Summary: Bob Brinker's Moneytalk

Brief Summary, Commentary and Moneytalk Excerpts, April 12, 2008

.

Bob Brinker’s Moneytalk monologue began with his report of the closing numbers for the S&P 500 at 1332.83, and the Dow at 12,325.42. Brinker did not give the closing numbers for the Nasdaq today, but last Saturday he said: “Nasdaq had a big week, up over 5% -- sitting in at 2371.” The Nasdaq closed Friday at 2290, down 81 points for the week.
.
The Nasdaq is firmly in bear market territory – even by Brinker’s own definition of a bear market, which he describes as a 20%+ decline. The Nasdaq has declined 24.1% off the October 2007 high on a closing basis.
.

Here are some comments about the Nasdaq from Kirk's Facebook Brinker Forum:
.
Jim Firestone said:

"I think the reason Brinker did not mention the Nasdaq performance on the Saturday program is because it is near or at bear market territory. Since Brinker's timing model is not predicting a bear market, mentioning this decline would be somewhat embarrassing for him. He should care about the Nasdaq though, since it is relevant to his QQQQ shares."
.

Kirk Lindstrom replied:
.

"Yes, his P1 recommends 15% in QQQ via a RYDEX fund. One would think a market timer who REALLY could successfully do it (time the markets) would have picked Gold or Oil rather than QQQ, which is currently in bear market territory. Heck, he'd have picked XLE rather than QQQ back in 2000!
.
Yahoo! says the 52 wk range for QQQ is 41.61 - 55.07
and it currently trades at 42.87 or 22% off its peak.
.
Given its high beta, if we are still in a bull market, then it should come back... but I think it got a lot of its gains last year from Google, Apple, Rimm and a few other stocks that I thought were over valued."

.
STOCK MARKET DISCUSSION……There was no further stock market discussion on the program today. Last week, Brinker said: “……..it’s going to be a week where I think stocks will be trading on their own merit. I don’t think they will be trading as much on the news background this week based the economic calendar and the earnings calendar.

.
Brinker talked mostly about fixed-income investments today, and only indirectly referred to the stock market by recommending “diversification.” Last week he said that he did not have a recommendation to sell stock market holdings at this time, and that he would not be taking money out of the stock market at this time.

.

NO BEAR MARKET ON THE RADAR

.
December 5, 2007 Marketimer (S&P 1481): “As is frequently the case, a number of stock market forecasters are claiming that the correction is the start of a bear market. We have heard the same claims during every correction since this bull market began in March of 2003. We continue to believe that a bear market (S&P Index decline in excess of 20%) is not on the radar screen at this time. We expect the bull market to continue at least well into 2008, and we look for significant stock market gains, including new S&P 500 record highs."

.
Here is an excerpt from Peter Brimelow's Marketwatch article. He published this quote from the February Marketimer. (see the link below) Bob Brinker said:
.
"As has been the case with every correction since August of 2007, several stock market pundits are claiming that a bear market is underway. We do not believe this is the case. We expect the S$P 500 Index to work its way into record new high ground by late this year or in 2009.".

.
March 1, 2008, Larry Swedroe was guest-speaker on Moneytalk. Swedroe has said that he thinks splitting hairs over a 20% decline bear market-definition is "silly." Brinker said this to him: “Of course at this point Larry, as you well know, we have not had a bear market."

.
January 4, 2008, Page Three, Paragraph One: (S&P 1468) “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 range 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."

.
By mid-January, Brinker had removed his mid-1400’s buying opportunity, which had been in place for several months.

.
Mid-February, in a special bulletin, Brinker said that the correction bottom was in and issued a new, lower “attractive for purchase” buying level – as reported on Marketwatch in an article by Peter Brimelow on February 21^st. Brimelow quoted a couple of paragraphs from Brinker’s Bulletin including these:"The initial closing low in the current stock market correction process occurred on Jan. 22, when the S&P 500 Index closed at 1310.50. The market subsequently rallied for eight days, at which point it began the process of testing the area of the Jan. 22 closing low."
.
"In our view, the correction bottoming process has proceeded with a high degree of historical consistency to date. We have witnessed a decided reduction in selling pressure during the testing process, which is essential to a successful outcome. We now rate the stock market attractive for purchase on any weakness that occurs in the current area of the S&P 500 Index low 1,300s, or any minor weakness that occurs below that level."

.
http://www.marketwatch.com/news/story/bold-bulls-bloody-unbowed/story.aspx?guid=%7BEC77C4E7%2D96CB%2D4BDC%2DAD15%2D2DC81C4ECB51%7D

.
TREASURY MARKET…..(Brinker comments paraphrased) Very low yields….10-year U.S. Treasury note at 3.5%; 10-year TIPS base rate 1.15%. There is a 2.3% differential, which is what the markets are pricing in as the implied inflation rate for the next 10 years…Strongly positive slope yield curve based on 3-month Treasury Bill of 1.1% compared to the Treasury Bond of 4.3%.

.
ECONOMY........(Brinker comments paraphrased)........moving at a very, very sluggish pace.......there is a probability that the first quarter real GDP will be in negative territory, and second quarter also has potential to be negative depending on the impact of the stimulus package checks which will be distributed in May. The "traditional academic historical definition" of a recession is two consecutive quarters of negative real GDP. Brinker said: “.......by later this year, the economy should be moving in the direction of starting a recovery.”

.
GE.......(Brinker comments paraphrased)........credibility issue with GE because back in March, the CEO had said that there was going to be a good quarter.......and that is why there has been so much reaction in Wall Street. In December, the CEO claimed that the results were “In the bag.” People react to the “quick change.” New credibility will have to be established. Brinker said: “Now the revenues at the company were pretty darned good. They were up 8%, and you know in this environment that’s pretty good – to $42.2billion. That’s a nice increase. Now the forecast was $44billion, and obviously that was wrong………and I think that people were looking at the revenue line, they were disappointed because the promises were too high……..this really calls into question the whole issue of making these forecasts………you know some companies just don’t do it anymore……….now in Wall Street right now, there are 13 analysts that have a buy recommendation on the stock, and there are 6 analysts that have a hold recommendation on the stock and there are no analysts that have a sell recommendation on the stock. That is among close to 20 analysts that were surveyed. Now that is not to say that there are no sell recommendations on the stock."

.
Various Points Brinker made to callers:

.

• Always be sure your CDs have FDIC coverage.
• .
  Likes Vanguard GNMA Fund.
• .
  Barack Obama’s tax increase proposal will raise marginal tax rates to over 62% for entrepreneurs and increase corporate taxes, which are already about 40%. The worst idea Brinker ever heard of and he is stunned that the financial media and the mainstream media is closing its eyes and not reporting it.
• .
  If we had begun to increase the mileage on cars by 1/3 mile per year in 1974 when the Saudis' “declared war on us,” we would not have to “beg” for the 12 million barrels of oil that we import every day.
• .
  Do not have more than 4% of your stock market allocation in one stock.
• .
  Diversify your portfolio.
• .
  What comes out of Treasury Secretary Paulson office about being for a strong dollar is “nonsense and pap.” Paulson doesn’t “give a hoot” about the plight of the dollar, or he’d stop talking about it and do something about moving the country in the direction of a balanced budget.
• .
  Weak dollar means a stronger Euro.
• .
  In general, GE is a well run company, but well-run companies can still be decimated.
• .
  GNMA’s are preferable to TIPS for current income.
• .
  

Bob Brinker quote of the day: “The bottom line in all this is, Obama’s tax policies are genuinely an “obamanation.” (That’s truly the way it sounded folks.) LOL!

.
Saturday, Brinker's guest speaker was one of the editors of J.K. Lasser's "Your Income Tax 2008."
.
Sunday it was Charles Morris, author of the book, "The Trillion Dollar Meltdown: Easy Money, High Rollors and the Great Credit Crash."

.