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A Classic Example of Front-Running Media Hype


While this piece is dated, we post it to the blog from time to time, lest we all forget!

 In 2002, we authored a piece entitled A Classic Example of Front-Running Media Hype.  We wrote the piece because we were outraged by all of the media hype surrounding the American Heritage Fund (AHERX) and its manager Heiko Thieme.  Here is why.

In 1989, Mr. Thieme, known as the Rocket Man, (no, not that rocket man!) was named “Best Investment Advisor” at the International Investment Congress.  I guess his past record at American Heritage was an inconvenient truth:

1984 - lost 25%
1987 - lost 19%
1985 - lost 14%
1988 - made 2%
1986 - lost 26%
1989 - lost 3%

In the first quarter of 2002, the American Heritage Fund was #1 in the world, putting Thieme back on all the talk shows, and, true to form, in May of that year, Business Week said Heiko had “a sixth sense for stocks.” In spite of an awesome record of success from 1991 through 1993,  Thieme’s complete investment record must have again been irrelevant to the sizzle and hype:

 1990 - lost 31%
1993 - made 41%
1996 - lost 5%
1999 - lost 32%
1991 - made 97%
1994 - lost 35%
1997 - made 75%
2000 - lost 42%
1992 - made 19%
1995 - lost 31%
1998 - lost 61%
2001 - lost 47%

From March 2002, American Heritage went on to lose 50% of its value for the year.  Thieme and his American Heritage continued to bounce from awe to horror until it all but closed in 2007.                            

2002 - lost 13%
2005 - lost 33%
2003 - made 29%
2006 - lost 13%
2004 - made 33%
2007 - closed

Today, it is virtually worthless with a per share value of 5¢.  In spite of some remarkable years since its inception in 1982, purchasing the American Heritage Fund has clearly been a purchase of the sizzle and the hype.

Hopefully, it is abundantly clear that investors who count on the financial press to guide their mutual fund decisions may be greatly disappointed.

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