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Sunday, March 27, 2011

March 27, 2011, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

March 27, 2011....Bob Brinker hosted Moneytalk today....

Bob Brinker’s comments paraphrased, summarized or excerpted:

….Had a very good week. The S&P 500 Index was up almost 35 points to 1313.80, bringing calendar year 2011 returns to almost 5%. That is within 2% of its 2011 closing high. Other indexes following along.... A minor correction because of what happened in Japan, but has almost completely recovered.

...The Middle East is in turmoil and instability continues.....Syria is not a major oil-producing nation. Iran is a big deal when it comes to oil.
Brinker said: "Why did the United States smoke the peace pipe with a tyrant like Maummar Gaddafi a few years ago. Well he's still a tyrant. Now he's not smoking the peace pipe. Instead we are dropping artillery over there.....This is very bad news for Israel, by the way.....The big oil is in Saudi Arabia.....And it doesn't appear likely that it will end soon in terms of middle east unrest, and that has pushed oil up to $105 a barrel, and $115 a barrel for Brent, crude that is used for most of Europe and Asia."
Honey EC: I'm not sure when the United States smoked the peace pipe with Gaddafi -- anybody remember?

HOUSING INDUSTRY in the "dumpster."

.. Comes out next Friday....median private payrolls forecasted to go up 222,000.....expect to lose 27,000 more government jobs and that would bring net non-farm payroll gain to 195,000....very similar to the prior month.
Brinker said: "We are seeing much better new jobs growth. Really a remarkable turn-about when you consider the 8 million jobs that were lost in the financial debacle of 2008 and the period around there."
UNEMPLOYMENT RATE.....Projected to stay close to 8.9, where it is right now.

The Fed Chair will now have quarterly press conferences. It’s a good idea, because there is a great deal of misunderstanding and misinterpretation in the media about what the Federal Reserve is doing as they try to create an atmosphere for better jobs growth.

...exceptionally low.

: "They are fighting in Washington over minuscule spending cuts relative to the budget. I don't see anything in Washington today that would bring austerity. How are you going to get austerity out of a senate that's controlled by the Democrats? How are you going get austerity out of a White House that has been proposing trillion dollar plus annual deficits......It's not going to happen.....My opinion is that this president will not endorse an austerity program. And under the current make-up of the Senate, I don't think that they will endorse an austerity program. So I don't think it's going to happen in the foreseeable future with the current make-up of those governing bodies."

Honey EC: Brinker is clearly correct about that, but I was surprised to hear him be so candid about it.

"I'm in Las Vegas, Nevada. And here in Las Vegas, Nevada, real estate has been his as hard as anywhere in the country. In the State of Nevada, it's estimated that 65% of the mortgages are underwater, negative equity in about 65% of the mortgages. As well as 1 out of 7 properties setting unoccupied. It's been one of the worst real estate downturns, and we're not alone, California has seen it, Phoenix has seen it, South Florida has seen it......"

Honey EC: Brinker, like most everyone else, got hit hard by the drop in value of his million dollar penthouse condo in Lake Las Vegas. Some that are adjoining or nearby him are selling for under $200,000.


John from Fairbanks, Alaska, told Brinker that he was moving from Alaska to Washington and asked Brinker which he would recommend -- a 15-year or a 30-year loan on a new home. Brinker said that since John qualified for a 4 1/2% loan, he would call that free money and take the 30-year "free ride." Brinker also pointed out that John was moving from one no-state tax state to another no-state tax, but that he would no longer get the nice check for oil that Alaskans get every year. Brinker said that the people in Alaska are "absolutely wonderful people. We hear from them all the time."

Keith from California asked Brinker to explain the difference between a short-term correction and a minor pullback.

Brinker replied: The generally accepted language for a correction is that the market is down over 10% but less than 20%.....I think anything in the single digits is a minor pullbacks. Some people would call it noise. That's really what we've had here.....And my forecast, as I've given it on this broadcast has been very consistent on this point......And that is, and we started saying this earlier this year, and that was that we thought that pullbacks would be in the single digit category..... So you can always see short-term corrections in a cyclical bull market, which is what I believe we are in right now.......From my point of view, it's just provided those looking for an opportunity to dollar-cost new money into the market, to do so......

......Now we've had outright buy signals on the market over the past couple of years for those sitting with some money to invest. We have had a buy signal that we gave in the beginning of July last year when the S&P was around 1030........ And we upgraded the market at the beginning of July last year to attractive for purchase and we're glad that we did it.....And then prior to that in mid-January of 2009, we went out and said that we thought the market was attractive, and it was in the low-to-mid 800's at the time, by the way. Now it's at 1313, so that's a pretty big gain from back then....And the rest is history."

Honey EC: Brinker has a SELECTIVE memory, either that or he is DELIBERATELY misleading listeners into thinking he can accurately time the stock market. His January 2009, mid-800's buy signal was BEFORE the S&P dropped into the 600's in March, 2009, and AFTER he had issued multiple buy-signals in 2008 at much higher levels, including the mid-1400's (several times), the mid-1300's and the low-1200's.

And more importantly, in March 2009, he discarded the mid-800's buy signal and said he would have to look for a new market bottom. Here's what he said in the February and March 2009 Marketimers. Note the levels of the S&P:

Marketimer, February 2009 (S&P @ 825.88) Bob Brinker wrote: "....we recommend using periods of weakness in the low-to-mid 800's S&P 500 Index price range to add to positions. Our model portfolios remain fully invested."

Marketimer, March 2009 (S&P @696.33) Bob Brinker wrote: Due to the fact that the November 20, 2008 S&P 500 Index closing low failed to hold during the testing process, we believe a new bottoming process will be necessary in order to put an end to the bear market.”
Christopher from "Hoosierland" asked Brinker what fundamentals to look for when choosing a trading stock. Brinker said there were three things to look for: know the company, a lot of volatility and liquidity. Brinker cautioned against incurring tax bites on short-term trades, and the tendency to buy high and sell low.

Anthony from Milwaukee asked: "In your model portfolios, you have several International Funds. Would they protect against hyper-inflation in the United States?"

Brinker replied: "Well they certainly provide a cushion against a falling dollar.....Which is one of the several reasons we have international holdings in our model portfolios. We actually have international holdings in model portfolio I, II, III and also active-passive portfolio......And no question about it, one of the cushions that you get with an international weighting is that if you have a weak dollar that is going to accrue to the benefit of those holdings."

Honey EC: Yes, Brinker is correct. He recommends Vanguard International Growth Fund (VWIGX) and Vanguard FTSE All-World (VFWIX) in all of his portfolios -- never more than a total of 20% international in any portfolio, and much less in the balanced portfolio.

Walt from Illinois asked:
"What is your feeling about investing in silver bullion?"

Brinker replied
: "I've made it very clear that I regard silver bullion as an alternate to using gold bullion for those that want to have a precious metals hedge. And I've said on this broadcast that I prefer the exchange-traded fund approach, rather than going out and buying severely marked up gold or silver coins. I think you should not be surprised if it turns out that what you've bought is only worth half of what you've paid for it if you turn around and sell it. I hope everybody heard what I just said....That's an incredible statement that I just made.....

.....But if you want to buy gold or silver, you do the exchange-traded fund. By doing that, you buy gold bullion backing the exchange-traded fund GLD for gold, or you buy silver bullion backing the exchange-traded fund SLV for silver. When I first mentioned the GLD shares on this broadcast years ago, they were trading in the 50's, believe it or not. I recommended that specifically for listeners that wanted to have a hedge on gold....I said that's the way to do it. Sometime ago, I also mentioned SLV when it was trading in the 20's for that same purpose - for those that want to have a hedge.

Honey EC: Don't be mislead. When GLD was down in the $50 range, Brinker was VERY negative on buying gold and used to go way back to the time when it was $800 an ounce and point out what a bad investment it was.

Bob Brinker quote of the day (about the 529 tax-advantaged plan): "I really don't understand congress, being so limiting in what they will allow you to put away in the education savings account......If there's anything more important to the future success of the United States in a global economy than education, I don't know what it is. And the government should be encouraging you to save for education, not discouraging you as they do with these tiny education limits."

Honey EC: Wonder why Brinker thinks that the only way for parents to save for college is on the backs of taxpayers? Wonder why Brinker never points out something that is not only possible, but often done -- young people actually WORK (Yikes! did I use that four-letter word?) their way through college or earn scholarships.

Bob Brinker's guest-speaker was John Mauldin, "End Game"

Best selling Android WI-FI Tablet at Amazon: Motorola Zoom, at $589.99:

Moneytalk on demand audio/podcasting available for FREE at KGO810 radio for up to seven days after broadcast. The program is archived in the 1-4pm time-slots. You can take it with you! I download and save all three hours, including the third hour guest-speaker, so that I can refer back to them in the future if Bob Brinker mentions something about them on the air. (Honey EC: The KGO link seems to be down right now. I will post the link as soon as it comes back up.)

Dixiegeezer took this picture in Costa Rica. Please enlarge and marvel at one of God's most amazing creature:


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