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Wednesday, July 28, 2010

Bob Brinker's 5 Root Causes of Bear Market Not Present Right Now

Bob Brinker reviewed what he believes are the 5 root causes for a bear market on Moneytalk on May 22, 2010.

Bob Brinker remains bullish and says that none of the 5 root causes for a bear market are currently present.

Excerpts from Moneytalk, Bob Brinker said:
"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.......

[Tight Money].....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.....

[Rising Interest Rates]......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.......

Hyperinflation, rising inflation].......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......

Rapid Economic Growth].....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.....

[Over-valuation]....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."

Excerpts originally posted here [LINK]

Dixiegeezer took this beautiful picture. I'm not sure what kind of plant it is:

Sunday, July 25, 2010

July 25, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

Bob Brinker is not hosting Moneytalk today. Bob Brinker's replacement-host is Lynn Jimenez. Jimenez is a business reporter for KGO810 radio.

Anyone that has any comments about Jimenez program today, please feel free to send them. I did not listen closely enough to even comment on it.

It seemed to me that the main topic was how to get help with mortgage problems. If anyone has need for this information and missed the program, you can go to KGO810 [LINK] and download the programs for free for the next seven days.

Let's review Bob Brinker's latest stock market and economic views:

Brinker believes that the stock market has been in a correction and that it will not correct more than 20%. In other words, he believes that the "cyclical bull market" within the "secular bear market" will continue and will reach new highs "down the road." [Of course, the new high he is shooting for is the April 2010 high of S&P 1217 -- certainly not the all-time-high in October, 2007 of S&P 1565.]

On July 11th, Brinker said (summary link): "Now if I'm correct that all we've been seeing here is a stock market correction in an ongoing cyclical bull market, we should see a lot of happy campers...... when the S&P 500 makes new recovery highs down the road. That would mean it would have to get above the April 23rd, 1217 closing level....."

ANOTHER NEW ALL-NEW-MONEY-IN SIGNAL: July 11th, Brinker said that he had issued another buy-signal in his newsletter on July 1st when the S&P was at 1030. He considers 1030 an "attractive for purchase" level, but recommends dollar-cost-average at higher levels.

Last week (summary link), Brinker said that he likes the yields, but is very selective about the fund he recommends (he recommends Vanguard, of course).

Brinker advises extreme caution when buying them, especially in California.

Brinker said this on July 11, 2010 (summary link): "....Frankly, I don't see this double-dip recession that we're hearing so much about out there from certain quarters. Now I know that many are out there that just trying scare the wits out of you with their double-dip forecast, but I want to share with you that I just don't see it."

My daughter and son-in-law were out bike-riding this afternoon and took this picture of Almaden Reservoir in southern Santa Clara County. We've had slightly better than average rainfall in the San Jose - Santa Cruz area this past year.


Sunday, July 18, 2010

July 18, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

July 18, 2010, Bob Brinker hosted Moneytalk today.

STOCK MARKET....Bob Brinker recited closing market numbers, pointing out that it seemed to him like the Dow has been around the 10,000 mark for a "lifetime." He said that the Dow, S&P and Nasdaq all dropped about 1% last week after the big rally of about 5%+ the week before.....The S&P is about 12% below its April 23, 2010 closing high....and down 4 1/2% since New Years Eve -- not counting the dividend.

INTEREST RATES....Brinker said that nothing much has changed and recited Treasury rates.

Brinker said the Treasury market implied inflation rate is 1.7% annual over the next ten years.

.Bob Brinker said even though we hear much talk about a double-dip recession, he does not agree - "....not by a long shot."

Brinker gave the following reasons why he believes the double-dip bears are wrong:

1. There is a positive Treasury yield curve by a margin of 380 basis points -- Brinker said: "That's not what you see when you are going into recession.....If you go back to the mid-1960's, every time we've had a recession, it has been preceded by an inverted yield curve. An inverted yield curve simply means that short rates are higher than long rates. We have the opposite of that right now."

2. A few months ago, people were really worried about what's going on in Europe. Greece was a train wreck but it only represents about 2% European Union GDP. Since the Greece-bailout, "....the problem has been contained......The whole situation involving Europe has cooled down big time." They have successfully defended the Euro and it has rallied...this reduces the inflationary force in the United States which happens when the dollar is too strong.

3. Corporate profits are increasing at a nice pace.....75% of companies that have reported for the second quarter are exceeding expectations...corporations are sitting on close to a $Trillion in cash....and balance sheets have strengthened.

"There's no question about it, we have seen a correction in this stock market. And frankly, it's been a correction that has been totally within the parameters that we laid out on this broadcast this year for a correction.....Now one the things we said is for this to be the kind of correction that would make sense in 2010, that we would want to see a correction which would be less than 20%. Well we've had that.....

........Now we've been down as much as 16% on a closing basis in the S&P 500, when we down in the 1022 - 1030 range earlier in the month. And that was when I upgraded on July 1st to attractive-for-purchase. Prior to that we had been on a dollar-cost-average recommendation in my investment letter.....On the first of (July) we upgraded that to attractive-for-purchase down there in that range where the market closed June 30th at 1030.....I do believe when the market is down in that range, that it makes sense to be a buyer in this market. That's my view as I published it in the investment letter at the beginning of the month......

.......When that market is down in the low-ten thousands and certainly that's within the 1022-1030 area - in that vicinity as well - and when the market is down there, yes, I do rate the market as attractive-for-purchase. We've already had a terrific opportunity to do that earlier in the month. But if the market were to go back into that area, certainly that is the way I would view it. I would it view it as attractive-for-purchase. I would view it as attractive-for-buying if it went back into that area. Now right now, it's not in that area, so we dollar-cost-average at 1065. But if that market were to go back into that area, yeah absolutely, I would consider that to be an opportunity, just as we already had an opportunity earlier in this month to be a buyer. I'm Bob Brinker, this is America's money program...

[Honey EC: Anyone remember in 2008 and half of 2009, as the market lost 57% of its value, there were months and months that I typed words like these in my summaries:
"Bob Brinker did not talk about the stock market today, and no callers had any questions about it."]

"Actually on page 7 of my investment letter, I publish a fixed income portfolio for those that are looking for a diversified fixed income approach. This is generally for those people who are not interested in stock market investing."

Honey EC: The fixed income portfolio on "page 7" of Marketimer that Brinker is talking about
lost 2.1% in 2008. And even though it was never revealed on any Brinker website, Mark Hulbert reported:

fixed income advisor model portfolio #1 lost 21.7% in 2008
Brinker's fixed income advisor model portfolio #2 lost 11.5% in 2008
Brinker's fixed income advisor model portfolio #3 lost 5.2% in 2008

Brinker continued: "And we have included a portion of that portfolio in the high yield area, the so-called junk bond area. I like the yields in that area. I want to be very selective. We recommend a specific fund in the letter.....I think the yields in that area are pretty darn generous when you contrast those with the other yields that are out there. And I don't mind having a reasonable holding - certainly not a gigantic holding - by any means in that particular area. I think it's a way to enhance the overall yield of a diversified fixed income portfolio. Now remember these are taxable.....If you're in the top bracket in California, then you're paying a lot of taxes......You're probably paying 50% as we go into next year with the Federal tax increases that we are expecting in January......So you'd always have to compare that with the after-tax yield of a municipal fund....."

[Honey EC: As Brinker pointed out, the Vanguard GNMA Fund is now selling for $11.04 + a 7 cent distribution. Let's hope that Brinker is closer to being correct on the down-side than he was on the up-side. He's been saying for years that he expected the price range to be between $9.50 and $10.50....

....Several times today Brinker commented that some people had sold their GNMA Fund too early. Hey Bob! Is it possible that they did that because you repeatedly have said that $10.50 was the top of the price range? At least until the price went embarrassingly higher than $10.50, then you stopped saying it - and you sure didn't say it today. LOL!]

SHAKY MUNICIPAL BONDS...Brinker said: "Do keep in mind that a lot of the municipalities out there are really dealing with shaky finances. You've already seen yourself the bankruptcy filing in Vallejo, California......And it wouldn't surprise me to see additional bankruptcy filings. Particularly, in places like California where some of these places of these municipalities have promised excessive benefits. And as a result, in order to try to pay them, they are going to find that they don't have the money. And then they try to raise their taxes and then they'll find people fleeing the area rather than paying for these excessive benefits. And it could be a negative self-fulfilling prophecy for some of these municipalities that have over-extended themselves with the guarantees they've given the unions......"

VALUE ADDED TAX (VAT): Brinker said:
"I think they have another idea in Congress. I think that idea is to raise taxes through what most people would regard as a stealth tax. And that would be the value-added tax program. I think there are people in Washington that are very impressed with the revenues that are being raised below the radar in Europe through the very vigorous value-added tax program in Europe. And I think there are people in Washington that are looking for the value-added tax as the next windfall for Federal revenues. And I would not be at all surprised if going down the road, their intention is to raise taxes through the value-added tax effort."

Bob Brinker's Miscellaneous Tidbits and Viewpoints:

* Amazingly, Goldman Sach got away with a $550Million slap on the wrist when they settled their dispute with the government -- about 5% of company annual earnings. A cynic might think that some nice donations to candidates might come out of it....

* The housing market is in a "malaise" at this point because the foreclosures and short-sales are putting price pressure on existing homes as well as new homes. Close to 90% of home sales are existing homes.

* Unemployment is "stubbornly high."

* The leading economic indicators come out on Thursday and are expected to confirm that the economy is slowing down in the third quarter.

* Two ways to protect yourself from GNMA Fund NAV risk: 1: Switch to an insured, laddered CD. 2: Set a mental stop at a level at which you would automatically sell out.

* Small businesses and entrepreneurs are not hiring because of concerns about the health-care bill and possible new taxes.

Today, he claimed he would. In answer to a caller's question about investing his kids college funds over the long-term, Brinker recommended the Vanguard Total Stock Market Index or VTI. Then Brinker added: "I cannot guarantee you that I would recommend staying in for five to eight years because if things change down the road, it may be necessary to take a defensive posture. And if that's the case, and if I identify that opportunity, I will act on it, obviously in my investment letter."

Bob Brinker's guest-speaker was Sebastian Mallaby:

To Go is Available on Demand Totally Free at KGO810 radio for seven days after broadcast. Moneytalk has been canceled on all Saturdays. The Sunday program is archived in the 1-4pm time-slots. To download and listen later, 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:

This morning, my daughter and son-in-law took this picture in Saratoga while bike riding (click to enlarge pictures):

My Idaho sister-in-law and brother are baby-sitting a family of robins on their porch. This close-up was taken with the aid of a mirror. Three days old here:


Tuesday, July 13, 2010

Bob Brinker Moneytalk-Deja Vu

Last Sunday (July 11, 2010) Bob Brinker discussed the stock market and the economy at length. Bob Brinker is very bullish and issued another buy-signal at S&P 500 Index 1030 on July 1st. He talked about how he has been criticized for his optimism and lack of bearishness.

As you read my Moneytalk Summary (see prior post) of Brinker excerpts, many of you who have been following this Blog for awhile, may have felt it was deja vu -- that you had read it all before. Yep, you have -- almost verbatim.

As the 57% Megabear decline of 2008-2009 was just getting started, this is what Bob Brinker was saying on April 19, 2008:

Brinker said:
“....Stock market sitting in at 1390 on the S&P 500 Index. Now the all-time high recorded last October at 1565 prior to the correction, and we’ve had the correction. In my opinion, it came and it went and it’s in the history books. And right now, we are in a position where investors are looking ahead. I think they are looking ahead to an economic recovery down the line and that’s why we’ve seen the market improving.”

Brinker said:
“You’ve heard me say on the broadcast, I think we are going to new all-time-historic-record stock market highs by 2009. I think by the time we get into 2009, we are going to be talking about all-time-historic record highs on the S&P 500 Index. But I know what you are talking about, I see it all the writings….in talking heads. They are talking down the United States of America. They are talking down our economy………(Caller John: “Do you think people tend to focus too much on short-term?”) "Oh, absolutely, absolutely, I know this for a fact because when we have gone through this recent bottoming process, and certainly we have worked very, very hard to identify the bottom that I believe that we did accurately identify in the first quarter.

It’s my opinion that the March 10th (2008)
[Honey EC: Actually, the low was March 9, 2009 at S&P 677!) low on the S&P 500 was the bottom for the correction. And I think that what happened was that was a very successful test of the initial low recorded January 22nd. You might remember the S&P 500 closed on January 22nd in a very high volume panic-atmosphere at 1310. Well we knew, that despite the fact there’d be some short-term rally.......back then, we knew there was going to have to be a successful test of that low. And we knew what was required of that test before it occurred. Now that is exactly is what happened. And the closing test in March was, actually it was less than 3% below the initial low established on January 22nd. So we are talking about a text-book testing process in that correction low that we looked at.

Unfortunately, unfortunately, and I’m sure you’ve heard this, there were a lot of people out there, and I mean a lot of people out there, who got it completely backwards off that correction low and that successful test……I’ve been telling people, going to, actually to February because we do this through the investment letter, of course, I’ve been telling people to actually use periods of weakness to buy into the market at specifically down in the low-1300’s or any minor weakness just below that level, which we got a little bit of there on March 10th and in mid-March, to take those opportunities to add to positions if you’re looking to add to positions – no mention, no thought of selling anything into this kind of weakness……”

Caller John concluded by saying: “I took your recommendation, Bob. When it was below the 1300’s I added…….I’m just glad I got you, your son and the Marketimer on demand.

Brinker said: "And just for the record, I’m right with John. I was the exact same thing that John was doing. When we saw that weakness on the correction test into the low-1300’s and that very, very minor weakness that we had just below that level for a very short window of time, I was doing the same thing that John was doing – which was adding to positions."

Brinker continued: “And if John is seeing people crying now about the fact that they sold out of the market at the bottom, how do you think those people are going to feel in 2009……if I am correct........and this market recovers to record highs in 2009, how is somebody is going to feel that sold out of the market at 1300?.......this is Moneytalk.”

BAD NEWS BEARS…..Brinker said: “Those who are out there with the bear stories now are making fools of themselves because it just doesn’t compute does it? When you have a market that’s seen this kind of buying it just doesn’t compute……. that America is spiraling downward – doesn’t make any sense.”

Brinker, in answer to his guest speaker’s direct question, “Are you still bullish," said that he thinks we are going to have “new record highs in the stock market by next year” but that a lot of people think he’s lost his mind. Brinker added: “We’ll see who wins out. I’m pretty confident of my forecast…..”
Brinker monologue cont: "...........if you are looking for the market into 2009, then obviously, you should be feeling pretty good about your stock market portfolio. Because not only has it shown a very nice advance since the correction lows in March, but in addition to that, I think it has a lot further to go. And I continue to expect, as I have said, that we will see new all-time-historic-record highs in the S&P 500 Index."

Honey here: Brinker said ALL of that above on April 19, 2008. It is archived here in my Summary on that date.

The S&P has never recovered to the 1300's level that it was when Brinker said he had been buying -- never mind 1390, where it was when he said he was feeling sorry for anyone that sold at 1300.

Earlier this year, I asked if anyone had used the hanging tomato planters. Some of you had...I was very late getting mine planted, but it sure is fun to see how well it is doing. I started with a very small home-started plant that my daughter gave to me. Look at it now:


Sunday, July 11, 2010

July 11, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

July 11, 2010....Bob Brinker hosted Moneytalk today. Bob Brinker talked about the stock market at length today, even citing from his July Marketimer. I have transcribed most of the excerpts from his long opening monologue:

Bob Brinker said:
"If you're a regular listener to this program, you're well aware that I've been talking for the past couple of months about the fact that we've been experiencing a stock market correction which began at the end of April and continued into the summer season.....I've said that stock market corrections are computed this way -- they are declines of less than 20% on a closing basis in the S&P 500 Index......Now there's nothing unusual about stock market corrections......they occur on a regular basis. But the thing that always tells you you've been in a correction is that when they play themselves out, they are followed by a resumption of the uptrend that was in place prior to the correction. When you're in a cyclical bull market that's what happens.....

.....And the major call that I made was that this is not a new bear market. Was I criticized for that call? Absolutely. There were people out there that said I had lost my mind. That we had entered a new vicious bear market that would carry to new lows......I disagreed....I believed it is a correction in an ongoing cyclical bull market and that is what I believe today.....

.....Now, if you are wondering why I upgraded the stock market to a buy when my investment letter was published online at Bob on Thursday, July 1st, I will address that as well.....

To begin with, as I said on this broadcast several weeks ago, we had the possibility then that a buying opportunity would develop if everything fell into place on this correction. Otherwise, as you know, we were on a dollar-cost-average recommendation. We did not have an outright buy recommendation......We did not have an attractive-for-purchase stock market backup when we were near the highs, or in that region.....
Honey EC: Brinker claims he did not have an "outright buy recommendation." That is not quite true. After he totally missed the bear bottom in March 2009 and the market turned up, Brinker began to continuously advise "buy on weakness" -- while carefully NOT defining what he considered weakness.
However, Brinker did define "buy on weakness" as "attractive-f0r-purchase" and also as a "buying opportunity." Here are two examples, one in 2009 and one in 2010 (there are more):

Marketimer, April 3, 2009, Bob Brinker said:
"We regard the market as attractive for purchase during periods of weakness....."

Marketimer, March 4, 2010, Bob Brinker said:
"In summary, we are maintaining our fully invested position in all Marketimer model portfolios. We continue to view short-term periods of weakness as buying opportunities for subscribers looking to add money to their equity portfolios."
Brinker continued monologue: ......And so there was the potential, as I described on the broadcast a few weeks ago to upgrade the stock market to attractive-for-purchase. In other words, to buy. So that lump sum purchase could be made at favorable price levels -- that's the whole idea. To time a favorable level to buy into the market. That's the whole idea of that upgrade. It took a lot of patience because the correction began back on April 23rd when we made the 2010 recovery high in the S&P 500 Index of 1217. Now the broad-based index, the S&P 500 was down 16% on the night of June 30th, closing at the 1030 level.....And on the next day, Thursday, July 1st, my investment letter which went online that morning, cited that that level, the close of June 30th, 1030 region, that level of prices close to that level were attractive for purchasing the market. And prices in the low-1000's -- and certainly 1030 is right there -- in that range of the S&P 500 Index is what I was talking about, and specified at that time back on Thursday, July 1st.....

.... Now subsequent to that, the S&P 500 Index closed on that day at 1027. The next day was Friday, July 2nd, and the S&P closed at 1022. The next market day was Tuesday, July 6th, following the holiday weekend and the S&P again closed in the same region -- 1028 was the close. All of these closes.....were all within less 1% of the Wednesday, June 30th close of 1030, when I upgraded the stock market to attractive-for-purchase when my letter went online on Thursday, July 1st.......
Honey EC: The July 2010 Marketimer that Brinker is citing on page 3, Brinker said: "We expect the S&P 500 Index to trade into the 1275 to 1325 range by next year based on our current economic assumptions."
Brinker continued monologue.....Now if I'm correct that all we've been seeing here is a stock market correction in an ongoing cyclical bull market, we should see a lot of happy campers...... when the S&P 500 makes new recovery highs down the road. That would mean it would have to get above the April 23rd, 1217 closing level.....
Honey EC: I certainly hope Brinker is right this time. I would be one of his "happy campers" if so... But be aware that Brinker issued 6 buying opportunities during the course of the 2008-2009 Mega-bear market. The S&P is still below all of them except the last one -- which he retracted just two months after issuing it because the S&P had continued to drop.

Please note that Brinker HAS NOT ISSUED A SINGLE SELL SIGNAL since August 2000 when he raised his cash position to 65%. Brinker has not recommended raising even ONE DOLLAR of cash since he became fully invested in March, 2003!
Brinker continued monologue....There have been some things going on out there that I think are going to be favorable for stock market investors going forward.....I think it's important to those who are interested in the stock market and I sure am and I know many of you are as well.....Let's take a look at the Euro. The Euro has been showing some serious signs of stabilization........And the German economy, now you know the German economy is the ax for Euroland and it's growing very nicely, indeed......There is more.....

.....We're hearing rumblings from Washington DC that the qualified dividends tax increase scheduled to take effect in January possibly could be capped at as little as 20% starting next year. That would be a big deal because currently, it is scheduled to rise to the new top Federal income tax level which looks like it will be 39.6% next year. You take a tax from 15 to 39.6, that's almost triple. You take it from 15 to 20, it's not a big deal......Maybe even some of the redistributionist in Washington are realizing that this is just going to far.....We'll keep an eye on this.....

.....They should reduce the top corporate rate to 25% to make American companies competitive with other industrialized countries.....Our maximum corporate rate of 35% is just too high and it is not fair......And they should allow full same year expensing of business investment.... Believe me, that would stimulate the economy. .....There's more to talk about about this stock market. I expect strong profit year for 2010 for US Corporations.....And you know earnings are the life-blood of stock prices.....And I think if profits are strong this year, that is something investors are going to be pleased with. But it doesn't stop there. There's more.....

.....Frankly, I don't see this double-dip recession that we're hearing so much about out there from certain quarters. Now I know that many are out there that just trying scare the wits out of you with their double-dip forecast, but I want to share with you that I just don't see it. It's not in the metrics that I study. Let's start with railroad traffic. Rail car loadings are strong. You don't get strong rail car loadings when you're heading into a recession.....So I think they are off the rails on this forecast of a double-dip.....

......Another point on this....There's a very positive slope in the yield curve right now and that is not an indication that you're going into a recession. That's not the way it works.....So I think the double-dippers are wrong..... I think that investors are going to be better off down the road than many people believe.....
......There's still food out there for the nattering nabobs of negativity. They can worry about that European debt, and that government spending gone wild, and that high unemployment, and more government regulation, and higher taxes ahead....There's still food for them. I'm not one of them.....I'm Bob Brinker"

Bob Brinker's guest-speaker was Suzanne McGee:

Moneytalk To Go is Available on Demand Totally Free at KGO810 radio for seven days after broadcast. Moneytalk has been canceled on all Saturdays. The Sunday program is archived in the 1-4pm time-slots. To download and listen later, 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:

Dixiegeezer took this picture and framed it:


Friday, July 9, 2010

Top CD Rates at Largest Banks

Article by Kirk Lindstrom: I wish Bob Brinker would talk more about how savers in the US are bailing out over spending politicians and the banks via extremely low interest rates. Those of us who didn't buy houses we could not afford with "normal interest rates" and who have saved money are probably paying more via reduced interest income than "regular tax payers." FOR SURE we are certainly paying far more (in lost income relative to inflation) than folks who "lived larger" than they could afford then left the banks, taxpayers and savers to pay for their excesses when their homes were foreclosed and/or abandoned.

"Highest CD Rate Survey + Current US Treasury Rates"
Rate (APY)
(Click link for Full Rate Sheets)
Vanguard Daily
Vanguard Prime Money Market Fund
6 Month CD
Aurora Bank 
1 Year CD
Sallie Mae Bank & 1.50%@ Discover Bank 
1 Yr US Treasury
US Treasury Rate Quote
18 - Month CD
 Aurora Bank 
2 Year CD
Stonebridge Bank & Bank of Internet USA
3 Year CD
4 Year CD
 Bank of Internet USA
5 Year CD
Astoria Federal Savings Bank
5 Yr US Treasury
US Treasury Rate Quote
7 Year CD
Pentagon Federal CU aka PenFed 
10 Year CD
Discover Bank
10 Yr US Treasury
US Treasury Rate Quote
Vanguard Money Market Rates shown for Reference 

Full CD Rate Table at  Very Best CD Rates

How many of you remember getting double digit interest rates on money market funds and CD accounts in the 1980s?
Currently, year-over-year CPI inflation is at 2.0% yet the top 2-YR CD term of the five largest banks is only 1.50% at Chase Bank! We are losing money, when adjusted for inflation, by holding it in safe CDs, savings accounts and especially US Treasuries!!

I heard on CNBC-TV that banks have over one trillion US dollars above what they need to be "well capitalized" yet they don't lend it out because they are afraid they won't get it paid back. I suspect there is more to it such as they still have bad mortgages on their books that will require that capital if we get a double dip recession so they are being safe. Since they have all this money, they have no incentive to pay high interest rates to attract more deposits.
CD Rates - APY in %
as of 7/9/10 for $10,001

6- Mo
12 Mo
Bank of America (BAC)
JP Morgan Chase (JPM)
Bought WaMu
Citibank (C)
Wells Fargo Bank (WFC)
Bought Wachovia
27 Mo
35 Mo
58 Mo
HSBC Bank North America -
Branch Rates
HSBC Online Rates
US Treasury Rates
See the full survey at CD Rates at Largest US Banks
It is amazing to me how CD rates have worked their way down to nearly nothing since I graduated UC Berkeley in 1979.
Check out these historical CD rate graphs
1-Month CD Daily Chart
Click charts to see full size images
6-Month Certificate of Deposit Historical Chart
6-Month CD Daily Chart
6-Month Certificate of Deposit Historical Chart
Related information:
With rates so low, banks will try to sell you their annuity products. Make sure you read my article: Beware of Annuities

Friday, July 2, 2010

Bob Brinker Says Market Attractive for Purchase Now

On Moneytalk, Bob Brinker is on record saying that the stock market is simply "correcting," and he does not believe it is headed for a 20% cyclical bear market decline this time.

Bob Brinker wrote in the June 2010 issue of Marketimer: "We will continue our effort to identify the cyclical bull market opportunities while doing our best to take a defensive stance during the cyclical bear markets. For now, we are maintaining our favorable stock market view in what we view as a continuing cyclical bull market."

Bob Brinker's model portfolios have remained fully invested as the S&P 500 Index has now declined 6.7% year to date and 15% since the recent April 23, 2010 market high (1217). How well have his portfolios performed during this "market correction"?

Data compiled from

Model Portfolio I:
As of 4-30-10: $249,377
As of 6-30-10: $217,994
Down: 12.6%

Model Portfolio II:
As of 4-30-10: $208,652
As of 6-30-10: $182,294
Down: 12.6%

Model Portfolio III (50% bond funds):
As of 4-30-10: $209,835
As of 6-30-10 $195,123
Down: 7%

Since April 2009, Bob Brinker has recommended "buy on weakness." Now that the S&P 500 Index has corrected 15%, Brinker says that it is "attractive for purchase." The S&P level that equals a 15% decline from the April 2010 high, is 1030.71.

The S&P closed at 1023 today (July 2, 2010).

Dixiegeezer took this lovely "field of waterlilies." Reminds me of a great Monet masterpiece:


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