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Sunday, December 23, 2012

Means Testing Social Security

Today a caller suggested to Bob Brinker that one part of a compromise package to avoid going off the fiscal cliff would be to means test social security benefits.

Bob Brinker agreed with the caller's suggestion calling it a "no brainer."

What do you think?

Monday, December 17, 2012

VWALX Vanguard High-Yield Tax-Exempt Bond Fund

Moneytalk with Bob Brinker Commentary for December 16, 2012 Radio Show
The following commentary is from my "Retirement Advisor" writing partner,  David Korn. 
Caller:  This caller owns the Vanguard High-Yield Tax-Exempt bond fund (VWALX) which has a net asset value of $11.37.  
Bob said the highest that fund has been at any point this year is $11.40 so it is within 1% of its high for the year.  
Caller:  What¹s your forecast on the fund?  
Bob said when you are dealing with high yield securities, you are dealing with a level of credit risk.  Bob said watch how investors react to the quality of the holdings in the fund.  If they get worried about the quality that can impact how much they are willing to pay for shares.  The other thing to watch is interest rates.  We haven¹t seen much movement in the interest rate arena since they came off their lows.
Kirk Comment: Hmmmm... I seemed to have missed the answer to this question.  I went back to the show archives and didn't hear Bob give an answer. 
EC (David Korn):    The Vanguard High-Yield Tax-Exempt bond fund (VWALX) is up 13.02% for the year ending 11/30/2012.  Read more about the fund at this url:
Kirk Comment: Note that this fund is known as a "junk bond fund" and it has risk similar to stocks during bear markets for equities.  I prefer to own stocks since the upside is better (unlimited) for stocks while the downside is very similar.  From Vanguard:
Vanguard High-Yield Tax-Exempt Fund Admiral Shares (VWALX)This low-cost municipal bond fund seeks to provide a high level of federally tax- exempt income and typically appeals to investors in higher tax brackets. The fund’s lower credit quality may provide a higher yield, but it makes the fund more susceptible to price volatility due to uncertain prospects for the bond issuers. Investors who are looking for a fund that may provide sustainable federal tax-exempt interest income and can tolerate moderate risk to principal may wish to consider this fund as a complement to an already diversified fixed income portfolio.
Kirk Comment:  Read: Best Retirement Portfolio For You 

Bob Brinker on Gold

Moneytalk with Bob Brinker Commentary for December 16, 2012 Radio Show
The following commentary is from my "Retirement Advisor" writing partner,  David Korn. 

Caller:  This retired fellow is age 77 and has cash sitting in Vanguard¹s Money Market account.  Should he invest 20-30% of his portfolio in gold and if so how should he buy it? 

Bob said Bob said the first question is whether you want to "speculate" in gold because when you buy gold it is like all precious metals ­ you are speculating what other people will pay for it in the future. If you are going to buy gold, Bob would limit it to a small percentage of your portfolio as a hedge ‹ meaning 5% or less of a portfolio and he would use the exchange traded fund GLD. Stay away from numismatic coins unless you are a certified coin dealer. Bob reiterated that he does NOT view gold as a long-term investment, merely a speculation.

EC (David Korn):    The SPDR Gold Shares (GLD) closed Friday at $164.13 and have traded in a 52-week range of $148.27 to $174.07.
Kirk Comment Bob Brinker has GLD listed as a "hold" on page 7 of his December 2012 Marketimer under "INDIVIDUAL ISSUES" as a HOLD at $166.05  He says in the newsletter "individual stocks are limited to no more than four percent of total equities in order to control specific stock risk."  Gold is not an "individual stock" but an ETF much like VTI, SPY and DIA that he also recommends under "INDIVIDUAL ISSUES."   Looking back:
  • Bob Brinker had GLD listed as a "hold" on page 7 of his December 2012 Marketimer under "INDIVIDUAL ISSUES" as a HOLD at $166.05.
  • Bob Brinker had GLD listed as a "hold" on page 7 of his December 2011 Marketimer under "INDIVIDUAL ISSUES" as a HOLD at $170.13.
  • Bob Brinker had GLD listed as a "hold" on page 7 of his December 2010 Marketimer under "INDIVIDUAL ISSUES" as a HOLD at $135.42.
  • April 2013 Update:  GLD is currently at $140.91.  Its most recent low was on April 15, 2013 at $131.31.

Kirk Comment:  Read: Best Retirement Portfolio For You 
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Friday, December 07, 2012

Intel Bob Brinker's Favorite Trading Stock - INTC

Does anyone remember "the old days" of the 1990s when Bob Brinker almost seemed frustrated with all the calls he got asking about Intel?  I could never figure out why he talked about it so much as his "favorite trading stock" but never had it in his newsletter, even as an "off the books" recommendation.

Why Intel is a Great Buy (while at $19.75).

When was the last time Bob Brinker took a call on Intel?  If you remember him taking a call about Intel in the past five years and what he said, please send me an email or post a comment with what he said.

To me, it seems missing the last TWO bear markets (remember we had a 20% intraday bear last year) has left Brinker deflated and much younger people, like Jim Cramer, with more energy have taken over the airwaves while Brinker's show was cut from 6 hours a weekend to 2 hours plus an hour of interviewing a guest on less popular radio stations.

Now and then I like to watch Jim Cramer's "Mad Money" show on CNBC to see what direction the wind is blowing.  That is, I think Cramer has a very entertaining show, especially if you like shouting and nobody taking the other side of his arguments, but it seems he echos what is "group think" that tells you "why" a stock is up or down, but does very little for making good, long-term decisions.  Sponsors who sell trading strategies love his show as it is easy to sell stocks and advice for stocks that are moving.

On his October 28, 2012 show during the "Lightning Round" he gave a bearish call on Intel:
Intel (INTC): "During the period when it was doubling and doubling again, I was behind it, but I have walked away from it. INTC has a good yield, but it has no product used by mobile to speak of, except their own, and that isn't doing so well. INTC is stuck in the world of the PC, so even though it has a good yield, I say 'don't buy."
Two weeks later, on November 11, 2012, I bought shares for my personal account at $20.06.  I also increased the "Auto buy at $19.75" price target in my newsletter for my "Explore Portfolio" to anything under $20.25 to take advantage of any price weakness.

Late last month, on November 21, 2012,during the "Lightning Round" Cramer again gave a bearish call on Intel:
Intel: "I’m not going to tell someone to sell this stock with a 4.6% yield. I am going to say wait until it goes to 4% for a bounce, because I do believe the yield will support it, but I don’t see any reason why you should own it. Sell it only after a bounce when the yield drops to 4%."
Yesterday I heard him trash talk Intel again on the "Morning Bell" show by saying Intel should have used their cash to buy Arm Holdings (ARMH) when Arm was cheap. I couldn't have disagreed more. That motivated me to write this article saying why I disagreed:

Why Intel is a Great Buy (while at $19.75).  Excerpts
  • I bought my first shares if Intel in April 1993. At a split-adjusted price nearly 10 times what I paid for those shares, I believe Intel is a safer, more compelling buy now than it was in 1993.

Intel Since Inception
  • Yesterday, Dec. 4, 2012, Intel announced the largest bond sale in its history to buy back stock. This offering was 20% larger than its $5 billion similar offering in September 2011.
  • Wise investors will take advantage of low prices now to buy before tax loss selling ends and Intel uses these funds to repurchase shares.
  • I think Intel did something far better than buying ARM. Intel invested billions in new semiconductor equipment to build products with better performance than anyone can get from ARM chips running on competing processes.
  • Summary 
    Intel is a great buy here, especially under $20. Intel's valuation numbers will improve as they buy back shares with the funds from its just announced $6 billion bond offering. I took profits at $27.25 in February of this year with my newsletter explore portfolio, but now I am buying back
  • I would not be surprised to be taking profits in some of the Intel stock I've bought recently right around the time when TV gurus jump on the Intel bandwagon again next year. Jump on now and get a good seat!

Yesterday Intel closed at $19.85 and now it is over $20.

Was yesterday the last chance to buy Intel under $20?  I didn't mention in in my Seeking Alpha article, but I think Intel will probably build chips for Apple (AAPL) in the near future. By the time that is public knowledge (ie Intel chips showing up in tear-downs of Apple products) the stock will probably be $30 and then Cramer will change his tune.

More articles by Kirk Lindstrom at

October Jobs Report - Big Government Creates Jobs

Today's Jobs Report:
Total nonfarm payroll employment increased by 171,000 in October, and the unemployment rate was essentially unchanged at 7.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, health care, and retail trade.
Labor Secretary Hilda Solis
(Dept. of Labor photo)
73% of New Jobs Created in Last 5 Months Are in Government!!!
(From - Seventy-three percent of the new civilian jobs created in the United States over the last five months are in government, according to official data published by the Bureau of Labor Statistics.

In June, a total of 142,415,000 people were employed in the U.S, according to the BLS, including 19,938,000 who were employed by federal, state and local governments.

By November, according to data BLS released today, the total number of people employed had climbed to 143,262,000, an overall increase of 847,000 in the six months since June.

In the same five-month period since June, the number of people employed by government increased by 621,000 to 20,559,000. These 621,000 new government jobs created in the last five months equal 73.3 percent of the 847,000 new jobs created overall.
 See Table A-8. Employed persons by class of worker and part-time status
Household Survey Data Both the unemployment rate (7.9 percent) and the number of unemployed persons (12.3 million) were essentially unchanged in October, following declines in September. (See table A-1.)

Among the major worker groups, the unemployment rate for blacks increased to 14.3 percent in October, while the rates for adult men (7.3 percent), adult women (7.2 percent), teenagers (23.7 percent), whites (7.0 percent), and Hispanics (10.0 percent) showed little or no change. The jobless rate for Asians was 4.9 percent in October (not seasonally adjusted), down from 7.3 percent a year earlier. (See tables A-1, A-2, and A-3.)
Earnings rising slower than 2.2% inflation rate: 
In October, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.58. Over the past 12 months, average hourly earnings have risen by 1.6 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees edged down by 1 cent to $19.79. (See tables B-3 and B-8.)
Consumer Price Index - October 2012 The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.2 percent before seasonal adjustment.

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