THREAD FULL!!! Bob_Brinker_Discussion_41,600 is CLOSED!!!!!

Top 1523. Jun 2, 2002 4:52 PM

» dija - Re: Yes Kirk, the same guy Bsing that answer is promising the fo

In response to message posted by Will_L:

Will L. said: "Yes, Kirk the same guy Bsing that answer is promising the following..."

Will, he is not promising anything!

-- posted by dija

Top 1524. Jun 2, 2002 4:56 PM

» dija - Re: Re: Speaking of Models

In response to message posted by Will_L:

Will L. said: "The funny thing is he for years up through 98 in fact used the Dow as his basis."

Will, didn't he use the Dow AND S&P 500?

Then, didn't he decide, correctly, that the Dow was too narrow and start using the S&P and Total Stock Market Index?

Nothing wrong with that, unless you are looking for something to bash.

-- posted by dija

Top 1525. Jun 2, 2002 5:04 PM

» dija - Re: Dija: answer this question part 1

In response to message posted by ACousins:

AC said: "...your contention that the CTR has nothing to do with his longterm model are (sic) wrong. Agreed?"

Of course I don't agree. Where are "oversold readings and internal divergences" and "tax loss selling going away and other calendar-oriented posititive readings" in his longterm model?

The long-term model has nothing to do with the CTR call. That's not to say there might not be one or two factors that were used for both calls. I'm sure he looked at sentiment for both calls, for example. But the two calls are essentially unrelated, IMO.

-- posted by dija

Top 1526. Jun 2, 2002 5:10 PM

» dija - Re: Dija: answer this question part 2

In response to message posted by ACousins:

AC said: "THEY (the CTR and CB durations) OVERLAP AGREED?"

Disagree, AC. For one thing, you CANNOT say that the CTR call was for nine months. When he said, in Jan. 2001, that a CTR could last three to six months, IT HADN'T STARTED YET. Therefore, he obviously was not predicting a nine-month CTR. So the CB starts where the CTR ends. And the CB has the potential to last MUCH longer.

-- posted by dija

Top 1527. Jun 2, 2002 5:20 PM

» dija - Re: Model Time Frame

In response to message posted by Kirk:

Kirk said: "There are a great many people out there that have made money in this market...it might be an 'eye opener' even for someone like dija."

Not an eye opener for me Kirk. I have made money since Jan. 2000, even though I put some money in both the QQQs and TEFQX, because I don't follow Brinker (or anyone) blindly. I make my own decisions, just as Brinker taught me to do.

Obviously, being an objective person, I must admit he has many faults. But he came along at just the right time in my life, and as a result, I am now very happily retired. I would NOT be retired today if I had not been turning the radio dial one day in early 1993 and found him. That is a fact.

-- posted by dija

Top 1528. Jun 2, 2002 5:23 PM

» dija - Re: Duration

In response to message posted by Kirk:

Kirk said: "If anyone like dija wonders why some of us that might be considered as professionals or just interested in accuracy don't respect Brinker...this was a perfect example."

What did you do, Kirk? Look up the definition of 'duration' after you got back from wind surfing?

-- posted by dija

Top 1529. Jun 2, 2002 5:26 PM

» Kirk - Re: Speaking of Models

.
In response to message posted by dija:

Will L. said: "The funny thing is he for years up through 98 in fact used the Dow as his basis." Will, didn't he use the Dow AND S&P 500? Then, didn't he decide, correctly, that the Dow was too narrow and start using the S&P and Total Stock Market Index?

Actually, as a guy who owned most of these new DOW stocks at the time of the switch ( bought Intel and MSFT back in '92 or '93), the DJIA was changed to add more technology to try to make it "better represent" the overall market. I already had my 5 or 20x gains in MSFT and Intel when they added them to the DJIA.

To the credit of Dow Jones, they didn't overload the DJIA with tech as did the S&P500 stock pickers who were tossing out companies like RiteAid to put in JDSU right as JDSU was about to burst. JDSU lost over 90% and RiteAid went on to double.

Maybe he switched at the wrong time as perhaps if he stuck with the DJIA he might have seen the rotation to value which the DJIA has far more of than the S&P500 (I think the cap weighting has something to do with it).

The real lesson from this is even the "index funds" are actively managed.

Now back to Brinker, I seem to recall he gave all his targets in term of the DJIA. IF someone asked about the S&P500 THEN he'd divide by the ratio of the two and then scale his projections so his model was based ONLY on the DJIA back in 1998... He might have made the switch when he started to talk about P/E and found the S&P500 had their earnings estimates on their website and he could then use it to scale with P/E and sound "fancy".

-- posted by Kirk

Top 1530. Jun 2, 2002 5:35 PM

» Kirk - Re: Re: Duration

In response to message posted by dija:

Kirk said: "If anyone like dija wonders why some of us that might be considered as professionals or just interested in accuracy don't respect Brinker...this was a perfect example." What did you do, Kirk? Look up the definition of 'duration' after you got back from wind surfing?

dija... if I had to do that, then I wouldn't have thought his "non answer" was so funny and pathetic, would I?

We actually had a long discussion of duration in our real investment learning thread here, "Ask Rande", awhile back. I belive Rande even put it into one of his tests he often gives.

To answer your question. Of course I looked it up to give a link here to prove that I was right. Dorks like you wouldn't believe me otherwise unless I had a link to a proof that showed Brinker didn't know what he was talking about while pretending he did.

BTW, I bought my first strip Zero in 1984 and sold it in 1993 at a huge gain... Sorry to inform you that some of us can learn to buy and sell bonds without the help of a guy on the radio. I've also recommended them in my newsletter so I should have a basic understanding of what I recommend, no? Brinker, otoh, told his listeners in the past to call their money fund to make sure they wouldn't break a buck from PG&E bonds having troubles showing he didn't even know how money funds work. He had that advice on his web site until I pointed out the folly here. THAT is one summary from his site that I kept a copy of as it was so funny to read.

-- posted by Kirk

Top 1531. Jun 2, 2002 7:12 PM

» Karin_ - From Morningstar

When Cash Flow Lies
Yet another pernicious effect of stock-option mania rears its head.
by Pat Dorsey, Director of Stock Analysis | 05-31-02

It's natural to think of a company's financial performance as being
independent of its share-price performance. Companies make money by
selling gizmos or providing services, right? If demand for widgets
goes up, and WidgetWorks manages to fend off archrival Widget-o-Rama,
then WidgetWorks makes more money. Easy. Maybe WidgetWorks' stock
goes up, maybe it goes down, but as long as more widgets are going
out the door and customers are paying their bills, WidgetWorks keeps
on increasing earnings and cash flow.

Well, maybe.

The fact is, if WidgetWorks compensates its hard-working employees
with stock options, then a stock-price decline could cause both
earnings and cash flow to decline quite a bit, regardless of how many
widgets are sold. Why? The reason is the wonderful little tax benefit
that option-granting companies reap when happy employees exercise
their stock options, which can quickly vaporize when the stock heads
south and fewer employees cash in their options.

This little accounting quirk is worth your attention because, unlike
a lot of accounting conventions, it affects cash flows. As I've often
pointed out, there are a lot of ways that a company can fiddle with
its reported earnings to make it look like it's growing faster than
it really is. However, the statement of cash flows usually reveals
these kinds of shenanigans, which is why we at Morningstar tend to
use it as our touchstone when assessing the quality of companies'
financial results. (For more on how cash flow and earnings can
diverge, check out this article
http://news.morningstar.com/doc/article/...

Tax Benefits Cloud the Picture
Unfortunately, stock options provide cash tax benefits to companies
that issue them, which means that cash flows can be inflated--and
that, in turn, means that a declining stock price can lead to
dramatically lower cash flows. Here's how this works: Your employer
gives you 100 options with an exercise price of $10. A few years
later, the stock is trading for $30, and you decide to cash in. You
pay taxes on the $2,000 difference (the $30 market price less the $10
exercise price), and your employer gets to take a tax deduction of
$2,000 against its corporate income. (In general, taxable employee
compensation is tax-deductible for companies.) In other words, your
employer reduced its tax bill by $700--assuming a 35% tax rate--just
because you exercised your 100 options.

As long as your company's stock keeps going up, and it keeps giving
out options, this process continues. More options are exercised, tax
deductions are taken, and your company saves cash by lowering its tax
bill. But what happens if the stock takes a tumble? Well, a lot of
people's options will be worthless--since their exercise prices will
be higher than the market price--and consequently fewer options will
be exercised. Since fewer options are exercised, the company's tax
deduction gets a lot smaller, which means it has to pay more taxes
than before. And that means lower cash flow.

Pretty neat, huh? When the stock price declines, the company makes
less money than it did before. And lest you think the amounts
involved are trivial, let's run through a few examples.

No Small Distortion
Luckily for us, many companies break out the effect of the stock-
option tax benefit on their cash flow statements. (Look for a line
labeled "tax benefits from employee stock plans," or "tax benefit of
stock options exercised.") Sun Microsystems SUNW
http://quote.morningstar.com/switch.html... reported about
$2.1 billion in cash flow from operations in fiscal (ending June)
2001, $816 million of which resulted from this lovely tax benefit. In
other words, Sun would have generated 40% less cash in 2001 if its
employees hadn't exercised tons of options.

-- posted by Karin_