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Vol.3 Issue 8 August 1st, 2006
Send comments and suggestions or get more information
Quote of the Month:
"We do our
customers a favor and ourselves a favor if we make the DVD available
sooner. It combats piracy. We can spend less on marketing. There
will be a halo effect. By waiting, we have a complete new launch,
and that costs a significant amount of money."
Bob Iger, CEO, Walt Disney Company
Speaking to Michael
Eisner on Interviews, May 2006.
- War and Your
Portfolio. 11 Preparedness
Tips Against War, Terrorism and "Acts of God." by Natalie
Pace, CEO, NataliePace.com.
- Ask Natalie: A Trader Wants to Know Why High-Performing
Pros Don't Short When the Markets Overheat.
- Faded Blue
Chips: Why the Pension Crisis Could
Spoil Christmas on Wall Street. By Natalie Pace. Including 8
Ways to Protect Yourself Now and a Pensions Stock Report
- 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!
- 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
- Can Your Ivy Leaguer Balance
a Check Book? Financial Summer School for College-Bound Kids. By Carrie Schwab Pomerantz, chief strategist/consumer education for Charles Schwab & Co., Inc., and President of Charles Schwab Foundation.
- 25 Ways You Can Stop Global
Warming. By David R. Fried,
Editor, The Buyback Letter and Buyback Premium
- Women's Foundation CEO &
President Patti Chang Creates a Better World for Women and
Girls. Find Out How You Can
- Succeed. Despite. By Gary
- Be the Star of Your Own
Blockbuster. By Chellie Campbell. (Stop the Horror
- Will Double-Digit Corporate
Profits Fuel a Year-End Rally? By Paul Woods, President & CEO, Odyssey
Advisors LLC. Including a 2nd Quarter Stock & Bond
Market Score Card.
- While Bernanke Bumbles, Will
Further Rate Hikes Kill the Economy? By Meri Anne Beck-Woods, Chairman & COO,
Odyssey Advisors LLC.
- Real Estate Investor IQ
Test. You dream of Trump
Towers, but are you a budding mogul or destined for the
- Real Estate Buyer
Checklist. by Steve Dietrich,
President, Financial Research Group.
- Is it Time to Break Your ARM
Before It Breaks You? By
Kassie Welch, Mortgage Financial Consultant, United Pacific
- Real Estate Investor IQ Test
- 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.
War and Your Portfolio.
Pace, CEO, NataliePace.com.
11 Preparedness Tips Against War, Terrorism and "Acts
|Natalie Pace, NataliePace.com CEO and
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.
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.
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.
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.
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.)
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.
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.
buy defense stocks on the fly either. In March of 2003,
at the onset of the 2nd 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 1st 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.
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.
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.
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.
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
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
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.
A Trader Wants to Know Why High-Performing Pros Don't
Short When the Markets Overheat.
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
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
the kind words.
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.
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.
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.
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.
have a question for Natalie, please email her at info@NataliePace.com.
Faded Blue Chips:
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
America's Best Known Brands Sag Under the Weight of
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
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 train… 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
25 S&P 500
Companies Most Indebted to Pensions and OPEB
underfunded Pensions & OPEB
*Ford Motor Company
$1.818 B MC
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.
Eight Tips to Consider when Protecting Your Portfolio
from Pension Fall-Out
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.
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.
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.
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.)
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).
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).
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.
a New Blue Chip Portfolio for the 21st 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.
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.
Articles of Interest:
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
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
Top Ten Investing Mistakes.
Brokers and Lovers: It Pays to Pick a Good
Lessons from Enron. Power is Intoxicating. 11
Ways to Avoid Getting Drunk.
Mother's Milk: It Does a Baby
by Dr. Jay
Eliminate ear infections. Reduce asthma symptoms.
Learn How from the Doc Who Specializes in
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.
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!
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.
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.
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
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
* Green, runny
Blood tinged stool
Chronic nasal stuffiness
* Excessive abdominal
* Mimic of GER (gastroesophageal reflux)
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
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.
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 lessens and often
goes away completely when breastfeeding moms become
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
elimination is crucial. Long before you use cortisone cream, stop
all dairy. Stop peanuts and eggs, too.
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
breastfeeding mom's diet or changing the diet of an older child
eating solid foods will often lessen medical problems
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
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
Read more at:
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.
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.
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
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:
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
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
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.
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."
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:
Other Medical Experts on
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.
McDougall often cites milk's problems alphabetically:
(dairy is the leading cause of allergies in adults and children) and
continuing with a discussion of…
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
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
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
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
Read more at:
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
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 and… eat it!"
The kids respond with a hearty "eeeeew!" Even adults get it
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
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."
Good Nights! The Parents' Guide to the Family
Listening To Your Baby: A New Approach to
Parenting Your Newborn.
Good Food Today, Great Kids Tomorrow
DR. GORDON ONE-ON-ONE
Don‘t 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.
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
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
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.
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
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.
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.
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.
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
21st, 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.
vaccine is already available for use by doctors… 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
My daughter is
the young married woman and/or woman in a long term monogamous
relationship, would you recommend that she receive the
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.
recommend the vaccine to younger girls who are not sexually
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?
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.
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
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
insurance cover the cost of the vaccine?
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?
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
Do you know
how many women participated in the trials and if there were any side
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.
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?
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?
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?
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 1st 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,
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!
cases of HPV be caught and treated? Does this happen
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
Do you think
the vaccine will help prevent the amount of HPV cases you are
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.
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.
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.
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
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?
Schwab Pomerantz, chief strategist/consumer education for Charles
Schwab & Co., Inc., and President of Charles Schwab
Financial Summer School for College-Bound Kids.
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
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
— 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:
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.
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.
tips on teaching kids the basics of money management, visit www.schwab.com/moneywisekids.
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
by David R. Fried,
Editor, The Buyback Letter and Buyback Premium
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."
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!
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
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.
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.
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.
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.
saved reduces CO2 emissions by 20 lbs.! Saving 100 gallons reduces
CO2 emissions by 1 ton!
Five steps you can take in your own
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.
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.
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.
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
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
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.
letter on to everyone you know!
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
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.
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.
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.
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
Five steps you can take in your own
(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.
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.
Five benefits you will receive from taking
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.
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
ceiling fans and motion sensors, planting trees, etc. creates
sales at retail and jobs. This is a general benefit to the
feel good about yourself knowing that you are participating in
a worthy and needed cause that benefits all of mankind and future
warming will be a thing of the past. Go to RenewUs.org and watch this 3 minute movie and
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.
David Fried, Los Angeles,
free to send comments to email@example.com
useful web sites:
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
CEO & President Patti Chang Create a Better World for Women and
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
|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.
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
"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 work…
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.
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.
love and respect,
President & CEO
The Women's Foundation of
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
To support the Women's Foundation of
California, click here!
by Gary Kobat.
"The effort is only in the becoming, in the
purification of our character, in the reaching upward… Once the
situation is correct, union is inevitable."
|Gary Kobat Friend and Client Geoffrey Erickson
wins the Ogden Utah Marathon.
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
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
move… 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
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's… despite all
the mood swings in the other areas of your life.
So here you are... but understand something:
you're not done yet… to allow yourself to feel, to experience,
to laugh, to cry, to grow, to move from guessing - to knowing…
It is time… time
to make your move.
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: firstname.lastname@example.org. 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
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
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."
young man smiled. "I did pretty well for a while. I made it to the
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
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
Contrast that story with this
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
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
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
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,
too—until they settle down to have a family, if that is the norm of
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."
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
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 job—what 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 facts—or opinions? Are they
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
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.
Corporate Profits Fuel a Year-End Rally?
Woods, President & CEO, Odyssey Advisors LLC. Including a
2nd Quarter Stock & Bond Market Score Card.
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.
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
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
here's the stock market index and industry group scorecard for the
Source: Thomson One Financial
|Paul Woods, President & CEO of Odyssey
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
90 ay Treasury Bills
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
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.
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.
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
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
Bumbles, Will Further Rate Hikes Kill the
Anne Beck-Woods, Chairman & COO, Odyssey Advisors LLC.
|Meri Anne Beck-Woods, Chairman & COO, Odyssey
marked the 17th 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
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 ‘94 and another .50% in
February of 1995 (source: Bloomberg L.P.).
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
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
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
© 2006 by Odyssey Advisors LLC
Real Estate Investor
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!
Real estate is the highest performing asset over the long term,
beating out stocks, bonds and the money markets.
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?
percentage of loans in California is interest only?
dramatic increase in home values across the United States results
from:A. Population increases
B. Higher income &
C. Low unemployment
D. Falling interest
E. The existence of new mortgage products that allow no-down,
interest only and "liar's" loans
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
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"
The influx of foreign capital from wealthy immigrants (from the
Middle East, China and India) into the world's most free economy -
D. Low interest rates
important factor in successful real estate investing
A. Preserving the ability to sell at a time of your choosing
B. Location, location,
C. Locking in the lowest interest rate possible
D. Beautification & remodeling
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:
Tampa, Orlando, and even Riverside, CA have the following in
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
rates rise and inflation escalates, the most vulnerable areas
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
D. New York and Silicon Valley
recognize the below described financial instrument? (How much
would you invest in it?)
determines the amount and the length of time the contribution
can pay more than the minimum contribution but not
customer tries to pay less the financial institution keeps all
of the previous contributions.
in the account are not liquid.
in the account earn a zero rate of return and are not
customer's income tax liability increases with each
And when the
plan is competed no income is paid out to the
B. Bank saving account
E. Conventional Mortgage
improvements to your home, what is the maximum amount of cash you
can take out of your home as tax deductible?
Why do jumbo
loans usually have higher interest rates than lower conforming
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
Which type of
mortgage has the lowest minimum house payment?
A. 50 year
40 year loan
C. 30 year interest only loan
If you put
$200K down on a $400K, how much of the home is
A. $200K because you put a 50% down payment on a $400K home
B. It is 100% financed because you finance your down payment
switch jobs before retirement, you usually can choose among
several things to do with your 401(k). Which is the best
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
1. Four Hot Markets and Five That Are Burned
Out. By Natalie
Real Estate Warning: Speculators Are Being Suckered In,
While Insiders Are Cashing Out By the Millions. By Natalie
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 Safely… By Natalie
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.
Financial Network INC, San Diego CA.
guest lecturer at the Anderson Graduate School of Business, UCLA.
*Taken from Doug
Andrew, author of Missed Fortune 101
Real Estate Buyer
Dietrich, President, Financial
Research Group, and a former guest lecturer at the
Anderson Graduate School of Business,
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.
respects, the classic recommendations concerning home purchasing,
especially for young professionals and female entrepreneurs
re-entering the market, remain unchanged.
Lifestyle First — 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
2. Do the
Research — 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.
Risk/Reward of Your Investment — 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.
location, location! — 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.
— 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! — 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?
the interest rate — 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.
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.
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.
Manage Your Resources, Team and Decision Process For Success
— 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.
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
Is it Time to Break Your ARM Before It BREAKS YOU?
Welch, Mortgage Financial Consultant of United Pacific
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.
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.
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
Recent History of Prime Interest Rates
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.
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.
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
In deciding whether to refinance an ARM, consider these
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
• 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/.
Articles of Interest by Kassie Welch:
to Buy Your Dream Home? 6 Tips to Keep it From
Becoming a Nightmare. By Kassie Welch.
Real Estate Investor
are the highest-performing asset class. Over the long-term,
even bonds beat out real estate.
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®.
C. 60% were
Falling interest rates AND the existence of new mortgage products
that allow no-down, interest only and "liar's" loans.
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.
economics and demographics, quality of life, schools and safety.
the ability to sell at a time of your choosing.
purchases for investment or second homes are a very significant
portion of new home purchases.
like Las Vegas and Florida, where investment or second homes
are a very significant portion of new home purchases
transactional fees because it cannot be sold to Fannie Mae
or Freddie Mac.
C. 30 year
interest only loan.
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.)
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
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
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
Racking Up Returns
Despite the Wars.
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
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.
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%.
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
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 Ň the
average minutes. No one comes close to Yahoo.
Total Unique Visitors (000)
Total Pages Viewed (MM)
Average Minutes per Visitor
Internet : Total Audience
Source: comScore Media
(Note: comScore Media
Metrix is a division of comScore Networks, Inc.)
Don't buy into hype on
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
1. Higher Interest
Rates. The Federal Open Market Committee raised interest rates
for the 17th 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
from the June 28-29, 2006 meeting. Be aware that sellers tend to
dominate the boards with each interest rate hike.
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
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).
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
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.
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
I have listed the companies that I own under the column "NP
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.
Price when featured
Gains since original feature
Stock in a great sector.
this is only traded on the Toronto Exchange)
Cap: $68.9 million. Outstanding Shares: 45.1M. Biz: "Solves
the largest single liability facing the mining industry
worldwide -- metal contaminated acid water. Reduces and/or
eliminates sludge liability. Patented BioSulphide™ water
treatment process. Market includes $72 billion in cleanup
costs in the US and $6 billion in Canada. Q1 2006 revenue was
$700,000. Q2, Q3 and Q4 2006 revenue estimates are $1 million,
$1.4 million and almost $2M respectively. 2Q earnings: August
2006. Buy recommendation with a one-year target of $2.10 from
M Partners' analyst Lawrence Casse. Water treatment and metals
recovery for acid-contaminated water in mining ind. BioteQ's
customers include Jiangxi Copper (China), Breakwater
Resources, Falconbridge, and Phelps Dodge. This company is
only trading on the Toronto Stock Exchange's TSX. Go to
Bioteq.CA for more info. When we first listed the company last
year, it was a very high risk penny stock. Bioteq's board and
size lend more stability to this investment. Board includes:
Kenneth F. Williamson, B.Sc., MBA (Chairman BlackRock Ventures
Inc, Director Glamis Gold and Director Quadra Mining), Kelvin
Dushnisky, M.Sc., LLB (Senior Vice President, Corporate
Affairs Barrick Gold Corporation), and Ian Telfer, C.A.
(President and Chief Executive Officer Goldcorp Inc.).
3, issue 4, "Blockbuster Sale." Very high risk. Distressed
acquisition play in a heated up M&A environment? On 4.10,
Citigroup analyst Tony Wible said in a client note, "While we
believe the in store rental industry continues to be under
pressure from video-on-demand and online rental services, we
see Blockbuster as best positioned in this environment." He
gave BBI a Buy, with a target of $5.75. On May
14th, Institutional holdings of BBI increased
significantly. Jules Haimovitz was added to its board on
5.26.06. Haimovitz is currently vice chairman and managing
partner of TV production company Dick Clark Productions Inc.
He was formerly president of MGM Networks Inc., a unit of
Metro Goldwyn Mayer Inc., and served as president and chief
operating officer of TV programming syndicator King World
Productions Inc. Currently in a legal battle with NetFlix over
the right to rent movies through the mail, which NetFlix owns
the patent on.
Global Investors Eastern Europe
seems to be in the right countries, and, within those
countries, in the right, growing sectors. See vol. 2, issue 8.
Great way to diversify, as well as to add growth. Eastern EU
economy rocks. Western EU economy stalls. Your international
fund should reflect the difference.
season, half of the top 10 shows among young adults are on
ABC, including such great series as Lost, Desperate
Housewives, Grey's Anatomy and Extreme Makeover:
Home Edition. And Dancing with the Stars was
another great success for us, captivating audiences of all
ages." Bob Iger. Disney Shareholder Meeting. Disney/Pixar/ABC,
distributed by Apple iTunes. Hmmm… The most successful
animation film company meets the most successful family media
company meets the most successful new media device, the iPod.
Sounds like the happiest place on Earth to us. As the largest
individual stockholder, Steve Jobs may be the prime candidate
for the new Chairman of the Board. Laura Martin, CFA, of
Soleil Media Research Analysts, picks Disney and News Corp. as
the media large caps with the "highest option value." Soleil
also puts Google's value, based upon this same metrics, at
Blue Chip Hold for your long-term portfolio, but biotech is a
sector with a LOT of volatility. Investors who buy on "bad
news" in the volatile biotech sector see the greatest gains.
Impatient investors who demand to have their DNA now run the
risk of losing value if there is any report that casts DNA's
drugs in a negative light. Biotechnology is a volatile sector.
Popular #2 biotechnology company with lots of pipeline drugs
in the DNA-based treatment sector. But very pricey. P/E:
troubles in the already tight metals market, or investor panic
over inflation and terrorism could send gold prices even
higher than they currently are (which has been happening all
year). Inflation is great news for investors holding Goldcorp.
2006 production at Goldcorp is expected to reach 2 million
ounces at a total cash cost of less than $150 per ounce, with
2.4 million ounces produced in 2007. As of Dec. 31, 2005,
Goldcorp, including the Nevada Placer Dome interest, had 25.3
million ounces of Proven and Probable reserves. On 5.15.06,
Goldcorp announced record net earnings of $$92.4 million
($0.91 per share) for 1Q 2006, an increase of 3-fold over 29.5
million last year. 2005 gold production increased to 295,100
ounces, compared with 275,400 ounces in 2004. Gold sales were
288,400 ounces, compared with 217,500 ounces in 2005, at a
total cash cost of $88 per ounce. On 7.17.07, gold was trading
at $653.10, and at $637.30 on 7.30.06.
joined the S&P 500 on 3.31.06. Great Blue Chip Hold for
your long-term portfolio. Buy in at a better price, according
to Soleil Media Research Analysts, which puts Google's
value, based upon forward-looking revenue metrics, at
$362/share.. If you want to buy an IT play that is trading at a better value, look at Yahoo, Disney and News Corp., all of which are listed here. If you've quadrupled your money, profit taking and capital gains are attractive these days. Announced 4Q earnings on 1.31.06. Missed expectations, and investors panicked (as we warned they would). Google shares sank 12 percent in after-hours trading to $379.00, losing roughly $15.3 billion from their $128 billion market capitalization. Google dropped as low as $344.20 on 2.13.06. Very volatile. High price and high P/E of 56.1 (compared to Yahoo?s P/E of 24.30).
visited the Coffee Bean and Tea Leaf shops lately? Seen Krispy
Kreme doughnuts in the pastry case? A survey of just a few
shops revealed that the goods are selling great, and reflects
well on the new management team's commitment to bringing in
the dough to satisfy the sweet tooth of investors. KKD is
expanding into Asia - namely Macao, the Phillipines, Hong Kong
and Japan. No need to rush and buy until after the 1Q earnings
report (which is being filed late), unless you've noticed a
strong increase in doughnut sales, which may have missed the
analyst radars. In turnaround mode, and trading at 5 year
lows, though things have sweetened up since KKD hired Kraft
Foods veteran Daryl Brewster as president and chief executive
in March 2006. Taken off S&P Midcap 400 effective
10.27.05. The Company expects to report a net loss for the
first quarter of fiscal 2007.
Vol. 2, Iss. 7
Venetian, Sands Macao
(1st mover advantage in China's
results will be announced at market close on 8.2.06. Major
Growth stock, which means that the 52.90 P/E is high for
buyers, but not necessarily for holders of the stock (and
further upside potential means that a sell now may be
pre-mature). The Venetian, The Palazzo (2Q '07), The Sands
Macao, The Venetian Macao (1Q '07). 97% occupancy rates at the
Venetian. Las Vegas Sands Corp. is also making deals with
other Macao hotels to manage their casinos and show rooms,
including the Four Seasons, Intercontinental Hotel, Holiday
Inn, Far East's Cosmopolitan and Dorsett, Shangri-La Hotel
Macau and the Traders Hotel Macau, all on the Cotai Strip in
Macao. Earnings on 5.4.06: Net revenue for 1Q 2006 increased
31.3% to a record $530.4 million compared to $403.8 million in
the prior year's quarter. Net income in the 1st Q
of 2006 was $121.8 million, or $0.34 per diluted share,
compared to $7.1 million, or $0.02 per diluted share, a year
ago. Room revenues increased 5.8 percent to $91.1 million
compared to $86.1 million. The company's casino revenues in
Macau soared 63 percent to $278.2 million compared to $171
million during the same period last year due to market demand
and capacity increases at The Sands. Completing $2.5 billion
debt facility to develop "Asia's Las Vegas™" in Macao.
Trading in mid-range. Growth company. Volatile share price.
Patrick Lo, CEO, won the Ernst & Young's Entrepreneur
of the Year Award (on 6.16.06), NetGear is on Business Week's
Hot 100 list (for the 2nd year), and NetGear
was awarded Best Buy's Bravo Award for Business Excellence.
The NETGEAR Skype WiFi phone is available for pre-order
online for a price of $249.99. Skype currently has 100 million
registered users, according to the NetGear press release,
and the NetGear phone is the first Skype Wifi phone. An
October report from Jupiter Research predicted that 20.4
million U.S. households will subscribe to some form of Internet-based
broadband phone service by 2010. Judges from the IT Industry
and CRN readers rated NETGEAR Best in Service and Support
among crowded networking category that included companies
worldwide with both voice and data legacies in Dec. 2005.
2Q earnings on 7.27.06: $130.7 million in revenue, +21.5%
from a year ago, and 2.7% higher than last quarter. Net
income was $9.9 million +18.1% from a year ago. According
to CEO Patrick Lo, NetGear has 58 new products. CFO Jonathan
Mather is leaving on 10.31.06 to pursue other opportunities
closer to his home base in Southern California, according
to the company press release. A replacement is being searched
for, and a smooth transition is anticipated.
Vol. 2, Iss. 10
MySpace and DirecTv.
article, "News Corp. Enters New Media," from vol. 2, iss. 10.
Investors are starting to take notice of this undervalued
juggernaut, especially now that MySpace revenues are starting
to hit the books. MySpace is 2nd in page views
online, behind Yahoo! and 6th in ranking, according
to Comscore Media Metrix, which should start translating into
a major jump in ad revenue this year, especially since
MySpace's core demographic is the coveted 16-34 year olds.
MySpace is now a Top 10 Global Internet Brand with over 94
million registered users, making it the fastest growing
Internet site in the world. Media is in favor for 2006,
according to Smith Barney and Soleil Media research analysts.
Murdoch has been quoted as saying that MySpace and IGN
Entertainment will be his leading drivers of growth in coming
years. Mobizzo, Fox's mobile network, which pioneered text
voting on American Idol, launched on 2.27.06, and will
have micro-pay downloads of films and TV (including
Napoleon Dynamite, the Fox cult film), games music and
more. $59.58 billion market cap on sales of $24.65 billion,
vs. Google's $119 billion MC on sales of $6.1 billion. 3Q
revenues (5.10.06) increased to $6.2 Billion; net income more
than doubled, to $820 Million. Rupert Murdoch has some
talented, innovative leaders under his aegis, and they are
hitting home profits. News Corp. has completed $2.5 billion of
a $3.0 billion buyback program initiated last June, and
increased the stock buyback program to $6.0 billion. "This
$3.0 billion step up clearly reinforces our view that
repurchases of News Corporation shares are among the best uses
of our cash in today's environment," according to Rupert.
Murdoch is hosting CEOs and world leaders for a 5-day retreat
in CA to discuss "everything from geopolitics to the
environment to technology, the situation in the Middle East,"
according to Andrew Butcher, company spokesperson.
44. 1st featured Dec. 2002.
announced on 2.13.06 that Cisco will distribute Opsware's
products worldwide and that the companies will collaborate on
advanced network management solutions built on Opsware's
Network Automation System, which sent a rocket through
Opsware's share price. Net revenue for the year ending 1.31.06
was $61.077 million, 61% higher than last year's net revenue
of $37.8 million. Ben Horowitz, president and CEO of Opsware
Inc. reported on 5.24.06, "We are raising our revenue estimate
to $100 million this year based on our accelerating pipeline
and the high impact of our upcoming product releases."
Unfortunately, the net loss also doubled, from $7.2 million
last year to $14.75 million in 2006. Analysts are mixed on
whether the Cisco deal will bring profitability to this
six-year old company that has never turned a profit.
ThinkEquity analyst Ranjini Chandirakanthan lifted 2007
revenue estimates to $100.8 million from $94.1 million, and
predicted that Opsware will "be one of the fastest-growing
companies in our space." Jefferies & Co. analyst Katherine
Egbert writes that "The company has yet to demonstrate an
ability to profitably scale its business despite improving
services gross margins and strong license sales." Marc
Andreessen is Opsware Inc.'s largest individual beneficial
shareholder with approximately 10.1 million shares
beneficially owned. He cashed out $16 million (or about 2
million shares) at $8.00/share this year. May 24, 2006
earnings: revenue grew to $22 million, up 74% year-over-year
(most of it "non-EDS"). GAAP net loss in the first quarter was
$(5.8) million or $(0.06) per share. CFO Sharlene Abrams
resigned on 7.12.06. She will continue through Oct. 31 to aid
a smooth transition to new CFO David F. Conte. Ms. Abrams is
under SEC investigation for handling of options at her prior
company, Mercury Interactive.
near 52-week low.
NataliePace.com's 2005 Company of the Year 2005.
Vol. 1, Iss. 56.
2Q 2006 on 8.7.06 at 5:00 pm ET. Tarceva sales hit $103
million, according to the Genentech quarterly report, which
should mean good news for OSIP, especially if Roche and Europe
sales were strong as well. Morgan Stanley's Steven Harr has
raised the target price to $42 for OSIP, and the StockScouter
rating has jumped to a 10. Harr anticipates about $1.3 million
in 2006 royalties for OSIP's Diabetes drug, with royalties
expanding to about $43.8 million by 2010 (source: AP). Genetic
based "cancer pill." 1st and only of its kind.
FDA-Approved Tarceva for lung cancer last November. Canadian
regulators approved Tarceva on 7.13.05. European approval
granted on 9.21. Switzerland approved Tarceva in March 2005.
FDA approved Tarceva for use with pancreatic patients on
9.13.05. Submitted new drug application to Japanese FDA on
4.17.06. Partner of Genentech (DNA) and Roche. Good news. More
sales. Analyst recommendations. If you're still in, you're
likely to receive some reward, provided the Israeli/Hezbollah
War doesn't ruin the summer for Wall Street.
RELM dropped in early May on heavy institutional
investor selling (manic hedge funds), but has added back
gains of 20% in under
20 days (price: $5.96 on 6.28.06). Added to the Russell
Microcap Index on 6.30.06. RELM Wireless Corporation RWC
announced on 5.18.06 that it has received orders from a
federal government agency valued at $2.3 million. Of this
total, $1.5 million was for digital P25-compliant radio
products. The company expects to ship these orders in the
second quarter of 2006. According to Feltl & Co. analyst
Richard Ryan, RELM has
just 1% share of a domestic market worth $1.9 billion (and
the global market is eight times larger), so there is plenty
of room for growth. Coverage on MoneyCentral.msn.com on
1.18.06 means it might come up on more investors' radars.
In addition to providing communications for national security
needs, RELM can actively address communications needs at
hazardous substance facilities such as oil refineries, mines
and chemical plants.
has mines in Brazil, Chile and Argentina, but not Peru. Most
of RTP's mines are in Australia and the US. Any troubles in
the already tight metals market could send prices even higher
than they currently are. Metals demand is huge; supply is
limited; stock price is high. Analysts say pressure on price
should continue on high demand in China and Asia, as well as
the high cost of opening up new mines. Due to the commodities
crunch, gear, personnel and materials are in high demand and
at a premium cost, however Rio Tinto is a very well managed
corporation. Finds, processes and mines minerals: copper,
iron, coke (from coal), aluminum, titanium dioxide and
diamonds, and has increased investment in the Cortez Hills of
Nevada. Rio Tinto has been added to Jim Jubak's 50 Best Stocks
in the World List (eff. 9.05). Great press usually means more
buyers. Hang on, and enjoy the dividends, but don't get
sucked into buying high. As long as Jubak keeps RTP rich
in headlines, expect investors to keep buying high. Bought
back $378 million in shares during 1Q 2006, with $2.5 billion
planned for 2006/2007. RTP bought back $972 million in shares
in 2005/2006. Announces ż year results on Aug. 3, 2006. Go to
RioTinto. com to access the webcast.
$6.3 Bil Market Cap
Revenue tripled to $126 Million 1Q 2006,
and Sirius ended the quarter with 4,077,747 subscribers, the
2nd quarter it has led XM with new subscriber adds.
Loss was -$458.5 million, or ($0.33) per share, which CEO Mel
Karmazin says is attributable to Non-cash equity charges which
do not impact cash flow. Karmazin sees spectacular prospects
both near and long term for Sirius. Sirius signed Stern and
aired the Super Bowl; XM signed Oprah. The head-to-head
competition in the U.S. continues, with Sirius gaining serious
ground over XM. Howard Stern has paid off (big-time) in
subscribers and online hits for Sirius, but not new investors
(yet) for Sirius. Sirius announced on 12.27.05 that it topped
3 million subscribers, and then surpassed 4 million subs on
3.20.06, and is on track to finish the year strong with over
6.2 million subscribers, yet the share price is 50% off of its
52-week high. XM Satellite Radio ended 2005 with 5.9 million
subscribers. Originally XM projected 9 million by year's end,
but the company has cut its subscriber year-end forecast. XM
radio is installed in GM cars; GM is losing market share and
having biz cash flow issues. Could impact XM. Mercedes just
agreed to make SIRI standard on SL and CL models for 2007.
Nielsen//NetRatings report said the online traffic to Sirius'
grew 188%, to 1.9 million in March 2006 from 666,000 unique
visitors in the year-ago period. That beats XMSR traffic,
which turned in 1.69 million in unique visitors in March. They
announce 1Q earnings on 8.1.06.
Sohu entered into a multi-year advertising agreement with
leading online retailer, Joyo.com (owned by Amazon). 2Q
2006 Revenues were a record US $34.1 million, up 36% year-on-year.
Net income (GAAP) was US $7.2 million. Stock buyback program
up to $30 million, announced on 7.25.06. 2006 revenues were
increased by Sohu's exclusive right to 2006 FIFA World Cup
online video content, according to Chairman and CEO Dr.
Charles Zhang. "China Internet is the most dynamic
industry within the world's fastest-growing major economy,
in our analysis," according to Michael Tieu, a Brean
Murray Carret & Co. analyst. Tieu noted that while China's
online advertising market is a rounding error of that of
the United States, its ad sales are forecast to grow 40%
a year to about $3 billion in 2010. See NataliePace.com ezines,
vol. 3, issue 4 and volume 2, issue 9 for feature articles
on Sohu. Financial Times ranked Sohu in the Top 10
Chinese Global Corporate Brands on 9.6.05. (6 days after
our article.) Sohu was selected as the official sponsor
of Internet Content Service (ICS) for the Beijing 2008 Olympic
Games. See Sohu CEO in an exclusive interview on the Forbes.com
Video Network by typing in Natalie Pace on the seach box
at Forbes.com. Could be some bumps in the road between now
and Beijing Olympics 2008, which should ultimately be worth
it, with China still growing at over 9% in real GDP per
Price Em Eur & Mediterranean
See Vol. 2, Iss. 8
3, issue 4 and vol. 2, issue 8 for articles on why Eastern EU
rocks, while Western EU stalls. Great way to diversify, as
well as to add growth. Go global with the emerging countries.
Avoid the countries in the EU that are stalling in economic
See the feature interview with CEO and Chairman Rob McEwen in NataliePace.com ezine, vol. 3, iss. 2. This is a gold exploration company that is being traded off the big boards. If the choice is between this and the craps table, you might have better odds here (and more fun if McEwen strikes gold.) Note: U.S. Gold is not producing gold at this time. They are digging to find a new reserve. U.S. Gold closed the private placement of 16,700,000 subscription receipts at a price of US $4.50 for aggregate gross proceeds of US $75.15 million on Feb. 22, 2006. As of 4.14.06, there were 50 million shares outstanding, with a market capitalization of US $409.5 million. A company spokesperson said on 6.28.06 that U.S. Gold is working closely to secure a listing on the American Stock Exchange.
Vol. 2, Iss. 10
Yahoo is the #1 web site, with more traffic, page
views and time online than MSN or Google. Revenues were
$1,567 million for the 2nd quarter of 2006, a 26% increase
compared to the same period of 2005. Net income was $164
million, compared to $755 million a year ago. Free cash
flow for the second quarter of 2006 was $358 million, a
19 percent increase compared to $300 million for the same
period of 2005. Don't
be fooled by headlines that focus only on search. Yahoo
is still number one on the worldwide web, though Google
and Microsoft have the worldwide war chests, with market
caps of $129.9 billion and $281.9 billion respectively,
compared to Yahoo's $46.63 billion. So why is Google's market
capitalization over twice the size of Yahoo's? Do investors
really think Google is twice as valuable? Reuters reported
on 4.14.06 that Terry Semel, who took over as CEO of Yahoo
five years ago, cashed in Yahoo shares worth appx. $429
million between 2003 and 2005.
We'll look to add Citigroup in September. (Refer to the
M&A Mania article in volume 3, issue 6 for details on
Citigroup's appeal.) Waiting to see what the next Fed meetings
and the summer do to the markets. Citigroup reports 2Q
earnings on July 17th. Raising interest rates and
the current M&A mania are positive for Citigroup, but
interest rate hikes, combined with high oil prices and the
summer doldrums, are tough on the markets. Price: 6.19.06 =
$47.78… The Feds terminated their enforcement action against
Citigroup on 6.26.06. ($48.33 on
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
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.
Price when featured
In the most recent earnings report, Delta
Airlines, which is currently operating under bankruptcy
protection, reported owing $18.695 billion in total liabilities
subject to compromise. Of that, $8.873 billion is owed to
its pension plan and retirees, $5.768 billion in debt, $2.772
billion for aircraft leases, and $1.282 billion in accounts
payable. Continental owes over $10 billion in current liabilities,
long-term debt and pension funding. American Airlines' financial
obligations surpass $26.6 billion, including $5.1 billion
owed to pension plans (which is more than AMR's market capitalization),
according to the earnings report filed with the SEC on April
20, 2006. Will American or Continental get profitable without
restructuring under Chapter 11? The companies have stayed
afloat while most competitors have fallen. American Airlines
has such a strong brand, and so few investors are aware
of the depth of their debt, that AMR tends to run up on
any good news in the sector. It's not a slam-dunk short
or put. Reports quarterly earnings this month, which may
beat analyst earnings expectations. Don't buy into the hype.
Read the article, "$72 Oil Will Sink Airlines,"
in vol. 3, issue 7.
See the article Faded Blue Chips in vol. 3, issue 8.
According to Standard and Poor's Report on Pension Plans
(6.06), GM owes -$69.258 billion in pensions and other post
employment benefits (OPEB). General Motors' market
capitalization is $18.1 billion, and last year the company
lost over $10.95 billion.
volume 2, issue 6 for a feature article
near 52 week low.
pay the IRS $32 million to settle an employment audit
(3.16.06). Hired investment bank Lazard LLC to shop the
company to suitors and appointed board member Joseph L.
Fischer as interim CEO. Fischer was Former Senior Vice
President, Dial Corporation and Former Group President,
Corporate Controller, Johnson & Johnson. The FDA approved
the use of Erbitux on head and neck cancer on 3.1.06.
Results from study are impressive and the EU commission just
received a positive opinion from their committee, on 2.23.06,
to grant approval in Europe. New panitumumab drug from
Amgen is predicted to gain market share of colorectal cancer
in about three to four years, though it is not expected to
gain approval and product launch before 3Q 2006.
Swissmedic, the Swiss agency for therapeutic products,
approved Erbitux for head and neck cancer on 12.22.05.
IMC-11F8, a new drug that blocks the activation of epidermal
growth factor receptor, should have its clinical trial
enrolled by the 2nd half of this year. IMClone just
won the right to market outside the US and Canada in an
arbitration with Merck. Erbitux is one of the most expensive
cancer drugs available. Pressure on bringing the price of
Erbitux more in line with the other gene-based cancer
treatments could be forthcoming…
Vol. 1, iss. 55
issued a warning on "unscreened human tissue"
on 10.26.05. LifeCell reported a recall of products, and
took a charge of $1.4 million in 3Q 05 to reflect the recall.
LifeCell's product is in high demand and sales are growing,
however the story on some of the unscreened and untested
tissue it received from Biomedical Tissue Services is not
over. Lawsuits have been filed by some plaintiffs who unknowingly
received products from Biomedical Tissue services and the
impact of those lawsuits is still largely unknown. According
to the Associated Press, the FDA shut down BMT for not screening
the tissue for communicable diseases, among other violations.
$15.5 million in insider sales by CEO, CFO and controller
in last 12 months, most recent sales occurred in March '06.
2Q: Product revenues for the second quarter were $35.7 million,
up 60%, compared to $22.3 million reported for the same
period in 2005. AlloDerm(R) Regenerative Tissue Matrix,
increased 73% to $30.3 million from $17.6 million a year
ago. LifeCell has a great product in high demand, but the
potential fallout of the unscreened human tissue could be
more than most $688 million companies can take.
Cool List eff. 8.1.06
($18.00 on Cool list)
SEC is reportedly investigating for handling of stock
options (possible back dating). Verisign admitted that they
are doing an audit into the past, which may affect their
earnings and possible restatement of earnings.
Gevity Human Resources were taken off the Cooling Off list effective
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