Author: Steve Boren

Fats blamed in bogus prostate risk

The "fat police" are at it again. This time, researchers are accusing dietary fat of increasing your risk of prostate cancer.

Please — this study is as bogus as the PSA test itself.

Researchers claimed to have studied the diets of 512 men with prostate cancer and 838 healthy men…and found the highest intakes of total fat were associated with a 153 percent increase in prostate cancer risk.

They said it didn’t matter if the fats were saturated, monounsaturated or polyunsaturated fats — fat in any form upped the risk.

That’s it, scrap the meat and load up on veggies right?

Not so fast. Despite all those numbers being thrown around like they might actually mean something, there was not a shred of real science behind this study, which somehow slipped into the pages of the British Journal of Nutrition.

Must have been a slow month for article submissions.

The study wasn’t based on a careful analysis of dietary fat in each eater. It was based on a food frequency questionnaire. If you want to know how accurate those are, try to recall everything you ate, how often you ate those foods, and how much of them you ate each time.

Now try to get 1,350 people to do that.

See my point?

You can link almost anything you want to prostate tumors — but they’re still not going to hurt most people.

The problem isn’t the tumors. It’s the overreaction and over-treatment. The fact is, people get cancers all the time — and in most cases, they never do any harm. In any given year, prostate cancer claims around 200,000 lives — on the entire planet. More people are struck by lightning.

The best way to lower your risk for prostate cancer is to not get screened in the first place…because in this case, what you don’t know usually won’t kill you.

Separating fats from frauds,

William Campbell Douglass II, M.D.

Inside socialized medicine’s bizarre rationing scheme

In Britain, weight-loss surgery has become a game of "survival of the fattest." As it turns out, funds for the procedures are limited, so only the fattest of the fat are getting approved.

The rest are told they either need to pork up or move to a postal code where there’s a lower demand for the surgeries.

Welcome to the world of socialized medicine. Doughnut, anyone?

Forget for a moment that these surgeries are bad news to begin with…because this isn’t about that. It’s about what happens when you ration health care — turning major medical decisions into crass lotteries.

British guidelines say stomach-shrinking surgery is recommended for anyone with a BMI over 40 and another condition — like diabetes — that would be improved if they weren’t so fat. They also need to have tried other forms of weight loss first, and failed.

Put yourself their shoes for a moment. You’re a loyal plus- sized British taxpayer. You want the surgery…your doc approves…you meet the guidelines for it…let’s get started, right?

Sorry, old chap…but the guidelines have gone to the dickens. The only pounds that really count are the sterling ones they use for money over there — and there’s not enough of those to fix everyone’s fat.

Since local bean counters actually get to make the final decisions, you can try moving to an area with more cash in the kitty…or you can eat fish and chips until you move to the top of the list. That’s if you don’t drop dead first — there’s a reason they call it "morbidly obese."

Laugh at the Brits if you want — but don’t laugh too hard or too long. This kind of bizarre logic is common in socialized medicine, and while you’re busy laughing, ObamaCare is being rewritten and reworked with our oversized bellies (and ever-shrinking wallets) in mind.

William Campbell Douglass II, M.D.

Early prison release programs: Recipe for political disaster?

A backlash over an Oregon law that allows inmates to trim as much as 30 percent from their sentences via expanded "earned-time credits" shows some political pitfalls when policy changes open prison doors earlier, reports Stateline.org. California, Colorado, Illinois, Kentucky, Michigan, and Wisconsin are among other states that have accelerated prisoner releases or may do so. Victims’ advocates attacked Oregon’s law as a threat to public safety; prosecutors and the Democratic state attorney general say the law goes too far and that inmates should be able to shave no more than 15 percent off their sentences, as the federal government allows.
The Crime Report

LAPD Central Division honors its own
The Central City Police Boosters held its annual Police Recognition Day Luncheon and Awards Ceremony, honoring officers and civilian staff who helped improve public safety in Downtown Los Angeles. "Crime stats are down," said LAPD Chief Charlie Beck, who slipped in an unscheduled appearance between the keynote speaker, Councilwoman Jan Perry, and Central’s Commanding Officer, Captain Todd Chamberlain. "These are the people who help make it happen for Central Division and for the community."
Blog Downtown

Ask a friend or associate, “Can you explain ‘cap and trade’”? More than likely you will be astounded at what a poor grasp (if any) he or she has of the subject, even though the future of our economy and even our country hinges to a large extent on whether or not cap-and-trade legislation passes or not. Without knowledge, our citizenry will not realize this innocuous phrase “cap and trade” really means government control of an ever diminishing energy supply and the rationing that must accompany any restrictive policy implemented.

Explaining how the government plans to control energy, and the effects of that control, is just one of the points that co-producers and directors Phelim McAleer and Ann McElhinney put forth in their documentary Not Evil Just Wrong. This explanation is not given by means of graphs and charts, but by the words of a young couple who have raised their family by hard work and who can see what the Obama administration’s promise to shut down coal plants (because the tax on them would be prohibitively expensive) would do not only to their family, but to their community and the nation.

Where did this rush for “cap and trade” legislation come from? It is a spin-off (actually the only goal) of the hysteria over global warming alleged by the UN’s Intergovernmental Panel on Climate Change (IPCC), warming supposedly caused by the tiny human contribution of carbon dioxide to the atmosphere. This alleged connection has become “fact” in the mainstream media, in liberal political rhetoric, and in academia. Yet polls show that most American voters believe that climate change is caused by natural factors; moreover, more people become skeptical every day as we see and feel temperatures on the decline. This year, for instance, meteorologists joke that winter in the upper plain states came 70 days early.

McAleer and McElhinney show that a general trend of planetary warming has been going on since the end of the Little Ice Age some 150 years ago, proving that there is no connection between CO2 and increasing temperature – except in that increases of CO2 levels in the atmosphere follow temperature increases on Earth because the oceans warm and outgas CO2. Further, they show that the major “proof” given by global-warming alarmists of CO2 forcing temperatures up was a farce. The proof, which was offered by the IPCC in its 2001 assessment, was a graph known as the hockey stick. The film gives the history of this graph, documenting how it was found to be a fraud that caused the IPCC to remove it in its 2007 assessment.

About the In” Crowd

Not Evil Just Wrong provides plenty of time for environmental alarmists to explain their positions, which appear ludicrous when juxtaposed with a few basic facts. First on the list is Chief Global-warming Alarmist Al Gore, whose Inconvenient Truth was found to contain nine significant errors according to Britain’s High Court.

In another example of self-condemnation, a member of Plane Truth promotes shutting down air travel because of a belief that CO2 emissions from aircraft are going to cause the planet to become uninhabitable from skyrocketing temperatures (temperature increases that I’m sure he is sad to see are not coming about, as the Earth’s temperatures have actually been decreasing during the past several years to record lows – as proven by satellite temperature readings and underwater ocean monitors). There’s no word from Al Gore in the movie about stopping air travel; apparently because he continues to fly around in his private jet from one “green” function to another. Nor was there any commentary
from Obama and his wife, who took separate jumbo jets to Copenhagen to lobby the International Olympic Committee to hold the 2016 Olympics in Chicago.

Many viewers (including your correspondent) were expecting the documentary to be strictly on the global-warming issue, since dialogue on that issue is in a critical phase in U.S. Politics. So when a relatively large segment of the movie was about the insecticide DDT, it seemed incongruous – at least at the beginning. Eventually a realization hits that the controversy over DDT and that over global warming are both examples of the environmental movement’s disregard for the effect of their policies on the well-being of the human race. And how environmentalists – at the highest level, not the college student next door who has no idea of what is being done in the name of being “green” – consider mankind to be an alien life form on the planet, while protection of the snail darter is to be accomplished at any cost. With less and less energy to supply water and sanitation, cultivate and process food, provide health services, and allow us the many other modern life enhancing amenities we enjoy – how many lives would be sacrificed to the “green religion” of the environmentalists?

In one scene that made me want to throw bottles at the TV set, a well-to-do environmentalist showed no concern to a Ugandan mother, Flora Kobusingye-Boynes, over the loss of her child to malaria, a disease that was almost eliminated by the use of DDT, but then resurged when the EPA banned DDT’s exportation and insisted other countries adopt the same policy. Now the death toll of malaria victims worldwide, but mainly in Third World countries, mostly young children, is estimated by the World Health Organization to be one million per year. Recently the World Health Organization, under strong pressure from human rights organizations, particularly in Africa and Asia, rescinded its ban on the pesticide that has been shown in test after test to be harmless to humans and animals, including birds. The environmentalists continue to push to overturn this ruling, regardless of its toll in human misery and death.

Pushing Back

While there were many other villains on the environmental Left that were allowed to embarrass themselves – NASA’s James Hansen noteworthy among them – there were also heroes of the skeptic camp who offered reasonable commentary on the shallowness of the hysterical arguments and gave verifiable scientific rebuttals. Among the scientists were Atmospheric Physicist Richard Lindzen of MIT, Stephen McIntyre, who discovered the “hockey stick” graph could be produced with any data set, and Professor Fred Singer, who has been involved in global environmental issues since receiving his Ph.D. in physics from Princeton in 1948.

A particularly convincing skeptic of anthropogenic global warming was Dr. Patrick Moore, a founding member of Greenpeace who left the organization when it became obvious to him that the movement had gone down the slippery slope to misanthropic policies, such as banning the use of chlorine to purify drinking water.. He knows well whereof he speaks.

Then there’s Roy Innis, who leads the Congress of Racial Equality (CORE). While most civil rights organizations are in lock-step with leftist environmental policies, CORE ridicules them, presenting an understanding that restricting the access to energy of a society – again, which all “cap and trade” proposals would surely do – would be particularly devastating to the poor in developing nations who are already living on the brink of abject poverty.

Finally, there are the producers of the movie. In an interview with The New American, co-producer/director Phelim McAleer was pleased with over 7,000 premieres on Sunday, October 18 (this
movie has not been disseminated through the usual channels, but was shown in homes and at college campuses). The producers estimate that about 400,000 people watched the movie’s premiers. But McAleer hopes that this is just a beginning and says that we Americans must educate ourselves on the many sham environmental issues that are but an excuse for government to institute new, unlimited taxes and to shift the balance of economic power from individuals and functional corporations to government, where destruction of our capital is assured. We agree that widespread viewing of this film could help awaken many of those who have not yet realized the danger faced by our Republic.

The New American – November 9, 2009

Mouthing off for fatty acids

It’s like I’ve always said: Good oral health doesn’t begin in some dental torture chair. It begins with your diet — and a new study shows how loading up on essential fatty acids can help.

Researchers in Japan have found that seniors with the highest levels of docosahexaenoic acid — an omega-3 fatty acid better known as DHA — have the lowest risk for dental disorders like tooth loss and periodontal disease.

These conditions are caused by our age-old enemy, and I don’t mean terrorists, commies or Huns. It’s inflammation… and the omega-3s are on our side in that battle.

The Japanese researchers followed 55 seniors with an average age of 74 for five years, and found that those with the lowest levels of DHA had 1.5 times the number of dental problems, according to the study published in Nutrition.

We all should be taking care of our mouths…but if you’re up there in years, you know the deal: Lose your teeth and you can pucker up for a gummy kiss goodbye to the ability to chomp down on the best cuts of meat.

But the steaks, er, stakes are even higher than that — because there’s a real connection between your teeth and your ticker. In fact, dental and heart problems often go hand-in-hand.

One study last year even found that people with high levels of bacteria in their mouths were more likely to suffer from heart attacks.

Let’s bring this full circle now…because another new study finds that you can kill those bacteria with a diet rich in omega-3 fatty acids like DHA, EPA and ALA…which, not coincidentally, are also important to overall cardiovascular health and good circulation.

Turns out the way to the heart isn’t through the stomach after all — it’s right there in the mouth.

Take good care of both by making sure you get enough fatty acids. Then, avoid fluoride toothpastes and rinse with hydrogen peroxide instead…and you’ll keep yourself alive and chomping.

With a bite every bit as bad as my bark,

William Campbell Douglass II, M.D.

Low-carb living tops nasty weight-loss pill

Fads, gimmicks, drugs…I’ve seen all the screwy diet trends come and go. But there’s one lifestyle that beats all of them every single time.

Of course I’m talking about low-carb living. And I’ve got the research to prove it.

When researchers compared the popular new weight-loss drug orlistat — sold as Alli and Xenical — to a low-carb diet, not only did the low-carb group lose more weight, they also lowered their blood pressure in the process.

That’s the power of an honest-to-goodness steak for you. (And remember: the fattier, the better!)

Here’s the details: Researchers studied 146 dieters with an average age of 52 and body mass index of 39 (that would put a 5’10" man at 271 pounds). After 48 weeks, the low-carb eaters lost an average of 9.5 percent of their body weight while enjoying some of the best food of their lives. The drug-takers managed to lose 8.5 percent of their body weight in between bouts of the gas, incontinence and diarrhea that often accompany this med.

To the researchers, that was a tie…but once you factor in blood-pressure readings, it wasn’t even a fair fight — the drugs never had a chance. Low-carb dieters lost an average of 6 points off their systolic and 4.5 points off their diastolic readings.

The pill-poppers, on the other hand, had almost no change in blood pressure at all, according to the study published in the Archives of Internal Medicine. But they probably did get more bathroom reading done. After all, this med has one of the most disgusting diet mechanisms imaginable.

Orlistat works by forcing dietary fat right back out the other end — sometimes quickly and dramatically. Stick close to the toilet when you take these pills — you might even want to eat your meals there, just to be safe.
William Campbell Douglass II, M.D.

Do I Hear $300 Million? AND ANOTHER THING …
By Jack Humphreville

In January, DWP recommended a transfer from the Power Revenue Fund of $147 million to the City’s Reserve Fund. This amount, representing about 5% of prior year’s audited revenues, is $85 million lower than the $232 million anticipated in the City’s budget.

This begs the question: Will the current year’s budget deficit hit $300 million? Read more…

A Rose by Any Other Name THE NEW DONE
By Shawn Simons

Over the last month I have been thrust into the middle of negotiating a vision for a restructured Department of Neighborhood Empowerment, one that administers to the needs of the Neighborhood Councils in a more focused and effective manner. In the end, the Mayor has decided to combine DONE with the CDD (Community Development Department), a move that frankly created fear for many NC reps and a reaction to fight to maintain a stand-alone department. Read more…

NC Leaders at the DONE Restructure Table; Keys in BudgetLA Plan Adopted BUDGETLA NOTEBOOK
By Stephen Box

The City of Los Angeles is in flux and the resulting reorganization of the city is dividing the community into two groups, one is experiencing overwhelming crisis, the other is experiencing incredible opportunity. Read more…

PROFILE
Edited by Sara Epstein

(Mayor Villaraigosa has nominated the current Community Development Department GM to head the new combined CDD/DONE Department. Here is Richard Benbrow’s profile as it appears on the CDD website.)

Richard Benbow GM has been the General Manager of the Community Development Department (CDD) since June 16, 2006. Mayor Antonio Villaraigosa appointed him to head the Department following Mr. Benbow’s exemplary 30-year career with the City of Los Angeles Community Redevelopment Agency (CRA/LA), where he rose to the rank of Chief Operating Officer. Read more…

DONE/CDD Consolidated; Staff Count at 16; Elections, Funding to be Outsourced DONE REMODELED
Edited by Ken Draper

The second shoe finally fell on the Mayor’s restructure plan for the Department of Neighborhood Empowerment on Monday sending shockwaves across grassroots LA ranging from jubilation to bitterness and threats.

The realignment will consolidate the DONE with the Community Development Department … creating the Community Development/Neighborhood Empowerment Department (CDD/DONE) and includes plans to outsource NC funding and elections and to create a volunteer corps to be supported by neighborhood councils.

The staff is set at 16, the DONE GM BongHwan Kim will leave and the current CDD GM, Richard Benbow, w ill head the new Department of Community Development and Neighborhood Empowerment.

Read more…

Our Thousand Oaks Tea Party is a non-partisan
organization supportive of Constitutionally-limited
government, fiscal responsibility, and free markets.
We oppose corruption, wasteful spending, raising
taxes, and the influence of special interests in our
government which was designed by our Founders to be
"Of the People, By the People, and For the People."

Dear Tea Party-9/12 Members:

Please see below information about:

1 – Sat., Feb. 27 – 12-4 p.m.– Tea Party Anniversary Celebration!
2 – TPP Statement – We don’t want a third party – we want reform!
3 – Wed., Feb. 24 – GOP Mixer & Meeting – 6 p.m. – Camarillo
Be a candidate for Central Committee!!!
4 – Select and support other good candidates!

1 – J u s t t h r e e m o r e d a y s

u n t i l o u r T e a P a r t y ! ! !

This Tea Party, like others across the country on this day,
is in commemoration of the first tea parties in 2009 which
were simple, consisting primarily of sign and flag waving.
(On Tax Day, April 15, Tea Parties will be more elaborate.)

Our goal is to let other citizens know WE ARE HERE and
WE ARE SERIOUS in workig to RESTORE OUR REPUBLIC!!!

Location: Lynn Rd. & Hillcrest Dr., Thousand Oaks
Bring: Signs, flags, drinking water
Wear: Red, White & Blue, costumes of the Founding era
Space available for some folding chairs

Agenda:

12:00 – Gather and wave signs and flags
1:30 – Program
2:00 – 4:00 – resume waving signs and flags

Ventura Country STAR on our Tea Party – Feb. 16
http://www.vcstar.com/news/2010/feb/15/tea-party-to-mark-anniversary-with-thousand-oaks/

Watch for a short article n the T.O. Acorn Feb. 25.

IN THIS ISSUE:

1. The Fed Blinks
2. What's the Outlook for Treasury Bonds
3. Revisiting the Hg Capital Advisors'
4. Long/Short Government Bond Program
5. Performance Evaluation
6. Is This Program Right For You?

Introduction

The Fed's action last week to raise the discount rate paid by banks that borrow money from the Fed is now old news. However, the reverberations of this action are still being felt in both the stock and bond markets. While the Fed's decision was not necessarily a surprise in light of recent comments by Chairman Bernanke and FOMC minutes, the swiftness with which action was taken did shock the markets somewhat.

Investors want to know where they can invest now to get a return on their money. One likely target is the long-term Treasury bond, or “long bond,” since its price is highly sensitive to changes in interest rates. Now that government intervention in the credit markets may be coming to a close, many investors are looking for long Treasury bond prices to fall and are seeking ways to capitalize on this expected price trend. However, there are still other factors, such as the recent Greek sovereign debt situation, that can affect bond prices in the opposite direction, so shorting Treasuries could be a recipe for disaster.

While I can't tell you which way long-term Treasury bond prices are headed in the near term, I can say that there is a way for aggressive investors to potentially take advantage of this market, no matter which way bond prices head. Back in 2007, I first wrote about the Hg Capital Advisors Long/Short Government Bond (LSGB) Program. The LSGB Program is a mutual fund-based strategy that employs a combination of long/short trading and leverage in an attempt to realize capital gains based on price movements of the 30-year Treasury bond.

In the remainder of this week's E-Letter, I'm going to discuss the Fed's latest action and what may lie ahead. In addition, I'll revisit Hg's Long/Short Government Bond Program and tell you why I think it may be a good investment for aggressive investors who want to capitalize on the long bond's price movement. In 2009, the LSGB Program posted a gain of over 60%, net of all fees and expenses. While past performance can't guarantee future results, The LSGB Program may be worth consideration for the aggressive portion of your portfolio.

The Fed Blinks

Late last Thursday, the Fed took what could be the first step in a process to mop up some of the excess money supply and get on the road to raising interest rates. The Fed discount rate, the rate at which banks can borrow money from the Fed, was raised from 0.5% to 0.75%. While this move alone is not all that significant, it's what the Fed may be thinking that will affect the markets.

Many analysts expected the Fed to make such a move after Chairman Ben Bernanke's recent comments about plans to phase out subprime-era lending programs to banks and businesses. The January FOMC meeting minutes also mentioned an increase in the discount rate. Thus, this move was not a surprise and was generally seen to be a symbolic gesture.

Investors, however, took the Fed's move as a signal that it may be phasing in an exit strategy to remove all or most of the excess liquidity it has pumped into the system since the credit crisis began. Accordingly, immediately after the announcement, stock futures began to react negatively to the news, and Treasuries extended their losses. The discount rate hike also boosted the US dollar, which automatically affected gold and other commodities prices. Observers said that the stock and bond markets weren't as surprised by the news as they were by the timing – at 4:30 PM EST on a Thursday afternoon.

Over the course of the subprime debacle and resulting recession, the markets and the Federal Reserve have been engaged in a staring match, each trying to determine the next move of the other. The Fed has blinked and now it's up to investors to decide how to position themselves to ride out the exit strategy.

While few analysts believe that the fed funds rate will be increased anytime soon, the swiftness with which the discount rate was raised after first being mentioned in FOMC minutes makes anything possible. I suspect that the Fed is using the hike in the discount rate as a trial balloon to see how markets react to the thought of tighter monetary policy.

While expectations of the Fed raising interest rates would place negative pressure on 30-year Treasury bond prices, there are still plenty of other forces beyond traditional fundamentals that have the potential to exert up and down pressure on long bond prices, including:

1. We know that much of the action in Treasury bonds over the past couple of years has been due to massive government intervention in the credit markets. While the Fed is signaling that its easy money policy may be coming to an end, this could abruptly change if we encounter worsening problems with unemployment, foreclosures and/or lower consumer spending. A renewed need for government stimulus and other easy money policies could again affect short-term price trends in Treasuries.
2. The US economy and markets are also not immune from global contagion, as we recently experienced with the Greek sovereign debt issue. While this crisis may be averted, several other countries' sovereign debt is at risk as this is written. Any major default on sovereign debt could counteract any downward pressure from the Fed on Treasury bond prices.
3. Most analysts feel that inflation is subdued and will not raise its ugly head for the foreseeable future. I have to say that I tend to agree for the short term, but further out I think that our ballooning deficits and national debt will come home to roost in the form of higher inflation.
4. Finally, we have the issue of continued financing of our huge government debt. No matter whether you're a conservative or a liberal, you have to agree that the expected doubling of our national debt over the next decade will have an effect on interest rates, and thus bond prices. Will foreign governments continue to buy our bonds at rock-bottom yields, or will they insist on a higher return to compensate for our spendthrift ways?

The bottom line is that there are good reasons for 30-year Treasury bond prices to go up or down as we slowly unwind the unprecedented financial and fiscal stimulus that has been pumped into the economy. As a result, it may make sense to have a small allocation to an aggressive investment that can potentially take advantage of market trends in either direction. The Hg Capital Advisors Long/Short Government Bond Program is such an investment. Read on to learn more about this dynamic investment.

The Hg Capital Long/Short Government Bond Program

As I noted back in 2007 when I first introduced Hg Capital, we had been searching for an effective program that could actively manage the 30-year T-bond on a long and short basis. Since the long bond price can be subject to significant volatility, it naturally lends itself to a strategy that seeks potential capital gains that these price movements can produce.

The Hg Capital Advisors Long/Short Government Bond Program seeks to provide short-term capital gains by trading the Rydex mutual funds designed to provide a long and short exposure to the price movements of the current US Treasury 30-year bond. The Hg strategy is a proprietary trend-following model with overbought and oversold signals also having an input.

However, Hg Capital's LSGB trading model isn't your run-of-the-mill trend following strategy. Hg has identified a number of what they call “rules” and has incorporated them into their model. In essence, these rules are actual observations of historical market activity, as opposed to conceptual ideas of how it “might work” or “should have worked.”

Each day, Hg Capital enters current market data into their computer system, and their software analyzes literally thousands of rules in order to determine which single rule is the most likely, from a statistical standpoint, to be indicative of the market's action during the next trading day. As you might imagine, the computing power necessary to run this analysis is extensive.

The primary emphasis of the bond model is an analysis of interest rate data, or yield. As bond yields indicate a developing trend, the Hg trading model will buy either a long or inverse (short) Rydex long-term Treasury bond mutual fund, depending upon the direction of the move. The model can also trade based on overbought or oversold conditions in the market. If the model cannot detect a tradable trend, it will issue a signal to go to cash (money market). However, cash positions are relatively rare, historically amounting to less than 10% of trading days.

Hg Capital's methodology does not attempt to predict what the market may do over the next week, month or year. All it is concerned with is the next day's market action. If the model happens to be long 20 days in a row, this doesn't mean they got a signal saying the market will go up for 20 days. Instead, it means they got 20 independent signals on 20 consecutive trading days that all said the program should be long. In fact, this string of long trades could have theoretically been caused by 20 different rules gaining prominence on each of the 20 trading days.

The Hg trading model is 100% mechanical, and Hg will not override a signal, even in the case of a national emergency. Hg's statistical analysis indicates that their system is right approximately 58% to 60% of the time, based on daily data. Our historical month-end performance analysis shows the bond program had a positive monthly return approximately 66% of the time, but past performance does not guarantee future results.

Hg's methodology does not employ any formal stop-loss techniques. However, since no signal lasts for more than one trading day, the effect of a bad trade may be limited by its short duration. Hg is quick to point out that the Long/Short Government Bond Program is aggressive, and should not be seen as an option for investors who want only a buy-and-hold Treasury bond exposure or interest income.

Performance Evaluation

The detailed performance information below shows that the LSGB Program compares very well to both equity and bond benchmarks over a variety of time periods. The LSGB Program is also virtually non-correlated to the broad stock and bond markets, as well as to the other investment programs offered by Halbert Wealth Management, as I will discuss in more detail later on.

Since its inception in December of 2004, the Hg Capital Advisors Long/Short Government Bond Program has posted an actual annualized return of 17.27% as of the end of January 2010, net of all fees and expenses. The worst losing period (or “drawdown”) was –25.01%, which occurred during the recent subprime meltdown. (See a more detailed discussion about the worst drawdown below.) The charts and tables below show detailed actual performance, net of all fees. Past performance does not guarantee future success. Also be sure to read additional important disclosures at the end of this E-Letter.

Note that the worst drawdown of -25.01%, measured as of month-end, occurred during the worst of the subprime crisis and credit crunch in 2008. Astute readers may recall my original introduction to the Hg Capital LSGB Program back in 2007 disclosed that the strategy had no cash or “neutral” position at that time. As a result, the model had no way to go to a neutral position when the global credit markets came to a standstill in 2008. Accordingly, we withdrew our recommendation of this investment in January of 2009.

However, as all good money managers do, the principals of Hg Capital monitored their trading model during this period of extreme volatility and found that the lack of a cash option definitely contributed to the depth and severity of the drawdown that occurred in 2008. After considerable research and testing, they implemented a cash position in the model, as well as other changes to enhance the model's ability to manage crisis market conditions.

In mid-2009, we reviewed the changes made by Hg Capital and the corresponding improvement in performance. At that time, we became comfortable that the changes implemented by Hg's principals were effective in reducing the risks when market volatility was high and we reinstated our recommendation.

While Hg's principals feel that the enhancements to their model should keep drawdowns from approaching the -25% level in the future, there is no guarantee that they will do so. Hg Capital co-founder Byron Haven points out that the road to the 60%+ return in 2009 was punctuated by at least four drawdowns of 7% along the way, which indicates that this strategy is still an aggressive approach to trading the 30-year Treasury bond.

For investors with an appetite for aggressive investments that can trade long and short on a partial leveraged basis, this program may be just what you're looking for. Small allocations to this strategy can provide additional diversification to both aggressive investors and moderate risk investors who want to include an aggressive allocation in their portfolios.

Administration

Hg's LSGB program is traded at Rydex Funds using mutual funds that seek to provide daily long and short returns based on the price movements of the current Treasury long bond. The Government Long Bond 1.2X Strategy offers a 120% leveraged long exposure, while the Inverse Government Long Bond Strategy provides an unleveraged short exposure.

The LSGB Program is available to both taxable, IRA and other tax-qualified accounts. Since this program trades frequently it will likely be subject to “wash sale” rules and short-term gains (or losses). Thus, it may be most suitable for IRAs and other tax-qualified retirement accounts, including no-load, low-cost variable annuity products that may also help to negate the tax consequences of frequent trading in a non-retirement account.

The minimum account size for the Hg Capital LSGB Program is $25,000. Management fees are deducted quarterly in advance, based on the following schedule:

First $500,000

2.50% annually

$500,001 to $1 million

2.25% (entire account)

Over $1 million

2.00% (entire account)

Non-correlation is the Key to Diversification

As I have previously noted, the Hg Capital LSGB Program seeks capital gains from frequent trading of long bond index mutual funds based on the movement of interest rates. With that being the case, you may be wondering why you should consider this program, since it is so much like actively managed equity investments. After all, if the Advisor is managing the asset for capital gains, what does it matter whether it's a stock or bond?

That's a very good question. As I discussed above, one answer is that Fed actions and global uncertainty could result in “tradable trends” in the long-term Treasury bond. Tradable trends are price movements of sufficient size and duration to be identified by Hg's trading model as potential opportunities to produce capital gains.

Another answer is that the potential for capital gains in the long bond, both long and short, generally occur independently from those of equity investments. As a result, successful trading activities can produce a return that has little or no correlation with both equity and bond indexes. By correlation, I mean the tendency of an investment to go up or down in relation to other investments.

If two investments go up and down together, they are said to be positively correlated. If one goes up when the other goes down, and vice versa, they are said to be negatively correlated. However, if an investment's gains or losses are independent of others, then it is said to be non-correlated. Non-correlated investments are often preferred because they have the potential for gain or loss without respect to how any other investment in the portfolio may perform.

The chart below illustrates this relationship. It shows the extent to which Hg Capital's LSGB Program's performance is correlated to major market indexes and other investment programs my firm offers. A value of 0.700 to 1.000 is indicative of a high correlation, values between 0.400 and 0.700 indicate a moderate correlation, and values below 0.400 indicate little or no correlation.

Market Indexes: Hg LSGB Program
R-Squared Correlation S&P 500 Index 0.097 Barclays Long-Term Treasury Index 0.104 Other Investment Programs
We Recommend: * Columbus High-Yield Bond 0.156 Niemann Equity Plus 0.122 Niemann Risk Managed 0.130 Potomac Guardian 0.163 Scotia Growth S&P Plus 0.046 Scotia S&P Moderate Growth 0.014 Select Advisors Conservative 0.053 Select Advisors Moderate 0.027 Third Day Aggressive 0.009 Third Day S&P Plan 0.000 Wellesley Convertible Bond 0.116

The above R-Squared correlation analysis covers a period of time from the inception of the Hg LSGB Program in December 2004 through January 31, 2010. Past R-Squared Correlation of the Hg LSGB Program to these indexes and other investment programs is not necessarily indicative of future correlation, and there is no guarantee that these numbers will not change significantly over time. Be sure to read the Important Notes at the end of this E-Letter.

* For more information on any of our other recommended investment programs, give us a call at 800-348-3601 or click this link to go to the Halbert Wealth Management website.

As you see from the table above, the LSGB Program has had virtually no correlation with the major stock market indexes in the past. It even goes one better by having a low historical correlation to the Barclays Long-Term Treasury Bond index, which is closer to what a buy-and-hold position in Treasury bonds would return. Best of all, the LSGB Program has had virtually no historical correlation to any of the existing AdvisorLink®actively managed investment programs.

What does this mean to you? It means that you can construct a portfolio of actively managed investment programs that may perform independently from each other over time. If the LSGB Program continues to perform as it has in the past, it could provide an additional degree of risk management to virtually any portfolio.

Conclusion – Not For the Weak or Faint of Heart

I think Hg Capital's Long/Short Government Bond Program may be an excellent way to include an actively managed Treasury bond exposure in a diversified portfolio. While there are no guarantees, the LSGB Program offers the potential to make money in both rising and falling interest rate environments by trading long and short, which is attractive to many investors.

However, it should not be viewed as a conservative bond investment. Many investors include Treasury bonds in their portfolios for the safety and security of the asset class. While that's generally true if you buy and hold individual bonds to maturity, it is important to note that this is not the case when bonds (or bond mutual funds) are frequently traded, and especially not when long and short positions are taken and leverage is employed.

I encourage you to check out Hg Capital Advisor's Long/Short Government Bond Program and see if it fits with your other investments. However, before investing in the LSGB Program, you should review your financial goals and other investments in your portfolio in order to determine if it is in line with your overall risk tolerance.

If you would like to have assistance in this review, feel free to call one of our Investment Consultants at 800-348-3601 or e-mail us at [email protected] and we'll be happy to help you. You can also obtain additional information and contact us via our website at www.halbertwealth.com or by completing our online request form.

Wishing you profits,

Gary D. Halbert

IMPORTANT NOTES: Halbert Wealth Management, Inc. (HWM), Hg Capital Advisors, LLC, and Purcell Advisory Services, LLC (PAS) are Investment Advisors registered with the SEC and/or their respective states. Any opinions stated are intended as general observations, not specific or personal investment advice. Please consult a competent professional and the appropriate disclosure documents before making any investment decisions. Investments mentioned involve risk, and not all investments mentioned herein are appropriate for all investors. HWM receives compensation from PAS in exchange for introducing client accounts to the Advisors. For more information on HWM or PAS, please consult Form ADV Part II, available at no charge upon request. Officers, employees, and affiliates of HWM may have investments managed by the Advisors discussed herein or others.

As benchmarks for comparison, the Standard & Poor's 500 Stock Index (which includes dividends) and the Barclays Long U.S. Treasury Indexrepresent an unmanaged, passive buy-and-hold approach. The volatility and investment characteristics of these benchmarks cited may differ materially (more or less) from that of the Hg Capital Long/Short Government Bond trading program since they are unmanaged Indexes which cannot be invested in directly. The performance of the S & P 500 Stock Index and the Barclays Long U.S. Treasury Index is not meant to imply that investors should consider an investment in the Hg Capital Long/Short Government Bond trading program, which is actively managed, as comparable to an investment in the “blue chip” stocks that comprise the S & P 500 Stock Index or the US Treasury securities with a remaining maturity of 10 plus years that comprise the Barclays Long U.S. Treasury Index.

Historical performance data from 2007 to present represents the composite returns of representative accounts managed by Purcell, called the Purcell Dynamic US Government Bond. It reflects the reinvestment of dividends and other earnings, and is net of all transaction, custodial and Purcell's maximum management fee of 2.50%. Performance prior to 2007 represents an actual account in a program named Hg Capital 199Hg-TYX, custodied at Rydex Series Trust, and verified by Theta Investment Research, LLC. These results reflect actual trades in a proprietary account of the Advisor, managed to mimic the Advisor's trading signals. The results may not reflect the performance of actual client accounts due to contributions and withdrawals from client accounts, tax loss sales, client-imposed investment restrictions and other factors. These performance numbers have not been verified by HWM, and therefore HWM is not responsible for their accuracy. Since all accounts in the program are managed similarly, the results shown are representative of the majority of participants in the Program. The Program's objective is to capitalize on the up and down movements in the price of the 30-year Treasury bond. Purcell Advisory Services utilizes research signals purchased from Hg Capital Advisors, an unaffiliated investment advisor. The signals are generated by the use of proprietary software developed by Hg Capital Advisors. Statistics for “Worst Drawdown” are calculated as of month-end. Drawdowns within a month may have been greater. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Mutual funds carry their own expenses which are outlined in the fund's prospectus. An account with any Advisor is not a bank account and is not guaranteed by FDIC or any other governmental agency.

When reviewing past performance records, it is important to note that different accounts, even though they are traded pursuant to the same strategy, can have varying results. The reasons for this include: i) the period of time in which the accounts are active; ii) the timing of contributions and withdrawals; iii) the account size; iv) the minimum investment requirements and/or withdrawal restrictions; and v) the rate of brokerage commissions and transaction fees charged to an account. There can be no assurance that an account opened by any person will achieve performance returns similar to those provided herein for accounts traded pursuant to the Hg Capital LSGB trading program.

In addition, you should be aware that (i) the Hg Capital LSGB trading program is speculative and involves a high degree of risk; (ii) the Hg Capital LSGB trading program's performance may be volatile; (iii) an investor could lose all or a substantial amount of his or her investment in the program; (iv) Purcell Advisory Services will have trading authority over an investor's account and the use of a single advisor could mean lack of diversification and consequently higher risk; and (v) Hg Capital LSGB trading program's fees and expenses (if any) will reduce an investor's trading profits, or increase any trading losses.

Returns illustrated are net of the maximum management fees, custodial fees, underlying mutual fund management fees, and other fund expenses such as 12b-1 fees. Management fees are deducted from the account on a quarterly basis, and are not accrued monthly. They do not include the effect of annual IRA fees or mutual fund sales charges, if applicable. Dividends and capital gains have been reinvested. No adjustment has been made for income tax liability. Consult your tax advisor. “Annualized” returns take into account compounding of earnings over the course of an investment's track record. Money market funds are not bank accounts, do not carry deposit insurance, and do involve risk of loss. The results shown are for a limited time period and may not be representative of the results that would be achieved over a full market cycle or in different economic and market environments.

More…

$82.5 million Orange Line
Contract Awarded by Metro

The extension of the Orange Line busway from Canoga Park to Chatsworth is scheduled to open in 2012. Metro has awarded a contract for much of the work that needs to be completed. Here’s the memo from Metro CEO Art Leahy’s email to staff:
"We [have] issued Brutoco Engineering & Construction, Inc. a Notice of Award in the amount of $82.5 million for the design and construction of the four-mile busway extension for the Metro Orange Line (MOL). The contract includes: four new stations; new platforms at Canoga Station; grade-separation structure over active railroad tracks and Lassen Street providing direct access into the Chatsworth Metrolink Station; a bicycle/pedestrian path connecting to an existing path at Browns Creek; a park/ride lot at Sherman Way Station; expanded parking at Chatsworth Metrolink Station; landscaping; Los Angeles River and Santa Susana Wash bridge crossings; street improvements; and satellite bus parking facility." The $215.6-million busway extension will be the first major transit project to open that was funded by the Measure R sales tax increase approved by Los Angeles County voters in November 2008.

Day of the Horse Festival
Moves to Stoney Point Ranch

Chatsworth’s annual Day of the Horse will be 11 a.m. – 3 p.m., Sunday, May 23, at Stoney Point Ranch, 10861 Andora Ave.
The free festival sponsored by the Chatsworth Neighborhood Council and the Council’s Equestrian Committee will feature dressage, horsemanship, jumping skills, equestrian displays and the 2010 student poster contest. Refreshments will be available.

This year’s poster contest theme is "Having Fun Safely with Horses." Winning posters will be displayed and awards will be handed out at the event. Participants must be there to claim their award.
Those eligible to participate in the poster contest include any child who either attends school in Chatsworth or resides in Chatsworth. In addition, if a child boards a horse in Chatsworth, he or she is eligible. Posters must be received by April 23. Judging will take place on April 28. Winners will be notified by May 3.

It is very important that each poster submitted have the entrant’s name, school, and contact phone number printed clearly on the back. Children who either reside in Chatsworth or have a horse in Chatsworth must include their home address or the name of the facility where their horse is boarded. If you have questions regarding the art contest, please call Mary Kaufman at (818) 326-5772.
This year’s Day of the Horse is being held at Stoney Point Ranch, a new location. Please plan to park on the street and walk into the ranch. Parking inside the ranch is limited. The ranch is just south of Stoney Point at the top of Topanga Canyon Boulevard.

Jan Eddy-Languein is chairing the event with the help of the rest of the Chatsworth Neighborhood Council’s Equestrian Committee. If you have questions, suggestions for exhibitions, or if you want to volunteer, call (818) 709-4822.

Sign Up for Instant Police News

The LAPD now offers a free service that allows Los Angeles residents to sign up to receive messages directly from the police on crime, traffic, missing persons, emergencies and other public safety information directly to their phones or email inboxes.

You can sign up for bulletins based on your home ZIP code or you can register for multiple locations to keep up to date on traffic, crime and emergencies at your workplace or homes of relatives.

To sign up for this free service or for more information, visit http://www.nixle.com.

City Controller Wendy Greuel
to Speak in Chatsworth

Neighborhood Council Forum March 3

As the city faces a $212-million budget shortfall, Controller Wendy Greuel has become one of the most important players in the search for solutions.

She will speak and take questions at the Chatsworth
Neighborhood Council board meeting, 7 p.m., Wednesday, March 3, at Lawrence Middle School, 10100 Variel Ave.

The controller, an elected citywide official, is the taxpayers’ watchdog and the city’s chief auditor and accountant. The controller’s job is to investigate and publicly report problems with city departments, increase governmental efficiency and save taxpayer money by improving operations, conduct financial and performance audits of all city departments, offices and programs, monitor and report on all matters relating to the city’s fiscal health, keep the city’s official financial records, and supervise all expenditures of city funds, including payroll.

Her department’s recent audit of the Neighborhood Council system uncovered numerous financial irregularities including the failure of the supervising Department of Neighborhood Empowerment to balance its books since 1999.