Brief Summary, Commentary and Moneytalk Excerpts, January 5-6 2008
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STOCK MARKET Saturday, Bob Brinker did not mention any change in his views about the stock market. He considers recent activity nothing but expected "volatility." He offered no forward looking guidance and he did not say when he expected the correction to end.
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However, in the opening monologue, Brinker repeated his usual mantra, which is that those who are worried about a 10% decline may not be suited for investing in the stock market--and he reminded listeners that there has been several recent market corrections.
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One retired caller had 50% in stocks and was worried about the market. Brinker told him that 50% in stocks during retirement is fine in “generic” terms, but went on to say this: “....maybe your risk tolerance just is not such that you can deal with the kind of fluctuation. You know my definition for a bear market is a decline in excess of 20%........So in order for us to be in bear market territory — by my definitions — we would have to see the stock market, the S&P trading below 1250.”
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Several times on Sunday, Bob Brinker hammered the point that the market was "volatile," and probably would remain volatile for some time to come. After saying that he believed that we are in for a period of very, very slow economic growth in the first and second quarters, but expects a rebound in the second half of 2008, Brinker made this comment: “Now if you study the stock market you know the stock market discounts the future about six to seven months in advance. So if we were to see a recovery in the second half of 2008, following this slow period then the stock market would be in the process of having discounted that as we speak.”
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ECONOMIC GROWTH Brinker seemed to switch horses Saturday on the subject of economic growth. Up until then, the context of his economic talk has been to emphasize that he did not see a recession ahead and that the “cassandras” and “bad news bears” are all wet.
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While he didn’t mention a recession Saturday, he inferred that he had been underscoring the economic slowdown by “talking about it ad nauseam on the program.” (Honeybee sez: That is simply NOT TRUE. He has always been very matter of fact in saying that the economy would have slow growth--with emphasis on "no recession on the radar".)
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REAL GDP NUMBER Coming out this month for 4th quarter – a series of weak quarters –in the ballpark of 1% plus or minus; way below trend growth.
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HOUSING RECESSION New home purchases have declined by 34% -- largest YOY drop since January 1991. Construction is down – jobs lost. Brinker expects it will take at least all of 2008 to work through the extra housing inventory and advises buyers to “low-ball” offers. One cause of the housing problem is the difference between the “bid and the ask"--only highly-motivated sellers are willing to lower prices.
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WEAK DOLLAR “Dollar weak, Euro strong.” U.S. exports become attractive overseas and creates jobs in the United States. A “net plus” for the U. S. economy. Brinker insinuates that the Fed is lying when they say they are for a strong dollar.
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TRADE POLICY Can’t reverse globalization.
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PROPERTY TAXES Will change because some will be “valued-down.”
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MONEYTALK POLITICS Brinker said that on Moneytalk, politics are all about taxes.
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TAX BREAKS Should be targeted to middle class to stimulate economy because they are the “spenders”….Brinker said he considers those in the 15% bracket middle-class – perhaps some in the 25% bracket.
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DRILLING FOR OIL IN ANWAR Brinker said "it’s a disgrace that the U.S. has not already approved a full scale drilling program in the Alaskan National Wildlife Refuge. By the way, did you know that China is drilling for oil 90 miles off the coast of Miami – and we can’t drill in Anwar! We look like fools.”
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RECESSION A caller asked Brinker what he thought could possibly cause a recession.
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Excerpts of Brinker's reply: “I think we can identify what we certainly know would cause a recession. One thing would be if the Fed gets it wrong. If the Fed interprets, for example, high oil prices as a priority – now so, far they have not done this…………then they would make the mistake, which would be very disappointing, that they would think that they can actually control oil prices – which they cannot. They have no power whatsoever. Oil is a global commodity, and they have no power whatsoever at the Fed, or to even have a significant impact. If they make the mistake of thinking that they have to fight oil prices by raising rates, then that will cause a recession. All they have to do is go back into a pattern of raising interest rates –tightening monetary policy--that will definitely cause a recession. There is no question in my mind.
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So far they have gone the other way……..I expect them to cut rates again by the end of this month – at the January 30th meeting, at the latest……And I wouldn’t be surprised to see them cut rates again after that, because they are behind the curve. We have a ROOKIE at the controls at the Fed. I’ve talked about it for months, and you have ROOKIE risk. And ROOKIE risk tells you that the ROOKIE in control may not do everything the perfect way…….They were locked in their IVORY TOWER going into August. We were badgering them to death – I don’t think they care."
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Caller's Followup to Brinker's Recession Reply: “So as of now, your newsletter projections and recommendations hold.”
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Bob Brinker: “Well, we just published, we just published. Today is January 6th, we just published on January 4th. Everything_that_is_in_that_letter, I stand by today. I’m Bob Brinker. This is Moneytalk.”
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Honeybee sez: I counted four separate times today that Bob Brinker extensively touted his newsletter and model portfolio contents and performance DURING THE PROGRAM (not in paid advertising). Is that ethical?
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jerry said...
bob did say that the markets are a discounting mechanism by about 6-7 months and he expects a 2nd half rebound and that the mkts are discounting this as we speak so if you read between the lines which you must do with bob sometimes i would say he thinks we are near the end of this correction but yes but with the volotility not going away anytime soon we could still go a bit lower due to that.. bob is favorable on the mkts and rates the funds in his newsletter as attractive for purchase now
January 6, 2008 6:10 PM
Hi Jerry,
Yes, you are correct. In paragraph four of my weekend Moneytalk Summary, I have posted the excerpt of what Brinker actually said about the market now "discounting" the economic slowdown.
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I certainly agree that with Brinker it is necessary to "read between the lines." This often gives him "weasel" room, in case he needs it.
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And as you said, Brinker is favorable on the market (actually he is 100% bullish--short-term, intermediate-term and long-term).
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I'm not sure why you are always looking for a reason to take Bob to task-- he has done the show for 20 years now, and it seems that people know what he offers. As far as 'ethics', it is his show to say what he wants. Where is the 'ethics' issue?
Likewise, you seem to have problems hearing him sometimes. He has predicted 2008 growth to slow to less than 2% for months now. Anyone who predicts more than that as far as recession goes is a fool or a huckster. The lack of a prediction isn't because he is afraid to predict-- it is because it is unpredictable. My favorite thing about Brinker is that he doesn't call things that cannot be called.
Some advice-- develop an audience like he did-- on your own, without riding someone else's coattails. Then you will have the right to judge someone else.
Hi sage,
Thank you for your comments.
Please consider it a privilege that I accept your comments on this Blog. After all, it is MY Blog.
Therefore, it is my privilege to post my opinions. However, I always make it very clear to readers exactly what is editorial comment and what is not editorial comment.
I derive my right to "judge" what Brinker says on the national airwaves six-hours a week from the same source that he derives his right to say what he choose to say--the First Amendment.
I find it very strange that Brinker is allowed to basically turn his program into a six-hour infomercial for his newsletter.
It makes me wonder if he has made some kind of a deal with ABC. Most people have to pay for infomercials.
I appreciate your weekly summary of Moneytalk. Often I can't listen to the show so the blog is my first stop to catch up on Bob's forcast.
I see your point on self promoting the newsletter. However, I'm inclined to give Bob a pass on this since the newsletter is what probably enables Bob to share his insight and time with his listeners. And for those who trust his advice the newsletter is a big asset.
Jim
I, too, get tired of all the bashing. Brinker provides great information and he isn't afraid to stick his neck out. Right now he's bullish and a whole host of other so called eperts are either bearisn now or won't say....Bob does give his opinions which is more than most do...sure, he does leave a little wiggle room, but he's bullish longer term now...what can be more forthright than that?
Hi Jim
Glad to know that you appreciate my Moneytalk summaries.
And thanks for your answer to my question about the ethics of Brinker's "free" advertising of his newsletter.
If I understand you correctly, you are saying that you do not think it is ethical, but you are willing to "give him a pass" on it.
IOW: you are willing to overlook his lack of ethics because he "shares his insight" on a radio program that he is no doubt compensated for doing?
I don't mean to sound snide, I sincerely want to know if this is really what you are saying...
tamworth said, "I, too, get tired of all the bashing."
This is not a site where you will find a Brinker-sychophant. It is one of the few places on the internet that you will get Brinker's true record--even the parts that he has covered up.
Most other websites where Brinker could be freely discussed have been shut down and/or censored.
My original Beehives at Suite 101 (over 3500 posts) were ALL removed without warning, and I was forbidden to start a new Bob Brinker thread on threat of having my membership terminated.
Brinker's model portfolio performance record that he touts on Moneytalk to sell his newsletters to uninformed listeners are ranked from Janary, 1988.
Anything that Brinker has said or done since then that affects his market-timing record, can and will be discussed on this Blog.
If you consider that "bashing," then I suggest that you don't let the door hit you in the behind on the way out.
I too am tired of the "Bashing". I am tired of Bob Brinker bashing our President, the chairman and members of the Federal Reserve Board, members of Congress and other people in the financial industry. Maybe if this nasty little man stopped doing it, people would be less inclined to bash him.
honeybee wrote:
Bob is favorable on the mkts and rates the funds in his newsletter as attractive for purchase now.
If the market drops another 10 points, I bet Brinker will wish yet again he kept to his original buy at $1380 level rather than "buy in mid 1400's."
Do you have it in your files when he changed from 1380 to "mid 1400's?"
He's been pretty accurage on these buy the dips, even if he is fully invested and can't take advantage. I've had two new subscribers to my newsletter the past two days who want to use the "Brinker Buying Opportunity" to add some of my more risky/speculative/high beta stocks to their portfolios rather than mutual funds.
Rasputin came to chat last weekend and said he bought a huge, (6 -figure) slug of VTI on the decline. He has had good luck buying the dips then selling when the market returns to old highs and collecting CD interest.
BTW, if you click on the 6 months S&P500 chart here, you will see we finally had a lower close... Brinker used to like that for calling final bottoms... too bad he gave up talking about technical analysis and charting on the show.
I hope nobody panics.
HoneyBee, Thank YOU for all of your MoneyTalk summaries. I find them very valuable for different reasons, some of which are your candid remarks and opinions about the TRUE record, because we'll NEVER hear Bob tell us about his screw-ups (QQQQ) and other "inconsistencies."
If others who read your summaries have any problems with anything in regards to your informing us about the TRUTHFUL records of Bob Brinker, please do not even bother responding to these foolish inappropriate remarks from these weirdos! Why are they reading this blog of yours which is such a great service to all of us if they are not finding it useful or of their liking? 'Cause they're weirdos; that's why.
I believe that we have to take the good with the bad. And i'm sure that Bob has both. Thanks for pointing that out to all of us.
Jeffchristie,
You are so correct that Brinker never hesitates to "bash" others. For example, he called Ben Bernanke a "rookie" repeatedly this past weekend.
One gets the feeling that he views himself superior to almost everyone. A couple of times over the weekend, he even offered what he called "no-brainer advice" to President Bush. And speculated about whether or not the President was listening to him. LOL!
hi kirk, if indeed this lower close is the final bottom how fast could the mkts make another run at the previous highs ? especially with all the bad news out there? thanks jerry
Kirk said: "If the market drops another 10 points, I bet Brinker will wish yet again he kept to his original buy at $1380 level rather than "buy in mid 1400's."
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Do you have it in your files when he changed from 1380 to "mid 1400's?""
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Well Kirk, the truth is the market has been real close to that previous 1380 more than once since Brinker issue the "mid-1400's" buying opportunity.
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Brinker first issued that "1380 or lower" buying opportunity in mid-March, 2007. (That is, if I recall correctly--my exact records were lost when "someone" convinced Suite101 to destroy years of my work with no warning.)
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But to answer your question: It was in August, 2007 that Brinker first initiated the "mid-1400's" buying opportunity. Here is the quote:
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August 3, 2007 (S&P 1455), Marketimer: “We rate the stock market as attractive for purchase on any weakness that occurs in the area of the S&P 500 Index mid-1400’s.”
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As of January 4th, this is STILL his recommendation.
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Jerry Wrote:
hi kirk, if indeed this lower close is the final bottom how fast could the mkts make another run at the previous highs ? especially with all the bad news out there? thanks jerry
Who knows? To make a guess, I'd say it could rise at least as fast as it has from prior major lows such as the lows in 1998 and 2002, which I consider major bottoms. Technology, especially the companies that ran up in 2000 and have yet to make a new all time high (which leaves out Google since it is new) has been in a secular bear market. My guess from the work I do is the valuation in the technology sector has not been this good since 1993/1994 when companies like MSFT and Intel and HPQ made major pullbacks and offered good buying opportunities. I've got a favorite stock (one of my largest holdings after adding on this decline) in my newsletter and personal portfolios that generates a ton of cash and has a PE of only 9! A stock like that could DOUBLE and still be cheap relative to the overall market... Of course, it could keep going down too so it is high risk, high reward... great for trading around a core position... but not for for those who sell on a 10% pullback since it corrects many times more due to the higher beta.
Take a look at the S&P500 charts I have here. Zoom in in 1998... it looks like the S&P went from about 900 to 1400 in less than a year... 5/9ths is 56%.... a nice gain!
Hi Honeybee,
thanks for the help in keeping track of the radio show. I get the newsletter and find the show ENTERTAINING as anything for free on the radio should be taken. If you listen to any of the people on the "business" radio waves, they are all shills for the their own websites, notice services, newsletters, money mgmt firms, etc. The radio is just a teaser, they always say just enough to get you interested, then say, to learn more, please subscribe. We have a guy on the radio here in PHX, lets call him Kary Galtbaum, that advertises thruout his show, and has the arrogance to always crow he was right about 2 of his last 20 predictions from the days before, ALWAYS AFTER THE FACT and always hedged the day before. So transparent, but entertaining nonetheless, because he takes himself SO seriously.
Hi Major minor (I LOL when I read your handle),
Are you sitting down?
I totally agree with everything you said. I am aware that the practice of "teasing" newsletters, etc., on talk shows is done by many.
I believe it is unethical--period. But mostly, I focus on Bob Brinker, and don't care how unethical others are, I care about how unethical Bob Brinker is....
I was very a devoted fan of Brinker's between 1987-1999, and had nothing but respect for him.
I can tell you that he did NOT do the "freebie" advertising of his newsletter during those years. He seemed to have such integrity that, sure he would advertise, but when callers would try to bring up the subject, he would "not go there."
Back then, Brinker would also discuss the stock market with callers--and even individual stocks. There was a more open exchange between him and the callers about the market that is now completely gone. It made the program exciting, instead of grindingly boring listening to every detail of someone's personal net worth.
For instance, in 1998, when the market had everyone so worried, he reassured listeners by discussing his market views GOING FORWARD.
I'll never forget the day that he actually told a caller, "You can't afford to be out of the market even one day."
The old Bob Brinker is gone, and in his place is someone who grudgingly shares the most minimal amounts of information possible.
"I'll never forget the day that he actually told a caller, "You can't afford to be out of the market even one day." "
That actually came AFTER he stopped talking about the market after the DJIA failed to hold to a 10% correction and fell below is "DJIA 8650 buying opportunity." (Chart) to finally bottom 20% down. Brinker says it was 19.9% on a closing basis so it was not a missed bear... but he also switched to talking about the S&P500, which fell less than 20%, after that incident.
I remember it well because I wrote the monologue for Jim Jorgensen's radio show that weekend. On Friday, the market fell to 7,400 before reversing! As this chart shows, the scary part was past and we were on our way. To Brinker's credit, he did not sell out... but I remember well he did not talk about the market between DJIA 8650 and 7400... As our friend Will_L who may write more for you on it.
That last line should be "ASK our friend Will_L who may write more for you about that incident."
Kirk said: "...but I remember well he did not talk about the market between DJIA 8650 and 7400... As our friend Will_L who may write more for you on it."
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Yes, I agree that there was much more to the story than I presented--and I know that Will_L agrees with you about the details of what happened.
Will has written quite a lot of the history about how Brinker acted when he was mistaken about his market prediction.
Indeed, when Brinker made that statement, it was NOT the first time (in the 1998 correction) that he recommended a "buying opportunity" and the market kept dropping.
When Will returns from "warmer parts" of the world, I will ask him for more information. In the meantime, I will see what I can find in my archives.
HONEYBEE yes i agree i remember back then when he said if there gonna give away the semi capital manufactures away like amat hint hint im buying...so i bought and made alot of money now those days are gone.. he wont talk about stks anymore i think i also remember after jim cramer talked about his show that was the end to the old brinker shows
Hi Honeybee,
Thanks, I hear you loud and clear and am sorry that he disappointed you. Indeed, he is human (greedy and flawed, as are we all). For most folks in the financial business, ethics are way down the list where money is involved. Most are only concerned with what is legal. Sorry for the cynicism, but it has served me well on many occaisions.
My personal and humble opinion is that no one knows the future (read, can time the market), so we should not invest faith in anyone who proclaims to know it. Above average returns requires above average risk (gain or loss) in the long run. I appreciate Bob's record and use it as one of several inputs for decisions on when to put money into the market. I'm in wealth accumulation mode right now, not yet distribution, so I imagine that 20 years from now I'll use his timing (or Bob Jr.s timing) for when to take money out. I just can't bring myself to put all my eggs in Bob's basket.
Thanks again for keeping Bob real and giving us all a forum for discussion!
Maj.Min.
Hi Jerry, you said: "he wont talk about stks anymore i think i also remember after jim cramer talked about his show that was the end to the old brinker shows"
Wow Jerry, I was not aware that Jim Cramer had ever talked about Brinker's show.
When did that happen? Do you recall what Cramer said about Brinker or his show?
TIA__Honeybee
Hi again, my new friend, Major Minor. 8^)
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Again, hope you are sitting down, because I agree with everything you said.
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I'd like to just comment on a couple of your points. You said:
"....sorry that he disappointed you. Indeed, he is human (greedy and flawed, as are we all)."
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Indeed!! But what bothers me is that he is in a position where people place great trust in him that can (and has) affected their lives. Does that not require a greater measure of integrity, honesty and ethics from him?
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You said: "For most folks in the financial business, ethics are way down the list where money is involved. Most are only concerned with what is legal. Sorry for the cynicism, but it has served me well on many occaisions."
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OUCH!! How true...and Brinker, the one financial guru that I actually pay any attention to (as far as his ethics are concerned), certainly proves your point.
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You said: "My personal and humble opinion is that no one knows the future (read, can time the market), so we should not invest faith in anyone who proclaims to know it."
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BINGO!
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You said: "Above average returns requires above average risk (gain or loss) in the long run. I appreciate Bob's record and use it as one of several inputs for decisions on when to put money into the market."
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That sounds like a very wise plan, but be careful about "Bob's record." His advertised record is not the same as his actual record.
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You said: "I'm in wealth accumulation mode right now, not yet distribution, so I imagine that 20 years from now I'll use his timing (or Bob Jr.s timing) for when to take money out. I just can't bring myself to put all my eggs in Bob's basket.
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BOING! Now that almost knocked me off my chair. Are you saying that you expect "Bob Jr." to take over Marketimer when his dad retires? Or are you saying that he already has taken over Marketimer?
BTW: Are you aware that "Bob Jr.s" expertise and education is in computer sciences--not financial matters?
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You said: "Thanks again for keeping Bob real and giving us all a forum for discussion!"
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My pleasure and thank you for your fabulous contributions.
__Honeybee
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MM said, jokingly, I think:
"(or Bob Jr.s timing) for when to take money out."
Who is that? I don't see that name listed on his web page? Is there a new baby in the family that will take over in 20 years?
AAR, why are you worried about distributions 20 years from now? I don't know NOONE that even thinks of that 20 years in advance?
MM continued:
"and use it as one of several inputs for decisions on when to put money into the market."
I sure hope you listen to David Korn of begininvesting.com too. He sent out a 2nd (in my memory) timely email bulletin yesterday, with a follow up email discussing the rational and stop loss point.
If you got the email, and followed it, you are sitting in the Catbird seat right now, smiling all of the way to the bank.
Above average returns requires above average risk (gain or loss) in the long run.'
I would say that the QQQQ "hold for recovery" has been a very long LONG run.
HTH, and, of course, it's only my simple minded opinion.
Yes, I believe there is a conflict of interest between his newletter subscribers and the talk show. How can he give his newletters an advance warning of market conditions and then not give the same warning to his talk show? If he does give warning to talk show then he is shortchanging his subscribers !!
As a previous Brinker newsletter subscriber, I still receive notices about alert. I just received an alert on January 20, 2008.
Anyone know what was said?
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