Company of the Year: A Shining Star of the Beijing Olympics.

by Natalie Pace. 

Includes a Stock Report Card. 

Company of the Year:  Suntech Power Holdings (NYSE: STP)
CEO of the Year:  Dr. Zhengrong Shi, Chairman and CEO

Click here for a Solar Energy Stock Report Card. 

2007 was quite a year for Suntech Power Holdings Chairman and CEO, Dr. Zhengrong Shi.  On February 21, 2007, Dr. Shi joined the Global Roundtable on Climate Change, which is part of the Earth Institute of Columbia University in New York City.  The Global Roundtable brings together more than 100 high-level, critical stakeholders from all regions of the world.  At the time, Dr. Shi had a solar panel company in Mainland China that was pulling in about $407 million in annual sales annually (mostly from Germany - the most progressively green country in the world) and had a value on Wall Street of about $5 billion. 

By October 22, 2007, when Dr. Shi was named one of Time magazine's 2007 "Heroes of the Environment," investors bought Suntech Power Holdings in droves, pushing the share price of Suntech from an average share price of about $35, all the way up to $90.   Of course, since I had named Suntech Power Holdings as my 2007 Company of the Year back in January of 2007 (when the share price was just $34), I was beyond pleased to have yet another company in my cache that had doubled or more since our feature.  And I would never have dreamed that in 2008, the company and the share price would again be in buying range.  (We warned our readers of a potential pullback on January 30, 2008, when the Suntech shares were still up 57% from January 2007 and up 107% from our first feature in October of 2006.)

When I named Suntech Power Holdings as the 2007 Company of the Year, its shares were trading at $34.01, with a price to earnings ratio of 59.30 (in January of 2007).  On July 30, 2008, the share price was back to $34.98 (after the rocket ship ride up to $90), with a much lower price to earnings ratio of 29.50 and a forward P/E of just 22.  (In other words, the stock is definitely on sale!)  Sales of Suntech solar products more than tripled, totaling over $1.3 billion by the end of 2007.   In his May 2008 earnings report, Dr. Shi projected that Suntech will reach one gigawatt of photovoltaic cell production capacity by the end of 2008.  That is tremendous growth.

The Bird’s Nest Stadium of the 2008 Beijing Olympics Powered by Suntech Power Holdings solar panels

All that, and in just a few short days, the world will be seeing Suntech Power Holdings solar panels lighting up the gorgeous Bird's Nest Stadium at the Beijing Summer Olympics.  Suntech's low share price, high sales and impressive seat on the global stage offer a delightful convergence of wonder, exposure and opportunity that is difficult to pass up.  (And yes -- full disclosure -- I own shares in Suntech Power Holdings.)

While, recently, investors have turned their back on solar manufacturing, governments, energy companies and homeowners have been buying solar products like there's no tomorrow.  And, if you believe the scientists, that may in fact be what is at stake in the world.  What kind of world will we leave to our children if we do not clean up our act, our air, our dirty energy, our garbage and our wasteful habits NOW? 

This, more than profit, is what drives Dr. Shi to expand his business - the pursuit of making the world a better place.  Of course, he's aware that the company must make enough of a profit while saving the world to stay in business and to expand manufacturing facilities worldwide. 

It makes sense when you think about it.  Why would a clean energy provider ship products across the ocean using fossil fuel?  Dr. Shi predicts that the high price of oil will drive factories to return home, to become more local to the customer.  Yes, 2008 could be the year that American manufacturing jobs come home and outsourcing becomes a curse of the past.   

As you'll read in my interview with Dr. Shi, he is in this business to make sure that we not only have a tomorrow, but also a very clean and beautiful tomorrow, and that commitment means looking all up and down his supply chain - from the executive suite to the manufacturing facilities to the suppliers and finally to the manner in which the product reaches the customer.  Dr. Shi's team is developing a vertical integration platform that provides standards for environmentally responsible silicon manufacturers to adhere to -- to separate the providers he'll do business with from those who are in it for a quick and dirty buck. 

Suntech Power Holdings was named our 2008 Company of the Year and added (back) to the Hot News on Cool Stocks list on July 1, 2008.  Hoku Scientific, a silicon manufacturing partner of Suntech’s, was highlighted as within an attractive price range on July 1, 2008 as well.   (btw: if you are not reading the mid-month update, be sure to check online on or about the 15th of each month.  For exact dates of the mid-month update, check the calendar section of NataliePace.com frequently.)

Full Disclosure:  Natalie Pace owns shares in Suntech Power Holdings and in Hoku Scientific.  

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. 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.

Investors should NOT be using the Hot News on Cool Stocks list or the Cooling Off list to trade their nest eggs. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.

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.

Exclusive Q&A with CEO of the Year, Dr. Zhengrong Shi.

by Natalie Pace.

Company of the Year:  Suntech Power Holdings (NYSE: STP)
CEO of the Year:  Dr. Zhengrong Shi, Chairman and CEO

Dr. Zhengrong Shi has been a magnet for awards over the past few years. He was named one of Time magazine's 2007 "Heroes of the Environment" in October of 2007. In February of that same year, Dr. Shi joined the Global Roundtable on Climate Change. Last month, he won Banksia’s International Award for Environmental Leadership. You might think that Dr. Shi is having the time of his life, and he is, but if he has his way, this is only the beginning. 

In just a few short days, the world will be seeing Suntech Power Holdings solar panels lighting up the gorgeous Bird's Nest Stadium at the Beijing Summer Olympics.  In a few short years, Suntech could be manufacturing solar panels here in the United States.  And if he breaks into the documentary/movie business, look out world (and Al Gore)!   

Suntech Power Holdings workers installing solar panels at Bird’s Nest Stadium in Beijing, China

As you'll read in the interview with Dr. Shi below, he is in the clean energy business to make sure that we not only have a tomorrow, but also a more beautiful tomorrow, and that commitment means working hard up and down his supply chain - from the executive suite, to the manufacturing facilities, to the suppliers, to the manner in which the product reaches the customer and even to the habits of everyday people worldwide. Dr. Shi's commitment to running a clean energy business from cradle to grave in the product lifeline includes teaching others, including his employees, to walk the clean and green walk in their daily lives.  This passion for educating others about the importance of greening our world RIGHT NOW  -- to "act quickly" in Dr. Shi's words -- means that Dr. Shi sets aside 20% of his time for speaking engagements and meeting with governmental leaders. 

Read my interview with Dr. Shi in the next article to learn why I believe Dr. Shi deserves to receive the CEO of the Year designation, alongside prior honorees: Dr. Eric Schmidt, CEO, Google (2007 CEO of the Year), Chris DeWolfe and Tom Anderson, CEO and President, respectively of MySpace (2006 CEOs of the Year) and Ben Horowitz and Marc Andreessen, CEO and Chairman, respectively, of Opsware (2004 CEOs of the Year). 

NATALIE PACE:  How big is the worldwide solar voltaic marketplace currently and how big is it expected to grow over the next five years?

DR. ZHENGRONG SHI:  It is growing at the rate of 40-50% annually.  For example, last year, the total global solar market was nearly four gigawatts, but could rise to over ten gigawatts by 2010.  In comparison to the overall energy market, solar is still very small.  Just to put things into perspective, last year the solar power generation was the equaivalent of eight coal-fired generation plants. 

Which country is your biggest customer?

Last year, Germany still represented over 50% of our sales.  However, more and more countries are introducing important civil policies, including Spain, Italy, France, the U.S., South Korea and many more countries that are just beginning to get involved.  The Spanish market will reach one gigawatt this year.  The Italian market is already growing fast.  France is catching up very quicky.

How much of the worldwide solar energy marketplace does Suntech currently have?

Last year, we had 10% market share.  We are expecting to grow that very quickly. By 2010, our goal is to reach 15-20% of market share.

I see from your most recent earnings report in May that you are projecting to reach one gigawatt photovoltaic cell production capacity by the end of 2008, up from 540 MW in the first quarter of 2008. How do you expect to do that?

We are continuing to expand our capacity, and, through innovation, to reduce our costs.

How will skyhigh oil prices affect global interest in solar?

High oil prices make solar attractive as we focus away from traditional energy sources. We cannot depend on fossil fuels forever.   What can be better than solar?  Silicon is the second most abundant element in the earth's crust.  Sunlight is completely clean and free! 

How do escalating shipping costs (from high oil and gas prices) affect your ability to compete in the global marketplace?

With oil prices going up, my personal view, which is confirmed by economists, is that regional economies will boom again. An article in the Wall Street Journal says that American jobs will return home.   We don't have enough local energy to transfer containers around the globe like we do today. Suntech Power Holdings is a global company.  We plan to spread our manufacturing facilities globally to avoid transfer costs.  We produce energy.  We don't want to use dirty energy to transport the clean enegy product.  That shouldn't be the way.

Do you see solar energy's potential to fuel electric cars as something that might make solar attractive to more homeowners within the next 2-5 years?

I think solar and electric cars will be a perfect match in the future.  With the hybrid cars, especially the second generation, you should be able to use home electricity to charge your car.  In the long term, the factory should be able to charge by solar power as well.

Will that make solar panels more affordable with an earlier payback on the investment?  That seems to be what keeps homeowners from leaping into solar now - the price...

That is definitely the future.  Many governments are trying to use solar electricity to offset peak energy price fluctuations, especially in a place like California, where electrticity prices are pretty high.  That is happening also in Australia.  This will reduce the time of return of investment for the homeowner as well.

What is Suntech's competitive advantage?

All of the solar companies are doing pretty well right now.  The main reason that we have become the number one solar panel manufacturer in the world is that solar is our only area of expertise.  Unlike the big conglomerate power companies, we are able to make decisions quickly to respond to the marketplace.  We are dedicated to innovation and evolution.  We have a team of 200 solar engineers and scientists working on the latest technology solutions.  I am personally leading the team.  We focus on a low-cost to watt production, and are the cost leader.  We target to reduce costs by 50% over the next three to five years, and to increase market share over the next few years through increased global recognition of our product.  I think that Suntech is already a very well-recognized brand in the industry.

How will the Olympics increase awareness worldwide.  You are the official solar sponsor of the Beijing Olympics.  Right?

Our contribution to the Olympics at the Bird's Nest Stadium is posted along the entry gate.  People will easily see the Suntech installation to power the entire lighting and security cameras.  I think this will be very good exposure. 

You have made a significant investment in helping to create more silicon manufacturing facilities, particuarly in the Hoku Scientific silicon plant in Pocatello, Idaho.   Will that help to reduce costs, particularly of the very expensive source material, silicon?

That's definitely true.  The cost of silicon represents of 75% of our production costs.  There was an artifically high price of silicon because the industry was very young.  There was no proper value chain and supply and chain development in the past.  But silicon is only one of many strategies in what we call the Virtual Integration process of entering the multi-gigawatt environment.

Will the future look more like every homeowner with solar panels on the roof or will the existing grid be powered by solar?

It will be the combination of all probabilities. I see the future as high beauty.  All of the glass windows should be replaced by Centium solar product.  Eventually you won't even need a curtain because the glass will be coated with silicon material.  If all of the windows were to be replaced by power glass, that could produce 30-40% of the power needs of the household. The air conditioner, computers and communication could be powered by this power glass.   We should utilize all of the roof space to put on panels and generate electricity that is consumed locally.  Another scenario is the desert.  Recently, I read an article, saying that if we cover .3% of the Sahara Desert with solar panels, we could power all of  Europe.  All of this is quite possible.  Once we determine which is the best strategy, we should act quickly.

Cadmium telluride solar providers have been far more popular with investors in the U.S. than the silicon solar makers.  How do you think that will change in the coming years? 

The reason cadmium telluride was popular recently was due to the high cost of  silicon and that they could use much less or no silicon at all in production.  Over the long term, we expect silicon to be very cost competitive and even cheaper that cadmium telluride.  The efficiency of silicon is almost double of cadmium telluride.  We have to compare the cost at the solar power level, not the panel level, or even at the level of cost per kilowatt hours generated to get a true cost/benefit analysis.  Having said that, cadmium telluride was better suited to certain applications, where the cost of land wasn't an issue, like the desert. 

You have won so many awards and honors, from being named a Hero of the Environment by Time magazine and being awarded the International Award for Environmental Leadereship by Banksia.  There are tens of thousands of CEOs competing with you, including those who head up other solar companies. Why are you winning these awards over your peers?

Businessmen and entrepreneurs are different.  The entreneur focuses more on pursuing a passion and dream to want to change something.  You need a reasonable profit, otherwise you don't have a chance to pursue your passion.  But it is not a profit-driven company.  I have said that in numerous scenarios and even to our investors.

So, first of all, I think I have a great business. I define entrepreneur as somebody who actually wants to change the world using business and money.  I respect Bill Gates very much.  He is a true entrepreneur.  He used Internet technology and his business model to change people's lives.  I don't think he's just running a business to make money. I think he's providing a solution more than making money. 

That is also the attitude that I'm having.  We are not just running a business.  We are providing solutions to change people's lives.  That differentiates me greatly from just a normal business person.

Describe some of the environmental protection initiatives and awareness programs that you have created that have gotten you so much attention worldwide.

Up to 20% of my time is spent in giving speeches globally, and especially in China, trying to educate politicians, business people and students about the problems we're having.  Especially In China, the number one problem is the environmental problem -- global warming and climate change.  I use a simple story to explain that change is very rapid and that we have to change the way of our living now.  We sponsor a lot of environmental protection activities, in the Himalayas, I sponsored the Olypmic torch and also the Bird's Nest stadium. We want to make a movie in Chinese because different media has a different impact on the normal person and general public.  A movie might be more powerful to educate them. 

Why are you uniquely qualified to lead Suntech now and into the future?

I truly believe that solar will become one of the key solutions for global energy.  Once we determine this, we must act quickly and reduce our dependence upon fossil fuel.  This passion has helped me to have the confidence to become a world leader.  We're not just satisfied with existing technology. We have to be very revolutionary in our way of thinking.  We're thinking of radical solutions because we are also users.  We use solar energy for our own production.

But, more and more people are sharing this passion to finally do it.  There are many people like me who are qualified to lead a company with an innovative solution, even on a great scale. 

Are you confident that the manufacturing of silicon is truly environmentally sound?  Are we erasing a big CO2 footprint with "clean energy" or are we creating just as much pollution as we're trying to clean up.

I believe solar is definitely a clean industry.  Unfortunately, given the short supply of silicon in this moment, some business people try to cash in and out very quickly and make a huge profit.  The factory should have made more investment, but because they want to catch this trend and make a product quickly and profit quickly, they are not doing it properly in the first place.

So, how do you ensure that you are only buying silicon from factories that are taking a more responsible approach?

We are very passionate about the future and we want all of our partners to carry the same passion and attitude. We are working on our integration strategy with numerous up-chain companies.  We work closely to make sure that their conduct is complying with environmental protection and code.  If they don't, I will help them.  Suntech is very determined to stay with clean manufacturers. 

You've emphasized the importance of governmental leadership in providing incentives for solar energy.  What can the average person do to help clean up our world?

We have very detailed rules in the company.  We only switch on the lights when it is getting dark and when it is necessary.  We keep the computers turned off when we are not using them.  We stopped using paper cups.  We are in the process to stop using bottled water.  All of these details are important.  It's not just our manufacturing that needs to change.  Our living behavior needs to change. 

Any last words for our readers?

Solar is only three to five years away.  It is right close to our life now.  All of the politicians and governments should have confidence in solar energy, and give it great support and push. The governments are actually the determining factor.  That makes the difference. 

Be sure to watch for the Suntech Power Holdings products at the Beijing Olympics next week, where they are the official solar sponsor.  Suntech is also one of the sponsors of the Solar Power Conference in San Diego in October 2008.  (For more information and a link to the site, go to the Calendar section at NataliePace.com.)  If you'd like to hear more from Dr. Shi, you can view him speaking on a panel at the 2007 Solar Power Conference by clicking on Dr. Shi.

Full Disclosure:  Natalie Pace owns shares in Suntech Power Holdings and in Hoku Scientific. 

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. 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.

Investors should NOT be using the Hot News on Cool Stocks list or the Cooling Off list to trade their nest eggs. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.

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.

Energy Prices, Offshore Drilling, and an "Excess" Profits Tax.

by Dr. Gary Becker. Dr. Becker is a University Professor, Department of Economics, and Sociology Professor, Graduate School of Business, The University of Chicago.  He won the Nobel Prize in Economics in 1992 for his groundbreaking work in "human capital."

Increases in energy prices sharply accelerated during the past year, as the price of oil more than doubled, and gasoline prices in United States rose by 25 percent. Responding to these price increases, Senator McCain and President Bush have called for an end to the 27-year old federal moratorium on offshore drilling for oil and gas in US waters, while Senator Obama supports a continuation of the ban. McCain has also indicated that he is reconsidering his opposition to drilling in the Arctic region of Alaska. In another response to the energy price boom, Obama has proposed an excess profits tax on oil companies, while McCain has come out against such a tax. What does economic analysis contribute to an evaluation of these proposals?

Supporters of a continuation of the moratorium worry that offshore drilling and oil leakages will kill many fish, and damage beaches and other coastal areas. These are potential risks, but whether to continue the moratorium involves a balancing of the advantages of drilling against environmental and other risks. These risks have not been affected by the rise in energy prices, but the benefits from drilling clearly have increased. Additional oil (and gas) from offshore drilling would lower US spending on imported oil, and thereby reduce the transfer of wealth from Americans to other oil and gas producers. Larger domestic energy supplies would also improve energy security in the event of a disruption in the supplies of oil and gas from major producers located in places like the Middle East and Nigeria that have had terrorist attacks on oil production facilities.

Even if offshore drilling started tomorrow, it would take several years before actual production began since construction of platforms in deep water and installation of equipment take time. The value of ending the moratorium now would depend not on energy prices and risks of disruption this year or the next, but on the situation beginning in several years and extending over the following decade. Some oil specialists are predicting a rise in the price of oil to $200 a barrel during the next few years. I have argued previously why such a large price increase is unlikely (see my post on May 11); indeed, oil may very well retreat from its present level of over $130 a barrel. Still, as long as world GDP continues to grow over the next decade at a sizable pace-which is likely- the price of oil will remain far above what it was in the 1990's.

This means that the financial and other benefits from offshore drilling are likely to greatly exceed the benefits at the time the moratorium was imposed, for oil was then much cheaper even in inflation-adjusted terms. The increasing share of imports in the oil consumed by the United States, and the rise in oil prices, explain why the value of imported oil rose more than five fold since the 1980s. This is why cost-benefit calculations of whether to end the moratorium and allow offshore drilling have shifted in the direction of allowing drilling. Although the risks of offshore drilling are much harder to quantify than the benefits, I believe the shift in the benefit-cost ratio has been large enough so that the time has come to allow drilling. Norway and Great Britain, to take two examples, have allowed drilling in the North Sea for many years without suffering major environmental damage. To be sure, in the end oil companies are the ones who have to decide whether the gains from drilling are worth the risks, including lawsuits if there are damaging oil spills, but these companies seem eager to start drilling offshore.

The proposed excess profits tax on the earnings of oil companies would discourage the search for additional oil, and hence would have the opposite effects on this search from a relaxation of the moratorium on offshore drilling. An excess profits tax that is expected to persist for many years discourages further exploration for oil simply because much of the profits on new oil production would be taxed away. In 1980, President Jimmy Carter introduced a windfall tax on oil companies to prevent them from profiting a lot from the high price of oil due to the Iran-Iraq war. An evaluation by the Congressional Research Service, a think tank that provides reports to Congress, concluded that the tax significantly reduced domestic oil production and raised oil imports. Disillusionment with the tax led to its abandonment in 1987. Yet the lessons from this fiasco have been forgotten, for since the post-Katrina rise in gasoline prices in 2005, members of Congress have made regular attempts to introduce legislation with a sizable excess profits tax on oil companies.

Even those Americans who worry a lot about global warming and other global pollution form the use of oil should be reluctant to discourage oil production offshore or elsewhere by American oil companies. Lower production by American companies would cause a rise in the world price of oil. Moreover, increased production by other countries would tend to offset reduced production by the United States, so that the effect on global warming and global pollution is likely to be modest. However, the increase in wealth transferred from the United States to the Middle East, Russia, Venezuela, and other oil-producing countries could be substantial.

To keep track of Dr. Becker's continuing research and commentary, visit his web site and blog. To hear more of his recommendations for strengthening the U.S. economy, check out his panels from the 2008 Milken Global Economic Conference.

Is My Bank Sinking and Should I Abandon Ship!?

by Shawn Harris.

With the recent demise of a relatively large bank, everyone is wondering if the money that they have sitting in their checking account is safe.  For the vast majority of the population, there should be no concerns about losing money that they have deposited into common checking accounts and CD's.
 
The federal government, through the FDIC, guarantees personal deposits up to $100,000, and retirement accounts (IRA's and such) up to $250,000.  If you have less than this deposited in these accounts, the government will guarantee 100% of your deposits (and the interest already earned on those deposits).
 
What happens if you have more money than that in your accounts, as 10,000 people at Indymac did?  Most of that money will also be returned to you, eventually.  With regards the recent Indymac default, the FDIC has authorized that 50% of the funds that were not covered by the initial guarantee limits of FDIC will be immediately returned to the individuals.  Once Indymac is sold and removed from receivership, it is anticipated that those people will receive an additionally 35% - 30% of the balances that they held.
 
All in all, they will have received around 80% of the deposited funds that were in excess of $100,000 (or $250,000 for retirement accounts).  For someone with $300,000 in his or her checking account, the bank would release around $260,000 - $270,000 of that.  This is a horrible return on investment, but hardly a complete wipeout.
 
Should I transfer funds out of my bank?
No, probably.  Unless you have over $100,000 sitting in a single checking account, you should not even consider moving banks (assuming your bank is FDIC insured, which it should be) or changing your account structure.  
 
If you have more than $100,000 in any account and you are worried, talk to your local banker.  Most people don't know it, but EACH account is insured for up to $100,000.  So if you're married, open up an account for your husband, and then open another with both of you.  If you have a trust, open an account for each beneficiary.  Each account is insured up to $100,000.
 
If after adding a few accounts to your bank, you still have excess cash, then you have too much money sitting around not being used.  Go talk to an investment advisor.
 
The FDIC also insures up to $250,000 of retirement accounts. Accounts that qualify are those retirement accounts that purchase investment vehicles that are completely controlled AND offered from bank assets.  The best examples of these are CD's.  IRA's are covered to the extent that they are invested in bank deposits.
 
Other investment accounts are NOT typically guaranteed by FDIC. Check this link to see what is covered and not covered by the FDIC:

http://www.fdic.gov/consumers/consumer/information/fdiciorn.html

However, if its not covered by the FDIC, and it is an investment, it won't disappear when the bank goes under because the underlying assets are just managed by the lending institution, but the asset still exists (in the stock market, bond market, mutual funds, non-FDIC money market accounts, etc.).  
 
So, moral of the story, if your IRAs are heavily invested in bank deposits (CDs) or you own a lot of CDs, then you may want to spread these assets over a few separate banks if they're greater than $250,000 (including interest earned).
 
Is my bank in trouble?
All financial institutions are having a horrible time on the stock market right now, and you will be hearing about that in the news continually some time to come.  This does not mean however that your bank is in threat of going into receivership.  
 
If you bank at a major lending institution (think Wells Fargo, BofA, Chase, Citibank) you don't have much to worry about.  These companies are well funded, and if anything did start to happen, not only would the government step in (before FDIC), but so would their competitors (remember when BofA "helped" Countrywide, and now owns them).  
 
Local banks and credit unions are at a higher risk of going into default, because their risk is not as well diversified.  If you have a large amount of funds, in excess of what is guaranteed by the FDIC, then you may want to transition some funds out of these institutions until the market settles a little bit.
 
Why did Indymac bank have to close its doors?
The short answer is that Indymac did not have enough liquid money to cover its withdrawals.  There was a run on the bank (remember It's a Wonderful Life), and the bank had to shut its doors because it ran out of cash.
 
At its core Indymac Bank was not a traditional bank.  Though it did have standard banking services such as checking/savings/investment services, its primary focus was on mortgage lending.  As the mortgage industry collapsed, Indymac was unable to remain in business.
 
If you follow politics at all, there is an entertaining side note to this story.  A very prominent senator released a letter ten days before the demise of Indymac that resulted in the run on the bank.  It goes to show how prominent the media is in our culture, and why it is important to elect government officials that are aware of the power that they possess...
 
Lastly, to put the demise of Indymac into perspective, though it was the 2nd largest bank ever to fail, Indymac was not, at the time of its demise, one of the 50th largest banks in the United States.

 
Cordially,

Shawn D Harris
Broker
Mortgage Planning Specialist

I Appreciate Referrals.  If you know someone who needs expert mortgage advice contact me.

Direct: 800.871.7987 x 702
Cell: 619.249.9129
Fax: 888.326.5016

Weathering Tough Financial Times-The Long-term Costs of Quick Cash.

Investor Alert.  By FINRA.org

June 26, 2008

Rising costs of food and fuel, declines and volatility in the housing and financial markets, and an ever-tightening credit crunch have gathered to form a perfect storm that could lead some Americans to make poor financial choices. Not so long ago, those who faced a temporary financial setback, such as the loss of a job, a health emergency or an unexpected expense, could borrow or use credit to get by-and many still do. Recent data from the Federal Reserve show consumer use of credit cards and revolving lines of credit at an all-time high.

But while some Americans use credit as a safety net to weather life's occasional storms, others rely on it as a way to finance a lifestyle they otherwise could not afford. Debt has become a norm in the U.S.-and, according to the Center for Responsible Lending, households are finding it difficult to break that cycle. Similarly, personal bankruptcy filings continue to rise-as does the age at which consumers declare bankruptcy. A recent study by AARP found that in 2007 more than 1 in 5 debtors were over the age of 55, compared with 1 in 10 in 1991. The study also found that the rate of personal bankruptcy filings among those ages 45 to 54 had jumped by more than 48% from 1991 to 2007. For those ages 55 to 64, the rate rose by 150%-and for those ages 75 to 84, 433%.

In tough financial times, many investors feel pinched for cash-and some may search for different, often risky ways to make ends meet. Troubling trends include investors leveraging or prematurely depleting their retirement savings, trading in their insurance policies in transactions known as "life settlements," and tapping their home equity through reverse mortgages.

FINRA is concerned that some investors may be risking their most valuable assets in an effort to raise cash quickly-including those in or near retirement, who may not have time to recover their losses. We are issuing this Alert to warn investors about the long-term consequences of these strategies and to provide tips on weathering tough financial times.

Forgoing Your 401(k)?
When finances get tight, you might be tempted to free up money in your budget by cutting out contributions to your 401(k) or employer-sponsored retirement plan - or to cash out altogether. Under the tax code, plan providers can allow hardship withdrawals in certain situations - to prevent eviction or foreclosure on a primary residence, for instance, or to address a severe financial hardship. Recent reports by major plan providers confirm that hardship withdrawals rose significantly in 2007 compared with 2006 - in one case, by as much as 15 percent. And that trend appears to be continuing.

In addition to withdrawals, other products and strategies have emerged that allow investors to tap their retirement nest eggs prematurely - such as "72(t) withdrawals" and 401(k) debit cards. Some financial advisers have been touting Section 72(t) of the Internal Revenue Code as a "loophole" that allows you to retire early by obtaining penalty free withdrawals from an IRA before age 59 1/2 through a series of substantially equal periodic payments. The pitch may promise that you can cash in your company retirement savings in your 50s, reinvest the money, and live comfortably off the proceeds for the rest of your life. But the hitch is that these early retirement strategies sometimes assume unrealistically high rates of return on the recommended investments and require imprudent rates of withdrawal each year.

Another relatively new way investors can access funds from their employer-sponsored retirement plans is the 401(k) debit card. When investors use a 401(k) debit card, they borrow from their 401(k) account. If their plans allow these cards and they choose to use this feature, their employers must first approve the amount that can be borrowed. Investors can then use the funds for any purpose and usually don't have to explain why they need the money or how they intend to spend it. The danger is that taking money out of your retirement savings, even for a short period of time, can have enormous repercussions for your retirement security - particularly if you never put the money back.

Before you tap your 401(k), know that there are several good reasons to keep your retirement savings intact:
   1.Tax Liability - Unless you're over the age of 59 1⁄2, you will not only have to pay income taxes on the amount you withdraw, but you will also be subject to a 10% tax penalty. In most cases, your employer will withhold 20% in federal taxes, so the amount you receive will be significantly lower than the amount you requested.

   2. Opportunity Costs - The repercussions of withdrawing funds from your 401(k) could be enormous in terms of lost growth opportunity. For example, let's assume you are 30 years old, and have a 401(k) balance of $20,000. If you leave that money alone, and your account averages a 6% rate of return over the next 32 years, your balance at retirement will be $129,068 when you're 62 - even if you do not make any additional contributions during that time. If you take it out, you'll have nothing. Even if you have a shorter time horizon, you will forgo significant savings opportunities by taking money out of your 401(k). For a 45-year-old, that $20,000 will grow to $53,855 in 17 years.

   3. Opening Assets to Creditors - Under the Bankruptcy Abuse Protection and Consumer Protection Act of 2005, your creditors cannot touch your 401(k) balance or similar retirement savings account - even if, as a last resort, you file for bankruptcy protection. Balances in traditional and Roth IRAs are also protected up to a limit of $1 million. But if you take money out of your retirement plan through a loan or a hardship or regular withdrawal, your creditors can go after that sum.

If you can tighten your belt in other ways and continue contributing to your 401(k), you can also take full advantage of the array of additional benefits that retirement plans offer. For example, contributing pre-tax dollars to a 401(k) immediately reduces your taxable income and lowers your tax bill. And if your employer matches a percentage of your contributions, every dollar you contribute entitles you to free money.

But if you really need the money, be aware that you may be better off borrowing from your 401(k) than taking a withdrawal. Depending on your plan's terms, you may be able to borrow at a lower rate from your account than you could from a bank or other lender, especially if you have a low credit score. And you won't have to pay taxes on the proceeds of your loan as you would with a withdrawal. At the very least, you should check with your plan administrator to learn whether this option makes sense for you before seeking to cash out. To learn more, read Smart 401(k) Investing.

Living Without Life Insurance?
Some older investors who are strapped for cash consider selling their existing life insurance in transactions known as life settlements. A life settlement, or "senior settlement" as they are sometimes called, involves selling an existing life insurance policy to a third party - a person or an entity other than the company that issued the policy - for more than the policy's cash surrender value, but less than the net death benefit.

Life settlements can be a valuable source of liquidity for people who would otherwise surrender their policies or allow them to lapse - or for people whose life insurance needs have changed. But they are not for everyone. Life settlements can have high transaction costs and unintended consequences - including the inability to purchase a new insurance policy, potential loss of state or federal benefits such as Medicaid. In many cases, you will have to pay taxes on the lump sum you receive.

In addition, be aware that whoever buys your policy will have access to a great deal of personal information about you, including your health status. After all, the buyer is acquiring a financial interest in your death. In addition to paying you a lump sum for your policy, the buyer agrees to pay any additional premiums that might be required to support the cost of the policy for as long as you live. In exchange, the buyer will receive the death benefit when you die.

If a need for cash is driving your decision to consider a life settlement, be aware that surrendering your life insurance policy for its cash value or pursuing a life settlement may not be your only options-especially if you would ideally like to retain your coverage. You might be able to borrow against your policy or be eligible for accelerated death benefits, which allow an individual with a long-term, catastrophic, or terminal illness to receive benefits on his or her policy prior to dying.

For more information on life settlements and how to take each of these steps, read our Investor Alert entitled Seniors Beware: What You Should Know About Life Settlements.

Abandoning Ship?
The sting of the recent sub-prime mortgage crisis extends not only to Wall Street, but also to Main Street. An estimated 2 million homeowners stand to have foreclosure proceedings initiated against them in 2008, up from approximately 1.5 million in 2007. Borrowers who can no longer afford to pay their mortgages when the low, teaser rates adjust to higher levels have a limited set of choices: sell, refinance, seek a modification from the lender, or face foreclosure. But, in an area with depressed housing values, the former two options might not be available. As a result, some homeowners who are upside down in their houses - owing more on their mortgages than their house is worth - are simply walking away, wreaking further havoc on their credit profiles and their financial futures. If you do not have equity in your house, be sure to contact your lender before allowing your mortgage to default. You may be able to obtain a modification of your loan terms or develop a workable repayment plan. For help, contact a HUD-approved Housing Counseling Agency.

Reverse Mortgages
If you do have equity in your home and are over the age of 60, you might have heard about reverse mortgages. Like a home equity loan, a reverse mortgage allows you to convert your home equity to cash that you can use for any purpose. Unlike other home loans, however, homeowners make no interest or principal payments during the life of the loan. The interest is added to the principal, which is why reverse mortgages are often called "rising debt" loans.

Because home equity is often a homeowner's most valuable asset, and most precious source of retirement security, a reverse mortgage is a very serious decision. For many borrowers, choosing one is a last resort way to secure additional monthly income in retirement. Whether the decision is right for you may ultimately depend on a number of factors - your health, your spouse's health, other sources of income, the reason you're tapping your home equity, when you do it, and how wisely you use your loan proceeds.

You will also want to be aware of the broader financial impact of your decision:
    * Eligibility for Benefits - While you typically do not have to pay taxes on the proceeds of a reverse mortgage, the income or lump sum you receive could impact your eligibility-or your spouse's eligibility-for various state and federal benefits, including Medicaid.

    * Loss of Homestead Exclusion - Depending on the laws of your state, a reverse mortgage may not enjoy the same home-equity protection that would otherwise apply against creditors-or if you have a health emergency and your spouse must liquidate assets to pay for nursing home care.

    * Estate Consequences - A reverse mortgage is not the right choice for those who want to leave their homes to their heirs.

The bottom line is that reverse mortgages are an expensive option that may prematurely deplete your home equity. Before you consider one, be sure to weigh all your options-including selling your house (and then downsizing or renting while carefully investing the sale proceeds), taking out a home equity loan, consolidating your debt to reduce expenses or seeking help from your children or other heirs. Also, be sure to look into any local government assistance programs that may provide less risky, or lower cost, ways to address your needs.

For more information about reverse mortgages, please see our Investor Alert entitled Reverse Mortgages: Avoiding a Reversal of Fortune.

Tiding Over a Temporary Setback or Delaying the Inevitable?
If current economic conditions have led you to borrow more than usual - or to consider tapping assets you wouldn't otherwise touch-you need to ask yourself tough questions: Have I taken on a manageable obligation that fits within my budget? Or have I put off for one more day (or month or year) the inevitable day of reckoning? The trouble with putting off until tomorrow the debt you should pay down today is that you're inviting the power of compounding to work against you - and you may be perpetuating an endless cycle of debt.

    * Saving and investing are essential to financial security. If you are spending all your income (or worse, spending more than you make by running up debt) and never have money to put away, you'll need to find ways to reduce your expenses or make additional money. Here are some steps to consider:

    * Getting a handle on your expenses. Unexciting as it sounds, the best way to do so is to write down what you and others in your family earn, and what your monthly expenses are. It's not a bad idea to keep a running log of all income and expenses, even the little ones, for a couple of months. By identifying and eliminating unnecessary extras, you might find that you have more resources than you previously thought.

    * Pay off credit card or other high-interest debt. Few money-management strategies pay off as well as, or with less risk than, paying off all high interest debt you may have. Using credit can have advantages and disadvantages. If you spend within your means and pay off your balance on time and in full each month, credit cards can serve as a safe, convenient substitute for cash - with the added bonus that they can help you establish and maintain a solid credit history. But if you use them to purchase items you couldn't otherwise afford - or max out your cards to cover routine monthly expenses-credit cards can quickly compound your debt.

    * Minimum or More? Paying only the minimum balance due each month can land you in a perpetual cycle of debt. For example, let's say you have a $3,000 balance on a credit card that charges 18% APR and requires a minimum payment of 2.5% each month. Assuming you charge nothing else, it will take you 263 months - nearly 22 years - to pay off your debt. In addition, the total amount you pay for that $3,000 charge will be $4,115.44.

    * Get help if you need it. If you have less-than-optimum credit, so-called credit repair services may dangle the prospect of a clean credit history or a new credit identity. But the truth is that no one can legally remove negative information from a credit report if it is accurate. A good first step for those who have over-extended is to consult with a non-profit credit-counseling agency to develop a workable debt management plan. Well beyond changing your spending patterns, a debt management plan may involve consolidating some of your loans or credit cards and negotiating repayment terms with creditors. The key is to avoid predatory lenders whose promises of easy credit should raise red flags. Rather than filling a need for short-term credit, high-interest short-term loans tend to trap borrowers in a cycle of escalating debt.

    * Create a budget that includes money to save and invest. Once you have paid off your credit cards and any high-interest, short-term loans, you can start charting a course to financial security. To get started, consider adopting this healthy practice: Pay yourself something each month when you pay your household bills.

    * Practice good habits. Sometimes, a single action can create a continuing habit. For example, if you contribute as much as possible to an employer sponsored retirement plan where you work or have money transferred directly each month from your checking account to one or more savings and investment accounts, you've established the habit of paying yourself automatically. Not only does that eliminate the risk that you will forget to save or invest regularly, but you also might find that you never the miss that money because it comes out of your paycheck before you can spend it.

    * Other good habits to consider include:
       1. Reinvesting all the interest, dividends, or distributions you earn on your existing investments, which happens automatically with tax-deferred accounts.
       2. Earmarking a percentage of all gifts, bonuses, and unexpected income to your investment accounts.
       3. Paying your credit card bills in full each month.
       4. Budgeting a specific percentage of your income for investing.
       5. Making sure that the amount your employer withholds for taxes is neither too much nor too little-the average federal income tax refund is more than $2,000-and putting the difference in your investment account throughout the year.

Conclusion
Weathering rough economic times can prove challenging for many investors. But staying the course nearly always pays off in the long run - and that means taking a long-term approach to investing and making sure you maintain a diversified portfolio that spreads your risk of losses. If strapped for cash, be sure to carefully consider the long-term consequences of quick cash, especially the tax implications of your decisions and the potential for losing a significant asset.

Additional Resources
FINRA, Smart 401(k) Investing
FINRA Investor Alert, 401(k) Debit Cards-Think Before You Swipe
FINRA Investor Alert, Think Twice Before Cashing Out Your 401(k)
FINRA Investor Alert, Look Before You Leave: Don't Be Misled By Early Retirement Investment Pitches That Promise Too Much
FINRA Investor Alert, Seniors Beware: What You Should Know About Life Settlement
FINRA Investor Alert, Reverse Mortgages: Avoiding a Reversal of Fortune

Pain at the Pump.

by Paul Woods, President and CEO, Odyssey Advisors.

In the second quarter of 2008, the biggest story was sticker shock at the gas station.  As gasoline prices rose to over $140 per barrel, it became increasingly difficult not to cringe when the cost of a fill-up was tallied and the magnitude of the cringe seemed to be directly related to the size of whatever was being filled up.  As a result, hybrids were suddenly discovered and companies like Toyota now can't make them fast enough to keep up with demand.  Dealers, of course, were perfectly willing to correct this supply/demand imbalance by adding thousands to the sticker price. 

In the last year, gasoline prices have nearly doubled.  To solve this problem, Congress and our President would like us to use more ethanol.  However, it apparently didn't occur to anyone in government that people aren't going to eat less simply because their food was being turned into fuel.  With 1/3 of our corn crop now used to produce a fuel that no one seems to want, while the population increases, food prices have also skyrocketed.

About the only thing that hasn't gone through the roof is the inflation rate.  Current readings reinforce the suspicion that, among government bureaucrats, the preferred method of dealing with inflation is not to report it.   According to the Bureau of Labor Statistics, the cost of the things consumers buy has risen only 4% in the last year.  I'm serious.  At the root of this are arcane statistical techniques for massaging raw data known as the Quality Adjustment Method (QAM) and consumer substitution changes.

The bottom line is these techniques are used to keep reported inflation low so that cost of living increases don't bankrupt entitlement programs like Social Security.  Even the Federal Reserve appears to be aware that the BLS version of inflation is way too low.  At the end of the quarter, they stopped cutting interest rates citing concerns over inflation.  Investors know this amounts to Fed speak for "the next change in interest rates will be up, but we're not sure when."  The saying "sell in May and go away" was rarely more appropriate as the stock market had its worst June since 1930.

In the second quarter of 2008, big was boring, small was risky, but medium sized companies were just right.  Growth stocks buried value stocks, and are now in the second year of defying conventional wisdom (value outperforms growth) in the investment industry.  For reference, here's the stock market segment scorecard for the second quarter of 2008:  

Source: Thomson One Financial, Thomson Baseline

Within these market segments, energy, transportation, and utilities were the top performers while investors bailed out of most stocks tied to consumer spending, the economy, and the festering sub prime mess.  For reference, here's the stock market index and industry group scorecard for the second quarter of 2008:

Source: Thomson One Financial, Thomson Baseline

Interest rates reached a low for the year in mid April, and have been rising ever since.  As a result, Treasuries are now headed for their biggest quarterly loss in four years because of speculation in the past few weeks that rising energy prices would prompt the Fed to boost interest rates.   During the most recent Fed meeting in June, they held the Federal Funds rate at 2%, which was the first time in eight meetings this rate hadn't been cut.  Caught between a rock and a hard place, America's central bankers offered as bold a statement as they could make on inflation at their last meeting while not being able to do much about it.  The Consumer Price Increase was 4.2% higher in May than a year earlier, but the economy seems too weak to accept rate increases anytime soon.

Source: Bloomberg LP

Meanwhile around the world, central bankers are raising interest rates at a rapid rate.  This is weakening the U.S. Dollar and making U.S. debt obligations less competitive.  We continue to avoid any hint of leverage in the securities we purchase for our clients and favor short to intermediate notes and bonds at this time with a reasonable spread to U.S. Treasury issues.  Municipal debt has lagged due to increased supply from California and other states.  This is producing some bargains in municipal bonds as the ratio of municipal bond yields to Treasury yields now approaches 100% in some maturities.  Corporate debt spreads have widened due to concerns about the economy and we are seeing 7% coupons on ten-year maturities for the first time in a while on A+ rated debt.  While this is tempting, it is a little long for us at the moment.  We continue to be conservative in our bond purchases and expect the next change in interest rates to be an increase.

We haven't seen anything yet to change the opinion we had at the start of 2008 that this will be a challenging year for stocks.  Earnings expectations continue to be revised downward and actual earnings for the S&P 500 are currently showing a double-digit decline.  The likelihood of higher interest rates will probably also put pressure on valuations.  While John McCain reads up on economics and remains an enigma, an Obama presidency would probably lead to sharply higher taxes on income, dividends, and capital gains.  This would represent change, but none of it would be good for investors.  Our outlook on stocks remains cautious because of pressure on earnings and enough uncertainties to keep a lid on valuations.  Our primary focus is still on finding companies able to expand their business in the current environment. 

Best regards,
Paul A. Woods

ABOUT PAUL WOODS
Paul is the President, Chief Executive Officer, and Chief Investment Officer of Odyssey Advisors. He has over 35 years of experience in the investment management and research analysis of common stocks. He manages the Odyssey Clean Energy Portfolio, which produced a return of 141.9% before fees in 2007. Paul has done a great deal of independent research on clean energy and has written multiple articles on various segments of this industry.  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.

NataliePace.com Note: Please note that the returns and statistics regarding the Odyssey Clean Energy portfolio were provided by Odyssey Advisors. Since Odyssey is not followed by an independent tracking firm, such as Hulbert's Financial Digest, the results which the company provided have not been verified with an independent source.

International Investing:

Subscribers chat with global strategist and editor of the 2006 Index of Economic Freedom, Dr. Marc Miles

This is a reprint of an online chat NataliePace.com subscribers enjoyed with Dr. Marc Miles on July 16, 2008. 

QUESTION:  What do you think about Wells Fargo reporting record earnings?  I know from my sources that they are charging exorbitant fees to people who are behind on their payments and over drafted in their banking accounts.  Isn't it possible that their "record" earnings are smoke and mirrors?  The people they are gouging (and calling it earnings even if the accounts are overdrawn) may walk away.  There could be a higher default rate than anyone is prepared for...  I've seen this in the past with other corporations that eventually went belly up. They were slow to report problems, slow to write down losses and over optimistic on the earnings they would receive for charges and prices that were above what the market and their customers could bear.  When other banks are failing, how is it possible that Wells is reporting record earnings? Your thoughts?

Dr. Marc Miles:  Banks in general are making their money on these fees.  The banking business has changed greatly in recent years.  Apparently, Wells Fargo did not have asset write-downs to offset these.  The banks that have been really hurt are those that specialized in subprime mortgages and buying the paper for these.  Perhaps Wells Fargo was thoughtful (or lucky) enough not to get trapped there.

According to the Milken Institute, Wells Fargo was the top subprime lender in 2006, with $83.2 billion of subprime loans and 13% of the marketplace.

If Wells Fargo still has all those mortgages on their books, then lots of luck.  Assets are required to be marked to market these days, so I am surprised that there were not significant write downs, especially in the California market.

I guess we need a CPA to explain how they go from being the number one subprime lender in 2006 to record earnings in 2008, while other mortgage lenders are out of business.  Either that or a magician.  Smells fishy to me.

Your suspicions are well founded.  Those facts seem inconsistent.  Either the facts are wrong, or there are some nasty surprises ahead.

What is your opinion regarding the Belgium government?

Belgium is always an interesting case.  It has a radical split between the Walloons (French speaking) in the South and the Flemish (Dutch speaking) in the North.  They have been deadlocked for most of the last year trying to form a stable government.  The problem is that the North has become rich and dominant, while the South is poor.  So the Flemish resent constantly sending resources from their pockets to the South.  The outlook for the country's stability is not good.  It might even split in two. 

So, even in flux, do you consider Belgium stable enough for investors?

If one can invest in Northern companies, that is the way to go.

When do you think we may start to recover?  Is this a good time to buy?

What we are feeling in the US is being felt globally.  The Europeans are complaining about the same things.  Typically the English speaking countries bounce out of these slowdowns first, because they have the least regulations on labor markets, etc.  I have been expecting the US to turn about now.  Perhaps the Fannie Mae and Freddie Mac situation will slow that a bit, but I think that we are at or near a bottom.

Thank you.  We all hope you are right.

As far as the stock market goes, the best time to buy is when people are most negative.  The professionals are looking for "capitulation," i.e. when investors just give up and assume everything is going to hell in a hand basket.  With the gloom that surrounds the equity market these days; we must be near that point.  This is definitely NOT the time to decide to sell equities and move into fixed income or something. 

Is there an economic precedent in history that we can look to for some possible outcomes?

The more things change, the more they stay the same.  If you look at 1990 around the first Iraq War, everyone was predicting the worst for the stock and bond markets, as well as oil prices.  Suddenly, the first two took off in a positive direction, and oil prices fell, leaving the bears in the dust.

What are your thoughts on Australia and New Zealand's ability to benefit from the migration of money from the West to the East (China)?  My friends in China have become enamored with Australia and New Zealand and less enthused with the U.S.  Even saying that we don't know enough about economics if we're suffering so, and Australia has better architects, etc.  One thing for sure, they have MUCH better interest rates, a 7-9%.

Seven to nine percent interest rates may be good for those looking for income, but they are killers to those planning to expand a business.

More to the point, however, financial centers are shifting away from the U.S. to newly established places like Qatar, Dubai, Hong Kong and Singapore.  There are some smaller centers, and Australia and New Zealand probably fall into that category.  I haven't followed the events there closely.   What you want to look for is whether they feel obliged to adopt the restrictive regulations that are coming out of Washington.  Those regulations are killing the New York market.  

Will you give us more insight on the "restrictive regulations" that are coming out of Washington and how this is killing the New York market?

One has only to look at proposals to tax pass through income of hedge funds as regular income, not capital gains.  Or consider the current urge to regulate oil futures not only in the US but those held by Americans in the London market.  These regulations are much more stringent and expensive than those in other financial centers (though London is facing its share of new regulations such as taxing income of non-domicile residents after seven years).  The result is an increased incentive for investment professionals to move elsewhere.  Hedge funds and other managers can run their businesses from almost anywhere.  Cantons in Switzerland are currently making tax deals to attract hedge fund managers that have become disenchanted with the London market.

Marc Miles: Greg, how is the economy in Denmark? Spain is going through a tough period right now. 

Greg (a subscriber, living in Denmark right now, who is traveling to Spain on holiday tomorrow): The economy is strong, but there seems to be concern that a major stumble in the USA economy will hit hard.  The USA is the biggest source of direct foreign investment here.

Question: Since the U.S. is China's biggest customer, our economic hardship will send ripples worldwide, right?

Marc Miles:  A very interesting thing is going on between the US and China.  With the rise in oil prices, the cost of shipping has skyrocketed.  Most of the decisions to build plants in China and ship to the US were made based on much cheaper energy.  Some plants have actually moved back to the US to be closer to markets and reduce shipping costs.  We are also seeing this domestically.  The lean and mean, "just in time" inventory strategies of the last twenty odd years are changing.  Instead of having one plant and lots of warehouses around the country, plants are moving closer to customers. 

What market is looking the most inviting for investors right now?

Typically the most battered, like financials.  Most of the bad news is out, so chances are there will start to be surprises in the upward direction.

How easy is it to begin investing in foreign markets and where is the best place to start learning?

I suggest that one start carefully investing abroad.  It takes time to learn about what is happening there.  I strongly suggest reading the Financial Times, which has much better global coverage.  So start with foreign stock indices or some of the ETFs before venturing into specific countries and companies.  Watch how they move and which components do well.  You can learn a lot. 

Will loss of consumer confidence in the USA ripple to China or increase the surplus because people will be making more decisions based on "inexpensive."

No doubt China will feel the effects of what is going on in the U.S., especially given the energy effect.  I already mentioned how the rise in oil prices and shipping costs have causes some companies to move production back to the US.  But the U.S. is not in as bad shape as you hear, so the effect on China will probably not be great over time.

Dr. Miles, because of the threat of inflation, can we expect interest rates to rise to any significant extent in the near future?

Right now, interest rates are low because of fear.  Treasuries are considered a safe haven.  Even in the face of the higher inflation they have not rocketed.  Neither has the spread between Treasuries and the inflation adjusted Treasuries.  So, I don't expect any jump soon in the yield on Treasuries.  Of course, one can never predict what the bright lights over at the Fed will come up with.  So, if you have debt tied to prime or the equivalent, you could still face higher costs. 

Was the crisis with Fannie Mae and Freddie Mac expected, and if not, why not?

Natalie:  John, the Feds stepped in to help both companies when Greenspan was still the Chairman of the Federal Open Market Committee.  We've been reporting on that since 2003, and Fannie has been on the Cooling Off list for over 18 months!  The Fannie Mae put has been one of the top performers on my Cooling Off list. 

The problems with Fannie Mae and Freddie Mac have been anticipated for several years. You have to break these into two parts, first the mortgages they sold and guaranteed and second the securitized mortgages they bought for their own portfolio.  My understanding is that the attempts to help them only involve the first part, the mortgages they sold.  The second part, their portfolios with these risky assets, is equivalent to a hedge fund.  Several people have pointed out to me over the last few years that the value of those assets is less than the value of their liabilities.  In other words, these companies are realistically bankrupt.  Nothing is being done about the underlying problem, however, so I don't see equity holders benefitting in the long run.  In fact, it is fair to say that equity holders may lose everything when you and I have to bail out these institutions.

Where are you interested in investing?  How can people keep their "safe" portion of their nest egg protected when stocks, bonds are both weak?  Is there a way to invest in foreign bonds that are yielding more, like Australia and New Zealand, easily for the average investors?

The key to safe investing is DIVERSIFICATION.  Often people forget that this includes diversifying against the dollar, which means buying foreign stocks.  I have always felt that the core of the average person's portfolio should be invested in broad indices for the U.S. and International markets.  I am not talking about S&P500 indices.  They are only large capitalization stocks.  I mean Wilshire 3000 or Wilshire 5000, i.e. small, medium and large capitalization stocks.  The best performing group during the turmoil of last quarter was actually the small cap stocks.  How many of you would have predicted that?  So, have a core that insulates you from sharp movements in one sector of the market or U.S. versus international.

Natalie, where can I find a good financial planner or stockbroker?

Natalie:  Check out the "How to Find a Broker" article on the home page under the Investor Edu section.  Get referrals for at least 3 candidates from people you respect who have had a great relationship with their CFP for more than seven years. 

Dr. Miles, any last thoughts?

It is always darkest just before the dawn.  Take note of all the dark thoughts you hear in the press and among investors.  Then take heed that such gloom means better times are near.  So DON'T PANIC.  PLAN!

Full Disclosure:  Natalie Pace owns put options in Wells Fargo.

Please note:  NataliePace.com does not act or operate like a broker.  We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S.  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.

Investors should NOT be using the chats or chat transcripts to daytrade their nest eggs.  Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more.  The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

IMPORTANT DISCLAIMER:  Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Dr. Marc Miles opinions are his, not NataliePace.com's and constitute his judgment as of the date of this publication.  As the marketplace is constantly changing, his opinions 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.

Playing the Numbers to Profits in Your Business.

By Chellie Campbell, author of Zero to Zillionaire and The Wealthy Spirit.

"You have to find something that you love enough to be able to take risks, jump over the hurdles and break though the brick walls that are always going to be placed in front of you. If you don't have that kind of feeling for what it is you are doing, you'll stop at the first giant hurdle." George Lucas

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

Terry and John were stuck.

They had worked hard on their new consulting business - designed the program, the workshops, the coaching, the speeches. The website, the ads, the email lists, the brochures. They had targeted their market, networked, and handed out business cards. Then they fiddled with everything, readjusted, redesigned, redeployed. Hours, weeks, months went by as they delayed and discussed and tweaked.

Meanwhile, no money was coming in.

All this activity was designed to create a profitable business - while the phone on their desk gathered dust.

You know that phone - the one with the money in it. The one at the other end of which is your prospect, your customer, the person with all the money to hire you, pay your fees, praise you, write you testimonials, and send you more customers! The one that can say, "Yes!! Yes! I want you, I need you, I love you, and here's the money! When can you start?"

The problem is, he isn't going to call you. You have to call him. And there's just one catch: before you find him, you have to call a bunch of other people who are going to say:
"Not now"
"I'm not interested."
"I have to ask my _____.
"I don't have the money."
"I don't have the time."
Yada yada yada. And we soooo don't want to hear that! And so, to avoid that disappointing confrontation, we don't pick up the phone.

Terry and John weren't picking up the phone. And so they were running out of money. When they came to me, I smiled. Then I told them to pick up the phone. Yeah, I know, it's a Web.2 world, and everybody wants to figure out the perfect suck-you-in ad or email campaign so that other people will be moved to pick up the phone and call you.

Well, you can do some of that, and some of that works. But you have no power and control over it - you send the email and wait. Now your prospects are in control of your money and your life and they don't know what your timetable is. So I told Terry and John to start smiling and dialing and to keep track of the numbers of how many people they called and how many people said yes.

Terry did it. When I saw her again the next month, she was a changed woman. She looked strong and confident, as people do who face a challenge in a powerful way. Her power was written on her face and in the energy of her body. She had walked through her fear and opened up to just having lovely conversations with people that might be interested in her service or give her a referral. She said she repeated 50 of my affirmations before every call, and that she was scared picking up the phone, but she did it.

Just do it. You're not in charge of the response on the other end of the phone. You're only in charge of making the call.

She hasn't sold her program yet, but she will. If you call enough people in the right target market, you're going to make some sales. It's a numbers game. And Terry is playing the numbers.

1. Write the number of calls you made this week here _____.
2. Write the number of sales you made this week here _____.
3. Write the amount of money you made this week here ___________.

The simple math of business is this: a bigger number in line one = a bigger number in line two = a bigger number in line three.

Next month - what to say when you make the call. (Hint: it had better not start with "Hi, let me tell you about me and my great stuff.") For the complete "It's Not Cold Calling - It's Gold Calling" report, join the Dolphin Club today and get this and other reports and bonus gifts free with your membership at www.chellie.com.

As a professional speaker and author of The Wealthy Spirit and Zero to Zillionaire, Chellie has been teaching Financial Stress Reduction® Workshops since 1990. The Wealthy Spirit was a book-of-the-week on the Doctor Laura Schlessinger radio show and a GlobalNet book-of-the-month selection. She has been quoted in Good Housekeeping, Lifetime, Woman's World, and Essence, and more than 30 popular books.

Chellie has also been responsible for helping countless people to increase the profitability of their businesses. If you are stuck having too much month at the end of your money, learn Chellie's time-proven strategies to success in her Financial Stress Reduction® Workshops.  If you are interested in Chellie's September 2008 workshop on How to Create a Successful Seminar Business, be sure to contact her right away. Space is limited. Go to Chellie.com for more information.

 

Why Am I So Tired?

by Diane Kusunose P.T., B.T., Galvanic Skin Response and Cold Laser Specialist at HealthWalk 

Diane Kusunose

Did my mind tell me I was tired or did my body tell me I was tired? How do our emotions and stress influence physical functional changes in the body? And what is the connection between physical pain and emotional pain? The connection between the mind-body is an important key to our health as explained by Candice Pert, Ph.D., a prominent neuroscientist and author of the book, Molecules of Emotion, and Louise Hay, another authority in this field. Our emotions create the bridge and are involved in sending messages back and forth. So in other words, what we think and feel can contribute either to our wellness or to our physical illness. For instance, a painful injury to the body can create a state of depression. Stress can also shut down bodily functions that lead to fatigue.

In the summer months, feeling vibrant is especially necessary for one to be able to participate in the physical activities that go along with the longer daylight hours. The last thing we want is reduced energy and persistent fatigue. In this article I will share with you the chemical reactions that affect the mind-body connection and how it relates to fatigue as well as offer some simple solutions to help you bring back your energy.

So how does the mind and body respond to stress and what are some causes of fatigue? The mind is not just in the brain...but in the body as well. There is a chemical connection between the mind and body including molecules and short chains of amino acids called peptides, neuropeptides, and receptors. The peptides are found not only in the brain but also in the stomach, intestinal tract, muscles, glands, and all major organs! When the brain is overloaded with a traumatic experiences or the onset of a flu-like infection, the body's receptors can get over-stimulated and end up sending mixed signals to the brain as well as draining the body of ATP energy. The result is fatigue. Some people experience general fatigue and others experience chronic fatigue. Symptoms may begin slowly or quickly. Fatigue doesn't only make you feel tired but it also affects organ function.

What is needed for a full recovery and to enhance the ability of the body to produce energy? We look to the system of the body responsible for energy production, the digestive system. This system has identical tissues and chemicals to those of the brain. As a result of this strong connection, stress and negative emotional states can directly affect the health of the GI tract and must be considered with chronic GI disturbances.

One of the major physiological reactions to stress is a heightened sympathetic nervous system and the shutting down of the digestive system as the oxygen, glucose, and essential nutrients are provided to the muscles in readiness for fight or flight. Chronic stress therefore leaves the digestive tissue system starved of what it needs to maintain a healthy intestinal wall and produce protective mucosal lining. Mal-absorption is a state arising from abnormality in digestion or absorption of food nutrients across the gastrointestinal lining. This mal-absorption process is called Leaky Gut Syndrome and deprives the body of energy, leaving the body and mind fatigued. Intestinal mucosal lining damage can occur due to enzyme deficiencies, malnutrition, infective agents or microorganisms, overuse of antibiotics, and pain medications like aspirin and ibuprofen. Other causes include food intolerances and bacterial and fungal imbalances.

To restore the body's ability to create energy via food production, there are many solutions to restoring the gut lining. One highly effective tool is Galvanic Skin Response (GSR) testing which helps determine nutrients the body is lacking and which combinations of nutrients are needed to replenish the body. Through GSRtesting, at HealthWalk we can assess your needs for digestive enzymes, probiotics, Vitamins A and B12, Iron, zinc, L-Glutamine, insoluble fiber such as cellulose powder, Aloe Vera juice, Essential Fatty Acids, and herbs such as Milk Thistle and Deglycyrrhizinated Licorice to name some of the body's nutrient needs.

GSR also determines which homeopathic remedies and Bach flower essences are recommended to help balance the mind-body connection. Bach flower essences nourish the emotional connection and homeopathic remedies can treat the physical and emotional needs.

A recent HealthWalk client had chief complaints of painful bloating, constipation, and fatigue not relieved from rest. She underwent GSR testing and Cold Laser Therapy. Cold Laser Therapy stimulates the cells of the body to produce ATP energy and increase circulation, assisting movement in the connective tissue. This tissue also circulates the neuropeptides connecting the mind and body. The result of laser light is the reduction of pain, inflammation, and improved connective tissue health.

The GSR results indicated a program of digestive enzymes, probiotics, Olive Bach flower essence, Lycopodium homeopathic remedy, and Aloe Vera juice/Clearvite detox drinks. After one month on this protocol her symptoms greatly diminished. She also experienced five cold laser therapy sessions focusing on her back and abdominal areas where her pain was prevalent. With this combination of supplementation and cold laser therapy, our client's pain was soon gone and her body bounced back to health and emotional wellness once again.

HealthWalk™ offers customized, non-invasive and effective support to enable your body's own innate powers to enhance health, performance and healing. HealthWalk is dedicated to supporting and educating you to achieve and maintain vibrant wellness. HealthWalk is a unique integrative healthcare facility and sanctuary with a global umbrella of leading edge technologies, services, supplements and products backed by over 20 years of research.

HealthWalk, the leading edge non-invasive healthcare center and products company has specially priced Health and Wellness Services Packages and Discounts on Products and Services for NataliePace.com subscribers. HealthWalk is offering 10% discount for NataliePace.com subscribers on all individual HealthWalk products and services. Please mention the discount code, HWNP upon ordering.

In today's high stress world, you face a host of special health needs and challenges from work and home demands. Health issues include physical and emotional stress, sleep issues, memory and information retention, weight control, gastro-intestinal distress, hormonal imbalances and emotional and physical health.

Remote Galvanic Skin Response (GSR) analysis - $325 (available to be conducted via phone and internet)

G.S.R. measures through the conductivity of the skin, the autonomic nervous system responses to stress. A stress profile is determined by looking at the body's meridians, vertebrae, teeth, and organs. G.S.R. can also look at food, environmental, chemical, viral, bacterial, and fungal stressors.  G.S.R. provides the means for clearly seeing what is transpiring in your systems so that a thorough analysis of your reactions to energy, foods, supplements, toxins and more can be observed. Then with the G.S.R. we can confirm the compatibility of all potential solutions prior to recommending them.

HealthWalk In Clinic Package
In one full, comprehensive and enlightening day at HealthWalk's clinic you will learn more about your health and bodily functions (hormonal balance, blood composition, biological activity, diet analysis) than you have ever known. The whole analysis and consultation process is non-invasive, thorough and deeply informative. You will come away with the solutions, supplements and support to guide you on your path to enhancing, regaining and maintaining your vibrant health.                         

HealthWalk's special package includes Vital Hematology, Comprehensive Hormone and Adrenal Analysis and Consultation, Digital Infrared Thermal Imaging (breast and lymph screening), Galvanic Skin Response (G. S. R.) and a consultation session with the Health Guide. 

Special discount for NataliePace.com subscribers - $995 regularly $1170

HealthWalk's Remote Program allows you to obtain a comprehensive analysis and support for your health so you can achieve wellness from your own location. HealthWalk has contracted with labs throughout the country to work with you to obtain the blood and saliva samples to do a thorough analysis and consult with you via phone and email on your specific health issues and to offer you appropriate support. This program gives you a comprehensive analysis and solutions on what and how your body is functioning at the adrenal, biological, hormonal, cognitive, mental and metabolic levels. The significant majority of all illnesses and promotion of wellness can be related to the proper functioning and understanding of the endocrine system, the biochemical aspects of the body and the proper functioning and understanding of nutrient uptake, allergies, inflammation, and potential or current toxins in the body. This program will give you the information and support you need to enhance, regain and maintain vibrant health.

The cost of the Remote Program is $1395
Call HealthWalk at 877-255-4703 or email info@healthwalk.com
www.healthwalk.com
HealthWalk, 5825Avenida Encinas suite 111, Carlsbad CA 92008

You can lose everything in life and make it all back
With one exception; Your Health

Please note: This article has not been evaluated by the Food and Drug Administration. The information herein is not intended to diagnose, treat, cure or prevent any disease.

Ask Natalie:

Where Does a Rookie Investor Start?

Dear Natalie:  I am a complete novice and I want to invest in the stock market. On the teleconference on Thursday, Sandy mentioned that she had found a stockbroker who was open and willing to work with her on a Green investment strategy.  Is finding a broker the best way to begin and what else should I be working on right now before I commit to investing?  If possible I would like to contact Sandy's broker, since he seems right for my vision also.

Thanks.
Ready and Willing

Dear Ready and Willing:

Photo by: Stacie Isabella Turk, Ribbonhead.com ©2008. Stylist: Arlene Hylton-Campbel, 818-710-0079.

The key to success in investing is the key to success in most things.  There are three important steps.  1) Just do it.  2) Educate yourself to get better at it.  3) Find a great partner/mentor who can teach you tricks of the trade.

1.  Just do it.  Nobody seems to have much of a problem being a great shopper.  That's because you have to shop to survive.  Investing is the key to thriving - which is why so many of us think it's something we can put off.  Who wants to live that way?  It's why so many people are trapped in a cycle of debt - because they focus on surviving instead of thriving.  Start NOW to become an investor by tithing to yourself FIRST each time you get a paycheck.  As you can see below, the average returns of the stock market for the last 39 years are over 10% (well above the returns of real estate), so you don't have to be a rocket scientist to earn gains while you sleep.  You just have to be in the game. 

The easiest way to do starting investing is to set up a 401(k) through your employer or an Individual Retirement Account through a brokerage.  Put at least 10% on auto-deposit into this plan NOW, as the first transaction that occurs with your paycheck each pay period.  A good portion of the money you put into these accounts is pre-tax, non-taxed money (until you withdraw), so this is money that you would be giving to the government, if you are not putting it into your own Buy Your Own Island plan (which is what I like to call my retirement plan).  If you don't know WHAT to invest in yet, don't let that stop you from setting up the account.  You can always assign the investments to Treasury Bills or the money markets, where your investment is very safe (provided it is FDIC insured) and relatively protected from a reduction in value.  

2.  Educate yourself.  Remember that the water of wisdom you drink is only as good as the well from which it is drawn.  There are a lot of fly-by-night organizations with no track record offering you software and get rich quick schemes that are expensive to the investor and have no guaranteed rate of return.  So, stick with tried and true organizations, like FINRA.org, SEC.gov, NataliePace.com, WISE Senior Services and other governmental, for-profit and nonprofit organizations that have been in the business of empowering the individual investor for over seven years.  (Seven years is key because that means the organization has held up in a bear market.)  FINRA.org and SEC.gov have a lot of very easy to read investor articles and resources that will help you understand investing, learn how to allocate your assets across various investments (bonds, stocks, CDs, Treasury bills, etc.), diversify across various industries and avoid shysters and scam artists. 

Remember that a broker is a salesperson, and further, that the range of experience, track record, wisdom and knowledge varies greatly from one professional to another.  In general, until you find a GREAT, trustworthy certified financial partner who has proven herself over time, trust the above-mentioned companies and organizations to provide you with the news, information and education you need to succeed, over what your broker tells you.   (Once you find a great partner, you'll find that what she says will be in line with what you are learning from FINRA, the SEC, NataliePace.com, WISE Senior Services and other reputable resources.)

Another great way to jumpstart your education is to attend my Get Rich and EnRich Investing Retreat.  The next one is in September and there is only ONE SEAT remaining.  At the retreat, you will receive HANDS ON training from me personally for three full days in an intimate setting with just a dozen other people.  At the end of these three days, you will have learned how to live like a billionaire, how to invest like a billionaire and how to walk the lifestyle of a billionaire daily.  You'll know how to evaluate investments, how to grade potential investments in a report card and how to distinguish between investing in great companies that have potential for great gains and charity (an investment in your niece's startup Internet business).  For more information, call 866.476.7442, email Heather@NataliePace.com with RETREAT in the subject line and check out the banner ad on the home page at NataliePace.com.

3.  Find a great partner/mentor.  Brokers and spouses: it pays to pick a good one!  Interview certified financial planners as if your life depends upon it because your lifestyle does.  Take your job seriously because a smart, ethical, wise CFP who is the perfect match for your needs, your goals and your risk tolerance, can truly help you create the life of your dreams - now and into retirement.  For more information on how to find the perfect CFP partner, read, "How to Find a Broker," in the Investor Edu section at NataliePace.com.

If you have a question for Natalie, please feel free to post it on the Sharing Wisdom bulletin board.  That way others get to benefit from your curiosity!  It's anonymous.  Remember: There are no stupid questions.  Finding answers to your questions is the pathway to wisdom.

If you are interested in Natalie's September 2008 workshop, be sure to contact her right away. Space is limited. Call 866.476.7442 or email Heather@NataliePace.com for more information.

Bottom Fishing for Blue Chips in a Bear Market.

by Kelley Wright, managing editor, Investment Quality Trends stock newsletter.   

Kelley Wright, managing editor, Investment Quality Trends stock newsletter

The close of each trading day provides investors an up-to-the-minute snapshot of investment sentiment. Since the major averages peaked last October, volatility has increased to the point where daily market movements have become so exaggerated that investors have become fixated on these daily gyrations. The unfortunate result of this short-term fixation is the investment viewpoint becomes limited and places too much emphasis on the prevailing mood, which lacks context and insight into the greater trends and cycles that are in force. For this reason we must step back and look at the bigger picture.

We believe the big picture is captured in our study of the change by percentage in our four categories of value since we began publishing in 1966 (see the graphs in the Special Reports area of the web site). What this study clearly shows is the systematic structural progression from periods of exceptional value, to periods of appreciation, to periods of overvalues and the inevitable decline once again to periods of exceptional values.

Moving from the broad categories to a specific sector we can isolate and examine this progression more closely. Consider the pharmaceutical sector and three of its components that qualify as Select Blue Chips; Bristol-Myers (BMY), Merck (MRK) and Pfizer (PFE).

Beginning in 1970, the long-term charts of BMY and MRK are almost mirror images; a slow but steady climb that was briefly interrupted in 1987, which then continued higher until the end of 1991. Both stocks then declined almost 50% through mid-1994, reversed direction and climbed until they peaked in 1999. In almost perfect lock-step fashion both stocks declined once again to their 1994 levels. At that point the two stocks diverged as MRK accelerated until 2004 when the problems with Vioxx and similar compounds emerged. MRK has since rejoined BMY at its 1994 level, which the charts suggest is a major area of support and a likely juncture from which to begin a new uptrend.

The chart of PFE is quite similar to those of BMY and MRK except that its decline from '91 to '94 was much shallower and its decline since 1999 has been more long and drawn out. As with BMY and MRK, the charts suggest that PFE has reached an area of support and has begun building a base.

For the investor who focuses solely on the moment, it is highly likely he would be unaware of the long-term structure and cycles within the pharmaceutical sector and its above mentioned components. That the current dividends of BMY and PFE exceeds their respective trailing twelve months earnings are a concern but should come as no surprise as these stocks have been in a bear market. Bear markets are, if nothing else, the result of declining earnings. That the Directors of BMY and MRK have remained resolute with respect to their dividend policies, however, would suggest they have expectations of improved earnings. One could glean from the recent price action in these companies that the market is sensing this as well. As is often the case, stocks will reverse direction before the evidence is evident. Given the repetitive trends and cycles for this sector and the appearance of historic good value in these individual stocks, investors might be well served by additional investigation and consideration.

To be more succinct, while it is apparent that the broad market has yet to establish its low, it does not preclude individual sectors and stocks from reaching areas that represent historic good value and an excellent buying opportunity for the investor with a long-term outlook.

The equity markets have staged an impressive rally from extremely oversold levels. Declining crude oil prices have definitely contributed to the upside momentum but it remains to be seen if crude oil has one more leg up left in it. Labor Day is the traditional top for crude oil as it is the end of the driving and vacation season. We still have an election left to decide and that could contribute some additional volatility until Wall Street makes its determination as to the victor. As Yogi Berra has said, "It ain't over ‘till it's over." As I write in this issue's Mail Call feature, opportunities abound but dollar cost averaging may be the most prudent strategy.

THE TIMELY TEN
Investment Quality Trends primary purpose is to assist subscribers in growing their capital and income base from which to derive cash for their current and future needs. To that end we believe that high-quality stocks purchased at historically low-price-to-high-yield offers the best potential for downside protection and upside appreciation. For subscribers to effectively mirror our Model Portfolio for performance tracking purposes (every stock in the Undervalued and Rising Trend categories), would require holding one hundred forty one stocks as of the Mid-July issue; clearly too many positions to be practical.

The Timely Ten, therefore, is not just another "best of, right now" list. It is our reasoned expectation based on our methodology and experience for what we believe will perform best over the next five years. Do we believe that all 10 will go up simultaneously or immediately? Of course not. Our four decades of research and experience, however, leads us to believe that these stocks, purchased at current Undervalued levels, are well positioned for appreciation.

Whether you are looking to build a portfolio from scratch, are partially invested and looking to add new positions, or fully invested and in need of some affirmation and hand holding, The Timely Ten represents our top ten recommendations as of each issue.  Short of utilizing the personal investment management services of our sister company, this is as close to hands on advice you can get.   The Timely Ten consists of Undervalued stocks that generally have a S&P Dividend & Earnings Quality rating of A- or better, a "G" designation for exemplary long-term dividend growth, a P/E ratio of 15 or less, a payout ratio of 50% or less (75% for Utilities), debt of 50% or less (75% for Utilities), and technical characteristics on the daily and weekly charts that suggests the potential for imminent capital appreciation. This issue's selections are:

Kelley Wright's stock newsletter Investment Quality Trends is currently performing at the top all of his peers on Wall Street for the past 20 years and is ranked #4 in risk-adjusted performance by Hulbert's Financial Digest. Kelley's stock newsletter, IQTrends.com, is earning 11.6% in annualized gains over the past 20 years, according to Hulbert's, compared to general stock market performance of 11% (as of May 2008). IQTrends.com also has lower risk and volatility than the market average. To subscribe, go to IQTrends.com

Regulatory Reminder
Please keep in mind that as an investment newsletter, the staff at Investment QualityTrends are legally bound to only answer questions of a general nature and are unable to provide specific buy/sell recommendations or specific advice on an individual basis. For those interested in obtaining more information on individual management services in accordance with our approach, our sister company, I.Q. Trends Private Client Asset Management, is a Registered Investment Adviser with the U.S. Securities and Exchange Commission. Among the platforms available through I.Q. Trends Private Client are individual portfolio consultations and active account management. For more information, please contact Mr. Michael Minney at (866) 927-5250 ext. 201.

Disclosure documents are located at: http://www.iqtrendsprivateclient.com

Please note: 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.



NataliePace.com Calendar: Don't miss the Pure Prosperity Conference at Agape International Spiritual Center in Culver City, California, with Michael Bernard Beckwith, Natalie Pace, Mark Victor Hansen and Tina Lifford!

The calendar features important ezine publication dates, teleconferences, chats, conferences and other opportunities to invest in knowledge, success, personal enrichment, prosperity and peace.

The NataliePace.com Calendar section features conferences, retreats, educational opportunities, cultural events, galas, market events 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. 

Federal Open Market Committee Meeting
Tuesday, August 5th, 2008
The Feds meet for one-day to determine whether or not to increase, pause or lower the Fed funds rate. Summer doldrums. Wall Street is getting ready for vacation.

European Council Interest Rate Announcement
Thursday, August 7th, 2008
11:30AM through 12:45PM GMT
ECB Governing Council meeting in Frankfurt, Germany, followed by interest rate announcement. News conference directly thereafter.  This announcement could have a big impact on the U.S. bond markets, which haven't been having much fun of late. 

2008 Beijing Olympic Games!
Friday, August 8-24, 2008
Aug. 8-24, 2008. Beijing, China hosts the 2008 "Green" Olympics. Athletes worldwide will compete, but the sure winner is alternative energy, as the real star of the show. Bird's Nest Stadium is being powered by Suntech Power Holding’s solar panels and General Electric is greening everything from the air, to the water to the power,  and even providing the television coverage to boot...  Talk about a green blue chip!

Premium Subscriber Chat with Natalie Pace
Wednesday, August 13th, 2008
8:45AM through 9:30AM PT
Where do you profit when the markets head south? Put options! Learn a few tricks of the trade from a top Wall Street stock picker. Also, what's up with last year's Hot industries, like solar energy? Is it fried? Learn trading tips for turbulent times.

Agape Pure Prosperity Seminar, LA, CA
Friday, August 15th, 2008
7:00PM through 10:00PM
Michael Bernard Beckwith hosts money gurus Natalie Pace, Mark Victor Hansen and Tina Lifford in this special seminar, at the Agape Sanctuary in Culver City, California. How would you live if you had all the money in the world? Live that life now.

Agape Beach Party, LA, CA
Saturday, August 16th, 2008
Join Michael Bernard Beckwith and the Agape International Spiritual Center devotees at the beach to celebrate, frolic, break bread and enjoy sunny Southern California.

Sea of Change Fishing Tournament, Dana Point Harbor, CA
Saturday, August 23^rd, 2008
The Sea of Change Fishing Tournament will give 100% of the proceeds to benefit the housing facilities that provide harbor victims of abuse and domestic violence.  Bragging rights for the biggest 5 fish, hob-knobbing with the locals and all for a great cause.

GDP 2Q 2008 report (preliminary)
Thursday, August 28th, 2008
8:30AM through 8:45AM ET
The U.S. Dept. of Commerce, Bureau of Economic Analysis (BEA.gov) releases its preliminary report on GDP growth in the 2nd quarter of 2008. Advance estimates from the BEA came in at 1.9%. Treasury projections were much lower. Will the advance numbers hold?

Labor Day
Monday, September 1st, 2008
Have a great celebration on the official end of summer fun!

21-day Get Rich and Enrich Coaching Call Series
Monday, September 8th, 2008
7:00AM through 7:30AM
How would you live if you had all the money in the world? Wake up to Natalie for 21 days in a coaching call series designed to activate and maximize the creative, abundant potential in your life. Live your dreams starting right now! Call 866.476.7442 to sign up for this extraordinary, life-changing work.

Premium Subscriber Teleconference with Natalie Pace
Wednesday, September 10th, 2008
5:00PM through 6:00PM PT
Want to get in on stocks like Suntech, Sohu, Opsware, Google and World Water and Power BEFORE they make 300 to 600 percent gains? Have questions about where the stock market is headed? Get the news, information and education you need to succeed!  Premium subscribers: get the call-in information on the Premium Subscribers Only section of the Sharing Wisdom bulletin board.

Agape Music Symposium and Arts Festival, LA, CA
September 10^th-14^th, 2008
4 extraordinary days of workshop, panel discussions, choir practices, and visioning through music, dance and spoken word ministries.

Federal Open Market Committee Meeting
Tuesday, September 16th, 2008
The Feds meet for one-day to determine whether or not to increase, pause or lower the Fed funds rate. How are the Back to School stock sales looking?

Hail to the Chiefs Reception, Washington, DC
Wednesday, September 17th, 2008
6:00PM through 8:00PM
Join the Women's Campaign Forum in honoring the women Chiefs of Staff who serve our Senators and Representatives in Washington DC.

Get Rich and EnRich Retreat, Santa Monica, CA
Tuesday, September 23rd, through Thursday, September 25, 2008
3-day Get Smart about investing beach retreat. Green and recession proof your portfolio. Learn how to pick stocks that are poised for rock star gains. Email Heather@NataliePace NOW to be one of just a dozen lucky individuals to attend this intimate training.

Tour the solar-powered Living Home, Santa Monica, CA
Friday, September 26th, 2008
11:00AM through 12:00PM
Tour the first platinum LEED rated home in the world. LivingHomes solar-powered pre-fab was installed in under one day! Don't miss this incredible opportunity!

AltCar Expo & Conference, Santa Monica, CA
Friday, September 26th, 2008
Electric, natural bas, biodiesel, hydrogen, ethanol, propane, hybrid and other vehicles. Join the debate by test driving your fave new rad car!

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