Issue 17

11/22/04

A $20 Hedge Fund

Issue #17 - A $20 Hedge Fund

1. Dollar v. Euro Getting Wacky
2. A $20 Hedge Fund
3. Online Investor Education Center

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Dear Friends,

Today we dip our toes into the wonderful world of currencies
and although I try to keep it short and sweet, I still feel
that it is information you should all be aware of.

Additionally, there are a couple of new additions to the
Investing With Mom stable of services that I wish to share
with you. The first is an upcoming addition to our Advisory
portfolio that you won't want to miss out on.

The second is a new service that will be presented to
Advisory subscribers only, before we eventually release it
for general consumption. In other words, if you subscribe to
the Advisory before we fully launch this new service, you'll
get it for free.

If you don't, you'll have to pay extra for it later on. This
is one opportunity you won't want to snooze through, trust
me on this.

Finally at the end of today's issue, I have an educational
site that I think you'll find very helpful and informative.
I hope you enjoy our varied discussion today.

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Dollar v. Euro Getting Wacky

While this newsletter isn't really the place to analyze the
currency markets, I felt that this is something to be
mentioned simply because several of the stocks in the
Investing With Mom model portfolio are in there partially
for currency reasons.

As anyone who's been paying attention to the dollar knows,
it has been quite some time since the dollar has seen a
sustained rally in currency markets. The dollar has been
declining against most worldwide currencies for about 2
years now for a large number of reasons. Overall I think the
trend will continue, but I'm beginning to have some doubts
about the dollar's trend against the euro.

The simple answer is that everyone is expecting the dollar
to continue to decline against the euro and that is starting
to worry me because when everyone believes something will
happen in the market, usually the opposite happens. This
does not mean that I think the dollar will rise against
other currencies, but rather I have a feeling that the euro
may not cooperate with everyone's expectations over the next
few months.

Most currencies that are rising against the dollar are
backed by strong commodities based economies, not so the
euro. For every well-reasoned argument that the dollar
should decline, there is another excellent argument that the
euro isn't in a great shape either. There are deficits in
Germany and France that are just as ominous as the US's
enormous deficits and unlike the US, where we have a
tax-cutting President, the EU is a land of both high taxes
and extreme levels of red tape.

Two analysts that I greatly respect and admire, John Mauldin
being one of them, both came out late last week with
concerns that the euro might not be the sure trade in the
near future that everyone and their dog seems to think it
is. I would tend to agree with both of these analysts that
the possibility of an "adjustment" or two seems quite a bit
more likely than most everyone seems to be willing to admit.

That said, I find it hard to believe that the dollar could
possibly rise against any commodities based currency at any
time in the next couple of years, at least not any sort of
sustained rise. However, if you have any interests in the
dollar/euro exchange, my recommendation would be to place
some hedges against possible sharp "adjustments" by the
dollar, especially if these "adjustments" run counter to
everyone's analysis.

Now I realize that for most of you this is not an issue, but
for some of you, I don't believe that you would be wise to
be involved in possible dollar/euro trading without
considering the possibility for short-term countertrends,
and that's all I'm saying. Just keep an alert eye out, as
the volatility will be increasing over the near term.

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A $20 Hedge Fund

While I do not know what BuyandHold's requirements are, I do
know that they do not allow their clients to purchase shares
of recently IPOed stocks. I'm sure that there are many
reasons for this and I'm inclined to believe that I would
probably agree with them most of the time.

A few months ago however, I came across a brand new stock
that I felt would fit the role of the exception to the rule
and no it wasn't Google. Instead it was a hedge fund styled
stock. While not exactly a hedge fund, it's compensation
model the investment team running it is similar to what you
would expect for most hedge fund management teams.

The difference is that this "hedge fund" is freely available
to anyone who invests in the stock market and the good news
for small investors is that it costs less than $20 to buy a
share. Even better is that according to my calculations this
fund is currently about 60% below the average value of its
peers and should be spitting out a 13% dividend within a
year or two at the most.

I can't say anymore about it at this time, because this
hedge fund is one of several investment opportunities coming
soon to Advisory subscribers. However, I can say that
Advisory subscribers will be getting an opportunity to buy
this hedge fund, for less than it IPOed at just a few short
months ago.

Now for those of you who haven't subscribed to the Advisory
because you aren't sure how to go about starting up your
portfolio from scratch, I have some exciting news for you.
In addition to our regular recommendations for the current
Advisory portfolio, I'm currently working on a new portfolio
that will be debuting for Advisory subscribers only, the
first week in December.

This new portfolio, will be an income portfolio that will be
completely based on dividend paying stocks. All purchases
will be published online for anyone to check up on and I
will be publishing screen shots of the actual portfolio and
its performance several times a month.

This new opportunity, will not be using BuyandHold, so I
will be giving instructions on how to open the type of
account necessary to follow along with each of the moves I
make in the new portfolio. We will be starting with $5000
and on occasion we will be using a little bit of margin to
juice the returns, and so I will recommend using a
particular account that will be conducive to the portfolio
we will be building.

The goal will be to generate about 20% returns annually
after taking care of fees and taxes, this will result in
$1000 in annual income for every $5000 invested.

While you will be able to use almost any brokerage you wish,
I will be running this new portfolio under the assumption
that you will have an account exactly like the one we're
using to operate the portfolio in. That's why I will give
detailed instructions on how to open and setup the account
we'll be using.

To get the full information on the hedge fund and to learn
additional information about our new portfolio, you need to
subscribe to the Investing With Mom Advisory as quickly as
you can. I expect to have all this information ready to go
within a few more days, so that I can publish it within the
next week or so.

Remember to check last weeks issue of the newsletter online
to receive the birthday discount, between now and my mom's
birthday, Dec. 12th, 2004.

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Online Investor Education Center

For those of you who would like to learn more about the
basic principles behind options, or technical analysis,
there's an excellent website I recommend you check out.

By visiting the 21st Century Investor Education website,
you will find, as I have, an excellent resource center that
will allow you to learn more at your own pace. Additionally,
it is a free site which makes it perfect for small investors
like us who don't wish to spend all our investment capital
learning how to properly trade options.

I first took their options course about a year ago and I'm
currently taking the technical analysis course and I'll
probably retake the options course before the end of the
year. Not because I plan on trading options on a regular
basis anytime soon, but rather because it will help me to
better understand the markets as a whole and why certain
events have an effect on the stock markets.

Best of all, you can take the online courses as quickly or
as slowly as you'd like. The entire setup is such that you
get to read the material and take the tests whenever you
wish.

In my opinion, you could spend several thousand dollars at
various options seminars and not learn anything you couldn't
get out of this course, it is that good.

Investments good for my mom and you,
Andy Prior