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Thursday, September 15, 2011

Stagflation: Inflation at 3.8%; Core Inflation at 2.0%; GDP 1.0%

Stagflation is stagnant economic growth with inflation. With rates for safe investments in treasuries, CDs and GNMA near record lows, inflation is tough on savers as it erodes the value of their savings.  The Federal Reserve is trying to encourage savers to take more risk but they continue to pour money into safe investments.  As the returns at the bottom of the page show, TIPS (Treasury Inflation Protected Securities) have been the clear winner for safe, fixed income investments this year.
Thursday, September 15, 2011
Consumer Price Index for August 2011

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.8 percent before seasonal adjustment.

The seasonally adjusted increase in the all items index was broad- based, with continuing increases in the indexes for gasoline, food, shelter, and apparel. The gasoline index rose for the 12th time in the last 14 months and led to a 1.2 percent increase in the energy index, while the food index rose 0.5 percent, its largest increase since March.
All items less food and energy up 2.0% year-over-year.  You can read the full release at
Kirk's Explore Portfolio TIPS as of 09/14/11
CUSIP Value Paid Buy Date Interest $ Gain % Gain
912828PP9 $34,548 $30,846 3/24/2011 $173.86 $3,876 12.6%
912828MF4 $35,641 $29,847 1/11/2010 $631.65 $6,426 21.5%

Vanguard Funds YTD as of 09/14/11:
click the links for a current price quote and performance graphs
  • GNMA Fund Investor shares, VFIIX, up 6.68% YTD
  • Total Bond Mkt Index shares, VBMFX, up 6.33% YTD
  • TIPS: Inflation-Protect Securities fund, VIPSX, up 11.20% YTD
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  1. Is it best to wait until Nov. to purchase I bonds? And, are TIPS a good purchase now?

  2. Rick

    I think it is best to buy i bonds near the end of the month and sell them near the beginning of the month since you get credit for the whole month's interest.

    For more info, see I Bonds Explained.

    My current advice for Series I bonds and TIPS is on page 8 of my September newsletter. If what I write is unclear, I am happy to answer clarification questions from subscribers via email.

  3. BTW, I will address the question of buy i-bonds now or wait until November in my October newsletter that I am working on now. I will send it out about a week before the month ends so there will be plenty of time to make a decision and act.

  4. Do any of you subscribe to Kirk's newsletter? If so, what do you think? I have requested a sample, and would like to hear your opinions. The newsletter results seem compelling, but since he does not have a large Briniker-like following, I am still forming my opinion.

  5. Bob Brinker seems to focus primarily on fixed income investing these days, and complaining about the political - economic situation. For a Joe-average investor, who is mostly interested in the stock market, the MoneyTalk doesn't really hold my interest. I dropped my MarketTimer subscription after Bob completely missed the 2008 debacle, and just left us hanging, with no real advice, and only his explanation, "we didn't see this coming!" I was also screwed in the 2000 QQQQ fiasco, and feel like I gave him a second change. He won't get a third chance....

  6. Bill,
    I've subscribed to Kirk for many years and have been satisfied. I call Kirk a swing trader. In the simplistic, he buys some of a stock when it is below the buy target point, sells some when it reaches the targeted sell point. Then he waits for that stock to cycle itself again at some future date. The methodology is mechanical and the targets are published. The actions are not done on a whim.

    At one time I followed Bob, but that was before I saw him for what he truely is.

    Al in SJ

  7. Why Buy and Hold? We've had some major disappointments in some major, previously stable issues. Remember it's not a Profit until you sell.
    Buy and Hold has become an illness like QE 1, 2 and 3. In this atmosphere it's important to keep a positive cash flow working to beat the Growing appetite of DC and in my case Lansing.
    I've been following Kirk's advice for 4 Years now and it's quite enjoyable once you learn to take some profits along the way. There is no trend in markets that is a straight line up or down and while Market Timing is virtually impossible taking profits and reinvesting those profits on dips has been very productive for me. In flat markets there is also a time for Dollar Cost Averaging. I'm retired and adjust my investing to a much more conservative strategy than recommended by Kirk's Newsletter while incorporating the parts that fit. The Monthly News and Charts on the recommended Equities is extremely helpful. I've done quite well in a shaky economic atmosphere. I like that Kirk doesn't just report the rosy good trades in his Newsletter. Every position and resolution is listed good or bad and the good far outweigh everything else. His Strategies can be adjusted to any level of Risk Tolerance you might have. The TIPS recommendation has been an especially nice surprise.

  8. posted elsewhere:

    "Both John Bollinger and Bob Brinker (Marketimer) have sent out bullish hotlines tonight, Thursday, September 22"

    Let's see if old Bobby can be right for once.

  9. dennis the menanceOctober 26, 2011 6:43 PM

    I have listened to Bob Brinker from time to time over the years. I believe that he is a knowledgable guy but that does not mean I agree with everything that he talks about on his radio show concerning stocks a good example of this is his recommendation to avoid low dollar amout stocks. Well what do I have to say about that apple computer was once a low dollar stock it traded at just 5 dollars a share in 1998 today it trades at 400 hundred dollars a share. petsmart was once a low dollar amount stock it traded at 2.00 dollars a share in the year 2000 today it trades around 45 dollars a share this is just a couple of examples their are many many others.


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