Things I've Learned By Listening To Bob Brinker
We have mentioned the name of Bob Brinker from time to time, and for anyone who may not be acquainted with him, Bob Brinker broadcasts his "Money Talk" program each Saturday and Sunday from 3:00 to 6:00 PM locally on radio station WLS (890-AM) as well as on the Internet on ABC Radio Stations like KGO-AM in San Francisco.
Besides the fact that you likely will hear some nuggets of valuable investment information that you won't hear elsewhere, it is fascinating to observe how Bob Brinker's mind works... he is so clear and succinct in the things that he says and most importantly, he always makes abundantly good sense!
I always keep a yellow legal pad handy when listening to Bob Brinker, and here now is a compilation of ideas that he has expressed over the years.
-------------------------------------------
"It is important to manage your money with the idea that you only have one portfolio. And what you are trying to accomplish is the optimum efficient management of all your financial assets, for a rate if return that is relative to your tolerance for risk!"
"So your mindset has to be the same as that of a corporate Chairman who manages a group of companies that don't all do the same thing. And a corporate Chairman should always manage his various companies toward a common goal. And that same common-goal mentality should drive every investor's efforts toward managing his/her own personal finances."
"If you think one portfolio all of the time, you can't go wrong. It's a winner!"
------------------------------------------
"The first thing you have to do in order to manage your money well, is to determine your asset allocation model. And your asset allocation model in turn determines what percentage of your total portfolio will be in the stock markets of the world, and what percentage will be in fixed income or interest-bearing securities."
"Asset allocation is usually a function of age, and asset allocation begins by knowing exactly what you have. It needs to answer questions like: How old am I?; How many years do I have until retirement?; What percentage of my money do I want to have in stocks?; What percentage of my money do I want in fixed income sources? "
"Until you determine your asset allocation percentages, you can't possibly have any idea of how to invest the money because you wouldn't know where to invest it!"
------------------------------------------
"You should always be moving steadily in the direction of that Promised Land of personal financial freedom - known as the Land of Critical Mass... There are no alarm clocks or wake-up calls; there is no pressure at all. Because in the Land of Critical Mass, people do whatever they choose to do with their time, and that makes all the difference!"
"How do you get to the Land of Critical Mass?... Well there is really only one way to do it, and it begins by understanding that there are two types of money: one is assets, and the other type is earned-income."
"Assets we have defined previously as being anything that puts money in your pocket. Therefore assets are a very, very precious form of money."
"Earned-Income is a form of money that carries a certain amount of baggage with it - because earned-income requires you to give up your time, or a quantity of it - in return for earned income... But your life is not your own!"
"So it's only assets, and assets alone, that can bring you personal financial freedom - the ability to live your life the way you choose... as opposed to owing your soul to the company store."
"You build your assets by discipline in saving and by discipline in investing!"
There are three important things to do once you have achieved Critical Mass:
1. Be very careful to never lose any of your capital assets.
2. Take good care of your state of health.
3. Enjoy your money!
-------------------------------------------
"Whenever you have an investment in a specific stock or stocks, what is very important is the amount of stock risk that the individual takes in his portfolio."
"It doesn't matter which company you own because whatever the company, things can change. But if you own shares in a company where right now things are going well, and its future prospects look bright, then the only important thing to do is to stay close... Stay as close as you can to the top management of the company; as close as you can to future earnings expectations from within the company; and as close as you can to future important corporate announcements affecting the company. And if you take care of all three of these bases then you will be doing as well as you can in shepherding your investment!"
"The more money that you have invested in one stock, the more important it is to stay close to senior management, and to try and catch the trends that are going on within the company - which can gag you with respect to the best approach to take in managing that particular investment."
-------------------------------------------
"When buying bonds, you should only invest in investment-grade bonds, and of this type there are only four kinds: AAA, AA, A, and BAA. And it is important to watch the BAA type very closely, even on a day-to-day basis, because this type of investment grade bond could very easily be downgraded to BA."
"Before ever buying any bond fund, you must know the average maturity of all the bonds in that fund in order to determine the interest risk... Are the bonds in the fund long-term, intermediate-term, or short-term duration?... Long-term bonds are generally higher risk while short-term bonds are usually lower risk."
"It is also very important to know the quality of the bonds in any bond fund's portfolio."
-------------------------------------------
"The secret to investing in money market funds - since they all have a net asset value of $1.00 - is to be invested in the one that has the lowest expense ratio."
-------------------------------------------
"If your portfolio is invested almost entirely in stocks, then the only kind of bond you should be invested in is U. S. Treasury securities."
"If you don't have any stock investments in your portfolio and you are invested entirely in fixed income (bonds), then you should have 30% of your portfolio invested in International Bonds."
-------------------------------------------
"There are four major market indicators that investors should pay attention to:
1. The Economic Cycle.
2. Monetary Policy.
3. The Valuation of the Market.
4. Market Sentiment.
------------------------------------------
"In a Runaway Inflation - go to Money Funds."
"In a Recession - go to Treasuries."
------------------------------------------
"You should track the Consumer Price Index (CPI) like a hawk!... As long as your investments are earning interest at a rate that exceeds the CPI, you are making money!"
------------------------------------------
"Whenever you are evaluating any company and you re considering to purchase its stock, you should consider only the OPERATING EARNINGS figure and NOT reported earnings, in making your evaluation."
------------------------------------------
"If we ever come to a period of time when you think that we are headed for major inflation, then it would be best to be out of both stocks and bonds and go heavily into both cash and gold. Also, gold stocks and gold mutual funds would do well in a period of high inflation."
------------------------------------------
And so this is a potpourri of comments that I picked up by listening to Bob Brinker over many years. If you have a problem with anything stated then I suggest that you call his "Money Talk" program any weekend and let him explain it in greater detail!
* * * * *
Besides the fact that you likely will hear some nuggets of valuable investment information that you won't hear elsewhere, it is fascinating to observe how Bob Brinker's mind works... he is so clear and succinct in the things that he says and most importantly, he always makes abundantly good sense!
I always keep a yellow legal pad handy when listening to Bob Brinker, and here now is a compilation of ideas that he has expressed over the years.
-------------------------------------------
"It is important to manage your money with the idea that you only have one portfolio. And what you are trying to accomplish is the optimum efficient management of all your financial assets, for a rate if return that is relative to your tolerance for risk!"
"So your mindset has to be the same as that of a corporate Chairman who manages a group of companies that don't all do the same thing. And a corporate Chairman should always manage his various companies toward a common goal. And that same common-goal mentality should drive every investor's efforts toward managing his/her own personal finances."
"If you think one portfolio all of the time, you can't go wrong. It's a winner!"
------------------------------------------
"The first thing you have to do in order to manage your money well, is to determine your asset allocation model. And your asset allocation model in turn determines what percentage of your total portfolio will be in the stock markets of the world, and what percentage will be in fixed income or interest-bearing securities."
"Asset allocation is usually a function of age, and asset allocation begins by knowing exactly what you have. It needs to answer questions like: How old am I?; How many years do I have until retirement?; What percentage of my money do I want to have in stocks?; What percentage of my money do I want in fixed income sources? "
"Until you determine your asset allocation percentages, you can't possibly have any idea of how to invest the money because you wouldn't know where to invest it!"
------------------------------------------
"You should always be moving steadily in the direction of that Promised Land of personal financial freedom - known as the Land of Critical Mass... There are no alarm clocks or wake-up calls; there is no pressure at all. Because in the Land of Critical Mass, people do whatever they choose to do with their time, and that makes all the difference!"
"How do you get to the Land of Critical Mass?... Well there is really only one way to do it, and it begins by understanding that there are two types of money: one is assets, and the other type is earned-income."
"Assets we have defined previously as being anything that puts money in your pocket. Therefore assets are a very, very precious form of money."
"Earned-Income is a form of money that carries a certain amount of baggage with it - because earned-income requires you to give up your time, or a quantity of it - in return for earned income... But your life is not your own!"
"So it's only assets, and assets alone, that can bring you personal financial freedom - the ability to live your life the way you choose... as opposed to owing your soul to the company store."
"You build your assets by discipline in saving and by discipline in investing!"
There are three important things to do once you have achieved Critical Mass:
1. Be very careful to never lose any of your capital assets.
2. Take good care of your state of health.
3. Enjoy your money!
-------------------------------------------
"Whenever you have an investment in a specific stock or stocks, what is very important is the amount of stock risk that the individual takes in his portfolio."
"It doesn't matter which company you own because whatever the company, things can change. But if you own shares in a company where right now things are going well, and its future prospects look bright, then the only important thing to do is to stay close... Stay as close as you can to the top management of the company; as close as you can to future earnings expectations from within the company; and as close as you can to future important corporate announcements affecting the company. And if you take care of all three of these bases then you will be doing as well as you can in shepherding your investment!"
"The more money that you have invested in one stock, the more important it is to stay close to senior management, and to try and catch the trends that are going on within the company - which can gag you with respect to the best approach to take in managing that particular investment."
-------------------------------------------
"When buying bonds, you should only invest in investment-grade bonds, and of this type there are only four kinds: AAA, AA, A, and BAA. And it is important to watch the BAA type very closely, even on a day-to-day basis, because this type of investment grade bond could very easily be downgraded to BA."
"Before ever buying any bond fund, you must know the average maturity of all the bonds in that fund in order to determine the interest risk... Are the bonds in the fund long-term, intermediate-term, or short-term duration?... Long-term bonds are generally higher risk while short-term bonds are usually lower risk."
"It is also very important to know the quality of the bonds in any bond fund's portfolio."
-------------------------------------------
"The secret to investing in money market funds - since they all have a net asset value of $1.00 - is to be invested in the one that has the lowest expense ratio."
-------------------------------------------
"If your portfolio is invested almost entirely in stocks, then the only kind of bond you should be invested in is U. S. Treasury securities."
"If you don't have any stock investments in your portfolio and you are invested entirely in fixed income (bonds), then you should have 30% of your portfolio invested in International Bonds."
-------------------------------------------
"There are four major market indicators that investors should pay attention to:
1. The Economic Cycle.
2. Monetary Policy.
3. The Valuation of the Market.
4. Market Sentiment.
------------------------------------------
"In a Runaway Inflation - go to Money Funds."
"In a Recession - go to Treasuries."
------------------------------------------
"You should track the Consumer Price Index (CPI) like a hawk!... As long as your investments are earning interest at a rate that exceeds the CPI, you are making money!"
------------------------------------------
"Whenever you are evaluating any company and you re considering to purchase its stock, you should consider only the OPERATING EARNINGS figure and NOT reported earnings, in making your evaluation."
------------------------------------------
"If we ever come to a period of time when you think that we are headed for major inflation, then it would be best to be out of both stocks and bonds and go heavily into both cash and gold. Also, gold stocks and gold mutual funds would do well in a period of high inflation."
------------------------------------------
And so this is a potpourri of comments that I picked up by listening to Bob Brinker over many years. If you have a problem with anything stated then I suggest that you call his "Money Talk" program any weekend and let him explain it in greater detail!
* * * * *
posted by Bob Moser at
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