October 29 Exclusive Investment U Student Only Tele-Conference

Good Day All! Dr. Brown’s theme today is recovery. His intro talk at the beginning will be a discussion of recovering losses from the last year.

Concept 1: Always Know the Direction of the Major Trend

In order to more quickly recover your losses you must understand the direction of the major trend.

Concept 2: Trade in the Direction of the Major Trend

If you trade counter to the major trend you will be crushed.

Concept 3: Add controlled leverage to enhance returns.

LEAPS can be traded on the SPDR if you know the direction of the major trend.

Concept 4: Watch the technical’s on the daily chart.

LEAPS can be sold when technical’s turn counter major trend. Traders can buy more on the recovery.

Here is the link for SPDR options: http://finance.yahoo.com/q/op?s=SPY

Do not trade more than 6% of your annual savings in LEAPs if you are starting out. If you are experienced with options you can trade more but only if you really know what you are doing!

Doc Brown Recommends These Books on Options:

1. The Ultimate Options Primer
2. Get Rich with Options: Four Winning Strategies Straight from the Exchange Floor, 2nd Edition Lee Lowell

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Q. I have a questions about this package and it´s possibilities that I would like to ask Dr. Brown. I am a citizen of Austria and am therefore very interested in the problems that involve investments in US-Stocks due to the risk of a further declining US-Dollar, etc. etc. So, I would like to know if one could apply this course to every other stock market (which I, in general, presume), e.g. the various european stock markets, and which differences one should take into account? (E.g. different sources for information, I presume... do you, by any chance, have some ideas for this problem?)

Are there parts of this course that would only work at the US stock market and what other problems might arise?

Do you have some ideas or suggestions how an int. Investor could avoid/minimize the risks and problems of a declining dollar when investing in US-Stocks?

Thank you very much for your time and efforts.

A. Most European countries have their own stock exchanges. The biggest are the CAC 40 index, in Paris, and Frankfurt's Dax 30. Some of the world's biggest telecoms, utilities and financial services groups trade on European stock markets. In Austria Austrians can trade stocks through a full service bank. An Austrian has to do his or her own research and carefully select the most reputable brokerage or full service bank in Austria. An Austrian investor should not let them give any personal advice. This allows Austrians to buy shares of European companies in euros. As long as an Austrian buys shares in euros a weakening dollar will not hurt you. An Austrian can do his or her own analysis based on what he or she learns in this course.

Stock markets arre still very low so a European investor could simply identify 5 to 10 of the best stocks on the top exchanges above in the CAC or DAX and buy and hold.

The dollar is actually strengthening. People don’t understand this since they don’t look at a monthly chart. Wall Street wants you to keep your focus on the short term but look the big fact that they’re hiding from you…

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Q. How long will it take to build a million dollar portfolio, and what is the basic investment required, I know that no one has a crystal ball to predict such results, just need your best estimate.

A. It all depends on how long the new bull market holds up. We’ve had a historic selloff. It also depends on how much you currently have in the market working and how much you can save and invest each year. This question is the same one little kids ask on long driving trips, “how much longer?” Meanwhile the adult driver simply tends to the task of driving paying attention to the details necessarily to successfully arrive.

The investors that will make the most money in this new bull market will simply “tend to their investment knitting” as Warren Buffet puts it. Follow the course.

1. Save 20% or even more if you can of all of your after tax income.
2. Use some to pay off your house.
3. Put no less than 70% into a core passive portfolio of which the Gone Fishin’ Portfolio is a good example.
4. Put no more than 30% into single stocks or options.
5. Get out of the market if the VIX goes over 40. See http://finance.yahoo.com/q?s=^vix
6. Sit back and let the market work for you.

As far as time estimates just remember that the Gone Fishin Portfolio returned about 19% from 2002-2007. Say your 40, earn $90,000, make a 20% contribution, and get annual raises of 4%. By age 65, assuming a 12% per year market increase you’d have a nest egg of $2,159,611.

If you save more, get higher returns, or already have a few hundred thousand you could get there in as few as 5 years. In fact one Oxford Club member (Harry J.) confided to me that he had $250,000 in his retirement plan in 2002 which he converted to the Gone Fishin’ Portfolio. His nest egg was still over a million last March despite the big drop! He turned his quarter million into over a million in just 5 years.

Question: What do you recommend for a brand new subscriber to the course? Is there an action that I should take immediately to take advantage of the current financial climate? Or should I just bide my time while I study the course materials once I receive them?

Answer:

It all depends on your level of experience and temperament. Investors who want faster returns have to become traders (active investors). But, success will depend on temperament. Investors who are obsessed with money — or the idea that it makes life secure — are less likely to succeed as traders. When the money obsessed investor is wrong, they have a hard time cutting their losses which is why most investors should stick with a set and forget it strategy like the Gone Fishin’ Portfolio. However those who realize that investing is a game have an edge. They know they can’t be right all of the time; the future is by definition, unpredictable. This makes it easier to ride if you look at it like a wild bull. Active investors who treat all of this as a game know from time to time, they’ll get beaten around, but get out quick when the market turns on them, and get back in quick when the time is right. Its part of the game and it takes years to learn to be a good trader but anybody with the right attitude can do it. In fact anybody who is a good poker player in Las Vegas is more likely to be a good active investor.

An investor that is trying to take advantage of the new bull market would look to LEAP and straight call strategies. I gave a SPDR LEAP strategy at the beginning of this teleconference. Straight call strategies can work well on momentum stocks if you have good timing. Regardless traders starting out do not trade more than 30% of your savings on single stocks and not more than 20% of that in options. That will restrict the option strategy to 6% of your total annual after tax income.

Again, think twice about your commitment. Warren Buffet says that indexed mutual funds are best for most people (that's the Gone Fishin Portfolio folks).

Are any of the investment ideas that we learn during this call can by applied to our 401k and IRA? What is the minimum amount of money would we need to get started in building a million-dollar portfolio from scratch?

The Gone Fishin Portfolio is great for a retirement account and can be employed into a Roth or Standard IRA directly. It can be tweaked into a 401(K) as follows:\

Step 1: Get a full list of your investment options from your company plan administrator.

Step 2: Go to http://www.morningstar.com/ and print off the description for each index fund available.

Step 3: Match the Gone Fishin Portfolio funds with the selections in your 401(K). Make sure you order a copy of Alex Green's book on the Gone Fishin' Portfolio

There is no minimum required for starting a million dollar portfolio from scratch. Obviously the more you earn and the more you save of what you earn the faster you’ll get there. This has been the most severe drop since the great depression. Those that got into the market in the early 1930s made large fortunes into the 1940s. Same goes for those who got in the early eighties and nineties. This is likely the case now. Here’s a great video about the crash by the founder of Vanguard:

Here's what Warren Buffet has to say about strategies like the Gone Fishin Portfolio...