POLITICAL SHIFTS PRESENT STOCK MARKET OPPORTUNITIES

Market myths are pervasive and dangerous. There is no reason to believe that a shift of power on Capitol Hill will change or alter the direction of economic forces now in place. Because investors are thinking otherwise, many wonderful companies are now trading at 50% discounts to our estimates of intrinsic value. This issue's Fallen Angels Report offers several for your consideration.

But first, some background...

History proves that stock market and economic cycles frequently last far longer than forecasters predict. Jim Oberweis, Forbes, and Ibbotson Associates provided some myth-busting information that bears this out. During the ten years following the 1973-74 bear market, small growth companies consistently rewarded investors. From 1974 through 1983 (generally considered terrible stock market years), small-cap stocks returned an average of 28.4% per year while the big "blue chip" shares returned 10.6% (www.forbes.com/oberweis). Why were stocks so profitable after the terrific bear market mauling of the mid-seventies? Because investors had bailed and bolted after the declines, creating buying opportunities for bargain hunters.

THE KUZNETS CYCLE AND THE STOCK MARKET

It's happening again, only this time in basic materials and commodity producers. The 1971 Nobel Prize in economics went to Simon Kuznets who came up with the concept of GDP. His work explained the long-term nature of commodity booms. Kuznets noticed that highways, roads, airports and other infrastructure projects are built over 15 to 20 year periods. States, countries, and governments make commitments to these projects and have to fund them until they are completed. The demand for workers and commodities needed for infrastructure construction accelerates for many years, driving up the price of labor and basic materials. The present commodity boom is only 7 years old, and worldwide thousands of infrastructure projects are underway.

HYBRID AUTOMOBILES USE 4 TO 5 TIMES MORE COPPER THAN GAS POWERED CARS

Emerging economies in China, India, and elsewhere are heavy consumers of a wide rage of commodities...everything from energy and minerals, copper, steel, gold, etc. According to research provided by U.S. Global Investors (symbol GROW), the average house contains over 400 pounds of copper in the form of wiring, water pipes and appliances. Even with the receding housing market, we believe that the Kuznets Cycle will continue for another 3 to 5 years, driving up the price and demand for basic materials.

The Fallen Angels Funds


Gabriel Wisdom and Michael Moore manage two no-load mutual funds, the FALLEN ANGELS VALUE FUND and the FALLEN ANGELS INCOME FUND.

If you would like more information, please call American Money Management, LLC at (888) 999-1395 today. A prospectus is available at www.amminvest.com.

About American Money Management, LLC

American Money Management, LLC, an SEC Registered Investment Adviser, manages accounts for individuals, companies, trusts and retirement plans. Minimum account size is $100,000 but investors are invited to try a managed account with as little as $25,000 (AMM reserves the right to withdraw this option at any time). For more information on our managed accounts program, please call us at 888-999-1395 or visit us on the web at www.amminvest.com.

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Disclaimer
The opinions expressed are those of Gabriel Wisdom and Michael Moore and do not necessarily reflect the opinions of American Money Management, LLC (AMM), an SEC registered investment advisor who serves as portfolio manager to private accounts as well as to mutual funds. Clients of AMM, Mr. Wisdom, Mr. Moore, employees of AMM, and mutual funds AMM manages may buy or sell investments mentioned without prior notice. This newsletter should not be considered investment advice. The opinions expressed do not constitute a recommendation to buy or sell securities. Investing involves risks, and you should consult your own investment advisor, attorney, or accountant before investing in anything. Current stock quotes are obtained at http://finance.yahoo.com. Prices are as of the close of the market on the previous day of trading.