Oprah, First Lady Maria Shriver and Queen Noor.

By Natalie Pace, CEO, NataliePace.com

Oprah Winfrey and Maria Shriver were on-air talent working in Chicago.Ê Queen Noor was an anti-war activist.Ê How did they recreate themselves, align their paths with greatness and end up in the most influential positions in the world?ÊÊ In candid and inspiring keynote addresses at the California Governor's Conference for Women last December-- where they came together to promote philanthropy, equality and dialogue-- Oprah, Maria and Queen Noor shared the secrets to their success.

Show me your friends and I'll tell you who you are.
When Maria Shriver hosted her first California Governor's Conference for Women this year, the event went from innovative and interesting to regal and monumentally important.Ê First Lady Maria Shriver took an annual event for women, which in years past was centered around a governor's pulpit, and turned it into Girlfriends For Good on the Global Stage.Ê (Governor Arnold Schwarzenegger was on hand only briefly in the morning, largely to introduce his wife.)ÊÊ In addition to the breakout sessions that are designed to educate and enrich women who are working in California (part of the original format), Maria added opportunities to volunteerÑright there, on the spot, no excusesÑand the Inaugural Minerva Awards, honoring four outstanding women who are Òarchitects of change.ÓÊ The keynote speakers of the day had many things in commonÑwealth, power, position, global reach, a desire to share their secrets with other professional women--and many considered themselves friends to Maria Shriver.

If an examination of Maria's friends reveals anything about California's First Lady, then she is our modern-day Minerva, the Goddess of wisdom, who is a tireless warrior when clad in her helmet and otherwise, an ensign for peace.ÊMaria's way of using her position to promote progress and good will is exemplified in her choice of dress--a tailored green skirt suit set off by running shoes. The style of a woman on the moveÑmore concerned with outcomes than head turns!Ê

Maria's bold fashion statement was surprising to attendees, but probably not to her friends, as Maria, Oprah and Queen Noor have always made choices outside of the box. Their personal Òfull circleÓ stories were both risky and groundbreaking, most importantly for the poignant, moments of truth that put each one on a personal path to power and influence.Ê

Greatness came to all three of these women by calling it right at the crossroads.Ê Maria's position as the First Lady of California is a direct result of her choosing Arnold Schwarzenegger as her life partner.Ê Queen Noor's position as an international humanitarian activist and an active voice on issues of global peace-building and conflict recovery came as a direct result of choosing to marry King Hussein of Jordan.Ê Oprah's pivotal moment came when she was interviewing Ku Klux Klan members for Òratings.ÓÊ As Oprah told it to the audience at the California Governor's Conference for Women and Families, she made a conscious choice at that moment to create a new niche in day-time television -- to promote good.

For those of you living on a glacier for the last twenty years, Arnold was just a famous body builder (Mr. Olympia) with a string of bad B movies (Hercules in New York and Stay Hungry) when Maria started dating him. Could she have dreamed that her husband would become the Republican Governor of California? Can you imagine the food fights at the Thanksgiving table of the most famous Democrats in America? If you think of Maria Shriver as the woman who picked Arnold and then stood beside him while Arnold transformed from champion body builder to the highest paid actor in Hollywood to Governor of California (who is now seeking to amend the Constitution to give him a shot at the Presidency), you get an idea of just how Maria is shaping up Sacramento.Ê In fact, I'm putting in my bet now that Maria Shriver outpaces Hilary Clinton as the first female President in the United States.Ê

Maria Shriver had no shot as a couch potato. Her father, Sergeant Shriver, founded the Peace Corps.Ê Her mother, Eunice Shriver (John F. Kennedy's sister) founded the Special Olympics.Ê If you see an injustice, create a solution and get a million people to commit to the cause.Ê Now pass the mashed potatoes please.Ê

ÒPeople come up to me and ask me what I'm doing in Sacramento about this issue or that issue,Ó Maria says, and I say, ÒBack at you. What are you doing?ÓÊ When the excuses fly that someone has kids, Maria barks, ÒI've got four!ÓÊ When someone claims that work is overwhelming, she hits back with, ÒI've got five jobs!ÓÊ

Bottom line?Ê Maria was bread on activism, essentially born in running shoes, so get on board or step aside and shut up.Ê Which is likely why Oprah, Queen Noor and Arnold Schwarzenegger are her closest friends.

Fame isn't a cakewalk, according to Oprah, who had an amusing tale of trying to pee with a fan standing outside her stall, but it is all possible because she believed in herself.Ê Her grandmother used to advise Oprah to get herself some good white folk to work for (back in the days before Martin Luther King leveled the playing field for African Americans).Ê Because Oprah never saw herself as a cleaning woman, Oprah now has some good white folk working for her.Ê ÒIf you think there is a glass ceiling,Ó Oprah counseled the women in the audience, ÒYou might as well build it yourself.Ó ÊAs you believe, so it is.

Queen Noor of Jordan Associated Press

Her Majesty seemed uncomfortable giving a distinctly Middle Eastern perspective of 9.11 to an American audience.Ê She was on edge, wincing and playing with her auburn hair, but forthright in her admission that 9.11 was not an insane plot of a small group of radicals, but resulted from a Òcomplex web of factionsÉ [including] a widespread disaffection with U.S. policy and procedure.ÓÊ (And this admission at a Republican Governor's Conference for Women!!)

In addition to her royal duties, Her Majesty Queen Noor continues to promote equality, justice, tolerance and pluralism through the King Hussein Foundation and through the Noor Al Hussein Foundation, both of which she chairs.Ê The King Hussein Foundation is responsible for the Jubilee Secondary School, which promotes democratic education and fosters thinking based in Òfreedom of speech and responsible, mature dialogue,Ó in the words of the late King Hussein.Ê The Noor Al Hussein Foundation focuses on empowering local communities by providing business, marketing, technology and technical training and access to the capital markets.Ê

Queen Noor chairs the first meeting of KHF Board of Trustees, June 30, 1999.

Calculated Risk-Taking Pays Off
Promoting global peace, which is a mandate of Queen Noor, does not mean parsing the truth.Ê Being the Queen of Media for Oprah does not mean ratings, at the expense of her Òhigher calling.ÓÊ And, obviously, coming from America's most high-profile Democratic family never meant marrying her father's golf buddy for Maria Shriver.Ê When these three friends came together in Long Beach, California last December, to share their strength and vulnerability with 10,000 very lucky professional women, those of us in the audience got the feeling that their alliance was only beginning to scratch the surface of a better world being crafted in their very capable and powerful hands.

It's not easy being Maria Shriver's friend, as she doesn't settle for status quo and inspires those around her to greatness, but at the end of the day, as Sheryl Crow puts it, California's First Lady sure knows how to throw a good party!

What a better way to end a truly exhausting day of intellectually challenging perspectives than to listen to Sheryl Crow sing of ÒHer Favorite Mistake,Ó and ÒAll I Want To Do Is Have Some Fun.ÓÊ First Lady ÒMinervaÓ Maria Shriver had the perfect ten-hour shoes for kicking it up backstage, with her powerhouse friends.Ê And out front, Minerva Award winner, Lula Washington, the founder and artistic director of the Lula Washington Contemporary Dance Foundation, which is based in South Central Los Angeles, kicked off her heels and led a league of professional women in a good old-fashioned line dance. Rock on!

Quotable Wisdom from key speakers at the California Governor's Conference for Women and Families:
ÒGet it in the whisper.Ê If you don't get it in the whisper, you get the thump on the head.Ê If you don't get it with the thump, you get the brick. Then the brick wall falls on you.Ê If you still don't get it, the whole house caves inÉÊ So get it in the whisper because the universe always whispers first.ÓÊÊ Oprah

ÒIt's not that men enjoy keeping us down.Ê They just enjoy being up.ÓÊ Linda Ellerbee, best-selling author, television producer, journalist

ÒWe have a culture and tradition that oppresses women.Ê Islam does not oppress women; it is the culture.ÓÊ Sakena Yacoobi, Founder & President, Afghan Institute for Learning

ÒPeople think their superiors will pluck them up, but it's the people around you who lift you upÉÊ Everyone you touch will be a part of where you get to.ÓÊ Patty Stonesifer, Co-Chair and President of the Bill and Melinda Gates Foundation

ÊÒCelebrity gets in the way of artistry.Ó Sheryl Crow, rock star

ÊÒIt doesn't matter whether you are a waitress or a CEOÑthe question is are you true to yourself?Ê Are you improving the quality of life of those you meet and work with?Ê Are you a force for good in a world in desperate need?ÓÊ Her Majesty Queen Noor

ÒDon't compare yourself to other women.Ê There is no woman in reality that looks like she does in a magazine.Ê Concentrate on being the best that you can be.ÓÊ First Lady Maria Shriver

ÊÒKindness works.Ê It's like a boomerang: it ALWAYS comes back to you, even if not from the person you gave it to.ÓÊ Gayle King, editor, O Magazine

ÒInvest in the success of those around you.ÓÊ Anne Sweeney, Co-Chairman, Disney Media Networks, President, Disney ABC Television Group

ÒNever lose your sense of humor or perspective.Ê Misbehave and have fun.ÓÊ Anne Gust, Executive Vice President, Gap

Share the Wealth.

Links to Volunteer Opportunities and Celebrity Galas

As Sandra Taylor, the Senior Vice President of Starbucks, says, ÒYour gift of time is often more valuable than your gift of dollars.Ê Volunteer in your local community.ÓÊ Devote one day to building a house with Habitat for Humanity.Ê Laugh your way to enlightenment, at Co-Abode's Comedy Night in West Hollywood, California, on March 3^rd.ÊBid and Win a celebrity hand-painted Gibson guitar to benefit the Pediatric Epilepsy Project at UCLA. Shine with the Stars at Starlight Starbright's celebrity gala on March 24^th in Beverly Hills, California.Ê (And if $750/ticket is out of your league, donate a teddy bear online.)Ê Stay up-to-date about philanthropic events (and more) in the Calendar Section of NataliePace.com.

Go ahead.Ê Challenge yourself to be an architect of change.Ê Take a day off--for good.Ê The links below make philanthropy just a click and a step away.

Co-Adode, benefiting single mothers.Ê Co-Abode.com
Special Olympics. SpecialOlympics.org
Habitat for Humanity, building homes for the homeless, Habitat.org
Debt AIDS Trade Africa, promoting health and economy in Africa, Data.org
Kids Korps, Kids helping kids.Ê KidsKorps.org
Natural Resources Defense Council, NRDC.org
Senior Corps programs, seniors volunteering for service, SeniorCorps.org
Starlight Starbright, brightening the lives of seriously ill children, SLSB.org

#1 On the Street.

Meet the Managing Editor of the Top Performing Newsletter in an exclusive Q&A, where he reveals his tricks and Hot Tips.Ê

Kelley Wright Managing Editor, Investment Quality Trends Newsletter

Investment Quality Trends (at IQTrends.com) is rated the #1 Top Performing Newsletter for five-year risk-adjusted returns by Hulbert's Financial Digest.Ê That's no small feat, considering the Wilshire 5000 has posted negative annualized returns of -1.4% for the past five years, while Investment Quality Trends has booked an impressive, annualized 16.6%gain.Ê Wonder what their secrets are and how you can use them to sweeten up your own portfolio returns?Ê Read on for an exclusive interview with Kelley Wright, the Managing Editor.Ê Mr. Wright was handpicked by Geraldine Weiss, the founder and Publisher Emeritus ofÊ Investment Quality Trends, and his tenure has certainly paid off, although Kelley admits that the secret to their success is a rigid formula that was established by Geraldine over forty years ago.

NataliePace.com:Ê Congratulations on being rated the #1 newsletter (risk-adjusted) by Hulbert's Financial Digest for having the best returns over the last five years!

Thank you! We work really hard. Geraldine Weiss (Publisher Emeritus) was a true pioneer but she didn't get all of the kudos that she deserved.Ê I'm trying to do that for her now.

Is Ms. Weiss retired or does she still play an active role in the newsletter?

She just had her 12^th grandchild and she remarried about four years ago.Ê They are playing bridge and bouncing grandbabies on their knees--having a great timeÑbut she sees everything that goes out the door.Ê I have her ear if I need her. She's a great person to get perspective from, and bounce ideas off of.

How would you describe your investment style?Ê

Our style is that we seek total return through capital appreciation and dividend income from a select universe of very high quality blue chip stocks that meet very stringent criteria.Ê

Dividends are great, especially with the new tax lawsÉ

Dividends meet the most basic of all investment fundamentals; getting a return on your investment dollar. Dividends also minimize risk and provide protection from losing principal.Ê We do not have a lot of turnover.Ê Mark Hulbert (of Hulbert's Financial Digest) tells me that he's calculated our average hold at about 1600 days.Ê We keep expenses low.Ê And you have to know when to reel it in, to listen to the market.Ê The market will tell you when it's time to be cautious and when it's time to be bold.ÊÊ When it's time to be bold you just have to go for it.

Are you bold or cautious right now?

There are some interesting divergences right now.Ê Our methodology is that the stocks we follow have a profile of value.Ê Our profiles are long-term, 25 years or longer, of repetitive extremes of low price and high yield to high price and low yield. One of our internal screens is to look at the percentage of stocks that are undervalued.Ê In our universe, we have one of the smallest percentages ever, since 1966, that fall into the undervalue category. It's at its leanest time ever, in almost 40 years.Ê From that perspective, we don't see a lot of value in how we measure stocks.Ê

Where are you seeing more positive signs for the markets?

At the same time in the Dow Jones Industrial Average, we consider that when the yield is 3%, it is undervalued, and at 1.5%, the Dow is overvalued.Ê The Dow's yield is about 2.3% and climbing, which is indicative that the individual components of the Dow have been raising dividends.Ê While we can't find a lot of value, there seems to be growing value in the stock market, as measured by the Dow.Ê That is an interesting contrast that we are mulling over.Ê Also, the Dow Jones Industrial's utility average is in the overvalue area, but the dividend chart doesn't show signs of breaking down soon.Ê The utilities right now are just screaming.Ê So some interesting dichotomies are going on.

Do you increase the cash in your portfolio when the markets are overvalued?

When a stock becomes overvalued (by our methodology), we liquidate it.Ê If there is nothing to replace it with, we keep it in cash.Ê Gerry says stocks are like streetcars, another one will come along. We don't mind being long because we understand their characteristics and profile.

Are you carrying a larger percentage of cash in your portfolio right now?

I am.Ê I've got close to 50% cash, although it's always a good time to buy a high quality, undervalued stock.Ê We view the market of stocks as opposed to the stock market.Ê When something fits our profile, we don't give a tinker's diddle what's going on in the market, we go buy it.Ê

So when the markets opened on September 17, 2001, after 9.11.01, were are you on a buying spree?

Yes.Ê We list our criteria for selecting stocks at the top of page two of every issue.Ê If you make it past that, we know it's high quality company.Ê If that company reaches its historic level of undervalue, we buy in.Ê

Let's talk about how you manage risk.Ê Your strategy is to focus on the Òserious investor who is interested in long-term portfolio return (Capital and Dividend gain) with low downside risk.ÓÊ You've been in business since 1966.Ê How has the portfolio weathered some of the storms of the markets?

On Black Monday, October 19, 1987, the Dow Jones Industrial Average was down 25%.Ê Our undervalued section was down only 12%, significantly less than the broader market. Incidentally, we had a positive year for 1987.Ê In 1988, our returns were over 18% in the first quarter.Ê We know from experience, even if there is insanity going on around us, if our stocks are undervalued, we buy them.Ê We may be early, but that's okay because our stocks pay a dividend.Ê We get paid to wait and that's fine.

How do you use dividend trends to determine Overvalue and Undervalue in stock price?

If you grab a 30-year chart, and we have great charts in our archives, there are very repetitive patterns. You can see where stocks turn.Ê It's almost scary.Ê They just have these turning points at specific yield levels.Ê It's almost like a DNA pattern.Ê Each one has it's own pattern.Ê We do have an algorithm that we use, but you can learn a lot just by looking at a chart.

Do you look at products, competition and management at all, or do you just run the numbers?

We're just number geeks.Ê That stuff gets worked into the equation, but it's not something we break out and look at individually.Ê You don't break into our universe if you don't have good management and good products, where the companies know their markets and consumers.Ê Those are part and parcel of making the grade to get into our universe in the first place.

I couldn't help noticing that Merck made it into your Buy List in the January 2005 newsletter.Ê With all of the lawsuits Merck is facing over Vioxx isn't that a pretty risky call for a risk-adverse newsletter?

We have some caveats.Ê Merck was part of our 2004 Lucky 13.Ê We loved it in January 2004, but by April of 2004, there were four big drugs in the pipeline that imploded.Ê From a fundamental standpoint, we looked at it again.Ê They've got patent protection running out in 2005.ÊÊ They don't buy other companies.Ê They don't buy products to fill the gaps.Ê We called the company, and they said everything was organic.Ê ÒDon't worry, we'll be able to pay dividends,Ó they said.Ê In April of 2004, we wrote a piece and said, ÒTechnically, Merck meets our criteria, but you can't live in a bubble.Ê You can't be so contained by methods that you don't see the forest for the trees.Ê They will have to take on debt to cover dividends.ÓÊ In April 2004, we told subscribers it's time to sell although we had to hold it because it was part of our Lucky 13.Ê Nothing has happened from a fundamental standpoint; they meet the criteria.Ê However, in our Blue Chip information notes, you'll see a disclaimer.Ê

Are you still holding Merck?

On December 15^th, which is the day we publish the last issue of the year, we sold it so fast it would make your head spin.Ê It is technically undervalued and meets our criteria, but not without humongous caveats.ÊÊ I try to let people know that although it looks good you might want to stay away.Ê The yield looks phenomenal, but when you pull the covers on it, it's like, ÒOh My God, cover that back up!!Ó

Another surprise was to find Fannie Mae in your Rising Trends listÉÊ Fannie Mae has lost their CEO and has been the subject of Congressional and securities scrutiny for their accounting, executive bonuses and business practices.

Fannie Mae technically is in a rising trend, or it was before they cut their dividend.Ê The company met all the criteria to be a select Blue Chip, and was more than 10% above undervalued.Ê However, we wrote a piece about Fannie Mae last spring.Ê We said, ÒThere's enough speculation going on here that, although on the surface it looks okay, you might want to pay attention to it.Ê In October/November., we cut it to a 5 rating, and said, ÒThere are other places to make money.Ê You don't need this risk.ÓÊ After that, they cut their dividend in half.Ê It's technically overvalued at $72, and it's now trading at $62.Ê You probably want to get rid of it.

Are you getting rid of it?

It's technically still in our portfolio.Ê IQ Trends is stuck with it because it meets our criteria.Ê

I know you're more interested in stocks than in the markets, but what's your call for 2005?Ê Are you bullish or bearish?Ê You've already said that most companies are registered as overvalued by your criteriaÉ

Those kinds of incidentals, Geraldine Weiss calls the flutes and the woodwinds.Ê They are interesting and provide something to look at and talk about but they are just for conversation until they work their way into the market.Ê I think we'll have a recession at the end of 2005 or the beginning of 2006 because of oil.Ê I don't think the oil move is over.Ê The demand genie is out of the bottle.Ê From a macro perspective the oil shock has already affected the economy a lot.Ê In our Lucky 13 for 2005, we structured the stocks very defensively with high yield companies, like Altria (NYSE: MO), SBC Communications (NYSE: SBC) and Bristol Myers Squibb (NYSE: BMY).Ê We hunkered down and got defensive this year.

NataliePace.com note:Ê Altria is the parent company of Philip Morris USA, the tobacco company.

Which sectors do you think might rally this year?

In February of 2003, we featured Nucor (NYSE: NUE), a steel manufacturer, at $36.Ê It went to $90, split, and now it's in the $50s.Ê Nucor unfortunately committed a sin and lost their Standard & Poor's dividend and earnings quality rating, which dropped below B+.Ê We moved the stock into the Faded Blues.Ê Faded Blues no longer meet our criteria.Ê China is buying everything that they can get their hands on.Ê The fact of the matter is that Nucor no longer meets the criteria, so they are no longer on our radar.Ê We're defensive first.Ê We protect our principal.Ê It doesn't matter what's going on with the movers and shakers, if they don't meet the criteria, we feel terrible that we're missing it, but God bless you and knock yourself out.

Any oil companies on your radar?

In terms of oil, you and I both know that the price of crude has nothing to do with the earnings of oil companies.Ê That being said everyone is long Exxon Mobil, which is overvalued by our methodology.Ê I wish that there were some drillers or oil tankers or ancillary companies that met our criteria but unfortunately, they don't.Ê So, we're either missing a phenomenal opportunity--or our criteria are protecting us from something.Ê

I'm cognizant of what's moving, where money is flowing.Ê If that intersects with our criteria, then I'm a happy, happy guy.Ê If it doesn't, then we wait for things that do meet what we do.Ê It takes a lot of discipline and patience to follow our method, but it's worked for a long time.

Well, here's another interesting call.Ê You've got defense companies littered all over your Sell list, while the money from this Republican Administration continues to pour into contracts.Ê Caterpillar (NYSE: CAT), General Dynamics (NYSE: GD), Northrop Grumman Corporation (NYSE: NOC) are lined up next to Lowe's (NYSE: LOW) and Merrill Lynch (NYSE: ML) on the Investment Quality Trends Sell list.

Gerry and I talk a lot about this.Ê If a company doesn't have enough confidence or belief in where it's going forward to raise its dividend, which would make it undervalued and attractive, why should we stick our necks out for them?Ê Their price is too high relative to the yield.Ê They have to dramatically raise the dividend or the price has to come down.Ê While they are phenomenal companies, they are not phenomenal values.

Do you think that skillful CEOs might escalate dividends just to put the company on the radar of institutional investors?ÊÊ If a company is having difficulty, the extra investment dollars can shore up the cracks.Ê Fannie Mae comes to mindÉ

Citigroup (NYSE: C) has been on a tear raising their dividend.Ê There is one of two things going on.Ê Sandy Weill is one of the brightest guys on the Street, so they are either going to clean up, or this guy is one of the greatest poker players of all times trying to shore up confidence in the company with the market because bad news is on the way. McDonalds is another.Ê They cranked their dividend up.Ê Usually, this means that the board feels like the prospects are good going forward.Ê We think that is the best vote of confidence there is.Ê You would think that with Uncle Sam cutting checks like crazy to Raytheon and General Dynamics that the boards would say we're swimming in cash, we've got to do something here.Ê But they are not raising their dividends. We think more is to be revealed there. A tip off might have been in the State of the Union address where President Bush said he was trying to rein in defense spending.Ê

Well, the proof of your methods is definitely in the pockets of smart Investment Quality Trends subscribers, who have pocketed an annualized 16.6% return for the past five years, while most market investors are still minus. Thanks for sharing some of your secrets with our readers.

You can subscribe to Investment Quality Trends online at IQTrends.com.Ê For more information, email info@IQTrends.com or call 858.459.3818.

DON'T MISS THE NataliePace.com MEMBERS ONLY CHAT with Mr. Wright on Wednesday, March 9^th, 2005 at 8:45 a.m. PST (11:45 a.m. PST).Ê Practice logging in NOW to be sure that you know your password and how to type in your questionsÉÊ (Directions are below.)

Don't miss Kelley Wright at the Las Vegas Money Show on May 9-12, 2005, where Mr. Wright and many other of the nation's top money minds will share their wisdom with you.Ê Be sure to say that NataliePace.com referred you!Ê

Directions to Participate in the NataliePace.com chat with Kelley Wright on 3.9.05 at 8:45 a.m. PST:

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Stock-Picker's Market 2005.

Learn why the Vice Chairman of Goldman Sachs and the Vice Chairman of the Milken Institute concur that in a sideways market, gains are hard picking.Ê

The Economic Summit 2005 presented by the Beverly Hills Chamber of Commerce and the Milken Institute on February 8, 2005 sported three of the top economic advisors in the U.S. alongside Maria Bartiromo, the CNBC beauty, who anchored the numbers dialogue in real-world wisdom and application.Ê Donald Straszheim, CEO - Straszheim Global Advisors and the Vice Chairman, Milken Institute, Robert Hormats, Vice Chairman, Goldman Sachs International and Joseph Quinlan, Chief Market Strategist, Bank of America, all agreed that 2005 would be a challenging year in the markets, which would favor the select stock picker.Ê Wonder which sectors they see promise in, and why the evidence supports a sideways stock market?Ê

Acting as moderator, Donald Straszheim posed provocative and challenging questions about the biggest factors affecting the markets.ÊÊ The biggest concerns were the budget deficit and reduced earnings, while Maria pointed out that oil prices would remain the over-riding short-term concern because, ÒIt hampers the ability for consumers to spend money on anything else.ÓÊ With earnings and productivity slowing down, the economy needs for the consumer to have the ability to spend, unless corporations, which are sitting on hordes of new cash, pick up the slack.Ê

So far, as Alan Greenspan pointed out in his speech on February 16, 2005, corporations are hunkered down about hiring and capital spending. ÒThe lingering caution evident in capital spending decisions has also been manifest in less-aggressive hiring by businesses.Ê In contrast to the typical pattern early in previous business-cycle recoveries, firms have appeared reluctant to take on new workers and have remained focused on cost containment.ÓÊ The last time that happened was in the deep recession of 1975, as Mr. Greenspan notes in the same speech. And for those of you who are behind on your Carter Administration history, 1976-1980 was noteworthy for two crisesÑthe hostages in Iran and the energy crisis, with gas rationing, high gas prices and long lines at the pump.Ê Today's environment sees the same challengesÑterrorism, high gas prices and conservative business spending.

As Maria puts it, ÒIf you look at the fundamental facts, earnings growth and productivity, we'll be bumping around at this level [in the markets] for some time.ÓÊ Profits over the next twelve months will be less robust than last year, according to Robert Hormats, the Vice Chairman of Gold Sachs International, because businesses having rising costs in capital (due to interest rates), in energy, in salaries, in health care and companies cannot pass these costs off to the consumer, due to price wars and international competition.Ê (Perhaps nowhere is this more visible than in the airline industry, which is imploding under unsustainably low fares and high costs of fuel, labor, pensions, benefits and more.)

If caution in corporate spending and constrained consumer spending weren't enough to throttle the stock market, historical statistics also show that the first year of the presidential termÑi.e. 2005--is the weakest for stocks, with a statistically significant chance that there will be a negative return.Ê Why?Ê As Paul Woods, the CEO of Odyssey Advisors, explains, ÒInvestors know that good things tend to happen to the economy in the years leading up to the election and any excesses are fixed afterward, and ...the risk of losing money in stocks doubles.ÓÊÊ

Don't panic!Ê No one at the Beverly Hills Economic Forum predicted that the markets were about to collapse, but, rather, that the coming 24 months would be a grind. Joe Quinlan, Chief Market Strategist for the Bank of America encouraged investors to practice patience and look for decent returns in dividends.Ê Last July, Elizabeth McDonald, Forbes editor and on-air personality, advised NataliePace.com readers that in sideways markets, you need to prune your portfolio and to focus profit taking on shorter windows. ÒYou really have to be astute about your stock picking, about buying low and selling high,Ó Ms. MacDonald said.Ê Joseph Lisanti, the editor of Standard and Poor's The Outlook , is anticipating increased volatility in 2005 on brisk merger and acquisition activity, which provides opportunity for day-traders.Ê

Consumer Spending - the Home Equity ATM machine
The economy since 2000 has relied upon consumer spending, but that driver is predicted to dampen this year.Ê As Robert Hormats notes, ÒPeople have leveraged their homes to buy goods in Wal-Mart.Ê A lot of people who found it easy to service their debt, will find it a lot harder.ÓÊÊ

Interest rates and oil prices remain the major factors affecting consumer spending in the coming year, and both are expected to continue to provide pressure on the pocket book.

ÒWith underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured,Ó according to the Federal Reserve Board's statement released on February 2, 2005. In Greenspan-speak that means the Feds will continue to raise interest rates as long as inflation doesn't spin out of control.Ê

And few people are postulating that oil prices will drop.Ê Robert Hormats notes that very little investment has gone into new supplies for oil, while the demand in China and India are high. ÒA significant part of this unexpected increase in oil consumption, about 2.2 million barrels per day, reflected quickly growing oil demands in East Asia, notably China,Ó according to Governor Ben S. Bernanke of the Federal Reserve Board, lecturing at Darton College, Albany, Georgia, on October 21, 2004.Ê With supply running near capacity and growing demand, Mr. Hormats predicts that, ÒThe average price of oil will stay considering higher in the next few years.Ó

Stock Picking in A Sideways Market
Mr. Hormats advises investors to Òlook for areas where there are structural imbalances.Ê In a lot of the commodities and energy, there has been under investing.Ê Prices have to stay high while that catches up.ÓÊ He still believes that China is an opportunity, although it will be a bumpy road and requires more due diligence and research. Joseph Quinlan is looking for opportunities in the Baltics, Russia and Turkey, noting that there is a Òmini China right in the middle of central Europe.ÓÊ While Maria admits that she's not a stock picker, she did note that in an economy where earnings are slow, Òpeople will want growthÓ companies.

Not everyone is enamored with the opportunities in China and India, however. Glenn Yago, Director of Capital Studies at the Milken Institute, and Joel Kurtzman of the Kurtzman Group say that the business risks in China, Russia and India are being overlooked by a lot of companies and investors.Ê They enumerate the risks that businesses face, namely Òpoor market and banking regulation, corruption and inadequate accounting practices. Add to that bad economic policy, fuzzy rules regarding property rights and laws that are on a country's books but inequitably enforced.ÓÊÊ There is one Asian hot spot, Hong Kong, which actually carries less business risk than the U.S., while Russia, India and China are Ònot financially safe,Ó according to Mr. Kurtzman and Mr. Yago.Ê If you're looking to invest in Asia, there is still a huge difference between the climates in Hong Kong and the mainland, where banking regulation and free enterprise is a historically new phenomenon.

Another risky sector with promising growth is the health care industry, with so many Americans entering retirement, but that the sector is also plagued with volatility.Ê Lawyers, rising costs, HMOs that don't want to pay rising costs and worries that the FDA might become gun shy after the VIOXX problems were all cited as factors that would keep volatility high in pharmaceuticals and biotechnology.

Cash is King!
Maria advises, ÒIt is important to always have a horde of cash for emergency funds, like medical bills.ÓÊ Not only will you need more cash for daily incidentalsÑwith rising gas prices, health care, insurance, and more--but also cash allows the savvy investor to capitalize on market volatility.Ê In a sideways market, day-traders with cash on-hand can buy into market slides, and cash in on rallies.Ê Buying into your favorite company when the price dips, and selling when the share price soars, might be the only gains you'll see, other than dividends, in the coming 24 months.Ê That is, if the respected economic advisors at the Economic Summit 2005 are right in their predictions.

For more information on how to maximize profits while protecting your bottom-line, check out last month's article in NataliePace.com ezine Volume 2, Issue 2, entitled ÒCash is King.Ó

Top 10 Signs Inflation is Running Hotter than the Feds are Admitting

by Stefan Whitwell, CFA, Managing Partner, Tierra Capital, L.P.

Stefan Whitwell, CFA Managing Partner, Tierra Capital, L.P. http://whitwell.net

1.     Rent. In Santa Monica, you can rent a two-bedroom cave in a turn of the century building for $1800.  Rent doesn't cover utilities or the mental anguish of toxic air filtration systems and zero water quality.

2.     Property Taxes.  No need to worry: every new legislator running for office assures us that they are going to lower real estate taxes and that Brad and Jen are getting back together.Ê Consider selling a body part on the black market to keep current in meantime.

3.     Health Care. Annual cost of U.S. health insurance now higher than the replacement cost of the ailing body part on a secondary market in a third-world country.

4.     Beds. When did beds become as expensive as cars?  My teenager asked for a new bed.  After pricing them, I gave him a pillow and told him to just sleep in his car. (It was cheaper, with the added benefit of getting him to school.)Ê  He also rejected my college futon.  Said it smelled like rancid beer and kept poking his fingers through the burn holes. ÒDid you smoke?Ó he asked. ÒOf course not,Ó I said. ÒWe did a lot of camping back in those days.  Flying embers.Ó

5.     Dinner. Maybe I should finally learn how to cook after putting this off a mere 30 years.  Am I the only one who can remember the days when a dinner for two in excess of $100 was unheard of?Ê Since when is a martini worth $18, even with the apple slice?

6.     College. An Ivy League education costs about $40,000 per year (after-tax).  Assuming you can get your kid in and out in four years - that is $160,000 - or roughly $320,000 pre-tax. Why does my teenager think my suggestion that he just skip college and go right to work for Club Med (free lodging) is just a joke?

7.     Gas.  Something about way-over $2/gallon is just wrong - especially when it is used to fuel my car, idling in traffic, for hours at a time while I admire the bumper of the car in front of me in Los Angeles traffic.

8.     Granite countertops, cement, wood and steel.  May be cheaper to live at the Four Seasons or pay a hypnotist to convince me that plastics and other synthetic materials are healthy and more beautiful.

9.     Housing. Is it just me, or are lot sizes getting smaller and the houses more expensive?  I saw a tired looking fixer-upper right next to the 405 freeway: 1400 square feet, 50 years old.Ê The realtor told me it was a Ògreat dealÓ for only $500,000.Ê This is a lot of money no matter what interest rates are!

10.  Ice cream cones. Price is up even more when you adjust it for the mix-with-extra-air-inflation trick.  Remember the days when you could buy a non-air triple scoop at Thrifty for 45 cents?

More information on Stefan Whitwell can be found at the following web-sites.

http://tierracapital.net
http://whitwell.net

Ski Vacation Burn-Out!

Working Parents Of Four Slave to Keep Their Kids in Private School and on the Slopes. Is There an Easier Way? NataliePace.com's Living Wealthy Team finds a Òpassive incomeÓ solution.

Each month, NataliePace.com provides subscribers with your chance to have four seasoned financial consultants give you a personal money makeover. The Living Wealthy financial consultants are: Carista Luminare-Rosen, Ph.D., Educational Director of Inner Securities and Holistic Wealth Consultant, Stu Zimmerman, Chairman & CEO, Inner Securities and Holistic Wealth Advisor, Gregory Wendt, CFP¨, Money Manager and Certified Financial Planner, and Judith Green, Mortgage and Real Estate Financial Advisor.Ê See the end of the article for instructions on how to receive your personal money makeover.

Profile of this month's LIVING WEALTHY Candidate:

Name- Theresa and Harold (not real names)
Age - 40 and 34
Married - yes
Children - four children ages 2 and 4 in present marriage, Theresa has two children 9 and 11 from prior marriage
Profession - Software developer, independent contractor (yoga instructor/fitness guru)
Annual Income - $90,000 ( Theresa), $30,000 ( Harold), plus $40,000 in child support (non-taxed)
Net Worth - $710,000
Asset Allocation - $410,000 house equity, $230,000 marketable securities, $70,000 IRA
One Year Life Goal - To make more money than we spend
Five Year Life Goal - To have a second family home at ski resort
Ten Year Life Goal - Mother not working anymore and husband fully providing
Deepest Heart's Desires - To be more relaxed and trust that everything will work out (Theresa). To travel extensively (Harold)
Greatest Fear/Insecurity about Money - I will always have to be a working mother ( Theresa). I won't make enough money to make Theresa happy (Harold).

Theresa and Harold seek help, in their own words:
We love to enjoy life through international travel and skiing vacations. We highly value education for our kids.Ê The two older go to private school, and the two youngsters have 30 hours of childcare each week, while mom and dad work. We have a great life together, but somehow we always seem to be spending more money than we make each month, even with the tax-free child support of $3500/month.

Harold makes only $30,000 a year working full-time while I, Theresa, am a full-time working mom with four young kids. We are fully dependent on my monthly income. I like to work, but I feel I have no choice and see no end in sight to have more time to be with the kids during the school day. We want to be saving each month rather than be in the red. I just do not see how we can make our expenses lower. We hope that Harold makes more money but the job market is limited in his field.  How can we begin to save instead of bleed cash each month?
--

JUDITH'S RESPONSE:
Dear Theresa and Harold:

While I agree with the good advice to Òspend less, make more,Ó and to appreciate the blessings you have, I want to encourage you to rethink your views on how to ÒmakeÓ money.

A key truth about money manifestation is that, rightly used, money creates money. You are both accustomed to working in environments where you are paid by the hour. Ultimately, you measure your potential income by the hours you have available, and those hours are also the precious time you have for each other and for your family.Ê If you can think outside of the Òpaid by the hourÓ model of income generation, you may discover new ways to make money.

Consider that the very, very wealthy make money through passive sources, which include not only traditional securities but also real estate appreciation. In your travels and on your ski trips perhaps you have noted prices and the recent appreciation of properties in those desirable areas.

There are no guarantees that appreciation will continue, but if you research property values over the past five years, you may find a financial solution in your desire to have a second home in a ski town. For example, in one ski town, a two-bedroom condo sold for $150,000 three years ago, $250,000 last year, and can't be bought for less than $325,000 right now. With the innovative mortgage tools available right now, you could refinance and convert some home equity to liquid funds, and then use some of that money as a down payment on another property with good potential for appreciation and rental income.

If you're ready to object on the basis of monthly payment, consider that one type of mortgage can give you a $500,000 loan for only $1850 per month (plus taxes and insurance). In a ski town in high season, that's less than one week's rental for a modest property, and if you own the property, you're getting the rent plus the appreciation.

You might not be ready to tackle the responsibilities of a ski-town property, but you could find a similar financial opportunity with investment property closer to home. While any property ownership involves some commitment of time, this is one clear path to making money outside of the hourly-pay paradigm. If you choose to take on investment property now, you'll have more knowledge from experience when you're ready to find property in a resort town.

And, if you apply the more innovative home mortgage solution to your present mortgageÑeven if you decide not to invest in other property right now--you may find you've lowered your monthly payment, increased your discretionary money, relieved some of your financial concerns, and freed yourselves to enjoy the great blessings of your life together.

Judith Green, a mortgage and real estate financial advisor, specializes in problem solving for clients with more complex or non-traditional lending and credit issues. She can be reached for comments or to request a consultation at createmoney123@netzero.com.

CARISTA'S RESPONSE:
Dear Harold and Theresa,

Both of you seem to be in a continual state of stress and I invite you to be concerned about the long-term effect of stress on your individual and family health. Two healthy parents is the best and most dependable security you can offer your four children, and yourself. In a 1998 study, Carnegie Mellon psychologist Sheldon Cohen found it's not the big incidents like a car accident or a family death that cause the most stress, but the smaller, continual conflicts that increase the odds of stress-related illness by 3-5 times.

Your challenges are very common, especially for those families with working mothers who want more time with their kids while not wanting to sacrifice the lifestyle they get from being able to work. For Theresa, your challenge is to consider new ways to balance motherhood, career, relationships and self-care.

Like a juggler, do you keep all the balls in the air at once or leave some on the ground at any given moment and focus on one or two? For example, when the ball of motherhood and the ball of career are always in the air at the same time, this can become overwhelming, and loss of life balance can be as stressful as not having financial ends meet each month. Then add any other ball, like the need for self-care or intimacy with your husband, and, well ÉÊ Life can truly feel like a three ring circus with or without the clowns!

For both of you, there are important questions to ask yourself to clarify whether you need to make some healthier choices to balance your desire for financial security and the emotional security that a balanced budget will give you each month. Sometimes sacrificing some travel for financial and overall well being will give you greater peace of mind than spending a week in Tahiti worrying about how you are going to pay for it.

Without any self-judgment, and for the purpose of self-reflection, consider these questions just to open the discussion between you, and clarify some essential values. Perhaps it is time to revise some priorities, or stay true to the ones you already have chosen with greater certainty.

1.       Once your kids are grown up, what do you sense will be more important in their childhood development -- the travel they experienced with you each year, the private education they received, or having one or two parents more available during their day?

2.       What is more supportive for overall family harmony and wellness -- to travel, go to private school, or be more free from worry and stress each month about how the bills are going to be paid?

3.       How do you each feel about the amount of time, energy and money you each give to your jobs? To the family? To your overall life balance? To life's pleasures? Is there anything to change?

There are no right or wrong answers as you continue to explore the perspective of the other Living Wealth Advisors in this column. The opportunity you have here is to question your present spending patterns, and be willing to build in some new choices and habits that give each of you and your kids greater peace of mind each day, and throughout the month. You can do it!

Best Wishes,

Carista

Carista Luminare-Rosen, Ph.D., Director of Education, Inner Securities, Inc. To contact Carista directly to share comments or for a consultation, she can be reached at Carista@Innersecurities.com or visit the website www.innersecurities.com.

STU'S RESPONSE:
Dear Theresa and Harold:

Before we look at what you don't have, let's first look at what you do have.Ê In your own wordsÉ ÒYou have a great life together.ÓÊ Congratulations!Ê That really says it all.Ê

In fact, a recent PNC Advisors survey of private wealth clients with more than $10 million in investable assets found that only 46% of the respondents indicated that the extra wealth made them happier.Ê Your Ògreat life togetherÓ is a treasure that money alone can't buy!

So, your concerns and fears about finances notwithstanding, you two are truly blessedÉ with physical health, four children and each other.Ê And it sounds like you do a wonderful job of celebrating your life through travel and skiing.

AndÉ you do have your hands full!Ê With four children, including two pre-schoolers and two from a prior marriage, and each of you working full-time, you have a lot going onÉ with a lot of responsibility.Ê It is natural that you want to provide comforts and financial security to ones you love.Ê Given that each of you can expect to live another forty years, you are correct that your dipping into savings each month for the rest of your life is unsustainable.Ê

You two need to sit down individually and really prioritize what makes your heart sing and what means most to you.Ê Then compare your lists with each other to see if your life goals and values are aligned.Ê It is likely that you will change some of your behaviors and actions to get your spending and income into line with net savings.

Harold, you may need to do some soul searching to determine if you can afford to stay in your field, which, frankly, isn't paying you adequately.Ê If you want to fulfill your heart's desire of traveling more extensively, you may want to explore a career in the travel or hotel industry.Ê That way you can be doing more of what you love and get paid for it (probably more than you are currently earning) at the same time.Ê

Theresa, we all live with uncertainty and unknown about the future.Ê Your task is to appreciate the blessings you have in your life right now, including having an ex-husband who is making a significant contribution to your monthly cash flow, so that you are more relaxed everyday.Ê With your priorities in order, you can focus your energies accordingly, and trust that doing your best will always be sufficient.

Best wishes to you both,

Stu

Stu Zimmerman, Chairman & CEO, Inner Securities. To contact Stu directly for a consultation, he can be reached at Stu@innersecurities.com or visit the website www.innersecurities.com

GREG'S RESPONSE:
Dear Theresa and Harold;

I know I am oversimplifying by saying this, but you only have two directions you can go: spend less and make more.  Of course it's obvious, but the question is how to do it?

Naturally on the Òmaking moreÓ category, you are the best people to answer that question.Ê The best way to begin working on the Òspending lessÓ part of the equation is to get a very clear handle on what you are CURRENTLY spending. Only after you know where your money is going now can you explore avenues to reduce your spending.  You can start the task with simply itemizing every dollar you have spent for the last three to six months. Keep track of cash withdrawals from the ATM and cash spent for miscellaneous items.

You can put all the figures in a spreadsheet, or better yet start using Quicken Software to track all of your expenditures.  By getting a handle on your budget, you will begin to see areas where you can reduce your spending.

I share your passion for travel!  In looking at your budgetary limitations, I would encourage you to explore ways to travel more on less.Ê Many foreign destinations will now be more expensive, considering the weaker dollar. So perhaps you can focus most of your travel domestically.Ê Instead of flying overseas, consider doing Òroad tripsÓ here at home. You get my drift, there are so many ways to have fun without spending a fortune.

With respect to your 5-year goal of having a second family home at a ski resort, what is the experience you are looking for?Ê Do you want to be able to go to a home in the mountains regularly?Ê Are you sure you want the hassle and expense of owning it?

My overall thought is that your dreams may not need to cost as much as you envision.

Good luck,

Greg

Gregory Wendt, CFP¨
www.gregwendt.com <http://www.gregwendt.com>
Premier Financial Management, LLC
Investment Portfolio Management, Comprehensive Financial Planning, Socially and Environmentally Responsible Investing

If you want to be considered as a candidate for this Living Wealthy column, go to www.innersecurities.com and click on "LIVING WEALTHY."  Fill out the "Living Wealthy Profile" and "IS Quiz" and return to wealth@innersecurities.com.

For more information on the Living Wealthy team, visit www.innersecurities.com or call 707-425-2360.

Google, Taser, Overstock: We Found Them First.

Op-Ed by Natalie Pace, CEO & Editor in Chief, NataliePace.com

Natalie Wynne Pace Founder & Ceo, NataliePace.com "spreading wealth by sharing wisdom"

Google, featured in May 2004, is up +122%
Taser, featured in January 2003, is up over 3000%
Overstock, featured in April 2003, is up 425%
Martha Stewart, featured in December 2004, is already up 40.6%

Over the past two years, NataliePace.com has found great companies that have great products, a great edge and a share price that is poised to pop.Ê NataliePace.com also looks at socially conscious investing.Ê In issue 41, we featured the sports apparel company that worked to get rid of child labor in the industry.Ê In volume 2, issue 2, we featured an airline that allows reservation clerks to work from home and has other staff-friendly policies.ÊÊ We warned you of Fannie Mae over a year ago, and were the first to let you know that Altria is the new name for the Philip Morris tobacco company.Ê

So how did the featured companies of 2004 size up in share price returns?Ê Rio Tinto rocks.Ê Sunoco gushes.Ê Advanced Micro Devices chips away.Ê Opsware wins awards but not investors (yet)ÉÊ

Companies featured January 2004 through December 2004.Ê
In 2004, we switched strategies a little bit.Ê There were a number of high-risk sectors we felt were being overhyped.Ê While we still picked the leader in the sector, we warned that we wouldn't make any investment in the sector, not in the leader or the laggard.Ê Both the auto industry and the wireless cell phone industries - two on our Avoid List--posted flat and negative gains.

Of the twelve companies that we featured favorably, four posted gains above 40%, six are trading in positive territory and five are under less than 15%.Ê You can never predict exactly when the public will catch onto a hot stock, which is why some still have a great story, though investors haven't bought in yet.ÊOpsware hasn't exploded, but will it if it beats annual earnings in April and posts its first profit?Ê (Based upon reported earnings and the trend of 100% revenue growth, Opsware looks poised to beat Wall Street.)ÊÊ

If so, Opsware wouldn't be the first company we've featured to hibernate before rewarding investors with big profits. We featured Overstock.com in April of 2003, and it was flat for a year, before hitting gains of 438% this month. Taser International has run up to 9,000% gains since we featured the company as Company of the Year in 2003, but it didn't start its rally until a year after we featured them. We believe OSI Pharmaceuticals, another company with a great, effective product and sound husbandry in the boardroom, is another company that could see that kind of growth.Ê Patience pays off!

With 2005 expected to be a flat, volatile year, gains are more likely to be made in shorter windows, quicker turnarounds and by picking and hanging onÊ to outstanding companies in the outperforming sectors.ÊÊ I've been beating the drum on the NASDAQ being still -50% off from the 2002 highs, with real earnings in select companies, while the Dow Jones Industrial Average is onlyÊ 8% off with mature companies and tepid real earnings growth.Ê Metals, petroleum, Internet technology (Google, Opsware) and biotechnology are all sectors that should benefit from increasing demand.Ê Metals and petroleum have popped, while biotechnology and technology remain extremely volatile.ÊÊ

Usually, January is NataliePace.com's favorite profit-taking month, but smart investors might hang on to see just how many investors come in with equity money before the end of April. January's historical gains were suppressed by the unease over Iraqi elections. The summer doldrums,Ê July through September, are predicted to be dismal this first year of President Bush's first term.Ê So, late October may be the best buy-in month, before the annual Santa rally, where 50% of the market gains are typically seen.

Finally, remember that taking on higher risk for potential higher reward by picking individual stocks is something you do with only a select part of your portfolio, and the older you get, the less risk you should be taking.Ê There is merit in taking a longer approach with your retirement plan, and having a broker who prunes your profits when there is a run-up in any one sector.Ê As Sally Krawcheck, the CFO of Citigroup advises:Ê ÒWhat your financial services provider should be doing is not to get you in and out of segments of the market on a rapid-fire basis, but to give you a diversified portfolio.Ê When the stock market goes up, you take some profits out.ÊÊ When fixed income goes up, tilt it that way.Ó

Companies featured December 2002 through June 2003.

Hot News on 16 Cool Stocks.

Op-Ed by Natalie Pace, CEO & Editor in Chief, NataliePace.com.Ê

Our Hot Stocks List is Smoking, with 6 Posting More than 40% Gains and 11 in Positive Territory.

(Note: These are not buy/sell recommendations.Ê Always consult a professional before buying or selling stock.)

2005 is another year that we are calling Òday-trader's paradise,Ó where the annual trend is lackluster gains (with a statistically significant potential of a negative return this year) and profits are found in short windows of market volatility.Ê It is a stock picker's market, and investors are advised to prune companies out of their portfolio that are struggling with lower margins and higher costs, especially any company that has missed pension plan pay-ins (many airlines).Ê Be sure to read the Stock Picker's article in this issue, with plenty of great advice from the Vice ChairmanÊ of Goldman Sachs and the Vice Chairman of the Milken Institute (an economic think tank).

Buying:Ê Note that, normally, January is our favorite profit-taking month--the month of the largest gains of the year--when buying should be kept to a minimum, especially in a year when the indices are not predicted to post much annual growth.Ê (The best buys are typically found in September, during the Back To School Stock Sales.)Ê However, with the elections in Iraq keeping everyone on their seat about terrorism in January, the markets performed dismally and there are a few interesting companies with attractive share prices.Ê Monitor stocks very closely between now and April.Ê Volatility is expected to be high, on M&A activity.Ê Summer doldrums could be horrible this year, and you might be glad that you took your profits before the summer holiday, freeing up cash for aÊ stock buying spree in late October.

Selling:Ê Because this is a stock picker's market and a day-trader's paradise, where stocks have proven time and again over the past twelve months to advance and pullback, this year the theme is look to take your profits in shorter windows.Ê Advanced Micro Devices share price ran up over 80% from October to December, and is a prime example of how quickly gains can fall-off.Ê (The tax hit of a short-term gain is much less prohibitive than in past years, though it is a higher percentage than if you hold the stock for more than a year.Ê Consult your accountant.)Ê There are a few sectors that should continue to perform very well this year on outstanding earnings, including metals, energy, technology and biotechnology. Pick your company well, however.ÊÊ It's your call on whether you want to take your profits early on these sectors, or keep the chips on the table.Ê Remember that profit taking allows you to buy back in at a more attractive price, should it occur.Ê Additionally, there is a whole lot of risk in the market right now, and it is almost impossible for even a great company to swim against a market downturn.Ê

Bottom Line:Ê NataliePace.com is providing you with news and important information, but you need to get with your broker and financial planner to figure out your best game plan, using personal investment strategies that are designed with your best interest and investing style in mind.Ê That will depend upon your age, your retirement plan, your risk tolerance and portfolio diversificationÉÊ

FYI: We will be taking IBM and Goldcorp off of this Hot Stock List after this issue.Ê

Full disclosure:Ê I have listed the companies that I own under the column ÒNP OWNS?ÓÊ

Please note:Ê NataliePace.com does not act or operate like a broker.Ê We are a media and information center.Ê This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making.Ê The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.Ê ALWAYS do your research and/or consult an experienced, reputable financial professional before buying or selling any stock.

Grande Latte Investing: How Saving $4 a Day Makes a Difference.

By Meri Anne Beck-Woods, Chairman & CFO, Odyssey Advisors, LLC www.OdysseyAdvisors.com

Giving up one Latte a day and saving $4.00 can add up to $1,440 per year to put toward an investment account that will return around the 8-11% historical average for stocks without taking a huge amount of risk.

Meri Anne Beck-Woods Chairman and CFO, Odyssey Advisors, LLC

Because women live on average seven years longer than men they need to save and invest more for the greater expenses a longer life creates in terms of assisted living and health care. Also women usually earn approximately $0.75 to $0.80 cents for every $1 a man will earn from a job with a large company today.  This gives them a smaller amount to work with so they ideally need to save a minimum of 12% of their income while a man should save 10% of his income if single. Think a rich husband with a high paying job will bail you out, keep in mind, one of two marriages end in divorce, the average age of widowhood in this country is 56, and 25% of widows go through their husband's death benefits in two months.

Here's the good news about investing in yourself instead of Starbuck.  Did you know that if you put aside and invested $3000 per year ($8.22 a day) from the age of 19 to the age of 27, stopped and didn't add another dime you would still have $1,528,739.35 at age 65 with a 10% return.  Wow! On the other hand if you didn't start until you were 27 and contributed the same $3000 per year until you reached age 65 your retirement savings would be $1,207,777.67, with a 10% return.  In the first example, by starting young, even though you stopped early and put in only one-fifth the dollars, your return was 17% higher than the person who started later and achieved a similar annual return but not the compounding benefit.

David Bach, author of the best selling book Smart Women Finish Rich talks about building your dream basket.  He says, and I agree, that your time frame is an important element to determine what type of investment you should utilize to achieve your dream.

If you have a short time horizon, say two years or less, put your money in the safest of instruments, money market accounts and CD's.  If your timeline is two to five years, again stay safe but branch out to bonds and bond funds.  The return won't be 10%, but the money will be there when you need it, in addition to the interest income you earned.   A time horizon of five to ten years allows you to invest in riskier instruments like stocks, stock funds, or balanced funds, with a higher return.  Since stocks usually have at least one down year in five (and three in recent times) this time frame will allow you to recoup your investment if you hit a rocky patch, and still achieve your dream.

David Bach's website www.finishrich.com has a wealth of free resources and calculators that can show you the latte effect results.  Speaking of the Latte effect, I first heard this from Natalie Pace and not David Bach when she said giving up one Latte a month and paying for this ezine was well worth the money. That is another of David's recommendations, read at least one financial publication, and two financial books (preferably his) a year.

Just by reading about investments and the market, you are educating yourself on how to manage your own money or oversee a professional money manager or financial advisor who does it for you.  Let's start at ground zero - no matter what age you are - and say you want to start investing and make the transition from jars of loose change to a low cost automatic investment plan. Something that allows you to make regular investments of small amounts of money at a relatively low commission, with online statements and confirmations and free dividend reinvestment, is a good way to go.  

You may have heard of Sharebuilder, an organization that allows you to buy stocks for $4 or less when you have an automatic deduction made from your checking or savings accounts.  With a nominal subscription fee you can have a certain number of free trades per month and an additional charge on trades over that number.  Also as you move through the various levels of subscription services,  from $12 to $20 per month there are more features you can use such as a gain and loss tracker or portfolio tax tool.  This program, unlike Ameritrade, E*Trade, Schwab or TD Waterhouse, does not have high minimum investment amounts--ranging from $1,000 to $10,000--and in-activity fees.

In addition, the advantage of a steady investment program allows you to dollar cost average (make purchases at various prices over time so you don't buy always at the high or mid point but at the low point as well). You can go to the website at www.sharebuilder.com.Ê Compare their commissions with Schwab and TD Waterhouse, which have lowered their commission charges recently.  

If you are a member of Costco, they have a relationship with Sharebuilder, which might be advantageous depending on the type of membership you have and the benefits offered. Costco actually puts $50 in a gold member's account and $75 in an executive member's account payable 4-6 weeks after they open a Sharebuilder account, so that's like free money.  They also pay a quarterly rebate on a percentage of the fees.  Go to Costco.com, select services and click on Sharebuilder to see the details.  

Think of any plan like this as being similar to the Christmas savings accounts people used to have to save money for presents for their family.  This type of account could be a present to yourself, which even appreciates and can grow to the point where you can move up the financial client food chain, where an experienced Financial Planner or Fee Based Investment Advisor can be employed to manage your estate!

Remember just because you cannot afford the maximum annual contribution to an IRA or 401K does not mean you shouldn't invest as much as you can. Think you can't get to three thousand dollars a year, think again.  If you saved only $7 per day that would be $217 a month or close to $3,000 at $2,604.  Pay yourself first, as you want to make sure that your money will outlast you and you don't outlast your money.

Information has been obtained from sources believed to be reliable however Odyssey Advisors LLC does not warrant its completeness or accuracy.  Opinions constitute our judgment as of the date of this material and are subject to change without notice.  This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.  Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Meri Anne Beck-Woods is the Chairman and CFO of Odyssey Advisors, where she manages investments for high net-worth individuals, families and institutions.Ê She can be reached at 310.568.4700.

The Importance of Counting.

By Chellie Campbell

Chellie Campbell Author of The Wealthy Spirit Photo credit: Mary Ann Halpin

ÊÒI've just always been math-challenged,Ó my client Barbara moaned.Ê ÒThe words ÔBalance Sheet' and ÔIncome Statement' scare me!Ê I don't know how or where to start doing the accounting for my business.Ó

Boy, do I understand that predicament!Ê Many of the people who come to me are in the same boat.Ê And, since I've been there myself, I help them out of frantic mode by sharing with them that accounting didn't come naturally to me, either.

I was a musical comedy actress for years. All through high school, and then as a Dramatic Art major in college, I avoided math like the plague.Ê Math class in my day had word problems that began, ÒFarmer John has six bushes of wheat and he sells them at 39 cents a bushelÉÓÊ Uh, who's Farmer John?Ê What's a bushel?Ê When's recess?Ê I just couldn't relate.Ê So I tuned out and turned off.Ê

It wasn't until the company where I was a secretary promoted me to Office Manager that I had to learn, because bookkeeping was one of my duties.Ê I told them I didn't know anything about that, but they said they'd teach me.Ê So I nervously set out to learn what I had been avoiding all these yearsÉand was surprised to discover I loved it.Ê It wasn't ÒaccountingÓÑit was Òcounting my moneyÓ.Ê Like Cuba Gooding's character in "Jerry Maguire", everyone in the company came to me and said, "Show me the money!"  They were all bringing money in or sending money out, and some of that money was mine.Ê The life of the business depended on making sure there was more money coming in than going out.Ê That's what profit is, and without profit, eventually there won't be any business, and then everyone is out of a job.

If you're working in a home-based business, you need to become proficient at counting your money.Ê Keep it simpleÑlist all your income from your business each month at the top of a piece of paper.Ê This is your Ògross.ÓÊ Then list all the expenses related to your business at the bottom.Ê When you subtract the money you spent from the money you made, you have your profit or ÒnetÓ.Ê (My accountant, Barbara Barschak, has an easy method for remembering the difference between ÒgrossÓ and ÒnetÓ:Ê ÒNetÓ is a smaller word!)Ê

Here is the reason you do all this counting:Ê Look at your ÒnetÓ and see if that's the amount of money you want to be making every month.Ê If the figure is too low, maybe you need to raise your prices, make more sales, or make bigger sales to bigger customers.Ê Or perhaps your income is fine, but you're spending too much money on new computer programs, advertising, taking clients to lunch, or promotional giveaways.Ê Debtors Anonymous has a special section called Business Owners Debtors Anonymous because the endless expenses a business owner can justify as Ògood for businessÓ or Òtax deductibleÓ can trap them in a cycle of overspending.Ê

In addition to counting your money, here are more things you need to count in order to have a profitable business:

1.      Count your ads.Ê Count how many customers you get from that networking group you belong to.Ê Does it justify the expense of the dues and dinners?Ê How many customers has that ad in the yellow pages brought you?

2.      Count your calls.Ê Count the number of sales calls you make to get business, and count the number of clients you get as a result.Ê How many calls do you have to make to get a customer?Ê (Tip:Ê if you want to double your income, double the number of sales calls you make.)

3.      Count your time.ÊÊ How many hours do you spend making the money?Ê If you're spending 3 hours to make a $10 sale, you are only making $3.33 per hour before expenses.Ê Probably that isn't enough.

4.      Count your blessings.Ê ÊBe grateful for every saleÑsomeone wants your product or service.Ê You are doing wonderful work in the world that is helping someone!

Chellie Campbell is the author of The Wealthy Spirit: Daily Affirmations for Financial Stress Reduction.  She created and teaches the Financial Stress Reduction¨ Workshops, on which her book is based, in the Los Angeles area and gives programs throughout the country.Ê Her free e-newsletter is available at www.thewealthyspirit.com.ÊÊ Permission granted for use on NataliePace.com

Greenspan at a Glance,

...and other Analysts' Quotes of the Economy

Buy Low; Sell High
ÒTo buy when others are despondently selling and sell when others are greedily buying requires the greatest fortitude and pays the greatest reward.ÓÊ Sir John Templeton

Cautious Corporations
ÒAlthough capital investment has been advancing at a reasonably good pace, it has nonetheless lagged the exceptional rise in profits and internal cash flow.Ê This is most unusual; it took a deep recession to produce the last such configuration in 1975.Ó Alan Greenspan, Chairman of the Federal Reserve Committee, 2.16.05

ÒThe lingering caution evident in capital spending decisions has also been manifest in less-aggressive hiring by businesses.Ê In contrast to the typical pattern early in previous business-cycle recoveries, firms have appeared reluctant to take on new workers and have remained focused on cost containment.Ó Alan Greenspan, Chairman of the Federal Reserve Committee, 2.16.05

Investor Education
ÒWe believe that the most potent form of investor protection is investor education.ÓÊ NASD

The Dollar
ÒA bottom for the dollar by spring, with the greenback's value edging up through the rest of the year.ÓÊÊ The Kiplinger Letter 12.30.04.Ê Vol. 81.Ê No 53

ÒHigher prices for most items, but a LOWER inflation rateÉ automakers and airlines will make price hikes stick.Ê That spells increased long-term interest ratesÊÊ roughly 5 1/2% for 10-year Treasuries by the end of 2005, up from just under 4 1/2% now.Ê The Fed ReserveÉ will inch short-term rates to 3 1/2%.Ó The Kiplinger Letter 12.30.04. ÊVol. 81.Ê No 53

Personal Savings
ÒThe sizable gains in consumer spending of recent years have been accompanied by a drop in the personal saving rate to an average of only 1 percent over 2004Ña very low figure relative to the nearly 7 percent rate averaged over the previous three decades.ÓÊ Alan Greenspan, Chairman of the Federal Reserve Committee, 2.16.05

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