War and Your Portfolio.

by Natalie Pace, CEO, NataliePace.com.

11 Preparedness Tips Against War, Terrorism and "Acts of God."

Natalie Pace, NataliePace.com CEO and founder

I wouldn't write an article on plants, animals or driving, but as one of the few people who cashed in substantial gains in 2001 (without shorting) during a bear market year that saw the first strike on American soil since Pearl Harbor, I feel a bit qualified to talk about protecting your assets against war and terrorism. It doesn't take a crystal ball, but it will require a gut of steel.

You don't have to rush out and buy into certain industries (say, defense) over others, although certainly some asset classes will always outperform others in certain scenarios. (The ongoing threat of terrorism means that defense stocks are no bargain these days...) You don't need to get your MBA, or learn how to read complicated charts, or study up on your Nostradamus and astrology. In fact, surviving (and even thriving) during war and acts of terrorism is largely a matter of common sense, planning, acting according to a rationally laid plan and remaining calm, even while formerly rational people are at wits end and screaming Apocalypse.

Below I have outlined the strategies that I use to keep my portfolio healthy in uncertain times. These strategies are important to keep in mind while the war wages overseas between Israel and Hezbollah, even though the effect on the U.S. markets has not been dramatic or sustained. (The Dow is still trading near its all-time high, and the volatility in the markets over the past two years is directly linked with the high price of oil.) These tips become critical if any act of terrorism occurs here in the U.S.

1. Don't panic. It's not the end of the world. The U.S. economy isn't that fragile. Americans are resourceful, hard-working, imaginative, innovative, inventive, pull-together people. If you panicked and sold in September of 2001 AFTER 9.11.01, you lost on average -35% (NASDAQ) and -17% (DOW). If you waited just three months, until December 2001 to sell, on average, you would be looking at 10-16% GAINS (NASDAQ) and ZERO LOSS (DOW). Those people who had the foresight to BUY when the markets opened on 9.14.01, earned 30% on NASDAQ stocks and 20% on S&P 500 and Dow Jones Industrial stocks within four short months, by January 1, 2002.

   

   Source: MoneyCentral.msn.com

2. Consider taking your profits, the FIRST TIME you are in a position of profit. (Look for this to occur within 3-6 months). If war and/or an act of terrorism causes a big hit to the economy, the fallout will show up more severely on earnings statements 6-18 months out than on the near term statements. The market lows occurred in October of 2002, not October of 2001. Thus, investors who locked in some profits after the Santa Rally in 2001 were a lot happier than those who experienced 2002 all in, and had to go through a third straight year of losses in their portfolio.

   

   Source: MoneyCentral.msn.com

3. Consider BUYING INTO your favorite companies right AFTER the attack. If you bought into the NASDAQ after 9.11.01, just four months later in January 2002, you were looking at 30% gains. During the same period, the DOW and S&P 500 were up 20%. It's called BUY LOW; SELL HIGH, and it works like a charm. So, always have some extra liquidity in your portfolio during volatile times (war qualifies), and a list of your favorite healthy stocks handy.

4. Portfolio Diversification. 2003 was a great year for stocks, and most investors have seen delightful returns. The last five years have seen dramatic returns in real estate. Bonds, meanwhile, have been performing poorly, and turning in negative returns during some quarters. Has your diversification model become too heavily skewed into stocks or real estate? Diversify your assets. Your best protection against terrorism and other natural disasters (including market corrections) is to not be over-concentrated in ANY ONE asset class. Note: This definitely includes real estate. If you've never lived through an earthquake, fire, flood, riot or hurricane, trust me, these disasters can put you underwater on your mortgage faster than you can say Katrina. Don't have all your Lincolns in stock, bonds or your home. Remember that CASH is the best performing asset in market corrections, war and terrorist attacks, and affords you the possibility of buying low. (Cash these days achieves bond-like returns in the money markets with very little risk.)

5. Take some chips (faded blue chips) off the table now. Are you letting all of your profits ride? Profit-taking is essential to building wealth. Any gain above 12% is considered a very healthy return. If you're looking at 70% gains, and you're trying to read a crystal ball to balance the risk of market correction or terrorist attack against the risk of selling too early and missing out on another price pop, realize that there is a huge difference between all and nothing. You don't have to gamble ALL of your gains to be INVESTED enough to capitalize on future growth. And a gain is a gain. When my money has hit home runs, I like to let it rest on the bench for awhile before I put it back to work.

6. Don't rush out and buy into an Anthrax BIOTECH. The first problem is: that's what everybody is doing, which means that the stock might be overpriced. The second concern is that desperate people become over jubilant about marginal results. Human Genome Sciences (HGSI:NASDAQ) had an anthrax vaccine in Phase I trials after 9.11.01. This is the earliest phase of human testing, only the first of three necessary phases, and everyone was exuberant about the "miracle" cure when Anthrax was killing innocent people randomly. Though the initial results for the vaccine were "promising," everyone lost interest when the Anthrax threat suddenly disappeared, and HGSI couldn't get funding to complete the studies. Human Genome Sciences is still cash negative, having lost another $242 million last year, and it's stock is still in the doldrums.

   

   Source: MoneyCentral.msn.com

7. Don't buy defense stocks on the fly either. In March of 2003, at the onset of the 2^nd Gulf War, Boots and Coots was the darling of the bulletin boards. Investors flocked to buy WEL:AMEX on rumors that Boots and Coots was going to win a contract to put out oil fires in Iraq, like they'd done in Kuwait during the 1^st Gulf War. Boots and Coots did win the contract (as a subcontractor of Halliburton), but many investors didn't know how bad their balance sheets were! Investors who bought into Boots and Coots at the high of $10 bucks/share may never see a return on their investment. Boots and Coots traded at $1.78 on July 28, 2006.

   

   Source: MoneyCentral.msn.com

8. Turn off the Tele, and slather on the elbow grease. During and after disasters, your goal should be to avoid danger, get safe, and then clean up and rebuild. Re-watching disasters over and over again on television, with reporters covering every angle and interviewing anyone standing within a 400 mile radius, is not going to bring victims or your investments back to life. Healing your heart and your portfolio is going to take time. Wallowing in negative images may make you feel desperate, which could result in a very bad decision, like selling your investments at an all-time low. The U.S. has certainly known wars, but since 1969, through three wars and a major terrorist attack, the stock markets have still returned between 10.5% and 12.6% annualized.

   

9. Cash is King. Don't forget the rule of thumb that you should always have six months of living money in liquid assets (like Money Markets and/or CDs). Suze Orman makes a good point that you shouldn't put all of your cash in one long-term CD. Instead, she recommends that you stagger the maturity dates of multiple CDs so that you're never in a penalty position if you need to withdraw some funds. A diversified portfolio includes more cash/savings as you get older, with many money managers recommending that you have a percentage equal to your age in safe assets, such as money markets, savings, T-bills and government bonds. Having cash available during hard times also means that you can capitalize on buying opportunities.

10. Lock into a Fixed Interest Rate. Now may be the best time to lock into a fixed rate mortgage. Nothing spoils a neighborhood like war. If there is a terrorist attack is in your neighborhood, real estate values will plummet overnight and remain low for a period of time (while rebuilding occurs). You will not have a choice to refinance once the value drops beneath your loan. With interest rates still at a 40-year low, there's likely a lot of money to be saved by locking in that rate for the years to come. You'll appreciate a stable mortgage payment during the rebuilding period, while you're waiting for the value of your home to return.

11. Blue Chips. In the past, investors relied upon Blue Chips to stabilize their portfolio, especially through the volatility caused by war. These days, the legacy corporations are in more trouble than most people realize. Consider limiting your exposure now to any overvalued or underperforming or vulnerable legacy brand. For a list of companies that are suffering under the liabilities of pensions and other post employment benefits, see the article "Faded Blue Chips" in this month's ezine.

I end this piece wishing peace to those who have lost family members in any war, and to the 50 million Arabs and 5 million Jews living in the Middle East.

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

Ask Natalie:

A Trader Wants to Know Why High-Performing Pros Don't Short When the Markets Overheat.

Hey Nat,
 
I hear your site is really doing awesome.  I'm proud of what you've done with it.  You've earned that success for sure.
 
I still monitor your site and Tipstraders.com.  Hey, I'm a trader, and that's where I see your trades. I can't tell you how much my trading knowledge has expanded since going to work here.  Trading is about the best profession there is as far as I'm concerned.
 
Anyway, I was looking at your trades today, and noticed you never short anything.  Then I looked at the recent trades of the top 15 on Tipstraders.com and noticed that none of them short the market, either. So I'm asking myself, of all these top traders, why isn't anyone shorting anything?  With many of the homebuilders and tech stocks retracing up to 50% of their value in the last few months, it seems that people are hunting wabbits in duck season. I'd like to hear your thoughts on this.

Cuz - Utah.

Natalie Pace, NataliePace.com CEO and founder

Dear Cuz,

Thanks for the kind words.

Please read the column: "Real Estate Slumped in June, but REITs CEOs Have Been Cashing Out Since 2005" in this month's ezine.  We had REITs as a "burn-out" sector in May of 2005 (when they were trading at double today's value), and called General Motors as a train wreck in 2004 (ditto).  

Even so, we don't feature "shorts" because that is a sophisticated market play that is appropriate only for professionals, largely because the losses are unlimited and the trading complicated. Shorts have been the downfall of countless hedge funds that have bitten the dust, most of which were run by seasoned professionals.

With buying and holding a stock, you get to weather the storms of volatility and choose to sell for a profit whenever you desire -- provided the company doesn't go bankrupt. Choosing when to buy and when to sell is the most basic of all investing success formulas. Anytime you are forced to buy high or sell low, you lose.  With shorts, if you bet wrong or bet right but at the wrong time, the brokerage could ask you to "cover your shorts" which means that you may be forced to close your position early with substantial losses simply because your loss exposure is more than you can afford or more than you are willing to have out on the table.  

Even options are for very sophisticated investors only, because, even though your loss is limited to your investment, companies that are seriously in trouble can hang on longer than your option period, forcing you, again, to take a loss.  

As you can see from NataliePace.com's performance, you can make a lot of money with far less risk simply by noting trends early, and using those as buy-in and/or profit-taking opportunities. Any pro on Wall Street would leap though the roof at returns of over 50 cents on the dollar, which is what many NataliePace.com subscribers have been enjoying since the inception of our ezine.

If you have a question for Natalie, please email her at info@NataliePace.com.  

Faded Blue Chips:

by Natalie Pace.

Why the Pension Crisis Could Spoil Christmas on Wall Street. Including 8 Ways to Protect Yourself Now From a December Nest Egg Disaster and a Pensions Stock Report Card.

The Joy of Living Longer
The good news is that Americans are living longer and looking mahvelous. Medical advances and a focus on health and nutrition have given us longer life, enjoyed with much greater health (for most of us). The not so great news is that, despite what your union tells you and/or your employer promised you in the past, chances are you will have to work, instead of retire, during your golden years, because your pension plan will not be enough to cover your living and health expenses (unless you get on the ball and start managing your retirement plan yourself). And it's not because the corporations are trying to screw the little guy.

America's Best Known Brands Sag Under the Weight of Retirees.

Hummer, owned by General Motors

For some of America's most beloved brands - like Ford and General Motors - the obligations that they have to provide benefits for retirees actually exceed the value of the companies themselves, by a lot. General Motors? market capitalization is $18.1 billion, while the amount that the company owes in pensions and other post employment benefits (OPEB) is -$69.258 billion (source: Standard and Poor's). Ford's market value is only $12.66 billion, with -$43.588 billion in obligations to their retirees. Both companies are losing money, and bleeding further and further into the red. Click on Pensions Report Card to see the losses and liabilities of Ford and GM, alongside the other companies with major exposure to pensions and OPEB.

"The companies who provide these benefits are not particularly good at it," according to Frederic Brace, the Chief Restructuring Officer at UAL Corp. (the parent corporation of United Airlines). No kidding! Trouble is: the U.S. government doesn't appear to be much better. When corporations can't meet the pension obligations, the Pension Benefit Guaranty Corporation is supposed to pick up the tab. The PBGC takes in only $1.5 billion per year, and is already $23 billion in debt. Last year alone, United Airlines turned over $7 billion in pension liabilities to the PBWC (source: Milken Institute).

Delphi has asked for permission from the bankruptcy judge to cancel its pension plans. Delta is in bankruptcy trying to figure out how to return to profitability (and you can bet that restructuring their retiree obligations plays a big role in that). And even if the PBWC can continue to issue checks to unlucky retirees who discover that their golden egg was spiked with fool's gold, the monthly check can be dramatically lower than what they were promised. A pilot who is counting on $125,000 in retirement will be distressed to discover that the maximum s/he can receive from the PBGC is $43,500. So much for retirement! It's back to the blue skies to keep the grandkids (and great grandkids) in shoes!

Though not all companies with unions and defined-benefit plans are as fiscally challenged as the American auto manufacturers and airlines, ANY corporation that has not successfully shifted the responsibility of retirement and health care to the employee has far more liabilities than their current balance sheets show. According to a report issued by Standard & Poor's in June 2006, 91 companies owe over a billion to pension plans and other post employment benefits (OPEB), while 145 companies (those with 401(k)s instead of defined-benefit plans) owe nothing. 15 companies owe over $5 billion. 5 companies owe over $10 billion. Ford, GM and Goodyear Tire each owe more than the market capitalization of their companies.

In their June 2006 report, Standard & Poor's characterizes the pension plan crisis in America, as "an oncoming trainÉ headed straight for us." So, when will the pensions obligation train collide with corporations' If the Federal Accounting Standards Advisory Board has its way, it could happen as early as December 2006. The FASAB has drafted a new accounting standard that requires companies to start listing their pension and OPEB obligations on their earnings reports effective December 15, 2006. It is anticipated that the final ruling (and enforcement) will come at the next FASAB meeting scheduled for September 27 and 28, 2006.

It is unclear just what will occur on Wall Street when Blue Chips, like GM, Ford, AT&T, Exxon Mobil, Boeing, IBM, Du Pont, Altria, Lockheed Martin, Caterpillar, Goodyear Tire, Alcoa, Pfizer and Chevron, all reveal that they owe between $5 and $69 billion a piece to retirees. Standard & Poor's believes that "the FASB phase 1 implementation will be a wake-up call to investors when they get their 2006 reports," and that shareholders will experience, on average, equity reduction in the 8-9% range. While a reduction in shareholder confidence may not be severe in all industries (especially oil companies like Chevron and Exxon Mobil), and while the shift away from company-sponsored pensions and medical to employee managed 401(k)s and health savings accounts may run more smoothly than the doomsayers believe, it is clear that General Motors and the Ford Motor Company are facing disasters, and that investors in AT&T and Verizon will be surprised to learn that the companies have obligations to their retirees that exceed $20 billion each.

25 S&P 500 Companies Most Indebted to Pensions and OPEB

(source: Standard and Poor's)

*3 Companies With Projected Pension and OPEB Benefit Obligations that Exceed Equity Market Capitalizations have been highlighted in Bold.

Additionally, with the Dow Jones Industrial Average trading near all-time highs, the beaten-down NASDAQ, which hosts a large percentage of information technology companies with no pension obligations, may be a safer haven for investors trying to pick up a few presents during the annual Santa rally.

Source: MoneyCentral.msn.com

Eight Tips to Consider when Protecting Your Portfolio from Pension Fall-Out

1. There are no free lunches. It's your retirement. If you want to ensure that it is golden, you need to learn how to pan for gold. That means identifying shysters (who are slick and ready to sell you snake oil), learning investing 101 basics from the pros (easier and cheaper than buying complicated option strategies software) and loving your Freedom Plan enough to allocate it properly and check up on its health regularly.

2. Consider Cashing In Profits at the First Opportunity. If you have a company that is seriously "in the money," don't wait to cash in the gains. If you can't find anything that you'd like to invest in (that is trading at a reasonable price), then keep the money in the money markets, where you can get bond-like returns with very low risk. It's better to take the profits and pay the taxes than to risk losing the upside, especially when it comes to any legacy corporation that is suffering from high pension liabilities.

3. Santa Rally Comes Early This Year. Typically the markets have their best performance in the fourth quarter of the year, and culminate in the best-performing month of January. This year, if the Federal Accounting Standards Advisory Board succeeds in mandating that corporations include their pension and OPEB obligations on their balance sheets beginning December 15, 2006, there will be a number of negative earnings surprises. If you want to be safe, take your holiday profits in early December this year.

4. Small caps and technology over blue chips and large caps. Reallocate the stock portion of your portfolio away from large caps and blue chips and into information technology, small caps and the money markets. Historically, small caps outperform big caps, and this year may prove that theory in spades! Again, if you cannot find any "deals" in technology and/or NASDAQ and/or small caps, just keep your money liquid until there is a better buying opportunity. (September is historically the best buying opportunity of the year, and the NASDAQ is still trading near 6-year lows.)

   

5. Market Awareness, Not Market Timing. Being aware of trends and ahead of the game is not market timing - it is market awareness. Your broker is right that most people lose when trying to jump in and out of the market based upon predictions of boom or bust cycles. Over the long term, having the proper mix of stocks, savings, bonds and real estate is the best strategy. However, within each asset class, you do well to take your profits during harvest season and re-invest when there are a great number of deals to be found. Just consider this to be harvest season, while the Dow Jones Industrial Average is trading near its all-time high, and most investors are clueless as to the new accounting change that could start showing up in December. Yes, there are a few "ifs" and "coulds" in that sentence, but if you are taking profits, you are taking profits. No one is asking you to lock in a loss (unless your losses are concentrated in GM or Ford).

6. Trust results. If you receive conflicting information from numerous sources who try to discredit what you want to do, find out the track record of the person doing the talking. You'll be hard-pressed to find a news organization with a better track record than NataliePace.com. TipsTraders.com has us at over 50% annualized, since inception. We were first to call Google, Genentech, MySpace, Rio Tinto and more, and we were first to warn that REITs were poised to burn out (in May of 2005).

7. Care For Your Own Nest Egg. Imagine insisting that Shaquille O'Neal SCORE on free throws. You can threaten him, sue him, kick him (if you're that brave), bribe him, beg him, and he will still miss most of the time. Likewise, with insisting that corporations design and protect your retirement plan. Your union can threaten to strike, to sue, what you will, and that will still not solve the problems faced by legacy corporations that are forced to provide more for people who ARE NOT WORKING than who are. Pension plans were popular after World War II, when the average person lived to be 65. Today, people live to be 78 and health care costs are astronomical. The freedom to live life as you desire, to work or to retire or to go fishing, is yours. Decide how you desire to live and set goals to achieve your dreams! Don't rely on someone else to realize your dreams for you. Despite what your corporation and anyone else may promise and what they might even desire to deliver, shift happens. Start as soon as possible taking your future into your own hands. Play it safe in the beginning and reduce your risk. As you learn more, you will be amazed to discover just how much your money can work for you.

8. Reconstruct a New Blue Chip Portfolio for the 21^st Century. Read the article of the same name in next month's ezine. Find out which companies are the new blue chips for the coming century for your buy and hold fund.

Full disclosure: I purchased put options in General Motors in July, after their positive earnings report. We first began reporting on General Motors' troubles in July of 2004.

Other Articles of Interest:
Hybrids: Car of the Stars, But Should You Own the Stock? By Natalie Pace, CEO, NataliePace.com. July 1, 2004. In 2005 and 2006, when rising interest rates and inflation are expected to be a problem, automakers will be hit by higher costs to finance cars and higher prices of the steel, aluminum, etc. used to produce cars.
Real Estate Slumped in June, but REITs CEOs Have Been Cashing Out Since 2005. By Natalie Pace.
Call It Your "Buy My Own Island" Plan, Not Your Retirement Plan. By Natalie Pace. Including 6 Easy Wealth Tips That Make Life More Enjoyable.
From Flipping Burgers to Owning Your Own Island. By Natalie Pace, NataliePace.com CEO and founder. How tithing 10% to Your Nest Egg will make you a millionaire, even if you're only bringing home $30,000.
Investing is Not Surgery. Brokers are Not Surgeons. (They Are Salespersons). Why wise, informed, personal, daily, healthy choices keep you fiscally fit. By Natalie Pace, NataliePace.com CEO and founder.
Top Ten Investing Mistakes.
Brokers and Lovers: It Pays to Pick a Good One.
Lessons from Enron. Power is Intoxicating. 11 Ways to Avoid Getting Drunk.

Mother's Milk: It Does a Baby Good.

by Dr. Jay Gordon.

Eliminate ear infections. Reduce asthma symptoms. Learn How from the Doc Who Specializes in Nutrition!

Dr. Jay Gordon has devoted his career to promoting wellness and getting information to parents on how to boost your child's immune system, eliminate ear infections, reduce rashes and set the stage to make all your doctor visits wellness checkups! He has appeared on national television, consulted on TV shows and sees patients in Santa Monica, California.

Dr. Gordon's wellness plan saved my son from chronic ear infections, year-round antibiotics, tubes and probably surgery and hearing loss. The ear infections disappeared, and since then, over the past decade, Davis has only been to see Dr. Gordon for routine check-ups, bumps and bruises and chicken pox! Dr. Gordon always jokes that he does his job too well! Now a teenager, my son has the healthiest immune system of all of his friends and refuses to go to any other doctor (even though he has to sit in the toddler chairs at Dr. Jay's office!). Imagine how you will enjoy and invest all of the money you save by having a healthy (and happy) child!

The below article is also available on Dr. Gordon's web site, along with a number of resources for parents. -- Natalie Pace.

In August of 2000, the American Academy of Pediatrics issued an official statement about allergenic proteins in a mother's diet appearing in her breast milk and creating problems for her baby. They stopped far short of talking about excellent research showing that cow's milk in the diet of a pregnant or breastfeeding woman creates even more problems than we ever thought for her nursing baby.

Breastfeeding moms get lots of advice about the food they should be eating while nursing their babies. I try to discuss this with the mom- and dad-to-be when we meet during a prenatal appointment. I often wish I could talk to more women before they become pregnant to discuss anti-allergy measures and other topics.

Please don't misunderstand the incredible superiority of human milk for human babies. Infants who receive formula have more intestinal problems by far than infants who drink breastmilk. Uninformed medical practitioners have actually told mothers that their babies were "allergic to their breastmilk." Nothing could be further from the truth.

Babies can be allergic to protein fragments from mom's diet, which end up in the milk, but if they are sensitive to those proteins, they will be much more affected by artificial baby milk made entirely of non-human protein. Even so-called "hypoallergenic" formulas are rarely any better. They are made of proteins broken down into smaller fragments to provoke less of a reaction, but they are still allergenic and don't solve the problem for many babies.

Common Symptoms of a Reaction to Dairy:
* Green, runny stool
* Blood tinged stool
* Skin rashes
* Chronic nasal stuffiness
* Vomiting
* Diarrhea
* Excessive abdominal discomfort
* Cramping
* Coughing
* Mimic of GER (gastroesophageal reflux) symptoms
* Heartburn
* Spitting up
* Gassiness
* Constipation

Gassiness
Babies are gassy. That is an immutable fact caused by the need to double or triple one's weight in a year. Try doing that yourself and see if you don't spend a little time gassy.

I have seen the gassiest babies get better when moms removed dairy products from their diets.

Some babies seem to cry much more than others and their parents describe them as "writhing in pain." Changing the nursing pattern helps some newborns and older babies if overactive milk ejection reflex (OMER) or a hindmilk/foremilk imbalance is the cause, but many more babies are helped when mom changes the way she eats. My list of allergens begins with cow's milk and continues with eggs, peanuts, wheat and citrus. The most important change a mom can make is to stop drinking milk and eating things made with milk.

Blood in Stools
Babies with blood in their stool often stop having blood when moms stop drinking milk and eating other dairy products.

Cow's milk protein irritates the intestinal lining and virtually always causes what's called "microhemorrhaging." Sometimes this bleeding is quite visible and helps alert parents to the need for mom to change her diet. Blood in the stool can be frightening but is rarely dangerous. It has a few other causes such as viral irritation, but the most common reason I have seen it is dairy allergy.

Eczema
Eczema lessens and often goes away completely when breastfeeding moms become dairy-free.

Skin rashes occur frequently in newborns and babies. The most common, worrisome, persistent problem is an allergic rash called eczema. Dermatologists and allergists describe eczema as not a "rash that itches, but an itch that rashes." That is the first thing that happens and the first thing the parents may notice: increased irritability and "face rubbing" by their baby. They may also see a red rash, which becomes more and more "angry" looking and eventually gets scaly and even bloody. Superficial skin infections can follow and be difficult to treat.

Dairy elimination is crucial. Long before you use cortisone cream, stop all dairy. Stop peanuts and eggs, too.

Constipation
Babies who are constipated often improve when dairy is eliminated from mom's diet. Older children may also get relief from constipation with complete dairy elimination. In older children, studies have shown that some bedwetting may also be cured by dairy elimination. The allergic reaction to the offending protein in milk is exhibited in a variety of ways that affect the bowels and urinary tract. If your child is suffering from problems in these areas, dietary restriction should most certainly be considered prior to doing further testing or using medications.

Changing a breastfeeding mom's diet or changing the diet of an older child eating solid foods will often lessen medical problems dramatically.

Cold Symptoms
Babies who have constant runny noses often get better when moms stop all dairy. Cow's milk allergies may look just like "hay fever" at any age: stuffiness, cough, and a runny nose that seems to persist for weeks and weeks.

Older kids with ear infections often stop having ear infections when dairy is removed from their diets.

This has been a key intervention in my practice. I have cared for hundreds of kids who have taken ten or even twenty courses of antibiotics and even steroids. They were able to cancel scheduled ear surgery because they got better when they stopped drinking milk and eating cheese. The ear infections just plain stopped for many of the children and for others they decreased to manageable childhood illnesses rather than being a constant source of pain, school absences and incapacity.

Read more at: notmilk.com

GER (Reflux)
Before a baby gets evaluated for GER (gastroesophageal reflux), breastfeeding moms must eliminate all dairy from their diets. To some, this seems like a drastic step. It is far less drastic or invasive than the tests and medications for GER in babies.

When eliminating dairy and watching for a reduction of GER symptoms, patience is a key. The offending protein can take a few weeks to be completely undetectable in breastmilk. Many will see improvement within days, because the levels begin to decrease as a diet devoid of dairy is consumed. It is not unusual to see little change until two or three weeks after eliminating dairy.

The almost miraculous improvement in hundreds of troubled babies in 22 years of practice might be the strongest evidence, albeit anecdotal evidence, that I bring to the table. Does this work 100% of the time? No, nothing works 100% of the time, but dairy elimination is the single-most important advice I give to dozens of people each and every week.

Casein and B-lactoglobulin
The two proteins that trigger the biggest allergic response are casein and b-lactoglobulin. If your baby doesn't get as much relief as you had hoped just from dairy elimination, read labels carefully. Soy cheese and many other foods that we expect to be dairy protein-free are really not. Even diaper creams may contain casein.

Read more here: Dairy Terminology

Increased exposure to allergens like dairy allergens can even lead to fatal reactions. Fortunately, the "minor" symptoms almost always go on for a long time before major reactions in almost all babies, children and adults.

Lactose Intolerance
The major "sugar" in cow's milk is lactose and some people confuse lactose intolerance and cow's milk protein allergy. Lactose intolerance evolves gradually after about age 7 or 8 years and is particularly common in those of Asian, Native Alaskan and African decent. Gassiness and bloating after drinking milk, eating cheese or ice cream occur in many people. Some choose to ignore it, others limit dairy and still others just use supplemental lactase (an enzyme) to lessen their symptoms.

Viral stomach flu can create temporary lactose intolerance.

We adults are clearly not meant to drink cow's milk and the number of children adversely affected by dairy protein and dairy sugars is underestimated in mainstream nutrition books.

A very informative article in the August 2000 issue of "Discover Magazine" features a discussion with T. Colin Campbell, an ex-dairy farmer now a Cornell University nutritional biochemist:

"The bottom line for Campbell is simple: 'It's unnatural to drink milk.' Most adults in Asia and Africa, along with many in southern Europe and Latin America, have trouble digesting lactose, the main sugar in the milk of both humans and cows. Some suffer from bloating, cramps, or diarrhea if they try. A 1978 population survey, compiled by geographer Frederick J. Simoons of the University of California at Davis, suggests that it was only because of a genetic aberration that milk became a food staple in northern Europe and North America. Nature normally programs the young for weaning before they reach adulthood by turning down production in early childhood of the enzyme that breaks down lactose. But a gene mutation inherited by people of northern European descent prevents the production of this enzyme from being turned down. As a result, the majority of Americans can drink milk all their lives."

This excellent, short article also talks about osteoporosis as it relates to dairy consumption: Countries with the highest dairy intake have the highest incidence of osteoporosis. This striking fact seems at odds with everything we think we "know" about calcium and nutrition. Osteoporosis is related more to calcium excretion due to salt and protein intake than to calcium deficiency in the diet. The entire article and the attached graphics are well worth a look.

Read more at: discover.com

Other Medical Experts on Dairy
Hundreds of medical articles and many books have been written about the problems with milk products in humans. The authors are physicians of great standing in the medical community. The late Frank Oski MD was head of the Department of Pediatrics at Johns Hopkins University and the editor of the Yearbook of Pediatrics. The late Dr. Benjamin Spock was the most famous and most influential physician of the past 100 years and many other doctors have participated in trying to bring dairy's shortcomings to the attention of doctors and patients alike.

Dr. John McDougall often cites milk's problems alphabetically:

Allergies (dairy is the leading cause of allergies in adults and children) and continuing with a discussion ofÉ

Anemia. Again milk products are the number one cause of this problem because they cause blood loss and also interfere with iron absorption. Additionally, kids who drink lots of milk feel very full and often have no "room" for healthier iron-containing foods. Dr. Oski wrote many articles about milk's role in causing anemia in America's children.

Arthritis is the third on Dr. McDougall's list and he documents published studies from the British Medical Journal, the Journal of Arthritis and Rheumatology and other major medical journals. The mechanism of action involves antibody/antigen particles which lead to inflamed joints.

Atherosclerosis, or heart and blood vessel disease, make the third "A" on the list. Milk is the number one source of saturated fat in most diets. A further problem involves the antibodies formed against milk attacking the delicate lining of arteries.

Blood loss, constipation, and diabetes follow in alphabetical order. The medical evidence strongly points to early exposure to cow's milk leading to an increase in Type 1 diabetes. I have seen constipation clear up in a matter of days when parents remove dairy products from their child's diet and the intestinal blood loss from drinking milk (or exposure to milk protein through breast milk) is an accepted medical fact.

Read more at: Food for Life Global

Talking to patients about dairy products is a lot easier than it used to be because the "problems with milk" are better known than just a few years ago. Still, it's hard to combat the $400,000,000 annual advertising budget available to the purveyors of dairy products. Milk does not "do a body good" nor build strong bones. It is a traditional food that has become a lazy staple of the American diet.

Children (and their parents) get healthier when they have fewer dairy products and are healthiest when they have none.

When I talking to older kids about making dairy a smaller part of their diets, I tell them that it's kind of like an old Seinfeld joke: "Hey, look at those large animals in the field! Let's go squeeze those things underneath them and then drink whatever comes out. Then, let's take whatever's left over, put it aside for a year or so andÉ eat it!" The kids respond with a hearty "eeeeew!" Even adults get it sometimes.

Jay Gordon, MD, FAAP, IBCLC - In the middle of his residency training, pediatrician Jay Gordon took an unusual step. Deciding that he needed greater knowledge about nutrition, vitamins, and alternative medicine in order to practice medicine the way he wanted to, Dr. Gordon took a Senior Fellowship in Pediatric Nutrition at Sloan-Kettering Institute in New York City. After his residency at Children's Hospital of Los Angeles, Dr. Gordon joined the teaching attending faculty at UCLA Medical Center and Cedars-Sinai Medical Center.

Intensely interested in infant nutrition and breastfeeding, Dr. Gordon is the first male physician to sit for and pass the International Board of Lactation Certification Exam. He has served on the Professional Advisory Board of La Leche League for twenty years. Dr. Gordon treats patients at Santa Monica, California. In addition, he finds time to participate in the training of medical students and residents, lecture all over the world, write books, and contribute to AOL with the Ask The Pediatrician weekly chat. He writes a monthly column for "Fit Pregnancy" magazine and has recently contributed to "New York Parent," "Parenting" magazine and has been quoted in the L.A. Times, New York Times, London Times . . . and many other times.

Busy as he is, Dr. Gordon finds that his most challenging job is "being a good husband and the best possible parent to my 16-year-old daughter."

Books:
Good Nights! The Parents' Guide to the Family Bed
Listening To Your Baby: A New Approach to Parenting Your Newborn.
Good Food Today, Great Kids Tomorrow

CHAT WITH DR. GORDON ONE-ON-ONE
DonÔt miss NataliePace.com's exclusive one-on-one chat with Dr. Gordon on Thursday, August 17th, 2006 from 8:45AM through 9:30AM PT (11:45 a.m. to 12:30 p.m. ET).
Dr. Jay Gordon is in the business of healthy kids. Learn 10 Nutritional Tips that can eliminate ear infections, reduce asthma symptoms and much, much more.

The First Cure for Cancer!

Q&A with Dr. Amy Rosenman on the new cervical cancer vaccine, which is recommended for all girls between the ages of 9 and 26.

A Young Mother of Four Battles Cervical Cancer

I was four years old when my mother was diagnosed with cervical cancer. She had brought me with her to the doctor's appointment where she was to receive the results from her Pap smear. I have no memory of the doctor's office, whether I was with my mother when she received the awful news, but I do remember what happened directly afterwards. I was sitting at the counter of an ice cream shop, eating ice cream, when she passed out, cracking her head on the Formica and then sinking beneath my stool. It was the beginning of a nightmare for her, for me, for my brother and sisters and father, for her friends, and for all the people who took care of us while she was in and out of hospitals, while her body disintegrated.

Barbara neglected to get a PAP smear after she had me -- her fourth child. Like many women, she often put herself last in the family, and didn't go to the doctor because she couldn't afford the deductible or because she didn't have time. One of the two reasons. Perhaps both. By the time she did go for the PAP Smear, the cancer had spread, through her lymph nodes, to the vital organs. It didn't look good.

Back then, nobody knew that cervical cancer was caused by a sexually transmitted virus. Barbara wouldn't have considered herself to be at risk. She'd been married to the same man since she was 18.

No one wanted to give the young mother a death sentence. The doctors instead exposed her to the most aggressive and experimental treatments of the day, including cobalt. The "medicine" leached the color from her skin, reduced her to a skeleton, and killed her within two short years.

While Barbara suffered through chemotherapy and cobalt treatments, I, like everyone who loved Barbara, prayed incessantly that someone would find a cure. After she died, I lost all hope that anyone ever would.

Thankfully, however, doctors and scientists all over the world accepted life missions to break the genetic code that would form the basis of a new DNA-based medical science. And, this year, the FDA has approved a vaccine that is effective against the virus that causes 70% of all cervical cancer. Miracles are always welcome, even if they come along decades too late.

Gardasil won't bring back my mother, but it means that cervical cancer might be eliminated in my lifetime. It is a sobering thought, and an important milestone, that perhaps, in the future, no woman will ever suffer the trauma of a positive PAP test or fight a losing war with cervical cancer. Gardasil might well be a prayer come true.

Of course, as the pediatrician Jay Gordon, M.D., FAAP, IBCLC, would remind us, "During the first year that the vaccine is available, we should approach it carefully. It's possible that this vaccine is a winner, but I need to watch what happens when the first million doses are given, to determine if the benefits outweigh the risks."

I can personally attest that the benefit of a cancer vaccine is fundamental. It is life, which is the one thing that I wish I could give back to my mom. If Gardasil is as effective as the trials indicate, with as few side effects, it is a huge step forward for medicine, a gigantic leap for women and an intergalactic shift for mankind's quest to conquer one of our most deadly enemies. Gardasil brings with it renewed hope for finding a cure for the three most common cancers in the world - skin, prostate and breast cancer. What's next? Life on Mars? Peace on Earth? For the first time in a long time - I am very optimistic. - Natalie Pace

 

On July 21^st, NataliePace.com subscribers chatted with Dr. Amy Rosenman, a UCLA trained gynecologist, about Merck's new FDA-approved cervical cancer vaccine - Gardasil. Is it available yet? Who should receive it? Does insurance cover the vaccine? How much does it cost? What are the side effects? Does it protect all women against all forms of cervical cancer? How common is the virus?
Dr. Rosenman has been on the faculty at UCLA, as an assistant clinical professor for the past 25 years, and is a member of the urogynecology faculty in the same fellowship.

 

Dr. Amy, have you started giving your patients the vaccine?

I have given my first doses of Gardasil quadravalent HPV vaccine this week. One to a 23-year-old who was not affected by HPV and one to a 24-year-old with a history of HPV exposure.

So, the vaccine is already available for use by doctorsÉ That is impressive distribution by Merck. So far, so good? No reactions?

No problems thus far, lots of interest. I am recommending it for my 22-year-old daughter. She's been too busy to come in this week. Kids!

Dr. Amy, your daughter is married, right? And you are still recommending the vaccine?

My daughter is single.

What about the young married woman and/or woman in a long term monogamous relationship, would you recommend that she receive the vaccine?

I would recommend the vaccine to anyone who never wants to get cervical cancer. Unfortunately, one of my patients who developed HIV many years ago got it from her husband. Prevention is much better than trying to treat this after the fact, and even though the vaccine is expensive, it is far cheaper than treatment of HPV.

Would you recommend the vaccine to younger girls who are not sexually active?

I had an interesting conversation with one of the Sisters of Charity at my hospital who was concerned that the vaccine was recommended for 11-year-olds. She thought it would increase sexual activity among teens (it won't) but the issue is that a virginal girl who gets married can still get this virus and cervical disease from her husband. [I explained] that it takes 3 doses for immunity and that it takes many years to reach all appropriate girls. She then understood and agreed with the vaccine.

Dr. Amy, as a single man, I received the Hepatitus B vaccination as a precaution a few years ago. Do you recommend that men receive the HPV vaccine to reduce the risk of carrying/spreading HPV?

It is controversial as to whether men should be vaccinated. I suspect that due to the clear logic of it the answer is yes, but as with all things, we will start with the target population where it is the most cost effective: at first, young women, monogamous or otherwise.

Women get cervical dysplasia and cancer in much greater numbers than men get penile cancer. Seems the cervix is more vulnerable to this virus than the penis, so men need to get in line, but my personal sense is that studies will be done to look at this, and it is a natural extension of the prevention model.

Have they tested it on men?

I have not seen any studies testing this vaccine on men, but our immune systems are pretty much the same, and the virus causes penile cancer so it will be tested in the future, no doubt.

Do you give the vaccine in addition to the yearly PAP smear, or instead of?

The vaccine does not replace the need for annual exams and PAP smears. It does not prevent all cervical HPV disease, just those caused by HPV 6, 11, 16, and 18, but there are over 100 strains. The vaccine works with the most common strains, which are responsible for about 70% of cervical cancers

Does medical insurance cover the cost of the vaccine?

Medical insurance does not yet cover this vaccine but there is not a doubt that they will. It is in their best interest to prevent disease. There is always a lag with new technologies.

How much does the vaccine cost?

The vaccine costs about $150-$200 per dose. Evaluation of an abnormal PAP smear costs over $800, so this is a bit of a no-brainer. Three doses are needed. The first can be given at any time. The second is 2 months after the first, and the third is 6 months after the first.

Do you know how many women participated in the trials and if there were any side effects?

About 6000 women were studied. Most of the side effects were related to the injection site: redness, swelling, itching. There were very few complaints of headache, nausea and the like, but almost the same number [of complaints] in the placebo group. They used a placebo with all the components of the vaccine except the vaccine and salt water alone, so it was a pretty good study. It is a well-tolerated vaccine with very few contraindications, those are: existing immune disease, clotting or bleeding abnormalities, and a proven sensitivity to a prior shot of the vaccine.

We had another doctor (a well-known pediatrician) say that he never gives vaccines when they are first approved. He wants to see what happens with the first million before he will recommend it. What do you think of that wait and see approach?

I think pediatricians deal with infants and that they come by their skepticism honestly. But this seems very safe. HPV is an epidemic, not like childhood diseases that are now rare. I treat this every day. Pediatricians do not. So I am more aggressive about it. Although the greatest impact is in children before any chance of infection when they still get regular checkups, the young adult population is ripe for immunization and better understands the ramifications of HPV infection.

How common is HPV? What percent of the adult population gets it?

The studies vary, but it is believed that 50-70% of all young sexually active adults will encounter this virus in their lifetime. And we are not just talking about a contagious disease. We are talking about cancer of the cervix. There are many countries in the world where there is poor access to screening and care where this will have an enormous impact some day.

What else is related to HPV?

Besides cancer, veneral warts are very unpleasant and the treatment of these warts is very unpleasant, and potentially expensive, and then there is the STI (sexually transmitted infection) issue to deal with in the relationship. Prevention is such an opportunity. This is really the 1^st vaccine to prevent cancer as well as a whole host of other diseases.

Is there a way to include screening for HPV as part of every adult's routine checkup as we do for hypertension and cholesterol, etc.?

The PAP smear is an effective HPV screen for cervical abnormalities. It is not felt to be logical or effective to screen for HPV in the absence of cervical abnormality or visible warts. There is not a treatment for the presence of the virus, only the havoc it causes. Better to prevent.

What is the single most important thing that parents and preteen/teen girls need to know about the vaccine?

We need to let parents know that this vaccine is safe, almost 100% effective and is not going to increase their daughters' sexual activity. Even chaste women and wives get this virus, even in monogamous relationships; the virus is a gift from prior relationships the male may have had. No finger pointing, just reality.

Dr. Amy, I was reading an old article in Cosmo that said HPV is common but benign, since there are over 100 types of HPV. Do you usually see a lot of cancerous cases?

Until you have treated cervical cancer in a 37 year old (as I am now), you cannot understand the heartbreak of this disease. And now there is a prevention so much more valuable than a cure!

Can cancerous cases of HPV be caught and treated? Does this happen often?

I see a lot of precancerous HPV. Because most women in our community have regular PAP screening, we find abnormalities while they are still very mild and benign. And they are easily treated, that is the miracle of PAP screening, it's one of the most successful cancer screening programs in history.

Do you think the vaccine will help prevent the amount of HPV cases you are currently seeing?

Even if there is prior exposure to 1 or 2 strains of HPV, this vaccine still helps prevent other strains. Remember, it protects against the 4 most common strains of HPV. There are over 100, but these 4 account for 70-80% of all cervical cancers and up to 90% of genital warts, the other strains are much rarer. As my grandmother used to say: AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE!

Do you think I should ask my gyno if he will put copies of this chat in his office? Is that one way to help spread the word?

I think it addresses the question his patients have and if they are comfortable with it, it will help.

Do you believe that most doctors now have access to the vaccine? Do you believe that most gynos know about the vaccine?

I think the word is getting out to all gynos. Merck is inservicing offices this month. It has only been available for the past few weeks, so give it a couple of months.

Dr. Amy, We really appreciate your time this morning. We will continue to help spread the word on this vaccine.

My pleasure. Hope you got the information you wanted from this chat. I am going to sign off now and get back to my patients here! I enjoyed chatting about such an important topic.

Other articles of interest:
The Cervical Cancer Vaccine, Gardasil, Was Approved by the FDA In June. So Should You Give It To Your 11-Year Old Daughter? By Jessica Mkitarian, volume 3, issue 7.
Keeping Your Sex Life (and Your Heart) Healthy. By Jessica Mkitarian, volume 3, issue 6.

Dr. Amy E. Rosenman is a director of the UCLA Urogynecology Fellowship Program in Santa Monica and one of the founders of the Pacific Continence Center in Santa Monica. Dr. Rosenman is president of the American Urogynecologic Society Foundation and is a published author in the field of urogynecology. She has been in private practice for the past 23 years. You can visit her website: RosenmanMD.com

Can Your Ivy Leaguer Balance a Check Book?

by Carrie Schwab Pomerantz, chief strategist/consumer education for Charles Schwab & Co., Inc., and President of Charles Schwab Foundation.

Financial Summer School for College-Bound Kids.

Summer's just getting underway for high school graduates, but many are already looking ahead to the first day of college in the fall. While figuring out class schedules and adjusting to dorm life might be their top concerns, some young people may face an even bigger challenge as they step out on their own for the first time: managing their own finances.

According to a recent survey by Charles Schwab Foundation, many young people are starting college at a disadvantage when it comes to understanding the basics of money management. The survey of teens between the ages of 13 and 18 found the following:

- Nearly a third of all teens surveyed (31 percent) owe money to a person or company. Older teens (16-18) owe an average of $351. Half of those who owe money are concerned about their ability to pay it back.

- Fewer than half admit being very or somewhat knowledgeable about how to pay bills (42 percent) or balance a checkbook (41 percent).

- Fewer than one-third (30 percent) admit being very or somewhat knowledgeable about how credit card interest and fees work.

With this in mind, we recommend that parents give their kids a "crash course" in the ABCs of personal finance before sending them to college in the fall. There are a few simple things teens can do this summer to prepare for managing their own money.

Get Them Involved In Managing The Family Finances
Before doing anything, parents or guardians should make sure they are in synch on the issue of finances and be consistent in the messages they are giving their children. This is important because, on a practical level, you don't want the child to play one parent against the other Ñ like hitting up Dad "the softy" for extra dough. And at a more philosophical level, if the parents are communicating different values about money, it will only confuse the child.

A good first step to take during the summer is to involve the child in the process of managing the household finances. As the survey results indicate, too many teens don't know how to track their expenses or balance a checkbook until they leave home. Parents can do their children a favor by showing them how the bills get paid each month.

Teach Them About Credit Cards
College students are inundated with credit card offers as soon as they set foot on campus, so it's important for them to learn how to use credit cards responsibly before they sign up for one on their own. Parents have some good options to help teach their kids about credit:

• Consider making your teen an "authorized user" of your credit card and establish clear parameters about how and when he or she can use it. An authorized user can be younger than 18, depending on the bank.

• Link a debit card to a savings account and show your child how to track expenses and reconcile the bank statement each month.

• Review your monthly credit card statement with your child and have him or her pay the bill at least once before the end of the summer.

Set A Budget
Hopefully, parents have a sense of their children's spending habits before they ship them off to college. Nonetheless, it's a good idea to have a child keep a journal of income and expenses for a month and help him or her plan for future purchases.

Once everyone has a sense of how much is being spent and how much is needed, parents should work with their children to prepare a budget for the school year. Don't forget to include a savings component. Encourage children to save at least 10% of any income. Once the budget is set, revisit it regularly to determine if the amounts are still reasonable.

By taking these simple steps, parents can help prepare their children financially for college and beyond, while potentially easing some of their own concerns when their children begin leaving their nest.

For additional tips on teaching kids the basics of money management, visit www.schwab.com/moneywisekids.

Carrie Schwab Pomerantz is chief strategist/consumer education for Charles Schwab & Co., Inc., and president of Charles Schwab Foundation. She speaks and writes extensively about personal finance issues for women and families, and is a driving force in the movement to increase financial literacy in America.

25 Ways You Can Stop Global Warming.

by David R. Fried, Editor, The Buyback Letter and Buyback Premium Portfolio.

Evidence suggests that most high-altitude glaciers in the planet's tropical regions will disappear in the near future, and that in most of the world, glaciers and ice caps are rapidly retreating, even in areas where precipitation increases, according to the U.S. Department of State. This implicates rising temperatures, not decreasing precipitation, as the most likely culprit. Coal-burning power plants are the largest U.S. source of carbon dioxide pollution, producing 2.3 billion tons every year, according to the Natural Resources Defense Council. Cars, the second largest source, generate almost 1.1 billion tons of carbon dioxide emissions a year. Carbon dioxide collects in the atmosphere, trapping heat from the sun and causing the planet to warm up. According to the EPA, the average household generates 45,000 pounds of greenhouse gas emissions each year! The Safe Climate Act, currently being considered by Congress, would freeze global warming emissions in 2010 at the 2009 levels. Beginning in 2011, it would cut emissions by roughly 2 percent per year, reaching 1990 emissions levels by 2020. After 2020, it would cut emissions by roughly 5 percent per year. In 2050, emissions would be 80 percent lower than 1990 levels. This system of cutting emissions and reducing over time is called a "declining cap."

Unfortunately, the Safe Climate Act may be too little, too late! Scientists recently discovered that Greenland's glaciers are receding twice as fast as previously thought! Clearly, today's political leaders are not acting with enough speed or decisiveness in the battle against global warming. Worse yet, our politicians are not providing adequate leadership. During World War II, our political leaders educated the public as to how they could contribute by buying Victory Bonds, growing a Victory Garden, etc... No such effort to enlist the public's help exists today!

Fortunately, we can be the leaders and let the "leaders" follow or be obsolete in this area. Here are 5 categories with 5 suggestions each that you can do to take matters into your own hands, followed by 5 benefits we all will share. Some of these you already know and some may be new to you. Either way, the ice caps are literally melting as you read this. Scientific evidence suggests that we need to act now to prevent massive damage to the Earth's ecosystem.

Five steps you can take in your own car and driving habits:

• Drive a fuel efficient car. Make sure the next car you drive is at least 35% more fuel efficient than your current one. If possible, buy a hybrid or flex fuel car. Meanwhile, do as many of the following things as you can.

• Maintain your car. Keep tires properly inflated. Under-inflated tires decrease fuel economy by up to one mile per gallon. This will eliminate up to 250 lbs. a year of CO2 emissions and save hundreds of dollars in gasoline. Having a vehicle's engine tuned regularly can improve fuel economy by an average of one mile per gallon. Replacing dirty air filters can improve gas mileage up to 10%! Get more information and additional tips at US Department of Energy.

• Avoid high speeds. Reducing high speeds will cut down on fuel usage. Fuel efficiency decreases significantly at speeds in excess of 60 miles per hour.  While driving on the highway, for example, reducing speed from 65 mph to 60 mph reduces fuel consumption by 10 percent.

• Drive smoothly and avoid jackrabbit starts.  Accelerating abruptly requires about twice as much gasoline as gradual starts.  Take it slow before accelerating at a stop sign or stoplight.  Avoiding unnecessary speedups, slow downs and stops can save as much as two miles per gallon. 

• Plan trips carefully. Cutting down on the time spent in the car is the easiest way to conserve fuel.  To minimize driving time, experts recommend combining all your short trips and errands. When possible, use carpools, public transportation, bike ride or walk.  If your family owns multiple cars use the most fuel efficient car whenever possible. Go to the market with a friend when possible.  

Each gallon saved reduces CO2 emissions by 20 lbs.! Saving 100 gallons reduces CO2 emissions by 1 ton!

Five steps you can take in your own home:

• Turn down your hot water heater. Instead of heating hot water only to mix it with cold water for an acceptable temperature, turn down the setting on the water heater. While you are at it, make sure that the water heater and hot water pipers are properly insulated. Also, wash laundry in cold or warm water instead of hot. You will save natural gas and money by following these steps. If you live in an apartment, ask the building manager to do this. For additional ideas, visit The Natural Resources Defense Council.

• Use energy efficient light bulbs and appliances. Replacing five or six light bulbs that are used the most can decrease carbon dioxide emissions from power plants by about 700 lbs. a year. You will save about $90 annually just from this act alone! Save even more by conserving electricity. Turn off all lights when you leave a room, run your appliances on full loads only and install motion sensors on outdoor lights that burn all night. Turn off unused appliances. Even when electronic devices are turned off, they use energy. Unplugging will save over 1,000 lbs. of carbon dioxide and $256 per year. High efficiency appliances can save $100 in annual utility bills and reduce carbon dioxide emissions by about 500 lbs. a year. Appliances endorsed by the Energy Star¨ use about 30% less electricity than other appliances. Find out more at EnergyStar.gov or read How to Reduce Your Energy Consumption.

• Use air conditioning and heating efficiently. About one-half of our electric consumption is used for cooling and heating. Install UV film on windows that are exposed to sunlight. This will decrease the need for air conditioning and save electricity. Install an attic and ceiling fans. By venting the heat from your attic you also decrease the need for air conditioning. Additionally, circulating the air with a ceiling fan will cut down on the need for air conditioning in the summer and circulate the hot air in the winter. Install insulation and weather stripping to make sure that no air is escaping. By adjusting your thermostat down two degrees in winter and up two degrees in the summer, you save 2,000 lbs. of carbon dioxide and $98 per year. Clean or replace dirty air conditioner filters as recommended and save 350 lbs. of carbon dioxide and $150 per year. For more information, read the page Simple Household Tools and Gadgets.

• Plant trees. Trees breathe in the CO2 produced by our cars, utilities and factories and produce oxygen. If you live in an apartment, cultivate indoor plants.

• Reduce and Recycle. Reducing your garbage by 25 percent can reduce carbon dioxide emissions by 1,000 lbs. per year. Recycling aluminum cans, glass bottles, plastic, cardboard and newspapers can reduce your home's carbon dioxide emissions by an additional 850 lbs. per year.

Five actions you can take to have impact at the community level:

• Get the word out. Ask your religious leaders to circulate these suggestions to their congregations and to other leaders they know. Your Clergy can find assistance at TheReGenerationProject.org. Ask them to communicate that if we believe that God created the Earth, it is difficult to justify continuing to pollute the Earth in a wasteful manner.

• Include schools. Insist that your local schools teach conservation and sustainability and the greenhouse effect. They can start at the EPA website designed to teach children about global warming. Curriculum is available from the Earth Day Network at: EarthDay.org or Climate Change Education.

• Ask your local government to be accountable. Are they conserving energy? Are fuel-efficient vehicles being used? Most of all, are they doing anything to provide local leadership? If not, then try to get this done. Your mayor's office or state assemblypersons are good places to start.

• Pass this letter on to everyone you know!

• Get more trees planted. Ask appropriate authorities at your local public entities of any kind (school, park, etc) find out how to plant more trees on your local public grounds. Visit ArborDay.org.

Five actions you can take to impact the world:

• Shop online to stop global warming. Go to: Our Energy Shopping. As a member of "our energy," a percentage of all your online purchases from more than 700 participating retailers (including Walmart.com and The Gap) will be contributed for green energy credits automatically every time you shop online, at no cost to you.

• Buy green energy credits. Energy Credits work in the following manner: You buy energy from a producer of green energy. Instead of receiving the energy yourself, the energy is put on the power grid. In essence, you are making a donation. Whole Foods purchases renewable energy credits to offset 100% of their electricity use. The Coca-Cola Company is spending 2% of its annual electricity bill on renewable energy credits. You can do the same for all or part of your usage. Call your local power company or check out Renewable Choice or Native Energy. To learn more about buying clean energy, visit The Natural Resources Defense Council.

• Write to your congressman and senators to make your voice heard! The National Ethanol Coalition provides a website that let you contact your elected officials. To access, click here!

• Use reusable products and reuse products whenever possible. For example, by bringing your own cloth bags to the supermarket instead of using a new bag from the market, energy is saved because fewer bags are produced.

• Take the pledge. Commit yourself to doing all you can to help pass the world on to the next generation as clean as it was when it was passed to us. Every Boy Scout and camper is taught to leave the campground at least as clean as they found it. The world is our campground.

Five steps you can take in your own workplace:

• Telecommute (work from home), or let your employees telecommute once a week. Carpool with co-workers. Ask your boss or allow your employees to work hours that allow driving in off peak hours to save the gas used at rush hour.

• Have an energy audit of your place of business. Most businesses, like most homes, can cut energy consumption significantly using the same steps recommended for homes. GreenOrder can help. They offer a complimentary assessment. If you own commercial real estate, go to BOMA.org.

• Develop a company energy policy. The following web page is Qualcomm's energy policy: QUALCOMM. Adopt their policy for your company or create your own!

• Use a portion of the money saved by conserving to buy green energy credits.

• Make sure your printer paper is 100% post consumer recycled paper. Save 5 lbs. of carbon dioxide per ream of paper.

Five benefits you will receive from taking action:

• You will save money when you save energy! Additionally, saving energy will have a positive effect on our national debt as we buy less energy from overseas. This will help make the dollar stronger and foreign goods will be less expensive.

• Saving energy will help hold the cost of energy down. All products require energy to produce and ship. Therefore, saving energy will translate into less expensive products in general.

• Installing ceiling fans and motion sensors, planting trees, etc. creates sales at retail and jobs. This is a general benefit to the economy.

• You will feel good about yourself knowing that you are participating in a worthy and needed cause that benefits all of mankind and future generations.

• Global warming will be a thing of the past. Go to RenewUs.org and watch this 3 minute movie and smile!

The Earth needs your help! No action is too small or insignificant to matter. If we don't act, more than 1 million species (25%) are in danger of becoming extinct according to scientists (Nature Magazine, 2004). History has taught us that we can win. Whales were once almost extinct and the ozone layer was once in danger of disappearing. It was the actions of responsible citizens like you and me that turned those situations around.

Please join me in exercising your power to influence the world in a positive way. Only you can do your part. No one can take your place.

Respectfully,
David Fried, Los Angeles, CA
Feel free to send comments to ddcoast@aol.com

Other useful web sites:
http://yosemite.epa.gov/oar/globalwarming.nsf/content/index.html
http://www.stopglobalwarming.org/
http://www.nrdc.org/globalWarming/fgwscience2.asp
http://www.renewus.org/index.html
http://www.mtv.com/thinkmtv/features/environment/break_the_addiction/index_12steps.jhtml
http://www.greenhousenet.org/index.html
http://www.climatechangeeducation.org/

David  Fried is the editor and publisher of The Buyback Letter, the only investment  newsletter devoted to finding opportunities among companies that repurchase  their own stock. His asset management firm - Fried Asset Management, Inc. -  offers separate investor advisory and money management services which use the  "Buyback Strategy" principles. Fried  Asset Management's managed accounts have gained 146.98% vs. a 28.67% gain for  the S&P 500 for the 8-years ending 12/31/05*.  All of his NEWSLETTER portfolios are beating the  S&P 500 since inception, and the prestigious Hulbert Financial Digest  consistently ranks The Buyback Letter among the top five for risk-adjusted  returns among stock-picking newsletters.

Women's Foundation CEO & President Patti Chang Create a Better World for Women and Girls.

Find Out How You Can Help.

Below is a reprint of Patti Chang's retirement announcement letter. The Women's Foundation will miss their CEO, but the many life-changing programs that were initiated under Patti's leadership will carry on!

Patti Chang, Senator Hillary Clinton, Patti's daughter Kiana and Diana Campoamor, president of Hispanics in Philanthropy at the 2005 GroundBreakers/DreamMakers Gala benefiting the Women's Foundation of California.

Dear Natalie,

For the last thirteen years, as president and CEO of the Women's Foundation of California, I have been privileged to walk a road with you to create a better world for women and girls.  It has been said that I have passion and courage. But it is by walking with you that my hope has been renewed again and again. So it is with much heartfelt appreciation and gratitude that I share with you my plans to retire from the Foundation this October.  As a philosopher once said:

"Hope cannot be said to exist, nor can it be said not to exist. It is just like the roads across the earth. For actually there were no roads to begin with, but when many people pass one way a road is made."

In 1993, I could not imagine the people I would meet on this road or the work we would do together. I want to share with you a few of the many snapshots -- local and global -- that have kept me inspired along the way?

Just after the war began in Iraq, while demonstrations against the war were being held all over the world, I went to rural China with fellow supporters of the Dragon Fund. The Dragon Fund provides tuition and room and board for girls who would otherwise not be able to attend school. In response to my question of where they would like to visit in the world, the students unequivocally said the United States. When asked why, one girl said, "Because if people in the U.S. cared enough to send me to school, everyone from your country must be kind." What crystallized in my mind was that gifts of education and acts of kindness -- not bombs -- are what it takes to change hearts and minds?

A 65-year old Native American-Latina grandmother lives in a city in the Central Valley where the level of arsenic in the water was eight times what the EPA allows. She is the only woman and the only person of color to sit on her local water board and to have fought and secured $3 million from the Davis administration for clean water. This remarkable woman thanked me for helping her realize her life's workÉ

State Senator Jackie Speier pointed out to me that while she received faxes every day from the right wing about their positions asking her to represent their interests, she failed to hear from the Foundation or any of our grant partners. As a result of this insight, we created the Women's Policy Institute, a training program for women leaders in the nonprofit world to learn how to enter the policy arena and shape legislation that affects the health and well-being of women and girls in California. During the celebration dinner for our first class of alumnae, a woman got up and said that she would never have imagined herself to be working with another Latina on a bill that was sponsored by a Latina state senator, presenting to a committee that had Latino representation. She realized for the first time that she belonged in Sacramento.  

The perseverance, love and dignity of so many people I have met along this road -- and the brainstorming of so many wonderful partners, both likely and unlikely -- has influenced me profoundly and provided me with mentors and teachers. This small, scrappy, spunky and spirited organization has been my home for more than a decade. And because I have seen it grow from a small group of part-timers pitching in to make a difference to a statewide force for change in the lives of women and girls, I know that the Women's Foundation of California will continue to grow and develop under new leadership. The board of directors is now engaged in a nationwide search for my successor.  As some of you know, I have spoken of succession and of wanting a child for the last few years -- although not necessarily in the same breath. The staff and board of the Foundation are strong, talented and capable, and there can be no better time for me to "retire," to take the next few years of my life -- a parenthesis in my career -- to spend with my family... from my strong-willed and vibrant two-year old daughter to my 94-year old father (both from the same province in China!). And I plan on actualizing some of what have been fantasies for the last two decades:  learning Spanish, taking physics, getting involved in oceanography both on land in the water, and having the time to read and to connect more dots. It is a luxury and a privilege to be able to do so -- a choice that most parents do not have. I have always believed that if women and girls were provided with real opportunities, they would transform the world and move beyond fighting "against" our "enemies" to fighting for what we know is just. Thank you for walking together and creating this road with the Women's Foundation of California.  

With gratitude, love and respect,

Patti Chang
President & CEO
The Women's Foundation of California

The Women's Foundation of California is the only statewide public foundation that is investing in women and girls throughout California to build a more just and equitable society.

Since 1979, the Foundation has delivered $19 million in grants and capacity-building to over 1,000 community-based organizations in every region of our diverse state.

To support the Women's Foundation of California, click here!

Succeed. Despite.

by Gary Kobat.

"The effort is only in the becoming, in the purification of our character, in the reaching upwardÉ Once the situation is correct, union is inevitable."
- Deng Ming-Dao

Gary Kobat Friend and Client Geoffrey Erickson wins the Ogden Utah Marathon.

The happiest people I know and have had the opportunity to hang with have had some of the greatest heartache that anyone would want to endure. The hole in their souls has made them more whole. Their hole gave birth to a whole new person inside them, an opening for their future.
 

When they realized that nothing was missing, that they were just warming up to a bigger stage of life, that they may have been different when they walked in and that it was now time to make their moveÉ they made their move.
 
I know I'm a more peaceful person since Geoffrey asked me to teach him how to win a marathon... in a wheelchair ...because we had mental, nutritional and heart rate teachings for him that the others weren't quite getting yet... But what really happened is that he taught me that I really didn't have anything to complain about.  My stuff wasn't really that bad... despite what I thought.
 
I know I'm a happier, more optimistic person since Melanie showed me how to be happy in multi-sport athletics, even despite no arms and no legs, when she relied on me to mentally help her, to be her teammate with her anxiety in her event.
 
I know I'm a more determined person now since Sarah asked me to pace her in her first triathlon in Malibu as a stepping stone training plan for her Ironman Kona race despite not having a leg.
 
And I know I'm inspired, blessed and grateful since witnessing your unbelievable commitment, passion, growth, and joy the past four weeks as you challenged yourselves to places you have never gone before within yourself despite what is happening, despite the mortgage payments, despite the alimony, despite your family's health, despite you haven't be exercising and you know you should, despite the weather, despite the market up or down, negative or positive, despite the kids, your parents, your relationship or the neighbor'sÉ despite all the mood swings in the other areas of your life.
 
So here you are...  but understand something:  you're not done yetÉ to allow yourself to feel, to experience, to laugh, to cry, to grow, to move from guessing - to knowingÉ

It is timeÉ time to make your move.
 
You are awesome.

Gary

A passionate life and fitness coach, world-class athlete, author, and keynote speaker, Gary Kobat works one-on-one with select individuals, customized mastermind groups, and larger goal oriented teams for lasting personal and professional change. If you are interested in joining a group or for a private consultation, email him directly at: gary@e-coach.com. Gary conducts intense indoor cycling training at the Revolution Studios in Santa Monica, California.

 

Be the Star of Your Own Blockbuster Story.

Why Retelling the Sob Story of Your Life is a Horror Show.

by Chellie Campbell, author of Zero to Zillionaire.

Have you ever heard someone say, "That's the story of my life" and they mean their life is joyful, successful, rich, and fabulous? No. It's a euphemism for "My life sucks right now and it always has." And it's usually said in a whine.

Do you ever say it? When? Do you act defeated when you say it? Feel like a loser? Like a zero? Do you think people can't tell? Well they can. You speak it. You reek of it. Your desperate, flailing, losing energy pervades the air and sends up flares just like blood in the water summons sharks.

Poker is my hobby. I was playing cards one afternoon when a young fellow walked by and said hello to a man sitting at my table. He looked up and said, "Hey, Joe, how did you do in that poker tournament last week? When I saw you it looked like you had a mountain of chips in front of you."

"Yeah," the young man smiled. "I did pretty well for a while. I made it to the final table."

"That's great!" said his friend.

But then Joe sighed and shrugged his shoulders. "But I didn't get any good cards after that and I finished in seventh place. I hardly made any money."

"That's the story of my life."

All the poker sharks were thinking, "Oh, baby, baby, come back and sit right down at my table and play cards with me - because you're going to lose and I'll be happy to get all that money that you're going to give away!"

Contrast that story with this one:
The Texas Hold'em poker jackpot had just been raised to $100,000 during certain hours at the Bicycle Club Casino. The very first day of the big jackpot, a poker player named George announced to each of the floormen that he was going to win it. He told the other players he was going to win it, too. "Isn't that new jackpot great? I'm going to win it today," he repeated over and over.

You know what happened? He won it! People shook their heads muttering about how lucky George was. I overheard a floorman say that George had won six jackpots in the past year, and four the year before that. I introduced myself to him later and inquired if that was true. The truth was even more astounding: the $100,000 jackpot was the fourth jackpot he had won in three days! I know many people who've been playing poker for years and have never won one. And whenever somebody else wins, they tell me sadly, "I've never won a jackpot. I've never even been at the table when the jackpot's been won. That's the story of my life."

What is it that makes some people winners and others losers? The clues lie in your past and in the stories you tell about your life.

Your Life: Low-Budget Horror Flick or Big, Rich Blockbuster?
What was your life like when you were growing up? Are you in the same financial circumstances now? In the same neighborhood? Did you set your sights higher than your parents or friends or did you get a similar job at a similar pay scale?

Chellie Campbell, Author of Zero to Zillionaire Photo credit: Mary Ann Halpin

Americans hate to think that we have social classes. We're comfortable with the term "middle class," but less happy about calling others "upper class" or "lower class." But it is plain to see in every city that we group in socio-economic milieus. Aside from a few rebellious types who don't follow the norm, most people aspire to blend in with others around them. So there are neighborhoods defined by a high collection of Blue Collar/Apartment-renting/High School Grad/Kmart Shoppers and others that hold White Collar/Tract Home-owning/College Grad/Nordstrom Shoppers. The fewer rich neighborhoods have Tuxedo Collar/Mansion-owning/Grad School Grad/Neiman Marcus Shoppers. My family used to drive by the mansions of Beverly Hills and Pasadena on Sunday outings. We oohed and ahhed over the gorgeous homes, but no one ever talked about how we might get one for ourselves one day. They were chimeras - unattainable dreams to be admired, but not to be had.

If you grow up in a low-rent district, your parents work in low-wage, unskilled jobs, and your friends at school scoff at their studies and have discipline problems, that's most likely what you will do, too. If all the parents on your street are working white-collar dads and stay-at-home moms, it's probable that the majority of the boys on your street are going to go to college and look for professional jobs and middle-class money. The girls are going to do that, tooÑuntil they settle down to have a family, if that is the norm of the neighborhood.

We are born into mind-sets of expectations that come with their own sets of values, languages, and experiences. We look around at the people we know who are like us and - for the most part unconsciously - we embrace and emulate that picture of our future. It comes with its own set of preprogrammed beliefs: affirming hope or hopelessness, affirming higher education or not, affirming riches or poverty. Some are good, some bad, some helpful, some harmful - these beliefs inform our actions, and our actions bind us ever more tightly to the same milieu. We grow up in a box, create more of the same boxes, and, as the song goes, "They're all made out of ticky-tacky and they all look just the same."

Our expectations of our financial futures are laid out for us from the beginning as we assimilate the luxuriousness or penuriousness of our surroundings. Our parents' attitudes and beliefs about money filter down and manifest in the quality of our homes, whether we rent or own, where or if we travel, what kinds of things we buy and where we buy them. They manifest in the stories they tell about how hard or easy money is to come by, what is worth spending money on and what is not, even whether or not they think they are succeeding in life. When we absorb and repeat the same convictions, without thinking or examining them, they will produce the same results for us.

Reflect about money and the role it has played in your life. Pay attention to your first memory of money. Was it received as a gift or did you earn it? Note your first jobÑwhat it was, how much you were paid, whether or not you liked it. Did you ever think of going into business for yourself? If you did, what made you willing to take the risk? If you didn't, what stopped you from taking the risk? Who said, "That's a great idea. Go for it!" and who said, "That'll never work. You'll lose everything if you do that,"?

This is the financial story of your life. Your choices have been informed by your experience of all that you have seen, heard, felt, recorded in memory, and repeated. We act in accordance with our beliefs, even if we have never examined them. Deep within, you hold cherished beliefs about finances, rich people, wealth, poverty, good, and evil. You were born into a milieu, and your beliefs lock you in the pattern that keeps you in it. Are they factsÑor opinions? Are they beliefsÑor truths?

Knowledge is power. Self-knowledge is the power to change your future. If we want our outer material life to change, we have to change our inner mental life.

Chellie Campbell is the author of Zero to Zillionaire and The Wealthy Spirit. 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. You can sign up for Chellie's Ezine at www.chellie.com. Chellie will be speaking at the Sunday morning session of the Arizona Chapter of Meeting Planners International, held August 11-13. You can find more information and register at their web site: http://www.azmpi.org.

Will Double-Digit Corporate Profits Fuel a Year-End Rally?

by Paul Woods, President & CEO, Odyssey Advisors LLC. Including a 2^nd Quarter Stock & Bond Market Score Card.

In the second quarter of 2006, the stock market sent a message to the Federal Reserve. The gist of the message was, ENOUGH ALREADY. Letting policy changes drag on forever and constantly overshooting the mark at the wrong time is getting old. We realize the folks running the Federal Reserve are government bureaucrats at heart and always have to be doing something to justify a bigger budget. However, investors also know that it's much easier for the Fed to kill an economic recovery than to start one.

Around the end of the quarter, new home sales were drying up, the number of unsold new homes was ballooning, and the housing market finally appeared to be crying uncle. Although we got another rate increase at the end of June, the Fed changed its language and implied that the string of 17 straight increases may finally be coming to an end. I suppose it's only fitting that a housing boom created when the Federal Reserve overshot the mark and dropped the Fed Funds rate to 1% should end with Fed excess in the other direction.

First quarter earnings came in ahead of expectations again and economic growth was strong. However, another spike in energy prices dampened future prospects for consumer spending while higher interest rates also appeared to be taking the steam out of housing. During the quarter, Congress also showed signs that the tax cuts that stimulate consumer spending and investment may be allowed to fade into the sunset. Overall, investors saw mostly bad news in the second quarter and reacted accordingly.

The second quarter of 2006 generally turned the first quarter on its head. What worked in the first quarter didn't in the second quarter and vice versa as the stock market gave up its first quarter gain. Investors didn't want to own anything with tech in the name or industry description; big companies outperformed smaller ones, value outperformed growth, and industries that weren't economically sensitive mostly outperformed the others. For reference, here's the equity market segment scorecard for the second quarter of 2006:

Source: Thomson One Financial

In addition, here's the stock market index and industry group scorecard for the same period:

Source: Thomson One Financial

Paul Woods, President & CEO of Odyssey Advisors, LLC

We have trouble getting too worked up about the second quarter and view it as a correction in an otherwise healthy market. Although we're also aware that stock investors are generally on vacation during the summer, corporate profit growth is still in the midst of an extraordinary run (double digit growth since early 2003) and economic growth appears stubbornly strong. As a result, we wouldn't be surprised to see stock prices stabilize if second quarter earnings meet or beat expectations.

Source: Bloomberg LP

In the fixed income market, yields rose across the board during the quarter, with the sharpest increase again occurring in the short end. The result is we now have a yield curve that only a government bureaucrat could love. One year bonds produce the highest yield and five year bonds produce the lowest yield. Yields rise from five to twenty years, then decline again to thirty years. The result so far this year is that bond portfolios in the short to intermediate range have produced modest positive returns while longer bonds have produced negative returns.

Source: Bloomberg LP

In addition to higher gas prices and slowing demand for housing, consumer credit card debt is high. At present, we expect the prime rate of 8.25% to add some additional pressure. With 2/3 of the U.S. economy still tied to consumer spending, some slowing in economic growth appears likely. Our strategy in fixed income so far has been to stay in the short to intermediate range and emphasize Government agency bonds unlikely to be called. However, if the long awaited economic slowdown finally materializes, we think it may be time to consider lengthening maturities in our bond portfolios.

The second quarter correction in stock prices coupled with higher earnings reduced valuations to a level where stocks now appear cheap relative to interest rates. Although stocks may show the usual pattern of going sideways for the rest of the summer, we like the combination of an undervalued stock market tied with rising earnings. Real estate is no longer much competition for stocks and it's an open secret that the years leading up to Presidential elections tend to reward investors with above-average returns. As a result, we'll be surprised if the stock market remains undervalued once the summer doldrums are over.

In the meantime, please feel free to contact us if you have any questions or if we can be of any service.

Best regards,
Paul

Paul Woods is the President & CEO of Odyssey Advisors, LLC, an independent investment advisory firm specializing in equities and fixed income and a monthly contributor to NataliePace.com. He can be contacted at www.odysseyadvisors.com or 310.568.4700. Check NataliePace.com's archived ezines for other articles by Paul!

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.

While Bernanke Bumbles, Will Further Rate Hikes Kill the Economy?

by Meri Anne Beck-Woods, Chairman & COO, Odyssey Advisors LLC.

Meri Anne Beck-Woods, Chairman & COO, Odyssey Advisors LLC

June 29^th marked the 17^th time the Federal Reserve raised the Federal funds rate. Now at 5.25% the FOMC and Chairman Bernanke hinted there might be an end in sight. The Las Vegas odds makers - or the rest of the financial community - concluded there was an 80% chance the rate would go up again before the committee's remarks and after only a 60% chance the rate would be bumped in August (emphasis on the word only).

It was June of 2004 under then Fed Chairman Allen Greenspan when the Federal Reserve began what would be a 24-month saga of 25 basis point rate increases, hoping to put a brake on the exaggerated exuberance of an overheated housing market and an economy undaunted by rising inflation and oil price increases not seen since the 70s (source: Bloomberg L.P.). That makes a 4.25% increase and still counting. When the average period for rate increases by the FOMC is 13 months in duration and 2.50% in total rate increases, we are forced to ask, when will Bernanke put on the brakes?

In his remarks before the Economic Club of New York on March 20, 2006, Chairman Bernanke said the tightening cycle that began in 2004 was notable in at least four respects:

1. The FOMC kept policy unusually accommodative for a considerable period of time before tightening.

2. The tightening action had been well signaled in advance.

3. Policy moved gradually, tightening only in one-quarter point increments over fourteen successive meetings, which stabilized policy expectations and dampened market volatility.

4. Long term interest rates did not move up with the Fed funds rate and the ten year was only marginally higher than the target Fed funds rate after the increases (source: Federal Reserve).

Paul Woods, also of Odyssey Advisors can be quoted in his quarterly client letter as saying "I suppose it's only fitting that a housing boom created when the Federal Reserve overshot the mark and dropped the Fed Funds rate to 1% should end with Fed excess in the other direction". Times of transition in Federal Interest Rate Policy are perilous as evidenced by the bond market debacle of 1994 when, like the U.S. policy on capital punishment, the bond market was put to death. In February and March of 1994, even though the economic assessment was neutral, rates were raised .25% each month. Then in an inter-meeting increase in April, rates were raised another .25%. In May, Federal funds rates were raised .50% with a neutral economic assessment, raised another .50% in August of 1994, raised even higher to .75% in November of Ô94 and another .50% in February of 1995 (source: Bloomberg L.P.).

So Bernanke's comments about the measured instead of erratic increases were correct, as long term rates went from 5.07% to 7.44% between 2.31.93 and 2.28.95, and short term rates on the 3 month bill went from 0.917% to 5.933%. Here is the conundrum: there is a lag between the time rates are increased and the time they are moving through the economy - sometimes as much as 12-18 months. The housing market is already beginning to feel the effects of higher mortgage rates, the automobile market is non-existent (Moody's bond rating service cut their fixed income bond rating on Ford to further Junk status on July 14, 2006, from Ba3 to B2 five levels below investment grade). The prime rate at 8.25% is putting a pinch on credit card debt holders whose interest rate is tied to the prime rate. Credit card companies have been very inventive in adjusting the minimum payment to extend the period of payback and interest rate paid over the life of the loan. The media would give you the impression the Fed on hold would be a perfect solution for the economy and halt the moderation in growth as well as soften the blow to the housing market.

While not quite as controversial as the United States Supreme Court, the Federal Reserve Board has three new members since February of this year. Ben S. Bernanke, Kevin Warsh (only 35 years old and a lawyer not an economist) and University of Chicago professor and former white house economist Randall Kreoszner, only 43. President Bush has appointed all seven Federal Reserve members; three have no economic degrees and a recent article from the Financial Markets Center on New Fed Governors' Financial Disclosures indicated we have a lot more "haves" than "have nots" on the Board dictating what John and Jane Doe will be paying in mortgage rates in the future based on the high and low end financial net worth disclosure.

What about inflation? We know the government is issuing debt at a record rate. We know the amount of U.S. Treasury debt purchasers in foreign countries are perhaps having second thoughts relative to growth in China and other countries where our debt may not be as attractive relative to our fiscal health. The high price of oil has been weathered very well mostly due to less dependence and more emphasis on alternative fuels and better conservation. The average CPI over the last 20 years has been 3.05% while the core averaged 3.06%. Going back an additional 9 years however makes the average jump to 4.28% while the core jumps to 4.33% (source: Bloomberg L.P.). The most recent data (5.31.06) shows a 4.2% CPI reading and a 2.4% core reading (ex food and energy) for the same period.

Bernanke has to be careful that the economy does not go into a tailspin if rates go too far. On July 14, 2006, sales at U.S. retailers fell unexpectedly and consumer confidence (the consumer being the bulwark of the economy) fell with the continued crushing burden of higher gasoline prices and higher interest rates. According to the U.S. Commerce Department and the University of Michigan, consumer sentiment index fell to 83 in July from 84.9 in June. Less sophisticated consumers expect inflation to fall, according to the University of Michigan report, while elsewhere the price of precious metals and other natural resources continue to surge as demand from China and other faster growing third world countries continues to accelerate.

With an election coming in 2008 and adjustable rate mortgages kicking in, it will be interesting if barnacles grow on Ben Bernanke and the Fed as they again overshoot the mark on raising interest rates at the expense of the U.S. Economy.

Information has been obtained from sources believed to be reliable, however Odyssey Advisors LLC does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this material and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Copyright © 2006 by Odyssey Advisors LLC

Real Estate Investor IQ Test.

You dream of Trump Towers, but are you a budding mogul or destined for the money pit? Take our Real Estate Investor IQ Test and find out!

1. Real estate is the highest performing asset over the long term, beating out stocks, bonds and the money markets.
   

   • True
   • False
     
     

2. According to David Lereah, Chief Economist, National Association of Realtors, adjustable rate mortgages should have 15% of the market. What percentage of loans are adjustable rate mortgages in the U.S.? And approximately what percentage in Los Angeles, San Francisco and San Diego?

   A. 25%
   B. 50%
   C. 60%
   D. 70%
   E. 90%

3. What percentage of loans in California is interest only?

   A. 20%
   B. 40%
   C. 60%
   D. 80%

4. The recent dramatic increase in home values across the United States results from:

   A. Population increases
   B. Higher income & wages
   C. Low unemployment
   D. Falling interest rates
   E. The existence of new mortgage products that allow no-down, interest only and "liar's" loans
   
   

5. In the face of an impending slowdown, there may be a strong incentive for builders to actually increase production because:

   A. In the hope of selling before anticipated price reductions or extended sales periods occur
   B. Home production in highly regulated areas is a multi-year process in which huge investments are made prior to the commencement of construction
   C. Real estate never decreases in value

6. The fundamental drivers of value for real estate are:

   A. Area economics and demographics, quality of life, schools and safety
   B. The fact that "they aren't making any more of it"
   C. The influx of foreign capital from wealthy immigrants (from the Middle East, China and India) into the world's most free economy - the U.S.
   D. Low interest rates

7. The most important factor in successful real estate investing is:

   A. Preserving the ability to sell at a time of your choosing
   B. Location, location, location!
   C. Locking in the lowest interest rate possible
   D. Beautification & remodeling

8. While the payments on a 15 -year loan will be greater, the interest rate will be about .50% less. Assuming a sale in 5 years, the Investment Return Rate on the additional payments is about:

   A. 4%
   B. 6%
   C. 8%
   D. 10%
   E. 12%

9. Las Vegas, Tampa, Orlando, and even Riverside, CA have the following in common:

   A. Double-digit return on investment this year
   B. Home purchases for investment or second homes are a very significant portion of new home purchases
   C. Desirable areas for real estate investment, even if you don't live there
   D. The best family fun and theme parks

10. When interest rates rise and inflation escalates, the most vulnerable areas are:

    A. The most expensive neighborhoods
    B. Areas, like Las Vegas and Florida, where investment or second homes are a very significant portion of new home purchases
    C. Suburbia
    D. New York and Silicon Valley

11. Do you recognize the below described financial instrument? (How much would you invest in it?)

    • Customer determines the amount and the length of time the contribution will continue.

    • The customer can pay more than the minimum contribution but not less.

    • If the customer tries to pay less the financial institution keeps all of the previous contributions.

    • The dollars in the account are not liquid.

    • The dollars in the account earn a zero rate of return and are not guaranteed.

    • The customer's income tax liability increases with each contribution.

    • And when the plan is competed no income is paid out to the customer.

    A. Money Market
    B. Bank saving account
    C. Annuity Bond
    D. Mutual Fund
    E. Conventional Mortgage

12. Without improvements to your home, what is the maximum amount of cash you can take out of your home as tax deductible?

    A. 500K
    B. 100K
    C. Zero
    D. 250K
    E. Unlimited

13. Why do jumbo loans usually have higher interest rates than lower conforming loans?

    A. Higher risk on higher mortgage amounts
    B. Higher risk of higher value homes
    C. Higher transactional fees because it cannot be sold to Fannie Mae or Freddie Mac

14. Which type of mortgage has the lowest minimum house payment?

    A. 50 year loan
    B. 40 year loan
    C. 30 year interest only loan

15. If you put $200K down on a $400K, how much of the home is financed?

    A. $200K because you put a 50% down payment on a $400K home
    B. It is 100% financed because you finance your down payment

16. When you switch jobs before retirement, you usually can choose among several things to do with your 401(k). Which is the best choice?

    A. Leave the money in your former employer's plan 
    B. Roll over the money to your new employer's plan, if the plan accepts transfers
    C. Roll over the money into an Individual Retirement Account (IRA)
    D. Take the cash value of your account

Articles of interest:
1. Four Hot Markets and Five That Are Burned Out. By Natalie Pace.
2. Real Estate Warning: Speculators Are Being Suckered In, While Insiders Are Cashing Out By the Millions. By Natalie Pace.
3. Buying Real Estate in Today's Market: by Steve Dietrich, President, Financial Research Group, and a guest lecturer at the Anderson Graduate School of Business, UCLA.
4. Debt-Rich America. Americans are now spending more than they are earning, and personal savings is a negative number. Is that a temporary dip or are we courting disaster?
5. Real Estate Party Policy: Tempted to Crash the Real Estate Party? 5 Tips to Make Sure You Drive Home SafelyÉ By Natalie Pace.
6. Buy Your Dream Home With No Money Down. Q&A with Kassie Welch, Mortgage Financial Consultant.
7. Top 10 Signs of a Bubblicious Housing Market. By Steve Dietrich, guest lecturer at the Anderson Graduate School of Business, UCLA and Natalie Pace, CEO, NataliePace.com.
8. You Don't Have To Be Donald Trump To Become a Real Estate Millionaire! You Just Have To Do Your Homework and Get in the Game. By Bobbi McKenna.

Questions were supplied by:
Gary Davis
Mortgage Banker
Harborside Financial Network INC, San Diego CA.
760 433-3804

and

Steve Dietrich, guest lecturer at the Anderson Graduate School of Business, UCLA.

*Taken from Doug Andrew, author of Missed Fortune 101

Real Estate Buyer Checklist.

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

Interest rates are still low. But, as you have probably noticed, the prices range from ouch to the absurd! If you are considering buying, now more than ever, you must steel yourself against the sweet wooings of the real estate broker and arm yourself with information. If you consider all of the following tips, which were designed by the seasoned real estate consultant and Anderson School guest lecturer, Stephen Dietrich, then odds are much greater that you will enjoy a rewarding long-term experience with what will likely become one of the most expensive investments you ever make.

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

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

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

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

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

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

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

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

8. Market Slowdown -- Overall, this is a time for caution, a return to fundamentals, and perhaps a more conservative approach to home buying. It appears that the market has fully adjusted to lowered interest rates and that sustained price increases in the future are likely to be more dependent on job and income growth. Job growth has been discouraging, especially in the Midwest and Northeast. If oil prices remain at $70 per barrel, it will add further stress to the economy. The signs of slower sales and a reduced rate of price appreciation in recent months may be the indication that the slowdown is finally here. The unknown is the degree of correction.

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

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

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

Is it Time to Break Your ARM Before It BREAKS YOU?

by Kassie Welch, Mortgage Financial Consultant of United Pacific Mortgage.

With seventeen consecutive increases in Prime since June of 2003, one quarter point at a time, and Adjustable Rate Mortgage (ARM) indices increasing as well, having an ARM could be a risky proposition. As ARM indices rise, so does interest rate exposure once the fixed rate or "teaser" period (from 1 month to 10 years, depending on the design of the loan) is over. At that time, the ARM is in the adjustable phase and the rate is based on the index plus margin.

Definitions:
Index: A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments, which is then used to adjust the interest rate on an adjustable mortgage up or down. Some of the most common indices are: the one-year Treasury Constant Maturity Yield; the Federal Home Loan Bank (FHLB) 11th District Cost of Funds; prime rate as listed in the Wall Street Journal.

Margin: The amount added to the interest rate index, typically ranging from 2% to 3%, higher for sub prime and/or non-owner occupied properties, to obtain the fully index interest rate on an ARM. The index moves up and down while the margin remains stable over the life of the loan.

Recent History of Prime Interest Rates

SOURCE:

Although there are ceilings or maximum interest rate caps on ARMs, they?re usually 9% and higher depending on when the loan was originated and its start rate at the time. With increased interest rates and subsequent payments, this may leave many homeowners unable to afford their mortgages, especially if they overbought and/or overestimated their future income. This becomes even more pronounced if the loan began as interest only and later became fully amortized, leading to even higher payments.

Since interest only loans make up nearly 25% of all mortgages originated for some (according to LoanPerformance, a subsidiary of First American Real Estate Solutions), this coupled with ARMs could present a dire problem. Last fall, former Federal Reserve Chairman Alan Greenspan stated that, "The dramatic increases in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages, are developments of particular concern." He believes that the growing use of riskier mortgages is pushing up home prices to "unsustainable levels" in some local markets.

For homeowners with plenty of equity, their worse case scenario is to refinance into another adjustable rate mortgage to keep payments affordable for the near term. However, as the market stabilizes as indicated by the National Association of Realtors¨, this could be a problem with home owners with less equity, particularly those who bought with little or zero down. If this sector of homeowners cannot afford their increased payments and/or are unable to refinance, this could lead to distress sales.

Ultimately, ARMs and interest only loans are tools, just like a hammer or saw. Inherently they're neither good nor bad. The judgment lies in how they're used, and if the user is financially disciplined. A qualified Mortgage Financial Consultant, Financial Planner or CPA can assist homeowners to evaluate their individual needs and situation to determine the best home loan. The following general guidelines may be very helpful to you, as you explore whether or not to refinance your ARM.

Refinancing can be a good idea if you:
¥ Have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
¥ Want to convert to another ARM with a lower interest rate or more protective features (such as a payment caps).
¥ Want to build up equity more quickly by converting to a shorter term loan.
¥ Want to draw on the equity built up in your house to get cash for other real estate, investments, major purchases or for your children's education.

Should you refinance your ARM?
In deciding whether to refinance an ARM, consider these questions:

¥ Have the recent interest rate increases made your monthly payments uncomfortable and/or unaffordable? Would another interest rate hike -- which is likely to occur -- cause you financial distress?

¥ If the current mortgage sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing to a new ARM or a fixed-rate loan enable you to pay your loan in full by the end of the term?

Kassie Welch, an eighteen-year veteran of the real estate finance industry, began her career at the Bank of New York (BONY) in the Mortgage Banking Division, where she was trained in all areas of real estate finance, from processing and underwriting to secondary marketing and loan servicing. Currently Kassie is a Mortgage Financial Consultant with United Pacific Mortgage and lecturer on Real Estate Financing, including her First Time Home Buying, 100% Financing, Credit Repair, and Adjustable Rate Mortgage Seminars. For more information about Kassie and her upcoming seminars, please visit http://www.dreamhomeownership.com/.

Other Articles of Interest by Kassie Welch:
Preparing to Buy Your Dream Home? 6 Tips to Keep it From Becoming a Nightmare. By Kassie Welch.

Real Estate Investor Quiz Answers.

1. FALSE. Stocks are the highest-performing asset class. Over the long-term, even bonds beat out real estate.

   

2. A&C. Adjustable rate mortgages comprise about 25% of loans nationwide and about 60% in California: 57% in Los Angeles, 62% in San Diego and 65% in San Francisco, according to the National Association of Realtors¨.

3. C. 60% were interest only.

4. D&E. Falling interest rates AND the existence of new mortgage products that allow no-down, interest only and "liar's" loans.

5. A&B. In the hope of selling before anticipated price reductions or extended sales periods occur, AND home production in highly regulated areas is a multi-year process in which huge investments are made prior to the commencement of construction.

6. A. Area economics and demographics, quality of life, schools and safety.

7. A. Preserving the ability to sell at a time of your choosing.

8. E. 12%

9. B. Home purchases for investment or second homes are a very significant portion of new home purchases.

10. B. Areas, like Las Vegas and Florida, where investment or second homes are a very significant portion of new home purchases

11. E. Conventional Mortgage

12. B. 100K

13. C. Higher transactional fees because it cannot be sold to Fannie Mae or Freddie Mac.

14. C. 30 year interest only loan.

15. B. It is 100% financed because you finance your down payment. (You are your own bank for everything you buy. Money spent is money not earning yield somewhere.)

16. Roll over the money into an Individual Retirement Account (IRA) . There are more options of where/when to invest through brokerage IRAs than there are through your employer's plan, and fewer restrictions on time periods when you can/can't purchase and/or redistribute, your holdings. A broker should be able to assist you with the roll-over without any penalty and/or fees.

Cashing out of a 401(k) before you are 59 1⁄2 can cost you dearly, both immediately and in the long run:

• If you do not transfer your money to an IRA or your new employer's plan within 60 days of receiving it, your current employer is required to withhold 20% of your account balance to prepay federal taxes. 

• If you keep the money, you must pay federal income tax on your entire withdrawal. In addition, you may also owe state tax on your distribution.  

• Plus, the IRS will consider your payout an early distribution, meaning you could owe a 10% early withdrawal penalty on top of combined federal, state, and local taxes.

When all is said and done, you could end up with a little more than half of your original 401(k) savings if you cash out!  In addition, you will owe tax annually on any future earnings your lump sum generates. 

Racking Up Returns Despite the Wars.

by Natalie Pace, NataliePace.com CEO & Founder, and top-ranked stock picker. Includes 20 Great Companies, over 50% annualized returns, and our popular Hot News on Cool Stocks list.

Finding Peace and Prosperity On Wall Street.

NataliePace.com's Hot News List features 20 GREAT COMPANIES that are racking up returns despite the wars, which keeps the companies featured in NataliePace.com at the top in Annualized Returns (according to TipsTraders.com).

For the past few years it has been the same old song and dance. Oil spikes: the markets drop. Oil prices moderate; Wall Street gets elated. In the meantime, oil prices have gone from $25/barrel to over $70/barrel in under three years, and prices at the pump are double. The pressures on demand keep increasing with China and India becoming oil consumers, and production facilities are running at capacity. Pundits predict that supply pressures will keep oil prices high for the foreseeable future, and few would be surprised if oil exceeds $100/barrel in the coming years.

With high oil prices, high stock prices (the Dow Jones Industrial Average is still trading near its all-time high) terrorism, war and the summer doldrums, there's very little reason to be all-in in your portfolio these days, especially when CDs are earning bond-like returns with little or no risk. Make sure that you have some cash safe on the sidelines. Many certified financial planners recommend a minimum of a percentage equal to your age.

Source: MoneyCentral.msn.com

Though the instinct might be to sell now, selling now could be locking in a loss unnecessarily. The last quarter of the year is when over 50% of the gains are made on Wall Street. Typically, January is the strongest performing month, and a good time to sell and lock-in your profits, however, as I indicated in the Faded Blue Chip article this month, investors should celebrate the holidays early this year. Meet with your certified financial planner to realign your portfolio and to take your profits before December 15, 2006, when companies are going to be forced to start listing their pension and Other Post Employment Benefit obligations on their earning reports. Standard and Poor's is predicting that the hit to earnings could be 8-9%.

Don't forget that for your 401 (k) and/or retirement plan, it pays to ignore the daily/monthly fluctuations and take a long-term view. The stock markets outperform real estate by almost double historically, and getting too fancy by trying to "time" the markets is really a game played only by a handful of seasoned professionals, those who know how to "hedge" their risks. Having said that, there is a big shift going on in corporate America, with former Blue Chips struggling under the burden of pensions and health plans (and unions that are forcing them to make good on their promises). If you've ignored the red flags - the bankruptcies of United, Delta and Delphi, and the catastrophic losses of General Motors, Ford, American Airlines, et al. - it could be invaluable, priceless, for you to read the Faded Blue Chips article now, before the legacy corporations are forced to reveal just how badly they are bleeding with regard to their obligations to retirees.

Make sure you know what a good balance is for equities, versus bonds and money markets in your portfolio, and have a good idea of what companies and/or mutual funds that you are interested in diversifying into. For some essential Investing 101 tips, read "Call It Your "Buy My Own Island" Plan," in vol. 3, issue 7. In your retirement plan, it pays to know the defensive, as well as the offensive, game.

Gains in a volatile marketplace (which is what is happening today and over the past six years) are made in shorter windows. Having a strong position in cash in an overvalued and/or volatile market is one of your best defenses against a downturn, and allows you the position to buy low, should you choose. As you can see in the Hot News chart listed below, while there are 20 companies that have posted excellent gains for NataliePace.com readers, there are only two companies that you might want to consider buying (Sirius Satellite Radio and Yahoo!)! Investment Quality Trends reports that only 11% of the 303 Select Blue Chip companies they follow are undervalued, which coincides, historically, with market tops. (IQTrends.com is one of the top-performing, risk-adjusted, newsletters of the past 25 years.)

Internet Advertising has been one of the strongest areas of revenue growth over the last few years, fueling the emergence of the powerhouse, Google. What many investors are unaware of is that the investor's darling, Google, receives only a third of the page views of MySpace.com (which is owned by News Corp.), and less than Å the average minutes. No one comes close to Yahoo.

Source: comScore Media Metrix
(Note: comScore Media Metrix is a division of comScore Networks, Inc.)

Don't buy into hype on Airlines
Credit Suisse analyst Daniel McKenzie rates four of the five airlines under his coverage "outperform": AirTran, American Airlines, and U.S. Airways. While it appears that these companies will beat earnings this quarter, having oil above $70/barrel wipes out earnings surprises for everyone, except Southwest Airlines, in the next quarter. (Southwest has oil hedges in place through 2009.)

Be sure to read the feature article, "$72 Oil Will Sink Airlines" in vol. 3, iss. 7. Don't get too excited about near-term positive earnings reports before you read this article!

EDUCATIONAL OPPORTUNITES AND INFORMATION:
1. Higher Interest Rates. The Federal Open Market Committee raised interest rates for the 17^th consecutive time, to 5.25%. Basically, the economy slowed, mostly due to moderated consumer spending and a softer real estate market, and inflation heated up, mostly due to high oil and commodity prices. Business spending "remained strong," according to the Minutes of the meeting. "[FOMC] Participants interpreted the incoming data on orders and shipments of durable goods, positive readings on business sentiment, and continued high levels of corporate profitability as suggesting that business investment would remain a source of strength going forward."

While inflation has kicked in, the "wealth-to-income ratio" is well above the historical average, largely due to substantial gains in home equity over the last few years, which has allowed Americans to absorb the impact without a great loss of confidence. Inflation will continue to be of concern, largely due to the prices of oil and commodities, the constrained supply of both and the fact that consumer prices across many industries (not just those directly affected by oil and commodities) have risen. The FOMC clearly wants to pause with the interest rate hikes to allow "the effects of past tightening [to go through] the pipeline," but have also stated that they?ll respond to incoming data as needed. Wall Street rates that as a 60% chance that rates go to 5.50% at the August 8, 2006 meeting.

Click to review the minutes from the June 28-29, 2006 meeting. Be aware that sellers tend to dominate the boards with each interest rate hike.

The tentative meeting schedule for the rest of 2006 is: August 8, September 20, October 24, December 12, 2006. In 2007: January 30-31, 2007, March 20-21 (Tuesday-Wednesday), May 9 (Wednesday), June 27-28 (Wednesday-Thursday), August 7 (Tuesday), September 18 (Tuesday), October 30-31 (Tuesday-Wednesday), December 11 (Tuesday), January 29-30, 2008 (Tuesday-Wednesday). The fact that the Federal Open Market Committee has decided to increase the number of 2-day sessions from two to four is an indicator that there is double the concern over managing the economy in the coming months and years.

2. There is no Wealth without Health! Don't miss the NataliePace.com Chat with Pediatrician Dr. Jay Gordon on how you can raise Healthy Kids. Learn 10 Nutritional Tips that can eliminate ear infections, reduce asthma symptoms and much, much more. Log into the NataliePace.com chat room Thursday, August 17th, 2006 at 8:45AM through 9:30AM PST (11:45 AM ET).

Subscribers only. Register for 90 days free at the NataliePace.com home page now. Pass the word onto any friend who has a kid, particularly one who suffers from chronic ear infections, asthma or other symptoms.

Read Dr. Gordon's tips for healthy kids this month in the article: "Mother's Milk: It Does a Baby Good."

3. We'll look to add Citigroup in September. Waiting to see what the Hezbollah/Israeli conflict and the summer doldrums do to the markets this month. Rising interest rates and the current M&A mania are positive for Citigroup, which has both commercial and investment banking businesses, but interest rate hikes, combined with high oil prices and the summer doldrums, are tough on the markets.

4. 20 BIG WINNERS, even given the current terrorism panic, which keeps the companies featured in NataliePace.com at the top in Annualized Returns (according to TipsTraders.com), with over 50% gains each year.  This hot news article still has the proud honor of featuring twenty companies that have posted gains (some hot/some cool), 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 seems to be sweetening up, and has even added doughnuts to Coffee Bean's pastry case. Brewster's team is selling franchises in Asia.  Turnarounds are difficult to stomach, even the turnaround of the most popular sweet on the planet. Lawsuits and challenges remain. It's a question of whether or not you believe in the brand, now that the executive suite is in better shape.   RELM Wireless produced 20% gains since our last Hot News update. Sirius Satellite Radio and Yahoo are ripe for more gains, and we have highlighted both as potentially attractive to buyers.  Check back in September for any Back to School Stock Sales. Still love Jet Blue as a consumer, but the sector is in trouble until they figure out how to fly solar-powered planes.  Start looking now for September stocks to buy.  

Bottom Line: NataliePace.com is providing you with news and important information, but you need to consult your financial planner to determine your best strategy for using the information. That will depend upon your age, your retirement plan, and your risk tolerance and portfolio diversification. The stock portion of your portfolio is a higher risk classification, where you ideally seek to gain higher returns. As the NASD said in a recent investor alert, don't bet the farm on the stock market. NataliePace.com is NOT a brokerage and doesn't operate or act like one. We are an online media service with a mission of providing the news and information you need to make better choices in business, investing and personal prosperity. Always consult a trusted financial professional before buying or selling any security.

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

Hot Stocks
Investors who "never pay retail," note that highlighted stocks are trading at their 52-week lows or near the price featured in NataliePace.com's article. This 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.

Verisign was taken off of the Hot News list and added to the Cooling Off Stocks list effective 8.1.06. Sony and Sunoco were both great runs for the list!

Cooling Off Stocks (that may be in Profit-Taking Range).
Note: We may look to add some of these companies to our Hot News list again, if the price point should become attractive and if the outlook for the company improves. The companies listed in bold have recently been added to this cooling off list and/or may be poised for a decline in value. Investors who have them in their portfolio should read the recent news and consider whether it is time to sell and take profits, dump losses, short the position and/or simply weather the storms, while keeping the company in their long-term portfolio. At any rate, always consult your certified financial partner before making adjustments to your portfolio.

ADP and Gevity Human Resources were taken off the Cooling Off list effective 8.1.06.

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, and consider your long-term goals and strategies.

IMPORTANT DISCLAIMER: Information has been obtained from sources believed to be reliable however Women's Investment Network, LLC does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors

VISION: To build a global community of investors through a worldwide website, seminars, radio, television and print partners.
GOAL: To provide high-quality, first-run, ethical financial news, information and education, presented in an entertaining format, across all media (television, radio, print and online).
MISSION: To provide the news, information and education investors need to make better choices and to make investing as much fun as shopping.
PHILOSOPHY: Member Mosaic. Piecing together a more complete picture of the publicly traded company, one tile at a time, by valuing firsthand consumer experience, conducting evaluations of the executive team and lining up the numbers of the publicly-traded company with its competitors in a Stock Report Card.
For more information on NataliePace.com contact us at www.NataliePace.com, P.O. Box 1350, Santa Monica, CA 90406-1350 or 1-866.476.7442 (toll-free telephone number).

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