Buying Real Estate in Today's Market:

by Steve Dietrich, president, Financial Research Group, and a guest lecturer at the Anderson Graduate School of Business, UCLA.

The key to understanding the recent increase in consumer home buying power is to know that it has come not from growth in personal income and traditional savings, but rather from falling interest rates and equity from the increase in home values. Steve Dietrich

Is Real Estate too High to Buy?
Perhaps the question most frequently asked of us in the real estate industry is, "What is happening to home prices; should I buy now?" In many areas, price increases over the past few years have exceeded 10-20%. In a number of areas increases of more than 30% have occurred. While the recent widespread surge in home prices has been spectacular, there is no reason to believe that this sector has repealed the fundamental laws of economics.

Home prices reflect any instant dynamic equilibrium point between supply and demand in particular neighborhoods, cities, and regions. The demand for homes comes from population and jobs or wealth. On a national or regional scale, raw demographic data indicate an almost insatiable demand for housing. However, in the absence of accumulated wealth, housing affordability depends on income, interest rates, and savings. The key to understanding the recent increase in consumer home buying power is to know that it has come not from growth in personal income and traditional savings, but rather from falling interest rates and equity from the increase in home values.

The historically low interest rates of the past few years have contributed significantly to the surge in home prices. In addition, the increasing popularity of variable rate mortgages has further increased the buying power of home purchasers. Data Quick Real Estate shows a very significant increase in the use of adjustable rate mortgages in the California market, especially in those areas with the highest prices and the greatest price increases. By November of 2003, approximately 65% of the homebuyers in the San Francisco Bay Area were using adjustable rate mortgages; however, 15 months later the rate appears to be stabilizing. One possible interpretation of this data is that in the areas experiencing the greatest price increases, buyers are forced to use adjustable rate mortgages in order to qualify for homes.

Any increase in interest rates affects the loan amounts available to both adjustable rate and fixed rate borrowers; however, the most significant reduction may be in the loans available to variable rate borrowers. This would indicate that some of California's highest priced communities are the most susceptible to the impact of any change in interest rates.

The huge amount of treasury debt held by offshore investors is a threat to the government's ability to manage domestic interest rates as a part of economic policy. In addition, efforts to maintain control over inflation are likely to result in increased interest rates. Thus, there is a significant probability that rising interest rates will take a real bite out of the purchasing power of the typical home purchaser.

Further threatening the continuation of price increases is the relatively low level of growth in personal income. If interest rates rise without a corresponding increase in personal income, the purchasing power of potential buyers will decrease, with significant impacts on both demand and prices.

While home prices of closed escrows remain at record highs in most California communities, some significant changes have occurred over the past few months. The unsustainable home price increases of 2004 appear to be moderating. In May 2005, the number of homes sold in Southern California declined over the May 2004 rate. It is important to remember that most price comparisons are made against prices a year earlier so that year to year prices will show increases months after a market peak.

In a classic economic model, a decline in unit sales would logically cause most producers to begin looking at a curtailment of production. However, home production in highly regulated areas is a multi-year process in which huge investments are made prior to the commencement of construction. Therefore, in the face of an impending slowdown, there may be a strong incentive for builders to actually increase production in the hope of selling before anticipated price reductions or extended sales periods occur.

Buyer Checklist
In many respects, the classic recommendations concerning home purchasing, especially for young professionals and female entrepreneurs re-entering the market, remain unchanged:

1. Consider Lifestyle First Ñ Perhaps the single most important step (and the most frequently omitted) in the purchasing process is a clear identification of both financial and personal goals and resources. For most individuals or families, their home purchase is the largest single item purchase. It may define, to a significant extent, the buyer's lifestyle, opportunities and relationships. Resources, flexibility, personal skills and desires, risk profile, schools, commute times, space requirements, and expected holding period are all key considerations. A careful goal definition thus goes far beyond just looking at the real estate involved. In the long run it is much more important to purchase the right house than to time the purchase perfectly.

2. Do the Research Ñ Employ the full range of your business and management skills. I am amazed at the number of MBA's who would not let their company select a new copier without a spreadsheet analysis and yet who venture into the home buying market armed only with confidence, lust, and a hot latte.

3. Risk/Reward of Your Investment Ñ Understand that real estate is generally illiquid in the absence of an overheated market such as we have today. Homes, like virtually all other forms of real estate, exist at a fixed location and, once constructed, provide a 40-60 year supply of "product," useable only at that location. Years ago when the mills left New England, and more recently when the high tech industry abandoned Colorado Springs, the homes and offices built to support the industries remained and the market suffered.

4. Location, location, location! Ñ The economic and social future of the communities in which you are interested is important. In the absence of rapid price increases, the fundamental drivers of future value will be more important - area economics and demographics, quality of life, schools and safety. Many of the larger cities will be stressed by an increasing demand for services without a corresponding increase in revenues.

5. Selling Ñ One of the most important factors in successful real estate investing is preserving the ability to sell at a time of your choosing. Your long-term profit may be more dependent upon your ability to select the time at which you sell the home rather than purchasing the home at exactly the right time.

6. Be sure you can afford it! Ñ What financial resources do you want to allocate to your home and what home price will these support under various financing alternatives? What is the best form of financing for your individual situation?

7. Picking the interest rate Ñ Variable rate or interest-only loans are popular with many real estate professionals. These generally allow the buyer to purchase a more expensive home, frequently with a smaller down payment. However, they do subject the buyer who does not intend to sell in a few years to an increased risk of future interest rate increases. A 15 or 30 year fixed rate loan may be more appropriate for some buyers. While the payments on a 15 -year loan will be greater, the interest rate will be about .50% less. Assuming a sale in 5 years, the initial rate of return on the additional payments is about 12%, not a bad rate of return on what is hopefully a very low risk investment.

8. Market Slowdown Ñ Overall, this is a time for caution, a return to fundamentals, and perhaps a more conservative approach to home buying. It appears that the market has fully adjusted to lowered interest rates and that sustained price increases in the future are likely to be more dependent on job and income growth. Job growth has been discouraging, especially in the Midwest and Northeast. If oil prices remain at $60 per barrel it will add further stress to the economy. The signs of slower sales and a reduced rate of price appreciation in recent months may be the indication that the slowdown is finally here. The unknown is the degree of correction.

Some markets, where home purchases for investment or second homes are a very significant portion of new home purchases, appear to have a higher potential for correction. These include Las Vegas, Tampa, Orlando, and even Riverside, CA.

9. Manage Your Resources, Team and Decision Process For Success Ñ Most buyers will have a spouse, partner, mentor, advisor or other participant in the home buying process. If you are buying with a spouse/partner, this decision is bigger than the home you are buying and a successful investment is generally not worth a failed relationship. Shared, defined goals most often lead to success. Inventory your team's resources (knowledge, contacts, time and perhaps remodeling skills) and use them to achieve success.

Steve Dietrich (dietrichsh@aol.com) is the president of Financial Research Group, a Southern California based real estate consulting and development firm, and a Guest Lecturer at the Anderson Graduate School of Business at UCLA, where he teaches a course in Entrepreneurial Real Estate Development.

Preparing to Buy Your Dream Home?

6 Tips to Keep it From Becoming a Nightmare. By Kassie Welch, Mortgage Financial Consultant

Going through the process of financing your home can result in your dreams being fulfilled or in an unending nightmare. The difference is being prepared. To give yourself the best shot of financial happiness, don't do the following:

Don't change jobs. If you're trying to buy a new home, now is not the time to follow your heart and start a business. Most lenders are looking for a minimum of two years employment in the same line of work, preferably with the same company. Pursue one dream at a time and, unless it can't be avoided, make the job change after you buy your dream home.

Don't deplete your savings or run up your credit card debt. Even though you can afford to spend your savings or make high monthly payments, when you go to buy a home that new car, flat screen TV or trip to Hawaii could make a big difference in your interest rate as well as how much of a home you can afford to buy. If you're serious about buying a home, avoid spending money until after the close of escrow. Keep your debt down and save as much money as possible. Even if you're getting 100% financing, you'll still need funds to cover closing costs and most lenders require cash reserves after the close of escrow.

Don't mess with your credit. Despite all the hype about how to manipulate your FICO scores, don't try to alter your credit report without talking to a professional. Paying off or closing the wrong accounts to try to raise your score could backfire on you. Most lenders require that you have four open accounts with a two-year minimum history. Also, please be careful when balance transferring debt. I know the 0 percent interest rate is appealing, but your FICO scores will actually be higher if your balances are spread across several accounts versus being on just one card.

Don't pay off all your debt. Some debts, like installment loans with less than 7 payments remaining, are not included in some lenders debt-to-income ratio, but having more cash to close may make the difference in having your offer accepted, especially in today's highly competitive real estate market. Also, paying down your debts to 50% will have a bigger impact on your FICO scores than paying off half of your creditors. Whatever you pay off, make sure to keep copies of your checks since it may take 30-60 days to hit your credit report. Again, this is the time to seek professional advice.

I'm having a Credit seminar on Saturday, July 30th, in Los Angeles.   Go to DreamHomeOwnership.com for more information. You can also ask me your questions one-on-one in the NataliePace.com chat on Wednesday, July 6^th, at 8:00 p.m. PST. The chat is available free of charge for all NataliePace.com subscribers.

Don't secretly borrow your down payment. Lender guidelines and debt-to-income ratios are designed to protect you as well as the lender. Reputable lenders do not want to give you more money than you can afford and then take back your home when you're unable to make payments. If you'll have to pay back the down payment, it will affect your ability to meet your total obligations. If the down payment is a gift, get it in writing. Otherwise your secret could be found out and you could lose your dream home.

Don't procrastinate. If you have good credit, a decent job and are tired of giving your hard-earned money to a landlord, buying your own place might be the right choice for you. With 100%, 103% and 107% financing options out there, it may be easier than you think to get into your dream home and start building toward your future, as a homeowner. There are no guarantees that the housing market will continue to rise, and there is the chance that prices might fall, but either way, you get to live there, and, in the U.S., you may get to write off the interest from your loan.

Find out more about Interest Only Home Loans and Perfecting Your Credit in the NataliePace.com chat room on Wednesday, July 6^th, at 8:00 p.m. PST. Interest Only home loans are no longer reserved for the rich, but you definitely need to be savvy.  Financing products are merely tools to help you meet your housing and financial goals.  They can be either good or bad, depending on how you use/misuse them.  Find out if an interest only loan is right for you. The July 6^th evening chat is available free of charge to NataliePace.com subscribers.

Kassie Welch, an eighteen-year veteran of the real estate finance industry, will be having a First Time Home Buyer seminar in Los Angeles, California, on Saturday, August 6th and September 10th.  Contact Ms. Welch if you'd like to receive her monthly newsletter and for more information on upcoming seminars.

Kassie Welch began her career at the Bank of New York (BONY) in the Mortgage Banking Division. At BONY she was trained in all areas of real estate finance, from processing and underwriting to secondary marketing and loan servicing. Currently Kassie is a Mortgage Financial Consultant with United Pacific Mortgage and a lecturer on First Time Home Buying and 100% financing. For more information, please visit www.dreamhomeownership.com.

Viva Las Vegas!

What Happens in Vegas May Stay in Vegas, But the Profits Can Be Yours.

by Natalie Pace, founder & CEO, NataliePace.com

Great ideas come from the most unlikely places. This month, after viewing numerous Bond films for a retro James Bond party, I just couldn't get too excited about researching mutual funds that specialize in the developing countries of Eastern Europe. I tried. The top analysts I wanted to interview about Estonia and Slovenia were out of town - at a convention in Paris, France, with a number of other CEOs. I'd never been to Estonia, but I imagined it as a place of babushkas and aprons and men with lots hair on their backs. If I'd watched To Russia With Love or Dr. Zhivago, I might have been more motivated, but unfortunately I hadn't and every turn to try and gather information was just coming up empty.

The Venetian casino resort on the fabulous Las Vegas Strip.

Conventions - in exotic locales! Why wasn't I in Paris, instead of watching Bond films for a party in the Valley? (It was a great party at a great house, butÉ) Business is certainly back with a bang. Men and women in suits swarming the lobbies of expensive hotels, in between breakout sessions. Not quite as sexy as Bond, unless you throw in a casino, a martini and a bit of misbehaving.

Enough daydreaming, I returned to slogging around other possibilities. Summer is the season when I typically pick a sector to warn people to stay away from or exit, and with Price to Earnings ratios so high, it would have been easy. Last year, when oil began its vicious sales spike, hybrids were all the rage. We warned investors that while any socially conscious person (or budget-minded cheapskate) should consider buying a hybrid, the production of hybrids was too small to affect the top line of corporations. We also noted the real crisis of the two major American automakers, Ford and General Motors, which had made the fatal decision to focus on SUVs over fuel efficiency, and were also suffering under much heavier pension and health care costs than the Japanese automakers. Click to review the article, "Hybrids: Car of the Stars, but Should You Own the Stock?"

Since that article, General Motors (NYSE: GM) and Ford (NYSE: F) have seen their share price fall by 25% and 32% respectively, and in May, their credit ratings were slashed to junk status, by Standard and Poor's. GM and Ford have some of the highest debt/equity ratios on Wall Street, and owe a combined $453 billion in debt, according to the Detroit Free Press. Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM), with debt/equity ratios of 16.53 and 23.41 respectively, and more than two trillion in combined debt, are two other corporations we'd avoid.

Del Monte's disappointing earnings announcement on June 23^rd, when they reported that profits had plunged 66 percent as a result of higher raw material and transportation costs, is a warning that the bottom line is going to be hit hard in retail. It's unlikely that grocery stores, mega discount stores, clothing stores, office retailers and more will be able to raise prices high enough to offset the record high cost of gas, metals and packaging. We'll look more closely at grocery stores in an upcoming article, but investors with holdings in retail, even in popular, high-priced chains like Wild Oats (with negative earnings) and Whole Foods (with a P/E of 52.30), should be aware that these stocks are priced for perfection, not for challenges.

But it's summertime, and who needs another pessimistic article about overpriced stocks, when all you really want to do is siphon off some home equity profits and hit the sand and surf? Surely there's something fun and exciting to sink your money in, right? And that probably explains why everyone wants to buy Google at $300 with a price to earnings ratio of 120.30 and a market capitalization of $82 billion. Trading volume tops 13 million daily at Google, which is about as punch drunk as slugging back ten martinis, which brings me back to exotic locales/casinos and those Bond films and the idea of investing in fun, which is attracting a lot of consumer and business dollars these days.

There's a saying, attributed to Joe Kennedy, that once you start hearing about investments from your shoeshine boy, it's time to sell. Well, you can probably hear about investing in real estate from your toddler these days, but the CEOs of major REITs are still buying. The Chairman and CEO of KB Home, Bruce Karatz, says that he's getting rid of retail real estate and investing in hotels and housing, even though "good deals are hard to come by." Sam Zell, the respected Chairman of Equity Group Investments, LLC, thinks that the ripple effect of "the greatest monetization in the history of the world" will continue to be "reinvested over the next 10 years until the economy grows to match that liquidity." Mr. Zell sold off a lot of office buildings in Silicon Valley this year, but asserts that, "The single best market today over the next 24 months will be New York CityÉ An asset will appreciate more there than a similar high quality asset anywhere else."

In addition to the shadow real estate party crashers of rising interest rates and rising inflation, there is the underreported burden of escalating building and labor costs. "The price of oil has doubled. Steel has tripled. Cement has doubled. Copper is at an all-time highÉ It costs 30% or more to build a new office building today than it did 18 months ago," according to Mr. Zell. Sam Zell also admits that securing labor is competitive.

I can never get too excited about buying at a 10-year high, especially when the cost of goods has tripled, so KB Home, whose stock is up 700% over the last five years, and Equity Office Properties, with modest gains of 20% over the same period, were eliciting little more than a yawn from me as I listened to these executives gush on. Sure these guys are high. They've been riding the real estate rocket for the last five years, while stock gains are hard-won. I can't put together enough reasons to short these companies at this time - summer is the strong season for real estate -- but why take the chance of buying high, hoping to sell higher?

So, I was about to nod off at the Milken Global Conference back in April, until I heard Mr. Karatz drop a bomb that was so exciting even he couldn't keep from laughing as he mentioned it. "Hotel occupancy in Las Vegas is at 90%. Vegas has more convention space than the next six cities combined. All the conventions want to go to Vegas."

Flash forward: All of the CEOs I wanted to speak to last week are in Paris, at a convention. Perhaps there is a way to invest in fun - Viva Las Vegas style.

Retail real estate and office buildings are still suffering from high vacancy rates, while spend-happy Americans and dollar-drunk foreigners are invading Sin City with wild abandon. As Bruce Karatz notes, "The dollar has put the whole country on sale."

And then you have Macao opening up Vegas style casino resorts, with the Sands Macao being so popular that the corporation paid off its construction costs in just one year of business in Macao. According to the Associated Press, "Industry insiders expect Macau to overtake Las Vegas as the world's biggest gambling market in 2005, with the territory's casinos expected to bring in more than US$5 billion in gambling revenue as newly affluent mainland Chinese flood into Macau to gamble."

Macao meets Las Vegas, the perfect Bond investment! Had I hit on a sector of real estate that is going to be on a tear for some time to come? Could Vegas real estate corporations be the Eden of an over-priced real estate and stock market, and does the corporate resort and casino move into Macao offer a new chance to capitalize on China's emerging economy?

For those of you who think that investing in Vegas is as amoral as investing in cigarettes (like Altria, NYSE: MO), just go back to the archives and find another featured pick. Our record's great and there's no reason to sacrifice your conscience on the hope of betting right on a casino resort.

If you're still reading, picture this. The conventions market in Las Vegas is so hot that the Venetian is booked 18 months in advance and hotel occupancy for the first quarter of this year was 97.8 percent at a rate of $243, according to Ron Reese, the director of corporate communications at the Venetian.  

Macao, which is the equivalent of Hong Kong's Catalina--an hour ride by boat--is virtually the ONLY casino resort locale in China. Singapore has opened up and is taking bids from Las Vegas resorts, like Wynn and Harrah's, to build there, but Macao already has Sands Macao, with Wynn Macao and Venetian Macao under construction. The Venetian Macao is projected to open in the 2^nd quarter of 2007.

The more I dug beneath the surface, the more interesting the idea of investing in casino resorts became. Trump Entertainment Resorts just emerged from bankruptcy and has issued 40 million shares of new common stock. Shares of the Company's new common stock will trade in the over-the-counter-market under the ticker symbol "DJTE.PK" with CUSIP number 89816T103. The Company intends to apply to have its new common stock listed on the NYSE or other national securities market in the near future. Perhaps what is most impressive about the reorganization plan is that existing shareholders weren't wiped clean off the plate. They received 1000:1 reverse split for their shares (which is better than nothing: what most shareholders receive), eighty-eight cents per share and one-year warrants for additional shares.

Donald Trump, CEO and Chairman, says, "The significant reduction in total indebtedness, interest expense and the availability of a favorable credit line give us the flexibility and wherewithal to bring our existing properties to a new level and to enter into new markets." There are signs that Trump's existing markets at Atlantic CityÑ Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino - will be benefiting from a small renaissance in Atlantic City. Occupancy rates are at 90%, according to a spokesperson for Trump Entertainment. The New Jersey Casino Control Commission advised that Caesar's is opening a new seafront shopping mall and Harrah's is adding a House of Blues. "There is growth here in the Northeast after a number of years of stagnation," according to a spokesperson for the commission.

But Atlantic City is still no Vegas or even Macao. As one NataliePace.com subscriber, from Ontario, Canada, puts it:

Additionally, the Trump Entertainment Resorts Corporation feels somewhat like the stepchild of the Trump brand. The exciting new condo towers in Las Vegas are NOT a part of Trump Entertainment. The partial ownership that Trump Entertainment USED TO HAVE in the Miss Universe Pageant was transferred to Donald Trump on May 20, 2005 (according to the 8-K).

If Trump's right about turning Trump Entertainment into as successful a brand as his real estate and media properties, then getting in on Trump Entertainment as a penny stock trading off the boards could give an investor bragging rights for life, in addition to tremendous gains. It's worth a trip to Atlantic City before buying in, however, because although "The Donald" claims he'll brand the corporation into a success, he appears to have stripped the best assets away from the venture. And a call into the automated answering service at the corporate offices is a far cry from the impressive handling of the receptionist on The Apprentice.

SoÉ we've managed to get thrilled about Vegas and we haven't even considered the popularity of poker. Last year, the World Series of Poker, sponsored by Harrah's Entertainment, brought in 14,000 players, more than double the number of 2003, and scored a ratings bonanza for ESPN. This year the prize pool is predicted to double again, from $45 million to $100 million. Teenagers have adopted the craze, and even girls night outs are becoming poker nights.

Harrah's (NYSE: HET) is the Las Vegas corporation that is listed on the S&P 500, pays dividends and hosts the World Series of Poker, but it is the Las Vegas Sands Corporation (NYSE: LVS) that burst onto the big boards last December with a $13 billion dollar initial public offering and won first-mover advantage in the coveted new exotic resort locale of Macao. Though Harrah's has 100% institutional investment, its market capitalization is still just $8.2 billion.

SoÉ is it name nostalgia that has me hooked on Las Vegas Sands? Perhaps nostalgia flagged the name, but first-mover advantage in Macao and Venetian love sealed the deal. "Putting your heart into your hotel is more important than putting your name on it," according to Las Vegas Sands Chairman and CEO Sheldon Adelson. Stepping one foot into the Venetian lends support to his word, and the new Palazzo Las Vegas promises to be just as impressive, as does the Venetian Macao.

Ron Reese, the Director of Corporate Communications attributes Mr. Adelson with the current success of Las Vegas. "He really changed the mindset in Vegas from a pure gaming destination to a business convention and exhibition center to fill the rooms mid-week." According to Mr. Reese, "Gaming isn't the focus. There are 4000 all-suite rooms at the Venetian. The rooms offered the first all-room mini-bar. Prior the thing was to drive people down to the floor."

The Venetian, one of the four hotels owned by the Las Vegas Sands Corporation, has award-winning restaurants, the world-famous Canyon Ranch spa, a sublime indoor Grand Canal shopping experience, gondolas with singing gondoliers, the Guggenheim Hermitage Museum and hip nightclubs. The show room is currently being remodeled, but The Blue Man Group will open in September in a brand-new state of the art theatre, and Phantom of the Opera will be added next summer.

The Las Vegas Sands Corporation has taken their "more than gaming" business philosophy to Macao as well, with Sands Macao and Venetian Macao (currently under construction). Wolfram Diener, the vice president of convention and exhibition, says "The opportunities in Macao are extraordinary, particularly in the Convention and Exhibition arenas, and I very much look forward to helping Venetian Macau Limited capitalize on them."

Hmmm. If all the executives were in Paris this month, perhaps next year it will be Macao, and I'll be there with them!

The Las Vegas Sands Corporation also struck a deal with Manchester United on May 10th to build a 5-star hotel and casino with full amenities near Old Trafford stadium. The project is contingent upon receiving a license to include a casino, so don't hold your breath. But here again, Mr. Adelson, who owns a majority share of the Las Vegas Sands Corporation, has proven that he can strike first and best.

For more information on investing in Las Vegas Resort stocks, click on the Viva Las Vegas report card and read the following exclusive interview with Scott Henry, the Chief Executive Officer of the Las Vegas Sands Corporation.

Natalie Pace has claimed the top spot among the 375 market gurus whose public recommendations are followed, evaluated, and rated by TipsTraders.com. With annualized returns of 77.2%, Ms. Pace led an impressive field, which includes John Bollinger (who came in #2), Robert Stovall, Adrian Day, Bernie Schaeffer, Mary Farrell, and a host of other A-list financial pundits, many of whom will also be speaking at The Money Show in Washington, DC. Learn Natalie's investing tips at The Money Show in Washington, DC (August 11-13, 2005, at the Wardman Park Marriott). For more information, go to the Calendar section of NataliePace.com.

Success Secrets of CEOs

Features an Exclusive Interview with Scott Henry, the Chief Financial Officer of the Las Vegas Sands Corporation (NYSE: LVS), and Ron Reese, the Director of Corporate Communication. Learn How the King of Conventions Saved the Strip.

by Natalie Pace, CEO & founder, NataliePace.com

Sands Macao, located on the island of Macao, China

It has been quite a year for the Las Vegas Sands Corporation. In December, the company launched an initial public offering that currently stands at $12.95 Billion. Though that pales next to Google's $81.31 billion market capitalization, it was enough to make LVS the largest company on the strip. Additionally, the casino generated sufficient cash flow in its first year of operation in Macao, at the Sands Macao Casino, to retire all of its $120 million outstanding debt on the Macao construction. All that and award-winning restaurants, 98% occupancy at the Venetian Las Vegas and a new deal with Manchester United to build a casino resort in the United Kingdoms (provided the authorities grant them a license to include a casino).

Whether you are looking at the financials, eating at Delmonico's or just floating in a gondolier down the Grand Canal at the Venetian Las Vegas, it is clear that the Las Vegas Sands Corporation's executive team has managed to create a business that rewards shareholders, employees and guests alike. How they accomplish that was explained to me by the Chief Executive Officer, Scott Henry, and the Director of Corporate Communications, Ron Reese.

N. Pace -- Your corporation has had a rather rapid growth since the Initial Public Offering last year. When did the corporation go public?

Henry -- Our IPO was on December 15, 2004.

That is outstanding news on the financial success of Sands Macao Casino. How did your corporation become the 1^st US casino in Asia's new Las Vegas -- Macao?

Henry -- We were awarded a license in 2002. Our goal was to have the property open as quickly as possible. We originally won the concession with a partner called Galaxy. Shortly thereafter we parted ways, with the assistance of the authorities in Macao. They split our concession. There is no cross ownership. Our respective business plans were different. Our goals were the same, but the ways of getting there were different. They are doing their own thing now, and we're doing our own thing.

What made you interested in Macao before it became the place to be?

Henry -- We saw a dramatic void in the marketplace--the mass-market gambler. Macao was oriented and catered to the VIP player, the high roller. We saw an untapped demand for the mass market.

So, how does the Sands Macao differ from the existing casinos, which are controlled by Stanley Ho?

Henry -- Stanley Ho's casinos are older. He has about 14-15 casinos. The Sands is a modern, Western, Las Vegas style casino catering to the mass as well as the VIP customer. It's the same corollary between downtown Las Vegas--the gambler's grind joint--and a mega-facility on the Las Vegas Strip. The Sands is modern with all of the conveniences. It's designed to be a casino, as opposed to being an office building or hotel that has been redecorated and filled with gaming tables.

Tells us of the experience of the executive team, and how you are achieving such success in Vegas and Macao.

Henry -- We have as strong a team, and as strong an entrepreneurial spirit, and as strong a developer/operator and bench as any other gaming company on the strip or in the world. We also have the entrepreneurial spirit and vision of our chairman. Sheldon Adelson is clearly a visionary who has redefined, not just the convention business, but also the casino business. We have a team that is very disciplined in approach to development and operations, and that allows us to achieve better results.

What goes on behind the scenes that provides an example of that discipline?

Henry -- The better return on investment comes from building a superior facility at a lower cost than what our competitors can build. Think about Wynn spending $1 million per room. The Venetian was under $200K a room. I would challenge you to find Wynn's property five times nicer than ours. We build a high-high quality product at a reasonable price. We build a facility from an organizational and logistical perspective, which makes it easier for our customers to move around. If they are here for a group meeting, they are in close proximity to where that meeting will be held. We place a premium on customer service and satisfaction. Every single employee is a team member. Those team members are rewarded and have incentives for delivering superior customer service.

Like what?

Henry - There are incentives and they also get recognized by their peers. We've been voted the number one place to work in Southern Nevada for four years in a row. Employees like their jobs and they take a lot of pride in what they do. We built a product here that is a great hotel, a great facility, with fantastic restaurants, retail--all here under one roof.

Mr. Adelson told Forbes magazine that, "It is more important to put your heart into the hotel than to put your name on it." Does that give us insight into his "entrepreneurial" spirit?

Henry -- The quote says it all. He takes a lot of pride in what he does and he doesn't have to be recognized for it. He built the greatest convention facility in Comdex. It doesn't have his name on it. For him it's not about seeing his name in lights. He was once asked in a meeting, "What is the theme of the Palazzo?" His theme is making money. Creating value. High quality products that deliver a return on investment.

Is there any Sands history associated with the new Las Vegas Sands Corporation, any keeping any of the old spirit in the new?

Reese -- Mr. Adelson founded Comdex, the large trade show for the computer/technology industry, in Vegas. He ran the Sands and built the world's largest private exhibition and convention center. It was trade-show driven. In 1995, he demolished the Sands to build the hotel. He realized that you can get people to Las Vegas on trade shows and conventions. He really changed the mindset in Vegas from a pure gaming destination to a business convention and exhibition center, in order to fill the rooms mid-week. He started building the Venetian in 1997, and opened in 1999 under that operating philosophy. People are going to come on the weekend. You have to figure out a way to get them during the week. Gaming isn't the focus. There are 4000 all-suite rooms at the Venetian. The rooms offered the first all-room mini-bar. Prior, the thing was to drive people down to the floor.

And tons of amenities that have everything to do with pampering and socializing, and nothing to do with gambling.

Reese -- The Venetian has the Grand Canal shopping mall, the world famous Canyon Ranch spa, the Guggenheim Museum. It's a motto now that has been adopted by others on the strip, as you see others trying to find rooms and conventions. Mr. Adelson was right in the mid-90s, when others thought otherwise.

Well, the hottest rage now is poker. Are there plans for future poker tournaments at the Venetian?

Henry -- It's something we're evaluating.

Harrah's Entertainment (NYSE: HEN) has 100% institutional investment, pays dividends and is part of the S&P 500. Does the Las Vegas Sands Corporation have plans to attract more institutional investors?

In order for a company to qualify for the S&P 500 you have to be more than 50% owned by non-insiders. Even if Mr. Adelson sold a huge slug of his stock, he'd still have 50% ownership. However, we have a bigger market capitalization than Harrah's and a better growth story. It hasn't hurt our value. Harrah's has been public for a very long time. We've only been public for seven months. Over time, I would hope that our institutional shareholding base will become bigger, but if the question is will Mr. Adelson or the company sell stock, there are no plans in the near future.

Can you give us an update on the Manchester United and United Kingdom casino resort?

Reese - Getting a gaming licenseÉ It's a very long process in the UK. They backtracked from where they were in the beginning. It's very competitive. They are in the infant stages of making the necessary changes.

And what's up with the unusually large charitable contribution -- $5 million -- that your corporation made to the Solomon R. Guggenheim Museum last quarter?

That contribution signifies our continued support and the strategic partnership that we have.

When do you plan to open the Venetian Macao and the Palazzo?

Venetian Macao and the Palazzo are scheduled for grand openings in the 2^nd quarter of 2007. Palazzo is currently under excavation, for the underground parking.

Viva Las Vegas and Macao! We look forward to experiencing your resorts, and, now, participating in the profits.

Money Affirmations That Make You Money!

by Chellie Campbell

"Chellie, an editor is interested in your book!" my agent, Lisa, exclaimed happily. "I sent her a bunch of proposals, and she returned all of them to me except for yours! Now she wants to talk to you."

My heart was thumping and my breath came fast. This could be the break we'd been waiting for. Lisa and I had been working together to find a publisher for my book, The Wealthy Spirit for over a year, through endless rounds of interest, rejections, almost-deals, and deals that fell through.

"Deb likes your book, but has some changes to suggest," Lisa went on. "Here's her number. Good luck!"

I tried to calm down and dialed Deb's number. We introduced ourselves and chatted pleasantly for a few minutes. Then I asked the fateful question, "What about the book do you feel needs to be changed?"

"Well, first of all," Deb replied, "We've got to take all the affirmations out of this book."

My heart sank like a stone. There was no way I could take the affirmations out of my bookÑthey are critical in helping people think more positively about money. I believe that what we focus on expands, and most people focus on money in a negative way. The average person has 60,000 thoughts every day, and most of what they're thinking about money is depressing: "The rich get richer and the poor get poorer," "The love of money is the root of all evil," "There's never enough money," and daily doses of "I can't afford it." I believe you have to actively change the way you think about money in order to have more abundance flow into your life, and that means repeating positive statements about money every day in order to replace those old, negative thoughts.

So, thinking this deal was never going to happen, I quietly asked Deb, "Why do you think the affirmations should be taken out?"

"Chellie, affirmations are old news," she stated flatly. "There are 97 books on affirmations out there. I can't go to my forty salespeople and say we're doing another affirmation book. This has already been done."

"So you think everyone already knows about affirmations?" I asked.

"Yes!" she replied.

"Then let me ask you a question," I said, "Are you doing them?"

There was silence on the phone for a minute. I elaborated, "Positive statements, out loud to yourself every morning, about money specificallyÑare you doing them?"

"Well, no, I'm not," she admitted.

"That's my point," I said, "People know about affirmations, but they're not doing them. Just knowing about them doesn't do any good. Listen, why don't you test them? I'll give you my list of favorite affirmations. Say them out loud while looking at yourself in the mirror every day for the next 21 days. Then we'll talk again in three weeks."

Deb agreed. Three weeks later, she was on the phone saying excitedly, "Chellie, this is amazing! I'm getting unexpected money in the mail, people are paying me back loans I had forgotten they owed me, and I'm getting bigger and better book deals!"

I asked, "So can the affirmations stay in the book now?" and she answered, "Absolutely yes!" And that's why the book was published with the subtitle, "Daily Affirmations for Financial Stress Reduction."

Here is the list I gave Deb that day. Why don't you give it the 21-day test yourself and see what happens?

1. People love to give me money!
2. I am rich and wonderful.
3. I am now earning a great big income doing what satisfies me.
4. Something wonderful is happening to me todayÑI can feel it!
5. All my bills are paid up in full and I still have all this money.
6. My affirmations work for me, whether I believe they will or not. (This is for the skeptics among you.)
7. A lot more money is coming into my life. I deserve it and will use it for my good and others.
8. All my clients praise me and pay me!
9. I am a money magnet!
10. Money comes to me easily and effortlessly, waking and sleeping.
11. I am now highly pleasing to myself in other people's presence.
12. I walk, talk, look, act, think and am rich!
13. I am a winner--I win often, and I win big!
14. I now receive large sums of money, just for being me!

Wishing you peace, prosperity, happiness, and abundance in all things. You deserve it!

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

The Financial Stress Reduction Workshop
Are you tired of having too much month at the end of the money?  Frustrated by not earning the money you know you deserve?  Do you want to start a business or grow one by getting more clients who praise you and pay you?  Do you sometimes feel you're working to pay your landlord, your credit card bills and Uncle Sam, with never enough left over for you?  Find out how to mind your money without losing your mind at this exciting, motivational workshop that will inspire you to change your financial life forever!  Award-winning Speaker/Author Chellie Campbell will show you how to easily and effortlessly create more money, eliminate debt, and enjoy life!

Whatever their circumstances, participants in the workshop have found themselves lifted to the next level of success.  One woman made $35,000 the first week after the class and went on to develop a nation-wide executive search firm.  A roofing contractor increased his sales 300% in just four weeks; an unemployed man found a new job and a six-figure income within three months.  Stuck at a plateau of $100,000 per year annual sales, a woman in advertising specialties booked over $2,000,000 the next year.  A secretary got a 35% increase in salary.  Wouldn't you love to create results like these?

Special Savings on August workshops!
For a limited time only, Chellie is offering a special for the upcoming sessions of the Financial Stress Reduction® Workshops beginning in August:  Enroll with a friend and you will receive the reduced price for couples, which will save you $295 each.  If you have any questions about the program, please give Chellie a call at 310-476-1622. Please feel free to forward this to anyone you feel might have an interest.  

Buybacks Versus Dividends:

2 Ways to Return Value to Shareholders.

by David R. Fried, Editor and Publisher, The Buyback Letter

Corporations in America can't seem to get over themselves. They're buying back shares in their own company at lightning speed, as fast as they can amass the money in their corporate coffers. Can't you just picture the conversation at the board meetingÉ "We have a couple of extra million (billion), right? Dividends are so yesterday! We're lookin' goodÉlet's buy back!"

In 2003, S&P 500 companies bought back some $131 billion in their own stock; last year buybacks increased by 50% to a record $197 billion, and this year's torrid pace should set another record. The sum for buybacks in 2004 even exceeded the $181 billion that companies spent on dividends that year.

Clearly, buybacks are not only smokin', they're on fire. Companies are awash in cash these days, and that's one reason buybacks are booming. They have the cash, they need to spend it instead of hoarding it, and so what better investment for a board of directors than in a company they know like the back of their hand, inside and out, warts, beauty marks and all?

One-quarter of the companies that bought back last year reduced their share count, which, as you know, increases current shareholder value. The fewer the number of outstanding shares, the more each share is worth, relatively, and it makes each dollar of earnings more valuable on a per-share basis. (The other 75% of the S&P 500 companies that bought back did so for other reasons, such as to reissue the shares for mergers and acquisitions or to satisfy employees who are exercising their stock options.) But our effective investing universe consists entirely of those companies that actually reduce share count -- it is from among those companies that we choose stocks for our six Buyback portfolios. For us, it is not enough to simply repurchase your own shares; you must reduce your share count for us to consider owning your stock. The other buybacks are marketing gimmicks - buybacks in name only - and not meaningful repurchases, in our not-so-humble opinion.

As corporate profits have rebounded in the last several years, companies have accumulated cash, and we believe that in the absence of an important acquisition or needed expansion of the business, cash in the coffers should be returned to shareholders, either through buybacks or cash dividends. We're big fans of any companies that return value to shareholders, in any form they choose to do it.

But head to head, buybacks versus dividends, we believe buybacks are superior, of course, and have built our successful Buyback Strategy on that foundation. When I own stock in a company that repurchases its own shares, my percentage of ownership in that company rises without obligating me to pay any additional taxes. A buyback is a tax-free event for the shareholder. You can't say the same thing about a dividend. Sure, the dividend puts actual cash jingling in your pocketÉbut that's only AFTER you pay the taxman.

It should be noted that a couple of years ago, when President Bush passed his economic stimulus plan, the tax gap between buybacks and dividends got closer. Here's how. Currently, a company can return its profits to investors via share repurchases. While this method is imperfect, it works in the following way: Let's use the example of a company that has a market cap of $1 billion and wishes to return $100 million (after corporate tax) to its shareholders. The result of a dividend would be that the shareholders would have about $85 million after tax of the company's $100 million payout. However, the result of a share repurchase (assuming no change in the stock price) would be that the market cap of the company would now be $900 million and the number of shares outstanding would have decreased by 10%. This 10% decrease in shares outstanding would mean that each share outstanding would now represent a percentage of ownership in the company that is increased by 11.1%. For example, if there were 100 shares outstanding and $100 of profit for the company, the earnings per share would have been $1. Now with only 90 shares outstanding, the earnings per share (given the same $100 in profit) would be $1.11, an 11% increase.

These changes are, generally speaking, reflected in stock prices over time. The holder of stock in a company repurchasing shares should see an 11.1% appreciation in his stock's value. This appreciation could be held until it was advantageous for the stockholder to sell - for example, at a time that takes into account the 15% long-term tax rate.

The result of this tax law change is that share repurchase and dividends are now almost equal for the shareholder from a tax efficiency standpoint. That is, the federal tax on dividends and on the gain from sale of stock (long-term) are both 15%. Until the change in the tax law, buybacks were a much more efficient way of returning cash to shareholders. Under the prior tax code, a dollar paid in dividends would be worth approximately 65 cents to the shareholder, while the dollar paid in share repurchase might be worth about 89 cents ($1.11 less the prior 20% long-term capital gains rate). Under the new proposal, $1 in dividends would be worth 85 cents to the receiver, versus the 89 cents the holder of the stock would receive upon sale, assuming the company used the money for buybacks instead of dividends. Additionally, it should be noted that the reduction in the tax on dividends is a change that may be altered at any time in the future by lawmakers.

But another factor siding with buybacks as a strategy for returning value to shareholders is that once a company declares a dividend, it is a negative event if that dividend must be reversed, decreased or even stopped in the future. But once the board of directors approves a buyback plan, it is not even a blip on the radar if that plan is slowed down or even stopped due to changing business conditions. The financial press doesn't take note of it, and therefore the stock isn't as subject to the nattering of pundits both in print and on cable. So a company that employs buybacks can simply shift its spending, while the company that uses dividends has to "take something away" from its shareholders.

Another reason buybacks are superior is that a company buying back its own shares can absolutely wait until it is an advantageous time to repurchase. It is not in that company's best interest to overpay for its own stock, so company leaders will bide their time until the price is right.

Even though buybacks are slightly more tax-efficient than dividends, at The Buyback Letter we have both bases covered. Those who want to hedge their bets can simply invest in our Buyback Income Index, which is designed for investors seeking income and growth. This portfolio of 10 stocks is up 104.55% since inception (March 1997), versus only a 48.63% gain for the S&P 500. That's an outperformance of 55.92%. The Buyback Income Index includes the following companies, which traverse the investing map:

• FINANCIAL SECTOR: Bank of Hawaii (BOH), with a 1.95% dividend yield; Commerce Bancshares (CBSH) with a 1.89% dividend yield; Credit Suisse Group (CSR) with a 4% dividend yield.
• TELECOMMUNICATIONS SECTOR: Telefonos de Mex. (TMX), with a 3.34% dividend yield
• ENERGY SECTOR: TXU Corp. (TXU), with a 1.73% dividend yield; Enbridge Energy (EEP), with a 7.34% dividend yield; PG&E Corp. (PCG), with a 3.3% dividend yield.
• CONSUMER BEVERAGE SECTOR: Diageo PLD (DEO), with a 3.49% dividend yield
• RETAIL SECTOR: Limited Brands (LTD), with a 8.33% dividend yield
• HOUSEHOLD PRODUCTS SECTOR: Clorox Co. (CLX), with a 1.85% dividend yield

Any way you slice it, we like boards of directors that return value to shareholders. Just don't blame us if we're in the bleachers of the Buybacks versus Dividends tournament, cheering wildly for the Buyback team. We think they're going to win.

David Fried is the editor and publisher of The Buyback Letter (www.buybackletter.com), the only investment newsletter devoted to finding opportunities among companies that repurchase their own stock. His asset management firm -- Fried Asset Management, Inc. -- offers separate investor advisory and money management services which use the "Buyback Strategy" principles. All of his portfolios are beating the S&P 500 since inception, and the prestigious Hulbert Financial Digest ranked The Buyback Letter #4 for risk-adjusted returns among stock-picking newsletters for the five-year period ending 5/31/2005. The Buyback Letter had an annualized gain of 14.6%, vs. the Wilshire 5000 total return of -0.6%.

FUNd Your Dream Business:

by Natalie Pace, CEO, NataliePace.com.

Where the Money Trees Grow and Why You Should Stop Chasing Venture Capital NOW. Article and exclusive Q&A with Beth Polish, the founding CFO of iVillage, and Patty DeDominic, President Emeritus of NAWBO.

(a reprint from October 1, 2004)

"Don't use credit to dig yourself out of a hole. You use borrowed money to move you from place A to B or C." Patti DeDominic

Patty DeDominic, Founder, CEO and Chairman of PDQ Services, Inc. Chairman, SCORE Foundation

I've spoken to many dot com crash and burn cases and the most common theme sounded is not that the Internet was not all it was cracked up to be. Most founders and executives warn that they were hyper-focused on chasing venture capital that never materialized. The Women's Executive Network secured two million in corporate sponsorships, but had to close up shop when the follow-on venture capital never came in. Co-founder Beth Fehmel now believes that her team wasted too much time chasing venture capital. Though Beth still loves the basis of the business plan and swears that her co-founder keeps the spark alive of one day reviving the business, Beth has gone back to her day job, as a respected executive, drawing a reliable income with benefits. Meanwhile, the Women's Leadership Exchange is enjoying great success and has launched a new award for Female Entrepreneurs aimed at getting them to the million dollar sales mark. (See the ÒTake Your Sales To a MillionÓ article in this ezine.)

California is full of entrepreneurs who have returned to their day-jobÑmen and women who could have been contenders, rejoining the ranks of executives working to realize someone else's dream. And it is not just a result of the "irrational exuberance" of the Roaring 90s. According to the Small Business Administration, one-third of new businesses will close within two years, and one-half will be gone within four years. What is the biggest reason businesses don't make it? You guessed it. They run out of money before the revenue kicks in.

So, if you're interested in starting your own business, or expanding it out of your garage, or hitting that million dollar sales plateau, the first thing you need to address is getting the money for operations and expansion. In theory at least, by following the road map to the money tree, you can skirt the graveyard of other's mistakes and become part of the successful half of our nation's entrepreneurs!

Where do the money trees grow?

Beth Polish. Photo credit: Philip Chase

If you trust the numbers, and smart entrepreneurs do their research, you wouldn't spend ANY time sending out your Executive Summary to countless Venture Capital firms, unless you were Marc Andreessen (who invented the Web browser) or a Nobel-prize winning doctor working on the next miracle drug AND you had a personal relationship with one of the decision-makers there.

Unfortunately, another commonly held fantasy is that the government is an avid supporter of entrepreneursÑparticularly minority-owned businesses. It turns out that government money, through the SBA and other programs, also accounts for only 2% of the seed money for new businesses.

So, if start-ups aren't getting venture capital or government funding, where does the cash come to open the doors? Just how does a great idea get launched and who takes the risk? You guessed it. Entrepreneurs tap their own resources to get the business off the blueprint and on the ground.

Where New Businesses Get Their Startup Capital
(Inc. Magazine 10/03)

2% Formal venture capital
2% SBA loan or funds from other government program
4% Financing from supplier, customer or other business entity
4% Private equity investment
8% Commercial bank loan or line of credit
10% Assets of family or friends (other than co-founder)
17% Other founders' personal assets
53% Personal funds

Funding At a Glance:
1. 53% of all business raise money through personal savings.
2. 10% of all companies use "Friends and Family." You'll need agreements to memorialize the exchange. This is a critical moment. You have other people you are responsible for.
3. 7% of businesses get bank loans and mortgages to finance the growth of company
4. 6% of entrepreneurs use personal credit cards.
5. 4% take angel financing. Angels are people who don't invest money professionally, but they are professional in how they invest their money. Major angel networks have grown up in Los Angeles, San Francisco, Chicago and other U.S. cities. Angels can help businesses. They know a lot. Be careful and meticulous with recordkeeping, however. They understand financial statements.
6. 2% of all businesses secure venture capital funding. Entrepreneurs always want venture capital, but very few companies fit venture capital requirements. Most are beating their heads against a wall! Even if you do fit the requirements, it is like the film industry: 2,000 scripts are submitted, 200 are optioned. 10-20 films get made. Focusing here is not the best place to start off.

Now that you know where the money tree grows, you need to know when the fruit is ripe for picking! There are many tips for keeping your new business flush with funds, some surprisingly simple (but KEY), and others that are downright racy. For more information on how to launch and succeed with your DREAM business, NataliePace.com turns to two veterans, successful executives, Beth Polish, founding CFO, iVillage and Patty DeDominic, President Emeritus, NAWBO.

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NataliePace.com: What are some tips you can give someone who is thinking of leaving the security of their own job and venturing into the speculative world of entrepreneurialism?

Patty DeDominic: Your values are very important. Your banker or financial partner is in fact your partner. You need to be in partnership with people whose values you can live with. I started out working for free. Sweat equity. When the business is started with the blood of your soul and someone wants to buy a part of it for nothing, you say, "Go away!" They say, "55% for a million." You say, "Forget it!" I started one business from scratch and borrowed office space. We did $350,000 in the 2nd year, and $400,0000 in the 3rd year. Today, in gross sales, we're doing multi millions a year from a variety of enterprises. I have no debt today. However, I still have a $3 million dollar line of credit.

Where did you get the startup capital?

Patty DeDominic: In 1981, the interest rate to take out a $50,000 mortgage on my house was 17%. I was happy to take that mortgage at that percent. I had the choice of take the money and grow or don't pay the money and don't grow. I also borrowed $50,000 from my father. That was a very important loan that I took. He gave me the retirement money that he and my mom had saved.

You must have really believed in the viability of the business, if you drained your dad's nest egg. Was it all smooth sailing from there or did you have to raise additional funds?

Patty DeDominic: 1982 was another scary time in business. Different banks have different tolerances for entrepreneurs. Some of them want you and some of them don't. It's not about looking for a bank that wants to help you. That's about as naïve as looking for a competitor who wants to help you. Banks want to bet on winning entrepreneurs. It's important to be able to design a plan that shows them that they will have the opportunity to make money with you. That's what clearly changed me from struggling to succeeding--realizing that it is a partnership. If the bank can benefit from me, and I can benefit from me, they'll like me.

Beth Polish: In figuring it out, it's important to know why you want to raise the money in the first place. I've been working with this woman who has been struggling to a nice level. She's not appropriate for debt financing, and is more appropriate for equity financing. In pushing her, I said, "Why do you want it?" She said, "I'm really tired. If I had the money, I could hire an assistant." We've all been there. You're working 24/7. None of the things she would use the money for would have increased the value of the company. This was time for her to double down personally.

Many entrepreneurs wait until they desperately NEED money before looking into loans and other debt options. When is the right time to push for a larger line of credit?

Patty DeDominic: It took fifteen years to get a million dollar line of credit. It took five weeks to double that credit. It was right after Orange County filed bankruptcy. If Los Angeles filed for bankruptcy--one of my major clients--I would be in trouble. I went to the bank. They said, "No problem. You have the line of credit in place." It's not about me; it's about the plan. If you have a good plan, and there is character and decent credit behind it, the people executing the plan will be there. You get the money. If all the executors have bad credit, then you're suspect. I've seen people with crappy credit get loans, if they have a good plan.

How do you know if you should launch your business with loans or bring in equity partners (partners who take a piece of your company for their investment)?

Beth Polish: A bank loans you money on the interest they charge and any other fees that they tack on--and they do tack on fees! In making decisions to invest in you, they say, "What is the likelihood that you will pay back the loan on time." They need to like you and believe in you. They get paid back during the course of the loan.

Debt financers will evaluate you on the five Cs.
1. Character. Do you have a good credit history? Have you borrowed money before and repaid it? Have you ever run a business similar to the one you are running?
2. Cash Flow. Do you have the cash flow to make your payments?
3. Capital. Do you have more assets than liabilities, as a cushion if your orders don't come in on time? What happens if your customers pay Net 60 instead of Net 30?
4. Conditions of the economy at large and the industry you are operating in. If your industry has deep economic fluctuations, they value that in.
5. Collateral. Tangible assets that would be sold or possessed that could help them make up the payments that you haven't made yet.

Lenders will evaluate you very closely on all five of these points. In many respects, they are not concerned with what your business is. What is important is, "Will they get the payments paid back, with interest, plus all of the fees paid on time?"

And equity partners?

Beth Polish: Equity partners make money when they sell the investment that they made in you. They don't get a penny until they liquidate that investment. They have to evaluate whether they will be able to sell their investment in you at all (i.e., will there be a market for your company's equity in the future), how many years it will take to be able to do so, and what their overall rate of return will be in their investment in you and your company. They get nothing along the way, except heartache. Equity investors are active, and they have a lot of control over your business, as a result of that.

Equity partners will want to know:

1. Do you have a product that is a "must have" or is it a "nice to have." They want to know that customers will pay for what you are offering. To do that, they'll talk to your customers.
2. What's the cost to obtain the sales you are projecting? Is your marketing campaign going to cost $5 million, instead of $500,000?
3. You and the management team. They are backing you and your team. It's not just you. It's the people you have assembled to partner and execute your plan. They will do background checks. If you are doing all of that, do you have advisors who are helping you?
4. Size of market. Is the business a billion dollar market? Will they see 20, 30 or 40 % return on investment? They want high growth, a large market and people, at the end of the day, who will want to buy their investment from them.

Is there any advantage or disadvantage of bringing in equity partners as opposed to just securing the money through a bank?

Beth Polish: A bank or lender is a partner only while you are borrowing money. If you haven't enjoyed your lender, you can fire your banker and find another. If you have an equity investor, family, friend, spouse, angel, etc., they are your partners until they sell their shares. You can't fire them. You might be able to marginalize them, but you can't fire them. Equity investors will have a say in how you run your business. Lenders won't have much of a say, and as long as you live within certain rules, they'll stay off your back.

Beth's mantra is, "DROOM® -- Don't run out of money!" How do you avoid that? When is the right time to borrow?

Beth Polish: It takes at least 3 to 6 months to raise financing so don't wait until you're almost out to begin the process.

Patty DeDominic: There is no one answer to that. When I took out the $50,000 mortgage, I had a business partner that I needed to get away from. We had two very different philosophies. He had funny things he wanted to do with the Internal Revenue Service. I don't do that. I'm concerned about being transparent. I do business with government. You have to be naked. I didn't want to have trouble with the IRS, or worry about "Who do you pay this week--payroll taxes or rent." You pay both. When you sense that there is a strategic opportunity to jump to the next level, that is a creative use of capital. It's just a lot of people understand about financing a new car or financing their house, but they don't get that you can finance your business, too. Why is it that we wouldn't hesitate about signing a mortgage, but we hesitate before signing a bank loan? Would you buy a car or a house for all cash? Don't use credit to dig yourself out of a hole. You use borrowed money to move you from place A to B or C. You can even out seasonal or annual opportunities when your cash flow needs are fairly stable.

How do you know if you have surrounded yourself with the right team?

Patty DeDominic: Your Certified Public Accountant should refer you to banks and to other people. Shop around, if your CPA isn't giving you useful advice every quarter.

Beth Polish: Same goes for your lawyer.

Patty DeDominic: Your insurance person also has a lot of financial savvy. A great hire nowadays is someone with a financial degree, as a controller.

Beth Polish' credentials include: iVillage, Goldman Sachs Ventures, Anthony Robbins' Dreamlife, Inc., Critical Junctures Group, Harvard MBA, BA Anthropology.

Patty DeDominic is the Founder/CEO, PDQ Careers Group & Companies, the largest privately held staffing and service firm in (the U.S.). She is the past chairman of the Los Angeles Chamber of Commerce, Chairman Emeritus NAWBO and has received many special recognitions over 20 years.

Take Your Sales to a Million

...with the Make Mine a $Million Business Awards

American Express OPEN, Count-Me-In and the Women's Leadership Exchange are challenging female entrepreneurs to break the million-dollar sales barrier, and have tapped a "Dream Team" of Mentors to help you do it. If competition is in your blood, and you believe your business is ripe for the challenge, you may qualify to win a $45,000 loan from Count-Me-In and the opportunity to have mentors help you create and power up the successful business plan.

 Three women -- two from Dallas and one from Oklahoma City - qualified to compete for the award last month. These business owners won the first-ever OPEN from American Express Make Mine a $Million Business(TM) Awards at the Women's Leadership Exchange (WLE) conference in Dallas.

Mary Childers and Denise Houseberg of Dallas, and Dr. Kimberly Hefner Poe of Oklahoma City, won the awards after delivering powerful pitches to a panel of judges at the Women's Leadership Exchange event. The trio will work with a "dream team" of business coaches from the Women's Leadership Exchange to create winning business plans designed to reach $1 million in annual revenue. The dream team of mentors includes women such as Gay Gaddis, who runs the largest woman-owned advertising agency in the country. Coaches will advise winners on issues ranging from business operations to marketing to finance. Each winner will also receive a loan up to $45,000 from Count-Me-In to finance growth. Two runners-up will receive loans up to $20,000.

Mary Childers owns ProServ LaundryMaintenance, and services industrial laundry equipment for hotels, hospitals and other facilities. Denise Houseberg runs MarketExpo.com, a fast-growing online shopping destination for home and garden accessories. Dr. Kimberly Hefner Poe owns Hefner Eye Care and Optical Center in Tulsa, Oklahoma, and delivers optometry care for patients that include cataract-stricken seniors as well as poor-seeing toddlers. With the help of the dream team and the loans from Count-Me-In, these entrepreneurs are challenged to achieve their million-dollar sales dreams, and the challenge goes out to you and your business owner friends as well.

Make Mine a $Million Business is a collaboration among Count-Me-In for Women's Economic Independence, a not-for-profit organization dedicated to increasing women's access to credit and capital; the Women's Leadership Exchange (WLE), an educational and networking company that conducts conferences for women business owners across the United States; and OPEN from American Express.

"Four out of ten women entrepreneurs in Dallas/Fort Worth tell us they have trouble accessing the financing needed to fund their business growth," said Alexa Brownell, director, Advocacy Marketing, OPEN from American Express. "The Make Mine a $Million Business program is designed to help women overcome these and other growth barriers. By combining forces with Count-Me-In and WLE, both long-time OPEN partners, we can provide women not just the money they need, but also the coaching and contacts that will help them thrive."

The Make Mine a $Million Business program will continue to roll out across the United States until 15 winners and 15 runners-up are chosen. The next slate of winners will be chosen in Southern California on August 2, Atlanta on September 21 and New York on November 3. Interested women business owners who would like to break the million-dollar barrier can learn more about the award criteria and apply at www.count-me-in.org. For more information on the Women's Leadership Exchange Conferences, go to www.WomensLeadershipExchange.com or the Calendar section of www.NataliePace.com.

Stocks and Bonds:

Redefining Investment Risk.

by Paul Woods, President & CEO of Odyssey Advisors, LLC

A Tale of Two Investments

Paul Woods, President & CEO of Odyssey Advisors, LLC

Let's assume that you're evaluating the risk of two alternative investments, both of which are segments of the stock market. In looking at annual returns, Segment #1 has declined in value six times since 1972 while Segment #2 declined in value eight times during the same period. In these down years, the average decline for Segment #1 was 11.11% while Segment #2 showed an average decline of 12.42%. Investors clearly lost less money and had fewer down years in Segment #1. Amazingly, neither of those things seems to be particularly important when the investment industry considers risk.

Which investment is less risky? Believe it or not, according to the way our industry views risk, Segment #1 is considered to be about 8.5% MORE risky than Segment #2. If risk is one of your hot buttons, investment professionals will overwhelmingly recommend Segment #2 as the more conservative investment. By the way, Segment #1 is midcap value stocks and Segment #2 is the S&P 500 Index, which is a proxy for large cap stocks. It's also worth noting that Segment #1 produced significantly higher returns during this period.

Volatility
If you're getting the impression that the investment industry views risk a bit differently than the rest of the world, you're right. We're saddled with a definition of risk that's inaccurate and is mostly inexplicable to the average investor. However, it does have the advantage of allowing investment professionals to use a lot of jargon and give the impression that risk is enormously complex and takes a lot of training to be properly understood.

We got to this point because, decades ago, academics scratched their beards, pondered risk, and came up with a definition that proved that none of them had ever invested in the stock market. Risk, they explained, was volatility. Volatility is the standard deviation of historic returns for a particular investment, which is a definition guaranteed to produce a blank stare from most investors. What it means in English is that greater fluctuations in price and returns equal greater risk.

Apparently, our industry believes that the first question that occurs to anyone evaluating a potential investment is, "How volatile are my returns going to be?" What's amazing is that this perception of risk has gone unchallenged for so many years. In the real world, more important questions for investors are, "What's my potential return?" and "What are the chances of losing money?"

The Probability of a Negative Return
Let's say that you're considering an investment in a portfolio of midcap stocks and you're curious about the risk. An investment advisor who has become a Chartered Financial Analyst tells you that, since 1972, the standard deviation of annual returns for this segment of the market is .2125. Someone without the benefit of all that training tells you that you can expect a decline in value about every 5 years and, in any given year, the likelihood of making money is about 80%. Does anyone seriously believe the first answer was more useful?

Probability tables are available to calculate a definition of risk that provides investors with a good estimation of the likelihood of losing money on an investment. Students of probability know that there are actually two components of investment risk. Volatility is one. However, average returns are the missing link that makes the current definition of risk misleading.

The simplistic view that investments with the same volatility have the same risk is absurd. If average returns differ, investments with the same volatility can have significantly different risk profiles. As our first example pointed out, it's also possible for an investment that's more volatile than another to decline in value less often if its average returns are significantly higher.

A Comparison
For comparison, let's look at segments of the stock market using both measures of risk, calculated using annual returns from 1972 and ranked from least to most risky:

As a professional, the first thing I notice is that the large cap (S&P 500) or "blue chip" segment of the stock market isn't the safe haven it's cracked up to be. A problematic definition of risk and a flawed interpretation of the Prudent Man Rule keep most professional investors in the "blue chip" segment of the market in general and in large growth stocks in particular. Under the guise of controlling volatility, most of their clients are kept in areas of the equity market with relatively unattractive returns and above-average risk.

Fixed Income
When it comes to bonds, using volatility as a measure of risk looks even more questionable. If historic volatility is the only consideration, then current interest rates don't matter when it comes to assessing risk. In this view, a bond with current interest rates at of 3% has the same risk as the same bond when current interest rates are at 7%. It doesn't appear to matter that, if interest rates rise and bond prices decline by 5%, the bond with a 3% coupon will produce a negative return while the bond with a 7% coupon will produce a positive return.

Using historic volatility and current interest rates as our average return, the chances of losing money in bonds decline as interest rates go up. Following are the probabilities of losing money in a 5-Year Treasury Note, depending upon the current level of interest rates. This data is also based upon total annual returns from 1972.

It's also difficult to resist pointing out that, even though bonds with maturities of 20 years and over have produced negative returns about as often as stocks over longer time periods, our industry believes that these have about 50% less risk than most stocks. Granted, the average decline in bonds was less than stocks in down years. However, that's probably little consolation for investors that purchased bonds because they're supposed to be a safe haven.

Conclusion
One of the things the investment industry seems to do pretty well is to obfuscate relatively simple ideas, and the concept of risk is a perfect example. The investment industry needs a better way of measuring risk, as the current measure is inaccurate and mostly incomprehensible to a lot of investors. It's past time to reevaluate this measure since everyone except investment professionals seems to have a pretty good idea of what risk really is.

Paul Woods is the President & CEO of Odyssey Advisors, LLC, an independent investment advisory firm specializing in equities and fixed income. He can be contacted at www.odysseyadvisors.com or 310.568.4700.

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

10 Portfolio Preparedness Tips:

Your Best Protection Against a Market Downturn on High Oil Prices, Threats of Terrorism, Rising Interest Rates and Inflation.

by Natalie Pace, the #1 Stock Picker, according to TipsTraders.com

I wouldn't write an article on driving or pet care, but as the top stock picker in the U.S., with 77.2% annualized gains over the last three years, I feel a bit qualified to talk about protecting your assets and maximizing profits in a volatile, sideways market. Recently, since June 23rd, the Dow Jones Industrial Average and the NASDAQ have lost all that had been gained over the last two and a half months. Those of us who report on the comments and conjectures of Nobel-Laureates in economics weren't surprised at this year's volatile, but flat market. Those of you who follow daily headlines, in particular, will benefit from reading on.

While you can never predict the EXACT day that volatility will occur, you can, with a careful evaluation of current conditions, come close to understanding what kind of sentiment investors will have in a climate of record high oil rates, rising interest rates, terrorism and inflation facing off against strong earnings (in select sectors), high corporate cash balances and strong merger and acquisition activity. It's a tennis match, with volatility smashing back and forth over the net, while the ball stays inbound (mostly) on the court. Whether you call it a "frothy market," a "sideways market," a Day-Trader's Paradise or a tennis match between Selena and Venus Williams, gains are hard-won in shorter windows. Sure, at the end of the day, there will be a winner and a loser, but only by a few points, and, while one competitor may slightly out-rank the other, either one has a decent shot of being the victor on any one day.

There's no undefeated champ dominating the investment court these days, outside of Google, metals, mining, REITs and energy. In 2003, a poor, distant cousin of 1999, you could have thrown a dart at a wall full of stocks, and come up a winner. In 2005, the game has become volatile and competitive, and if you haven't met with your financial partner to touch up your game plan, now's the time.

It doesn't take a crystal ball, but it will require nerves of steel and strict adherence to your strategy. You don't have to rush out and buy into certain industries (say, technology and biotechnology) over others, although certainly some asset classes will always outperform others and pruning the weeds out of the garden leaves room for more flowers. You don't need to get your MBA, or learn how to read complicated charts, or study up on your Nostradamus. In fact, to make it as easy as possible, I've outlined ten strategies that I use to keep my portfolio healthy in uncertain times. Here's the top ten list:

1. Don't panic in the event of a sell-off, rising interest rates and/or a terrorist attack. It's not the end of the world. Our economy isn't that fragile. Americans are resourceful, hard-working, imaginative, innovative, inventive, pull-together people. If you panicked and sold in September of 2001 AFTER 9.11.01, you lost on average -35% (NASDAQ) and -17% (DOW). If you waited just three months, until December 2001 to sell, on average, you would be looking at 10-16% GAINS (NASDAQ) and ZERO LOSS (DOW).
   
   
2. Consider taking your profits, the FIRST TIME you are in a position of profit. My personal experience? In August of 2001, right before 9.11.01, I bought Genentech (DNA:NYSE) and LoudCloud, which is now Opsware (OPSW:NASDAQ). What bad timing! Imagine how I felt on 9.11! Sure my stomach sank, however, I stuck to my strategy. I bought in because I believed in the potential of these two companies, and in just three short months, I was rewarded for my research and adherence to the game plan. On December 27, 2001, I cashed out BOTH stocks for combined gains of over 200%. If I'd let those gains ride in 2002, the third consecutive down year in the markets, most of those profits would have been wiped out, and there have been plenty of opportunities to buy back into the very volatile Genentech stock.
   
   
3. Consider BUYING INTO your favorite companies right AFTER bad news. If you bought into the NASDAQ after 9.11.01, just four months later in January 2002, you were looking at 30% gains. During the same period, the DOW was up, on average, 12%. It's called BUY LOW; SELL HIGH, and it works like a charm in volatile times. By January 2004, the NASDAQ was up 40% and the DOW was up 20%, from the low in September 2001.
   
   
4. Portfolio Diversification. 2003 was a great year, and most investors saw delightful returns. Has your diversification model, as a result, become too heavily skewed into stocks? Diversify your assets. Your best protection against terrorism and other natural disasters (including market corrections) is to not be over-concentrated in ANY ONE asset class. Note: This includes real estate. If you've never lived through a real estate downturn, brought on by earthquake, fire, flood, riot, hurricane, rising interest rates or a turn in the local economy, trust me, these disasters can put you underwater on your mortgage faster than you can say tsunami. Don't have all your Lincolns in stock, bonds or your home. Remember that CASH is the best performing asset in market corrections, war and terrorist attacks, and the easiest way to take risk out of your portfolio. And these days, with rising interest rates, you can achieve bond-like returns with no risk in a money market account.
   
   
5. Take some chips off the table now. Are you letting all of your profits ride? Profit taking is essential to building wealth. (If your goal is to protect wealth or tax sensitive strategies, again, develop a game plan with your professional partner that best suits your needs.) Any gain above 12% annualized is considered a healthy return. If you're looking at 70% gains, and you're trying to read a crystal ball to balance the risk of market correction or terrorist attack against the agony of selling too early and missing out on another price pop, realize that there is a huge difference between all and nothing. You don't have to gamble ALL of your gains to be INVESTED enough to capitalize on future growth. Two good questions to ask yourself are, "How much am I willing to bet on this company?" and "How much am I willing to lose?"
   
   
6. Don't rush out and buy into the next hot thing. (Google lovers and First-time real estate buyers LISTEN UP!!) The first problem is: that's what everybody is doing, which means that there are more buyers than sellers, which is a good sign that you are paying too much. In terms of hot, but risky stocks, like biotechnology, don't get hooked in on a great sounding therapy that hasn't been adequately tested and/or approved by the FDA. One of the best recent examples of this is Human Genome Sciences (HGSI:NASDAQ), whose stock shot up like a rocket in September of 2003 on the news that they had an Anthrax antibody that worked on rats and improved the survivability in rabbits and monkeys. This vaccine entered Phase 1 testing in March of 2004 with fast track designation by the FDA. Today, the stock is off by -45% and the development is in limbo. According to the Human Genome Sciences web site, "Further development of ABthrax is dependent on the government's willingness to commit to its purchase, either under existing authority or under Project BioShield, which is pending passage in the United States Senate."
   
   
7. Don't buy oil stocks on the fly either. Since last year, oil prices have gushed from $28 to the current $60/barrel, and the share prices of the major oil companies have shot up 60-200%. While no one is predicting a return to $28/barrel anytime soon, on the buy low/sell high continuum, oil and oil stocks are priced at least moderately high. I wouldn't be in a hurry to sell my oil stocks right now, but I'd look for better-priced opportunities in other investments as a buyer.
   
   
8. Turn off the Tele, and slather on the elbow grease. Re-watching disasters, financial roller coasters, farming statistics, the Terry Schiavo case, MJ's verdict and Brad and Angelina's newfound passion for impoverished countries over and over again, from every perspective, is not going to bring victims, your investments or Brad and Jen's relationship back to life. Wallowing in negative images may make you feel desperate, which could result in making bad decisions, like selling your investments at an all-time low, out of fear that the worst is still to come. That is ALWAYS a losing strategy. As Jim Cramer says, "No one ever made any money by panicking." Put down your gossip magazine, and print out a copy of NataliePace.com to take with you to doctor appointments instead. Research, information and education will empower you to make reasonable and, likely, profitable choices for your investments.
   
   
9. Cash is King. Don't forget the rule of thumb that you should always have six months of living money in liquid assets (like Money Markets and/or CDs). Suze Orman makes a good point that you shouldn't put all of your cash in one long-term CD. Instead, she recommends that you stagger the maturity dates of multiple CDs so that you're never in a penalty position if you need to withdraw some funds. Kelley Wright, one of the top-rated stock pickers in the US, currently has 50% of his portfolio in cash. Rupert Murdoch says simply, "Stocks are high." It's not a gain until you cash it in. Sometimes gains disappear when you let them ride.
   
   
10. Lock into a Fixed Interest Rate. Now may be the best time to lock into a fixed rate mortgage. With interest rates still near a 40-year low, there's likely a lot of money to be saved by locking in that rate for the years to come. You'll appreciate a stable mortgage payment if interest rates continue to rise, as they are predicted to do, especially if your budget is already stretched too tight for comfort. Alan Greenspan reported that personal savings are down to 1% in the US, which means most of us don't have much wiggle room for the increased property taxes, increased mortgage payments and higher cost of gas. Stabilizing this lethal cocktail could keep you and your family from a cash crunch hangover in the months and years to come.

In times of uncertainty, the best RX is information and preparation. Make sure that you've given your portfolio a good safety check!

Natalie Pace has claimed the top spot among the 375 market gurus whose public recommendations are followed, evaluated, and rated by TipsTraders.com. With annualized returns of 77.2%, Ms. Pace led an impressive field, which includes John Bollinger (who came in #2), Robert Stovall, Adrian Day, Bernie Schaeffer, Mary Farrell, and a host of other A-list financial pundits, many of whom will also be speaking at The Money Show in Washington, DC. Learn Natalie's investing tips at The Money Show in Washington, DC (August 11-13, 2005, at the Wardman Park Marriott). West Coast women can also register for her workshop at the Soul Sisters Retreat, sponsored by Agape International Church. For more information, go to the Calendar section of NataliePace.com.

Full Disclosure: Natalie Pace, founder and CEO of NataliePace.com, is not a broker or certified financial planner. She is a media executive, a writer, a successful investor and a respected stock picker. She doesn't own stock in any company mentioned in this article.

MySpace.com Moves Up With the Big Boys

MySpace.com received over 15.5 million unique visitors during the month of May 2005, and attracted more than 7.5 billion page views in the month of May, making it the fifth largest domain in the U.S. according to comScore Media Metrix. According to the company, MySpace is making significant capital investments in network infrastructure and substantial expenditures in connection with the recruitment and addition of technical, sales and other personnel to support and foster the anticipated continued growth of MySpace.com. Intermix, MySpace.com's majority owner, was added to the Russell 3000® and Russell Microcap™ Indices on June 24, 2005. Finally we congratulate Richard Rosenblatt, the Chief Executive Officer of Intermix, on striking a deal with Eliot Spitzer's office to settle the Spyware suit by paying out $7.5 million over three years. According to the Associated Press, Spitzer spokesman Brad Maione said a final agreement is two to three weeks away and must be approved by the court.

Investors were pleased with the proposed settlement and the recent earnings results, pushing the share price up to $8.79 (6.29.05) on double the average daily volume. Intermix's net income for the fiscal year ended March 31, 2005 was $4.5 million, compared to a net loss of $13.1 million in the prior year. For the first quarter of fiscal 2006, ending June 30, 2005, the Company is forecasting revenues of between $25 million and $26 million, which represents an increase of approximately 50 percent to 56 percent over the same quarter last fiscal year, with break even net income and EBITDA of approximately $1.3 million.

Hot News on 21 Stocks:

13 Winners, With 8 That are Still Green and 4 That are Ripe For Picking!

by Natalie Pace, ranked 1st in Stock Pickers by TipsTraders.com.

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

Stats, Facts and Educational Information:

1. Former Tyco International Ltd. Chief Executive Dennis Kozlowski and finance chief Mark Swartz were found guilty last month of stealing more than $150 million. This is one of the strongest signals to date to CEOs and CFOs to keep their books clean. Richard Scrushy walked out a free man, however, after convincing a jury from his hometown that his word was to be believed above that of 5 former CFOs who pled guilty and struck deals with the DA. Scrushy played the God card, having appeared regularly on his religious talk show in the area.
   
   
2. The name of the game continues to be volatility, as the Dow Jones Industrial Average and the NASDAQ lost two and a half months of gains in the past two weeks.
   
   
3. 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." In the buy low, sell high continuum, stocks are high. Conservative Buying and liberal Profit-taking are good strategies in high markets.
   
   
4. Ranked in the Top Stock Picks in the US. TipsTraders.com has ranked me 1st among the stock pickers in the U.S. What's the most important strategy in today's market? 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. To learn more great tips on successful investing, which have resulted in the 77.2% ANNUALIZED gains seen by the companies featured in NataliePace.com, be sure to register for The Money Show in August, in Washington D.C. To learn more and to register, go to the Calendar section of www.NataliePace.com. See you there!
   
   
5. 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. Take your gains early and often. Buy in on companies that you have hard facts are entering a period of growth, at a price near its 52-week low. Read NataliePace.com religiously. Develop a plan with your financial planner, and stick to it.
   
   
6. 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.
   
   
7. 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. Do your work to protect and diversify your portfolio now, increasing your position in cash. Then take a holiday. If you've hidden your profit from the bears, they'll move on to the next investor's campsite.
   
   
8. 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 will provide you with. For tips on finding your perfect partner, read the article online at www.NataliePace.com, in the archives, Volume 2, issue 4.
   
   
9. Breakout Companies. NataliePace.com has become known for picking breakout companies before their share price explodes. 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, and register for the Money Show in Washington D.C. in August, or the Soul Sisters' Retreat in July in Pacific Palisades, California. For more information, go to the Calendar section at www.NataliePace.com.

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:

Natalie Pace has claimed the top spot among the 375 market gurus whose public recommendations are followed, evaluated, and rated by TipsTraders.com. With annualized returns of 77.2%, Ms. Pace led an impressive field, which includes John Bollinger (who came in #2), Robert Stovall, Adrian Day, Bernie Schaeffer, Mary Farrell, and a host of other A-list financial pundits, many of whom will also be speaking at The Money Show in Washington, DC. Learn Natalie's investing tips at The Money Show in Washington, DC (August 11-13, 2005, at the Wardman Park Marriott). West Coast women can also register for her workshop at the Soul Sisters Retreat, sponsored by Agape International Church. For more information, go to the Calendar section of NataliePace.com.

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.