Vol.2 Issue 3 March 1st, 2005
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of the Month:
investment has been advancing at a reasonably good pace, it
has nonetheless lagged the exceptional rise in profits and internal
cash flow. This is most unusual; it took a deep recession to
produce the last such configuration in 1975."
Alan Greenspan, Chairman
of the Federal Reserve Committee, 2.16.05
First Lady Maria Shriver and Queen Noor. The Enlightened
Road to Royalty. By Natalie Pace, CEO, NataliePace.com.
the Wealth. Links to Volunteer Opportunities and
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.
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.
10 Signs Inflation is Running Hotter than the Feds are
Admitting by Stefan Whitwell.
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 “passive income” solution.
Taser, Overstock: We Found Them First. Op-Ed by
Natalie Pace, CEO & Editor in Chief, NataliePace.com.
News on 16 Cool Stocks. Op-Ed by Natalie Pace,
CEO & Editor in Chief, NataliePace.com. Our Hot Stocks List
is Smoking, with 6 Posting More than 40% Gains and 11
in Positive Territory.
Latte Investing: How Saving $4 a Day Makes a Difference.
By Meri Anne Beck-Woods, Chairman & CFO, Odyssey
Advisors, LLC www.OdysseyAdvisors.com.
Importance of Counting. By Chellie Campbell.
at a Glance, and other Analysts' Quotes of the
First Lady Maria Shriver and Queen Noor.
Pace, CEO, NataliePace.com
and Maria Shriver were on-air talent working in Chicago. Queen
Noor was an anti-war activist. How did they recreate themselves,
align their paths with greatness and end up in the most influential
positions in the world? 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
Show me your friends and I'll
tell you who you are.
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. 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. (Governor Arnold Schwarzenegger was
on hand only briefly in the morning, largely to introduce his
wife.) 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 volunteer—right
there, on the spot, no excuses—and the Inaugural Minerva Awards,
honoring four outstanding women who are “architects of change.”
The keynote speakers of the day had many things in common—wealth,
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. Maria'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 move—more concerned with outcomes than head
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 “full circle” stories
were both risky and groundbreaking, most importantly for the poignant,
moments of truth that put each one on a personal path to power
came to all three of these women by calling it right at the crossroads.
Maria's position as the First Lady of California is a direct result
of her choosing Arnold Schwarzenegger as her life partner. 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. Oprah's pivotal moment came when she was interviewing
Ku Klux Klan members for “ratings.” 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.
As Maria told the story at the California Governor's Conference
for Women, it all started two decades ago when she got an on-air
job in Chicago. She didn't have any friends there. She wasn't
thrilled about the weather, but she went any way for the “experience.”
It wasn't long before Maria was sharing clothes and girl-talk with
Oprah Winfrey, who, like most of Maria's friends and family, didn't
get the “Arnold” thing.
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. In
fact, I'm putting in my bet now that Maria Shriver outpaces Hilary
Clinton as the first female President in the United States.
had no shot as a couch potato. Her father, Sergeant Shriver, founded
the Peace Corps. Her mother, Eunice Shriver (John F. Kennedy's
sister) founded the Special Olympics. If you see an injustice,
create a solution and get a million people to commit to the cause.
Now pass the mashed potatoes please.
up to me and ask me what I'm doing in Sacramento about this issue
or that issue,” Maria says, and I say, “Back at you. What are
you doing?” When the excuses fly that someone has kids, Maria
barks, “I've got four!” When someone claims that work is overwhelming,
she hits back with, “I've got five jobs!”
Maria was bread on activism, essentially born in running shoes,
so get on board or step aside and shut up. Which is likely why
Oprah, Queen Noor and Arnold Schwarzenegger are her closest friends.
Oprah makes no bones about her spirituality, saying,
“My prayer for myself daily is, ‘God, use me.'” In her inspiring
keynote address, Oprah worked the stage like a rock star prophet.
Without cheat sheets, crib sheets or teleprompter, Oprah spoke as
if divinely inspired, as if channeling, weaving seamlessly through
stories--some bawdy, most humorous--to the general theme that “Things
are not just happening willy-nilly in your life… The universe is
speaking to you right now. There is a calling for you.” As for
Oprah, now that she is aligned with her calling and has become America's
daytime dose of enlightenment, she says, “I go to work. It doesn't
feel like work. It feels like breathing. That's when you know
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. 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). Because Oprah never saw herself
as a cleaning woman, Oprah now has some good white folk working
for her. “If you think there is a glass ceiling,” Oprah counseled
the women in the audience, “You might as well build it yourself.”
As you believe, so it is.
Harsh Truth of Terrorism
Queen Noor, an
American anti-war protestor who dreamed of joining the Peace Corps
but instead married a direct descendent of the Prophet Mohammed
and became the Queen of Jordan, said of Maria, ““I am here today
for someone who is a true sister, friend and colleague.” Queen
Noor's position in the Middle East is not exactly enviable from
a Western perspective, though most of us would trade a lifetime's
worth of Krispy Kremes for her wardrobe, beauty and grace.
Noor of Jordan
seemed uncomfortable giving a distinctly Middle Eastern perspective
of 9.11 to an American audience. 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 “complex web of factions… [including] a widespread
disaffection with U.S. policy and procedure.” (And this admission
at a Republican Governor's Conference for Women!!)
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. The King Hussein Foundation is responsible
for the Jubilee Secondary School, which promotes democratic education
and fosters thinking based in “freedom of speech and responsible,
mature dialogue,” in the words of the late King Hussein. The
Noor Al Hussein Foundation focuses on empowering local communities
by providing business, marketing, technology and technical training
and access to the capital markets.
Noor chairs the first meeting of KHF Board of Trustees,
June 30, 1999.
Risk-Taking Pays Off
global peace, which is a mandate of Queen Noor, does not mean
parsing the truth. Being the Queen of Media for Oprah does not
mean ratings, at the expense of her “higher calling.” And, obviously,
coming from America's most high-profile Democratic family never
meant marrying her father's golf buddy for Maria Shriver. 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 “Her Favorite
Mistake,” and “All I Want To Do Is Have Some Fun.” First Lady
“Minerva” Maria Shriver had the perfect ten-hour shoes for kicking
it up backstage, with her powerhouse friends. 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
Wisdom from key speakers at the California Governor's Conference
for Women and Families:
it in the whisper. If you don't get it in the whisper, you get
the thump on the head. If you don't get it with the thump, you
get the brick. Then the brick wall falls on you. If you still
don't get it, the whole house caves in… So get it in the whisper
because the universe always whispers first.” Oprah
that men enjoy keeping us down. They just enjoy being up.” Linda
Ellerbee, best-selling author, television producer, journalist
“We have a
culture and tradition that oppresses women. Islam does not oppress
women; it is the culture.” Sakena Yacoobi, Founder & President,
Afghan Institute for Learning
their superiors will pluck them up, but it's the people around
you who lift you up… Everyone you touch will be a part of where
you get to.” Patty Stonesifer, Co-Chair and President of the
Bill and Melinda Gates Foundation
gets in the way of artistry.” Sheryl Crow, rock star
doesn't matter whether you are a waitress or a CEO—the question
is are you true to yourself? Are you improving the quality of
life of those you meet and work with? Are you a force for good
in a world in desperate need?” Her Majesty Queen Noor
yourself to other women. There is no woman in reality that looks
like she does in a magazine. Concentrate on being the best that
you can be.” First Lady Maria Shriver
works. It's like a boomerang: it ALWAYS comes back to you, even
if not from the person you gave it to.” Gayle King, editor, O
the success of those around you.” Anne Sweeney, Co-Chairman,
Disney Media Networks, President, Disney ABC Television Group
your sense of humor or perspective. Misbehave and have fun.”
Anne Gust, Executive Vice President, Gap
to Volunteer Opportunities and Celebrity Galas
Taylor, the Senior Vice President of Starbucks, says, “Your gift
of time is often more valuable than your gift of dollars. Volunteer
in your local community.” Devote one day to building a house
with Habitat for Humanity. Laugh your way to enlightenment, at
Co-Abode's Comedy Night in West Hollywood, California, on March
3rd. Bid 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 24th
in Beverly Hills, California. (And if $750/ticket is out of your
league, donate a teddy bear online.) Stay up-to-date about philanthropic
events (and more) in the Calendar Section of NataliePace.com.
Challenge yourself to be an architect of change. Take a day off--for
good. The links below make philanthropy just a click and a step
benefiting single mothers. Co-Abode.com
Special Olympics. SpecialOlympics.org
for Humanity, building homes for the homeless, Habitat.org
AIDS Trade Africa, promoting health and economy in Africa, Data.org
Korps, Kids helping kids. KidsKorps.org
Resources Defense Council, NRDC.org
Corps programs, seniors volunteering for service, SeniorCorps.org
Starbright, brightening the lives of seriously ill children, SLSB.org
On the Street.
the Managing Editor of the Top Performing Newsletter in an exclusive
Q&A, where he reveals his tricks and Hot Tips.
Wright Managing Editor, Investment Quality Trends Newsletter
Quality Trends (at IQTrends.com) is rated the #1 Top Performing
Newsletter for five-year risk-adjusted returns by Hulbert's Financial
Digest. 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. Wonder what their secrets
are and how you can use them to sweeten up your own portfolio
returns? Read on for an exclusive interview with Kelley Wright,
the Managing Editor. Mr. Wright was handpicked by Geraldine Weiss,
the founder and Publisher Emeritus of 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.
Congratulations on being rated the #1 newsletter (risk-adjusted)
by Hulbert's Financial Digest for having the best returns
over the last five years!
We work really hard. Geraldine Weiss (Publisher Emeritus) was
a true pioneer but she didn't get all of the kudos that she deserved.
I'm trying to do that for her now.
Weiss retired or does she still play an active role in the newsletter?
She just had
her 12th grandchild and she remarried about four years
ago. They are playing bridge and bouncing grandbabies on their
knees--having a great time—but she sees everything that goes out
the door. I have her ear if I need her. She's a great person
to get perspective from, and bounce ideas off of.
you describe your investment 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.
are great, especially with the new tax laws…
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. We do not have
a lot of turnover. Mark Hulbert (of Hulbert's Financial Digest)
tells me that he's calculated our average hold at about 1600 days.
We keep expenses low. And you have to know when to reel it in,
to listen to the market. The market will tell you when it's time
to be cautious and when it's time to be bold. When it's time
to be bold you just have to go for it.
bold or cautious right now?
some interesting divergences right now. Our methodology is that
the stocks we follow have a profile of value. 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.
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. From that perspective,
we don't see a lot of value in how we measure stocks.
you seeing more positive signs for the markets?
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. The Dow's yield is about 2.3% and climbing,
which is indicative that the individual components of the Dow
have been raising dividends. While we can't find a lot of value,
there seems to be growing value in the stock market, as measured
by the Dow. That is an interesting contrast that we are mulling
over. 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. The utilities right now are just screaming.
So some interesting dichotomies are going on.
increase the cash in your portfolio when the markets are overvalued?
When a stock
becomes overvalued (by our methodology), we liquidate it. If
there is nothing to replace it with, we keep it in cash. Gerry
says stocks are like streetcars, another one will come along.
We don't mind being long because we understand their characteristics
carrying a larger percentage of cash in your portfolio right now?
I am. I've
got close to 50% cash, although it's always a good time to buy
a high quality, undervalued stock. We view the market of stocks
as opposed to the stock market. When something fits our profile,
we don't give a tinker's diddle what's going on in the market,
we go buy it.
when the markets opened on September 17, 2001, after 9.11.01,
were are you on a buying spree?
Yes. We list
our criteria for selecting stocks at the top of page two of every
issue. If you make it past that, we know it's high quality company.
If that company reaches its historic level of undervalue, we buy
talk about how you manage risk. Your strategy is to focus on
the “serious investor who is interested in long-term portfolio
return (Capital and Dividend gain) with low downside risk.” You've
been in business since 1966. How has the portfolio weathered
some of the storms of the markets?
Black Monday, October 19, 1987, the Dow Jones Industrial Average
was down 25%. Our undervalued section was down only 12%, significantly
less than the broader market. Incidentally, we had a positive
year for 1987. In 1988, our returns were over 18% in the first
quarter. We know from experience, even if there is insanity going
on around us, if our stocks are undervalued, we buy them. We
may be early, but that's okay because our stocks pay a dividend.
We get paid to wait and that's fine.
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.
It's almost scary. They just have these turning points at specific
yield levels. It's almost like a DNA pattern. Each one has it's
own pattern. We do have an algorithm that we use, but you can
learn a lot just by looking at a chart.
look at products, competition and management at all, or do you
just run the numbers?
just number geeks. That stuff gets worked into the equation,
but it's not something we break out and look at individually.
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. Those are part and parcel of making the grade to get
into our universe in the first place.
couldn't help noticing that Merck made it into your Buy List in
the January 2005 newsletter. With all of the lawsuits Merck is
facing over Vioxx isn't that a pretty risky call for a risk-adverse
We have some
caveats. Merck was part of our 2004 Lucky 13. We loved it in
January 2004, but by April of 2004, there were four big drugs
in the pipeline that imploded. From a fundamental standpoint,
we looked at it again. They've got patent protection running
out in 2005. They don't buy other companies. They don't buy
products to fill the gaps. We called the company, and they said
everything was organic. “Don't worry, we'll be able to pay dividends,”
they said. In April of 2004, we wrote a piece and said, “Technically,
Merck meets our criteria, but you can't live in a bubble. You
can't be so contained by methods that you don't see the forest
for the trees. They will have to take on debt to cover dividends.”
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. Nothing
has happened from a fundamental standpoint; they meet the criteria.
However, in our Blue Chip information notes, you'll see a disclaimer.
still holding Merck?
15th, which is the day we publish the last issue of
the year, we sold it so fast it would make your head spin. It
is technically undervalued and meets our criteria, but not without
humongous caveats. I try to let people know that although it
looks good you might want to stay away. The yield looks phenomenal,
but when you pull the covers on it, it's like, “Oh My God, cover
that back up!!”
surprise was to find Fannie Mae in your Rising Trends list… Fannie
Mae has lost their CEO and has been the subject of Congressional
and securities scrutiny for their accounting, executive bonuses
and business practices.
Mae technically is in a rising trend, or it was before they cut
their dividend. The company met all the criteria to be a select
Blue Chip, and was more than 10% above undervalued. However,
we wrote a piece about Fannie Mae last spring. We said, “There's
enough speculation going on here that, although on the surface
it looks okay, you might want to pay attention to it. In October/November.,
we cut it to a 5 rating, and said, “There are other places to
make money. You don't need this risk.” After that, they cut
their dividend in half. It's technically overvalued at $72, and
it's now trading at $62. You probably want to get rid of it.
getting rid of it?
still in our portfolio. IQ Trends is stuck with it because it
meets our criteria.
know you're more interested in stocks than in the markets, but
what's your call for 2005? Are you bullish or bearish? You've
already said that most companies are registered as overvalued
by your criteria…
of incidentals, Geraldine Weiss calls the flutes and the woodwinds.
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. I think we'll have a recession at the end
of 2005 or the beginning of 2006 because of oil. I don't think
the oil move is over. The demand genie is out of the bottle.
From a macro perspective the oil shock has already affected the
economy a lot. 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). We hunkered down and got defensive this year.
note: Altria is the parent company of Philip Morris USA, the
sectors do you think might rally this year?
of 2003, we featured Nucor (NYSE: NUE), a steel manufacturer,
at $36. It went to $90, split, and now it's in the $50s. Nucor
unfortunately committed a sin and lost their Standard & Poor's
dividend and earnings quality rating, which dropped below B+.
We moved the stock into the Faded Blues. Faded Blues no longer
meet our criteria. China is buying everything that they can get
their hands on. The fact of the matter is that Nucor no longer
meets the criteria, so they are no longer on our radar. We're
defensive first. We protect our principal. 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.
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. That being said everyone
is long Exxon Mobil, which is overvalued by our methodology.
I wish that there were some drillers or oil tankers or ancillary
companies that met our criteria but unfortunately, they don't.
So, we're either missing a phenomenal opportunity--or our criteria
are protecting us from something.
of what's moving, where money is flowing. If that intersects
with our criteria, then I'm a happy, happy guy. If it doesn't,
then we wait for things that do meet what we do. It takes a lot
of discipline and patience to follow our method, but it's worked
for a long time.
here's another interesting call. You've got defense companies
littered all over your Sell list, while the money from this Republican
Administration continues to pour into contracts. 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.
I talk a lot about this. 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? Their price is too high relative to the
yield. They have to dramatically raise the dividend or the price
has to come down. While they are phenomenal companies, they are
not phenomenal values.
you think that skillful CEOs might escalate dividends just to
put the company on the radar of institutional investors? If
a company is having difficulty, the extra investment dollars can
shore up the cracks. Fannie Mae comes to mind…
(NYSE: C) has been on a tear raising their dividend. There is
one of two things going on. 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. They cranked their
dividend up. Usually, this means that the board feels like the
prospects are good going forward. We think that is the best vote
of confidence there is. 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.
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.
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
You can subscribe
to Investment Quality Trends online at IQTrends.com. For more
information, email info@IQTrends.com
or call 858.459.3818.
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9th, 2005 at 8:45 a.m. PST (11:45 a.m. PST). Practice
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Kelley Wright at the Las
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many other of the nation's top money minds will share their wisdom
with you. Be sure to say that NataliePace.com referred you!
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why the Vice Chairman of Goldman Sachs and the Vice Chairman of
the Milken Institute concur that in a sideways market, gains are
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. 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. Wonder which sectors they
see promise in, and why the evidence supports a sideways stock
moderator, Donald Straszheim posed provocative and challenging
questions about the biggest factors affecting the markets. 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, “It hampers the ability for consumers
to spend money on anything else.” 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.
So far, as
Alan Greenspan pointed out in his speech on February 16, 2005,
corporations are hunkered down about hiring and capital spending.
“The lingering caution evident in capital spending decisions has
also been manifest in less-aggressive hiring by businesses. 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.” 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 crises—the hostages in Iran and the energy crisis, with
gas rationing, high gas prices and long lines at the pump. Today's
environment sees the same challenges—terrorism, high gas prices
and conservative business spending.
As Maria puts
you look at the fundamental facts, earnings growth and productivity,
we'll be bumping around at this level [in the markets] for some
time.” 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. (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.)
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 term—i.e. 2005--is
the weakest for stocks, with a statistically significant chance
that there will be a negative return. Why? As Paul Woods, the
CEO of Odyssey Advisors, explains, “Investors
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.”
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. 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. “You really have to be astute
about your stock picking, about buying low and selling high,”
Ms. MacDonald said. 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.
Spending - the Home Equity ATM machine
economy since 2000 has relied upon consumer spending, but that
driver is predicted to dampen this year. As Robert Hormats notes,
“People have leveraged their homes to buy goods in Wal-Mart.
A lot of people who found it easy to service their debt, will
find it a lot harder.”
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.
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,” 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.
And few people
are postulating that oil prices will drop. Robert Hormats notes
that very little investment has gone into new supplies for oil,
while the demand in China and India are high. “A 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,” according to Governor Ben S. Bernanke of
the Federal Reserve Board, lecturing at Darton College, Albany,
Georgia, on October 21, 2004. With supply running near capacity
and growing demand, Mr. Hormats predicts that, “The average price
of oil will stay considering higher in the next few years.”
Picking in A Sideways Market
Hormats advises investors to “look for areas where there are structural
imbalances. In a lot of the commodities and energy, there has
been under investing. Prices have to stay high while that catches
up.” 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 “mini China right in the middle
of central Europe.” While Maria admits that she's not a stock
picker, she did note that in an economy where earnings are slow,
“people will want growth” companies.
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. They enumerate the risks that businesses
face, namely “poor 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.” There is one Asian hot spot,
Hong Kong, which actually carries less business risk than
the U.S., while Russia, India and China are “not financially safe,”
according to Mr. Kurtzman and Mr. Yago. 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.
sector with promising growth is the health care industry, with
so many Americans entering retirement, but that the sector is
also plagued with volatility. 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.
advises, “It is important to always have a horde of cash for emergency
funds, like medical bills.” Not only will you need more cash
for daily incidentals—with rising gas prices, health care, insurance,
and more--but also cash allows the savvy investor to capitalize
on market volatility. In a sideways market, day-traders with
cash on-hand can buy into market slides, and cash in on rallies.
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. That is, if the
respected economic advisors at the Economic Summit 2005 are right
in their predictions.
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 “Cash
10 Signs Inflation is Running Hotter than the Feds are Admitting
Whitwell, CFA, Managing Partner, Tierra Capital, L.P.
CFA Managing Partner,
Tierra Capital, L.P.
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
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. 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.)
He also rejected my college futon. Said it smelled
like rancid beer and kept poking his fingers through the burn
holes. “Did you smoke?” he asked. “Of course not,” I said. “We
did a lot of camping back in those days. Flying embers.”
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? 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. The realtor told me it was a “great
deal” for only $500,000. 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
Ski Vacation Burn-Out!
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 “passive income” solution.
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. See the end of the article for
instructions on how to receive your personal money makeover.
of this month's LIVING WEALTHY Candidate:
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
Ten Year Life Goal - Mother not working anymore and husband
Deepest Heart's Desires - To be more relaxed and trust
that everything will work out (Theresa). To travel extensively
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).
and Harold seek help, in their own words:
love to enjoy life through international travel and skiing vacations.
We highly value education for our kids. 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?
Theresa and Harold:
While I agree
with the good advice to “spend less, make more,” and to appreciate
the blessings you have, I want to encourage you to rethink your
views on how to “make” 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.
If you can think outside of the “paid by the hour” model of income
generation, you may discover new ways to make money.
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.
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
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.
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
mortgage—even 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
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 firstname.lastname@example.org.
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.
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 … 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.
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
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?
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?
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?
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!
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.
Theresa and Harold:
look at what you don't have, let's first look at what you do have.
In your own words… “You have a great life together.” Congratulations!
That really says it all.
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.
Your “great life together” is a treasure that money alone can't
So, your concerns
and fears about finances notwithstanding, you two are truly blessed…
with physical health, four children and each other. And it sounds
like you do a wonderful job of celebrating your life through travel
And… you do
have your hands full! 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 on… with a lot of responsibility. It is
natural that you want to provide comforts and financial security
to ones you love. 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.
You two need
to sit down individually and really prioritize what makes your
heart sing and what means most to you. Then compare your lists
with each other to see if your life goals and values are aligned.
It is likely that you will change some of your behaviors and actions
to get your spending and income into line with net savings.
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.
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.
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
all live with uncertainty and unknown about the future. 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. With your priorities in order, you can focus your energies
accordingly, and trust that doing your best will always be sufficient.
to you both,
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
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 “making more” category, you are the best people
to answer that question. The best way to begin working on the
“spending less” 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
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. Many foreign destinations will now be more expensive,
considering the weaker dollar. So perhaps you can focus most of
your travel domestically. Instead of flying overseas, consider
doing “road trips” 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?
Do you want to be able to go to a home in the mountains regularly?
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.
Gregory Wendt, CFP®
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 email@example.com.
For more information
on the Living Wealthy team, visit www.innersecurities.com or call 707-425-2360.
Taser, Overstock: We Found Them First.
by Natalie Pace, CEO & Editor in Chief, NataliePace.com
Wynne Pace Founder & Ceo, NataliePace.com
"spreading wealth by sharing wisdom"
in May 2004, is up +122%
featured in January 2003, is up over 3000%
featured in April 2003, is up 425%
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.
NataliePace.com also looks at socially conscious investing. In issue
41, we featured the sports apparel company that worked to get
rid of child labor in the industry. In volume 2, issue 2, we
featured an airline that allows reservation clerks to work from
home and has other staff-friendly policies. 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.
how did the featured companies of 2004 size up in share price
returns? Rio Tinto rocks. Sunoco gushes. Advanced Micro Devices
chips away. Opsware wins awards but not investors (yet)…
featured January 2004 through December 2004.
2004, we switched strategies a little bit. There were a number
of high-risk sectors we felt were being overhyped. 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.
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%. 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. Opsware hasn't
exploded, but will it if it beats annual earnings in April and
posts its first profit? (Based upon reported earnings and the
trend of 100% revenue growth, Opsware looks poised to beat Wall
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. Patience pays off!
expected to be a flat, volatile year, gains are more likely to
be made in shorter windows, quicker turnarounds and by picking
and hanging on to outstanding companies in the outperforming
sectors. 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 only 8% off with mature
companies and tepid real earnings growth. Metals, petroleum,
Internet technology (Google, Opsware) and biotechnology are all
sectors that should benefit from increasing demand. Metals and
petroleum have popped, while biotechnology and technology remain
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,
July through September, are predicted to be dismal this first
year of President Bush's first term. So, late October may be
the best buy-in month, before the annual Santa rally, where 50%
of the market gains are typically seen.
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. 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. As Sally Krawcheck, the
CFO of Citigroup advises: “What 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.
When the stock market goes up, you take some profits out. When
fixed income goes up, tilt it that way.”
See the archived edition for the complete articles. Below
Company of the Year
InfoWorld 2005 Technology of the Year Award. Revenue growth
this year is 100%. Reported annual results last year on
4.15.04. Stock rallied to $9.81 in March 2004. See issue
44 in the archives.
Wireless acquisition had everyone wanting to buy BLS. Our
sources said: Don't buy, not even into BLS, owner
of Cingular Wireless. See issue 45 in the archives.
Corp moved offices to the US to attract more US investors.
Murdoch and sons are adept leaders. First to acquire DirecTV
when many companies were going bankrupt. See issue 46 in
had 15 straight Qs of profitability in an industry that
is posting billions in losses. They are growing and adding
planes and airports. Be patient and watch for rallies.
Buy in on dips. JetBlue is growing, as other airlines implode.
See issue 46 in the archives.
Long term Health care real estate in Florida and 19
other states. Net income was up 30% this year over last.
Revenues come from rent and interest. Dividends. Not
as strong a sector as metals and oil, but stable enough.
See issue 47 in the archives.
industry. Great company. Continued growth. Google's trading
at 20X book value, quite a premium. Their growth story
will likely continue. However, with the markets expected
to grind to a halt in 2005, continued investor enthusiasm
at current prices is not guaranteed. Click on Google
Report Card for a comparison with EBay and Yahoo!
See issue 48 in the archives.
sector. Great company. If you were smart and bought in
when we featured Rio Tinto, hang on for what many people
are predicting will be a great ride for the metals sector,
based on strong demand (largely in Asia) and limited supplies.
See issue 48 in the archives.
US Patents for the 14th year in a row. Dividend
paying Blue chip. Markets are not expected to post great
gains in 2005, and the DOW is high. See issue 49 in the
is the world's #1 trusted brand. 2006 is when company's
turnaround plan is projected to kick in. Price may be more
appetizing in September, but in the meantime, you earn dividends…
See issue 49 in the archives.
(price on 2.15.05)
warn against the auto sector. Hybrids, though popular, are
a small percentage of the cars produced. Auto ind.
Typically doesn't do well with high gas and metal prices.
Metal prices have tripled. TM is great, but the sector
sucks. See issue 50 in the archives.
Forbes picked this company in August, and since then it's
had a great run. Analysts believe oil will remain high,
as will profits in petroleum companies. Industry is expected
to continue to significantly outperform the markets. See
issue 51 in the archives.
like the company, but the sector continues to be volatile.
Look to buy in on slides and cash out on run-ups. You could
have cashed out in December for +80% gains. See issue 52
in the archives.
Company of the Year. See article issue 56. Biotechnology
is one of the most promising and one of the most volatile
sectors. OSIP has a great cancer pill that is the only drug
in its sector.
1.18, LIFC reported guidance that revenue rose 52% for the
year, however this is going to be on the low end of analyst
expectations. Institutional investors increased significantly
on 2.18. Growth guidance for next year is 22-28%. They
make AlloDerm and GraftJacket, used in reconstructive surgeries.
featured December 2002 through June 2003.
still love the company. Read article in iss. 44
Insider selling. SEC investigation. Competition. Lowered
earnings forecasts = Cash in and run in our view.
to say if the new CEO & CFO will succeed in resuscitating
this soil treatment company. Lawsuits from disgruntled
investors, cancelled contacts and environmental group protests.
blue chip. Dividends. Great, but volatile sector. We've
been waiting for this price all year.
is leaving, and this guy built the co. for 17 years. That's
a sign to take profits in our book. Wait for successor
for before reinvesting.
stock became popular with the ad campaign, and earnings
are up 100%. However, OSTK has had 3 years of cash negative,
while Amazon turned positive last year. We liked the stock
at $10.50, but at $56.49, it may be time to stock up on
love the product, but earnings have been dismal this year,
with negative EPS growth rate. Better opportunities lie
News on 16 Cool Stocks.
by Natalie Pace, CEO & Editor in Chief, NataliePace.com.
Hot Stocks List is Smoking, with 6 Posting More than 40% Gains
and 11 in Positive Territory.
These are not buy/sell recommendations. Always consult a professional
before buying or selling stock.)
is another year that we are calling “day-trader's paradise,” 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. 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). Be sure to read the Stock Picker's article in this
issue, with plenty of great advice from the Vice Chairman of
Goldman Sachs and the Vice Chairman of the Milken Institute (an
economic think tank).
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. (The best buys are typically
found in September, during the Back To School Stock Sales.) 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.
Monitor stocks very closely between now and April. Volatility
is expected to be high, on M&A activity. 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 a
stock buying spree in late October.
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. 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. (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. Consult your accountant.) 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. It's your
call on whether you want to take your profits early on these sectors,
or keep the chips on the table. Remember that profit taking allows
you to buy back in at a more attractive price, should it occur.
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.
Line: 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. That will depend upon your age, your retirement plan,
your risk tolerance and portfolio diversification…
We will be taking IBM and Goldcorp off of this Hot Stock List
after this issue.
disclosure: I have listed the companies that I own under the
column “NP OWNS?”
since original recommendation
in between high and low. Growth company.
to the NASDAQ 100 index effective 12.20.04. Poised to pick
up market share from XMSR. Read Vol. 2, issue 2 article
to access the numbers game, in comparison to XM Satellite
Radio (NASDAQ: XMSR)
of volatility in the price over last 12 months.
Investors increased significantly on 2.17. YE sales were
up to $5 billion, compared with $3.52 billion last year,
with earnings of $91.16 million, over a loss of $274.5 million
in 2003. Heavy competition in Flash and with Intel.
issue 44. 1st recommended Dec. 2002.
near 52-week low.
year-end in April. Look for movement in price now through
then. Earnings are up 100% this year over last. Forrester
ranked Opsware highest for lifecycle management and second
highest product only to IBM for utility computing.
is about as low as it has gotten, since the FDA approval
2005 Company of the Year. Read iss. 56. Genetic based
“cancer pill.” 1st and only of its kind. Received
James d. Watson Helix Award on 2.24.05 for launching “breakthrough
is near 52-week low.
(Pre 2:1 split)
earnings growth expected in 2005. Strong pipeline, and
some of the most popular DNA-based cancer treatments. Partner
with OSIP on Tarceva. Great buying opp.
is at 52-week low.
an industry that is bleeding red, Jet Blue maintains the
best bottom line, with 15 consecutive quarters of profitability.
With such a hostile environment, and over three companies
in Chapter 11, airlines will implode and the survival of
the fittest game should mean JetBlue wins. Hard times may
mean volatile share price.
keeps setting new 52-week highs and profitability is expected
to continue under constrained supply/heavy demand. Hope
you bought at $69!
will remain strong, while supply is constrained and demand
is outrageous. SUN mfgs. coke (used in steel industry)
and chemical ops as well, making plastic, fiber, film and
resin. Revenue climbed 62% in the 4th quarter
and net income was up over five times from last year.
make the wait attractive until turnaround is complete.
world's #1 most trusted brand, with an exceptional turnaround
plan, which starts in 2005 & culminates in 2006. Institutional
investment up significantly 2.17.05.
make the wait attractive.
exec leadership. Media, satellite TV, strong. Advertising
revenues are up. Institutional Investment up significantly
on 2.18.05. Inc. in the US this year.
price has been in a downtrend.
is a mature company that is posting one-digit growth (or
worse, when adjust for currency) and is reducing its pension
plan. PC biz is losing money, and will be sold off. IBM
without PCs? There might be better opportunities.
keeps setting new 52-week highs and profitability is expected
to continue. Hope you bought at $90!
demand is huge; supply is limited. Copper prices are triple
this year from last. RTP has a new patent on metal processing.
Jim Jubak featured RTP in “Global
Growth Stars” article.
in mid-range. Growth company. Volatile share price.
earnings are announced in March. Wireless connectivity
for homeowners and small/med businesses. Inst. Holdings
were up significantly on 2.17.05 before 4Q results.
turnaround mode. Trading at 5 year lows. Patience is key.
you believe the low carb craze has ended doughnut eating,
don't buy the stock. Problems are many: SEC inquiry, layoffs,
frozen credit, but operations may sweeten up under the guidance
of turnaround specialist, Stephen F. Cooper, the new CEO.
Patience. Turnarounds don't happen overnight.
at 52-week highs. Hope you bought below $25.
out in Spring 2005. Her new reality TV show, with Survivor
and The Apprentice producer, Mark Burnett, is
scheduled for Fall 2005. New ABC exec, Susan Lyne, brought
you Desperate Housewives. We think she'll knock
home another hit with Martha and Mark Burnett!!
Stock in a great sector. If your stomach is lined with
steel, this could be a fun, rewarding, high-risk bet.
Contract with Phelps Dodge. GoldCorp has invested in company.
Metals sector is on a roll! This company is only trading
on the Toronto Stock Exchange's TSX.
hang onto a company that is losing its visionary?
of 17 years is leaving. He built this outstanding company.
Take a look at buying back, once the successor is in place
and has proven his worth. Gold mining company.
note: NataliePace.com does not act or operate like a broker. We
are a media and information center. This article is intended
to educate and inform individual investors, and, thus, to give
investors a competitive edge in their personal decision-making.
The publicly traded companies mentioned in this article are not
intended to be buy or sell recommendations. ALWAYS do your research
and/or consult an experienced, reputable financial professional
before buying or selling any stock.
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.
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
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.
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.
Compare their commissions with Schwab and TD Waterhouse, which
have lowered their commission charges recently.
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.
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.
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.
Beck-Woods is the Chairman and CFO of Odyssey Advisors, where
she manages investments for high net-worth individuals, families
and institutions. She can be reached at 310.568.4700.
Importance of Counting.
Campbell Author of The Wealthy Spirit Photo credit: Mary
always been math-challenged,” my client Barbara moaned. “The
words ‘Balance Sheet' and ‘Income Statement' scare me! I don't
know how or where to start doing the accounting for my business.”
Boy, do I
understand that predicament! Many of the people who come to me
are in the same boat. 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.
Math class in my day had word problems that began, “Farmer John
has six bushes of wheat and he sells them at 39 cents a bushel…”
Uh, who's Farmer John? What's a bushel? When's recess? I just
couldn't relate. So I tuned out and turned off.
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. I told them I didn't know anything about that, but they
said they'd teach me. So I nervously set out to learn what I
had been avoiding all these years…and was surprised to discover
I loved it. It wasn't “accounting”—it was “counting my money”.
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. The life of the business depended on
making sure there was more money coming in than going out. That's
what profit is, and without profit, eventually there won't be
any business, and then everyone is out of a job.
working in a home-based business, you need to become proficient
at counting your money. Keep it simple—list all your income from
your business each month at the top of a piece of paper. This
is your “gross.” Then list all the expenses related to your business
at the bottom. When you subtract the money you spent from the
money you made, you have your profit or “net”. (My accountant,
Barbara Barschak, has an easy method for remembering the difference
between “gross” and “net”: “Net” is a smaller word!)
Here is the
reason you do all this counting: Look at your “net” and see if
that's the amount of money you want to be making every month.
If the figure is too low, maybe you need to raise your prices,
make more sales, or make bigger sales to bigger customers. 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. Debtors Anonymous has a special section
called Business Owners Debtors Anonymous because the endless expenses
a business owner can justify as “good for business” or “tax deductible”
can trap them in a cycle of overspending.
to counting your money, here are more things you need to count
in order to have a profitable business:
Count your ads. Count how many customers you get from
that networking group you belong to. Does it justify the expense
of the dues and dinners? How many customers has that ad in the
yellow pages brought you?
Count your calls. Count the number of sales calls you
make to get business, and count the number of clients you get
as a result. How many calls do you have to make to get a customer?
(Tip: if you want to double your income, double the number of
sales calls you make.)
Count your time. How many hours do you spend making the
money? If you're spending 3 hours to make a $10 sale, you are
only making $3.33 per hour before expenses. Probably that isn't
Count your blessings. Be grateful for every sale—someone
wants your product or service. 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.
Her free e-newsletter is available at www.thewealthyspirit.com.
Permission granted for use on NataliePace.com
at a Glance,
other Analysts' Quotes of the Economy
buy when others are despondently selling and sell when others
are greedily buying requires the greatest fortitude and pays the
greatest reward.” Sir John Templeton
capital investment has been advancing at a reasonably good pace,
it has nonetheless lagged the exceptional rise in profits and
internal cash flow. This is most unusual; it took a deep recession
to produce the last such configuration in 1975.” Alan Greenspan,
Chairman of the Federal Reserve Committee, 2.16.05
caution evident in capital spending decisions has also been manifest
in less-aggressive hiring by businesses. 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.” Alan Greenspan, Chairman of the Federal
Reserve Committee, 2.16.05
believe that the most potent form of investor protection is investor
bottom for the dollar by spring, with the greenback's value edging
up through the rest of the year.” The Kiplinger Letter 12.30.04.
Vol. 81. No 53
major determinants of stock prices are corporate earnings and interest
rates. The stock market almost always falls before recessions.
In fact, out of the forty-one recessions from 1802 through 1990,
thirty-eight of them, or 93 percent, have been preceded or accompanied
by declines of 8 percent or more in the stock returns index.” Jeremy
Siegel, the Russell E. Palmer Professor of Finance at the University
of Pennsylvania's Wharton School, and author of Stocks for the
for most items, but a LOWER inflation rate… automakers and airlines
will make price hikes stick. That spells increased long-term
interest rates roughly 5 1/2% for 10-year Treasuries by the
end of 2005, up from just under 4 1/2% now. The Fed Reserve…
will inch short-term rates to 3 1/2%.” The Kiplinger Letter 12.30.04.
Vol. 81. No 53
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 2004—a very low figure relative to the nearly 7 percent
rate averaged over the previous three decades.” Alan Greenspan,
Chairman of the Federal Reserve Committee, 2.16.05
promised to a burgeoning retirement-age population under mandatory
entitlement programs, most notably Social Security and Medicare,
threaten to strain the resources of the working-age population in
the years ahead. Real progress on these issues will unavoidably
entail many difficult choices. But the demographics are inexorable,
and call for action before the leading edge of baby boomer retirement
becomes evidence in 2008.” Alan Greenspan, Chairman of the Federal
Reserve Committee, 2.16.05
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across all media (television, radio, print and online).
MISSION: To provide the news, information and education investors
need to make better choices and to make investing as much fun
PHILOSOPHY: Member Mosaic. Piecing together a more complete picture
of the publicly traded company, one tile at a time, by valuing
firsthand consumer experience, conducting evaluations of the executive
team and lining up the numbers of the publicly-traded company
with its competitors in a Stock Report Card.
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