The Perfect President for Your Portfolio.

By Natalie Pace, CEO, NataliePace.com.

Steve Forbes (CEO & Editor in Chief of Forbes), Dennis Kneale (Managing Editor, Forbes) and Elizabeth MacDonald (Senior Editor, Forbes) deconstruct the presidential candidates and the affect their economic policies will have on real estate and stocks.

This month, in our Success Secrets of CEOs series, NataliePace.com taps the wisdom of Steve Forbes and two of his most respected editors on what to expect from the markets this election year and how to sweeten the rocky road of 2004. Looking for a few safe havens for your investment$? Wonder if the real estate bubble is ready to pop?

Steve Forbes, CEO & Editor in Chief, Forbes

Remember when retailers feared that "brick and mortar" was dead? That consumers would choose cyber space over reality? When economists postulated that the future upside of profitability was so tremendous that real world losses could go on for years and still be a mere blip in the galaxy? Today, four years after the grounding of such lofty dreams, investors should "expect that the total return on stocks will be in the neighborhood of 6% in real terms," according to Forbes editor Bill Baldwin. This news is simply business as usual to the long-term investor, but, judging by the surge in riskier market plays, like options, hedge funds and shorting, the 1990s investor may well be suffering from a case of shock and denial, still hungry for the means to become an overnight millionaire.

The gains of 2003, with NASDAQ posting 50% and the S&P 500 and the Dow Jones Industrial Average adding 24% and 22% gains respectively, certainly did a lot to resuscitate Sunnyvale (California) fever. Though it is unlikely that 2004 will be as spectacular as 2003, there are ample signs that 2004 will finish off in the black. Over half of the 2003 gains were seen in the second half of the year, with NASDAQ popping +25% and the DOW and the S&P500 jumping +15% each, and real earnings and corporate margins are back.

Historical statistics support a fourth quarter rally this presidential year, and the most respected financial minds in the U.S. are predicting that, barring a major terrorist attack, the U.S. economy and markets are on track to perform well through the end of the year. From 1928-2002, on average, the S&P 500 Index saw Total Returns of 13.52% in the years of a presidential election (Odyssey Advisors). Alan Greenspan, Chairman of the Federal Reserve Board, reported on June 30, 2004 that "output is continuing to expand at a solid pace and labor market conditions have improved." Tobias Levkovich, the Chief Market Strategist for Smith Barney, notes that, after a difficult summer, a late 2004 post-election market rally is "plausible," as "corporate margins have been outstanding and are now at 35-year highs." (Portfolio Strategist, 6.24.2004).

Dennis Kneale Managing Editor, Forbes

So, if you believe in the Santa rally, is now a good time to buy back into the markets? Have technology stocks become affordable again? Are energy stocks too expensive? Where are the safe havens for your money, and which sinkhole sectors should you avoid? Will the markets implode if Kerry is elected and repeals Bush's tax incentives? Will Bush's unrestrained deficit spending erode the economic recovery? Will investors settle into the calm of recovery, or will terrorism and fear of inflation continue to spark stock sell-offs?

For these answers and more, NataliePace.com turns to some of the most respected minds on Wall Street-- Steve Forbes, and his team of talented and experienced editors, Elizabeth MacDonald and Dennis Kneale.

NataliePace.com: How do you see the markets closing out 2004?
Steve--Obviously the big determinant will be the election. When Mr. Kerry does well, the market doesn't. When Bush does well, the markets do well. I think Bush will win and the market will have a very good year. Housing is up. Personal incomes are up. Capital spending is up. We're in a funk period. You know what they say, "In a bull market, you climb the walls of worry." People can't believe that the market can really go up, and that's when it does.

Elizabeth-- With the volatility of the election and the war in Iraq, people need to be extra careful this year. I think [we're] going to be stuck in the same trading range for the next couple of years--between 10,000 and 10,500. Investors shouldn't be dismayed by this. The DOW only hit 1000 for the first time in 1966, and it didn't break through that threshold until 1983. It's not that long ago. We're trading in a range, and you'll get a lot of spectacular dips and valleys. You really have to be astute about your stock picking, about buying low and selling high.

Dennis--The economy is getting stronger. Technology spending is, overall, improving. We're in the second Internet revolution. I think earnings growth is going to be strong in 2005. The outlook for ubiquitous broadband video gives me reason for hope. I think China is a constant, fantastic source for the entire world. China is not in a bubble, although there will be corrections from time to time. Biotechnology stories will be rampant. I'm hoping for more stability in Iraq. The market would thrive if we could do that. Boy, would we give anything to have one those 500-point days of the 90s now! Look at how our investor expectation has changed. It used to be that 500 points was routine. Now it is so rare.

How important is the result of the election to the performance of the markets?
Steve -- One of the reasons the election is important is because of the tax cuts passed last year. Those rate cuts for capital gains, dividends, personal incomes, as well as incentives for small business investments and capital spending, are all powerful stimulants to the economy. Whenever you cut tax rates, it's the most powerful thing you can do to stimulate the economy. As you know, Mr. Kerry wants to start rescinding the tax cuts. This is an election that determines how much fuel you will have for your car. It will determine how long a trip you'll take.

Elizabeth--If Kerry wins, the markets will whipsaw. I think Kerry's economic plan was minted in North Korea. It is one of the most retro, backwards, economic plans, that should be renamed The Bureaucrats, Accountants and Lawyers Full Employment Act. Watch out for him, and look at the details of his economic plan. It will take a lot of bureaucrats to make it enforceable. He's going to raise taxes. That is such a mistake all around.

Dennis--I think Republican administrations are better for the economy, even though Clinton presided over the biggest growth in the history of the U.S. Clinton was central and liberal. I think Kerry is a little demagogic for business tastes. He called companies that make the decision to go offshore, Benedict Arnolds. If you need to go off-shore in order to be competitive, that employs people. A lot of companies got leaner in the downturn. It was a sad thing for layoffs, but if you can put out the same thing with less output, you should. Ultimately that employs more people. The answer is not to be a demagogue, but to figure out intelligent policies. Of course, Kerry's got Warren Buffett liking him, and giving him advice.

What are the primary considerations over the next few months? Inflation? Oil prices?
Steve-- The Fed overshot the mark. They created too much money, so the Fed has to rein in the excess. The Fed gave us a mild inflation, which you see in gas prices, in shipping rates, in steel. Inflation never goes through the economy evenly. It hits one sector, then another.

Elizabeth--The Fed has been the reason why the market has performed so heroically after a recession, two wars and terrorist attacks. I don't think that inflation is a problem at all. Savvy investors will look at their holdings, and all of the forces. Consider portfolio pruning and rebalancing. You don't want to be in stocks with poor fundamentals. Volatility will get worse toward the end of the year. Remember portfolio diversification. The market leaders whip around unpredictably. Avoid major groups or any bets that you think are in fashion. Right now, you really have to be thinking about risk and volatility.

Dennis--I think the inflation thing is a bugaboo. There is not an inflation problem. It is a silly fear. The government numbers are often a little suspect. Be concerned about the market overreacting to the Fed's interest rates. Investors get skittish with each incremental rise. We still have the lowest interest rates in 40 years, but just fearing interest rates slows the markets done a bit. Iraq and terror--this longtime uncertainty-- keeps the market static. If Democrats win, the markets will be skittish. The first thing that Kerry would do is to repeal the tax "for the rich." That would be bad for the people and the market.

Are you concerned with rising interest rates?
Steve--Not if the Fed does its job right. The long-term loan rates should be fairly stable, even though short-term rates may go up some. The 10-year Treasury rate shouldn't go above five. The fixed mortgage shouldn't go above six.

Where do you see the markets heading in 2005, the first year of the new presidential term?
Steve--It will be dependent upon who's in the White House. If Mr. Kerry gets in, it's normal for a new President to have a rocky market the first year. If Mr. Bush is reelected, the markets will be turbulent in 2005, but if he pushes for major tax changes and social security reform, the markets will be fairly decent in 2005.

What sectors should investors avoid and which sectors do you favor, considering rising interest rates and inflation?
Elizabeth--Stay away from mortgage issuers. There is volatility in earnings. Most all of them have major derivatives exposure. They are not adept at managing that. They have been living in a sweet environment. Once rates go up, you'll see some problems there*.

Dennis--Banks might have a tough time. They've been able to borrow money at the Fed Fund's rate and loan it for extra. Their spread is narrow. You might worry about them. Credit card companies won't have as much ability to sign up new cardholders and new debt.

Steve--One area that I think can do better than expectations is housing--housing stocks and mortgage company stocks. Their P/Es are very low. Everyone figures that mortgage refinancing is done. Their earnings will go down, but not nearly as much as people anticipate. Also, high tech has been hit hard recently. I think it will come back again. I expect great things from companies like Amazon, EBay, Intel and the like.

Any comments on Google?
Steve--We don't know what their price will be yet. Will it be 150 or 210 times P/E? We have to wait for the coming out party for Google. We can judge Google's marriage prospects then.

Is the real estate market in a bubble?
Steve: There are certain areas in the country I'd be wary of, like New York City and Los Angeles area real estate. There are other parts of the country, where housing is still a relative bargain. Our Forbes publisher, Rich Karlgaard, has written a book called Life 2.0. It's about happiness--not the what or how of happiness, but the where of happiness. Where people live has a major impact on stress levels. Thanks to high technology, the sophistication gap has narrowed sharply. You don't have to be in a big center to be in the center of things. You can live in Des Moines, or Missoula, Montana and other places and not be cut off from the world. If you're in a university town, you can have intellectual stimulation and start companies in biotechnology and high technology. You can get housing for a fraction of the cost of what it is in Southern California. Why pay five times as much and have the hassle of five hours on the freeway, when I can go elsewhere and preserve my income? My kids have a better quality of life. I have more time to myself. Hey, why not!

Where would you place your investments now in the housing market?
Steve--Housing nationally as a whole will be decent. Florida just had a huge boom. Certain parts may be overbuilt. But baby boomers, my generation, are retiring and/or buying a second home. I think areas like the Florida panhandle will do extremely well. There is plenty of opportunity out there, though some areas may be over exuberant.

Do you have one favorite stock?
Steve--I don't. For people who want stock advice, I say the best investment is to buy Forbes magazine. Of course, that helps my stock. Most of my equity is in Forbes magazine. That's my favorite stock, though it's not publicly traded.

Elizabeth--I like Advanced Micro Devices (NYSE: AMD). I think the chipmakers are going to be coming back. AMD's chips are as fast as Intel's. They have a tiny market capitalization-- $4 billion versus $151.7 billion. They recently flipped from cash negative to cash positive. It is an underdog that Wall Street doesn't respect, but they should.

Dennis--The software stock that I like as a wild play is Siebel Systems (NASDAQ: SEBL), trading at $8-$9 share. With Siebel, there are two attractive factorsÑcash and the takeover play. Microsoft or Oracle will take them over. Tom Siebel is someone everyone in Silicon Valley loves to hate. Larry would love to buy the company of one of his former executives. Oracle needs better applications, and people are driven by ego. Siebel Systems has got $4/share in cash and almost no debt. Microsoft only has $5/share in cash.

Do you have any tips on successful stock picking? The smaller capitalization, the better stock performance in 2003. Is that the way it will play in 2004?
Elizabeth--Large caps are the way to go. In these so-called quieter markets, that's when disciplined stock selection pays off. You rotate into quality, solid fundamentals. They tend to outperform small cap growth. Don't ignore small and micro caps, but they're now more expensive. There are a lot of dogs in there, but the momentum is still on the side of smaller stocks. You have to take a microscope to the Russell 2000 and the Wilshire Micro Cap Index. It's all about valuation, fundamentals, risk and momentum, P/Es, profit margin and return of equity. Play it safe for now.

What is the best stock in the energy sector or energy services sector?
Steve--They've had a big run-up. With oil prices coming down, people unload them. I would wait for oil to go to $28-30 barrel, then you'll find some bargains out there. You buy a company dull as dishwater, such as Exxon Mobil (NYSE: XOM), or a small one like Sunoco (NYSE: SUN), and, over time, they'll do fine for you. For all of the ups and downs, they pay a nice dividend, so that you can collect money while you wait. Don't try to market time these stocks. Dollar cost average them.

[NataliePace.com note: On Wednesday, 7.28.04, light crude oil traded for $43.05 on the New York Mercantile Exchange.]

Elizabeth--Energy stocks always benefit from rising prices. Many are now trading in single digit multiples. They tend to be cheaper than other cyclicals. I like Conoco Phillips (NYSE: COP). It is an integrated oil/chemical producer. There has been a shortage of domestic refining. This company is stepping in there. Their P/E is just 10. I also like Devon Energy (NYSE: DVN). They're cheap at 8 times earnings.

Dennis--I always thought that Dynegy (NYSE: DYN) shareholders overdid it. People thought Dynegy might be Enron. The stock got killed. It has pipelines. That might be a stock worth looking at.

Full Disclosure: Steve Forbes has shares in Sunoco.

*NataliePace.com Note on Mortgage Lenders: On February 24, 2004, Greenspan advised the Senatorial Committee on Banking, Housing and Urban Affairs that the Federal Reserve Board is concerned about Fannie Mae and Freddie Mac's mortgage portfolios, because of concentrated interest rate and prepayment risks. Mr. Greenspan concluded that, in order to steer off the possibility of a financial meltdown or insolvency, "The Congress needs to create a Government-Sponsored Enterprise regulator with authority on a par with that of banking regulators, with a free hand to set appropriate capital standards, and with a clear process sanctioned by the Congress for placing a GSE in receivership." According to Mr. Greenspan, Fannie Mae, Freddie Mac and the Federal Home Loan Banks collectively stand behind more than $4 trillion of mortgages, or more than three-quarters of the single-family mortgages in the U.S. The Federal Reserve Board is concerned that Fannie and Freddie have not managed the risk by "holding greater capital," but have relied upon "heightened leverage," anticipating, with too much merit, that the U.S. government would be supportive "in a crisis."
According to Ken Levy, a Fannie Mae spokesperson, Fannie Mae's Effective Short-Term and Long-Term Debt was $693.719 billion in February, compared to a Net Interest Margin of $629.168 billion. To read Mr. Greenspan's testimony directly, CLICK HERE.

Stock Report Card: Energy Companies. Are dividends the sweet revenge for the arm and leg you are spending at the pump?

Steve Forbes and Forbes editors Elizabeth MacDonald and Dennis Kneale pick their favorite energy stocks. NataliePace.com lines up the numbers. You be the judge.

CLICK HERE TO GO TO THE STOCK REPORT.

11 IMPORTANT FACTS TO CONSIDER.

1. Energy stocks are trading at their 52-week high. If you buy now, you may be paying top dollar (unless oil spikes again). In fact, according to www.MoneyCentral.msn.com, all of these companies are currently overvalued, based upon their P/E to growth ratio.
2. Steve Forbes recommends waiting for oil to drop to $28-$30 barrel, when there will be some "bargains" out there.
3. High dividends! Buy energy companies at the reasonable price, and earn dividends while you wait for the share price to go up.
4. While oil companies may be the necessary evil that everyone loves to hate, the world's dependency on gas is not going away soon.
5. Although supply is not strangled, instability in the Middle East, ongoing terrorism and the insatiable new demands for energy in China and India are fueling demand.
6. Expansion is held in check by environmentalists. Who wants an oil refinery in their back yard?
7. Increased demand and slow access to increased supply puts pressure on the price. Higher prices increase profitability, which means better analyst ratings and greater interest by investors to buy the stock!
8. Energy is an important hedge against inflation. The key is buying your favorite dividend-paying energy company at a reasonable share price.
9. July saw a spike in per barrel price (up to $43/barrel on Friday, 7.30.04) on terrorist attacks in the Middle East and tax problems in Russia. OAO Yukos Oil Co. is trying to settle payments for back taxes with the Russian government. Iraqi and Saudi Arabian oil fields and pipelines continue to be terrorist targets, though both of these channels are also stabilizing forces when OPEC tries to choke off supply.
10. Oil revenues in Iraq, which are predicted to be triple of what they were under Saddam Hussein, could help to stabilize the country. Iraq pumped 1.6 million barrels a day in May, but only 1.49 million barrels in June, due to terrorist attacks. Saudi Arabia increased production to stabilize prices, from 8.65 million barrels/day in May to 9.1 million/day in June.
11. We'd have to agree with Steve Forbes. Sunoco is the star of this Report Card!

Road Map to Paradise.

"When I Grow Up I Want To Be Healthy, Wealthy and WiseÉ"É Remember how important montages were in kindergarten? Treasure Map Your Way to Success.

By Judy Katz www.katzcreative.com

A remarkable and unique method of visualizing dreams and goals, called "Treasure Mapping," is changing the lives of entrepreneurial women across the country. The process involves cutting out those images, words or expressions that represent what you want to manifest in your life, and pasting them into a journal or onto cardboard. Although amazingly simple, treasure mapping is quickly becoming the newest trend in personal and business development.

Leslie Grossman Co-Founder, Women's Leadership Exchange

Leslie Grossman knows first hand the power of treasure mapping. She's the co-founder of the Women's Leadership Exchange, a national company based in New York that holds regular all-day networking and business development conferences around the country. Back in 1989, Grossman owned a tiny public relations and marketing company that was, she admits, "going down the tubes." She had also just moved to a new home with her husband and their two children, when her husband unexpectedly found himself unemployed. Living on credit cards, the family's prospects "looked bleak and hopeless."

Having heard about treasure mapping, Grossman was skeptical, but felt she had nothing to lose by trying the method others claimed had changed their lives. Using old magazines, scissors and tape, she began to cut out pictures and words that expressed her hopes and desires and taped them to a piece of cardboard. The images she chose included a woman working out, a couple walking hand-in-hand along a beach, and a family happily spending time together. At the time, her car was falling apart, so she added in a new Range Rover. She threw into the mix headlines such as "500 of America's Fastest Growing Companies," "Success," and "Vision."

"None of this was real at the time," she reveals today. "I was in survival mode." After positioning the treasure map in plain sight within her bedroom, Grossman looked at it first thing in the morning and each evening before bed. At some point, however, it fell behind the dresser, disappearing from her sight but not her mind.

Flash forward two yearsÉ
Leslie's daughter Sara, who was crawling around to find a lost ball, pulled out the long lost treasure map and showed it to her mother. Sure enough, everything pictured had come to pass! Grossman had lost weight and felt wonderful. She and her husband, Rich Abrams, had been on a romantic vacation. The family was doing better than ever, and her business was thriving. About the only thing that hadn't materialized was that, although the Grossman / Abrams family had a new car, it wasn't a Range Rover!

Almost immediately, Grossman created a second, even more ambitious treasure map. Not many years later Ñ you guessed it Ñ her life had taken another quantum leap. A larger home, health and happiness for the family, and the business she started was thriving. That company, the Women's Leadership Exchange, had also landed the major "presenting sponsor" they needed. It was the same OPEN: The Small Business Network from American Express, whose logo she had taped on her map. Now she was in a position to help bring the Women's Leadership Exchange message to women across the country.

The Women's Leadership Exchange conferences feature presentations by highly accomplished female business leaders, and facilitate a high degree of networking. Attendance is now at more than 600 business owners per conference. Women are lining up to attend these conferences for mentoring on a variety of critical business topics and to "get out from behind their four walls," as Leslie puts it, and connect with other successful women who can help them substantially grow their businesses.

"Treasure mapping helps me the design the life I want for myself, and I highly recommend it to all dynamic women who are determined to make their dreams a reality. It's not magic. It's harnessing the power of the subconscious mind," says Grossman. "Putting your hopes and dreams on paper in pictures and words, and looking at it several times a day, keeps your mind focused on what you want. Today women lead such busy lives that treasure mapping helps by focusing us and creating visual cues that keep us on our path to achieve the goals that are important to each of us."

INSPIRING CONFERENCE IN LONG BEACH, CALIFORNIA
The Women's Leadership Exchange is sponsoring a conference in Long Beach, California on August 3, 2004. Meet The Apprentice star, Carolyn Kepcher, Arianna Huffington, the President of IKEA and other powerful female executives and entrepreneurs. Learn powerful strategies to grow your business and network with other successful entrepreneurs and corporate leaders.  Complete details and registration information are on the NataliePace.com website, in the Calendar section.

How to Create Your Treasure Map
There are a number of sites on the Web about treasure mapping. Many of them are inspiring "blogs" about personal successes. Others provide more helpful advice on beginning your own visual blueprint for success. Here are two of the best:

http://www.teamchrysalis.com/AC/V3/AC36_Treasure_Map.htm
Chrysalis Performance Strategies Inc. posts a step-by-step guide to treasure mapping as well as a link to a previous articles on discovering what you really want.

http://www.creatavision.com/treasure_mapping.htm
This site is called Creative ManifestingÑThe art of deliberately creating all that you desire. In her article "Treasure Mapping Is a Fun and Fabulous Way to Manifest," according to Anisa Aven, who describes a number of her achievements through treasure mapping, as well as some do's and don't's.

About Women's Leadership Exchange
The Women's Leadership Exchange (WLE) is a New York City-based multi-media company founded by and for female entrepreneurs. Featuring educational conferences in Long Beach/Los Angeles, Atlanta, New York, Dallas and Chicago for already established businesses with revenues from $750,000 to $25 million, the WLE offers women entrepreneurs access to the tools and connections that drive business growth. The WLE also offers its e-newsletter, "The Exchange," its online New Women's Network Directory, its women's business spa retreat in Puerto Rico (the next one is Jan. 14 - 17, 2005) and topic-specific seminars on such issues as finances. For more information, visit www.womensleadershipexchange.com or call 1-888-937-5800.

Fit, Fab and On Sale.

The Value Investor's Guide to Buffett's Billions.

By Anthony J. Diaz, Director of Research, Odyssey Advisors, LLC. www.OdysseyAdvisors.com

Value investing: the investment process where one selects companies whose stocks are currently undervalued by the market. In other words, NEVER PAY RETAIL! Modern-day value investing gurus include Warren Buffett. Benjamin Graham is widely acknowledged as the father of modern security analysis. Graham founded the school of value investing in the early 1900's. His value investing treatise, The Intelligent Investor, remains the seminal publication on the subject.

The stock market is a living organism, and like most living organisms, it doesn't always act and react rationally, see the forest for the trees, or consider anything beyond the immediate future. It has its good days and bad days, and all too often, there is no rhyme or reason as to what's really going on. Value investors take advantage of this erratic behavior.

If a company with a respectable performance profile and a solid history of good financials is being overlooked by the market in general, or if it is being beaten down by the market for temporary reasons (e.g. a new product launch is receiving tepid consumer reaction, a new movie is bombing at the box office, the CEO is undergoing heart surgery) a value investor regards this as a buying opportunity.

[NataliePace.com note: In the words of John D. Rockefeller, "The way to make money is to buy when blood is running in the streets."]

This is like seeing a great pair of shoes finally going on sale and snatching them up at a bargain instead of paying a higher, retail price. You know the shoes are worth much more than the sale price since you've done your research. The shoes are well-made from good quality materials, are in style and will stay in style, and go well with most outfits on most occasions. They are great shoes, but the footwear retailer is selling them for less than their true value (value investors use the term "intrinsic value") for whatever reason, so you take advantage of this irrational behavior. You buy the shoes at less than retail and brag to all your friends about what a great buy you found.

It is no different when buying value stocks, except you're buying stocks with the expectation that their prices will eventually rise to their true worth when the market corrects itself or after the company's temporary issues or problems are over with or remedied. This can take weeks or it can take years, but it is at that time when you have the potential of a capital gain. You must research your investment candidates thoroughly and understand the companies and their industries through and through. Some good resources are http://moneycentral.msn.com and http://finance.yahoo.com. These sites do not charge a fee. You must also be willing to stand your ground when the pundits and the stock market in general say otherwise, and be able to let a stock go when you find that its fundamentals have changed significantly.

Most value portfolio managers screen first for fundamental measurements such as price-to-earnings (P/E) and price-to-book (P/B) that are lower than the S&P 500. They then analyze each company's financial statements. As I illustrated earlier, the key is not to invest in cheap stocks necessarily, but in those companies that are currently undervalued by market over-reaction, misperception, and short-term focus and whose stocks have catalysts for potential, long-term capital appreciation. This will only come from companies on sound financial footing and with a good track record.

From this short list of undervalued, financially sound companies, you conduct a thorough qualitative evaluation. Review annual reports, SEC filings, press releases, and web sites, and talk to suppliers, customers, and competitors with the goal of truly understanding the companiesÑtheir management in particularÑand the industries in which they operate.

It is preferable to invest in companies whose management have demonstrated long-term competency and integrity, and whose top executives have been in place a long time. Do they have a history of making good on their expressed intentions, effectively executing new plans or policy changes, and honestly admitting when they are wrong on occasion? Or are they changing their story from quarter to quarter, singing and dancing their way around missteps and lapses in judgment instead of honestly admitting their mistakes and taking steps to learn from them? In simpler terms, does the company's leadership know what needs to be done, and are they doing it consistently well? And on those rare occurrences when they don't, do they fess up and learn from their short-comings?

What suppliers, customers, and competitors have to say about a company can be particularly revealing. If a company is on solid ground with their suppliers and customer base, this can be of marked advantage against their competitors. In contrast, if a company is constantly having difficulty with key suppliers or distribution channels, this could spell trouble going forward. Similarly, if customers are constantly complaining, or worse, defecting to the competition, this would not bode well.

Finally, interviews with the competition can be a harbinger of a company's shifting competitive landscape in terms of changes in market share, target market, pricing power, and geographic penetration. If a company is not aware of these factors and taking measured steps to adapt accordingly, an investment in their stock may be ill-advised.

Whatever companies remain on your list at this point should be reconsidered for that certain, special something that distinguishes them from everyone else in their competitive set. Does the company have a sustainable advantage over their competition, such as patented products, a high barrier to entry, or a captive supply chain? Coca-Cola's arrangement with bottlers and grocery store chains gives them a sizeable competitive advantage over their rivals. Does the company have a highly recognizable brand name or trademark (e.g. Harry Potter, Star Trek, eBay)? Does the company have an especially strong association with their customers? Harley-Davidson and the Walt Disney Company boast of having some of the most loyal customers in the world.

[NataliePace.com note: It should be noted, however, that 43% of Disney shareholders recently voted against having the Disney CEO, Michael Eisner, on the Board. This resulted in George Mitchell being named as the Chairman of Disney's Board, while Mr. Eisner remains the CEO.]

The end result of this investment discipline is a portfolio of quality, value stocks with the potential of considerable, long-term capital appreciation. You must constantly monitor your portfolio to ensure that your holdings continue to have the characteristics that qualified them in the first place, making adjustments when necessary.

Warren Buffett once said, "We don't invest in fair companies at great prices. We look for great companies at fair prices." Value investing is very methodical, requiring equal doses of quantitative rigor and qualitative insight, and a great deal of patience since it's a challenge to identify these companies and it can take 3-5 years or longer before the market "bids up" a value stock to its true worth. As evidenced by Buffett's success and that of many others, however, value investing can be well worth the effort and the rewards can be great to those who commit the time and refuse to pay retail.

Anthony J. Diaz is Director of Research for Odyssey Advisors, LLC, (310) 568-4700, www.odysseyadvisors.com. With over 20 years experience in domestic and international business, he earned his BA in finance with highest honors from the University of Southern Mississippi, and an MBA in finance from the UCLA Anderson School of Management.

Is there a season when stocks go on sale?
Natalie Pace, CEO, NataliePace.com. "My favorite time to buy is in September and October. September historically generates the lowest, negative market returns, and October is the bewitching month--the month of Black Monday and the Great 1929 Crash. While these months are very hard on investors, for patient shoppers, they can be buying opportunities, provided you have done your research and are sure that the great company you are buying stock in is trading at a bargain!"

Global Gas and Summer Heat.

"[The] increase in interest rates produced negative returns and made bonds the worst performing financial asset during the quarter." Learn how Mr. Woods is protecting his clients' portfolios from rising interest rates and sizzling inflation.

by Paul Woods, CEO, Odyssey Advisors, www.OdysseyAdvisors.com

Paul Woods CEO, Odyssey Advisors

Imagine gasoline at $5.00 per gallon with small cars and motor scooters everywhere. This isn't a futuristic vision of California; it's what the overtaxed residents of Europe are dealing with right now. After spending some time in Italy in early June, gasoline prices in California seemed like a bargain. However, we can't quite get rid of the nagging feeling that Europe might be our future.

We did some ranting in our last letter about the inability of the Bureau of Labor Statistics to find any signs of inflation. They finally threw in the towel in the second quarter. Consumer Prices showed an increase of 1.74% at the end of March that increased to 3.00% at the end of May. For wholesale prices, the rise was more dramatic. The Producer Price Index showed an annual increase of 1.03% in March that became 4.86% in May. A good rule of thumb is that, as long as the PPI shows a bigger increase than the CPI, the CPI will probably keep increasing.

In the past, higher oil prices were generally caused by disruptions in supply. This time, it appears to be driven by higher demand from developing countries, particularly China and India. Their insatiable demand for a wide range of industrial materials, in addition to energy, appears to be fueling the higher prices that may make this inflationary cycle more difficult to control.

Higher inflation in the second quarter also produced higher interest rates and trashed the bond market. Following is a comparison of interest rates as of 3/31/04 and 6/30/03:

Investors who thought they couldn't lose money in bonds may have done a double take when they looked at their portfolios in the second quarter. This increase in interest rates produced negative returns and made bonds the worst performing financial asset during the quarter. With interest rates going up a lot faster than consumer income, we can't help wondering if real estate is next.

The Federal Reserve preserved its reputation for being behind the curve by finally increasing interest rates at the end of the second quarter. As usual, it was too little and too late. A .25% increase in the Federal Funds rate meant that banks still paid less to borrow short-term funds than did the Treasury. Eventually, the interest rate on Fed Funds will have to be greater than the inflation rate. With inflation at 3% and climbing and the Fed Funds rate now at 1.25%, we don't expect this cycle of interest rate increases by the Federal Reserve to end anytime soon.

The untold story on the evening news is the phenomenal recovery in our economy. We realize that another bomb going off in Iraq is a bigger story but wonder how many people are aware that real growth in our economy, right now, is higher than at any point in the 1990s. In the first quarter of 2004, real GDP growth of 4.95% was the strongest since the fourth quarter of 1984.

Because of strength in the economy, it appears as though second quarter earnings for the S&P 500 will be at least 20% higher than last year. Higher interest rates and inflation have put pressure on stock market valuations, but strong earnings are the reason stocks have produced modest positive returns so far this year. However, between higher interest rates, slowing money supply growth, and tougher comparisons in the second half of 2004, it's likely that growth will begin to slow a bit from this point.

As the economy has strengthened, the quality spread between Treasury debt, corporate bonds, and high-yield bonds has narrowed dramatically. As a result, in addition to taking interest rate risk, bond investors don't appear to be adequately compensated for taking credit quality risk at present. Between better capital spending in the private sector and election year spending by the public sector, the demand for borrowed funds should stay high. Inflation-adjusted yields are still negative on shorter bonds and relatively unattractive on longer bonds. As a result, we expect the bond market to continue to underperform the stock market and are still emphasizing Treasury and U. S. Government Agency bonds with maturities of less than 5 years.

As we get ready for the summer doldrums in the stock market, we can't help noticing that this year has already felt like an endless summer. The unexciting returns characteristic of most summers have been the pattern so far this year and, until we see some stability in inflation and interest rates, this may not change. The key question is whether the current pickup in inflation is temporary or longer lasting. Just in case, we've begun to reduce the exposure to economically sensitive companies, add a few inflation beneficiaries, and broaden the industry diversification in our stock portfolios.

Women Helping Women and Girls.

Get funding NOW for your non-profit Enterprise from The Women's Foundation.

Under the guidance of Patti Chang, President and CEO, the Women's Foundation of California aims to create a world in which all women and girls can thrive. Their strategies center on impacting statewide policy, awarding money to organizations that are positively impacting the lives of women and girls and inspiring donor activism and increased philanthropy among women.

Patty DeDominic with President Bush Founder & CEO of PDQ Personnel Services, Inc. and PDQCareers.com.   President Emeritus of the National Association of Women Business Owners

In an exclusive interview, NataliePace.com CEO, Natalie Pace, spoke with Women's Foundation of California board member, Tina Frank, the Vice President of the Los Angeles office, Patty Murar, and the founder of the Los Angeles Donor's Circle, Patty DeDominic, about some of the programs that have been improving the lives of women and girls in California and around the world. From educating at-risk teens on how to balance their own checkbooks, to funding a student-run store, to ensuring that new mothers are properly educated about breast-feeding, there is no doubt that the Women's Foundation is actively making the world a better place for women. If you have a nonprofit organization that is seeking capital, read on to discover how to apply for funding NOW. If you are inspired to join up and empower other women and girls, please visit, www.womensfoundca.org. Otherwise, just be inspired by these powerful executives, who, despite pressing demands from career and family, are passionate about improving the landscape of opportunity for others.

NataliePace.com: How is the Women's Foundation impacting the lives of women and girls?

Tina--There are a couple of things. First of all, only about 8% of charitable dollars go to charitable organizations that specifically give aid and support to women and girls. We really need to increase that number. Secondly, the Women's Foundation goes in with early funding. Without early funding, [most young corporations] could not have stayed on their feet. When you are the first money, you have to do a lot of due diligence. We have been there many times in the beginning.

What is the primary focus of the Women's Foundation of California?

Tina--Educating girls globally. That is a fascinating issue because it brings together the right and the left. Educating girls and women is both a social issue--the right thing to do--and an economic development issue. Countries, where the women are educated, economically do far better than those countries that do not. That to me is the strongest mission that anyone could imagine because you have both the right and left pulling for the same thing, but the outcome is the sameÑgetting women and girls educated.

Can you give us a success story?

Tina--Did you know that the foundation is teaching women how to be legislative advocates? It is an incredibly successful program. When people come to Sacramento or Washington, often they are a big bother. They have a passion and are there for the right reason, but they don't understand how to be effective when thy get there. After the group of 25 women went through this program, which is sponsored by the foundation, the legislators came back to us and said how incredible these women were, what an enormous benefit to the legislative staff. For them to say that! These women were so well trained. They were incredibly effective.

Was there a particular bill or law that they impacted?

Tina--One example was these tote bags [filled with free baby formula] that are given out after a woman has a baby. The legislation was that the tote bag should say that if you give the baby the formula in the bag, it may diminish the baby's impulse to nurse. The formula companies went nuts. They tried to crush these women. These women had never in their lives experienced anything like this, but they were tough. You should have seen the tenacity that these women had, even as first year advocates. Against huge amounts of money and connections, they came up against corporate America and won!

Having nursed my children, it's obvious, of course, that the babies would stop nursing, but it's not so obvious to everyone, especially new mothers. This is something so logical and simple and so important for women to know. I think it is horrifying that corporate America would want to suppress that kind of factual information.

What is the single most important thing that we need to do in the U.S. to promote the economic development of women and girls?

Tina--In the U.S., it is educating girls in math and science, so women have the opportunity to run companies. Technology is only going to become more and more important. Technology has been one of the greatest equalizers for women in decades. You don't have to be strong. You just need to be smart. You're seeing women starting business at a greater rate in this country than at any other time. Technology gives them flexibility.

Let's talk about how a Los Angeles-based Women's Foundation "Donor's Circle" sponsors financial literacy. The Los Angeles Donor's Circle funded a student owned and operated retail store at Archer School for Girls, in addition to an Independent Living Skills program for at risk young women. Patty, the at-risk program seems obvious, but why did your Donor's Circle pick a private school to fund?

Patty DeDominicÑWe evaluated ten programs and funded five of them. We funded the Student Store because the girls totally operate that business. They staff it, order inventory, price their products--basically all aspects of making that store a success.

Patty Murar--These girls give back 15% of their profits to the scholarship program at Archer School. They are closing that loop of business and philanthropy--the giving back part.

What other programs did the Donor's Circle sponsor?

Patty MurarÑThe Aviva Center focuses on the highest risk young women, who have been in foster care and abused in various ways. We support this program that helps women learn to be on their own after the age of 18. Their program is focused on living skills, like balancing a checkbook, affordable housing, savings account--very basic financial literacy skills. They had a basic program in place. Our grants help them to reach more young women and to bring in new materials to use in their financial literacy practice. The essence is that it is an independent living skills program for high at-risk girls who have a hard time becoming financial literate.

What other kind of programs excite you?

Patty DeDominic-- The WYSE, Women and Youth Supporting Each Other. This is a mentoring program where college girls mentor high school girls. There are about 200 college mentors and about 300 mentees. We're excited because it is an existing program that uses a peer-to-peer strategy. Our grant expanded the curriculum in their program to include more financial literacy skills--helping these high school girls see themselves as going to college. The program was already scaled to expand nationwide. We can make one grant that would have a ripple effect over the country.

Patty Murar-- The UCLA curriculum will be dispersed to the 11-12 other campuses.

Patty DeDominic-- Oftentimes, people dump money down a black hole. If you don't think in terms of systems or getting it scaled out, you can't impact the problem on a wide scale. You might be able to help one person, which is great, but if you can help 500, which would you rather do?

The Los Angeles Donor's Circle mission is to have 100 women giving $10,000 each for a total of $1,000,000. Is your Donor's Circle complete or are you still drafting qualified supporters?

Patty DeDominic-- Our goal is to have 100 founders and a minimum of $1,000,000 invested in women and girls. We're not asking each founder to write a $10,000 check. Some have written that check. Some will write it over a few years. We'll be together over the next five years, making investments, not donations. We hope that the Donor's Circle grows beyond the 100 founders. We have 70 now. We'll be pushing hard to get the next 30 founders. Once we get that, we'll let the project grow more organically rather than focus on recruitment.

What personal and professional obstacles do women face in business?

Patty Murar-- We had focus groups talking about wage disparity and discrimination. Women said that the major issue was, "I wish I had known the importance of financial literacy, of understanding how money grows." We will be publishing a book for young women, called The Money Planner, to help them understand financial principles. We want to fund those programs that speak to the young women and in many cases are developed through young womenÉ The first six [Donor's Circle] grants do exactly that.

Patty DeDominic-- In the past, there was more resistance to women educating themselves than there is today. In California, women are welcome in all classes. That wasn't the case when the Women's Foundation was started, and when I started 25 years ago. I have a different perspective today. I thought the difficulties in business were associated with me being a women. What I've learned is that starting a business is really hard. It's hard for men, as well as women. All people experience some forms of prejudice, men and women, tall people, short people, etc. Personally I feel a desire to help those who want to grow themselves and have better financial success. In most cases, the difficulties they encounter aren't personal. Some groups make the mistake in thinking it is against them, against women or people of color. I have three adult sons, and I know it's hard for them, too.

49% of businesses in the U.S. are owned by women, yet women receive only 12% of the venture capital, according to Springboard Enterprises.

Patty DeDominic-- We've found that many women were not as big picture or ambitious as the men. They would start smaller businesses with less risk. There is no difference now with a man or a woman getting a loan. If you have decent credit, a man or a woman can get a credit card. A man cannot get a loan without a decent business plan and collateral.

Morgan Stanley just settled a lawsuit with women in their organizations who claim they were unjustly passed over for promotions and raises. 100 years ago a woman couldn't vote.

Patty DeDominic-- I think it's important to have access to the past, so that the big mistakes of yesterday aren't repeated, but it is a mistake to dwell. There are women all over the world who don't have half of what we didn't have 100 years ago. In my opinion, spending time focusing on what we don't have is wasting it. I would rather that we harness the power that we have and make a difference for the women who don't have half of what we have. What is particularly exciting are the micro-loan programs. It's wonderful to see the success in other countries as well as the US.

[NataliePace.com note: Dear members, on that note of helping women who don't have half of what we have, you can send a note of encouragement to women in Iraq by going to www.womenforwomen.org]

We know about Count Me-In, but what other micro-lending organizations are out there? [www.count-me-in.org]

Patty Murar-- WomensFoundCa.org. WFNET.org (Women's Funding Network). It's a trade and training organization with 112 women's funds across the world. They have lots of links. They do an international conference every year, in April of 2005, in San Diego.

Patty DeDominic-- SCORE gives free business counseling and helps entrepreneurs build their business plans. It is a 40-year-old national organization of 11,000 volunteers who give their time to help people start or grow their businesses, with funds from the US Small Business Administration. I'll become the chair of the foundation in September.

So, the good news for the budding female entrepreneur is that there are resources out there, and, at least in the U.S., her access is almost equal.

Patty DeDominic-- One of the problems with our society is that people expect someone else to have all of the answers and to do it all. They assume that it is the responsibility of someone else to right the wrongs of the general community. That is not just a perspective of people in need. That's a problem with affluent people as well--thinking that somebody else should do it. I learned a long time ago that if I waited for someone else to do it, there was a chance it might not get done. I didn't think I was the right person to launch the Donor's Circle. Tracy Geary chastised a group of us, saying, "You're so powerful and sitting around expecting someone else to do it." It was overdue and it was needed. Women who promote well-being and health in their housing projects, as they get better and build those skills, they find out that they are not only good in the barrio, they're good in city council, too. This scenario is being repeated all over the world. We're told by the people who operate these programs that women are surprised at how powerful and influential they can be. There is a continuum that their development takes, and it is predictable. In many ways it gets easier as people rise in problem solving, networking and in their professions. You know - the smarter we work, the luckier we get.

How can a non-profit organization apply for a grant with the Donor's Circle?

Patti Murar-- We did the first grant by invitation only because we wanted to know what was out there. The 2^nd grant cycle is just about to begin. We'll be accepting email inquiries now through September. We're going to close the application process in early October. Grants will be decided on in November, and approvals out the door in December or early January. For more information, contact PattyM@WomensFoundCA.org.

Can non-profit organizations that are located outside of California apply?

Patty DeDominic-- We want readers to refer great organizations that are based in California. Our Donor's Circle is in Southern California. Anyone who wants to start a Donor's Circle in other parts of the country, we can introduce them to other people who want to do that. That's how we started ours. We were inspired by the Washington Women's Foundation. Our founders would be thrilled to mentor other cities/states to start their own Donor's Circles. We expect other circles to pop up in California in 2005, if not sooner.

Brace Yourself For Rising Interest Rates.

The Federal Reserve Board is moving to a less "accommodative" stance. Will the new policy be a "smooth" or "dynamic" adjustment?

INFLATION:
It should be noted that, while the Federal Reserve Board admits that "incoming inflation data are somewhat elevated," they also maintain that at least a portion of the pressures are transitory. Anyone buying gas, renting a home, going on vacation or purchasing consumer products might beg to differ! The bottom line is that we hope inflation will abate. Many analysts, however, are worried that the Feds are going to continue adjusting the fund rate too little, too late, at least until after the election. There is a lot of good talk out there on how to protect your portfolio against rising interest rates and inflation. It should pay to keep informed and to act now to protect your assets. Be sure to check out NataliePace.com issue 50 (in the archives) for two great articles by Stefan Whitwell and Paul Woods.

"Inflation also seems to have been boosted by transitory factors such as the surge in energy prices. Those higher prices, by eroding households' disposable income, have accounted for at least some of the observed softness in consumer spending of late, a softness which should prove short-lived." Alan Greenspan, chairman of the Federal Reserve Board, testifying to Congress on 7.20.04

Capital spending and employment
"Orders and shipments of nondefense capital goods have been on the rise, and backlogs of unfilled orders for new equipment continue to buildÉThe proportion of temporary hires relative to total employment continues to rise, underscoring that business caution remains a feature of the economic landscape." Alan Greenspan

"Despite the softness of recent retail sales, the combination of higher current and anticipated future income, strengthened balance sheets, and still-low interest rates bodes well for consumer spending." Alan Greenspan

RISING INTEREST RATES:
The Feds confirm that interest rates are going to be adjusted, but they leave the door open on just how much, when. In their press release from June 30, 2004, they write, "With underlying inflation still expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability."

To read the June press release, click here:
http://www.federalreserve.gov/boarddocs/press/monetary/2004/20040630/default.htm

10 Most Common Investment Mistakes and 3 Sure-Fire Success Strategies. .

By Natalie Pace, CEO, NataliePace.com

Natalie Pace, CEO, NataliePace.com

Over the past five years, putting money into your 401k has been like cutting your dollar in half.  NASDAQ is down 50% from January 2000, while the S&P500 is still off over 20%.  (Dow Jones Industrials -10%.)  

The situation is alarming, but what is the remedy?  If your financial professional isn't offering you the kind of advice that you find valuable, then your first step might be to start shopping for someone who does. Check out "How To Find A Broker" in the Research section of the NataliePace.com website. If you qualify, you should also consider hiring a money manager.

The second step you can take is to become a better partner with your broker. Yes, education is the key, and educating yourself does not mean dulling yourself senseless with charts and numbers. Start with this Top Ten List!

In addition to reading the Top 10 Most Common Investment Mistakes (and avoiding them in the future), be sure to check the NataliePace.com calendar for other educational opportunities, including online chats with money managers, conferences and investing seminars. Go to www.NataliePace.com, and click on Calendar to sign up NOW. NataliePace.com also offers an online tutorial, called the Member Mosaic, located under the Research section at www.NataliePace.com. You can learn and practice many practical applications of stock research and market terms there. Finally, many brokerages and financial sites offer free classes and/or online tutorials. You don't have to spend a lot of money or time to get started on the path of financial wisdom, and the difference in your bottom line can be tremendous.

TOP 10 INVESTMENT MISTAKES

1. Trading on Analyst Recommendations. USA Today reports that researchers at the University of California and Stanford found that, in the year 2000, the most highly rated stocks had a -31% return. Those least favored soared an annualized 49%. This study examined 40,000 stock recommendations from 213 brokerages. This phenomenon is not merely a tale of Jack Grubman and Henry Blodget. Many analysts are brilliant and well-informed, and most are not criminals. It's a simple case of supply and demand. If everyone is doing it, you're simply following the crowd, paying top dollar when the skies are blue, and unloading cheap in hurricanes. Leaders don't run with the herd.

2. Bankruptcy Buying. Think buying United Airlines at $1.29 a share because you are POSITIVE that they will come out of bankruptcy is a BRILLIANT idea? Guess again. The reorganization plans of most corporations call for the CANCELLATION of the existing common stock, with holders thereof receiving NO distribution. (Translation: your stock certificates become wallpaper). Common stock shareholders are commonly wiped out during bankruptcy because they are last on the priority list with claims against the company's assets. US Airways shareholders had their assets completely wiped out the company emerged from bankruptcy.
   
   
3. Free Fat. Ever notice how fried food only tastes good for about ten minutes? The minute it cools off, it's just a squishy mess of oil. Same with buying into a company AFTER it has fattened up its share price. It's very tempting to buy stock AFTER shareholders have earned seven thousand times their investment, but that is called CHASING MONEY. There were people, lots of them, who bought AOL Time Warner and Priceline at peak share prices, near or above $100/share, in 2000, thinking that heavenly heights could last forever. Too bad losing weight isn't as easy as losing money. Time Warner Inc. (NYSE: TWX, AOL's holding company) is now trading at $16.65/share, while PriceLine (NASDAQ: PCLN) is at $23.68.
   
   
4. Hot Tips on the Bulletin Boards. Pump and Dump schemes abound on the bulletin boards, where shareholders (and scam artists) can ANONYMOUSLY talk up stocks for their own gain. When the story sounds UNBELIEVABLE and you think you have to ACT NOW to get it before the rest of the world finds out, you could save yourself a big NIGHTMARE by peeking under the corporate financial sheets. You can access quarterly and annual reports at www.sec.gov. These reports tell the corporate story truthfully (because they are official and filed with the SEC), whereas press releases and blogs can leave out important facts, with less consequence for the company.
   
   
5. Headlines. Headlines are usually not written by the writers who pen the story. They are written to catch your eye. If you don't read the fine print, you could be missing the most important information. Before United declared bankruptcy, investors gobbled up shares of UAL shares on the headline that United had received $1 billion in promised concessions from its unions. A key consideration was hidden on the inside pages, howeverÑthat the Federal Loan Guarantee required $1.5 Billion in union labor concessions. The Loan Guarantee application was subsequently rejected and United Airlines was forced into Chapter 11 only a few weeks after that headline appeared in the New York Times, one of the nation's most respected news sources. The headlines of less respected news sources with much smaller budgets can be even more dangerous, especially if they are simply picked off of the company's press release.
   
   
6. Press Releases. Press releases are written by professional writers who are hired by the company to present their corporation in the best light. Additionally, press releases are not held to the same standards as the official corporate filings that public companies must make with the SEC. A company can talk about an increase in revenue without ever mentioning that increased revenues don't mean the company is PROFITABLE or that, due to cash constraints, the company's fiscal health is on the ropes. American Technology Corporation's stock fell on 12.31.02 on news that independent auditors had "substantial doubt" about their future. The company had been losing money for the last three operating years, and, according to Bloomberg News 12.27.02, needed to raise more capital to meet operation costs. Elwood Norris, then CEO, made no mention of the auditors' concerns or the capital crunch in his holiday letter to shareholders, however. Instead, he wrote that ATCO was experiencing its 3^rd straight quarter of revenue growth, and that the convertible subordinated promissory notes that were due on 12.31.02 had been extended to a repay date of 12.31.03.
   
   
7. Relying too heavily upon the advice of your broker. If your broker has handled your account beautifully through the market downturns, and/or over the past few decades, just skip this one. You're lucky to have a partner who cares about your future and has the knowledge and expertise to get you there, and certainly nobody bats 1,000. Many investors don't understand that the broker is the entry-level position in the business, and place far too much faith in his/her knowledge, morals and information. Most brokerages, especially over the last four years, have extremely high broker turnover. Some brokers are hocking stocks based upon sales commission incentives. Finally, brokers don't have to have a college education or experience in the field (although they do have to pass a series of tests.)
   
   
8. Buy and Hold. Buy and Hold works if you haven't bought too high and have decades of investing ahead of you. Buy low; sell high works all the time. Day trading may not be your bag, but senior financial planners recommend at least re-examining your stocks routinely (once a quarter), or at specific buy/sell target points. Buy and hold strategies, or ignoring your portfolio, has resulted in monumental portfolio losses over the last four years. Learn about portfolio diversification and examine your holdings at least annually to take your profits and realign your risk as necessary.January, each New Year, might be the perfect time.
   
   
9. ROULETTE: Placing all your chips on one sector. Even the most stable stock is considered to be high-risk. Additionally, all markets are cyclical. Lynn Newman, CFP, warns that if everything in your portfolio is doing poorly, you're not well diversified. Conversely, if everything is going great, look out!! As a benchmark, you should have the same percentage as your age in safe assets. Many financial professionals recommend keeping six months of cash liquid.
   
   
10. If you can't blindly trust analysts, or brokers, or long-term strategies, or headlines, or hot tips, or press releases, or past winners, just what is left to judge a stock by? PLENTY! If you love the product or service, that's a good start. Follow that passion up with information on market data, reliable news sources (read the entire article) and the observations and knowledge of people whom you know and trust. William J. O'Neil has a system for picking market winners called CANSLIM. On-line, NataliePace.com features the Member Mosaic, another trademarked stock research strategy. Click on Member Mosaic, and learn about market terms while you play!

THREE INVESTMENT STRATEGIES THAT DO WORK
1. Buy into companies that you know and understand.
2. Make sure that company is the leader in the sector.
3. Buy low/sell high.

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

Billionaire Fever.

Investing in the "Next Big Thing" Has Created More Moguls Than Billionaires.

By Stefan Whitwell, CFA, Managing Partner, Tierra Capital, L.P. http://tierracapital.net http://whitwell.net.

Stefan Whitwell, CFA Managing Partner, Tierra Capital, L.P. http://tierracapital.net

17 Words to ask before putting your money where their mouth is...
Someone comes and asks you to invest in a deal. If you were only given the opportunity to ask three questions using just 17 words in total, what would you ask them? By thinking about the core issues and by asking the right questions, you can save yourself time and money - and your time might be more valuable than your money.

Should I invest?

Whitwell Rule #1: Start by asking the person who is soliciting the funds, "How much are you investing?"
Understanding the motivation of the key players (principal and broker) in an investment situation is important. Motivation has a lot to do with emotion and little to do with theory. Remember that the things that motivate people can differ from person to person. Do not blindly assume that money is the best and only form of motivation. That said, when someone has invested a substantial amount of their own money, they tend to be more focused on the success of that investment than they would otherwise.

The best scenario is when the sponsor has invested money into the deal from their own wallet. However, sometimes people try and make it appear that they have cash at risk, even when they did not actually take cash from their wallet to put into the deal. For example, sometimes people forgo fees that they will have the right to earn pursuant to the deal and "invest" these into the deal. Although this is positive, this is "future money" that they are putting into the deal as opposed to cash from their wallet. Remember, a dollar today has more meaning than a dollar tomorrow.

Another way people try to persuade you that they are committed is by pointing out that because they share in the profits, they have a strong interest in the success of the deal and therefore your interests are harmoniously aligned. Wrong. True alignment means you both stand to either lose or gain based on performance. If he does not have any capital at stake and the deal goes bust, you lose capital but he does not.

Another argument that ranks up there with election year promises is "I have invested sweat equity," when said by someone who in fact also has the means to invest capital but chooses not to do so. You might be surprised how often this is the case.

Real example: I was at a meeting in Tokyo earlier this year listening to a film producer pitch some investors on the idea of investing in his film. He is personally worth millions. He was asking for them to make an initial investment of $5 million. He repeatedly told the group that this movie would return multiples on their money (multi-hundred percent) and that it was virtually risk free due to his connections in the business. I casually asked him how much he was investing and the answer was "zero." This guy is now a contender for the Hammerhead of the Year Award for 2004. Invested capital tends to increase your motivation and motivation increases your commitment.

Whitwell Rule #2: The second question that I suggest you ask also requires no investment jargon: "When will I get my money back?"
An important corollary is "How will you generate the cash needed to return my principal?" This is something we all care about.

How people answer this question reveals a lot about their thought process and the nature of the investment. I like it when their answer shows that they have thought a lot about the importance of returning my principal. I also like it when they talk about back-up plans - since not everything goes right all the time and it helps to have alternatives. In addition, I like answers that are specific and concrete and involve actions that can be taken by the team. Answers which largely depend on external events make me nervous - both because the team does not have the power to control the outcome and also because the team might lose motivation if they face externalities that are less positive than expected. Once team motivation is threatened then the whole deal is at risk.

I also like simple answers. When they cannot answer the question in one sentence, I almost invariably do not like the answer. When I worked at James D. Wolfensohn, Incorporated as a mergers and acquisitions analyst, we often drafted "deal memos" for the partners. These memorandums contained summary analysis regarding potential clients or potential deals. Some partners preferred long documents. Notably, our Chairman, the former U.S. Federal Reserve Chairman Paul Volcker demanded one-page memorandums. He believed that if you cannot communicate the ideas on one page then you do not really understand the core issues. The same applies to how people answer the second question.

Whitwell Rule #3 : The third question is "Have you done this before?"
If the answer is "yes," then the team is well-positioned. If the answer is "no" then you need to spend more time understanding the qualifications of the team.

Just because the answer is "no" does not mean it is not a good investment. For example, two years ago, I helped sponsor a new residential construction company called Primera Homes in Austin, Texas. The other founders had never created a construction company before but they all had extensive experience in construction and one of the founders had built four businesses from scratch that he grew to $100 million in sales. I believed in their integrity (I still do) and the business proposition was attractive and simple (better quality homes, for less, and built two times faster than the speed of other home builders). They have executed day in and day out and in just 18 months have returned all my capital. The company is profitable and well positioned for the future.

The third question is also designed to help identify key areas that might require more investigation. For example, much to my surprise I still see many business plans that depend on an IPO for the return of investor capital. Many of the authors have never taken a company public and have no clue how burdensome this process can be -- before, during and after the IPO. This hurts their credibility in my eyes.

In review, without reading any thick books on investing, without utilizing any fancy financial theory, without an MBA or CFA, and without memorizing any investment lingo, you can learn a lot about potential investment deals by asking three basic questions:

#1 - How much are YOU investing?
#2 - When will I get my money BACK?
#3 - Have you DONE this before?

Investing in these 17 words will save you a lot of time and money. Like most things in life, the good old basics prove to be reliable time and time again. It is amazing how many people preoccupy themselves with all sorts of investment ratio calculations, financial lingo, ultra-detailed legal analysis and in the process forget the basics.

Make It Happen!

VISION: To build a global community of investors through a worldwide website, seminars, radio, television and print partners.
GOAL: To provide high-quality, first-run, ethical financial news, information and education, presented in an entertaining format, across all media (television, radio, print and online).
MISSION: To provide the news, information and education investors need to make better choices and to make investing as much fun as shopping.
PHILOSOPHY: Member Mosaic. Piecing together a more complete picture of the publicly traded company, one tile at a time, by valuing firsthand consumer experience, conducting evaluations of the executive team and lining up the numbers of the publicly-traded company with its competitors in a Stock Report Card.
For more information on NataliePace.com contact us at info@NataliePace.com

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