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Vol.3 Issue 4 April 1st, 2006
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suggestions. or get more information at info@NataliePace.com
of the Month:
people are absorbed with learning the Western world standards.
[China] is not the Wild West. It's a capitalist market. It's
called a communist government, but it is a Confucius government…
a very capable government."
Charles Zhang, Chairman and CEO, Sohu.com
Surpasses U.S. Internet Usage. Sohu.com Weaves the
Most Promising Asian Worldwide Web. By Natalie Pace,
NataliePace.com CEO and founder.
the Chinese Yahoo, errr… and Google and Forbes All Rolled
Into One. by Natalie Pace, CEO, NataliePace.com. Sohu is
hot on Wall Street these days. Find out why in a Q&A
with Dr. Charles Zhang, CEO and Chairman of Sohu.com,
and Carol Yu, Sohu CFO.
Lunch Your Way to Profitability. By Chellie Campbell.
How to Beat the Loneliness of the Home-based Business
Debbie "the Liar" Allen Explains the Ant Dance :
The Art of Empowering Future Presidents and Keeping
America on Top of the World. By Natalie Pace.
Your Bliss; Embrace Your Gifts. By Gary Kobat. You
have a calling, a destiny. Follow it, flow with it.
Million Roofs: A Place With Sunshine Gets Serious About
Solar By Paul Woods, President & CEO of Odyssey
a Stock is Not a Bond. By Meri Anne Beck-Woods,
Chairman & COO, Odyssey Advisors LLC; and Sonya Nangoy
Krawczyk Fixed Income Research Associate.
Bond Investing : The National Association of Security
Dealer's Top 10 Things to Do BEFORE You Invest in Bonds
or Bond Funds.
Sale? Article and stock report card, including data
on Blockbuster (BBI), NetFlix (NFLX) and Movie Gallery
(MOVI). by Natalie Pace.
Investing in Stocks and Real Estate. Learn the tricks
of worry-free, outstanding, long-term 401 (k) returns,
with the Most Successful Blue Chip stock picker in the
U.S., Kelley Wright.
Tax Scams Involving an Official Looking IRS Email Address.
and Delighted : How to Consolidate and Eliminate
Your Bills and Prosper. By Kassie Welch.
News on Cool Stocks… by Natalie Pace, CEO, NataliePace.com.
Powder Puffs at This Power Lunch. By Maya Patel.
C-Level Women Reveal Secrets of the Executive Suite.
Theory of Economic Evolution. Why Mid-Caps are Safer
Than Blue Chips in 2006, and Why China will Continue
to Flourish. by Natalie Pace, CEO, NataliePace.com™.
Calendar: Conferences, subscribers-only chats, galas,
networking, teleclasses, seminars and other special
opportunities! Check out what's happening online at
the Calendar section of the web site.
Surpasses U.S. Internet Usage.
Pace, NataliePace.com CEO and founder
Weaves the Most Promising Asian Worldwide Web.
users spend almost two billion hours online each week (1.765 billion
hours), while the U.S. audience logs on for 129 million hours
Charles Zhang Ringing the Opening Bell at NASDAQ
© Copyright 2006, The Nasdaq Stock Market, Inc. Reprinted
On March 13,
2006, Dr. Charles Zhang, the Chairman and CEO of Sohu.com, rang
the opening bell at the NASDAQ, a milestone for a Beijing-based
company, but that was nothing compared to the bomb of a statistic
that Dr. Zhang dropped later that morning at the Forbes.com Video
Network interview. Dr. Charles Zhang reported that, according
to his internal research, Chinese Internet users were over 150
million, possibly up to 200 million, and that Sohu.com, including
all of their properties, was in the top five most trafficked sites
IN THE WORLD. Nielsen NetRatings, which doesn't have statistics
for China, reports that the U.S. had 154 million active users
in January 2006, which means that China, if Dr. Zhang is correct,
is at or above the U.S. in Internet users.
this milestone (China surpassing the U.S. in Internet users) go
unreported? It turns out that it isn't that easy collecting data
on over a billion people in a country as vast as China, where
most people are not connected by phone lines.
(China Internet Network Information Center) reports that the number
of active Chinese Internet users was 111 million by December 31,
2005, up from 94 million in December 2004, and growing, over the
past two years, at a steady rate of 18%. However, according to
Dr. Charles Zhang, the CNNIC polling is conducted by calling fixed
line phones. "Young people do not use fixed line phones.
They all have mobile phones," Dr. Zhang said, explaining
why he believes the CNNIC is reporting lower than accurate numbers.
Even if we
China definitely wins in another critical area. One of the most
valued metrics of Internet usage (especially for advertisers)
is time online. Chinese users average 15.9 HOURS PER WEEK, while
Yahoo!, the most popular Internet site in the U.S. can only get
its users to stick around for less than one hour per week
(216.5 minutes/month per ComScore Media Metrix). That's 1.765
billion hours per week online in China compared to 129 million
hours per week online in the U.S..
with all that time online? This is the first time in Chinese history
that the nation has been connected. As Dr. Zhang explains, "People
log onto the Internet, Sohu, because in China there was no Forbes,
Reuters, Washington Post. Print media was all state-controlled
and official, and the Internet filled this void." Indeed,
according to the CNNIC, 67.9% of the online usage in China is
spent devouring news, above search (65.7%) and email (64.7%).
By contrast, only 3% of Yahoo's U.S. traffic clicks over to news
has a lot more room to grow than the U.S. While roughly half of
the U.S. population is actively using the Internet, just 11.7%
of the Chinese population is plugged in currently.
Users in China
Internet Network Information Center, CNNIC.net
400 million cell phone users in China, with over 6.1 million mobile
users connecting online (source: CNNIC). As cell phones become
increasingly the connection of choice, you can expect China, which
is a generation ahead of the U.S. in mobile technology, to lead
the world in mobile Internet access growth. And everything hits
hyperdrive over the next two years, as the country ramps up to
host the summer Olympics hit Beijing in 2008.
So why is
Sohu the hottest site on the worldwide web these days, when Baidu
is the better known brand in the U.S.? Sohu.com is up 20% this
year, while Baidu, the blazing IPO of summer, has lost 23% since
January. While Sohu, Sina and Baidu all rank in the top 10 most
popular global Internet sites ((above Amazon and AOL),
Sohu has twice the revenue and three times the net profit of Baidu,
and Sohu is the official web site for the 2008 Beijing Olympics.
Additionally, Sohu was the first publicly-traded Chinese company,
alongside Sina, to adopt Sarbanes-Oxley accounting standards,
which speaks well of the management team of Dr. Charles Zhang
(Chairman and CEO) and Carol Yu (CFO).
Is Sohu better
than Baidu for your portfolio? I asked that question and more
in the Forbes.com
Video Network Q&A with Sohu.com Chairman
and CEO, and MIT doctor of physics, Dr. Charles Zhang.
Articles of Interest:
Can Do Better Than Baidu. (from
NataliePace.com's 9.1.05 ezine, vol. 2, iss. 9)
Internet Network Information Center
Milken Institute, a global economic think tank
of Information Industry, China
the Chinese Yahoo, errr… and Google and Forbes All Rolled Into
by Natalie Pace, CEO,
hot on Wall Street these days. Find out why in a Q&A with
Dr. Charles Zhang, CEO and Chairman of Sohu.com, and Carol Yu,
Portions of this Q&A first
appeared on the Forbes.com
Video Network on 3.13.06.
Yu, CFO, Sohu
Natalie: Since your site is in
Chinese, let's begin by describing what Sohu does. Is
your company more of a Google,
Yahoo or MySpace?
Dr. Zhang: It's combined. Sohu is
like Yahoo, and we also have a search engine like Google, but
it's more than that. It's also like the New York Times
or Forbes -- traditional news. Sohu is a broad, comprehensive
offering with 250 million page views downloads per day. Most people
log onto Sohu to find out what's going on in the world.
That's incredible. And we want
to remind everyone that China has 111 million active users. (source:
More than that. My internal data
shows that it's probably 150-200 million active users in China.
Dr. Zhang, while China, arguably,
has more active Internet users than the U.S. -- Sohu's revenues
last year were just $108 million, compared to Yahoo's $5.3 billion.
What do you predict in terms of revenue growth going forward?
Dr. Zhang: Businesses are realizing
that the Internet is such a wonderful marketing platform, so advertising
will continue to grow. Small enterprises will wake up to the Internet,
and see that search advertising is the way to go. It will take
some time, but $100 million revenue is quite a size for a Chinese
Roughly a third of your revenue
is coming from non-advertising sources. Describe your diversified
revenue stream for our viewers, and give us an idea of why the
mobile platform is so important in China at this time.
Dr. Zhang: Two-thirds [of our revenue]
is advertising -- branded and search -- and both are growing nicely.
We also have a subscription business.
Wireless Value Added Services,
Dr. Zhang: Yes, and there are 400
million mobile phone users in China. There has been an explosion
of wireless revenue, which was 60% of the revenue mix.
In the past, this revenue was a little volatile. Now, we've got
a good mix with the advertising and we control the payment gateway
because advertisers just send a check to us!
Americans worry that it is the
Wild, Wild West out there in China, especially when it comes to
accurate accounting. Yet, your earnings reports and press releases
always stress that Sohu complies with GAAP and Sarbanes-Oxley
accounting standards. Why are you so diligent in this?
Dr. Zhang: Chinese people are absorbed
with learning the Western world standards. It's not the Wild West.
It's a capitalist market. It's called a communist government,
but it is a Confucius government. Western media should understand
that the government is a very capable government.
Many major analysts say to invest
in companies in Taiwan, Singapore and Hong Kong, not Beijing,
because they have a much longer legacy of complying with Western
style accounting. Are you leading the pack in compliance in mainland
China? Is Sohu an anomaly?
Carol Yu: We're surely leading the
pack. All of the U.S. listed companies were required to pass Sarbanes-Oxley
in 2004. We passed it at the same time. There are only two companies
in China that managed to do that.
Carol Yu: Sina and Sohu. So it's
just two, out of all Chinese companies that are listed, that are
meeting the same standards as a U.S. domiciled company.
Carol, you were part of a joint
venture of Arthur Andersen and the Ministry of Finance in China.
You were a part of the leading delegation to open up the free
markets during this historical move from communism to incentive-based
compensation. Tell us about how your role in getting Chinese companies
listed on U.S. markets.
Carol Yu: I'm very lucky. I started
working in China about twelve years ago. I have frequent dialogs
with senior government officials in China. Twelve years ago, I
helped the Chinese SEC to bring the first batch of companies to
become listed on the NYSE. I basically had the Chinese SEC on
one side and the U.S. SEC on the other side. At that time, the
Chinese did not know what GAAP was. I was the translator. We,
in fact, helped the first Chinese companies get listing in the
U.S. So, the dialog started then, and I continue to have frequent
conversations on how to bridge the huge gap between a state-owned
Chinese Communist country product and fit it into the U.S. rules
What are your growth projections
for 2006? How are you going to keep your costs in line. I'm sure
your challenges for costs are less than it is here in the U.S.
Carol: Not really. The competition
has heated up for talent and for good, exclusive content. But
I think we are still in the high growth phase of the business.
Our advertising revenue will grow about 25% in the fiscal year
2006, which is also calendar year.
Your site is in Chinese. There
is a huge Chinese community here in North America, particularly
Canada and the U.S.
Zhang, Chairman and CEO, Sohu.
Dr. Zhang: Yes, there is user growth,
but no comparison as to the user growth in China, which is now
over 150 million.
Carol Yu: Without tapping that, we
are already a top ten global site.
Dr. Zhang: And that is only the Sohu.com
name. With all of our properties, we are in the top three in the
Carol Yu: Surely top five.
Dr. Zhang: 150 million is only 11%
of the Chinese population. It is still a niche market in China.
When it reaches 300 million, then you are going to see advertising
really take off.
Then we can compare this moment
in China to the 1940s in America, when free TV became the norm
and connected our country. Is this device, the Internet, the first
time that China has been connected nationwide?
Dr. Zhang: Yes.
Carol Yu: The Internet in
China is the only media that has national reach, other than TV.
Alibaba hit the headlines last
August when Yahoo bought a 40 percent stake for a billion. You
recently strengthened Sohu's search engine. With all of the cash-rich
U.S. Internet companies visiting Asia, surely you've been courted.
Do you think you can take on Alibaba on your own or is Sohu for
Big deals may get a lot of attention,
but really it's the company on the ground floor that must innovate
and develop technology. The Internet platform favors the company
with innovative products. We believe in in-house developed technology
and products. In two years, we'll be the largest Chinese language
search engine in the world.
You're positioning yourself to
rule by the 2008 Beijing Olympics.
Yes, and also helped by the Olympics…
NataliePace.com is in the business of
bringing you recipes for the rich life™, and we are proud
to introduce you to one of the fastest-growing companies in the
world, with one of the best reputations for complying with the
accounting standards of the free world.
Click to watch the interview with
Charles Zhang, SOHU CEO, and
Natalie Pace, NataliePace.com CEO, on the Forbes.com
Other Articles of Interest:
Can Do Better Than Baidu. (from
NataliePace.com's 9.1.05 ezine, vol. 2, iss. 9)
China Internet Network Information
Comscore Media Metrix
The Milken Institute, a global
economic think tank
Ministry of Information Industry,
Nielsen Net Ratings
Lunch Your Way to Profitability.
by Chellie Campbell.
How to Beat
the Loneliness of the Home-based Business Person.
Author of Zero to Zillionaire
Photo credit: Mary Ann Halpin
If you are in business for yourself
and working from home, you are likely to get lonely sometimes.
You have no office cohorts, no company cafeteria, no water-cooler
or lunchroom to hang out in and chat with folks to ease a stressful
day. The evil temptations arise then: somehow the refrigerator
door opens of its own accord and ice cream jumps out into your
bowl as if by magic. The television or radio clicks on (by itself)
and that talk show is just so interesting today, and look! It's
about people in home-based businesses, too, so you convince yourself
it's work-related. Or you get lost in research, i.e., surfing
the web…ahhh, and where did the day go? I've been so busy! (How
come I didn't make any money?)
The answer to this problem is to
join a networking group. Otherwise known as "relationship
marketing", networking at its best is fun, meeting good friends
over a good meal and referring business to each other wherever
possible. It is a support group of like-minded business people
who cheer each other on to ever-greater successes. When everyone
in the group is focused on finding referrals for everyone else
in the group, the result is lots of business for everyone! And
when you know you're going to have your networking get-together
sometime soon, it's easier to stay focused on your work.
I've been a member of a networking
group for eighteen years. (It's very funny when I'm at a meeting
and mention this fact—someone always comes over to me, wide-eyed
and asks, "So is it working for you?" Duh.)
The simple fact is networking works
if you work it. You can't just go to one meeting every other month,
give three people your business card, and wait for the phone to
ring. If you're in business for yourself, you have to make the
phone ring in other people's offices. The best way to make a networking
group work for you is to remember these three simple principles:
- Visibility: You've got
to make a commitment of time and energy—pick a group, a regular
meeting schedule, and show up consistently. People begin to
develop trust in you when you are a regular attendee of a
meeting. It takes some time for this to happen, so don't quit
before you've given it a full year of consistent effort. When
people just show up a few times and then stop coming, I refer
to them as "smash & grabbers" like the burglars
who smash a window, grab all they can in a few short minutes,
and then disappear. I want to do business with people I'm
going to see again next Tuesday.
- Credibility: Do a good
job, honestly and with integrity. Be professional, always
return phone calls, be on time, keep your word. If you can,
join a committee, work on the board of directors, become an
officer. That will increase your visibility and at the same
time people will see you are a contributor to the success
of the organization (not only am I going to see you next Tuesday,
but I'm going to see you being a leader—big-time credibility.)
Look for the opportunity to refer business to as many other
people in the group as possible. Call people and ask them
what kind of clients are they looking for? What goes around
comes around—if someone were referring a lot of business your
way, wouldn't you be on the lookout to return the favor as
soon as possible?
- Likeability: People do
business with people they like. Not everyone in every group
is going to be your best friend, but you can reach out, shake
someone's hand, and smile. Remember this is your opportunity
to greet old friends and meet new ones. The temptation will
be strong to find a few buddies and sit with them every meeting.
Don't do it! Pretend you are the hostess of the meeting and
welcome the newcomer into your group. Do some positive affirmations
and talk yourself up into good, friendly energy. Leave your
complaints at home. Then I'll look forward to seeing you on
If you follow these instructions,
you'll have so many new friendships, clients, and referrals, you
won't remember what loneliness was like. And there's a side benefit—you'll
make a lot of money, too. Just remember it's not net-sit, it's
not net-eat—it's net-work!
are you doing next Tuesday?
Join Chellie at an exciting
Live Meeting next Wednesday, April
5th from 9:00-10:00 am (PT) and learn how to Laugh All the
Way to the Bank:
Make More Money - And Have More Time
For Fun! You're invited to this
complimentary seminar, delivered via web conferencing from Microsoft
Office Live Meeting. All you need is a web browser and a phone.
We hope you'll join us. Follow the Microsoft
link to register for the program:
Chellie Campbell is the author of
to Zillionaire. She created and teaches the Financial
Stress Reduction® Workshops on which her book is based in
the Los Angeles area and gives programs throughout the country.
Her free e-newsletter is available at www.thewealthyspirit.com.
Debbie "the Liar" Allen Explains the Ant Dance:
of Empowering Future Presidents and Keeping America on Top of
On Friday, March 17, 2006, the National
Association of Women Business Owners, Los Angeles, honored Debbie
Allen with the Trailblazer Award at a gala luncheon that filled
the Beverly Hilton Hotel with nine other honorees and hundreds
of colleagues and friends. (Learn more about the other nine honorees
in next month's article: Sexy, Sassy and Smart.) Debbie Allen
has blazed more trails and received more awards in more fields
than most of us would dare to dream of, and she can still throw
her leg over her head! As her friend, Suzanne De Passe said in
her hilarious introduction of Debbie:
tell you how pleased and honored I am to be here in support
of my friend, Debbie Allen, the liar… The first lie is her
age. Here we have a woman who is a dancer, an actress, a choreographer,
a director, a writer, an instructor, a philanthropist, a songwriter,
a wife, a mother, a sister, a best friend and she claims to
have done all this stuff in under 60 years."
Debbie Allen added the Trailblazer
Award to her two Emmy's and her Golden Globe (for her work in
the hit TV series, Fame), but her greatest achievement
to date, she believes, is the Debbie Allen Dance Academy, a nonprofit
dance organization for boys and girls that provides a safe haven
for kids to go after school. According to the DADA mission statement,
the Academy prepares young dancers for a serious career in dance,
musical theatre, film, and television, all the while developing
the discipline, self-confidence, and creativity that every individual
needs to succeed in life. That means that close to 400 children,
ages 4-18, are getting the opportunity to learn dance and acting
from award winners like Debbie Allen, ballet from respected troupes
like the San Francisco Ballet and Dance Theatre of Harlem and
hip-hop from the choreographers of Britney Spears, Janet Jackson,
Michael Jackson, and Justin Timberlake!
It may sound like heaven - the perfect
new stomping ground for a woman who has made a career of dancing
over barriers, but finding the funding to keep an art school going
in California, even one that can attract students from all over
the world as DADA does, can be daunting. California is fiftieth
out of all the United States in terms of its level of arts funding.
Debbie Allen used her own money to launch the academy and convinced
some business students to write the business plan "in exchange
for chicken." The directors are always concerned about keeping
the doors open and the lights on, as DADA relies upon the generosity
of everyday folks like us, as well as corporations. Over 50% of
DADA students are on some form of scholarship and, as is the case
with most nonprofit organizations, the 501c(3) not-for-profit
charitable organization is chronically underfunded. (So, please
feel free to step up and join the dance!)
Debbie Allen has not only traded
in the glamorous red carpets and Academy Awards of her earlier
days, she has invested her own nest egg to ensure that our future
leaders get what they need to succeed. What could possibly inspire
her to work so hard, in a field that is a constant financial challenge?
Debbie explains the ant dance and why art is so important to society,
in her own words:
tell you how glorious it is to walk into a room and have a
little four-year-old come up to you and say, "Mrs. Allen.
I can do it! I can do the ant dance!"
at this child, and she might be the next Suzanne De Passe,
the next Condoleezza Rice, the next President of the United
States. This child has found a sense of herself in the ant
in a time right now of intense competition. With China and
India - there are many places in the world that do what we
do cheaper and faster. Creativity is the way we will maintain
our leadership. Creativity is something that our students
need. You can't put a price tag on it. So, I jumped off a
cliff in 2000, with my life savings, and I started the Debbie
Allen Dance Academy. I talked young business graduates into
writing a business plan, in exchange for chicken. I talked
to some of my friends in radio and advertising. We didn't
have any scholarships. We didn't have any business foundations.
We had a dream. We believed.
On May 23rd, all of you
are invited to the Debbie Allen Dance Academy festival in Culver
City, California. They're going to close off the streets and show
the world that Los Angeles students can dance and dream! Get more
information at the Calendar
Section of NataliePace.com.
Contributions to the Debbie
Allen Dance Academy are tax deductible.
If you'd like to help the next four-year-old on her path from
the ant dance to the presidency, please click on DADA
to donate online.
Your Bliss; Embrace Your Gifts.
by Gary Kobat
"on the wheel" of 7-time Tour de France winner Lance Armstrong
You have a calling, a destiny.
Avoid it and you will experience less.
Follow it, flow with it and
you will expand to experience more.
When you "follow your bliss",
you allow yourself to discover who it is you really are at your
core, your most essential, most energetic self; who and what
was in mind when you were born.
Following your bliss will
have you surpassing your wildest dreams, creating a unique force,
a noble yet sacred pathway, inspiring yet daunting, courageous
yet humbling, powerful and empowering.
When Joseph Campbell wrote
about "following your bliss," he didn't mean hanging out on
the beach with your favorite beverage. He wrote that "following
your bliss" meant "no matter what" -- an entirely different
He wrote that "following
your bliss" means:
1. that there will be a lot of work
2. that when you get a calling to
tap into who you really are that you follow that energy
3. that there will be some tough times
ahead and that people might not understand you
4. that you will have to develop character
traits that have been dormant inside
5. that your gifts inside will need
to finally come out
6. that you might have to develop
qualities that you don't think you have right now
7. that following your bliss is tough
work sometimes and that your world might be standing on it's head
along the way
8. that if you really follow that
bliss that all hell may break loose in your life and you may be
doing things that you never have thought of
Following your bliss is not for
the faint of heart. It is not for cowards. You might not fit
in for a while, when something in you is trying to get out.
Following your bliss means you
are taking on the impulses inside yourself, giving yourself
no wiggle room and making it a way of life… then noticing that
your life starts to improve....
Joseph Campbell writes that,
as your life starts to improve, "all improvement is just a release
of the lies you have about yourself, about what you can't do
and really is a reconnection of the infinite possibilities of
who and what you can do .... ..letting the chips fall where
It is not always glamorous
work to slowly change your habits and help others change theirs,
to dismantle the old and quietly build anew.
No one will give you an Academy
Award or a Nobel Prize, but deep inside you will have won the
respect of the hardest person to please in the world: yourself.
You see, in life, your gift
is really your "bliss".
Until next month: be smart...
follow your bliss and feel the shift.
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:
Million Roofs: A Place With Sunshine Gets Serious About Solar.
by Paul Woods, President
& CEO of Odyssey Advisors, LLC
Woods, President & CEO Odyssey Advisors
One thing that stands out when looking
at the current demand for solar panels is that most of them are
found in places that don't have much sunshine. Germany and Japan
account for the vast majority of the market, which says more about
their governments than their climate as both countries have climates
roughly equivalent to the northern border of the continental United
States. Even though Germany and Japan account for almost 70% of
the market for solar panels, this has more to do with their high
cost of producing electricity and willingness to subsidize energy
One consequence is that solar panels
generate less electricity in these countries than they would if
moved closer to the equator. To really make a dent in the demand
for fossil fuels, solar has to be installed in places with more
sunshine, and that day came a bit closer with recent announcements
that China, Italy, and California are initiating major solar programs
Since incentive programs in China
and Italy won't impact most of us, we'll focus upon California
where it took an end run around the folks that claim to be champions
of the environment to keep a very ambitious solar program alive.
the Union Environment
It probably didn't escape
notice that unions spent $160 million to get California's easily
confused voters to block the reforms requested by a Governor they
had just elected. What probably escaped notice, however, is that
they also almost derailed a huge new solar program a bit earlier
in the year. A bill whose goal was to install solar panels on
a million roofs in the state in just over a decade died in the
Assembly last August.
Those on the left side of the aisle
aren't shy about telling anyone that will listen that only they
can be trusted to protect the environment. However, they also
know how to count contributions and when it comes to choosing
sides between environmentalists and unions, it's no contest. At
the last minute, the trade unions wanted a provision added that
all labor for these installations would be done at prevailing
trade union rates. Democrats were happy to oblige and added this
provision to the final bill in the Assembly Appropriations Committee.
By making this bill too expensive, it died a mostly unpublicized
death in 2005 in spite of wide support from a variety of groups
including the Governor.
As this was the second time this
bill died of the same causes, it became obvious to everyone that,
as long as our elected representatives are involved, protecting
the environment will always take a back seat to protecting union
wages. To get solar panels on a lot more roofs, the state needed
a Plan B that kept the Assembly out of the process. Enter the
California Public Utilities Commission (PUC).
Plan B and
On January 12, 2006, the
PUC voted 3-1 to adopt the California Solar Initiative (CSI).
The first vote allocated $2.9 billion to encourage the installation
of solar systems between 2007 and 2016. The second vote allocated
another $300 million in incentives for 2006, which increased the
total incentives for solar to $3.2 billion.
The goal of the CSI is to install
3,000 megawatts of solar capacity by 2017. That may not sound
like a lot, but in the context of the current world market, it's
huge. In looking at the data from Photon International, the total
world solar output probably increased to around 1,500 megawatts
in 2005. As a result, the demand from California alone will be
enough to TRIPLE the world market for solar if the ultimate goal
of the CSI is reached.
How it Works
The goal of this plan is
to install solar systems on a million homes, businesses, farms,
schools, and municipal buildings by 2017. These systems will be
eligible for a rebate that starts at $2.80 for each watt of capacity
installed and declines to $.25 per watt in 2016. For example,
a homeowner that installs a typical 2,500-watt system costing
around $20,000 would receive a $7,000 rebate this year.
Although solar is still an expensive
method of generating electricity, the costs are coming down steadily.
However, this plan is designed to reduce the rebates by around
10% per year while solar costs are expected to decline at 6-7%
per year. The result is that it makes sense for someone considering
a solar system to get it installed sooner rather than later.
The money for the CSI will
come from around $350 million in existing funds already earmarked
for solar as well as an additional surcharge of .002 - .009 cents
per kilowatt-hour for gas and electricity bills, depending upon
usage. Proving the adage that no tax is ever temporary, this surcharge
will replace another surcharge that resulted when California locked
in long term contracts to purchase power at the top of the market
during the last power crisis. The previous surcharge was set to
expire in 2007, and the official line is the surcharge for CSI
will have a relatively minor overall impact upon gas and electricity
With solar, the more sunny
days, the better. As a result, the economics favor inland locations
over coastal and also favor connecting solar panels to the electricity
grid as opposed to using batteries or other devices to store the
energy produced. Solar is typically an expensive system to install,
but once installed, these last a long time and the subsequent
costs are low. As a result, this makes the most sense for a home
that an owner plans to keep a long time.
Finally, roof size and the amount
of power you need to generate will probably dictate the type of
solar cells you end up buying. With high real estate prices, homes
in this state tend to be smaller. If someone needs to produce
a lot of power from a relatively small roof, solar systems based
upon mono-crystalline or mulit-crystalline cells are expensive
but produce more power for a given surface area. If you have the
luxury of more roof space, string ribbon cells manufactured by
Evergreen Solar or amorphous cells in the shape of roof tiles
manufactured by Energy Conversion Devices will produce the same
amount of power for less money.
As an investor, I can't
help wondering about the future for electric utility companies
if consumers start generating their own power. In this context,
the following from News of the Weird last month http://www.newsoftheweird.com/archive/nw060101.html
may be a preview of things to come.
To support its December rate-increase
request, the Connecticut utility Yankee Gas Services said it needs
more money because too many of its customers have lowered their
bills by heeding calls to conserve energy. And a November report
commissioned by the U.S. Chamber of Commerce included the proposal
that Congress replenish the federal Highway Trust Fund by imposing
a special tax on gas-saving hybrid cars (in that those cars consume
less fuel than regular cars and therefore pay less in gasoline
tax). [Connecticut Post, 12-10-05] [Boston Globe-AP, 11-26-05]
For disclosure purposes, it should
be noted that Odyssey Advisors, LLC has investments in a number
of solar companies.
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
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
a Stock is Not a Bond.
by Meri Anne Beck-Woods,
Chairman & COO, Odyssey Advisors LLC; and Sonya Nangoy
Krawczyk Fixed Income Research Associate
When A Stock
Is Not A Bond. Fixed Income 102:
Something Sexier than a Bond:
A Bond ETF
Anne Beck-Woods, Chairman & COO, Odyssey Advisors LLC
Thinking about investing
in the bond market, but not quite sure how to deal with the complexity
of achieving a diversified bond portfolio? Well, bond ETFs may
be your answer. In fact, put in "LQD" in the stock quote
field of a finance website such as Yahoo! Finance and you
will find yourself a real-time (or close-enough) quote
of a bond ETF or a bond Exchange-Traded Fund. Buying one share
of a bond ETF would immediately get you exposure to hundreds of
bonds that essentially mirror the exposure, risk and return of
a certain bond index. What's the catch? Read-on to get a better
knowledge of the risks and rewards of a bond ETF.
are hard to figure out. Bonds are very difficult to manage on
your own due to their subtle risks and lack of liquidity and lack
of price transparency, compared to your regular and oh-too-familiar
stocks. Bond ETFs on the other hand behave the same as bonds,
as their prices react the same way to changes in interest rates,
yield spreads and yield curves. When interest rates go up bond
prices go down. Better yet, by purchasing a bond ETF, you get
the diversification of about 100 bonds that represent an index
such as the Lehman Aggregate Bond Index or the Lehman TIPS Bond
Index. Ever since its debut in July 2002, Bond ETFs have gained
tremendous popularity. But don't let their names fool you. They
are all part of one investment family: Barclays Global Investors.
Currently you have
six options listed below that give you a broad market exposure:
Aggregate Bond Fund
7 - 10 YR Treasury Bond Fund
$ InvesTop Bond Fund
1-3 Treasury Bond Fund
U.S. Treasury Inflation Protected Securities Fund
20+ Treasury Bond Fund
Barclays Global Investors
Note: Barclays manages all of the funds above with the
exception of the LQD managed by Goldman Sachs & Co
the various iShares ETF bond vehicles will be interesting. Typically
a shorter maturity bond will have less risk. The AGG will report
a weighted average maturity of just short of a seven year bond
and a weighted average coupon of 5.19|% with over 100 holdings.
So if it acts, feels
and even sounds like a bond, is an ETF a bond or a stock? Indeed,
this creature is actually a stock certificate, not a bond. Therefore,
it has the benefits and risks of a stock. Similar to a stock,
there is no guarantee of getting your principal back. Specifically,
when you buy a United States Treasury bond (or note), the issue
is an obligation of the U.S. Government and there is a government
guarantee of a return of stated face value of the bond when it
matures, whereas there is no such guarantee with any other kind
of bond, corporate or non-treasury bond or bond ETF. Even a U.S.
Government Agency bond does not have a government guarantee. There
is an implication of more safety, but no guarantee.
On the other hand,
you can buy and sell a bond ETF anytime during the trading day
and ETF shares are priced continuously throughout the day. Other
than the iShares Lehman TIPS Bond Fund that is listed on the New
York Stock Exchange ("NYSE"), all other bond ETFs are
listed on the American Stock Exchange ("AMEX"). Furthermore,
to get really fancy, bond ETFs can be sold-short, traded on margin
and hedged with options just like stocks. Too much risk you say?
Don't discount them just yet! They have many beneficial features
for an individual investor.
The real benefit
of a Bond ETF is that you could own a bond portfolio that tracks
a major portion of the bond market, short term, intermediate,
or longer maturity giving you the diversification, liquidity and
price transparency for not much money. Barclays attempts to achieve
performance correlation of > 95% between its bond ETFs and
its underlying index. However, if you only want to be exposed
to a specific sector of the market or favor high-income or no-income
bonds, then bond ETFs may not be for you. The risk metric of a
stock will be significantly greater than a bond. Income and capital
preservation are usually most important for an older fixed income
investor. A younger person will consider total return and an ability
to manipulate a bond market derivative masquerading as a fixed
involved in a bond ETF
A Bond ETF and ETFs in general are considered lower cost
investment vehicles. First, you do have to pay trading commissions
similar to that of stocks when you buy and sell a bond ETF. Therefore,
bond ETFs are cheaper for investors that just buy and hold. Each
bond ETF share range 3/28/05 - 3/28/2006 listed below
Second, there is
an ongoing management fee plus expense ratio of 0.15% or 0.40%,
depending on the fund, that Barclay's Global Fund Advisors receive
based on a percentage of each Fund's average daily net assets.
However, they are substantially lower compared to that of a major
reputable bond mutual fund such as PIMCO's Total Return A (PTTAX)
that has an expense ratio of 0.9%. Third, bond ETFs are more cost
efficient than laddering (buying individual bonds of varying maturities)
because you get instant diversification and a set duration with
the purchase of one trade.
are my dividends?
Bond ETFs pay out
interest through monthly dividends to investors (similar to bond
mutual funds) and capital gains are paid out through yearly dividends.
The monthly dividends
are taxed as ordinary income. iShares may issue a yearly dividend
that would be taxed as ordinary income if they are net short-term
capital gains or as capital gains if they are long-term capital
gains. From 2002 on, including 2005, the iShares Funds announced
Zero Year-End Capital Gains Distributions. Taxes can adversely
impact fund performance and especially in a down market where
you might pay tax and incur a loss.
To review and
wrap-up, here are the general pros and cons of investing in a Bond
- Diversification in the bond market
for less money
- Greater knowledge of holdings
in fund (2 day lag rather than quarterly on current holdings
in each EFF fund showing the top ten bonds held)
- Liquidity and price transparency
- Lower tax implications
- Lower costs
- Risk of not getting your principal
- Brokerage fee for buying and selling
- Not enough information about each
index available to public
- No control over how and when you
want your interest income
So next time when
you're in the mood for something sexier than a Bond be sure to
consider bond ETFs. But, just remember, a bond EFT is a stock
not a bond.
iShares Bond Fund
prospectus, July 1, 2005
"The Basics of Building
an ETF Portfolio" by Tracy Byrnes, TheStreet.com Contributor,
"Bond Brief: Inversion's
End" by Katie Benner TheStreet.com Staff Reporter 3/8/2006.
"Girl's Guide to Bonds 2003" www.NataliePace.com
by Meri Anne Beck Woods Volume 37, September 2003
Meri Anne Beck-Woods is Chairman
and CFO of Odyssey Advisors LLC, an independent investment advisory
firm specializing in equities and fixed income. Meri Anne is a
co-author of the book, Inspiration to Realization, where her chapter
"How the Millionaire Next Door Can Be You" speaks to
everyone's ability to become a millionaire. She can be contacted
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, Odyssey
Association of Security Dealer's Top 10 Things to Do BEFORE You
Invest in Bonds or Bond Funds
You've heard it before: Asset allocation
is the foundation of prudent investing. You've probably heard
this before, too—your portfolio should contain a mixture of stocks
and bonds. This is sound advice. But do you understand
the critical characteristics of bonds?
has written a Smart
Bond guide (available online) to
help those who already invest in bonds and mutual funds that primarily
invest in bonds—and those who are considering investing—better
understand this important component of a balanced portfolio. See
below for the 10 Things to Do BEFORE You Invest in Bonds or
- Define your objectives.
Is your investment objective to have enough money for your child's
college education? Is your goal to live comfortably in retirement?
If so, how comfortably? You probably have multiple goals. Lay
them all out and be as precise as you can. Remember: If you
don't know where you're going, you'll never arrive.
- Assess your risk profile.
Different bonds and bond funds, like stocks and stock funds,
carry different risk profiles. Always know the risks before
you invest. It's a good idea to write them down so they are
all in plain sight.
- Do your homework. You're
off to a good start if you've come this far—but keep going.
Read books and articles about bond investing from the library.
Look up information on the Web. Start following the fixed-income
commentary on financial news shows and in newspapers. Familiarize
yourself with bond math. And most importantly, know the right
questions to ask before you buy a bond fund or individual bond.
Don't buy anything you don't understand.
- If you're considering buying
a bond fund, read the prospectus closely. Pay particular
attention to the parts that discuss which bonds are in the fund.
For instance, not all bonds in a government bond fund are government
bonds. Also, pay attention to fees. Individual bonds also have
prospectuses, which derive information from a bond's indenture,
a legal document that defines the agreement between bond buyer
and bond seller. Ask your broker for a copy of the prospectus
to read it.
- If you're buying individual
bonds, locate a firm and broker specializing in bonds. Not
all firms, and not all brokers, know the bond business. Talk
to a number of brokers, and find one you are satisfied with.
Make sure your broker knows your objectives and risk tolerance.
Check broker credentials and disciplinary history using NASD's
- Ask your broker when, and at
what price, the bond last traded. This will give you insight
into the bond's liquidity (an illiquid bond may not have traded
in days or even weeks) and competitiveness of the pricing offered
by the firm.
- Understand all costs associated
with buying and selling a bond. Ask upfront how your brokerage
firm and broker are being compensated for the transaction, including
commissions, mark-ups or markdowns. If you're not buying a Treasury
bond, it's a good idea to
assess whether the additional return is worth the added risk.
- Plan to reinvest your coupons.
This allows the power of compounding to work on your behalf.
It's a good idea to establish a "coupon account" before you
start receiving coupons,
so that you have a place to save the money and are not tempted
to spend it. If you are buying a bond fund, you don't have to
worry about this—the fund does this for you.
- Don't try to time the market.
As hard as it is to time the stock market, it's even harder
to time the bond market. Avoid speculating on interest rates.
Decisions are too often made on where rates have been rather
than where they are going. Instead, stick to the investment
strategy that will best help you achieve your goals and objectives.
- Don't reach for yield.
The single biggest mistake bond investors make is reaching for
yield after interest rates have declined. Don't be tempted by
higher yields offered by bonds with lower credit qualities,
or be focused only on gains that resulted during the prior period.
Yield is one of many factors an investor should consider when
buying a bond. And never forget: With higher yield comes higher
web site offers a wealth of resources for the individual investor
- on stocks, bonds, as well as a resource for checking up on your
broker. Click over and play around! Remember, an investment in
education (yours) always yields returns.
by Natalie Pace.
and stock report card, including data on Blockbuster (BBI), NetFlix
(NFLX) and Movie Gallery (MOVI).
credit: Courtesy of Apple
What's the easiest way to expand
worldwide market share of iPods, Macs and iMusic? Expand Apple
Retail. And what's the easiest way to ramp up retail? Buy an existing,
beleaguered chain, like Blockbuster. At least, that's the premise
X. Cringely, a popular PBS pundit,
who writes, "Don't be surprised if Apple saves the day for
Apple won't confirm or deny whether
or not they are interested in rolling out more retail. However,
since May of 2001, when Apple opened its first retail store, Apple
products have been devoured by delighted consumers. On February
23, 2006, Apple® announced that one billion songs had been
legally downloaded from iTunes®. Apple shipped 1,254,000 Macintosh®
computers and 14,043,000 iPods during the first quarter of 2006,
representing 20 percent growth in Macs and 207 percent growth
in iPods over last year. And investors have rewarded Apple's growth
by driving up the share price 550% over the last five years.
On the other hand, things couldn't
be more bleak for Blockbuster. The company lost -588.10 million
last year and the BBI share price has lost 80% of its value over
the last five years, which has Carl Icahn, a board director and
14.68% shareholder, hopping mad. In a letter dated April 7, 2005,
Mr. Icahn blamed John Antioco, Chairman and Chief Executive Officer
of Blockbuster Inc., for losing $1.25B in income, for spending
sprees and egregious bonuses and salaries. Icahn warned Antioco
that he'd better "be sure that any offers for the company
see the ‘light of day'" and Icahn's presence on the Blockbuster
board assures him a voice in the decision-making. All told, BBI
looks like a prime buy-out target during the current Mergers and
Acquisitions feeding frenzy.
With a market capitalization of just
$419.3 million and more than 9,000 stores throughout the
Americas, Europe, Asia and Australia, buying Blockbuster may be
the best way for Apple to roll out more retail, especially now
that iTunes is selling pod casts and downloads of TV shows. At
an average price of $108,552 per prime neighborhood location (based
upon the $419.3 million market capitalization, multiplied by the
2.33 debt/equity ratio), Apple could hardly make a better buy
than the fading premium brand. With infamous corporate raider
Icahn on the Blockbuster board, it's hard to imagine that Blockbuster
isn't being pushed to sell. Of course, there are a lot of ifs
in this paragraph - if a deal is even being negotiated, and if
that deal goes through.
Despite the fact that neither company
is talking about whether or not they are talking, there is a whole
lot of very high profile trading going on. Major hedge funds have
been on a buying spree of Blockbuster options and shares. Since
September 2005, GLG Partners LP, England, UBS AG, HBK Investments
L.P., Morgan Stanley & Co. and Citadel have all purchased
large positions of options and shares of Blockbuster.
Sometimes, it just pays to draft
in the wake of giants and get sucked into their momentum. Someone
is smelling something, even if the scent is only wafting along
the super elite on Wall Street. Of course, if these juggernaut
hedge funds start backpedaling, you could get run over. In the
former case, just remember that you heard it here second. (Robert
X. Cringely said it first.) In the latter case, if you're invested
and you wake up with an unpopular stock that no one wants to buy,
rest assured that we'll stay on top of the situation to keep you
informed of your (and their) options. Since hedge funds are involved
and the Blockbuster annual shareholder meeting is coming up (the
meeting last year was on May 11th), expect a lot of volatility,
especially on the 3rd Friday of each month, over the
next few months.
Click to access the Blockbuster
Report Card, which lines up
the numbers of Blockbuster with competitor companies, NetFlix
and Movie Gallery.
RISK LEVEL: VERY HIGH
Full Disclosure: Natalie
Pace does not own shares in BBI, NetFlix or Movie Gallery.
Apple FYI: Apple Computer
celebrates 30 years in business on April Fool's Day, 2006.
Please note: NataliePace.com does
not act or operate like a broker. We are publish financial news.
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 consult an experienced, reputable financial
professional before buying or selling any security.
Investing in Stocks and Real Estate.
the tricks of worry-free, outstanding, long-term 401 (k) returns,
as NataliePace.com subscribers tap the wisdom of the Most Successful
Blue Chip stock picker in the US, Kelley Wright.
Reprint of the NataliePace.com subscriber's
only chat with Kelley Wright, the managing editor of the Investment
Quality Trends newsletter, that
took place on March 15th, 2006.
Wright, Managing Editor, Investment Quality Trends Newsletter
Good morning! I'm Natalie Pace, NataliePace.com
CEO. Let me introduce Mr. Kelley Wright, the #1 Blue Chip stock
picker in the US, and one of the smartest money managers I know.
Kelley's investment newsletter, Investment Quality Trends, was
founded by the legendary Geraldine Weiss. Kelley was handpicked
by Gerrie to continue her legacy and he is adhering to her strict
guidelines to continue performing great on Wall Street with the
least risky portfolio around.
Q: I mainly want to listen in,
as I'm a bit of a novice investor. Hope that's okay!
NP: It's great for you to listen
in, but I also encourage you to ask questions. If you are a novice,
the more information you have the better. Consider it like you
are walking up a path to wisdom and the first steps are getting
your questions answered with regard to which direction to head
Q: Kelley, are you a fundamental
investor or a technical investor?
KW: We use a combination of the two
disciplines. Our criterion is a fundamental screen for quality.
We then establish repetitive patters for price and yield. Pattern
identification is technical.
Q: Kelley, I'm primarily a fundamental
investor. I have recently been introduced to a company that uses
technical investing methods. The name of the Company is _____.
Have you heard of this company?
KW: No, I haven't.
NP: Did you read Mr. Wright's great
article in March 2006 on how to avoid investment pornography,
i.e. all of those "tricks" that are hawked in money
conferences and in infomercials that are "tested, proven
and/or 100% guaranteed!"? (Located it in the NataliePace.com ezine
vol. 3, issue 3.)
Q: Are you using the Group Rotation,
MACD and Stochastic criteria?
KW: No, we choose stocks that represent
historic levels of undervalue based on their dividend yield.
NP: According to the Investment Quality
Trends web site, a company will earn the I.Q. Trends designation
Select Blue Chip after it has met 5 of the 6 following
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
4. At least 80 institutional
investors must hold the stock.
5. There have been at least
25 years of uninterrupted dividends.
6. The earnings have improved
in at least seven of the last 12 years.
Q: Based on those criteria, it
seems like you all have a long-term vision when it comes to stocks,
unlike a lot of the advice I'm getting that is more towards playing
KW: We buy stocks when their prices
are low and their yields are high. When the prices rise to the
point that the yield is no longer attractive, we sell.
NP: You should never be "playing"
with your nest egg. You might take a portion of your portfolio
to be more active with, but never more than you can handle and
certainly never risking your retirement. Kelley, what are your
thoughts on active trading?
KW: We don't trade. We hold stocks
until the value has been wrung out and then we exit the position
to find another undervalued opportunity. Trading is for professionals
with a certain skill set.
Q: Trading is something I don't
think I have the stomach for.
NP: You don't have to "trade"
to make impressive returns. As an example, stocks rewarded investors,
on average, 11.2% over the last twenty years, which makes stocks
the best performing asset class. You don't have to get fancy to
make a decent return, when you are in for the long term. The one
line you will never hear from someone who is trying to sell you
something is, "Trading is for professionals."
Q: Kelley, do you have any software
that is available in the marketplace or do you do research the
old-fashioned way of reading everything and anything you can find?
KW: We read like crazy. As for our
methodology, we have a system that data mines for us.
Q: What system are you using that
mines the data for you?
KW: Our systems are proprietary and
were designed in-house by my IT guru.
NP: You can access Kelley's "data"
by subscribing to his bi-monthly newsletter at www.IQTrends.com.
Kelley's team does all of the work for you, and for less than
what you might pay to own the software and do all of the extra
work yourself. Kelley, do you think reading anything and everything
is important for the average person? Are you discerning with the
source of the information, and do you think that the average person
who has a day job might experience information overload?
KW: There is an abundance of information
available today. One must be able to distinguish between fact
and opinion. That is a learned skill.
NP: I've also done an analysis of
headlines. Oftentimes, even in Forbes, the New York Times and
Wall Street Journal (the most respected financial news sources
out there), the KEY DATA is found on page 16, not front and center.
The headlines can be misleading, and that is what everyone is
KW: If you are trading on news,
then you are late.
Q: Your system sounds a lot like
my friends at _______. These traders use other companies' systems
and then developed their own! They don't rely on news. With their
system, they are happy to make 1-3% on their money per week!
NP: I want to advertise here that
Kelley's "system" has worked AT THE TOP OF THE GAME
for 20 years. The Investment Quality Trends newsletter
is the NUMBER ONE risk-adjusted NEWSLETTER in the US, according
to Mark Hulbert, the most respected independent tracker in the
KW: Our system identifies the undervalued/overvalued
price/yields for each stock we follow. The day you buy, you already
know the yield exit point. At that point, you merely wait for
Mr. Market to do his thing. Our system is a bit mechanical in
that way; which is good if you are an emotional investor.
NP: I'd like to remind our novice
investors to beware of the sales pitch, "We're making 1-3%
per week!" You'll get a lot of salespersons trying to throw
up numbers and returns that sound impressive, but are not true.
People will say, "So and So made 6000% gains in JUST TWO
DAYS!!" but that is not indicative of the success of their
product or formula for EVERY PERSON OVER TIME. In fact, So and
So who won the lottery of 6000% gains in one day, might have lost
9000% the next, just like Vegas. What is indicative of GENUINE
SUCCESS is if an independent organization, like Hulbert's Financial
Digest, tracks the returns and measures them against the major
stock market indices over time. Investment Quality Trends meets
those rigorous standards and outperforms everyone on the street.
KW: If I could consistently make
1-3% per week, we wouldn't be chatting. We have been very consistent
at making a little over 1% per month, however.
NP: In short, Kelley is a very well
respected expert with impressive returns that have been proven
over a long period of time. 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.
Q: Mr. Wright. Slight stray away
from stocks. What are your thoughts on the real estate market
KW: I am not a real estate expert.
As a Southern California resident, however, I am a seasoned real
estate buyer/seller. In my opinion, the market moved too high
and will correct.
Q: So, I've been hearing and reading
for the past several months.
NP: I have an important article in
the March ezine (vol. 3, issue 3). The REITs CEOs have been CASHING
OUT in the multi-million range since last summer and there is
more product on the market now than over the last few years.
Q: Thanks. I'll check out the
NP: One thing to remember, however,
is that we haven't received the international vote yet. Just when
you think that our high end US real estate is over-valued, the
foreign capital moves in! We're seeing that with the Dubai ports
situation. There is a lot of interest abroad to buy US real estate.
The last time around, the foreign capital, then Japanese, moved
into the most desirable locations. Beverly Hills and Rockefeller
Center benefited more than San Bernardino, California and Peoria,
KW: Remember when the Japanese bought
Rockefeller Center and Pebble Beach? Everybody howled that was
the top, and we ended up getting those properties back at pennies
on the dollar!
NP: That's right! Prices in Southern
California are unsustainable for the average person. $490,000
median in LA, for crapola in undesirable locations (2-hour commute
or high-risk neighborhoods)! $610,000 in Orange County?! Who can
afford that? Remember, however, that foreigners are reading the
headlines about the great returns from real estate in the U.S.,
too. From what I'm hearing internationally, investors abroad are
interested in buying into U.S. real estate now. The ports move
and the Unocal bid were not isolated incidents. We'll start hearing
more about foreigners wanting to diversify and own hard American
Q: Kelley, could you give me your
thoughts on the purchase of Falconbridge by INCO and how it will
affect the nickel company stock over the short term?
KW: Neither company meets our criteria.
We typically buy companies when their prices are depressed and
their yields are high. This is our primary goal; acquiring high
quality companies when they offer value. We don't really care
what a company does, as long as it meets our criteria and offers
Q: Could you share with us what
companies meet your criteria that are involved in the Anti-Aging
and Biotechnology sectors?
KW: I can't say specifically about
anti-aging, but Sigma-Aldrich (SIAL) makes all of the chemical
building blocks for the biotechs.
NP: Kelley, would you talk about
the difference between Blue Chips and Breakouts for our guests.
Both the risk and the reward factors…
KW: Trying to catch a breakout is
like trying to time a rushing train through an intersection. The
best an investor can hope to achieve on a consistent basis is
to identify an undervalue AREA and wait for Mr. Market to catch
up and make you look like a genius.
NP: (err…. I've done pretty well
at catching breakouts, but then again, I don't sleep AND I have
access to CEOs that the average person could never dream of speaking
KW: Natalie, you are way smarter
than the average stock picker!
Q: Could you elaborate on what
you refer to as Breakout because I have not heard that term before!
KW: A breakout is when you see the
price action "breakout" from consolidation.
NP: It is clear from your language
that your technical analysis is focused on aggressive performance.
Aggressive performance means VERY HIGH risk. In fact, some of
the most colossal losses on Wall Street are from HEDGE FUNDS who
think that they are smarter than everyone else and try to catch
those runaway trains at intersections. The difference in Kelley's
message - and this is extremely important -- especially with the
bulk of your 401 (k) - is that you should be able to rest easy
at night and not have the worries that you can lose everything
you are investing. This is achieved through proper asset allocation,
portfolio diversification and making sure that you clearly understand
the level of risk you are taking on.
KW: We have three primary goals:
protect principal, earn an immediate and growing stream of dividends,
and capture long-term gains for total return.
Q: I'm clearly a bear investor,
as I seem to worry a lot! Which keeps me from investing promptly.
KW: We buy what the market doesn't
like and hold it until the momentum players catch on and then
we sell to them.
Q: That sounds wise.
NP: It is even more important for
worriers to follow the rules of a company like IQ Trends. The
most common way to lose money is to panic and run with the crowd
- in any direction, buying or selling.
K: We worry about losing principal,
but that doesn't make you or us bears. We recognize the value
Q: I'm a fundamental investor.
I'm only learning about technical investing at this point and
still skeptical about my ____ software. I'd much rather be on
the golf courses of the world playing golf than spending 20-30
minutes a day on my lap top computer making trades.
KW: Equities are risky by nature.
The greater percentage of equities one owns increases the level
of risk. This is, of course, unless you buy high-quality companies
when they offer historic value.
NP: So, what is the recommended formula
for a mix of stocks, bonds, money markets, T-bills and how does
it change with age?
KW: We are always long, or looking
to be long. If we don't have any opportunities, we buy T-Bills.
NP: Interesting. So you're keeping
your non-stock investments liquid (T-bills). Why? And how much
of your current portfolio is invested, compared to percentage
in T-bills right now?
KW: I'm not a bond guy. Bonds have
no capital appreciation potential. I can also get a pretty good
yield from my stocks, so bonds don't offer much to us. I'm about
75% stocks and 25% T-bills.
NP: Your system takes so much
risk out of stocks that you are risk-adjusted almost to the more
traditionally safe bond, right?
KW: Correct. Our newsletter is at
25% less risk than the Wilshire 5000. Our managed accounts have
betas of about 35% to 40%.
NP: For our novice investors, a touted
measure of percentages is to make sure that a percentage equal
to your age is "safe" i.e. not invested in stocks or
any other "risk" investment. As you get older, you move
more to yield-bearing safe havens (like bonds, T-bills, money
markets). Money managers like Kelley will overweight or underweight
based upon current market conditions. Kelley, does 75% in mean
that you are more optimistic this year than last?
KW: Not really. I just sold some
TFX [Teleflex Inc.] and BLS [Bell South] though and haven't moved
the proceeds yet. I don't try to market time too much. If there
is stuff to buy that we like, we just buy it.
NP: Duh!! I'm overlooking that your
article this month (March 2006) included a chart that makes a
strong case that the market is overvalued. That means there is
not much to buy right now, right Kelley?
Q: What are your thoughts about
the Baby Boomers causing a stock market crash once they retire
and learn their 401 (k), mutual funds, RRSPs have too many government
restrictions? With health concerns, they'll need money to pay
for their medical treatments.
NP: Unfortunately, now that people
have to invest themselves, rather than have companies responsible
for it, I don't think we have enough people who really understand
how to protect their portfolio and what tax consequences there
are for this and that withdrawal. I think ignorance will keep
a lot of people "all in" on their 401 (k)s.
KW: Investing is about providing
for someone's cash needs; either cash now or cash later. Inflation
is a permanent given, so the price of goods and services will
continue to go up in the long-term. This means we're all going
too need a lot of cash. I think a high-quality portfolio of dividend-paying
stocks with rising dividend yields is the best way to prepare
for now or later.
NP: I'm more worried about headlines
and bond yields attracting money in and out, than I am having
a cohort of savvy aging investors who exit the stock market in
KW: If bond yields keep going up
that will change in a hurry.
Q: I'm absorbing all of this! It's
been a very insightful chat, and though I was a bit shy, I've
learned a lot, so thank you all so much.
NP: Novice investors are encouraged
to check out the Investing Edu section of NataliePace.com for more Investing
101 tips. Also, I'm a big proponent for hiring professionals.
You get access to Kelley's mind twice a month in his bi-monthly
newsletter for less money than you probably spend on coffee. Subscribing
to his newsletter more than pays for itself, while you rest easy,
while your money does the work for you. For more information,
visit the Investment Quality Trends web site, at www.IQTrends.com.
KW: It was my pleasure to be here!
I would go anywhere to share time with Natalie!
NP: Likewise. A moment spent with
the wisdom of Kelley Wright is a moment that cannot be better
invested! Have fun, and stay tuned in frequently to NataliePace.com
for more recipes for the rich life™.
Don't Miss Your chance to chat one-on-one
with The Most Successful Blue Chip Stock Picker on Wall Street
-- Geraldine Weiss, the founder of Investment Quality Trends,
on Wednesday, April 5th, 2006, from
8:45AM through 9:30AM PT. Investment
Quality Trends has the highest risk-adjusted returns for the past
20 years, according to Hulbert's Financial Digest. Their
focus is dividend-paying Blue Chips. Meet Geraldine Weiss and
learn what companies she thinks are hot for 2006.
This is a subscriber's only chat. Try logging into the chat
room now to ensure that you know how to! Also, find out more information
on the chat in the Calendar
section of NataliePace.com.
Tax Scams Involving an Official Looking IRS Email Address.
The Internal Revenue Service is warning
consumers about an Internet scam in which consumers receive an
e-mail informing them of a tax refund. The e-mail, which claims
to be from the IRS, directs the consumer to a link that requests
personal information, such as Social Security number and credit
This scheme is an attempt to trick
the e-mail recipients into disclosing their personal and financial
data. The practice is called "phishing" for information.
The information fraudulently obtained
is then used to steal the taxpayer's identity and financial assets.
Generally, identity thieves use someone's personal data to steal
his or her financial accounts, run up charges on the victim's
existing credit cards, apply for new loans, credit cards, services
or benefits in the victim's name and even file fraudulent tax
The bogus e-mail, which claims
to come from "email@example.com" tells the recipient that he
or she is eligible to receive a tax refund for a given amount.
It then says that, to access a form for the tax refund, the recipient
must use a link contained in the e-mail. The link then asks for
the personal and financial information.
The IRS does not ask for personal
identifying or financial information via unsolicited e-mail. Additionally,
taxpayers do not have to complete a special form to obtain a refund.
If you receive an unsolicited e-mail
purporting to be from the IRS, take the following steps:
* Do not open any attachments
to the e-mail, in case they contain malicious code that will infect
* Contact the IRS at 1-800-829-1040
to determine whether the IRS is trying to contact you about a
More information on these and other
scams may be found on the criminal enforcement page at IRS.gov.
How to Consolidate
and Eliminate Your Bills and Prosper.
It's tax season and the reality of
your spending is there in black and white. As you calculate the
interest you've paid to Visa, Mastercard, Discover and American
Express you think how nice it would be if you were debt free.
Unless you've got a winning lottery ticket, a debt consolidation
loan is a debtor's dream. Consolidating could help with just one
monthly payment, and allow you to finally pay off those debts,
if you plan properly.
Consolidating bills isn't always
easy, especially if you've fallen behind in payments. If you have
late payments, are between jobs or have a lot of debt, it can
be hard to find a consolidation loan at a lower interest rate
than you're currently paying. If so, you could end up deeper in
debt than when you started, especially if your new monthly payments
are higher than what you're currently paying, making you cash
When consolidating your debt keep
these three goals in mind: 1. Get the lowest interest rate
possible 2. Keep your payments affordable so that you don't
go into deeper debt and 3. Have a plan to pay off your debts in
3 - 5 years, if possible.
Here are some of the best ways to
Using Credit Cards - Balance
transfers are like manna from heaven if you have a good credit
rating. Call your current creditors to ask what interest rates
you're eligible for if you transfer your balances. Even though
the short term zero percent interest rate is attractive, go for
a fixed rate until the balance is paid in full. With interest
rates rising, it's a safer bet to commit to a rate today than
to risk where rates will be after the zero percent "honeymoon"
If you can't negotiate a lower rate
with your current creditors, try shopping for a new card. Be careful
not too apply for too many accounts in a short period of time
since it may hurt your credit rating. Once you've consolidated
into one account, set up auto payments since lower rate options
are only good if your account is in good standing.
Using Equity - If you own
your home, refinancing or taking out a second mortgage might be
a better choice. Although you're "betting the farm"
so to speak, the interest on your home loan will probably be tax
deductible; making the true cost of consolidating less expensive.
(Please check with your certified tax preparer regarding your
Deciding whether to refinance or
take out a second mortgage depends on your existing interest rate.
If you currently have an adjustable rate mortgage, I recommend
a "cash out" refinance into a fixed rate mortgage, unless
you plan on selling your home in the next few years. Again, with
rates going up, it's better to be safe than sorry.
If you currently have a low fixed
rate mortgage, then a Home Equity Line of Credit (HELOC) or a
fixed rate second may better suit you. A HELOC is like a credit
card on your home that you can borrow against repeatedly, whereas
a fixed is a set loan/ payment amount paid off usually over 20
or 30 years. The advantage of the HELOC is that you can borrow
money from your home and pay it off repeatedly without refinancing
each time you want/need money. Also, HELOC payments tend to be
lower, since they're interest only (please note the balance does
not pay down unless you make additional payments).
The disadvantage of HELOC loans is
the interest rate, which is usually tied to Prime and increases
each time Prime goes up. If you're worried about increasing interest
rates, then a fixed rate second would be your best choice. The
payments are initially higher, but there are no surprises down
A word about consumer credit counseling
organizations, although they may negotiate lower interest and/or
payments, it's often at the expense of your credit rating. There's
nothing worse than getting out of debt only to discover you now
have low FICO scores, which mortgage lenders and large purchase
financiers use for making their decision and pricing. Also, if
consumer credit counseling appears on your credit report, it's
like a waving a red flag to potential creditors saying, "I
can't manage my money." If credit counseling seems to be
your only choice, choose wisely making sure that whoever assists
you does so with anonymity on your credit report and without your
current credit being considered derogatory.
The key to consolidation is to create
a plan that allows you to pay your debt down in a reasonable amount
of time and have enough cash to live on meanwhile. There's nothing
worse than restructuring your debt into one large bill, only to
need to use your credit card the next time your car breaks down
or some other "emergency" comes up. Managing debt is
challenging, but it can be done. If you're a homeowner, call your
Mortgage Professional to discuss your options.
An eighteen-year veteran of the real
estate finance industry, Kassie
Welch began her career at the Bank of New York (BONY) in the
Mortgage Banking Division. At BONY she was trained in all areas
of financial services, from processing and underwriting to secondary
marketing and loan servicing. In addition to a degree in Business
Administration from California Polytechnic University, she holds
certifications in appraisal, underwriting and fraud detection/prevention
from the Mortgage Bankers Association. Kassie is known for her
integrity and dedication to getting her clients the best possible
rate/loan program to meet their needs.
News on Cool Stocks…
by Natalie Pace, CEO, NataliePace.com,
respected journalist and top-ranked in performance by TipsTraders.com
Pace, CEO, NataliePace.com™
See below for Important highlights
from the New York Times, Money Central, Reuters, Bloomberg, CNBC,
Fox News, policymakers and more. Alphabetized for ease.
General Motors lost $10.6
billion in 2005, as it struggled with high labor and commodities
costs, loss of U.S. market share to foreign rivals and sluggish
sales of sport-utility vehicles. GM also restated earnings for
the past several years.
Though Ford Motor Company
has the highest amount of underfunded pension liability, at -$12.306
billion, is laying off, plans to spend a billion on restructuring
and is expected to loss money in 2006, the corporation is still
receiving an average 7 stock ranking (out of 10) on MSN.com
(source: Standard and Poor's, July of 2005). In their most recent
10-K filing, Ford warned that the company may not see a profit
in 2006, due to declining market share and escalating costs (the
cost of metals are through the roof). This is why trading on analyst
recommendations is one of our Top
10 Investment Mistakes. Click to
review the other nine.
Ford FYI: Chairman and CEO
Bill Ford will receive no salary, bonus or long-term compensation
this year unless the automaker reaches sustained profitability.
International Automated Systems
Inc. (OTCBB: IAUS) has signed a $150 million purchase and
installation contract to install a turnkey 100-megawatt power
plant for Solar Renewable Energy-1 LLC of Nevada. This contract
is subject to finalized funding and approval by the Public Utility
Commission Nevada. IAUS is trading on the "pink sheets,"
and should therefore be given 100X the research before even thinking
Yahoo is still number one
on the worldwide web, though Google and Microsoft
have the worldwide war chests, with market caps of $112.1 billion
and $279.3 billion respectively, compared to Yahoo's $45.92 billion.
Internet Media Companies
Unique Visitors (000)
Pages Viewed (MM)
Minutes per Visitor
Internet : Total Audience
Source: comScore Media
Stats, Facts, Quotes and Educational
- There are two very important
events this month. Chat one-on-one with the #1 Blue Chip
Stock Picker in the U.S. on 4.5.06. Attend the most high-profile
networking conference in the U.S. - the Milken Global Economic
Conference April 24 - 26th. For more information,
visit the NataliePace.com
calendar at www.NataliePace.com.
- Higher Interest Rates.
The Federal Open Market Committee decided on 3.28.06 to
raise its target for the federal funds rate by 25 basis points
to 4-3/4 percent, for the 15th consecutive rate hike,
and believes that "further policy firming may be needed."
Click to review the FOMC
Press Release from the March 27th
and 28th, 2006 meeting.
- 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 Blue Chips, are
in a buying range right now. (For more Info, read "Want
to Be Sexy and Fiscally Fit?"
in last month's ezine.) Investors are still feeling the burn
from the NASDAQ 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. Technology 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 research
of your old favorite Internet stocks again, while trimming back
your exposure on legacy corporations with structural challenges,
like automakers, defense contractors, airlines, and/or any corporation
established before 1980 that still has a defined-benefit plan.
- Real estate is on
everyone's bubble warning list, but one thing to remember is
that we haven't received the international vote yet. Just when
you think that our high end US real estate is over-valued, the
foreign capital moves in! We're seeing that with the Dubai ports
situation. There is a lot of interest abroad to buy U.S. real
estate. The last time real estate skyrocketed, in the 1980s,
the foreign capital, then Japanese, moved into the most desirable
locations. Beverly Hills and Rockefeller Center benefited more
than San Bernardino, California and Peoria, Illinois. The ports
move and the Unocal bid were not isolated incidents. We'll start
hearing more about foreigners wanting to diversify and own hard
American assets. The U.S. ranks pretty high on the most desirable
countries to live in, in the world.
- 20 BIG WINNERS, which keeps the
companies featured in NataliePace.com at the top in Annualized Returns
(according to TipsTraders.com). This hot news article still
has the proud honor of featuring twenty companies that have
posted positive gains, versus just seven that have gone south.
Of the seven that have gone south, we were most concerned with
Krispy Kreme, but with the hiring of Kraft
Foods veteran Daryl Brewster as president and chief executive
that company is clearly moving forward. Turnarounds are difficult
to stomach, even the turnaround of the most popular sweet on
the planet. Lawsuits and challenges remain. 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 were adding up more than
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?"
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 appear to be 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.
since original feature
the article in the vol. 2 iss. 11 ezine, entitled, "Harvesting
Profits…" Morgan Stanley analyst David Togut lists
ADP as "overweight." 2Q results were just under
forecasts, at $2.15 billion in sales (expectations were
$2.17 sales). 17.5 percent gain in quarterly net profit.
The company's earnings rose to $259.7 million, or 45 cents
per share, from $250.1 million, or 42 cents per share, a
year earlier. On 1.24.06, ADP added an automated accounts
payable management solution, which streamlines AP, while
at the same time simplifying Sarbanes-Oxley compliance.
Sold its claims services business to Solera Inc. for $975
million in cash, on 2.9.06. There should be a one-time gain
next quarter of $450 million from the sell, but 2006 full
year earnings are expected to fall by up to 2 cents per
share, with a loss of 7 cents per share in 2007.
Stock in a great sector.
this is only traded on the Toronto Exchange)
treatment and metals recovery for acid-contaminated water
in mining ind. BioteQ's customers include Jiangxi Copper
(China), Breakwater Resources, Falconbridge, and Phelps
Dodge. This company is only trading on the Toronto Stock
Exchange's TSX. Go to Bioteq.CA for more info. If your stomach
is lined with steel, this could be a fun, rewarding, high-risk
bet. Annual Shareholder's Meeting is scheduled for May 1,
2006. More details to follow.
vol. 3, issue 4, "Blockbuster Sale." Very high
risk. Distressed acquisition play in a heated up M&A
Global Investors Eastern Europe
seems to be in the right countries, and, within those countries,
in the right, growing sectors. See vol. 2, issue 8. Great
way to diversify, as well as to add growth. Eastern EU economy
rocks. Western EU economy stalls.
receives a Buy rating at $26.40 from Soleil Media-Metrics.
Disney/Pixar/ABC, distributed by Apple iTunes = dream partnerships
of the future. $5.85 billion share buyback program announced
(Jan 2005?) Just purchased Pixar, and along with it got
Steve Jobs as the largest individual shareholder (with 7%
of the company's stock). Hmmm… The most successful animation
film company meets the most successful family media company
meets the most successful new media device, the iPod. Hmmm.
Sounds like the happiest place on Earth to us. Produces
Lost and Desperate Housewives and you don't
have to be either to know they are huge hits for the company.
CFO Tom Staggs said that syndication for the two TV shows
should net $1 billion in operating profit. In the February
6 earnings call, Bob Iger said that content from The Walt
Disney Company had resulted in 2.5 million episodes sold
on iTunes. As the largest individual stockholder, Steve
Jobs may be the prime candidate for the new Chairman of
the article in the vol. 2 iss. 11 ezine, entitled, "Harvesting
Profits…" Roy C. King became President and COO on 12.20.05,
responsible for sales, marketing and biz development. Participated
in the NASDAQ inaugural Small-Cap Investor Conference on
2.7.06 in London. Missed earnings on 2.28.06, but expects
double-digit growth in revenues, client employee count and
earnings in 2006. Increased dividend and plans to buy back
a million shares in 2006. For the quarter ended Dec. 31,
profit fell to $9.9 million, or 35 cents a share, from $12.5
million, or 44 cents per share, in the year-earlier period.
For the year, earnings were $37.4 miilion, or $1.31 per
share, compared with $4.7 million or 18 cents per share,
in 2004. Revenue was $608.8 million, up from $585.5 million
a year earlier.
were spooked in 2005, when 17-year CEO and Chairman Rob
McEwen left the company (to become CEO & Chairman of
U.S. Gold, listed below). However, McEwen remains the biggest
shareholder and the transition to the new management seems
to be working out quite well. Share prices are high, but
gold is in favor on most analysts' lists this year. Vancouver-based
operation, with Canadian mines and the lowest production
cash cost of gold, at $25 US per ounce. With the acquisition
of Placer Dome assets in Nevada, the price of production
is expected to rise to $150 ounce. 2006 production is expected
to reach 2 million ounces, with 2.4 million ounces produced
in 2007. As of Dec. 31, 2006, Goldcorp, including the Placer
Dome interest, had 25.3
ounces of Proven and Probable reserves. On 3.5.06, Goldcorp
announced record net earnings of $286 million ($0.91 per
share) for 2005, an increase of 460% compared with $51 million
($0.27 per share) in 2004. record fourth quarter net earnings
of $102 million ($0.30 per share), compared to 2004 earnings
of $15 million ($0.08 per share). 2005 gold production increased
to 1,136,300 ounces (2004 - 628,000 ounces) and gold sales
more than tripled to 1,344,600 ounces at a total cash cost
of $22 per ounce (2004- 427,600 ounces at $115 per ounce).
Goldcorp will acquire certain Placer Dome assets from Barrick,
and the Eleonore gold project in Quebec as a result of the
transaction with Virginia Gold Mines; both of which are
expected to close during April 2006. Total gold production
in 2006 from the combined Goldcorp and Placer assets on
an annualized basis is expected to be approximately 2 million
ounces at a total cash cost of less than $150 per ounce.
volume 2, issue 6 for a feature article
near 52 week low.
to pay the IRS $32 million to settle an employment audit
(3.16.06). Hired investment bank Lazard LLC to shop the
company to suitors and appointed board member Joseph L.
Fischer as interim CEO. Fischer was Former Senior Vice President,
Dial Corporation and Former Group President, Corporate Controller,
Johnson & Johnson. Reported 4Q Erbitux sales totaled
$121.2 million, compared with an analyst consensus of $114
million, and a profit of $13.1 million, or 15 cents per
share, compared to a loss a year ago. Total revenues for
the full year ended December 31, 2005 were $382.9 million
compared with $388.7 million for the full year 2004. Net
income for the full year 2005 was $98.9 million with diluted
income per share of $1.14 compared with $113.7 million,
or $1.33 per share, in 2004. Filed for FDA approval to use
Erbitux on head and neck cancer on 8.30.05, and received
"priority" review status on 10.31 from FDA. Review
expected 2.28.05. Results from study are impressive and
the EU commission just received a positive opinion from
their committee, on 2.23.06, to grant approval in Europe.
New panitumumab drug from Amgen is predicted to gain market
share of colorectal cancer in about three to four years,
though it is not expected to gain approval and product launch
before 3Q 2006. Swissmedic, the Swiss agency for therapeutic
products, approved Erbitux for head and neck cancer on 12.22.05.
Merrill Lynch analyst Eric Ende thinks IMCL is a TOP SELL
for 2006, while research analyst Steven Harr, Morgan Stanley,
calls IMCL "overweight." New press releases under
the new CEO are looking very positive. Perhaps ImClone will
have an easier time getting the message out about this great
DNA-based cancer drug under his guidance. Reports say that
Bristol Myer Squibb may be looking to sell their 17% stake
turnaround mode. Trading at 5 year lows.
off S&P Midcap 400 effective 10.27.05.
Kraft Foods veteran Daryl Brewster as president and chief
executive in March 2006 (sparking a rally). He was previously
the head of Kraft Inc.'s $6 billion North American snacks
and cereals business. KKD got an extension on its 12.15
deadline to file financials with the SEC, but faces NYSE
delisting after April 30, 2006, if they don't get the reports
in on time. Don't forget that Michael Sutton, the former
chief accountant for the SEC, is on KKD's board. Turnarounds
like this are very hard on the stomach. This high-risk investment
is only for the seasoned investor with nerves of steel.
Vegas Sands Corp.
Vol. 2, Iss. 7
Venetian, Sands Macao
mover advantage in China's Vegas!!)`
Venetian, The Palazzo (2Q '07), The Sands Macao, The Venetian
Macao (1Q '07). 97% occupancy rates at the Venetian. Go
to LasVegasSands.com, click on Investor Information, and
then Investor Day, to see a Web Cast on fast growing and
vast the Macao market is. Las Vegas Sands Corp. is also
making deals with other Macao hotels to manage their casinos
and show rooms, including the Four Seasons, Intercontinental
Hotel, Holiday Inn, Far East's Cosmopolitan and Dorsett,
Shangri-La Hotel Macau and the Traders Hotel Macau, all
on the Cotai Strip in Macao. Bidding on new Singapore casino/resort
with Singapore's leading developer and hotel group, City
Developments Limited. Morgan Stanley analyst Celeste Mellet
Brown recommended the stock for growth investors, with a
target point of $59, Assuming a bull market, while a bear
market warrants a $47 price target. Earnings on 2.14.06
were record 2005 net revenues of $1.74 billion, an increase
of 45.4% over the prior year. Net income in 2005 was $283.7
million, or $0.80 per diluted share compared to full year
net income of $495.2 million, or $1.52 per diluted share
in 2004. (2004 included $417.6 million for sale of the Grand
Canal Shopping Mall.) Looking to secure a $2.5 billion credit
facility to develop "Asia's Las Vegas™"
in Macao. Yeow… Yeehaw! CEO Sheldon G. Adelson plans to
sell 42.8 million shares, worth approximately $2 billion,
after selling $366 million on 9.13.05, for trust diversification
purposes. This will reduce his personal stake in the company
from 75.3 percent to 63.2 percent, which should be viewed
as a positive more than a negative, although investors typically
get spooked when the founder sells. To put this in perspective
another founder, Bill Gates, sells over a billion each year
to fund the Bill and Melinda Gates Foundation, without causing
a twitter in the financial markets. Adelson has to sell
if he's positioning the corporation to be more attractive
to institutional investors and for listing on a major index.
in mid-range. Growth company. Volatile share price.
were itching to RE-ADD NTGR TO THE HOT LIST ON 1.16.06,
when NTGR announced a deal with Skype (owned by eBay) to
offer Wi-Fi Internet phones. However, as we reported on
1.15.06, Institutional investors unloaded 10% of shares,
or 3,304,900 shares, on 1.10.06, and we expected the price
to dump on this large sale. Sure enough it dropped from
$20.76 to $17.42. An October report from Jupiter Research
predicted that 20.4 million U.S. households will subscribe
to some form of Internet-based broadband phone service by
2010. More information on Netgear's Skype Wi-Fi phone, including
pricing and availability, is planned for the first quarter
of 2006. BusinessWeek named NTGR as one of its 100 Hot Growth
Companies. Judges from the IT Industry and CRN Readers Rated
NETGEAR Best in Service and Support Among Crowded Networking
Category that Included Companies Worldwide with Both Voice
and Data Legacies in Dec. 2005. 4Q earnings missed expectations
by a penny, largely due to not keeping up with supply. Net
income was $8.9 million versus $8.6 million a year ago,
with per-share earnings flat at 26 cents. According to CEO
Patrick Lo, they have 58 new products.
2, iss. 10
Fox, Myspace and DirecTv.
article, "News Corp. Enters New Media," from vol.
2, iss. 10. Bought Myspace, Scout Media and IGN Entertainment,
all IT companies, for far less than competitors are paying
for their holdings. With sales of $24.4 billion and a MC
of $51.52 billion (compared to Google's $5.25 B in sales
and $127 billion MC), we think investors will start taking
notice of this undervalued juggernaut, especially once MySpace
revenues start hitting the books. Myspace has surpassed
Google in page views and user time online, which should
start translating into a major jump in ad revenue this year,
especially since MySpace's core demographic is the coveted
16-34 year olds. MySpace is now a Top 10 Global Internet
Brand. Media is in favor for 2006, according to Smith Barney
analysts. Murdoch has been quoted as saying that MySpace
and IGN Entertainment will be his leading drivers of growth
in coming years. Mobizzo, Fox's mobile network, which pioneered
text voting on American Idol, launched on 2.27.06, and will
have micro-pay downloads of films and TV (including Napoleon
Dynamite, the Fox cult film), games music and more.
issue 44. 1st featured Dec. 2002.
was announced on 2.13.06 that Cisco will distribute Opsware's
products worldwide and that the companies will collaborate
on advanced network management solutions built on Opsware's
Network Automation System, which sent a rocket through Opsware's
share price. CONSENSUS INSIDER BUYING (which we reported
on in January) turned out to be a very good sign. Q4 Revenue
Totals $18.6 Million, up 61% Year-over-Year. Non-EDS Revenue
Projected to Grow 83% to $73 Million in Fiscal 2007. Net
loss on a GAAP basis in the fourth quarter was $(3.3) million
or $(0.03) per share and included non-cash charges of approximately
$0.7 million relating to previous acquisitions, and $1.2
million of non-cash stock based compensation. Annual earnings
in April '06. The Cisco deal is huge. On 2.13.06, Opsware
shares were up 10% on the news. Andreessen is Opsware Inc.'s
largest individual beneficial shareholder with approximately
10.1 million shares beneficially owned.
near 52-week low.
2005 Company of the Year 2005. Read vol. 1, iss. 56.
shareholder's meeting will be on June 14, 2006. On Feb.
9th, the BOD made the bylaws more shareholder
friendly, in the hopes of attracting back investors. Genetic
based "cancer pill." 1st and only of
its kind. FDA-Approved for lung cancer last November. Canadian
regulators approved Tarceva on 7.13.05. European approval
granted on 9.21. Switzerland approved Tarceva in March 2005.
FDA approved Tarceva for use with pancreatic patients on
9.13.05. Partner of Genentech (DNA) and Roche. Total world-wide
net sales of Tarceva(R) (erlotinib) for 2005 were $309 million.
Total U.S. sales of Macugen(R) (pegaptanib sodium injection)
for 2005 were $185 million. Total revenues for 2005 were
$174.2 million, an increase of $130.4 million or 298% compared
to revenues of $43.8 million for 2004. The Company reported
a net loss of -$157.1 million (or -$3.02 per share) for
fiscal 2005 compared with a net loss of -$268.6 million
(or -$6.36 per share) for the 12 month period ending December
31, 2004. Ended 2005 with in excess of $150 million in cash
and investments on its balance sheet.
million in new orders in January from state government agencies,
for 1Q delivery. $9.9 million in new orders in 10.05 for
4th Q 2005 delivery. For the quarter ended December
31, 2005, sales increased appx. 61.5% to $9.0 million, compared
to $5.6 million for the same quarter last year. Net income
for the fourth quarter was approximately $8.3 million, or
$0.58 per diluted share, compared to net income of $6.6
million, or $0.50 per diluted share, last year. For 2005,
sales increased approximately 38.1% to $28.5 million, compared
to $20.7 million for 2004. Net income for 2005 was $10.3
million, or $0.75 per diluted share, compared to net income
of $7.9 million, or $0.65 per diluted share, for 2004. Two-way
land mobile radios (LMRs), for govt and public safety. According
to Feltl & Co. analyst Richard Ryan, RELM has just 1%
share of a domestic market worth $1.9 billion (and the global
market is eight times larger), so there is plenty of room
for growth. Coverage on MoneyCentral.msn.com on 1.18.06
means it might come up on more investors' radars.
demand is huge; supply is limited; stock price is high.
Analysts say pressure on price should continue on high demand
in China and Asia, as well as the high cost of mining. Due
to the commodities crunch, gear, personnel and materials
are in high demand and at a premium cost, however Rio Tinto
is a very well managed corporation. Finds, processes and
mines minerals: copper, iron, coke (from coal), aluminum,
titanium dioxide and diamonds, and has increased investment
in the Cortez Hills of Nevada. Rio Tinto has been added
to Jim Jubak's 50 Best Stocks in the World List (eff. 9.05).
Great press usually means more buyers. Hang on, and enjoy
the dividends, but don't get sucked into buying high.
As long as Jubak keeps RTP rich in headlines, expect investors
to keep buying high. Earnings reported on 2.2.06. Net earnings
were $5.215 billion compared with $3.297 billion in 2004.
$1.5 billion special dividend (equivalent to $1.10 per share),
and a share buyback program totaling $2.5 billion by the
end of 2007 were announced. Investments in growth totaled
$2.552 billion. Landslide in Indonesia spooked the commodities
market and spiked copper prices in London and Shanghai on
3.27.06, on speculation that the mid-March fatal landslide
at the Freeport-McMoRan Copper & Gold Grasberg mine
may disrupt output. The Grasberg mine in Indonesia is the
second largest copper mine in the world.
aired the Super Bowl; XM signed Oprah. The head-to-head
competition in the U.S. continues, while WorldSpace offers
satellite radio to Asia, Europe, Africa and the Middle East.
Howard Stern has paid off (big-time) in subscribers, but
not new investors (yet) for Sirius. Sirius announced on
12.27.05 that it topped 3 million subscribers, and then
surpassed 4 million subs on 3.20.06, and is on track to
finish the year strong with at least 6 million subs (or
more), yet the share price is 28% off of its 52-week high.
XM Satellite Radio ended 2005 with 5.9 million subscribers
and is projecting 9 million by year's end. XM radio is installed
in GM cars; GM is losing market share and having biz cash
flow issues. Could impact XM. Mercedes just agreed to make
SIRI standard on SL and CL models for 2007. Caris &
Co. analyst Susan Kalla says Sirius "may be able to bring
down subscriber acquisition costs to $100 per sub, leading
to a breakeven in 2006." Kalla said Sirius could reach about
16 million subscribers by 2010, and predicts a 2007 cash
break-even point for XMSR, with 18 million subscribers by
2010. The company issued and registered 34 million shares,
worth more than $200 million, to Stern and his agent the
week of Jan. 13, 2006.
earnings on February 6, 2006, and offered year-end expectations
that analysts are calling conservative. Piper Jaffray analyst
Safa Rashtchy upgraded his rating on Sohu to "Outperform"
from "Market Perform," recommending that investors buy the
stock. See NataliePace.com ezines, vol. 3, issue 4 and volume 2,
issue 9 for feature articles on Sohu. Financial Times
ranked Sohu in Top 10 Chinese Global Corporate Brands on
9.6.05. (6 days after our article.) SOHU selected as the
official sponsor of Internet Content Service (ICS) for the
Beijing 2008 Olympic Games. Insider buying, including CFO
(usually a good sign). Sohu execs rang the opening bell
at NASDAQ on March 13th, appeared on the Forbes.com
Video Network (with NataliePace.com CEO, Natalie Pace), and since
then shares have been on a rally. Is offering FIFA World
Cup 2006 online video content in China to Internet and mobile
phone users (a large segment of the Chinese connected population).
Rowe Price Em Eur & Mediterranean
Vol. 2, iss. 8
vol. 3, issue 4 and vol. 2, issue 8 for articles on why
Eastern EU rocks, while Western EU stalls. Great way to
diversify, as well as to add growth. Go global with the
emerging countries. Avoid the countries in the EU that are
stalling in economic growth.
the feature interview with CEO and Chairman Rob McEwen in
NataliePace.com ezine, vol. 3, iss. 2. This is a gold exploration
company that is being traded off the big boards. If the
choice is between this and the craps table, you might have
better odds here (and more fun if McEwen strikes gold.)
Note: U.S. Gold is not producing gold at this time. They
are digging to find a new reserve. U.S. Gold closed the
private placement of 16,700,000 subscription receipts at
a price of US$4.50 for aggregate gross proceeds of US$75.15
million on Feb. 22, 2006.
2, iss. 9
tones, domain names, plus, including Jamster…
net income rose to $271.4 million, or $1.06 cents per share,
from $114.8 million, or 43 cents per share, a year ago (1.26.05
release), boosted by sale of online payment system in the
amount of $252 million. Expects 1Q call to miss expectations
due to price cuts to win customers and problems in the mobile
content area. Repurchased 9 million shares for value of
$215 million in the 3rd Q. Revenue shortfall
in the mobile content area is expected to improve, according
to CEO. Michelle Guthrie, CEO of STAR Group, Ltd. (a division
of News Corp.) was named to the Board on 12.19.05. Annual
analyst day on 5.25.06 at corporate offices. Purchased m-Qube,
a leading mobile channel enabler that helps companies develop,
deliver and bill for mobile content, applications and messaging
services on 3.20.06. Now has the digital content platform
to enable carriers, Internet portals, media companies and
consumer brands to provide anytime, anywhere, any device
delivery of mobile and broadband services. M-Qube customers
include: Sony Pictures, CBS, Major League Baseball Advanced
Media, Warner Music Group, Reuters, GQ, Virgin Mobile Canada
and Telus Mobility.
2, iss. 10
featured article, "News Corp. Enters New Media,"
from vol. 2, iss. 10. Yahoo is the #1 web site, with more
traffic, page views and time online than MSN or Google.
Yahoo nearly doubled its fourth-quarter profit to $683 million
and revenues were up to $1.501 billion, a 39 percent increase
compared to $1.078 billion for the same period of 2004,
but missed Wall Street expectations by a penny (thus the
investor pullback). Don't be fooled. Yahoo is still a bargain
compared to Google. So why is Google's market capitalization
over twice the size of Yahoo's? Do investors really think
Google is twice as valuable and has twice as much future
potential as Yahoo, when Yahoo is the number one online
destination? Don't be fooled by headlines that focus only
on search. Yahoo's time online, page views and unique visitors
are all much higher than Google. (Refer to the chart at
the beginning of this article.)
Stocks in Profit-Taking Range.
Note: The news is still favorable on some of 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 two months ago, your individual
shares were worth $80 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 last month).
Blue Chip Hold for your long-term portfolio. Biotechnology
is a volatile sector. Popular. #2 biotechnology company.
But very pricey. P/E: 70.90.
Blue Chip Hold for your long-term portfolio. Buy in at a
better price. If you're drinking the Kool-Aid and want an
IT play that is trading at a better value, look at Yahoo,
Sohu and/or some of the other IT media companies (Disney
and News Corp.), all of which are listed above. If you've
quadrupled your money, profit taking and capital gains are
attractive these days. Announced 4Q earnings on 1.31.06.
Missed expectations, and investors panicked (as we'd
warned they would). Google shares sank 12 percent in after-hours
trading to $379.00, losing roughly $15.3 billion from their
$128 billion market capitalization. Google dropped as low
as $344.20 on 2.13.06. Very volatile. High price. Reports
on 3.29.06 say that Google is spending a billion to buy
a 5% stake in AOL, which would allow them to share AIM,
text messaging and video content.
1, iss. 55
FDA issued a warning on "unscreened human tissue"
on 10.26.05. LifeCell reported a recall of products, and
took a charge of $1.4 million in 3Q to reflect the recall.
LifeCell's product is in high demand and sales are growing,
however the story on some of the unscreened and untested
tissue it received from Biomedical Tissue Services is not
over. Lawsuits have been filed by some plaintiffs who unknowingly
received products from Biomedical Tissue services and the
impact of those lawsuits is still largely unknown. According
to the Associated Press, the FDA shut down BMT for not screening
the tissue for communicable diseases, among other violations.
The Alloderm product is in high demand, but the potential
fallout of this unfortunate turn of events is more than
most $688 million companies can take. $15.5 million in
insider sales by CEO, CFO and controller in last 12 months,
most recent sales occurred in March. '06. Product revenues
for the fourth quarter were $27.0 million, up 69%, compared
to $16.0 million reported for the same period in 2004. Product
revenues for full year 2005 were $93.3 million, up 59%,
compared to $58.8 million in 2004. Alloderm accounted for
$73.8 million of the sales. Net income for 2005 was $12.0
million, or $.36 per diluted share, compared to net income
of $7.2 million, or $.22 per diluted share income in the
says ad revenue is back, and merchandising is heating up.
public fired Martha's Apprentice show, and Martha's
daytime show isn't becoming the next Oprah. Revenues for
the year ended December 31, 2005, were $209.5 million, compared
to $187.4 million for the year ended December 31, 2004.
Operating loss was $(78.3) million for the year ended December
31, 2005, compared to $(60.0) million for the year ended
December 31, 2004. Martha is building homes with KB Home,
and launching a 24/7 channel on Sirius. The company is also
launching another magazine aimed at young women called BluePrint.
It's hard to get too excited about these projects, however,
when it is clear that Martha's comeback was a flop and when
ad dollars are abandoning print for new media. Sometimes
you have to just stop the loss and try something else. We
love Martha's recipes and hold no grudges.
good news that they would turn a small profit this year,
instead of posting a loss, gave investors more hope for
a turnaround than might be warranted. We originally featured
the Sony turnaround in Dec. 2003, only to watch the company
falter with its PlayStation and handheld music products.
Recent earnings gains, largely on flat screen TVs, are in
a very price competitive space. If you didn't sell when
PSX bit the dust, this is a great chance to get out with
some gains on your side. Sony reported a 17.5 percent gain
in quarterly net profit on 1.26.06.
court decision assesses after-tax damages of about $40 million
through Dec. 31, 2004, which Sunoco will record as a charge
in the third quarter. Shut down its LaPorte and Bayport,
TX polypropylene facilities and evacuated all its non-essential
personnel in TX on 9.22, due to Hurricane Rita. 4Q net income
fell $5.7 million due to unusual events, including the impact
of Hurricane Rita and a relocation, the company added. Full
Year net income totaled $63.2 million, or $2.40 per unit,
compared with $57 million, or $2.27 per unit, in 2004. Revenue
totaled $4.5 billion up 30 percent from $3.46 billion. Annual
meeting 5.4.06. "We project U.S. refining margins will remain
strong in 2006, albeit down from 2005 highs," wrote Standard
& Poor's Equity Research analyst Tina Vital in a research
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.
Powder Puffs at This Power Lunch.
by Maya Patel.
C-Level Women Reveal Secrets
of the Executive Suite.
Photo credit: Frank Poole.
The sounds emanating from Cipriani
in Manhattan on Thursday afternoon could have easily been mistaken
for those of a sample sale. In fact, it was the buzz of women
networking at the National Association for Female Executives ("NAFE")
lunch gala honoring the Top 30 Companies for executive women.
The only shopping taking place was at the silent auction.
To develop this list of 30, NAFE
looked beyond words and analyzed actions. They examined how women
fared among the company's five top earners. Among the Top 30 Companies,
18.7 percent of top earners are women, compared to fewer than
6 percent in the Fortune 500. Only 1.4 percent of Fortune 500
CEOs are women. (Source: Catalyst,
Barriers to Women's Advancement)
NAFE also considered the number of
women on corporate boards. The New York Times Company stood out,
with women representing 40 percent of its board. Colgate-Palmolive,
General Mills and Texas Instruments also have board ratios as
high as one-third female.
The fashionable attendees spanned
all industries and age groups. For many of us, it was our first
time attending a NAFE event. After exchanging ideas and cards,
we took our seats to listen to a panel of 30 women. They became
our momentary mentors. They responded to several rounds of rapid
fire questions. Each answer was uniquely delivered, but they all
had a common motif.
1. On finding work life balance…find
something in your job that connects to your personal interests
and take time out for yourself every day, especially to exercise
2. On risks of leaving a career…don't
lose confidence and remain connected to the field.
3. On career…does not need
to be mapped out-do not be afraid to try something new.
4. On overcoming impediments…no
door is closed until you peak in - do not accept preconceived
notions about what you can and cannot do until it has been tried.
Their wisdom revealed fundamental
truths about the way women work:
-The most fun jobs are those
where we can interact and understand people.
-Impacting people and the world
-Doing what we believe in is
The Top 30 Companies recognize
the expertise and instincts of women.
Knight Ridder and Yale New Have Hospital were among the companies
that excelled in the representation of women in top-tier positions
relative to the number of women employees overall. At Yale New
Haven Hospital, women fill 100 percent of the top-tier positions
reporting to the CEO.
Marna Borgstrom is the President
and CEO of Yale New Haven Hospital and Health System. In October
2005, after 26 years of service, she was the unanimous choice
of both the search committee and the full board of trustees for
the position. She is the first woman to be named as president
and CEO of the hospital and health system.
I was honored to chat with Marna
Borgstrom at the gala. She had a phenomenal mentor that recognized
her P&L talent before she did. I was curious if gender affected
her role and she explained that with a job there is a vision that
needs to be demonstrated. How it is demonstrated varies based
on each person and how women do it may be different. Ms. Borgstrom
believes that if people are nurtured, they perform better and
that they should be "given permission to be complete."
She values relationships and when asked to describe what has changed
since becoming CEO, she said her peer group. She spends considerable
time with the board of directors. Her guidance to us: 1) live
your values in everything you do; 2) demonstrate intellect and
ambition and 3) value relationships because what goes around comes
The intangible life skills shared
at the luncheon were priceless. Based on the post-gala whispers,
this was among the most engaging lunch appointments for many women.
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: firstname.lastname@example.org
Theory of Economic Evolution.
Natalie Pace, CEO, NataliePace.com.
Mid-Caps are Safer Than Blue Chips in 2006, and China will Continue
This is very dense. Do not attempt to operate heavy machinery
while reading. If you have insomnia, this might be a good way
to get to sleep!
have asked me my secret to finding the leader in the sector--
that company that is poised to lead the pack, to break out of
the current growth trend and shine in product sales and share
price growth. Typically, I try to keep the NataliePace.com articles focused
on simple "recipes for the rich life," through easy
to understand and implement strategies that will jumpstart your
journey forward on the path to personal wisdom, which is the foundation
of prosperity. However, in this article, I will begin to pull
back the screen on the way I perceive the world, through the dynamics
of economic incentives, and talk about a more sophisticated hypothesis
that I have been employing for years.
of my personal strategy to featuring great breakout companies
and countries (we featured China in 2002, Google at the IPO and
Eastern Europe in 2004), is based upon a rather progressive, yet
common sense, view of economics, which I call the Theory of Economic
of Economic Evolution timeline:
to Get Any Job
to Will Your Estate
of economic evolution basically flows from the premise that, regardless
of how emotionally mature or immature a person is, the desire
to win the lottery, rule the world and have princes and princesses
for children (i.e. economic gains) is primal and can be (and is
throughout history) harnessed for the greater good by an effective
Before I get
into the details of this theory, let me fully disclose that, while
I have put the Theory of Economic Evolution to good use in my
lifetime, this theory has not yet been scientifically tested,
nor academically challenged. In fact, I am publishing this theory
now, even in its state of imperfection, having not withstood rigorous
academic brow-beatings from my peers, because, regardless of confirmation
from the lab, it works for me, and there appears to be enough
substance here to warrant more attention. In addition, I hope
to encourage comments, questions and critical thinking from my
peers, the academic community and you, my inspired readers, so
that the theory can be further tested and more completely understood.
I am actively seeking an academic partner to throw darts at this
theory, sift through statistics, question its efficacy, and to
develop proofs designed to prove or disprove the model.
to this theory, the a priori tendency toward not just "freedom,"
but economic freedom, is so fundamental to human interaction
that virtually everything from war and peace, revolution and civil
disobedience (gang warfare), divorce rates and employee productivity,
can be predicted based upon this fundamental model of social evolution.
While a country, or a company or even a marriage is advancing
along nicely on the evolutionary timeline (which is essentially
a path toward greater personal freedom), the citizens, employees
and marital partners have more tranquility and the ground for
prosperity and productivity is rich. Conversely, when a subset
of the population, whether it be citizens, employees or a marital
partner, feels trapped and stifled in their ‘rights' to economic
freedom, the seeds for contention are sown, and the ground is
ripe for chaos, war, strikes, divorce and other "unproductive"
uses of time (arguing, complaining, etc.).
tells you that happy, productive people make better products faster
and cheaper, so, according to the theory, the country, corporation
and marriage that paves the path for personal freedoms is the
country, corporation and marriage which experiences the greatest
sustained prosperity. Common sense and observation of human behavior
also tells you that unhappy people throw a wrench in the works.
Civil disobedience, union strikes, marital strife, civil war,
etc. occur when individuals are no longer engaged and "invested
in" the success of the social structure. The theory of economic
evolution suggests that the most fundamental way of keeping individuals
actively producing and invested in the success of the country,
company and/or marriage is to satisfy an innate longing for personal
is a case of the means being more important than the ends, i.e.
the journey up the road is more important than arriving at the
end (and, theoretically, there is no end… simply more stages that
have yet to be discovered and employed). In practical matters,
a 20-year-old may not see far enough into his future to care if
you provide a retirement plan or health care package (that will
make it easier for his estate to remain intact and willed to his
children), but is keenly interested in career advancement now.
The 20-year-old just got the right to vote and is now looking
to get a better job. The forward-thinking company, knowing that
the individual will care in the future, will pave the path
for continued prosperity by offering a 401 (k) to individuals
after a certain period of employment. (The choice still rests
with the individual on when to start investing, which is
consistent with the theory.) On the other hand, a 60-year-old
may make career choices based SOLELY on matters of the estate.
She has had the right to vote for years and is looking toward
retirement, not career advancement. Thus, how well a company,
a marriage and/or a country "frees up" the rights of
its citizens to stride forward on the evolutionary
path to economic freedom, is one of the most reliable measures
of peace, productivity and wealth.
My own limited
point of view serves also to illustrate how the model works. The
U.S. is, by my calculations, about mid-way between the right to
get any job and the right to will one's own estate—a controversial
premise, which I will explain further in the next paragraph --
and yet, as close as I am to the brink of willing my own estate,
I cannot, yet, see what lies beyond the economic freedom of willing
one's own estate. Imagine then, how a slave or a servant may not
see far enough in the future to imagine owning his/her own plantation
or becoming a doctor, but is willing to risk his/her life to join
the cause for freedom and the right to vote. (We saw this in Afghanistan
in 2004, when women risked their lives to vote. Some were killed.)
Likewise a young assistant may not be overly concerned about the
401 (k), but is highly motivated to get a raise and a promotion.
As one steps
along the path to economic freedom, one sees the next plateau
to attain. As long as one is moving forward, the perception is
"freedom," which is an "engaged" state of
being -- highly productive and invested in the outcome and continued
success of the societal structure (government, corporate or marital).
This personal feeling of empowerment, of having all restraints
on personal prosperity and potential stripped away is both powerful
and productive, and far more difficult to employ in practice,
than it is to dream up in theory. This is especially true because
even the most "free" countries and companies have a
current structure that ends personal freedom with the right to
will your own estate. This means that countries and corporations
enter a period of stagnation when too many of their citizens/employees
retire (and end their personal march to greater economic freedom).
for a moment, to the current state of affairs in the U.S. The
U.S. is well advanced on the timeline in legal economic rights,
but not in practice. Blacks had the right to vote for 100 years
before they could really exercise the right to shape the larger
social structure; they were still forced to segregate themselves
as late as the 1960s. High schools in poor communities experience
the highest dropout rates, which limits the ability to secure
most jobs. Not surprisingly, the poorest neighborhoods with the
highest dropout rates also have higher crime rates, which is consistent
with this economic evolutionary theory. Many poor U.S. communities
are stuck between the right to vote and the right to get any job.
groups are very good at quickly advancing economic freedoms, which
includes placing education as a priority. This, again, is consistent
with the theory, and helps to explain why minority groups that
invest in education are also quick to assimilate and prosper in
the larger community. These immigrants jump on the road to getting
any job they desire and drive directly toward the active right
to will their own estate.
of Economic Evolution might explain why freedom, fulfillment and
education are correlatives of productivity, which is in turn a
key predictor of economic growth. People are happier when they
are evolving along the path toward greater economic freedom, and
education is fundamental to getting any job you want and to learning
how to will your own estate.
in the U.S., women won the right to vote 100 years ago, but as
late as the 1970s, no woman was the head of any Fortune 500 company
that she didn't inherit. (In 1982, Christy Hefner became one of
the first female Presidents of a major corporation in the U.S,
as the President of Playboy Enterprises, her father's company.
In 1988, she was elected Chairman and CEO.) Even today, women
account for only 13% of Board Directors, only 15.7% of corporate
officers, and women of color hold only 1.6% of C-level (as in
CEO, CFO, COO) spots. In most families, men are still more likely
to handle the nest egg. Single mothers make up the largest percentage
of people living in poverty.
suggests (but has not yet empirically proven) that if society
and the marital partners could do a better job of satisfying the
innate march of economic evolution for both sexes, which is essentially
a march toward the freedom to choose one's personal destiny and
prosperity, the social structure of marriage might be more successful.
Today, about half of the marriages in the U.S. end up in divorce.
I do not intend
to suggest here that one paragraph of explaining how the model
works in theory is proof of anything. Statistics must be analyzed
and the model must be tested. What this article is intended to
do is to provide a skeletal overview of the Theory, to point out
a few areas of societal strife that might be targeted for further
analysis, and to reveal some of the ways that I have utilized
the theory to identify countries and companies that are poised
for robust economic growth, the majority of which experience more
prosperity and productivity than their peers (and have earned
me quite a reputation among my colleagues).
illustration of how this theory works in real life, one can turn
to the explosion of economic prosperity currently occurring in
Eastern Europe and China. The former was a region where all rights
were stripped away by civil war. The latter is a Communist country
that has only recently, and aggressively, moved to a free economy.
has a very high concentration of well-educated persons. Over the
last few years, many Eastern European countries have been aggressive
about advancing personal freedom to own property and about establishing
pro-business policies. As a result, Luxembourg, Estonia, the Czech
Republic, Belgium and Lithuania all rank in the 25 most economically
"free" countries in the world, according to the Center
for International Trade and Economics. The Gross Domestic Product
growth rate of these Eastern European countries has been on the
high end of the world's countries, double that of their Western
GDP growth rate.
Ranking of Economic Freedom
Index of Economic Freedom
European countries are rebuilding and enjoying an infusion of
capital and prosperity, Western Europe is experiencing more panic,
public insurgences and violence. The headline story in the New
York Times on March 29, 2006 was "French Protests Turn
Violent." Why were rioters demonstrating against new youth
labor laws in Paris? The theory would suggest it is because Western
European social policies are being challenged (thus one's "estate"
is being threatened), while jobs are migrating to Eastern Europe
(where the citizens are as educated but can be paid less).
producing goods and actively participating in the prosperity of
France, on March 28th, citizens stormed the streets.
The Eiffel tower was closed. French newspapers were printed but
not distributed. Mail was not delivered. The Paris National Opera
canceled its ballet performances. More than a million people left
their jobs and rioted--labor unions claim it was up to three million--to
protest a law that was passed by Prime Minister Dominique de Villepin
last week, which allows employers to dismiss workers who are under
the age of 26 "without cause" during the first two years
European citizens had a very optimistic view of their future
in the past, today their right to get any job they want AND their
estate is being threatened. Western Europe is in the delicate
position of having to prevent backsliding on the Economic Evolution
model. On the other hand, the future and job possibilities in
the former war-torn Eastern European countries have never been
better, and productivity is, as a result, booming.
Center for International Trade and Economics ranks countries by
the amount of freedom currently allowed in business and
property rights, whereas the Theory of Economic Evolution places
more value on how well the country is removing impediments to
progress toward greater personal economic freedom.
According to the 2006 Index of Economic Freedom, Germany
qualifies as 19th most free, France #44, while China
bottomed out at 111th out of 157 countries. Yet China's
Gross Domestic Product growth rate was 9.5% (in 2004 and 2005),
the highest in the world, double that of most countries in Eastern
Europe and far superior to Germany's stalled 1.6% GDP growth rate.
(India, another country which ranks low, #121 on the Index, but
is making huge strides forward in the economic freedom of the
individual, is experiencing 8.6% GDP growth rate.)
China may not have advanced individual freedoms, by Western standards,
but the growth of personal freedoms on their own economic evolutionary
timeline is extremely robust. This "Confucius" government
is actively promoting personal enterprise at an unprecedented
rate, and thus the optimism of the inhabitants is high, as is
productivity and growth. People are moving into the cities at
unparalleled proportions and opening up new businesses like mad.
It's hard to imagine that the student-led Tiananmen Square revolt
(and massacre) was just 17 years ago (April - June 1989).
Eastern Europe are great examples of how robust "forward
movement" in economic freedom is a better predictor of productivity
than an advanced, but static (or declining), current state of
freedom. As demonstrated by the riots in Paris, many citizens
have become more invested in fighting for their rights (against
the state) than they are in working hard to make France a great,
productive nation. Not surprisingly, productivity and GDP growth
is stalled in many Western European countries, and the region
faces hard choices over the next few years.
we are seeing those same challenges in many of the more mature
corporations in the U.S. The airlines, many defense corporations
and the U.S. auto industry are suffering under "legacy"
costs, the enormous burden of providing health and pension benefits
to a large pool of retired workers. As a result, ANY corporation
with a defined benefit plan that has a large pool of non-workers
to support is hard-strapped right now to compete in the global
environment, and is likely in talks with their labor and retirees
to reduce wages and cut benefits. The workers, quite understandably,
are horrified at having their salaries and benefit plans cut in
half (or more). This means that labor (and their unions) is prepared
to focus away from productivity and profitability and on the fight
against their employer to keep what they've got. This is
consistent with the theory. Anytime an individual feels like s/he
is losing ground on personal freedom and prosperity, strikes,
walkouts and poor productivity are more apt to occur.
Is there any
way to keep productivity high during a challenging period of readjustment?
The theory suggests that in an environment of building or rebuilding,
leadership is essential to laying the groundwork for personal
economic freedom, which is necessary for progress and productivity.
The answer might lie in always laying the groundwork for the next
step of personal economic evolution (rather than end it
with retirement), something that just hasn't happened in most
societies. What we can say is that in a challenging environment,
employees and citizens are vulnerable to a message of hope (whether
or not it is a message of truth), which is necessary for keeping
citizens and employees invested in productivity. (Someone organized
the Parisian riot of 1-3 million people, convincing them that
warring against government is the most productive use of their
time, and will give them what they want.)
corporation (or marriage) is extremely vulnerable any time that
the individuals experience stagnation or backsliding on the Economic
Evolutionary timeline. Thus the leader who is invested with saving
his company or country must convey, at a minimum, that no one
will be stripped of rights, and everyone, including the "higher
ups" will share in the burden of working hard to get out
of the rut. In short, the perception of freedom and personal
gain - what's in it for me -- must not wane. Thus, in theory,
the troubled corporation or country whose leaders take a salary
cut, if they are expecting their workers to take one, should be
more popular with the staff (and thus have a more productive labor
force) than those who pad their golden parachutes, even as they
shuffle employee pension plans over the to U.S. government.
If you can
determine the ethos of the leader, in either circumstance, you
will be able to determine the pathos of the organization, and
from there predict the ultimate outcome - success or failure.
to be much easier to be an emerging country or corporation that
is trodding up the familiar path of economic evolution (like Jet
Blue and China), than it is to be a mature country or corporation
that must re-ignite the passion of its citizens and workers by
getting them to think beyond their pension plan (like Delta and
France). While Delta Airlines deals (in bankruptcy) with disgruntled
unions and disheartened workers, JetBlue has full planes that
take off and land on time. JetBlue's employees don't make more
money than Delta's, but they are happy about their jobs, and happy
about their 401 (k)s (which they control). Reservation clerks
can work from home, which gives mothers greater flexibility in
their employment options.
again, must be tested to determine if the model might help us
to understand the dynamics of freedom and prosperity, and thus
discover the next evolutionary milestone that mature companies
and countries can advance toward. In the real world of NataliePace.com's
success at featuring corporations, countries and sectors that
are poised to outperform their peers, the theory has proven to
be quite prescient. (Tipstraders.com, an independent tracking
firm, calculates the performance of the companies featured in
NataliePace.com at above 55% annualized, that is EVERY YEAR, which puts
my success at writing about prosperous corporations at the top
of over 700 A-list pundits and journalists.)
many "Blue Chip" corporations (specifically I'm talking
about companies that were founded before 1980, that have unions
and defined-benefit plans) that are deeply in debt to their pension
benefit plans, far more than investors are aware of because corporations
are not required to include the obligations in their accounting.
Any corporation that still has a defined-benefit plan, rather
than a 401 (k), where there is a large financial obligation to
a large pool of retired workers, is vulnerable to productivity
challenges, according to the Theory of Economic Evolution. Perhaps
the most important thing an investor should consider in 2006 is
how much exposure their portfolio has to corporations that will
experience the challenge of re-igniting the passion and productivity
of their staff in an environment where benefits and salaries may
have to be cut.
United Airlines, U.S. Airlines, Northwest Airlines, General Motors,
Ford Motor Company, IBM and more are not isolated incidents. To
review which corporations are the most indebted to their pension
plan obligations, please read the article, "39
of the S&P 500 companies
that are most deeply in the red on pension plans," from
NataliePace.com volume 3, issue 3.
of Economic Evolution might explain the genetic reason
"why" that human capital (education, health care and
social safety nets) is the most reliable way to ameliorate suffering
in the world, suffering in the company and suffering in the marriage.
It would suggest that it is important to have all individuals
feel free to pursue their highest desires and achieve their greatest
potential. The a priori right to personal fulfillment
of this economic timeline must be perceptibly advancing in order
for peace, stability, productivity and economic growth to occur.
articles, if this one hasn't already bored you to tears, we will
put the theory to the test and examine how freedom to have any
job you desire is broader than just allowing an intern the opportunity
to become a managing director, or a copper miner's daughter the
right to become the next Nobel Laureate, or a mother the right
to stay at home with her children. Check out the Sharing Wisdom
Bulletin Board on this topic to post your comments, ask your questions,
suggest further areas of examination, and to see whether or not
my Ph.D. friends think I'm full of bull or really onto something
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