[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
Dixiegeezer took this beautiful picture. Please click to enlarge:
