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Skousen: An Anti-Terrorism Portfolio

05/23/2003 12:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

"Our unique anti-terrorist portfolio is designed to protect investors against the financial consequences of future terrorist attacks," says Mark Skousen, editor of Forecasts & Strategies . "Investments in this portfolio include inflation-indexed Treasuries, a commodity index fund, precious metals, and some defense industry stocks."

"I have created what I call the anti-terrorist portfolio. These are no-load funds or low-load funds. One is the Pimco Real Return Fund (PRAIX ). This fund invests in the Treasury inflation indexed 10-year bonds. I do not recommend under any circumstances buying regular T-bills or government securities. They certainly don't pay enough interest and if inflation comes back and rates go up, you are going to be hurt. So I recommend the Pimco Real Return Fund. It has done very well in recent years and I expect that to continue, because despite all the talk about deflation, anti-terrorism and war means inflation. Inflation is still a very serious threat."

"The next idea is the Oppenheimer Real Asset Fund (QRAAX ), which invests in a commodity index, and so if oil prices rise, if gold prices rise, if copper, nickel, basic commodities, etc. rise, this fund will do very well. It has done very well over the last couple of years. I also recommend the Tocqueville Gold Fund (TGLDX ). Why? Because it is one of the few funds that actually has gold and silver -- the hard metals themselves -- in its portfolio. Most other funds hold only gold and silver stocks, and won't necessarily perform the same as gold and silver."

"Fidelity Select Defense Fund (FSDAX) has been roaring lately. It's up 20% in the last two months. The fund, of course, invests in defense stocks in general and it has been a very good performer. I think it has a lot further to go. Finally, the fifth choice is the Masters 100 Fund (MOFQX). The fund relies on 100 top traders throughout the country. The fund has only been in existence since December 2001 and it's out-performed the S&P 500 in every quarter. (Skousen and his family personally own a very large position in this fund.).

"Have we reached a bottom as of last October? In March, we gave a very strong buy signal, calling it the turning of the tide. We are very bullish on the stock market, even though I still hold a high position in income investments. So I remain on the conservative side. Overall, the anti-terrorist portfolio will likely be volatile, but should do well over the long run as a continuing war environment creates more inflation."

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