November 30, 2009, Investment U Student Only Open Call

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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

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...

September 24 Teleconference Exclusive For Investment U Course Members

Good Day All! Dr. Brown’s theme today is FEAR. His intro talk at the beginning will be a discussion of FEAR and how it handicaps you as an investor. First he wants to thank the IU Course student in who sent this question:

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“I have recently signed up for your service. I missed out on the bull run we have had because of fear. I subscribed to several newsletter firms and because they all had different takes on the market I was paralyzed and did nothing and for awhile played it to the downside which was a big mistake.”

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Dr. Brown’s Discussion of FEAR

The best investor of our day is Warren Buffet. He makes the interesting statement that you should “…be fearful when others are greedy, and greedy when others are fearful.”

Now most people take this as advice to buy at the bottom of the market.

However it is very hard to buy at the exact bottom of the market. You can see in the chart from Gecko Software below that the S&P hit bottom on March 9^th.

Chart 1

There’s a special index called the VIX that measures fear and tells you a lot ONLY when it’s above 40.

Chart 2

Chart 3

Notice how it dropped below 40 at the very beginning of April.

Chart 4

Here’s the point. The stock market crashed in 1987 a lot less than it did last year.

Chart 5

Warren Buffet went on a buying spree from 1987 through 1990… a full three years.

Chart 6

The major down-trend on the S&P only just broke in late July. So we’re only about 2 months off the bottom in reality.

Chart 7

SO WHO SAYS YOU MISSED THE MARKET?!!!!

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Dr. Brown, At 55 and on disability I am tempted to cash out of my IRA so that I can do more with my money without our GOVT> restrictions What are your thoughts on this.

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This is a very personal matter that you should discuss with a professional accountant or financial planner. Let me emphasize that I intentional do not give personal financial advice. You have to study the problem, think through it, and come to the best solution for your self.

Generally on the matter of taking early withdrawals from an IRA people usually find that the cost is not worth it. Also, when people chase high returns they often lose because of the psychological state of someone who desires to chase high returns.

Great investors make their money by making decisions unemotionally and waiting after they invest.

This is why I wrote the Seven Golden Steps and recommend Alex Green’s gone Fishin Portfolio. BTW the GFP can often be closely mimicked in most 401(K)s.

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I have an annuity and would like to transfer it to professional money management because I'm not doing so well with my own money. Do you have an idea that that would not trigger the tax consequences.

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Again, I give no personal financial advice. You’ll have to discuss this with a tax professional in your area.

But, on the general discussion of annuities I’d like to explain why I can’t stand them. The first reason is that the fees are ridiculously high and just plain ridiculous ranging from Mortality and Expense Charges, Surrender Charges, through Management Fees destroying the value of annuities as investments. People are generally much better off in the Gone Fishin Portfolio where the fixed income component offers superior returns at a lower cost.

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Could you tell us "how to start", that is how to get enough diversification as soon as possible with say $50K ?

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First of all congratulations on having enough money to have a GREAT start!

Again, I give no personal financial advice. But, in general I teach in the course that investors have to first protect themselves from themselves. This is done by allocating 70% to a core passive strategy. In my opinion the best core passive strategy is the Gone Fishing Portfolio (GFP). Then the 30% leftover can be invested in single stocks.

However, somebody completely starting out may be best off with simulated trading for the first year. During that year the entire allocation would be 100% core passive portfolio such as the GFP. Here’s a link to the best stock investing simulator on the market:

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

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In my first call much of the discussion revolved around how you
'begin' the process of saving and then investing. What if you are not
working and want to grow your nest egg? How, or do, the formula's
change?

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The 50:30:20 formula doesn’t change unless your at poverty level. Those at poverty level are forced by circumstances to use 100% of their income on needs.

I don’t understand. You say you’re not working. Does that mean you have no income? Or is your income passive?

It’s all base on income. Many people don’t have conventional jobs yet have income… sometimes substantial.

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I have finally decided to buy NOK, NEU, EWH, PLA, SWHC, ESI, EFR, TLM, SU

Have $10,000.00 to start and would like help on what weight I should put on each stock. Please help. Should I buy NEU and ESI because of their high price with the amount I have? Decided on SU instead of PBR because am not certain about Brazil’s political structure and feel SU safer bet in the oil stakes.

Already have TKLC, VE, GILD, ICGE

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I do not give allocation advice. You have to attack this a stock at a time. Apply what I taught you in the course. First of all a list of stocks should be organized according to the anomaly it best fits: momentum, IPO, insider, value, ADR, or takeover.

Then the list should be analyzed accordingly. Most factors such as financials and so forth can be found at http://www.marketwatch.com/ and http://finance.yahoo.com/

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Can you please give us a plan of attack for all this research? I am focusing on the momentum and value sections but it’s hard to know which squeak to start with. Do you have a specific order to go about this in?

Historical EPS is not easy to find!

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For momentum you want to look at Earnings Growth and RSI first. Don’t just check EPS growth. You also want to see if EBIDT growth is high as well. I have found a stock screener that is ideal for all of this send lots of emails to Investment U to get them moving to get it to you!

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Dr. Brown: I am 63 years of age. How do I accomplish the 7 figure investment goal in 10 years? Is that realistic? I have some capital to start with: $50k. Is it still realistic?

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There’s no switch you can flip to turn on the profits. You have to create your portfolio based on your study of the course and then wait for ten years. I can tell you that once you get started it gets easier over time and that $50k is a great start. You may also want to try to make the Investment U conference next year in San Diego. There you’ll meat people who have actually pulled off what you are trying to do!

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Dr. Brown: I believe I understand how to set up "The Gone Fishin' Portfolio" by allocating the % strategy to each of the Vanguard fund indexes to total 100% of your total $ investment. However, I don't understand how the Oxford Asset Allocation Model works. I see that there are 5 Portfolios (The Oxford Trading Portfolio; The Oxford All-Star Portfolio; The Seven Deadly Sins Portfolio; The Gone Fishin Portfolio; The Perpetual Income Portfolio) with allocations of 30% US Stocks; 30% Foreign Stocks; 5% Precious Metals; 5% REITs; 10% High-Grade Bonds; 10% High-Yield Bonds; and 10% Inflation Adjusted Treasuries. I will have 6 stocks that are worth about $100,00 if liquidated that I will be receiving within a couple of weeks and I'm trying to figure out how to use the Oxford Asset Allocation Model. Could you give me an example using the $100,000. Thank you, Gary

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Hi Gary, again it all comes down to the percentages and I do not give specific investment advice. 70% into a core passive portfolio. Valid candidates are any of the 5 Portfolios (The Oxford Trading Portfolio; The Oxford All-Star Portfolio; The Seven Deadly Sins Portfolio; The Gone Fishin Portfolio; The Perpetual Income Portfolio). Then 30% can go into individual stocks. Alternatively an investor could put 70% and 30% into any two of the core passive portfolios above.