IU Course December 17 Q&A Conference Call

Could you please check out the website www.tradersaccounting.com . What do you think about putting our money in an LLC? Establishing a legal entity or Corporation where we can deduct expenses? Is this LLC more beneficial to day trading (which I don't want to do) or can we use it for longer term trading?

Trader tax reporting is done on Schedule C and Form 4797. But you can only do this if you pass the profit-making intent test and have sufficient trades throughout the year. If you can’t do so IRS hobby-loss rules apple and this sucks because you can only write off a small amount of your losses and none of your expenses.

If you can prove to the IRS that you are trading as a business then you can create an LLC or C corp and show your travel expenses such as going to the 2010 Investment U Conference as a business expense, create retirement plans, etc.

http://www.oxfonline.com/IU/IUConf0809.html

BUT most investors can’t pass the profit-making intent test and the best book out there on the subject is Bob Green’s The Trader Tax Guide:

http://www.amazon.com/Tax-Guide-Traders-Robert-Green/dp/0071441395/ref=sr_1_1?ie=UTF8&s=books&qid=1261069667&sr=8-1

GET this book and read it cover to cover to educate yourself in this area. Bob is a friend of mine and the most qualified out there teaching the public in this arena. He has great webinars as well for free to get you educated as to how to become a professional trader who trades for a living and reaps the IRS tax benefits. Bob’s the only guy out there you should learn from in this arena.

My second question is can you go a little bit more into how to choose LEAP puts to protect the Gone Fishin Portfolio before bear market down-turns. How to choose the strike price (deep in the money?) Or the expiration date. Wouldn't it be adequate to buy puts on the S&P 500 index and that would be enough OR do you buy puts for each stock index fund? Europe, Emerging Markets, Pacific Index, Small Cap and Total Stock Market Index?

I Thank you for the opportunity to learn from you!

You could either buy puts on the S&P 500 index ETF or each individual stock index fund ETF. Remember puts ONLY trade on the ETF not an indexed mutual fund. The trick to doing this is to watch the weekly chart for technical weakness. This means you’re looking back many years. My favorite technical indicator is Gecko Software’s BnB indicator. But this will cost you a subscription to their high finance platform and the BnB plugin.

http://www.trackntrade.com/trials/stocks.htm

So if you’re a small

investor it probably isn’t worth the bother.

If you are going to do this don’t forget that I don’t want you risking more than 6% of your portfolio in options!

Make sure your always understand the risks of derivatives; options, futures, or forex…

http://www.tradementors.com/disclaimer.htm

This is an advanced strategy that should only be attempted if you really understand what you’re doing.

WARNING: Also, remember that the GFP is a SET IT AND FORGET IT PORTFOLIO designed to have thing coming up when others are going down so by actively hedging you may inadvertently defeat the purpose of the GFP.

I currently participate in my company's General Employee Stock Purchase Plan. Every pay period 10% of my pay is used to purchase shares of company stock at a 15% discount. I also participate in a 401K plan and have reallocated the distributions to match the core passive portfolio as closely as I can. In your opinion, is the GESPP a wise investment?

My company is a DOW 100 company.

I am interested in purchasing ADR's as mentioned in your Global Investing lesson of the course. I am unsure as to whether this investment falls under the set-it-and-forget-it strategy or whether we are to place trailing stops and treat this as a common stock transaction. If we are to constantly monitor these, what sell criteria should we employ?

I don’t give specific investing advice and can’t speak specifically on your GESPP. BUT I can tell you that we are in a rising stock market and anytime you can buy a great DOW 100 stock at a significant discount with tax shelter that the investor is getting a great deal!

As far as ADRs you definitely DO NOT set and forget them. You trail stops and can also use great technical analysis tools like the BnB indicator above.

http://www.trackntrade.com/trials/stocks.htm

Hands down the BEST source of ADR information is Alex Green’s New Frontier Trader which you can subscribe to at:

http://www.newfrontiertrader.com/

Alex not only recommends ADRs in that newsletter but also tells you where to set stops.

What pre-announce for the earning, merging/acquistion, stock split, & dividend will influence short, intermediate, and long term strategy to enter and exit for profit?

Where is the best source to get this information?

The best source for this kind of information is Louis Basanese’s Takeover Trader Newsletter:

http://www.oxfonline.com/TOT/TOT0909gen.html?pub=TOT&code=WTOTK906

Lou is awesome at finding takeover rumors to buy into. Just remember that I don’t recommend more than 30% into single stock strategies. The remaining 70% of your savings ear tagged for stocks should be in a core passive index fund strategy of which the GFP is the best example!

I would like to thank you again for answering my questions in the last conference call.

Also again, I was not able to attend it live due to the time difference between the US East Coast and my current location in the middle east, but I read the transcript and listened to the record several times.

btw... Your materials have still not arrived and I am starting to worry where they are. Maybe someone of the IU staff could look into this? Thanx.

Again, thank you for specifying your answers from the last Conference Call. It really was very interesting to listen to/read your take on my questions and it also was very helpful.

And since you offered it in the conference call I would really like to take you up on your offer to forward some informations about the possibilities in the european stock markets to me/us.

Especially recommendations about sources for informations in these markets would be very much appreciated, but I will definitely take whatever informations you can dig up.

I have an account with a very good discount-broker here in austria, but I am not sure how

much of the informations, I would according to your course need, I can acquire through their system ( ...of course I would need to have your course first... ), but I will take a look at the idea to convert my account into USD. That might work...

Of course I also trade european stocks on occasion, so maybe I will just create a second account (in USD) for the trades in US. Thanks for this idea and the one about ADR's.

Your tips are really a tremendous help.

Now... I really enjoyed your explanations about the situation with the USD (vs. EUR), but of course, I have a few follow-up questions if you don't mind.

Your insight as a professional in this subject was very educational and interesting, especially your analysis about the actual forces behind currency movements and those forces are absolutely comprehensible as you laid them out for me/us.

Well, I do not want to turn this calls into discussions about currencies, but I was wondering if could clear some contradictions up for me/us. (These contradictions come from other advisors or specialists in comparison to your 3 major forces of currency movements and not from within your explanations...)

I am very interested in commodities (mostly Gold and such...) and listen therefore to some specialists in this field and I think that they have some very good arguments for their theories too. (I attached some files to this mail for clarification, so you would understand where I get my other informations from...)

Again, your explanations of the 3 major forces (and the Big Mac Index) are very clear and logical to me, but why don't some other factors influence currencies?

I find it hard to believe that if a country has a terrible monetary policy it would not influence their currency...

Ok, I see why the unemployment rate might not have a very big impact, but what about

the low interest rates, the credit crisis and thus the bail-out policy, the national and consumer debt... which I think are all straining the USD and essentially devaluate it.

And most importantly of course the monetary policy of the fed!

Since one year ago the monetary base has about doubled and I don't see how this could not have a tremendous influence on the value of the USD.

(see graphic: USD - monetary base.jpg)

Quotes from Jeff Clark - Casey Research:

"The U.S. government has printed so much money that the monetary base has swelled

from $800 billion to $1.7 trillion. This is the largest expansion in history and a staggering

devaluation of the dollar. It means that the U.S. government has created 2.1.dollars for

every 1 dollar there was in America one year ago."

Jeff Clark

Quotes from the attached OI Report by Byron King:

"The problem is, money can’t escape the natural law of supply and demand. When there’s to much of it floating around, each dollar is worth that much less relative to the whole."

Byron King

"There is no means of avoiding the final collapse of a boom brought about by credit expansion.

The alternative is only whether the crisis should come sooner as a result of the voluntary

abandonment of further credit expansion... or later as a final and total catastrophe of the

currency system involved."

Ludwig von Mises

Now on the other hand you say:

"I see no valid argument for an ongoing collapsing dollar. This is especially so in my

contrarian view since all I hear is sensationalist garbage about the collapsing dollar

that “experts” say MUST continue collapsing because of fiscal deficits, and so on that

are not directly related to currency values!"

Scott Brown, PhD

So, who's right? You may see how these contradictions are a bit problematic for me.

Are the facts right? Are they interpreted incorrectly? Are they just wrong as you stated

about the "sensationalist garbage"?

In this light your Prognosis/Speculation about the future of the EUR/USD is also very

interesting. You are convinced that the current (short term) trend of the EUR/USD will

soon turn around and start strengthening (contrarian view)...

Yes, the 6-7 year cycle would support this theory, but with the current monetary situation

in the US (doubled monetary base & Co.) are you sure this cycle will hold?

After all, the current situation seems to be very unique if you look back a few decades...

Sure, I am just an amateur and it is possible I missed something or don't quite understand

something here yet, but that's why I'm asking you. So, here I am again with a very big order, but I want to really understand this situation and not just skim the surface. Please, if you can, try to explain the situation one more time and

give me your opinion on those other arguments. Thank you very much.

Your help and informations are truly appreciated.

P.S.:

Your introduction into the VIX and the BNB was also VERY interesting

and therefore I have one question concerning the BNB Indicator:

Where can one find this indicator? Which services provide it?

Is it available only through TNT or also through anyone else?

P.P.S: - Administrative stuff...

If you need to, you can of course edit/rephrase my question for your blackboard,

since it is a bit long... again. But try to keep the core questions intact. Thanks.

...

And one more question:

The Oxford Club has a "Global Wealth Preservation Seminar" planned for

November 2010 in Europe/Austria... Do plan to / think about attending?

...

And another one:

Please let me know immediately once you secured that special offer for the

TNT-BNB service. I am definitely interested in that offer!

First of all if you have a discount brokerage in Europe use it for information on potential stocks using the IU course as a guide. They can give you better information than I can since they are in the European marketplace.

Second send an email to Joyce at Investment U to find out where the heck that course is and if it’s lost get another shipped out to you ASAP.

Third, don’t worry about currencies… I LOVE discussing currencies!

The main thing you want to remember is that currencies change value due to fluctuations in supply and demand. Some factors are direct like the Big Mac Index (Purchasing Power Parity) or changes in relative imports and exports between countries (trend on the current account). Other factors are indirect like unemployment and fiscal budgets. Indirect factors have not been shown to have a statiscally significant effect on changes in Forex rates.

However the people quoting all of the stuff in your questions have never studied currencies at the Ph.D. level as I have and have never done a serious review of the extant research literature in international monetary theory. Not only do they not know the research but they also know you don’t know. So they can blow smoke up your skirt and you wind up completely confused.

When a currency is truly engaged in a “free float” monetary policy is of no use and we see this empirically en top level economic studies in international monetary theory where very few things offer up statistical significance.

However, when hamburgers are EXTREMELY cheap or expensive on one side of a Forex trading pair the long term trend over many years shifts. Same goes with the trend on the current account.

The best way to see what is really going on is to look at a WEEKLY or MONTHLY chart and then drill down to the DAILY chart. For instance notice in this monthly chart how the long term uptrend from 2000 was harshly broken in 2008.

http://www.trackntrade.com/trials/forex.htm

http://www.trackntrade.com/trials/forex.htm

Then notice how we get firm buy and sell signals on the daily chart that are very useful because the EUR/USD forex pair trends very nicely. Right now I can firmly say that the EUR is weakening against the dollar since the daily chart is in a clear downtrend.

It doesn’t matter what the United States is doing in fiscal or monetary policy, nor does it matter what’s going on with unemployment or any other factor thought to have some tenuous connection to exchange rates.

The clear and present fact as you can see on the daily chart is that the EUR is weakening to the USD. That’s the hardest, clearest, and truest fact…so pay attention to the way the trend changes on the EUR/USD daily chart and you’ll be able to make at least one absolutely certain comment!

Is it because of unemployment…who knows?! Is it because of US monetary policy…who knows?! And perhaps the most important is that if you’re trying to profit on these changes to a very real extent … who cares?! It’s fun to sound smart at cocktail parties with deep intellectual discussions of how “money can’t escape the natural law of supply and demand. When there’s to much of it floating around, each dollar is worth that much less relative to the whole" or if “here is no means of avoiding the final collapse of a boom brought about by credit expansion” but in the end it is a bunch of nonsense adults use when they play the game of trying to look smart and make others look dumb.

The only thing I really know is that two weeks ago the trend on the EUR/USD when from up to down! So now the EUR is weakening to the USD and that is a fact!

Someday in the future the BnB will turn to an up arrow with a confirming upward shift in trend and then I will simple say, “wow, the EUR is now strengthening to the USD!” Because the only hard fact you have is in the how the price actuall moves not what other think it should do. Ironically the price of foreign exchange never cares about anybody’s opinion!

And, I wouldn’t care if Ludwig von Mises or Byron King were to call me “Doctor Dumbo” at their cocktail parties if I were to refuse to engage in their pseudo-intellectual rubbish.

Incidentally, since you seem very interested in Forex I have a free mini course you can subscribe to at:

http://www.futuresforexandoptions.com/

Let me know if I missed any parts of your question. I really enjoy your questions and your European perspective!

Ps. I don't think I will be able to make it to the "Global Wealth Preservation Seminar" planned for

November 2010 in Europe/Austria.

I have a few questions relating to your “Share BuyBack Investing Strategy” from Lesson 2 – Value Investing. First of all I was able to find a site that had a list of companies that are either announcing a buyback plan, or they are in the process of “adds to prior plan” or over a 1 or 2 year period. Do suggest any guidelines we must stick to here? For example do they have to be recently announced, or is it still alright if they are in a process of buybacks? How far back in time can we go? You say to then determine management’s motivation as either “undervaluation” or “best use of money”. Where exactly do we find this information? Is it mentioned somewhere in their guidance report? Next you want us to get the book to market ratios. Could you please demonstrate an example of this on a stock so I can be sure of the procedure? And finally you mention to sort prospects by company size, the smaller the better, but no less than 300 million market cap. What would be your recommended ceiling, the highest market cap we could look at? This is a great course, thank you very much, it’s a bit of a challenge, so I hope you are able to clear up these areas of confusion for me. Many thanks, Kaaren. Corfu, Greece.

Hi Kaaren, the best place to get information on share buybacks once you find the share buyback programs and associated stock symbol is at

https://www.lexisnexis.com/start/signin?service=lexis&contractURL=https://w3.lexis.com/research2/authResource.do&key=_c2AE46BC8-EDCE-0EAB-3403-7BAAF6E8982F_k17760B97-CA3B-55F6-5909-71027E4C363D&event=form

Remember you want to identify newsreleases where the excetives feel:

1) the stock is undervalued and

2) the repurchase is the best use of the money.

Of course, you’ll often find the same information with a google.com search so always try their first.

Then you can find the rest of the financials at http://finance.yahoo.com/ and http://www.marketwatch.com/ by plugging in the stock symbol.

And, yes this is definitely detective work but if single stock investing were easy the fund managers would be beating the averages but the majority don’t! On the other hand if Warren Buffet himself says you can do it if you apply yourself…then you can!

I am pleased you like the course... I wrote it to help!

Scott: My question is: If the dollar begins to gain some strength and the Feds raise interest rates 1% or 1.5% in the first quarter of 2010, what should the best investments be in and what to get out of to have your money grow for the next five years ...stocks, bonds, money market or funds or a combination of all and what percentage?

The general rule is that when interest rates move upward bonds yields drop and after severe stock market crashes it’s best to buy stocks and commodities move with a mind of their own. The Gone Fishing Portfolio is designed to counterbalance these three forces such that you can set up the portfolio and forget it. That’s why I recommend 70% in the Gone Fishing Portfolio.

After the crash of 1987 Warren Buffet bought extensively for three years up to 1990. He is buying extensively now. Stocks are a very wise approach in this current undervalued market looking out for five years I would expect stellar returns to both the GFP and individual stock investing strategies.

Dr. Brown, are any of these "investment" systems, or programs that are being promoted by the Oxford Club website worth their fees? There are so many that are being promoted that it could be confusing and frustrating. Their ad copy of course, are all tantalizing. Do we just ignore them?

I love this question…you’ve got me sitting here laughing out loud.

Believe me when I tell you, “I KNOW!” I can tell you that it can be overwhelming. However, this semester I performed an academic study with Prof. Eric Powers (Ph.D. finance, MIT) and Prof José Cao (Ph.D. economics, Cornell) to see if the newsletters really do pack a punch for the buck.

We looked at the Insider Alert by Alex Green. Honestly, my hypothesis was that Alex couldn’t beat the market. Boy was I WRONG...

We found average returns over 28% jaw dropping percentage points!

However, you have to use financial wisdom in deciding if you can afford these premium services. If you have a small portfolio under say $30,000 dollars you will find it hard to recoup the cost. If on the other hand you have a large portfolio over $100,000 then I recommend the VIP lifetime Oxford Club membership because you get all the newsletter in the Oxford Club for life for one single fee…as Kevin Long in membership services but it’s something like $5,000 or $6,000 which is actually a phenomenal deal if you have a large enough portfolio you are managing yourself.

Also, I STRONGLY RECOMMEND attending the 2010 Investment U conference because you WILL meet wealth investors in the Oxford Club who ARE extracting high returns with our newsletters. Through those friendships you can get a clear idea of how to proceed from other Oxford Club members.

Here’s the link for the conference:

http://www.investmentu.com/investment-research/CIU0310/IUconf1109.html?pub=CIU0310&promocode=F300L401

Have a VERY Merry Christmas and I will catch up with everybody in January of next year!

-Scott

November 30, 2009, Investment U Student Only Open Call

************************************

Last month you said if the vix goes over 40 - get out of the market.

1) Does that apply to the positions in the gone fishing portfolio (GFP) as

well as single stocks?

2) For the single stocks, does that mean sell immediately at market --

or would it still be OK to watch your trailing stops and not sell if

the trailing stop limit for an individual stock is not passed?

The first sign of danger is always a break in the long term trend. This is because the VIX doesn’t always give you fair warning. You can use a simple technical tool like a moving average cross over.

Alternatively you can use a more advanced tool like Gecko Software’s Bulls n’ Bears (BNB).

The BNB indicator is AMAZINGLY accurate at tops and bottoms on the weekly chart over a number of years. The weekly chart widens your vision so that you can see the big picture more clearly.

Notice in the chart below how the BNB clearly signals a top where you would have covered but the VIX was still low in 2007 on the break?

So to REALLY use the VIX you need to incorporate a long term trend-line where…

1. If the VIX is over 40 and the market is still in a strong uptrend as both were in 1999 then you get out or protect with long puts. In this case you would leave your GFP portfolio intact but would protect with a corresponding number of puts all of your GFP equity funds or ETFS.
2. If the market has clearly broken into a downtrend and the VIX is high wait on the sidelines until the market breaks its strong down trend.
3. To add real predictive power incorporate the BNB technical indicator which you can get at http://www.trackntrade.com/futures/bnb/ paying very close attention to the S&P 500 contract.

For single stocks you would trail stops tighten them up a fair bit if you see a break in the major trend on the long term weekly chart. Please let me know if the chart and this explanation helps more. The initial explanation I gave of the VIX is that it signals tops or signals bottoms when over 40. I didn’t expect so many questions concerning the VIX and didn’t give you the trick of incorporating a trend line on the weekly chart for a break in the major nor the BNB signal.

If you really want to understand the VIX you need to read Prof. Robert Whaley’s article. You can get it at www.TradeMentors.com

Again, please let me know if this helps,

-Scott

What is the most effective way (site) to locate high dividend stocks?

Just by chance, I located IRL, paying around 40%.

How can I determine if that is a safe stock to hold. Would a high dividend stock, such as this, be a good year in, year out stock to hold, and reinvest, as long as the dividends remain high?

There is a wide fluctuation in the IRL price; Should I apply a Trailing Stop if the dividends are that high?

Dividend stocks are no magic bullets. You also have to have underlying price increases. IRL looks great at first blush but when you pull up the chart you’ll see it’s in a strong downtrend. If you would have bought on the BNB up arrow and sold on the break of the trend or down arrow you would have done nicely…maybe.

I say maybe because the volume is very low in this thinly traded stock.

The best place in my opinion to search out dividend paying stocks is http://www.dogsofthedow.com/

Here you have high dividend paying stocks with companies trading on serious volume. Then you can look for stocks with the highest dividend yield. Same goes here. Look for a BNB up arrow as a buy signal. Sell when the stocks upward trend breaks down and look for another good dividend yielding stock about to enter a new up-cycle.

Again, to do this you will need the BNB indicator and the TNT High Finance platform at

http://www.trackntrade.com/hf/stocks/index.html

Take a look at GE. The stock is now entering a new uptrend as you can see in the BNB indicator. So you would buy this stock and wait for a BNB down arrow.

Now look at Bank of America. It is in a clear downtrend so you would NOT buy it. You would simply wait for a new up arrow to buy. You could make great returns doing nothing but trading the Dogs of the Dow this way! Notice how both of these stocks have VERY high volume.

Dear Investment U Staff / Dr. Brown,

…I would like to ask you to specify your answer regarding the possibilities to apply

your course for int. stock-markets. e.g.: Do you mention in your course specific sources for information for US stocks which one would have to adapt for int./European stocks? Or how about the probably different protocols for IPO's and to identify the "Hot-IPO's" from them? Different ways to identify the various stock types according to your classifications (momentum stocks, mispriced sec., takeover candidates, etc. ?)

In general how to find the proper information for these different markets and every other

difference that comes to your mind.

The problem with international stock markets is that there is not as much information on stocks on the web. You will have to very specifically focus in certain exchanges. For instance if your are earning money in EUR you will have to focus on the European exchanges I mentioned before, Frankfurt, Paris, etc…

Avoid stocks trading on any of the PIGS exchanges (Portugal, Spain, Italy, and Greece). Due to high corruption. If you make money is GBP then you would focus on stocks on the London Stock Exchange.

The good news is that the very large banks in Europe are universal. This means that they are also stock brokerages. You can open your account with one of the stronger European banks to get access to their information systems to find the factors I teach in the course.

Again, the problem is that other countries do not have as stringent reporting requirements in the US so you have to dig deeper if you’re overseas. The good new again is that the large universal banks should be able to help you get all the information you learn about in the course.

Furthermore I'm interested in your comments/analysis about the US Dollar.

Examining the chart of the EUR/USD exchange rate I agree that there seems to be a cycle of about 6 to 7 years underlying it. (1995-2001: falling=strengthening and 2002-2008: rising=weakening)

Also we might therefore be at the beginning of another strengthening cycle, but for an e.g. european investor that might be a problem in the long run if one buys an US stock now and holds on to it for a while. If you buy at a rate of e.g. 1.4 and want to sell later with a stronger US$ at e.g. 1.1 you might look at a (bigger) loss or at least at a reduced profit due to the fallen exchange rate.

But we will have to see if this trend really develops like this, since there are many issues that could keep the US$ from actually strengthening. (see below)

On the other hand, if the exchange rates between the US$ and the Euro keep climbing like they did for the past year, which would reflect a further weakening US$, as seen here:

http://www.bloomberg.com/apps/cbuilder?ticker1=DXY%3AIND , it would be in favor of european investors, but would change the mentioned 7-year cycle.

So, if the US$ actually manages to strengthen it will be good for the US but not so good for any int./european investor, but if the US$ keeps rising (=weakening) like for the past year it will be in favor of int./european investors but not so good for the US.

Which I actually believe is a real possibility, since I can not quite believe that the US$ will be able to gain real strength in the current economic situation.

My concerns with the possible gain of strength of the US$, which would actually be bad for me, are more fundamental and are linked with the overall state of the US economy, which in my opinion is really in a lot of trouble.

With an unemployment-rate far above the official numbers, the disastrous zero-interest policy of the Fed, the still looming credit-crisis, a national debt that would make every economist run for his live (http://www.usdebtclock.org ), the decline of the strength of the US$ for the last year, and some other worrying developments.

It will clearly take the current administration a long time to even begin to clean up this whole mess, which I think was for the most part created or at least knowingly ignored by the last administration, but that's a discussion for another time and place and does not

help us with the discovery of some good solutions for the future.

With this situation in mind I believe every int. investor should be really careful about any investment in stocks which depend (direct or indirect) on the US$ and keep a keen eye on them and the whole situation, should he or she choose to invest in such a stock.

So, after this explanation of my point of view from across the big pond I would like to ask you again if you have some ideas or suggestions how an int. Investor could avoid/minimize the risks and problems of a falling (=strengthening) dollar if one should choose to invest in a stock linked to the US$? Or maybe you have some ideas on how to eliminate the risk of currency rates altogether? Other than not to invest in foreign currencies at all,

of course. I know that's a long letter with a lot of questions, but I would really appreciate it if you would find some time and try to clear some of all this up for me.

Thank you very much for your time and efforts.

The best way to deal with the problem of a strengthening dollar is to trade in a USD denominated account in a large European bank or brokerage or in a US account even though you're in Europe.

You can also buy currency options such as those traded across the PHLX here:

http://www.nasdaq.com/asp/currency-options.asp

Just make sure you study the option contract carefully to know whether you need puts or calls. Alternatively, since it sounds like you’re a bit more advanced you could also trade forex in a mini account. The very best way to spot the long term trend in currency pair is using the BNB indicator on the TNT Live Forex platform you can get here:

http://www.trackntrade.com/forex/live/

Look at the chart below and you’ll see how the BNB indicator gives a clear signal of trend change on the weekly chart:

Most people get currencies wrong because they think they understand macro economics. I don’t know a single Ph.D. in macro economics who studies currencies who understands why exactly they move. So even though the economy in the US is REALLY BAD it doesn't mean the USD will weaken...in fact quite the opposite could happen just as easily and as you noticed the USD is due for a new strengthening cycle.

All I can say is that the trend on the US current account is now up (rising exports), the Big Mac index is over inflated and the long term up trend is still broken.

Sooooo…I see no valid argument for an ongoing collapsing dollar. This is especially so in my contrarian view since all I hear is sensationalist garbage about the collapsing dollar that "experts" say MUST continue collapsing because of fiscal deficits, and so on that are not directly related to currency values!

Dr. Brown, I am studying your program & I have a question. I have an established portfolio I see that I exceed your recommended 3% of portfolio value max. What is the best procedure to reduce the share quantity to meet your recommended share balance.

Your instructions are easy to follow & absorb with the exception of some of your math. Thank you,

Do you mean 30%? I assume you mean no more than 30% of your portfolio in individual stocks. Just keep an eye on the excess and as you get stopped out (hopefully with a profit) roll it over to a core passive portfolio like the Gone Fishin Portfolio, etc.

If you did not mean 30% please clarify for the next Q&A and I will readdress your question.

Nonetheless, I don’t want students allocating more than 30% into single stocks because it’s too easy to make mistakes and lose in a big way with single stock trading. By keeping most of your money in a core passive portfolio you are protecting yourself from yourself.

Dear Dr. Brown,

I have attended many of the lectures that Karim Rahemtulla has given on Deep in the Money Covered Calls. He has always presented these as an income opportunity not for leverage. The first meetings he recommended $15,000 for the covered calls portion of the portfolio. In April of last year, the base was $70,000, in a time of much greater volatility. I would like clarification on this; his goal was income while you seem to classify DITM covered calls as leverage.

You asked about my feelings about the course. I read the two course books in the first week and a half. I had read many classics on value investing and investments in general, including The Intelligent Investor. I was an officer and member of a very successful NAIC Investment Club for about eight years. The club was headed by Dick Dwyer, the head of the DC Metropolitan Chapter. Dick was working with me individually on technical indicators. He died at age 58. The women I met at the NAIC Investment Conferences were the most wonderful and interesting women I have met--and the most knowledgeable about investing. The NAIC strategy ignored focus on non-correlated assets. It focused on foreign investments only through investments in major companies with a global exposure. Moving to the Oxford Club investment strategies was easy.

Your course material is not new to me except in the area of options. I am interested in the options material but do not plan to trade options except DITM covered calls recommended by Karim Rahemtulla, or covered call options recommended by Agora Financial investment advisors.

The most important aspects of the Oxford Club membership for me has been:

• The discounted books, materials and training purchased as Chairman's Circle member, including the book The Gone Fishing Portfolio
• The Communique portfolio and all the Alerts offered to a Chairman's Circle member
• The strategy to invest in non-correlated assets
• The strategy to hold 70% of one's portfolio in core passive investment vehicles
• (combined with multiple successful core passive investment vehicles) as you have presented. This saves a great deal of time for me while ensuring that my funds are invested with minimum risk for the long term.
• The weekly Oxford Insight which offers a top notch synopsis of the weeks news and Communique recommendations.
• Access in person and to writings of top-notch financial advisors including Louis Basenase, Keith Fitz-Gerald, Karim Rahemtulla, Lee Lowell, Martin Hutchinson and Rick Rule, and
• The new website.

Your course is excellent. I have travelled all around the world and have only two trips that I am still eager to take. My college major was International Relations with enough credits for a major in Russian Area Studies if one had been offered. My graduate area of specialization was Economics of Underdeveloped Countries. I travelled to China with Agora and loved the trip for the chance to understand the political and social economic issues and to see China through the eyes of a well-known Chinese Tour Guide. The Frontier Trader is and has been my favorite Alert Service. The chapter on foreign investing was my favorite but the content was not new to me. I had been investing in ADRs for years. Perhaps it was Eric Roseman or perhaps another Agora financial advisor such as Dan Ferris who recommended real estate investments in China and Hong Kong with returns that more than covered the expenses of my trip to China. Having invested in China and Hong Kong before the trip made the trip all the more interesting.

I do not identify with the Million Dollar goal for the portfolio. If I were recommending a goal for each son and his wife, I would recommend setting a long-term goal that is much higher, with a short term goal based on values and priorities. Young professionals will need much more for college education for children, health and retirement.

My goal while a member of NAIC and more recently was to have my investments professional managed. At the time I was working for IBM and travelling each week. In the early nineties, when working for IBM, I had a portfolio manager from Merrill Lynch analyze my investments for the short term and long term. IBM had committed to limit my work week to 38 hours when I was hired. From the first week I worked far more hours. If I continued to work at IBM, the broker said my insurance and benefits would reduce my investment needs. Since I had been told by a doctor to expect ovarian or endometrial cancer around that time, before my sons graduated from college, the Merril Lynch financial advisor recommended a goal of $1,000,000 if I left IBM.. My sons have graduated, and I have yet to be diagnosed with cancer. Thus the one million goal is simply not meaningful to me.

I think that it is awesome that you have taken a stab at producing an investment book. I find your monthly presentations wonderful. I use your comments and the Communique issues to evaluate my portfolio that is professionally managed. I then write a review of the manager's strategy and performance for the boys in case anything happens to me.

Thanks again,

If you look hard at the portfolio math I gave you you’ll notice that I don’t’ recommend trading any more than 6% of your portfolio in these derivatives. Prof. Tim Crack (Ph.D. finance MIT 2000) was highly complementary of my recommendation to this fixed limit.

That means that in order to trade the lesser amount you would need $15,000 / 0.06 = $250,000 in portfolio size of which $175,000 (30%) should be in a solid core passive strategy like the GFP. If Karim raised the recommended buy-in to $70,000 you would need a portfolio of 1.167 Million to trade DITM covered calls safely.

I really enjoyed your comments and am very pleased you are enjoying the course!

-Scott

Hi Dr Brown,

In the InvestmentU's newsletter #1127 Karim Rahemtulla had the following advice:

"When the VIX is high: Any time the VIX hits 50 points or higher, it usually signals that investors are fearful, or panicking. This is the best time to buy stocks." and you arre recommending to that we get out of the market when the VIX hits 40 points.

Could you clarify the contradictions?

Second question is, what is the difference between the 401k and the ROTH. I have my contributions in a 401K but this are the savings from companies I worked with in the past.

To reiterate from above...

1. If the VIX is over 40 and the market is still in a strong uptrend as both were in 1999 then you get out or protect with long puts. In this case you would leave your GFP portfolio intact but would protect with a corresponding number of puts all of your GFP equity funds or ETFS.
2. If the market has clearly broken into a downtrend and the VIX is high wait on the sidelines until the market breaks its strong down trend.
3. To add real predictive power incorporate the BNB technical indicator which you can get athttp://www.trackntrade.com/futures/bnb/ paying very close attention to the S&P 500 contract.

A Roth is another kind of defined benefit retirement plan but it’s also available to you outside of your company. With the Roth you pay taxes on your income, contribute to the plan, and then don’t pay taxes when you withdraw in retirement.

The standard IRA is where you don’t pay taxes when you contribute but you do when you retire.

You should always roll your old 401(k) plans into a standard IRA. Just don’t let them send you check directly. In fact, the best thing to do is let the IRA department of a good online brokerage like TD Ameritrade do it for you.

Here’s some information…

http://www.tdameritrade.com/faq/transfer.html

Disclaimer...

http://www.tradementors.com/disclaimer.htm