Yesterday, you may have been surprised to see our announcement on Fool.com that The Motley Fool had created a brand new firm, Long-Term Mortgage Management, to purchase mortgage-backed securities with capital raised from our community. Sorry to disappoint investors, but that was part of our annual April Fool's Day joke.
While some Fools caught on to the hoax, others were ready to invest -- even though our government support was scribbled on a napkin. If you haven't already, get the post-April Fool's rundown and the absurdity of our financial system.
And while The Motley Fool loves a good prank on the first of April, we hope we haven't offended any Fools in the process. We'd like to share some of our favorite responses to this year's joke.
I can haz mortgage-backed securiteez?
"My check is in the mail. So is my cat Winston.
What return can I expect on Winston. Perhaps in fairness I should tell you he has been neutered."
Read the fine print
"OK, I may be interested, but how is this advertisement not a violation of U.S. securities laws (specifically regarding prospectuses)? Further, are you limiting this offering to accredited investors or is this going to be a registered offering?
Also, since when are Fannie and Freddie backed by the full faith and credit of the U.S. government? I was under the impression that that has always been nothing more than a market assumption with no concrete legal basis.
I am a loyal fool, and you have helped me make money, but you really need to run ads like this by your lawyers first. With this advertisement you are opening yourselves up to major lawsuits."
- Counsel for a law firm
Just slightly overthinking this
"I am interested in the LTMM investment opportunity by concerned about what appears to be a vast inequality between management versus investor compensation.
In questions 6 and 7 you indicate that your current projections for Fund profits are $42.7 billion before management fees and that investors will receive 2.16 billion of that in dividends in the first year. You also state that each year management receives 5% of assets under management and 50% of the remaining profits plus a modest vig (whatever that is). Does this mean that management gets 5% of 1 billion plus 50% of (42.7 billion – 2.16 billion) = $20.32 billion?? This would indicate that those of us putting up the money get 10% of the profits and those managing it bet 90%. Where am I going wrong in interpreting these answers?"
We're in a class of our own
"I assume that there are other parties creating similar funds to participate in this, is that correct? If so, who are your competitors in the market for these? Or is it exclusive to TMF, and why would it be?
The size of the fund you are creating, 1 trillion, just about would handle 75% of the MBS the government currently holds, is that correct?
The description of the way you intend to raise these funds sounds dangerous. Are you really using repo transactions?"
Not a recommended retirement strategy
"First, I am interested as an investor.
Second, is it possible this would qualify as an IRA investment?
Third, as an employment opportunity, I am a software engineer with a background in television production work. Why kind of positions might be available for someone with a diverse background and lives in unincorporated Alexandria, VA?"
From a Land Down Under
"I would like to invest some money in the above program. However I am from Australia and will not be able to call the hotline. I would appreciate it if you could suggest ways in which I could invest."
You may be on to something here...
"I have read your website and your frequently asked questions regarding the subject matter. How does one qualify to be an investor? Do you have any proof, beyond your website, that this is legitimate? Call me a skeptic, but "Geithbo's" note on the Hooters napkin isn't too convincing. Have a great day"
"I just sold my car to raise $4000 for this venture. Where do I send the money?"
There's something funny about that sum...
"I was delighted to read about the amazingly simple yet powerful opportunity presented by Tom and David G in their generous offer to invest on our behalf in riskless MBSs. With your expertise, these securities should be renamed to Money Banked Seamlessly. At any rate, my wife and I have worked very hard for over 4 decades now, often sweating and bleeding in the process. We have managed to save a good amount of money. Unfortunately, no opportunities to invest have ever come up, until now, of course. We have always been very skeptical of the financial industry. Again, until now of course. So, we would like to invest our entire life savings of $4,001,020.10 with you. That even includes the pennies under our car seats and from the drawers of our inherited cabinets. Of course, it's all in cash since we've never trusted anyone before. Please let me know where I can send you a delivery of this cold hard cash ASAP so that I can help you build a better future for your children."
We also accept Fredonian krugerands
"I've converted my Zimbabwean dollars, and Argentinean Bonds to come up with $500 to invest in this historic opportunity!!! Please reserve my spot!"
They'll turn up soon enough
"In you letter, you state there "we've been hit with a little negative publicity from media fleas" yet I haven't been able to find such critical articles. Mind sharing them? I'd love to ensure this language isn't a red herring. I'm interested in this opportunity, though!"
World's most valuable bicycle
"I am shipping via FedEx my Schwinn single-speed bicycle as my investment in the new fund. I have already painted "Motley Fool" on the fenders to improve its valuation, so I imagine it is worth about $500 million using similar financial engineering. Please send my login ID and password on receipt."
We apologize for the delay
"I would like to participate in this opportunity.
I have left a voice mail and the call back time was 2 days 4 hours. needless to say I cannot wait on hold that long. A foolish thing. Please send me information on how to participate or contact me."
The answers, in order: Yes, no, and maybe
"Is this a joke? Because I have friends who I recommended to your service calling me and asking if they should cancel their newsletters because you've lost your minds."
This does not exactly fill us with confidence
"Nice work. I was actually getting ready to call! You had me going through question 2 of the FAQs."
- Senior Managing Counsel for a prominent bank
So ... how happy was your lawyer?
"This is the best opportunity for profit I've had since April 1st, 1987 when I was rear ended by a drunk Senator in front of my lawyer's office."