Bob Brinker's Moneytalk: Summary, Discussion and Excerpts, October 31, 2009

October 31, 2009....Summary of Bob Brinker's Moneytalk, and Honey's Editorial Comments.

STOCK MARKET....Bob Brinker said: "The stock market has been undergoing a correction in recent sessions.....We have ten months in the books now and the total return on the S&P 500 Index year-to-date -- this includes the cash dividend which is at an annual rate of about 2% -- comes in at 17.1%.....On the Total Stock Market Index, which also has a cash yield of about 2% -- now standing at 18.5%. Now you recall those numbers were above the 20% level quite recently, so we've certainly had some corrective action in the market....."

FIXED INCOME YIELDS....Brinker said: "On the fixed income side, rates remain extremely low. In fact, when we speak about these as low as they are, some of these numbers seem to go even lower, which is hard to believe because they are close to zero." Brinker announced all of the latest Treasury yield numbers. [See links in Honey's market report below.]

[Honey EC: Do not be misled by the Brinker Fixed Income Ad that played during the program today. That newsletter is NOT published by Bob Brinker the radio talk show host. He only publishes Marketimer.]

IMPLIED INFLATION RATE....For ten years, as implicit in the market prices and yields, it is at 2% -- for long-term its 2.2% [See Brinker's explanation of this in last week's summary. LINK]

MUNICIPAL GENERAL OBLIGATIONS....Ten year AAA yield 3.34.....that would be a taxable equivalent in the 35% federal bracket of 5 1/8.

DEFLATION.... Currently at 1.3%.

GNMA [VFIIX].....Brinker said: "Remember this is a triple-A rated government backed security, because the government backs all principal and interest on GNMA securities.....As long as you have this active policy by the Fed to keep rates down, I wouldn't expect to see a whole lot of change....."

GNMA AT RISK IF FED "GUMS UP" INFLATION.....Brinker said: "The risk is down the road what we said earlier in this hour. If we get a situation where the central bankers gum up their efforts, whether they do it consciously or unconsciously doesn't even matter.....if they gum up their efforts to remove monetary stimulus from the system, that could cause inflation fires to burn down the road.....

.....Or if they make a, and I think it would a conscious decision in this case but it would not be advertised -- nobody would talk about it -- it would be kinda like the dollar position that the U.S. takes where we obviously are comfortable with a lower dollar but nobody ever admits it. Suppose the central bankers adopted a page out of that book and said well, we are willing to tolerate higher inflation than normal, but we're not going to talk about it or admit it.....That would also create a higher inflation risk. They would do this in order to inflate away national debt obligations of course which have become absolutely humongous."

INFLATION AND "DRUNKEN SAILOR" SPENDING...Brinker said: "Inflation is something that we always keep an eye on on Moneytalk. We don't take anything for granted. And I think right now it would be fool's errand to take anything for granted in terms of what is going on in Washington with deficit spending. And as long as they are willing to spend like drunken sailors and we have certainly seen that both parties have signed on to this particular mantra of spending like drunken sailors. They've both become particularly astute at doing this -- borrowing money and spending money.....We have to be vigilant about the risk of future inflation. ....

......Now we don't have inflation today. We have deflation......We are talking about going down the road in the future. What kind of inflation risk is out there? What kind of answers will come to critical questions that have not yet been answered? Here's one of those critical questions: Will the Central Bankers be overly cautious when time comes to remove their monetary stimulus from the financial system? All this money they've poured into the financial system in an effort to revive the economy......Will they drag their feet? Will they leave the stimulus in place too long? Because if they do, that creates an inflation risk......

.....But there's more to it than that. Is it possible that central bankers, whether they be in Washington or in other capitals, decide that they are willing to tolerate inflation at a higher level that is normally acceptable in order to inflate away the gargantuan national debts that are being racked up in places like Washington DC?.....We've talked about the national debt problem up around $12 Trillion right now. The highly respected Congressional Budget Office talks about it going to $20 Trillion within the next decade. Do we have any possibility that the central bankers saying that we are going to have to inflate some of this debt away and we'll tolerate a higher level of inflation than normal. Is that a risk out there? Of course, it's a risk.....Whether it comes to fruition or not remains to be seen, but we shall know all of this in the fullness of time.

[Honey EC: While it is true that President Bush (who had a Democrat Congress the last two years of his term) spent more money than his constituents would have liked, for Brinker to continuously harp about how there is no difference between the two administrations is sheer hyperbole. How long is he going to be afraid to criticize the current administration without bashing the previous one at the same time? It's becoming laughable because TO ME, it seems obvious he's AFRAID of criticizing Obama for fear of being called a racist....

(In edit Monday).....Does anyone remember all the demeaning names that Brinker had for Hilary Clinton? He had a whole list of them he strung together to ridicule her. Here it is: “Hillary Diane Evita Christine Rodham Clinton”

I resented Brinker doing this then, and I resent it even more now that he so carefully avoids using Obama's name at all -- never mind disrespectfully. So I'm a "non-partisan" critic for those who might have a problem with my right to clearly stated editorial comments on Brinker's political preaching.....

I am not the one with the national microphone flying under the radar as a financial advisor while making political pronouncements virtually unchallenged. Anyone who wants to disagree with me here, is welcome do so and I will not censor, cut off or denigrate you for it -- like often happens to Brinker's callers..]

POLITICAL SOAPBOX....Brinker said: "We've had a lot of discussion about what's going on in Washington because it really is important.....We are bi-partisan off the rails right now. For example, spending.....That means we need a program to get back to a balanced budget

[Honey EC: Mr. Brinker must not be aware that the Democrats have complete power in Washington right now. They can pass any bill they want without one Republican vote. And he must not be aware that ALL Republican congresspeople (including Olympia Snowe finally) are AGAINST this $trillion take over of another 13% of the American economy, government-run health care plan, that Obama and Pelosi are working so hard to pass.]

HEALTHCARE PROPOSAL....Bob Brinker said: "We said predicted on the program just a few weeks ago that the most likely outcome on the healthcare proposal would be that they would let the high earners pay for it. That's the way it looked at the time and that's the way it looks right now. The House has come out with a proposal to let the high earners pay for it. What they're proposing is to those making more than $500,000 a year -- and that's only about 1.2% of the taxpaying public -- pay a surtax on their income of 5.4%. Now for couples this would be over a $million a year.....This would take effect in 2011 when the other tax increase, the expiration of the current tax cut proposals goes by the board at the end of next year......

.....Let's take California....Starting in 2011, the top bracket would go to 39.6 under the current plan. Then we would have the 5.4 for the surtax. That takes it up to 45. Of course, California the top bracket is 10 1/2%, we have to add that on there. That gets it up to 55 1/2. But it's going higher because if you are running a business, you're subject to the uncapped Medicare tax already. You've already been slammed....paying both sides of that, that's 2/9. Now you're up to 58 1/2, and you throw in your Social Security obligation, what have you......In a high tax state, you're talking about just about 60% tax bracket. The government gets 60 cents on the dollar -- you get 40 cents on the dollar.....

...... That's where we are going under this proposal -- hasn't been voted on yet......These are the jobs creators that own the businesses -- the entrprenuers.....So I think it's fair to say that under these proposals, what we are really talking about here is a program to re-distribute income. This is about income re-distribution on the high end.....As long as you are aware of where it's headed, that way you're informed."

[Honey EC: Mr. Brinker may not know that there will be other tax increase besides the surtax and that they are cutting Medicare by $500 billion. So he can rest assured that the misery will be spread beyond his doorstep.]

Miscellaneous points Brinker made to callers today:

* Gold is so strong because people are concerned about too much money being printed, fearful of central bankers inflating away national debt and/or allowing the stimulus to remain in place too long.

* Brinker is in favor of the uptick rule being reestablished, but sees no need for a downtick rule.

* Repeal of Glass Steagall = bi-partisan incompetence.

* Don't believe your lying eyes if you are paying more at the grocery store these days, only believe the numbers that say prices are going down.

* Ron Paul is wrong to blame the Fed for anything. [Honey EC: Pardon me while I get my smelling salts.]

Bob Brinker quote of the day: "Moneytalk is an investment program. It's not an infomercial." About an hour later, Bob Brinker said: "The newsletter will be published next week. We are putting the finishing touches on it and it will be out early next week." [Honey EC: As Brinker said twice today, "it's not in my nature to criticize anyone," (LOL!) so I will assume that was only Brinker's "off-the-books" sense of humor at work.]

Honey's Market Report:
* Dow closed at 9712.73, dropping 2.6% for the week.
* Nasdaq Composite Index closed at 2045.11, dropping 5.1% for the week.
* S&P 500 Index closed at 1036.18, dropping 4% for the week.
* GLD closed at $102.53.....Last week it closed at $103.18.
* Treasury rates, TIPS, munis [LINK],
* Fed Funds, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]

Moneytalk programs are available free "on demand" at KGO810 radio for seven days after broadcast. You can download and save Bob Brinker's Moneytalk programs (owned by ABC) and listen whenever you choose at no cost whatsoever. To download the programs to your MP3 player or flash drive, just choose the day, then right click on the 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 [Moneytalk was preempted on Saturday, October 31st.]

Brinker's Saturday guest-speaker was David L. Scott: "The American Heritage Dictionary of Business Terms." Here is a link to Amazon. com where the book is available in paperback for $5.76 [LINK]


Bob took this picture from inside his home looking out his screen door at this beautiful deer. Notice the great antlers. I've seen a lot of deer around my home, but have never seen a big buck like this one.

* Follow me on Twitter [LINK]

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Bob Brinker's Moneytalk: Listen Online Radio Stations

Here is a complete list of Bob Brinker's Moneytalk, "Land of Critical Mass," Listen-Live Radio Stations.

San Francisco: KGO 810 1pm to 4pm. (Moneytalk on-demand free downloads are archived for seven days after broadcast.) PS: Moneytalk is preempted today (October 31) for a Cal Bears Game.

Phoenix, Arizona: KFNN 1510 2pm to 5pm. (No Moneytalk on-demand archives, but several other financial shows are archived, including Bill Tatro: "It's All About Money.").

Los Angeles, Ca: KABC 790 Weekend schedule shows 9pm Saturday to 3am Sunday only. (No Moneytalk on-demand archives)

Monterey, Salinas, Santa Cruz: KION 1460 1pm to 4pm. (No Moneytalk on-demand archives.)

Denver, Colorado, KNUS 710 Bob Brinker's Moneytalk no longer shows on the program schedule. I don't know if this is temporary or if he has been taken off the station. I'll check back later.

Chicago, Illinois, WLS 890 Bob Brinker's Moneytalk is scheduled for only 1/2 hour on Saturday -- replaced with "pet talk" and "The CSE Investment Show." Sunday schedule 3pm to 6pm. There are several financial shows available on-demand, but not Moneytalk.

Albuquerque, New Mexico KKOB 770 News Radio. 2pm to 5 pm. (No Moneytalk on-demand archives.)

Rochester, New York WHAM 1180 News Radio. 4pm to 7 pm. (No Moneytalk on-demand archives.)

New York, WABC 77 News Talk Radio. Bob Brinker is no longer carried on this giant station, but they carry some fine financial shows, including Larry Kudlow and Ric Edelman.

Bob Brinker's Moneytalk has been dropped altogether from XM Satellite Radio.

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Bob Brinker's Market Forecasts Discussed on Radio Program with Paul Merriman

Posted October 29, 2009.....Bob Brinker's dismal market-timing record was exposed on Seattle radio program and internet podcast in a "Sound Investing" interview with David Korn. From the FundAdvice website:

"Sound Investing is a weekly radio program hosted by financial educators Tom Cock, Paul Merriman and Don McDonald. The program has been on the air for 8 years in Seattle."

I have transcribed the first few minutes of the interview:

Tom said: “David, I think you do a wonderful job of educating investors. And your newsletter, I’ve read it for many years now. I know that you are not only an expert on just the investing process, but you do a lot of work on timing. And one of the major timers in the country is a guy named Bob Brinker. And you do something that I think is marvelous because if we’re not careful, people don’t represent their past as accurately as they might. And what you’ve done, is you’ve actually tracked Bob Brinker for how long?”

David Korn said, “Well, about eleven to twelve years now.”

Tom: “And what have you learned about information on the radio that our listeners maybe should be careful about and make sure they are able to dig into the real results of something?”

David: “I think you said it best. It’s important to look at real results and not just look at what someone says they did lately, for example. It’s easy to say hey I’ve been invested this year in a great bull market. But if you say that, you might not be disclosing the fact that you missed the brutal bear that started in October 2007 and really went to March of 09 of this year, which we’ve all seen really decimate many portfolios.”

Tom: “So let me understand. This is the guy who is being paid, or people are listening to him as to when to be in and out of the market. And his primary job, because he can’t make money on the way up – the market makes money on the way up – his job is to protect people on the way down, and what you are saying is he didn’t protect investors at all on the way down.”

David: “I can tell you that in tracking him, his Model Portfolios went fully invested in March of ’03. He had taken some out of the market in 2000, not all of it – some of it. And then he had gone back 100% in March ’03, and basically has stayed 100% invested from March ’03 to now.”

Tom: “Wait a minute, just to interrupt you here, so he’s a market-timer but he never made any move in that huge downturn.”

David: “Not from March ’03 to now. His Model Portfolios have been a 100% invested.”

Tom: “Now aren’t there really though two Bob Brinker’s? Isn’t there the radio show Bob Brinker and the newsletter Bob Brinker, and aren’t they very different from one another?”

David: “Well I think that his newsletter publishes these Model Portfolios, which you can look at the performance and you can see how they perform relative to the market. The radio, I think is frankly a pulpit for him to educate, but also to attract new subscribers. And I think if he can attract subscribers any way he can, he will. That seems to be the nature of it. But certainly, he has not made any timing move to allocate more toward cash since March of ’03. And we went through that 50%+ bear market from October ’07 to March ’09."

Tom: “That seems a bit odd, doesn’t it Paul?”

Paul Merriman: “One of the tricky parts of market-timing is to know whether your timing system has a fail-safe. When something can go down 50%, there’s not a fail-safe built into the timing system. Ken Fisher, people thought he would get them out and he didn’t.”


Honey here: Bob Brinker's Model Portfolio I lost over 50% from the market high to the March 2009 low. Brinker claims that his "timing model" totally missed the worst bear market since the depression because of "exogenous events" that he could not have predicted. Well, no matter what, as Paul Merriman said, there was NO FAIL-SAFE built into Brinker's timing system!

As my readers know, I also track Bob Brinker -- just as David does. However, there are a few differences between us. The most important one is that I do not charge for my work and David does. (Although, I am the first to say that David's newsletters have MUCH more in them than his Moneytalk summaries and are well worth the price of the subscription.)

David's Moneytalk summaries contain more detail than mine, but I feel that mine are sometimes more accurate because I transcribe many excerpts from the program so that I can present exact words and not just my interpretation. David only does interpretation. You can read some of David Korn's writings here on my blog and get the link to order a complimentary issue of David's OUTSTANDING newsletters. [LINK]

* You can listen to the complete interview at FundAdvice.com [LINK]

Chart Courtesy of Kirk Lindstrom [LINK]:

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Bob Brinker's Moneytalk: Summary, Discussion and Excerpts October 24, 2009

* ITEM: October 29, 2009 at 2:36 PDT: National Debt: $11,893,668,881,089.01

*ITEM: The worst recession since the 1930's has unofficially ended. Economy grows at 3.5% in 3Q. Moneynews.com [LINK]

* ITEM: Case-Schiller reports home prices rose in August -- 17 out of 20 cities. May signal home prices bottomed. See the percentages at Marketwatch [LINK]

* ITEM: If you haven't yet viewed the PBS Frontline program titled "The Warning," please take the time to watch it. Every investor, indeed every American should be made aware of the incredible callousness and thugishness of the people who were warned by Brooksley Born (of the CFTC), and how they shut her up and shut her down. TWO of those people are now in the Obama administration! Alan Greenspan acted like a tyrant. And after many Americans lost large amounts of money, lost their jobs and lost their homes, all he did was say, "I was wrong."

FRONTLINE: The Warning [LINK]

[There was nothing new on the Sunday program. Brinker did repeat his opinion that the recession ended in the second quarter. Brinker's guest speakers are listed at end of this summary.]

Summary, Saturday, October 24, 2009

STOCK MARKET.....Bob Brinker recounted the closing stock market numbers and said that the S&P 500 Index year-to-date total return is 22%; and the Total Stock Market Index is 24%. He explained that the two components of total return consist of price change and cash dividends. The annualized dividend rate on those two indexes is about 2%.

FIXED INCOME.....Brinker then moved on to fixed income, saying that rates have been very low and stayed low this week. He recited the yield on all of the Treasuries. [See the links below for Treasury data.]

IMPLIED INFLATION RATE.....Brinker said: "We like to make a comparison between 10-year Notes and 10-year Inflation Protected Securities to see what the base rate is on those TIPS and compare those to the Notes. And right now you get a differential of 2%. And what we mean by that is, you take that 10-year Note rate of about 3 1/2, subtract out the 10-year base rate on the 10-year TIPS of about 1 1/2, you get a spread there of 2%. And that spread represents the implied annual inflation rate for the next ten years as dictated by money flowing in the market. If you take the long-term TIPS and you compare that rate of 2.1 base rate with the long-term bond of 4.3, that differential is 2.2....That's implying a rate of inflation of 2.2% a year for the long term."

Brinker said, "Paul Volcker is a voice of reason in Washington. But unfortunately....he is not getting the respect he deserves in terms of implementing his recommendations and I happen to agree very strongly with the core recommendation he's been making as part of the White House executive branch."

Brinker went on to say that in his opinion, they like to have Volcker in their photo-shoots because they think it adds credibility to their efforts. But all that goes out the door when they ignore his solid advice which would be a game changer -- and they don't have any better advice.

Brinker said: "Paul Volcker is a shining beacon of light in this situation in Washington with reference with what to do to the financial sector in Wall Street. And instead of focusing on his recommendations and carrying them forward, I think they are more interested in the photo shoot opportunity and that is unfortunate."

Jack in San Diego made the statement that the FDIC was just about depleted but that Sheila Bahr did not want to use the line of credit offered by the Treasury for the FDIC because of personal feelings. Brinker said he didn't know about her relationship with the Treasury Secretary, but he thought that when the line of credit is needed, it should be used..... and her job is to co-ordinate her office with other government offices in the finance sector. So if there is a problem, she should "get over it."

John in Chicago wondered how long China would keep helping us out with our deficit. Brinker said it isn't likely that China will be "helping us out"...it's strictly business....they have chosen to buy $800 billion of our Treasuries.

Carl in Las Vegas (Brinker calls it the "city that never sleeps.") talked about politics for quite a long time. Carl said he voted for Obama so he wasn't there to bash him, but he wanted to know how he could justify appointing the same people to correct the problems that they had created.

Brinker replied: "This gets to the point that I raised earlier in this hour that I was going to talk about on today's broadcast and this is the time to do it. And this is this whole business where even today, despite of the promises of change, we have a lot of the same cast of characters in there from before. And on top of that, where we do have somebody that does offer a great idea for change, and that is to reverse mistaken policies of the repeal of Glass Steagall in 1999 by President Clinton......

.....Let's come up with a modern day Glass Steagall Act, and once and for all, let's separate the banking industry from the investment banking industry....They are two separate industry......Paul Volcker has made this case to the president. Unfortunately, he's not acting on it which is very disappointing.....Banking should be about taking in deposits and making sound investments.....Banking should not be investment banking.... Where we have these combinations like J.P. Morgan-Bear Stearns, like Bank of America-Merrill Lynch, to cite two. And even like Goldman Sachs-Morgan Stanley which even today retain their status as bank holding companies......Taxpayers should be there to back the FDIC and back up the traditional banking system. But the taxpayers should not be bailing out Goldman Sachs, Morgan Stanley, Bear Stearns, Merrill Lynch or any of them....

.....The reason Paul Volcker is right about this is today the the taxpayer is stuck with the so-called too big to fail responsibility of bailing out companies that have a win-win business plan. If an investment bank makes a lot of risky investments which they do all the time, if they make a lot of money, they keep the money. But if they go out and screw up....like Lehman did, Bear Stearns did and Merrill Lynch did.....the taxpayer gets stuck with the bill......

.....Let me sum it up this way.....The political office holders in Washington and their appointees -- the relationship between those people and the Wall Street Bankers is way, way too cozy and that's the problem. Not with Paul Volcker....he speaks his mind, he tells it like it is and he has it totally right.....Keep the investment banks separate....

.....Let me ask you a question. Is it a conflict of interest for a president of the United States, or a member of congress, to take campaign contributions from investment bankers or bankers? Why should bankers or investment bankers, or their companies, be making campaign contributions to Barack Obama when he was running, or John McCain when he was running, or any of these members of congress.....Don't you see that as an overt conflict of interest for them to be taking money from these people when we are trying to get this thing right?......

.....Why do you make campaign contributions? Do you make it because you like the way the candidate combs his hair? Or do you make it because there are some policy issues that you want to advance.....The answer is obvious.....We all know this, so why do we allow it.....Why are these people going to Wall Street hands out asking for contributions. If anybody questions it, let me make sure I say it one more time, The United States of America, as we just proved, have the very best government that money can buy."

FIXED INCOME MARKET-TIMING AND GNMA....John in Parsippany asked Brinker about market timing bond funds. He wanted to sell his Vanguard Bond Funds, including GNMA Fund and put the money in a money market account. He thought interest rates may be going up and bond funds coming down in price.

Brinker replied: "Well here's the way that would work. What's the yield now on the Ginnie Mae, about 3 1/3 or so?.....And the yield on the money funds are close to zero.....So let's say that hypothetically somebody sold a Ginnie Mae share at $10.74 and they would then forgo the 3.3% yield, they would not be making that anymore. They'd be in a money fund at close at to zero. So let's say they waited one year......One year from now, they would have lost 3.3% because they didn't collect the interest. So they would have to get the NAV down 3.3% in order to break even. So you'd need the Ginnie Mae shares at about $10.40 to break even.....This assumes you are in a tax-privileged account."

DEFICIT....Brinker said: "Our deficit has soared to new highs. It's right around $12 trillion now and the Congressional Budget Office is talking about $20 trillion based on current administration spending plans and congressional spending expectations over the next ten years."

LOW-GROWTH NEW NORMAL NOW?...Brinker said: "I think that is here now. I think that we have to seriously question whether the long-term growth rate of the real Gross Domestic Product of the United States is going to be anywhere close to 3 1/2%. If you go back over the last x-number of years, it's been in the area of the high-two's. And it's been coming down. It used to be we would think we could grow the economy 3.5 inflation adjusted. I don't right now that's a realistic assumption based on the amount of interest that we are obligated to pay every year on the ever growing national debt....."

CAN TREASURYS LOSE AAA RATING....Brinker commented that "we have to change" because we are "selling the country down the river," then he said: "One of the major rating-industry leaders, this month of October, has already stated on the record that it is possible that the Treasury could lose it's triple-A rating. They said it and they make the rating."

CHINA OWNS A LOT OF TREASURIES.... Brinker said: "China today owns about 6 1/2% of all the debt that is out there....They are doing it for diversification....they have a basket of currency that they own....They own yen, euros, dollars, and they are not really thrilled with this fiscal irresponsibility that we've been seeing out of congress......this free-spending, drunken-sailor spending mentality that they have in this congress. And they don't seem to even take it seriously anymore. They just go out with these projections and borrow and spend......

.....There are a lot of people unhappy with it...... They call the program all the time. Me, I'm unhappy about it. You should be unhappy about it. Because frankly, it's an outrage. This is one of the reasons that you've seen such weakness in the dollar. Because the official policy here is to debase the U.S. dollar by letting it fall in order to increase our exports.....And this is what we are getting out of Washington.....It doesn't matter which party is in power anymore.....We in the United States have the best government can buy."

PRESIDENT HAT IN HAND....Brinker said: "We had a call today talking about the subject and I've been talking about the great advice that Paul Volcker has given to the president. And so far, he's being ignored on this and that's a sad shame. One wonders when you see the president going hat in hand for campaign contributions this week for the DNC in the canyons of Wall Street.....

.... One wonders why is this relationship so close, why is it so cozy--well we know the answer to that. But it doesn't apply to Paul Volcker. He's above it all....He's basically gone to his boss, the president, and told him straight out what the problem is. And unfortunately, he's being ignored.....Paul Volcker has it right. He knows that there is only one viable way to go about it and that is to break up these monstrosities that have been created in the post Glass Steagall period, since 1999....

....Here we have somebody, he's kinda like a gift to the administration. Paul Volcker, yes, he will serve as an advisor to the administration. Yes he does have ideas -- first idea, let's get back to Glass Steagall. And they ignore him which is an insult in and of itself, which is why I think that Paul Volcker spends almost no time in the office they gave him in Washington. Did you know that? He's almost never in his office in Washington. He has offices in Gotham City......He knows they're not listening to him....

.....Instead it's the same old, same old. The reason it bothers me is the nation was promised change, we were going to have change. It was going to be different this time. Well, it's not different this time. It's the same old Saturday night. President goes to Wall Street, hand in hand this week for campaign donations for his party....It doesn't matter which party is in power because the relationship between these politicians and the Wall Street bankers is way too cozy."

ADMINISTRATION COMPENSATION CONTROLS WON'T WORK.....Brinker commented that the administration's controls on compensations are not going to work because really high quality people have the option to walk out the door and go to companies that are not covered by executive branch compensation controls -- that includes way over 90% of companies around the world -- Brinker guarantees this will happen -- and it will weaken these taxpayer-owned companies.

Brinker said: "Joe Sixpack loves this issue. Joe Sixpack thinks this is the greatest thing he ever heard. Oh yeah, let's cut their pay, sound good. Let's drink to that. Well let me tell you something, it's not going to make any difference. What would make a difference would be if they would listen to Paul Volcker and bring back Glass Steagall, and break up these behemoths that they've created and put back that wall.....

......One of the great lines of Ronald Reagan's term, in my opinion was "Mr. Gorbachev, tear down this wall." I love that quote......There should be a new quote from this president and unfortunately we're not hearing it. And the new quote should be, "members of congress, put this wall back." And this wall is between the banks and the investment risk takers in the investment banking industry. Members of congress, please, have you no decency? Put back this wall....This is Moneytalk."

Brinker's Saturday guest-speaker was Duff Mcdonald, "Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase" [Here is a link to Amazon.com where the book is priced at $18.48.]

Brinker's Sunday guest-speaker was Dale Robyn Siegel, "The New Rules for Mortgages." [Here is a link to Amazon.com where the book is priced at $10.76.]


Honey's Market Report:
* Dow closed at 9972.18, a 0.2% loss for the week -- unable to hold the 10,000 level.
* Nasdaq Composite Index closed at 2154.47, down 0.1% for the week -- can't get much closer to flat.
* S&P 500 Index closed at 1079.60, a 0.7% loss for the week.
* GLD closed at $103.49 last week it closed at $103.18 -- that's flat as it gets, but it had been up early in the week. It dropped a bit on Thursday and Friday
* Treasury rates, TIPS, munis [LINK],
* Fed Funds, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]

[Note: Moneytalk was pre-empted on KGO810 San Francisco today (Saturday) for a Cal-Bears game. ] Moneytalk programs are available free "on demand" at KGO810 radio for seven days after broadcast. You can download and save Bob Brinker's Moneytalk programs (owned by ABC) and listen whenever you choose at no cost whatsoever. To download the programs to your MP3 player or flash drive, just choose the day, then right click on the 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

Recently, a flock of robins came in and helped themselves to my pyracantha bush that grows just outside my patio. It's really quite tall because it's several feet to the ground. There are still enough berries left to be beautiful against the backdrop of the Santa Cruz Mountains. The robins will return and finish their feast, so I took this picture this morning. Click on it for a full screen view:


Monday, Dixiegeezer sent this beautiful eagle. Is it the American Eagle. Why so serious?

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POST OR READ COMMENT [LINK]

Treasury Auction Schedule

One way the US government finances its debt is by the sale of marketable Treasury Bills, Notes, Bonds, and Treasury Inflation-Protected Securities (TIPS - more info) to the public. Individual investors, through the US Treasury (www.treasurydirect.gov) or their bank and brokerage accounts, have the opportunity to participate in U.S. Treasury note, bill, bond and TIPS auctions without commissions for new issues.

Upcoming US Treasury Auctions

Security Term	CUSIP Number	Auction Date	Issue Date	Maturity Date
91-day Bill	912795S77	10-26-2009	10-29-2009	01-28-2010
182-day Bill	912795UP4	10-26-2009	10-29-2009	04-29-2010
2-yr Note	912828LT5	10-27-2009	11-02-2009	10-31-2011
4.5-yr TIPS	912828KM1	10-26-2009	10-30-2009	04-15-2014
5-yr Note	912828LS7	10-28-2009	11-02-2009	10-31-2014
7-yr Note	912828LU2	10-29-2009	11-02-2009	10-31-2016
29-day Bill	912795Q53	10-27-2009	10-29-2009	note 1
91-day Bill	912795S85	11-02-2009	11-05-2009	note 1
182-day Bill	912795U41	11-02-2009	11-05-2009	note 1

note 1: tentative subject to official announcement

In every issue of The Retirement Advisor Newsletter we cover upcoming US Treasury Auctions with a more complete auction calendar. We also give our estimate for rates for 3 month bills to 30-year bonds plus 5-, 10- and 20-year TIPS.

FREE Sample Issue - Click to Subscribe now

US Treasury Security Facts:

• Marketable securities can be bought, sold or transferred after they are originally issued.
  
• Treasury uses an auction process to sell marketable securities and determine their rate or yield.
  
• The value of Treasury marketable securities fluctuates with changes in interest rates and market demand.
• Marketable securities held in your account can be sold at current market prices through brokers and many financial institutions.

13-WEEK TREASURY BILL (Historical Quotes for: ^IRX)	5-YEAR TREASURY NOTE (Historical Quotes for: ^FVX)

10-YEAR TREASURY NOTE (Historical Quotes for: ^TNX)

Broker Links:

• e-Trade: 866-420-0007
• Fidelity: 800-544-5372
• Schwab: 877-563-7818
• Vanguard: 800-669-0514 8AM-6:30PM ET

For more details, see:

• More about TIPS Treasury Inflation-Protected Securities
  
  
• US Treasury Rates at a Glance
  
  
• Tentative U.S. Treasury Auction Schedule - PDF File
  

Two Newsletters:

There may be some confusion because I write two newsletters.

"Kirk Lindstrom's Investment Letter" is $155 a year and uses the "core and explore" method to invest. It has two core portfolios plus an explore portfolio of individual stocks. My aggressive core portfolio has 80% equities while my "conservative" core portfolio has 50% in equities. I recommend people start by getting their proper core portfolio created THEN add individual stocks I cover in my explore portfolio to build your own explore portfolio for 5 to 20% of your investment portfolio total. I have target prices to buy and sell my explore stocks so I find I almost look forward to market declines to get really great prices for stocks I can sell later at higher prices. Of course, following this explore portfolio is more work than buying index funds and rebalancing once a year that I recommend for my core portfolios. Compared to "other newsletters" costing more, my core portfolios and general stock market coverage in the first 11 pages of the 35 page monthly letter offer significant value even for those who don't dabble in individual stocks.

I write "The Retirement Advisor" with David Korn. We sell this for a very modest $99. We offer three model portfolios. We do not recommend individual stocks but we have articles that discuss current financial events such as economic data and Social Security COLAs. We also have articles to help you save money plus we find CDs with FDIC paying the highest rates. Our most aggressive portfolio has 50% in equities. Our most conservative portfolio contains no equity exposure.

The conservative (50:50) core portfolio in "Kirk Lindstrom's Investment Letter" is slightly more aggressive than the aggressive model portfolio #1 in "The Retirement Advisor." Over the very long term, you should expect the most aggressive portfolio to have the highest returns but at a price of higher volatility. Our idea when we started the "The Retirement Advisor" in 2007 is we thought people like Bob Brinker were far too aggressive with equity exposure recommendations for retired people at such a risky time for the markets. As our great returns show, it was good timing.

Bob Brinker's Saturday Guest: Micheline Maynard

Posted October 20, 2009....Bob Brinker's Saturday guest-speaker was Micheline Maynard (Mickie to Bob Brinker). Mickie's new book: "The Selling of the American Economy: How Foreign Companies are Remaking the American Dream."

David Korn did a brief summary of the interview in his latest newsletter. Posted with David's permission. David Korn wrote:

"The main gist of her book is how important foreign companies are becoming to our economy.

Some of the salient points of the interview are as follows:

1. Maynard says as long as America has been in existence, we have had foreign investments. Protectionism is a result of fear. The facts are that foreign companies have provided more stable jobs over the last few years than some American companies. Maynard says in her research she was very surprised to discover that foreign investment is now 15% of GDP and there are more than five million people here that are employed by foreign companies.

2. When we did the auto bailout, the argument was if the American car companies failed, we would lose about 2-3 million jobs in the United States. The reality is that foreign companies provide about double the American jobs in the auto industry.

3. Toyota, they has 1300 dealerships in our country and employ about 250,000 in the United States. That includes about 30,000 in their factories. Many of the politicians have pushed hard for foreign investments because jobs are jobs and we need them.

4. About 25 years ago, protectionism pushed by the unions backfired. The Japanese companies were told their imports would be restricted unless they built plants here and manufactured the cars here. Those companies started to open plants in states that did not have the traditional union base that places like Michigan did. The UAW was not able to organize those workforces.

5. Maynard talked about Tata, the parent company responsible for the Nano ‹ the tiny car aimed primarily at the Indian market that cost $2,500. It is actually one of the biggest companies in the world and they want to be the next Toyota in the United States. Tata actually owns the "Eight O'Clock Coffee" which is about as American a brand as you can get. They also manage some hotels here, and have a bunch of other businesses. This Indian company has a lot of ties to the U.S.

6. Ford Motor Company has a leg up on the other car markers in terms of getting their product line up turned around. The big question, however, for Ford and the other car markers is when the car market will turn around. We are going to have the worst year for cars since 1982 and there is a question of whether we will ever get back to the boom years. Ford has cut its costs such that it can compete. But there is still a lot of denial in Detroit.

7. There are are plans for Chinese companies to build hybrid electric cars in southern states.

8. What's your opinion of General Motors? Maynard says their is talk to get the IPO done in 2010, but you don't want to rush that. GM is like two companies now -- there is the new constituted GM and the old one that could stay in bankruptcy for years.

9. Bob noted that our government claims to favor a strong dollar, but the reality is it is nonsense. Maynard said the Yen and the Korean currency are very strong against the dollar and even Canadian currency is moving in that direction. Toyota wants to open a factory in Mississippi, but they are getting hit by the strength of the Yen. The American auto industry is now half foreign automakers. If you have these huge currency imbalances, it can have a big impact. If we were a homogenized society with only American workers employed by American companies it would be one thing. But with so many workers employed by foreign companies whose ability to prosper depends on currency, a big imbalance in the dollar creates problems. The flip side is that a German company like Volkswagon wants to open a plant here because it would be cheap for them to do so.

10. Maynard was surprised by the decision to put tariffs on Chinese tires since they really aren't a big issue. The big job losses in the tire industry have already taken place about 5-6 years ago. It was a strange decision, especially to a trading partner that has bought a lot of Treasury bonds. Eventually many Chinese companies will want to come to the United States to do build plants and business here and so we have to consider whether we want to make it conducive for them to come here and create jobs."

David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2009

You may request a complimentary copy of David Korn's weekly newsletter at this [LINK].

David Korn and Kirk Lindstrom publish "The Retirement Advisor." You can download a free copy at the same [LINK].

Sir Pig sent this picture of his children being schooled in where "Pork" really comes from on a hill near Washington DC:


Dixiegeezer took this closeup of an obviously friendly squirrel having lunch. Click on the picture for full screen:

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POST OR READ COMMENTS [LINK]

Bob Brinker's Moneytalk: Summary, Discussion and Excerpts, October 17, 2009

[Please note: I have added a brief summary of Sunday's program below.]

[Item: Jeffchristie has posted the latest results on the stock-picking contest in the comments section of this article. This includes Brinker's two picks from May, 2009] [LINK]

Summary posted October 17, 2009.....Bob Brinker's advice since March 2003 has been to remain fully invested throughout the whole time. In Bob Brinker's Marketimer newsletter and on Moneytalk he has maintained a buy-and-hold position for the past 9 1/2 years.

Since April 2009, Bob Brinker's only market-timing advice (applies to new money only) has been to "buy on weakness." (So far, "weakness" has remained undefined in his newsletter and on Moneytalk.) No doubt, Brinker is quite happy that his model portfolios are recovering some of the horrific losses they suffered in 2008 and the first three months of 2009.

Saturday, at the beginning of the program, Brinker said: "What's going on in the marketplace? What's going on in your portfolio? How are you doing relative to the market. Let's get to the nitty-gritty." Brinker recited the closing numbers for the Nasdaq and Dow, and said the Wilshire 5000 year-to-date return is at 25%.....the S&P 500 is at 22.8%, and "we still have 2 1/2 months to go in 2009."

Brinker commented that on the Fixed Income side, rates remain very low and then he recited all of the current rates. (I have posted a link to all the Treasury yields in Honey's Market Report below.)

Brinker's monologue comments:

* The implied inflation rate is now at 2 1/4.

* The deficit won't go away -- According to the Daily Treasury Statement, the Treasury Gross Public Debt is now at $11.9 trillion.....In the past year Treasury Gross Public Debt has increased $1.6 trillion.... Brinker said: "The reason that sounds staggering is because it is. That's a 15 1/4% YOY increase......That is getting very close to the $12. 1 trillion statutory debt limit which they are going to work to increase out of absolute necessity. We had an annual budget deficit for the fiscal year just completed on the 30th of September of $1.4 trillion dollars. That is the largest annual budget deficit in the history of the U.S.A. And according to the Congressional Budget Office, we could be looking at annual interest payments on the national debt of $800 billion within a decade.....

.....Can you imagine paying $800 billion a year in interest......And draining that money out of the U. S. economy, because you don't get a whole lot for paying interest on your debt.....There's already a tremendous amount being paid. But it's been a little lower recently because rates have been so low. You know the government is getting close to zero on those short-term bills --$253 billion interest paid in '08....$191 billion because of the zero rates in '09.....

.....This is going to be a topic that hopefully will get some attention in Washington. So far, our celebrity politicians have essentially ignoring it and coming up with new ways to spend borrowed money. But hopefully that will change at one point."

Some interesting calls:

* Steve in "bankrupt" Vallejo, California asked about the "green job phenomena." Brinker commented it was all about "politics," that "it's basically a farce" because the push for "green" solar and wind will only double the energy production from 1% to 2%, and is intended to take attention away from the "real issue in America, which is unlimited and unfettered deficit spending."

* Marty in Kansas City pointed out that gold is at an all-time-high and asked what Brinker thought about it. Brinker said, "There are those out there that are using gold as a substitute for fiat paper currency. I think it's pretty obvious -- you hear the callers on the program and you hear comments from people all over the world in the investment community that talk about the amount of paper currency that is printed by various central banks around the world. In fact that's been part and parcel of the approach to the credit market collapse after the Lehman Brothers bankruptcy last year. One of the main cogs in the government response has been to print money......

.....And there are those who react to that and believe that by printing all that money, inevitably that will lead to inflation. As a result, rather than sit around with paper currency, which they don't trust, they would prefer to have some money in gold. And that creates demand for gold bullion and I think that has been part of what you've seen. It certainly is not based on current inflation because right now the annual rate of inflation is minus 1.3%.....At this time, we are having deflation.....

....And let's face it, we have an official policy, unspoken and officially denied policy in the United States of debasing the dollar. We're doing it because it helps our exports. We are doing it because it increases our imports..... So gold is also used as a hedge against that."

Caller Mark in Nevada said: "I was hoping you could help me understand the big gap in what different articles and what people say the S&P 500 P/E ratio is. Some say it's around 16, others say it's around 140 based on earnings." Brinker said: "I know exactly what you are talking about, and the people who say it's 140, those people include the people who have missed this terrific cyclical bull market run that we've been enjoying for the past half year or so.....

.....These are the people who are probably sitting around in mostly, or partly, or whatever, in cash and missing out on this terrific run up we've been experiencing. And the reason is, they are looking in the rear-view mirror. When you look in the rear-view mirror in the stock market, all you get is yesterday's newspaper. You know what that's worth..... So the bottom line is, they are looking at reported earnings. And when you look at reported earnings and you can get the write-offs in there and all the rest of it, you can get those earnings down pretty low after a severe recession such as we've seen. So that's how they get that kind of a P/E multiple....

.....Now you mentioned the other example was a P/E in the teens. When you look at operating earnings of companies, especially when you are looking at projections that are current or forward, it's very easy to get that price/earnings ratio into the teens. And of course, that's a whole different ball game then.....And I think that those people who are looking at operating earnings are on the right track.....And I can assure you that if you're walking saying the multiple is a 140, you are missing out on this bull run......"

Paul in Portland said: "Thanks to you, I've enjoyed the last six months in the market." [Honey EC: Brinker let this jaw-dropping statement stand with no comment whatsoever. I wonder how many innocent listeners were misled by it.] Paul was concerned about banks making money from investments instead of from loans. Brinker replied that Paul was probably talking about bank holding companies like Goldman Sachs, and that he didn't see anything wrong with them making money from investments, but they should also have profitable lending portfolios.

Brinker said: "You know most of the companies that have been reporting earnings, have been beating expectations. That's one of the reasons we've seen such a positive stock market tone for the past half year or so.....and that has a way of going down quite well with investors. Because after all, we've been through a pretty tough recession....

......In my opinion, the recession ended in the second calendar quarter of 2009. I believe that the recession ended during the April, May, June quarter. And my expectation is that we are going to see a positive number, could see a decent positive number here in the third quarter when they report it later this month. And I'm also expecting we are going to see a decent positive number in the fourth quarter when they report that number in January. I think we are going to see, and this is what I've been saying for quite a while in the investment letter, I think we a going to see a positive result from Gross Domestic Product in both the third quarter and the fourth quarter.....

.....And I also expect we are going to see a decent rate of real Gross Domestic Product growth in calendar 2010. I think this is one of the reasons that you've been seeing such a positive tone in the stock market. Because I think that investors are discounting the future. That's what they always do. They don't look in the rearview mirror......And that's the reason that they've been bidding stock prices higher, and they've bid them a lot higher with the S&P now trading in the 1080's because they've been anticipating that you know, yes, it was a rough recession but we're not going to go back and do that again, we are going to look and ahead, and I think that is what has served them so well. The total stock market year-to-date, as we speak, showing a total return of 25%. I'm Bob Brinker, this is Moneytalk."

Additional Brinker points:

* The stock market reacts to earnings reports based on Wall Street expectations and estimates rather than company-reported comparisons to prior year.

* Credit union NCUA is the same as bank FDIC.

* The net-asset-value of Treasury Inflation Protected ETF's will fluctuate with interest rates.

* Alan Greenspan ("The Maestro") made headlines this week when he said large banks should be broken up. Read October 15th Bloomberg article [LINK]

* Brinker said: "Alan Greenspan is not the Fed Chair who went away. He's the Fed Chair who's always there."

* Paul Volcker is a "legendary Fed Chair" who moved on and went his own way. When he stepped down, he wasn't out there sniping like Greenspan.

* Brinker said: "Now I'm going to make a prediction that when when Ben Bernanke leaves the Fed Chair that he'll be more like Paul Volcker than he will be like the Maestro. I don't expect Ben Bernanke is the sort that is going to be out on the sidelines throwing cherry bombs into the policy."

Brinker's Saturday guest-speaker was Micheline Maynard, "The selling of the American Dream: How Foreign Companies Are Remaking the American Dream."

Brinker's Sunday guest-speaker was Robert A. Hefner, "The Energy Transition: The Rise of Energy Gases, Sustainable Life and Growth, and the Next Economic Expansion."

SUNDAY UPDATE

There were a few interesting events Sunday. Brinker talked about the "tsunami" of earnings reports that will be coming out next week. There are another 75 S&P 500 companies due to report earnings, including 11 Dow components. From Marketwatch [LINK]:

Among the highlights next week will be results from Apple Inc. due after the close of trading on Monday.

Tuesday will bring, among others, Coca-Cola Co. , Dupont, Pfizer Inc. and United Technologies Corp.

Wednesday brings results from Boeing Co., Freeport McMoRan, Morgan Stanley, and Wells Fargo.

On Thursday, results are expected from 3M Co., AT&T Inc., Credit Suisse Group, Dow Chemical Co., McDonald's, Merck, and Travelers Cos.

On Friday, results from Microsoft Corp. are due.

ITEMS:

* Sunday, October 18, 2009, Bob brinker said: "I have not issued a sell signal on the market. My portfolios are fully invested."

* A caller from Nevada asked Brinker if he thought the pension that he will be receiving from the state will be safe. Brinker told him that he was not worried about the State of Nevada because it is a "trophy location" -- especially "Las Vegas and Reno" -- because of "legalized gambling." [Honey EC: That was a very interesting comment from Brinker when you consider that Lake Las Vegas in Henderson, Nevada, where he bought a condo in 2006, is now in bankruptcy and the golf courses are closed.]

* Brinker did a rather long and emotional soap-box diatribe about smoking and mentioned some kind of "deal" between the Attorney General and the tobacco companies. Brinker didn't give the specifics -- he just said it was a horrible thing and he couldn't talk about it. (Google didn't come up with anything that looked like what he might have been talking about.)

* Strange item: Twice today, when Brinker was talking about something on his website, he said, "CLICK, CLICK, CLICK on it." I've never heard him do that before.

* Bob from Durango, Colorado said that his retirement is in Brinker’s Model Portfolio III.
Bob said: “Part of that portfolio, 20% is in the Vanguard GNMA Fund [VFIIX] and 20% is in the Short-term Investment Grade Fund [VFSTX]. And since the GNMA has that wonderful aspect about it of being guaranteed by the United States Government, I’m wondering what the reasoning is in having those two funds versus the whole 40% in GNMA’s."

Bob Brinker replied: “That is certainly something that you can do. The reason that we have diversified that money is related to the fact that we think the Short-term Investment Grade Fund which obviously is a fund that allows you to have a variety of bonds in it, is a very good fund. It’s had a terrific record, it has extremely low expenses. And we just think it adds to the diversification of the portfolio.....

..... Now that doesn’t mean that people can’t go their own way -- a lot of people do that. A lot of the people who invest in the investment letter portfolios have variations in their portfolios…..The reality is, that the investment grade portfolio has a low duration and it has quality investments. This is extremely important to me……..Now you have obviously, higher quality in the GNMA than you have in the investment grade. But I think the investment grade gives you exposure to the corporate bond market and I’ve been thinking very favorable about the corporate bond market. It’s had a very good year."

Honey EC: Brinker accepts calls on this portfolio and talks about its holding almost every weekend. It looks like he may be trying to appeal to those who are nearing retirement or in retirement in order to get new subscribers. Whatever the case, Brinker has now revealed 40% of the portfolios fixed income holdings. The other 10% of the fixed income portion is in Vanguard Inflation Protected Securities [VIPSX]. And the vast majority of the equity holdings in this portfolio is in Vanguard Total Stock Market Fund [VTSMX]. What Brinker has NOT revealed is that Model Portfolio III (balanced fixed income-equity) lost 23.9% in 2008!

Honey's Market Report:
* Dow closed at 9995.91, a 1.3% gain for the week. (The Dow broke through 10,000 this week, but couldn't quite hold on to it.)
* Nasdaq Composite Index closed at 2156.80, up 0.8% for the week.
* S&P 500 Index closed at 1087.68, a 4.5%, up 1.5% for the week.
* GLD closed at $103.18...Last week it closed at $102.84.
* Treasury rates, TIPS, munis [LINK],
* Fed Funds, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]


Moneytalk programs are available free "on demand" at KGO810 radio for seven days after broadcast. You can download and save Bob Brinker's Moneytalk programs (owned by ABC) and listen whenever you choose at no cost whatsoever. To download the programs to your MP3 player or flash drive, just choose the day, then right click on the 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

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POST OR READ COMMENTS [LINK]

Bob Brinker's Moneytalk: Summary, Discussion, Excerpts, October 10, 2009

Posted October 10, 2009....Bob Brinker began the program with the stock market closing numbers, Treasury yields, Treasury "implied inflation rate" (1.5%), and municipal bond rates. Bob Brinker commented that the S&P 500 Index (including dividends) has returned 21% year-to-date, and the Total Market Index has returned 23.4%.

[Honey EC: Bob Brinker never mentions the fact that the S&P 500 has risen almost 40% from the March 9th low of 677. Perhaps because in February (one month earlier) he issued an all-new-money-in buy-signal at "low-to-mid 800's."

In the February 4, 2009 Marketimer, Page 2, Paragraph 3, Brinker wrote: "....and we continue to regard the S&P Index 750 to 850 price range as the bottom area for the entire bear market."

That was the final time that Brinker issued a buy signal or called a market bottom. Anyone who bought at 850, rode the S&P down almost another 200 points. Then the Spaceship put on its cloaking mechanism, called everything off and went into waiting mode. Oops!! Five days later, the market bottomed and never looked back:

In the March 5, 2009, Marketimer, Bob Brinker said: “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 for a sustainable market advance, we need to see a sequence of events consisting of (a) the establishment of an initial closing low; (b) a short-term rally; (c) a test of the area of the initial closing low on reduced selling pressure."

So having done a course correction in the Spaceship Moneytalk in APRIL, when it became obvious the market had turned, Brinker never again talked about market lows, instead he relentlessly hearkens back to January and acts as though he never said anything after January.]

Brinker continued his opening monologue by repeating a lot of things he has previously said about the irresponsible fiscal policy of the government, and their "laissez faire" attitude about the soundness of the dollar -- and the horrific national debt.

I thought it would be interesting to read a brief summary of ALL of the calls today, and make note of the subjects covered and where the callers were from:

* Caller Charles from Boston said he was worried about hyperinflation and the possibility of rising interest rates. Brinker said that the economy would have to make a comeback before that would become a concern. Brinker then launched into another rant about the "cushy" life of politicians, how they get "life-time jobs with six-figures salaries, perks and benefits to die for -- and become celebrities." And after they leave office, many become lobbyists -- much like having the "foxes in the hen house."

* Caller Garry from Baton Rouge asked how long this out-of-control spending could go on without causing serious damage to our system, and what about a Federal Reserve audit? Brinker said an audit is not likely even though Ron Paul is working for one..... and that we are already suffering lower growth potential. Brinker thinks that GDP may reach a range of 2-3% and unemployment may peak at 10%.

Caller Penny, listening to KGO wanted to discuss Daylight Savings Time. Brinker said that it saved about 1/2 of 1% on energy use.

Caller Joyce from New York asked what effect insider-buying has on stocks. Brinker said it can be good for a stock if it shows they have faith in their company.

Caller Mark from California wanted to give his opinion of Daylight Savings Time. Brinker said he likes it because he can play more golf in the evenings, but that energy consumption savings are minor.

Caller Bruce from San Francisco asked Brinker how long he thinks interest rates will stay so low in light of the difficulties it causes for retired people. Brinker said that "nobody cares about that or they wouldn't be as low as they are now"....the ONLY thing that could pressure the Fed into raising rates is the "dollar." Brinker went on to say that if retirees have been following a 50-50 approach to investing, their "losses have been moderate." [Honey EC: Brinker ignored the caller's point about retirees' investments so that he could plug his "balanced portfolio." Bruce was referring to people who depend on Treasuries, CD's and Money Market Funds for income. Not all retirees invest in the stock and bond market through mutual funds.]

Caller Dan from Virginia asked about the "wash sale." Brinker said that it only applied to losses in taxable accounts. He said there is a perfectly legal way to get around it -- and that is to purchase a double position, hold it for one month, and then sell the old shares.

Caller Glen from New York wanted to talk about some trades he had made with a stock but he didn't name the stock (call was too esoteric to be interesting).

Caller Mary from Chicago seemed to want to brag a bit about having some of her kid's college money "left over." (Don't think Brinker got her point either.)

Caller Eddie said he had just used some of his retirement money to buy Bill Gross' Bond Fund and Vanguard Bond Fund. He asked Brinker if he thought he had done the right thing. Brinker told him to check the duration of the funds -- that if the duration was five years and rates went up 1%, then the net-asset-value would drop 5%.....Vanguard GNMA Fund (VFIIX) has a 2% duration, so if rates go up 1%, it will drop 2%. So it depends on one's tolerance for volatility.

Caller Mary from New England asked about buying gold. Brinker said go for the "gold content" -- not numismatics..... to look at the U.S. Eagle, which has a 4 1/2% premium, the Maple Leaf -- 4% premium, and the Australian Crown with a 1% premium.

Caller Doug from Wichita asked if the net-asset-value of GNMA Funds is safe, or if it might collapse like Fannie Mae and Freddie Mac. Brinker said that he doesn't see that happening because GNMA's carry a direct U.S. government guarantee on the principal and interest -- but...the U.S. Government might have to "pony up."

Caller David form Alexandria asked how one would go about "betting against the dollar." Brinker (for the fourth time) mentioned T. Rowe Price International Bond Fund (RPIBX) as a hedge for the dollar. And for the second time, he mentioned the exchange-traded-fund, FXE (Euro vs. dollar).

Brinker's Saturday guest-speaker was Richard L. Brandt, "Inside Larry and Sergey's Brain" (Thanks, Joe)

Brinker's Sunday guest-speaker was John Mullin, "Getting to Plan B: Breaking Through to a Better Business Model"

Honey's Market Report:
* Dow closed at 9864.94, a 4% gain for the week.
* Nasdaq Composite Index closed at 2139.28, a 4.5% gain for the week.
* S&P 500 Index closed at 1071.49, a 4.5% gain for the week.
* GLD closed at $102.84...Last week it closed at $98.37.

Moneytalk programs are available free "on demand" at KGO810 radio for seven days after broadcast. You can download and save Bob Brinker's Moneytalk programs (owned by ABC) and listen whenever you choose at no cost whatsoever. To download the programs to your MP3 player or flash drive, just choose the day, then right click on the 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

This chart is courtesy of Kirk Lindstrom:



Dixiegeezer took this picture of a Sandhill Crane N.E. of Tampa this morning:

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