former Treasury Secretary Henry Paulson testifying on the bailout of insurance company AIG.


“We have this bailout of AIG and you don’t know anything about it. Mr. Geithner had nothing to do with it. It just really boggles the mind that some of the biggest people involved in this whole thing from beginning to end had nothing to do with it... I don’t think anybody is going to buy that.”

Brinker is probably miffed because Rose never invited Bob on his show.

February 27, 2010 9:09 PM

Blogger Kirk said...

For the record, I watched both these LIVE while working. Buffett was masterful at getting Hank to say how he invests. To say Paulson runs from tough questions is a joke as he went into the lion's den to face the same idiots (Walters, Rangle, et. al) who attacked Hank Paulson on TV to hide their own failures. Brinker refused to answer my question on NBR.... I have a transcript of it somewhere... and he refused to come on the show again after that. My guess is Steve's question caught him even more off guard. If anyone is a coward about facing tough questions, lets ask the man who can't take questions live at a charity event. He needs then written down in advance so he isn't ambushed.

If you can't tell, I can't stand Brinker when he gets on others for things he himself is afraid to do.

February 27, 2010 9:16 PM

Blogger jeffchristie said...

After Brinker did his electronic lynching of Hank Paulsen he speculated as to whether Dick Cheney did the same thing with his holdings in Halliburton. You know Bob rather than making bizarre claims and engaging in demagoguery you might do a little research first to find the facts. It only took me a few minutes to find out how Cheney disposed of his interests in Halliburton. You were partially right. He did do it without incurring a tax liability.

"The "Gift Trust Agreement" the Cheney's signed two days before he took office turns over power of attorney to a trust administrator to sell the options at some future time and to give the after-tax profits to three charities. The agreement specifies that 40% will go to the University of Wyoming (Cheney's home state), 40% will go to George Washington University's medical faculty to be used for tax-exempt charitable purposes, and 20% will go to Capital Partners for Education, a charity that provides financial aid for low-income students in Washington, DC to attend private and religious schools.

The agreement states that it is "irrevocable and may not be terminated, waived or amended," so the Cheney's can't take back their options later.

The options owned by the Cheney's have been valued at nearly $8 million, his attorney says. Such valuations are rough estimates only -- the actual value will depend on what happens to stock prices in the future, which of course can't be known beforehand. But it is clear that giving up rights to the future profits constitutes a significant financial sacrifice, and a sizable donation to the chosen charities."

February 28, 2010 4:43 PM

Blogger jeffchristie said...

Hi Bob thanks for taking my call. You have ask callers how they feel about Mr.Paulsen being able to sell his stock without having to pay any federal income tax. Well are you sitting down Bob? I DON'T HAVE ANY PROBLEM WITH IT. He does not AVOID paying taxes he merely deferrers his tax liability.

By accepting the Treasury post, Paulson is poised to take advantage of a tax loophole that allows government officials to defer capital gains taxes on assets they have to sell to avoid a conflict of interest, as long as the proceeds are reinvested in government securities or a broad array of mutual funds approved by the government within 60 days.

Technically, the tax kicks in once these replacement assets are sold, using the purchase price of the original assets as the cost basis, says Tom Ochsenschlager of the American Institute of Certified Public Accountants.

February 28, 2010 5:09 PM

Anonymous Anonymous said...


jeffchristie, that whoosing sound we're hearing is all the wind going out of BB's sails on this Paulson-stock thing. So BB was so mad that Paulson didn't come on the show, he jumped on this tax issue without doing his homework.

Thank you for posting this.

February 28, 2010 5:40 PM

[Honey EC: Jeffchristie and Kirk wrote much more on this subject at this LINK]

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