Wind Power: Not Just Hot Air.

by Natalie Pace.

Includes a Wind Power Stock Report Card.

The craze for renewable energy worldwide continues, as everyone scrambles to save the world from pollution and global warming. It's on the top of country agendas worldwide. As former British Prime Minister Tony Blair said last week, at the California Governor and First Lady's Conference for Women, the 13 biggest polluting countries create more than 70% of the emissions, and those countries -- - four countries in Europe, plus South Africa, Russia, Japan, China, India, Mexico, Brazil and the United States -- are finally ready to sign an agreement to reduce carbon-based emissions. Tony Blair said, "Last year [at the G8 conference], we finally agreed that we should have a new global deal and that everyone should be partnered. That can be done this time around."

Reducing electricity usage and harnessing the power of natural energy sources is so important in California that former Governor Gray Davis decoupled utility revenues from the meter. California now rewards companies like PG&E when they save energy, instead of raking in the dough when customers are energy hogs. By attending to the utility company's bottom line needs, California legislators have ensured that the power industry is now part of the solution. Investments in renewable energy sources - particularly solar and wind - are flourishing in the state, as a result, and current California Governor Arnold Schwarzenegger has become the American spokesperson for Green on the world's stage.

Similarly, Germany's solar incentives have made it the leading country worldwide in solar energy (source: Milken Institute). Can you believe it? A dark, cold country like Germany outranks California in solar energy! Imagine how green North America could be if southwestern states and Mexico were as forward thinking in their solar policymaking, and beyond that, India and Africa.

Canada has locked arms with California, embarking on a well-publicized partnership to reduce carbon footprints. And in the global march toward sustainable living, no renewable power source will be left behind. Each region has a different renewable resource to exploit for the benefit of everyone - from photovoltaic solar, to solar thermal, to wind, to geothermal, to hydroelectric and beyond. (The Durst Organization is seeking a platinum LEED rating on their new Manhattan skyscraper without using one solar panel. See the article Green Skyscrapers in this month's ezine for more information.)

Clean energy continues to top the industries performing on Wall Street, beating out energy in the 1^st and 3^rd quarters of 2007, with 10.07% clean energy growth in the 3^rd quarter of 2007 (when oil prices were hitting $80/barrel), compared to 9.39% in energy. Our Hot News on Cool Stocks list has featured a number of companies focused on renewable energy over the past few months, including such top performers as Echelon (+39% since our August 2007 feature), World Water & Power (+203% since our April 2007 feature), Suntech (our 2007 Company of the Year) and more.

Echelon conserves energy with smart meters, Suntech makes solar panels (in China), while World Water creates solar solutions for agricultural and clean water needs - from the crop fields of California to the deserts of Darfur. But a recent visit to a community that is living off the grid - Angel's Nest in Taos, New Mexico -- was living evidence that the power of wind can be just as important as these solutions. Wind can be most effective at night, when solar energy flat-lines.

We've heard so much about solar, but what opportunities lie in the wind power business in the United States and the world? The American Wind Energy Association (AWEA) reports that The U.S. federal government approved a further extension of the Production Tax Credit (PTC) through to December 2008, giving significant incentives for the wind farm business. So, if the federal incentives are in play, why aren't we hearing more about wind? The answer may be - just as it was for solar for decades - that what used to be just hot and cold air is on the brink of becoming a major and explosive headline.

Texas and California have taken the lead in wind power, followed by Iowa, Minnesota and Washington state, according to AWEA (American Wind Energy Association). The growth of popularity of wind power, from a capacity of 9121 megawatts in 2005 to 12,634 megawatts by the end of the 2^nd quarter of 2007, is quite simply staggering. And there are literally thousands of current and planned projects all across the United States, spread out across 37 of 50 states. One of the added side benefits is that our rural farmers can sell power from a single, utility-scale wind turbine at an average income of $3,000/year per megawatt or more, without giving up an inch of cropland. (If you are a rural homeowner involved in the subprime crunch, think about installing a wind turbine to see you through?)

Now, some investors might be tempted to invest directly in the utilities that are building solar and wind power plants. However, that's a riskier play than you might think. Green utilities will have to figure out a way to earn revenue by saving energy, instead of reaping profits on energy guzzlers. It could take awhile to develop new ways to bring money in when there is no power going out. A handful of states to date have offered strong rewards to the utilities for doing just that. But until utilities are given some help across the nation with this (with the states taking leadership roles in their own communities), it is more likely that renewable energy will hurt the utility's bottom line and cripple investor confidence.

Some of the major utilities are already unprofitable. AES Corporation, which operates one of the largest wind power farms in Texas, lost -$40 million last year. FPL Energy, which owns four out of the ten largest wind farms in the U.S., is profitable, with increasing revenues and an 8.8% profit margin, but who likes to purchase the slow growth/low margin utilities industry at a 19.70 price to earnings ratio, especially when the pressure on earnings will continue to fall as more demand for renewables heats up?

Puget Sound Energy (PSD), Washington state's largest private utility and an active purchaser of wind farms, agreed to be acquired and taken private by a consortium of investors for $30 per share in cash. Too late to capitalize on that opportunity.

For a pure wind power play, then, consider manufacturers of the wind turbines, those companies that install them, set up the invertors and work with the governments and utilities to put wind on the grid. Europe has a corner on this market, and a clear advantage, as wind power, nuclear power and solar power have been part of the European renewable agenda since the Kyoto Protocol was introduced, back in 1992. (Many countries in Europe actually signed it in 1997.)

In this month's Wind Power Stock Report, I feature four international wind power companies, based out of Germany, Spain and Denmark. Each has an English version of their website available to investors, who can buy their shares off the boards (OTCBB). One company in particular stood out, as often happens, as a clear leader.

Conergy recently aligned with other alternative energy giants, including Suntech Power, Kyocera and Sunpower, to form the Solar Alliance, an industry group dedicated to keeping renewable energy at the top of the political agendas and to keep subsidies flowing into the company coffers.

Revenues at Conergy were up 71% in 2007 over last year, according to the 2^nd quarter earnings report. The PhotoVoltaic market, which Conergy has a piece of in addition to the wind applications, is expected to grow by 25-40% in 2008. Conergy's orders on hand equal more than $1.2 billion EUR. According to Chairman and CEO Hans-Martin Ruter, "These are not ten-year delivery contracts but rather hard orders for systems and components, the great majority of which will be delivered within the next 18 months."

What is as impressive (and important) is that Conergy's working cash flow (as of the 2^nd quarter) was 70% of revenues, whereas competitor Vespas is limping along with a cash flow equal to only 15% of revenues. While it appears that Vespas has prevailed in the patent dispute with German based Enercon, law suits are costly - both in executive time and money. Conergy's cash flow could prove key in an explosive environment where innovation and market position are essential to future success. Conergy also has a syndicated credit line of $600 million EUR, which "places Conergy on a solid financial footing," according to Ruter.

I'm probably also partial to any German-based company, since Germany is leading the world in solar, and additionally for the impressive showing that the German solar team had at the U.S. Solar Decathlon in October 2007, winning first place, and being one of just seven teams to generate more power than it used. But another promising development in the Conergy strategy is the recent announcement of Conergy's plan to build the largest windmill farm in Australia (New South Wales). Even though this development is early stage and is awaiting Australian Parliamentary approval, according to Forbes.com, it is more proof that the wind is at Conergy's back (so to speak) in renewables worldwide.

Note that Conergy came into buying range this month when Forbes.com said it was in "serious trouble" for forecasting that the income in 2007 would be a slight loss, instead of an expected 60 million euro ($85.9 million) profit. (Gamesa, Nordex and Vestas are trading at a 52-week high.) The company will make its annual earnings announcement on Nov. 12, but it looks as though investors have already sold off in anticipation of bad news, putting Conergy into buying range.

Conergy wins in many areas, including revenue growth, value, location in Germany, worldwide presence, the alliance with its peers (in the Solar Alliance) and CEO respectability. That's not to say that Gamesa, Nordex and (to a lesser extent) Vespas won't gain in popularity and enjoy increased share price. Merely that wind power is still a whisper on the renewable energy front, behind solar, and Conergy looks best positioned to whip up the winds into a roar.

DISCLAIMER: As of the printing of this ezine, Natalie Pace does not own shares in Conergy. (She always purchases her personal shares in any company at least three days AFTER articles are published. Check the Hot News list for future updates on her holdings.)

Green Skyscrapers and Solar Louvers.

by Natalie Pace.

Featuring the winner of the 2007 Solar Decathlon, platinum and gold LEED Manhattan skyscrapers and paraffin microcapsules.

Imagine louvers outfitted with mini-solar cells and micro-capsules of paraffin in the ceiling and walls that help to insulate your beautiful and fully-sustainable home (that even powers your electric car). If Wow comes to mind, you're not alone. On October 19^th, 2007, there were twenty teams from universities around the world competing for the best and brightest sustainable home, but one team's innovative designs were jaw-dropping -- in sleek beauty, simplicity of application and energy efficiency.

While19 other competing universities relied upon more traditional sustainable designs - green roofs and walls, brown-water irrigation systems and discarded shipping containers -- the 1^st place Solar Decathlon home that was built by the German team from Technische Universitat Darmstadt was an innovative collaboration of architecture and engineering unlike anything the world has ever seen.

2007 Solar Decathlon Winner: Technische Universitat Darmstadt Photo Credit: SolarDecathlon.org

Darmstadt won the Architecture, Lighting, and Engineering contests. The Architecture Jury said the house pushed the envelope on all levels and is the type of house they came to the Decathlon hoping to see. The Lighting Jury loved the way this house glows at night. The Engineering Jury gave this team an innovation score that was as high as you could go, and said nobody did the integration of the PhotoVoltaic system any better. Darmstadt was one of seven teams to score a perfect 100 points in the Energy Balance contest (meaning the team created more power than it used).

University of Maryland took 2^nd place and top honors in the communications category (website, tours and brochures), while the University of Santa Clara took 3^rd place with high marks in all of the comforts of life - including power, appliances and hot water. The team from University of Illinois at Urbana-Champaign won the contest for Market Viability and will be featured at the 2007 Greenbuild Conference in Chicago from November 7-9, 2007. (Former President Bill Clinton is the keynote speaker at the Greenbuild Conference this year, with General Motors as a platinum corporate sponsor.)

What the Solar Decathlon highlights is that, clearly, sustainable living is a collaborative effort between engineering and architecture. The teams that scored the highest were equally weighted in talent in both arenas, and that is exactly what is happening in green building all over the world - not just at university competitions. Green is no longer just about throwing a half dozen solar panels on the roof. Green means inviting scientists, architects, visionary kooks, engineers and discarded candles into a think tank to watch chaos light up and take on new (and more sustainable) forms.

Anyone who is knee-deep in green is rapidly discovering that sustainability applications are site specific, and, in the words of PG&E SVP Nancy McFadden, conservation is more important and valuable than solar, wind, hydro or geothermal. Solar panels aren't as efficient in Manhattan as they are in Los Angeles. In the Big Apple, PV (photovoltaic) panels take a beating from the elements and the sun's pathway is narrowed by the skyscraper landscape. Thus, "blue roofs," with rain water cisterns, ice farms, and, potentially, water turbines, help to power and conserve energy in mid-town skyscrapers that are located along the wet, Eastern seaboard. The Southern California builders are getting creative with solar as roof tops, awnings, parking structures and now, thanks to Technische Universitat Darmstadt, even louvers, but have little use for collecting rain water in the dry Southern California landscape.

Super Stars of Green Building:
Below are just a few examples (and links) to some of the world's most creative and interesting cutting-edge Green design, architecture and engineering, from all across the nation.

WorldsNest.com, Taos, New Mexico

Photo Credit: © WorldsNest.com

Angel's Nest, a fully sustainable home in Taos, New Mexico, insulates the 2-story structure with a rain forest, which also serves as the black-water filtering system of the estate. Air-to-water machines convert the indoor humidity into drinking water. The institute-like estate runs off the power grid with solar, wind and hydrogen power, recycles water, and houses an eclectic group of scientists, contractors and engineers who claim that they can reduce the cost of photovoltaics by a factor of eight, turn dirt roads into concrete with enzymes that are safe enough to drink and power skyscrapers on water turbines.

None of these prospective products are fully operational yet, but one of the most promising of the WorldsNest innovations currently seems to be the enzyme roads, which do indeed bind soil into a concrete-like hardness, using only soil stabilizing enzymes. The road, which had recently been bladed before my visit in October, was so compact that stones were sheered cleanly, without getting pulled up from the soil. Since most of the cost of roads comes from prepping the soil and rehabilitating warps and sinkholes caused by water damage, having a foundation that gets harder with rain could be an enormously efficient, cost effective, green solution.

A second great achievement at Angel's Nest is the integration of insulation, energy conservation and natural lighting. The front side of the building is floor to ceiling windows, while the backside has no windows and is a shield against the wind and elements, trapping in hot air in winter and circulating air flow in the summer.

While WorldsNest does not yet feature all of the cutting edge green technology applications that their scientists boast of owning the patents on, the founders of Worldsnest.com, Robert Plarr and Victoria Peters, are living examples of green visionaries who are walking the walk. Their home/living institute is a beautiful haven with delightfully bright and warm yoga studios, and even a floating bed, which proves that reducing your carbon footprint doesn't mean you have to give up the designer shoes! Buy Robert and Victoria's book to learn more about their Secret of Sustainability.

2007 Solar Decathlon Winner
Technische Universitat Darmstadt's solar-paneled louvers were an amazing feature of the home, but the team didn't stop there. The louvers were capable of being pulled back, like French doors, or shuttered for privacy and energy conservation. The slats themselves, which were imbedded with sleek, small solar panels, are automated to track the sun for maximum efficiency. Paraffin microcapsules offered an efficient and lightweight means of storing energy within the walls of the home. The innovations of this home could (and should) start turning up in the Home Depots and Lowes of the world soon.

The Bank of America Tower at One Bryant Park: the world's most environmentally responsible high-rise office building.
The Dursts, the skyscraper visionary greenies who are holding the high ground in Manhattan, have almost completed their second monumental achievement in sustainable urban office buildings, after having built the world's first green skyscraper, at 4 Times Square (the Nasdaq building) back in 2002. The Tower at Bryant Park sports all the latest in innovative sustainable design, including the world's first "blue" roof, complete with cisterns that capture rain water for irrigation of the plants and use in the toilets. When the Bank of America team moves into the first 34 floors next May (2008), each person will have personal climate control settings and will breathe filtered indoor air that is cleaner (by far) than the air outside.

The Bank of America Tower at One Bryant Park: the world's most environmentally responsible high-rise office building. (© Durst.org 2006)

Going for Platinum The Durst Organization and Bank of America are going for a platinum LEED rating on their skyscraper - all without one solar panel. Editor's Note: LEED, or Leadership in Energy and Environmental Design, is the industry standard for green building, and was developed by the U.S. Green Building Council. The top rating is platinum, then gold, silver and bronze. The sustainable systems incorporated into the design include: 1. Blue Roof - Cisterns collect 33,000,000 gallons of rain water annually, which is treated and then used to irrigate, flush toilets and cool towers. Savings: 10,300,000 gallons saved per year, with a 45% reduction in water costs. 2. Ice Farm (48 tanks): 8.5 megawatt co-generation plant, which allows the tower to stay off grid utilizing compressed natural gas. 3. Waterless urinals 4. Local Building Materials. 40% of the building materials are purchased from within a 500-mile radius. This supports local entrepreneurs and saves on gas and CO2 emissions. 5. Blast furnace slag (a byproduct of steel) is re-used in concrete for cement. 6. Floor to ceiling glass saturates the building with natural sunlight, cutting down on the use of artificial lighting. Natural shading at the top and bottom of the glass panels reduce glare for computer operators. 7. Continuous commissioning: annual maintenance checks ensure that operations are running properly and at optimal performance. Why doesn't One Bryant Park sport even one solar panel? According to Helena Durst, solar has a 25-year payback in Manhattan, with a 20-year life expectancy. (Perhaps someone should be lobbying the New York governor for stronger solar incentives?)

The Riverhouse at One Rockefeller Park:
This Battery Park City waterfront condominium high-rise received a Gold LEED rating. The urban flats are currently on sale starting at just under a million for a one bedroom, to almost $3 million for a 4-bedroom/3 bath with views of the Hudson River and the Statue of Liberty. Green features of the building include:

1. Rooftop Photovoltaic panels.
2. Wood from forests that are certified renewable or responsibly harvested.
3. Special paints, adhesives and sealants
4. Glass curtain wall: views and daylight without electricity
5. Geothermal wells heat/cool the lobby spaces
6. Water-saving faucets and dual-flush toilets
7. Natural gas for electricity
8. Triple-glazed "blue technology" curtain wall
9. Storm water run-off irrigates green roof - reducing "heat island" affect.
10. Storm water is also used in mechanical system cooling tower
11. Programmable thermostats and carbon monoxide censors in the parking garage

LivingHomes and the first Wired LivingHome
Imagine getting a prefab, architecturally significant, green home that is completely wired and goes up onsite in one day. Hard to believe, but true. The LivingHomes team builds the home in a factory, and then ships it to the site in under a dozen modules.

The living room of the first prefab green LivingHome -- platinum LEEDS home.

The first LivingHome, which is available for tours in Santa Monica, California, was the first platinum LEED rated home ever. Whole Foods junkies, Patagonia-wearing yoga lovers, hybrid owners and Wi-Fi Skypies should be on cloud nine with this beautiful home. First movers pay a premium, but could end up with a home that will be beloved and renowned throughout time, much as the Case Study homes from the 1950s are today. Be the first in your neighborhood to own one, or better yet, contact the team and build your own LivingHomes community. For more information, read "Green and Fab," from volume 4, issue 10.

BP's Green Gas Station:

Photo Rendering Courtesy: BP.com

Helios House is a "living laboratory" that uses green, eco-friendly innovations to give consumers a little better station experience. Located at the corner of Olympic and Robertson in Los Angeles, this station requires less water, wastes less water and pollutes less than a typical gas station. Other features include: 1. Recycled glass in the glass tiles 2. Solar panels 3. Green roof (living plants insulate and take CO2 out of the air) 4. Alkemi sinks and toilet seats (made with 60% post-industrial aluminum scrap) 5. Cell phone drop off (recycle your old cell phone at the station) 6. Low VOC "volatile organic compounds" paint is better for breathing Learn more, including how to take your class on a field trip to Helios House, at TheGreenCurve.com.

Solar One, Nevada

The 64-megawatt Nevada Solar One. Photo courtesy of Solargenix Energy.

Solar One, the world's 3^rd largest solar power plant, is located in Boulder City, just outside of Las Vegas. Nevada Solar One utilizes concentrated solar collectors - parabolic mirrors - with receivers, heating oil and steam turbines to generate enough power to light up over 15,000 households. Generating 130 MW hours/year, Solar One Nevada is a full-scale power plant. The carbon footprint reduction is, reportedly, equivalent to removing 17,000 cars off the nation's roads.

12 Green Tips For Your Home.

Easy. Easy. Easy. Beautifies your electric bill (and our world).

1. Remove your cell phone charger from the socket. This alone could save the planet - or at least Delaware (the nation's friendliest state for business). The charger keeps charging and charging -- even while the phone is chasing all over town with you, buzzing away with text messages. If you knew how much of your electricity bill was this one silly waste, you'd unplug immediately - as soon as it was charged!

2. Go Naked! In the winter, turn the thermostat down a few degrees and wear a sweater inside. Throw an extra blanket on the bed. In the summer, go naked (just kidding, wear a bikini at least). Be sensitive that a few extra degrees saved in every household amount to a massive reduction in energy statewide. In fact, according to Cynthia Bryant, California Governor Arnold Schwarzenegger's Deputy Chief of Staff and Director, in 2004 alone, California saved over 1.3 trillion kilowatt hours, for a cost reduction of $98.7 billion, after a statewide campaign to conserve energy.

3. Conserve Water: Turn the faucet off when you brush. Take shorter showers (or partner up). Be conscious that water is a precious resource and piping it in uses up valuable energy. Proactive homeowners could look into brown water systems to reuse their shower and sink water for watering plants.

4. CFLs Compact Fluorescent Lamps: Replace your old light bulb with this energy-efficient, long-lasting bulb. More energy, with less waste and less cost because you replace them once in a blue moon.

5. Electrochromic Windows. Darken and lighten electronically. In summer, darker windows reduce solar heat gain and still allow visible light to pass through. In wintertime, the windows can be left clear to brighten and warm the house.

6. Insulation. Keeping out unwanted heat and cold means that you don't have to be an energy hog to be comfortable. A rudimentary way of doing this is with curtains and shading in the summer and keeping windows and doors closed in the winter.

7. Low-Emissivity Windows. (low-e) coatings are thin, transparent coatings of silver or tin oxide that permit visible light to pass through but also reflect infrared heat radiation back into the room.

8. Passive solar energy and day lighting. Considerable amounts of solar energy can be captured for desired heating (while avoiding unwanted heating) without active mechanical systems, simply by properly designing a home, with respect to the sun. South-facing windows can let in a lot of heat from winter sun, while large overhangs keep out that solar heat in summer.

9. Phase-change materials. If you are remodeling, consider that it takes energy to change a solid to a liquid or a liquid to a gas (for example, melting ice or boiling water), which can be yet another way to heat and cool without juice from the grid. Conversely, there is energy embodied in the liquid or gas that can be released as heat energy when it liquefies or solidifies. Excess hot water or exhaust air is routed through the phase-change material, cooling the water or air and melting the material. When heat is needed, cool water or intake air is run through the phase-change material, absorbing heat from the solidifying material. (This application is being used in One Bryant Park's ice farms as well as the Universitat Darmstadt's 2007 Solar Decathlon winning home, with its microcapsules of paraffin.)

10. PV or solar electricity. Traditional building components can now be replaced with PV materials. BIPV materials are used for vertical facades, roofing systems, and awnings for parking and shading structures. Cost is thereby offset by not having to purchase the overhang materials.

11. Solar thermal collectors. Solar energy is used to heat water. Apricus was the solar water heater of choice at the Solar Decathlon.

12. SIPs Structural Insulated Panels. Pre-fab foam insulated panels make superior insulation easier to install.

For more information and links to green products, be sure to read the article, "Reduce Your Carbon Footprint!" from volume 4, issue 10.

Envision Solar CEO Robert L. Noble,

on Solar Carports, the Silicon Shortage and the Hottest Solar Companies on Wall Street.

Solar energy products, applications and companies are sprouting up as prolifically as Internet stocks pre-Y2K. At the 2007 Solar Conference in Long Beach, California, over 200 speakers and 10,000 visitors gathered to showcase all things solar. One of the newer companies in this space is Envision Solar, a privately held company that wants to lead the world in installing solar carports. I spoke with CEO Robert Noble by email in October 2007, discussing the solar marketplace and his market edge.

Which solar company currently has the best product?  (Does SunPower have the best solar panel?   Or Trina?  Or Suntech?)

Robert L. Noble, Founder/CEO, Envision Solar:  Like so many things in business, the short answer is, "It depends." Most of the polycrystalline module manufacturers are producing very high quality products, but are using the same raw material providers and same manufacturing equipment - without brand recognition and very high level quality control, many manufacturers may be forced to compete on price, leading to a so-called "race-to-the-bottom."

As a side note, you may want to see past issues of Photon International, if you'd like a review of global module producers / products today.

Which company is establishing a niche in an area with great potential?  (Carmanah's solar LED lighting for signs, airports, etc?)

Maybe we're biased, but we think we're approaching the niche of parking lot solar arrays with a unique view of the world - there's a staggering amount of unshaded parking in the U.S., not to mention an enormous potential for charging stations for plug-in hybrid electric vehicles, which many of the major auto manufacturers are working towards today.

Where are these companies going to get the silicon?  And is this one way where a company can edge out another Ñ by securing a steady supply without disruption?  (I'm thinking of the problems Evergreen had with MEMC Electronics last year.)

Right now, all the major silicon producers are scaling up, and really started doing so around 18 months ago.  Since we're working exclusively with Kyocera for our projects today, we're pretty well insulated from some of the shortages, but in listening to the manufacturers last week at Solar Power 2007, and trying to "read the tea leaves," I would speculate that there should be some alleviation in the short term supply issues in the next 9-12 months. In the short term, it will be important to have an uninterrupted supply, but in the long-term, innovation will be key.

Which company do you think is best poised with cutting edge and/or disruptive technology or break through in the industry?  (With rapid innovation, the company that comes up with something 10% better could secure an increase in business that is 10X that of the competition.)

Disruptive innovation is a difficult thing to predict accurately, but the venture capital industry has placed hundreds of millions of dollars on a wide variety of solar technology companies in recent years. Again, from what we've heard at Solar Power 2007, even some of the traditional polycrystalline manufacturers believe they can produce grid-parity electricity by 2012, which is awfully exciting.  

Any other comments?

There are vast tracts of land available for solar deployment - we need look no further than our parking lots, building facades, and rooftops in the search for clean energy.

To learn more about Envision Solar's, Envision Solar Trees and LifePorts, go to EnvisionSolar.com.

The Feds' Big, Fat Rate Cut.

by Kassie Welch.

Why lower discount rates don't mean lower mortgage rates.

Kassie Welch DreamHomeOwnership.com

I've received many calls and emails regarding the Fed lowering rates.  One person called today asking for a mortgage at 4.50% and said, "The news says the Fed cut the rate to 4.50%.  That's what I want.  If you won't give it to me, that's fine.  I can find a lender who will!"  Some people do not believe it when I try to explain reality.

What's worse: You can bet you will hear mortgage radio ads within the next week saying: "The Federal Reserve has cut rates! Call now and get the new lower mortgage rate!"  There is no shortage of mortgage companies out there who exploit the confusion of the general population when it comes to marketing efforts.  Now more than ever, it's critical to work with a qualified Mortgage Consultant, like myself, with over 20 years experience.  I'm here to help during this crucial financial time in history, where there is no certainty how severe the current credit crisis may be or how long it will last. 

Its amazing how much confusion there is about what the Fed is and what they actually do.  Below are an explanation and a clarification of the impact of Wednesday's announcement.  It's a bit long, but worth reading if you'd like to understand more about how mortgage interest rates are priced.    

In September, the Federal Reserve's monetary policy committee decided to cut the overnight borrowing rate between banks (fed funds rate) by 0.50%, from 5.25% to 4.75%. This was the first rate cut since June of 2003 and the largest since November of 2002.  The policy committee also cut the discount rate (rate for bank loans directly from the Fed) by 0.50% from 5.75% to 5.25%.  This follows an intermeeting, discount rate cut of 0.50% on the 17th of September.

The meat of the statement is contained in the following excerpt: "Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally.  Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."

This cut by the Fed has zero direct impact on mortgage rates.  As noted above, the rates controlled by the Federal Reserve impact the cost of funds to banks.  This affects rates on such things as equity lines of credit, credit cards and other Prime Rate indexed short term lending programs.

Mortgage rates are determined by the bond market.  Mortgage lenders do not obtain the funds they lend out on mortgages from the Federal Reserve.  They obtain the funds through selling bonds.  These "Mortgage Backed Securities" can be purchased by any investor through most any investment banker or broker.

A bond is a fixed income security.  This means you pay a certain price for the bond when you purchase it and at this price you are guaranteed a set rate of return.  So if you pay $95 for a 10 year bond that is yielding 4.5% you are guaranteed to receive a 4.5% return on your $95 every year for 10 years and at the end of this time period you will receive your $95 back.  Thus the rate of return you will receive is fixed: a fixed income security.

The price on bonds changes constantly, just like individual stock prices.  Bonds are traded on the open market continuously just like stocks.  The price on a bond and the yield move inversely.  So as the price on a bond goes up... the guaranteed rate of return or yield goes down.   As demand for a bond decreases, there are less buyers the bond issuer must pay a higher rate of return to attract buyers and thus the yield increases.

The key factor that drives prices on bonds is INFLATION, or in general, the increase in the costs of goods and services.  Inflation means it costs you more to live.

Since the rate of return on your bond is fixed, how much your return actually helps your buying power in the real world is impacted by inflation.  Let's say you have a bond that is paying you 5%.  If the inflation rate is running at 2% per year then your bond is giving you a return in real buying power of 3%.  But if the inflation rate jumps to 4%, suddenly your rate of return in real buying power is reduced to only 1%.  So your bond is not worth as much when inflation runs higher.

This is why bond prices and yields are primarily impacted by economic data related to inflation.  Bond investors only care about a Fed rate cut in the context of how they view it impacting inflation moving forward.  This is the key point! Again, the Federal Reserve has zero direct control over mortgage rates. Bond yields and thus mortgage rates are determined by bond prices which are driven by inflationary perceptions on the part of major bond traders!

Not only does the Federal Reserve have no direct impact on mortgage rates, but often a Fed move on the Fed Funds rate or the Discount Rate can have the exact opposite effect on mortgage rates.  This in fact is exactly what happened with the bond markets reaction to the Fed rate cut on September 18th.

The bond market (I am using the benchmark 10 year US Treasury bond for example as most mortgage backed securities track in line with Treasuries) actually sold off slightly in reaction to the news of the first Fed cut.  10 Year Treasury bonds closed down 2/32 with yields up slightly.  As I type this (3:06 pm on the 19th) 10 Year Treasury bonds are down a whopping 18/32 and yields are at 4.55%.

Last month, this yield hit a low of 4.32%. So as you can see, bond yields actually increased by .23 despite the Fed cutting by .5% in September.   Why?  Because the bond market is looking forward and is focusing on inflation. Oil prices are currently at all time highs and commodities prices are also trending higher.  Both are inflationary.

If bond traders think inflation going forward could be a concern then bond prices will drop, yields will rise and thus mortgage rates will rise.  Even though consumer price data released today indicated good news on the inflation front, bond traders are being extremely cautious and exhibiting some fear that reduced economic growth may not forestall increasing longer term prices.

I hope this has given a general explanation of why the Fed does not control mortgage rates and how they actually work.  This does not mean that the Fed action will have zero impact on mortgage rates.  Hopefully, it will.  If the Fed move can stimulate the economy and prevent a recession and at the same time reduced growth results in slackening price pressures and lower inflation then the bond market may be content and we could see mortgage rates hold fast or decline.

But keep in mind that mortgage rates right now are extremely low.  There is not much if any room for rates to really decline.  Long term fixed rates are currently within .75 of all time lows seen in 2003 (shorter term rates thus adjustable rate mortgage rates are well off all time lows and thus are not as attractive currently).  I think it is very unlikely that we will see inflationary pressures slacken to the point where bond yields will decrease significantly from where we are.

If oil drops to $40 a barrel and both consumer and producer prices decline substantially then we could see bond yields come down.  But that's certainly not something I would gamble on!

The real factor with regard to refinancing is the loan program.  If you're currently in an ARM (Adjustable Rate Mortgage), now is the time to refinance into a longer term ARM (10 years is what I would recommend) or a 15 or 30 year fixed, if you can afford it.  This is especially the case for self-employed individuals who utilize stated income loans since many of these programs are disappearing.  Just because you were able to buy your home or refinance in the past does not mean the loan program is or will be available in the future. 

In terms of buying homes, interest rates are still very low.   Even if the real estate market continues to soften, more than likely interest rates will rise resulting in the same or higher monthly mortgage payments.  Meanwhile, renters lose the tax benefit of home ownership, which is writing off the interest portion of their mortgage payment as well as the property taxes. This can really add up! So, be sure to factor in low interest rates and tax savings, in addition to the home price, when you are deciding your best buy-in moment.

For more information, you may reach Kassie at KassieWelch@aol.com or visit her website at www.DreamHomeOwnership.com.  

Foreclosures are Lower Than You Might Think, Despite the Histrionic Headlines.

Q&A with mortgage loan specialist Kassie Welch.

35% of people who own a home, don't have a mortgage and 93.48% of all people who do have mortgages are paying on time, according to Douglas G. Duncan, Ph.D., Chief Economist, Mortgage Banking Association. Wonder what other important details are being twisted into the hysterical headlines you've been so worried about? Read on as NataliePace.com subscribers chat with mortgage loan specialist Kassie Welch, and reflect on recent data provided by the Mortgage Banking Association.

I loved your 5 Tips For Borrowers who are in danger of losing their home.

Thank you. It's important that people know what their options are so they can either keep their home or save their equity if they can't find a loan that works for them.

Natalie's Note: If you missed that article, you can read Kassie's article on Subprime Loans in the vol. 4, issue 10 ezine.

Has the Fed's rate cut helped out?

Actually, the Fed lowering the discount rate didn't help first trust deeds since the cut stimulated the stock market, detracting from bond investment, so mortgage rates actually jumped up. First Trust Deeds' pricing is based off of the 10-year bond, and seconds are tied to prime. I have an article I wrote detailing this, in this month's ezine, that you might want to read.

What do you anticipate going forward, based upon your knowledge of seasonal trends, as well as the current pace of home buying?

First, I need to qualify that I only track the Los Angeles market, which is where I'm based, so my comments on the current market are area specific. As trends go, this time of year things tend to slow down. Most people don't want to move/relocate during the holiday season. Generally, those with their homes on the market really need to sell. Could be because they've already purchased a new home, are relocating, or an illness/death, etc.

So, in general, would you say that the annual trend in real estate is that winter is more of a buyer's market?

Absolutely! In fact, deals can be available if you're willing to buy/move when others aren't.

We've heard horror stories of price drops throughout the U.S. For instance, the National Association of Realtors reported that the median price for existing single-family homes dropped again in the 2^nd quarter of 2007 for areas like Las Vegas (-3.6%), Cleveland (-7.1%), Daytona Beach, FL (-8.3%) and Sacramento (-6.3%), while other cities saw sharp rises in prices, including Salt Lake City (+21.9%), Salem, OR (+16.7%) and Glen Falls, NY (+10.7%). In general, nationwide, prices were off -1.5%, with only the NorthEast showing overall, but modest, regional gains (.7%). What are you seeing in Southern California?

As for the real estate market in Los Angeles, it's holding. Major lenders come out with distressed and declining areas and LA County is not on the list. What we're seeing here in LA is the market stabilizing, which is a relief to many buyers who got out of the game because the bidding wars were pushing up prices.

I know this isn't the case in other areas of California, like San Diego, Bakersfield and the inland empire. I also wonder how the fires will affect that declining market since natural disasters tend to drag down values.

Natalie's Note: in Los Angeles, prices were up 2.9% in the 2^nd quarter of 2007, while San Diego posted flat performance of .2%, according to National Association of Realtors.

And the cover of the LA Times had a lot of flattened homes in the San Diego area...

I heard yesterday that 950,000 people were evacuated, but I don't know how many will actually end up displaced.

We've been discussing seasonal trends, but we do have to consider the larger annual trends, however, before going so far as to say that this year's prices will hold strong in the next 3-5 years. According to the National Association of Realtors, real estate returns are 6.6% annualized (on average) for the past 38 years (since 1969, when the organization began tracking returns). This includes some dismal years, and some years of rocket ship returns, as we saw prior to 2006.

Being in the business for over twenty years, I've seen lots of market fluctuation. I've watched values go up as well as down. The irony is that when values are down, interest rates are usually up, making the payments often times higher when buyers wait for the "deal."

Buying real estate is more than an investment for most people. It's not only the roof over your head, but it's your HOME. Regardless of market conditions, there are always people who need/want to own their own home, whether it's for the tax benefit, housing needs, or just that next step in life. I've weathered changing markets because I always put my client's needs first and take their entire financial goals into consideration.

I was wondering about people trying to fix their subprime mortgages. It seems to me that they go into these products because they couldn't afford the fixed rate payments at the time. But now that the interest rates for the adjustable rates have gone past the fixed rate, it would be almost impossible to refinance. Also, given that qualifying is now so hard, is there any hope for all of these people?

It really depends upon the situation. If "hope" equals low payments like they're used to, possibly, if they're willing to go into another negative loan. If not, rates and qualifying are high and more stringent.

Do you see the mortgage companies renegotiating on the notes now in order to avoid more foreclosures?

Some lenders are going to establish units that work on renegotiating loans. The modifications that I've been hearing about, however, are also at market rates. The only difference is that the fees are lower for the modification versus a refinance. The problem with renegotiation is that most of the companies servicing the loan don't actually own the loan. That makes them the middle-man who has to go back to the "investor" for any modification, which is challenging. I suspect that until a particular investor takes a big hit in foreclosures, that they'll be less likely to renegotiate.

The foreclosure rates are very high in comparison to where they've been. (We've been in a boom and who would foreclose when they could sell their home at a profit?) Overall, however, foreclosure rates are moderate statistically speaking.

NataliePace.com Note: Historically, about 1 percent of all first and second mortgages have gone into foreclosure, according to RealtyTrac.com. In a national delinquency survey conducted by the Mortgage Bankers Association, in the 2^nd quarter of 2007, foreclosures were at 1.40%, while delinquencies were 5.12%.

What would be a typical offer by a loan company to renegotiate? Because it seems to me that these new homeowners were barely able to afford the original payment. But what I see as the salvation here is that real estate, given 5-10 years, does recover nicely. If only the loan companies have the ability to see this and work to keep people in their homes rather than do the 1930's thing and take back all these homes. Actually, we're talking about Wall Street trying to come to a solution since they would be the major investors. Correct or not?

As for typical offers, I haven't heard about one. I do know from past experience, when I was an Auditor at a direct lender, that renegotiations are generally done for a short period of time. The assumption is that someone is experiencing hardship, which is affecting her/his ability to pay, but that the hardship should pass. I also agree that it will probably take 5-10 years for the market to recover and appreciate again.

A couple of mortgage companies refused to negotiate on some former clients' homes and they also refused to accept a lower price on new buyers' (short) and now they are holding the homes and trying to sell them a good $50,000 below what offers were brought to them months ago. I don't know what they are thinkingÉ

There's talk that the government will jump in with some "savior loans" via FHA, but these loans all require full documentation. This doesn't really help the typical homeowner who's in trouble now, who more than likely bought with a stated income product. Short sales are tough, too. Again, until the lenders feel the losses via foreclosure, they'll probably hold off taking any unnecessary losses. Renegotiating temporary buydowns is what I'm hearing about now.

Natalie's Note: Savior loans, which, if offered, will most likely be held through Fannie Mae and Freddie Mac, are capped at $400,000, which doesn't do a lot of good in the Southern California marketplace.

What we need is a solution that encompasses the 5-10 year time period, such as an equity share.

Kassie: I think direct lenders that are holding the actual paper they're servicing are going to be more apt for creative solutions, mostly because they'll be in the position to do so. If you give me more specifics, I'm better able to comment. I also have a few examples myself.

One recent call was from a family (6 adults) that lives together in a 6/4 house with a negative amortization loan. Payments are incredibly low at $1900, but the negative amortization loan is getting ready to recast (usually at year three when the homeowner hits 115% of the original loan amount, if they made only the minimum payment). The lender offered them a jumbo 30-year fixed at 6.5% and no fees, which is excellent, but this would basically double their payments. They can't afford this, but where are six adults going to pay less to live?

Natalie's Note: In terms of solutions for anyone really trapped in the subprime squeeze, etc., you might check out the FederalReserve.gov website. The Federal Reserve has an entire section devoted to helping any real estate homeowner who is in trouble, and they are actively working to make sure that the overall economy keeps working.

However, in the very big picture, there really aren't that many homeowners who are currently in trouble, despite what the headlines are screaming. 35% of people who own a home, don't have a mortgage, and 93.48% of all people who have mortgages are paying on time (source: Mortgage Banking Association).

What questions would you ask if you wanted to renegotiate a loan? Are there things to know so that you have the best chance?

I'd ask a lender what their policy is for hardship cases, since those guidelines are already in place. If your situation isn't hard case, like job loss, illness, etc., ask about refinancing without fees.

Is there a specific person in a bank that would be good to ask for when renegotiating? What kind of questions or approach should you ask/take?

Usually it's the collection department that's the first contact because hardship usually implies you're already behind in paying. They'll let you know who to speak with, if someone internally is available. Again, the best chance will be with direct lenders.

 If you have additional questions for Kassie, you can contact her at DreamHomeOwnership.com. Also, be sure to check out her article on "Subprime Loans," in vol. 4, issue 10.

A Shattered Peace.

by David A. Andelman.

It was 1919, the First World War was over, and the world's representatives gathered in Paris for the Treaty of Versailles, where they engaged in tough debates and hard partying, and changed the course of history to the present day. These events were fueled not only by world leaders but by compelling players who later became the bold-faced names of the twentieth century -- Ho Chi Minh, Allen Dulles, Lawrence of Arabia, John Maynard Keynes, Chaim Weizmann, and even Elsa Maxwell. The many errors committed by World War I peacemakers ultimately led to crises from Iraq to Kosovo and wars from the Middle East to Vietnam.

With a cautionary message for readers today, Andelman shows how world leaders dismissed repeated warnings from their experts and laid the groundwork for a host of catastrophic events. Beyond the hard bargaining at the negotiation table, there was as well a glittering, often chaotic social whirl that accompanied and complemented the talks themselves. Below is the story of the arrival on the international scene of one of these players -- the so-called "hostess with the mostest," America's top partygiver of the 20th century, Elsa herself.

This is an excerpt from the book, A Shattered Peace: Versailles 1919 and the Price We Pay Today. By David A. Andelman (Wiley: $25.95).

While the diplomats were establishing their positions and studying the political landscape, others were bringing their own unique and individual sensibilities to the new Europe that was already beginning to emerge after the First World War. A young Elsa Maxwell traveled to Paris as companion of a twenty-nine year old Philadelphia mainline society divorcée, Henrietta Louise Cromwell Brooks, fresh from an affair with General John J. Pershing. Mrs. Brooks's goal was to land an eligible second husband. She came home with a dashing brigadier general, at thirty-nine the American army's youngest. His name was Douglas MacArthur. But Miss Maxwell's goal was an even broader one -- to bring a new America to Europe. As she wrote later:

Many of the most glittering soirées took place at the home of Mrs. Brooks's mother where the gay young flapper and Miss Maxwell installed themselves. They quickly turned this elegant townhouse into a headquarters for the American military delegation and other young foreign army officers attached to the various embassies. They came for the Saturday night dances, but they took away the music performed on the piano by the inimitable Elsa:

And so she did -- enrapturing hosts of invited and uninvited guests from Bernard Baruch, advisor to seven presidents and a young aide on the American mission, to Arthur Balfour, the British foreign secretary who, one evening, she captivated with Cole Porter's latest hits. "Balfour's eyebrows became an extension of his hairline when he first heard the irreverent lyrics, but his reserve soon cracked and he laughed uproariously as I dipped deeper into Cole's private stock," Elsa observed.

At the dinner party at the Ritz that followed, Elsa mixed Balfour with Lord d'Abernon, former financial advisor to the Egyptian government and shortly to become the first post-war British ambassador to Berlin; Mrs. George Keppel, the avowed mistress of King Edward VII, and whose daughter Violet was just winding up a notorious love-affair with Harold Nicolson's Vita Sackville-West; the celebrated Edwardian beauty Lady Ripon; her great friend the Grand Duke Alexander of Russia who'd been hoping (in vain, of course) that the Peace Conference might help restore to the Russian throne his just-deposed and executed family; and thirty-eight year old Sir Ronald Storrs who ran Britain's disastrous Middle East policy. Harold Nicolson was not among the invited.

It was an extraordinary evening which wound up very late at night in the newly-opened nightclub of Paul Poiret where Elsa's guests gazed on "undressed French chorus girls" and were privy to "ribald jokes which probably never before had assaulted the ears of one of His Majesty's elder statesmen, but (who) chortled like a schoolboy." When Balfour bid a fond farewell to Miss Maxwell before dawn the next morning, he enthused that this was "the most delightful and degrading evening I have ever spent." The guest list was most opportune. The author of the famed Balfour Declaration, which set the Jews on a path to a homeland in the Middle East, was dining cheek by jowl ö quite literally, it would appear ö with a young Sir Ronald Storrs, military governor of Jerusalem, who had his own issues with how the Middle East should be divided, the role of the Jews and of Britain. They were thrown together for that one evening, but they were ultimately to provide some of the most explosive moments of the Peace Conference itself and many decades that followed. And into this heady mix, were to arrive the ultimate catalysts ö Sheikh Feisal ibn Hussein and Lawrence of Arabia -- self-styled power brokers who brokered little, in the very long run, but their own interests. Sad that few were perceptive enough to see this at the time.

David A. Andelman, author of A Shattered Peace, is executive editor of Forbes.com, and a veteran foreign correspondent for The New York Times and CBS News.

Top 10 Reasons to Renew Your Subscription to NataliePace.com Now.

(Clean energy is the top performer on Wall Street!)

1. We are in the money. Subscribers like Sam Sanders are up 87 percent this year alone. If you were reading our reports religiously, you might be just as blessed. In Sam's own words:

What a year since I first heard you talk at the Millionaire Mind Intensive last October, 2006. Your approach to the market made sense and your fee to subscribe was reasonable; in fact this was the best investment I have ever made to get financial insights and recommendations. Taking your picks I increased my stock portfolio over 87 percent for the year and I feel confident I am invested in stocks that will continue to play out positively for the future. You have truly made investing fun, interesting and profitable. Thank you. Kindest regards, Sam

2. Green is Good. Clean energy was the top performer in the first and third quarters of this year, above even energy, which is saying a lot considering oil prices are sky high and China and India are drinking up the supplies like growing, thirsty teenagers. In the third quarter, clean energy rang up gains of 10.6 percent (in 3 months!), while energy gains were 9.39 percent, followed by technology at 6.14 percent gains. You can also enjoy the fact that most scientists think we're saving the world by promoting wind, solar, hydroelectric and geo thermal power sources.

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4. The Santa Rally and the Pre-Election Year Rally have performed beautifully this year, just as we reported that it was poised to do since last December (encouraging you to stay overweighted in stocks, particularly in the alternative energy field). Since January of 2005, the Dow Jones Industrial Average has posted gains of 30 percent, while NASDAQ is up 25 percent. Woo Hoo! And you knew to ignore subprime doomsday prophets and stay in, thanks to our news reporting and prediction that a big, fat rate cut by the Feds would save the Santa Rally.

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SUBSCRIPTIONS:
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Are You a Zillionaire or a Cranky, Rushed, Overworked Mouse?

by Chellie Campbell, author of Zero to Zillionaire.

It was a Winnie-the-Pooh kind of blustery day, after a rainstorm. The wind darted fitfully through the puddles in the parking lot; sunlight silvered the edges of few remaining clouds. Gusts blew strands of hair into a nimbus around me as I strolled to my car, the box boy following me with my cart full of groceries.

Filled with that joy of living that sometimes sails on the breeze of such a day, I threw my arms wide and said, "Isn't this a glorious morning?" as I opened the trunk of my car.

The young man smiled as he started loading my trunk with my newly purchased goodies. "I was just thinking of that song," he said, and started singing, "Oh, what a beautiful morningÉ"

"Oh, what a beautiful dayÉ" I joined in.

He turned to me and we sang the rest of the chorus together in full voice: "I've got a beautiful feeling, everything's going my way!"

Several people walking by looked at us curiously, but we didn't care. We laughed together and I clapped my hands, delighted with this moment of shared connection. "What's your name?" I asked, smiling happily.

"Ken," he replied. "What's yours?"

"Chellie," I said, and extended my hand. He took it and we shook hands. "Pleased to meet you," we said in chorus, and laughed again. We wished each other a beautiful rest-of-the-day, and waved goodbye.

No, we're not quitting our day jobs, or trying out for American Idol. Not every moment has to lead to some big thrilling conclusion or life change. It's just a moment out of time, when the cares and the goals and the worries and the to-do lists fade into inconsequence, and we live truly in the moment of now. Eckhart Tolle wrote an entire book called The Power of Now but all you really need to know is what Baba Ram Dass said in the sixties: "Be Here Now." Pay attention to this precious second of your life. And this one. And thisÉ

When you have "too much on your plate" and you are rushed to get everything done, you are missing your life. Life isn't in the to-do list or the fear of "what will happen if" or the longing of "I'll be happy as soon as." It isn't in your dreams or plans or goals. Life is in the spaces between those things.

When was the last time you sang with the box boy at the market?

Overcoming Overwhelm
This article isn't about getting more done, but getting less done. I remember years ago, watching Michael in the television series Thirtysomething, say words to the effect that "all of life boils down to six activities: 1) Eating; 2) Sleeping; 3) Goofing Off; 4) WorkÑif you're lucky; 5) SexÑif you're really lucky; and 6) Looking for a place to park."

I don't think we do enough goofing off.

In the spring of 2005, the non-profit organization Families and Work Institute released a study entitled Overwork in America. They found that one-third of the respondents felt chronically overworked, and more than half reported feeling overwhelmed at least once in the past month by the amount of work they had to accomplish. More than half complained that they were often asked to work on too many tasks, were interrupted too many times, and that resulted in difficulty in completing projects. Nine out of ten said that although they worked hard, they didn't have enough time to get everything done. 79% of those surveyed said they had paid vacation time in 2004, but 36% weren't planning to use it.

And those that do take vacations often take their cell phones, pagers, laptops, Blackberrys, etc. and keep right on working while the Seine and the Danube and the Mississippi rivers roll on by, ignored and unappreciated. People laugh and say to me, "What's a vacation?" They are so afraid they'll miss a phone call, or that they won't get all of their work done, that they don't even go out of town. A poll by the National Federation of Independent Business showed that most small businesses are open for 11 hours a day, usually beginning at 8:00 a.m. and more than 25% of them are open seven days a week.

Does this sound like you? I told a fellow business owner that I was excited about my upcoming vacation, and she rolled her eyes and said, "What's a vacation? I haven't had a vacation in six years." I was horrified. "You don't get them back, you know," I said. She stared at me. "It's isn't like you save them up and some year you get six vacations. Those six vacations are lost forever. If I were you, I'd schedule one helluva grand vacation for myself right away!"

Do you work even when you're sick? Comedienne Rita Rudner says, "I work for myself which is great. Except when I call in sickÑI know I'm lying." The common wisdom about owning your own business is that you can work half-days. And you can choose which half you want to workÑthe first twelve hours or the second twelve hours.

Are you bragging about how you suffer for your business? Or your art? Or your job? Or your children? You build the mouse trap, you put the cheese in it, you snap it shut on yourself, you whirl on the treadmill, and then you complain about your mousey life. Besides that, you're a cranky little mouse. Do you think you're not wearing that "I'm-so-busy-please-don't-interrupt-me" face? You think I can't hear the annoyance in your voice when I call and I've disturbed you? Who do you think wants to hire cranky, rushed people? And who wants to marry them?

Are you a Zillionaire or a mouse?

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. You can sign up for Chellie's Ezine and workshop at www.chellie.com.

Ninjas Take a Toll.

by Paul Woods, president & CEO of Odyssey Advisors, LLC.

The stock market goes bungee jumping in the third quarter.

In the third quarter of 2007, the meltdown in the mortgage market continued to affect housing, and ninja loans became a new buzzword. These aren't loans made to Japanese dressed in black, but are made to borrowers with no income and no job or assets. While the bulk of these are concentrated in real estate, many credit card lenders have additional exposure as they chose not to let a little thing like a lack of a Social Security number get in the way of giving credit cards to our burgeoning immigrant population.

While most financial companies had their public relations departments working overtime to assure us these loans weren't that big a problem and they didn't have much exposure anyway, investors weren't buying it. Everyone, including the Federal Reserve, knows that most of these loans will reset at higher rates in the next 12 months, which could make the current problems look like the tip of the iceberg. To cushion the pain of this on borrowers and financial institutions, the Fed reduced the Federal Funds rate by 50 basis points toward the end of the third quarter, and more reductions are now expected.

This is the same Fed that caused most of this problem in the first place by keeping interest rates too low for too long and flooding the economy with liquidity, so depending upon them to fix it seems roughly equivalent to asking an arsonist to put out a fire. Although we were happy to see the resulting rally in the stock market, throwing a life preserver to lenders foolish enough to make these loans in the first place probably insures this problem will happen again.

Looking at overall returns for the quarter might give the impression the stock market was fairly dull. It was anything but, as the returns shown mask a bungee jump in stock prices during the third quarter. The stock market has an evil twin that's irrational, high strung, and volatile, and that twin was in charge through August 16^th. By the middle of the quarter, the stock market had given up its gain for the year and was in negative territory. The good twin finally subdued his evil brother in the last 6 weeks and the result was a modest return that probably wasn't worth the aggravation.

In the third quarter in stocks, big was good, growth was better, and small companies and value stocks mostly stunk up the place. For reference, here's the stock market segment scorecard for the second quarter.

Source: Thomson One Financial, Thomson Baseline

Among industries, the story was rising energy prices. Anything that had energy or tech in the name did well, while industries likely to be hurt by higher energy prices lagged the rest. Investors generally preferred resource/raw materials companies, technology, and industrials while financials, transportation, and consumer spending stocks lagged the rest. For reference, here's the stock market index and industry group scorecard for the third quarter of 2007:

Source: Thomson One Financial, Thomson Baseline

As you can see, 2007 is shaping up to be a coming out party for alternative energy in general and clean energy in particular. Investors are beginning to recognize that higher oil prices are a blessing in disguise as they make the economics of alternatives look better. Whether your hot button is reducing hydrocarbon emissions or telling the folks that control world petroleum supplies to put their oil where the sun doesn't shine, that day gets closer with every increase in energy prices.

Source: Bloomberg LP

As you can see from the above, lower interest rates produced a rally in the bond market. The Federal Reserve finally got around to its usual pattern of cutting interest rates before a Presidential election year, though it took them longer than usual in 2007. They appear to be doing their best to make up for lost time, and cut the Federal Funds rate by ý% in September. The Fed has indicated that further interest rate reductions are likely, and we have no reason to doubt them.

An examination of current yields still shows yields on one year bonds higher than the two year maturities. As a result, there's room to correct this inversion, and another Federal Reserve rate reduction of at least ý% by the end of the year appears to be likely. Our reaction has been to lengthen the maturities of bonds in our fixed income portfolios while continuing to emphasize credit quality and liquidity. Government agency bonds still offer attractive yield spreads over Treasuries, particularly in five year maturities.

Economic growth continues to be positive, but unexciting. Real growth is chugging along at a bit less than 2% per year, but corporate profits remain stubbornly strong and continue to exceed expectations each quarter. In addition, money supply growth has begun to accelerate and this, combined with the likelihood of lower interest rates, reduces the chances of a recession and makes it more likely that economic growth will again begin to accelerate sometime before the next election.

Although the stock market's evil twin occasionally makes an appearance in October, the fourth quarter is when investors usually pick up a bounce in their step and it isn't because of the holidays. In the last ten years including three years of the worst bear market in a generation, the fourth quarter has produced a positive return in nine of those years. With the stock market still undervalued relative to interest rates, corporate profits still growing, and real estate and bonds offering little competition, we'll be very surprised if the stock market doesn't add to its gains 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.

Prevent the Portfolio Pack Rat Syndrome.

by Michael Iachini, director, mutual fund research, Schwab Center for Financial Research

Does your mutual fund portfolio look like a pack rat's closet, bursting with yesterday's hot styles and top sellers? If so, you're not alone. Mutual fund investors tend to pour money into hot asset classes just as they're beginning to flame out, and bail out of poor-performing classes just before they hit bottom.

The problem is that a collection of historically high-performing funds does not necessarily make a well-diversified portfolio and can greatly increase risk. Avoid the "pack rat syndrome." Think of a well-diversified portfolio as a puzzle where each fund fits neatly with the others to complete a well-balanced picture.

Begin by establishing a long-term asset allocation plan Ñ your combination of large-cap and small/mid-cap U.S. stocks, international stocks, bonds and cash. That plan determines the broad risk level of your portfolio. But don't stop there. Consider these five additional risk control steps.

1. Invest in both value and growth stocks. We suggest an equal allocation to each over the long run.

2. Diversify your international holdings. Consider funds that invest in developed-market large- and small-cap stocks, as well as in emerging markets. Although emerging-market and international small-cap stocks are risky on a stand-alone basis, they generally have lower correlations with developed-market stocks and, as such, offer attractive diversification benefits.

3. Don't concentrate in one investment strategy. Specific strategies perform better or worse in certain market environments. For example, growth funds that focus heavily on price or earnings momentum often outperform their peers in overheated markets, while funds that look for growth at a reasonable price (GARP) often outperform their peers in sideways or falling markets. So, in picking funds, remember to diversify across investment strategies.

4. Avoid overlap across funds. Consider the top holdings of each fund in your portfolio, making sure you're not inadvertently concentrated in a single sector or security.

5. Look for disciplined risk management. Sophisticated quantitative techniques are helping fund managers control risks better than ever.

Ask Natalie:

Premium Subscribers Parade Their Favorite Companies for a Royal Review. With questions on Hoku and Primus Telecommunications.

As part of our ongoing education for our premium subscribers, each month we host a premium chat. Last month's chat was an opportunity for subscribers to grill Natalie on some of the featured companies, like Hoku, as well as a few of their own.

Question: Do you think the guys at Hoku can execute?

Natalie: I think this is going to be a very volatile stock. But HOKU has such big partners that I believe there must be some pedigree to the guys. I mean the governor of the state of Idaho is behind the new plant, and Hoku's partner is Suntech - the largest solar manufacturer in the world. Hoku is proceeding the right way. Volatility will center on any snags/holdups with the construction of the manufacturing facility, etc. that might arise, since this plant is still in the construction phase. Investors these days are trigger-happy for headlines. On the other hand, if the world catches wind that HOKU might be the next MEMC Electronics, investors will pile in. Then at the least sign of trouble, they'll jump back out again. This is a fairly new story, and hasn't captured a lot of Wall Street headlines yet.

Is Hoku going to focus on solar?

Hoku's most recent press releases and earnings reports have indicated that they are maintaining the obligations of the Navy fuel cell contracts, but that none of their prior customers are interested in moving forward with more fuel cell orders. Thus they've redesigned their entire game plan to focus on solar. I didn't want to like this company so much. But they do have the wind at their back in the solar sector. It's not easy to attract such big partners, as Suntech, Sanyo, the U.S. Navy and Nissan.

I'd like to hear a general market update.

In terms of the markets themselves, back in mid-October, it seemed as though everyone had forgotten about subprime problems. The Dow leapt over the 14,100 trading wall on October 9, 2007, for a close of 14,164.53. A few months earlier, in July and August, I had people calling my office, screaming about an economic meltdown and wondering if they should sell everything they own. This month, oil and fires have brought back the investor jitters, and the markets retreated back down to 13,671 on October 25, 2007. However, I think the overall lesson is that anytime you start panicking about your investments, it's time to take a vacation or go see a movie, not sell everything. And, if you check out my Hot News list, we still have over 40 companies that are top earners, compared to just three that are down a bit, so there is always money to be made in any marketplace.

I'm assuming that you are aware of the Santa Rally; in the last quarter of each year, 50% of the market gains are rung up, typically. This is a historical average that is very reliable, but there is always the chance of some disaster (man-made or natural) that can shake things up. The pre-election year rally is another reliable historical trend, and yes, this is a pre-election year. In the year before the election (2007) and the year of the election (2008), historically the markets perform at almost double of the years after the election (2009-2010). This pattern holds up in data studied for over a century. Paul Woods says it best. The Feds fix whatever problems happened in the run-up of the election, after they get a new President in office.

Having said that, I'll have a mid-month market update that includes a report from the Milken Institute's State of the State Conference. There are some concerns going forward, especially with oil at $90/barrel. It's imperative in a volatile, slow-growth environment to keep up with current trends, especially with inflation flags, like escalating oil prices. It's not about knee-jerk reactions. It's about profit-taking and the "weighting" or percentages you have allocated here or there in your long-term portfolio. In your trading portfolio, it's about knowing when to take your profits, and ongoing information from a reliable, reputable source is your best friend when evaluating those things. We work hard to be just that for you.

Bush scares me. I hope he doesn't move on Iran. Could have a deleterious effect on the market. Of course, we can't control that.

Nobody likes war, especially when our armed forces would be stretched across three countries in the Middle East. And frankly, I'm so weary of seeing our young boys in peril and risking their lives. I encourage you to become an active reader and participant in our Peace=Prosperity articles and events, most of which are listed on the calendar section of NataliePace.com.

The best way to protect yourself fiscally-speaking is to have your portfolio properly allocated. That way if Bush does move into Iran, you don't have to panic. Btw: I just finished my book, which has a number of other tips on protecting your portfolio from war and other challenges. (It will be released in 2008, so look for it!)

You mean other allocations besides stocks?

Yes. If you've got a percent equal to your age that is not in the stock market then you are never over-exposed to the actions of an aggressive President. The ratios change with age because your horizon for making back returns is shorter when you are near retirement. Considering the pre-election year and the Santa Rally, there is a good case for being slightly over-weighted right now, meaning if you're 50, you might have 55-60% in stocks, knowing that you'll look to weight back to normal (or less) in January - after the Santa Rally. Remember, trading in your tax-protected retirement account means that you avoid capital gains (and earn that additional amount in returns).

A book would be great. I appreciate your attention and concern for our financial interests.

I think that cushion of "safety," of having an appropriate amount in risk-reduced places like the money markets, CDs and Treasury Bills allows people to trade with their brain, instead of their stomach. When there is too much of the nest egg in the stock market and the markets don't cooperate, I've seen people dump for losses (unnecessarily) simply to stop the stomach acid burn, so they could sleep again at night. There are bond-like returns in the money markets these days (which is a fancy word for the savings portion of your brokerage account). This is the easiest way to protect your portfolio until you get savvy enough to start adding a few bonds to your holdings.

Do you still think Satcon is a good purchase?

I really like the story at SATC. They just won an Air Force contract valued at $2 million and have a $50 million backorder on their converters. This is the company that did the invertors on the Google solar conversion. Solar is likely going to continue to be the top performer for some time. There is an explosion of interest. I can't give you a buy/sell order because I'm not an analyst or a broker. Hopefully this information is helpful to you for determining your own decision, and certainly you can use the information on the Hot News list - including the price SATC was trading at when we first listed the company - to inform your decision-making.

There's a company called Primus, symbol PRTL. What do you think?

I get a little nervous when I see the words telecommunications and OTCBB in the same vicinity. You must do 1000 times the homework, and have 1000 times the reasons to buy before jumping in on any company that is trading off the boards, especially if it is competing in a legacy industry, like telecommunications, with giant Blue Chip corporations. Remember the general rule that Jabba the Hutt rules the universe and the hare wins the dash. In this case, the colossal lead that Skype (the hare) has in VOIP worldwide (Skype grew faster than MySpace), combined with the might and weight of the giant telecom AT&T (Jabba the Hutt) makes me nervous.

I did a spot check on the financial results for Primus (which you can do on your favorite financial website), and the trend in earnings is opposite from what I like to see. Both 1^st and 2^nd quarter 2007 results were lower than the year prior, and 2005 was a better year than 2006 and 2007. In general, I want to see increased earnings or have a compelling reason why I think earnings are going to pop - not a declining trend. For instance, World Water & Power had $30 million in back orders, so you don't have to be a genius to know what the earnings are going to look good going forward (barring any unforeseen problems).

The declining trend isn't unexpected in telecom, where you have VOIP long distance worldwide being given away for free. But after three years, this company should be figuring out other streams of income. PRIMUS Telecommunications Group announced in May 2007 that it expects overall revenue to decline in fiscal 2007 as compared to 2006, as it continues to prune or to divest low-margin, or non-core revenue streams.

So, everything looked like a big red flag until I jumped over to the recent news section and saw that Primus Canada is partnering with Motorola on something called WiMAX IEEE 802.16e-2005, which could be positive. The fine print also says that Primus is the largest alternative communications carrier, with over 1,000,000 customers, in Canada - another plus if they can figure out how to make money off of that. If you know what WiMAX IEEE is and think it's going to be a huge profit generator, you've got a leg up on the rest of us (so please do share). I'd try to figure out what this technology does, if the competition is testing something similar and if this is going to be a new, hip, cool thing that we all have to have.

Additional questions to consider: This is a company with over a billion in sales, that manages to earn just $1 million in income, for a .13% profit margin. I'm assuming the answer is simply research and development and the enormous overhead burden of providing customer service and support for a free service - VOIP. Also, why is the company trading off the boards? How long has it been trading off the boards? What are the plans to get re-listed? Who is running the company and how respected is the C-level team (CEO, CFO and COO)?

If you answer all of these questions and think the picture adds up to something exciting, email me with your findings!

Yours in peace, health, wisdom and prosperity,

Natalie

Subprime Squeezes Speculators (not Homeowners).

by Natalie Pace.

Includes my Hot News on Cool Stocks list.

The Hot News lists below feature 43 companies earning great gains, versus just six that are headed in the opposite direction. 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 (and the majority of the remaining 52% well outperformed the marketplace. (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. Over the last few years, I've been in and out of the #1 position, according to that independent tracking firm. TipsTraders has me listed as Highly Recommended, again, in 2007.

Market Report:
The Federal Open Market Committee decided on September 18, 2007 to lower its target for the federal funds rate 50 basis points to 4-3/4 percent. The big, fat rate cut thrilled investors. The stock market immediately rallied on the news. For Halloween, the Feds decided to give investors some more candy, with another 25 basis point reduction in the Fed Fund Rate. Investors fell in love with stocks and the markets soared on the news.

General Stock Market Performance

Subprime Squeezes Speculators, Not Homeowners.
Corporate profits are strong. Earnings are strong. Cash is strong. So what is spooking investors? The idea (fueled by headlines) that every homeowner in America is going to be at risk of losing his/her home. (That old Depression era gene is a tough one to defuse.)

Truth be told, there really aren't that many homeowners who are in trouble, despite what the headlines are screaming, and there really aren't that many people foreclosing -- yet. Think about it: how many people do you know who have lost their home, and what were the circumstances? No one I know, and the two couples who are at risk of being in trouble have one thing in common - they were gambling. One uses the home equity as an ATM machine. This is the 3^rd real estate bust cycle for that family, and they are trying to avoid their 2^nd bankruptcy, as a result of that behavior. The other was a speculator who recently bought a handful of houses in Nevada as an investment, despite warnings from her friends that the markets were about to turn.

35% of people who own a home, don't even have a mortgage. (They own it free and clear.) And 93.48% of all people who do have mortgages are paying on time (source: Mortgage Banking Association). Even though foreclosures have increased from ZERO, which is where they have been for the last five years, the national foreclosure rate is only slightly above the 40-year annual average.

Historically, about 1 percent of all first and second mortgages have gone into foreclosure, according to RealtyTrac.com. In a national delinquency survey conducted by the Mortgage Bankers Association, in the 2^nd quarter of 2007, for 1-4 unit residential properties, foreclosures nationwide are only at 1.40%. "Those are not record numbers," Douglas G. Duncan, Ph.D., the Chief Economist at the Mortgage Banking Association said, in the understatement of the year.

So, how can the Los Angeles Times report that foreclosure numbers have blown up and are leaking into affluent communities? When the beginning point is zero, an increase to 1.4% can be a large percentage. Remember nobody was foreclosing two years ago. Anyone with a heartbeat could have sold a home in 24 hours if they needed to, so who is going to foreclose?

And who are these distressed homeowners who are foreclosing? According to Dr. Duncan, for the most part, they are speculators with real estate fever - investors who were overextending themselves to cash in their real estate lottery tickets. There are really only three states that are suffering from regional economic difficulties -- Ohio, Indiana and Michigan. (And for those homeowners who are affected by the challenges in auto manufacturing and other legacy corporations, our wishes are with you that you will get a better job, a great 401 (k) and are able to stay in your home or find a better one in a more robust communityÉ)

The current foreclosure problem is really "a continuing story of seven states," according to Dr. Duncan. Between 2001 and 2007, Michigan lost 300,000 payroll jobs on net, which takes a toll on the demand side of housing. (Home prices are highly correlated with the conditions of the local economy. When the economy booms, prices rise. When it wanes, prices fall.) But the states that are really driving up the national foreclosure numbers are California, Nevada, Florida and Arizona, and most of the foreclosures in those four states involve investor loans by non-occupant investors or the second home of the homeowner - in other words people who attended those real estate workshops where they were taught they couldn't lose in real estate because, they thought, it never goes down. (This is a brazen, bold lie, and it sounds exactly the same as the one circulated during the "new economy" before the Internet bust of 2000.)

During the real estate gold rush, prices in those four states were sky-high, and virtually non-affordable to the locals. However, easy access to credit and no down, fully financed adjustable rate, interest only loans at 40-year low interest rates meant the speculative investor could get in above her means and pray to God that s/he could get out with a profit before the loan reset (and the monthly payments doubled). As Angelo Mozilo, the Chairman and CEO of Countrywide Financial Corp, told the audience at the Milken Institute State of the State Conference on October 29, 2007, "We had a lot of speculators lying to us. They've run, and are gone from the scene." Subprime loans account for 42% of loans in Nevada and 40% in California (which has 17% of all subprime loans in the U.S. and over 19% of all delinquencies).

It's important when we discuss solutions, and when we take away lessons learned, to acknowledge that, outside of a handful of economically depressed states, people are not losing the roof over their head. The majority are 49ers who sifted for gold, turned up empty-handed and now want to blame the guy who sold them the map, when it was their decision, their risk and now, sadly, their loss.

If you were tempted to jump into real estate, or even if were one of the few who had to give your home back, it is time now to replace blind faith, a whistle and a prayer, with wisdom. I'd highly recommend investing in education - and attending my Living the Rich Life Retreat in January. You will learn how to thrive, break the binds of basic needs and invest with greater ease and confidence.Click on FOMC, or go to FederalReserve.gov, to read!

Getting smart about the average returns of real estate, stocks, bonds and classic cars means that you'll be the master of your universe, in charge of creating the rich life of your dreams. The more you know, the less you have to run and hyperventilate or rely upon the advice of people who make their living by selling you something. And, even now, there may be more options - creative options - to consider before you give up and let the bank take back the home. You'll delight in designing a new Double Your Fun Budget blueprint that creates gainful investing (through Stocks on Steroids and more) while you sip on those café lattes!

Yes, even if you are stung, bruised and disenchanted, now is the time to buck up, wise up and stop whining. The rich life is a life plan, not a lottery ticket, which is why the setting of our retreat is in the most beautiful hotel in the world - the Loews Santa Monica Beach Hotel. Join us. You know you want to. Take some from your education budget, some from your long term and short term fun budgets and register now. We'll show you how to invest for profits once you arrive. Our premium subscriber Sam Sanders is up 87% this year. What are you waiting for?

View of the famous Santa Monica Pier from the Loews Santa Monica Beach Hotel.

Poolside, overlooking the Pacific Ocean, at the Loews Santa Monica Beach Hotel.

The Writer's Guild Strike Update
The Writer's Guild represents over 12,000 current members. The most recent report is that the two sides are coming closer, but haven't reached an agreement. The WGA is hosting a membership meeting on November 1, 2007 at the Los Angeles Convention Center, and the leadership issued the following statement on October 26, 2007.

WGA Contract 2007 Negotiations Statement

"This morning, we responded to the package presented yesterday by the AMPTP (Alliance of Motion Picture and Television Producers). We agreed to several of their proposals and withdrew or modified a number of our own proposals in order to narrow the areas in dispute. We also proposed a smaller working group to address several enforcement proposals made by both sides. The AMPTP caucused for more than four hours and returned with a package that included new rollbacks related to our pension and health funds. They rejected our modified proposals and ignored our working group offer. They then informed us that they are not comfortable meeting at the WGA and insisted that negotiations return to the AMPTP. They declined to meet again until Tuesday. This means only two days remain to resolve the substantive issues of this negotiation before Wednesday night's contract deadline."

Historically, the WGA likes to strengthen its position by acting in conjunction with the Screen Actors Guild and Director's Guild. The SAG and DGA contracts aren't up until June of 2008, so the writers may continue working without a contract for the next few months, as they've done in the past.

No one has a crystal ball. If the writers do strike, day-traders could panic and bail on Disney, News Corp. (owners of Fox), Time-Warner, Viacom and other media companies. (Over the long-term, it's doubtful that these companies are going to be in jeopardy - there are too many unscripted reality shows that don't even need writers these daysÉ) It's time to carefully weigh your positions in media, offset against the returns you might expect to enjoy during the Santa Rally. I'd consider profit-taking in media in the long term portfolio beginning in early 2008, as the industry has enjoyed a nice run-up for the past few years, and we are entering a stormier climate for the sector (and economy).

You'll see that I've made my choice to keep media on the Hot News List for now, though I continue to monitor the situation carefully (but not obsessively).

Peace and Prosperity,

Natalie Pace

EDUCATIONAL OPPORTUNITES AND INFORMATION:

1. Interest Rates: The Big, Fat Rate Cut! The Federal Open Market Committee cut the Fed Funds rate by 50 basis points on September 18, 2007, to 4 û%, after pausing nine times in a row (in August, June, May, March and January 2007, and December, October, September and August 2006). The federal funds rate remains at 4-3/4%.
   
   
2. FOMC Information: Interested in reading the minutes of the September FOMC meeting for yourself? You can. The official Federal Reserve document is available online. Click on FOMC, or go to FederalReserve.gov, to read!
   
   
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, real estate veterans and CEOs! Be sure to join my investor teleconference on November 14^th, 2007 at 5:00 p.m. PT. (Note: This is changed from November 7^th because that is the opening day of the GreenBuild Conference and President Clinton's keynote!) Your chance to get your questions answered one on one, and learn how to become a top stock picker yourself. Email Heather@NataliePace.com for the call-in instructions, if you don't receive them by November 5, 2007 (when we'll be sending them out.)
   
   
4. Survey Results:
   This month we have the all-important "All I want for Christmas" and Turkey surveys. Don't forget to cast your vote! If you don't, you might end up with ties, or Jenny Craig certificates, or coal or power tools in your stockingÉ
   
   Below are the results from last month's surveysÉ
   Santa Rally: 62% of our survey respondents believe that the markets will close up on the year, while 24% thought that 2007 will be flat and 13% that the year will end down. Who will prove to be right?
   
   Subprime/Real Estate Forecast: When we first posted this survey in May 2007, at the first signs of a subprime crunch, more than half of the respondents thought that real estate would continue to increase in value, and that the subprime problems were a mere hiccup. Now, 45% of respondents believe that we're headed for a hard-core 5-7 year correction in real estate, 30% believe we'll experience a 3-5 year softening of the real estate market, while only 25% believe that the problems are noisier than need be and there will be gains going forward as soon as next year.
   
   The Feds Big, Fat Rate Cut: Was it the right thing to do? 77% of our respondents thought so, while 22% don't think the Feds "should be bailing out greedy people and companies who make poor financial decisions."

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.

The Hot News on Cool Stocks List
Full disclosure: I have listed the companies that I currently own under the column "NP OWNS?"

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). 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.

Highlighted Companies (Hot List):

Conergy (CEYHF)
Hoku Scientific (HOKU)
Krispy Kreme (KKD)
UQM Technologies (UQM)
U.S. Gold (UXG)
WisdomTree (WSDT)

Recent Additions/Deletions:
AU Optronics and National Health Investors are not considered to be in buying range.

1. Conergy was added on November 2, 2007.
2. AU Optronics was added on October 3, 2007.

Hot News on Cool Stocks List

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. Macerich posted 150% gains between May 2003 (when it was first featured) and September 2007 (when it was removed from the list).

Recently Deleted:

Stocks to Watch
Great Companies. The companies that are listed are worthy of watching. Some we're watching to add to the Cooling Off list and some for the Hot List.

Recent Additions:
General Motors added on 10.01.07

Recent Deletions:
Goldcorp deleted on 10.15.07
LifeCell on 10.01.07

Cooling Off Stocks List (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.)

Highlighted Companies (Cooling Off List):

None

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%. General Motors was removed on 10.01.07 with mixed performance.

Please note: NataliePace.com does not act or operate like a broker. We are a publishing, 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 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 Miss President Bill Clinton when he keynotes the GreenBuild Conference in Chicago, or Natalie in person at T. Harv Eker's Extreme Wealth Conferences in Las Vegas and Atlantic City! The whole world has gone green, and there are conferences galore to enjoy and thousands of ways to educate and enlighten yourself.

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.

Wind Energy Symposium, Carlsbad, CA
Thursday, November 1st, 2007
Conference Theme: The Wind Power Imperative: Securing America's Economic, Environmental & Energy Future. Sponsors include all of the top wind power companies worldwide.

Greenbuild Conference: Chicago, IL
Wednesday, November 7^th-9^th, 2007
If designing, building, living, and working in green buildings is important to you, come join 18,000 others, including former President Bill Clinton, who is the keynote speaker. Sponsored by General Motors.

Manifesting a Rich Life Conference: LA, CA
Friday, November 9th, 2007, Los Angeles
Featuring teachers from THE SECRET and other very special guests: Arnold Patent, Bob Doyle, Dan Millman, Hale Dwoskin, Howard Martin, Janet Attwood, Rick Jarow and more.

Mid-Month Update: Hot News on Cool Stocks
Tuesday, November 13th, 2007
Look for our mid-month update on the home page between noon and 7:00 p.m. You can access the article under the online magazines link as well!

Renewing Subscriber's Teleconference with Natalie Pace.
Wednesday, November 14th, 2007
5:00PM through 6:00PM PT.
P/E, GDP, ETF, Santa Rally, solar and clean energy, socially conscious investing. Outperform Wall Street with tips from a top stock picker. Get the call-in instructions from Heather@NataliePace.com. Want to get in on Opsware and World Water before they post 200-690% gains? If Sam can be up 87% on the year, so can youÉ

Book signing at the Strand, NYC
Thursday, November 15th, 2007
7:00PM through 8:30PM ET
David A. Andelman, executive editor of Forbes.com, discusses his new book, A Shattered Peace: Versailles 1919 and The Price We Pay Today. Did colossal errors set the stage for today's war in Iraq and troubles in Palestine? 828 Broadway (at 12th Street).

T. Harv Eker's Extreme Wealth Conference: Las Vegas!
Saturday, November 17th, 2007
Natalie Pace will be one of the fantastic money gurus teaching you how to invest like the rich do, in this 4-day educational/blueprint changing intensive.

Opportunity Green Conference 2007 at UCLA
Saturday, November 17th, 2007
Opportunity Green 2007 is an unprecedented gathering of the prime movers and shakers in the world of green business. Join 500+ industry professionals and together explore the future of sustainable & profitable business.

Global Full Moon Meditation
Friday, November 23rd, 2007
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.

Mozart's Don Giovanni at LA Opera
Saturday, November 24th, 2007
The sexy and sensual Erwin Schrott returns as opera's greatest Lothario in the ravishing production that won LA Opera kudos in 2003.

Global Full Moon Meditation
Saturday, November 24th, 2007
10:00PM through 11:00PM ET.
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.

Puccini's La Boheme at LA Opera
Sunday, November 25th, 2007
The most popular opera ever written. Against the festive holiday backdrop of 19th-century Paris on Christmas Eve, starving artists in the Latin Quarter engage in high jinks, high spirits and high romance.

T. Harv Eker's Extreme Wealth Conference: Atlantic City!
Tuesday, November 27th, 2007
Natalie Pace will be one of the fantastic money gurus teaching you how to invest like the rich do, in this 4-day educational/blueprint changing intensive.

December Ezine Online
Wednesday, December 5th, 2007
Look for our ezine to be on the home page between noon and 7:00 p.m. You can access the articles by scrolling to the bottom of the home page at NataliePace.com!

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