EWR's Investment Plan remains the same after Sept 11 as before: safety first. For comparison, please see the previous model (posted just below the current model) with explanations for each section (A,B.C). If you have been a reader of EWR for several years you have a grasp of the continuity of EWR's approach toward investment, and you most certainly have been more able to face the events of September 11, 2001 and the aftermath with greater understanding, if not greater preparation.

Here is the current model.

If you compare this model to the earlier model, posted below, you will see in the current model slightly less percentage of the portfolio in the Risk Area (C) and in the Foundation Area (A); while in the Safety Plus Income Area (B) you will see an increased movement toward short-term government securities.

From the previous model (below) review the explanations for each of the main sections. The principles have not changed. EWR maintains a model for invesment for both peacetime and war, but realizes that to believe war will never happen is to take the greatest risk. The model is also designed to protect against both inflation and deflation.

The following diagram of the EWR Investment Model first appeared in the July 1996 EWR, pp 2-4, and again on the front page of the Nov 1996 EWR and was reviewed in the EWR issues for July 1997 and July 1998.

These principles of investment have been consistent in EWR for many years. Safety first; a bedrock protection in coins against runaway inflation (that can hurt fixed-income investments); and a reasonable return on investment in short-term secure instruments and the more secure currencies. We will leave this earlier model posted so you may reflect on its merits and note that it has been around for several years prior to the recent events that have shaken the world's political and economic landscape, and compare it to the more recent model presented in the February 2002 EWR, now replacing this diagram in EWR's Total Investment Plan.

The Total Investment Plan divides your portfolio into three groups:

• Speculation. Money you can afford to lose
• Safe investments that yield some income
• Foundation, or insurance against catastrophe

A.  Foundation--The foundation of the pyramid is precious metals. These are bedrock investments. For thousands of years, they have always retained at least some of their value, no matter what has happened. Wars, famine, revolutions, earthquakes, hurricanes, the black plague, runaway inflation, the Dark Ages--precious metals are the only investment that has survived them all.

B.  Safe investments--Include Swiss francs. Switzerland is the world's most neutral nation and its currency is the best managed. The Permanent Portfolio Fund is a collection of investments balanced to withstand any shock. T-Bills are very short term US bonds backed by the government's printing press. The safest US paper investment you can own, T-Bills can be bought through Permanent Portfolio Fund (800-531-5142) or direct from a Federal Reserve Bank (202-874-4000). (See additional Suggested Vendors below.)

C.  Speculation--Money you can afford to lose: Crude Oil "Strips" Options, EWR's War Portfolio, or other speculations, such as those suggested in previous EWRs. You might earn huge profits, but risks are high. Be careful.

July 1996 EWR
     "I am forever meeting people who are embarrassed about earning only 4% or 5% on their money while their friends boast about profits of 100% or more. Two points: First, when a friend suffers a loss, it's a safe bet no one ever hears about it. Second, there are so many hidden dangers to your savings that just keeping what you have is a major accomplishment. Be proud of it."

February 1996 EWR
     "I am aware that many of you will find this pyramid plan disappointing. You have a lot of money in stocks, mutual funds or long term bonds, and you don't want to hear about how risky they are. Or, you are convinced there is a financial genius somewhere who can show you how to earn a real return of 100% per year with little risk, and now you know it's not me.
      "Bear in mind that in a raging bull market, even an idiot looks smart; he can buy anything and it will go up. But bull markets end, and this one is not only the biggest, but one of the oldest on record; it began in 1982. I sleep very well at night knowing I'm giving you advice that will keep you from serious harm."