Moneytalk Summary October 28, 2007

Brief Summary, Commentary and Bob Brinker Excerpts From Moneytalk, October 28, 2007

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STOCK MARKET: Bob Brinker said:

"Well, another good week in the stock market and S&P 500 trading just 1.9% below its all time historic record high. The S&P500 sitting in at the 1535 level as we speak and acting very, very nicely. We like to see the kind of a thing that we saw the week before last where we had just a momentary shake-out – one big down day. People running for the windows; running for the exits; panicking for a few hours – this is a wonderful sight for investors, because this is how you rid the market of people who should not be in the market -- people who don’t understand the words of J.P. Morgan. You remember the words of J.P., quote: ‘stocks tend to fluctuate’ unquote – the wise words of J. P. Morgan. And it’s true that stocks tend to fluctuate and so when you run into people who make a big deal out of small potatoes – short term fluctuations, well, they don’t belong in the market in the first place. They don’t understand what it means to invest in the stock market. After all if they did understand, they wouldn’t be making a big deal about a short-term market fluctuation.”

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FED MEETING NEXT WEEK: Brinker said that a 25 basis interest rate point cut is "baked in the cake." Beyond that amount, he doesn't know.
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HOUSING RECESSION: "Serious."
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MICROSOFT EARNINGS: Reported on Thursday. “It was a great week for Microsoft.” Vista, the new version of Windows, has increased the growth rate at Microsoft. Sales of Windows Vista for personal computers up 25%; net income up 23%; Revenues up 27%. If you had invested $7000 in Microsoft in the early 1990s, it would now be worth $252,000.
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APPLE: Reported earnings this past week were way ahead of optimistic expectations. “McIntosh computers selling like hotcakes.” If you had bought APPLE two years ago, you could have bought the stock in the $30. It is selling for $185 a share -- up 400% in the past two years. Quarterly profit of $904million, which is a little over a $1 per share—up from $542million.
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Globalization and Job Security: “There is no such thing as job security or job protection in a globalized world.” Brinker recommends that when you are standing on the track watching the train coming towards you, it’s best to re-tool, learn new skills or do whatever it takes to survive in a global economy.
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Vanguard California Tax-exempt Money Market Fund: It’s a "good fund for Californians in a high bracket." It pays 3.3% right now.
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ETF Capital Gains Taxes: “…..transactions that are made in the exchange traded fund when they re-balance to keep the portfolio in sync-----those gains have to be passed along to shareholders.” But capital gains distributions are low, just like in a no-load index fund.
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BRINKER TIP: Vanguard offers free stock trades for “good customers." He said to inquire about their “Flagship Accounts.”
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SPY and VTI: May be used in place of Vanguard Total Stock Market Index Fund if you want to buy/trade ETFs rather than Mutual Funds
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HOME OWNERSHIP: “On the downturn…dropping for the 4th consecutive quarter…..that’s the longest streak on the downside in 26 years.” Home ownership is now at 68%, so it hasn’t been a big drop because the record was reached in 2004 at 69.3% -- it's just a gradual slide down.
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POLITICS: Bob Brinker said: “Barring a train wreck of immense proportions, Hillary is heading for the nomination. But it’s not really going to be a nomination. It’s going to be a coronation and I expect that unless something dramatic happens, that next summer, Hillary Diane Evita Rodham Clinton will be crowned the Democratic presidential nominee. As for the Republicans, I have no idea who they are going to nominate.”
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HILLARY AND TAX ON ASSETS: "She is the one presidential candidate that has discussed a tax on assets and is the most likely to do it." Can she get it through congress?
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HILARY AND CAPITAL GAINS TAX: Brinker guessed that she would settle for 20%, but she might want more, “……..because she is a big believer in re-distributing the wealth. She really loves that notion of re-distributing, so she might want more.” On dividends, “She hasn’t made it clear." On income tax, “Over $200,000, you are getting a tax increase.”
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BOB BRINKER TAX WARNING: “So what does this mean? It means you have the balance of this year and all of next year to make money at today’s income tax rates – maximum federal 35, capital gains 15, dividends, qualified dividends, 15-Federal. You have until the end of 2008 because George W. Bush is not going to raise your taxes. "
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CHARLIE RANGEL’S TAX INCREASES: Bob Brinker said: “….proposing a $3 ½ trillion tax increase over the next ten years. Proposing a set of tax laws that would propel the top federal bracket to 44% in the next few years…..in the top bracket in California, if you paid 44 to the Feds and 9.3 to Sacramento, you’re tax bracket is over half –over 50%.”
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NATIONAL DEBT: “The Treasury Gross Public Debt, which is the all-inclusive measure of our indebtedness, one year ago was $8.5trillion, today it is $9.054trillion--that is, unbelievably, that is $503billion higher in the past year." Interest on this debt is about a billion a day.
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OIL IN DARFUR: Thanks to JeffChristy for this link that proves that Bob Brinker is very mistaken when he claims there is no oil in Darfur and says that is “the reason we are not involved in a big way”: http://www.twf.org/News/Y2004/0807-Darfur.html
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San Jose, California Housing Market: Bob Brinker told a caller not to expect home prices to rise very soon. Bob Brinker obviously knows very little about the housing market in the South San Francisco Bay Area.
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http://www.sjhousing.org/report/Misc/Housing_Statistics.pdf
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Bob Brinker’s amusing quote for the day: “Total return, we talk about a withdrawal that’s conservative which is 4%.............That’s the kind of rate on a million and a half nest egg that generates $60,000 a year – walking around money.”
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____Honeybee


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Moneytalk Summary October 20, 2007

Brief Summary, Commentary and Bob Brinker Excerpts From Moneytalk, October 20, 2007

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Saturday’s opening monologue began with Bob Brinker explaining what his program “has always been about.” Brinker said: “We talk about everything from investing in your 401K, or your 403B, to saving for all your future goals. And you can get that job done through knowledge. It’s the knowledge that empowers you to manage your personal financial future. That’s what it’s all about. We have no interest here in the get-rich-quick schemes. We’ll leave those to the sharks. We’re happy to get rich slowly, but that takes patience along with discipline….…..so that someday, you can arrive in the land of critical mass.”

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INFLATION NEWS: For September, CPI figures were "good." Core inflation rose 2/10 of 1%. Bob said there was more good news this week and this: “Now the year-over-year on core consumer price inflation stands at 2.1. But there’s a better gauge of core inflation -- the Personal Consumption Expenditure Index -- that’s only at 1.8 -- this despite the fact that we’re looking at a barrel of oil flirting with the $90 level.” Food was up 4 ½ YOY – effected by the ethanol craze. Medical care expenses up 4.6 YOY basis – that’s the second highest rate of inflation in the index.

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OIL IMPORTS: Brinker reminded listeners of the long gas lines in 1974 when people sometimes waited an hour to buy just a few gallons of gasoline. Brinker said that to this day, we still pathetically have to “cow-tow” to the Saudi Arabian royal family because after 33 years we haven’t gotten off the “Middle-East oil habit.” We import 12 million barrels per day—much of it from the Middle East. We get another 8 million barrels domestically. Brinker said that unfortunately, we don’t hear much about this subject from either Party. Among other things (nuclear), he believes we should be going into Anwar, but pointed out that politicians can’t even reach an agreement on that.
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http://www.politicalgateway.com/main/columns/read.html?col=59

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ECONOMIC GROWTH: Because of the pressure on the economy from higher energy prices, we are seeing “below trend growth"—acerbated by the housing recession.

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S&P 500 INDEX: Brinker said: “Now amazingly, despite all of this – albeit volatile, which is not that surprising, the S&P 500 Index today. sets at 1500. Now anybody hearing what I just talked about would say you must be joking. The S&P 500 Index is at 1500? Yes it is. Not only that, it’s only 4% off its record high which was registered in this very month of October. And so we’ve seen tremendous resilience in the stock market.”

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BONDS: Brinker said: “Quality bonds are acting extremely well as investors are fleeing risky credit holdings to get into quality credit. Who can blame them with the sub-prime meltdown and all that goes with it.”

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MODEL PORTFOLIO THREE: Caller Tom said he was a subscriber and asked how well Model Portfolio III might be expected to keep up with inflation during his retirement.
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Excerpt of Bob Brinker's answer to Tom's question: “Well if you take a look at that portfolio for the ten years – the last ten calendar years — complete calendar years through 2006, and I might add that portfolio is doing very well in 2007 as well with reference to its conservative balanced objective. But if you take a look at the last ten years, you have a 145% total rate of return on that portfolio. Now this is kind of unusual, but that portfolio for the last ten calendar years has actually beaten the total stock market index. That would not normally occur over the very long term because that portfolio has a good chunk of bonds in it. But it’s actually beaten the total market index for that ten year period by 145% versus 127% for the total market index. Again that has happened because of the fact that there was a period in there - a good solid long period in there in the early part of the decade when that portfolio was largely in cash reserves in terms of its equity position and as a result it benefited from that before it went back to fully invested on the March 11, 2003 buy signal.” (Honeybee sez: The portfolio that Brinker was advertising via this caller was 32.5% in money market funds between January 2000 and March 2003, and the remainder was in 25% VIPSX; 25% VFIIX; 5% European/International Funds; 12.5% Stock Mutual Funds.)

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FED, INTEREST RATES and FALLING DOLLAR: Brinker expects the trend of the dollar to be gradually lower and sees know reason to change that anticipation. He expects the Fed to decrease rates by ¼ of 1% at the meeting on October 30^th and will be surprised if they did more than that. He does not believe it’s the Fed’s job to defend the dollar. How high can the Euro go versus the dollar? Brinker said it will have to be dealt with in Europe—they are the ones being hurt by it.

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FED’S JOB ACCORDING TO BRINKER: “The Federal Reserves mission is to support maximum sustainable economic growth consistent with low inflation.”

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SMALL CAPS: A caller wanted to know if we are “coming out of the small cap era” and should we now expect more growth in mid-cap or large cap. Brinker said he’d been hearing this theory every year for several years and like a clock, sooner or later the pundits have to be right. Brinker said that the way to stay away from that kind of thinking is to have a diversified portfolio. “For example, if you have the total stock market index today, you have close to ¾ in the large cap, about 15% mid-cap and about 10% small cap.”

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Most of the calls were about esoteric subjects, and unless one had similar circumstances to the caller, they were of very little interest. I had difficulty even getting the first two hours of the program because it was pre-empted for various reasons, so I don’t know who was the third-hour guest.

_____Honeybee

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Bob Brinker on Black Monday, October 19, 1987

Is history repeating itself? Will Bob Brinker miss another "Black Monday"

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This is the twentieth anniversary of Black Monday, October 1987, when the Dow lost over 22% of its value in one day. I recall that day very well. I had been listening to Bob Brinker's Moneytalk long enough to believe that he was absolutely trustworthy and capable of predicting what the stock market would do in the future. I was "WRONG."

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Bob Brinker was just as bullish the weekend before that huge market drop as he is right now. As the market was tumbling in a very alarming manner that Monday, KGO radio did a guest spot with Bob Brinker during a financial report. Brinker was very reassuring--as only he can be with his velvet voice. He said not to sell. He was "WRONG." I could have saved myself some big losses by selling even during the middle of the day.

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Of course, Bob Brinker historians know that Brinker sold all equity allocations and went to 100% cash just a couple of months later--locking in large losses. And he remained in cash until early 1991--missing a lot of market gains.

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Last weekend, Bob Brinker could not have sounded more bullish on the stock market. He spent a lot of time hammering the "bad news bears," and saying how they talked "nonsense." Brinker poked a little fun at a caller who asked about the upcoming "Black Monday" anniversary and reminded the caller of other anniversaries--mentioning the 1929 market crash and the national tragedy that happened on 9/11/01. I guess some might have thought it amusing--I didn't...

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So today, October 19, 2007, the S&P 500 Index has lost over 4.2% of it's value since October 9th--down over 3.5% for this week alone. The Dow dropped 366 points today.

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Here are my comments about what Brinker said last Saturday:

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"STOCK MARKET: Five weeks in a row on the upside. This week the stock market made another historic record high — has been “acting beautifully” and “celebrating.” The “backdrop has been positive for the stock market” because retails sales increased by 6/10 of 1% -- way more than the pundits, guru and experts said it would."

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Very recently, Mark Hulbert reported on Bob
Brinker's Marketimer as follows: 

"Bob Brinker's Marketimer:  Bullish.  In his most
recent issue, published in early October, editor Bob
Brinker wrote: "We expect significant  additional
stock market progress into next year as investors
discount growing corporate earnings in an environment
of low inflation and benign interest  rates." His model
portfolios are fully invested."

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Bob Brinker's Gold "Recommendations"

This past weekend on Moneytalk, I heard Bob Brinker take
credit for making a recommendation to buy gold as hedge.
To the best of my knowledge he has never made a
recommendation to buy gold. He got away with this
on-the-air deception because there was a  small  element
of truth to what he said--so he could easily spin it to
make himself look good and get away with it.
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Bob Brinker has consistently refused to recommend gold
per se.  Rather, when callers have asked him about buying
gold, he would sometimes explain how much it was selling
for in the late 1970’s as opposed to what it is selling
for now. He would never mention how much the price of
gold has increased over the past few years.
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And he would say that he did not own gold and  had never
recommended buying it, but if someone was determined to
own a small amount as a “hedge,” he would suggest buying
the gold ETF: GLD.
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Here are David Korn’s comments about the “gold” calls
this past weekend.  These are excerpts from David Korn’s
newsletter—posted with his permission.
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David Korn wrote all of the following:    

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Caller:  This caller owns some gold and wanted Bob's
opinion on whether to continue holding it or sell.
Bob said he wouldn't be doing numismatics unless he
was a coin dealer due to the mark up that you must
pay to transact.  As far as whether to stay with gold,
Bob said if investors want to own it as a hedge, that
is fine.  In fact, Bob said he just checked the numbers
and Bob said since he has been recommending gold as a
hedge for those who want it as a hedge, it is up about
40% and so it has done very well.  Bob said if you want
to own it as a hedge against inflation or whatever,
you can do that, but Bob said he doesn't own it and
doesn't see inflation.  Bob said he has not missed out
being in gold because he has been invested in the
stock market and it is up over 100% in the last few years.
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EC:  This is a new one for Bob -- taking
credit for making a recommendation on
something he doesn't own and wouldn't
own and said specifically he  would not
make a recommendation to own.Bob has
been steadfastly BEARISH  on gold for
as long as I have been doing my newsletter.
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Caller:  If you own gold outright and want to convert
it to dollars, this caller said he heard the premiums
could be as high as 4%.  Bob said that is absolutely
true.  The transaction costs associated with selling
gold and gold coins can be astronomical.
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Brinker Comment: Bob said the American  Eagle gold
coin sells at a 5% premium to their gold content
as does the Canadian Maple Leaf.  That is a hefty
premium.  However, if you want to buy gold coins
with the smallest premium, that would be the
Krugerrand, the Australian Crown and the Mexican
Peso.  Bob said gold has a portable value for
some people in third world countries, or in
countries where people are trying to escape
from their country.  They can be sewn into their
clothing and taken with them.
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EC:  Gold for December delivery closed at $753.80 an
ounce on the New York Mercantile Exchange Friday.  
I am still looking for an entry point for a position
in gold. I feel like a broken record saying that, and
should have just jumped in at some point over the past
year or so, but was (and am) hoping for a significant
correction.  Might not get one.  The investment
vehicle I will use (if gold ever gets to a price I
feel comfortable purchasing it at), is the streetTRACKS
Gold Shares ETF (ticker: GLD)."

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If you want to subscribe to David Korn's excellent newsletter,
go to www.begininvesting.com


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Bob Brinker, Greenspan, Bernanke and Paul Volcker

Bob Brinker's comments about the "Maestro" on Moneytalk this last weekend (see excerpts I previously posted) are spot on, in my opinion. Alan Greenspan may be the first EX-Fed Chair to ever roam the world and shoot off his big mouth--no offense, SIR, but you had your seventeen years of doublespeak. Why now are your words crystal clear???
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PRAGUE (Reuters) - Former Federal Reserve Chairman Alan Greenspan sees no imminent danger in the weakening of the U.S. dollar, a Czech newspaper quoted him as telling a closed-door conference in Prague via a video link.
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Greenspan reiterated his view expressed earlier this month that the odds of a U.S. recession due to the credit crisis were 50 percent at most, the daily Pravo said in an advance copy of a story set for publication on Thursday.
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The ex-Fed chairman said inflation was a far bigger concern for the United States than the dollar, which was trading at a tolerable level, the newspaper said..
Greenspan said it was impossible to foresee an end to the U.S. economic troubles and that the outlook for the economy hinged on a recovery in the property market, he was quoted as telling the conference organized by the Czech Teleaxis agency..

Moneytalk Monologue Excerpt, March 17, 2007, Bob Brinker said:

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• "I do admire Paul Volcker. When he turned over the reins to Alan Greenspan back in 1987, he did it with dignity. He did it with class. He did it with respect. Dignity, class and respect equals Paul Volcker. Because when the Maestro took over, he really did not have to look over his shoulder every day to see what Paul Volcker was saying.
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  Now Paul Volcker at that point had become a legend, an icon, a true legend in his time, unlike so many people that we know about today - names to be withheld - who are simply legends in their own mind. We know who they are. No, Paul Volcker was a legend in his time. And one should not be surprised at the way he respected the role of his successor, who happened to be the Maestro - and was not out there stirring things up all over the world while the Maestro is trying to get a foothold, trying to get the reins of the new job.
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  It's a tough job - the most powerful man in the world. Don't let presidents fool you by telling you they are - they're not - the Fed Chair is. And I think back to those Paul Volcker days, especially those days after he handed off the reins to the Maestro. And I think how wonderful it must have been for the Maestro to have had a classy, dignified, respectful predecessor in Paul Volcker, that would allow him to take his Chair and move forward without looking over the shoulder every five minutes at what Paul Volcker might be saying behind his back around the world to the investment community in particular. And I think myself how sad it is - how SAD it is that, in my opinion, Ben Bernanke has not been presented with that same set of circumstances. How sad that is, and yet how obvious that is"___Bob Brinker

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Moneytalk Call Excerpt, Sunday March 18, 2007:
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• Caller: "With guys like Alan Greenspan out there, do you put that into your model portfolio. I'm starting to wonder about, is it about time to start thinking getting a little safe - to go to the sidelines?"
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  * Bob Brinker replied: "Well to be frank with you, to be frank with you, James - at this point, there's probably nothing that Alan Greenspan could say in his worldwide speech-making tour that would make a hill of beans difference to me.
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  Because, frankly, to be honest with you, I'm being straight here - I've pretty much discounted the guy at this point, and I'm going to tell you why. Because I would have thought seventeen years as the most powerful man on earth, being a knight of the British Empire, being coined the Maestro in a best-selling book - I would have thought that all of that - a career like that would have been enough, would have been enough for the Maestro. And when I see what I'm seeing, and I love your word "upstage."
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  I'm going to be honest, I've held back here, now I'm not going to hold back. If I were Ben Bernanke, I'd be furious with this guy. I would be FURIOUS with this guy. That's what would be the case, if I were Ben Bernanke. And the fact that Ben has held his tongue puts him more in the class of a Paul Volcker, in terms of dignity and self-control and respect. I would be furious with this guy, because I would be saying what you were saying earlier in your comment - what is this guy doing?!"___Bob Brinker

Bob Brinker Doesn't Understand Alan Greenspan

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Here is an excerpt of Bob Brinker's comments about Alan Greenspan on Moneytalk, October 13, 2007:

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The MAESTRO: Reminding us that Alan Greenspan was making percentage bets on the likelihood of a recession, Bob Brinker said:

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“There’s something about the Maestro that I really don’t understand, and this is what it is. For seventeen years Alan Greenspan was Chairman of the Federal Reserve – by far, the most powerful person in the world. And yet for seventeen years we could never get Alan Greenspan to really tell us what he was thinking. I mean, this guy was like, he was like on permanent STEALTH CONTROL. You never really knew what Alan Greenspan was thinking. And do you remember he told us that? Do remember his quote? I’ll paraphrase here just a little bit….he said, ‘If you think you clearly understood what I said, then perhaps I misspoke.’ Now that is the quote for which Alan is best known. And this guy, he would never really tell you what he thought UNTIL HE LEFT as Chairman of the Federal Reserve. Now since he’s gone – he’s been gone for little over a year, you can’t shut the guy up. He’s giving speeches all over the world. He’s making predictions about probabilities of recession. I mean, it’s unbelievable! Seventeen years of silence, and now it’s Alan Greenspan 24/7. But that’s okay because he gets paid up to $150,000 for his speeches. So in the end, it’s okay. It’s all about the money. And we understand that. We have the best government money can buy, so we understand when it’s all about the money. I mean, we have been there – done that. So there’s nothing new at all there.”

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Moneytalk Summary October 13, 2007

Brief Summary, Commentary and Bob Brinker Excerpts From Moneytalk, October 13, 2007

STOCK MARKET: Five weeks in a row on the upside. This week the stock market made another historic record high — has been “acting beautifully” and “celebrating.” The “backdrop has been positive for the stock market” because retails sales increased by 6/10 of 1% -- way more than the pundits, guru and experts said it would.

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FED POLICY/ RECESSION: The minutes from the last policy meeting of the FOMC show that the central bankers have been carefully staying away from using the “R-word.” A Fed quote: “Further policy decisions would depend on how economic prospects were affected by evolving market development and by other factors.” Brinker said that would be interesting if it wasn't so “obvious” and not just “more of the same.”

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TREASURY GROSS PUBLIC DEBT: “This is the number that we refer to when we talk about the total outstanding obligations of the United States Treasury…….$9.05 Trillion.” It has increased in the past year by $500 billion.

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INTEREST RATES: Remain “benign.” No inversion in the yield curve.

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ECONOMY: Should be able to grow – albeit slowly.

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MORTGAGE BUSINESS: “Things are not good…..” It's a difficult area of the economy to be involved in these days.

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SUB-PRIME LOANS ADJUSTING NEXT YEAR: Will lenders perhaps freeze rates? Bob Brinker said: “I don’t think anything is going to happen the general market place. Not anything that will affect the general level of rates, however, the Democrats want to bail people out of bad loans.” Perhaps they will pressure lenders to go “easy on adjustments.” There are a lot of people losing there homes and in a “lot of trouble” and “there is a lot more coming.”

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FDIC and SIPC: Are separate insurances. Go to FDIC website for more info. SIPC insures up to $½ million -- of which, up to $100,000 of the $1/2 million can be in the form of cash.

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ANNUITIES IN IRAS: You could call them the “Department of redundancy” because IRAs are already tax-sheltered.

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MONEY MARKET FUNDS: There has not been much history of money market funds deviating below $1 value. Very safe short-term investments – measured in weeks, and holding Commercial Paper, Treasury Bills, FDIC CDs—quality instruments. Quality money market funds have “not had problems.”

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COMPARING S&P 500 INDEX TO TOTAL STOCK MARKET INDEX: The total stock market index contains S&P Index stocks plus most of the extended market. No need for “specialization” into other funds if you own the total stock market index because it is “all inclusive.” Brinker is sure that John Bogle would agree with this.

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INFLATION NEWS: “Inflation has been behaving nicely." Core wholesale inflation came in this week at 1/10 of 1%. Over the past year, the core rate wholesale inflation is only 2%. “That is remarkable, because when we consider what we were told……. higher energy prices, they will leak, they will seep into the core index and they will drive prices higher – nonsense! This is utter nonsense. If that were true, with oil at over $80 a barrel, we wouldn’t be looking at 2% wholesale price inflation over the past year. We wouldn’t be looking at core inflation in general in the consumer realm, down at 1.8% in the personal consumption expenditure index. So we can see from the figures, how wrong these people have been that told us that rising energy prices were going to cause inflation – this is nonsense. Don’t listen to this nonsense, unless you want to be dragged down the primrose path.”

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BOND MARKET: “Continuing to act very, very well in the face of the slow growth that we are seeing in the economy.”

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BEN BERNANKE: “The most powerful man in the universe is Ben Bernanke. He has the economy in the palm of his hand. That’s why we try to encourage him to make good decisions here on Moneytalk.”

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TAXING OUT OF STATE MUNI BONDS: “If you buy an out-of-state municipal, you’re going to get hit over the head by a tax of up to 9.3% in the State of California.” Of course, this depends on your tax bracket.

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ECONOMY IS LIKE THE UNIVERSE: “Reality is that the U.S. economy and the world economy is an ever expanding pie.” Statistics show that over time, it grows in size and dollar-volume, so in that sense, it is “like the universe in that it is ever-expanding….” Who actually ends up getting the larger or smaller pieces of the pie depends on business models, management and production of new products.

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MODEL PORTFOLIO THREE: Is it okay to use CD’s as an alternative to holding to the short-term bond portion of portfolio three? “Yes, you could use FDIC insured Certificates of Deposits as an alternative holding to short-term quality bond fund.” Bob Brinker went on to explain that the caller had asked about a “…..portfolio that is a balanced portfolio. In other words, not all of the money is in the stock market in model portfolio three, but rather, in model portfolio three, a good chunk of that money is in fixed-income securities. This is a balanced portfolio. Basically it’s designed to generate current investment income. Obviously, this is for those entering or enjoying retirement……” (Honeybee sez: As Bob Brinker explained, this "model portfolio" is 50% stock and 50% bonds. The stock portion includes VTSMX ; 5% international growth funds; and approximately 10% in a couple of Mid-cap funds. The 50% bond portion is in GNMAs, TIPS and short-term investment grade bond fund—all Vanguard.)

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DVY: Is doing well and is up about 10% for the past year in spite of holding financials and no technology. DVY generates about two times more cash dividends than the S&P Index ETF. Brinker does not recommend comparing DVY to the S&P or to the total stock market index. DVY is fine for Roth IRAS, but his first choice would be the total stock market index.

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FALLING DOLLAR: It makes sense to have the dollar “gradually depreciate” because the United States is “trying to do something about its trade deficit problem.” A falling dollar “helps exports” and “hurts imports.”

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HEDGE AGAINST FALLING DOLLAR: “Buy international bond funds.”

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NUMISMATIC COINS: “Don’t fool with them....” However, they do have “portability value in third-world countries” for those who want to “sew them in their clothes” and try to “escape across borders” or “climb up on their camel and go trotting across the desert.” Most charge a 4% premium. Three low premium coins are the Krugerrand; the Mexican Peso; and the Austrian Crown -- all charge less than 1%...

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CHARTING Bob Brinker said: “I’m not a believer of projecting the future of the stock market by looking and studying and reading charts. I consider that to be financial astrology.”

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Bob Brinker’s guest in the third hour was Robert Reich, who is the author of “Supercapitalism,” and Bill Clinton’s former Secretary of Labor.

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Two Important Bob Brinker Market-Timing Anniversaries

Yesterday was the five-year anniversary of the end of the
cyclical bear market which began in Y-2000 and ended with
the S&P 500 Index closing at 776 on October 9, 2002 and the
Dow closing at 7,278. 

Bob Brinker issued a buy signal in March 2003, returning
all "available" cash reserves to the stock market. However,
he repeatedly warned both subscribers and Moneytalk listeners
that it was only temporary because (he said)  the stock market
had begun a secular bear megatrend in March 2000. That was a
long-held but erroneous opinion and  has subsequently been
proved completely wrong.
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October, 2007 is the seventh anniversary month of arguably
Bob Brinker's biggest market-timing blunder. Bob Brinker
sent all Marketimer subscribers a special bulletin
advising them to "Act Immediately" and purchase QQQQ at
a price that turned out to be very near the all-time-high.
The QQQQ lost over 70% of value over the next three years,
while Bob Brinker repeatedly advised a "hold" on it. 
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The QQQQ-trade has never been closed and all Marketimer
guidance ceased as of March 2003. Here is an copy of
the bulletin:

• 
  
• October 19, 2000
• .
  SUBSCRIBER BULLETIN
• 
  FROM MARKETIMER
  .
  MARKETIMER is projecting a significant countertrend rally which is expected to be led by the Nasdaq 100 Index. We expect this rally to persist over a period of approximately 2-4 months, and to generate Nasdaq gains in excess of 20% from the vicinity of the recently established Nasdaq closing low point.
  .
  We view this projected Nasdaq rally as a significant trading opportunity for MARKETIMER subscribers seeking potential short-term capital gains. Our clear vehicle of choice for this opportunity is the Nasdaq 100, which is traded on the American Stock Exchange under the ticker symbol QQQ.
  .
  We recommend MARKETIMER subscribers with aggressive objectives invest 30% to 50% of existing CASH RESERVES in the QQQ shares in order to exploit this opportunity. Also, we recommend subscribers with conservative investment objectives invest 20% to 30% of CASH RESERVES in the QQQ shares in order to take advantage of this opportunity.
  .
  MARKETIMER will provide follow up guidance for this short-term opportunity in regular monthly editions, and, if necessary, in follow up bulletins.
  .
  We recommend subscribers interested in taking advantage of this recommendation act immediately.
  .
  P.O. Box XXX/ Irvington, NY 10533/ phone: 914-XXX-2655/ Editor: Robert J. Brinker"

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A similar bulletin was sent to the clients of Bob Brinker and Sheldon Jacob's "Private Client Group." (Later sold to another company.)
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(RYOCX is a proxy for QQQQ--as it clearly states in the BJ Group bulletin.)

.

• The BJ Group
  A Division of
  Centurion Capital Management's
  Private Client Group
  Robert J Brinker
  Sheldon Jacobs
  .
  October 19, 2000
  .
  Dear Client:
  .
  I am pleased to inform you that the BJ Group has executed a significant trade for you under the guidance and supervision of Bob Brinker.
  .
  Bob Brinker advised us of a short-term trading opportunity (countertrend rally) in the Nasdaq 100 Index. In response, we have purchased for your BJ account(s) a position in the Rydex OTC fund--a proxy for the Nasdaq 100 Index. Aggressive accounts will receive a more significant position; conservative acounts will have exposure to a lesser degree given the risk profile of the technology-laden Nasdaq 100.
  .
  It is important to note: we have not sold any existing funds. This purchase reduces your money market reserves or cash position for the duration of the trade. As of this writing, it does not imply a change in Bob's longer term outlook for the market.
  .
  We are committed to the Brinker investment strategy and look forward to the exciting prospects of this recent development.
  .
  Sincerely......(Signed by President and the Managing Director, BJ Group.)

.
.

Moneytalk Summary October 6, 2007

Outline and Brief Summary of Bob Brinker’s Opinions From Moneytalk, October 6, 2007:

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S&P Index: Closed at highest closing level in history —“nice” 2% rise this week, closing at 1557.59 – coming off of the summer correction. “….it’s a good stock market. It’s trading at all time high record levels.”

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Employment Data from Friday: Revised for August. Instead of a decline of 4000 jobs, it’s an increase of 8900 jobs. September payrolls grew 110,000. Three month moving average – July, August, September = 9700 average new jobs. “It’s a good employment report.”

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Market Gains Since March 11, 3003 Buy Signal: Before dividends are added in, S&P Index has a gain of 94 ½%. With Dividends added in, total return in excess of 100%.

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Latest Buy Signal: “Mid-1400s.”

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Dollar-Cost-Average into stock market? Yes.

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Global Investors: “….are not morons.”

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Economy: “…..continues to grow.” Slow growth expected for remainder of year.

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Inflation: “Very low year over year – core inflation on the key index is less than 2%”

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Interest rates: “Outstanding.”

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Rising Oil Prices: “Counter inflationary.”

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Economy/ Recession outlook: “Growing below trend.” Bad news bears in the financial community are spreading “idiocy” and “nonsense” about a recession – it’s “fiction.” “There is no recession and there is no prospect at this time of a recession.”

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Stock Market is Recession Gauge: “You don’t a get record run on the stock market on the precipice of a recession – it doesn’t happen.” The stock market is a gauge for predicting recessions, and you don’t get all-time-highs when the market is headed for recession. “Those predicting recession are full of soup.”

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Negativity in a Bull Market: “Completely unjustified because in a bull market, you want to be invested. You want to be making money while the sun shines. And when you’re out there with this doom and gloom, it’s counter-productive and extremely costly.” “They don’t know what they are talking about.” Negative “talking heads” make “fools" of themselves because they don’t study “stock market history.”

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Term Life Insurance: “Like it” because it is a “death benefit policy to help those who need your income in the event of your absence.”

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Steve Forbes Prediction: May see a 3000 point loss in the Dow, similar to 1987, if the Fed doesn’t bring the price of gold back to $450 per ounce. Fed needs to soak up excess money it created in 2004, 2005, otherwise there will be a flight from the dollar. Brinker said that Forbes' prediction has been proved wrong because the market just closed at an all-time-high.

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Can Treasuries Become Junk Status within 20 Years: For that to happen, the “....full faith, credit and taxing power of the United States Government would have to become worthless." Hopes the people will put the politicians in a position over time where they will get the fiscal house in order.

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DVY versus SPY: SPY is doing better than DVY right now because of “financials” in DVY. DVY is more conservative because it's a good dividend-payer. SPY is broader-based and pays about half the dividends of DVY. It has been performing better recently partly because it contains technology, which has been doing well. Brinker said that he does not include DVY in his model portfolios because he seeks performance rather than cash dividends. (Honeybee comment: DVY is included in Brinker’s “Individual Issues” list and rated as a “hold” along with several other of the most popular ETFs.)

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Cash-Cow Money: “….is coming from business plans that are not growing as fast as the general market place. But they are still profitable and pay nice dividends which are paid out to the shareholders.” You get a lot of that in the financial sector, which are not growing as fast as the Industrials.

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Total Return Investor: “….can invest in the total stock market, which has certainly outperformed any of these dividend products. You get less cash dividends, but you can liquidate shares to make up the difference” First started talking about this method back in 1986….

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Bob Brinker’s March 11, 2003 Buy Signal: Returned all available stock market allocated-cash reserves to fully invested position. All “model portfolios” bought at that level. (Honeybee comment: Bob Brinker’s model portfolios held 35% equities throughout the 2000-2002 cyclical bear market. Additionally, in October 2000, many subscribers bought QQQQ on Bob Brinker’s recommendation with up to 50% of the 65% cash reserves that was raised from model portfolio holdings and other investments in January 2000.)

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The following was an interesting call and anyone who owns a home should take note:

.

A caller said that while flying “under the radar,” the House of Representative has passed a Bill (HR 3648EH) as of October 4^th that will allow people who have been forgiven mortgage debt not to have to pay Federal Income Tax on that forgiveness. But in order to pay for this tax break, the House Bill will change the present exclusion on principal residences—making it proportional to amount of time lived in the home. Right now, the exclusion is $250,000 for a single person and $500,000 for a married couple if the home is lived in 2 years out of past 5 years.. It’s almost certain to pass the Senate. Brinker said it is an de facto tax increase and it will be interesting to see if the President signs it. Brinker said that many in the Democrat Party think that taxes are too low.

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The Next President and Tax Increases: “Hillary Diane Rodham Evita Clinton is in a very commanding position right now." “It is pretty much looking right now like a coronation.” “She’s going after the people with the money.” “She’s going to jack up the rates with the help of congress.” As long as she leaves “Joe Sixpack” alone, it won’t have a major affect on the broad economy. Capital gains taxes could go from 15-20%. If the top bracket goes from 35% to 39.6, the wealthy will buy one less “Lamborghini” or a “smaller yacht.” “….will really pick up speed if we get a change in the Whitehouse in 2009.”

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What If Hilary Gets Elected? A tax increase is a “slam dunk” if Hillary is elected. “She will owe that election victory to her shirtless ones. They will put her in office and they don’t want to see their taxes go up. They will not tolerate a tax increase in their income bracket. And that’s why I don’t believe she can raise the taxes in the low brackets. If she does, I will be stunned and it will be a humongous political mistake for her if she were to do it, in my view.”

Mark Hulbert Quotes 2-day Old Issue of Marketimer

In light of the fact that Bob Brinker canceled James’ subscription for allegedly revealing information about Marketimer online, is this an example of utter hypocrisy by Bob Brinker, or will he cancel Mark Hulbert’s subscription to Marketimer.

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Here is what James posted on Kirk Lindstrom’s Facebook Bob Brinker Discussion Thread:

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"I got an e-alert from Brinker today about the October MarkeTimer being available online but when I put in my info I got a message saying my information was no longer in the system. I called and was told I was no longer entitled to receive the newsletter online because I was sharing information about its content online. I was planning on not renewing my subscription anyway for 2008 but now I get a refund for the last 3 months of this year. Hummmm!"

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http://www.facebook.com/topic.php?uid=2267714264&topic=2783&start=90&hash=cf8362e909a958f2039972761221277f
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Just two days after the issue date of the October Marketimer, Mark Hulbert says this on Marketwatch:

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"# Bob Brinker's Marketimer: Bullish. In his most recent issue, published in early October, editor Bob Brinker wrote: "We expect significant additional stock market progress into next year as investors discount growing corporate earnings in an environment of low inflation and benign interest rates." His model portfolios are fully invested."

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http://www.marketwatch.com/news/story/top-performing-stock-market-timers/story.aspx?guid=%7BC376F696%2DDD62%2D4434%2D88FA%2D3697C4890E00%7D

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