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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Wednesday, October 22, 2003 - Vol. 5 No. 125
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In This Issue:
* COMMENT: Most Misunderstood Investment.
* OFFSHORE: End the OECD Blacklist. Syria a Tax Haven? Swiss-EU Negotiations Drag On.
* WEALTH: Bahamas Tax Reform; What Does That Mean? New Zealand Flat(ulenec) Tax. Dollar Slide. Yuan Revaluation.
* PRIVACY & RIGHTS: EU Privacy. Wiretapping. No UK Privacy. Spy Car. Data For Sale. Spy in the Sky. Liberty Origins. Terrorism and Tyranny.
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LINK: http://www.isecureonline.com/Reports/OHL/WOHLH600/
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Our Guest Commentator is Eric N. Roseman, president of ENR Asset Management, Inc. and a member of The Sovereign Society's Council of Experts. He is an asset manager and serves as editor of The Sovereign Society's Commodity Trend Alert, a weekly advisory service focusing on Commodity Trading Advisors.
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COMMENT: Profiting from the Most Misunderstood Investment
Dear A-Letter Reader:
Could you benefit from an investment that gains 7%-15% every year, sometimes even more, with significantly less risk than stocks? That's what hedge funds -the world's most misunderstood investment - offer.
I'll explain why hedge funds are misunderstood in a moment. But first, consider their advantages.
The key advantage of hedge funds is that they reduce risk, as measured by "standard deviation," a traditional way of measuring price volatility. The higher the standard deviation an investment has, the more risk an investor assumes. A low standard deviation means that investment has less price volatility.
A recent study published by Credit Suisse 1st Boston and hedge fund analysts Tremont Advisors, LLC, proves this point. The study examined a critical period of rising and declining stock market values from Jan 1994 to Aug 2002. During this period, investors enjoyed the best bull market profits in a generation followed by devastating losses starting in March 2000.
The study shows that from 1994 to 2002, the CSFB/Tremont Hedge Fund Index gained 10.8% per annum with a 9% annualized "standard deviation." Over the same period, the S&P 500 Index gained 8.1% per annum but incurred a much higher standard deviation of 15.8% per annum, or 43% more risk than the Hedge Fund Index.
Not only did hedge funds outpace the S&P 500 Index from Jan 1994 to Aug 2002, but they achieved this higher rate of return with much less risk than a fully invested portfolio of U.S. common stocks.
In summary, multi-manager hedge funds can produce healthy long-term returns, irrespective of the overall stock market's direction and with far less risk to your capital.
And some hedge funds have performed even better. For instance, one fund that I recommend has gained an impressive 35% in 2003 - all the while taking much less market risk than an equivalent stock portfolio.
What's the secret? Hedge fund managers seek to reduce market risk by not only going long but also short selling selected securities. Gains or losses arise from the managers' ability to buy securities that perform better than the ones they have shorted, irrespective whether the overall market is rising or falling. For this reason, hedge funds are often said to be "market neutral."
Yet, at the same time, hedge funds are perhaps the most misunderstood asset classes in the investment universe. The mainstream press portrays a few larger-than-life hedge fund managers as "unregulated gunslingers" and the spectacular 1998 failure of highly leveraged hedge funds such as Long Term Capital Management caused many investors to assume that all hedge funds were extremely risky investments. Now, the Attorney General of New York claims to have uncovered a hedge fund "scandal." Yet the truth, proven statistically, is that hedge funds offer the best risk- adjusted returns of any investment.
However, not all hedge funds are created equally. Many hedge funds have a low risk profile while many others are very aggressive and heavily leveraged. You must carefully choose their products and conduct due diligence on their prospective advisor.
Nor are hedge funds only for high net-worth investors. An increasing number of low-volatility market-neutral funds are becoming available to the retail investor.
Hedge funds have come of age. They deserve to be in every investor's long-term global asset allocation plan and have clearly proven their ability to protect capital in all markets with less risk than common stocks.
Eric Roseman
Montreal, Quebec, Canada
PS: Sovereign Society members: Click below for my top hedge fund
recommendations; http://www.sovereignsociety.com/vmembers.php?nid=728
PPS: Not a Sovereign Society member: Click below to sign up and you'll immediately receive a password allowing you to access Eric's recommendations as mentionned above.
LINK: http://www.agora-inc.com/reports/SVS/WSVSD405/
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Comment LINKS:
* Information on hedge fund indexes. LINK: http://www.hedgeindex.com
* Hedge fund database and news. LINK: http://www.hedgefundnews.com
* Managed Account Reports, Inc., LINK: http://www.marhedge.com
* ENR Asset Management, Eric Roseman's hedge fund advisory service.
LINK: http://www.eas.ca
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* OFFSHORE *
ESTATE EXPERTS CALL FOR END TO O.E.C.D. BLACKLISTS
Now that the OECD has admitted there is no "level playing field" STEP
says it's high time to end the phony OECD anti-tax haven blacklists.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=13748
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IS SYRIA AN OFFSHORE TAX HAVEN?
The anti-tax haven crowd claimed terror cash was stashed in traditional
offshore havens; now $3 billion of Hussein's turns up in SYRIA. LINK:
http://www.nytimes.com/2003/10/21/international/middleeast/21SYRI.html
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SWISS VOTE BLOCKS FORMAL E.U. NEGOTIATIONS
The lame duck Swiss government and the EU keep on negotiating,
but Swiss conservatives' election victory may make some talks moot.
LINK: http://www.scoop.co.nz/mason/stories/WO0310/S00227.htm
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* ADVERTISEMENT *
100% Accuracy. With Average Gains of 100%!
Steve Sarnoff Has Given His Readers A Chance to turn $5,000 Into $1 Million With the
Hot Streak of the Decade
If you were one of Steve Sarnoff's loyal readers in 2006, you would have had a chance to make money on every single one of his recommendations. And not just small gains, either - the average return was 100%. Catch this streak while it's still hot - and learn how quickly you could turn $5,000 into $1 million.
LINK: http://www.isecureonline.com/Reports/OHL/WOHLH600/
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* WEALTH *
BAHAMAS UNDER PRESSURE FOR TAX REFORM
NASSAU: Will government impose a graduated income tax and will
now exempt offshore investors also be taxed for the first time? LINKS:
http://www.tax-news.com/asp/story/story.asp?storyname=13762
http://www.thenassauguardian.com/national_local/354177735737287.php
* Sheepish NEW ZEALAND gov backing off animal flatulence tax. LINK:
http://www.nzherald.co.nz/storydisplay.cfm?storyID=3529313&thesection=news&thesubsection=general
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SLIDE IN DOLLAR VALUE HINTS ECONOMIC RECOVERY
Falling dollar's role in rising US profits. LINK:
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1066565190832
* US has few allies over revaluation of China yuan. LINK (SUBS ONLY):
http://online.wsj.com/article/0,,SB106667427673721400,00.html?mod=home_whats_news_asia
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* PRIVACY & RIGHTS *
EUROPEAN UNION PRIVACY ISSUES
* Data retention plan in Europe unlawful? LINK:
http://www.out-law.com/php/page.php?page_id=dataretentionplan1066391630&area=news
* Pro-liberty groups attack plan for EU health ID card. LINK:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2003/10/21/wid21.xml&sSheet=/news/2003/10/21/ixworld.html
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ALL ABOUT WIRETAPPING
Strict controls supposedly aim to keep politics out of US surveillance.
LINK: http://www.philly.com/mld/inquirer/news/local/7055258.htm
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NO U.K. RIGHT TO PRIVACY
* Law lords rule there is no British right to privacy. LINK:
http://politics.guardian.co.uk/homeaffairs/story/0,11026,1064949,00.html
* Big Brother UK car spy puts privacy at risk
LINK: http://www.news.scotsman.com/scitech.cfm?id=1146672003
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YOUR PRIVATE FINANCIAL INFORMATION FOR SALE
Sensitive credit data gets sold under an unpoliced honor system. LINK:
http://www.boston.com/dailyglobe2/292/business/Theirs_for_the_taking_sensitive_credit_data .shtml
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* U.S Feds want all-seeing spy eye in sky.
LINK: http://www.wired.com/news/politics/0,1283,60855,00.html
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ORIGINS OF AMERICAN LIBERTY
Cato's Letters, widely echoed by the founding fathers, was a central
inspiration for what became America and for the rest of the world.
LINK: http://www.mises.org/fullstory.asp?control=1355
* TERRORISM AND TYRANNY: Trampling Freedom, Justice
and Peace to Rid the World of Evil. by James Bovard.
LINK: http://www.bookreporter.com/reviews/1403963681.asp
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* THE SOVEREIGN SOCIETY OFFSHORE A-LETTER. *
Bob Bauman, Editor * Daniel Aponte, Jr. Research Asst.
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