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 Brinker.com 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:




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