FWIW Newsletter financial recommendation

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I listen to "Money Talk" on ABC radio stations on weekends a lot of the time. Bob Brinker, the host is a former Wall Street type who has had this program for about 14 years. He also publishes a monthly newsletter. It costs about $185 per year. Generally very good advice, and worth the money I might add.

Heretofore he has recommended that people stay fully invested in the market. He tends to recommend no-load index funds, buy and hold, dollar cost averaging, and tells people repeatedly to have no more than about 4% of their equity assets in any one stock. He is focused on tax advantaged investments, with no front-end or back-end fees, and teaches investor research and self reliance. He is leary of the crazy tulip bulb type .com stocks except those with a business to business focus. Your basic solid advice that, when followed with regularity, makes for a solid portfolio and sleeping through the night.

This month's letter, for the first time, advised subscribers to reduce their U.S. based equities from 75% of their portfolio to 25%, and non U.S. based equities from 25% to 15%. This reallocation of assets was discussed publicly today, so I am not setting myself up for being chased here. His thinking is based a model that looks at tight money, rising rates, potential for inflation, rapid growth, overvaluation of equities, low unemployment, etc.

On the show today (I only heard part of it), he is looking to protect his audience from a potential downturn. I think I heard that with 60% of the portfolio in cash-based reserves (money market, T Bills etc.), there is still capability for about a 7% return if the market continues. If it goes into a 20% down turn, this model suffers a 5% loss.

After about 10 years spent as a single person figuring out how to take care of myself, I am not sophisticated enough to time the market, play with puts and calls options, commodities, and the like. I also do not want to have to go back to work because everything goes south. For "Joe six-pack" folks like me, this is a significant heads up.

-- Nancy (wellsnl@hotmail.com), January 15, 2000


Joanne Sixpack, I presume? Thanks for the heads up!

-- W (me@home.now), January 15, 2000.

Bob Brinker giving this advise now? - Watch out! - Thanks, was at work and could not listen to his report. ---

-- Barbara (ba3_4him1@yahoo.com), January 15, 2000.

Nancy, don't worry, MOST folks who "invest" or I should say, gamble, with derivatives (i.e. puts, calls, options and options strategies, as well as futures) LOSE their money.

If you are retired, Nancy, you have absoloutely no business "investing" in those things, and any broker who would sell them to you (a retired woman, alone) deserves extremely close scrutiny hy his superiors..... and has questionable ethics.....

-- formerly (formerly@nowhere.zzz), January 15, 2000.

Thanks Nancy.

This is a VERY significant wake up call for Jo/anne 6 pack.

I hope they listen - this mania can't continue, somethings gotta give, and soon...

-- Andy (2000EOD@prodigy.net), January 15, 2000.

Formerly, thanks for the nice comments. Yes I am retired (really early tho). I am not that much a frail little old lady in a print jersey dress. More like a consultant in sweats writing marketing materials in a small northern California beach community.

I took some heavy duty financial risks to get myself to the point where I could make some choices and bailed from a high tech Silicon Valley marketing job. I subscribe to Investor's Business Daily, read Barron's occasionally, watch Bloomberg in the early am, and have attended a lot of seminars. My goal has always been to figure it out for myself and keep the transaction fees down to a reasonable level. If my son read your well meaning comments, he would be ROTFLOL.

I still play a couple of .coms in a tax deferred account, but I watch them closely.

What struck me about Bob Brinker's newsletter, was the 180 degree turn. That, to mee is significant-- just like $28.00 bbl oil.

-- Nancy (wellsnl@hotmail.com), January 15, 2000.

Check this out nancy...

Bob Brinker (richard640) Jan 15, 11:19 No one-well almost no one--has called the last 10 years in stocks better then my good friend Bob Brinker. His Marketimer stock mkt. timing model has turned negative--he says downside risk has grown to more than 20% and he is recommending capital preservation in all portfolios--either this is a very BIG DEAL or Bob is about to be tossed on a very illustrious dung heap of long time correctly bullish traders that,because the excesses were so glaring, finally made a bear call--Don Hayes of First Wheat Butcher is on that pile, btw., along with Ed Yardeni.

-- Andy (2000EOD@prodigy.net), January 15, 2000.

Andy, his newsletter took me back. I just finished reading Harry Dent's book on invesing for the roaring 2000s. Needless to say, the two contradict one another.

When I set up a spreadsheet to figure out how to protect myself, I also factored in pension dollars. I am blessed to have one of those kick in in March. Brinker says to treat pension dollars like T Bill income that pays about 6% and you never get the principle.

When I added that in to the asset allocation, I am taking a calculated risk and just tweaked things on the tax deferred side. I am still arguing with myself about cashing in a mutual fund and some of my tech stocks that have a really low cost basis. The tax hit is not appealing. I may put in some stop loss orders and become more vigilant during the trading day with Yahoo and Bloomberg watching this whole thing play out.

Even tho I am not a gold bug, I enjoy your posts on gold and oil and figure I have learned a lot, thx.

-- Nancy (wellsnl@hotmail.com), January 15, 2000.

For what its worth, he has been in the market duriong all turns even suggesting people dump free money during most major dips, what he calls "gift horse buying opportunities." He is not a doomer or perma- bear. He has been bullish for this entire market. During this weekends show's he didn't spend time on doom talk about the end of the world or the stock market just the chance of gain is small while the cahnce of pull back large. Risk vs Reward, easy concept unless you believe its different this time...

Log this as a warning shot across the bow.

-- Squid (ItsDark@down.here), January 16, 2000.

Nancy, thank you for the info on Bob"s newsletter. I used to be a subsciber, before I sold my stocks in '98. I got out a little early, but being a retiree, was afraid that if I waited much longer, the Y2K scare would cause a turndown. And I couldn't afford to lose my gains. I did do quite well, thanks to Bob Brinker- respect him a lot. Have been wondering what his current recommendation is, even tho I'm almost entirely out of the stock market. And, except for the .com stocks, the rest haven't done very well, anyhow.

I'm wondering how safe a money market in a fund company would be, in a real crash, tho- they aren't guaranteed 100%, whereas a C.D, Treasury or bank money market is. I'm a little nervous leaving money in a money market that isn't guaranteed 100% of the principal.

-- Jo Ann (MaJo@Michiana.com), January 16, 2000.

Jo Ann, everyone to his own tolerance for risk. A lot of my retirement money is tied up in a 401K that does have a guaranteed income fund. I do not wish to tap it for several years yet, so a GIF is my most realistic option.

Yes, FDIC insured accounts are safe, as are T bills, but Brinker did not say it was going to be so bad that there would be a meltdown in the Vanguards of the world. His recommendation is to reduce risk and protect people in a down market.

-- Nancy (wellsnl@hotmail.com), January 16, 2000.

Nancy, thank you for the added note. Yes, I realize Bob isn't talking major crash....I guess I'm more of a nervous Nellie than I thot I was, listening to all the doomers on this forum! I used to be a buy and holder, but when I read that it took the market 25 years to recover, from the '29 crash, I decided I didn't want to take the risk of a possible crash, due to Y2K. Now that that milestone is over, I have to make some big decisions, but I think I'll take the guaranteed route and make a bit less, until I see which way the wind is blowing. Always glad to hear other people's thoughts and thanks for yours.

-- Jo Ann (MaJo@Michiana.com), January 16, 2000.

Maybe Bob isn't talking major crash, but I am.


-- dinosaur (dinosaur@williams-net.com), January 16, 2000.


Domeone sent me this...

I listened to Brinkers sell call to his radio listeners this weekend, and it was obvious to me the confusion and uncertainty that many callers demonstrated. Brinker seemed himself to be uncomfortable at times with the role of bear.

Brinker's model portfolio calls for only a 25% allocation to U.S. stocks, 60% in cash (T bills/MMFs) and 15% international stocks (not including U.S. stocks). This is after a 75%-100% allocation (depending upon the investor's self-perception of risk tolerance) to U.S. stocks for most of the past decade and a half with ~66% in U.S. stocks most recently.

Given that Brinker has the largest listener base of all other investment advisory radio programs by far, and he manages private accounts as well as advises professionals, his influence is significant. (He is a partner in The BJ Group with Sheldon Jacobs).

What is more important, he is "the first" permabull to become "outright bearish" during the mania. This is a profound development, IMO.

Tomorrow is the first trading day following Brinker's big national sell call. Could his sell call be one of the catalysts for the public's recognition of the bear?

Interestingly, on an anecdotal note, a colleague of mine who has closely followed Brinker and his advice for years thinks that Brinker "is panicking" because of high valuations and "a little Fed scare" which my colleague believes will be "just a blip in the long term".

However, of the three other people I know who closely follow Brinker, each is going to take his advice and reallocate the first thing tomorrow via their 401-Ks, IRAs and regular investment accounts. One couple who receives Brinker's newsletter wanted to hear his personal comments on the radio before pulling the trigger.

It will be interesting to see how widespread Brinker's influence is in the weeks ahead.

-- Andy (2000EOD@prodigy.net), January 17, 2000.

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