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

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

BRINKER COMMENTS SUMMARIZED, PARAPHRASED OR EXCERPTED

BUDGET DEFICIT....Brinker said: "It is estimated this fiscal year that we will have the largest annual budget deficit in the history of the United States. Now the latest number out is estimated at one trillion six hundred fifty billion dollars to be added to the national debt as a result of this year's deficit. So that give rise to the question that we ask from time to time on the program: 'How high's the deficit, mama?' Fourteen trillion and rising to paraphrase the old Johnny Cash song."

MANAGING FISCAL AFFAIRS IN WASHINGTON: Brinker said: "We live in a country that is fiscally operated like a train wreck of the first order. That's the way they manage the fiscal affairs in Washington."

VANGUARD GINNIE MAE FUND: Brinker told a caller that he had a percentage of Ginnie Maes in his investment letter portfolio. He said that it has been an "amazing" fund.

Honey EC: In January 2011, Brinker cut weightings of the Vanguard Ginnie Mae Fund down to 25% from 40% in his fixed income fund. Wonder why? He gave the caller the impression he was a raging bull on the fund. Hope the caller (and audience) wasn't mislead....

PRICE OF OIL....is way up this week. Brinker said: "What we have right now is a situation where we are hostage to the world oil price. And without any doubt, this runs up the amount of money we have to ship overseas every day in order to pay for that oil. What's amazing to me is here we are just two years now after the ad ran in the Washington Post, courtesy of Dr. Bill Wattenburg of KGO radio. The open letter to President Barack Obama about something that could be done about the problem that still has not been done. His predecessors did not take action and he has not take action......

......Billions of dollars being spent on alternative wind and solar solutions which today, combined, produce less than 1% of all the energy produced in the United States.....About one tenth of 1% of the power generated in the United States is solar.....We still have the same 103 very clean nuclear facilities still operating around the country that were operating two years ago, but no new operating facilities. We still have our cleaner burning natural gas reserves multiplying. They've doubled in the last 5 years and yet we don't exploit these reserves the way we should....."

STOCK MARKET

* Ray from Chicago, who said he was an investment letter subscriber nearing retirement, asked Brinker if he approved of his basically balanced portfolio positioning.

Brinker told Ray yes, then again mentioned the Stephanie Pomboy article in Barrons and said that even though he intended to read the article, the fact that she has been bearish the past couple of years made him cynical about "that kind of writing."

Ray followed up by asking if Brinker thought a stock market correction could happen at any time.

Brinker replied to Ray: "I have even made comments on the broadcast about this subject.... The market, and the areas of risk we could be seeing in the market from time to time that would be normal expectation.....As a matter of fact, last month right here on the broadcast, I pointed out that there are going to be along the way, and they might be small -- they might not be as small as what we've seen, which has been minuscule. Right now, we're 1.7% below the recovery high....it's almost nothing at all......

.....Of course there are going to be short-term corrections in the market. I also pointed out that my guess was that at this point, the likelihood would be that they would be single-digit percentage corrections. So far, that has been correct......I view it as a health-restoring event in a cyclical bull market, which is what I believe we're in. It's a heck of a one, but I think that's what it is -- a cyclical bull market. We've had ones greater than the one we're in right now and we certainly had a lot that were smaller than this. I just don't see any reason right now to sign on to the doomsday machine. If I did, I would tell you."

Honey EC: Brinker is back in full swing with his cyclical bull market within a secular bear market-timing shtick. In order for him to claim to be watching for the end of a cyclical bull market, there needs to be a secular bear market waiting in the wings -- so to speak. How else can he convince people that he is a market-timer when the fact is that he has made no change in his equity allocation for the past eight years?

However, Brinker has flip-flopped on the secular bear market three times in the past decade at times when the market threatened to make a complete joke of it all.

First he said a secular bear began in 2000. Then in June 2007, he retroactively claimed it had ended in June 2006.

June, 2007 Marketimer, Brinker said: "In our view, the valuation based secular bear market that was established following the March, 2000 closing high reached its conclusion on June 13, 2006."

Then in May 2009, he said that the secular bear market hadn't ended after all:

May 2009, Marketimer, Brinker wrote: "Although it appeared to us that the secular bear megatrend that began in Year 2000 had reached its conclusion, there is no question that the secular bear megatrend remains intact. We define a secular bear megatrend as one during which the major indexes make no material and sustainable progress above their historic highs."

MORE CALLS

* Caller Anthony from Buffalo, stated that the United States is not allowed to use its own available oil reserves then said: "I think those who control the price of oil worldwide want to get it up to $200 a barrel so they're going to be making a heck of a lot more profit."

Brinker replied: "Well Anthony, you and I will agree to disagree right up front because first of all, I do not believe there is a conspiracy in the United States to not extract oil. On the contrary, we are extracting many millions of barrels of oil every single day....and we just have the new find in the North Dakota- Montana region -- the Bakken find that I mentioned. So there is plenty of willingness to go out there and extract oil if it's a good find."

Honey EC: I guess Brinker never heard of the radical environmental movements that largely control where the US can drill for oil. And I guess he isn't aware that by the stroke of a pen Obama banned drilling in the gulf coast. The ban may now be lifted (however, I think Obama is ignoring the courts' decision), but how many jobs did that ban cost the US? And as Brinker likes to quote Johnny Cash: "How high is the price of gasoline now, mama?" It's between $3.50 and $4.00 in the San Jose/Santa Cruz areas and rising. Wonder why the media doesn't report every penny increase like they did during the previous presidential administration?

* Caller Mike from Kalamazoo wanted to know what company Brinker would recommend he use to set up a self-directed 401K program. Brinker said he should go with one of the major companies that has an array of no-load mutual funds. He specifically named Vanguard and Fidelity.

Honey EC: Brinker has only recently begun mentioning Fidelity on the broadcast. Could the fact that his son (the computer expert), who publishes a fixed income newsletter, uses Fidelity Funds as well as Vanguard Funds? And I wonder why Brinker never recommends Charles Schwab, a company that has a much broader choice of all investment vehicles and offers competitively priced funds and ETFs. Could it be because Brinker's model portfolios largely use only Vanguard mutual funds?

* Caller Steve from Chicago, an investment letter subscriber, asked Brinker if he had read the Barron's article by Stephanie Pomboy. He said that she is bearish on the stock market and is pro-Treasurys, gold and oil.

Brinker said: "How long has she been down on the market while the market has been going straight up? (Steve: "a couple of years"). Brinker said: "Holy mackerel. The market has doubled in the last two years.....Why would anybody want to listen to somebody like that? I will read the article tonight, but how much credence would you give to someone who has been looking for the dark side for the past two years while we've seen the market basically double in price......I do think it's a valid approach to reading the article to at least be a little bit cynical going in, but I do appreciate the call."

Honey EC: How ironic that Brinker would slam Stephanie Pomboy for being bearish on the stock market for the past two years while it doubled. Did he forget that he was bullish on the market over the prior two years when the market was more than cut in half? You couldn't make this stuff up. Brinker-truth is stranger than fiction. :)

* Caller Carl in Rochester asked Brinker what fund or ETF he would recommend to invest in oil or commodities. Brinker said that he didn't usually take "sector-approach" to investments, but that the XLE was a widely-traded index-oriented energy sector Spyder.

* Rick from Hartford recited what Brinker called talking points about the lack of action by Department of Energy. Rick began by saying that we just had "8 years of a failed presidency" etc.

Brinker replied: "Let me ask a question, since they've had the better part of 3 decades to resolve the problem, what was this Energy Department doing under 8 years of William Jefferson Clinton?

Rick responded: "I try to keep it in perspective that it was also under Reagan, who..." Brinker interrupted and pointed out that Rick did not answer his question, probably because he was "too caught up in his talking points."

Honey EC: Jeffchristie also has a question for Rick: "You want to talk about Ronald Reagan, the man voted the greatest president in US history in a recent Gallup poll? He beat out Abraham Lincoln by 5 percentage points. Is that who you want to talk about?"

* Caller Fred from Colorado said he'd like to see purely electric battery-powered cars. And to extend the driving range, have battery exchange stations every 30 to 60 miles where people could pull in, pay a fee and have their batteries removed by a forklift and a fresh battery installed.

Brinker replied that it might be just a "little inconvenient" to have to pull in and wait in line to get a battery exchanged. He also pointed out that if they were plugging into a coal-fired energy center, it would just create another pollution disaster...

Honey's reaction to Fred's suggestion: Laughing out loud! :)

A BRINKER FISH-STORY? Brinker started the second hour of the program today by reading a letter that he said he had received. Is there anyone willing to do the math and let us know how this could be anything except a fairy tale? Brinker presented this story as fact:

Brinker said: "I want to share with you a nice I received from one of our Moneytalk regulars, who listens to our broadcast up in the Pacific Northwest. Her name is Lynn.........

....She writes that she first started listening to Moneytalk when she was in her early thirties and single, and had total assets to her name of $5,000. And she writes that she listened to our broadcast religiously and eventually she scrounged up enough cash to start as an investor. Well, here she is 20 years later. It's a nice story. ....

.....She writes, your advice has seen me through marriage, a daughter, saving for college, unexpected widowhood in my 40's, recent re-marriage, and arrival at my own critical mass of approximately two million dollars in assets today. I would have to give you enormous credit for helping me get to where I am today. Excellent advice, first rate book recommendations, and interesting and informative guests on your broadcast. Please know that your work has been a blessing to me and my daughter."

Bob Brinker's guest-speaker was Matthew Lynn from London, "Bust: Greece, the Euro and the Sovereign Debt Crisis" (Bloomberg (UK))




Moneytalk is FREE and available for downloading at KGO810 radio up to seven days after broadcast. The program is archived in the 1-4pm time-slots: KGO: Moneytalk free on Demand
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Snow in Santa Cruz Mountains

This may get a lot of laughs in many areas of the country, but snow in the Santa Cruz Mountains, especially close to the coast, is very unusual. I have lived here eleven years and it's the first time I've ever seen snow on my deck.

The first two pictures were taken at 7:30am before the cloud bank had backed off so the mountains are not visible.






The second two pictures were taken from my covered patio a few minutes later. No way could I walk on the snow-covered redwood deck and remain upright. :) The sun melted all the snow in about 2 hours.

When you enlarge the last picture, there is an astonishing thing in it that I did not know was there when I took the picture. I have a hummingbird feeder hanging under the patio and the camera caught one of the gorgeous little darlings waiting in the tree for me to move - or, it looks like he might have been in flight.

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February 24, 2011, Bob Brinker's Latest Stock Market Advice

February 24, 2011....Bob Brinker's most recent stock market-timing advice is to dollar-cost-average during periods of short-term market weakness as a method of "adding to equity positions in the current stock market environment."

The S&P 500 Index closed at 1306 today. Bob Brinker is predicting a target range of 1350 to 1400 zone for 2011 based on his P/E projections. But as usual, this all depends on the economic recovery and the ability of the Federal Reserve to "manage monetary policy."

In spite of those predictions, on Moneytalk, Brinker has been very non-committal about the stock market. I looked back through my weekly Moneytalk summaries for 2011 and this is what showed up. Can you read anything between the lines?

January 2nd: Fill-in host, Neale Godfrey.

January 9th: "Brinker made no mention of the stock market today."

January 16th: Brinker said: "Are there going to be short-term corrections in here? Of course there are. It's my guess that there are going to be single-digit corrections. That's my best guess right here. That if we get corrections in this market, and we're talking about a market that's been horrendously strong as it's reached its new recovery high in the S&P at 1293. But we're certainly in a position where we could easily see short-term corrections in this market because it's always been that way. There's nothing new about this. But my personal view would be that they would be single-digit corrections based on what I'm seeing."

January 23rd: "The only mention of the stock market was at the beginning of hour three when Brinker recited the latest stock market closing numbers."

January 30th: No mention of the stock market.

February 6th: "Brinker recited the closing numbers and said it has been doing exceedingly well."

February 13th: Fill-in host, Lynn Jimenez.

February 20th: "Brinker reported that the Dow and S&P 500 index closed above June, 2008 levels -- so far this year, up 7%. The Nasdaq is almost back to ten-year high."

As they have been since March 2003, all of Brinker's model portfolios are fully invested. That is understandable when one considers that he expects any stock market correction at this time to be contained in the single-digit range -- as he said on Moneytalk just a month ago.

Dixiegeezer's "fishing in Florida" (please click to enlarge, it's breathtaking):



* Please note the much-improved search window near the top of the page.

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February 20, 2011, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

February 20, 2011....Bob Brinker hosted Moneytalk today.

The following Bob Brinker comments summarized, paraphrased or excerpted:

STOCK MARKET: Brinker reported that the Dow and S&P 500 index closed above June, 2008 levels -- so far this year, up 7%. The Nasdaq is almost back to ten-year high. Brinker gave no hint of any change in his bullish outlook.

STOCK MARKET REACTION TO A GOVERNMENT SHUTDOWN? Brinker said: "If you look back at that period back in the mid-1990's, the market kinda yawned. So I don't see any expectation that this would be a dramatic event in terms of a stock market issue."

INFLATION: Brinker recited the weekly "Treasury implied inflation rates" but there were no calls about inflation in the real world this week. The ten year Treasury implied inflation rate is 2.4%.

TREASURY YIELDS....are historically low:

Three-month Treasury Bill = annual yield of 0.1%.
Six-month Treasury Bill = annual yield of 0.125%.
One-year Treasury = annual yield of 0.25%.
Two-year Treasury Note is yielding 0.75%.
Five-year Note is yielding 2.25%.
Ten-year Note is yielding 3.6%.
Thirty-year Bond is yielding 4.7%.

REAL ESTATE-HOUSING MARKET: Brinker said that there have been some signs of stabilization, but it is going to take time to work through all the short sales, foreclosures and inventory.

UNEMPLOYMENT RATE: "at 9%"

TOO BIG TO FAIL BANKS: Brinker said: "I still think there are a few banks that currently are in the too big to fail category.....This is just an opinion, it could be right, it could be wrong. I think that Citigroup, Bank of America, J.P. Morgan and Wells Fargo. I think those four banks would be in the category....of too big to fail."

STATE BUDGET DEFICITS AND TAX INCREASES....Many of the states are running gigantic deficits which creates a problem when you don't have the keys to the printing press. No state has a printing press, so they have to have to come up with "smoke and mirrors" which is one of the "leading ways they do things in Sacramento, California." Or they have to come up with changes. The changes could be reduction in benefits -- or tax increases. It looks like tax increases are becoming increasingly popular at the state level.....

MINNESOTA PROPOSED TAXES....The State of Minnesota has proposed a new all-time-high 13.95% marginal tax rate on incomes over $500,000, and a 10.95% for single filers earning above $80,000 taxable income. Brinker opined that since neighboring South Dakota has a zero state income tax many high-earners may be leaving Minnesota and moving across the border to South Dakota.

FEDERAL BUDGET DEFICIT....Brinker said: "Right out of Ripley's Believe it or Not this week, the White House projected that the federal deficit for this fiscal year through September would be 1.65 trillion dollars. That is the biggest deficit in the history of the United States for any one year."

NATIONAL DEBT ....Brinker continued: "So the national debt just continues to spiral out of control. It's already gone through 14 trillion dollars. It's getting very close to the $14.3 trillion number that triggers the need to increase the national debt ceiling. In fact, the Treasury Department now says that interest expense is going to rise to 3.1% of Gross Domestic Product within 5 years. Last year, it was 1.3%, given the low rates.....And they also predict cumulative deficits of over $4 trillion through 2015.....It's starting to look like we could be looking at a 20 trillion dollar national debt in considerably less than ten year."

INTEREST ON NATIONAL DEBT.....Brinker continued: "And the Treasury Department estimating that net interest expense is going to triple in four years to an all-time-high of $554 billion. This is just for interest. Last year with the low rates, it was 185 billion dollars......The politicians in Washington are spending like a runaway freight train. In turn, they are running up the national debt to levels that are truly incomprehensible in such a short period and that in turn is going to run up the cost of serving the debt."

REDUCING MATURITY OF NATIONAL DEBT PORTFOLIO.....Brinker continued: "And to make matters worse, they have been trading down the average maturity of the national debt.....They have reduced the effective maturity of the US national debt to about 3 1/4 years.....That means that in an average of 3 1/4 years, the Treasury has to roll over the entire portfolio on an average basis. Now you know, we are talking about a lot of debt here. It's about 9 trillion dollars right now if you look at the marketable government debt outstanding right now...... And by the way, it's up like $3 trillion plus in the past 26 months. It's up like $3.15 trillion in the past 26 months......Now that means if we get into normalization of interest, that's going to increase the interest of that national debt......So all in all, it is truly an amazing situation."

CUTTING BUDGET DEFICIT: Brinker said: "These numbers they're kicking around in Washington. Possibly cutting $61 billion from the budget deficit. Now wait a minute. What about the other 96% of the deficit? It's astounding to me that the people that have been sent to Washington to change all of this in the last election are talking about such tiny amounts.....They are going to have to make decisions on entitlements and military to get anything meaningful done.....Forty percent of the federal budget in in entitlements, Medicare, Medicaid, Social Security.....They have to go after those if they are going to cut spending."

* Caller Gary from Virginia said he was a Marketimer subscriber and was primarily invested in portfolio 1, but had reached the point where he needed more fixed income and wanted to know if Brinker thought it would be a good idea to simply begin using the fixed income allocation from portfolio 3 rather than selling off everything and starting over.

Brinker replied: "That is a great question and my answer is the same as it's always been. That is this, that model portfolio 1 and model portfolio 2 are both all equity portfolios. Therefore, they apply to the equity portion of an investor's portfolio. That is also true of the active/passive portfolio that you see each month on page 7 of the investment letter. Now model 3 of course, that is a portfolio is designed as a balanced portfolio so it includes a combination of stock market and income investing......But if you want to take model 1 or model 2 or the active-passive and use those for the equity portion of your portfolio......The if you wanted to have a fixed income portion, you could take that fixed income portion in model 3 and you could also take the income, which is the dividend related income portion and you could plug that in as well."

Honey EC: Brinker's active-passive portfolio is simply is the kind of portfolio that most advisors recommend for those who don't want to be bothered with making changes, but want wide diversity in a simple form with low expenses and high level of tax efficiency.

Brinker's active-passive portfolio has been fully invested for over 8 years. It has an 80% weighting in Vanguard Total Stock Market Index (VTSMX), 10% in Vanguard International Growth (VWIGX), and 10% in Vanguard All-World ex-U.S. (VFWIX). (Brinker recommends VTI as a substitute for the Vanguard Total Stock Market Index Fund for those who want to use an ETF.)

Vanguard Ginnie Mae Fund (VFIIX).

* Caller Josephine from South Carolina asked about Vanguard Ginnie Mae Fund (VFIIX). Brinker told Josephine that her weightings were beyond the amount he recommended in his investment letter, then he found out her holdings were only 20%. He breathed a sigh of relief and said that was okay. (He later told Joe that the fund had done "incredibly well.")

Honey EC: In January, Brinker lowered the Ginnie Mae holding in portfolio 3 down from 40% to 25%.

Vanguard Wellesley Income Fund (VWINX)

Josephine followed up by asking Brinker if the Vanguard Wellesley Income Fund (VWINX) was going to be "in the fixed part of his portfolio" or was it going to be "in the equity part of his portfolio."

Brinker replied: "That's a hybrid. We're using that as a hybrid. So the answer to your question is yes and yes. It is an income related security..... And that fund has done a great job in a conservative realm. That is a fund that is 62% in fixed income securities, and 38% in income-related securities, such as dividend paying stocks. So that makes it a hybrid........Personally, and I've said this before in the past, I think it's a well-managed fund."

Honey EC: Maybe someone else remembers Brinker mentioning Wellesley Fund before today, I do not. However, Josephine's question is a good one, but Brinker artfully dodged and did not answer.

In my opinion, Brinker spun like a top to avoid admitting that in January, 2011, he added this fund, which is 38% stock, to his fixed income portfolio, and to model portfolio III which is already heavily over-weighted in stock.

Why does Brinker have a fixed income portfolio with stock in it? Does calling Wellesley a "hybrid" fund somehow make it appear less strange to have equities in a fixed income portfolio? Or does the rose by another name maybe not smell the same, and is it still a rose? (Sorry, mixed metaphors again. LOL!) As far as Vanguard Wellesley Income Fund (VWINX) holding dividend paying stocks, that is true, but the fact remains, they are stock.

* Caller Jim in San Diego, one of several callers who claimed that thanks to Bob, he was in the "Land of Critical Mass" said he was "stopped and shaken out" of some of his individual stocks because of fear. He wanted to know how to handle fear and greed.

Brinker replied: "One of the ways you handle that is by managing specific stock risk by limiting yourself to no more than 4% of equities in any one company stock. I think the best way to handle it is to take a step back and take a macro-view of what you're doing. And what I'm talking about here, and you can use stock equivalents exchange-traded funds.....Things like the S&P 500 Exchange-Traded Fund, the Spyders....where you would be investing in the S&P 500 instead of the XYZ company. You would be throwing away that specific stock risk that you've been dealing with and you would substitute for it a market risk.....And you might find that you are more comfortable diversified across hundreds of companies."

Jim followed up by telling Brinker that he had tried XLE (energy spyder), but was still inclined to sell when, for instance, he heard of problems in the mid-east.

Brinker replied: "Let me share with you something I've done personally and I've also recommended in my investment letter.. And that is turning a potential negative into a positive, literally. And that is to invest in oil stock that is in a politically safe region. And the region that I've chosen, I consider to be the most politically safe regions in the world, which is Canada. And Canada is the largest exporter of oil to the United States in the world.....

.....The reality in the mid-east has been very, very ugly, very unstable......I would agree with anybody that calls the mid-east a giant tinderbox......Aside from the fact that about 3% of the world's daily oil supply floats through the Suez Canal.....a substantial portion of the world's oil supply comes out of Saudi Arabia....So when you consider the potential risk to the world's oil supply......and when you oil that you can identify, long sources of oil supply and decades of proven reserves....in political stable reasons.....And again, I mention Canada as one of my favorites, the negative becomes a positive."

Honey EC: I was expecting Brinker to talk about his Canadian oil company "off-the-books" stock recommendation today because last week the NAV rose from $40.82 to $44.90. Brinker added Suncor (SU) to his individual stock list back in May, 2009. I purchased some of it a couple of weeks ago and have a watermelon smile on my face. :)

Funniest call of the day was from Joe from Ohio, who said: "May I thank you for all your years of service. I've been listening to you for over 20 years. And my sister's daughter just got married and she wants to thank you for the beautiful wedding reception she was able to provide for her daughter because of your advice......And my brother would like to thank you for his retirement home in Florida....(on your advice) He went into Ginnie Maes and he now has a beautiful retirement home in Florida." [Honey EC: You can't make this stuff up, noone would believe you. LOL!!]

*Caller Michael from Kansas City, who said he had been listening to Moneytalk for ten years and also loved his subscribtion to Moneytalk on Demand. Too bad Michael doesn't know he could download Moneytalk for free from KGO810.

Moneytalk is FREE and Available on Demand at KGO810 radio for seven days after broadcast. The program is archived in the 1-4pm time-slots. Be sure to download the Greg Farrell interview in the 3-4pm time slot: KGO: Moneytalk, it's Downloadable

Brinker's guest-speaker was Greg Farrell:

The National Debt:

Another masterpiece of photography by our friend, Dixiegeezer. Click to enlarge:

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February 13, 2011, Bob Brinker's Moneytalk: Lynn Jimenez Fill-in Host

February 13, 2011....Bob Brinker took the day off from Moneytalk today. Lynn Jimenez was the replacement host. She is a business reporter for KGO 810 radio in San Francisco, California

[Honey EC: There were a couple of interesting calls today. I transcribed portions of the Steve from Mountain View call. He probably would not have gotten on the air if Brinker had been hosting. And if he had made it on the air with Brinker, Brinker would have found a way to spin and disguise what Steve said. Brinker has successfully hidden these costly blunder from all except those who followed his advice in 2007-2008 and are still underwater -- as Steve eloquently pointed out.

....Also, I thought that readers would find some of the things Lynn Jimenez had to say today interesting and insightful as to where she is coming from. I did not summarize or comment about the call near the end of the second hour where Jimenez got on her political soapbox and made misleading and BIASED statements about the old-new governor of California, Jerry Brown. However, I think it was very unprofessional for her to use the program to espouse her own personal political opinions.]

At the beginning of the program, Jimenez gave an outstanding financial report. She said that investors added money to mutual funds at the "fastest clip in seven years."

Lynn Jimenez Stock Market Timing and Recommendations

Dan in Aptos said he was worried about his stock holdings and a possible market crash, and wanted to know when to sell. Jimenez told Dan: "When you are uncomfortable, make a change. When you're uncomfortable, maybe take some profit and find another place to put it. But I'll tell you something. Right now, at least for the several months, I believe that we have maybe another 10 to 12% growth to anticipate from the S&P 500. Now that may level off, and of course, it ratchets down, but you know, in my gut, I don't see it at 6 or 7 thousand......

.......But when you're uncomfortable, make the move but think about it and study. You know, it's a tough decision, you know. We're all getting older and we can't really afford to start out all over again. I don't know. It's tough. I mean, what would you do? Do know how to spot and profit when the economy changes course. I mean, that's what I'm trying to learn every day. And we're going to get more information about that from Lakshmann Achuthann. He wrote the book on it."

Jimenez also recommended these specific stock sectors to Dan: "energy, industrials, fertilizers, chemicals, industrial machinery, health care distributors."

Jimenez said that she thinks the stock market will go down once Quantitative Easing stops, but "doesn't know how much it will go down."

Safety of General Obligation Muni-Bonds and why states won't default

Jimenez commented that she likes some muni-bonds. Jimenez said: "I have a hard time speaking for other states like Illinois and New Jersey, okay. And even Texas. You know Texas has a bigger deficit than California, it's $27 billion. I think California's $25 billion. Because everybody cut taxes, didn't cut spending and then the recession hit. So it didn't matter if you were you know, a very conscientious state, the recession took away about 28% of your income. That's gotta hurt, right?.....

......But here's the issue here, you know, we're not Greece. People in the United States pay taxes. Muni-bonds that are general obligation and guaranteed, have a tax source to raise the money. All right? And every Treasurer of every state, and there are 30 states in big trouble, knows that if they default on the bonds, if they were even going to declare bankruptcy, that they would never get money again at the rates that they could afford. It would just be impossible. There are 50 states, why go to one that defaults. So I think that some of the fear is misplaced, depending on the type of muni that you have.......At least in California...if you have solid school bonds and solid general obligation bonds, you should be okay."

Brinker's I-Bonds "timing was terrible" for Nancy

Nancy from LA said she bought IBonds on Brinker's recommendation back in 2005 and 2001. Jimenez told her that her "timing was terrible." Jimenez laughed and said she wasn't laughing at her, then she recommended that Nancy sell the I-bonds.

Bob Brinker's 2007 Gift-Horse Buying Opportunity

Steve from Mountain View said: "The reason I sold was, this was back in the late 2007 when I followed Bob's advice to lump sum into the market at S&P 1400. And it's been over, almost 3 1/2 years now and I'm still at a loss, but I decided to sell on the recent strength and wait for another buying opportunity to fully recoup my investment."

Jimenez replied: "According to S&P, there statistical evaluation is that there might be another 10-12% on the market. But you know, when you wait for the tops and wait for the bottoms, that's when you get burned. You know, if you're comfortable doing this, then that's fine.....But you are at an interesting turning point here. Treasuries, they're not paying a huge amount and you could get crushed should inflation come up. At the same time, you are leery about stocks, so there's CDs, they're not paying a whole lot, second mortgages, muni-bonds. You're pretty much at the top of gold right now, I think. That's my opinion. So you're going to have to do a little work, Steve."

Steve follow-up: "With the jobless recovery and the next wave of home losses to come, I think you'd have to be a birdbrain to think that the worst was over in the economy."

Jimenez said: "I think the very worst may be over, but I think you're right that we're going to see some retrenchment. That always happens.....But we were so close to a total collapse that I don't think we're at that point again."

Honey EC: Steve is correct. Brinker considered mid-1400's a gift-horse buying opportunity beginning in August 2007 and each month thereafter through January 2008. The megabear that Brinker's timing model failed to see coming, started getting down to business in January 2008, so Brinker rescinded his mid-1400's buy on January 10, 2008. Then he began issuing ever lower buy-levels each time the market dropped throughout 2008 and early 2009.

Marketimer October 2007, Brinker wrote: "....we see the potential for the S&P 500 Index to rise at least into the mid-1600's range next year....In the August and September editions of Marketimer, we rated the stock market attractive for purchase on any weakness that occurs in the area of S&P 500 Index mid-1400's range. During August and September there were 18 buying opportunities, consisting of 15 market days on which the S&P 500 Index closed within the 1430 to 1470 range, and three market days on which the index closed slightly below that range. Although we do not believe further weakness into the mid-1400's range must occur, we remain comfortable with rating the market attractive for purchase should any such additional weakness occure. Above that price range, we prefer a dollar-cost-average approach for new stock market investing. All Marketimer model portfolios remain fully invested."

Marketimer December, 2007, Bob Brinker wrote: "We continue to rate the market attractive for purchase on any weakness in the area of the mid-1400's range of the S&P 500 Index. Any additional weakness below this range is regarded as a gift horse buying opportunity."

Marketimer January4, 2008, Brinker wrote: "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 500 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."

Steve is just one of many who still has losses from where he was 3 years ago, all because he believed that Bob Brinker and his "timing model" would get him out of the market before a 20% bear (never mind 57%). But the fact is that Marketimer's "timing model" didn't even see a bear market coming, and didn't see when the bear bottomed in March 2009. Beware of voyaging market-timer spaceships wearing cloaks. It might not be Captain Kirk and Spock. It might be a Romulan in shark's clothing. :)

Moneytalk third-hour guest-speaker was ECRI's Lakshman Achuthan, co-founder and CEO of Economic Cycle Research Institute. Lakshman discussed economic cycles and his outlook on inflation. You can download the interview now from KGO and listen at your convenience.

Kindle edition of Lakshman Achuthan's "Beating the Business Cycle"

Moneytalk is FREE and Available on Demand at KGO810 radio for seven days after broadcast. The now Sunday-only broadcast is archived in the 1-4pm time-slots. KGO: Moneytalk, it's Downloadable


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February 6, 2011, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

February 6, 2011....February 6, 2011....Bob Brinker hosted Moneytalk today -- Superbowl Sunday. Brinker said he was rooting for the Pittsburgh Steelers +3.

STOCK MARKET: Brinker recited the closing numbers and said it has been doing exceedingly well.

INTEREST RATES: Brinker said that the Fed continues to hold short-term rates at rock bottom levels.

UNEMPLOYMENT INSURANCE CLAIMS: Brinker said they have come down to the low 400,00s which is better than mid-400,000, but he'd like to see them in the 300,000 which would indicate improvement in the labor market.

UNDEREMPLOYED (U6) COMPONENT: Came down to 16.1 in January.

UNEMPLOYED: Hundreds of thousands dropped out of the workforce in January, and that is a factor in the unemployment number dropping to 9.0 from 9.8 two months ago.

NEW JOBS: Brinker expects to see improvement in the numbers as we move forward. He thinks the weather affected the January numbers.

GOOD TAX NEWS: Brinker announced that the Senate had voted to repeal the "diabolical 1099 tsunami." and that he expects the Senate to do the same -- and he is sure the president will sign it. This legislation was scheduled to begin in 2012 and would have required 40 million businesses across America to issue 1099 forms on any purchases above $600 -- from any contractor.

PELOSI KNEW WHAT SHE WAS TALKING ABOUT: Regarding the 1099 potential financial disaster, Brinker said that the former Speaker of the House knew what she was talking about when she said that they'd have to pass the healthcare bill to find out what was in it.

CASE SCHILLER HOME PRICES: Brinker recited the numbers for the top-10 cities (Honey EC: Those numbers, plus much more info, is available at this [LINK])

CHINA BUY US BANK: There were a couple of calls today asking about about the possibility of China taking over a US bank. Brinker said that there was no way that could happen.

Honey EC: The Wall Street Journal reported that they are trying to do it: "CHICAGO—China's biggest bank signed an agreement that would make it the first Beijing-controlled financial institution to acquire retail bank branches in the U.S., though regulators could still block the deal."

* Tom from Florida said: "I'm a long time listener and a Moneytimer [sic] subscriber......I met you at George Mason University and I followed your advice and I reached critical mass three years ago....I'm in a new home and I have enough money to pay off the balance on the mortgage at about $200K right now..... I could pay that off, thanks to you, Bob, on critical
mass. I haven't touched my, I have a big, big nest egg, thanks to you, Bob, and I could pay that off......Well I'm on Federal Retirement, US State Department (Brinker asked how much pension).....Over $100K." Brinker recommended that Tom pay off the mortgage.

Honey EC: Brinker also asked about Tom about his health care benefits and found out he has full Blue Cross/Blue Shield paid for him -- and I'd betcha his whole family too. Brinker then asked about Tom's net worth. Tom said, "Over a few million." Brinker said taxpayers would appreciate his sharing this information since they are paying for it. I found it fascinating that instead of giving credit to a cushy Federal "State Department" job that no doubt contributed to those "few millions" he accumulated, and pays him a six-figure pension for life, he gave credit to Bob Brinker for his "critical mass."

TFB pointed out the ridiculous contradiction about the $millions that Tom said he had "not touched," while at the same time crediting Brinker for having "critical mass." Indeed, Brinker has recommended a fully invested equity allocation since March 2003, either by following his buy-signals or dollar-cost-averaging.

TFB wrote: "If this guy had any money sitting around and he followed Da Brink he would have thrown in up to his equity allocation at S&P 1450. So since he said he had a few million laying around,which I would equate to 3 million or so(and assuming a 60-40 allocation) even at today''s high he would be thanking Da Brink for losing his around 180k."

There was no guest-speaker today because the the third hour of Moneytalk was not a live broadcast. It was a series of spliced calls from previous programs, which I have confirmed by locating three of the calls in my past summaries.

A very large percentage of the calls they chose for the third-hour were from Marketimer subscribers. Otherwise, the calls were mostly generic, repetitious, no longer relevant or simply too esoteric to be of interest.

But I will cover one of them because I believe it is pertinent to Brinker's current advice on precious metals. Whoever chose this call from a year ago January 2010, may find him or herself getting a few lashes with Brinker's wet noodle for two reasons. :)

Firstly, Brinker is basically admitting that he added an ETF that is pure speculation to his Marketimer off-the-books list of "individual issues." He did that as of May, 2009 and has never given any follow-up guidance as to price or how much to buy.

Second, in the interim time between the following re-run call from January, 2010, when he said that he knew of no vehicle for silver that compares to GLD and November, Brinker has clearly stated that it's okay to use SLV as a substitute "hedge" for the dollar in place of GLD.

Caller David from Castle Rock, Colorado said: "Over the many years that I've listened to you, I know that you have not been a proponent of precious metals, and though in light of the unprecedented debt financing that we see our country involved with these days, and some believe the potential devaluation of our currency, do you find that possibly that taking a modest position in Vanguard Precious Metals and Mining Mutual Funds to be a reasonable position these days?"

Brinker replied: "There's been no change in my views that I've expressed frequently in recent years on Moneytalk, that if you're going to do anything in that area, my preferred vehicle for that is the Exchange Traded Fund which happens to be the second largest in the world, ticker symbol GLD. Because I think the GLD shares are an excellent way to provide a
vehicle for those who want to have a hedge in the gold market......

......Now my views have not changed. I view gold as a speculation. When I hear people saying buy gold, it's going to two or three thousand, I'm always amazed when I hear this kind of discussion because I don't know how they know that. By definition, the price of gold is a speculation. And if you want to speculate on gold and use it as a small hedge in your portfolio, then it is your right to do so. But no matter how you look at it, it's a speculation.....

.....When you buy shares in a common stock, if you are an investor, you buy because you think there's an increasing earnings and dividend streams..... But when you buy gold, you don't have that increased earnings and dividend stream because gold does not pay dividends. Gold bullion bars just sit and you pay for storage. So the bottom line is, it's speculation on what others will pay for a bar of gold. "

Caller David's follow up question: "I've heard that there has been a historic correlation between the price of gold and the price of silver. Is there a similar Exchange Traded Fund in silver as there is with the GLD in gold?"

Brinker replied: "I would say that the answer would be that GLD has become such large fund, as I said it's the second largest Exchange Traded Fund......I think when you look at the size of that fund, when you look at the volume of trading in that fund, I think we would have to say that in the precious metals category, as an Exchange Traded Fund and as a play on something like gold, it really does stand out. I don't know any Exchange Traded Fund in silver that would even be close to GLD in terms of its size, in terms of its level in turnover trading and things of that sort."

Here is the original summary of this very same call (written by David Korn) posted at this blog on January 11, 2010 [LINK to original post]

"Caller: This caller noted that Bob had never been big on precious metals, but in light of the unprecedented debt financing an possible devaluation of our currency, do you think a modest position in the Vanguard Precious Metals and Mining Mutual fund might be a reasonable idea? Bob said if you want to do anything in that area, his preferred vehicle is the exchange traded fund that tracks gold (ticker: GLD). Bob said he still views gold as a speculation. When he hears people saying gold is going to 2,000 or 3,000 he is amazed because they don't know that. The price of gold by definition is a speculation. When you buy shares in a common stock, you buy because there is an increase in earnings and dividend stream. But when you buy gold you don't have that increase in dividends stream. Gold bouillon bars just sit and you pay for storage. You are speculating in what others are willing to pay for gold."

And here is what he said about using SLV on November 7, 2010 [LINK to Summary post]

BUYING SILVER AS HEDGE Brinker said: "As far as silver is concerned, I think it could be considered as an alternative form of hedging in a portfolio......The preferred way for those who wish to have a silver hedge in their portfolio would be the Exchange Traded Fund that holds the silver bullion -- that trades under the symbol SLV.....the Ishares Silver Trust."

Congratulations to Bob Brinker for 25 years of Moneytalk. As he usually says these days: "It's all about the money."

Moneytalk is FREE and Available on Demand at KGO810 radio for seven days after broadcast. The now Sunday-only broadcast is archived in the 1-4pm time-slots. KGO: Moneytalk, it's Downloadable

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