From Honey's Bob Brinker Beehive Buzz at Suite 101:
Should this kind of deceptive practice be illegal? Obviously, it's immoral, dishonest and contemptible. Here is a verbatim transcript of Mary's call to Moneytalk yesterday:
* QQQQ call, Saturday, August 26, 2006
Bob Brinker: “We’re back on Moneytalk, Mary’s with us in Fairfield, California. Hello mary, welcome.”
Mary: “Thank you Bob. Uh, Bob, my husband and I are going to be purchasing a vacation home and we will be liquidating some of our investments for a down payment. Now we have about $100 thousand dollars in the Q’s which we bought about $55 a share. Now my thinking is if we liquidate the Q’s vs some of our shares in the Vanguard Total Stock Market that although we’d be selling at a loss, we wouldn’t have to pay capital gains, plus we’d have a tax write-off. We would then still have our shares in the Vanguard Total Stock Market which would be working for us, whereas….”
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BOB BRINKER: “Mary, let me ask you about your balance sheet because I’m getting a little confused, what is your total net worth?”
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Mary: “Oh about three million dollars.”
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BOB BRINKER:
“Three_million__dollars.” Now how much do you need for this vacation property down payment?”
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Mary: “We are going to put down about four hundred thousand.”
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BOB BRINKER: “What’s it worth—what’s the property worth?”
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Mary: “Eight hundred.”
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BOB BRINKER: “You’re putting down 50%.”
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Mary: “Yeah.”
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BOB BRINKER: “Alright, okay, is there a reason for that?”
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Mary: “Well, my husband is going to be retiring in about four years, and…”
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BOB BRINKER: “Okay, so alright, that’s the reason. Putting down four hundred thousand. Now this three million dollars, how much of it is in the stock market?”.
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Mary: “Well, we had the right allocation according to, you know, what your guidelines you have set down.”
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BOB BRINKER: “Yeah, what percentage allocation do you have.”
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Mary: “You know, I don’t know off the top of my head what our allocation is.”
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BOB BRINKER: “That’s pretty important because you said your husband is going to retire in four years, and that’s why I wanted to get to this because the whole idea here is, if you are getting that close to retirement, you are going to be looking at a fairly balanced portfolio. Because balanced portfolio, basically half financial assets in the bond market, half in the stock market, that would come into play approaching retirement. Of course, in retirement but also approaching retirement, and if you are within four years, then, you know, that’s approaching retirement, so I think I’d probably be thinking about having a balanced portfolio.”
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Mary: “ Uh, huh. Well, I think we do because my hus…we followed…..(Bob interrupts) go ahead….”
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BOB BRINKER: “In our balanced portfolio, we don’t have any holdings in the Nasdaq. We don’t have any SPECIFIED holdings in the Nasdaq. You mentioned you had a holding in the Nasdaq 100 Index.”
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Mary, “In the Q’s.”
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BOB BRINKER: “Well that’s the Nasdaq 100.”
Mary: “I know you told….”
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BB, raising voice to talk Mary down: “In our balanced portfolio which is published on a monthly basis, we don’t have ANY holding in the Nasdaq Index. So I think that, you know, if you are going to go to a balanced portfolio, you are not going to be holding Nasdaq 100 assets.”
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Mary: “Okay, well, we are thinking about liquidating the Q’s, in order for this down payment. And as I said, we would sell at a loss, but we wouldn’t pay capital gains.”
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BOB BRINKER: “That’s absolutely correct—absolutely correct.”
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Mary: “Right, and that’s why I think we would prefer, I think selling the Q’s….”
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BB, raising voice--shouting Mary down: “But you need four hundred thousand dollars.”
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Mary: “Uh-huh.”
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BOB BRINKER: “You have 3% of your money, you have 3% of your money in the Nasdaq 100, the Q’s, whether you own the Q’s or whether you own some other format. You own, about 3% of your assets are in the Nasdaq, about 3%, but you need four hundred thousand down payment. This is only one hundred thousand.”
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Mary: “Right, we are going to be selling some of our other investments.
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BOB BRINKER: “Yes, you would have to.”
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Mary: “Uh-huh.”
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BOB BRINKER: “But I think that uh, if I’m looking at a balanced portfolio right now, I don’t have any money invested SPECIFICALLY in the Nasdaq 100 in a balanced portfolio. That would be my approach. I would not have any money invested SPECIFICALLY in the Nasdaq 100 in a balanced portfolio.”
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Mary: “So what you’re saying……….”
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BOB BRINKER: “I’d have about half of the portfolio in fixed income securities and about half of the portfolio would be in the stock market, but of that half that would be in the stock market, I wouldn’t have any SPECIFICALLY earmarked for the Nasdaq. Of course, I would own Nasdaq securities within my overall allocation to the market, but I wouldn’t have a SPECIFIC holding in the Nasdaq in a balanced portfolio.”
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Mary: “ So, what you are saying is you advise we sell our Q’s, rather than……..”
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BB, interrupting: “Well I can’t give you that recommendation because, you know, in a balanced portfolio, I don’t have any!! So, you know, I can’t tell you to sell. You’re looking at a loss in them. You may want to hold them for recovery. You may want to sell them. That’s YOUR decision, but I couldn’t possibly give you a recommendation today on what you should do SPECIFICALLY within you portfolio. That wouldn’t be the proper thing to do. But I can tell you that in a balanced portfolio today, I haven’t been recommending owning any Nasdaq holdings—SPECIFIC Nasdaq holdings.”
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Mary: “Well, I know a few months ago, you had mentioned that, it was in a newsletter, and my husband did miss that about, you know, reducing……………”
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BB, loudly interrupting Mary: “Well we HAD a small holding in the balanced portfolio. We had a small holding in the Nasdaq which we eliminated in April. However, it was at a higher price. We eliminated that holding. It was around $42 a share. Right now it’s around $38. It was around $42 a share that we eliminated that holding. Now if you were to say, well okay, I’ll eliminate it at $42 a share, I would not have a problem with that. But, I can’t make a recommendation to you to sell on the weakness that followed that recommendation.”
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Mary, loudly trying to say something: “Well, if we have a……….”
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BOB BRINKER: “I can certainly say if you want to sell them at $42 a share because they don’t fit in your asset allocation, I’m okay with that.”
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Mary: “ Well, if we have a choice between selling the Q’s or selling hundred thousand dollars worth of our Vanguard Total Stock Market, wouldn’t selling the Q’s be………”
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BOB BRINKER: “This is the part I don’t understand, why it has to be one or the other. I don’t understand why you can’t do a proportionate, a proportionate move that would raise the money for the down payment on the property. The black or white part of it makes no sense to me at all. Doing it on a proportional basis—fine, if that’s the decision you make. But on a separate subject with reference to owning the Nasdaq SPECIFICALLY in a balanced portfolio. I would not own in it a balanced portfolio. We recommended eliminating it from the balanced portfolio this past April, as you noted. And um, that’s our recommendation. So if it got back to the price where we recommended it, which was around $42 a share this April, in a balanced portfolio, then certainly that’s what I would do……….This is Moneytalk.”
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