Summary of Bob Brinker's Moneytalk September 29-30, 2007

Bob Brinker talked about the GM contract problems quite a lot over this weekend. He made the point that GM pays employees a total of $80 per hour “all inclusive” wages, while Toyota pays it’s employees a total of $50 per hour (all inclusive). Brinker pointed out that this makes it difficult for GM to compete with Toyota.

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A couple of callers pointed out that the people at the “top” in some of these companies make unbelievable amounts of money. Brinker said he agreed with the callers -- in general -- that over $100,000 per day was absurd.

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Here is a brief summary of Bob Brinker’s take on important subjects that he covered over the weekend:

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• Stock market: Very close to new high. S&P for month of September total rate of return 3.7%, which translates to 44% annualized rate. “Defied” the bad news bears.
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  S&P returns since March 2003: Almost 100% -- COUNTING dividends.
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  Interest rates: Brinker expects them to trend lower.
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  Economy: “Hampered” by a housing recession, but is “fair.” Expect slow growth for the remainder of the year.
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  Inflation: “Inflation is a dead duck.” YOY core inflation is less than 2%.
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  Ongoing housing recession: Could be around for a good part of 2008. Real loss in nationwide house-prices for the past year is 6.6% The days of using home equity lines as ATM’s is “over.” New mortgage market will be based on “stronger underpinnings.”
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  Recession…Brinker said: “We’re not having a recession. There’s no probability of a recession in here.......”
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  In case of a major disaster, such as a whole city being wiped-out: The only 100% protection for portfolios would be Treasuries. Gold is doubtful.
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  Effects of weaker dollar: Increases corporate earnings/helps make exports more competitive/imported products less competitive in U.S.
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  Precious Metals: No recommendations. For those who want a hedge, use GLD
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  Dependency on middle-east oil: We’ve had no real leadership the past 15+ years. We need to be building nuclear power plants.
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  Bob Brinker said that he did not have a recommendation for Emerging Market Funds, but that in each of his “model portfolios” he had international investments. The international funds that Brinker was referring to in his “model portfolios” are Vanguard International Growth (VWIGX) and Dodge and Cox International (DODFX).
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  Record-keeping for IRS: The IRS can check back seven years, so keep anything that has to do with tax returns for seven years.
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  Brinker’s last “buying opportunity” was in the “mid-1400s” range. He reminded listeners of this several times this weekend and pointed out that the market is now close to its all time high. He pointed out that there were many opportunities to buy at that level and even lower.
  
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Honeybee sez: The sad, but important fact that Brinker neglected to mention is that he didn’t tell Moneytalk listeners about this buying opportunity until AFTER the market was way above that level. Generally speaking, you can't buy stocks retroactively. Although, I understand it's possible to call the end of a non-existent secular bear megatrend that way. 8^)

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