“Cash in With Crisis Bonds” Safe Haven Investor

By Travis Johnson, Stock Gumshoe, February 3, 2009

Many of you have forwarded copies of the latest ad from Justice Litle for the Safe Haven Investor newsletter from Taipan — all the newsletters with these kinds of names are pretty active these days … Safe Haven, Safe Money, I think it’s time I start up a “Safe Gumshoe Report” to tell you exactly how to build a proper underground vault for your gold coins and collectible Beanie Babies.

But that’s a project for another day. Today, we’ve got a nice little teaser that tells us we could be making “safe” money while the world burns if we buy Crisis Bonds.

What is a crisis bond?

I’m so glad you asked! Let’s investigate this one together, shall we?

Justice calls it the “Safest Investment in America Today.” No tiptoeing around there, eh?

Here’s the promise:

“Urgent Market Alert: Wall Street Pushed to the Brink: New “Crisis Bonds” Auctioned at Fraction of Full Value.

“Reply today and receive your first guaranteed monthly payout by February 28!”

So we get some kind of dividend or coupon from these “crisis bonds,” there’s a place to start.

But there’s more …

“I call these special investments “Crisis Bonds” and they’re specifically tailored to investors looking to both protect their assets AND build their wealth during these tough times.”

And later, he gives a bit more of an outline of what he means by “crisis bonds” …

“In today’s market they offer you everything you could want for your portfolio:

“They’re unaffected by volatile shifts in share prices…

“They provide you with a recurring high percentage payout, just like clockwork…

“They actually allow you to flip them into an even bigger profit in the long term…

“And thanks to the ongoing chaos on Wall Street, some are currently priced at around 50% off their normal price levels!”

And, like so many other successful letters, this one actually starts with a story …

“In 1970, a young Greek-American immigrant named John, fresh off a tour of duty in Vietnam, came home to launch his business career and plowed every penny he had into a very special kind of investment.

“That investment eventually helped him amass a $1.7 billion fortune and transformed him into one of today’s most respected industry players.

“In 1990, Kenneth, a recent college graduate, using the same special kind of investment, laid the foundation for what would eventually become one of the most successful hedge funds in America.

“In 2008 his fund was valued as high as $18 billion.”

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We get some other quotes from the financial press, as we so often do, because those quotes lend gravitas to the argument and make it seem like it’s not a scam (not that it is a scam, in this case it happens to be a perfectly reasonable and real investment … more on that in a moment).

“in an interview with Forbes magazine, John said:

‘This is the most undervalued I’ve ever seen the [Crisis Bond] market. It’s unbelievable.'”

and …

“‘[Crisis Bonds] are a hybrid investment that have produced some decidedly decent returns.’ – USA Today”

and …

“‘Companies like HSBC Investments and F&C Investments are listing [Crisis Bonds] among their current favorite assets.’ – The New York Times (International)”

OK, well that’s probably enough dinking around with that first part of this teaser ad (don’t worry, there’s a bit more, too, including a specific investment that they think you should buy today). So let’s spill the beans on this part …

That Greek immigrant “John” is John Calamos, founder of the Calamos Investments advisory firm.

And the young “Kenneth” is Kenneth Griffin, who started the famous hedge fund Citadel.

What do those two famous investors have in common? They both got their start investing in convertible bonds.

Yes, “crisis bonds” are just convertible bonds. If you’re not familiar with the basics of this class of security, they are bonds that