Sunday, June 21, 2009

Bob Brinker's "Evolving" California GO Bond Advice Ignores What President Obama Did to Chrysler Bond "Speculators"

Yesterday and last weekend Bob Brinker made it quite clear to his audience that his recommendation for California Municipal bonds, including General Obligation (GO) bonds, is NO MORE than one percent of your portfolio in any one issue. This is a big change from the past where he has strongly recommended CA GO bonds with no limits on how much to invest. I also do not think Bob Brinker is paying attention to what President Obama did to bond holders when he gave some of their assets to powerful unions.

At the facebook's "Investing for the Long Term" forum to discuss Bob Brinker, Runner Twentysix said:

Runner Twentysix replied to Honey's post on June 18, 2009 at 12:03pm
I wonder if anyone ran out and bought CA GO's after Brinker, over the past month said there was not chance of the Federal Gov. letting CA go bankrupt. Remember how he said that if CA went bankrupt, there would be no Highway Patrol! There is no chance of that he SHOUTED. If anyone followed his advice and bought, and then heard this weekends show, they have to feel that old Bob just blindsided them. And maybe they loaded up because Bob never mentioned the 1% bond rule before, only his no more than 5% in one stock. It is obvious that he just makes this stuff up as he goes.
George Johnson replied to Runner's post on June 18, 2009 at 6:06pm:
That's why I don't listen to him. Even though he may have some good and wise investment advice, how can you trust a snake oil salesman?
Unlike Brinker, I sold my CA GO bonds as soon as California ran into budget trouble back in 2008. I think Brinker takes too much risk with his fixed income portfolios. Brinker's fixed income results for 2008 were horrible as all four of his "fixed income only" model portfolios lost money while the Total Bond Fund at Vanguard gained 5.1%!

Bob Brinker's 2008 Fixed Income Performance

Every six months, major investment newsletter tracker Mark Hulbert publishes a performance summary for the large investment letters he follows. From "The Hulbert Financial Digest January 2009 Long-term Performance Ratings" Mark lists for last year, 2008:
  • Brinker's "fixed income advisor" model portfolio #1 lost 21.7%
  • Brinker's "fixed income advisor" model portfolio #2 lost 11.5%
  • Brinker's "fixed income advisor" model portfolio #3 lost 5.2%
  • Brinker's "Fixed income only" portfolio in “Marketimer” lost 2.1%
From listening to Moneytalk, you get the impression Bob Brinker did really well in 2008 since Vanguard's GNMA fund (VFIIX Charts) gained 7.1% in 2008. Obviously, Brinker took a lot of risk with his fixed income portfolios and they suffered in a good year for the more conservative "Total Bond Fund" from Vanguard (VBMFX Charts) that I recommend for the fixed income side of my "core and explore" newsletter portfolios.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 104% (over a double!) vs. the S&P500 DOWN 11% vs. NASDAQ down 17% vs. Warren Buffett's Berkshire Hathaway (BRKA) ONLY up 24% (All through 6/21/09)

Does Bob Brinker Pay Attention to President Obama?

In past months, Brinker surprised me by saying he still liked CA GO bonds because they were by law second in line to be paid from CA revenue after teacher salaries. I thought this was odd to say given President Obama was at the same time attacking Chrysler bond investors, including retired teachers, as speculators when they objected to giving union employees Chrysler assets that they were legally entitled to. My thinking was if President Obama thought it was OK to take assets legally due Chrysler bond investors to give to powerful auto unions, then he would have no problem taking assets due CA GO bond holders to pay salaries of powerful California public employee unions. I am sure there are far more voters working for California than investing it its bonds.

Doubled Money in a Down Market!

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 104% (over a double!) vs. the S&P500 DOWN 11% vs. NASDAQ down 17% vs. Warren Buffett's Berkshire Hathaway (BRKA) up 24% (All through 6/21/09)

As of June 21, 2009, "Kirk's Newsletter Explore Portfolio" is up 5.0% YTD
vs. DJIA DOWN 2.7%
(More Info & FREE Sample Issue)

HURRY! Subscribe NOW and get the June 2009 Issue of "Kirk Lindstrom's Investment Newsletter" for FREE! !

3 comments:

  1. Jeff Christie Last weekJune 22, 2009 8:14 AM

    Last Sunday (two weeks ago) on moneytalk Bill Flanigan said:

    "Lets talk to Bill in Newport beach.
    Bill said he owned quite a lot of California municipal bonds including general obligation bonds and he was worried about getting his money back. Flanigan noted that last month Moody's assigned a negative outlook to the entire asset class. Caller Bill said the state was in a mess. Flanigan responded by saying if they were in his portfolio he would be looking somewhere else. I had to wonder is he was aware that Bob Brinker had recommended California general obligation bonds and was still OK with holding them. The call ended with the caller saying he has lost confidence in the state and Flanigan said there is no reason to hang on.

    On the subject of Hulbert ranking Brinker 7th, how many market timers does he track? Brinker is 7th out of what? I would like to see all of them by name.

    ReplyDelete
  2. The Brinker fixed income advisor is not published by the Bob Brinker you listen to on the radio, rather by his son Bob Brinker, Jr.

    Getting the advise from these two mixed up can be misleading to your readers.

    ReplyDelete
  3. I've heard advertisements for both newsletters on Moneytalk.

    They have the same guy reading the text and they are both newsletters have "Brinker" in the title.

    I do not remember any of the commercials making any distinction between the radio entertainer father and the computer software writer son.

    Why would it matter who "published" the newsletter? Harpor Business publishes Ben Graham's "Intelligent Investor." I only care what Graham has to say, not the publisher.

    ReplyDelete

Note: Only a member of this blog may post a comment.