Lessons From Enron:

Power is Intoxicating. 11 Ways to Avoid Getting Drunk.

by Natalie Pace, CEO & founder, NataliePace.com. Writer/commentator on Cavuto on Business, Kiplinger's Personal Finance and Forbes.com

Jeff Skilling, President and COO; Ken Lay, Chairman and CEO Joe Sutton, Vice Chairman source: 1999 Enron's Letter to Shareholders

Power. There is no doubt that Enron had power. Kenneth Lay, the founder, Chairman and CEO of Enron, was one of the most connected businessmen in the U.S. with personal ties to President George Bush and Vice President Dick Cheney. Kenneth Lay is still a free man. Martha Stewart has already served jail time. Andersen and Andersen, Enron's accounting firm, was the first casualty of the Enron scandal.

Ken Lay's power on Capitol Hill was real, but his $100 billion energy business turned out to be a fraud (allegedly). Who is ultimately to blame for Enron's (alleged) crimes will be decided in the trial (finally) in January 2006. What's more important to the average investor is that, as chief whistle-blower and former Vice President, Sherron Watkins, says, "It can happen again." Investors can swoon over a company's grand achievements, invest manically in what they think is a once-in-a-lifetime opportunity and end up bitter and broke from the whole sordid affair. And the most sobering aspect of it all is that Enron was the most highly respected company in America prior to its demise, having won Fortune's Most Innovative Company Award six years running and topping analysts' recommendations lists.

Before you abandon Wall Street altogether, know that there were plenty of warning signs that Enron was a fraud, and, as you'll see below, most of the problems were available to anyone who cared enough to inquire. As Richard Furlin, the President of Furlin Financial and the former Senior Director of Analytic Content at Standard & Poor's says, "There weren't just red flags, but banners and skyrockets. The problem was that the so-called watch dogs (auditors, stock analysts, etc.) had little motivation to expose the problems."

Greed has been a constant theme throughout humanity. You can regulate it, prosecute it, punish it, and somehow it still finds a way. You can't kill greed, but you can educate yourself to spot warning signs and successfully identify Iago from Desdemona, and Enron from Johnson and Johnson.

Below are eleven of those Enron "banners and skyrockets" that you, as an astute individual investor can watch for in other corporations. With the proliferation of the Internet, earnings reports, corporate statements, executive speeches, press releases, SEC filings and more are all online and available to the average investor. If all eleven problems listed below are present in the literature and actions of a corporation, you'd be wise to move on, no matter how hot the stock is on Wall Street or how many awards the corporation and its executives have won.

Before we dig into the warning signs. Here's a brief refresher course on Enron.

By 2000 Trading amounted to 96% of Enron's revenue, a move away from the natural gas and pipelines business that Enron was founded upon.

2000 10-K $101 billion revenue, $10.5 billion in debt, according to Enron's financial statements, which were audited by Anderson and Andersen

2000 Forbes names Enron to Platinum 400 List, for revenue in excess of $100 billion

2000 Kenneth Lay received $135 million from salary, bonus and stock options (source: Forbes)

2000-2001 Enron is on the short list of the Secretary of Defense's Corporate Fellows Program. Listed among assets were the facts that 80% of revenue ($100 billion) were from businesses new in the last five years (red flag) and the Blockbuster video-on demand service (which was a money loser for Enron)

12.28.00 $84.87/share. Enron becomes the 7^th most valuable US company.

2.2001 Jeffrey Skilling becomes Enron's CEO.

2.6.01 Enron wins Fortune's "Most Innovative Company" award for the 6^th year in a row.

3.5.01 Fortune reporter Bethany McLean writes, "The company remains largely impenetrable to outsiders. How exactly does Enron make its money? Details are hard to come byÉ Analysts don't seem to have a clue." (Red flag. A Fortune journalist writes this!)

4.17.01 Quarterly Earnings Release. Enron reports a 281% increase in quarterly revenues to $50.1 billion and 20% increase in net income to $406 million, from a year ago.

5.6.01 Mark Roberts, Off Wall Street's director and principal analyst, publishes a 26-page report for subscribers highlighting Enron's declining profitability, increasing leverage, high 33 P/E (for a trading firm, Goldman Sachs was at half), poor earnings quality and confusing/opaque financial statements.

8.14.01 Jeffrey Skilling resigns, citing "personal reasons," exercising options for $66 million (source: Enron: The Smartest Guys in the Room). Kenneth Lay becomes CEO again. (BIG RED FLAG!)

8.15.01 Sherron Watkins sends letter to Kenneth Lay warning of accounting irregularities

8.20.01 Kenneth Lay exercises Enron share options worth $519,000.

8.21.01 Kenneth Lay exercises Enron share options worth $1.48 million. (SKYROCKET)

9.26.01 Kenneth Lay states, "My personal belief is that Enron stock is an incredible bargain at current prices and we will look back a couple of years from now and see the great opportunity that we currently have."

10.11.01 Accounting firm Andersen and Andersen shreds Enron audit docs.

10.16.01 Enron reports losses of $638Million, which was run up between July and September, and announces a $1.2 billion reduction in shareholder equity. (SKYROCKET)

11.8.01 Enron revises five years of financial statements. Instead of massive profits, Enron reportedly lost $586 million. (SKYROCKET)

11.9.01 Dynegy announces takeover of Enron for $8 billion in shares.

10.29.01 - 11.12.01 Employees of Enron cannot trade their shares of Enron, while the 401-K plan is transferred to a new administrator. During that time, the share price fell from $13.81 to $9.98 (per Enron press release of 12.14.01).

11.19.01 Enron warns that it needs $690 million for debt due by the end of the month.

11.21.01 Enron trading at $5.33 share

11.27.01 $4.01/share, Market cap of less than $3 billion

11.28.01 Enron downgraded to junk bond status. Dynegy pulls out of takeover. 11.28.01 becomes the heaviest single-day trading volume in history for a firm listed on the NYSE or the NASDAQ.

11.29.01 Enron trading at $1.52 share

12.2.01 Enron files for bankruptcy.

1.10.02 Attorney General John Ashcroft and the 100-strong team of federal investigators in Houston, where Enron is based, exclude themselves from the Enron investigation.

1.16.02 Enron is delisted.

1.23.02 Kenneth Lay resigns

1.24.02 Congressional hearings begin.

1.25.02 Clifford Baxter, former vice chairman and chief strategy officer, commits suicide. Left the firm in May 2001, after clashing with Skilling over accounting practices. (Per Sherron Watkins)

1.2006 Jeffrey Skilling, Kenneth Lay and Richard Causey (former top accountant) are scheduled for trial in January. All are free on bail.

6.2006 Andrew Fastow, former CFO, will be sentenced. Fastow pleaded guilty to one charge of conspiracy to commit wire fraud and one charge of conspiracy to commit wire and securities fraud and faces a maximum of 10 years in prison. He is cooperating with the Enron Task Force. His wife, Lea, is serving a one-year term on a misdemeanor tax charge.

The Securities and Exchange Commission concluded in a report to the Senate that Enron's alleged crime was accounting fraud:

Beginning as early as 1997 and gaining momentum in 1999 and 2000, Enron is alleged to have engaged in complex and ultimately pervasive accounting fraud designed to make it look like the company had more revenue and earnings, less debt, greater operating cash flow and generally healthier financial statements than it in fact hadÉ Not only do these fraudulent practices appear to have been many and varied, but they also involved substantial -in some cases staggering - amounts of money.

The accounting irregularities listed in that report include:

1. Not fully disclosing the extent and nature of transactions the company engaged in with so-called "related parties" - primarily partnerships operated by Enron's Chief Financial Officer, Andrew Fastow, and those who worked for him ($500 million)
2. Improperly excluding the debt of certain so-called "special purpose entities" from the company's balance sheet
3. Treating certain transactions as asset sales (in order to get poorly performing assets off the company's books and/or to realize immediate revenue) without actually transferring the risks of ownership
4. Executing transactions that, in reality, were loans disguised as commodity trades and treating them as trading liabilities rather than debt and treating the cash received as cash flow from operations rather than cash flow from financing. (est. $7-8 billion in recorded liabilities)
5. Failing to disclose the full extent of contingent liabilities, ie, debt that would come due if Enron's stock price and/or credit rating dropped below a specified level
6. Misaccounting for a note received in exchange for the company's stock so that it was considered an asset and increased shareholder equity instead of (properly) reducing shareholder equity. ($1 billion)
7. Engaging in transactions that purportedly hedged the company's risk in certain investments but, not being true hedges, were designed instead to keep losses from these investments off Enron's books and left Enron open to significant financial risk. ($710 million)

Amidst Enron's impressive earnings reports and prestigious awards, prior to the blow-up, there was only one lone Enron naysayer whose voice was publicly available--Bethany McLean of Fortune magazine. John Olsen, a former analyst of Merrill Lynch, was fired when he announced that he would downgrade Enron. Off Wall Street recommended a short sell on Enron in May of 2001, but the information is marketed for a premium to money managers only, and is not publicly available.

So, how can an individual see through the awards, the presidential access, the outstanding headlines and the workplace that even whistleblower Sherron Watkins called "exciting?" Go back to the basics - what you know about mankind and what you know about business--and refuse to be gullible when someone asks you to trust blindly. Hear "trust me" as your call to conduct a full investigation.

Red Flag #1 Question Authority, Especially if it is a Suit Asking for Blind Faith:
When you think about it, not even church leaders ask you to go strictly on blind faith. When asked for evidence of a God, they can respond, "Angelina Jolie." When asked for evidence of earnings, Jeffrey Skilling called the inquisitive analyst an asshole and later said, "It's difficult to show how money goes in and out of Enron - particularly in wholesale." If the company can't explain something as fundamental as earnings in language you can understand, be suspicious.

Red Flag #2: Pigs Don't Fly.
Explosive Earnings in the World's 7^th Largest Corporation? Going from $40 billion revenue in 1999 to $100 billion in 2000 is the equivalent of watching Jabba the Hut run the 100-yard dash in less than ten seconds. By the time a company is fat enough to attract $40 billion in revenue, the market is well-established, competitors have found a way to yank some of the customers to their corner and the staff of newbies has grown substantially. Moving fast with that kind of girth is against at least 400 laws of human nature and business. Microsoft had $38.92 billion in sales last year. They are on track to beat that number, but not to double it.

Red Flag #3: Watch What They Do, Not What They Say.
Liars will say anything, but their actions reveal everything. Check the insider trader activity to see what the insiders really believe about their company." Over four key Enron executives had resigned and cashed out millions between 2000 and 2001 before Jeffrey Skilling resigned, including Lou Pai, Clifford Baxter, Kenneth Rice and Joe Sutton. Kenneth Lay sold $2 million in stock the week after Sherron Watkins warned him of "accounting irregularities." This was a month before Lay tried to reassure investors and employees that the Enron stock was an "incredible bargain." There's a handy "insider trading" click on most financial web sites that is updated daily.

Red Flag #4: When the Rats Are Jumping Overboard, It's Time to Bail
The executive exodus began in 2000, and by the time Jeffrey Skilling resigned in August of 2001, almost all of his key team had taken the money and run. Kenneth Rice, chairman of Enron Broadband, resigned in August 2001. Lou Pai, chairman of Enron Energy Services, cashed out $270 million (source: Forbes) and left in 2000. Joe Sutton cashed out $42 million and left in November of 2000. Clifford Baxter, Vice Chairman, resigned in May 2001, three months before Jeffrey Skilling. According to Skilling, Mr. Baxter was resigning to spend more time with his family, however, Sherron Watkins wrote, in her August 2001 letter to Kenneth Lay, that Mr. Baxter complained "mightily" to Skilling and "all who would listen" about the shady accounting tactics that the company was using to hide debt and inflate earnings. Additionally, Jeffrey Skilling had been grooming himself for the CEO position at Enron for years, but after just six months of his dream come true job, he announced that he was throwing in the towel for "personal reasons." "Personal reasons" and "to spend more time with family" are the executives' equivalent of "irreconcilable differences." Most of the time, there is a lot more scandal hiding behind those milk-toast mantras.

Red Flag #5: Jack of All Trades, Master of None
Kenneth Lay (CEO and Chairman), Jeffrey Skilling (COO and President) and Joe Sutton, Vice Chairman opened their letter to shareholders in 1999 with the following red flag, ""Enron is moving so fast that sometimes others have trouble defining us." Moving fast for the Concord is pretty exciting. Moving fast in a thousand opposite directions is hardly the best business model. Successful companies find something that they do well and perfect itÑfrom product to profit margins--before expanding into related industries. The Enron executives boasted that, "Enron often introduces a product before the competition even senses a market exists. Cross-commodity trading, weather derivatives, energy outsourcing and 1999's two major initiatives - EnronOnline and Enron Broadband Services - demonstrate our resourcefulness." The letter is littered with the term, "First-Mover Advantage" and largely bereft of the details on growth, infrastructure, sales, ROI and other basic elements of a successful new business proposition. In the 1999 report, Enron claimed first mover advantage in online innovation (predicting that they would outperform Intel in the 1^st year of business), in weather, in energy trading, in oil in Spain, coal in Poland, weather derivatives in France, natural gas in the U.K., power plants in Poland, Turkey, Sardinia, Croatia and Spain, wind power in California, Germany and Spain, pulp and paper and even emissions derivatives. But how can a staff of pipe and gas people outperform the experts of those diverse fields? When Enron revised five years of financial statements, on November 8, 2002, instead of massive profits, they reportedly lost $586 billion. Any skeptical investor could have picked through the Enron growth plan and passed.

Red Flag #6: Follow Your Gut Instincts
According to Enron, India's power plant, which was still under construction at the time of Enron's bankruptcy, would serve as a "cornerstone for a vast India energy network that will serve as a springboard for multiple Enron businesses, including broadband services, in the region." India is attracting a lot of attention as an outsourcing magnet for American corporations, but even today, when you think of India, poverty and orphans also come to mind. The Internet and India don't fit into the same sentence as well as computers and Japan, South Korea and Hong Kong do. One of the biggest reasons that Enron's power plant failed in India was because most of the citizens there couldn't afford to pay for the energy. (Poverty in India is still widespread.) Likewise, Enron overlooked a key detail in their vision of broadband for the region: less than five in 100 Indians used the Internet (as of 2002) and 71.9% of the population still lived in the sticks, rather than the cities (source: Milken Institute).

Additionally, though on-demand, streaming video is happening today, there wasn't the proliferation of personal bandwidth to support streaming video in the United States in 1999. Clicking into a website that had too many graphics could crash a dial-up connection during Enron's glory days, and high-speed Internet was still at a small penetration point.

Red Flag #7: Gambling Versus Core Earnings
In 2000, Enron was earning over 90% of its (inflated) earnings from hedging as opposed to the core business, which was originally pipes and natural gas. ANYONE RUNNING OVER TO HEDGE FUNDS ON BLIND FAITH THIS YEAR TAKE NOTE OF THE COLLOSAL FAILURE OF ENRON! Standard & Poor's began issuing "core earnings" per share as opposed to "as-reported" earnings per share in 2002, as a result of Enron. If the core business model is failing and the company is using financial tricks to stay alive, there are a number of major problems. One is that they are taking on higher risk than investors and employees realize, and the other is that, because the earnings look good, investors don't realize that the company might be lagging their industry. As Robert Lessin, the Vice Chairman of Jeffries & Company, Inc., notes, "Some of the greatest, most dramatic losses EVER have been hedge funds." High returns come from taking on high risk, and companies, like Enron, that gamble with shareholder dollars and employee retirement funds, are exposing everyone to fiscal fallout.

Both General Motors and Southwest Airlines are struggling with the core business model and relying more heavily on hedging and derivatives. General Motors losses are well-documented with the downgrade of their credit to junk status by two of the top three ratings agencies. Southwest, on the other hand, looks like a hero and their CEO was recently voted by Forbes.com browsers as one of the best CEOs in the U.S. , even though their core business is suffering. While the Southwest load factor (how full the planes are) was down to 69.1% in April, from 76.2% last year, Southwest blew earnings expectations out of the water, reporting net income of $76 million for the 1^st quarter 2004, over just $26 million a year ago. To Southwest's credit, the CEO is upfront and honest about Southwest's hedging activities. In the press release issued by Southwest on April 14, 2005, Gary c. Kelly, CEO, stated:

Hedging fuel was a brilliant short-term play, and Southwest's CEO Gary Kelly will prove to be a genius if hedging gets them through the tough times, while management restructures and implements a more profitable business model. Additionally, in terms of disclosure and "soul," Gary Kelly ranks high. It is unlikely, however, that the company can rely upon investments to continue saving its bottom line indefinitely. Southwest's interest expense increased by 42% in the first quarter 2005, largely due to higher debt levels and higher floating interest rates.

Red Flag #8: Bulls Make Money. Bears Make Money. Pigs Get Slaughtered.
Jim Kramer calls it, "Buy and homework." Set your sell criteria and stick to it. Kelley Wright, the managing editor of Investment Quality Trends, owned Enron in his portfolio, but sold it when it became Overvalued. "This is an example of sticking to your knitting and it protected us," according to Mr. Wright. It can be that simple. Have an investment strategy that includes profit taking when a corporation's share price looks more expensive than it's worth. Whether your strategy is based on P/E (Enron's at 33 was double that of Goldman Sachs), explosive share price growth, eight years of prosperity, insider trading, executive exodus or all of the above, any one of those sell strategies would have saved you, if you'd sold before Jeffrey Skilling resigned in August of 2001. A look deeper than headlines would have revealed enough problems to havewarranted profit-taking.

Red Flag #9: The CEO is the Soul of the Company.
Enron's own shareholder literature boasts that during the California energy crisis, the company was able to "successfully capture the high margins of Summer 1999." The California Blackouts and Brownouts of 1999 dramatically impacted the lives of Californians. Seniors were forced to pay $100 electric bills that they couldn't afford, and some were actually dying of heat exhaustion. Commuters were injured or killed in traffic accidents because the streetlights were out. Brush fires destroyed homes. Further, according to some of California's energy officials, none of the alleged shortage made any sense, and, taped documentation that was included in the Enron: The Smartest Guys in the Room movie, suggests that some Enron traders masterminded blackouts to bring in income for the company. Enron, again, in its own literature, boasted further that energy shortages were "fantastic opportunities" because "during peak times, electricity prices will soar from $17 or $22 per megawatt hour to $35, $60 or even thousands of dollars per megawatt hour. At peak prices, the profit margins are enormous." That kind of corporate greed, of capitalizing on basic human needs, was the reason that utility companies were so heavily regulated in the first place.

Red Flag #10: Placing Too Much Stock in the Man
Enron encouraged its employees to invest in Enron stock, and matched 1/2 of their 401 (k) contributions in Enron stock. Retirement plans that were worth hundreds of thousands of dollars were lost in less than three months. Diversify your holdings. Never have 100% of your investments in any one thing, and certainly not in the company that you work for. As a benchmark (starting point), protect at least a percentage equal to your age in a safe harbor (a risk-free savings account). What remains should be spread out over stocks, bonds, real estate and other investments, according to a carefully designed plan, that considers your personal strengths, as well as the input of a certified financial planner, tax accountant, attorney, etc.. Don't let fear of taxes or the greed of getting more stock from the company prevent you from understanding the basic premise that it isn't a profit until you cash it in!

Red Flag #11: Analyst Recommendations Over Common Sense
As in all walks of life, there are good analysts and bad analysts. There are analysts with a moral spine and others who are just trying to pay for their kids private school and braces. There are analysts who can be pressured to give favorable recommendations, and analysts like John Olsen, the analyst of Merrill Lynch who was fired for not recommending Enron, who place integrity first in their career. New regulations and prosecutions of past fraud aside, snakes can always find a loophole. Fortunately, they also leave tracks. Jim Moglia, the Executive Managing Director of Harris Nesbitt Corp's U.S. Debt Products Group, explains it this way:

Spotting companies that are "financially outrageous" is not as difficult as you might think. In Enron's case, there was a laundry list of aggressive financial practices, including:

1. Mark to Market accounting
2. Lots of subsidiary companies with no offices, staff or product
3. Fuzzy details on all of the financials, which were repeatedly present in the shareholder letter of 1999. The executives promised to take billions in cash and "redeploy it into businesses with faster growth and higher returns" without providing any specific details on what those businesses were.
4. Bold, unsubstantiated statements about the financial prospects of new ventures (the broadband market in India, outperforming Intel online)
   

Power. It's intoxicating. You dream of champagne, caviar and Angelina Jolie, and wake up broke, hung over, next to a criminal. If you're willing to risk everything for 15 minutes of glory, then trust the headlines and hot tips, without conducting any due diligence on your own. Have blind faith. The lessons of Enron are, however, that investors should be as picky with corporations as they are with business partners, friends and lovers. Don't be seduced. Choose carefully. Over the long term, investing in a great company with exciting products and a respectable executive team is much more rewarding than watching your future get shredded in a Wall Street scandal.

Top Ten Signs the CEO is Rolling in your Dough.

1. CEO and CFO sell millions of shares on the same day. (Moneycentral.msn, Morning Star and most financial online sites have handy little clicks to peek at insider trading activity.)
   
   
2. Quantum theory and the darkest caverns of your lover's brain are easier to understand than the company's Quarterly reports.
   
   
3. Product prices have dropped faster than the Titanic, but earnings reflect steady growth.
   
   
4. The stores are filthy and understocked, and employees shrug off your questions, but earnings reflect steady growth.
   
   
5. You could swim to Antarctica in less time than it takes for credit adjustments to appear on your monthly bill or back-ordered merchandise to be delivered.
   
   
6. Executives spotted more frequently in the society pages than in the board room.
   
   
7. CEO's biography includes a graveyard of bankruptcies.
   
   
8. Bo Bice performs at the birthday party of the CEO's wife, which happens to be held concurrently with the annual board meeting in Bermuda.
   
   
9. Shadow companies, without offices, personnel or any apparent operations, "buy" products and services the company can't sell.
   
   
10. "Greed is Good" speech from Wall Street is enlarged, framed and hanging behind CEO's desk.

If you've seen this list before, we're reprinting it in honor of Enron: The Smartest Guys in the Room, a must see film for any investor.

The Oscars of Wall Street:

Winning Awards to Gain Credibility and Free Press

by Rebecca Mettler, President of Direct Access PR

Rebecca Mettler, President of Direct Access PR

"Wow! Is that really me?" said my client Rebecca Flores, as we reviewed her award nomination. "You make me shine and sound so good." In fact, this month Rebecca Flores was the first Latina named "Young Entrepreneur of the Year" by the Small Business Administration (SBA), Santa Ana, California office, and her phone hasn't stopped ringing since with new business opportunities.

Beyond the Golden Globe and MTV awards, now it is awards season for many companies. A simple ÔGoogle' search reveals countless award opportunities available for nonprofit organizations, women in business, products and entrepreneurs/CEOs.

When it comes to positioning companies as leaders or industry experts, awards play a critical role in the public relations/marketing program of any size company. Oh! and just a little tip, many publications offer awards, meaning winners gain publicity in addition to a plaque for the office lobby.

Benefits of Awards
Awards get the attention of investors and customers that matter most to growing a business! Yes, you got it, awards can make stock price go up and gain higher levels of venture capital investment for publicly traded companies. And for small and mid-size companies being nominated can be just meaningful. Why, you ask? An award nomination puts your company into a group of other well-known leaders. That alone can up your business game!

Award Opportunity Overview
Women on their Way Award
Sponsored by Wyndam Hotels and The Wall Street Journal.
Deadline for submissions is July 1.

Deloitte's Fast 50/Fast 500
Since 1995, business and financial consulting firm, Deloitte, has been recognizing fast-growth, high-tech companies. Companies exhibiting extraordinary financial growth, significant partners and customers usually make the ranks!

Ernst & Young's Entrepreneur of the Year® Award
Ernst & Young presents its annual Entrepreneur Of The Year® award to the most successful and innovative entrepreneurial business leaders in more than 30 countries around the globe.

Amazon.com's Nonprofit Innovation Award
Specifically for nonprofit organizations, Amazon.com and The Center for Social Innovation at the Stanford Graduate School of Business have joined forces with a celebrity panel of judges to select a nonprofit organization to feature on Amazon.com's Web site for donations. The nonprofit will also get a matching grant from Amazon.com.

Other Noteworthy Awards:
Product Awards
InfoWorld's CTO Award (Natalie's Stock Pick - Opsware's (Nasdaq: OPSW) CTO Tim Howes was named in the Top 25.)

InfoWorld's 100-Now Accepting Nominations!

InfoWorld's Technology Company of the Year and Innovators

Women in Business Awards
eWomen Network Femtor Award

Los Angeles Business Journal Women Making a Difference
Deadline July 16, 2005

National Association of Women Business Owners (NAWBO) Trailblazers Award

Orange County Business Journal Women in Business

Women's Leadership Exchange COMPASS Awards

How to Research Awards

1. Review the Web sites of your industry publications.
2. Review the business associations that you are part of such as the Small Business Association, and National Association of Women Business Owners (NAWBO).
3. Google it! Researching terms like Women in Business Awards, Nonprofit Awards, can reveal countless opportunities.
4. Don't forget the locals! Local business journals, newspapers and chambers of commerce offer award opportunities.
5. Research organizations trying to capture a market. Wyndam Hotels wanted to capture the attention of more business women. To capture some market share, they began offering an award with The Wall Street Journal. Banks and credit card companies are following suit to do business with women and minority-owned businesses.

Awards can be the difference in developing a recognized brand or being just another company or executive playing in a crowded marketplace.

DO YOU WANT AN AWARD? PROVE-IT Public Relations Campaigns
Every company calls themselves a leader! Just because you say you are, doesn't mean it is true. You have to prove it! Public relations educates the public about your unique market position!

1. Industry Analyst Relationships
   Leading industry analyst firm Gartner Group's coveted Magic Quadrant sets stringent criteria and names company leaders every year. Getting into this Magic Quadrant basically guarantees business success. It is like getting coverage on Oprah. Which leads to the mediaÉ
   
   
2. Strategic Media Publicity
   Oprah. Need I say more? When Oprah covers a product or personality, it equates to instant success. The same is true with any strategic public relations campaign that allows you to develop relationships with the press.
   
   
3. Awards
   In order to be a leader, you need awards with a set of criteria and unbiased judges to name your company, its products/services or executives a success!

Make My Company #1
Consider hiring a public relations firm.
Rebecca Mettler is the President of Direct Access PR and has been successfully launching companies and their products/services for 10 years. Please contact Rebecca at info@directaccesspr.com or 866-687-6886 for Direct Access PR to develop your winning award nomination for less than $300! Gain free monthly public relations tips through her free e-newsletter sign up at www.directaccesspr.com.

Penny Stocks:

Beware of Pump and Dump Schemes

by Owen Davey

Owen Davey

I have always been a skeptic. When someone tells me that there is a great opportunity to make a lot of money if only I purchase some stock, I immediately think the opposite move is the right idea, especially when that stock is a small-cap or a micro-cap. The first thing I think is, "What do they have to gain by telling me this?" "What makes me so special that I deserve to be Ôin the know'?" Of course, usually I have deserved nothing, so there must therefore be an ulterior motive at work here.

Why do self-proclaimed gurus like to push these stocks onto the unsuspecting and less skeptical public? These companies typically have what is called a "small float." This means that the number of shares in the hands of the public is very small. It might be the case that a $5 stock only has three million outstanding shares for example. When this is the case, the volume is usually very small and the stock price movements are not interesting. However, when touts can sell the idea of buying this stock, and generate a lot of volume, the small number of shares coupled with the sudden demand can cause the stock to move very fast to the upside. When the stock gets high enough and the buying volume is still strong, the initial holders of the company then dump their shares with the price being supported by all the buyers who are now left holding the bag. At this point, there are only sellers. What went up fast must now come down fast. There is no other way. The company is going nowhere and there will be no more buyers. Period. This is called the pump and dump scam.

Before I moved into the more quantitative areas of finance with derivatives contracts and other more sophisticated things that only institutions can do, privately I used to specialize in short selling these kinds of over hyped-stocks. We found many snakes on the Internet promoting crapola so they could pump and dump into an unsuspecting public. Some of them we could prove were frauds. We would short them and then report them to the SEC. Sometimes the SEC shut the stock down and people would go to jail, but more often than not, the press release was just a misleading half truth that moved the stock significantly without anything strictly illegal going on.

Enter First Wave Technologies (NASDAQ: FSTW). During the bull market of the late 1990s, people were very open to buying just about anything. First Wave Technologies put out a press release of their own making that announced that they had secured an "Exclusive Contract with Microsoft!" Wow! Fantastic news for FSTW!! Right? Wrong.

The press release did not mention how large the contract was. They could have sold Microsoft a package of rubber bands for all we knew. A group of people I worked for put the full court press on the company. We called them incessantly looking for the secretaries and any executive that would talk. Eventually we got it out of them. The contract was for only $100K and there were no recurring fees. It was just a one-time deal of no consequence other than the fact that Microsoft was involved. This was not worthy of a press release, but First Wave Technologies put out the release anyway and misled the buying public and the grossly misinformed daytraders.

To be fair to First Wave Technologies, it was the daytraders that spread the word once they were in, and egged other daytraders to get in. The volume was about 20 million shares that day, which was about a thousand times the norm. The stock went from about $1.50 to about $9. I was fortunate enough to short a thousand shares at around $8.625. A few days later I covered at $3.50. Easy money. The stock trades at $1.70 today where it belongs.

So, the other day I was perusing an Internet message board for stocks. I came across the following tout:

"Boys and girls, it's that time again. Cambex is kicking tail and taking names. Opened May 16, 2005 at .1300 and closed at .1911. Share price is expected to ascend throughout week, possibly hitting .30 tomorrow May 17, 2005. Cambex's customers include Chase Manhattan Bank, EDS, Fidelity Investments, Lockheed Martin and Oracle. Affiliates include First Gov and IBM. Cambex provides memory for IBM, Sun Microsystems, Hewlett Packard and Intel-based servers, as well as Cisco routers."

The first thing I wondered is "Just how much memory does Fidelity Investments need?" They do not sell memory, so this was very strange. It all goes downhill from there. I felt compelled to write a response to our little guru:

"With all due respect, what makes you so good at picking? Tell us about yourself. Don't you think it is difficult to make honest money on the OTC and Pink Sheets? For one, you have commissions to defeat...and even tougher....you have to beat the large spreads (spread = ask - bid - 25% of the bid in your case!!) There is very little liquidity in these stocks, so a very small amount of buying (or selling) can jack the price up (down) really fast. Therefore, it can be very advantageous to get in early and promote the virtues of such a company, not based on its fundamentals, but based on the fact that you own it! 98% of the time, a significant move in a company like this is indicative of something illegal going on."

By the way, beware of press releases from micro-crap companies, especially if it says PR Newswire or Businesswire or some other outlet that is not usually associated with serious news. Those press releases are nothing but stock promotion. These wires will put out anything sent their way for a fee. You can send one out on a moment's notice, too, if you felt like it and you can say anything you like, though you might get sued if you are stupid. So, these companies often promote themselves with some pure garbage that is totally unsubstantiated and unverified...but suckers will eat it up because it is written down on the net - SO IT MUST BE TRUE!! Haha....it is probably not true or at best it is a very misleading half truth - like the one stock I remember that issued a big press release about their CONTRACT WITH Microsoft!!!!!!!!!

Then there are other companies that are outright frauds. The movie Boiler Room provides a depiction of what has happened in the underbelly of Wall St. all too often. See it the next time you are compelled to buy some micro-cap company.

Long term investment of well-known companies is more consistent and has always generated good returns over ANY 5 year period - even during the Great Depression! Sure, companies do promote themselves a lot on TV (like OTCBB touts and fraudsters try to do on the Net) and what not, but there is still a ton of information out there that investors can use. Also, there are big institutions trading those stocks and that is the smart money - which generally knows what it is doing. They can move those stocks, but little investors cannot. Little investors CAN move OTC stocks and Pink Sheets stocks....they can be very easily manipulated by a few posts here and there on the Internet.

There are a ton of scams and frauds out there indeed and you ought to be very careful where you put your money.

If you want to make quick bucks and invest in something that behaves like a penny stock, then go for options. The stocks that the options are written on are things you can be a lot more secure in, and you could also make a 10 bagger more easily with options than with penny stocks. Same goes for futures and what not (though options on futures may be more appropriate as your downside risk is limited)....and I say my statement is true even for someone who never heard of Black-Scholes. Note that no one should use more than 5% of her investment money for options.

Finally, it is useful to know how to identify the companies that are trading off the boards, (i.e. not listed on the three major U.S. exchanges, the New York Stock Exchange, the Nasdaq and the American Stock Exchange.). Any stock that is considered "OTC," "BB," "OTC Bulletin Board," "Over The Counter," or on the "Pink Sheets," is a micro-cap company that is not currently meeting the standards for listing on a major exchange. Being on these boards does not mean fraud, but it does mean that you should watch your shirt. These companies have far fewer reporting requirements with the SEC although they are of course subject to the same laws. It is best to avoid these companies altogether unless you know them very intimately.

Owen Davey recently completed his Mathematics PhD at UCLA. From 1998-2000 he did a lot of trading on the short side targeting suspicious companies. His current interests include pricing derivative contracts using quantitative techniques. He may be contacted at OwenDavey@hotmail.com.

NataliePace.com note: CAMBEX Corp. (CBEX) was still at $.13/share on 5.27.05.

This Father's Day: Save His Life.

Interview with the CEO and Chairman of the Prostate Cancer Foundation, Leslie Michaelson.

by Natalie Pace, CEO & Founder, NataliePace.com

Prostate cancer attacks ONE OUT OF EVERY SIX MEN, and is 33% more likely to attack men than breast cancer strikes women. If you know and love a man over 45, this interview with Leslie Michelson, the CEO of the Prostate Cancer Foundation, is a MUST READ.

Prostate cancer is the most common non-skin cancer, yet before the Prostate Cancer Foundation was founded in 1993, little was known, reported or researched to cure this deadly and demeaning disease. All that is changing now, however. New DNA-based drugs are being tested for efficacy, and Leslie Michelson, the CEO of the Prostate Cancer Foundation, is more optimistic than ever. If you love a man nearing the target risk zone of age 55, or are just interested in investing in the biotechnology companies that are pioneering cutting edge treatments, read on! And if you wish to help the Prostate Cancer Foundation find a cure (or at least a biotech cocktail), please donate generously to the Prostate Cancer Foundation's 2005 Home Run Challenge.

The Prostate Cancer Foundation's 2005 Home Run Challenge -- in conjunction with Major League Baseball and the Major League Baseball Players Association -- in 2004 raised more than $2.1 million, based on 132 home runs hit in 60 select games.  The PCF Home Run Challenge allows everyone to join in the fight against prostate cancer by raising money for research through America's favorite pastime - baseball.  With support from Major League teams, players, managers and their coaching staffs, and umpires, each home run hit in 60 selected games, played from June 8-19, will raise money to fight prostate cancer, the most commonly diagnosed non-skin cancer in America. You can participate by clicking here. 

Leslie D. Michelson, CEO and Vice Chairman of the Prostate Cancer Foundation

Natalie Pace--I'm stunned by some statistics in the Prostate Cancer Foundation literature. Prostate cancer is the most common non-skin cancer in America. 30,000 men die each year from prostate cancer. Can you put that in perspective for us? How does that statistic compare to breast cancer or AIDS?

Michelson--A woman has a one in eight chance of getting breast cancer. A man has a one in six chance of getting prostate cancer. Men are 33% more likely to get prostate cancer than a woman is to get breast cancer. And it gets worse.

With a one in six risk of being diagnosed, prostate cancer is actually very, very common, isn't it? And yet we're shocked to discover that some of the most powerful men on the planet, men like Rupert Murdoch, have faced this disease.

Michelson--What we have is a situation in which everybody knows how awful breast cancer is and how society is harnessing numerous resources to address it. Prostate cancer is every bit as bad, and nobody knows. One of the reasons is that it's just beginning to attack baby boomer men. A second reason is that prostate cancer deals with male sexual function. That's one of the few remaining taboos in society. We can talk about breasts more easily than we talk about a penis. There's a subtlety to it.

Well, we've just said penis in this article, and hopefully woken everybody up. Now, we'll just scare the heck out of them. Some of the side effects of "male hormone deprivation treatment" (MHDT), read like Man HellÑloss of libido, impotence, hot flashes, breast growth and osteoporosis.

Michelson--Absolutely. It's terrible. We believe that there are about a million men who are on Male Hormone Deprivation Treatment. It's terrible.

Are there alternative treatments?

Michelson--Not currently. When you're diagnosed with prostate cancer, you basically have four options. Surgery to remove the prostate. Two forms of radiation, internal and external, or do nothing, also known as watchful waiting. Every year, 220,000 men need to grapple with that decision. I've been in health care for 25 years now. I don't know a single circumstance where so many people have to make such a difficult choice with so little data. It's almost impossible to design and conduct a trial to determine which of those treatments is best for which people.

Why?

Michelson--It's a slow growing disease. It's very difficult to tell people that you're going to randomize themÉ that you are going to select which treatment they will attempt, regardless of their wishes. You'd need to run the trial for ten years to get your results, at which point, surgery and radiation have improved. The things you figure out become no longer relevant because they have been superceded by technology.

I hate to harp on the side effects, but when the side effects of MHDT are so undesirable, when the cure is so vile, what could prompt any man to try that?

Michelson-- Every year, about 70,000 men get MHDT as a form of treatment when their cancer returns. Because prostate cancer feeds off the male hormones, just like breast cancer feeds off of estrogen, these men get all of their male hormones taken away. In some sense we are our hormones. These men have no libido, experience impotence, and softness of tissue. A large number get osteoporosis; 10-15% get gynecomastia, development of small breasts. It's terrible. The longer you stay on MHDT, the longer you're in a post-menopausal situation. Every year 30,000 men have their cancer figure out how to grow without male hormones. In that scenario, they get chemotherapy. They die. Chemo works for maybe a couple of years, except in rare circumstances.

So, chemo is a short-term fix.

Michelson--Short-term, yes. Fix I wouldn't use. It's a short-term delayer of the inevitable.

Do you think men know that?

Michelson-- Men at large, no. Men who are on MHDT know it. Look. I'm a health care guy. I've been doing this for 25 years. I'm quantitative and statistical, and I had no idea. I'm usually not a good indicator of the masses, but if it's health care data that I don't know, that tells you how little is out there. We've done market research on this. Most people have no idea--older men, younger men, men with and without prostate cancer, women. People want to know, and they're angry that they haven't been told. Our market research puts the lie to the myth that men are uninterested in their health. There's this archetypical notion that men are insensitive to their health. This isn't true. Our market research shows that men aged 25-35 are pretty unconcerned about their health. They're healthy by and large. They don't need the regular treatment and check-ups that women need. In their 40s, however, a little switch goes off in men and they get a strong desire to get information about this disease. They feel that society is cheating them by not giving them information about their diseases. We're inundated about smoking, lung cancer, cardiovascular disease, AIDS and breast cancer. But if you're a nonsmoking man, and you're not involved in risky behavior for AIDS, the two issues that you really need to worry about most are cardiovascular disease and prostate cancer. The amount of public information available for prostate cancer is trivial compared to those other diseases.

So, a big part of your task is to get the word out.

Michelson--One of the things that we've done is to put together a relationship with TBA Chiat Day, an extraordinary ad agency. Jay Chiat passed away from prostate cancer. He was a revolutionary icon in the ad world. We approached Chiat Day about doing a pro bono campaign for us, in honor of their founder. They're working with us to get information about the disease out, sot that we can harness more of society's resources to defeat the most common non-skin cancer in America.

I lost my mother to cancer when I was a child, and I always imagined living to see the cure for cancer. It's hard to believe that, in 1993, when the Prostate Cancer Foundation was founded, research on prostate cancer barely existed. Why was prostate cancer the "silent killer" for so many years?

Michelson--I had to figure that out, in order to make the prostate movement happen. The first thing I realized was that breast cancer attacks on average, earlier. Prostate cancer attacks later in life. My thesis is that when baby boomer women were attacked by breast cancer, they responded. Baby boomers address problems that they don't like. Women took some of the energy of the women's movement and poured it into the breast cancer movement. Baby boomer men are just beginning to be attacked by the ravages of prostate cancer because it kicks in at age 55 or 60. The leading edge of baby boomers are just turning 55. As baby boomer men hit their target zone for prostate cancer, the number of new cases will go from 220,000 to 300,000 within ten years. It's a tricky area in research because the disease grows so slowly. It's inherently complex. It's quite heterogeneous. The biology is difficult to understand. There are all of those considerations. Fortunately, with the tremendously good work the Prostate Cancer Foundation-funded researchers have accomplished, there are a lot of resources being devoted to finding a cure for this disease.

Mike Milken, the founder of the Prostate Cancer Foundation, has talked about the great disparity between Research & Development and the medical care system. If there really isn't a viable treatment for prostate cancer, why are we spending $100 billion each year to treat cancer patients, and less than $3 billion trying to find a real cure? There's no company in the world that would spend that much money delivering a product that doesn't work, and frankly only desperate consumers, who have no other option, would spend that kind of money buying it. Is there hope on the horizon for medical breakthroughs against the disease?

Michelson--Yes. There has been fundamental change, and it's beginning to yield results.

Years ago, the basic approach to treating cancers was to feed the body toxins that would target rapidly dividing cells. What happened some years ago, as we began to deal with the Genome, the focus shifted to molecularly targeted or mechanism based approaches. Rather than going after all rapidly dividing cells, scientists now go into the cell and identify the defect in the DNA. They then target something that only goes to that portion of the DNA with that defect. All of the work done 50 years ago, when Watson and Crick discovered DNA, is paying off. The results are very encouraging. There has always been hope. Now there is a stronger basis for that hope.

NataliePace.com note: Rosalind Elsie Franklin photographed the DNA helix, accurately postulated that the bases were on the inside and presented her work in November 1951 to an audience which included James Watson. This lead to Watson and Crick's "discovery" and model DNA. Many scientists give Rosalind equal credit alongside Watson and Crick for one of science's greatest achievements to date.

Another positive statistic is that over the last ten years prostate cancer death rates have reduced by 30%? Was it treatment, therapy, a change in diet? What is most responsible for that significant reduction?

Michelson--It's a little hard to know all of the components that resulted in that success. I think part of it is better screening. The Prostate Specific Androgen (PSA) test is a marvelously sensitive blood test that measures levels of an enzyme produced by the prostate gland. We're able to detect cancer sooner. There have been improvements in the surgical technology, in the radiation technology, in the MHDT and in chemotherapy. I can't say that there have been any stunning breakthroughs, but there has been incremental progress in each of those areas. The cumulative effect is quite significant.

Let's talk about prevention. There is an extremely high genetic component to prostate cancer, but is there a way of lowering the odds, through diet and exercise, for example? Do green and red vegetables cut a man's risk? Should males over 50 cut out red meat altogether?

Michelson--We will be providing a Nutrition and Prostate Cancer guide. Nutritional research is complicated because there's no question that nutrition is a significant factor in determining one's health. What's not as clear is what nutritional guidance is best for which people and which disease. Diets lower in fat, higher in soy and higher in lycopene may have a protective effect for prostate cancer. Lycopene is most abundantly available in cooked tomato products. It gives the reddish color to tomatoes and watermelon. It's more biologically available if it's cooked. The data shows that men who eat more servings of cooked tomato sauce have a reduced instance of prostate cancer.

NataliePace.com note: The Nutrition and Prostate Cancer guide, authored by leading researchers in the field, will summarize the latest information and help you navigate through the information available about various nutritional approaches so that you can create a strategy that's right for you. Go to www.ProstateCancerFoundation.org to pre-register for your copy of the guide.

So real men do eat pasta! I'm assuming Italians have reduced rates of prostate cancer.

Michelson--I guess. The data is hard to come by.

In 2000, the US News & World Report reported that PSA screening finds tumors so small that 25-33% of the men who have their prostates removed, are getting rid of tumors that were potentially "insignificant" and didn't pose an immediate threat. Your statistics show that nearly every man will have prostate cancer cells in his body if he lives long enough. Should PSA screening come with a warning label?

Michelson--Any early detection program needs to be carefully designed so that you are not detecting and treating disease that would not become clinically significant. Ovarian, breast cancer, all of these tests require tuning. The use of the PSA similarly requires tuning. One needs to use the test as an early detection tool, either for people who are at high risk of the disease due to familial disposition, or being African American or being over the age of 50. The results need to be evaluated carefully to make sure that if there is going to be treatment that it will be clinically significant.

African American men? They are in a high risk group?

Michelson--Few people realize the disproportionate toll prostate cancer takes on the African American community. African Americans are 1.54 times more likely than white men to get prostate cancer, and 2.33 times more likely to die from it. Those disparities must be the result of more than the diminished access care that black men get. There has to be some genetic predisposition. Asian men have a very low rate of prostate cancer.

Could that be diet?

Michelson--There are a lot of potential explanations. One could be genetic resistance. Another could be that incidents of the disease are significantly under-reported. That could be a significant factor. For these kinds of conditions, where there are associations of one's manhood, the health care statistics don't always reflect the reality.

Let's talk a little about biotechnology. How does the Prostate Cancer Foundation work with biotechnology companies, like ImClone, Millennium, Genentech, GlaxcoSmithKline, etc., to come up with a cure?

Michelson--What we are after is the most expeditious path possible to better treatments and a cure. We provide lots of grant money to academic researchers. Although we do not provide funds to biotech or pharmaceutical companies, we work with them to help move their prostate cancer drugs along more rapidly. We'll provide assistance to anyone who has a technology that has promise for defeating prostate cancer.

You mentioned DNA-based drugs for treatment of prostate cancer. Have any of these drugsÑTarceva, Avastin, Erbituz--shown promising results in trials? I'm assuming Iressa is no longer being used.

MichelsonÑNo, unfortunately these drugs that were based on molecular targets and approved for use in other cancers have not yet been shown to work in prostate cancer. But they are still being evaluated in combination with other drugs where they might be shown to be more effective.

Leslie D. Michelson is the Chief Executive Officer and President of the Prostate Cancer Foundation, with over twenty-five years of health care experience, having served as a founder, CEO, investor, advisor, and/or director for a portfolio of entrepreneurial health care, technology and real estate companies. Mr. Michelson received his B.A. from The Johns Hopkins University and a J.D. from Yale Law School.

SPECIAL EVENT FOR NataliePace.com subscribers: Mr. Leslie D. Michelson will be featured in a Father's Day online chat on June 22nd from 8:45-9:30 a.m. PST. Who should tune (type) in? Anyone who is, or who loves, a man nearing 50. Learn what you can do NOW to reduce your risks for prostate cancer, what nutritional changes to make to your diet and which of the cutting-edge cancer treatments hold out the most promise. Early detection and prevention could save your man's life.

Watch the NataliePace.com calendar for the Prostate Cancer Foundation's eBay auction in September, where you can bid on and win some extraordinary, once-in-a-lifetime opportunities (like dates with Miss Universe). September is prostate cancer month as well as the 75th anniversary of Fortune magazine. Fortune has named PCF their non-profit partner for the year and will participate in the eBay auction with them.

Cancer Cures.

Great for Patients, Expensive for Investors - With One Exception. Article and Stock Report Card

by Natalie Pace

Natalie Pace, CEO & Founder, NataliePace.com

DNA-based cancer cures mean that cancer patients have hope for less toxic treatments, an improved quality of life and even a cure on the horizon. Given the horrible side effects of chemotherapy, investing in companies that are leading the charge to wipe out one of the most prolific killers in America feels good. The problem is that Wall Street investors have flooded their favorite biotechs with money, leaving very little room for disappointment. Expensive, even considering that this is a growing market, is the general comment for this Cancer Cure Report Card, which contains three standout companies that NataliePace.com has featured over the last few years - namely Genentech, Life Cell and OSI Pharmaceuticals. (Click on Cancer Cure to access the Report Card.) There is one biotech, however, one that consistently makes headlines, which looks tempting to buy, but should you sell the rest?

LifeCell. With one of the lowest P/Es on this stock report card, the most outstanding quarterly earnings report and increased demand for LifeCell's premiere product, AlloDerm, LifeCell remains one of our favorite of the eight biotechs featured in this article, at the original feature price of $10.25. AlloDerm is used cosmetically, for lip augmentation, but also for reconstructive surgery, like hernias and for burn victims. The senior management team appears to be strong and stable, with the CEO and SVP, Operations having worked together at LifeCell and previously at Ohmeda Inc. for over a decade. Cosmetic surgeons have good things to say about the product and the company. Look to July, when the next earnings report is released.

Dendreon. Prostate cancer patients have hopes that Provenge, Dendreon's drug, may help their own immune system beat the disease. However, investing in any drug before FDA approval, is a high risk bet for investors. Advanced stage prostate cancer patients who are interested in participating in a Provenge trial, can go to www.dendreon.com or call 866.477.6782 for more information. Also, NataliePace.com subscribers can learn more about Provenge from the Chairman of the Prostate Cancer Foundation in the NataliePace.com chat room on June 22^nd, at 8:45 a.m. PST.

Genentech. How do we love thee, let me count the waysÉ. DNA has been NataliePace.com's favorite Ôtrading around the core' stock in most of the last five years, and this year DNA has positively exploded to a 5-year high. Because this stock is so well known, with a stock symbol that is so easy to remember, each headline on good or bad news is capable of producing massive spikes and dips in the share price. Since February of this year, when NataliePace.com noted that the stock was at a bargain price of $47.69, Genentech has posted 66% returns. If you bought when NataliePace.com first featured Genentech, at under $19/share, you've made four times your return on investment.

Genentech has a great future with Avastin and Tarceva, a great pipeline, respected management and is the new blue chip of biotechnology, but it is trading at a very high price, even with the baby boomers retiring. With a P/E of 94.40 and a market capitalization that is 20 times annual sales, there is little margin for investor disappointment, and biotechnology companies are extremely volatile, given the life and death nature of cancer and drugs.

The applause for Genentech is still echoing in the halls of the American Society of Clinical Oncology's conference on May 17th, which means there may be room for more upside, even if the stock is currently valued at designer prices. However, I'd be more concerned about the summer months, beginning now, which are seasonally weak. At some point investors are going to worry about valuations, especially if oil remains high.

ImClone has an outstanding drug, Erbitux, and capable marketing partners (Bristol-Myer Squibb and Merck), but the corporation also has high debt and is missing the visionary founders (Sam and Harlan Waksal) who dipped a little too aggressively into the company cookie jar a few years back when the FDA rejected their first application for Erbitux. Sam is in jail. Harlan was let go from the company, but never charged with a crime, even though he allegedly neglected to pay taxes on the $50 million in stock he cashed out.

What is most notable about ImClone these days is that the share price tends to whipsaw from extreme to extreme, with a trading range over the last five years of 250%. The current price is off -130% from the same time last year. Money managers don't have the best things to say about Bristol-Myer Squibb's past record for accounting practices, but the most recent earnings report of ImClone looks to be one of the cleanest documents being issued on Wall Street. And the news for what Erbitux is doing for ovarian cancer patients could hardly be more impressive. At $34.48, with the lowest P/E on this report card (37.10), the price looks attractive to me.

OSI Pharmaceuticals has one of the most promising DNA-based treatments available in Tarceva, which became the lung cancer drug of choice when Iressa failed to show survival rates in tests. (This has yet to hit the mainstream front-page headlines.) OSI Pharmaceuticals, along with partners Genentech and Roche, made the product available within a week of the FDA-approval, and the first full-quarter sales were strong, at $47.6 million in the U.S., according to Genentech. Recent realignment of the executive suite and boardroom at OSI Pharmaceuticals places a question mark over the management of the company, including the abrupt departure of Dr. Nicole Onetto, Chief Medical Officer, who is "leaving to pursue other interests" without a replacement. A company spokesman declined to comment. We'll keep investigating. In the meantime, with an FDA-approval in the bag, the great performance of the drug, and a marketing partner like Genentech and Roche, OSI Pharmaceuticals should continue to benefit from increased sales of Tarceva, and it is only a matter of time for this company to start grabbing headlines. Stay tuned for updates.

The bottom line is that Genentech and LifeCell and OSI Pharmaceuticals make great staples for your biotech shopping list, whenever the share price goes on sale. If you're in a position of profit with Genentech, consider that the stock is trading at a premium, while the markets are flat, but volatile and entering the traditionally weaker season. And if you like monitoring your investments and trading in volatile windows, ImClone looks ripe right now.

Your Money Blueprint By T. Harv Eker.

Excerpts from Secrets of the Millionaire Mind

by T. Harv Eker (HarperBusiness/March 1, 2005)

"It's simple arithmetic: Your income can grow only to the extent that you do."

T. Harv Eker. Author of Secrets of the Millionaire Mind

Have you heard of people who have "blown up" financially? Have you noticed how some people have a lot of money and then lose it, or have excellent opportunities that start well but then go sour on them? Now you know the real cause. On the outside it looks like bad luck, a downturn in the economy, a lousy partner, whatever. On the inside, however, it's another matter. That's why, if you come into big money when you're not ready for it on the inside, the chances are your wealth will be short-lived and you will lose it.

The vast majority of people simply do not have the internal capacity to create and hold on to large amounts of money and the increased challenges that go with more money and success. That, my friends, is the primary reason they don't have much money.

A perfect example is lottery winners. Research has shown again and again that regardless of the size of their winnings, most lottery winners eventually return to their original financial state, the amount they can comfortably handle.

On the other hand, the opposite occurs for self-made millionaires. Notice that when self-made millionaires lose their money, they usually have it back within a relatively short time. Donald Trump is a good example. Trump was worth billions, lost everything, and then a couple of years later, got it all back again and more.

Why does this phenomenon occur? Because even though some self-made millionaires may lose their money, they never lose the most important ingredient to their success: their millionaire mind. Of course in "The Donald's" case, it's his "billionaire" mind. Do you realize Donald Trump could never be just a millionaire? If Donald Trump had a net worth of only one million dollars, how do you think he'd feel about his financial success? Most people would agree that he'd probably feel broke, like a financial failure!

That's because Donald Trump's financial "thermostat" is set for billions, not millions. Most people's financial thermostats are set for generating thousands, not millions of dollars; some people's financial thermostats are set for generating hundreds, not even thousands; and some people's financial thermostats are set for below zero. They're frickin' freezing and they don't have a clue as to why!

The reality is that most people do not reach their full potential. Most people are not successful. Research shows that 80 percent of individuals will never be financially free in the way they'd like to be, and 80 percent will never claim to be truly happy.

The reason is simple. Most people are unconscious. They are a little asleep at the wheel. They work and think on a superficial level of lifeÑbased only on what they can see. They live strictly in the visible world.

The Roots Create the Fruits
Imagine a tree. Let's suppose this tree represents the tree of life. On this tree there are fruits. In life, our fruits is called our results. So we look at the fruits (our results) and we don't like them; there aren't enough of them, they're too small, or they don't taste good.

So what do we tend to do? Most of us put even more attention and focus on the fruits, our results. But what is it that actually creates that particular fruits? It's the seeds and the roots that create the fruits.

It's what's under the ground that creates what's above the ground. It's what's invisible that creates what's visible. So what does that mean? It means that if you want to change the fruits, you will first have to change the roots. If you want to change the visible, you must first change the invisible. In my experience, what you cannot see in this world is far more powerful than anything you can see.

The Four Quadrants
One of the most important things you can ever understand is that we do not live on only one plane of existence. We live in at least four different realms at once. These four quadrants are the physical world, the mental world, the emotional world, and the spiritual world.

What most people never realize is that the physical realm is merely a "printout" of the other three.

Money is a result, wealth is a result, health is a result, illness is a result, your weight is a result. We live in a world of cause and effect.

Have you ever heard someone assert that a lack of money was a bit of a problem? Now hear this: A lack of money is never, ever, ever a problem. A lack of money is merely a symptom of what is going on underneath. The only way to change your "outer" world is to first change your "inner" world.

Whatever results you're getting, be they rich or poor, good or bad, positive or negative, always remember that your outer world is simply a reflection of your inner world. If things aren't going well in your outer life, it's because things aren't going well in your inner life. It's that simple.

What Is Your Money Blueprint and How Is It Formed?
Whether I'm appearing on radio or television, I'm well known for making the following statement: "Give me five minutes, and I can predict your financial future for the rest of your life."

How? In a short conversation, I can identify what's called your money and success "blueprint." Each of us has a personal money and success blueprint already embedded in our subconscious mind. And this blueprint, more than anything and everything else combined, will determine your financial destiny.

What is a money blueprint? As an analogy, let's consider the blueprint for a house, which is a preset plan or design for that particular home. In the same way, your money blueprint is simply your preset program or way of being in relation to money.

I want to introduce you to an extremely important formula. It determines how you create your reality and wealth. Many of the most respected teachers in the field of human potential have used this formula as a foundation for their teachings. Called the Process of Manifestation, it goes like this:

T + F + A = R
Your financial blueprint consists of a combination of your thoughts, feelings, and actions in the arena of money. [Thoughts + Feelings + Actions = Results]

So how is your money blueprint formed? The answer is simple. Your financial blueprint consists primarily of the information or "programming" you received in the past, and especially as a young child.

Who were the primary sources of this programming or conditioning? For most people, the list includes parents, siblings, friends, authority figures, teachers, religious leaders, media, and your culture, to name a few.

Every child is taught how to think about and act in relation to money. The same holds true for you, for me, for everyone. You were taught how to think and act when it comes to money. These teachings become your conditioning, which become automatic responses that run you for the rest of your life. Unless, of course, you intercede and revise your mind's money files. This is exactly what we do for thousands of people each year, on a deeper and more permanent level at the Millionaire Mind Intensive Seminar.

So What Is Your Money Blueprint Set For?
Now, it's time to answer the "million dollar" question. What is your current money and success blueprint, and what results is it subconsciously moving you toward? Are you set for success, mediocrity, or financial failure? Are you programmed for struggle or for ease around money? Are you set for working hard for your money or working in balance?

Are you conditioned for having a consistent income or an inconsistent income? You know the scoop: "First you have it, then you don't, then you have it, then you don't." It always appears as though the reasons for these drastic fluctuations come from the outside world. For instance: "I got a great-paying job but then the company folded. Then I started my own business and things were booming, but the market dried up. My next business was doing super, but then my partner left, et cetera." Don't be fooled, this is your blueprint at work.

Are you set for having a high income, a moderate income, or a low income? Did you know there are actual dollar amounts for which many of us are programmed? Are you set for earning $20,000 to $30,000 a year? $40,000 to $60,000? $75,000 to $100,000? $150,000 to $200,000? $250,000 a year or more?

Are you programmed for saving money or for spending money? Are you programmed for managing your money well or mismanaging it?

Are you set for picking winning investments or picking losers? You might wonder, "How could whether or not I make money in the stock market or in real estate be part of my blueprint?" Simple. Who picks the stock or the property? You do. Who picks when you buy it? You do. Who picks when you sell it? You do. I guess you've got something to do with the equation.

If you are a salesperson and your blueprint is set for earning $50,000 a year and somehow you make a huge sale that makes you $90,000 that year, either the sale will cancel or if you do end up with $90,000, get ready for a crummy year to follow to make up for it and bring you back to the level of your financial blueprint.

On the other hand, if you're set for earning $50,000 and you've been in a slump for a couple of years, don't worry, you'll get it all back. You have to; it's the subconscious law of the mind and money. Someone in this position would probably walk across the street, get hit by a bus, and end up with exactly $50,000 a year in insurance! It's simple: one way or another, if you're set for $50,000 a year, eventually that's what you'll get.

So again, how can you tell what your money blueprint is set for? One of the most obvious ways is to look at your results. Look at your bank account. Look at your income. Look at your net worth. Look at your success with investments. Look at your business success. Look at whether you're a spender or a saver. Look at whether you manage money well. Look at how consistent or inconsistent you are. Look at how hard you work for your money. Look at your relationships that involve money.

Is money a struggle or does it come to you easily? Do you own a business or do you have a job? Do you stick with one business or job for a long time or do you jump around a lot?

Your blueprint is like a thermostat. If the temperature in the room is seventy-two degrees, chances are good that the thermostat is set for seventy-two degrees. Now here's where it gets interesting. Is it possible that because the window is open and it is cold outside, the temperature in the room can drop to sixty-five degrees? Of course, but what will eventually happen? The thermostat will kick in and bring the temperature back to seventy-two.

Also, is it possible that because the window is open and it's hot outside, the temperature in the room can go up to seventy-seven degrees? Sure it could, but what will eventually happen? The thermostat will kick in and bring the temperature back to seventy-two.

The only way to permanently change the temperature in the room is to reset the thermostat. In the same way, the only way to change your level of financial success "permanently" is to reset your financial thermostat, otherwise known as your money blueprint.

You can try anything and everything else you want. You can develop your knowledge in business, in marketing, in sales, in negotiations, and in management. You can become an expert in real estate or the stock market. All of these are tremendous "tools." But in the end, without an inner "tool box" that is big enough and strong enough for you to create and hold on to large amounts of money, all the tools in the world will be useless to you.

Once again, it's simple arithmetic: "Your income can grow only to the extent that you do."

Fortunately or unfortunately, your personal money and success blueprint will tend to stay with you for the rest of your lifeÑunless you identify and change it. And that is exactly what we will continue to do with you at the Millionaire Mind Intensive Seminar.

T. Harv Eker BIO
SECRETS OF THE MILLIONAIRE MIND: Mastering the Inner Game of Wealth, by T. Harv Eker (HarperBusiness/March 1, 2005), is a phenomenon in the publishing industry, hitting #1 on the NY Times bestseller list, and several other national lists, its first week it went on sale.

Success guru T. Harv Eker is the president of Peak Potentials Training, one of the largest personal success seminar businesses in North America. He regularly fills convention halls with upwards of 2,000 people with his "Millionaire Mind Intensive" seminar and other programs. Harv has taught more than a quarter of a million people "to think rich to get rich" through his seminars. He is now reaching an extensive new audience with his bestselling book.

T. Harv Eker's Three-Day Millionaire Mind Intensive Seminar Free!
Right now when you purchase Secrets of the Millionaire Mind, T. Harv Eker is offering scholarships for you and a family member to attend the three-day event as his complimentary guests. That is a total value of $2,590Ñfor free!

You can purchase the book at any local or on-line bookstore. Use Reference # 191922 when you register on-line for the Millionaire Mind Intensive Seminar and receive a FREE bonus gift! To receive your 2 FREE tickets to the Millionaire Mind Intensive Seminar go to the website listed in your book.

International Investing:

Would You Believe Cairo, Not China, Had the Best Returns last year?

By Meri Anne Beck-Woods, Chairman Odyssey Advisors LLC, www.Odysseyadvisors.com

Meri Anne Beck-Woods, Chairman Odyssey Advisors LLC

Whether we like it or not, the United States is becoming a smaller and smaller portion of the global economy, especially as underdeveloped countries (like China and India) increase their competitive advantage, which could vary from lower labor costs, less regulation, a stronger currency or increasing technology. As investors, we know that diversification, including the use of foreign stocks, foreign mutual funds, or international exchange traded funds could reduce the overall risk of our portfolio and possibly provide a higher overall return. We also know that investing in international and particularly emerging market securities can produce very volatile results. So, unless you have a fair amount of money and a long-term investment horizon, you might not want to play.

While hindsight is everything, perfect knowledge would have let you know that the Cairo equity market, up over 120% in 2004, was the world's best performing equity market. Meanwhile the U.S. major market index, the S&P 500 Index, returned a meager 10.87% (with dividends).

Important to any discussion of foreign investing is the Morgan Stanley Capital International (MSCI) Europe, Australia, and Far East (EAFE) Index which represents approximately 42% of the global stock market capitalization. EAFE covers 21 advanced countries, such as Japan and the United Kingdom, and is a widely cited benchmark for foreign investing. The problem is this index closely tracks the performance of the S&P 500 stock index, so you don't get a lot of diversification.

According to MSCI, EAFE's correlation to the S&P 500 index is .84, which means it does not provide much insulation against volatility in this country. The more the indices move in tandem, the less good it will do to invest in more than one of them. This global confluence of markets reflects growing confluence of underlying global growth. The well known financial publication, The Economist, reported late last year that for the first time since at least 1980, not one of the 55 economies it tracks was in recession. The magazine cited a study by JP Morgan Chase of 30 countries, showing that, since 1971, the standard deviation in their growth rates has been diminishing.

Even more important, EAFE excludes developing countries, which are covered under a separate MSCI index. This means, the United Kingdom and Japan, with their large market capitalizations, together account for nearly half of EAFE, while the world's two most populous and dynamic economies--China and India--are not included at all. This makes the EAFE rather inadequate, both for capturing the world's growth and fully diversifying a stock portfolio. Actually, EAFE doesn't even include Canada. It is true that emerging markets only account for 5.2% of global equity market capitalization, however they include some of the fastest growing economies and a far greater proportion of population. Additionally, the MSCI Emerging Markets Index (symbol MXEM) has a lower correlation--0.77--to the S&P 500 than does the MSCI EAFE.Index (symbol MXEA), so you actually have some real diversification. Remember you can never actually invest in the actual index, only a fund that either replicates the index through sampling or exact replication.

For the average investor an international Exchange Traded Fund (ETF) is the easiest way to invest internationally. An ETF is similar to a closed-end mutual fund. ETFs trade like common stock and change in price during the trading day. For the two international indices we discussed previously, the MSCI EAFE Index and the MSCI Emerging Market Index there are two Exchange Traded Funds you can invest in today. The first, the Ishares MSCI EAFE Index Fund (amex: EFA) trades on the American Stock Exchange, paid a $2.41 dividend in 2004 and, for the one year period ended 5/20/05, was up 18.93% versus the actual MSCI EAFE Index it supposedly replicates, which was up 19.53%. The management fee and expense ratio are both .35%. The smallest unit that can be purchased is one share, which closed on May 23, 2005 at $157.09 US. In 2003, this ETF was up over 39%, while in 2002 it was down over -15%.

The Ishares MSCI Emerging Market Index ETF (amex: EEM) trades at $206.78 per share, is up over 38% for the one year period ended 5/20/05 and also paid out $2.41 in dividends in 2004. This ETF has only been available since April 7, 2003, so we don't really know how it would have performed in 2003 and 2002. The actual MSCI Emerging Market Index was up over 54% in 2003 and down only 4.96% in 2002 and presumably the ETF would have comparable performance. The expense ratio for this ETF is higher at .75% or 75 basis points due to the higher cost of doing business in less developed countries.

As an investment advisor, I would want to balance four separate risks in managing an international stock portfolio. These would be Asset allocation (stocks, bonds or cash), Currency Exposure, Sector Allocation, and Geographic Weighting. When we look at these two ETF international funds, there are several major differences. The Ishares MSCI Emerging Market ETF has the largest geographic weighting in South Korea at 18|%, with South Africa next at over 12%. In terms of sector weightings, the biggest bet is in telecommunications at over 15% with the next largest holding in banks, at over 14%.

The ishares MSCI EAFE index ETF, on the other hand has its' largest geographic weighting in the United Kingdom, at over 26%, and 22% in Japan. In terms of industry sector weightings, banks top the list at almost 19%, dropping down to almost 9% in telecommunications. Since these are equity international ETF funds, you are betting that stocks will outperform bonds.

Current Top Ten Holdings
As of May 19 2005
iShares MSCI EAFE Index Fund (EFA) & iShares MSCI Emerging Markets Index Fund (EEM)

ishares MSCI EAFE Index Fund
Top 10 Holdings 2004 Return
BP 22%
HSBC Holdings 12%
Vodafone Group 10%
GlaxoSmithKline 5%
Total SA 23%
Royal Dutch Petroleum 10%
Novartis AG 12%
Nestle SA 12%
Toyota Motor 20%
Royal bank of Scotland 7%
Source: Bloomberg LP

ishares MSCI Emerging Markets
Top 10 Holdings 2004 Return
Samsung Electronics 3%
Kookmin Bank 2%
POSCO 32%
Taiwan Semiconductor -8%
AU Optronics 15%
Korea Electric Power 28%
LUKOIL 17%
Siliconware Precision -15%
America Movil SA 86%
Chung Hwa Telecom -15%

Additional Research on ishares top ten holdings provided by Barrett Thornbury, Equity Research Associate Odyssey Advisors www.odysseyadvisors.com

While the range in 2004 returns for the EAFE fund is from +5% to +23%, the Emerging Markets range of returns is much wider at -15% to + 86%, which is indicative of the increased volatility in the Emerging Markets fund.

Year to date returns for the EAFE fund are -2.78%, however the Emerging Markets fund has a year to date return of +2.11%. This emphasizes the differences in funds that either closely track or differ greatly from U.S. markets. The S&P 500 is down -4% year to date.

Another difference between these two exchange traded funds is that the Emerging Markets fund has higher positions in individual investments. According to Bloomberg, LP, the Emerging Markets fund currently has a 7.4% position in its' largest holding, Samsung Electronics Co., while the EAFE fund's largest holding is BP PLC, at only 2.6% of the fund.

Actually the global bond market is much bigger than the global stock market and many foreign bonds are achieving investment grade status for their government issued securities. Western Europe dominates this market at $1,732.4 billion in debt, with U.S. and Canada a paltry $589.2 billion. Hopefully this will teach you something about the subtle differences in international investing. Bonds will be the subject of a future article.

Meri Anne Beck-Woods is Chairman and CFO of Odyssey Advisors LLC, an independent investment advisory firm specializing in equities and fixed income. Meri Anne is a co-author of the book Inspiration to Realization, where her chapter "How the Millionaire Next Door Can Be You" speaks to everyone's ability to become a millionaire. She can be contacted at mabwoods@odysseyadvisors.com.

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.

Copyright © 2005 by Odyssey Advisors LLC

Picking Breakout Companies :

Subscriber Q&A with NataliePace.com CEO & founder, Natalie Wynne Pace, ranked 3^rd in Stock Pickers by TipsTraders.com. From the NataliePace.com WWW Wed. chat series, May 4, 2005.

Natalie Wynne Pace, ranked 3rd in Stock Pickers by TipsTraders.com.

What's the topic for today?
Today we'll focus on picking breakout companies. NataliePace.com has had incredible success picking breakouts before the share price pops. We picked Google (doubled), Genentech (+200%), Overstock (+300%) and Taser (up to 9000% gains). Most recently, LifeCell popped when they reported that earnings had doubledÉ

What search criteria do you recommend for finding good, long term, profitable trades?
There are two questions here, what's my strategy and the idea of long term, profitable trades. I'll take both, in that order.

My strategy is simple, but the mastery is in the details. 1) Start with things you know and understand. 2) Make sure the company is in position to lead the sector on the top and bottom line. 3) Buy low; sell high.

With regard to long term, profitable trades, the message given over the last nine months, from Elizabeth MacDonald at Forbes to Robert Hormats, Vice Chairman, Goldman Sachs International, is that this is a Stock Picker's Market, not a Buy and Hold market. With the challenges that the American economy is facing - rising interest rates, rising inflation, cooling off housing market, high budget and trade deficits - sophisticated investors will look to prune the weeds out of their portfolios and take profits in shorter windows. If you'd like to review which sectors are in the best position over the next few months, please review the archives. We've been discussing this in our ezines for over a year.

Is leading the sector better than leading the industry group?
That's where it gets a bit more complicated. I recommend that you read last month's Metals Manufacturing Report Card article. As you can see there, first you identify the positive trend in the industry, and then you must make sure that the company is on the right side of the supply/demand food chain. In the metals industry, certainly, the mining companies are in a better position than the manufacturers and the auto parts companies, who are on the losing end of the high prices of raw materials.

Are there other considerations?
The upside potential of the industry in general is extremely important, as is the direction of the market. For instance, Jet Blue leads the airline industry with the highest load factors, 16 quarters of profitability, new jets, low overhead, but fuel prices have killed the industry. Also, as we saw in 2000 and in Japan during the 1990s, if the direction of the market is south, it is very rare for even great companies to swim against the tide and post share price gains for investors. That is why shorter windows of profit-taking are important during sideways markets, which many analysts are predicting for this year.

I see the drugs/biotech industry gaining momentum. What is the upside potential of LifeCell?
Please read our the Cancer Cures report card in this issue, which focuses on the upside potential of Life Cell, as well as other great biotechnology companies. Let's put it this way. LifeCell just smashed earnings expectations, announcing 7 cents per share, with expectations at 4 cents per share. LifeCell's 1^st quarter profit just doubled, and their projections for annual sales and earnings are well above current analyst targets, according to the Associated Press. That's a pretty good indication of the popularity of their products. When featured in December, share price was $10.25. It is currently trading at $12.69. Dr. Steven Carp, a board-certified plastic surgeon, says this about LifeCell's product, "Alloderm is a nice product, used not only for lip augmentation, but also for reconstruction. The reconstructive uses include nasal, face, abdominal hernias, etc." Burn victims are also helped with Alloderm.

Is there another biotech that you like?
OSI Pharmaceuticals was featured as our 2005 Company of the Year. The last earnings report showed that Tarceva is exploding in sales as of 1Q 2005, the first full quarter following the FDA approval. Genentech, OSIP's partner on Tarceva, reported that 1Q sales were $47.6 million. Experts believe that Tarceva could achieve $100 million sales per quarter, now that doctors aren't prescribing Iressa. Iressa was found not to improve lung cancer survivability, and, overnight, doctors began prescribing Tarceva in its place. Tarceva showed 42% survivability in trials.

From a trading perspective, Rio Tinto doesn't look good yet.
That's where the buy low; sell high part of the equation is essential. RTP has posted great gains since we featured them in May of 2004 (archived ezine #48), when the share price was just $89.60. What you pay and when you buy/sell is just as important as what you buy.

So you're thinking that the support on OSIP at $40 will hold. If it breaks through $50, the upside looks good.
I'm a reporter, not a market timer or analyst. I feature great companies with great products who are run by top-tier, reputable managers when the share price is low. Those fundamentals are the key, in my view. Of course, we also look at market trends as well. By the way, OSIP has already broken $50. Earlier this year, it was trading above $85.13.

So what happened?
Biotech and tech went out of favor (temporarily) with the major movers in the marketplaceÑthe hedge fund managers. Additionally, the information on Tarceva's sales, and Iressa's fallout, has not yet made national headlines. In my view, waiting for price ceilings to shatter means that you are chasing money. NataliePace.com has had tremendous success dancing to our own tune - again - featuring great companies with great products run by talented managers, when the price is right.

Do you look at stocks from a technical perspective? Apple has great growth, great improvement of existing products and explosive earnings. Their share price just tanked.
I love Apple products, but all of their topside growth has to be compared alongside the P/E, share price, operating percentages, how much is shared with outside sources (like Apple Records, note their current law suit), market capitalization and which way the market is headed in general. In my view, you should never buy retail - which tends to occur in the first half of the year. As we head into the summer doldrums, I wouldn't be on a buying spree, unless I knew that 2Q was going to be a great quarter for a company. OSI Pharmaceuticals might fall into that category. Cancer drugs are not seasonal purchases. Apple's 2^nd quarter sales are unlikely to be as impressive as they are during the last quarter of the year, when year-end spending by companies and consumers is at its hottest. We'll probably be featuring Apple in an upcoming Stock Report Card over the summer. It's always a good idea to line up the numbers of a company and its competitors, when you see a market exploding, like iPOD and iMUSIC have. Not looking at Apple alongside Napster, RealNetworks and Yahoo would be a mistake.

Taser was a great investment. How do you use technicals to get out at the right time?
In our January 15^th mid-month news update (subscriber's only), we featured updated news on Taser, which was almost a full month before Taser was due to report year-end earnings (on 2.8.05). There were a lot of red flags that Taser was not going to meet earnings targets, and when earnings targets are missed, especially in a company that is trading with a high P/E, investors can get nervous and start a selling spree. Some of the issues of concern were an SEC inquiry into the safety of the gun, lots of negative PR from organizations that were opposed to testing on pigs and challenging the safety claims of Taser, slower sales on increased competition and insider executives bailing out (selling their stock) to the tune of $124 million. Insider selling was more than DOUBLE what Taser's annual sales were (at $59.20 million). Our view is that all investments are like a mosaic. The more tiles of information that you turn over, the more complete the picture is. Incidentally, the share price of Taser fell from the high (at $33.45) to the low ($7.33) after our news update. It is currently trading at $11.44 (as of 5.31.05).

What about ETFs (Exchange Traded Funds)? Are they the way to go right now?
Suze Orman recommends ETFs saying, "If you rely solely on mutual funds, you are woefully out of touch. And you could be losing a lot of money." David Fried, editor of the Buyback Letter, suggests Index Funds and Stock Newsletters as an alternative to mutual funds. Exchange traded and index funds are getting a lot of publicity as alternatives for people who don't want to watch their investments very much, but have been disappointed with the performance or the fees of their mutual funds. If you have a choice, there are a lot of reasons to choose ETFs and Index Funds over mutual funds. (Some people do not have that option, but you should at least ask your broker or your Human Resources manager if your plan allows you to self-direct your investments, ie. the choice of ETFs, Index Funds or even personally selecting your own stocks.) Another option that people should consider is creating their own basket of select stocks, instead of a mutual fund. With the help of top-performing stock newsletters, you don't have to be an expert to achieve gains that are well-above the norm.

If you have your risk tolerance, portfolio diversification strategies in place and are a fairly sophisticated investor, the returns you can generate by investing in select stocks can be far more rewarding that ETFs or Index Funds. For instance, following the stock picks from the Investment Quality Trends (IQTrends.com) or the Buyback Letter (BuybackLetter.com) stock newsletters means that over the last five years, you have outperformed the Wilshire 5000 by 15% or more EACH YEAR. These stock newsletters do the research based on strict guidelines, and give their subscribers buy and sell strategies that are easy to follow and extremely effective.

Additionally, many of the companies featured each month in the NataliePace.com ezine have performed spectacularly. In fact, TipsTraders.com ranks me 3^rd among stock pickers with 77% annualized gains. A subscription to NataliePace.com is just $54.00 per year right now. That's less than the price of one grande latte per month.

NataliePace.com is currently offering an incredible deal for subscribers -- TWO years for the PRICE OF ONE. Subscribe to NataliePace.com now (before 6.15.05) and receive 24 months of access to Natalie Pace and her incredible team of writers, many of whom are ranked as the top stock pickers in the US. Once we receive notice of your subscription, we will add an extra year to your subscription and notify you by email. Subscribe online by clicking on the blue-highlighted NataliePace.com.

Go to TipsTraders.com, and enter in Natalie Pace in the Search Box, for an independent record of the performance of the companies featured by Natalie in the NataliePace.com ezine (currently ranked #3 with 77% returns EACH YEAR).

Please feel free to pass this incredible deal onto your friends. We'll add three additional months to your subscription for each friend who signs up! Just send us a note with your friend's name(s), and once we verify her subscription, we'll add 3 months to yours. That easy!

We pride ourselves on personalized service and your privacy. We don't share our member's contact information with other organizations. If you have any questions or comments, please feel free to contact us at 866.476.7442 or at info@NataliePace.com. Thanks in advance, as your subscription enables us to expand our services and mission to spread wealth by sharing wisdom. .

Hot News on 17 Stocks:

13 Winners and 5 Waiting in the Wings! Banking on Breakout Companies Works.

by Natalie Pace, ranked 3^rd in Stock Pickers by TipsTraders.com.

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

Statistics, Market Trends and Education:

1. NASDAQ vs. DOW. Signs of divergence. Intel, Yahoo! And now Dell have shown impressive top line gains this quarter, resulting in the NASDAQ (+2%) outperforming the DOW (-1.8%) by almost 4% over the past year. Since January 2004, the NASDAQ has gained 22%, while the Dow Jones Industrial Average is flat. As you can see from the chart below, the Dow Jones Industrial Average is near its historical high range, while the NASDAQ is still over 50% beneath the highs of 2000. Additionally, as we've been noting all year, the most impressive growth in earnings is being concentrated in a few outperforming sectors, namely energy, metals, biotechnology and technology.



2. P/Es are high. Risk is high. Inflation is high. Interest Rates are Rising. As Elizabeth MacDonald of Forbes warns, "In these so-called quieter markets, that's when disciplined stock selection pays off. It's all about valuation, fundamentals, risk and momentum, P/Es, profit margin and return of equity. Play it safe for now."
3. Ranked in the Top Stock Picks in the US. TipsTraders.com has ranked me 3^rd among the stock pickers in the U.S. What's the most important strategy in today's market? Taking your profits in much shorter windows. The minute a stock looks overvalued, take your profits. Chances are you'll have an opportunity to buy in at a better price soon enough. And if not, you still have the glory of your gains to rest upon. As we enter the historically weak season of the market - the summer doldrums - don't buy anything that is trading at a 52-week high, except shorts.
4. Stock Picker's Market. "Investors can't really count on a favorable push from a rising market to help their stocks move upward. And that makes concentrating your bets in rising sectors -- and avoiding the falling ones -- just that much more important right now." Jim Jubak, Money Central Guru.
5. Cash is King. Kelley Wright, the #1 stock newsletter publisher in the US, has 50% of his portfolio in cash right now. Paul Woods, another respected money manager and the CEO of Odyssey Advisors, is "cautious" and focusing on liquidity (cash). In 2000, cash was the top-performing asset, and with rising interest rates, you can ensure bond-like returns with cash (from interest), at no risk. Additionally, liquidity allows you to buy in on opportunity. Patience, planning and a sound strategy always pay off for the sophisticated investor.
6. Dead Hot Summer. We're heading into the weaker season - summer doldrums. Lots of bears around. Important to note that P/Es are high, traditionally not a great time to buy, especially when the E part of the equationÑearningsÑare flattening out. (The E part of the equation is exploding in some of the biotechnology and technology companies, while it is flattening or declining in the more mature companies, like automakers and mega retail.) Do your work to protect and diverse your portfolio now, increasing your position in cash. Then take a holiday.
7. Brokers: It Pays to Pick a Good One. Risk tolerance, portfolio diversification strategy and tax strategies are some of the many services that a great financial planner can provide you with. For tips on finding your perfect partner, read the article.
   
8. Breakout Companies. NataliePace.com has become known for picking breakout companies before their share price explodes. (Go to TipsTraders.com for an independent analysis of our performance.) Our strategy is simple; our research methods are sophisticated. 1) Start with what you know as a consumer. 2) Make sure that company is the leader in the sector. 3) Buy low; sell high. For details on the more sophisticated research we do to make these mandates sing on Wall Street, before sure to read the Stock Report Card and accompanying article each month.

Bottom Line: NataliePace.com is providing you with news and important information, but you need to consult your financial planner to determine your best strategy for using the information. That will depend upon your age, your retirement plan, your risk tolerance and portfolio diversification. The stock portion of your portfolio is a higher risk classification, where you ideally seek to gain higher returns. As the NASD said in a recent investor alert, don't bet the farm on the stock market.

Full disclosure: I have listed the companies that I own under the column "NP OWNS?"

Stocks in our Watch For Good News Category

(Investors who "never pay retail": Note that highlighted stocks are trading at their 52-week lows.)

Stocks in Overvalued (Take Your Profits) Category:

Please 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.

VISION: To build a global community of investors through a worldwide website, seminars, radio, television and print partners.
GOAL: To provide high-quality, first-run, ethical financial news, information and education, presented in an entertaining format, 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 as shopping.
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.
For more information on NataliePace.com contact us at info@NataliePace.com

NOTICE: NataliePace.com is NOT a stock brokerage service, and does not operate or act as one.