by Natalie Pace.

Includes a "Smart Meter" Stock Report Card.

United Nations Secretary General Ban Ki-Moon and California Governor Arnold Schwarzenegger toured the corporate headquarters of Echelon Corporation on July 27, 2007.

Echelon Corporation is a "green, smart meter" corporation that helps utilities, cities, corporations and even consumers to control and reduce energy use. According to a company press release, Eddie Bauer has seen a one-year return on investment and nearly a 20% reduction in energy costs through the installation of an Echelon building control system in its fulfillment center. McDonald's is incorporating Echelon software into its new kitchen. The city of Milton Keynes in the United Kingdom is using Echelon's technology to remotely control and monitor 400 streetlights in the city. An additional 10,000 streetlights are planned over the next three years because the new system has reduced energy usage by 40 percent, increased security and safety in the city and reduced maintenance costs, according to an Echelon press release.

So, Echelon was clearly gaining momentum before Governor Schwarzenegger decided to drop by for a tour of the corporate headquarters with his buddy, United Nations Secretary General Ban Ki-Moon. But it appears that the Governator has bigger plans - of the worldwide dominion ilk -- for Echelon.

"The Secretary-General has made climate change one of his top priorities at the U.N. and has taken swift action, calling for world leaders to work together to develop a global consensus on fighting global climate change," said Governor Schwarzenegger. "A critical part of the global solution must address the needs of fast-growing economies like China and India and we have innovative technologies to make that happen right here in California. I am eager to show the Secretary-General our state's advancements in technology that may help to reduce emissions and hope we can work with the United Nations on their commitment to building a global solution."

According to the Energy Information Administration's International Energy Outlook 2007, emerging economies, like China and India, became bigger polluters than the U.S., U.K. and Europe for the first time ever in 2004. The EIA divides countries into two classes, namely the Organization for Economic Cooperation and Development (OECD) economies (the US, UK, Australia, Europe and other developed countries) and non-OECD economies (mostly emerging economies, like India, China and Africa). From 2003 to 2004, carbon dioxide emissions from the non-OECD countries grew by almost 10 percent, largely because of a 17-percent increase in coal-related emissions in non-OECD Asia, while emissions from the OECD countries grew by less than 2 percent. In 2030, carbon dioxide emissions from the non-OECD countries are projected to exceed those from the OECD countries by 57 percent.

Clearly, while the U.S. and other developed nations should be reversing the carbon footprint, it is as much of an emergency to also assist emerging economies in reducing theirs. During the tour, Governor Schwarzenegger commented that Echelon was "clearly one of the answers" of global warming. According to Governor Schwarzenegger, "California's green industry is on the cutting edge of the technologies that may assist these countries in reducing their environmental impact, and I am pleased to have the opportunity to promote this."

The U.N. Secretary General is serious about addressing the global policies of climate change as well. The Secretary-General has called for a high-level meeting on climate change to take place a day before the opening of the General Assembly in New York, September 24. In December, a summit in Bali, Indonesia will be held to negotiate a climate change agreement to follow the expiration of the Kyoto Protocol in 2012.

It's hard to get a better cheerleader for your business than the two most prominent green politicians in the world today - Governor Schwarzenegger and Secretary General Ban Ki-Moon, and while no one can guarantee the future of any business, Friday's media event was quite auspicious for Echelon.

Just days before the high profile visit, Echelon reported second quarter 2007 earnings that were up almost 40% from the year prior. On July 26, 2007, the company reported revenues of $26.7 million compared to revenues of $19.4 million for the same period in 2006. According to Chairman and CEO Ken Oshman, "the growing movement towards Internet integration of control and data systems driven by energy management" is responsible for this explosive trend.

So, are any other companies poised to compete in this "smart metering" space? There are, namely Itron, Comverge, General Electric and Siemens. However, of these, the clear growth story is Echelon. Itron reported first quarter 2007 revenues of $148 million, which were approximately $7.6 million, or 5%, lower than 2006 first quarter revenues of $156 million. Comverge had a successful IPO in April 2007, and the share price is almost double - at $32.68 (on 7.27.07), compared to $18 at the IPO. Revenues at Comverge are still only 40% of those at Echelon, however, and Comverge doesn't have government dignitaries pitching their product (yet).

Siemens is a huge German corporation with a big customer footprint. But Seimens is also suffering from explosions in the executive suite. Siemens is losing its CEO and Chairman this year, largely due to the SEC upgrading its informal inquiry into possible bribery into a formal investigation. The U.S. Justice Department is investigating possible criminal violations with regard to the possible bribery also, according to a company press release issued April 26, 2007. SEC and Justice Department investigations are typically hard on a company's share price. Losing the CEO and the Chairman can sometimes help that process, giving the shareholders some confidence that the new team will clean things up, but it is an explosive cocktail that I'd avoid drinking at this point.

Which leaves us with the $406 billion company - General Electric - a perennial performer and stabilizer for your long-term financial freedom plan. Even with all of its girth, General Electric still grew an impressive 12% in revenues in the most recent quarter - to $42.3 billion. And as the company leads in many of the green energy plays, GE is certainly not going to be left in the dust of the revolution toward renewable energy. Since General Electric is trading near its 52-week and 5-year high, I'd put it on my shopping list and wait for a price closer to the 52-week low of $32.00.

What makes Echelon stand out among the competition for me, in addition to being a growth leader, is that IBM acquired ECHELON CEO and Chairman Kenneth Oshman's last company, ROLM CORPORATION. Clearly Mr. Oshman knows how to attract the big boys - whether it is IBM or Governor Schwarzenegger or the United Nations Secretary General. And clearly, he also knows how to create business and fulfill orders. Additionally, with so many venture capital firms in Silicon Valley going green, Echelon should be able to remain well capitalized for any growth that might be needed to guarantee fulfillment of a worldwide customer base.

Wish we'd known about the company at the 52-week low of $7.19. However, based upon current trends, current momentum and the new cheerleaders Governor Schwarzenegger and UN Secretary General Ban Ki-Moon, $19.68, the price on 7.27.07, may turn out to be a bargain compared to the future.

Echelon was added to the Hot News List this month. General Electric was added to the Watch List.

Panic at the Sub Prime Disco:

by Steve Dietrich, real estate consultant and developer, and president of Financial Research Group.

Defaults Spread from Sub Prime to Middle-Class. Learn 6 Ways to Protect Yourself from Joining the Fall Out Boy Club!

The last five years have been the real estate equivalent of the wonderful age of sex, drugs and rock and roll of the 1960's - nothing but fun, without any accountability. But the black lights and lava lamps are burning out.  I am far from a residential workout specialist, but I do have a few comments.
 
The rules for homeowners are the same as those for entrepreneurs -- never run out of cash (or good credit). You will either be short-term road kill or long term road kill, unless the world changes quickly enough to save yourself from your follies or bad luck.  Natalie, since you teach your followers to make their own luck, here are a few comments to help.  
 
Long before 90% of your readers were born, legendary Bill Zeckendorf (original co-developer of Century City) addressed the issue of dealing with rising interest rates with his famous quote, " I would rather be living at 20% than dead at the prime rate." Bankruptcy followed shortly thereafter for the legendary dealmaker and developer.

Many people are getting short of breath and high blood pressure worrying about how to make ends meet in the current climate of rising interest rates and having Adjustable Rate Mortgages and hybrid loans coming due. A better strategy is to find a way to get through the next 6-7 years, while assuming that your equity will not save the day. Mr. Zeckendorf chose bankruptcy. You might have to increase your income, or reduce your expenses and/or lock into a fixed rate (if you qualify), but if there is a way to get your mortgage and debt load more affordable, now is the time to do it.

Avoid Foreclosure Investments and Mortgage Lenders You've Never Heard Of Before
Avoid those businesses that are "promoting" this or that quick fix - whether they are promising to loan you money (when no legitimate lender would) and/or to provide you with a listing of foreclosed property. Below are some of the problems and pitfalls that could ensnare you and make the problem even worse than it already is.

There was a time when banks underwrote loans that they would hold in their portfolio. If the loan went bad it was a black mark against the loan officer. Too many black marks and you are assigned to the West Mojave branch of Monolithic Bank.
 
Today the situation is vastly different as almost nobody holds the loans they write. While lenders used to make money over the years from the spread between their cost of money and the interest rate, today it is all about the profit generated at the time of the transaction --  loan fees, other charges and the spread between what the borrower pays and what the institution can sell in the market.  There is a great motivation for the loan agent to jack up the interest rate at the end of the initial "honeymoon" period because that generates a premium value for the loan. The firm you deal with to get a loan today is not your lender, but rather a middleman marking up the cost of your money. In other words, the loan officer knows that you will pay a very high penalty if you default in any way on the loan promises - and s/he also knows that it is no skin off his/her nose.

Consolidating Debt into a Home Equity Loan. Don't Do It Without Reading These Tips!
I am not a fan of consolidating debt and placing it on the home. Last month, foreclosures soared to 17,408 in California, an increase of 799% from the same period last year (source: DataQuick Information Systems). As prices decline in many markets, the homeowners will lack the equity to make the lateral moves to a home of equal value, unless they have additional cash to invest in the home.
 
Lenders look for three key things: equity in the house, income to meet the loan payment and a record of meeting financial obligations. Over the past years they have compromised these three key measures by making loans with little or no down payment, using teaser rates to meet income coverage ratios and ignoring past credit transgressions. In essence they rewarded exactly the kind of behavior that leads to loan losses.  Why?  Because the market rewarded them for their behavior. However, the market is not eternally stupid.  
 
For an existing homeowner in or near trouble, the following seven points might be extremely beneficial.
1. Don't pile debt onto the home: Do not overburden the home with debt. Adding to the debt on a home (above the 65% level) should be a last resort, regardless of what the tax attorney says.
 
2. Maximize income: If you will need to finance or refinance and it is going to be difficult then you need to work to maximize the income that the lender will recognize.  This is a classic problem for the self-employed as the willingness of lenders to make "cheater loans" where there is no income verification is long gone.
 
3. Increase your credit score! Keep your credit score as high as possible. At the risk of being sent into exile, I would even liquidate some stocks if required. For those families with cash flow problems or the lack of equity in the home this is a time for zero base budgeting where every expenditure is examined.  

Editor's Note: We'd rather see you increase your income or cut your expenses, rather than dipping into your nest egg. There are usually great penalties for pulling money out of your retirement account before you retire. It is something to avoid, if possible, but to consider, obviously, if you are going to lose your home. Before considering this option, read the NASD Investor Alert, warning that you could lose half of that money. (Click on NASD for a link to the article, or go to the archived NataliePace.com ezines, vol. 3, issue 7.)
 
 4. Get a long-term fixed rate loan: Given the turmoil in the world this is a good time to have a long term fixed rate loan unless you feel confident (at the 80% level)  that you will sell your home in a few years. In the early 1990's, one of the projects I worked on was the evaluation of several portfolios of single-family loans on the Texas coast. In most cases the homes were sold to retirees and these loans had a 5-10 year term. The loans were due and there was simply no alternate source of single-family loans for the borrowers, most of whom had a perfect record of making timely payments for years. As a result, many were unable to refinance (or keep their homes), not because they weren't worthy borrowers, but because the lending climate was too constrained.

For those who expect to remain in a home for perhaps 6-10 years it is important to understand that the cost of home ownership is a function of cost and interest rates. If prices continue to fall but interest rates rise, early purchasers may still have a significant advantage, based upon all of the money you will save in the lower interest rate payments.  
 
5. Avoid foreclosures at this time as an investment: I would be very cautious about purchasing foreclosure property as an investment in many markets, as these down cycles have a habit of extending, often with a small bounce that serves as a false signal that the hard times are over.  A foreclosure property purchased as a primary or secondary residence may be okay.

6. Condos could force a continued correction: Some feel that the best bargains may be found in unsold new homes. In those markets where high-rise condos are under construction, the condos may continue to drive down market values for both the condo and single family home for a number of years as those in the pipeline are completed.  
 
An interesting issue arises with single-family sales. The government collects data on when the home is "sold" which is defined as put under contract. Therefore when the buyers default on the purchase contract the sale that did not happen is not deducted from the total sales. Private market data may provide a better understanding of the actual market.

7. IF YOU ARE A SELLER DON'T CHASE A FALLING MARKET - If you need to sell in a weak market make sure you price the property to sell. The president of a large department store chain offered us sound advice on pricing real estate in a soft market, "The first discount you take is the cheapest discount, make sure you price it to sell."

Don't miss our subscriber's only online chat with Steve Dietrich.
Wednesday, August 8th, 2007
8:45AM through 9:30AM PT
Sub Prime Fears? Ask the Real Estate Expert.

Steve Dietrich, is a real estate consultant and developer, and the president of Financial Research Group. Since its formation in 1970, Financial Research Group (FRG) has provided sophisticated real estate development and consulting services to clients like Wells Fargo, USA Petroleum, Bank of America and more. Chat with President Steve Dietrich about how to survive a softening real estate market, especially if your ARM is about to break!

Check the calendar section for more details and a link to the NataliePace.com Chat Room!

Real Estate Scams:

by Natalie Pace.

Top 4 Email & Business Scams, with 9 Tips on How to Avoid Them! When things get desperate, that's when you are most vulnerable.

According to DataQuick Information Systems, home forecloses in California have hit a record high, to 17,408 for the three months ended June 30. This is a 799% increase over the same time last year. Ouch! If you are feeling the pinch of your home loan or credit card debt, join us in the chat on August 8^th with real estate specialist Steve Dietrich, the President of Financial Research Group (FRG). (Get more details at the Calendar Section of NataliePace.com.) And read on for some get rich quick scams that you would do well to avoid.

Many of us have become so accustomed to spam that we can smell it a mile away, and delete it without looking! However, the senses tend to get clogged when you are over stressed and/or worried about something. Don't be seduced by the "sounds too good to be true" offer. Real solutions are more likely to be found in credible companies that have been around for over five years (minimum).

1. Your Loan Has Been Approved!
   For someone worried about being extended too far in his/her real estate investments, a notice about a new loan at a great interest rate might be extremely tempting! But don't be fooled. A legitimate bank has not mysteriously found your non-existent application and overlooked that the value of your loan currently exceeds the value of your home. Do not reply to any unsolicited mail by email, even if it has managed to squeeze by your spam filters. This sort of "phishing" scheme is a way to steal your identify and drain money from your assets. Go to a legitimate bank and speak to a live loan officer, to explore options.
   
   
2. Foreclosures R Us!
   Recently a film executive, who was moving back to Los Angeles and couldn't afford to rent or buy a place that she liked (due to sky-high rentals and property values), asked about a new company that promises to let unqualified lenders rent to own foreclosed property. According to the website, this company - HomesAdvance.com - charges people $99.00 for a 180-day subscription to their service, which purports to provide the subscriber with listings of preforeclosures, foreclosures and homes for sale by the owner. The site itself bears almost every red flag imaginable to the savvy online shopper. This doesn't mean definitively that HomesAdvance.com isn't a legitimate business, but that you should do twenty times the amount of due diligence before subscribing to a company that has all of these red flags. See below for a list of things to BEWARE OF on any site. As your mother always said, "If it sounds too good to be true, it probably is."
   
   
3. Buying Opportunity!
   Desperate real estate and mortgage brokers will say or do anything when the buys and sells start lagging on the market. The prices may have softened in many markets across the United States over the last year and a half. Even if the prices have leveled out or increased during the seasonally strong summer months this year, don't be fooled. The overall trend is continued softening in most regions of U.S. real estate, based upon a tightening of lending standards, high real estate prices (relative to affordability), increasing interest rates, a high level of new home ownership and consumer fears that the market will continue to soften. While regional trends can differ from the national trend, don't be too anxious to rush in and buy right now - especially on the advice of a broker, who makes money if they sell you something.
   
   
4. You've Received a Greeting Card!
   Alright, I know. This has nothing to do with real estate. However, these emails have a lot of the same problems that those loan approval emails and other spam scams have. They look like they are sent by legitimate companies, including Hallmark, BlueMountain, Citigroup - even government agencies, like the IRS and the FBI. So how can you tell that they are not? First of all, they say you've been sent a card by a "friend" or a "mate", not the name of someone you know. (Legitimate e-invites typically say the name of the sending party.) Secondly, notice if the email address doesn't match the name of the company. In the case of the greeting card scams, the link they ask you to click on doesn't even say the name of the company! Be careful! If you click on the link, you'll need to scan your computer to make sure that someone on the other end hasn't attached spyware or adware and now has the ability to see confidential, personal online transactions that will allow him/her to steal from you. This is probably just a phishing scam to steal your identity and money!

TOP 9 SIGNS TO BEWARE OF ONLINE and in Emails

1. Amateur Looking Site. Many illegitimate websites look like they were created by an elementary student on a budget of $500. No legitimate operation would present themselves that way. By comparison, check out WestSideRentals.com or CraigsList.com. These and other legitimate operations have easy functionality, have hundreds of pages and sorting functions, and have more accessible data than you could possibly need!
2. No address listed. If there is no way to contact the corporate office, you shouldn't be doing business with the company.
3. No list of executives' names. If the executives at the company are hiding their identities, you have to wonder why! What else are they hiding?
4. Customer Service Line Feeds to an Answering Machine. You can tell the difference between an office system and one of the old fashioned answering machines. Few legitimate businesses, especially ones that are charging top dollar, have an old-fashioned, home-based answering machine at the end of the line, like many of these fly by night scams do. (The company may try to make it sound like an office system by saying that your call will be recorded!)
5. The email address doesn't match the name of the company. This is one of the top signs that the email you just received is a fraud.
6. No sample product. If you have to buy before you can even see what you're buying, that's a big problem. On many ÒphishyÓ sites, the "members" section is password protected, and none of the literature explains in plain English what you can expect in return for your payment! Many times, judging by the rest of the site, information would be available by Teletype only (an archaic early form of the Internet). In fact, often, the only part of the website that looks professional (somewhat) is the payment page!
7. Rudimentary software. A listing company should have some pretty advanced listing and sorting capacities. There are no listings to sort on the site, unless there is something AWESOME hidden on the subscriber's only page!
8. Long on Testimonials, short on details. The testimonials page is long and deep. The information on the company is short and lacks basic information on who owns the enterprise and where it is located!
9. Started Doing Business last year. See what year that the site was created by looking at the copyright information that is often listed at the bottom of the page. Look at the bottom of the website page and on the About Us page for additional information that you might gather that will be helpful in determining whether or not you are dealing with a legitimate business.
10. When foreclosures rise, it is a frightening time. Whether you are an owner who is stretched too thin or a buyer who wants to capitalize (buy lower) into a weakening sector, it will pay to deal with reputable firms that have been in business for over five years! There are no easy solutions when the real estate markets are priced higher than most people can afford. You will have to be creative, and it is critical to explore your options for a solution while your credit is still good and the value of your property is still relatively high. In other words, if you think you might be vulnerable, start solving the problem NOW!

Even Virgin Investors Can Discover the Joy of Stocks:

by Natalie Pace.

Top 10 Things You Already Know About Investing.

1. If you can shop, you can pick a stock. Read the articles, "Don't Blind Date Your Money. Get Smart and Have More Fun," in the NataliePace.com archived ezine, vol. 3, iss 1, and "Recipe for Successful Investing" in vol. 3, iss. 10. Both articles are written by Natalie Pace.

2. If you can pick a husband, you can pick a broker. For tips, go to "How to Pick a Broker" in the Investor Edu section at NataliePace.com.

3. If you can tip 15%, you can tithe 10% -- to your financial freedom account. Get invested now!! For a sample HOW TO plan, read the articles, "The Secret of Wealth: Double Your Fun Budget," in the NataliePace.com archived ezine, vol. 4, iss 3, and "Thrive: The Secret to Wealth Life Plan", in vol. 4, iss 4. Both articles are written by Natalie Pace.

4. If you make $14 an hour, you can be a millionaire in less than 31 years, by tithing only 10% to your freedom plan. Read "From Flipping Burgers to Owning Your Own Island!" (vol. 3, iss. 5).

5. Even virgins can learn the joy of stocks. Read, "The Joy of Stocks, as Told by Virgin Investor," in the NataliePace.com ezine, vol 3, issue 10. Written by Jodi Seidler.

6. If you call it your "Buy My Own Island Plan," you're more likely to open the statements, than if you're still ignoring your "retirement plan." Read the article of the same name in NataliePace.com archived ezine vol. 3, iss. 11.

7. If you can control your emotions, you'll make better investment choices. Get tips on how to from David Fried, in his article, "How to be a Better Investor?"

8. You should think twice before cashing out your 401 (k)! (If you do, you could lose half of your savings!) NataliePace.com featured a special Investor Alert from the NASD in vol. 3, iss. 7.

9. If you prepare for emergencies, natural disasters, war and terrorism, chances are you and your portfolio will survive. Find out 11 Preparedness Tips Against War, Terrorism and "Acts of God," in the article "War and Your Portfolio," from NataliePace.com archived ezine, vol. 3, iss. 8. 

10. In the case of Adjustable Rate Mortgages, it might be a good idea to break your ARM before it breaks you. For tips on what to consider, read Kassie Welch's article from NataliePace.com archived ezine, vol. 3, iss. 8.

Upside Down: The Financial Markets Meet Alice in Wonderland.

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

Paul Woods, President & CEO, Odyssey Advisors LLC.

In the second quarter of 2007, signs of the approaching apocalypse began to appear. Congress appeared determined to reward every illegal immigrant that participated in the first successful invasion of the U.S., Paris Hilton dominated the headlines, and honeybees began to die mysteriously. My hunch is the death of the honeybees was a mass suicide because of the first two news items, but that hasn't yet been officially confirmed.

Things were mostly turned upside down in the bond market in the second quarter. A weaker economy is supposed to produce higher bond prices. Instead, economic growth slowed dramatically and the bond market responded with higher interest rates. Like they say, this wouldn't be any fun if it were too easy. As conventional wisdom went out the window, bond market gurus became road kill and some large fixed income hedge funds began to implode by the end of the quarter.

In the stock market, everyone knows that higher interest rates usually produce lower stock prices and value stocks are usually a better investment than growth stocks. The Alice in Wonderland theme was maintained as the equity market responded to higher interest rates with a rally that saw growth leave value in its dust. About the only piece of conventional wisdom left standing was "sell in May and go away" as the equity market finished the quarter with a decline in June.

In the second quarter in stocks, big was good, value was bad, and REITs were ugly. For reference, here's the stock market segment scorecard for the second quarter.

Source: Thomson One Financial, Thomson Baseline

Within these market segments, the top performers were energy and other resource companies, technology, and industrial companies. Investors apparently concluded that higher energy prices would hurt consumer spending and higher interest rates would be a negative for financial companies. These industries, along with health care, underperformed just about every stock market index. Here's the stock market index and industry group scorecard for the second quarter of 2007:

Source: Thomson One Financial, Thomson Baseline

In a forecast we'd like to forget, we expected the Federal Reserve to begin a cycle of interest rate cuts this summer to fix a yield curve that was inverted (short term interest rates were higher than long term interest rates). However, the bond market got tired of waiting for the Federal Reserve to overcome bureaucratic inertia and fixed the problem on its own, as you can see.

Source: Bloomberg LP

In our industry, the euphemism for too much money loaned to folks with too little property and a history of not paying loans back is the sub prime market. By adding a little lipstick to these loans, dressing them up, and putting them in a nice package, they become marketable as Collateralized Debt Obligations. As bond yields have been close to historic lows in the last few years, the higher yield of these instruments appealed to some investors willing to ignore the risk side of the equation.

In the second quarter of 2007, the inevitable began to happen and the result was a CDO cloud hanging over the head of many hedge funds, major institutions, and brokers. In some cases, hedge fund losses approached 20%. Once the cream of the crap was liquidated, creditors were left with collateral that became the equivalent of toxic waste. As worries this might have to be liquidated for pennies on the dollar rippled through the bond market, interest rates went higher. By the way, we've always believed in taking risk in stocks, not bonds, so our clients have no exposure in this area.

Meanwhile inflation remains above the Federal Reserve comfort zone and interest rates continue to rise in Europe, which will cause the dollar to head south unless the same happens here. All this has more than offset slowing economic growth and produced higher interest rates during the second quarter. Currently, we expect the Fed to remain steady and not make a move in either direction. The pull back in bond prices and increases in bond yields particularly in the Federal Agency market and Treasury market allowed us to buy some cheaper bonds with higher yield for our clients in the second quarter. We continue to emphasize quality, liquidity, and intermediate maturities.

Economic growth slowed from over 3% to under 2% in the last three months as problems in the housing market and lackluster consumer spending began to take a toll. We still don't see a downturn, but expect growth to remain unexciting for a few more quarters until recent increases in money supply growth begin to stimulate the economy in time for the next election.

Given what's happened to conventional wisdom so far this year, we're a little reluctant to climb too far out on a limb with our forecasts. What we can say is the stock market is still undervalued relative to interest rates, but less so than it was a quarter ago. The combination of higher stock prices and higher bond yields now has the equity market about 12% undervalued, according to our model. However, stocks still look like the only game in town as problems in the mortgage market will probably keep a lid on real estate prices, and fixed income yields haven't gone up enough to make bonds a compelling alternative. We expect the combination of rising earnings and undervalued stocks to produce a higher return in the equity market by the end of the year.

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 © 2007 by Odyssey Advisors LLC.

Buy Low; Sell High.

by Natalie Pace

What's High? What's Low? How Do You Know?

Everyone knows the mantra, "Never pay retail," but it's a lot easier to apply that to shoes than it is to stocks - until you really start to understand price to earnings ratio, average P/E and how it differs for different companies and different sectors. And then, once you understand how to price the company, you then have to get a feel for the marketplace - to determine whether or not you're entering into a bull or bear market. Now, as I've said ad nauseum, the markets have a historic return of between 10-12% every year, so, as with shoes, if you are stuck with something that has gone out of style - i.e. everyone is into real estate this year - then, like you would with shoes, you can just keep your stocks in the box (portfolio) without wearing them. Chances are that in a few years, what you're storing will be all the rage again, and you'll be glad that you took good care of them.

Natalie's Note: Price to Earnings Ratio is the cost of a share of stock divided by the earnings per share. If the P/E is 20, then you are paying $20 for every $1 in earnings. If the P/E is 43.20, as it was for Google on July 27, 2007, then you are paying $43.20 for every dollar in earnings. Since the price of a Google share on July 31, 2007 was $511.91 and the earnings per share was $11.77, then the P/E was 43.49 -- 511.91 divided by 11.77 equals 43.49.

However, in your trading portfolio, if you really want to maximize gains, you are going to need to have a general understanding of the dynamics of the marketplace. You'll have to be able to discern which guru is right - as the television shows are pretty good at pitting a bull against a bear in the market analysis roundtables. (I am rarely across the table from someone who agrees with me. It doesn't make for good television!) Over time, especially if you track the market performance of the pundits you listen to, you will come to have ones that you trust over others. For instance, I've come to do that with Nobel Laureate winning economists! Everyone has an area of expertise, and as you gain more knowledge, you'll become more of an expert at discerning exactly whom you should be listening to.

Price to earnings ratio varies by industry, but as a general rule, the lower the number the better. The average P/E ratio of the Standard & Poor's Composite stocks was 29.41 in the first quarter of 2000, which was the all-time market high of that period, before the recession of 2000-2002. In the preceding year, 1999, the average P/E ranged from 30.50 to 32.60.

If the average P/Es of the S&P 500 get near that range again, be cautious. That means that investors are paying 30 times earnings on average for every stock, even those with little or no growth potential. You don't want to pay 30 times earnings for companies that only have an annual growth of 5% or less. It's overpriced and reckless. (Google's top line revenue growth in the 2nd quarter of 2007 was a robust 58%.) The market and economy regulators have gotten much better at disseminating good information, controlling trading and preventing the kind of economic crisis that occurred during the Depression, so this isn't a doomsday warning. I'm merely using this data as a point of reference of a high market average P/E that you would want to avoid.

In 2007, the average P/E of the S&P500 was 15.9, with a forward P/E in 2008 predicted to be 14.1. According to Standard and Poor's Senior Index Analyst, Howard Silverblatt, companies still have excess cash reserves, with the industrials having over $600 billion, which is 5.9% of market value and 39.6% of long-term debt. If you are worried about the weak U.S. dollar, many of the companies that are publicly traded are now participating in the global marketplace, and are not over-reliant on the U.S. dollar as the only currency. Earnings have been outstanding, at double-digit operating growth for the last 18 consecutive quarters! These are good fundamentals, on average, for the general marketplace.

Now, here is where price to earnings gets a little tricky. In young, growth companies, the price to earnings ratio might be listed as NA, which means negative earnings (not Not Applicable) - i.e. no earnings at all because the company is still losing money. That isn't uncommon for a young company, and it isn't necessarily a bad thing. MySpace.com was negative earnings when it was gobbled up by News Corp., and rewarded many investors a fantastic return on their money. When Opsware announced that they were being acquired by Hewlett-Packard on July 23, 2007 for $14.25 per share, they were still in negative earnings - after five years of operations. My newsletter featured Opsware in 2002, when it was trading for just $1.80, so investors that purchased after our article was published saw a return of 690% in just five years!

Negative earnings in a large legacy corporation, like General Motors and Ford Motor Company, both of which had negative earnings in July 2007, is not a good sign. After a century of doing business, if you start losing money, that means that something has gone very wrong - either consumers are no longer buying your product, or your costs are out of control, or both - as was the case for GM and Ford in 2006 and 2007.

With young growth companies, sales might be increasing at such a rapid pace that the earnings might explode within a short period of time. Google was only nine years old in 2007 - it was still in beta testing in 1998 - and it had already grown to a market value of $159 billion and was on track to post $15 billion in annual revenue, with about $4 billion of that in profit. Investors that bought in at the Google IPO in May 2004 - at $89 per share - were looking at 475% gains by July 2007, when the Google share price was at $511.89. (And yes, Google was one of the NataliePace.com featured companies in May of 2004!)

The easiest way to check out the trend line of earnings growth is to read an earnings report. Most companies list the revenue and income side by side with the data from the same period one-year ago. Additionally, many financial websites offer easy clicks to a Financials page, which shows graphs of the revenue over the past few years, lined up by quarter and by year. That makes it very easy to see how well the company is doing, and how popular its products are. Google's revenue growth went from just under a billion in 2003, to $6 billion by year-end 2005, and was on track to rack up $15 billion in 2007! That is incredible growth. Opsware revenue growth went from $61 million in 2006 to $101.7 million in fiscal year 2007, and is on track to continue growing, with a company like Hewlett-Packard behind it and Cisco distributing its products.

Now that you're getting a feel for the individual company, it pays to also measure the climate of the overall marketplace. There is a saying, " A rising tide lifts all ships." In 1999, you could have thrown a dart on a wall full of stock names and come up with a winner. The same was true in 2003 (and many other pre-election years.)

I would add that a sinking tide grounds all ships as well. It is very hard for most companies to buck the trend of the general stock market. Few young technology companies, outside of Opsware and Google, survived the technology crash. eToys crashed and burned, as did many other brands that seemed destined to soar pre-Y2K, when we worried that malls would become a thing of the past. (Instead, malls became walking promenades - people became even more social!)

No one has a crystal ball on when the low and high of the markets will occur, but there are a few historical trends that it pays to know about.

1. Santa Rally. Over 50% of the stock market gains each year are made in the last quarter. Thus, it often pays to wait to sell until December or January, even if you are tempted to sell earlier. Additionally, September, the worst performing month each year, can be a great time to buy in anticipation of the seasonally strong October, November and December. (This is how I made over 200% gains in 2001 -- a dismal, down stock market year -- by investing just before the Santa Rally!)
   
   
2. Sell in May and Go Away. Almost all Wall Street professionals take their vacations in August. There is low volume, lower volatility and less attention paid to the markets in August. July is only slightly more active. I don't like selling in May - I prefer selling at the market high in January -- but I definitely like going away!
   
   
3. Summer Doldrums. The summer doldrums are reliably boring, even in spectacular years, like 2003 and 1999! Take a vacation! Everyone else is! Notice how flat the growth trend becomes in July and August in the following two charts.





4. Pre-Election Year Rally. The pre-election years, like 2007, 2003 and 1999 are typically the top-performing year in the four-year election cycle. Paul Woods, the CEO of Odyssey Advisors, crunched the data for 164 years and 40 Presidential elections, and the results were the same: in the pre-election and election years, the stock markets are more likely to perform double-digit returns, whereas in the two years after the election, single-digit returns are the norm. Pre-election years serve up almost double the gains, on average, as post election years.

   Presidential Election Cycle - Average Returns
   (based upon total returns 1842 - 2006)

   Election Year	Average Returns
   1 Year before election	15.79%
   Election Year	11.85%
   1 Year after election	6.78%
   2 years after election	9.32%

   
   Source: Morningstar/Ibbotson Associates

5. Small Caps for Performance. As you can see in the asset performance chart below, companies with market capitalizations of less than one billion post higher gains than the large, well-known companies. They are also riskier. Examples of companies like this would be: Netgear, which posted over 3X gains by July 2007, since first being featured in NataliePace.com. AOL in the early days is another example. AOL was a great company that soared and then eventually weathered the Dot Com crash, but at a big price. The share price was VERY LOW from 2001 through 2007 - so low that the former CEO Stephen Case was tossed out of the company and Time Warner (AOL's owner now) changed the stock ticker from AOL to TWX. eToys was a company that didn't make it. A company, like Krispy Kreme, which was wildly popular in the first part of the new century and then went out of style between 2005 and 2007, had a market value of just $526 million in July 2007. The turnaround specialist CEO certainly hopes that he'll convince Wall Street to buy more stock and sweeten up the returns! 12.72% returns every year are almost double what real estate does historically, but be aware that there is more risk attached to that return!

 

6. Large Caps for Stability. Companies that have been around for a long time and have a large market capitalization - over $10 billion - are great stabilizers for your portfolio. Between 2000 and 2002, when the NASDAQ lost over 65% of its value (where the majority of younger, small capitalization companies are concentrated), the Dow Jones Industrial Average went down only 22% (where 30 of the large cap "Blue Chips" are concentrated, including Boeing, Citigroup, Intel, Coca-Cola, and more). The companies with the biggest value on Wall Street typically perform at 10.66% returns every year. Blue Chips are one of the top performing asset classes, but still under the performance of the small cap companies. On the other hand, they are a great foundation for your portfolio, and typically earn dividends while you hold them!



Source: MoneyCentral.msn.com

7. Exchange Traded Funds over Mutual Funds. If you've turned on a television, you've probably heard the pundits espousing ETFs. ETFs are funds that typically have a much lower cost structure, pay lower commissions and have lower fees attachéd to them. Consequently, they are more popular with investors than they are with brokers. If you've had a broker whom you have loved worked with over a long period of time and s/he has performed magnificently, then it's hard to want to wrestle their bread and butter away from them (the mutual funds). However, for many people that is not the case. ETFs have almost all of the benefits of mutual funds, except that they are not actively managed. Having said that, some ETFs, like the Wilderhill Clean Energy Portfolio, do seem to be "smart" ETFs with regard to their holdings.
   
   
8. Diversification and Asset Allocation. It is more important to know diversification and asset allocation than it is to know how to pick stocks. And it is very important to make sure that you are not trying to "time the markets" with your financial freedom plan (your nest egg). Your trading portfolio should be a smaller portion of your liquidity, where you take on higher risk (in direct proportion to your wisdom, experience and emotions) for higher gain.
   
   
9. Natural Disasters. Natural disasters are, in most instances, buying opportunities, not the Apocalypse. Make sure that you read the chapter, "Terrorism and Your Portfolio," for tips on how to protect your portfolio from disasters, and capitalize upon the buying opportunities that are created anytime share prices fall.
   
   
10. Happy People Make Better Products Faster Cheaper. This is my personal economic theory, by which I judge a corporation and/or a country's ability to perform in the future. This chapter is dense reading, but it is probably the key to my market edge, and yes, I'm confident that I will continue to outperform my peers, even if I hand out a lot of my secrets! (I've still got my rolodex and complex pattern recognition abilities as well, which I encourage you to develop to improve your performance.) Remember! My police officer cousin was my "source" for the information on Taser (before it went on to post up to 9000% gains). You don't have to know the CEO to get some great scoop on a product or service that is poised to be in style! The gems of information might be found in what the employees are telling you!
    
    
11. The Economics of Freedom. This ties into the theory that "happy people make better products faster, cheaper." Basically, however, whenever you see that people feel as though they are losing "rights," like you see in some of the legacy corporations where unions are buying people's retirement and health plans out for pennies on the dollar, and in some countries (particularly Western Europe) that are cutting back on liberal work or social policies, the economic growth is apt to wane or lag. When people are feeling optimistic about their future, they become more productive, and productivity, according to Dr. Gary Becker (Nobel Laureate) is one of the leading indicators of economic growth! Taking this to the extreme, it's pretty hard to make a widget in the middle of a war, and you have less incentive to steal from or harm your neighbor when you have more than you need! It is legal to apply this idea to publicly traded companies, and it might give you a clue as to why some companies can be so forward-thinking and fresh, while others are a real drag to work for. In the end, it is real people making these products - for better or worse.
    
    
12. Emerging Markets. When building and construction was booming in 2004, all of the sudden copper, a basic material in construction, tripled in price, after having been in a price rut for over a decade. The share price of major copper mining companies, like Phelps Dodge, also tripled. Alternative energy was the top performer in the first half of 2007, after being in the doldrums for three decades. Emerging markets can be a new market, like social networking, or simply new blood in an old market, like the electric car. If it's an older company, you'll need to pay more attention to debt and the ability to secure more financing if needed at a reasonable rate. In a younger company, you'll need to monitor cash on hand, to make sure that the company has sufficient funding to reach its goals. (Being aware of cash on hand and long term debt is much easier than it sounds and very important! Both line items are listed in the earnings reports.)
    
    
13. Historical Performance. Some stocks, like Microsoft, "trade around the core" of a certain price point for years and years. Over the first seven years of the new millennium, you could have bought Microsoft in the low 20s and sold it in the 30s for consistent gains, over and over again, year after year. Other companies, particularly the younger ones, have a trend of increasing gains that plateaus at a certain point. Still others, like mega corporations like Citigroup and Coca Cola, trade in a steady range, but provide great dividends. You can review the historical price performance charts EASILY on your favorite financial news site! It's just one click to create a one-year chart, or a five or 10-year chart. Very informative!

Easy to say: hard to do
In short, buy low; sell high sounds so easy, but it's counter-intuitive. It means you're walking in when everybody else is saying, "It's the Apocalypse," like in October of 2002, and going on a buying spree. When you are buying low, chances are that everybody is telling you how stupid and crazy you are. Selling high means that you are having the vision to see the end of the party. People who sold high, at the beginning of 2000 or end of 1999, were saying, "We're going to have a rookie president, we've had eight years of prosperity, NASDAQ's been running on negative earnings for five years, so I think I'm pulling stuff off the table." I was one of them. Everyone told me I was an idiot because I didn't understand the New Economy. Because so many wanted to brag about their gains, many of them actually walked away from me at parties, like I was some kind of black cloud! All I was saying was to take their 900% out of AOL! Sell Sun Microsystems at $95!

A few things to understand. Cash (liquidity) is always king. You can't have too many years of negative earnings in most companies. (There are some, like airlines, that the government bails out.) Be wary if the average P/E gets too high. Be attentive and investigate the investment opportunity, if the revenue at any corporation is doubling. As a rule, look for Back to School Stock Sales in September (historically the lowest performing month) and selling opportunities in January (historically the highest performing month). And NEVER PAY RETAIL!

Hip Resurfacing: an Alternative to the Total Hip Replacement.

Especially for Active Adults (like Floyd Landis, the 2006 Tour de France winner).

Reprint of July's online chat with orthopedic surgeon, Dr. Vijay Bose.

2006 Tour de France winner Floyd Landis.

Hip resurfacing is a less invasive procedure than the Total Hip Replacement, according to orthopedic surgeon and hip resurfacing specialist, Dr. Vijay Bose. On July 18^th, NataliePace.com subscribers welcomed Dr. Bose into the chat room and found out more about who qualifies for the hip resurfacing procedure, why hip resurfacing isn't common in the U.S. (yet) and how one patient is already riding 225 miles a week on his bike after just 12 weeks post-operative from the surgery.

Dr. Bose has performed more than 900 hip resurfacing surgeries over the last twelve years, and is considered to be one of the ten most prolific surgeons in this specialty. He lectures and trains surgeons worldwide, and his hospital, which is located in India, works with U.S. insurance companies for payment. Patients like our own Gary Kobat find that having the surgery done in India is more cost effective than the United States, AND a much more luxurious setting for the rest and recovery post-operative.

The Birmingham Hip Resurfacing System (BHR™), the hip resurfacing product of England's Smith and Nephew (SNN), was the first approved for use in the U.S. by the FDA -- on May 9, 2006. By being the first company with an FDA-approved product, Smith and Nephew also had a mandate to train 336 American surgeons in BHR™ hip resurfacing techniques in 2006, and is continuing the effort in 2007. FDA approval on the 2nd competitor in this product arena is not expected until the second half of 2007, giving Smith and Nephew over a full year's first mover advantage in the U.S. for this new product and procedure.

SUBSCRIBER CHAT with Dr. Vijay Bose on July 18, 2007.

Dr. Vijay Bose with Gary Kobat after surgery in Chennai, India.

Q: There is a SARI score, and the research I've seen says that resurfacing works much worse in small people with cysts that have high activity rates. Do you see that, too?

Dr. Bose: I personally do not subscribe to the SARI score. I have not had any problems in resurfacing small people or those with cysts. What Beaulé and Associates are describing may be related to the implant. There are of course many variables, and the same with high activity level. I've had no problems with the Birmingham Hip Resurfacing System (BHR™) so far.

Quick update to Dr. Bose from hip resurfacing patient Gary Kobat: I'm riding 225 miles a week on my bike at 12 weeks post-operation, and completed a 25 mile per hour ride on a Tour de France type avenue the other day on my 70 miler. I'm in the pool twice a week for the last eight weeks. I started running as my phase two program after 6 weeks. That was easy. I'm now up to up to 15 miles a week. My goal is to get that up to the 40-600 miles within the next 8 weeks. I'm running a 7-7:30 minute mile now easily. Still building strength in the running muscles. No pain! I love BHR™! People are amazed how rapidly I recovered, and I have a BIG smile on my face every day!!!

Dr. Bose: Thanks for the update Gary. Inspiring stuff. Wish you the very best.

Q: Since I haven't had my surgery yet, I am worried that I will not have a big smile on my face. Are you saying that the Conserve Plus has more problems than the Birmingham?

Dr. Bose: I am not saying that. I find that some implants are more suitable for specific patients like smaller patients. The same implant may not be good for patients with a bigger build, etc.

Q: You are giving me a politically correct answer. How about a politically incorrect one?

Dr. Bose: I'm not sure about political correctness, but this is a scientifically correct one.

Q: Are you saying that the Conserve Plus is not good for small people? On another note: if I look at all the statistics and the incision length posted on the web, Dr. Bose comes out far ahead of the others. Who wants a 12-inch scar? And if I listen to you guys, living in pain makes no sense either because it doesn't get better.

Natalie Pace: Dr. Bose, I've watched Gary, pre-diagnosis, post-diagnosis and now post-operation. The fear that so many people have when they get the diagnosis is incredible. I've known so many people who just live in pain, and really as a cripple, rather than attempt surgery. Is there anything that you tell patients to help them move from fear into the surgery/solution and recovery? Gary seemed to be so much more confident after discovering you and deciding to go to India for his surgery. In fact, the process has been so steady and so unbelievably non-intrusive, that it almost seems as though he hasn't been through surgery at all - except for the scar.

Dr. Bose: Resurfacing makes so much sense even to non-medical people. Why chop off bone when it is not required? The idea of removing bone makes people avoid surgery.

Gary: The surgeons I met with did Jimmy Connors' tennis hip, Arnold Schwarzenegger's hip, etc. Very world class surgeons. I also met a surgeon who had done 5500 Total Hip Replacements. And yes, they all did not want to support me to get back to competition level training. I will be qualifying for Team USA in October for the 2008 world championships. Yes, it was painful for a week, but well worth the patience.

Q: Are you saying that you were only in pain for one week after surgery?

Gary Kobat: Yes. My confidence is sky-high now. I really appreciated sleep more in the recovery. It was awesome to actually take a few weeks off to commit to the healing needed. I was in the hospital, per Dr. Bose, five days. I walked with a walker for two days the day after. I moved to the crutches for a few days. Then one crutch. Then no crutch by 7-10 days. Had it available by my side, but didn't need it. The pain: maybe a few days after, but never in the hip, just in the muscle tissue, scar, etc. It heals soooo fast. It's mind boggling for everyone to watch here in L.A. right now. Ask Natalie!

Q: Thanks, Gary. That is very encouraging.

Natalie: Gary is truly as powerful today as he ever was -- and since I've known him he has been one of the finest physical specimens known to man! His body is unbelievable. I believe it is 2% body fat or something crazy like that. He's "small" but strong, shapely, lean and mean -- in the most enlightened delightful sense of the word. I see NO DIFFERENCE IN HIM TODAY! Truly. The only difference would be that he smiles all the time and doesn't wince in pain.

Q: I do not mean to be the negative voice here, since I will have my hip resurfaced. However, I read, by Stephen Murphy, who is against resurfacing, that the revision of a resurfaced hip is much more difficult than people admit and destroys a lot of tissue.

Natalie: Is seems that questioning and pushing is the only way that many people get even the option of considering the resurfacing procedure, since so many U.S. surgeons won't even acknowledge the procedure. So your skepticism and questions may well lead you to the best outcome.

Dr. Bose: I can confirm that revision of a hip resurfacing would be the easiest hip operation to do. It is manifold easier than revision of a Total Hip Replacement.

Q: I like to hike, mountaineer, ski, climb, rock and ice.

Dr. Bose: I see no problem with all those activities that you have mentioned.

Gary Kobat: One prominent person had a Total Hip Replacement, and it dislocated on a Grand Canyon hike. Another's femur cracked while skiing because of the Total Hip Replacement's prosthetic implant. With the BHR™, none of that. No dislocation. No prosthetic into the femur, etc.

NataliePace.com note: Gary is a patient, not a doctor. Ask your orthopedic surgeon for a professional opinion on whether the Total Hip Replacement or hip resurfacing is right for you! You can even get an opinion with Dr. Bose, one of the most experienced and respected hip resurfacing surgeons on the planet, by contacting him at HipResurfacingIndia.com.

Dr. Bose: The only thing to say at this point is that the same mechanism of wear-induced poly debris osteolysis, by which a Total Hip Replacement fails, is not operative in a metal on metal hip resurfacing.

Gary: Our friend/patient, Cory started running first and biked second phase. I took the opposite approach: biked first to build more muscle mass to support the running.

Q: It makes logical sense. So why are so many surgeons so dead-set against it?

Dr. Bose: It is because they confuse modern metal on metal resurfacing with the old metal on poly resurfacings, which were a disaster.

Natalie: Dr. Bose, since you have been doing resurfacing since 1995 (right?), I'm assuming that you are truly one of the most experienced surgeons in the world in this area. Am I right?

Dr. Bose: I have been associated with resurfacing since 1995. My series of over 900 cases would certainly be in the top ten in the world with regard to numbers. The indications are more complex in this part of the world as well.

Natalie: I'm wondering if you are seeing a lot of surgeons from the US coming to get trained by you, now that the FDA has approved the procedure here. I did a random calling of Santa Monica orthopedic surgeons and none of them specialized in hip resurfacing and no one would refer the patient out to another surgeon who does either. I'm worried that many people don't know it's an option, unless they decide to go hunting on the web for themselves...

Q: Here in Philadelphia, most surgeons do not do resurfacing and actually recommend against it.

Gary: I also had the same responses from USA surgeons, and none wanted me to run. Dr. Bose is the master at vision of what CAN-BE. He sees it all the time with his patients. By the way. I'm 5'6" 138 pounds or small.

Natalie: Dr. Bose, what is the easiest way for people on the North American continent to consult with you? I'm assuming it begins with them getting you X-rays? Do most Americans contact you via email?

Gary: I contacted Dr. Bose via email, and sent him my X-Ray attached to the email. He read it. Said I was a candidate. I booked a flight, and away I went four weeks later. His staff is amazing. Very kind. The facilities are first class. Plasma tv in the rooms. Kitchenettes. Extra bed for a friend. The food was awesome. The resort I stayed at was amazing to recover.

Natalie: Alright. I believed you right up to the part where you said the hospital food was awesome!

Q: Thanks. I saw the website and have already sent the x-rays, so now we will see.

Natalie: Gary, AND this was all less expensive than the co pays for the work here in the US, right?

Gary: My insurance was not very kind. It was less to pay cash in India. I feel like I got a $55,000 Mercedes Benz for the cost of $15,000 or less. I'm adding hotels, spa, hospital, flights, time off, etc into the total cost.

Q: My Blue Shield said that they would pay 70% of the hospital and doctor costs. That is definitely better than nothing.

Natalie: Q, will Blue Shield cover the procedure if it is done in India? I've heard that some US companies are doing that. Dr. Bose, are you aware of any insurance companies that are paying you or the hospital?

Q: Yes. I have a traveling suitcase on my card and that means that I am covered worldwide.

Dr. Bose: Yes. Apollo Hospital does work with some American insurance companies.

Gary: I summed it up. I didn't want a great doctor who had done only 10 BHR™ cases in the USA to operate on me, even with the insurance. Dr. Bose says that you master the BHR™ by your 100^th case, not 15^th. Dr. Bose has 900+. It was the same with the insurance issue. L.A. was $55,000 total cost, and my out of pocket was 30% of that = $16,500. If you are really on a budget, India is probably $10,000 with economy flight, hotel instead of spa, etc. I eBay'd my race bikes to pay for India. Best investment I ever made.

Q: I am so happy for you that you are doing well. Thanks for the encouragement. Dr. Bose, how long do you tell people that the hip will last?

Dr. Bose: We have results with the BHR™ for only 12 years. However, as the follow-up and our experience increases, we are getting more confident.

Natalie: What is the life span of the resurfacing compared with the Total Hip Replacement?

Dr. Bose: We can only make an educated guess about the life span of a well done resurfacing. It would be many times that of a conventional Total Hip Replacement, as the same mechanisms of failure are not operative here.

Maria: In terms of life span, the BHR™s that were removed for whatever reason must have been analyzed for wear. How good or bad did they look? I have read many success stories with resurfacing. It just seems that having another 5 hips before I die is a lot. I won't have any bone left.

Dr. Bose: Most early failures are now thought to be technical errors. If put in wrong, they will show early wear, which technically we call as edge wear.

Natalie: Sounds like a good reason to go to the surgeon who has performed 900+ surgeries.

Q: I agree. It is better to have an experienced surgeon. I know for a fact that the Rothman Institute in Philadelphia stopped doing resurfacing after the two surgeons that had taken the course did about 20 hips because they had too many problems. So now they recommend against it.

Natalie: Well, we're working with a Yahoo discussion group to post the articles we've run on you this month, Dr. Bose. I'm hoping that will help to get the word out. I wish that there were more surgeons in the U.S. that were tapping into your experience and wisdom regarding this procedure. Are you scheduled to speak at any upcoming conferences o/b/o Smith and Nephew?

Dr. Bose: I will be lecturing at the hip resurfacing meeting in Miami in October this year.

Q: How important is the number of resurfacings a doctor has done to the outcome? Say one with 50-100 vis a vis 800?

Dr. Bose: I think if someone has done over 100, it should be okay, provided that it is a straight forward resurfacing.

Q: How many femoral head fractures have you done?

Dr. Bose: Are you asking about the indication being femoral fractures or the complication being fractures?

Q: Both.

Dr. Bose: I have not had any femoral neck fractures as a complication yet. I have done resurfacings on about 30 post femoral neck fracture situations, which has joined up (united).

Q: What is the highest body mass index you have done resurfacing for a patient?

Dr. Bose: BMI of 40.

Q: Would you say, that all things being equal, you would recommend resurfacing rather than THR?

Dr. Bose: Certainly yes.

Q: I have met many of your previous patients who are grateful to you!

Natalie: Well. Any last questions or comments? Gary, are there any concerns you have, or is it really unbelievable recovery with no snags?

Gary: I really find that "having faith" in this area when soooo many hold onto "fear" is the best way to approach this. Too many people delay too long and live with sooo much pain. They do not have to. You just need a little faith for a few weeks, and it will truly be behind you.

Dr. Bose: I think that in the modern hip surgery context, hip resurfacing must be the first option for hip arthritis. If one does not qualify for a resurfacing for any reason, only should then must a Total Hip Replacement be considered.

Natalie: Dr. Bose, thank you for those scientifically correct (un-PC) words. I think the message that gets conveyed more often here in the U.S. is the opposite... We can't wait to see/hear you in Miami in Oct!

Gary: Dr. Bose. YOU ARE AMAZING! Thank you sooo much for helping me do what I LOVE to do. I will email you an update.

Natalie: Q, I hope this chat helps you to make the best choice for yourself, and one that will be as successful for you as Gary's has been for him! Gary, thank you so much for coming in and sharing the patient's point of view. Dr. Bose, thanks for continuing to be on the leading edge of a new life for active people around the world.

Q: Yes. Thanks for all the information. I guess now Dr. Bose has to respond to my x-rays, when he gets them.

To Contact Dr. Vijay Bose, go to his website at:
http://www.hipresurfacingindia.com/

Dr.Bose regularly trains surgeons from all over India and from neighboring countries who come to Chennai Hip Resurfacing Surgical Center. He has traveled extensively in India and abroad to give lectures, and to conduct workshops and live surgical demonstrations of hip resurfacing surgery. He has compiled a DVD for surgeons who are starting to do BHR™ surgery, which shows the modifications in technique used in AVN, Coxa vara and in Fused hip. Surgeons or healthcare professionals who would like to have a copy of Dr. Bose's DVD can request one by e-mail, through his website.

For more information on Hip Resurfacing, you can visit the following websites.
http://surfacehippy.info/
http://www.hipresurfacing.com/
http://www.activejoints.com/resurfacing.html

This chat is not intended to diagnose, treat, cure or prevent any disease. Always consult a licensed physician and orthopedic surgeon to determine the best option that is right for you and your specific needs.

ExpandingÉ

by Gary Kobat, Life and Fitness Coach to the Stars.

Gary Kobat with Jim Carrey and Will Ferrell.

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    ...a tree  ..hemmed in by giants  Érequires tenacity to survive.
 
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Without the difficulty of being hemmed in, the tree in the forest would not be forced to marshal its power; to grow toward the light. It must truly bring forth all of it's inner strength to spread it's branches. If it is to become grand, it is in part due to this suffering.

Throughout our life, times of adversity confront us all, but by having clear vision, passionate determination, goals, keys of faith, gratefulness, commitment and, most important, a deep personal reason for being and doing, these times of adversity can be crucial to the development of our inner personality. And yes, we will emerge from adversity stronger than before.
 
All endurance athletes know this. These are the hours and the days when we have the freedom -- make the freedom -- to shape, to create our future. Our defining moments often occur during these most uncertain times.
 
[The best ones know: it's not about getting this; it's about letting this. ]

DifficultyÉ
 
Life, like the Indoor Tour de France I hold each year at Revolution Fitness Studios, is a place of discovery, experience, connection, and wisdom. It's no accident you're on earth, it's no accident you're reading this, it's no accident the riders come do the tour.

Our challenges and what we've suffered along the way, were and are in our life for that purpose; without discovering that vital piece of information, our life will have been like driving 1000 miles to the Grand Canyon then spending our entire stay in a hotel room. If we believe that life is only a struggle, that the world is against us, our life will lack the magic that makes it vital, wondrous, and transcendent.
 
Know that we are never really off the path to our highest best self. Our best self is like an ocean and our paths are like rivers, each river different, but all eventually leading to the ocean. Even when we are not sure, or we've done wrong, or are misguided, we're still on our path to our highest, best self.

The progress we make on our path, like an athlete, will be quick or slow, according to our awareness. If we're consuming too much alcohol, over-full of pizza, chocolate-ooodeed, maintaining too much fat-weight or "slacking off-unfocused-just showing up", chances are that our progress will be
slow. If we're, however, intentionally seeking our best, which creates a desire to discover ourselves, we'll use our so-called challenges, or mountains, as an opportunity to learn, clean up, get in alignment, and we'll progress quickly.
 
An athlete, like anyone in life, will have many challenges, many opponents in a lifetime, but the ultimate opponent is the athlete's own self. To talk about overpowering others is inconsequential; yet one's fear, non-specific goals, ignorance, selfishness, narcissistic tendencies, insomnia, lack of self-love, and a wide array of blocks or demons are the ones to be conquered. To actually overcome one's own issues is the true nature of victory.
 
As they say on the Tour de France after week number two:
 
"..i now remember what it is like to manage physical tiredness AND psychological strength in the course of a three-week window of focus: we must adapt one stage at a time."
 
When we time trial, they time trial.  When they climb, we climb.
 

The Official Top Ten "Indoor Tour" Inspection CheckList:

1)   "...gotta have vision and a goal check."
2)   "...gotta have a big reason check."
3)   "...gotta be rested, and ready-to-rock check."
4)   "...non-glassy-eye check."
5)   "...I'm accountable, I'm responsible, anti-high maintenance check."
6)   "...gotta have fun check."
7)   "...safety first check."
8)   "...no whining, I'm coachable, I'm prepared check."
9)   "...gotta have fuel and hydration check."
10) "...gotta finish strong, ride to endure, test myself, expand, have faith, and let-go check."

UnfoldingÉ..
Over 800 riders took-on and faced the challenging stage rides of the indoor tour over the past three weeks, packing uncertainty's awkwardness with rich new meaning. At times, some of the riders felt lost but the veterans knew and believed that the adversity would uncover precious things, in both the new riders and their world, that otherwise may not have been found.

Train smart. Live, race, recover smarter.

Gary Kobat

A passionate life and fitness coach, world-class athlete, author, and keynote speaker, Gary works one-on-one with select individuals, customized mastermind groups, and larger goal oriented teams for lasting personal and professional change. If interested in joining a group or for a private consultation, email him directly at: gary@e-coach.com or visit one of his spinning classes at Revolution Fitness in Santa Monica, California.

 

Winning More Requires Losing More.

by Chellie Campbell, author of Zero to Zillionaire.

Chellie Campbell, author of Zero to Zillionaire.

If you aren't winning enough in your life, it's because you aren't losing enough.

"What?!" you may be thinking. "I'm losing plenty, thanks. That can't be right."

It is right. You have to take risks to win. And you don't win every time you take a risk. Success is a percentage gameÑand it's not even a big percentage. The difference between successful people and unsuccessful people is that successful people are willing to fail more often than unsuccessful people. They are willing to hear "no" and get rejected. Millionaire baseball players bat .300Ñthat means they only hit three balls out of ten. But they make millions because most people can't even hit that many.

The difference is that winners have an intense, laser-focused attention on the goalÑand on winning the goal. They don't see the goal as out of reach, they believe that they will attain it if they just do the right things. If they don't know exactly what the right things are, they are willing to experiment, pay for lessons, workshops, coaches, and try different things until they happen upon the things that work, and then they do those things over and over and over, ad infinitum, until the goal is achieved. They send out a ship, and then they send out another one. And another one. And another and another and another. It doesn't matter how many ships sink, how many people say no to you; it only matters how many people say yes. So keep on going until enough people say yes. You have to have this kind of determination not to quit and to keep going until the yeses arrive like the next ship on the next wave. Or the one after that.

It's fun to see the goal and see yourself reaching it. That vision is what keeps you going when your ships encounter stormy seas. Sailors learn to sail when they're out on the ocean, not when they're home safe at the dock. What good is the finest navigation equipment, the latest in ship-to-shore radios, new white canvas sails, and scrumptious food stored in the galley, if you don't brave the waves?

Yes, it's hardÑso what? It's hard for everyone. If you have another excuse, go back to chapter one and let me kick you in your "but" again. Or you can spend your life commiserating with the other Angry Tuna over how life is too hard.

After my first book was published, I received a letter from a friend congratulating me. She said that she had always had a secret desire to be a writer, and had even written a magazine article once. Eagerly, she sent it to the editor of a magazine, and waited anxiously for her ship to come in. But this one floundered on the rocks. The only driftwood from the wreckage was a rejection slip. She never tried again.

That's the saddest thing to meÑthat you are talented, glorious, special, and the world needs you, but you don't trust it. You have had one shipwreck and you are afraid to brave the storms at sea again. One idiot out thereÑwho isn't even Your PeopleÑsays something mean and you give up your greatness in subservience to their opinion? Stop that! Don't give up the ship! Try again. Build another ship, build another fleet if you have to. The only failure is failing to begin again. Your People are out there waiting for you, praying for you to show up. The world needs you or you wouldn't be here. The only thing stopping you is you. And that you can change.

So how do you remain undefeated in the face of lost ships? How do you garner the strengthÑmental, physical, and spiritualÑto build another? And the one after that? How do you face mounting losses, over and over again?

The 5-Step Breakdown-to-Breakthrough Recovery Program
Breakthrough is usually preceded by breakdown. We are usually hanging on to what is in our way, so it has to completely break down before we're willing to let go of it and move on to our greater good. Breakdowns, like breakups, are painful. Here's the 5-Step program to help you recover:

1. Cry. Sometimes there's just nothing so satisfying as a good crying jag. I climb in my bed and weep and wail. Did you know tears release toxins from your body? And blowing your nose does too, so crying is a healthy, beneficial release.
2. Eat. After crying, I usually have a headache and I need comfort. I eat the most satisfying junky comfort food I can get while still in my bed cocoon. I want to be bad. Last time, I ate donuts and potato chips. Sugar alternating with salt usually does the trick. (This is not a dietary recommendation for more than a day.)
3. Call Friends. I need "Oh, poor things" and I need my confidence rebuilt. After a recent hurt-feeling crying jag, my friend, Michelle, whipped me back into shape with this: "You need to be giving headaches, not getting them!" Oh, yeah. Thank you!
4. Laugh. I almost skipped this step, moving straight to "Once more dear friends, into the breach!" I know that's Shakespeare and went online to find the right play (Henry IV) to quote. The search engine asked: "Did you mean "Once more dear friends, into the beach?" Hee. Go to the beachÑthat's a great recovery idea, too.
5. Get back to work. Crying is healing for an hour or an afternoon or a day. Any longer than that, and you've developed a Tuna habit.

This is the Cry-Eat-Call-Laugh-Work program. That's recovery in a nutshell. And it's the last step that's the most important in being a Zillionaire. To implement Step 5, you have to have a goal that matters to you. You have to want it, and you have to want it bad. Lots of people get stuck somewhere in the first three steps, but steps four and five are the most important.

Thomas Edison invented the electric light bulb. It took him some 10,000 experiments to get it to work. But he knew that it was just a matter of time before he tried the right element and he was successful in his quest. He had a single-minded devotion to purpose. His attitude was not that he had had 10,000 failures, but that he had successfully discovered 10,000 things that didn't work. And each element he eliminated brought him closer to his goal of finding the one that did work.

This is a popular example of perseverance, but it wasn't the end of the story. Once he had the light bulb working, he had to invent and build the hydraulics and dynamos that created the electricity. He had to figure out how to wire a building and bring the electricity to the bulbs. Meanwhile, the world was being lit by gas lamps. Do you think the people who made the lamps or piped the gas were thrilled about being put out of business by electricity? No one believed in his crackpot idea anyway. He had to pay a man in New York City to allow him to wire his building with electricity.

Of course, on the day he threw the switch and lit up that building like a Christmas tree on a dark night, everyone who saw it became quite interested in investing in his new company, General Electric. It's only worth about $400 billion now.

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.

If you are stuck in a rut in your business or life and/or having too much "month at the end of your money," Chellie's workshop might be just what you need to get things on the right track. The new workshop series begins on August 13, 2007. Don't hesitate! You can sign up for Chellie's Ezine and workshop at www.chellie.com.

Testimonials for Chellie's Financial Stress Reduction® Workshops:
"Since I registered for your class, my husband and I were not only given a free second honeymoon to the Caribbean, but our income has more than tripled! It's been nearly six months since I completed your course and I'm making more money than I ever have in my life, and having more free time to enjoy it. You are a blessing to so many!

-- Linda Sivertsen, Author, Lives Charmed

"The last day of Chellie's workshop (I have taken it twice and both times it doubled my income) I asked if there was any reason I would not go ahead and take it again back to back (since there is a money back guarantee that you'll make at least as much as you spend on it). She said, "Ok" and I almost signed up but had too many clients from the last time. Work with Chellie and you're gonna have these high quality problems!"

-- Greg Mooers

Aggressively Optimistic Borrowers (Sub Prime) Spook Wall Street.

by Kelley Wright, Managing Editor, Investment Quality Trends stock newsletter.

FOOTNOTE LEGEND

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

INVESTMENT OUTLOOK - Mid-July 2007
Main Entry: Sub- Function: prefix; 1: under: beneath: below <substandard>.- Merriam-Webster's Dictionary of Law.

Sir Isaac Newton's third law of motion states "for every action there is an equal an opposite reaction." I doubt seriously that Newton was contemplating the credit markets when he was developing his laws of motion; the applicability in this context, however, is no less appropriate. While the nation's mortgage bankers would have been prudent to consult with Newton prior to funding some of their - how should I write this - more aggressively optimistic borrowers (read sub-prime), my guess is their role model was more likely Gordon Gekko ("greed is good"), the fictional character from the popular 1987 movie Wall Street.

Making credit available to new borrowers is both a benefit to the economy and profitable to the lenders that make those markets, assuming that the lenders qualify appropriately and follow established guidelines. Owning a home has long been the American dream. Unfortunately for some, greed and easy money has turned the dream into a nightmare.

The third quarter of the year has historically been the roughest on the stock market. As usual there are myriad reasons why the market should be doing one thing or another, but the fact of the matter is that the Dow has been consistently hugging its 10-week moving average (on the weekly charts) and is trading significantly (about 750 points) above its 40-week moving average. For the less technically minded this simply means that the primary trend remains intact and that the market would need to drop a pretty fair amount before that trend is in any danger.

One could argue that a correction and consolidation would be healthy and is long overdue, but I would argue that a correction is already underway in some specific sectors of the market. Take the banks for example. The recent rise in interest rates and the spillover from the sub-prime mortgage mess has played havoc with the likes of Bank of America (BAC). As referenced in this space previously the interest-sensitive utility sector has also corrected sharply. The difference between the banks and utilities though is that the banks are at historic levels of Undervalue and the Utility Average is still at Overvalue.

With central banks across the globe either raising or hinting that they may be raising overnight lending rates, the pressure on the interest-sensitive sectors of the market will most likely remain in place for the foreseeable future. That being said, the opportunity currently exists to acquire high-quality companies with long-term rising dividend trends. At some point the market of investors will recognize the value that exists in these companies and the buying will commence. Timing, as always, is the devil in the details; that's why we like to get paid while we wait patiently for the inevitable.

It seems like every summer we hear analysts agonize over weak retail sales from May and June. I've often wondered if any of these folks have heard of the phenomenon known as "vacation." After a long school year with the seemingly never ending number of trips to pick up the dozens of items that the kids absolutely have to have, I know that my wife doesn't want to go anywhere near a store unless it is a medical necessity. The calendar cannot be ignored so I suspect that when Uniform Day (as they call it at my kids' school) rolls around in mid-August, parents across the fruited plain will be descending en mass to pick up clothes, shoes and the requisite supplies for another school year. Two potential beneficiaries of this impending spending spree are Wal-Mart Stores (WMT) and TJX Companies (TJX). A quick perusal through the Undervalued category reveals that both companies are ranked A+ by S&P for their earnings and dividend quality and have excellent dividend histories as evidenced by their "G" rating from IQ Trends. It is a fortunate circumstance when quality and value intersect with opportunity.

Whether you are looking to build a portfolio from scratch, are partially invested and looking to add new positions, or fully invested and in need of some affirmation and hand holding, The Timely Ten presents our top ten recommendations as of each issue. Short of utilizing the personal investment management services of our sister company, this is as close to real time as you can get.

The Timely Ten consists of Undervalued stocks that generally have a S&P Dividend & Earnings Quality rating of A- or better, a "G" designation for exemplary long-term dividend growth, a P/E ratio of 15 or less, a payout ratio of 50% or less (75% for Utilities), debt of 50% or less (75% for Utilities), and technical characteristics on the daily and weekly charts that suggests the potential for imminent capital appreciation. This issue's selections are:

REGULATORY REMINDER
Please keep in mind that as an investment newsletter, we are legally bound to only answer questions of a general nature and are unable to provide specific buy/sell recommendations or specific advice on an individual basis. For those interested in obtaining more information on individual management services in accordance with our approach, we have a sister company named I.Q. Trends Private Client Asset Management which is a Registered Investment Adviser. Among the offerings provided by I.Q. Trends Private Client are individual portfolio consultations and active account management. For more information, please call Mr. Michael Minney at (858) 427-1071.

Disclosure documents are located at: http://www.iqtrends.com/pc/

MAIL CALL (Questions from Subscribers and Seminar Attendees)

Kelley Wright, Managing Editor, Investment Quality Trends stock newsletter.

Q. When a company buys back its own shares is this a positive sign or an attempt to boost up the price of a sagging stock?

A. It could be either or both. A buyback increases stock values because with fewer shares outstanding, earnings per share rise and price/earnings ratios shrink. If the stock is Undervalued a buyback is a good investment. If the stock is Overvalued the company is wasting shareholders money. All things being equal we would prefer that the company increase its dividend.

Q. When a takeover occurs, do the Undervalued and Overvalued parameters change for the dominant company?

A. The acquirer is typically larger than the acquired in terms of capitalization and number of shares outstanding. Accordingly, the dominant company has the most influence on the patterns of Undervalue and Overvalue; therefore, the parameters of dividend yield follow the pattern of the surviving entity, or the dominating partner.

Q. Do you ever recommend mutual funds?

A. No. The emphasis of IQ Trends is on the performance of stocks and corporations, not on the performance of mutual fund managers. We believe investors who are willing to devote a small amount of time and attention to building a portfolio of Undervalued blue-chip stocks are likely to do better over the long-term than any mutual fund where investors control neither the selection of stock purchases or sales.

Kelley Wright is currently outperforming all of his peers, by bringing in the top risk-adjusted returns on Wall Street for the past 20 years, with his stock newsletter, IQTrends.com, at 12.8% annualized gains, according to Hulbertÿs Financial Digest. To subscribe, go to IQTrends.com.

690% Gains!

by Natalie Pace.

Opsware, NataliePace.com's 2004 Company of the Year, Scores Acquisition by Hewlett-Packard. Includes my Hot News on Cool Stocks list.

Marc Andreessen Chairman, Opsware Inventor of the Browser, Netscape.

For a look at the original 2004 Company of the Year article and a feature interview with Marc Andreessen and Ben Horowitz, go to vol. 1, issue 44.

48% of the companies featured in my stock newsletter between 2002 and 2005 -- 25 out of 52 companies -- DOUBLED from the time we listed them in our feature article to the time when I took the company off of the Hot News on Cool Stocks list. (See the chart in the article, "25 of our Companies Have Doubled," from volume 4, issue 4, the April 2007 ezine, for a listing of companies.)

Additionally, the market performance of the companies that are featured in my Hot News on Cool Stocks list are still keeping me at the top of over 830 A-list pundits on TipsTraders.com in annualized gains! According to the Tipstraders tracking data, all of the companies featured in the NataliePace.com Hot News list are pulling down 30% gains on average every year. That is a whopping 150% return over just five years. The Hot News lists below feature 37 companies earning great gains, versus just eleven (after the recent market pullback) that are headed in the opposite direction.

Well, 2007 has been a banner year for the companies we've been featuring. Last month, World Water and Power tripled, earning shareholders who invested in April 2007 three times their investment in under four months. This month, Opsware is the superstar, rocketing up to $14.25 share overnight on the news that the company would be acquired by Hewlett-Packard (announced on 7.23.07).

Ben Horowitz, CEO, Opsware.

Opsware is a company that we've had faith in for quite awhile. We first featured the company in December of 2002, when it was trading for just $1.80/share. At that time, CEO Ben Horowitz had just pulled a rabbit out of his hat, transforming LoudCloud, a young, full service Internet provisioning company that was competing with Electronic Data Systems, into Opsware, a software company that would sell products to EDS. The transition saved the company (and LoudCloud shareholders), and because the product and the executive team were so strong, we had faith that the future would be bright for Opsware.

By the time we named Opsware as our Company of the Year - in 2004 - the share price had rallied to $6.57. And of course, on July 24, 2007, the day the H-P acquisition was announced, shareholders received the ultimate reward of $14.25. What we're even more proud to report is that the performance of our Company of the Year features is well above that of any other stock newsletter out there. Check it out.

Click on the blue-highlighted words to link to the feature article. (Please note that the ezines from 2002 and the first half of 2003 are no longer featured online.)

As you can see directly below, the performance of the companies featured over the last two years is on track to be as impressive as the companies that were featured between 2002 and 2005, even with the recent market pullback.

A Sample of Companies Featured in the NataliePace.com ezine

Volumes three and four are 2006 and 2007, respectively, and the issue number is equal to the month (i.e. Vol. 4, iss. 4 is the ezine in April 2007). All of these ezines are listed at NataliePace.com, under the Online Magazines link, Archived Editions.

Vol. 4 = 2007
Vol. 3 = 2006
Vol. 2 = 2005
Vol. 1 = 2004 (and prior)

Elation!
In February 2007, in the article, "Buy High; Sell Higher? Why 2007 is Poised to be a Banner Year," we began reporting that the pre-election year rally trend was supported by high cash levels in corporations (particularly in the technology, new media and metals sectors), interest rate trends and earnings. Additionally, with real estate softening, investors that had been enamored with that market turned back to Wall Street for performance. True to our forecast, the markets have been on fire this year, just as they were in 2003 and 1999 (two other pre-election years). We continue to expect that 2007 will finish strong, with momentum gaining through the Santa Rally and into January 2008 (even given the concern over sub prime and the most recent pullback). The important thing now is not to buy HIGH, however. Stay calm and rational.

Since the beginning of 2007, the trajectory has been volatile, with an overall bullish trend (even considering the pullback of last week).

Source: MoneyCentral.msn.com

In 2003, the overall track for the year was strong gains - especially in the NASDAQ. You can see, however, that things stalled out between July and October. It's called the summer doldrums. August is typically low volume, while Wall Street professionals jet over to the Hamptons for their annual sunburn.

Source: MoneyCentral.msn.com

The trend line for 1999, another pre-election year, looked very similar. Also, note how strong the Santa Rally trend was in both years, with 10-50% gains in the last four months of the year. As in 2003, the NASDAQ Composite Index was the super performer in 1999. Again, you can see that the action really stalled out during the summer.

Source: MoneyCentral.msn.com

Stock Market Overview:
We are in a pre-election year and have been enjoying a stock market rally this summer. Despite the concern over the real estate market and sub-prime mortgage lenders, which the bears consider Wall Street doomsday omens, the general feeling about Wall Street is still that people want to be invested! As you can see below, the stock market over the last year and a half has been a wonderful place to be. If you were invested, chances are you are earning wonderful gains.

Now, for those who are desperate to pay their mortgage and must liquidate, know that they will be shedding the dogs of their portfolio first. That's probably why Krispy Kreme took such a hit. There was no news to really justify it getting stomped on so hard last week. Even great companies, like Google, that seem pricey could take a hit as well. You'll note that as we predicted in the July mid-month update, Google's share price has taken a pretty big hit.

I'm including the full report on Google below, which we published on the 16^th of July, two days before the Google earnings release, and three days before the markets took their tumble. As you can see, the mid-month update is KEY! You don't want to miss it! Having said that, August is the ONE MONTH out of the year when I do not publish a mid-month update. As most Wall Street professionals, I take that time off to be with my family. This year, while I'll spare you the details, is a very important year for my family and I. We are grateful for life itself. I encourage you to enjoy the blessing of life, health and R&R in August as well! Life is truly the greatest gift of all, and then perhaps health, and then perhaps peace, and then perhaps love. (Okay, yes, perhaps I've been listening to too many old Beatles records.)

General Stock Market Performance

When you take a sample look at the general market performance, compared to some of our breakout companies that were featured since January of 2006, like World Water & Power, Trina Solar, Apple Computer, MEMC Electronics, Suntech, Blockbuster, NetGear, Opsware, Disney and News Corp., you can see that the price of this newsletter is more than worth its keep! The majority of the stocks featured in NataliePace.com are performing well above the general stock market.

And of course, WorldWater & Power is our rock star! We listed this solar energy company -- that is trading off the boards with a $30 million backlog of orders -- at 56 cents in April. It is has more tripled in just three months to $2.00, largely because of the press the company received when the CEO was selected to go on a "green" tour with Governor Schwarzenegger to Canada.

Google Earnings Surprise?
If you've been reading our ezine over the years, you know that we've been bullish on Google since the Dutch auction of its Initial Public Offering. Once before, in January of 2006, we warned that Google might miss earnings. They did, and dropped $16 billion in market capitalization overnight (before going back up).

With a hoard of stock options becoming due this year, there has been significant insider selling. Additionally, one of Google's top partner/advertisers - eBay - has pulled some of its advertising dollars away from Google, to "test" some campaigns on competing sites, including Yahoo, MSN and AOL. Meanwhile, Viacom's chief, Sumner Redstone, is playing hardball with YouTube over using unlicensed content. At a Price to Earnings ratio of 47, we thought the sum total of all of this news would be too difficult for investors to stomach, and put Google on the Cooling Off list for traders.

Even though Google continues to be a long-term hold for your nest egg, for day traders who capitalize on volatility, the stars were aligned for a trip south before the July 18, 2007 earnings report, in my view. (And for those of you who wonder whether or not I'm going to invest in a Google put, the rules are that I have to publish this article BEFORE I make any changes to my personal portfolio. Consequently, at the printing of this article, I did not have positions in Google.)

As you can see below, Google is still a top 10 site on the Internet. We can't live without it. There's no reason to worry about your nest egg, even if the price fluctuates over the next 6-9 months, assuming you haven't purchased your shares at the top of the market. With regard to the Cooling Off list, now that Google has taken its hit, we will remove it from the Cooling Off list for now, but plan on watching the climate again before the next earnings release, which should be sometime around October 18, 2007. There are still a number of factors that bear watching, including the number of stock options that are being vested, increased operating costs and a moderated net income growth (though top-line revenues are still increasing at a strong pace).

Top 10 Web Brands for May 2007

Source: Nielsen//NetRatings, U.S., Home and work; Period: May 2007

EDUCATIONAL OPPORTUNITES AND INFORMATION:

The Federal Reserve Board:
Not surprisingly, the Feds decided to keep rates at 5 Å percent during their two-day meeting on June 27 and 28, 2007.

1. Interest Rates: In a Pause Pattern. The Federal Open Market Committee has paused eight times in a row now (in June, May, March and January 2007, December, October, September and August 2006), after raising interest rates 17 consecutive times prior. The federal funds rate remains at 5-Å%.
   
   
2. Interested in reading the press release of the June FOMC meeting for yourself? You can. It is available online. Click on FOMC, or go to FederalReserve.gov, to read! According to the FOMC statement, "The Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected."

The tentative FOMC meeting schedule for the 2007 calendar is: 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.

3. Calendar Section: Conferences, Online Chats and more: Check out the Calendar section of NataliePace.com regularly. There are many wonderful opportunities to chat one-on-one with millionaire money managers, economists, respected money gurus and CEOs! Next week, on August 8^th, 2007, we are featuring a very important Real Estate CHAT! Please get more details at the calendar section of NataliePace.com. 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. Your investments and portfolio should take into account 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 under the column "NP OWNS?"

Hot News on Cool Stocks List

Highlighted Companies (Hot List):
Citigroup (C)
Echelon (ELON)
Gap (GPS)
Jet Blue (JBLU)
Johnson & Johnson (JNJ)
Krispy Kreme (KKD)
Smith & Nephew (SNN)
UQM Technologies (UQM)
WisdomTree (WSDT)
Yahoo (YHOO)

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 (if you have already purchased them or if you are willing to come in at a higher price). 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 moved to the Cooling Off list. Bioteq Environmental (TSE: BQE) had 144% gains. Rio Tinto was removed on 11.15.2006 with 145% gains. Las Vegas Sands was removed on January 5, 2007 with 139% gains, Agilent on 2.1.07 with flat performance, and RELM Wireless was taken off with 3% gains on 2.1.07. Blockbuster ran up 82.5% in gains, which we cashed in on February 12, 2007. Intuit, deleted in June 2007, was a wash for us - up and down.

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.

Recent Additions:
LifeCell added 7.1.07

Recent Additions/Deletions:
Google (Added on 7.16.07. Deleted on 8.1.07 with losses of -6.7%.)

Highlighted Companies (Cooling Off List):
None

Cooling Off Stocks (that may be Poised for a Decline in Share Price). Note: The companies listed in bold have recently been added to this cooling off list and/or may be currently poised for a decline in value. Investors who have them in their portfolio should read the recent news and consider whether it is time to sell and take profits, dump losses, short the position and/or simply weather the storms, while keeping the company in their long-term portfolio. At any rate, always consult your certified financial partner before making adjustments to your portfolio. (Again, note, that 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%). LifeCell was removed on 7.2.07 with -4.5% overall performance. (The cooling off list anticipates that a company will lose share price value.) Google was added on 7.16.07 and then removed on 8.1.07 with losses of -6.7%.

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.    

NataliePace.com Calendar:

Don't Panic Over Your Mortgage. Consult the Real Estate Expert for some options you might not have thought of, in our Subscriber's Only Chat on September 8^th.

The NataliePace.com Calendar section features conferences, retreats, educational opportunities, cultural events, galas and online chats with executives and VIPs. Stay plugged in! Visit our calendar section often.

See below for just a few of the amazing educational and networking opportunities that world-class organizations are offering for you. To access links to the event website and registration, go to the Calendar section at NataliePace.com.

Wednesday, August 8th, 2007
Sub Prime Fears? Ask the Real Estate Expert.
8:45AM through 9:30AM PT

Since its formation in 1970, Financial Research Group (FRG) has provided sophisticated real estate development and consulting services to clients like Wells Fargo, USA Petroleum, Bank of America and more. Chat with President Steve Dietrich about how to survive a softening real estate market, especially if your ARM is about to break!

Tuesday, August 28th, 2007
Global Full Moon Meditation
7:00PM through 8:00PM PT

On each full moon, people worldwide meditate at the same time, to promote greater health within and greater peace throughout the world. Meditate for 5 minutes or quiet your mind and focus on peace for the full hour.

Friday, September 21st, 2007
International Day of Peace
1:00AM through 11:00PM PT

September 21 has been designated by the United Nations as an international day of peace, wherein all countries are to observe a global ceasefire. More than 3500 Peace Day events took place in 200 countries in 2006!

Saturday, September 22nd, 2007
Yoga, Peace, Kirtan, TranceDance, Meditation
10:00AM through 11:00 PM PT

GlobalMala.com presents a day of yoga, kirtan, dance, meditation, raw/vege food and more in a 12-hour ritual peace fundraiser at the solar-powered LA convention center.

Monday, September 24th, 2007
Solar Conference 2007, Long Beach, CA
8:00AM through 7:00PM PT

Solar Power 2007 features over 175 exhibitors, 125 speakers, networking opportunities galore, and an anticipated 10,000 visitors! Every major solar company in the world, from STP, SPWR to GE Solar will be there on display!

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