Conservative Retirement Portfolios

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Sunday, July 29, 2007

Bob Brinker on Energy Prices and Charlie Maxwell

This is an excerpt from David Korn’s July 28-29, 2007 weekly newsletter (Click for a FREE SAMPLE ) that comments on Bob Brinker’s Money Talk.


Brinker Comment: The price of oil has been rising. It is peak driving season in the U.S. which causes demand for gasoline prices. Gasoline prices have been rising, not just because of the demand from drivers, but also because of the fact that we are strained in our refinery capacity. When we take out refineries for routine maintenance or because of a break down, it causes problems. The entire refinery industry has been pretty stagnant. Crude oil is now at $77 a barrel which is essentially at the record. The all-time record close is $77.03 and on Friday it closed at $77.02. That is close enough to call it a record level. One of the things that has helped make oil priced high is the rebound in GDP in the second quarter which many think can continue into the future.

David Korn Comment: Over the last year or two, Bob has stayed firm in his prediction that the price of oil would trade between the $50s and $70s per barrel. Bob said he bases that prediction on the outlook expressed by energy expert, Charlie Maxwell. That means that we are at the very high end of that prediction.

Brinker Comment: The U.S. has fallen flat on its face in terms of managing its oil needs. We knew back in the mid-1970s when we waited in gas lines that we had a problem. Here we are 33 years later and we still have a problem. One problem is that we, as a nation, consume 24% of all the oil produced around the world. The International Energy Agency is forecasting that worldwide oil demand is going to increase 1.8% next year. While that might not sound like much, when you consider that in the world today we consume 80 million barrel a days, then a 1.8% increase is another 1.5 million barrels a day that will be consumed. A lot of this has to do with China and other emerging markets. How is the world demand going to keep up with supply? That is the question. In the U.S., we can do more. Its hard to believe that the U.S. doesn't like nuclear power. Other countries in the world use nuclear power widely, including France, Japan and others. Even China has announced 40 new nuclear plants.

David Korn Comment: The International Energy Agency recently made its July 2007 report available to the public. In the report, they are projecting global oil demand to rise by 2.5% in 2008. Read the report at this url:

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Monday, July 9, 2007

July 7-8, 2007 Recap


This isn't a weekend I am doing an Interpretation of Moneytalk. Bob published his newsletter earlier in the week, and the shows that follow that usually are relatively bland as these were. Bob did show up, and here the highlights in bullet form:

1. Bob discussed the recent jobs report saying that the number of new jobs reported of 132,000 fell right in the "sweet spot." As for the stock market, it is now only about 1% from its all time highs.

2. Bob noted that the FOMC left interest rates alone, and predicted that they will remain unchanged at the August meeting.

3. Bob mentioned an auction of the Treasury Inflation Protected Securities next week. Here is a link to the TreasuryDirect auction web site:

4. Bob said he still likes GNMAs and expects them to trade in a range of $9.50-$10.50. If you can't handle the volatility, Bob suggested creating a laddered portfolio of CDs.

Finally of note, Bob got a mention by Mark Hulbert this week in an article where Mark analyzed the top market timers. Mark quoted from Bob's June Marketimer where Bob had wrote that he believes there is "no risk" of a bear market occurring this year. I referenced that quote in my June 9-10, 2007 newsletter. It bears noting that none of the other market timers are bearish right now and their average stock market exposure is 79% --- exactly the same as mine. Read Mark Hulbert's article entitled, "Top market-timing newsletters are still bullish" at this url:

See: Thursday, June 26, 2008 Bob Brinker Fan Club Market Update - DOW down 19%

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Sunday, July 1, 2007

June 30-July 1, 2007 Recap


Caller: This caller had $300,000 to invest and wanted Bob's advice. Bob recommended that she take a"top down view" which means first trying to determine what your asset allocation should be. To do that, you consider your age, your tolerance for risk and make your decision on how you are going to allocate between stocks, bonds, real estate and any other asset class. Bob said for new money, he would recommend a dollar cost average approach using either the Vanguard Total Stock Market Index Fund for the equity portion of your portfolio or the GNMAs for the fixed income side.

EC: A couple of things here. First, Bob obviously isn't too worried about the terrorist attack because he is still recommending going into stocks. We aren't at the market highs, nor are we at Bob's last "buy" level of 1380. Thus, the dollar cost average approach seems to be the conservative advice Bob will maintain unless the market declines a fair amount further.

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