|Bob Brinker Moneytalk Summary
September 11, 2011 Radio Show
Key Topics: Market Update, 9/11 Memorial, Gold, GNMA, Social Security, Moneytalk Guest
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September 11, 2011 Moneytalk Summary with Editorial Comment by Kirk Lindstrom
September 11, 2011 Moneytalk Update:
In the Market Update section we show the market fell 19.6% from its 2011 peak to low last month on an intraday basis. Bob must be screening callers like crazy as I would expect most want to know if he thinks that is "the bottom" or if the market will go lower. At times like these when the markets are down a lot, Bob is happy to take calls patting him on the back for his GNMA advice or to discuss anything but the US stock markets. I've summarize some of the more interesting calls below.
Opening Comments: Bob Brinker usually gives market statistics when the markets are going up and he's proud to be fully invested. When the market is down significantly and he's been fully invested, he usually finds something else to talk about. On Sunday he talked about how the events on 9/11/01 struck close to home for him because he used to work in the "canyons of Wall Street." He said the replacement tower will be the tallest building in the country when completed. It will have 100 floors, cost $3.2B with a scheduled completion date in 2013.
Kirk 1: Read about the just opened 9/11 memorial site at this URL: http://www.911memorial.org/Gold: Caller Tom from San Jose, California asked if silver and gold were in a bubble about to burst and if they would go higher with the government bailouts.
Bob Brinker said the bailouts were "yesterday's news" since they occurred in 2008 as part of TARP. Brinker said he believes gold and silver are going up mostly from speculation and to some degree from people substituting owning precious metals for fiat currency. Brinker reiterated his advice he prefers people who wish to hedge up to 5% of their portfolios with Gold own its exchange traded fund, GLD. GLD Charts and Quote - Gold Charts and Quote
Kirk: I believe the caller may have been asking about the bailouts being discussed for Europe, especially Greece, not something that happened three years ago in the US. We know the bailout in 2008 and 2009 to save the US banking system led to higher prices for precious metals. Remember the "bailout" includes buying bonds with QE1 and QE2 to keep rates artificially low to cause inflation. Low rates and higher inflation push the price of metals up.GNMA Advice: David Korn, my co-editor for the "Retirement Advisor" newsletter, DK summarized this call:
Caller: This caller has 5% of his portfolio in the Vanguard GNMA and he is considering switching that into the Vanguard Wellington or Wellesley Fund. Bob said that would be different than what he is recommending. Bob said he has a recommendation in his income portfolio that has over 90% of its assets in income investments. Even the portion that is not in income is in dividend paying stocks. In that portfolio, he has a higher weighting in his GNMA than 5%. He also has several other funds. Bob said he would not’t recommend going to zero in GNMA – that is not something he has recommended.
DK: The Vanguard GNMA Fund (VFIIX) closed today at $11.21.Brinker Comment: Bob said the GNMA fund continues to be an extraordinary investment. Bob said he still holds the Vanguard GNMA fund in his Model Portfolio III which is a Balanced Portfolio as well as his Income Portfolio. Bob said he has held them for many years. These securities have done well, even through the financial crises. Even as we speak, they are within a few cents of their all-time high.
DK: WSJ article entitled, “Using Ginnie Mae Funds as a Cash Stash” at this url: http://tinyurl.com/3z83l2kContinued below
Is Social Security Ponzi Scheme? Bob Brinker took many calls asking about Texas governor and presidential candidate Rick Perry's charge that Social Security is a Ponzi scheme. Brinker has been pretty clear he doesn't like what most of the GOP candidates have said so far and this was no exception. His defense was almost laughable.
Brinker Comment: Brinker said "The Social Security Trust Fund, money that should have been set aside for the payment of benefits, has been spent. And the reason it was spent was because when the government went to a unified budget many years ago, that gave them a license to take the payroll tax revenue that comes in every year and spend it not only on Social Security benefits, but anything else they chose to spend it on, and that's what they've done. "
Kirk: Well, duh Bob! Spending the money and using new funds to pay off current investors who wanted to take funds out is EXACTLY what Bernie Madoff did with the money people gave him to invest! The Securities and Exchange Commission say the following about Ponzi schemes:INVESTING IN IRAQI DINAR: David Korn, my co-editor for the "Retirement Advisor" newsletter, DK summarized this call:
Caller: This caller wanted Bob’s opinion on investing in the Iraqi dinar which he owns a bit of. Bob said he has no money invested in the Iraqi dinar and thinks there is a scam risk associated with this. Bob said the only people he expects to make money from this are the people that are selling it.
DK: Some states have issued warnings to investors to exercise caution about companies offering opportunities to invest in the Iraqi dinar. Here is one such warning last month from the Wisconsin Department of Financial Institutions: http://tinyurl.com/42ynds4
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Market Update: Bob Brinker remains fully invested. On Sunday, July 31, 2011, Bob Brinker said (show summary) it was amazing how the stock market had taken all of the debate over the debt ceiling in stride. He said the S&P 500 was "setting about 5% below its closing high for the year, which is truly amazing." Bob Brinker's Marketimer newsletter portfolios #1 and #2 have been 100% equities (fully invested) since March 2003. See Bob Brinker's Asset Allocation History Bob said he was taking advantage of dollar cost averaging weakness lately and in fact bought some more into the market on Friday (July 29, 2011). Bob said:
Of course, the market is now at 1292, a couple of percent higher than when that call came in at the end of June. So this is what happens. If that individual would have sold out at 1270 at that time, he would be faced now with either sitting it out or re-entering at a higher level.Friday, September 9, 2011 the S&P500 (charts and current quote) closed at 1,154
Kirk: I am sure glad I wasn't 100% in stocks at the top like Bob Brinker! I lowered my asset allocation to equities just before the market top. This gave me plenty of funds to send ten (10) different buy alerts to my subscribers announcing portfolio purchases in August with the majority very near the lows for the month. I usually only have one or two explore portfolio changes a month but August was a special opportunity to get many good stocks well off their recent highs. Some have yields over 4% too!Market Statistics for Friday Sept. 9, 2011: S&P500 closed at 1,154.23
=>This means the decline from intraday high to intraday low is 19.6% and we are currently 15.8% off the peak.
=>The decline in the S&P500 from the closing high to the closing low was 17.9%
=>Today QQQ is $53.18 which is down 39.5% from $87.87, the highest QQQ was while Brinker was recommending it for up to 50% of
cash reserves. You can see an actual copy of the special bulletin advising purchase of the NASDAQ100 via QQQ HERE .
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September 11, 2011 MONEYTALK GUEST
Bob had on Joseph F Hurley, author of the new books:
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