Moneytalk Show Review for April 24, 2011

Excerpts from Moneytalk Summaries - April 24, 2011:

STOCK MARKET STRENGTH
 
Brinker Comment: The stock market has shown a tremendous come-back over the last 25 months. It is rather remarkable when you consider everything that has happened. The all-time closing high in the S&P 500 of 1565 occurred back in 2007. At today¹s closing price of 1337, the S&P 500 Index is 14.5% below its all-time high. However, you have earned 3.5% years of dividends during that time which tacks on another 7% to our return. Therefore, on a total return basis, the S&P 500 is only 7% down from its all-time high. And right now, the markets are doing very well. The Dow just recorded a new high for 2011 and the S&P 500 is just a hair away from its 2011 high.

More S&P500 Charts

SELL STOCKS NOW?
 
Caller: This caller read an article suggesting that the S&P 500 price-earnings ratio was getting higher than historic levels and that the stock market was entering bubble territory. He asked Bob if now was a good time to sell his stock holdings. Bob was pretty emphatic in his response and said he takes a completely different view of earnings. Bob said that based on the work he does, using 2011 operating earnings estimates that he has a high level of confidence in at this point, he thinks the S&P 500 is trading below its historic average multiple. Bob said ...

Read the rest of the summary at Moneytalk Summaries - April 24, 2011

Elaine Garzarelli Bullish - Has 1500 S&P500 Target

Elaine Garzarelli, president of Garzarelli Capital and a market timer that correctly called the 1987 bear market that Brinker missed, is Bullish. Garzarelli says the S&P500 could reach 1500. Below are excerpts from her appearance on the PBS show "Nightly Business Report."

TOM HUDSON (NBR Host): What makes you so confident in higher stock prices with all the uncertainty that remains?

GARZARELLI: Well, basically, my indicators for the stock market are bullish. They`re at a 76 percent level. And they need to go down to 30 percent for a major bear market. We`re down below 43 percent for 10 to 15 percent correction. And basically there are economic cycle, monetary valuations and sentiment. And those are the four categories of my indicators. So it`s fundamental for the most part.

HUDSON: I want to ask you about oil in a moment. Last fall the last time you were on with us you were bullish and your indicators were as well. You were looking at the time for S&P 500 at 1300. We`re above that now. So do you have a price target in mind?

GARZARELLI: For earnings for this year and this is assuming that oil prices stay where they are now, which is pretty high, I have 94 for S&P earnings and for next year I have 102.50. So if you just multiply a 15 multiple by that, which is conservative, our models say 17 would be better based on the BAA bond rate. You get up to 1500 on next year`s earnings, 2012 earnings.

HUDSON: Give me real quick on oil, what price is going to start to concern you?

GARZARELLI: I would say $128, $130. We`d have to change our forecast for much slower growth.

To take advantage of higher oil prices, Garsarelli likes the exchange traded fund for oil, XLE.

HUDSON: Kind of a valuation play as well. We`ve talked about oil a little bit and you do like the major integrated oils with the XLE, the energy exchange-traded fund. If oil prices don`t move up to your concern level of $128 or so, where do you go from here for the XLE?

GARZARELLI: Well, no, this is based on where oil prices are today. I would recommend XLE at current prices, which is about $113 but this one should outperform the market by two times. It`s been the best leader in the last six months of all the sectors and in there we`ve got Exxon, Chevron (NYSE: CVX), Schlumberger (NYSE: SLB), Conoco and Halliburton (NYSE: HAL) as the top ones.

Charts for XLE, the energy sector spider.

Quotes and charts for other  Crude Oil ETFs

Elaine also likes the material and financial sector via XLB and XLF, the exchange traded funds for those sectors:

HUDSON: You new picks, you like materials, we`ll begin with the XLB materials sector, exchange-traded funded. It clearly has been benefiting from the weak dollar, strong commodity. What do you see ahead?

GARZARELLI: Well, I think that the materials will outperform the stock market by about two times. So that`s a pretty good leverage. The stocks, some of them are Dupont, Freeport, Dow, Alcoa (NYSE: AA), Nucor (NYSE: NUE).

HUDSON: All real household names certainly in that kind of global industry. You also like financials, which is an interesting pick and clearly there`s been a lot of focus on the finance sector and banks especially. We`re ahead of earnings season, and the spider financial exchange-traded fund has yet to break out to post recession highs.

GARZARELLI: Yes, but I think it will. It was lagging a little bit. Now it`s starting to lead for the last couple of weeks and I think it`s the cheapest of all my sectors actually. The stocks in there would be JPMorgan, Wells Fargo (NYSE: WFC), B of A, Citi, U.S. Bancorp (NYSE: USB).

Charts and quotes for XLF, BAC, C, WFC

Moneytalk on Demand - Listen for Free

"Moneytalk with Bob Brinker" is carried live by KGO Radio 810 AM in San Francisco, California from 1AM to 4PM, PST. You can listen to the show live here.

You can also listen to Moneytalk any time you want FOR FREE up to a week after the show at the KGO Radio MP3 Archives for Sunday

Simply select the day and the hour you'd like to hear. A new window will open containing an upgraded player, and also a link you can use to download the chosen hour.

1 - 2 p.m.
2 - 3 p.m.
3 - 4 p.m.

When you get to the MP3 Archives for Sunday page, you can easily store the shows on your computer to listen to later on.  Follow these steps:

1. Left click on "1 - 2 p.m."
2. Right click on "right-click to download"
3.  Select "Save Link as"
4. Navigate to "Documents, Music"
5. Click "New Folder"  
6. Name the folder "Money Talk on Demand"
7. Save as "Moneytalk April 3 2011 1-2PM"
8. Repeat steps 1, 2, 3 and 7 for the other hours.

To listen, simply navigate to  "Documents\Music\Money Talk on Demand" then click the file. For example, see:

• C:\Users\Kirk\Music\MoneyTalk on Demand\Moneytalk April 3 2011 1-2PM.mp3
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Bob Brinker's guest author was Barbara Weltman from JK Lasser.  Barbara has three books on taxes for 2011:

• J.K. Lasser's New Tax Law Simplified 2011: Tax Relief from the American Recovery and Reinvestment Act, and More  
• J.K. Lasser's 1001 Deductions and Tax Breaks 2011: Your Complete Guide to Everything Deductible
• J.K. Lasser's Small Business Taxes 2011: Your Complete Guide to a Better Bottom Line

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