FORTUNES INC.

Fortunes Inc.

Table of Contents

ASSET ALLOCATION STRATEGY UTILIZING MUTUAL FUNDS3

STRUCTURING THE PORTFOLIO OF FORTUNES INC.6

FORTUNES INC.'S RULE BOOK8

ALLOCATION CHANGES WITH THE MANAGERS12

THE SOUL OF THE PORTFOLIO OF FORTUNES INC.13

KEY RECOMMENDATIONS14

CALCULATION OF WEIGHTINGS17

CURRENT POLITICAL RISK23

REFERENCES26

APPENDIX28

Fortunes Inc.

Fortunes Inc is a successful London print shop. It is a co-operative which was set up ten years ago after an industrial dispute. The business is run by its 25 workers, including printers, graphic designers and sales staff. It has a flat management structure, which means that no-one is more senior than anyone else. Everyone earns the same no matter how many years they have worked for the business. The ages of the members range from early twenties to mid fifties.

Staff turnover is very low largely, it is felt, because the members like having an equal say in the decision making. They can decide how to structure their hours, what benefits they should have and what equipment they need to buy for the business.

Asset Allocation Strategy Utilizing Mutual Funds

To begin with? investors should decide on a strategy for allocating their assets. Fortunes Inc.'s choice is to use mutual funds. This way Fortunes can identify the best manager for any particular category. Do not use index funds. Index funds are glorified traps in down markets. They are not actively managed? so no one is there to save the investor in down markets. There is an active manager that is superior to any index fund.

Keep in mind? before Socrates drank the poison he taught everyone how important it is to "Know Thyself." Investors must examine themselves for three important issues. First? what are the goals? Is it to buy new businesses? To contribute to charities? To fund a very comfortable retirement? Second? how much time does the investor have to accomplish those goals?

Volume- and price-based capital controls were key features of the macroeconomic stability achieved by South Korea? Japan? and Brazil during their most successful periods of economic growth. In the view of some economists? capital controls remain a necessary and viable policy tool for emerging economies. Capital controls reduce the ability of investors to flee whenever a government pursues a policy of which they don't approve. In such cases? capital controls augment policy autonomy and state capacity. More germane to the present discussion? they also reduce macroeconomic instability by damping capital inflows and outflows.

Many progressive economists and some important organizations like the United Nations Conference on Trade and Development have also proposed adapting economist James Tobin's proposal for a uniform global transactions tax on foreign currency trading. The Tobin tax is primarily intended to address the problem of foreign exchange market volatility caused by speculation in this market. This approach could also be adapted to offset the instability associated with international PI flows. Short-term traders fleeing assets denominated in a country's currency could be charged a substantially higher tax on their currency trading. This modified Tobin tax would offset some of the extreme liquidity associated with PI? reduce the profitability of country-to-country transfers in international ...