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Thursday, May 25, 2017

Brinker's Suncor Energy, $25 Oil & Self-driving Cars

If you follow Bob Brinker and bought Suncor Energy (SU) when he recommended it in Marketimer in the "mid-$30's" back in 2009 and still hold it today per Bob's advice after years of under performance, then this article is something to consider.
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5/23/17 Article: "Be warned: $25 oil is coming, and along with it, a new world order
  • "Oil demand will peak 2021-2020 and will go down 100 million barrels, to 70 million barrels within 10 years. And what that means, the new equilibrium price is going to be $25, and if you produce oil and you can't compete at $25, essentially you are holding stranded assets," Seba said.
  • "At $25 a barrel, that means deep-water, sands, shell oil, fields, most are going to be stranded, and also all the refineries and pipelines associated with these expensive oils are also going to be stranded. And that is going to reshape worldwide oil, geopolitics and so on."
The cost to extract oil from shale is coming down but this chart shows they all lose money today when oil sells below $29 per barrel.   Where does this chart bottom out?

Bob Brinker recommended buying Suncor Oil in his newsletter back in early 2009.  After trying to snag some cheap shares in his May 4, 2009 Marketimer in the "mid-$20s" Brinker chased the stock price in the next issue (June 2009) with a recommending to buy in the "low-$30s."  By my definition, that allowed his subscribers to buy at $33.34 (lower third of "the 30s") just before it dropped back to the mid-$20s.

Bob Brinker doesn't count this recommendation in his measured performance like I do with my "Explore Portfolio" for obvious reasons...  The graph above shows how poorly SU has done compared to the Total Stock Market fund that is the majority of his model portfolios.  IMHO (in my humble opinion) Brinker likes to recommend popular things in his "individual issues" so he can talk about them on the radio as a form of "advertising" but he doesn't track their performance since I've found they usually grossly under perform when taken as a group.
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Sunday, May 14, 2017

Bob Brinker's Market Outlook, Advice for New Money & More

Bob Brinker Market Update for May 2017.  In this issue I discuss:
  • Bob Brinker's May 2017 Market Outlook.
  • Marketimer Allocations
  • Is Brinker more or less bullish than in past years at this time?
  • Series I-Bonds
  • Advice for new money.
  • GNMAs
  • Timer Digest Update
  • Link to Listen Live (1-4PM PST, 4-7PM EST)
Bob Brinker's May 2017 Market Outlook.  In his May 2017 Marketimer newsletter, 
  • As of May 3, 2017 with the S&P500 at $2,384.20, Bob Brinker is bullish and fully invested.
  • He expects the S&P500 to earn $130 in 2017 and says it can support a P/E ratio of 17 to 18 times that.
  • Bob says the market can "trade well into the S&P 500 Index 2400s range going forward."
  • We're nearly there already given the market has traded into the 2400s already this month!
  • Bob also says "tax reform legislation" going forward could lead to "a healthy increase in operating earnings in 2018."  This is pretty much what every talking head on CNBC from both political parties says would happen if companies get to keep more of the money they earn.
Marketimer Allocations:
  • Model Portfolio's one and two are 100% in stock funds with 80% in the US and 20% as the listed percentage in an "All-World" index fund.  
  • The actual percentages in his portfolios vary from what is listed since he doesn't rebalance or update the percentages often.   
  • It seems odd he offers zero guidance for using the percentage he recommends or the actual percentage in the portfolios he shows and reports measured performance for.  For example, he recommends 30% in VTSMX for P3, but the actual percentage is 33.5%, over 10% more than he recommends!
  • Model Portfolio three is listed as 50% in stocks but since he doesn't rebalance often, he has quite a bit more in stocks than fixed income.  Of the stocks, he has about 20% of that in the same "All-World" index fund.  (so 10% "All-World" and 40% US)
  • His "Active/Passive Portfolio" is 100% in stocks with the same 80:20 balance between US and foreign
  • His "Income Portfolio" is 100% out of stocks with money spread between three managed funds with duration between 1.25 to 1.52 years and yield between 1.95% and 4.62%
May 13, 2017 Market Update - Summary

  • The four major US markets I follow are up between 1.9% and 13.7% YTD.
  • The S&P500 and Nasdaq markets set new record closing highs this week.
  • The 2400 level continues to be strong resistance for the S&P500 while open gaps are cause for concern.
  • The New Rates for New and Old I-Bonds are out.
  • My Explore Portfolio continues to do well in 2017 after a great 2016.  It finished the week at a new record high!
  • Full Article: Markets Near Record Highs, Open Gaps & 2400 Resistance Level

I plan to add to and finish this article over the next few days so come back and look for more.

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