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Saturday, May 22, 2010

May 22, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

Bob Brinker hosted Moneytalk May 22, 2010:

Bob Brinker said: "The Dow at 10,193, S&P 500 at 1087, the Nasdaq at 2229 and the Nasdaq 100 at 1822. Now the the total rate of return year-to-date on the S&P 500 is negative 1 3/4%, that includes cash dividends and price change. The Wilshire 5000.....minus 0.95%.....So what's going on out there?.....Let's look at this market and see if we can put some semblance of order into what is going out there. I know there is a lot of emotion in the market and a lot of politics, too, especially with what's coming out of euro-land.......

......What are the root causes of a bear market. We don't have a bear market here -- we have a correction.....The S&P 500 is down about 10 1/2% from its closing high, been down as much as 12%, as of this past Thursday at the close.....So this is a correction. Anything below a 20% decline is considered a correction in Wall Street. So we have a correction -- that we know. What about this talk we hear out there about a bear market.....Are we going to have a bear market right now, here.....I'll give you my perpective on the way I look at that because I use several filters when I analyze the causes of a bear market. Now it's true you can have exogenous factors like you did in 2008, where you had the subprime meltdown and it definitely was an unusual situation because it led to a banking crisis.......


.....First one of the root causes of a bear market is tight money. What is tight money. That is when the Federal Reserve pulls in their horns, takes away the punch bowl, restricts the growth of the money supply. And money is harder to get, and as a result money price of money goes up....Do we have that now? No. Do we have the prospect of having that now? No. We have easy money now and the Federal Reserve is clearly on an easy money track.....especially with what is going on in Europe.....


......What's another root cause of a bear market? No question, rising interest rates. I'm not talking about the federal funds rate going from 1 to 2. I'm talking about a meaningful rise in interest rates.....When we look at the rates today, they are low, low, low. How low are they? Well, 3-month Treasury Bills are 15 basis points. That's about 1/7 of 1% a year. Six-month Bills are 21% basis points....One-year Treasuries are about 1/3 of 1% annual. Two-year Treasuries about 3/4 of 1% annual. Five-year Treasuries at 2%. Ten-year Treasury Bonds at 3 1/4. Thirty-year Bonds at 4.1........Rising rates are not a problem as we look at the market place right now.......


.......What's another root cause of a bear market, a decline in excess of 20% in the S&P 500......No question about it, Hyperinflation, rising inflation. Do we have that? No. I know there are a lot of people out predicting it, but they've been wrong. Right now we have a year-over-year Consumer Price Index increase of 2.2. And better than that, the year-over-year core Consumer Price Index is one of the lowest of all times. It's 0.9.....excluding food and energy......So if you've been betting on inflation, well, that horse fell somewhere down a back stretch. I hope it's okay. ......We don't have an inflation problem right now......


.....What's another cause of a bear market. At the root, it's rapid economic growth and a boom in the economy. The economy is roaring ahead. Do we have that? Not on your life. Not even close......Some people are worried about a double dip.....


....And another root cause of a bear market is over-valuation. When stock prices are so high relative to valuations they're on the moon like they were in January of 2000. Well, not true. We don't have over-valuation right now. We have good valuation right now.....

....So all five of those are no's. We don't have tight money. We don't have rising rates problems. We don't have rising inflation problems. We don't have rapid growth in the economy and we certainly don't have over-valuation in the stock market......Out of five possible root causes of a bear market, we have zero. That is why I am of the opinion that we are not in a bear market. I know there are people out there that are saying, ohhh, Katy bar the door. They have every right in a free country to express that view, but I am not in that camp. I do not believe this is a bear market. I think it's a correction. And obviously, corrections are always the same...they cause a lot of angst and we are seeing that right now.....and that is what they are supposed to do.....


......You know, in my investment letter this year, I wrote that quote: "Cyclical bull market corrections typically fall within a range of 5-10% and sometimes reach the teens in percentage terms." All of those are less than 20. And we've already been down as much as 12% Thursday night. There's nothing unusual about such corrections. They've occupied the headlines in the financial sections many times in the past during cyclical bull markets. And after we all saw the S&P 500 rise 80% in almost a straight line in a period a little over one year. Well the market certainly is entitled to have a correction of some consequence along the way, doncha think?......


......You know, just a couple of weeks ago in my investment letter, this is what I wrote, quote: "Any short-term weakness is viewed as a health-restoring event." I also went on to write earlier this month that I would take a more positive view with regard to investing new money into the market during a correction for those who find themselves under-invested. And I do believe that those who are looking for opportunities to make additions to their stock market portfolios and are using this correction and periods of weakness within this correction -- there have been plenty of those. I think that's a reasonable course of action....


....So from my point of view, I think it's a correction. I don't think we are going into a bear market, defined as a decline of more than 20% of the S&P 500 Index. And I also believe that when the correction is over, we are going to see new recovery highs in the S&P 500 Index. That's what I think. I'm Bob Brinker. This is America's money program."



Misc. Bob Brinker points:

* There was a lot of discussion about possible reasons for the stock market's May 6th "flash crash." Brinker made the point that even though there has been lots of speculation, it still remains a mystery -- and it definitely needs more investigation.

* Regarding stop losses: A lot of people with them got hurt on May 6th. Brinker said: "Sooner or later they are going to take you out." And: "It's a matter of live by the sword, die by the sword." [Honey EC: That seems to me like a rather strong expression.]

* Regarding Greece: Brinker doesn't think that Greece will "sink the world economy."

* Brinker talked quite a lot about the almost $13 Trillion National Debt and called it a "disgrace." He believes that changes need to be made to entitlement programs, including Social Security. After much discussion about the US national fiscal irresponsibility, Brinker said: "We are talking about the future of our Republic."

* Brinker said that the new health care plan is a "gigantic new entitlement." He said the claims that were made about insurance companies having to take patients with "pre-existing conditions" is not true. He said that all they have to do to "get off the hook" is pay a daily fine of $100 for each case, which is a lot cheaper than accepting patients with pre-existing conditions.

* In response to a caller who mentioned Black Monday in October 1987, Brinker said that was a day that "will live in infamy," but that it did not come close to "bear market parameters" at its "absolute low."

* Brinker revealed a tidbit about his past to caller-Debbie. He said that many years past, he was almost killed by a big rig on a Texarkana Bridge.

Bob Brinker's Saturday guest-speaker was Laurence Kotlikoff
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Moneytalk 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: kgofeedback@yahoo.com

Saturday, at the end of hour-three, Bob Brinker made the announcement that he will be hosting Moneytalk on Sundays only, beginning June 6th. Blog readers have known that for a couple of weeks now. 8)


Dixiegeezer's Parrots in Love:


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28 comments:

Dan G said...

No kidding! The guest host is none other than Bob Brinker? Gosh, maybe I'll listen after all. Or maybe not.

Bluce said...

AHAHAHAHAHAHAHAHAHAHAHAHAHA!

Bob Brinker giving a lecture on bear market detection!

He said something like, "When this correction is over, I think we'll see new highs . . . "

I'm pretty sure he means the market high of a couple weeks ago, Dow 11,000-something.

Hey Bobby, what about the Dow high of 14,000 nearly 3 years ago? How come you're not mentioning that? Don't we have to surpass THAT number to officially be out of the bear?

AHAHAHAHAHAHAHAHAHA! The bear market expert! If I hadn't heard it with my own ears, I wouldn't have believed it.

Veek said...

I've listened to Brinker since 1998. I've got to say that I started to listen to him and follow his advice at the very best time (for me). I started investing in the Fall of 1998, got out in January, 2000 and got back in in March 2003 (MOABO...remember that??) But like so many others, I followed it right down to the bottom last March. Shame on ME!! Anyway, listening to Brinker rant at the opening of today's show just reinforced my belief that his "model" is flawed. It does work "sometimes" but so does flipping a coin. Clearly the collapse of 2008-9 was caused by factors that Bob DOES NOT take into account. Those factors are at work today and Bob continues to rant, whistling in the dark while the gremlins prepare their next "surprise" for him. And again, he won't admit that he was surprised!!!

Veek

Anonymous said...

It is clear he has put himself in a position where he will ride it down again because he will never say he was wrong.

He truly has become a member of the Church of Buy and Hope he use to bash at least a couple of minutes each broadcast.

Bartee said...

my brother julian has warned me that the market will crash in sept as all the derivatives will crash... I am worried ,,, I am beginning to question bob brinker and his advice...is he headed for a permanent vacation ??? hummmm

Bluce said...

Honey wrote at the end of the commentary: "Saturday, at the end of hour-three, Bob Brinker made the announcement that he will be hosting Moneytalk on Sundays only, beginning June 6th. Blog readers have known that for a couple of weeks now. 8)"

When he said "Stay tuned for a program note when we come back," I thought "It can't be."

I was really surprised to hear him actually announce it. Because of the way he is about so many things, I expected him to never even mention it.

Honeybee said...

Bartee,

Yesterday at the very end of the program (so callers couldn't question him?), Bob Brinker announced that he will only do Moneytalk on Sundays beginning June 6th, so that is halfway to a permanent vacation.

He made a point of "thanking" those who honored his "request" to only do one day a week.

I'm not buying it, but that's just my personal opinion based on the fact that some stations have already dropped Moneytalk altogether.

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Honeybee said...

Bluce,

It surprised me a bit too. But my take on it is that he wants to be on record claiming it was HIS decision.

Do you buy it?

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Honeybee said...

Anonymous,

Bob Brinker has been a member of the "church of buy and hold" since March, 2003.

All of his market-timing talk is nothing but HOT AIR! And the amazing thing is that he totally gave himself away yesterday.

Note that he covered his arse for missing the over 50% megabear by claiming it was an "exogenous event." He's had that excuse on the table for ten years or more.

Note that he also covered his arse for riding the market down up to 20%. He knows that the market doesn't often drop more than 20%, so he seldom has to worry about looking like a dope for missing sizable corrections.

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Jason said...

All of his market-timing talk is nothing but HOT AIR! And the amazing thing is that he totally gave himself away yesterday.

Brinker is just another glaring example of the futility of market timing. Brinker got ONE lucky call and even that was a partial call because he was afraid to go completely to cash.

I haven't seen ANY published market timing systems that consistently beat the market.

...What it all means is you can get great short-term market timing performance with anything from coin flipping to astrology, but FEW, IF ANY "MARKET TIMING SYSTEMS" CAN BEAT THE MARKETS OVER THE LONG TERM.

Most of us rely on asset allocation and careful stock selection to match or beat the markets slowly over the long haul...

Kirk


http://kirklindstrom.blogspot.com/2008/11/donald-bradley-turn-dates-for-2009.html

Kirk said...

Honeybee wrote:

Yesterday at the very end of the program (so callers couldn't question him?), Bob Brinker announced that he will only do Moneytalk on Sundays beginning June 6th, so that is halfway to a permanent vacation. He made a point of "thanking" those who honored his "request" to only do one day a week.

If it was HIS REQUEST, then it might have been a CHOICE to do none or one day a week. Thanking the network for not cancelling his show if he could get his ratings up by being more forthright makes sense.

Larry Kudlow's ratings have soared past Brinker's and many affiliated stations made the switch to Kudlow on Saturday already.

Yesterday Brinker obviously changed how he does the program by discussing his current market views during a downturn and how his model parameters were still bullish (as he reads them). This sort of discussion has been mostly absent since many web sites and blogs started to post summaries of what he said on the air over 10 years ago...

Anonymous said...

I just wish he would retire completely so we can listen to real news worth financial information.

Dan G said...

Did I just hear him right? Did Brinker say that we are still in a secular BEAR market that started in 2000? I thought he abandoned that some time ago and said the secular bear was over and we were in another secular bull trend.

I could be wrong (this would be the second time--the first time was when I thought I had made a mistake), but that's what I remember. Anyone?

jeffchristie said...

Dan

You are correct. I noticed it too. Today Brinker was ask by a caller around 40 minutes into the first hour about the status of the secular bear market. Brinker said we were still in it after 11 years. Honey has document Brinker's statement in 2007 that the secular bear market ended in 2006. To read all about it put "secular bear" into the search box at the top of the front page and search the Blog.

Jim said...

Brinker spoke a "half-truth" today, as he has many times. He told a caller he took some money out of the market in 2000, then put it back into the market in March 2003. WRONG! He could only put half of his initial cash reserves back in during March'03. The other half was put back in much earlier for the QQQQ trade. I wonder why he didn't mention that? LOL.

Honeybee said...

Dan and Jeff,

I had visitors this afternoon, so didn't hear Moneytalk. But Jeff sent me the time and hour, so I listened to that part of the program by downloading it from KGO.

You are both right. Brinker is either going senile or he is a bald-faced liar.

In the June, 2007 Marketimer (when the market was nipping at breaking its all-time highs), he claimed that the secular bear market that started in 2000 had ended the prior year in June, 2006.

Of course, he never mentioned that change on Moneytalk, and anyone who subscribed after June 2007, won't have a clue that he is lying.

And I'd betcha whatever you want that most of his subscribers are new since the market bottomed in March, 2009 and he started his timing hocus-pocus again.

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Anonymous said...

I love this. The market is down, for the year and the decade... and Brinker says it and everybody is wrong. Can't make this stuff up.

My amazement is that Brinker can even afford to retire after the drubbing his real estate and equities portfolio has taken over the last decade.

Look on the brightside: Brinker is in the black with GLD!

Cat Bird Seat said...

Mr. Klarman is president of the Baupost Group, an investment firm in Boston that manages $22 billion. His three private partnerships have returned an annual average of around 19% since inception in 1983—and nearly 17% annually over the past decade, as stocks went nowhere.
..
Mr. Klarman specializes in buying securities that nauseate other investors. As the credit crisis exploded, he put more than a third of his assets into high-yield bonds and mortgage-related securities. I asked him what he had meant, in a recent letter to his clients, when he compared the financial markets to a Hostess Twinkie. "There is no nutritional value," he said. "There is nothing natural in the markets. Everything is being manipulated by the government." He added, "I'm skeptical that the European bailout will work."
..
Mr. Klarman said, "The government is now in the business of giving bad advice." Later, he got more specific: "By holding interest rates at zero, the government is basically tricking the population into going long on just about every kind of security except cash, at the price of almost certainly not getting an adequate return for the risks they are running. People can't stand earning 0% on their money, so the government is forcing everyone in the investing public to speculate."
...
Mr. Klarman pointed out that his own ideas "on bottom-up opportunities in undervalued securities are more likely to be accurate than my top-down views on what's going to happen in the world at large." In other words, while you might want to insure against a disaster scenario, you shouldn't bet the ranch on it.

And, said Mr. Klarman, one of the best ways to protect against a decline in purchasing power is to buy whatever is "out of favor, loathed and despised." So forget about gold or other trendy hedges. Instead, wait patiently for markets—European stocks, perhaps—to get so cheap that they turn most investors' stomachs. Then you can pounce.
"

Full story here

Dan G said...

This post will be on TA and support levels, so Jason ("it don't work!) should cover his eyes and grit his teeth.

The major indexes are once again at a major support area (eg, Dow 10,000) which stopped declines in February, and in the "flash crash", and finally in the latest drop. We are in that area now, and the Stochastic Oscillator is oversold and looks to be just turning up.

So even though we haven't had a "follow through" day yet, this would appear to be a low-rish area to buy a moderate position, but with an eye on the exit if that level is breeched significantly. Just my thoughts.

OK, Jason can open his eyes now. TA BS is over!

Jason said...

And I'd betcha whatever you want that most of his subscribers are new since the market bottomed in March, 2009 and he started his timing hocus-pocus again.

Didn't Brinker even say once that NOBODY could forecast a secular bear market until it was already here?

Anyway, since Brinker's record as a market timer is disastrous why would anybody believe this secular bear market call?

Market timing is a fool's game and I agree with Kirk when he says NOBODY CAN TIME THE MARKETS...

"...I don't believe anyone can time the markets..."

-Kirk-


http://bobbrinkerfanclub.blogspot.com/2009_03_01_archive.html

Cat Bird Seat said...

Jason, when did you start advertising for Kirk?

The link you provided goes to a period in time when Bob Brinker was so scared of the markets he took off his buy the dips and DCA to "wait for a test of the lows" or some nonsense.

But the link you gave says right at the top, note the date:

Tuesday, March 31, 2009

Message to Bob Brinker Fans:

Did your current investment newsletter tell you to raise cash by taking profits near the market top in 2007?

Mine did! I took profits to increase the cash position of my most aggressive "explore portfolio" to 30%.

* See the October 2007 "Take Profits" page from my newsletter

Did your current investment newsletter tell you to use cash raised when the markets were near their highs to buy a blue chip DOW stock when the markets were at their lowest levels in 13 years?

Mine did! When the markets made a 13 year low, I had cash in the portfolio and told my subscribers to use some of it to buy some General Electric (GE Charts) shares at $6.76."


Did Kirk pay you?

Stalker Police said...

Jason wrote "Anyway, since Brinker's record as a market timer is disastrous why would anybody believe this secular bear market call?"

That is the point I get from reading this blog.

I don't understand why you keep quoting Kirk. Who cares, this is a blog about Brinker.

Anonymous said...

My amazement is that Brinker can even afford to retire after the drubbing his real estate and equities portfolio has taken over the last decade.

He can retire very comfortably from the suckers that bought his newsletter.

Jason said...

My amazement is that Brinker can even afford to retire after the drubbing his real estate and equities portfolio has taken over the last decade.

What makes you think Brinker's portfolio has taken a drubbing?

I've heard him talk about his extensive Muni holdings and for all we know, he may have been heavily into munis over the last decade and done very well.

That's what Suze Orman does. She dishes out financial info right and left but stashes all her dough into tax free muni bonds.

Suze says she only has a million bucks in the stock market and doesn't care if she loses that.

Munis are her choice for virtually her entire portfolio.

Bluce said...

Honey wrote: "Bluce,

It surprised me a bit too. But my take on it is that he wants to be on record claiming it was HIS decision.

Do you buy it?"


No, I agree with you.

Dan G said...

The 10,000 Dow support is in big danger tomorrow as the Dow futures are now (12:30am) pointing to a trashing of the market tomorrow, at least on the opening. Dow Futures now down 187 points! This does not look good for the bulls.

Dan G said...

Bear market? Well, if you are a Dow Theorist, you might say so. A lower high followed by a lower low in the Dow industrials and the Dow Transportation Indexes. But that's only if we close this way. In any case, it's not pretty now, that's for sure!

Dan G said...

Quite a nice comeback today which avoided closing at a new low and signalling a Dow Theory sell signal. Good work, bulls! They MAY be able to pull this thing off afterall! But tomorrow is another day.

Notes



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