Are GM, Delphi and Delta the Beginning of Japan-like Stagnation for the U.S.?

Exclusive Q&A by Natalie Pace, CEO, NataliePace.com™.

For a Check-up on the Economy, We Call On the Doctor, Dr. Gary Becker, Nobel Laureate and Professor of Economics and Sociology at the University of Chicago.

They don't call him Doctor for nothing. For the past three years, Dr. Gary Becker, Nobel Laureate, Economics, and professor at the University of Chicago's Graduate School of Business, has been optimistic about the performance of the U.S. economy, and for three years, he's been right on the money. While others worried about the twin trade and budget deficits, outsourcing, inflation, rising interest rates, and sky-high oil prices, Dr. Becker cited statistics that are, in his view, more important than those numbers for determining economic growth - namely productivity and the ratio of debt to gross domestic product.

Last April in Beverly Hills at the Milken Global Economic Conference, Dr. Becker outlined a case for a resilient U.S. economy. Productivity was high. The ratio of the debt to GDP was low, especially in comparison to Europe and Japan. The U.S. was borrowing at low interest rates, which Dr. Becker called "a good deal." And China was merely taking away the low-skill, low-paying jobs that Americans aren't very good at any way. "Our comparative advantage is in knowledge-based types of goods," according to Dr. Becker, which means that the U.S. needs to worry less about what jobs are migrating to China and focus more on improving the education of grades K-12. These steps may seem "far removed from the trade-balance issue, but really, indirectly, are very important in enabling us to respond to any trade problems," Dr. Becker said.

2006 might be a different story, however. Though productivity remained strong in 2005 and real gross domestic product grew by a little more than 3%, Federal Reserve Chairman Ben Bernanke expressed concern to Congress, in his Semiannual Monetary Policy Report on February 15, 2006, that "steeply rising energy prices pushed up overall inflation, raised business costs, and squeezed household budgets." He also cited signs of a slowing housing market and structural weaknesses in "several areas of business," particularly in the automobile and airline industries.

Corporations with defined benefit plans, like Ford and General Motors, are underwater on their pension obligations by a whopping $450 billion, while the public sector pensions are drowning by an additional $260 billion (source: Milken Institute). The airline industry has lost approximately $42 billion since 2000 and is carrying over $100 billion in debt, according to Airport Transport Association VP & Chief Economist John Heimlich. General Motors lost $8.6 billion in 2005, driven by "poor performance" and legacy costs, according to GM Chairman and CEO Rick Wagoner. Clearly the aging of the U.S. population, alongside escalating medical costs and global competition is wiping out some industries, especially those that provide rich benefit plans to their workers and retirees.

With just 3.3 workers for each Social Security beneficiary, is the U.S. headed toward the kind of economic stagnation that has plagued Japan since the early 1990s? Will the legacy costs of the former Blue Chip auto, airline and defense industries weigh down the Dow Jones Industrial Average? Will high oil costs burn a hole in the consumer's wallet, as the housing market cools down? Will corporate spending take over as the fuel of the economy in 2006?

To gauge how these pressures will affect the U.S. this year, we checked in early with the doc, who will be a panelist again at the 2006 Milken Global Conference in Beverly Hills in April. Is Dr. Becker, a man who believes that poverty, misery, and crises are unnecessary, as optimistic about the U.S. economy in 2006 as he was in 2003, 2004 and 2005?

Gary Becker Nobel Laureate, Economic Sciences, 1992; Professor, Economics and Sociology, University of Chicago; FasterCures Board Member

You received the Nobel Prize in 1992 largely for making economics more "human." Tell us about your work that led up to the prize and how it has impacted the world.

The inspiration was my teachers at Chicago, with Milton Freidman being the greatest influence on me. In an environment where economics was a powerful engine to discuss all types of behavior, I started thinking about discrimination. The Economics of Discrimination became my first book. I didn't have a plan at that time, but I gradually started doing that, and then continued to focus on education, crime, allocation of time, fertility, the family and additional social issues. In the Ô70s, it dawned on me what I was doing -- The economics of human behavior. I discovered that problem by problem really.

What have we learned about discrimination?

People who don't want to discriminate have an advantage over people who do. Also, if government raises the cost of discriminating through policies, I showed how that would trace through the economy. Who is mostly hurt by discrimination? Under different conditions, that varies. Compare South Africa with the U.S., where it was much more harmful to the discriminators (the whites). That may have been why apartheid disappeared. It was a very inefficient system to operate.

We are seeing that advantage playing out today in the metals mining sector. Former Goldcorp Chairman and CEO Rob McEwen solved the problem of a labor crunch by looking at women in mining and recruiting his executive team there. Do you think that pro-minority public policy was, perhaps, more necessary in the Ô60's than today?

Discrimination has declined, but there are still disturbing rates of drop outs in black families and Hispanic families, too. There is still a distance to go. There was a fallback in the 1990s, probably related to other issues, like the decomposition of the family. The breakup of black families took off in the Ô60s. There is no question that young blacks are suffering from that now.

Would you encourage the government to relax/repeal Proposition 209, and to allow universities to recruit Blacks and Hispanics?

No, I believe the outcome for Blacks and other minorities is best if they are treated equally with others. With the difficult family backgrounds that many blacks have, giving them favoritism in competing for places does them no favors. I would, however, support making special efforts to find Blacks and Hispanics who do meet the common standard.

You say that poverty is "self-fulfilling," simply because some minority groups underinvest in education, training and work skills, such as punctuality. Would you say that wage ceilings are self-fulfilling for women because the woman is more likely to leave the job, or to work fewer hours, to care for the family?

The playing ground is more level, but we can document a couple of facts. Women are less likely to be full-time. Even if full-time, they are less likely to work overtime. If a child gets sick, it is more likely that the women will stay home than the man. This is even true in Sweden, by the way, one of the most gender-balanced countries in the world. Even in a world with no discrimination, you'll get differentials in promotions and achievements. We've seen narrowing because education has grown and the labor force has grown. It used to be that women's pay was 3/5ths of men. It's now 80-85%, if you work full-time. Women have narrowed the gap, but it is not yet equal. At the top of every profession, it is still dominated by men. That will be reduced, but I'd be skeptical if there will ever be complete equality.

Why?

Because women are going to make more of the commitment to family rearing and those activities. I do believe a lot of that is biological, and that is a fact. A lot of young women are taking time out when their children are younger. A lot of women enjoy childrearing and get other compensations within the family. The problem is that when divorce comes, we need to see that women get compensated enough with childcare payments and the like.

Single mothers are more likely to be living in poverty than any other group, aren't they?

No question. Unmarried mothers. And that's a group that's grown a lot in the last 20 years.

You say that much of the widespread poverty, misery, and crises in many parts of the world are unnecessary. How can we apply your research to the benefit of mankind?

We've seen a lot of applications of it. I would mention two factors. Growing investments in people, education and health. The government that recognizes that the private sector can function better in a free economy experiences the greatest growth. Look at a decentralized China, at India, at Taiwan, and some African nations. India did modest things in 1991, and they had a much more rapid rate of growth than other countries. China has had rapid growth for 25 years. These things work. The devastating poverty that India had and has less of now is absolutely unnecessary, if governments do the right things. That can mean doing less things rather than doing more. There are certain things that government should do and that they don't do that well - namely education, providing a safety net, safety and low crime.

Your research, coined as "human capital," was really the first time that economists made a case for how important education is to pulling nations and communities out of poverty. You say now that K-12 education is far more important for the future of the U.S. than worrying about outsourcing low-paying, low-skilled jobs to China and India.

Human capital is, simply, the acquisition of knowledge, information and skills by people. It includes things like education, training on the job and health, being three of the most important forms of human capital.

In your Nobel speech, you noted that people are not motivated solely by selfishness or gain. Give us an example of how employers, say, can use incentives, other than just money, to motivate their employees.

You have to motivate employees by morale and by treating them well, and having them feel some loyalty and commitment. They have to think it's a team effort. If you're cutting everybody's salary, you gotta cut your own. If you expect them to work hard, you gotta work hard. There is growing literature on these non-monetary factors.

What should corporations be doing differently?

Take Delta. Delta executives were paying themselves certain things and asking employees to take cuts. It was a foolish thing to do. The executives were working hard at the time, but those are the times when you gotta show that you are taking some of the burden as well. It is the morale issue. I had a meeting with some of the top people [at GM]. They are cutting a lot at the top, including the CEO's salary. It doesn't mean a lot in terms of total costs, but it means a lot in showing that you'll bear the burden. If they work very hard and pull the company into profitability, that's the time to make up for it.

Like Lee Iacocca when he saved Chrysler, right? He was an American hero. Nobody begrudged him taking a huge bonus for turning the company around.

If you save a company, you deserve a big bonus. If they bring Delta out of bankruptcy and Delta starts making money, people will applaud and the workers will start doing well.

You'd like to give individuals control of their own social security and health savings accounts. This would certainly help corporations that are suffering from legacy costs, but how does it help the individual?

Well, I'm generally confident of that because the individuals know their interest and have that at heart. They do make mistakes, but the government doesn't know what you want. The government is pushed and pulled by various special interest groups, who want something out of them. You want to give the individual an incentive to spend on health when it is justified, but not to spend just because it's someone else's money. When considering medical treatments, if I have to spend $1000, I consider whether it is worth $1000, rather than spend $1000 of their money and $50 of my money.

How many Americans are currently uninsured?

There are about 300 million people living in the U.S., so, about 13% or so are uninsured. It's a big number. Any poor person is covered by Medicaid, and older people by Medicare, however, many young people have jobs and don't have medical insurance. Some of these people now can go to emergency rooms, but you don't have much choice of who is treating you. With tax-free contributions and accumulation, some, maybe many, will have an incentive to set up these plans.

How would you address the cost side of health care, or do you rely on market forces? A blood test can run five hundred dollars. A hospital stay can be in the tens of thousands. An office visit with a specialist is booked at $500 or moreÉ

Market forces can do it, but some of the costs have to be reined in. Most health expenses occur in the last six months of people's lives. How do you withhold treatments for sick and older people when the treatment will do very little good, even if, at best, it adds a month or two of life expectancy? Europe is said to be more caring than the U.S., but, in that sense, they are much tougher. I think that is a tough issue, but one we need to sink our teeth into.

Okay. So, let's say that Social Security and Health Savings Accounts are controlled by the individual, but can only be invested in index funds. Does the average American worker truly know what an index fund is? Aren't we asking the laymen to maneuver in a fairly sophisticated financial market?

I would like the restrictions to be broad, but some restrictions are necessary. Otherwise, it is called the "Economic Good Samaritan" problem. If someone at 65 is in bad shape, you help them out. That's the case for restricting their portfolios. We have thousands of mutual funds that would be okay for people to take.

Which is exactly what makes everyone's head spin! Too many choices and not enough information! How many employees actually know the difference between a bond fund, a Blue Chip value Index and a micro cap growth stock? We saw what happened when everyone invested in Internet stocks in the late 1990sÉ

It won't matter too much. So they check off a bond. They'll get less risk and lower return, but they'll do at least as good as under the government system. Small caps will add more risk in their portfolio, but over time, that risk evens out. In the long run, it all averages out. We allow IRAs, and they are doing reasonably well. They may have gone too much into Internet stocks in the 1990s, but a lot of sophisticated people did that too!! They weren't the only ones.

Insurance and legacy costs are wiping out a lot of corporations, particularly those with unions. Standard and Poor's lists almost 40 companies that are underfunded by a billion or more on their pension plans. This also can be a drag on the stock markets, right?

I think it is a serious problem. I know General Motors has an annual health care budget of over $5 billion -- annual. That's one of the reasons they are in trouble. They are trying to force the union to accept co-payments and restrictions. Defined benefits plans need to be defined contribution plans. If unfunded liabilities for these people were taken into a general accounting, it would show that the Federal deficit is much, much larger than reported. Companies are in exactly the same situation. The reputable companies fear that the legacy companies will get into trouble and put the burden on the taxpayer. What we should be doing about that is a good question. You'd like to see companies account for future liabilities, as well as current. Profitability is less than it appears because you have this debt out there, and it should be counted as part of the debt now.

Some worry that the U.S., with an aging population, could be headed toward a stalled economy, like Japan has suffered from. Are we on the brink of economic decline?

We're in much better shape than Japan. Yeah, we're aging, but much slower than Italy and Japan and the other European countries. We have a much higher birth rate; our birth rate is at replacement level. Japan is lower than replacement and Europe is lower than Japan's. We have a lot of immigration of young people. As long as we continue to have higher birth rates and young immigrants, I don't think we'll have that big of a problem.

But there are certainly companies that can't support having only three workers for every retireeÉ

The older companies, like General Motors and Ford, they're in trouble. It's not just the legacy costs, but their cars aren't popular. It is a problem for the Federal government and some private companies. We need to force these companies to have a depreciation and contribution set aside to fund these liabilities, and deduct some from their taxes, so that they can build up a fund.

WhewÉ so the U.S. is not on the brink of economic collapse, though some older companies are being challenged with "legacy costs." And, perhaps social security can be saved by allowing individuals to set up their own health, social security and retirement accounts. Sounds like a planÉ To keep track of Dr. Becker's continuing research and recommendations, visit his web site and blog. To hear more of his recommendations for strengthening the U.S. economy, attend the Milken Global Economic Conference. To review the companies that are underfunded by a billion or more on their pension plans, see below.

39 of the S&P 500 companies that are most deeply in the red on pension plans.

Source: Standard & Poor's (July 2005)

Real Estate Warning: Speculators Are Being Suckered In, While Insiders Are Cashing Out By the Millions.

by Natalie Pace, CEO, NataliePace.com

Article and REITs Stock Report Card,

The Historic Town of Bisbee, AZ Photo copyright by Daniel Ter-Nedden. From www.ghosttowngallery.com

There's a line from a song that goes, "If you want to know if he loves you so, it's in his kiss." Well, real estate is experiencing the big kiss off from REIT executives, who have been cashing out to the tune of HUNDREDS of millions of dollars since the summer of 2005.

Executive insiders at Toll Brothers, including Bruce and Robert Toll, have cashed out more than $229 Million over the past year, near the high of $100 per share (source: MSN.com). Likewise, KB Home CEO Bruce Karatz sold $146 million over the last year, near the 52-week high of $85. KB had fallen to $69.26 per share on Friday, February 24, 2006, while Toll Brothers was down to $33.34. Click to review the NataliePace.com™ REITs Report Card, to see additional data on insider buying, income, debt, news and more.

Meanwhile, Johnny-come-lately buyers, who were probably also late to the Internet party in 2000, are being seduced into buying high, with aggressive financing, such as interest-only and no-down loans, all on the promise of future double-digit gains. David Lereah, the Chief Economist of the National Association of Realtors, warned attendees at the Beverly Hills Chamber off Commerce Economic Forum in February that, "Adjustable rate mortgages should have 15% of the market. Now they have 50%, and about 70% in California. 60% were interest only. These households are trying to stretch their income in order to afford these lofty prices."

Maria Bartiromo, the host and managing Editor of CNBC and author of the book, Use the News: Separate the Noise from the Nuggets, agreed with Mr. Lereah, saying, "It does appear that people have become as jubilant about real estate as they were about technology in 2000." And even the new Federal Reserve Chairman Ben Bernanke testified to Congress on February 15, 2006 that the housing market was showing signs of softening.

It's hard to find any analysts or economists who are bullish on real estate these days. Five out of five panelists at the Beverly Hills Economic Forum were predicting a softening of the real estate market, largely as a result of rising interest rates, but also due to house affordability issues and an over-reliance on aggressive lending and speculative buying.

For the homeowner who intends to live in their place for a while and reap the tax benefits of writing off their interest payments, who would be paying rent any way, experiencing a flattening of home prices is nothing to panic over. However, the speculator who took on more than he could handle in an interest-only, no-down loan, could be strapped with a mortgage bigger than the value of his home and no way to make the payments, especially if prices drop, the markets get flooded with sellers and interest rates continue to rise. And certainly anyone with a 401 (k) and stock investments should reconsider their exposure to the former darlings of the stock market - the Real Estate Investment Trusts (REITs). As Mr. Lereah warned earlier this month, "If there is a sharp rise [in interest rates] to 8%, all bets are off."

REITs have run up impressive gains over the past five years, while the rest of the indices have still not recovered from their 2000 highs. The NASDAQ is still off over 45%, and the Dow Jones Industrial Average and S&P 500 are still below the historical highs set in early 2000. Meanwhile, the Vanguard REIT Index Fund (VGSNX) has posted 40% gains since January 2000, in addition to the lovely dividends doled out by REITs. KB Home has knocked home 500% gains in share price over the same period, while Toll Brothers posted an astronomical 1100% increase by their high in the summer of 2005.

If the additional For Sale signs you've been seeing on the street corner aren't enough to jolt you into trimming back on your REITs, consider these other red flags. Toll Brother's has lost 70% of its value since July 2005 (when executives were cashing out at top dollar). On February 23^rd, the company reported that signed contracts were down 21 percent, to $1.14 billion, over all regions. On February 13, 2006, KB Home disclosed that sales might not meet projections because the first two months of 2006 have been marred by cancellations and a decline in orders for new homes. KB Home announces earnings on March 22, 2006. Finally, the National Association of Realtors reported in January that, in December, existing home sales were down nationwide, and most dramatically in the West, where sales had fallen by -12.1% over last year.

Buyer Reality Check:
Ignore the real estate broker who is lying to you about real estate returns "always going up." S/he has a vested interest in you buying the property, NOT in whether or not you make money on it. That's her paycheck. Over a 25-year period, stocks, real estate and bonds have gone up, and the returns, historically, have been in that order, with stocks paying off better than real estate and real estate performing better than bonds. According to Hulbert's Financial Digest, as of January 31, 2006, the Wilshire 5000 (considered to be a more comprehensive indicator than the Dow Jones Industrial Average or the S&P500) has gained an annualized 12.5% (every year) over the last 25 years. By contrast, home prices, which everyone thinks is the hottest investment in town, are up just 7.4% this year, as of 12.31.05 (source: National Association of Realtors). All indicators are that the returns are flattening or heading south in real estate, rather than higher.

In any 5-10 year period, the performance of any security can (and does) fluctuate. If you buy high into real estate and the market drops, that 4-7 year period that it typically takes real estate to recover from calamity, when you are LOCKED IN to living in a place you cannot sell (because you owe more than the price of it) and you cannot RENT (because the rent won't cover the payment), and you cannot MOVE, feels like forever. You are virtually imprisoned, and you are in real trouble if you lose your job or can't afford to make payments for one reason or another. This is made more acute because typically the reason you are locked in is because everyone else is scared off from the region or the investment because industry has moved out of town or there has been a local calamity, and there you are stuck with it.

3-point Sure-Fire Investment Strategy:

1. Start with your heart and add your brain. You will make more money by investing things that you understand and like than you will by chasing the herd. Are you investing in real estate right now because you heard someone tell you how much money they made in the last five years? Or are you investing because you have been interested in real estate or a particular home or income property for a while, and have been tracking the returns, fluctuations, risks, rewards for at least six months, in the area you are interested in buying? If you are chasing money, that is always the easiest way to lose money. If you are sure you want to buy, you need to start educating yourself and determining which type of investment is best suited to your tastes, AND you need to consider the other two points of this foolproof strategy. Keep reading.
2. Pick the Leader in the Sector. In real estate, this has a great deal to do with location. Don't buy swampland just because it is in an outlying area to Disney World. Don't ignore the fact that commuters are spending 2 hours on the road. That will become a huge factor with rising gas prices. If you set your sights on something truly beautiful (to you), you might have to put together a plan for the purchase and be patient about waiting for a buying opportunity, but chances are much greater that you will gain.
3. Buy low; sell high. Do not believe any mortgage or real estate broker who tells you that real estate always goes up. When you buy high, you're going to have to be alive a long time to realize any gains, and perhaps go through a spell of being underwater on your mortgage, which is challenging to survive. Buy and hold works if you live forever. Buy low; sell high works every time.

SELLER REALITY CHECK:
The National Association of Realtors reported that, in December, sales were down in the U.S. by -4.4%, and in the West by -12.1%. Inventory shot up 26.3%, while the months of supply on the market also rose from 3.9 to 5.1 months (up 30.8%). Prices are up slightly year over year, however, when the supply goes up and demand goes down, prices soften.

If you need to sell, depending on the region you are located in, do your research now and plan to act sooner rather than later to get top dollar. Summer is, historically, a strong season for real estate, so you might have momentum going for you. What may be working against you is rising interest rates, and, perhaps, an increase in sellers and/or foreclosures. If speculative buyers start panicking, the market could be flooded with sellers in the summer. And if the Feds feel a need to continue raising interest rates, that could be an unpleasant surprise for the markets as well. Markets don't react well to surprises.

No one has a crystal ball, but the guardians of industry, the Federal Reserve Board governors, have been throwing water on the real estate fire for 14 consecutive sessions, and they haven't said they are finished yet. In the minutes of the January 31, 2006 Fed meeting, the governors concluded that, "Although the stance of policy seemed close to where it needed to be given the current outlook, some further policy firming might be needed to keep inflation pressures contained and the risks to price stability and sustainable economic growth roughly in balance." Translation: you may get another rate hike on March 27-28, at the next meeting.

So far, there is small indication of a panic, but sure signs of a softening in real estate, and that the Feds are intentionally guiding the economy toward that end. Don't be a sucker when real estate is getting the kiss off.

Other Articles of Interest:
1. You Don't Have To Be Donald Trump To Become a Real Estate Millionaire! You Just Have To Do Your Homework and Get in the Game. By Bobbi McKenna
2. 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.
3. Debt-Rich America. Americans are now spending more than they are earning, and personal savings is a negative number. Is that a temporary dip or are we courting disaster?
4. Real Estate Party Policy: Tempted to Crash the Real Estate Party? 5 Tips to Make Sure You Drive Home SafelyÉ By Natalie Pace, founder NataliePace.com
5. Buy Your Dream Home With No Money Down. Q&A with Kassie Welch, Mortgage Financial Consultant
6. Top 10 Signs of a Bubblicious Housing Market. By Steve Dietrich, guest lecturer at the Anderson Graduate School of Business, UCLA and Natalie Pace, CEO, 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 security.

IMPORTANT DISCLAIMER: Information has been obtained from sources believed to be reliable however NataliePace.com LLC does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication 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.

Hybrids.

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

Why You Don't Have to Drive Ugly Little Cars to Save Money on Gas

Kirsten Dunst arrived at the 77th Annual Academy Awards via the Toyota Prius Hybrid, a Super Ultra-Low Emission Vehicle, as part of the "Red Carpet Green Cars" drive-up championed by Global Green. USA Photo Credit: Academy of Motion Picture Arts and Sciences

It's pretty obvious that, if there's a God, he had a sense of humor when he handed out oil reserves. He allowed the Jews to wander the Middle East for thousands of years, and then settle in the only place without oil. Meanwhile, oil supplies ended up in the hands of a group of folks that mostly despise the West, treat women like property, are nostalgic for the 6^th century, and can be whipped into a murderous frenzy over a few cartoons.

The Oil Problem
Although most alternative energies will reduce the demand for fossil fuels in general, they will do little to quench the thirst for oil. The problem is that most of these technologies are designed to produce electricity. For reference, here's an overview of our sources of electricity by fuel source in 2004:

As you can see, when it comes to producing electricity, petroleum is relatively insignificant. Putting a solar panel on your roof or a windmill in your backyard will reduce the demand for coal and allow some aging nuclear plants to be retired, but will have little impact on the demand for oil.

As long as we're on the topic of things that won't solve the problem, ethanol is worth mentioning. This belongs in the category of another government bribe for the farm vote rather than a serious solution to the problem. Leaving aside the question of whether there's enough farmland to grow enough corn to be distilled into enough ethanol to make a difference (probably not), this looks like another government welfare check for farmers. According to most studies, when all the energy inputs are counted, the process of distilling corn into ethanol consumes more energy than it produces.

Transportation
Oil is mostly refined into gasoline and diesel fuel and is overwhelmingly used in the transportation industry. When it comes to powering our vehicles, alternatives are pretty limited for the time being. Although it's expensive, volatile, and requires a huge new infrastructure, renewable hydrogen looks like the long-term solution that will allow us to someday give the Middle East the lack of attention it deserves. However, we need something in the meantime.

I remember visiting Europe last year before the major run up in oil prices. As most Europeans believe in taxing everyone and everything to death, gasoline there was already the equivalent of $5 per gallon. The result was a sea of ugly little cars. With little cartilage in one knee, riding in these as a passenger was painful and I couldn't help hoping our future would be different. After visiting car dealers and making a lot of new best friends in the last few weeks, it might be.

Hybrids
A hybrid is any vehicle that combines two or more sources of power. In this case, hybrid cars combine a gasoline engine with a rechargeable battery and electric motor. The gasoline engines for hybrids are usually a bit smaller than the typical gas-guzzler to accommodate the extra components under the hood. However, the hybrid motor provides extra power for quick acceleration or hills. When the hybrid is stopped, some are virtually silent as the gasoline motor shuts off and the car runs off the electric motor. These are cars that don't need to be plugged in as they use the gasoline engine and also recover the energy used in braking to recharge the battery.

Paying a Premium
As with any new technology, hybrid technology is in its early stages and still very expensive. Here's a comparison of the five cars that currently offer a standard version and a hybrid along with the approximate MPG gas savings:

Source: Acura.com

At present, the Honda Civic appears to be the only one with a big increase in gas mileage and a small increase in price. In most cases, the hybrid has additional features that account for some of the price difference. However, this technology still increases the price substantially. Is it worth it?

Doing the Math
If we assume that gas costs $2.50 per gallon and someone drives 15,000 miles per year, here's the annual cost of gasoline:

Fuel economy standards for hybrids are reported to be just as misleading as for other cars, and a good rule of thumb is to reduce the reported gas mileage on the window sticker by 3-5 MPG. As a result, if I trade in my gas-guzzler that gets about 15 MPG for one of the roomy hybrids, actual mileage will probably improve to a bit over 25 MPG. As you can see from the above, savings would be about $1,000 per year. With current gas prices, it could take over 8 years to make up the price difference through gas savings. From doing this exercise, it's hard to make a case for hybrids on fuel savings alone.

In evaluating advantages of a hybrid, the key variables are gas mileage, miles driven per year, and the cost of fuel. High annual fuel costs or the expectation that gasoline prices will continue to increase make hybrids look better.

Surprises
I made a point of driving the original and the hybrid version when visiting a car dealer. Before getting into a Toyota Highlander, the first thing that struck me was the sticker on the window that indicated the gas mileage was higher in the city than the open road. When I asked if this was a misprint, the explanation was that stop and go driving actually improves fuel economy in these. When the car is stopped or the car decelerates, the electric motor takes over and saves gasoline.

It should be noted that this applies to cars based upon the Toyota hybrid technology, as cars based upon Honda hybrid technology have the more typical lower gas mileage in city driving. For what it's worth, the warranty on the Toyota battery and electric motor package is 150,000 miles versus 75,000 miles for the Honda package. As a result, city folks that do a lot of stop and go driving would probably prefer the Toyota technology (also used by Ford & Mercury) while the Honda technology looks better for those that spend a lot of time on the open road.

The second major surprise had to do the performance of the car. I have to confess to having a bias that these cars were probably built for environmentalists that would happily hold up traffic by driving an underpowered car that took most of the day to go up a hill. Another surprise. Hybrids combine the power of two motors and are significantly faster and more responsive than the original. They were a lot of fun to drive.

Federal Tax Incentives
For anyone that purchases (leases probably don't qualify) a new hybrid after 1/1/06 with the intention of driving it and not selling it, tax incentives vary by a formula only understood by a bureaucrat. Here's the incentive for current and planned hybrids:

Source: HybridCars.com

This is worth more than a deduction as your tax bill is reduced by the above amount. However, as with any government program, there's some fine print. The biggest caveat is that this tax credit sets a limit of 60,000 hybrids per carmaker. It's first come, first served. After that, the incentives phase out over a 15-month period.

Carpool Lanes
For California drivers, some hybrids qualify to be driven in the carpool lane with only one occupant. The bar is set fairly high, as hybrids have to get 45 MPG or more before the owner can apply for a sticker that allows the use of the carpool lane at any time without another passenger. At present, the Honda Civic, Honda Insight, and Toyota Prius are the only hybrid vehicles that qualify.

All Things Considered

In the last few years, oil production hasn't kept pace with demand and it's getting down to crunch time. A way has to be found to reduce the demand for oil, or skyrocketing prices and a lot of unpleasant consequences will do it for us. This is going to be a tough problem to solve, but keep in mind that it's mostly a technological problem and higher oil prices finally provided the incentive to solve it. If hybrid vehicles gain significant popularity, these may be a way to manage our dependence on oil with relatively few sacrifices until a more permanent solution is found.

For those considering a hybrid, Federal tax incentives will shorten the payback period and the combination of more horsepower AND better gas mileage in the roomier cars and the ability to drive in the carpool lane with smaller cars is a combination that should appeal to many people. This is a very impressive technology, but to gain widespread acceptance and make a dent in the demand for oil, hybrid vehicle manufacturers will have to become more realistic when it comes to pricing and a wider variety of vehicles will have to be made available. Our hope is that more competition and increasing sales will result in pricing that shortens the payback period from gas savings dramatically.

For anyone interested in more information on these, http://www.hybridcars.com/index.html is worth a visit. This website includes a brief description of the publicly traded companies involved in hybrid vehicle technology. For disclosure purposes, it should be noted that Odyssey Advisors, LLC presently has investments in three companies with some exposure to this industry.

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 a 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 © 2006 by Odyssey Advisors LLC

Meet the Most Successful Blue Chip Stock Picker on the Planet, Geraldine Weiss, the founder of Investment Quality Trends.

by Natalie Pace, CEO, NataliePace.com™.

Geraldine Weiss, Publisher Emeritus Investment Quality Trends

When she founded Investment Quality Trends, in 1966, she couldn't even get a job in the industry (as a woman, she was offered secretarial positions instead of an analyst's desk). Today, her newsletter is ranked number one for risk-adjusted returns for the past twenty years by Hulbert's Financial Digest, a respected independent stock newsletter-tracking agency. Many Wall Street VIPs who wouldn't offer her a job are now ardent subscribers to her bi-monthly stock updates.

While the Wilshire 5000 has posted 11.8% annualized returns for the past twenty years, Investment Quality Trends has brought subscribers a return of 13.2% over the same period. And the best part is that since you're investing in dividend-paying Blue Chips, you can rest easy at night while your money earns dividends and posts gains.

A Company will earn the I.Q. Trends designation Select Blue Chip after it has met 5 of the 6 following qualifications.

1. The dividend has been raised five times in the last twelve years. 2. It carries a Standard & Poor's Quality ranking in the "A" category. 3. It has at least 5,000,000 shares outstanding. At least 80 institutional investors must hold the stock. 4. There have been at least 25 years of uninterrupted dividends. 5. The earnings have improved in at least seven of the last 12 years.

With this kind of stability, research and strict criteria going into each buy, sell or hold and the Investment Quality Trends track record, IQ Trends is a reasonable alternative to a mutual fund, if you are interested in managing your own holdings, but want the best research available. The Investment Quality Trends buy/sell strategy is a long-term buy and hold proposition (not the day-trading favored by many stock newsletters), thus it can be ideal for the retirement plan, where you want less risk, less trading and less active management, combined with a much more favorable return than is seen in the average mutual fund.

Geraldine is no longer actively managing Investment Quality Trends. Instead she is enjoying her golden years and her family, including twelve grandchildren. However, Kelley Wright, the managing publisher of Investment Quality Trends is continuing Ms. Weiss' legacy, and adhering strictly to her formula. As Kelley says, "Geraldine Weiss was a true pioneer but she didn't get all of the kudos that she deserved. I'm trying to do that for her now."

Although Geraldine's system calculates winners based upon the 6-point checklist, it is founded upon a simple theory that Dividends Don't Lie (the title of her first book). "We pick only quality stocks," Geraldine says. "Those companies care about their stockholders and are willing to share their profits in the form of dividends."

So, if you're wondering what's in Investment Quality Trend's Lucky 13 list, or on their undervalued chart and which blue chips are ripe for harvesting profits on, read on, and mark your calendars to come into the NataliePace.com chat room on March 15, 2006 at 8:45 a.m. PT to ask your questions of Ms. Weiss and Mr. Wright one-on-one.

 

NEVER PAY RETAIL!
"Women make better investors than men. They learn to look for bargains and look for seasonal trends. Men like a stock pick because they like Joe or the broker. Without any investigation, they'll go and buy. A woman rarely will do that. A woman will research and make sure she is getting a bargain." Geraldine Weiss

Geraldine, you are a legend. Your stock newsletter, Investment Quality Trends, is ranked number one in risk-adjusted returns for the past 20 years, with 13.2% annualized gains (source: Hulbert's Financial Digest). However, when you started out, in 1966, there weren't many women in the financial business, were there?

I used the initial G. Weiss because when we sent out promotional literature, I used the same letter that my partner sent out. He got all the replies and I got none. There was a feeling against women in the business back then. Everyone thought I was a man when I used G. Weiss. Lou Rukeyser invited me to be a guest on his show, so I had to come out of the closet. By then, they didn't care if I was a woman or a well-trained monkey.

Women in the U.S. today have much more opportunity in almost every aspect of life and business. That wasn't the case thirty years ago, was it?

It was very different in the beginning. I tried to get a job as an analyst and all I was offered was a secretarial position, so I started my own business. I was the first woman to start an investment advisory business. It isn't that way anymore.

You had your degree. Why were you getting offered entry-level positions?

They would say that they didn't have an opening, but they did have an opening as a secretary.

Well, the upside was that it prompted you to start your own business, which is today, one of the most successful in the history of Wall Street.

That's right.

What's your secret?

We pick only quality stocks. Those numbers hold up better with quality companies that have been around a long time, have a reputation and have a lot of stockholders. Those companies care about their stockholders and are willing to share their profits in the form of dividends.

The research criteria you use is quite strict. Did you have a Eureka moment that led to the structure of your formula?

My father and mother were both investors. I heard about the stock market over the dinner table. My father was a stickler for picking blue chips that pay a dividend. My folks were not all that different. There were a lot of people who were interested in the income of stocks. The market wasn't a gambling casino. When it came time for me to think about the stock market, I remembered what I learned from my father. I realized that dividends and income were important. I then began to realize that stocks fluctuate to the extremes from high to low dividend yield. When the dividend yield was low, massive investors were not interested any more. I applied that to blue chips and determined that as dividends were increased, the price would rise. You could buy at undervalued and hold it indefinitely as long as dividends continue to rise. It was a very good strategy, as long as you stuck to blue chips.

No epiphany. Just hard workÉ

It was amazing to me that it worked. This is so simple! Why doesn't every one realize this? Everyone is looking for the Holy Grail, and it is just such a simple thing.

Do you see anything worth buying these days?

The perfect examples are financial stocks, many of which are undervalued because everyone is looking for interest rates to go up. When you look at Bank of America, which is going to be around for a long time, the yield is 5%, and it is selling at 11 times earnings. This is a good buy, and you hold it until interest rates start coming down again. You're buying stocks that are not popular, that are not in favor, and you wait for them to come back in style. If you buy good quality, they do come back. As long as you have a relatively long-term horizon, and you're not playing the market, it is an approach that will reward you.

Can just anyone determine the undervalue and overvalue point of a company by looking at its dividend yield?

We look at long-term data. Each company is different. There is no blanket formula. It has to be applied to that company and that stock. Every stock has to be evaluated independently. This is something they should be teaching in high school and certainly in college--for men and woman.

Well, maybe you should write the textbook!

I've written two books. It doesn't pay. The sad thing is that financial books don't pay more than poetry books. For the 1^st book I received a $15,0000 advance. The 2^nd book gave me an $18,000 advance. For the time, effort and anguish of writing a book, it doesn't pay. I see these people on T.V. with a popular novel and Hollywood picks it up, but that's not happening with financial books.

Investment Quality Trends covers 350 stocks. Every month. That's like writing a book every 15 daysÉ

Once you determine the criteria, you put that on the computer and mark the yield you're looking for. As far as our issues go, it's pretty simple. UnderValued Stocks: those you look at to buy. OverValued: you look to sell. A rising trend stock could be attractive, if it's just started to rise. Stocks in declining trends, if it's getting close, near 10% of UnderValue or OverValue, I'll consider it. I don't look for the last dollar. Again, this isn't a trading vehicle. It is a long-term investment vehicle.

SoÉ good for 401(k) s?

Perfect for that. You're sticking with good quality. You're looking for dividends. That's exactly what you want in your 401k or your KeoghÉ

In 1966, when you began publishing, what it was like for women?

I started publishing the newsletter because in 1966 Ñ 30 years ago Ñ it was very difficult for a woman to break into this business, even as a stockbroker. I wanted to analyze stocks and the stock market, so I realized I would have to start my own business to do so, which I did.

Why there was there the perception that women didn't have the experience with money? Women have always been the shoppers of the world.

Actually women make better investors than men. They learn to look for bargains and look for seasonal trends. Men like a stock pick because they like Joe or the broker. Without any investigation, they'll go and buy. A woman rarely will do that. A woman will research and make sure she is getting a bargain.

I'm assuming you finally did get the invitation to the Stock and Bond Club.

When I was invited to join, I didn't. By that time, it was a social club, and I didn't have the time.

How long were you in business before Lou Rukeyser found you?

It was almost 10 years. The first time he had me on the show, I thought, "I'm so nervous. I wonder if anyone ever died of stage fright." His producer said they had more response than with any other program. Actually I was on his show three times, and then he invited me to be a speaker in his seminars. Just a few years ago, before I retired, he invited me back again. He likes my approach, too. He always said, "My father would have liked your approach. He said stocks that pay dividends go up too."

Are you concerned with some of these old-school blue chips that are in the red on their pension plans? Standard and Poor's published a report in July that names 39 companies that are a billion or more underfunded on their pension obligations.

I don't know that you can do anything about it. The funds are so large. That's why we follow the funds. They do point the way where you're going. It's too bad. Usually there is some calamity that shakes it all out. In 1973, all of the mutual funds went out of business, and then you build it up again. Maybe these hedge funds will reduce the impact, but it is a problem -- something that you have to watch.

What do you think about hedge funds?

It is a problem that these fine companies get jerked around by these funds. On the other hand when they sell, hedge funds offer opportunity because they irrationally depress a stock. It offers good value if you're an alert investor. Look at Pfizer right now. There's nothing wrong with Pfizer. Merck -- I'm a little afraid of that. And yet, we had the same problem with Philip Morris (NYSE: MO). Altria [the new name of Philip Morris] came through all those lawsuits smelling like a rose. I have a feeling that Merck and Pfizer will come through it, even though there are pending lawsuits. I think that they are frivolous lawsuits. Those are the kinds of things that the institutions are afraid of, and individuals can take advantage of with a few hundred shares.

What's the most important thing that every investor should know?

The big thing is diversification. Don't put all of your money in at once. Wait until you see a good value and then buy. In the meantime, keep your money free. When you see the Bank of America priced right, you go in and buy 100 shares. Do it gradually.

Are you bold or cautious right now?

The housing bubble is definitely a bubble. I certainly wouldn't invest in real estate right now. There is never a time when there isn't good value in the stock market. Financials, for instance. What's going to happen to the whole market I don't know and I don't care. There is always something to buy. Rarely can you indiscriminately buy anything. If you're selective, there is always something.

Do you consider any other criteria, like whether or not the CEO is ethical? Do you try to avoid the Enrons of Wall Street?

It's difficult to know what people are doing in their personal life. Is the quality of the company an A+ company? Does it pay its dividend? Does it increase its ratio? Is debt 50% or less of the incoming revenue? All of these nuts and bolts are important, and they add up. You don't know what the CEO is doingÉ

They're all charming man. In order to be the president of a corporation, of course you're charming, of course you know how to say the right things. Only look at the figures. Just calculate the performance of the numbers of the company. Don't look at what they say, but what they do.

Any sectors where you are bullish/bearish?

There is good quality and good value in the financials and also in the drug stocks. Bristol-Myer Squibb is selling for yield, at almost 5%. Bob Evans Farms and also Mimi's here. Those are interesting stocks that happen to be undervalued. There aren't a lot. Wal-Mart and MacDonald's are undervalued. Those are good stocks.

I'm very nervous about the real estate market. It really is greatly overvalued. That will come to an end.

Do you have any advise for women who are hearing the Biological clock ticking at the same time as the Tenure clock?

I personally waited until I had my children in school to go back to work. I felt that was important to make sure they had a home to come back to. It depends upon the person. I think a woman's main job is to the family. On the other hand, I didn't want to be stuck in the house. But that was me. My daughter in law is an attorney. She doesn't want to have kids until she's over a certain age. Everybody has to do what's right for them. Everyone has to wrestle with those problems for themselves, in however they are comfortable doing it.

 

Geraldine Weiss just had her 12^th grandchild. She has the number one stock newsletter in the U.S. I guess you could say that she has managed to balance work and family quite well!

Don't miss chatting one-on-one with Ms. Weiss and the current managing editor of Investment Quality Trends, Kelley Wright, in the NataliePace.com chat room on Wednesday, March 15, 2006 at 8:45 a.m. PST. For more information, go to the calendar section at NataliePace.com.

If you would like to start earning reliable gains the easy way, you can subscribe to Investment Quality Trends online at IQTrends.com. For more information, email info@IQTrends.com or call 858.459.3818.

Want to Be Sexy and Fiscally Fit? Avoid Investment Pornography!

by Kelley Wright, Managing Editor, Investment Quality Trends.

Kelley Wright, Managing Editor, Investment Quality Trends Newsletter

While the Money Shows are an excellent forum for investor education, the exhibit hall is an excellent forum for disinformation and a centralized location to see all the things that should be avoided and/or ignored if one is serious about their financial well being. While I am an advocate of the free market and free enterprise, I am also cognizant that fear and greed are two very powerful emotions and that the less than scrupulous can and will take advantage of that fact.

Perhaps it is our wiring or just our fallen human nature that makes immediate gratification so attractive. Whatever the case, please understand the following: there is no software that generates 100% fool proof, guaranteed profit trades; that "revolutionary" new trading system being demonstrated at the big booth at the end of the row that was "back tested rigorously" only works under the conditions of the test. As a friend of mine likes to say, "back testing is simply torturing the numbers until they confess." You will not make 10,000% in the next 46 minutes using Dr. Joe Blow's heretofore unpublished, double-secret trading system that will only be released to the first fifty traders lucky enough to pay $3,000 for it. It's all RUBBISH!

The fact of the matter is that much of what the investment advisory community produces is nothing more than investment pornography. First you get excited, then confused and eventually angry when you realize that it's just marketing hype, and you got suckered.

Altruism is the exception, not the rule. A case in point would be a conversation I had with the head of a publishing company who asked if we would ever consider joining his stable of newsletters. As I looked at the rows of airbrushed photos of the respective editors I realized that only one of their letters had made subscribers any money, and then only when the market was moving in his direction. I pointed this out to the fellow and suggested that the contrast of our track record might cause problems for the other newsletters. "Returns? Who knows about returns; we only care about subscriptions. They (the public) will buy whatever we sell them." Enough said.

A couple of months back I suggested in this space that Google (GOOG) would one day be the mother of all shorts. I made that statement for a number of reasons, one of which was something I witnessed at the AAII Conference in November. Our neighbor in the next booth was demonstrating his very well known publication's momentum trading system. The stock he was using to make his point was Google. When I heard this fellow say that GOOG was the only stock he owned and he was margined to the hilt I knew the top had to be close.

Later that day we had a chance to chat and he asked about our approach and how it worked. He listened intently for a couple of minutes and then began to explain the "flaws" in our system. I nodded my head and thanked him for his insights. I saw this fellow in Orlando last week but I didn't have a chance to ask him about his position in Google. Hmmm, don't you just hate those margin calls?

If I had a dime for every person that told me IQT is "technologically challenged," or "hey, you could use some colored ink pal," or any of the other helpful hints we inevitably hear, I'd probably be in the Cayman Islands contemplating the cloud formations. If what we do is dull, boring, vanilla or any of the other delightful adjectives that are suggested to me, then so be it. I sleep like a baby at night and for the most part our subscribers do as well. 1). Protect your principal. 2). Earn a return on investment (dividends). 3). Capture capital gains for total return. Now that's excitement!

The Hulbert Financial Digest ranks IQ Trends the number one investment newsletter out of the 165 letters surveyed for risk-adjusted returns for the previous twenty years. What is important to note is what separates us from the other four letters in the top five; specifically the amount of risk required to generate returns. Two of the letters had about the same level of risk as the Wilshire 5000 index; one was almost twice the risk of the Wilshire 5000 and the other more than twice the risk of the Wilshire 5000. IQ Trends achieved its returns with about 24% less risk than the Wilshire 5000. Beyond the obvious that superior returns with less risk is desirable, less risk equates to less volatility and therefore generates higher compound rates of return over time.

The punditry's compulsion to be viewed as insightful is nothing new; neither is their capacity for absurdity. By example, this notion that the new Fed chief will need to flex his inflation-fighting muscles to demonstrate his machismo to the markets is sophomoric at best and willfully ignorant at worst. Bernanke made it to this position because of his mind, not because he has the biggest slide rule at the conference table. It is simply pathetic what passes for commentary these days.

Companies in the News:
AT&T (T) and Bell South (BLS) are humming; Verizon (VZ) isn't. Guess which one is the Faded Blue Chip?

Speaking of the Faded Blues, I read an opinion that General Motors (GM) was a buy now that they had taken their medicine. OK, so let me get this straight. The company is bleeding red to the point that they cut their dividend 50%, and this is a good thing?

Auto and home insurer Mercury General (MCY) declared a first-quarter dividend of 48 cents, equaling an annual rate of $1.92. The annual payment represents an 11.6% increase over the rate paid in 2005. It is those double-digit dividend increases every year for the past twelve years that earns MCY a "G" designation by IQ Trends.

Cooper Tire & Rubber Company (CTB) today announced a quarterly dividend of 10.5 cents per share on common stock, payable March 31, 2006, to stockholders of record at the close of business March 3, 2006. This will mark the 136th consecutive quarterly dividend paid by Cooper Tire & Rubber Company.

Arthur Gallagher (AJG) looks like a mess on the surface, but are things really that bad underneath the hood? Earnings have certainly taken a hit as the company settles their sins of the past but the core businesses of brokerage and risk management are producing revenue gains of 7% and 6% respectively. AJG also has a growing risk-management business that's not tied to insurance brokerage. Lastly, the company pays a good dividend and has a "G" designation for their track record of consistent dividend hikes. This stock might be too "iffy" for some, but for the patient investor it should turn out to be a solid performer.

AN OVERVALUED MARKET:
80% undervalued stocks coincides with historic market bottoms.
17% undervalued stocks coincides with historic market tops.

FOOTNOTE LEGEND
U - UNDERVALUED buying area: Dividend yield is historically high and price is attractively low. Bargain buys.
O - OVERVALUED selling area: Dividend yield is historically low and price is unattractively high. A sale should be considered in this area.
R - RISING TRENDS: Stocks have moved at least 10% from Under-value and should be held until price is at or near Overvalue.
D - DECLINING TRENDS: Stocks have moved down at least 10% from Overvalue and should be avoided until price is at or near Undervalue.

Question: How Do I Know Which IQ Trends stocks to buy?
Q.) Given the fact that there are approximately 100 stocks between the Undervalued and Rising Trend categories, how does one choose which stocks to put into their portfolio? Do some subscribers just buy them all?

A.) This is a frequent question and one we address at most presentations, most recently the paid event at the World Money Show.

Unless you run a mutual fund 100 stocks is simply too many to track and you would probably lose most of the advantage a more concentrated portfolio would provide. Accordingly, we generally advise that you hold no more than 25 stocks.

A filter we suggest at our presentations consists of the following: 1) stocks that are Undervalued; 2) stocks that have a "G" designation for consistent dividend increases of at least 10% per year; 3) stocks that are ranked "A" or better by S&P; 4) a P/E of 15 or less; 5) a dividend payout percentage of trailing twelve months earnings of 50% or less (except for utilities at 75%); 6) debt as a total percentage of capitalization of 50% or less (75% for utilities); and lastly, 7) a book value of two times or less.

While we try to make this as mechanical as possible, we realize that stock picking is still an art to a degree. For those subscribers that don't have the time or the inclination to learn such nuances we offer a non-discretionary consulting program for an extremely modest annual fee. For details contact Michael Minney at 858-427-1071.

Don't miss your opportunity to tap Kelley Wright's wisdom in an exclusive NataliePace.com online chat.

Wednesday, March 15th, 2006
8:45AM through 9:30AM.

Online Chat With The Most Successful Stock Picker on Wall Street. Investment Quality Trends has the highest risk-adjusted returns for the past 20 years. Their focus is dividend-paying Blue Chips. Meet the Founder, Geraldine Weiss, and the Managing Editor, Kelley Wright, and learn what companies are hot for 2006.

Investment Quality Trends is rated the #1 Top Performing Newsletter for twenty years (risk-adjusted) by Hulbert's Financial Digest. If you are interested in accessing Mr. Wright's newsletter, to post those kinds of gains yourself, go to www.IQTrends.com.

Want a Raise Now? It Could Be a Check Mark Away.

by Maya Patel.

Many employers offer "matching funds."

If you forgot to set up your 401 (k), you could be throwing free money down the drain.

Friends, family, sitcoms and books provide infinite guidance on what to anticipate as we enter a new phase of life. In your twenties, wouldn't it be great to have some sort of a "Smart Girl's' Guide" to life on your own?

I had a job offer from a major Wall Street firm and found a studio apartment within walking distance to the office. Simultaneously, some of my friends were moving to NYC. So with my new home, my corporate casual wardrobe and my social network, I thought I was set.

On the first day of work I was given a welcome package that included a myriad of papers. As I took a cursory flip, I saw keywords like 401 (k), medical and dental insurance. After spending sometime with the paperwork before running out for drinks with the other new analysts, I filled out what I thought was relevant--the medical and dental benefits.

I did not bother with the 401K. My basic (mis)understanding of the plans were as follows:

1. My shoe budget goes down. Money, that could otherwise be spent today, would be deducted from each paycheck and saved for use after I was too old to enjoy it (591/2).

2. I was giving up enough to the man! I felt the burden of expenses as a newly minted graduate living in New York City and justified just saying no to another boring, necessary evil that sucked more money out of my wallet and away from great shoes and clothes!

Yes, friends, smart as I am, with an enviable new job in the Big Apple, I actually worked for 6 months without a 401K plan, wasting over $5,000 of my budding nest egg and throwing away $2,500 of free money from my employer! Even more startling is that only about 36% of single woman are planning for retirement. (Source: Oppenheimer Survey on Women and Investing)

Due to ignorance, fear, short-sightedness and my desire to hit happy hour right at 7:00, I had overlooked all the benefits of participating in a 401K, benefits that, incidentally, pay off NOW, not just when I retire. And the best thing about it is that after you enroll and allocate your investments, you just have to monitor the statements to make sure that your money is working for you and that you have not made investments in securities that are headed south. Of all the crazy money-making schemes that we think of, from Vegas to selling articles, letting your money do a little work for you, and monitoring its progress has to be the easiest!

If You Don't Save It, It Just Goes to Uncle Sam:
Tax Advantages: The money you contribute to a 401K plan is a pre-tax deduction. Therefore, you pay yourself before paying the government. The money cannot be used for your next vacation or to buy Manolo Blahniks any way, so isn't it better to save it in a 401K instead of giving it to the government? In addition, you are not taxed on any gains, including interest, you make on 401K money until the funds are disbursed. The money in a 401K plan grows tax deferred.

It's the Easiest Way to Become a Millionaire
If you have 40 years to retirement and make $25,000 (with a fixed 5% raise a year) and contribute 10% of your salary with a 3% company match, you could retire at 65 with $1 million in savings. 

Year 1:
Employee Salary: 25,000
Employee Contribution (10%): 2,500
Employer Matching Contribution (3% of 2,500): 75.00
Investment Rate of Return: 8%
Total Account Value: 2,689.36

Instant Raise From Your Employer
Company Match: Many employers have a match system in place, where they offer to match a certain percentage of the employee's contribution. In my case, it was 50% of my contribution. That is free money! An instant raise!

Some employers require you to stay at the firm for a certain number of years before the matched amount is considered vested. At my firm it was three years. I only learned about vesting upon departing the firm, so I recommend that you ask about vesting when you enroll. Add this to the list of the other questions you have for your 401 (k) manager.

Investment Variety
This is the fun part! 401k plans offer a range of investment options. On average, companies now offer 13 investment options. The most common options are listed below. If you're still confused, there are a number of articles cited at the end of this article, which should help you make sense of the best options for you (source: 401khelpcenter.com).

Large-cap Stock Funds: Generally have a median market capitalization of more than $5 billion to $10 billion. These stock funds are made up of large companies.

Mid-cap Stock Funds: Normally have a median market capitalization of between $2 billion and $10 billion.

Small-cap Stock Funds: Small-cap stock funds typically have a median market capitalization of less than $2 billion.

International Stock Funds: International stock funds invest in equity securities of issuers located outside of the United States.

Global Stock Funds: This type of mutual fund generally includes at least 25 percent foreign securities in its portfolio.

Bond Funds: Bonds are usually divided between longer maturity and shorter maturity. Short-term bonds are generally considered to be less risky than long-term bonds. A bond fund is always replacing bonds in its portfolio to maintain its average maturity objective. You may also have a foreign bond option.

Stable Value Funds: These funds can provide an attractive alternative to bond funds or money market funds in a 401k plan. These funds invest in stable value contracts with insurance companies or banks, and their market risk is generally less than that of a stock or bond fund.

Money Market Funds: Sometimes referred to as "cash," money market funds are like bank savings accounts in that the value of your original investment does not fluctuate and your investment is not "at risk" as it is with stocks and bonds. However, they are not guaranteed by the FDIC, like a bank savings account would be, and the rate of return is historically lower than for stock and bond funds. As you near retirement, you want to have less money at risk, and you may wish to increase the amount in the Money Market and Bonds, and reduce your exposure to stocks.

Index Funds: These funds are intended to replicate an existing market index such as the S&P 500, which is an index of 500 large U.S. company stocks. Index funds and exchange-traded funds (ETFs) generally have lower internal fees and costs than "mutual" funds, which means more money is returned to investors.

Company Stock Funds: These funds allow you to invest in the company you work for. Company stock funds are not diversified investments, which makes them theoretically more volatile than a mutual fund. The NASD warns that, "If your company stock holdings exceed 20% of the value of your total investment portfolio, you may wish to consider redistributing your assets across a broader spectrum of investment." This was a HUGE problem just five years ago, when 57.73% of Enron employees' 401(k) assets were invested in Enron stock, as it lost 98.8% of its value.

Emerging Market Funds: These funds are made up of stock of companies located in developing nations.

Life Cycle Funds: A life cycle fund is a mutual fund geared toward investors in a certain age group or with a specific time horizon for investing.

This is a great entrée to investing, because you have a manageable list of investment options to research and allocate funds. Allocations should be made according to your risk tolerance, age and investment goals. To determine how much risk to incur consider your investment horizon - how much time before you will need your money. You should choose where you'll invest your 401(k) funds based on how many years you have before you retire. The closer you are to retirement, the less time you have before you'll need your money and the lower risk you'll want to take. Stocks carry much more risk than bonds (and historically a higher rate of return), and bonds have more risk than money markets.

Portability
A 401k retirement plan can follow you throughout your career. When You Leave Your Job, Don't Leave Your 401K! My last article outlined options for rolling over your retirement plan without any penalty or tax consequences.

Loan and hardship withdrawals
As I analyzed the benefits of contributing to a 401k, a tiny hesitation remained. If I am not able to withdraw money until I am 591/2 without paying a hefty penalty, what happens if there is an emergency in the interim?

The government allows plan administrators to offer 401k loans to participants. (The government doesn't require this and therefore it is not always available.) Proceeds of 401k loans are not subject to taxes or the 10% penalty except in the event of default. The government does not set guidelines or restrictions on the uses for 401k loans. Many employers, however, do, and these can include minimum loan balances (usually $1,000) and the number of loans outstanding at any time in order to reduce administrative costs. This is an option you have under the 401k plan, however there are detailed criteria for loan and hardship withdrawals that are not listed here.

Six months into my first job, I finally threw in the towel and committed to the 401k plan. I felt foolish for not contributing sooner. I effectively missed a raise of $2,500, since my firm was matching .50 for every dollar I contributed.

This should be the Smart Girls' financial lesson number 1. Don't throw away $2,500 on the dream of a pair of shoes.

Maya Patel is an associate in the Debt Capital Markets Group at Harris Nesbitt Corp. She focuses on the origination, structuring and execution of high yield and investment grade public and private debt financings, as well as private equity transactions. Previously, she was an analyst in the Leverage Finance Group at Citigroup Global Markets. Email: maya.patel@harrisnesbitt.com

Other Articles of Interest:
The Eastern European Renaissance. This Year's "It" Investment. Article and Stock Report Card by Natalie Pace.
Leave Your Job, Not Your 401(k) By Maya Patel. Discount Brokerages Make Rollover IRAs Easy.
NASD Investor Alert: Putting Too Much Stock in Your Company - A 401(k) Problem
What the Mutual Fund Salesman Forgot to Mention. by Paul Woods, President & CEO of Odyssey Advisors, LLC. How sales charges, high fees, and excessive diversification will have you working way too long.

Are You Starting Your Day with Rocket Fuel or Breakfast Glue?

by Gary Kobat, personal trainer and life coach.

"Two thirds, or over 67% of the U.S. population are NOW overweight or obese."  Change Your Diet; Change Your Life. Start Here.

That's our own Gary pacing Jim Carrey in Jim's first Half Ironman

No we don't mean coffee. Our question: are you starting your day with food or fuel?
Eating a traditional seventy-percent-plus carb breakfast is one of the most unhealthy dietary habits in existence in this country.  Breakfast bagels, breads, muffins, cereals, potatoes, sugars, dairies, and even more sugars (or liquids and foods that turn into sugar) are on every corner with commercialism at it's worst. Clearly this type of eating "non-plan" does not contain a current understanding of human physiology and daily human performance need at today's levels, and is basically how everyone got onto the "over" weight and obese track in the first place.

Something is not working here.  Realize a paradigm shift is in the works!

History shows, research confirms, and the latest studies are just in: When you consume less FOOD, you'll live a longer, higher-quality life.  When you eat more FUEL, you'll live an even longer, healthier, vitalic, energetic, higher-quality life.  

You are what you eat, or more importantly, what you eat that is still with you. Your biography becomes your biology. Regarding what you consume, you need to ask yourself another powerful question: is your meal plan clogging you, energizing you, or cleansing you?  

Foods and Fuels are the most powerful drugs you will ever consume. Remember: you don't get overweight, you DO overweight.  Your consistent daily actions, not what you do once in a while, are what determine your health, fitness and longevity (ie: weight destiny). Two thirds, or over 67% of the U.S. population are NOW overweight or obese.   That's "over" 10-30 lbs. "over" weight.  We refer to that as the infamous "over" syndrome. (Over eat, over emotional, over stressed, over tired, over, over, over É) and our kids are getting worse everyday.

"Over", "more", "emotional only" eating and "supersize" is OUT! Small portions, the size of your palm are IN! All you can eat is OUT!  Five-to-six small meals a day are IN! Excess carbs? Please!  Start your day with proteins to balance your mood the rest of the day, then eat your carbs for energy mid morning, have your biggest meal as lunch so you have plenty of time to digest it for energy the rest of the day, and don't eat after 9pm. The truth is unless you are training for a marathon, an ironman, or a long bike excursion, packing seventy percent-plus of your daily diet with carbs is absolutely heading you away from your objective and putting you on the obesity path of the masses.

Bagels, similar to the flour and water you used as a kid in elementary school, turn into paste or glue. So remember the next time you think you need a bagel, you are really ingesting glue, and for what reason, the marathon? (Endurance athletes get a hall pass on this one.) So that means that all pastas, breads, cakes, muffins and chips turn into some sort of paste, and on your sides if you are not working out or training enough.

Let's also remember the three consumable FUEL delivery systems: liquid fuel, soft fuel, and hard fuels.  Liquids are converted into energy in minutes; soft fuels are converted into energy in less than 10 minutes, and hard fuels take forever, sometimes hours, to digest. So when you are in need of energy, work or training, think about how quickly you need your energy and then make your fuel decision. Liquid protein shakes, bananas, fruit, oatmeal, egg whites, veggies, etc. make great liquid and soft instant energy snacks, as well as meals, anytime of day.

Experiencing a light activity day? Eat lighter. Experiencing a heavy activity day? Eat more. Setting yourself up for energy-success means planning your fuels and meals for the next day, the day after that, and the day after that.  Match your daily fuel needs with your activity levels, considering yesterday, today and tomorrow.  

There are 1.5 hours of carbohydrates in your system at any one time, or the equivalent of running all-out for 1.5 hours at top end heart rates, which you don't do. This fuel acts as short term energy in your system when needed. Also realize you have 3-4 weeks of fat on your body as long-term energy fuel, and that there is 2.5 times the energy from a fat gram than a carb gram of fuel.  So psst: you have plenty of fuel in your body, you don't have to "over" eat, and when we create a fat burning machine by eating less sugars, we will have more energy.
 
Heads-up and think about dramatically reducing or eliminating your intake of EXCESS fats, oils, toxins, wheat, dairy, and acids: sugar-salt-nicotine-alcohol-caffeine-and prescription drugs. Also think about not eating when you are stressed or emotionally upset, don't drink during meals, properly combine fuels, eat slowly, chew your food many times, enjoy your food via a tranquil mind, remove the dead foods, devitalized foods, and excess DRY foods. Remember: the world is 70%+ water. Your body is 70%+ water. Your eating program is what % water? Drink water.
 
And let's not forget that the purpose of the elimination cycle in your body is to remove toxic waste from your body. Elimination is not merely one bowel movement, but the overall elimination of waste from all of the cells and tissues of the body. You are a body of living cells, and a healthy cell is fully hydrated, oxygenated, and holds little fat. The elimination cycle is without doubt your greatest ally in the prevention of inner disease, weight gain, and higher energy.

Take into consideration liquids, soft fuels, and hard fuels when understanding fuel, energy, health, and longevity. Give your insides a break once in a while, and lighten up on the hard fatty foods and eat fuels. Eat small, eat fuel, eat frequently, and you may just find yourself with more energy, less weight, and a better outlook in your day, in your career, and in your life.
 

Until next month: Eat smart. Live, work, train, and recover smarter.
 
A passionate life and fitness coach, world-class athlete, author, and keynote speaker, Gary Kobat works one-on-one with select individuals, customized mastermind groups, and larger goal oriented teams for lasting personal and professional change. If you are interested in joining a group or for a private consultation, email him directly at: gary@e-coach.com.

Couch Potato's Guide to Investing.

by Natalie Pace, CEO, NataliePace.com™

6 Tips for Making Money the Easy Way.

M-M and Cary Stratton Making Money The Easy Way Photo: M-M Stratton, Megorama.com

1. Throw me the Remote, Will Ya? This is easier said than done, isn't it? You don't want to ask a TV hog to hand you the remote because that is only going to invite an argument on why they should give it to you and how it's their turn to decide what to watch. At the end of the day, with investing at least, it's your money, dang it, and you get to say what goes. But, it will pay to have someone else digging between the couch cushions searching for the lost remote (or digging through those thousands of index funds finding the gold). So, find someone who is comfortable with giving you control, understands which shows you like to watch (or the kinds of companies you like to invest in), honors your ethics, doesn't test your boundaries of decency, etc., all that, and is capable of stashing your goods in a safe place. Make sure your financial planning partner doesn't have a record of losing things! Finding the remote is a pain, but losing your nest egg can be devastating.
   
   
2. Channel Surf. Stop Main-lining CNBC and start using TV for the purpose it was invented - brain dead entertainment. That's right. Switching from Cramer to Crumbs might actually improve the performance of your portfolio. Why? Because you won't be running with the herd on headlines. Yes, just as you suspected, if you buy into Google fever, chances are you are buying high, and if you wait until Enron is on everyone's dump now list, you might be better off using your stock certificates as wall paper. People who bought Google at the high lost over $100 per share in the last 60 days. If you want to get information that is proven effective, try out some of the stock newsletters that are tracked by Hulbert's Financial Digest and/or TipsTraders.com. These independent tracking companies hold the journalists and money managers to their picks, and give you an independent accounting of how well the companies they report on perform. There is a big difference between the talking heads. Learn which ones have a record of making money for people. It's just a click away. You can do it during commercials.
   
   
3. Exercise is Over-Rated. Guess which kind of investor loses the most money, the one who ignores their money or the one who mainlines data? Just like Evel Knievil, the American stuntman who broke 35 bones in his pursuit of fame, those risk-loving performance freaks who expect that their calculations are going to save them from blowing out a tire and landing in a body cast when they leap off of tall buildings, are the ones who spend more time on the sidelines recuperating. Sure getting a little exercise is going to make your fiscal physique sexier, but there is a case to be made for getting cuddly with your honey for a movie marathon and forgetting about stocks, bonds and real estate for the weekend. After all, most of Wall Street does this for the entire month of August. Getting on a balanced regimen of evaluating your portfolio and holdings once a month, once a quarter or even twice a year should serve you better than hyperventilating every time the Feds raise interest rates or oil nears $70 a barrel. No one ever made any money by panicking and taking on too much risk is a good way to lose a lot of money, even for professionals. The more balanced your portfolio, the more you can sleep at night, the more rational your buy and sell decisions will be.
   
   
4. Chips and Cola. It always pays to anticipate what the next big trend is going to be, which gives you license to sample a few snacks during LostÉ The last ten years was the decade of designer coffee (like Starbucks), but will Vitamin Water be the ticket of tomorrow? NataliePace.com gets our best leads from subscribers like you. Friends tipped us on MySpace in 2005, Google in 2004, Opsware in 2003 and Taser in 2002. So be sure, once you figure out what the next big thing is, that you email us at info@NataliePace.com! This investing tip alone gives you license to experiment and enjoy your life (and email us with the location of the Garden of Eden and the great new products and services that are there for the picking).
   
   
5. Desperate Housewives. Did you know that Disney downloads, from shows like Desperate Housewives and Lost, totaled 2.5 million episodes at $1.99 each on Apple's iTunes, according to CEO Bob Iger (on the 2.9.06 earnings call)? Did you know that Desperate Housewives and Lost are owned by ABC, which is owned by Disney, which just bought Pixar, making Steve Jobs (CEO, Apple and Pixar) the largest individual shareholder of Disney stock? Everyone has been worried about declining revenue for movies and television due to downloads, and Disney/Apple found a way to earn almost $5 million in their first at bat.

If anyone can figure out how to monetize movie downloads, it is Steve Jobs, and now that Pixar is owned by Disney and Jobs is the largest shareholder, you can bet that he is sharing some brainpower and bandwidth with Disney CEO Bob Iger. In only three years of operations, iTunes just sold their billionth legal download on February 23, 2006. iTunes Music Store now features a selection of over 3,500 music videos, Pixar and Disney short films, a variety of hit TV shows, 35,000 podcasts, 16,000 audiobooks and more than two million songs from the major music companies and independent record labels.

Hmmm. Has Disney just become the happiest place on Wall Street?

6. Check off: Check Out. If you work too hard to worry about mish mash, gobbledy gook like 401(k)s and Keoghs, check off some boxes, hand them back to your human resource manager and then check out into the blue haze of the television tube. Odds are that doing something with your retirement plan and then forgetting about it is better than doing nothing. The Wilshire 5000 (a broad gauge for the stock market) has posted 11.8% annualized returns for the past twenty years (source: Hulbert's Financial Digest). Investment Quality Trends, one of the most successful stock newsletters, has brought subscribers a return of 13.2% over the same period. And the best part is that if you're investing in dividend-paying Blue Chips, you can rest easy at night while your money earns dividends and posts gains. Of course, the more you know, and the more interest you take in your money, the more likely you are to really succeed, and reading just a few articles below should go a long way toward that goal. That is, if you're willing to get off the couch.

Other Articles of Interest:
Brokers and Lovers: It Pays to Pick a Good One.
Discount Brokerages Make Rollover IRAs Easy.
10 Steps to Protect Your Retirement NOW.
Don't Blind Date. Get To Know Your Nest Egg and Have More Fun.  by Natalie Pace, CEO and founder, NataliePace.com™.
10 Common Investment Mistakes; Avoid them and Profit! by Natalie Wynne Pace, CEO and Founder of NataliePace.com.
The Joy of Stocks, as told by Virgin Investor, Jodi Seidler.
Celebrities, Style and Parties. While You Dream of the Good Life, Your Future Could Be Cat Food. by Natalie Pace.  
NASD's Smart 401(k) Investing.

Ten Ways to Higher Pay.

by Warren Farrell, Ph.D.

Learn tips from one of the most respected authors on career advancement in the world.

Warren Farrell, Ph.D. With his wife, Liz and two daughters Photo Credit: Leslie Ellen Ray

My research for Why Men Earn More uncovered twenty-five differences between what men and women do in the workplace. Here's the rub. Everything men do leads to more money; everything women do leads to more balanced livesÑand usually, to better lives. So you don't just want to imitate men.

The road to high pay is a toll road. The trick is discerning which tolls are worth it. For example, working outdoors in the rain and sleet is a disadvantage for most people, but many park rangers choose the profession precisely because they love the out-of-doors. Here are ten tips for you and your daughter to consider. Most lists are slanted toward female executives, but womenÑlike menÑcome in all education and skill levels, so this is a diverse list.

1. Be aware of the 80 fields in which women earn more than men. Five fields that pay women more than men and also provide excellent opportunities are:

• Speech language pathologists ($45,000 women; $35,000 men; women make 29% more than men)
• Statisticians (35% more than men)
• Advertising and Promotions Managers
• Motion Picture projectionists
• Dental hygienist

2. Master a technical field, and then sell a technical product. Men love to buy from smart women. Thus female sales engineers get paid 143% of male sales engineers. Engineers and computer scientists constitute the majority of the highest paying fields now, and will in the future. There are hundreds of scholarships available only to women for female engineers and computer scientists, and women's pay exceeds men's (until the women choose to work fewer hours, travel less, move less, or work for a public agency rather than a private firm).

3. For women with fewer skills and less education, join the Marines, Navy or Air Force, but not the Army. Only three women in the War in Iraq have been killed in those three servicesÑall the other female deaths are in the Army. The safer opportunities are also the ones that translate best into civilian life, such as training in administrative work, weather, computer fields and health services.

4. Pharmacists now earn almost as much as doctors, have far more control over their lives, and do not experience the emotional taxation of being intimately involved with patients as they die.

5. Investment banking and financial analyst are two excellent choices for women who want to earn a lot, earn more than their male counterparts, but do not like taking major risks with money. Female financial analysts average $69,000 per year, 118% of their male counterparts. CEOs are selected from among those assuming bottom line, financial responsibilities for a company, not human resources or public relations, so these fields also pave the way for women who want to break alleged "glass ceilings".

6. Be more willing to take financial risks, whether by selling and working on commission (commercial real estate; insurance), or working toward being a venture capitalist. Venture capitalists typically earn between $100,000 and $300,000 per year.

7. Start a construction company. You don't need to lift a hammer or nail. You do need to be able to organize those who do. All government agencies and universities and many companies are required to hire a certain percentage of female-owned construction companies.

8. In medicine, take your eyes off doctors and consider nursing, or being a medical assistant or physician assistant. All are projected to be among the fastest growing fields in the next decade. Nursing can pay more than $100,000 per year as a traveling ("gypsy") nurse or as a nurse anesthetist. Only female nurses are allowed to see and touch the bodies of both sexes, giving hospitals an incentive to hire women. Medical Assistant requires nothing more than on-the-job training. Physician assistant, requiring only a Bachelor's, pays very well.

9. People who work 44 hours per week make almost twice what people earn who work 34 hours per week. The extra hours, if well used, lead to disproportionately fast promotions, and job opportunities that would not otherwise be available. To get those ten extra hours, hire out your repetitive chores--they cost less than what you'll be getting paid for your extra ten hours, and you'll be helping someone who needs the money.

10. The most important career decision you will ever make is the choice of your spouse. If you want family, well-raised children and a very successful career, there's a way to have it all. Marry a man who is happy to raise the children while you raise the money. Those men are available if they know you will respect them. National polls among people in their twenties now find 70% of men (vs. 63% of women) desirous of trading pay for more time with the children. Children raised by dads in intact families do extremely well on all twenty-six different areas of measurement (socially, physically, psychologically and academically).

When you follow your bliss, it's often money you'll miss (thus "starving artist" and actors called "waiter"). If you want to pursue your dream without being poor, work in computers or engineering for a few years, then take off a year or two to pursue what fulfills more but earns less.

Dr. Warren Farrell has been chosen by the Financial Times as one of the world's top 100 thought leaders. His books are published in over 50 countries, and in 13 languages. They include two award-winning international best-sellers, Why Men Are The Way They Are plus The Myth of Male Power. His most recent is Why Men Earn More: The Startling Truth Behind the Pay Gap--and What Women Can Do About It. U.S. News and World Report chose Why Men Earn More as "One of the 5 Great Career Books of 2005."

Warren has appeared on more than 1,000 TV shows, from Oprah to Larry King Live, and has been featured in Forbes, The New York Times, and The Wall Street Journal. In 2003, his campaign for Governor of California was a special feature of CNN. He lives with his wife and daughters in Carlsbad, California, and virtually at www.warrenfarrell.com.

Women Score for Companies; Need a Seat on the Board.

Anne Sweeney (a woman who scores AND has a seat on the board) Co-Chairman, Disney Media Networks President, Disney-ABC Television Group PHOTO CREDIT: ABC/BOB D'AMICO

"Top performing companies have a higher representation of women on their leadership teams," according to Ilene H. Lang, President, Catalyst, a New York based research and advisory company.

Catalyst completed a ground breaking study in 2004 that included the 353 Fortune 500 companies that sustained their Fortune 500 standing four out of five years (from 1996-2000). Catalyst found that companies that had the highest representation of women in top management, had 35.1% higher ROE (Return on Equity) and 34% higher TRS (Total Return to Shareholders) than companies with the lowest representation. Yet, in the 2002 Catalyst Census of Women Corporate Officers and Top Earners, women only represented 15.7 percent of corporate officers in the Fortune 500. This is up from 12.5 percent in 2000 and 8.7 percent in 1995, when Catalyst started tracking women in top level positions, but the statistics tell only part of the story because, of the 15.7% of women corporate officers, only 9.9% hold line officer positions or "clout" positions. The remaining women are in executive "support" roles. In general, women continue to be invisible and undervalued. 95% of top earning positions are dominated by men and you can well imagine the statistics for women of colorÑ1.6%, up from 1.3% in 1999.

In Catalyst's last census of women board directors, board seats in the Fortune 500 increased from 12.4% in 2001 to 13.6% in 2003, with women of color comprising 3%. Change is incremental, yet by 2010, women in the labor force will increase by almost 10 million, a growth rate almost one-third higher than men (source: Monthly Labor Review). Think of their purchasing power.

So what does all this mean? Women continue to struggle to gain a seat at the table. Sheila Wellington, past President of Catalyst, in her book, Be Your Own Mentor, urges women to be strategic about every career decision. In order to become visible in the workplace, women need to make it known that they are interested in promotion and must actively seek challenging assignments to gain the experience that will put them in contention for line positions. The "glass ceiling" and the "glass wall" -subtle obstacles and invisible barriers to breaking into the boardroom that keep women from gaining experience in profit and loss arenas -- remain solidly in place. As a result, savvy entrepreneurial women are simply leaving corporations in record numbers and redirecting their talent towards starting their own businesses at twice the rate of men upending conventional wisdom that women are uncomfortable taking risks. The number of 50% or more women-owned firms with employees expanded by an estimated 28% between 1997 and 2004, three times the growth rate of all firms with employees (source: Center for Women's Business Research). In other words, women are outstanding business leaders, reliable and profitable.

Women are taking control of their lives, trading corporate politics, structure, rigidity and barriers to advancement for flexibility. Women make 80% of product purchasing decisions and represent 54% of the voters that turned up at the polls in the last presidential election. Women are more comfortable with using their intuition, are process and detail oriented and bring a different voice to the table. Judy Rosener, Professor Emeritus, The Paul Merage School of Business at UC Irvine, says, "Women have a tradition and history of being outsiders. So we see things differently. It's not that we're better or more ethical than men, but I think we ask new kinds of questionsÉthat the good ol'boy network won't say."

The 21^st century workplace requires managers to build collaborative teams, flatten the hierarchy, and embrace a transformative leadership style that takes advantage of not only a man's voice but also a woman's. Women managers are seen as great implementers. Talented and experienced women in management not only want a level playing field but the right to compete for executive leadership roles while maintaining flexibility, choice and control over their lives. The corporations that are requiring managers to keep a Diversity Scorecard, to include "Gender Initiatives" and are allowing women to be in profit/loss C-level positions that deliver monetary results, are more profitable, as we've seen from the Catalyst Research, yet the Western Region lags behind the rest of the country with only 13.4% of women holding these top positions. With the cost of housing in California at formidable levels, retaining and attracting women leaders is bottom-line smart.

The Inamed Academy's Women's Leadership Conference: Shaping Possibilities will be held in Thousand Oaks, California on March 23^rd and 24^th, and will address the topics that more than fifty business leaders in three focus groups believe are critical to women's advancement into executive "clout" positions. Work/life balance, risk-taking, emotional intelligence, presentation skills, negotiation, and career and networking strategies will be addressed by experts and in experiential workshops. The conference will also feature a panel with male CEO's to get the goods on what they are looking for in candidates for C-level positions.

The Women's Leadership Conference: Shaping Possibilities provides outstanding women executive role models such as Kris Leslie, CFO of DreamWorks Animation SKG; Patty DeDominic, President of PDQ Personnel Services, Inc.; and Judy Rosener, Professor Emeritus, Paul Merage School of Business, UC Irvine, the leading world expert on gender diversity in the workplace and author of numerous publications on women at work.

Promoting women in the work place is not a movement of vilifying men and encouraging women to think of themselves as helpless victims of the corporate establishment. Instead, women are learning relevant, concrete skills and strategies to realize the possibilities of how women can follow their passions, chart their own course to reach executive line positions, or if they choose, launch their own business.

Fran Lotery Ph.D. and Lois Phillips, Ph.D., co-chairs of Inamed Academy's Women's Leadership Conference: Shaping Possibilities, March 23-24 at the Westlake HYATT HOTEL, are passionate about impacting gender practices in corporations and empowering each woman to chart her own course to become "the CEO of her life." Both Fran Lotery and Lois Phillips are business consultants, authors, and speakers with a long history of championing women leaders in politics, education, and business.

Don't miss the opportunity to chat one-on-one with Patty DeDominic, CEO, PDQ Careers, in the NataliePace.comª chat room. For more information, go to the calendar section of NataliePace.com. Subscribers only. Tuesday, March 7th, 2006 8:45AM through 9:30AM PST (Online Chat with Patty DeDominic and NAWBO Leaders and Legacy Award Recipients) Join hostess Patty DeDominic, CEO, PDQ Careers and NAWBO Legacy Honoree, as she and other NAWBO award recipients share their secrets of leadership and leaving a legacy.

Don't Gamble the Roof Over Your Family's Head in the Stock Market.

by The Wallet Doctor
The Delano Max Wealth Institute, LLC
scott@bonanzabase.com

ÉYour Best Nest Egg Is Freedom from Debt! 

I teach all of my students the incredible tranquility of the debt-free-state.  Freedom from debt offers you incredible respite. You can wake up in the morning knowing that your feet don't have to hit the floor running to scramble up some green to feed the mortgage monster for another 30 days. When you are debt free you really can settle down and relax and savor your options instead of desperately seeking solutions to monthly payments. You really do need to think right now about the life you really want. How much of your time do you want to enjoy right now? You will enjoy yourself much more "now" by becoming debt free while investing in the long term where you don't have to frantically watch your stock prices on a computer monitor all day.

Sit down and look at the income you make. Total up all of the house payments, car payments, and credit card payments that you make. For most people this is over $1,500.00 per month. My wife and I, for example, had a $750.00 house payment and two $325.00 car payments shortly after we were married 15 years ago. Stop and think about what I am about to show you. If you were able to erase your mortgage, your car loans, and your credit card debt you would be giving yourself a raise, in this scenario, of $18,000.00 per year! Putting the maximum $4,000.00 contribution into two wife and husband Roth IRAs means that you would still have $10,000.00 to have fun with. You could go on a romantic trip to Las Vegas, for instance, a favorite for my wife and I.

Now here is the great part. You would be able to have the same lifestyle you do now living on $1,800.00 a month less. The U.S. savings rate in 1980 was 10%. In the fourth quarter of 2005, as reported by the Bureau of Economic Analysis on of January 27, 2006, personal saving as a percentage of disposable personal income decreased to -0.4 percent of disposable personal income. Part of this problem has been attributed by economists to an increase in home values making people feel wealthier than they really are. But read what I have to say very carefully. Home Equity Can Be An Illusion!

Californians are particularly prone to wake up calls if the hottest real estate bubble in state history cools off. According to San Francisco mortgage research firm LoanPerformance, 48% of homes in California were purchased with interest-only loans in 2004. That is a significant jump up from fewer than 2% in 2001. In the higher-priced Bay Area counties of San Francisco, Marin, and San Mateo, two out of three homebuyers chose an interest-only loan during the first two months of 2005, compared to only 59% of homebuyers in the same period during 2004 and 18% in 2002. If we enter into an economic environment of rising interest rates, an avalanche of foreclosures could dampen or depress residential property prices. The same could occur in other parts of the country.

How history repeats itself! In the massive economic boom and run away bull market of the roaring 1920s, interest only mortgages were popular then too but tamer. They were interest only for the life of the loan and not interest rate adjustable as I explain below. After the banking system and stock market collapsed, ushering in the great depression, the United States witnessed a flood of foreclosures on interest only mortgages as property values were depressed and people could not refinance.

Many homebuyers have been simply ignorant to the very real risks of an interest only mortgage. I think of these dangerous mortgages as medium term financial guillotines. You don't want to let a mortgage broker, realtor, or banker talk you into putting your head into one and here is why. Interest only mortgages give you a low payment for usually five to ten years because you are paying only the interest on the mortgage but not the principle. However, when the clock strikes midnight on New Years Eve of that last interest only payment in the fifth or tenth year, the party is over. Your gilded carriage turns into a rotten pumpkin as the mortgage payment explodes to the fully amortized interest and principle amount!

Another problem with interest only mortgages is that they are frequently attached to adjustable rates, making them in reality interest only adjustable rate mortgages (OI-ARMs). People entering these loans think, "Hey, no problem because I have five years until the interest payment adjusts, and the interest rate has been low forever." They think that they can pay the mortgage off, refinance, or sell the house if they have to because they have lots of time and subconsciously believe that yesterday and today equals tomorrow. Meanwhile, "You can't sustain double-digit growth forever," as David Lereah, the chief economist of the National Association of Realtors, notes. Or as Maria Bartiromo, the CNBC host of Closing Bell, put it more succinctly to a crowd in Beverly Hills this month, "It does appear that people have become as jubilant about real estate as they were about technology in 2000."

Market depreciation is disastrous for anyone holding such a loan. Property depreciation can be caused by factors including but not limited to terrorist attacks, outward migration of an industry from a state or a metropolitan area, earthquakes, volcanoes, hurricanes, nuclear explosions, or other human and natural disasters. But that is just ONE dimension of risk on these nasty home loans. Interest rate increases in the mortgage market can impede a homeowner's refinancing into a superior 30 year fixed mortgage. This is because higher interest rates drive the payment up out of reach of the homeowner's front and back-end debt to income ratios, which the banks require to approve the new mortgage. In short, your current salary ends up coming up short on the refinance, if interest rates and principal owed goes up.

The mortgage banking industry is not clearly informing homebuyers of their risks. Part of the reason is the shift in the banking system to a fee based business model over the traditional deposit cost, loan interest spread business model of the past. Mortgage originators are more interested in the fees they clear on the new interest only loans than the financial quality of the mortgage itself today because they know the loan will be sold out of the portfolio promptly. This devil may care attitude is a potential moral hazard in mortgage loan underwriting quality today.

Many homebuyers enter into these debt agreements because they want to live in an area where the market has experienced extreme appreciation relative to the national average, they want to live in a more upscale community than they can realistically afford, or they have a delusional belief that they temporarily need a low payment. Clearly there are many more risks on these loans that these people are not considering.

Additionally, it blows my mind to observe so many people actually attracted to sophisticated leverage plays (leverage is another financial term that simply means debt), when they don't even know which mutual funds they have in their nest egg. Aggressive mortgage companies have been flooding the market with cheesy advertising to dupe people into one of the dumbest financial mistakes they can make; taking out a second mortgage on their home! This means that instead of actually cashing out the mortgage, you are putting the precious roof over your head at risk! The Federal Deposit Insurance Corporation that insures your bank deposits offers strong warnings against seeking a second mortgage when you are cash strapped as does the Federal Trade Commission.

I also observe people attracted into the investment markets that emphasize "making lots of money fast on debt." Unfortunately these same markets can make you lose lots of money very, very fast. As a former futures and futures options trader I am extremely sensitive to leverage of any kind.   I get really annoyed by some of the financial "gurus" out there that are teaching people to take out second mortgages out on their homes to invest in the stock market.    

Here is a checklist of things you can do right now to start becoming free of debt, and start saving and investing toward a more carefree life:

1. Look out for wasteful expenditures in your household (make sure your significant other is on board in this area).
   
   
2. Do not buy a new vehicle after you cash out the loan. This is a significant and short term source of savings for most families. If you immediately begin paying what you were paying on your monthly car payment into an investment retirement account, such as a Roth IRA, you will be getting richer instead of expanding your lifestyle or wasting the extra money. Sit down and plan with your partner now what you will do when you cash out your car loan. My wife and I saved $600.00 of the money we were paying on car loans or $7,200.00 annually. If you did this you would only be short $800.00 to make the full contribution this year to both you and your significant other's Roth IRA! If you saved or earned an extra $3.08 per each of the 260 working days in a year you would cover the additional $800.00 short fall.
   
   
3. Use some of the money you were paying on a car loan to accelerate your mortgage. For instance, if you were to put $100.00 toward the principal balance of a $100,000.00 mortgage (at 6% for thirty years), you would reduce the payoff date by nine years and save $39,551.45 in interest payments! This is called accelerating a mortgage.
   
   
4. Follow Warren Buffet's investing advice for the money you save in your Roth IRA. Look for large, well-managed companies that are undervalued in terms of share price. Then buy and hold for long term gains over years or even a decade or more. Novices should avoid sophisticated, short term, highly leveraged, fast buck investment strategies like futures, futures options, and stock options as an investment vehicle, no matter how well known the author/ speaker/ guru is.

Successful investing takes patience, resolve, discipline, forgiveness of mistakes, and consistency. In my many years as both a finance professor and investor my personal observation is that women have more of these characteristics than men. Women, however, do not always exploit these natural strengths for fear of loss, or fear of what other people will say if people were to find out they invest. Don't let your fear hold you back, but be methodical in learning about the stock market before you commit your hard earned savings.

Don't ever forget that a strong man is one who fully supports the woman he loves. Don't tolerate a man who belittles you in any way; who makes you think that you cannot invest or manage your money just as well or even better than he does. My wife and I do all of our financial planning together as a team. My fearlessness can also lead to impetuousness, which is balanced by her level head.

Dr. Scott Brown a.k.a. "The Wallet Doctor" holds a Ph.D. in finance from the University of South Carolina and is a professor of finance at the University of Puerto Rico. Dr. Brown can teach you how saving the daily price of a cup of coffee at Starbucks can make you a millionaire in the stock market through long term stock investing. Dr. Brown's website is: http://www.walletdoctor.com/

Bonds 101: When is 3% is Better Than 6%?

by Steve Selengut

Why Higher Interest Rates are Good for Income Investors.

"You might also ask why Wall Street makes such a fuss about the dismal bond market and offers more of their patented Sell Low, Buy High advisories, but that should be fairly obvious. An unhappy investor is Wall Street's best customer."

When is 3 percent better than 6 percent?  Yeah, we all know the answer, but only until the prices of the bond securities we already own begin to fall. Then, logic and mathematical acumen disappear and we become susceptible to all kinds of special cures for the periodic onset of higher interest rates. We'll be told to sit in cash until rates stop rising, or to sell the securities we own now, before they lose even more of their precious Market Value. Other gurus will suggest the purchase of shorter-term bonds or CDs (ugh) to stem the tide of the perceived erosion in portfolio values. There are two important things that your mother never told you about Income Investing: (1) Higher Interest Rates are good for investors, even better than lower rates, and (2) Selecting the right securities to take advantage of the interest rate cycle is not particularly difficult.

Higher Interest Rates are the result of the Government's efforts to slow a growing economy in hopes of preventing an appearance of the three headed inflation monster. A quick glance over your shoulder might remind you of recent times when the government was trying to heal the wounds of a misguided Wall Street attack on traditional investment principles by lowering interest rates. The strategy worked, the economy rebounded, and Wall Street is trying to scramble back to where it was nearly six years ago. Think about the impact of changing interest rates on your Income Securities during the past five years. Bonds and Preferred Stocks; Government and Municipal Securities; they all moved higher in Market Value. Sure you felt wealthier, but the increase in your Annual Spendable Income got smaller and smaller. Your total income could well have decreased during the period as higher interest rate holdings were called away (at face value), and reinvestments were made at lower yields!

How many of you have mental bruises from the realization that you could have taken profits during the downward trajectory of the cycle, on the very securities that you now lament over. The nerve; falling below the price you paid for them years ago. But the income on these turncoats is the same as it was in 2004, when their prices were ten or twenty percent higher. This is the work of Mother Nature's financial twin sister. It's like acorns, snowfalls, and crocuses. You need to dress properly for seasonal changes and invest properly for cyclical changes. Remember the days of Bearer Bonds? There was never a whisper about Market Value erosion. Was it the IRS or Institutional Wall Street that took them away?
 
Higher rates are good for investors, particularly when retirement is a factor in your investment decisions. The more you receive for your reinvestment dollars, the more likely it is that you won't need a second job to maintain your standard of living. I know of no retail entity, from grocery store to cruise line that will accept the Market Value of your portfolio as payment for goods or services. Income pays the bills, more is always better than less, and only increased income levels can protect you from inflation! So, you say, how does a person take advantage of the cyclical nature of interest rates to garner the best possible income on investment quality securities? You might also ask why Wall Street makes such a fuss about the dismal bond market and offers more of their patented Sell Low, Buy High advisories, but that should be fairly obvious. An unhappy investor is Wall Street's best customer.
 
Selecting the right securities to take advantage of the interest rate cycle is not particularly difficult, but it does require a change in focus from the statement bottom lineÉ and the use of a few security types that you may not be 100% comfortable with. I'm going to assume that you are familiar with these investments, each of which could be considered (from time to time) for a spot in the well diversified Income Portion of your Asset Allocation: (1) The traditional individual Municipal and Corporate Bonds, Treasuries, Government Agency Securities, and Preferred Stocks. (2) The eyebrow raising Unit Trust varietals, Closed End Funds, Royalty Trusts, and REITs. [Purposely excluded: CDs and Money Funds, which are not investments by definition; CMOs and Zeros, mutations developed by some sicko MBAs; and Open End Mutual Funds, which just can't work because they are really "managed by the mob"É i.e., investors.]  The market rules that apply to all of these are fairly predictable, but the ability to create a safer, higher yielding, and flexible portfolio varies considerably within the security types. For example, most people who invest in Individual bonds wind up with a laundry list of odd lot positions, with short durations and low yields, designed for the benefit of that smiling guy in the big corner office. There is a better way, but you have to focus on income and be willing to trade occasionally.
 
The larger the portfolio, the more likely it is that you will be able to buy round lots of a diversified group of bonds, preferred stocks, etc. But regardless of size, individual securities of all kinds have liquidity problems, higher risk levels than are necessary, and lower yields spaced out over inconvenient time periods. Of the traditional types listed above, only preferred stock holdings are easily added to during upward interest rate movements, and cheap to take profits on when rates fall. The downside on all of these is their callability, in best-yield-first order. Wall Street loves these securities because they command the highest possible trading costsÉ costs that need not be disclosed to the consumer, particularly at issue. Unit Trusts are traditional securities set to music, a tune that generally assures the investor of a higher yield than is possible through personal portfolio creation. There are several additional advantages: instant diversification, quality, and monthly cash flow that may include principal (better in rising rate markets, ya follow?), and insulation from year-end swap scams. Unfortunately, the Unit Trusts are not managed, so there are few capital gains distributions to smile about, and once all of the securities are redeemed, the party is over.  Trading opportunities, the very heart and soul of successful Portfolio Management, are practically non-existent.
 
What if you could own common stock in companies that manage the traditional Income Securities and other recognized income producers like real estate, energy production, mortgages, etc.? Closed End Funds (CEFs), REITs, and Royalty Trusts demand your attentionÉ and don't let the idea of "leverage" spook you. AAA + insured corporate bonds, and Utility Preferred Stocks are "leverage". The sacred 30-year Treasury Bond is "leverage". Most corporations, all governments  (and most private citizens) use leverage. Without leverage, most people would be commuting to work on bicycles. Every CEF can be researched as part of your selection process to determine how much leverage is involved, and the benefitsÉ you're not going to be happy when you realize what you've been talked out of! CEFs, and the other Investment Company securities mentioned are managed by professionals who are not taking their direction from that mob (also mentioned earlier). They provide you the opportunity to have a properly structured portfolio with a significantly higher yield, even after the management fees that are inside.

Certainly, a REIT or Royalty Trust is more risky than a CEF comprised of Preferred Stocks or Corporate Bonds, but here you have a way to participate in the widest variety of fixed and variable income alternatives in a much more manageable form.  When prices rise, profit taking is routine in a liquid market; when prices fall, you can add to your position, increasing your yield and reducing your cost basis at the same time. Now don't start to salivate about the prospect of throwing all your money into Real Estate and/or Gas and Oil Pipelines. Diversify properly as you would with any other investments, and make sure that your living expenses (actual or projected) are taken care of by the less risky CEFs in the portfolio. In bond CEFs, you can get un-leveraged portfolios, state specific and/or insured Municipal portfolios, etc. Monthly income (frequently augmented by capital gains distributions) at a level that is most often significantly better than your broker can obtain for you. I told you you'd be angry!
 
 Another feature of Investment Company shares (and please stay away from gimmicky, passively managed, or indexed types) is somewhat surprising and difficult to explain. The price you pay for the shares frequently represents a discount from the market value of the securities contained in the managed portfolio. So instead of buying a diversified group of illiquid individual securities at a premium, you are reaping the benefit of a portfolio of (quite possibly the same) securities at a discount. Additionally, and unlike regular Mutual Funds that can issue as many shares as they like without your approval, CEFs will give you the first shot at any additional shares they intend to distribute to investors.
 
 Stop, put down the phone. Move into these securities calmly, without taking unnecessary losses on good quality holdings, and never buy a new issue. I meant to say: absolutely never buy a new issue, for all of the usual reasons. As with individual securities, there are reasons for unusually high or low yields, like too much risk or poor management. No matter how well managed a junk bond portfolio is, it's still just junk. So do a little research and spread your dollars around the many management companies that are out there. If your advisor tells you that all of this is risky, ill-advised foolishnessÉ well, that's Wall Street, and the baby needs shoes.
 

Steve Selengut
http://www.sancoservices.com
Professional Portfolio Management since 1979

Author of: The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read, and A Millionaire's Secret Investment Strategy.

NataliePace.com note: The opinions expressed in this article are solely the opinions of the writer and do not represent the positions of NataliePace.com. 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 and/or investment vehicles 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 security.

Everything's Turning Up Green for St. Patty's Day, ErrÉ. Except Real Estate.

by Natalie Pace, CEO, NataliePace.com™.

Consumer Discretionary and Blue Chips with Legacy Costs. Our Monthly Hot News On Cool Stocks Report.

(Note: These are not buy/sell recommendations. Always consult a certified financial professional before buying or selling stock. NataliePace.com is not a brokerage or financial service company and does not operate or act like one.)

Companies (and countries) in the News:

Natalie Pace, top-ranked stock picker Per TipsTraders.com

Beware of Blue Chips with "legacy costs": 30% of the Stocks held by the largest number of accounts at Merrill Lynch (source: NY Times 2.9.06) are underfunded on their pension plans by more than a billion (source: S&P 500), including Chevron, Exxon Mobil, IBM, Johnson & Johnson, Pfizer and Procter and Gamble. If you have a retirement plan that is loaded with mutual funds, you should be aware that pension plans and "legacy costs" for companies with unions and/or benefits-based retirement plans have many money managers and market analysts concerned about the performance of huge companies, especially those with labor unions, and bullish on small to mid-caps (over Blue Chips and large caps) this year. The larger/older the company, the more likely it is to be suffering from heavy internal costs, like supporting more retirees than workers and escalating medical costs, while at the same time having little room to negotiate benefits that allow them to compete on the world stage. The billion dollar losses at General Motors, Delta, United Airlines, American Airlines, Ford Motor Company and more are just the tip of the iceberg on headlines that might be forthcoming in some of the former blue chip companies this year.

"The reputable companies fear that the legacy companies will get into trouble and put the burden on the taxpayer," according to Dr. Gary Becker, Nobel-Laureate Economist. For the doctor's fix, be sure to read the exclusive Q&A with Dr. Becker this month. You will also find a list of the 39 companies who are "underfunded" by more than a billion to their pension plans.

If you wish to have more options in your retirement plan or 401 (k), you may be able to roll it over (without penalty) into a self-directed plan. Click on 401 (k) to read an article outlining online discount brokerages offerings.

Please note: There will be an online chat with Blue-Chip stock picker, Kelley Wright, of Investment Quality Trends, the #1 risk-adjusted newsletter in the US for 10, 15 and 20 year returns, on March 15, 2006. Go to the calendar section of NataliePace.com for more details.

Though Ford Motor Company has the highest amount of underfunded pension liability, at -$12.306 billion, the corporation is still receiving an average 7 stock ranking (out of 10) on MSN.com (source: Standard and Poor's, July of 2005). This is why trading on analyst recommendations is one of our Top 10 Investment Mistakes. Click to review the other nine.

Enron: Kenneth Lay and Jeffrey Skilling are on trial in Houston this month. Skilling faces 31 counts of fraud, conspiracy, insider trading and lying to auditors for allegedly lying about Enron's financial state before the company crashed. Lay faces seven counts of fraud and conspiracy for allegedly perpetuating the scheme after Skilling resigned in August 2001. Both have pleaded not guilty. Meanwhile, Enron: The Smartest Guys in the Room is nominated for an Academy Award for the Best Documentary Feature. If you are interested in hearing the story from the filmmaker's perspective, you can buy or rent the movie online at Moviefone.com, or NetFlix or Blockbuster.com, et al.

NASDAQ: The following NASDAQ-listed companies participated in the inaugural Small-Cap Investor Conference in London on 2.7.06. As you can see, one of the companies that we are reporting on, Gevity HR, Inc., was included in this elite group!

Healthcare: ArthroCare Corporation (ARTC); deCode genetics, Inc (DCGN); Encysive Pharmaceuticals Inc. (ENCY); Momenta Pharmaceuticals, Inc. (MNTA); Myogen, Inc. (MYOG); QLT Inc. (QLTI); and Ventiv Health, Inc. (VTIV).

Technology: Coherent, Inc. (COHR); Diodes Incorporated (DIOD); Gevity HR, Inc. (GVHR); Power Integrations, Inc. (POWI); SafeNet, Inc. (SFNT); Synaptics Incorporated (SYNA); Telvent GIT, S.A. (TLVT); and Xyratex Ltd. (XRTX).

Real Estate and Retail Pull Back: At the Beverly Hills Economic Summit earlier this month, the five panelists concurred that consumer spending would likely abate and real estate gains would level off or fall some, while capital spending (from corporations) should pick up the slack in the economy. For more information, read the Real Estate Warning article in this ezine.

Satellite Radio: XM Satellite Radio suffered a blow of confidence from former board director Pierce Roberts Jr., who resigned on 2.15.06. "Given current course and speed there is, in my view, a significant chance of a crisis on the horizon," Roberts wrote. "Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now." XM lost $675.3 million, or $3.07 per share, this year, compared with $651.2 million, or $3.30 per share, last year. Revenue rose to $558.3 million from $244.4 million. The company has 6 million subscribers (compared to Sirius' 3 million) and just signed Oprah to feature her own 24/7 show on the network. CEO Hugh Panero is projecting profitability at the end of the year, with 9 million subscribers. More information on Sirius is listed on our Hot News list below.

Overstock (NASDAQ: OSTK). We featured Overstock in 2003 at $11.50 and then took it off of our list on 12.15.04, when the stock was trading at $55.13. Overstock has a lot of potential, but they also have a lesser experienced, unproven executive team. Indeed, when the short positions moved in, the company responded with lawsuits (swords instead of sweets for the investors). By 2.27.06, Overstock had fallen to $22.98. In a press release on February 7, 2006, CEO Patrick Byrne reported that Overstock's "goals in 2005 were to grow revenue 60-100% and break even +/- 1%. We achieved the first, but I failed on the second." The company is forced to stop the bleeding and refocus on the core business, the online shopping experience. Byrne projects that it will take 6-9 months to "rehabilitate the patient and get him running again." Overstock scores in CEO disclosure and honesty, which is a positive, but fails in the business growth plan, which is a whopper of a negative. For the year ended December 31, 2005, Overstock.com reported net loss of $24.9 million, or $1.29 loss per share, compared to $5.0 million, or 29 cent loss per share last year. We'll continue to report on this, but when shopping on Overstock, it may pay to be a customer and not an investor at this time, at least until the Back to School Wall Street Stock Sales in September (when the patient may be recovered). Overstock bargains are still found online, but technology spending was too rich and ill-conceived for our taste.

Stats, Facts, Quotes and Educational Information:

1. There are three important online chats this month. Chat one-on-one with the Chairman and CEO and the President of U.S. Gold on 3.1.06, with NAWBO Legacy CEO Patty DeDominic and other VIP women in business on 3.7.06 and with the #1 Blue Chip Stock Pickers in the U.S. on 3.15.06. For more information, visit the NataliePace.com calendar at www.NataliePace.com.
2. M&A Mania. Mergers and Acquisitions are exploding this year, for the fastest start to a year since 2000, when the $165 billion AOL-Time Warner merger was announced (Jan. 2000). The value of 622 deals announced so far equal $49.9 billion, according to Thomson Financial. 2005 saw 1,013 deals with a total value of $37.4 billion. 2001 had 1,031 deals for a value of $31.2 billion. 2000 was a record year with 939 deals valued at $218.9 billion.
3. 10% Returns Predicted in 2006. Liz Ann Sonders, the chief investment strategist for Charles Schwab is predicting a 10% return for the S&P500 in 2006, as is Tobias M. Levkovich of Citigroup and Henry C. Dickson of Lehman Brothers.
4. Technology in Favor, according to Smith Barney and the Federal Reserve Board. "Technology is our favorite sector for 2006 - as we expect stocks to benefit from a pickup in enterprise spending, and valuations to increase from current levels. We would highlight two names in particular today: QLogic & Cognizant Technology Solutions." Dr. Albert D. Richards, CFA, Smith Barney, from Portfolio Strategist, 1.12.06. Every industry in the world relies on technology and now that capital spending is back, you can expect to see more outlays in this area. "Rising business sales, a declining cost of capital, and ample financial resources in the corporate sector continued to foster a favorable environment for capital spending, a sentiment echoed in executive surveys, which generally pointed to widespread increases in planned capital outlays," according to the Federal Reserve Board minutes, where the governors noted that "real outlays for equipment and software posted a solid gain in the third quarter."
5. Media in favor, according to Smith Barney. "Attractive valuation; low earnings expectations; out of favor with buy-side, anticipate more positive news flow," according to Portfolio Strategist, 1.12.06.
6. Higher Interest Rates. The Federal Open Market Committee decided on 1.31.06 to raise its target for the federal funds rate by 25 basis points to 4-1/2 percent, for the 14^th consecutive rate hike, and believes that "further policy firming may be needed." The next FOMC meeting will be 2 days, on 3.27 and 3.28.06. Click to review the FOMC Minutes from the January 31, 2006 meeting.
7. Tobacco Companies and Mutual Funds: Did you know that tobacco companies are popular holdings of mutual funds? Altria, Philip Morris Tobacco Company's new name (NYSE: MO), is 74.0% owned by institutional investors (aka funds). If you don't know what you checked off on your 401 (k), you might be manufacturing and marketing the cigarettes that you don't want your neighbors and kids to smoke. (If you don't care, that's one thing. If you don't know, it's time to wake up.)
8. Don't Buy High. The Dow Jones Industrial Average and the S&P 500 are trading close to their historical highs set back in 2000, while the NASDAQ is still almost 50% off from the highs set back in March of 2000. Investment Quality Trends, which tracks over 309 Blue Chip stocks, notes that only 26, or 8.5% of them, are in a buying range right now. (For more Info, read "Want to Stay Sexy and Fiscally Fit?" on this month's ezine.) Investors are still feeling the burn from the crash, but corporations are not. This time around, technology and the Internet are making real money, and cash-rich/capital-rich corporations are in need of finally updating their software and technology. Tech is on a number of analyst's lists for being in favor, while blue chips have a concentration of the corporations that are suffering from "legacy costs." It may be time to lick old wounds and rummage through the file cabinet, for out with the old and in with the new.
9. Real estate is not showing any substantial weakening inn prices or construction, according to the Federal Reserve Board's analysis of the numbers, but REITs are reporting problems, including cancellations and price softening. Additionally, the National Association of Realtors has reported an increase in inventory and fewer sales, particularly in the West. Demand is expected to soften in the coming quarters. For more information on this important shift in investor sentiment, read the Real Estate Warning article.
10. Updates on Past Features: Goldcorp, Pixar (now Disney) and Sony have recently exploded, and we've included them this month, so that you evaluate whether you wish to add to your position, hold or take your profits!

Please note: There will be an online chat with the former Chairman and CEO of Goldcorp, Rob McEwen, on March 1, 2006. Go to the calendar section of NataliePace.com for more details.

21 BIG WINNERS, which keeps us at the top in Annualized Returns on the companies featured in NataliePace.com (according to TipsTraders.com). This hot news article still has the proud honor of featuring twenty-one companies that have posted positive gains, versus just five that have gone south. Of the five that have gone south, we were most concerned with Krispy Kreme, but there are signs that Stephen Cooper, turnaround King/CEO, is moving that company forward. Turnarounds are difficult to stomach, even the turnaround of the most popular sweet on the planet. Lawsuits are many. OSI Pharmaceuticals, Sirius Satellite Radio and Yahoo - in our view, these are all great companies with exceptional products and/or leadership. Sometimes it takes awhile for the rest of the investment world to realize that. Still love Jet Blue as a consumer, but the sector is in trouble until they figure out how to make solar-powered planes. Tried to hang with Martha Stewart Omniliving, but, despite a recent jump in ad revenue, the flops weighed down her attempts at a comeback.

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, and 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. NataliePace.com is NOT a brokerage and doesn't operate or act like one. We are an online media service with a mission of providing the news and information you need to make better choices in business, investing and personal prosperity. Always consult a trusted financial professional before buying or selling any security.

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

Hot Stocks
Investors who "never pay retail," note that highlighted stocks are trading at their 52-week lows or near the price featured in NataliePace.com's article. It may be a good buying opportunity. The companies that are listed below which are not highlighted may not be in a good buying range, but they (outside of KKD, which might be a real dud) are poised to continue performing well. There are never any guarantees in life, and all stocks are risk-based investments. Consult your certified financial planner before making any changes to your investment strategy.

Stocks in Profit-Taking Range. Note: The news is still favorable on these companies (so far) for the long-term (as in Genentech and Google), which means if you have them in your 401K or long-term portfolio, you might want to keep them there. However, for the trading portion of your portfolio, in a market of modest gains but high volatility, many analysts recommend taking profits in shorter windows. A gain is a gain. If you took gains from Google a month ago, your individual shares were worth $100 each more than they are today.

We may look to add some of these great companies to our hot news list again, if the price point should become attractive (as we did NetGear this month).

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 security.

IMPORTANT DISCLAIMER: Information has been obtained from sources believed to be reliable however NataliePace.com LLC does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication 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.

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 www.NataliePace.com, P.O. Box 1350, Santa Monica, CA 90406-1350 or 1-866.476.7442 (toll-free telephone number).

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