April 1 Investment Opportunities
A (Truly) Good Looking ETF
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I’m always on the lookout for new investing opportunities, and I recently received an announcement of four new opportunities being considered by a company called April 1 Investments. I think you’ll find them interesting.
April 1 ATF Fund
In anticipating how investors will react during an economic downturn, we are relying on the truism that when times get tough, life is reduced to its essentials. This fund recognizes that for many people the essentials include alcoholic beverages, tobacco products and firearms. We see this combination of investment in America’s central nervous system depressant of choice, America’s central nervous system stimulant of choice and America’s paranoid lifestyle accessory of choice as a perfect diversifier for uncertain times.
The fund will invest primarily in brewers and distillers, tobacco products companies and gun manufacturers, and we must be prepared to depart somewhat from the conservative tone of our usual marketing materials. Tentative tag lines for this fund include: “April 1 ATF Fund: A double shot of performance,” “April 1 ATF: Smokin’!” and “April 1 ATF: Lock and Load!”
April 1 Global Probability Fund
While we all may have paid lip service to the concept that “It’s better to be lucky than good,” it’s time we started acknowledging the role that luck plays in successful investing. This fund will give investors exposure to lottery and sweepstakes activities worldwide. From the familiar Tri-State Megabucks and other state lotteries, to the regionally dominant Singapore Jik-Jik Lottery and on to the legendary Irish Sweepstakes, April 1 Global Probability Fund will offer investors a chance to participate in the biggest and hottest lotteries and sweepstakes around the globe.
April 1’s strong research capabilities will play a unique role in the marketing and management of this fund, as numerical selection strategies will be of paramount importance. Since the actual chance of winning is statistically insignificant, the retail success of the fund will hinge on lifestyle and affinity group choices. Our research department will examine a wide range of strategies for the generation of numerologically sound picks, e.g.: celebrity birthdays, sun sign equivalents and fortune cookie inserts. A separate sleeve, based on a strategic alliance with the Psychic Friends Network will target other selection avenues.
A new strategic alliance: April 1 and The Family
Even in today’s relatively lax regulatory environment, we must recognize that legal and regulatory prohibitions are a significant drag on the performance of many enterprises. In our unceasing efforts to seek out new strategies for adding alpha, we have encountered an opportunity that we were unable to refuse, one that may redefine for us the meaning of the term ‘deregulation.’
The April 1 Family Fund will be unlike our other strategic alliances in that we will not actually manage the assets involved. Rather, our partners in Palermo, Italy, and Medellin, Colombia, will, using their historically successful business methods, endeavor to provide attractive returns on investment. April 1’s responsibility, in addition to providing venture capital infusions, will be to optimize the quality of the partnership’s assets by a proprietary “laundering” process. We anticipate a significantly altered role for our legal department, and a shift in our compliance and disclosure policies. We will be seeking legal’s advice on the adequacy of our “Don’t ask, don’t tell” reporting process as a means of reducing our personal risk exposure.
We understand that these funds represent a significant departure from our previous business strategies, and that some employees may find some facets of these new enterprises objectionable. For those who may contemplate leaving April 1 for positions at other firms, we feel obliged to reveal that the strategic alliance with The Family may have significantly altered the terms of separation from April 1. Unquestioning loyalty and a strict policy of nondisclosure to regulatory agencies will be cardinal virtues from now on, and employees cannot expect the kind of benign separations that have been the rule in past years. We expect to give a whole new meaning to the phrase “employment for life.”
The THC Fund
April 1 Investments works hard to stay current with the latest trends in investing, and the recent legalization of the sale, possession and use of marijuana in certain states presents an opportunity that we can’t ignore.
We know that many companies already have a head start in marijuana investing, and our marketing department has been burning the midnight oil looking for a way for us to get into the game.
And we’ve found one.
Our partners in The Family have offered to make available to us the use of their sophisticated and highly successful product distribution infrastructure, which will allow us to make an offer that no other investment house can match.
Every investor in the April 1 THC Fund will be entitled to receive a monthly dividend consisting of samples of the finest product the marijuana companies have to offer. And these samples will be delivered to your door under cover of darkness by a courier from The Family. You may, if you wish, make further purchases from The Family, which offers a surprisingly wide range of products, some of which are even legal.
As part of our due diligence in preparing the THC Fund for offer to the public, we have, of course, just sampled the dividends ourselves. The results appear to be highly … wait, what were we writing about?
We expect these dividends to get higher and higher.
(I hope you enjoyed my April Fools prank!)
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I have a stock recommendation today that’s very genuine, and has nothing to do with the preceding blather. It’s iShares MSCI Frontier 100 Index (FM), an exchange-traded fund that tracks the fortunes of 100 leading frontier stocks.
If you look at the chart for FM, you will wonder why I haven’t been beating the drum for this ETF for months, as it has an impressive history of advances. It may be a little extended here, but that’s the only thing you can say bad about it, right?
The truth of the matter is that frontier stocks are very volatile, and that all that upward movement on the chart is a reflection of higher risk, which cuts both ways.
Frontier markets are those markets that have yet to achieve emerging status. That means they’re less liquid, allow less access to foreign investors and often operate under currency exchange rate controls that keep currencies from responding to market forces. There are also potential problems from government instability or interference in markets.
Right now, frontier markets are soaring because Persian Gulf states like Kuwait, rising manufacturing sites like Vietnam and populous countries like Pakistan are enjoying the global economic recovery. The recovery has increased demand for commodities and labor, the twin pillars of most developing economies.
If it sounds like I’m emphasizing the potential downside for FM, that’s partly right. I want to be sure that you understand the risks.
But it’s hard to argue with a chart like the one FM has carved since January 2013. Despite major corrections in June and August of last year and a smaller one in January 2014, FM has made some great returns. Plus, it accelerated its rate of climb in the middle of March and gapped up today.
The ideal buy of iShares MSCI Frontier 100 Index would be on a pullback of a point or so. Start small and keep your mental stop in place at around the 50-day moving average, now at 34.5.
Sincerely,
Paul Goodwin
Chief Analyst of Cabot China & Emerging Markets Report
And Cabot Wealth Advisory
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