by Natalie Pace, CEO and founder, NataliePace.com.

Includes a Company of the Year Stock Report Card.

Our Selection Process:
Over the past four years, we have become known as the premiere newsletter for picking breakout companies. Wonder how we identify so many great companies/performers in our annual Company of the Year designation? Below I give up a few of my secrets.

This year, I targeted the most dynamic and effective CEOs in the world. I then screened for only those companies that had doubled revenue over the last two years. That criteria eliminated some of the companies of our top CEOs, including Sohu.com, News Corp. and Disney, and left just five companies - Google, eBay, Suntech Power Holdings, Las Vegas Sands and Apple.

Las Vegas Sands was tossed out for having the highest price to earnings ratio, the highest debt and the loosest insider selling - almost double what the combined sales of the other companies were. Too bad the slot machines at the Sands and Venetian aren't cashing out $223 million over the last two months for Las Vegas and Macao casino visitors, instead of lining the pockets of Las Vegas Sands executive insiders. Insider selling of this magnitude, right at the time when the company is under pressure to finalize the terms of their proposed building of "Asia's Las Vegas" in Macao smells fishier than the Hong Kong harbor. This is further exacerbated by the many reports I've received from Chinese economists and investors who confirm that the government officials have intentionally slowed the pace of foreign companies building in China and Chinese provinces, like Hong Kong and Macao.

A key disclosure in Las Vegas Sands' November 9, 2006 earnings report convinced us to take Las Vegas Sands off of the Hot News list this month as well. According to the quarterly earnings report, "The Company does not have all the necessary Macao government approvals that are needed in order to develop the Cotai Strip developments." 139% gains since we first featured the company in July of 2005 works great for us. (For more details on Las Vegas Sands, Apple, Google, eBay and Suntech, click on the Company of the Year Stock Report Card, and read up on the Las Vegas Sands News.)

The Contenders:
With Las Vegas Sands sidelined, Apple Computer, eBay, Google and Suntech Power, all worthy candidates for Company of the Year, were left on the table. As you look for the new Blue Chips of your 21^st century portfolio, Apple, eBay and Google are some of the most stable holdings in Silicon Valley. If you haven't already bought these companies, flag them for your long-term freedom fund and buy them at the best possible price. (Few of these companies are bargains this month.) Suntech Power is a great growth stock for your trading portfolio and/or your "green" socially conscious allocation.

Why are we picking technology companies as the new blue chips? Google and Apple continue to dominate, innovate and monetize new cyber-space applications of the old industries of entertainment, information (news) and advertising. Over the last two years, Apple successfully redefined the way we listen to music and watch television, while Google has made online advertising more effective and less intrusive for millions of information-seeking web surfers worldwide. Google's new click-to-call and click-to-add to your blog options are the next wave of Internet advertising, and prove that the company is the leader in capturing eyes and wallets online, in ways that don't annoy their audience.

Not only does Google own the most popular search engine and video site (YouTube), but Google is also monetizing these new products more quickly than its peers. Google's sales have more than doubled since 2004, while Yahoo sales are up just 74% over the same period. Apple is doing the same thing for the music business. Apple stores are the most exciting retail centers of recent memory, while Tower Records, Wherehouse Records and more have all closed up shop. And the halo effect of newbies buying Apple computers because they love their iPod has become real revenue. Apple's annual sales in 2006 were over double the sales in 2004.

It appears as if these two companies don't have a lot of cross-pollination -- yet. But, the recent addition of Dr. Eric Schmidt to Apple's board should bring possibilities of future alliances to these two giants of industry. (Pixar's former CFO, Ann Mather, is on Google's board.)

The strong interpersonal relations between Google and Apple also extend to eBay. There is a saying, "Show me your friends, and I'll tell you who you are." Meg Whitman's alliances with Google (and Tom Online in China) indicate that she is powerful and poised for even greater success than she has achieved to date. eBay is leading the next wave of online advertising revenue worldwide, as Google's partner in the Click-to-Call innovation, which, like text-based search advertising before it, brings retailers and service providers to the online customer effectively.

Specifically, Google will become the exclusive text-based advertising provider for eBay outside the United States. In addition, eBay and Google plan to integrate and launch "click-to-call" advertising functionality that leverage both Skype (which is owned by eBay) and Google Talk globally in each company's respective shopping and search platforms. The companies said the financial terms for certain components of the deal involve revenue sharing, but did not disclose specific details.

"We're pleased to expand our long-standing relationship with Google to explore new market opportunities, like click-to-call advertising, that benefit both our communities of users," said Meg Whitman, President and CEO, eBay Inc. "People continue to evolve how they shop, communicate and advertise online. By combining the power of eBay in ecommerce and Skype in communications with Google's leadership in search and advertising, we can increase the usefulness of the Internet for shoppers, merchants and advertisers around the world."

"This agreement underscores how much we value eBay as a partner," said Eric Schmidt, CEO of Google. "Our technologies will allow us to connect users to relevant advertising across eBay's international properties. By working together to promote click-to-call functionality through Google Talk and Skype, we are offering advertisers another innovative way to connect with customers."

It's a good idea for eBay and Google to value one another. Both are consistently in the top 10 websites for unique visitors and page views. By linking arms and sharing revenue and technological innovation, they ensure the continued success and dominance of one another, likely at the expense of their peers.

Top 10 Web Properties as Measured in Unique Visitors
November 2005 vs. November 2006

Top 10 Properties: Page Views

Since she took the helm at eBay, Meg Whitman has perplexed the business world with her unexpected acquisitions. First there was PayPal, which has become a great revenue source for eBay, in addition to being a natural new division for the mega site. In 2005, there was the Skype acquisition.

What could the world's largest online auction website want with an emerging telecommunications company based out of Eastern Europe? It turns out that "click-to-call" is at least a partial answer to that question, but not the only answer. Ms. Whitman also leveraged existing Skype relationships in China to a full-fledged partnership with Tom Online (partially owned by China's wealthiest entrepreneur, Li Ka-shing).

China has 123 million Internet users and 400 million mobile phone users, according to the eBay press release. (These figures are considered conservative, as there is difficulty gathering reliable data in China.) Chinese consumers are expected to spend about $5.88 billion online next year, nearly 9 times what they spent in 2005, according to iResearch. eBay will own 49% of the new Chinese web site, with Tom Online owning 51%.

Company of the Year
The growth and maturation of the partnerships between eBay and Google, and potentially Google and Apple are some of the most exciting on the planet. And yet, it is the outsider Suntech Power Holdings (NYSE: STP) that gets the designation as NataliePace.com's 2007 Company of the Year.

It's hard to find even a diehard capitalist who isn't green these days. (Even Rupert Murdoch has been quoted as saying, "Everybody's green.") Business leaders, politicians and everyday folk alike are united in one common cause: Screw high gas prices. Let's tap renewable energy. As we indicated in the October 2006 article, "Sun Powers Whole foods," Suntech is the clear worldwide leader in photovoltaic solar panels. And China's commitment to subsidizing solar energy, which is key to an emerging (and expensive) marketplace, is much more high profile than anything President Bush is doing.

In March of 2004, Premier Jiabao Wen, the 3rd most powerful man in the Chinese government, visited Suntech, addressed Suntech staff and praised the company, ensuring government support at the policy level for what Wen called the "future of China's renewable energy industry." Additionally, Suntech's Board of Directors seats such heavyweight business leaders as Mr. Chengyu Fu, Chairman and CEO of CNOOC Limited, and president of China National Offshore Oil Corporation, a PRC state-owned enterprise. Since Premier Jiabao Wen's visit, Suntech has more than tripled revenue and cornered the market on the scarce silicon wafers that are needed to keep production up to the high levels of demand in 2007.

With the largest market capitalization, the highest sales (double that of SunPower's), the lowest price to earnings ratio (most of the solar energy companies in the U.S. are still cash negative), a corner on the silicon market and a Chinese labor force, it's difficult to imagine that any American-based solar energy company will catch up to Suntech's colossal lead. Sales are increasing between 27-42% each quarter. During this decade, solar energy may at long last become a viable renewable energy alternative, and if it does, you'll be glad you purchased your SunTech shares this year.

Full Disclosure: Natalie Pace plans to purchase shares in SunTech Power Holdings three days after the publication of this article, on January 8, 2006.

Other Articles of Interest:
Solar Powers Whole Foods, But Not the Whole World.
Google: The People's IPO.
eBay's Skype Outpaces News Corp's MySpace, with 113 million registered users.

Chief Executive Officers of the YEAR.

by Natalie Pace.

Extraordinary executives doing amazing things that are transforming the way we live, interact and communicate worldwide, and making their companies rich in the bargain.

1. Dr. Eric Schmidt, CEO, Director and Chairman of the Executive Committee, Google:

The first thing you notice about Dr. Schmidt's photo is that he isn't wearing a tie or a button-down. He's got on a polo shirt. The CEO of the most successful IPO in history is laid back, a team player, and that may well be the key to the phenomenal market lead in search and advertising revenues that Google has maintained over mega-giants, like Yahoo and Microsoft.

Where others think "competitor," Dr. Schmidt thinks "partner." Over the last few months, he has inked deals with MySpace and eBay, which look like master strokes in the race to provide ever more innovative ways to link users, businesses and advertisers in the most subtle, effective and desirable way. Google mastered search-based links, and is now moving into "click-to-call" and click to add options. Overnight, since the recent acquisition of YouTube, Google has already begun collecting revenue from the previously cash bleed start-up. All that without annoying the end user.

It's as simple as this. You add the trailer for Casino Royale to your MySpace page, and Sony Pictures pays Google and MySpace for the grass roots advertising. If you decide to "click-to-call," an option that Google and eBay are developing together, then eBay will get in on the revenue action. If you view a 30-second video, chances are there will be a very effective, but brief, advertisement at the end. And YouTube now offers streaming video of new films and television shows.

When Google launched its IPO in summer of 2004, experts argued whether the company could take a valuation equal to Yahoo or eBay. At today's market value of $140 billion, Google is as valuable as Yahoo ($34.74 billion), eBay ($41.92 billion) and News Corp. ($67.94 billion) combined. Revenue has tripled in two years, to an expected high this year of over $10 billion.

According to Larry Page's original IPO letter, "Google is a triumvirate," between Page, Sergey Brin and Dr. Schmidt. Whether Dr. Schmidt is the spokesperson of the three-headed decision-making team, or the humble team-playing mastermind, Dr. Eric Schmidt has ensured himself the distinction of being the only CEO in existence who has managed and grown a company from zero to over one hundred billion in under two years.

Dr. Schmidt has a Bachelor of Science degree in electrical engineering from Princeton University, and a master's and Ph.D. in computer science from the University of California-Berkeley. In 2006, Dr. Schmidt was elected to the National Academy of Engineering, which recognized his work on "the development of strategies for the world's most successful Internet search engine company."

2. Dr. Charles Zhang, Chairman and CEO, Sohu.com:

Sohu.com was one of the 1^st Beijing-based companies to be listed on the NASDAQ, in 2000. Most technology companies didn't survive the fall of NASDAQ, but Sohu did, and is now one of the most popular online destinations in the world and the official sponsor of the 2008 Beijing Olympics. The pathway from fledgling, battered visionary entrepreneur during the Internet cleansing of 2000-2002 to one of the most respected and powerful CEOs in the world today, reveals exactly why Dr. Zhang is the Chinese CEO of the Year. Dr. Zhang was born in the East and educated in the West, and he embodies an understanding of Western individualism and innovation, alongside the tradition, responsibility and work ethic of the East. He has proven himself to be more than capable of maneuvering and excelling in both worlds, and of promoting a bridge of commerce between two distinctly different world powers.

Dr. Zhang has a Ph.D. in experimental physics from the Massachusetts Institute of Technology. Before founding Sohu.com, he was MIT's liaison officer with China. As one of the first Chinese entrepreneurs to list on the NASDAQ, Dr. Zhang also pioneered the adoption of Western accounting standards for Chinese business.

Dr. Zhang reports that his team of programmers has found a way to stream media that will sideline the need for uploading video programming, which would eliminate millions of dollars in costs for sites like YouTube.com. He has also turned his focus away from the "grey-haired" mentality of short-term earnings, toward making Sohu.com the best user experience possible. Being the best technology-driven company in the world worked for Google, YouTube and MySpace, and Dr. Zhang anticipates the same success for Sohu. According to Dr. Zhang, "When you have a product that is 10% better than the competition, that will affect the user base and you will become 10 times more popular than the other one."

In 2007, the world's population of Chinese-speakers will begin experiencing Sohu as a major broadcaster of the Olympics and more. As the popularity with users increases, it is likely that Sohu's desirability with investors will also.

Sohu is not cheap, at a P/E of 31.60. There may be opportunities to buy in at a lower price, if you're willing to be patient. However, look to get in well before the summer of 2008! Also, read my candid interview with Dr. Zhang this month for more insight on the amazing transformation of the Chinese economy and what inspired the evolution of freedom in the minds of former Communist government officials.

3. Steve Jobs, CEO, Apple:

Steve Jobs made it cool to buy music again, and even found a way to charge us for downloads of our favorite television shows. Along the way, he managed to open up the hottest new retail shops and sell millions of Apple computers to former PC diehards. Revenue has more than doubled in the last two years at Apple, and the stock is up 160%. Over 65 million iPods have been sold and over 1.5 billion songs legally downloaded from its iTunes online store, according to the Apple website.

Additionally, Apple and Jobs successfully survived a SEC inquiry into the timing (and backdating) of options, and won a lawsuit from Apple Records demanding that Apple cease its iTunes product line and/or turn over a portion of the profits. "The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apple's stock option granting practices," according to Al Gore Jr. (the former Vice President of the United States), chair of Apple's Special Committee, and Jerome York, chair of Apple's Audit and Finance Committee. "The board of directors is confident that the Company has corrected the problems that led to the restatement, and it has complete confidence in Steve Jobs and the senior management team."

And now, as the ad on the Apple home page indicates, "The first 30 years were just the beginning. Welcome to 2007." Apple is all the rage with customers and traders alike. The stock, with a price to earnings ratio of 37.40 and a price of $84.84 is no bargain. Still it's hard to imagine that Apple will get less popular next year, or that you'll find it trading at a better price (unless there is a serious shock to the economy or world, at which point, you'll want to bite the bullet and buy a few more shares at the lower price).

4. Bob Iger, CEO, Disney:

He bought Pixar, the most successful animation film company of all time for Disney, and took a chance on the new media possibilities of the iPod at a time when his existing partners (television stations) were threatening to sue - all within the first few months of taking the top job. (Pixar created seven of the most successful and beloved animated films of all time: Toy Story, A Bug's Life, Toy Story 2, Monsters, Inc., Finding Nemo, The Incredibles and Cars. Pixar also won 20 Academy Awards and its films have grossed more than $3.2 billion at the worldwide box office to date.)

Both bets appear to be paying off. The television audience didn't fall off, even though more than 12 million downloads of ABC television programs and over half a million movies have been sold through Apple's i-platform. The hit dramas Lost, Grey's Anatomy, and Desperate Housewives continue to post high ratings and demand high rates for advertising on television, which should keep their television partners from blowing a gasket over the availability of the programming on Apple. These programs were three of the top five shows on network programming, and won ABC TV (a Disney company) the top primetime ranking for adults ages 18-49. As a result, Disney shares are up almost 45% since Mr. Iger took office from Michael Eisner, and the stock is trading higher than it has in six years.

5. Meg Whitman, President and CEO, eBay:
   
   

   Meg Whitman has perplexed analysts and investors during her tenure with her unexpected acquisitions. The purchase of PayPal was a brilliant move that few understood at the time. In 2005, she purchased Skype, a Voice Over Internet Protocol based out of Eastern Europe. What appeal does telecommunications have to the world's largest auction site? It turns out that the Skype acquisition helped with two key partnerships that eBay announced over the last few months - a strategic alliance with Google worldwide, and one with Tom Online in China.

   "We're pleased to expand our long-standing relationship with Google to explore new market opportunities, like click-to-call advertising, that benefit both our communities of users," said Meg Whitman, President and CEO, eBay Inc. "People continue to evolve how they shop, communicate and advertise online. By combining the power of eBay in ecommerce and Skype in communications with Google's leadership in search and advertising, we can increase the usefulness of the Internet for shoppers, merchants and advertisers around the world."

   "This agreement underscores how much we value eBay as a partner," said Eric Schmidt, CEO of Google. "Our technologies will allow us to connect users to relevant advertising across eBay's international properties. By working together to promote click-to-call functionality through Google Talk and Skype, we are offering advertisers another innovative way to connect with customers."

   Analysts and investors still haven't figured out exactly how Skype and click-to-call works and how much money can be pulled in as a result. But Skype is the fastest growing website in the world, ahead of Myspace and YouTube, and the ability to monetize the free long distance with products and now advertising, should start adding up in the coming quarters. Meanwhile, look for Ms. Whitman to continue to innovate and perplex her pals on Wall Street and in Silicon Valley. It's a strategy that alienates some investors in the short term, but stands to delight them at the end of the day.

6. Dr. Zhengrong Shi, Suntech Power Holding's Chairman and CEO:
   
   Suntech has the lowest price to earnings ratio, double the market capitalization of the competition, is experiencing 200%+ growth, racks up more sales than the combined strength of its competitors, boasts one of the lowest debt/equity ratios and has strong government and business support globally - from China, to Australia, to Japan and the U.S.
   
   Suntech's Chairman and CEO, Dr. Zhengrong Shi, was asked to join the International Advisory Committee of the New York Stock Exchange on August 10, 2006. In March of 2004, Premier Jiabao Wen, the 3rd most powerful man in the Chinese government, visited Suntech, addressed Suntech staff and praised the company, ensuring government support at the policy level for what Wen called the "future of China's renewable energy industry." Additionally, Suntech's Board of Directors seats such heavyweight business leaders as Mr. Chengyu Fu, Chairman and CEO of CNOOC Limited, and president of China National Offshore Oil Corporation, a PRC state-owned enterprise.
   
   Dr. Shi recently cornered the market on silicon wafers, and gave a blow to Evergreen Solar's ability to meet demand, when Suntech won the silicon supply contracts from MEMC Electronics.
   
   U.S. based media is starting to take note of Dr. Shi and Suntech. The New York Times recently named Dr. Shi as a "green" entrepreneur and New York Times Columnist Thomas L. Friedman warned that: "China's emerging green power entrepreneurs could clean our clock in the clean power business." As we note in our Company of the Year article (read it to find out which of these CEOs has the distinction of running the company of the year), we predict: "With the largest market capitalization, the highest sales (double that of SunPower's), the lowest price to earnings ratio (most of the solar energy companies in the U.S. are still cash negative), a corner on the silicon market and a Chinese labor force, it's difficult to imagine that any American-based solar energy company will catch up to Suntech's colossal lead."
   
   
7. Honorable Mention: Ross Levinsohn: former President, Fox Interactive Media.

   Ross Levinsohn discovered lightning in a bottle (MySpace.com), and then rescued it from a drowning mother ship (Intermix) at a time when Wall Street pros were warning his boss (Rupert Murdoch) that he was overpaying by about $400 million.

   On Friday, September 30, 2005, News Corp. completed their purchase of Intermix (MySpace's parent company) for $629 million. Insiders accused the Intermix management of selling out for a song, saying that the deal was a fire sale that was never shopped around town. Investment bankers joked that Rupert Murdoch was taking a bath.

   In under a year, MySpace became one of the hottest properties on the web, and is currently number one in page views, above Yahoo, MSN and Google. (Fox Interactive Media is the umbrella division of News Corp., containing all of the Fox websites, including MySpace, although Myspace is largely responsible for the number one page view ranking.) MySpace just signed a deal with Google that is valued at over $900 million. Hitting $500 million in revenue for the Fox Interactive Media division should be easy, according to Peter Chernin, especially since the MySpace/Google deal was signed.

Top 10 Properties: Page Views

Despite being the chief architect of the best acquisition in recent memory, Ross Levinsohn "resigned" from News Corp., effective November 27, 2006. Peter Levinsohn became President of Fox Interactive Media because, according to Peter Chernin, "At this point in FIM's evolution, Peter's adept leadership, keen knowledge of the complexities of the digital space and ability to work skillfully across multiple business lines makes him the ideal person to lead this important asset into the future." Mr. Chernin wishes Ross success "in whatever he chooses to do next and we hope there is an opportunity for us to participate."

Whatever Ross is looking to do, if you're looking for a chief acquisitions officer, this executive has a good nose for the next big thing, and the instinct and killer negotiating skills to get in and buy while everyone else is still rubbing their chin.

Other Articles of Interest:
Google: The People's IPO.
China Surpasses U.S. Internet Usage. Sohu.com Weaves the Most Promising Asian Worldwide Web. By Natalie Pace, NataliePace.com CEO and founder.
Sohu: You can Do Better Than Baidu With Other Google Acquisition Targets. Article and Stock Report Card by Natalie Pace.
Disney Media Networks Co-Chairman Ann M. Sweeney on Apple: Disney's "E" Ticket To The Future.
eBay's Skype Outpaces News Corp's MySpace, with 113 million registered users.
Solar Powers Whole Foods, But Not the Whole World.
Myspace: The Next Google
News Corp. Takes on Cyber Space With Acquisition of Myspace.com.
Myspace Conquers Google; Takes on World. Exclusive Q&A with MySpace co-founders Chris DeWolfe and Tom Anderson.

China's Evolution Toward Freedom.

by Natalie Pace.

A candid interview with one of the most respected CEOs in mainland China, Dr. Charles Zhang, Chairman and CEO, Sohu.com.

Dr. Charles Zhang Ringing the Opening Bell at NASDAQ © Copyright 2006, The Nasdaq Stock Market, Inc. Reprinted with permission

Sohu.com is one of the most trafficked sites in the world, and Dr. Charles Zhang, as the Chairman and CEO of the publicly traded company, is as respected and influential in Asia as Dr. Eric Schmidt (Google's CEO) is here in the U.S. As with many Internet CEOs, Dr. Zhang has lofty ideas about how his company will innovate and leave the competition in the dust, attract more visitors, and perhaps license the patented technology, as a result. Unlike most other Internet entrepreneurs, Dr. Zhang consistently delivers up results. So, what innovation is going to blow the world out of the water in June 2007? Read on to find out.

Under the aegis of Dr. Zhang, Sohu.com was listed on the NASDAQ in the U.S. back in 2000, became the official website of the 2008 Beijing Olympics, and is now preparing to become a major Internet-based broadcasting company, with streaming video, ala YouTube. As China ramps up to show its best face to the world in 2008, Sohu.com will surely play a big role in Chinese speaking communities around the globe. The company continues to post steady growth, and is on track to ring up 30% higher full-year revenues over last year. By as early as June 2007, the site is poised to become a major broadcaster in China, according to Dr. Zhang.

On December 5, 2006, I spoke with Dr. Zhang, discussing streaming media video, why grey hairs don't belong in the Internet company's boardroom, the new "Confucius" economy in China and more. Dr. Zhang's candid insights on the amazing transformation of the Chinese economy and what inspired the shift toward a more open market in the minds of former Communist officials, allays fears of a "conspiracy" and reveals instead the honest birthing of a nation evolving toward greater freedom. Discover what Dr. Zhang believes to be the most important contributions to the evolving mindset of government officials below.

Natalie Pace: Please describe the main areas that your company makes money these days for our readers?

Dr. Charles Zhang: Sohu.com is a portal. The portal provides news -- political, real estate, entertainment, sports - with a wide range of content every day. We have become the main source of news in China. We are also like Yahoo and Google, with search, email, participating in message boards and clubs and communities. Recently blogs have become very popular, and with broadband, there is video content. Sohu.com has become a multi-media platform and an interactive community platform.

So, you're looking to be the Chinese portal for social networking and video content - ala YouTube and MySpace - in addition to being a news provider and the official website of the 2008 Beijing Olympics?

Yes, eventually. It's the future of News Corp, Time Warner, YouTube, Yahoo and Sohu.

And yet the technology is very expensive. Myspace and YouTube are two of the fastest growing businesses in the United States. Getting them to turn a profit, when there is so much cost associated with the technology of running these media-rich sites, is the trickÉ

Yes, but in China, there is streaming media technology, which is leading the world. We haven't allowed individuals to upload in China yet, so there was more incentive to develop the streaming technology.

Are you concerned that another Chinese website or a startup might beat Sohu to the punch, like YouTube jumped into the market and beat all of the major US portals in under 18 months of doing business?

In China, the startups have all kinds of challenges because of language problems. In the U.S., with YouTube and MySpace, there is no language problem. With experienced persons on the board and management of these startups in the US, you can quickly rise up to dominance, and it is very hard for the traditional company, like Yahoo, to catch up. In China, the new startups have a high fatality rate because of the language issue, access to capital, investor relations and board management.

What are the new "policy changes" with the mobile providers and how will that affect Sohu revenue going forward?

The most important application of the mobile phone is really point-to-point -- sending messages. We have nothing to do with that. That is provided by the operators. We make money on the value added services - like ring tones and jokes. I think until there is more wealth, a bargain-basement mobile network is widely established, and advertising or other value-added services emerge, the wireless revenue will stay flat, or decline for a while. It is a less important part of our business, and only a quarter of our revenue now. Our business continues to be centered around the personal computer, with wireless and brand advertising. There are so many people here, so we are able to sell advertising. The mobile screen is too small for advertising.

However, with phones becoming handheld computers, advertising and other revenue has got to be just around the cornerÉ

The sheer size of the mobile usage is enormous. The number of mobile handsets is at half a billion. Most of the exposure to the mobile phone is 12 hours a day. You're probably by your PC only two hours a day. The PC has a more rich application, but we are experimenting with how to integrate it seamlessly to your phone. Reading, writing your blogsÉ The PC is like the aircraft carrier in the war, and then you have the F-16. The mobile phone is like the F-16. When you leave the ship, you are still communicating with the ship, and all of the activity that you set up there.

What is your traffic like?

We have 250 million page downloads per day. It includes Sohu.com, and six other websites.

What new products are you launching?

We are launching a new version of the search engine, Sogou, version 3.0, which is more powerful than the existing one. We'll retrieve 10 billion pages, and also a much more relevant and intelligent search than the existing one by the Google search engine. This is not just stand-alone search. It will also power Sohu, so that the text communities and the search engine will help to create multi level text and improve the reading experience.

HmmmÉ A new search engine sounds interesting, but slightly 2004. What about social networking and video?

Blogs are our MySpace strategy. Young people will use their blog as their own space. They will do their search and see their music, everything, on their blogs. We have this seamlessly integrated platform on a person's blog.

When do you plan to launch videos?

By June next year, we will create a good YouTube experience. For the last three years, we have become a technology driven company. Our focus on technology will demonstrate its strength and power. It's almost like a submarine that will emerge from the ocean in June of next year.

That's a very strong statement. So you've been navigating under the radar, so to speak, but may actually blow the competitors out of the water in June?

In the early years, we were good at marketing and brand building. We introduced China to the US, but we were weak on the Internet technology. Over the past few years, we've hired the best minds in China. This program will show our strength in June.

Will the U.S. companies be impressed enough with your streaming video technology to license it?

We are leading in China in video streaming. This technology is leading the world, and could be used by U.S. companies. YouTube costs so much because of bandwidth, storage and capacity. This would be eliminated by video streaming.

YouTube is free and doesn't have any advertising on the site. How will video streaming generate revenue for Sohu?

The streaming technology gives us the opportunity to be the PC driven, telecom and broadcasting platform that will replace the television. Because of the relatively less competitive nature of Chinese TV, which is state-owed, that gives us the opportunity to become a major broadcasting company.

Will video streaming and Sohu as the "major broadcasting company" be up and running for the 2008 Beijing Olympics? (Editor's note: Sohu.com is the official website for the Beijing Olympics.)

Definitely we will broadcast web casts of the Beijing Olympics on the website. Besides that, we'll have the function to generate maps, and offer hotel reservations and registrations around the world. 2007 will be a year with many Olympic related events, and the whole of China is really excited. Our cameras will be broadcasting many important events. One of the events is the passing of the torch. We'll report this all of the way, including many exciting, important places, and the selection of the runners. We'll report the sports events through three means: one is text-based media -- articles; secondly through interactivity, with blogs and communities; and third is the broadcasting. Our camera will film and capture all of these athletes talking and everything behind the scenes.

What has been your greatest challenge or disappointment and/or what would you have done differently?

We went public in the US in 2000. I think the biggest problem for an Internet company from China listed on the NASDAQ is that the traditional school of thought management to an Internet company doesn't apply, in terms of management, what kind of management is important, and what kind of background and training management should have. The costs, quarterly earnings, business model -- all of these traditional management styles apply to the Internet. But I don't think it should be like that. I think, especially across cultures, the NASDAQ and public companies' requirements and the investors' opinions, here in China are regarded as holy and serious. The people don't ask why, they just do it. People just do those things in hiring, in corporate environment. Everyone is trying to learn from U.S. companies, and hire people with grey hair and people who talk business and time span, but these go against the Internet company. This is missing the point. You are spending time on things that are secondary. What are most important are product and the user experience. When you have a product that is 10% better than the competition, that will affect the user base and you will become 10 times more popular than the other one.

Wow. You're right. You've just described the success of MySpace.com and their hip, young executive team.

If you care for this quarter and the next, and the other company creates just a better product, they will become ten times bigger! This is the biggest challenge for an Internet company in China, and in the US. I don't know much of what is going on with Yahoo, but I think Yahoo has a problem with its technology. If you look at China and the most competitive companies now and what they were doing five years ago, you have all these mistakes that were made and corrected. We are still in existence. Many companies make short-term mistakes and are just all gone. The Internet company is a different animal simply because of this exponential networking fact, and it should be managed differently.

What quality do you possess that has most lead to your success?

I'm a good person. I treat people fair. I have a team who really work hard for me and are very loyal. Second of all, I think through things very deeply. I try to understand things in a very broad framework -- from social phenomena, society, people behavior -- and I also try to understand myself. That enables me to identify and to understand why we were successful in becoming very famous and such a powerful brand. It gives me the ability to meditate and to change. It's why I want to change the company into a Technology-driven company. I have to make sure the [other] influence gets gradually erased -- the influence of the short-term talkers -- including restructuring the board and hiring the right people who understand this philosophy. Am I spending time meeting reporters and clients, or our engineers and our users to understand the product better?

You were one of the first mainland Chinese companies to become listed on the NASDAQ. Clearly, you are on the leading edge of the political and social change occurring in China. What prompted China to open up to a market economy?

The Internet demands China's freedom so much beyond people's imagination. This advancement basically means that everyone has access to information. This gradual education and change of habits happened everywhere, not only in the private sector, but with government officials, too. The government has a rule that if you are 60 years old, you have to retire, so the government leaders are very young. The officials are the same age as we are. They are very open-minded and they are trying to learn.

You've called the new focus of the Chinese government "Confucius." How does a Confucius government differ from Communism and Capitalism?

In China, everything works in harmony. We have moral obligations to the country, and it's like a big family. The market economy and Capitalism are really the common assets of humankind. Confucius is more of a philosophical approach -- how this person benefits versus society versus the collective group -- whereas the West is based on individualism. Even Communism was imported from the West. In the 1920s, when the Communist party was established in China, it was Mao and a group of Chinese intellectuals trying to save China. They just jumped onto the Communist Theory. Even then, it was still a Confucius government, where the individual is still considered as part of a collective nation.

How does this cultural ethos affect your management style and the productivity of the average worker?

In terms of commitment, first of all, the people are so diligent and are working so hard. The Confucius culture is one that you have to work hard to be recognized by your parents, ancestors, country and the Emperor. Confucius people are very driven. You don't persuade them to work hard; they automatically work hard. There is less individualism, and more self-sacrificing. But you have to understand that you don't solve things in a black and white way. You have to be delicate and subtle and care for people's feelings and try to solve things given a very important time frame. Deng Xiaoping did not argue that this government was Communism or Capitalism. He just did it and let time tell. It's like Eastern medicine: you look at the whole body. You try to see the whole system and let time work things out.

While the markets are opening up, there is still criticism about human rights and the freedom of the press in China. You are providing so much news. Do you worry about censorship and/or being arrested for publishing the wrong thing?

I'm not concerned about so-called freedom of the press. The freedom we enjoy is so much more than it was ten years ago. Now it is too much. We should ask the Internet companies to have a social responsibility. There is too much violence.

Other articles of interest:
China Surpasses U.S. Internet Usage. Sohu.com Weaves the Most Promising Asian Worldwide Web. By Natalie Pace, NataliePace.com CEO and founder.
Sohu: You can Do Better Than Baidu With Other Google Acquisition Targets. Article and Stock Report Card by Natalie Pace.

Comfort Zones: Stop Playing Safe. Stop Playing Small.

by Gary Kobat, life and fitness guru to the stars

...just because something feels familiar does not mean it's the most powerful use of your energy.

Gary Kobat with Jim Carrey and Will Ferrell

Comfort zones are life blueprints that we follow unconsciously. Without realizing it, we make choices that keep us in the familiar, even when the familiar may not be the healthiest place to be.
 
Comfort zones at some point stop serving us and become obstacles to our fulfillment and happiness; in fact they may lead to longer and longer plateaus or periods in the black hole.
 
Comfort zones are a state of mind, like:

1. avoiding conflict or discomfort,
2. blaming, drama, anger or victim thinking...

Nine times out of ten, we go on autopilot and gravitate to what we know, even if it makes us unhappy.
 
Have you ever sincerely wanted to change something in your life, but no matter what you did, you kept running into the same self-defeating patterns? Comfort zones live powerfully in our subconscious, with surface change not effective until we bring them out into the light.
 
When we go into a comfort zone we feel some immediate relief. We've learned the landscape well. We know how to navigate, sneak around, and take the short cuts.... Though we think we are moving forward because we are no longer uneasy, we're really not moving at all or sliding back. Comfort zones: if you're in one, get out, because you're slowly dying.
 
Many of us love working under pressure. We feel it keeps us focused. But have we ever finished a project of lower quality than we wanted because we ran out of time?

...exactly

If you feel stuck, have lost your passion, don't have a fire in your belly, chances are you are in a comfort zone. If you feel dull, uninspired, and are going through the motions, chances are you are in a comfort zone.
 
You don't always know you're in a comfort zone until things start unraveling. They start unraveling because the way we have been operating isn't serving our higher purpose. When we break free, we create opportunities for huge movement in our life. Passion returns. We reinvent ourselves. We redefine who we are.
 
Comfort zones are like blind spots; until we recognize them, we won't begin to move out of them. When you're in one, know that a friend, mentor, coach, teacher, or therapist can help point them out. But also know: you can't receive from someone until you're ready to give to yourself.
 
Once you detach from a comfort zone, get ready to change: to blast off... to make higher energy choices... You'll feel friction as you let go, so don't be surprised... It won't feel familiar, nor will it feel familiar to the other people in our lives. Actually, it will challenge them too, to let go of their own comfort zones either because we are inspiring in how we are approaching our change or because it has disrupted our interactions with them. Don't let other's discomfort hold you back.
 
Zero in on your comfort zones. Identify the ones that are not serving you anymore. Take the next step. Let go. Hang in the uncomfortableness for a while, and notice the amazing amount of new opportunities you have created.
  
Thank you for allowing me to do what I love...

Train smart.  Live, race, and recover smarter.
 
Gary.

Medicine and Vitamins:

by Marilyn Tam, co-founder, Us Foundation.

How A Dollar A Day Keeps Children Alive in Impoverished India.

Marilyn Tam at lunch with students in the Nandi Hills Village, India

The children came in groups of tens, twenties, thirties, forties and fifties. They came on foot on the hard packed potholed dirt roads, the older ones, ages eight or nine, holding the hands of the younger ones. Many of them walked barefoot the several kilometers from the eleven villages around Nandi Hills, Bangalore rural district, India to the HH Sai Maa Health Centre, as they owned no shoes. There are no buses nor could they have afforded to take one. They came with their teachers, smiling and eager to get some needed medicine and vitamins, and to learn about health and hygiene.

The children streamed in until the brick and cement hall was packed with over a thousand thin small bodies, all sitting quietly on the cool cement floor, wide eyed in anticipation of what we may share with them. Tears welled up in my eyes as I looked at the sea of expectant, upturned little faces. I could feel their hope and trust along with their unquestioning acceptance of what is. Turning to my colleagues, I can see that they too are overwhelmed. We are awed by the magnitude of the challenge and encouraged by the potential we have to make a difference in so many young lives.

We have come, a collaboration of four organizations, Us Foundation www.usfoundation.org , Airline Ambassadors International www.airlineamb.org , Humanity in Unity www.humanityinunity.org and Vitamin Angels Alliance www.vitaminangels.org to provide anti-parasitic medicine and vitamins for 25,000 children. I, as the representative of Us Foundation, the lead organization in this project, am responsible for organizing the program. Quickly I composed myself to share with them the parasite related health issues and the hygiene steps necessary to prevent re-infection. Working with the local team from Sai Maa Health Centre, we handed out the local language hygiene and nutrition picture flyers so that the children and teachers can take the information to their villages.

This is why we are here, to avert the loss of the next generation; for a mere US$1 we can ward off the major childhood diseases and blindness for one child. With little access to clean water and no organized sewage system in the Nandi Hills rural area; the probability of the children being infected with parasites is almost 100%. We brought anti-parasitic medicine to eliminate the parasites and multi-vitamins to support their health. The vitamins can prevent the children from illnesses that we usually only read about in the western world, rickets, scurvy, and most debilitating of all, blindness from a lack of vitamin A and other nutrients. With the medicine and vitamins the children have an opportunity to grow into a healthy functioning youths.

Speaking through a translator to the children and teachers, I am amazed by their attention and focus. With a thousand children jammed crossed legged on the hall floor, bony knees pushed up into the back of the child in front for over an hour, there was not a single disagreement. And they were attentive and interested. What they lacked in material wealth they had in a maturity and awareness that I have rarely seen in people of any age much less young children.

Dispensing medicine

The distribution of the anti-parasitic medicine began. The volunteers sat in a row to dispense to the children who filed by. We made sure that they chewed and swallowed the citrus flavored tablet before we thanked them and sent them on. Two doctors worked with their teachers to get the children's health history to track their health progress. The line moved quickly. Heartwarming and heartbreaking memories burned into my heart as I handed out the medicine. The children wore their threadbare school uniforms or their best clothes if they couldn't afford one for the occasion. Their hair, neatly combed for the boys, and braided with ribbons or flowers for the girls. Big brown eyes took up most of the thin sweet faces, watchful and shyly smiling or sober past their age.

Then the big event: lunch! We dished out the food to the children in long rows in the hall; again the calmness and congeniality impressed all of us volunteers. Serenely waiting for their food the children sat still, no fidgeting or rambunctious activities and they ate quietly and in such good behavior that it would impress Ms. Manners.

We closed the event with songs and chants, we laughed till we cried and then too soon it was time for the children to walk back to their villages. We gave the multi-vitamins supplies to the teachers to dispense with the children's school lunches along with extra anti-parasitic medicine for their village.

The next few days were spent introducing the anti-parasitic medicine, vitamin and health education program to parents and other villagers in the rural community. We handed out hygiene kits, health and nutrition flyers and lots of goodwill, which we got back manifold. The human connections dissolved verbal languages and customs; we were bonded with smiles and spirit.

From now on, November 14^th, International Children's Day, will have even more meaning as that was the day we launched our program. Starting January 2007 we have monthly missions scheduled to deliver more aid and to continue the health and nutrition education to improve and maintain the children's health. We have started with 25,000 children in this area and there are so many more we can help. At US$1 per child, less than the cost of a Starbucks coffee drink, can save four or five children. What a wonderful opportunity we have to make a dramatic change in so many people's lives for so little!

If you are interested in participating in a future mission, please log in www.airlineamb.org. For tax deductible donations to this program, please send your donation to the India children's project at:

Us Foundation
P.O. Box 5780
Santa Barbara, CA 93150
www.Usfoundation.org

Marilyn Tam is the founder of Us Foundation, the author of "How to Use What You've Got to Get What You Want," and former President of Reebok Apparel Products & Retail Group. Marilyn's vision is to add 25,000- 50,000 children to a children's health & education program in Kashi, India to launch in late MarchÉ Us Foundation will be collaborating with the same organizations, adding Save the Children, and eventually will be doing this program in 41 countries!

Overcoming the Last Hurdle.

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

Is the electric car ready to shock a few people?

Tesla Motors CEO Martin Eberhard discusses the Tesla Roadster With Gov. Schwarzenegger

At the turn of the last century, cars came in steam, electric, and gasoline versions. When Thomas Edison was asked which he favored, without hesitating, his reply was electric cars. They didn't have the vibration, noise, and smell associated with gasoline cars or the long start up times and limited range of steam cars. Had someone listened to him at the time, we might not now be stuck with a classic 19^th century technology and sending huge amounts of money to countries whose chief exports are petroleum and terrorists. For all its advancements, the internal combustion engine is still a noisy, heat-blasting, poison-spewing monster with too many moving parts.

The Conundrum
In spite of what the proponents of Proposition 87 promised in the last California election, putting a solar panel on your roof right now will have virtually no impact on the demand for foreign oil. Alternative energy technologies like solar and wind produce electricity only. The problem is that oil is overwhelmingly used to fuel our vehicles, with only about 3% being used to produce electricity. However, some amazing strides have been made recently in a technology developed in the 1830s, and there's now a light at the end of this tunnel.

Electric Power Generation by Fuel Type (2005)

Source: Energy Information Administration

The Electric Car
The obvious solution to clean technologies that produce electricity and the need to fuel our vehicles is the electric car. Although these have been around since the 1830s, electric cars haven't exactly caught on so far. Some automakers had a brief fling with electrics in the 1990s in response to a program from the California Air Resources Board to produce a zero emissions vehicle. This program was subsequently modified after complaints by automakers that it made no sense to produce these cars because of the lack of consumer demand, and most of the electric cars produced at the time ended up in museums. This of course touched off conspiracy theories and charges of automaker incompetence. However, the real problem was probably that battery technology was in its infancy and electric cars were unable to provide the performance and range that would satisfy anyone but the most rabid environmentalist.

Raising the Bar
As a result, Tesla Motors stunned a lot of people at a recent auto show. One observer summed it up by saying, "Until today, all electric cars have sucked." Martin Eberhard, the CEO of Tesla Motors, says traditional carmakers have failed with electrics for two reasons. According to him, these were marketed as "penalty boxes" for environmental do-gooders and gas-mileage-obsessed penny-pinchers. Second, they just didn't understand batteries. The Tesla's lithium ion battery pack gives it the power to hit 60 mph in four seconds, a top speed of 130 mph, and the ability to run 250 miles without a recharge. A one-hour charge is good for 80 miles, while it takes a 3.5-hour charge to go 250 miles. It even plugs into a wall socket at a roadside stop in a pinch.

Tesla's electric roadster is a big ticket item at $90,000-$100,000 depending upon options. Their strategy is to initially enter the high end of the market, where buyers are willing to pay a premium, in order to accumulate the funds necessary to broaden the product line. In 2008, Tesla expects to introduce a car designed to compete with BMW's 5 Series for about half the price of the roadster. Following that will come the development of a low cost family car. By the way, Tesla doubled their production target and is already sold out for 2007, which is bound to raise a few eyebrows in the auto industry.

Not There Yet
Although Tesla is claiming driving costs of around a penny per mile, that's the direct cost of electricity to charge the batteries. Tesla is also claiming a useful battery life of 100,000 miles. We're taking this with a few grains of salt, because with current lithium ion battery technology, that's pushing it.

The best thing about lithium ion batteries is their light weight and their ability to be formed into a variety of shapes and sizes. However, there are still some serious drawbacks. Even if never used, these batteries begin aging from the time of manufacture, so an older battery will not last as long as a new one. People living in Phoenix should note that these batteries also have the annoying habit of rupturing, igniting or exploding if subjected to high temperatures or direct sunlight.

From the standpoint of someone considering an electric car, another problem is that lithium ion batteries lose storage capacity over time. The capacity loss is directly related to temperature and the amount of the charge when stored. If your garage is a carport in the desert, don't even think about buying a Tesla Roadster as your range could be less than 30 miles after 5 years. Higher temperatures reduce storage capacity more quickly, but keeping the charge low when the car isn't being used will prolong life. However, the risk here is driving too far with too low a charge, which may result in batteries that are irrecoverably dead and have to be replaced.

Let's assume that most people keep their electric cars fully charged and the batteries lose capacity at the rate of 20% per year. That means the range of a Tesla Roadster is 250 miles the first year, 200 miles in the second year, 160 miles in the third year, etc. Even if these batteries can be charged the usual 750 times, the constant erosion in the car's range may make it necessary to replace the batteries even if there are some charges left. The cost of replacement is still the wild card, but using conservative assumptions and assuming a big markup on Tesla's custom battery pack of 6,831 rechargeable batteries, this car is probably still more expensive to drive than a gasoline car once the cost of batteries is amortized.

Getting Over the Last Hurdle
It's possible that a small company in Reno, Nevada may have radically changed the economics in this equation. In February 2005, Altair NanoTechnologies announced a prototype battery that has three times the power of existing batteries and can be fully charged in six minutes. In a recent test, the company claims their batteries went through 15,000 charge/discharge cycles while still retaining 85% of battery capacity. To accomplish this, the company removed the graphite from conventional lithium-ion batteries and replaced it with nanotitanate, a substance they developed. The batteries can operate from -50¼C to over 75¼C and appear to be safe even at extreme temperatures. They are currently being used in a new production electric truck made by Phoenix Motorcars in Ontario, California.

Phoenix Motorcars is planning to introduce a sport utility truck in early 2007, using the Altair battery. Its target market is fleet sales in California, 2% of which are required to be zero emission vehicles (ZEVs) by the California Air Resources Board. This truck carries a price tag of $45,000 and has a relatively small battery in order to allow the truck to carry 5 passengers and a full payload. It has a range of around 130 miles, goes from zero to 60 mph in about 10 seconds, has a top speed of 95 mph, and recharges in less than 10 minutes.

Later in 2007, Phoenix plans to introduce a SUV with a similar price tag. It will be offered in two configurations, one with a range of 130 miles and the other with a range of 250 miles. It's a safe bet the one with the longer range will have less room for passengers and storage, but will also be faster with a higher top speed.

A Seismic Shift
It should be noted that the estimate for the number of charge cycles comes from Altair and has yet to be verified with independent tests. In addition, since the cars using these batteries are new, there's no history to compare against. Phoenix Motorcars is conservatively estimating a 12-year life on the Altair battery pack, so the batteries may outlive the rest of the vehicle. Not having to replace the batteries and pay only for the cost of recharging is the type of seismic shift that may finally tilt the economics away from combustion engines.

Laying the Groundwork
American and Japanese automakers are quietly laying the potential foundation for electric cars with hybrid vehicles. We're huge fans of gasoline/electric hybrids as they proved it was possible to save money on gasoline without sacrificing comfort or performance. Hybrids also give automakers experience with the necessary batteries and regenerative braking technology that captures the energy used in braking to recharge the batteries while driving. All that remains is to remove the antiquated combustion engine.

General Motors has recently reversed their reversal of the 1990s and again announced plans for an electric car. Several other U.S. and Japanese automakers are also jumping on this bandwagon. An all electric Prius may be possible within 18 months, although Toyota has made no announcements. Beyond that, a small selection of electric cars from major automakers is expected around 2010.

Reservations
As previously mentioned, the Altair battery technology is unproven, and it will take some time to see if it really works. To remove the last roadblock for electric cars, Altair's batteries will have to perform as promised and become more widely used. Range is also still an issue for electric cars. They now can probably cover most driving done by most people on most days. Folks may still need another car for longer trips, although Altair's batteries recharge in about the same amount of time that it takes to fill a gas tank, so the wider availability of the appropriate electrical outlets would mitigate this problem. It's also hard to be thrilled with the places chosen so far for assembly. The Tesla is being assembled in England while the basic truck from Phoenix Motorcars comes from Korea. Unfortunately, automakers in both countries are notorious for poor quality. Finally, the selection of electric cars needs to improve dramatically for these to become more widely accepted.

The Future?
An electric car that costs significantly less to drive than a gasoline powered car, that recharges in the time it takes to fill a gas tank, and has the comfort and performance to satisfy American drivers is one of the most potentially important and disruptive technologies of the decade. Imagine a one-time purchase of solar panels (subsidized by taxpayers) that not only eliminates your electricity bills but also provides a lifetime supply of fuel for your car. Imagine telling the lunatics that control world oil supplies to put their oil where the sun doesn't shine and finally giving the Middle East the lack of attention it deserves. Imagine having to figure out what to do with all the money you aren't spending on electricity and gasoline. Like Martin Luther King said, I have a dream.

For disclosure purposes, it should be noted that Odyssey Advisors LLC has an investment in Altair NanoTechnologies (ALTI) for a small number of clients willing to tolerate very high risk.

Paul Woods is President and CEO of Odyssey Advisors LLC, an independent investment advisory firm specializing in equity and fixed income management for individuals, entrepreneurs, families, endowments, and non-profit institutions. He can be contacted at pwoods@odysseyadvisors.com

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

Copyright © 2006 by Odyssey Advisors LLC

Bonds: Your Nest for the Golden (Not Goose) Egg.

by Bond Specialist Meri Ann Beck-Woods, the Chairman and COO of Odyssey Advisors.

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

On December 15^th, subscribers chatted with bond specialist Meri Ann Beck-Woods, the Chairman and COO of Odyssey Advisors, about the myths and must-knows of how bonds can help to stabilize your portfolio.

Question: I understand that bonds may be a good, relatively low risk method of balancing my portfolio.

Meri Anne Beck-Woods: Bonds can act as a risk minimizer, with stocks as a return maximizer. But bonds can be risky as well, and, at times, more risky than stocks.

I'm trying to find the right style of investing in stocks. I'm very analytical, but I've also got an artsy "intuitive" side to me. I've been reading and researching the Investor's Business Daily style of investing. Do either of you recommend the CANSLIM method, or have you found something better for smart people with limited time?

CanSlim has a very good reputation when used with common sense and sound judgment. The devil's in the details.

(Editor's note: Paul Woods, a 30-year money manager veteran with superior skills in stocks, will be in the NataliePace.com chat room on January 10, 2006. That would be a good question to ask him.)

You're saying there are different types of bonds with different risks?

There are maturity risks and coupon and leverage risks depending upon the type of bond you buy.

I do not own any bonds. I'm a principal in a couple of small companies and very prone to taking risky maneuvers. I'm looking for bonds to balance my risk-taking behavior.

A bond ETF can give you diversification in bonds with less risk than an individual portfolio and a reasonable expense ratio of 15 to 20 basis points. Although, you do need to pay commissions.

So, many bonds are not a "buy and forget" type of investment? ETFs! Wow, that is nice. And it will have liquidity. I didn't know that they had bond ETFs, but it makes sense now that you've said it.

Correct. If you are an entrepreneur and take a lot of risk, you can get a lot of diversification with a bond ETF fund and not pay a lot and reduce your risk. Also, how soon you need your money back will determine the type of risk you want to take in a bond portfolio. The longer the maturity, the greater difference in price volatility.

Why would you go into a bond ETF instead of an equity ETF, if there is volatility in bonds and less return?

Bond ETFs are not a substitute for equity ETFs. They have a different purpose for fixed income investors who either don't have enough money for a full-sized bond portfolio and want diversification, or are aggressive and want to short bonds in a cost effective way.

I am 40 and have been an aggressive investor so far. I have zero percent bonds in my portfolio and plan to retire in 5 years. How much would you recommend as a percentage for bond ETF funds?

Probably 15 to 20%. It would depend upon your circumstances. If you have 100% equities at 40, you are still very young. A small position in one or two bond ETF funds would not be a bad idea, however.

Can you be more specific about bonds to go into? The U.S. dollar is predicted to be bearish. Have we outlived the European market? Do you recommend buying a bond ETF that has a smattering of all currencies? Is there such a beast?

The dollar has been strong for a long time and predictions about the euro surpassing the dollar have not come to pass. The Chinese yuan and other Asian currencies other than the yen will be stronger than the dollar.

How would you capitalize on this?

The AGG ETF has a small amount of Canadian, Mexican, Luxembourg and Italian bonds. But it has a longer maturity and risk factor. There are foreign bond mutual funds but the expense ratio is usually high as well as the management fee, when compared to bond ETFs at 15 to 20 basis points.

You mentioned shorting bonds. Where do you get the education on this and isn't it quite risky - something you are trying to avoid by buying bonds in the first place?

Shorting bonds would be risky, and would be for an aggressive investor doing market timing, which I personally don't recommend.

If bonds have a maturity date, then why does the longer ETF have a greater risk factor associated with it?

The average maturity of each of the bond ETF funds is different and can range from just over 2 years to 23 years. Remember ETF funds sell every day and never mature like a regular bond. You always have the market risk of not getting all of your money back .

Are the bond ETFs similar to the Barclay's iShares? Is there an iShare bond I can purchase?

There are 6 Barclays bond ETF funds covering all segments of the bond market.

Any one in particular that you recommend?

The expense ratio is either 15 or 20 basis points for each fund. The one with the highest Sharpe ratio or risk-adjusted return right now for one year is the iShares Lehman AGG bond fund, symbol AGG, with a .28 risk-adjusted return and one-year total return of 5.919. The Lehman 20-year treasury has a high one-year total return of 6.44 and a risk-adjusted ratio of 0.23. The lowest return among the bond ETFs has been the TIPS, the Treasury Inflation bonds. Usually, you want a higher risk-adjusted return, which is the return of the fund, less the 3-month Treasury bill return, divided by the standard deviation of the return of the fund.

Why not just buy T-bills with almost the same return and 0% risk?

T-Bills have had negative returns over time due to inflation. In recent years, they have had returns lower than the Fed funds rate. Right now, they have a higher return for 6-month T-bills, due to the yield curve being higher in the short end.

Is there a relationship between returns in real estate and T-Bills?

There is more of a relationship between the 10-year treasury note and real estate due to the setting and spread of mortgage loans.

Are you recommending only buying bonds for a one-year term versus long term bonds, and why?

Every investor has unique needs for income or capital preservation. I am not a market timer and would recommend different maturities for different people. 5-year bonds usually have a high percentage of return and a lower percentage of risk than the longer bond.

Money markets are returning close to 5%. How do you balance the need for bond ETFs in your portfolio, compared to the favorable marketplace of money markets these days?

Remember the pros are diversification in the bond market for less money. One bond costs a $1000 or more, whereas the most expensive ETF is only $108. This will give you diversification of from 24-124 bonds, depending on the bond ETF you choose.

That's great and I can trade them through my broker, right?

Yes. Dividends on bond ETFs average 4.2 to 4.6%, although they are taxed as ordinary income, unlike stock dividends.

What is an ETF?

Exchange traded fund - a fund compared to a bond index. There are also many equity exchange traded funds with the same advantages of diversification, although higher risk. Say you want a foreign fund with a lower expense ratio than a mutual fund. An ETF would work.

(Ed's Note: Paul Woods does a great job of explaining ETFs in the article, "What the Mutual Fund Salesman Forgot to Mention." You can find it in the archived NataliePace.com ezine, vol. 2, iss. 10. Also, you can find a good variety of ETFs at AMEX.com (the American Stock Exchange site) and at iShares.com, the Barclay's site.)

Natalie, how do you feel about market timing with ETFs, as in moving to bonds or cash when the market is strange, and moving to hot sectors, using ETFs?

Natalie Pace -- I think the whole purpose of bonds is to balance risk and to have a long-term view, so that you are not juggling your entire nest egg. As Meri Anne aptly points out, stocks are really the return maximizer. You can take on higher risk with a portion of your portfolio with stocks, and still sleep at night, if you are certain that you've got your assets covered with safer investments, like bonds and money markets.

And by the way, I don't recommend "market timing" with stocks either. I've been publishing a magazine for four years, every single month, through some of the toughest years in the stock market. We've always found one great company to feature, and the returns on those features have produced 45% annualized gains. That's the best on Wall Street without trying to get too fancy. My "stocks on steroids" trading strategy is simple: 1) Invest in what you know and love, 2) Pick the leader in the sector; 3) Buy low; sell high. A market downturn becomes a buying opportunity. A bull market becomes a selling opportunity. (As you know, I also believe you should be taking a long-term view for the 401 (k) of your equity portfolio.)

Oh my! Choose a good company and forget the timing, and use bonds to secure your nest egg?

Meri Ann Beck-Woods: Good work, Natalie. The bond market produces average returns more in the 5-10% range, except in a bull market. The cons of bond ETFs are the risk of not getting your principal back in total, and a brokerage fee for buying and selling. In addition, there is the expense ratio and not enough information about each individual bond available to the public, and no control over how and when you want your interest income.

Thanks Meri Anne! As you can see, Ms. Beck-Woods is a very experienced bond trader. She has over 35 years experience in the money management industry as a fixed income and balanced fund manager. She is the Chairman and COO of Odyssey Advisors, a money management firm for institutions and high net-worth individuals. Meri Anne is the former president of the Los Angeles Association of Investment women and a member of the CFA Institute. She is also a co-author of the book Inspiration To Realization and a lifetime member of the Network for Empowering Women entrepreneurs. She can be reached at 310 568-4700 or at her website at www.odysseyadvisors.com.

Information has been obtained from sources believed to be reliable however Odyssey Advisors LLC does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this material and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Copyright © 2006 by Odyssey Advisors LLC

Blue Chip King Kelley Wright on How to Earn Steady, Low-Risk Returns You Can Sleep and Retire On!

On December 6, 2006, NataliePace.com subscribers plumbed the wisdom of Mr. Kelley Wright, managing publisher, Investment Quality Trends stock newsletter. Kelley is currently outperforming all of his peers, by bringing in the top risk-adjusted returns on Wall Street at 13.1% annualized (every year) since inception, according to Hulbert's Financial Digest. (The stock market has returned 11.8% annualized over the same period, with more risk than the Investment Quality Trends stock newsletter.)

The Federal Reserve Board is meeting next week, on December 12, 2006? What do you think will happen?

Kelley Wright: The Fed is in a tough spot because of the dollar, so they can't go any lower. The bond market is screaming for them to do just that, however.

So you think in the squeeze, that they will just do nothing, with the one director dissenting again?

They will stand pat.

How about the new provision that companies must list their pension plan and other post-employment benefit obligations on the earnings reports effective December 15, 2006. How do you think that might affect Blue Chips like General Motors, Boeing, AT&T, etc.?

Pensions are a problem that has to be dealt with. The big, successful companies will find a way to make it work though.

My current portfolio is all lumbering Blue Chips with a disappointing run in past few years. I am considering moving into faster growth stocks. Any advice?

Big Blue chips are great investments; you do need a strategy though, to pick the right ones.

(Editor's Note: Kelley's stock newsletter, Investment Quality Trends at IQTrends.com, categorizes the Blue Chips, so that you can see which ones are ripe to buy, hold or sell. That might be a great way to compare your current holdings with those that Investment Quality Trends believes to be best poised for future returns. Their criteria are very stringent and they stick to it like glue.)

I'm an Investor's Business Daily type of investor, usually holding for many months. Do you have any feelings regarding the market continuing strong, versus a major correction in 2007?

I think there will be strength in the market until March, then we could see a slow grinding down turn.

Regarding Blue Chips, many of the speculators I know feel uncomfortable about the direction of the market, so they're in cash.

If you focus on the market of stocks, as opposed to the stock market, and buy high-quality issues when they reflect historical value, you will be fine.

How do you feel about the markets in general? Do you buy into the Santa Rally and the pre-election year rally buzz?

The Santa Rally is a seasonal phenomenon that is consistent. Whether we had our rally in September through November remains to be seen.

Blue Chips are nice, but they tend to be high-priced. Because I don't have a lot of cash to work with, I like to find lower-priced companies where I can buy more shares and benefit better from price moves. What is your experience with this strategy?

Tom, forget about price; focus on value. This is to say when you buy a stock that represents historical value, you will be better off than trying to find something that is low-priced. You are betting on capital appreciation that may not materialize. Everybody loves capital gains, but capital gains are never assured. A long-term consistent dividend trend is the best evidence you are invested in a profitable concern.

(Editor's Note: Tom, in order to have "more cash" to work with, you should also be diligent about tithing to your freedom fund. Make sure that you are depositing 10% of your gross earnings into your freedom fund each paycheck. For more "Freedom Fund" tips, read, "Call it Your Buy My Own Island Plan," from vol. 3, issue 11 of the NataliePace.com ezines.)

Yes, of course, historical trading range is a good indicator of value and I use buy/sell limits. When it comes to Natalie's stock picks, it is the ones with lower price that get my attention the most. Blockbuster, for example.

High quality issues with a consistent dividend record have repetitive patterns of low price/high yield and high price/low yield. If you buy in the former instance and hold until the latter, you will compound at a high rate of return with low risk and volatility.

I keep reading about inflation, the housing market, trade deficit, etc. How will these factors show up in the stock market?

The market always rewards a company for managing so well that they constantly increase the dividend. Growth comes with a rising dividend trend. Growth of income is also important because you can leverage that income growth into additional issues.

What are the IQTrends.com criteria for evaluating companies?

We have a fundamental approach to technical analysis. First we use a very Graham and Dodd like quality screen that eliminates about 96% of the market. Then we define their dividend trends using charts to identify their high and low dividend bands over 25 years. Our Criteria for Select Blue Chips consists of: dividend increases five times in the last twelve years; an S&P Earnings and Dividend Quality Ranking of A or better; 5,000,000 shares outstanding; at least 80 institutional investors; 25 years of uninterrupted dividends; and earnings improved in at least seven of the last twelve years.

How do you feel about the tech sector? Do you think that Akamai is overvalued?

We don't screen for sectors; we screen for quality and value. That said, Teleflex is the only stock in our Undervalued category that has a tech component.

How many companies do you follow?

We have about 300 issues in our universe currently.

Tell us your thoughts on natural foods sector and specifically companies like Whole Foods, Wild Oats and United Foods.

When you search for value as we do, what is currently Undervalued is generally out of favor, so "hot" companies or sectors don't usually hit our radar screen. The natural foods sector doesn't have any companies that meet our Criteria.

(Editor's Note: Remember that Blue Chips offer steady returns, dividends and they also stabilize your portfolio. Even if you're an options junkie, if you don't cover your assets with Blue chips and diversify, allocate, etc., you're likely putting too much at stake.)

The beauty of Kelley's IQTrends. Com newsletter is that it offers very nice returns. What are you at right now, Kelley? 13.5% EVERY YEAR for the past 25 years?

Yes, with about 25% less risk than the Wilshire 5000. Using the Rule of 72, 13.50% means your portfolio doubles every 5.33 years.

(Editor's Note: If you subscribe to Kelley's newsletter, only made $14/hour, but put aside 10% and saw those kind of returns, you'd be a millionaire within 31 years. That's the magic of compounding and stability.)

I'm not familiar with the term "risk-adjusted." Does this mean you have more liquidity, less volatility or what?

Risk adjusted means taking less investment risk to make a similar return. By example, if my portfolio returns 10%, it is equivalent to another portfolio earning 12.5% but with 25% more risk.

Is 10% an ideal return?

An ideal return is one that beats inflation and taxes with some left over to reinvest and compound.

(Editor's Note: The stock market has been returning about 12.5% every year over the past 25 years, so, for professionals, 10% return is underperforming. For novices, it's not so bad.)

Kelley, since more Blue Chips are concentrated in the Dow, how do you feel with the Dow at an all-time high? How many of your 300+ companies are ripe to buy? How many are in selling range? Is the Dow overvalued right now?

The Dow has a dividend profile of Undervalued when the yield is 3.0% and Overvalued when the yield declines to 1.50%. At about 2.16%, the Dow is in the middle of its value range. There are currently 32 stocks in our Undervalued category.

So that means, there are 32 stocks worth looking at to buy?

Not the whole Dow, but select issues like Citigroup and McDonald's.

Does your yield rule of > 3% apply to individual stocks or the Dow in general?

Just the Dow. Each stock in our universe has its own unique profile of Undervalue and Overvalue.

Using buy/sell limits, volatility has worked in my favor with some stocks, especially those in my Roth. I am hearing you say how volatility is a bad thing to be avoided.

Volatility is a trader's game, not an investor's.

Do you think there will be legislative relief to companies overburdened by pension obligations?

Tom, how did the companies get overburdened? If a company mismanaged their pension plan, who is ultimately to blame?

(Editor's Note: There is already a fund in the United States called the Pension Benefit Guaranty Corporation. When United Airlines eliminated their benefits-based pension plan, the PBGC picked up the slack. The problem is that PBGC is overburdened and underfunded currently, with no relief in sight. Additionally, someone who might have expected a certain amount in retirement based upon their pension plan promise, would be looking at a cap rate that could be significantly lower than what they expected. That certainly was the case with the United Airlines pilots, who are receiving only about half of what they were promised.)

Kelley, any last words of wisdom for our chatters?

Understand your needs and the what, when and why you are investing. Then plot a strategy to realize the rate of return you need to generate to meet those needs.

Do I include my primary residence as part of my portfolio, or do I leave that out when I consider how to diversify my investments?

Your home is an asset, but not a tradable one.

For an individual investor, do you see any problem with having a portfolio consisting of only 3-4 carefully picked stocks at any one time?

10 are better.

How do you determine when to sell?

Kelley Wright, Managing Editor, Investment Quality Trends Newsletter

(Editor's Note: The Investment Quality Trends newsletter does extensive analysis to determine when a stock is overvalued and ripe to sell. Check out IQTrends.Com, where you can go for a free tour of their newsletter and check out their criteria for evaluating stocks. I've been featuring Kelley Wright in my ezine for the past few years, and for Blue Chips, you really cannot get any better than the criteria/formula/screening of IQTrends.com. Blue Chips generate, for the most part, easy, stable money returns, and the IQTrends.com stock newsletter is well worth the small investment that you pay to receive Kelley's newsletter and research twice a month.)

 

 

 

The Perfect (Cyber) Broker: Missing the Greed Chip.

Learn how to tell if your broker is a shyster or a saint with one easy question, and a 5-minute online alternative to being shark bait.

Many Enron employees saw their golden eggs become goose eggs, as a result of one simple mistake - investing too much in the stock of their own company.* This year, the new wave of lawsuits aren't directed at shady CEOs, but at brokers promising riches beyond your wildest dreams. As corporations move from benefits-defined pension programs into 401 (k)s, which are handled by the employee, NOT the corporation, individuals are finding themselves plunked on Wall Street without the first clue as to where to turn and what to do. And, as happens to strangers all over the world, the first "native" offering to drive them around, may in fact be driving them down a dark alley where they'll end up stripped naked of all of their belongings.

*Editor's Note: The NASD recommends that you "should have no more than 10 to 20% of total investment assets in company stock." For more information go to the NASD.com Investor Alerts.

Unfortunately, the Los Angeles Times has recently identified three such victims -- former Exxon Mobil workers who took an early retirement and placed their nest eggs in the hands of an aggressive, but slick and likable, broker. Rather than the promised rich life, these men, all over 60, are looking at lawn mowers, as in ones they'll be pushing to earn enough to eat. As Bradley Simon, one of the bilked retirees says, "There are a lot of sharks out there. These boys in these suits and those nice ties - they aren't looking out for you."

So, how can you determine whether the person who is pitching to handle your nest egg (or perhaps already handling it) is a shyster or a saint? There is one easy way to tell. It is a red flag that any one of the three Exxon Mobil retirees could have seen. It is as simple as following the money.

Yes. All you have to do is to ask one easy question. "How much of my nest egg should I invest in the stock market?" The three Exxon Mobil retirees had portfolios that were between 84% and 91% invested in stocks, which is a BIG RED FLAG. At retirement, their broker had put these men ALL IN on the stock market. The rule of thumb is to have a percentage EQUAL TO YOUR AGE that is risk-free, so only 40% of the portfolios of these 60-year-old men should have been invested in the stock market, if the broker were truly looking out for them. (60% should have been in lower-risk investments, like money markets, T-bills and bonds.)

If you are 60 or older, and the salesperson in front of you promises you riches beyond your wildest imagination, and is planning on putting 90% of your nest egg in the stock market, you are dealing with a crook, a novice, or a self-interested salesperson. In this scenario, your broker is not advising you well, even if you are fully aware of the risks, and agree to this extremely aggressive portfolio. S/he is more interested in the fees and commissions that s/he is earning. An experienced professional would never place your future all in on the stock market if you were at or close to retirement. Even a modest drop in the stock market could crack your nest egg, give you a heart attack and/or reduce your living expenses! Last time I checked, great certified financial planners were in the business of keeping their customers healthy, wealthy and alive!

If you want to check up on your broker or certified financial planner, simply look at your brokerage statement. If you are all in on stocks and/or stock mutual funds, no matter what your age is, that is a big red flag. If you have a percentage of your portfolio equal to your age that is NOT invested in stocks or mutual funds, your financial planner is likely experienced, wise and looking out for your best interest. Note that bond funds and money markets are considered to be "safer" than stocks. Do not include the bond or bond funds in your stock calculations when you are evaluating your broker.

If your broker fails this asset allocation test, the next step is to contact the NASD and see if the broker has any complaints on file. If s/he has been this aggressive with your portfolio, s/he may already have a few complaints on file from other disgruntled clients. You can contact the NASD BrokerCheck team at NASD.com or by calling (800) 289-9999.

Cyber Brokers:
There is no substitute for a great certified financial planner. S/he can truly be a wonderful asset, can help you navigate tax considerations, can present retirement plan options, can help you outline and achieve your financial goals, and perhaps even play a role in educating you to be more market savvy. However, if you are new to the investing game, it will pay to be ultra-safe while you learn enough to interview and identify a reputable certified financial planner. It is very difficult for brokerage houses to monitor self-interested brokers (until after they are sued by a slew of unhappy clients), so even the most reputable brokerage firms in the U.S. are vulnerable to the unethical actions of any one associate. On the other hand, a cyber-managed portfolio is not subject to the whims and greed of humans, so this is a viable, and desirable option, especially for newbie investors who are comfortable with making transactions online!

(Editor's note: For tips on finding a great broker, read, "Brokers and Lovers: It Pays to Pick a Good One," in the Investing Edu section of the NataliePace.com home page.)

The online discount brokers offer various types of cyber-managed 401 (k)s. With as little as a few minutes of research, you can set up your portfolio, and, in some cases, have the plan rebalance according to a pre-set, personalized formula! See below for details. Note that in many cases you are able to rollover your existing retirement plan into a new brokerage with no penalty. A sales associate can easily identify if you qualify, and assist you with the details of the rollover.

Cyber 401 (k)s
Amerivest: To access, TD AMERITRADE's Amerivest online retirement plan, go to TDAMERITRADE.com. Click on "Plan with Amerivest." Try a guided tour before you commit, by clicking on "Try Amerivest Now," located on the right navigation bar. Within just five minutes, you can set up a fictitious portfolio that considers your retirement goals, your annual contributions and your risk tolerance. The plan is both balanced and personalized. The Amerivest plan also readjusts itself regularly to make sure that you are always in line with your goals and objectives. It also allows you to customize your investments. This blueprint can be a great gauge to see how a broker who is "missing the greed chip" might design your portfolio. You can try out Amerivest without giving any of your personal information, and the company makes it easy to set up the account if you determine that Amerivest is right for you.

Charles Schwab offers a low-cost retirement plan, but one of the options is an "All Equity Portfolio," which is exactly the type of portfolio that novice investors should avoid. The Schwab portfolio options are based upon the type of investor that you are, and rely upon you to properly categorize yourself. The plans are not personalized and don't rebalance regularly, but assume that you understand these basics and are capable of selecting the best portfolio for yourself and managing/rebalancing the plan yourself, or with the guidance of a Schwab associate. Self-directed, motivated and savvy investors can easily compare Schwab's portfolios, from the "Conservative" portfolio (which is 55% bonds, 20% large-cap stocks, 10% small-cap stocks, 10% international stocks and 5% cash) to the "Growth" portfolio (which is 40% large caps, 20% small caps, 20% international, 15% bonds and 5% cash), and more. Savvy investors and existing Schwab clients are likely to be more attracted to this product.

e*Trade's Intelligent Investing Optimizer is designed to allocate your assets based on your investment goals, time horizon, and risk tolerance, according to the website. e*Trade also offers recommended ETF and mutual fund portfolios to customers with $50,000 of investable cash, according to the web site. (The links weren't functioning when we tried to design our portfolio online, so we can't report on the ease of use of this product.) e*Trade has offices, and associates to assist you with the process. E*TRADE does not offer 401K services, only IRAs, which can be opened with no minimums and no fee, according to a company spokesperson.

ScotTrade has an easy to use calculator to determine how much your IRA and Roth IRA contributions can/should be, based upon your age. The ScotTrade Retirement Center also sells "Educated Investor" products, ranging in price from $24.95 to $89.95. According to a ScotTrade spokesperson, you can create a fictitious portfolio and navigate around the ScotTrade web site before you open an account. Good luck. We aborted our attempts after the site kept asking for personal information, which we weren't willing to provide on a test run. (The Amerivest trial run works without any personal contact information.) ScotTrade's spokesperson assures us that they do not sell the information they gather. However, we did receive a call from a Scottrade sales associate almost immediately after we aborted our attempts to access the site. The difficult time I had trying to access the retirement products online appears to be intentional, so that the company can get your contact information and assign you to a sales associate.

e*Trade, Schwab, Scottrade and TD AMERITRADE all offer a lot of information and education for self-directed retirement planning, and branch offices where you can get assistance, but, so far, only TD AMERITRADE actually makes it easy to set up a cyber-balanced portfolio that holds your hand and walks you through the process of balancing risk tolerance with your financial goals. With TD AMERITRADE's Amerivest product, you can have your money earning for you, while you become a more informed, sophisticated investor. There is no chance that your broker is a shark if s/he is a robot. The cyber-broker is actually considering your needs without any regard for her own!

HmmmÉ I never thought I'd think a computer was the best partner, but in this case, TD AMERITRADE may have found the first solution for America's newest challenge - protecting the individual investor, who must now navigate Wall Street on her own! Think of Amerivest as the perfect date, while you get educated enough to interview and hire the right certified financial partner for a long-term, rewarding relationship.

Full Disclosure: As of the writing of this article, NataliePace.com has NO advertising or consulting agreements with TD AMERITRADE, e*Trade, Scottrade or Charles Schwab. Natalie Pace DOES NOT own stock in any of the companies mentioned in this article.

Other Articles of Interest:
"Brokers and Lovers: It Pays to Pick a Good One," located in the Investing Edu section of the NataliePace.com home page.
From Football Coach to CEO: Exclusive Q&A with Joe Moglia, CEO, TD AMERITRADE. From NataliePace.com ezine, vol. 3, issue 10.
Putting too Much Stock in Your Company - A 401(k) Problem. An Investor Alert on the NASD.com website.
What the Mutual Fund Salesman Forgot to Mention. By Paul Woods, President & CEO of Odyssey Advisors, LLC. From NataliePace.com ezine, vol. 2, issue 10.

Baby-U-Deserve-Getting-Every-Thing (Budget).

by Chellie Campbell, author of Zero to Zillionaire.

We keep track of the score of the money game on the money scorecardÑthe budget.

Chellie Campbell, author of Zero to Zillionaire.

What's your response to the word "budget"? Do you have a sinking, shrinking, depressed feeling? Are you afraid if you count the money you're going to find that you can't afford the lifestyle you've become accustomed to? Or want to become accustomed to? Do you think your money will somehow work out alright if you just don't look at it too closely? Are you Cleopatra, the Queen of Denial?

Let me give you a tip: If you don't count your money, you are always going to be stressed about money. You won't ever be relaxed, or feel secure, or rich. You will always have a gnawing sensation that maybe some bill is coming due that you've forgotten. You won't know if you can afford to take that great vacation trip to Italy, or buy that gold watch, or how much of a mortgage you can handle. You'll drug yourself with the credit card crack so often the thought of sobriety will scare you silly. Visit a Debtor's Anonymous meeting if you don't believe me.

So first, we have to make friends with the word "budget."

Relax. This isn't advanced calculus, algebra, geometry or trig. This is one-plus-one stuff, and if you can't count that, how do you expect to count your millions? I heard recently that a woman reading a newspaper with the headline "Twelve Brazilian Soldiers Wounded" turned to her companion and asked, "How many is in a Brazilian?"

Budgets give you grounding in reality, like a scale does for a dieter. Only the dieter wants to see a lower number and we want to see a bigger one. If you don't count, you won't know where you are in your program. You won't know if it's working or not, or if it is producing the results you want.

One woman in my workshop came to class after doing her budgets and said, "The good news is I doubled my income last year."

Everyone in the room cheered.

"What's the bad news?" I asked.

"The bad news is I only increased my profit two percent."

It often happens that when we start making more money, we get uncomfortable. We don't know what to do with the extra money, so we get rid of it in order to return to our comfort zone. Yes, for some people, being broke and anxious can be the comfort zone. If she had been budgeting every month, she would have seen the path she was headed down sooner, and been able to take steps to reduce her spending before all that extra money was gone.

Budgeting can be fun when you discover that you are making more money and enjoying more riches. But you won't have any extra money unless you budget. It will disappear into the black holes of the Universe that suck up all the excess cash that people haven't budgeted. If you don't have a plan for it, it will disappear.

That's why so many lotto winners end up broke within five years. We shake our heads over these stories, but these poor folks have no idea how to be rich. They have no consciousness about how to manage large sums of money, so they spend it foolishly, give large sums away to family and friends, go on spending binges, and forget that they are going to owe taxes, or that they've incurred debts that are going to catch up with them next year. If you've always lived paycheck to paycheck, what's natural for you is to be scrambling to pay your bills. So that is the situation that they unconsciously set up for themselves to be in again. They're still brokeÑthey're just broke at a higher level. If your unconscious habit pattern is to spend more than you make, it won't matter how much you make. You'll always find a way to spend more.

Some financial planners try to avoid using the word budget and disguise it in more user-friendly verbiage like "spending plan" or "savings plan." It doesn't work. You know they're talking about a budget. So I have reframed the meaning of the word: I say it stands for "Baby-U-Deserve-Getting-Every-Thing." Now saying "budget" is like saying a positive affirmation. A budget is your declaration of your priorities for spending your money. Get happy with budgets, because they are your navigational chart to riches.

You are going to need three different budgets. I have complicated names for them: Low, Medium, and High. Each of these budgets is just your budget for one month. You design all three and then at the beginning of each month, you choose which budget you are on for the coming month. Anyone can be on Low Budget for a month! That's as long a commitment as you have to make. Be committed for one month, be disciplined for one month. Then perhaps, next month you can move up to Medium Budget. Maybe you'll get a raise or a promotion. Maybe you'll get a diamond. Maybe you'll get a $7 million contract. Lastly, you need to look ahead to what's in your High Budget. What are you going to buy when your big ship comes in? High Budget is a positive affirmation in action. Because if you don't have a reason to spend the money, you won't have a reason to make the money.

Save Money And Enjoy Life, Too
All these financial professionals whose books, magazines, newsletters, CDs, etc. exhort you to stop spending money on lattes and save your pennies seem to have missed the news that pennies aren't worth squat anymore. It's understandable because they make their living from getting you to save and invest your money with them rather than spend it on yourself now. That is fine to a point. We have to make sure that we have some money tucked away for the future when we might like to retire or not work as many hours empire-building as we did when we were young. But we've got to have some balance in the program and enjoy our spending, too. Twenty-nine people out of one hundred die before they reach retirement age. We need to spend some of our money enjoying life now.

My father worked and saved all his life, building equity in his home, a pension when he retired from his company, and carefully increasing his savings and assets. When he was 84, he sold the family home he had lived in for 46 years. My sisters and I discussed different housing options with him, and looked at retirement communities, condos, and assisted living facilities. He was very concerned about his budget, preserving his savings, and not spending too much money. I nudged him and said, "Dad, all your life you have done a great job at saving for your retirement. Well, this is it! This is the retirement you've been saving for. You get to change your habit now and spend the money." We laughed about it, but old habits die hard. And it feels so good and safe to have money saved, it's difficult to let go of it.

Be wise with your money. Save some, but not too much. Spend some, but not too much. Sometimes getting control over your money means pulling back. Sometimes it means loosening up. You need to be able to do both, and adjust what you do depending on your current circumstances. The fringe positionsÑall savings or all spending, all black or all whiteÑare never the positions that work well in life or money. A balanced life and a balanced checkbook mean negotiating the gray areas in the middle. Look at your budgets over the next few months and see what adjustments are best for you right now.

Then keep looking. And keep adjusting. It's a process. The more you do it, the easier it gets, and the more money flows more easily to you. And the more money you get, the more fun it is to play with your budgets!

Chellie Campbell is the author of Zero to Zillionaire and The Wealthy Spirit. She created and teaches the Financial Stress Reduction® Workshops on which her book is based in the Los Angeles area and gives programs throughout the country. You can sign up for Chellie's Ezine at www.chellie.com.

Women on Wall Street:

by Janet Hanson, founder of 85 Broads, a global women's network.

Balancing High Stress Careers and Family By Networking.

Excerpt from the book More Than 85 Broads, from the chapter "A View From a Broad" continued from last month.

One of the first things I asked our team to do was to run a network search of all members who listed the World Trade Center as a work address. Seven of our members listed either Tower One or Tower Two in their profiles. We reached out to all of them immediately. A few hours later, we received an email from Christie Millard. The subject line in her email read "blessed to be alive."

Janet,

Thanks to God, survivor instinct and luck, I am alive and safe. It was an absolutely horrifying experience, beyond anyone's worst imagination, beyond what any special effects movie could ever re-create, but I made it down from the 78th floor of 2 WTC. Not everyone in my office did though, so this nightmare continues.

It's been a really tough few days. I've met with Maggie Craddock before, might have to call her up again. I know I need to see someone, but I'm finding it hard to accept help from anyone when I am so much better off than so many.

Please let me know the status on other 85 Broads membersÑI can only assume there were a number of them in the WTC complex. It is just sickening to think what the families of missing people are going through.

Christie

By the end of the week, we had heard from six of our seven members who had worked in one of the two towers. Then on Sunday I received this email from Rachel Simon, followed by other emails over the next days and weeks.

Sunday, September 16, 2001

Janet,

I wanted to let you know that I learned this evening that Cathy Chirls, a member of 85 Broads, was lost in the attack. Cathy contacted me over the summer and we met for lunch. We talked about what life was like after Goldman, discussing work, commuting, choosing our kids' schools, family, etc. Cathy was a lovely womanÑwe connected at lunch and I remember thinking that perhaps I had found a new friend.

Cathy was eager to help others. I shared my story with her about being laid off at Goldman a few months ago. After describing my work experience at Goldman, she immediately had two people she wanted me to meet. At the time, I told her that I was taking the summer off and she could give me their names in Sept/Oct when I started my job search.

I knew that Cathy worked at the WTC and emailed her this week asking if she was OK. Friday evening, her husband responded that she was missing. I forwarded your email to him.

Just wanted to let you know....

Rachel

Wednesday, September 19, 2001

Janet,

It breaks my heart about Cathy Chirls. I was supposed to have lunch with her on Monday (because of our 85 Broads connection). We had to move it to Wednesday, never knowing that Tuesday would bring this horror. Thank you for getting the sad message out that she is among the missing. Please if you hear any more, let us know. I truly appreciate the extension of all the prayers and comfort.

Rosalie

Friday, September 28, 2001

Janet,

Thank you for the focus that you have given to Cathy Chirls. I knew Cathy when I worked at Goldman Sachs. After I was let go from the firm last March, she contacted me and we got to know each other better. She was incredibly resourceful in tracking me down and we started a friendship based on a common bond. We shared our thoughts about life on Wall Street for women, the challenges, the inequities, and how we could try to change certain things.

Although I only knew her for a short time, it was long enough to realize what a warm and understanding person she was. She was a woman just like all of us, who was juggling work and family. She was an experienced and bright Wall Street professional. She was a mother and wife. She was a friend.

Cathy knew the value of a network of professional women. She contacted me. She opened her heart to me and shared her candid and sincere perceptions.

I found myself drawn to Cathy very quickly. I know that we would have continued to grow close in a relationship based on honesty, respect, and support.

I was terrified for Cathy when the tragedy happened and when I saw the email from 85 Broads, my worst fears were confirmed. Cathy understood that women need to help each other. We were trying to help each other. Let's all keep helping each other.

With appreciation,

Ellen Luntz

After 9/11, wanting to be part of a "community" seemed to grow exponentially. Wall Street was undergoing a furious "headcount reduction" and many b-school grads weren't able to land a single job offer. The need to connect seemed more critical than ever. By 2002, our network had grown to over 5,000 members who lived in 150 different cities around the world.

Many milestones were reached that year. Alison Levine, 85 Broads member extraordinaire, was the captain of the first ever all-U.S. women's team to attempt to summit Mt. Everest. Although her team came within 280 vertical feet of the summit before being forced to turn back, it was an incredible accomplishment. Equally exciting was Alison's dedication of two new children's school sites in Nepal on behalf of 85 Broads and Room to Read, a wonderful nonprofit organization in San Francisco. The pictures of Alison in her orange 85 Broads cap with hundreds of school children was an absolute thrill. Not long after, 85 Broads member Kate Reid left her job at Goldman Sachs to teach at one of our two schools.

In September of 2002, it was I who needed to reach out to the community of women in our network. I had just been diagnosed with breast cancer and was scheduled for surgery on October 21. I sent a letter to everyone in the network imploring them to get a mammogram and a sonogram if they were "at risk." It was the sonogram done by Dr. Susan Drossman that saved my life, as my mammogram hadn't detected a thing.

What astounded me was the number of emails I received from other members of the network who told me that they had had cancer too, not just breast cancer, but ovarian cancer, uterine cancer, and leukemia. Almost every one of them had been diagnosed in their late 20s or early 30s. Each and every one of them faced life-threatening challenges and every one of them shared their courageous stories with me.

Just as astoundingly, the day after I got home from the hospital the phone rang. It was Joe Gregory, who at the time was the co-chief operating officer of Lehman Brothers. Joe and I had had lunch in July, and he was calling to see how I was doing. I had only met him once. He wanted to give me some information that he thought would be helpful and just to say, "Hang in there." I remember staring at the phone after I hung up and thinking to myself, now there's a guy who understands the power of networking. In a word, I was completely blown away by his thoughtfulness.

For the next six months, I struggled with the fallout of my diagnosis. Only weeks after I was out of the hospital, I was back in again to have my ovaries removed as the type of breast cancer I'd had made me a likely candidate for ovarian cancer. A month after that, I had two skin cancer operationsÑ one on my lip and one on my chest. The one on my face left a deep, one-inch scar from my nose to my lip. I had a three-inch vertical scar on my chest, which only added insult to injury. By the spring of 2003, my memory seemed to be leaking brake fluid due to the fact that I was now experiencing "traumatic menopause," a condition that occurs when your ovaries are removed and your body stops producing estrogen. I seemed to have virtually no short-term memory at all which made remembering who was in the network an almost unbearable challenge. And of course my own family got the brunt of my anger, depression, and frustration.

Throughout 2003, I met several times with Joe Gregory at Lehman Brothers because he wanted me to come work there. I told him I couldn't do that because I already had a "day job," which was to run Milestone Capital in addition to my growing network "empire." But by the end of 2003, he had talked me into coming back to the Street at the age of 51. In May of 2004, I left my home in Bedford for 745 Seventh Avenue. It had been a decade since I'd worked in NYC and over 15 years since I'd been in a large office building. I had a new focus and a new mission. I was going to help Lehman Brothers become the preeminent "brand" with women on college and university campuses.

The experience of meeting new people and trying to remember their names, titles, and locations was utterly terrifying. When I ran into people on the elevator or in the building, I would act very friendly while at the same time try to rummage through my mental "attic" for a name or any reference as to how I might know the person I found myself talking to. It was not unusual for me to meet someone at a meeting and a week later run into them again and have no memory of the meeting or the person. It is a surreal moment, which I have learned to move through as best I can. People will often look at me with astonishment as they think I'm either kidding or rude or both.

At the same time that I reported to work at Lehman Brothers, we launched Broad2Be, an exact replica of our Broad2Broad co-mentoring initiative, for women at some of the leading undergraduate schools. We piloted Broad2Be at Dartmouth and in May of 2004 we held a wonderful event there for women undergrads and our Broad2Broad members at Tuck. It was a huge success and for the first time brought together undergraduate women with women in business school, as well as current and former women from Goldman Sachs.

Before long, we had over 50 Broad2Be schools in our network and in one year over 1,500 women joined the network, regardless of career focus. What I found to be absolutely stunning was the amazing cultural diversity on the campuses, and for the first time, I felt truly blessed to have launched the 85 Broads network. I was meeting women from all over the world and even though I couldn't remember their names or faces, I had an inner joy that lifted my spirits and helped me forget my own personal issues.

At Lehman Brothers, I had the opportunity to spend my summers meeting all of the female interns, both from undergraduate and graduate business school. I hosted two or three roundtable discussions a day, which I found to be both exhausting and exhilarating. We spent the hour and a half that we were together talking about what these amazing young women were passionate about. And we laughed about being a woman in a male-dominated business. In some of my 2005 summer roundtables I had women in the group who had been at Lehman Brothers the prior summer who hoped that I would immediately remember and recognize them. They would say, "It's great to see you again Janet," and I would thank them and say, "It's great to meet you!" Good thing these fabulous young women had a sense of humor.

Some days I would be almost manic and bursting with energy and sparkle. Some days no amount of coffee could keep me from feeling and sounding narcoleptic. Often I would receive an email or two following a roundtable discussion from the women who had attended.

Sent: Thursday, August 04, 2005 10:20 AM
To: Hanson, Janet
Subject: My deepest gratitude

Good Morning Ms. Hanson,

I was one of the young women at the roundtable yesterday and would like to express my deepest thanks. I went into the roundtable ready to meet a managing director with an amazing background from whom I could learn many things. But little did I know I would meet an extraordinary woman whose words would stay with me for the rest of my life. Yesterday you told the group that we inspired you. Well I believe you inspired us much more than you could imagine. I walked out of that room stronger and more courageous than ever. I have not felt that secure in a long time. I would simply like to thank you for taking the time to reach out to us. I hope to stay in touch with you and share my career advancements with you for I am sure you can give me some amazing advice, although you have already given the group and me more advice than we could ever dream of. So once again, thank you for being an inspiration.

My deepest thanks,

Andrea

Over the past few years, people have often commented that I am a courageous soul. That is because I have the love and support of my wonderful family and the extraordinary friendship of a guy by the name of Rodney Eyles. I was first introduced to Rod in 1999, when he was in New York to play in a professional squash tournament. Rod was one of the greatest squash players to ever pick up a racquet. I loved his fierce determination, even though he was on the "back nine" of his career. He was 32 years old, which in squash is "geriatric" due to the pounding a player's body, takes on the court. Rod was interested in teaching young up and comers in the United States how to play the game and so in 2000, he began coaching our son Christopher, who was 9 at the time. I had never known a professional athlete before, much less one from Australia! Rod's view of the sport and the world were unique and when he came to New York to teach Christopher, he always seemed to bring the brilliant Australian sunshine with him.

Before long, I became obsessed with getting myself into the best shape of my life. I started running and swimming and watching my diet. My weight dropped from 150 pounds to 110 pounds. I was in "the zone" and loving it. I found that my outlook on life was changing, that I was seeing everything from a more positive point of view and even though I was almost 50 years old, for the first time in my life I felt the incredible "high" of being an athlete.

TO BE CONTINUED NEXT MONTHÉ

In her new book, More than 85 Broads, trailblazing superstar Janet Hanson introduces us to some of the most remarkable, courageous, and successful members of 85 Broads, a global women's network she founded in 1999. Women--and men--will want to discover "the power of the network" at every stage of their careers and lives.

Zen and the Art of Bungee Jumping:

by Natalie Pace.

Why Checking Your Ropes is the Key to Successful Investing.

Bungee jumping. Exhilarating and exciting, providing that you have the safety lines attached properly. It is the last moment of your life, if you don't. What does this have to do with investing? Are you leaping off the edge of the canyon with a safety line or on blind faith? Even veteran jumpers take a moment each time they jump to check the fundamentals of their machinery. It is impossible to survive if there is a malfunction with the safety gear. It's hard to be Zen about falling if you know you're in for a crash landing.

Check your safety gear first:
Ask yourself the following questions.

1. Safety Ropes: In your freedom plan (formerly known as retirement plan), is a percentage equal to your age safe from risk? For more information on asset allocation strategies, read "Call It Your Buy My Own Island Plan," from NataliePace.com ezine vol. 3, iss. 11. Also read the articles in the Investor Edu section of the NataliePace.com home page.
   
   
2. Look Before Leaping: Before trading stocks, bonds or options, have you educated yourself enough with information from a reputable source? (For options, use the Chicago Board Options Exchange at CBOE.com. for stock and bond investing, check out the free investor information from the National Association of Securities Dealers at NASD.com.)
   
   
3. Have a Professional Holding the Lines: Is the person advising you on your portfolio a trusted professional who has proven herself over a long period of time? Does s/he have any complaints with the NASD? (Check it out easily on NASD.com.) For more information, read "How to Find a Broker" on NataliePace.com, under the Investor Edu option.
   
   
4. Avoid Common Mistakes: I'm sure any reputable bungee pro will tell you not to eat right before jumping. There are a few basics to investing, too. Do you have at least 7 great reasons to invest in the company, or are you relying solely on hot tips, headlines, analyst recommendations and/or technical analysis? (If you had done that in 2000, you would probably have lost a lot of money in Enron.) For more information, read "Lessons from Enron," and "Top 9 Investing Mistakes." Both articles are located in the Investor Edu section of NataliePace.com.
   
   
5. Pick the Pro: You wouldn't want to jump off of the Golden Gate Bridge from lines tied to Uncle Joe's pickup truck. Have you lined up the competition of the company you are interested in investing in? Try filling out a Stock Report Card on the company you are interested in investing in. Line up the numbers, alongside the competition. You'll find sample stock report cards under the Investor Edu link. This simple discipline can help you to identify the leader in the sector. For instance, you're better off investing in Southwest (a company with oil hedges in place) than in Delta (a company in bankruptcy). (For my money, I wouldn't invest in any airline right now - at least not until they invent solar-planes. Additionally, investing in companies that are in bankruptcy means that your stock becomes worthless when they emerge from bankruptcy and issue new common stock.) However, given those two caveats, it's easy to see that Southwest is doing pretty well, while Delta is losing billions, when you simply fill in the blanks of the Stock Report Card. Oftentimes, there is a clear leader when you take the time to look at some basic numbers, and this 20-minute process has been the key to my enormous success as a stock picker!

May all of your leaps off the cliffs be exhilarating, Zen-like bungee jumping, and may you land in a pile of dough!

Wonder How Our Past Companies of the Year have Performed?

Taser International: 2003 Company of the Year. Peaked at 9000% gains. We took it off our Hot News list with 3000% gains. The company is still up 600% over the share price at the time of the feature.

Opsware: 2004 Company of the Year. +34%. Marc Andreessen's 2nd Billion-Dollar Idea (after Netscape).

OSI Pharmaceuticals: 2005 Company of the Year. -51%. Invented the miracle "cancer pill," Tarceva. Explosive sales didn't impress investors like we hoped they would.

MySpace: 2006 Company of the Year. Parent Company: News Corp. is up +35%. (Myspace made 60% additional gains from the time of our first feature in April 2005, before being purchased by News Corp.)

Suntech Power Holdings: 2007 Company of the Year. Solar energy company, based in China.

Click on the company name to go to the feature article. Sorry! Our ezines from 2003 (including the Taser article) have been removed from the website.

Still Leading Wall Street, Earning Almost 42 Cents on the Dollar Every Year.

by Natalie Pace.

Includes our Hot News on Cool Stocks List.

Natalie Pace, NataliePace.com CEO and founder

All of the companies featured in NataliePace.com are pulling down 42% gains on average every year, according to TipsTraders.com. The list below features 29 companies earning great gains, versus just five that are headed slightly south.

Man oh! Man! Does it pay to put hot models in lingerie during the busiest gift-buying season of the year. According to comScore Networks, the Victoria's Secret's web site sold enough goods to be ranked in the Top 10 retail websites between November 1 and December 26, 2006. Amazon still pulled in at number one - no surprise there.

Top Retail WebSites: Ranked by Dollars Spent

Non-Travel (Retail) Spending
Excludes Auctions and Large Corporate Purchases
2006 Holiday Season to Date (Nov. 1 - Dec. 26)

We were anticipating that more people would catch the (Product) Red bug this holiday season, but the red states opted for electronics, cheap duds (JC Penney and Walmart) and those beautiful, anorexic waifs in Victoria's Secret's skimpy clothing. Official sales reports will be released this week, so don't be surprised if Limited Brands Inc. (NYSE: LTD), the parent company of Victoria's Secret, sees a nice little bump in share price. The Gap experienced a 4% decline in sales (from last December), and reduced expectations for their full year as a result.

The (Product) Red campaign, which includes products from Gap, Apple, Motorola, Emporio Armani, American Express, Converse, and more, is a five-year campaign. Lingerie may have won in 2006, but there are many stars who support the vision of founders Bono and Bobby Shriver in eliminating AIDS in Africa. Don't give up on the project before we see what these visionaries have in store for 2007. In an odd twist of sentiment, shares for Gap were up on January 4, 2007, after the bad news on Gap Sales was released, and analysts were still giving the stock an 8 out of 10 positive rating, while Limited Brands, which reported an increase of 6% in net sales, saw their share price decline. "We are clearly disappointed with Gap and Old Navy's holiday sales and overall performance for the year," said Paul Pressler, president and CEO, Gap Inc. "Given that we did not gain the traction we had expected, the management team, with the active involvement of our board of directors, is currently reviewing Gap and Old Navy's brand strategies. We are committed to making the necessary changes to improve performance."

Performance:
Below is a sampling of features and highlighted stocks, along with their performance and the date of the feature article or the time when we highlighted them as a buying opportunity on the hot news list. As you can see, there are plenty of opportunities throughout the year to buy and sell and make great gains. Sometimes it takes a few months for the company to pop (as happened over the last year and a half with Las Vegas Sands), and sometimes, as in the case of MEMC Electronics and Suntech, it happens right away (though the upside in these companies may just be beginning).

So how do you become a member of the 42 cents on the dollar club? Read the feature article (the headline article) and the Hot News on Cool Stocks article in every ezine. (The Hot News list is usually the last article each month.) Check out the highlighted companies, and see if you want to buy or short them. Check out the new "deletions" to see if you're interested in taking your profits. Hold the companies that remain on the list but are not highlighted. (There are often buying opportunities throughout the year. Just be patient.)

Also, check out the mid-month update, which is always posted as a home page article on the Monday on or about the 15^th of the month. (You can also access the most recent mid-month update on the home page at NataliePace.com, in the Online Magazines, Mid-month Update links.) Finally, read the Investing articles in the ezine to learn some of the strategies that I use to identify great breakout companies. Eventually, you want to become your own stock picker, so, check out the Stock Report Cards, which are located in the headline article each month and in the Investor Edu section of the home page, and start putting in your favorite company, along with its competitors, and lining up the numbers.  There is almost always a clear winner when you consider sales, income, price to earnings ratio and recent news.

Remember that your trading portfolio is SEPARATE from your 401 (k) financial freedom plan. You don't want to be putting your nest egg all in on Wall Street. There are many articles written that address how to best allocate your assets to reduce risk and maximize gains.

Finally, remember that I am a journalist, not a broker. These are not buy/sell recommendations. You should always consult a certified financial planner before making any changes to your portfolio, to determine the best strategy for your individual needs.

Happy New Year!

Natalie

EDUCATIONAL OPPORTUNITES AND INFORMATION:

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

2. Online Chats: Check out the Calendar section of NataliePace.com regularly. There are two wonderful opportunities to chat one-on-one with millionaire money managers this month! Don't miss out. Enter the chat room now to make sure that you know how to do it and that you don't have any firewall issues preventing you from accessing the room. (You'll need your passwords.)

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

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

Hot News on Cool Stocks List

Highlighted Companies (Hot List):
eBay (EBAY)
Genentech (DNA)
Intuit (INTU)
OSI Pharmaceuticals (OSIP)
RELM Wireless (RELM)
Sirius Satellite Radio (SIRI)
U.S. Gold (USGL, just added to the AMEX & TSX.

RECENT DELETIONS:
Bioteq Environmental. (Microcaps are extremely vulnerable to changes in the weather. With builders and real estate falling off, so could demand for commodities, which could mean less money spent on environmental clean-up.) 144% gains are good enough for us.

Gap: With disappointing December sales and lowered expectations for the year end, GAP shares may go down in value. While we still believe in the PRODUCT RED, there is a good chance that there will be a better buying opportunity after the annual results are released and the company gets back on track with a new improved brand/marketing campaign.

Rio Tinto. With copper supplies increasing, building in the U.S. tapering off and building in China curtailed by the government, the copper futures have taken a beating this month. On November 10, 2006, copper futures plunged to a 4-ý month low. (See below for additional information on Rio Tinto.) 145% gains are good enough for us.

Las Vegas Sands: Removed on 1.1.07. 139% gains are good enough for us. $223 million in insider selling, just at the time that the company is under pressure to finalize the terms of their building of "Asia's Las Vegas" in Macao smells fishier than the Hong Kong harbor to us.

Hot Stocks List
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.

Sony (NYSE: SNE) and Sunoco (NYSE: SUN) both had great runs for the list! LifeCell (NASDAQ: LIFC) posted over 180% gains before being added to the Watch list. Bioteq Environmental (TSE: BQE) had 144% gains. Rio Tinto was removed on 11.15.2006 with 145% gains.

Recently removed from the Hot Stocks List:

Stocks to Watch
Great Companies. The companies that are listed are worthy of watching and might be worth buying in on opportunity (i.e. at a better price), if you believe the news on future potential. 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.

Cooling Off Stocks List:

Highlighted Companies (Cooling Off List):
American Airlines
Fannie Mae
KB Home
Toll Brothers

DELETIONS:
IMClone, Verisign and Yahoo.

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 currently poised for a continued 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. (The stocks on this chart are expected to go down in price.)

The following companies were taken off of the Cooling Off list effective 10.16.06. Verisign (+15%). IMClone (-11%). Yahoo (-28%). (The cooling off list anticipates that a company will lose share price value.)

Please note: NataliePace.com does not act or operate like a broker. We are a media and information center. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations. ALWAYS do your research and/or consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.

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

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