Moneytalk Bob Brinker Summaries - Information ONLY

Top 177. Mar 6, 1999 7:38 PM

» SteveT - Saturday March 6, 1999

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:10 Bob indicated this had been an interesting week indeed. The job report came out showing our economy is growing like that famous bunny. The 30 year treasury bond is at 5.6% more than several months ago when it was under 5%. The Dow made a new minor high yesterday up about 1% from the old high, but up only 4% from highs of July 98. The S&P500 is not yet at a new high and the NASDAQ down 7% from recent highs Feb.1 99. Stocks that should be leading the way are not. INTC, DELL, and CSCO are well below all time highs. The P/E of the NASDAQ was at about 100 when it was at its high on Feb.1,1999. Could that be why those techs are down?

:21 Caller asked about shorting SPY. Bob reviewed ways to hedge. Currently is bullish but when a sell signal is issued one could in a non deferred account put up50 cents on the dollar to short SPY. Then at the appropriate time cover and pay the taxes on the gain(hopefully) by going short. Also mention was made of buying puts on the S&P500. Bob don’t like that as this requires one to be correct on the direction as well timing of the market. Bob thinks all trekies should learn more about SPY and the many options you have with them, one is you can place an order before the market opens and be guaranteed to get the opening price.

:32 Caller wondered if not getting a meaningful correction yet was cause for worry. Bob said the market has a little schizophrenia . The NAS has been performing poorly and the financials are starting to show leadership. Bob sees DOW 10,000 this year and recommends a fully invested position and allocation were you want it. We can justify a fully invested posture but must recognize that it is different then last Fall. The Market is more expensive now and is surprised some are predicting DOW 12,000 this year. For that to happen the S&P 500 would have to get to a P/E near 30. When we get to DOW 10,000 Bob think the media will go "nuts" they like round numbers but it really means nothing. Bob said beware of HYPE and keep our feet on the ground and the market can turn on a dime. Noted was Fridays volume and advance decline of 2 to 1 now is not the time to get excited like last fall.

My local radio station was off the air for about 10 minutes.

:54 Caller has $900,000 mostly in tech and about $500,000 in Microsoft most of that is profit. The caller is retiring in 4-10 years. Bob said he needs to put together a plan to diversify and it will not happen overnight.

1:10 Fridays Department of Labor Job numbers released showed 270,000 new jobs, and 150,000 new people looking for work each month. 1st Quarter GDP is expected to be around 3% and that hasn’t pushed inflation up yet. Hourly wages are up .01 to 13.04 manufacturing jobs are down 57,000 Over all jobs are there but higher paying jobs like manufacturing are falling. If this continues it may cause inflation, up to now increased productivity has buffered inflation fears. Low gasoline prices are helping consumers but not laid off oil workers. Our economy has grown so much it has out grown the work force.

SHARK ALERT

1:21 A 55 year old retiree has a son who is a broker and wants to manage dad’s money. Dad is currently in Vanguard Funds like Total Stock Market and GNMA. Has 1 Million in IRA account and $44,000 annual pension income IRA is 70% equities. Bob thinks the dads money management skills are better than the son. Compared it to Pandora’s Box.

1:32 Caller self described as Joe six pack is 55 and retired due to a disability rolled $135,000 from a 401K to an IRA at Fidelity mostly in Magellan. He was talked into moving it to a John Hancock financial sector fund. In the last 18 months he is down about $50,000.Wants to know if he should go back to Magellan? Bob said he should go ask the person who charge him $6750.00 (sales charges) for this advise recommended a sector fund. Bob thinks it better to go to a total Market index and chalk this up to paying tuition.

1:44 Caller is 54 and retiring in one year is getting new fund choices in a 401K in May. Has net worth of 1 Million 70%US equities, 10% house, 10% bonds, and 10% cash. Has $100,000 new money from an investment club(personal account) available and want to know were to put it. Bob thinks it more important to get his equity ratio down in the low 60% range and recommends putting it in fixed income and a Total market approach at work, and try to get some International and Europe representation in the equities.

1:54 Caller wanted to know the deal between IBM and DELL. This is just a 7 year deal to buy part and share technology. Should help IBM more than DELL according to Bob. Bob ended the hour talking about Demand for PC computers and sees demand rising 14-15 % this year. Worries about sales maybe a little over done.

2:10 The mess in Washington D.C. and the effect on the market was mentioned. Bob sees 2 years of continuing gridlock. This is good news for investors nothing meaningful out of the Capital until after the 2000 election then we will see.

2:13 Caller asked about a bear market in Bonds? Bob said bonds were less tolerant to drops in price. It comes down to how many years interest do you want to give up? If we have a 6% yield and the value drops 12% we lost 2 years worth of interest. GNMAs are less volatile and are used for income not as plays for bond traders.(maybe that is partly why they are less volatile8).) Bob said if the slight chance in NAV bothers one can use Money Market funds instead. Same caller asked about a Vanguard Growth and Income Tax managed fund that has 2 less basis points in expense ratio and out performed the S&P500 the last 5 years. Bob said he is free to choose one the other or both.

2:21 Barron’s 3-8-99 page 24 has an article about heavy insider selling in several Internet stocks. And heavy insider buying in Chemical and Bio-tech sectors.

2:23 Caller asked about short term mortgage outlook. Bob said flat. Caller could have locked in a 6.5% loan for a 1% fee and didn’t oh well.

2:25 Caller is 49 and has a 403B plan that is 74% equities and new money is deposited 50-50 . Bob thinks that 74% is at the high end of the range for that age. Said it was OK as long as the bull endures. Could put 2/3 of new money in fixed to try to get the equity ratio down a little.

2:28 Bob reviewed his current strategy which is Find any reasonable excuse to be in the market, never jump in and out, have allocation were you want it. If we see a bear market protect our Capital. Chances of a bear market essentially at zero.

2:32 Bob talked about China getting Nuclear secrets in the mid 1980s and how disappointing it is the White House is trying to minimumize the story. Full story in New York times 3-6-99 front page.

2:36 Caller has a 457 plan but no total market fund. Bob said to use the 500at 75% and 15% in mid-cap and 10% Russell 2000 would mimic the total market.

2:38 Caller was new to investing and wants to know how to get started. The guy is 32 making 30,000 annually and a 1200 monthly mortgage , and has about 200 a month to invest. Bob said he was doing an excellent job and said he should take this year to learn and refereed him to his web site and reading list.

2:44 Caller was interested in a closed end fund that invested only in Ireland. Bob asked why? The guy had relatives living there and liked the prospects for the economy. Considering 2% of net worth in this fund. Bob has no problem with this proposal. Also reviewed how close end funds work. In the case of an IPO the broker will tell you no commission but it is in the price you pay. Secondary market trades are supply and demand.

2:53 Caller asked after last week are we still in a correction? The NAS is still not back and that is a lot of the market, Not much excitement in volume were reasons cited. Caller revealed had gone from 100% equities to 25 % because he thought we were going lower. Bob said no bear in sight.

2:54 The hour was finished talking about HWP split and a story in Barron’s on page 15 of the 3-8-99 edition. And the DELL - IBM deal.

That’s all she wrote.

-- posted by SteveT

Top 178. Mar 6, 1999 8:03 PM

» Karin - Thank you Steve!

I have been working on my taxes and had little time to listen. Want to thank you for your special efforts on these summaries!

-- posted by Karin

Top 179. Mar 6, 1999 8:28 PM

» KirkL - Thanks Steve

proper counter

-- posted by KirkL

Top 180. Mar 6, 1999 9:24 PM

» Suny1 - Thanks, Steve

Great summary of BB's show today. I look forward to your post. Having it in print can beat having to review a tape for the parts I need to rerun because I didn't understand the point being made.

-- posted by Suny1

Top 181. Mar 7, 1999 2:04 AM

» Jaybird248 - Another great job, Steve!

The summary was great and really appreciated! Never heard that SPYs guaranteed the opening price before...news we can use when the futures look hot as they did Friday,

Thanks again!

-- posted by Jaybird248

Top 182. Mar 7, 1999 3:11 AM

» JeromeS_3 - Thanx

Steve Really apreciate BB summaries. JWS

-- posted by JeromeS_3

Top 183. Mar 7, 1999 6:41 AM

» TONYBRIG - Summary/Steve

Thanks Steve

Yours doesnt have any commercials.

I listened for about an hour and tried to get
thru but Nah. BUSY BUSY BUSY.

He really hammered home those SPDR'S. Could be
a good trading vehicle me thinks.

He's stil blasting Amazon . Com and seemed to
give EBay a back-handed compliment with his
short-squeeze theory.

Did he Day-Trade preach???

I was busy losing $ on Silver Charm (Santa Anita race)so didnt listen to much of the program.

Got so exasperated with them commercials; I
chucked the program.

Dan (thanks) told me about the stop-watch trick.

Talk to you later!

Oh- We have a new discussion thread its called
Ask Rande.
HE DESERVES IT!!

-- posted by TONYBRIG

Top 184. Mar 7, 1999 6:57 AM

» KirkL - March 6th Show

Tony,
I record the show on tape and listen during the week when driving, gardening or exercising. Easy to fast forward the commercials. I was told once there was 19min of show every hour back when Jorgensen was doing it for ABC. I wonder how many minutes BB actually is on these days?

To All,
Steve will be on vacation for 2 weeks so it would be cool if someone else could step in for the next few weeks.

BB also made mention of two New Books on Jr's website. I looked and am not sure which ones are new, but our "book of the Week" from last week "Capital Ideas" has been added as well as the book below. I believe Rande recommended them to us over the last few weeks.

<img src=http://www.amazon.com/covers/0/39/303/888/0393038882.m.gif>	A Random Walk Down Wallstreet by Burton Gordon Malkiel Click picture to order and help Kirk support this site.
	Review An unconventional guide to investing in Wall Street tells how to put together a broad portfolio of stocks through sidestepping the experts and how to rate the potential of a stock, bond, money market fund, or other investment..

<img src=http://www.amazon.com/covers/0/02/903/012/0029030129.m.gif>	Capital Ideas : The Improbable Origins of Modern Wall Street by Peter Bernstein: Click picture to order and help Kirk support this site. Only $11.96
	Review A savvy appreciation of how a small band of disinterested academics has revolutionized the way Wall Street and its offshore counterparts manage the world's investment wealth.

-- posted by KirkL

Top 185. Mar 7, 1999 10:27 AM

» RandeS - Kirk,

Kirk,

The two new books on your list should be read in this order -- "Random Walk" first and then "Capital Ideas." By the way, I talked about the two new Brinker site books at his site some time ago and was pleased to see he's added them -- "Investor's Anthology" and "Investment Policy" by Charles Ellis. I keep a half-dozen or so copies of "Investment Policy" at work and hand them out to new staff people who want to get into the investment advisory practice. Consider it "required reading." Finally, I'm recommended another book to TonyB on another of your threads that has to do with the history of stock manipulation. The wild, wild, story of Wall Street -- Once in Golconda : A True Drama of Wall Street 1920-1938 by Brooks. Available through Amazon. Makes a nice companion to "Reminiscenses of a Stock Operator."

-- posted by RandeS