Bob Brinker's Moneytalk Summary, November 17-18, 2007

Brief Summary, Commentary and Bob Brinker Excerpts From Moneytalk, November 17-18, 2007.
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Bob Brinker began the Moneytalk monologue by saying that listening to the “Star Ship Moneytalk” is the way to learn how to become your own personal financial manager so that you can “take charge” and avoid becoming “shark bait,” and that this is one of the "greatest gifts" you can give yourself and "your loved ones."
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CRITICAL MASS: Brinker said that the smart way to get to the Land of Critical is get there slowly “.......using patience and discipline along the way. Leave the fast-buck artists aside. You don’t need that kind of an approach – doesn’t work anyway.”

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STOCK MARKET: Bob Brinker said: “Well it’s been an interesting week in the stock market….remember last week the bad news bears were telling us, it’s all over now – we were in big trouble now. Well that’ what they were saying a week ago. Of course, it did not turn out that way. We talked about this last weekend. About those bad news bears and how wrong they have been for several years every year as they have been screaming fire in a crowded market only to find that their views were wrong again. This week the S&P 500 chalking up a gain to 1458.74 – a gain of about 1/3 of a percent. The Dow going up 1% to 13,176 and the Nasdaq gaining close to ½ percent, at the 2637 level…….”
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QUALITY BONDS: Bob Brinker segued from the stock market to the bond market, saying, “.......quality bonds continue to lead the way.“ The GNMA Fund that Brinker recommends is trading within one penny of a 52 week high. And is "......acting in outstanding fashion for all GNMA investors.” The 3-month Treasury Bill Yield is at 3.3%; the 10-year note at 4.5%; the 30-year Treasury Bond at 4 1/2% -- creating a positive yield slope of 120 basis points. The low yield is partly due to “.......demand from foreign governments.....” but some of it is due the expectation of “.....lower inflation down the road.”
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CORE INFLATION: Has held “relatively steady” despite the fact that the price of oil has risen into the mid-$90s. Brinker said: “Now of course, the inflation junkies told us – they were totally wrong about this, but they told us that rising oil prices would drive core inflation. It has not turned out that way.” Brinker believes that rising oil prices rob consumers of discretionary income and make it impossible for consumers to drive up other prices and thereby cause inflation. He says that high oil prices “....act like a de facto tax on consumers” -- and that is why the core inflation index has held relatively level. The housing “recession” has also been a contributing factor.
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WHY SO MUCH PESSIMISM ABOUT THE ECONOMY: A caller pointed out that he didn’t understand why there is so much pessimism in the country in light of the fact that he has observed that there is often difficulty in hiring enough people because everyone is so busy. Brinker mentioned a guest that he had on Moneytalk a few weeks ago (the author of “Richestan”) and pointed out that if you are lucky enough to reside in Richestan with the extremely well off, then the caller would likely be correct. Bob Brinker said: "Things have never been better for the extremely well off, but if you are talking rank and file, you get a lot of disagreement about what you just said.” Brinker told the caller that he does not think that we are in an economic boom – and he added, “Thank goodness, we are not in a boom, because the worst thing that can happen is economic boom, because that’s always followed by intense pain.”.

WILL THE HOUSING DEPRESSION TURN INTO A GENERAL DEPRESSION? Brinker does not see that happening.
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WHAT TO DO DURING THE HOUSING RECESSION: Brinker told the caller that all we can do is ride it out. He said that is what we have to do because, “It’s not going away and there is nothing to make it go away.” Brinker said that the best we can hope for is that the government will come up with some kind of a proposal to lessen the pain of all the foreclosures that are going to happen over the next year as mortgages reset. Sunday, Brinker said that the housing recession will last into 2008 and that housing starts are at a 14 year low.
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GOLD: Bob Brinker said: “Now a long time ago, when these shares were trading in the low to mid-$50s, I gave that recommendation on this program. That for listeners who desire to have a hedge in the gold market that I thought the security to use was the shares that trade under the ticker symbol GLD. Those are the Exchange Traded Fund Gold Shares. And at the time I first gave that recommendation to listeners that were looking for a hedge in gold, those shares were trading in the low to mid-$50s. They are currently trading at $77.75. So obviously, anybody that chose to put on a hedge in the gold market has done very well.”
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Barack Hussein Obama: Bob Brinker pointed out that at the most recent Democrat debate, Obama made a proposal to raise the income limit for paying Social Security taxes above $97,000 a year. Obama implied that his proposal would tax only the "upper class.” Here is an excerpt of what Obama said:

“I've heard you say this is a trillion dollar tax cut on the middle class by adjusting the cap. Understand that only 6 percent of Americans make more than $97,000 — (cheers, applause) — so 6 percent is not the middle class — it's the upper class.”

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“Hillary Diane Evita Christine Rodham Clinton” (that is Brinker’s title for Hillary—I do not know where he gets the “Christine”) did not agree with Obama. 8^)
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http://www.factcheck.org/clinton_vs_obama.html
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ESTATE TAX: Over the weekend, there was a lot of talk about the estate tax and Warren Buffett’s comments to Congress. Warren Buffett said: "A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy." As Brinker pointed out several times, the very fact that Buffet can fly to Washington D.C. and try to persuade congress to adopt his views on the estate tax proves that we are already in a plutocracy. Bob Brinker pointed out that Buffett has chosen to give a large percentage of his assets ($37BILLION at last count) to the Gates Foundation. (It was reported in 2006 that Bill Gates will retire from Microsoft in 2008 to “manage” the spending of his Foundation’s huge resources. I can’t find anything more recent about Gates plans.) A caller also pointed out that Buffett is giving huge amounts of money to his own family foundations.
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Honey comment…(sorry, can’t help myself): So while Buffett wants others to be taxed, he gets his choice about how to dispose of his own wealth. Many don’t get to make their own choices, especially if their assets are in family businesses or family farms. If Buffett wanted to be intellectually honest, he would simply put his money into the Federal coffers and let Congress choose who to pass it out to..... 8^) Instead, Buffett whines about others forming "dynasties" and then proceeds to give the Bill Gates dynasty (the largest in the U.S.??) the power to decide where the Buffett $billions will be spent. Personally, looking at some of Gate’s philanthropic choices, I think some are good, some not so good. I guess it’s not so different from government after all.

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ESTATE TAX EXEMPTIONS: Estates worth up to $2million are exempt in 2007 and 2008. The exemption slated for 2009 will rise to $3.5million, and by 2010 it will be repealed – but only for a year. Unless Congress acts, in 2011, the tax will roll back to $1million with a top tax rate of 55 percent. Brinker pointed out that there is a movement to abolish the estate tax completely, but it doesn’t sound like he would be for that happening. Bob Brinker said: “I’m comfortable with 3-$5 million as the cap on it.” But he believes if the democrats are in power, they will “......probably shoot lower than that."
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REVERSE MORTGAGES: Brinker said it boils down to the terms--such as what value will be placed on the property, and what time line the payments cover. He recommends getting some comparables and then checking with a CPA or enrolled agent.
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DATA FLOW COMING UP THIS WEEK: Market is open on Friday; expect light trading. Housing starts for October on Tuesday morning – estimated to be 1.17million. Leading indicators Wednesday morning – expected to be down “perhaps” 3/10 of 1%.
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_____Honeybee

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