Investment U Pop Quiz: What’s Your IU IQ?

By Dr. Steve Sjuggerud, President, Investment U
Monday, November 3, 2003: Issue #286

So, you’ve been reading the Investment U e-Letter for a while now. Your confidence as an investor is growing every day. Great!

But how much have you really absorbed from these e-letters? Here’s a quick way to find out – while having some fun in the process.

Just take this quick Investment U Pop Quiz, see the answers and explanations at the bottom. And if you need to, revisit the issues from which these questions came to make sure you’ve learned the lessons and upped your IU IQ. It may be a profitable exercise for you in more ways than one. Good luck!

Pop Quiz Question #1: From e-Letter #279 – Dollar Crash Imminent?

True or false: The U.S. dollar is extremely overvalued versus the euro (according to the exhaustive UBS survey on currency values).

A. True
B. False

Pop Quiz Question #2: From e-Letter #283 – Trader Buys the Red Sox

Multi-millionaire investor and Boston Red Sox owner John Henry is a self-made man. He made his millions through:

A. Real estate
B. Value investing
C. Trend following
D. Infomercials about “tiny classified ads”

Pop Quiz Question #3: From e-Letter #278 – 50%-Plus Gains Where Nobody’s Looking

What happened to the mining company Bre-X in 1996?

A. It struck the largest vein of gold in modern history, estimated at somewhere between 113 million ounces and 200 million ounces
B. It was broken up into two junior gold companies by the Canadian government
C. It was sued by the French government for violating the 35-hour workweek law
D. It was discovered to be a fraud – there was no gold

Pop Quiz Question #4: From e-Letter #285 – How to Turn a 4-Dollar Investment Into Serious Coin

What is the best $4 investment you can spend when considering investing in coins?

A. Buying an ultra-rare U.S. $4 Stella gold coin, minted in either 1879 or 1880.
B. Buying a $3.99 plastic coin case from www.AmosAdvantage.com for each of your coins
C. Spending $3.99 on the current issue of “The Greysheet” online, which lists the dealer prices for coins
D. None of the above

Pop Quiz Question #5: #284 – My 2 Favorite ‘Left-For-Dead’ Investments

According to the old investor’s saw, to really make triple-digit returns, you must be willing to:

A. “Buy straw hats in the winter”
B. “Buy whatever’s hot, and sell whatever’s not”
C. “Buy wherever the sun is shining”
D. “Buy the dips”

ANSWERS

Okay, then Let’s see how you did. On to the answers!

Answer #1: B – False. The dollar is only overvalued by 9% when compared to the euro, according to an exhaustive study by the United Bank of Switzerland. When you compare the costs of goods and services in Europe versus the States, the difference in prices won’t be too dramatic.

Answer #2: C – Henry is a trend follower. The only measuring stick for an attractive investment in his book – and he’s made mega-dollars using it – is price action. Earnings be damned.

Answer #3: D – Bre-X was a major scam. Bre-X shares tanked after it was discovered that there was, alas, no “gold in them thar hills.”

Answer #4: C – A Greysheet. This publication is used by wholesalers, and can really help prevent you from getting taken to the cleaners. Dealers mark up common coins (ones under $1,000) roughly 10% or more from these prices, while rare coins can be marked up by 25%. Don’t pay more. www.greysheet.com

Answer #5: A – Buy Straw hats in the winter. The idea here is that you buy an investment when there’s a low perceived value and sell later, when demand for it explodes. In that e-letter, I pointed to two “straw hat” investments: Argentina and a certain type of gold coin.

Scoring, numbers of answers correct:

5: Investment Senior – You’re the big man (or woman) on campus
4: Investment Junior – You’re nearly ready for the real world
3: Investment Sophomore – You’re a lot of fun to talk to at parties
2: Investment Freshman – Let the hazing begin!
0-1: Dear applicant: We thank you for your interest, but we regret to inform you…

This was meant to challenge you and to send you back through our back issues. We hope you enjoyed it. We’ll be back with a regular letter on Thursday!

Good investing,

Steve

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