In our Bob Brinker Free Discussion Forum we've been talking about Bob Brinker's market timing model. He uses this in his "Marketimer Newsletter" for predicting the stock market in the months ahead. On this weekend's show he recommended I Bonds for purchase this month to lock in good interest rates averaging about 6% for a full year. Bob Brinker is currently bullish (as of 10/24/05) and has his model portfolios fully invested in the mutual funds he recommends. Read on for more details and check out the following new articles:
Bob Brinker Update: April 23 and Bob Brinker Update 0402
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Bob Brinker on I Bonds
This is an edited excerpt from the free newsletter I sent to people on the Bob Brinker Fan Club mailing list (join for free). Follow the link to learn how to get on that mailing list so you don't have to wait for me to post the information here.
This weekend Bob Brinker recommended buying I Bonds BEFORE the rate is adjusted on November 1, 2005. Bob seems to be following what Susan Tompor wrote on October 19th in this article where she gives many more details about why now is a good time to buy I Bonds.Kirk's Comment: IF you think inflation is just a temporary blip and will decline in the next six months, then buying now makes great sense to lock in a high rate of return for a year. This seems to be the case Bob Brinker is making as he insists that inflation is low and the higher prices we see in anything that needs oil to be made or shipped is simply a deflationary tax.
But, if you think inflation will remain high for more than six months, then you are better off waiting until after November 1, 2005 to buy. Waiting will get you nearly 7% from I bonds for 6 months starting in a week. Then after 6 months, they adjust again where you will get more than 4.8% rate for the next six months if inflation remains high. The downside risk is you might get a lower core rate. If that happens, then you can always cash out after a year if the core goes up and still get an interest rate that far exceeds money market interest.
