Bail Out the Big Three Auto Producers? Not a Good Idea.

by Dr. Gary Becker.

The big three American auto producers General Motors, Ford, and Chrysler, are in terrible financial shape. They have asked the government for a bailout, and the Democratic leadership in Congress is eager to give them one. The United Auto Workers union was a strong supporter of President-elect Obama and of Democratic candidates.

These companies have lost tens of billions of dollars during the past few years, and they will shortly run out of cash. GM's shares have lost almost all their value, and Ford has not done much better. Cerberus Capital, a private equity company, owns Chrysler, and it has lost most of what it invested in the company. For this reason, Cerberus is trying get out of the automobile manufacturing business. All three companies were heavily into producing trucks and SUV's when the sharp run up in gas prices induced consumers to shift away from these gas-guzzlers and toward smaller and more fuel-efficient cars. Moreover, what money GM had been making came mainly not from car production but from its automobile credit business, (GMAC). This company would borrow from banks to lend to consumers who needed help in financing their GM car purchases. The financial crisis has dried up the money available to auto financing companies, and hence eliminated the major source of their profits.

If GM is not bailed out, the company claims it will be forced into bankruptcy within a few months, and Ford's situation is only slightly better. GM is blitzing Congress, President Bush, and President -elect Obama with pleas for a bailout, followed by a warning that bankruptcy will also hurt auto suppliers throughout the nation that depend on GM's business. GM is also claiming that bankruptcy will put major financial pressure on the Pension Benefit Guaranty Corp, the federal agency that insures benefits to retirees in the auto industry as well as to millions of other workers.

Nevertheless, I believe bankruptcy is better than a bailout for American consumers and taxpayers. The main problem with American auto companies is that during the good times of the 1970s, 1980s and 1990s, they made overly generous settlements with the United Auto workers (UAW) on wages, pensions, and health benefits. Only a couple of years ago, GM was paying $5 billion per year in health benefits to retirees and current employees because their plans had wide health coverage with minimal co-payments and deductibility on health claims by present and retired employees. In those days, the UAW was one of the most powerful unions in the US, and it bargained aggressively with the auto manufacturers, carrying out strikes when its demands were not met. When the American auto industry began to face tough competition from Japanese and German carmakers, they were saddled with excessive pay to their workers, and vastly excessive pensions and health benefits to their current and retired workers.

It is not that cars cannot be produced profitably with American workers: the American plants of Toyota and other Japanese companies, and of German auto manufacturers, have been profitable for many years. The foreign companies have achieved this mainly by setting up their factories in Southern and border states where they could avoid the UAW, and thereby introduce efficient methods of production. Their workers have been paid well but not excessively, and these companies have kept their pension and health obligations under control while still maintaining good morale among their employees. In recent years GM and the other American manufacturers have chipped away at their generous fringe benefits, but their health and retirement benefits still considerably exceed those received by American autoworkers employed by foreign companies. As a result of lower costs, better management, and less hindrance from work rules imposed by the UAW, about 1/3 of all cars produced in the US now come from foreign owned plants.

Bankruptcy would help GM and Ford become more competitive by abrogating significant parts of their labor contracts with the UAW. One of the greatest needs would be sizable reduction in their health costs through sharp increases in the deductibility and co-payments, and a reduced coverage of medical procedures. Bankruptcy should also help bring the wage rates of GM and Ford in line with those of foreign producers in the US. Some of their pension liabilities may be shifted onto the Pension Benefit Guarantee Corp, but even that would be preferable to an overall bailout.

A good analogy is what happened to United Airlines. By entering bankruptcy, it was able to reduce its inflated cost structure by breaking contracts it had with the pilots union and other employee unions. It exited bankruptcy a slimmer and more efficient airline. Whether it is able to compete effectively in the long run is still not certain, but it is in much better shape to compete than before it entered bankruptcy.

Bankruptcy may also force out the current management of GM and Ford. I do not know for certain whether they have competent management- GM surely did not have top management for much of its recent history. I do believe, however, that when a coach of a team loses a few games, he might legitimately explain that by injuries, bad luck, or even bad officiating. These excuses become lame when he consistently loses many games, and the correct and common practice is then to fire the coach. The same considerations apply to top management. When a company consistently does badly while some of its competitors (like Toyota) are doing well, its time to fire the management team, and see if another team can do better.

Is GM "too big" to fail? I do not believe the company is too big to go into a reorganization--which is what bankruptcy would involve. Such reorganization would abrogate its untenable labor contracts, and give it a chance to survive in the long run. A bailout, by contrast, would simply postpone the needed reforms in these labor contracts, the business model of GM, and its management.

Dr. Gary S. 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."

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.

Cherry Picking the Cherry Bombs.

by Natalie Pace.

Imploding Hedge Funds Could Spoil the Santa Rally. Includes a Hedge Fund Stock Report Card.

Click here for a Hedge Fund Stock Report Card.

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

Hedge Funds imploding may be the next financial meltdown, taking down a few of most beloved brands of the past century with them.

The banks in the U.S. are struggling, but that could be nothing compared to what is waiting in the wings for hedge funds. Hedge funds are private investment companies (mostly; there are a few that are publicly traded) that are designed to take on high risk for higher performance for high-net-worth individuals, who can, presumably, afford the risk. Trouble is that most high net-worth individuals don’t have much stomach for losses, and redemption day (the day when people notify their hedge funds that they want to end the relationship and cash out their investments) was November 15, 2008. Just a few days later, on November 20^th, 2008 the Dow Jones Industrial Average closed at its lowest point in ten years – at 7552.

Now, the markets had a rally after that, but I wouldn’t get too optimistic about it. Payout day from hedge funds to clients that are cashing out is December 15, 2008. If this day is as bad as advance indicators portend, the stock markets could see the worst financial storms of the year during the week before Christmas. This is why this article is entitled, "Cherry Picking the Cherry Bombs," instead of "Stocking Stuffers for the Santa Rally."

This warning/notice is not just for traders. It is even more important for anyone with an annuity, a 401(k), a pension plan, an IRA, etc., to make sure that they have realigned their nest egg to have at least a percentage equal to their age safe, plus 10-20% (since we’re in a recession) and have trimmed their exposure to the companies mentioned in this article. If hedge funds start imploding, they account for over a trillion in stock market assets, meaning that they will really drag the Dow down as fund managers are forced to liquidate their positions to cover cash-outs by their clients.

Additionally, at least one former Blue chip corporation has become a hedge fund, without people really knowing it. You may have this hedge fund in your nest egg!

As I mentioned in my March 2007 article, entitled "Money Grows on Wisdom Trees:"

Sears is one of the largest, oldest retail chains in the U.S, and formerly, was as American as baseball and apple pie. These days, however, Sears is more of a hedge fund, which might help to explain why you’ve been trying to get that appliance repaired (under warranty) for months or been waiting for a replacement for your coffee pot for so long that you’ve taken up drinking tea.

Almost all of the board directors at Sears are in the investment business, not the retail business. Edward Lampert, Sears Chairman, has his own investment fund. The COO of Lampert’s investment company, William C. Crowley, is one of the eight-member board, as is a senior advisor to TPG Capital (formerly Texas Pacific Group investment corporation). In fact, board director Emily Scott, a TV station founder, is the only person on the board without significant (direct) financial services experience. No one on the Sears board has any experience at all in retail.

In addition to being more "financial services" than retail, Sears Holding Corporation (SHLD) has had a number of red flags recently that spell bad news for any company in any industry. Their CFO just retired to spend more time with his family. The S&P credit rating is BB (somewhat speculative) with a Negative Outlook (11.9.08). Net income for the first half of 2008 was $9 million compared to $396 million last year. Short-term borrowings jumped from $80 million last year to $974 million this year. The corporation has $7 billion in long-term debt (including pensions and OPEBs). And their former CFO’s parting words were, "I am very confident that Mike Collins will continue to enhance the business acumen and financial discipline of the company."

Just as "retiring to spend more time with the family" can be CFO speak for "I didn’t want to sign off on the earnings statements," "enhance the financial discipline" is an odd way of encouraging the company to continue focusing on that area. Sears went on to say that they will "miss Miles' thoughtful advice and passion for analytic clarity." Miles Reidy, the retiring Sears CFO jumped ship in time to miss having to sign off on the year-end earnings report, which will now be overseen by the new-hire, Mike Collins, who has never held the position of CFO before, but will be responsible for the 2008 earnings report of one of the oldest retail chains in the United States, with over $50 billion in annual sales. Hmmm.

Sears announces their 3^rd quarter’s earnings on Tuesday, December 2, 2008. The corporation is battling a downgrade by Fitch, which could, potentially, make it more costly to borrow more money. It is pretty much a given that the earnings report will frontload any possible good news at the top of the press release and list any net loss as far down in the report as legally possible. (Fortress Investment Group, another publicly traded hedge fund, had several line items of "good news" ahead of their net loss.)

There is a phenomenon very common in high-risk money management, called "double up to make up." When an investment firm gets into trouble, many managers tend to take on even more risk to try and claw their way back to profitability. As you can well imagine, this strategy rarely works. But the managers will try to buy as much time as possible to give themselves every opportunity to get lucky.

Enron was essentially a hedge fund by the time it began its rapid descent into bankruptcy. Once the short-term loans were due and Enron hadn’t made enough by trading to fulfill their commitments, the company was doomed. The restating of past cooked earnings reports was something Enron might have endured if the profits and gains had been there. But the company is an example of how fast the tides turn when the loans come due.

I’m not implying that Sears is Enron, but the corporation has a lot of challenges given the current state of retail, the current state of the home improvement industry, the lack of money available for borrowing and the current freakish fallout of financial services stalwarts, like Bear Stearns and Lehman Brothers. It doesn’t take a crystal ball to see that Sears is facing a very daunting, even hostile, corporate environment.

Fortress Investment Group (FIG), the first publicly traded hedge fund, announced their earnings on November 13, 2008. Fortress’ losses for the quarter were $57 million. The losses for the year are $182 million. A significant portion of the losses include the massive compensation charged by the principals of the firm – something I warned about in March of 2007, writing.

Another criticism of hedge funds is the exceptionally high compensation of the principal executives, who are making the best living there is to be made - anywhere. According to the IPO papers that Fortress filed with the SEC, "In 2007, $98.1 million, $95.1 million, $63.8 million, $59.4 million and $92.8 million was distributed to Mr. Briger, Mr. Edens, Mr. Kauffman, Mr. Nardone and Mr. Novogratz, respectively" (the five principals at Fortress). And "subsequent to September 30, 2006, [the company] distributed $528.5 million to our principals in the period prior to the consummation of this offering."

This pay package makes these Fortress five principals the best-paid executives on Wall Street! They are better paid than Bob Nardelli, who took so much heat for his $210 million golden parachute from Home Depot -- an $83 billion company. (Fortress had an $11 billion dollar market valuation in March of 2007, and about $1 billion valuation on November 30, 2008.)

Hedge fund managers are certainly trying to earn their keep; it is likely that the massive volatility we’ve been seeing in the stock market is the result of managers trying to eke out a few gains in short windows to keep their business alive. When you have the market swinging wildly – 1000 points in either direction over the course of a few days – there is a lot of money to be made by anticipating the volatility. This tactic might be buying them a little time, but it is hard to imagine that the worst market climate in the past eighty years isn’t going to kill off a lot of investment managers (more than just Lehman Brothers and Bear Stearns).

Hedge funds typically have a lockout period of one year, which is why we haven’t seen massive implosions of hedge funds -- yet. (Yes, we have seen a few.) The next few weeks – which could potentially be a hedge fund customer exodus -- will be key to seeing just how well that segment of the marketplace has done and just how large of an impact the potential fall-out will have on the general stock market – including your nest egg.

On November 12, 2008, I put Fortress Investment Group and Sears Holding Corporation on the Cooling Off list, anticipating that the share prices of these two publicly traded corporations would go down in value. As of December 1, 2008, Fortress’ share price had lost -27% and Sears was down -36%. See the Hot News on Cooling Off article at the end of this ezine for additional information.

Great Holiday Gifts.

by Natalie Pace.

With discounts galore and a "new hope" in the White House, Americans are safe and warm and even a bit optimistic, despite the financial storms, this holiday season.

Each year, we post a Best Gift survey to help you select the Wow gift for your sacred beloved, your child, a family member or a friend. Wow. What a difference a year makes. Last year, stocks, not diamonds, were a girl’s best friend (the #1 most desired holiday gift by women) and guys wanted massages and pampering as much as they desired a flat screen TV (presumably at the same time).

This year, with flat screens on sale for as low as $2500 and stocks in the toilet, the most loved gifts are likely to be as upside down as this economy. So, we recommend clicking over to the survey page on the home page at NataliePace.com now – both to cast your vote and help others get a clue, as well as to peruse some of the ideas that are weighing in as favorites.

Whether you decide on an iPhone, mini-speaker system, TV, books or a vacation, you might consider that all of the above can be enjoyed at the NataliePace.com retreat. You’ll gain the wisdom to determine if you want to own Apple stock (and listen to some great iTunes while you’re there), you will find out where to get better nest egg information than is currently found on television, you will have your new book autographed by Natalie Pace, all while enjoying a great vacation in one of the most beautiful cities in the world (Santa Monica, California, average temperature: 80 degrees Fahrenheit). What a way to jumpstart your New Year; New You resolution!

Past attendees have treated the retreat as a great anniversary gift, a great birthday gift as much as a great Buy My Own Island blueprint/educational retreat. We have more fun than you can possibly imagine stocks and nest eggs could ever be! Nancy was inspired to lose 30 pounds and to triple her income. Dr. Jeff, someone who teaches options trading, found Natalie’s systems to be the easiest and most effective he’d ever learned. Many retreat alumni volunteer so they can experience the retreat again! So, whether you are a newbie or an experienced trader who needs a better system, give yourself the gift of the February 2009 Natalie Pace Get Rich and Enrich Retreat. Get more information on the home page at NataliePace.com, under the Retreat banner ad. Call 866.476.7442 or email Heather@NataliePace.com to register NOW. There are only a dozen seats available and the last three retreats have SOLD OUT.

Other Gift Ideas
Some of the best gifts are still made by hand. If you want to mix up some fantastic sugar scrub for that special person in your life (guys love it to – falls under the massages and pampering category), you can find a great recipe in the 2006 holiday issue, vol. 3, issue 12, located in the archived editions of the NataliePace.com online magazines. (Be sure to use a manly scent, like rosemary, when mixing it up for the guys.)

And while you consider what to wrap for Kwanzaa/Hanukkah/Christmas, here are a few ideas of what to do with that troublesome brokerage statement that is taking up all of the creative space in your brain.

Four Cleansing Rituals for a Bad Brokerage Statement

1. Fire ritual. Fold, spindle and mutilate the brokerage statement. Allow toddler to scribble scrabble with nail polish, then let cousin Eddie wad it up and use it to light his dank chronic spliff.
2. Earth ritual. Stomp on the statement, throw dust in the air and howl at the moon while you rip it to spreads. Sprinkle with cat food and leave near the garbage cans. Don’t worry about littering. The raccoons will eat it.
3. Water ritual. Assuming you don’t live near a waterfall or have access to a fire hydrant or fire hose, take the statement out to a wilderness area and sprinkle with cat food. Some wild animal will want to claim it and odds are high it will be marked in that special loving way that animals mark their territory – animal water ritual.
4. Wind ritual. The most wicked wind ritual involves eating too many beans, scratch and sniff tape and a holiday gift card to your money manager. However, if you’re just not that mean-spirited or if your CFP hasn’t been seen since September, the best wind ritual/remedy would be to turn off the hot air that has been blustering from your television and/or financial planner (who may still be telling you to be patient, the winds will turn), and come to my retreat to set up your nest egg properly. That way you will never need four rituals for a bad broker statement ever again.

Now that we’ve let off a little steam, let’s focus on the positive side of having a holiday season right smack dab in the middle of a financial meltdown. While 36% of the readers surveyed at NataliePace.com are going to spend less this holiday season, 27% noted that they could spend less and give away the same number of gifts! An additional 18% said they would be spending the same amount on holiday gifts that they always spend. So, cheer up! You could be getting some awesome gifts this year, despite the challenges Americans face going forward.

Which of the following is your favorite thing about this holiday season? Be sure to take our survey on the home page at NataliePace.com.

Six Great Things About the 2008 Winter Holiday Season

1. The finest gifts don’t cost a thing – health, love, family. Now if I could only convince my tween of that!
2. Two for one sales all over town!
3. President Obama and Vice President Biden help the rest of the world like the U.S. again
4. I can fill up the tank for $40 again!
5. The dollar is gaining in strength. (I can travel to Europe again!)
6. Governor Sarah Palin: coldest state; hottest governor (but not another Dan Quayle-like VP!)

U.S. Dollar to Euro Exchange Rate

And just in case the Gods are listening. All I, Natalie Pace, want for Christmas is:

1. For everyone to buy a copy of my new book, Put Your Money Where Your Heart Is so that we can collectively get rich while enriching our world.
2. That I can be a beneficial presence in service of my namesake. (My name literally means "birth of peace." Imagine trying to live up to that.)
3. A 3-week trip to Machu Picchu, down the Amazon and to Brazil during the Spring Solstice 2009! Where I’m told that cachaca, caipirinhas and coca leaves contribute to chakra/spiritual awakening. (Just kidding.)

Have a delightful holiday season, surrounded by family and friends, enjoying the fruits of our collective labors in great health and high spirits. Be blessed. Be bold. Tell a few jokes. Shine.

Xxoo
Natalie

Best of NYC and LA: Insider’s Guide.

by Natalie Pace.

One Stop Shopping at the Big Apple’s Best Bite and Room Plus L.A’s World-Class, Best-Kept Secrets.

Best of LA: Santa Monica Beach
Santa Monica, California is not just the crown of Los Angeles. It is also one of the finest cities in the world. If you want to stay at a beachfront hotel, Shutters, Casa del Mar, Loews and Le Merigot are all oceanfront, whereas the Viceroy, the Georgian and Hotel Oceana are right across the street, with a full ocean view. Sheraton Delfina is walking distance – just four blocks from the beach, and has rooms with an ocean view as well. The Ambrose Hotel offers shuttle service to the beach and is the only Green hotel in Santa Monica.

Santa Monica is driving distance to all the major attractions in Los Angeles, including Disneyland, Universal Studios, Hollywood Boulevard and Malibu. Be sure to bike or blade along the beach down to Venice, to see the architecture of the homes (south, near Washington Blvd.), the drum circles (on weekends), the artists, artisans, massage therapists and performers, etc.

World-Class Opera
Under the general direction of Placido Domingo, the Los Angeles Opera has become one of the most admired opera houses in the world. Domingo attracts the most gifted performers to his stage, including Renee Fleming, the most respected directors, including Woody Allen, the most talented artists, including David Hockney as set designer. Placido Domingo has an eye for controversy as well – putting Cleopatra naked in a hot tub for Handel’s Julius Cesare and staging a startlingly minimalist interpretation of M. Butterfly.

This isn’t boring opera at all! The respected music director, James Conlon, inspires heart-stopping performances from his musicians and singers. Expect to be delighted, surprised and engaged with the fantastic performances and dramatic interpretations staged at the Los Angeles Opera.

See George Bizet’s Carmen, one of the most popular operas of all time now through December 15, 2008. Raymond Aceto plays a stylish, sexy Escamilla, the matador who steals Carmen’s heart away from Don Jose – prompting the tragic ending of the opera. You’ll recognize (and probably sing along with) all of the songs, and for those of you who wish to follow the story, there are English subtitles.

Seniors and students can enjoy RUSH tickets the day of the performance for just $20 (90 minutes before the curtain rises). See the LAOpera.com website for additional information.

Best of New York City
If you ask any New Yorker what is the best burger and best breakfast, you’ll hear, "Norma’s and the Burger Joint." The good news is that both places are located in my favorite NYC hotel, The Parker Meridien. The bad news is that every New Yorker knows about them and the wait for each can be hours long on a weekday. Weekends are impossible. Thankfully, Parker Meridien guests get preferred treatment and don’t have to wait in line!

So, what you want to do to enjoy all the best that NYC has to offer is this. 1) Book your stay at the Parker Meridien. 2) Know your rights! 3) Think of Christmas in NYC. The room rates between December 15-26, 2008 are some of the best of the year! Simple!

As a Parker Meridien hotel guest, you have priority treatment EVERYWHERE within the hotel. That means that Norma’s squeezes you in at the last minute and you skip the line at the Burger Joint (picking up your burger, fries, shake and brownie -- that’s all that’s offered -- on the left, near the cashier).

Ha ha! Isn’t that valuable! It bought me bragging rights FOREVER when a group of NYU college students joined me at Norma’s for breakfast a few weekends ago. They couldn’t get over the Norma’s eggs Benedict and the crème brulee waffles and had a difficult time deciding whether or not to try the foie gras French Toast. I’ve had them all and the only advice I give is that Norma’s is an experience akin to the Eighth Wonder of the World and you should treat is as such. You’ll be reliving whatever you eat for decades, so go all out. If you really want to push the envelope, you can even have the Zillion Dollar Lobster Frittata, which comes with caviar and gold flakes. (Norma dares you to expense it!)

Now, some Parker guests don’t know these tricks, and they wait, unnecessarily, in line for these places. Or they walk by wondering what all the fuss and those lines are about. The Burger Joint doesn’t have a name out front – just a neon burger sign -- and isn’t even visible really, unless you’re looking for it. You have to just know it exists. That’s how popular it is.

So, trust me when I say that you get the best of everything in New York City by starting at the Parker Meridien, if you know how to work it. And here are some more "working it" tips.

1. Central Park. Just two blocks away from the Parker Meridien. Walking distance. A view of the Park is available in the towers. Ask for an upgrade to your room. It’s worth it!
2. August: Osage County by Tracy Letts. Wow. One of the best plays of this century, with the best performances I’ve ever seen on stage. This is wickedly funny and will remind you of some of the worst family dinners you’ve ever endured. Times Square, the hotbed of Broadway, is walking distance.
3. Charlie Chaplin and Bugs Bunny in the elevator. Making your romp up 50 floors well worth it!
4. Parker Palm Springs. Parker’s policy is uptown; not uptight. Parker Palm Springs takes it a step further and actually challenges you to try something you’ve never done before. Whether it is tennis on a clay court, cocktails and quaint games on the lawn before lunch or the risqué décor at Mr. Parker’s restaurant, expect to be surprised at the quirkiness of every detail at this unusual and delightful getaway. (Norma’s has a restaurant in this West Coast resort as well!)
5. Estrella ballroom. Great for weddings, conferences, lunches, birthday parties. Great 360-degree view of the city from the penthouse floor of the Parker Meridien!
6. Gravity gym. The best gym in any NYC hotel (as good as Equinox) plus the Parker Meridien is one of the only hotels with an indoor lap pool!
7. Whimsy/sense of humor and irreverent. From the Fuhgetaboutit door signs (Parker’s Do Not Disturb sign) to the Zillion Dollar Frittata to the Artichokey Eggs Benedict (artichoke heart replaces the English muffin), expect the unexpected at every turn. Get in the spirit of things and watch the staff respond.
8. Uptown, not uptight. First class all the way. With a sly grin. And a wink… And decadently delicious food. And all that you need to have a great time.

Real Estate Buyers Pick Up Bargains with Foreclosures and Short Sales.

by Natalie Pace.

Q&A with Lawrence Yun, Chief Economist and Senior Vice President at the National Association of REALTORS®.

Lawrence Yun is Chief Economist and Senior Vice President at the National Association of REALTORS®. He writes regular columns on real estate market trends, creates NAR’s forecasts, and participates in many economic forecasting panels, including Blue Chip and Harvard University Industrial Economist Council.

Dr. Yun has been quoted on the real estate market and the economy in the mass media, including the Wall Street Journal, the New York Times, NataliePace.com and the Washington Post. He also appears regularly on CNBC and Bloomberg TV. Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.

Is there any good news in Real Estate today?

Home sales for both existing and new homes rose in September. Inventory dropped a bit, though still remain elevated. Existing home sales were up in September from the same month a year ago. It was the first such year-over-year increase in nearly three years.

It seems a little hard to imagine that sales are up when the headlines are screaming foreclosures, prices are falling and no credit is available.

About 35% of current sales are related to people buying foreclosed homes or requiring short sales.

Ah ha! So, it’s mainly smart buyers, who are out there getting deals. Are you optimistic about the increase in home sales?

Foreclosure rates will continue to rise deep into 2009, but the bigger question is whether there are more buyers to easily absorb the foreclosed homes reaching the marketplace.

Buying is most active in areas with significantly lower prices. Buyers are taking advantage of these lower prices. Homeowners are feeling the pain, but buyers are getting a great deal.

What areas are the prices "significantly lower" and just how much lower are they this year, than say, three years ago at the high?

California, Florida, Nevada and Arizona are states with much lower home prices and these are the areas where we are seeing a strong return of homebuyers.

What’s your economic prediction going forward? Have we hit the bottom yet?

We are in a recession. The question is over whether we will have a short mild one or a deep prolonged one. That depends on whether the housing market can recover. The economy will not recover without a housing market recovery.

Note from Natalie: Wow, an economist who is honest about the "r" word! When I used that word back in February, people came out of the woodwork to remind me that we have to have two quarters of negative GDP growth (even though we had two quarters of .9% and .6% wink wink). Thanks for the honesty.

So far, we have not had two quarters of GDP contraction. However, a third quarter GDP is due tomorrow and it will be negative, and the fourth quarter will also be a negative in my prediction.

How do you know that foreclosure rates will continue to rise? Do you have the statistics on distressed homeowners who are ready to fold?

Foreclosures generally lag other housing indicators. Given that larger numbers of homeowners are underwater, some of these people will choose to foreclose if facing mortgage payment difficulty. Also job losses from recession will force additional people to foreclose.

Do you think the Hope Now Alliance will do a good job of keeping homeowners in their homes?

Hope Now claims it has modified up to 2.5 million loans in the past year. That is sizable, though I do not know to what extent the loans are being modified. Generally, modified loans are less costly for lenders than having to go through foreclosures.

Note from Natalie: So, if we have any distressed homeowners reading, at minimum, that statistic of 2.5 million loans getting modified with the help of Hope Now is a good enough reason to log onto HOPENOW.com and find out how that agency can assist you through troubled times.

What areas are experiencing the greatest reduction in home values?

Riverside, California, Sacramento, California, Bakersfield, California, Ft. Myers, Florida, Phoenix, Arizona, Las Vegas, Nevada, DC suburbs are some key areas that have experienced sizable declines in prices. Some neighborhoods have seen prices drop to the tune of 40%. Many in excess of 20%.

And then we have areas in Michigan, right? What other states are having trouble more as a result of the economic downturn (job losses) hitting their town hard?

The industrial Midwest is also hard hit. Michigan has lost jobs for seven straight years and is still shedding jobs to this day. It is a very difficult environment for housing or for any business when job losses pile on this high.

Very difficult indeed. There was a headline that someone couldn’t sell her home for a dollar in Detroit. Very sad. But there is a lot of manufacturing infrastructure and talent there and hopefully, there will be an industry that can come in and rebuild.

The right business climate will lead to smart people creating new businesses and hiring people.

I have a couple of houses in the San Diego area that are underwater and that don’t have cash flow. Do you have any suggestions on how to get out of this mess?

There is less help for investor property owners. But National Association of Realtors pushed for a higher loan limit so Fannie and Freddie can buy more loans in high cost areas like San Diego. Buyers returning to the market will help stabilize home prices. Many California markets are now seeing inventory conditions returning close to historical normal. That correlates to about 3-5% home price appreciation a year.

Now, let’s say the San Diego real estate investor wants to try and survive. How long will he need to hang on? Perhaps this isn’t your area, but with more people coming on the market to rent, do you think he might get some relief with rental prices coming up a bit? (I know a Malibu homeowner who is supplementing her income by renting her home for weddings and vacation rentals.) San Diego is a pretty desirable vacation destination, if the locations of his particular property are good.

The long-term outlook for San Diego is bright. Baby boomers – the wealthy ones – will seek out good climate areas as they retire.

That’s good to hear. I just need a way to hang on until the market turns.

The short-term concerns are over buyer hesitancy and how to absorb and limit foreclosed homes reaching the marketplace.

Currently, what are some stable markets for real estate investors?

I see price gains in Denver, Dallas and Houston. I also like affordable places like Indianapolis, Cincinnati and Pittsburgh, if jobs come around in these markets. There is more risk in California, Nevada and Arizona, but the long-term fundamentals are solid.

Dr. Yun, one thing you mentioned was "more traditional" housing returns. What is the statistical annual return of housing? It was crazy 2002-2005 and it seems a lot of newbie real estate investors thought that increasing 20%+ per year was average…

Normal returns have been 1-3 percentage points above consumer price inflation. Inflation runs about 3% per year, so home prices generally rise 4-6% per year.

I know you are housing more than stocks, but just how bad do you think investors will react to the negative GDP numbers on Thursday and how will the stock market reaction to that affect housing over the next 6-12 months?

The recession for the U.S. and the world economy is already priced into the stock market. I believe if we have a short recession, we could see respectable gains in the stock market because corporate profits are running about double the rate of what it was in 2000.

You indicated there are housing indicators that help to determine whether foreclosures will continue to rise in a community/state, etc. What are the real determinants of whether your city is ready to recover and move forward, is experiencing a "boom/bust" or is headed for a prolonged and painful period of slow growth?

Housing indicators on vacancy rates showed steady conditions in the third quarter. It is still high, but no longer rising. Also, new home inventory has fallen sharply because builders have cut back production. We are moving in the right direction in controlling inventory. There is still more risk because of foreclosures. But if you can pick up properties at "bargain" prices, then the risk is minimized.

Sometimes people forget about the Big Kahuna challenges of real estate, like high cost to carry, illiquid, natural disasters (drought and earthquakes in California and Nevada and hurricanes in Florida). Can you speak just a little bit to that? Even with "insurance" you have higher insurance costs in riskier areas and people in New Orleans were being denied claims because the "flooding" when the levies failed was not covered. (Only wind damage from the hurricane was.) This was eventually challenged in court, but it took years and in the meantime, many people lost their homes and were unable to hang on long enough to rebuild.

Florida is hampered with high insurance costs related to hurricanes. So many second homeowners could not carry the cost of mortgages and insurance and put their homes on the market. If the insurance cost falls, then home prices will pick up. It is an inverse relationship.

What have we learned from the real estate bubble and what lessons can real estate investors now carry as their wisdom talisman going forward?

Any time there are strange new behaviors – watch out! No income/no document loans – that is a clear warning sign. People buying with the intention of selling in a month or two. That is not normal and suggests exuberance and the "finding of the next fool." Abnormal new trends = be very cautious.

I know one investor who was saved because she refused to lie and say she would be living in the home. Any last words of wisdom?

Real estate has proven to be a solid long-term investment for homeowners and investors. Short-term is always a difficult call. But long-term returns have been consistently solid. With that in mind, best of luck, everyone.

Underwater on Your Home Loan?

by Shawn Harris, Mortgage Specialist.

Learn 3 Ways to Avoid Foreclosure.

Over the past month, I have been asked over and over again what are the options available to people that owe more on their house than it is worth.  I figured I should write an article so everyone can at least have an idea of what is out there.
 
There has been activity by the federal government, the courts, and by the lenders themselves that has created an air of mystery as to what your options are IF you are upside down and would like to change your current loan, or sell your home.

There are several options available to you, and I will go over the most common.

FHA Housing Stabilization and Homeownership Retention Act
Details:
Refinance your existing debt so that your new loan is 90% of CURRENT market value. When you sell, you kick a little of your profits back to the federal government.

Limitations:
Primary Residences only.  If you own more than one property, you do not qualify.
Current lenders must agree to it.  Your current lender has veto power, and must cooperate.  In addition to losing principle balance of loan, they must agree to pay 3% of loan amount to FHA, as well as pay for 2% of new loan expenses.
Must pay off all mortgages.  If you have a 2nd mortgage, it must agree to it as well as the 1st.
Loan must have originated prior to 2008
As of March 2008, housing payments must be at least 35% of your total income. If it’s less, then you can afford the home and can’t use this program.
You must qualify for the new loan using actual income (tax returns).  If you can’t qualify for the new loan, FHA will not do the loan.

My Take:
Most lenders are not entertaining this option, because it is so prohibitively expensive.  If you bought a house for $500,000, and it is now worth $300,000, the lender must take a $230,000 loss.  In addition to that, they must come out of their pockets, in CASH of 5% of the new loan amount, which takes their loss up to $243,500.   It is true that this is cheaper than a foreclosure, but banks are afraid if they start allowing this, they will "open the floodgates" and create much more default than should actually happen.
 
Also, it’s not in writing, but you must currently be in default to on your loans to even be considered.  

Loan Modifications
Banks are currently negotiating with homeowners that are currently default on their mortgages.  If you have missed mortgage payments, you should attempt to do a loan modification.  You can do this by yourself, or you can hire a specialist that can do the work for you.
 
There is no "primer" as to what to expect as an outcome for a loan modification as each lender has his own policy.
 
In most cases, the banks will rewrite your current mortgage to a lower interest rate, maybe interest only.  In most cases, it is for a fixed period of years (5) so that when/if the market turns, the banks are not locked into an artificially low interest rate.  Current market rates are around 6%, though I have heard of lenders offering short-term rates as low as 4%.
 
If you are currently delinquent on your mortgage, some banks will require that you come current on your mortgage, and some banks will allow you to add the delinquent amount to your principle balance.  

Many lenders will not modify your loan if you do not have the ability to continue to make payments based upon the new interest rate.  Banks want you to keep your home, but they typically do not lower the rate if they think it is only a short-term panacea.  
 
Also, though it is not written in stone, all reports that I have heard state that you must be in default (at least 30 days late) on your mortgage to be eligible.  If you are current on your mortgage, note that going late on your mortgage will drastically negatively affect your credit, and remove all refinance and purchase opportunities for you for at least a year.  
 
If you choose to work with a loan modification company, be VERY careful.  All those loan officers that sold sub-prime loans a few years ago are now selling loan modification services.   Generally, you should be wary of anyone who wants a large amount of money up front, and has no incentive to complete his services.  A modest amount of money up front is fair, as there is a bit of work involved in the process, and a fee for success once the loan has been modified is also fair.

The California department of real estate requires that anyone who accepts money UP FRONT register with the state.  If you do not see their name on the following web page, do not pay them an up front fee. http://www.dre.ca.gov/mlb_adv_fees_list.html

I am currently researching these companies to find the ones that charge a FAIR amount of money and are reputable.  I have a few that I am comfortable referring, so feel free to call me directly at 800.871.7987 x 702.

Lawyers Suing over Truth In Lending Violations and Right of Rescission
This is something that has started to occur over the past few months.  When the lender has you sign your loan documents, they are required to provide to you a "Truth in Lending" statement. This document states all of the fees that have been charged to you for the loan transaction, and shows how those fees affect the effective interest rate, or A.P.R.  Unfortunately (for the lender), this document is easy to mess up, and there are often changes to the exact fee after the loan documents have been signed. In addition, lenders must disclose all the features, reset dates, and adjustment periods properly on the TIL.
 
Lawyers (well, probably their paralegals) go over the truth in lending statement and compare it to the final closing statement, and if there are any discrepancies, errors, or lack of property disclosures they go back to the lender and call foul. There is a statue of limitations of three years, so if your mortgage is older than that, there aren’t too many options.
 
If an attorney finds errors in your paperwork, then you are in luck.  Many people will claim that you get your mortgage rescinded, or you will get cut a huge check by the bank. Fat chance at that.  If you find an error, this basically enables you to use that as leverage to negotiate a loan modification in your favor.  Or, you can hire a hugely expensive lawyer, sue your bank, fight the system, and a few years later maybe perhaps win a lawsuit that pays you actual damages (great news, you get that $300 fee back, plus interest!) plus attorney fees.
 
In some cases, people have had errors on a document called the 3 Day Right of Rescission. These are quite serious, and if there are errors on this document you may be able to have your mortgage rescinded.  Sound great?  Kind of, you still owe the money, and if the loan get rescinded you need to find a new loan to replace it.  If you’re upside down, this isn’t an option.
 
Again, I am investigating several attorneys who claim they are experts in this field.  By next week I hope to have a good referral.  Be wary of anyone saying they can get you cash payoffs.

Summary
In summary, be careful what you believe and who you trust.  There is no panacea available to make everything better.  If you are legitimately hurting by making your current mortgage, there may be some minor relief available to you. 

If you have a subprime mortgage, you should be able to have that high rate lowered to current (or maybe even below) market rates, if you can show you have the desire and the ability to make the payments.
 
If you think that the bank was negligent in the paperwork they provided you with (common among "option arms" and sub-prime loans), you can have an attorney take a look at your paperwork and perhaps find cause to go back to the lender for a loan modification.
 
If you have any specific questions, please give me a quick call and I will try to answer your questions accurately.  If you know of someone that is facing problems with their current mortgages, please feel free to forward my contact information.

 
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

Treasury's Guarantee Program for Money Market Mutual Funds:

...What You Should Know.

Investor Alert from FINRA.org (the Financial Industry Regulatory Authority)

Money market mutual funds play an important role in America's financial markets, offering a relatively lower-risk alternative for investors who seek stability and liquidity. Recent market events put a spotlight on the money market fund industry—including the U.S. Treasury Department's announcements on September 19 and 29, 2008, of a temporary guarantee program for the money market fund industry. In creating the guarantee program, Treasury seeks to address temporary dislocations in the credit markets.

We are issuing this Alert to help investors better understand money market funds and to answer some of the questions investors may have about Treasury's guarantee program.

What are money market funds?
A money market mutual fund is an investment company that pools money from investors to purchase short-term investments—such as Treasury bills, certificates of deposit, and short-term bonds (known as commercial paper) issued by large corporations—that meet certain standards set forth by the Securities and Exchange Commission for credit quality, liquidity, and diversification. As of July 2008, there are more than 800 money market funds in the United States—roughly 10 percent of all U.S. mutual funds.

The federal securities laws set limits on the types of investments a money market fund can make. Money market funds have traditionally attracted investors seeking to preserve their principal or who need a short-term place to invest their cash. As with any securities investment, investing in money market funds involves risk—and while rare, investor losses are possible. In contrast to bank money market deposit accounts and other bank savings accounts, money market funds are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. However, as explained below, for an initial three-month period, money market funds can participate in a guarantee program offered by Treasury that will insure assets held in money market mutual funds as of September 19, 2008.

What does it mean to "break the buck"?
Like other mutual funds, a money market fund is required to calculate its net asset value (NAV) at least once a day, typically after the U.S. markets close. A fund's NAV is its price per share, which reflects the total value of the fund's investment holdings. Money market funds invest with the goal of maintaining a stable NAV of $1.00 per share. That means that investors can typically expect to get back one dollar for every dollar they invest in the fund, plus any returns (meaning the interest or dividends the fund earns).

A money market fund is said to "break the buck" when its NAV falls below $1.00 per share. In the nearly 40-year history of money market mutual funds, this has happened on only two occasions—in 1994, when a fund lost approximately four cents on the dollar, and in September 2008, when the NAVs of money market funds issued by The Reserve Fund fell below $1.00.

Typically, there has been an expectation that when a money market fund reaches a point where it might break the buck, the investment management firm that sponsors the fund will take action to infuse the fund with cash so that the fund can maintain a stable NAV of $1.00 per share. Most money market funds in the U.S. are sponsored by large financial institutions that may provide assistance in the case of instability.

What is Treasury's Guarantee Program?
On September 19, the U.S. Treasury announced the establishment of a temporary guarantee program to protect shareholders of money market mutual funds—and on September 29, officially opened the program to eligible money market funds. Eligible money market funds include publicly offered funds that are registered with the SEC, are regulated under Rule 2a-7 of the Investment Company Act of 1940, and seek to maintain a stable $1.00 NAV. Both taxable and tax-exempt money market funds may participate. As explained in Treasury's September 29 announcement, eligible funds must apply and pay a fee to participate in the program: the program is not automatic. The program is not available to any fund that broke the buck prior to the close of business on September 19.

The program will insure shareholder assets in participating money market funds as of the close of business on September 19. In other words, if a money market fund that participates in the guarantee program subsequently fails to maintain a stable $1.00 NAV, the program will provide coverage to shareholders up to the amount they owned on the date the program was announced. This action is intended to enhance market confidence and alleviate investors' concerns about the ability of money market funds to absorb a loss.

Investors cannot sign up for the guarantee program on their own. Instead, each money market fund must decide whether to participate in the program—and, if so, must [have applied] by October 8, 2008. You can find out whether a money market fund participates in program by contacting the fund directly or checking their Web sites.

In addition, you should be aware of the following features of the guarantee program:
1. Limits on the Guarantee—The insurance provided by the guarantee program extends only to the total value of a shareholder's account in a participating fund as of the close of business on September 19, 2008. Here are some examples to illustrate how the guarantee program works:

-- Let's say you owned 200 shares of ABC money market fund on Sept 19 and bought 100 more on September 30. Let's also assume the fund is participating in the guarantee program and breaks the buck on October 10. Under the guarantee program, you would receive a guaranteed $1.00 per share for the 200 shares you owned on September 19--but your remaining 100 shares would be redeemed at NAV.

-- Now let's say you owned 200 shares of ABC on September 19, sold 100 on September 22, and purchased 50 on September 30. If the fund breaks the buck on October 10, all 150 of your shares would be covered under the guarantee program-even though some of those shares were purchased after September 19. As long as it remains in effect, the guarantee program will protect your investment in ABC up to the amount you held as of September 19.

2. Tax Issues—Participation in the program by a tax-exempt money market fund will not jeopardize the tax-exempt status treatment of payments. The Treasury and the IRS have issued guidance confirming this point.

3. Duration—Initially, the program will be in effect for three months, beginning September 19, 2008. After three months, the Secretary of the Treasury will assess the program, including whether to extend it (up to September 18, 2009).

The bottom line is that whatever amounts you held in a participating money market fund as of September 19 will be protected under Treasury's guarantee program for as long as the program remains in effect. For more information, see Treasury's Fads.

Information for Reserve Fund Shareholders
Because certain of the Reserve money market funds broke the buck prior to September 19, these funds are not eligible for the Treasury guarantee program. On October 30, 2008, the Reserve announced a plan to make an initial distribution to shareholders in the Primary Fund. The Reserve's board of trustees is continuing to work on plans to liquidate certain of its other money market funds. For more information and updates on the liquidation plan, be sure to check Reserve's Web site.

In the meantime, investors who need cash but cannot access their holdings in the affected funds should understand their alternatives. These include awaiting implementation of the Reserve's liquidation and distribution plan, liquidating other investments, or arranging for a loan from their broker (which might require signing a margin agreement). Each of these choices has consequences that investors should carefully consider before acting.

Where to Turn for Help
If you have questions, be sure to contact your brokerage firm—or the fund company if you purchased your shares directly. If your firm did not resolve the problem to your satisfaction, you can file a complaint online at FINRA's Investor Complaint Center.

ADDITIONAL RESOURCES
U.S. Treasury, Frequently Asked Questions About Treasury's Temporary Guarantee Program for Money Market Funds
SEC, Order-In the Matter of The Reserve Fund (09/22/2008)
SEC, Division of Investment Management Responses to Frequently Asked Questions about The Reserve Fund and Money Market Funds
FINRA Alert, Investing with Borrowed Funds: No "Margin" for Error
SEC Alert, Your Brokerage Account and Money Market Funds

To receive the latest Investor Alerts and other important investor information, sign up for Investor News.

Put Your Money Where Your Heart Is. Q&A with Natalie Pace, author.

(The book everyone with a job must own).

About Natalie Pace:
Natalie Pace is the only financial pundit in the U.S. who has a Nobel Laureate winning economist writing the preface to her book and enthusiastically recommending her nest egg strategies. Her new book, Put Your Money Where Your Heart Is, is available for pre-order NOW at Amazon.com. This book outlines the basic, fundamental GOLDEN NEST EGG strategies that Nilo and Bill Bolden used to protect their nest egg during tough financial storms. Using a pie chart that Natalie drew up on a napkin, Nilo protected her nest egg, while her bosses lost hundreds of thousands of dollars. As of December 2008, Nilo had lost nothing. If you lost more than 11%, there is a better way and buying Natalie’s new book is the start of a new life of taking ownership in your Buy My Own Island Fund, as well as the world at large. Natalie calls it getting rich and enriching – a definite win-win.

1. In what ways does your system differ from conventional investment strategies?
   My book is the solution for the current financial crisis. There is a saying that you must never confuse wisdom with a bull market, and what you are seeing right now is a lot of blowhards standing naked with the tide out.

I warned investors to recession proof their portfolio in February of 2008, to get Fannie Mae out of their mutual funds and nest eggs in 2003, to steer clear of General Motors in 2004, that housing was a house of cards in 2005 (when the KB Home and Toll Brothers’ insiders were cashing out hundreds of millions of their own stock) and to avoid Lehman Brothers in June of 2006. Bear Stearns was so bad it didn’t even make the grade. I’ve also been religious about telling investors that they should always keep a percent equal to their age safe, i.e. not invested at all in the stock market – not in funds of any kind, including those held by annuities. In recessions, you overweight into safety an additional 10-20%.

And for those of you who think all of this is going to be long and boring and impossible to understand, I try to use pheromones – making investing sassy and sexy – instead of mind-numbing charts. Just forensic, investigative, financial journalism summed up in sassy, actionable chapters with easy-to-implement instructions.

2. Give us an example of your defensive strategies.
   1. Always keep a percentage equal to your age safe (+10-20% during recessions). Safe investments right now are Treasury bills and high-quality bonds that you already own. In a recession, cash is king and not losing is winning. When real estate and stocks bottom out, the cash-rich investor will be in a fantastic position for great gains going forward.
   2. Diversify the remaining portion of your nest egg into 10 ETFs: small, medium and large cap (both value and growth) and four industries that are in favor. Industries that are in favor this year should be clean energy, gold mining, biotechnology and Australia/New Zealand (international). NASDAQ was in favor in 1999 (but not 2000-2002). Real estate was in favor 2002-2005 (but not 2006-2008). Clean energy was the top-performing industry in 2007, earning almost 60 cents on the dollar.
   3. Rebalance twice a year. Meet with your certified financial life partner twice a year to make sure that your Buy My Own Dream Life fund (formerly called your retirement plan) is following your blueprint. In late January, take your profits on any ETFs that might have excelled. In late September, buy back into any ETFs that might be undervalued.
      
      

These strategies would have allowed you to profit from NASDAQ in 2000, and would have saved you from the DOT COM crash in 2000-2002. It would have allowed you to profit at Dow Jones Industrial Average 14,000 (October 2007) and would have saved you from this year’s market crisis. Reading my book will help you to understand this better. Coming to my retreat gives you the time – 3 full days – to implement all of the knowledge and wisdom that is found in the book. Having someone to work with you while you make the change is priceless (and the retreat is only a fraction of what you’d pay to go to one year of college).

3. How do you make investing as much fun as shopping?
   Earning great gains is more fun than winning the lottery! When you know what you own, care about your life plan and can easily see that you’re making gains while you sleep, that is a total blast!

I have penned a 3-ingredient recipe for cooking up profits that works for stocks, real estate, classic cars, postage stamps, Beanie Babies – you name it! 1) Stick with what you know and love; 2) Pick the leader (in real estate, it’s location, location, location); 3) Buy low; sell high (easy to say; hard to do). The hardest parts are two and three, so I designed four easy questions for picking a leader and I also outline various buy low; sell high strategies in the book.

Just so you know how easy this can be, Bill and Nilo Bolden have lost nothing in their nest egg using a pie chart that I drew up on a napkin. And the Green Goddess Investment Club earned 40% gains on their first trade EVER this year, in a volatile, downtrending market. Put Your Money Where Your Heart Is is truly a book that everyone with a job should own.


4. How have your own background and investment experiences influenced your strategy?
   I was a busy soccer mom, as were all my friends, but we are also the shoppers of the family. So, I wanted a strategy that used skills we already have as shoppers, and I wanted to make my friends look forward to opening their brokerage statements.

I like so many people needed peer pressure to start getting smart about investing. So, I started an investment club. The book makes it easy to start your own investment club, if you need a discipline to help you jumpstart your own dream life.

And if the shoppers of the world – mostly women – compared notes with the investors of the world – mostly men – imagine how much better the gains of the household would be! The shoppers know the best products and services and the investors (after they read my book) know how and when to buy into the ownership of the company.

5. What advice do you have for investors during an economic downturn?
   1. GET SMART NOW. THE WORLD HAS SHIFTED!! Stocks don’t earn 12% per year anymore. For the last ten years, stocks have earned 4%. Treasury bills earned 3.3% with much less risk. If you want gains, you have to be invested in the companies of tomorrow, not the faded blue chips (like Fannie Mae, General Motors, AIG, US Airlines and more). This is something I’ve been saying for three years! In November of 2005, I wrote an article exposing the pension plan debt of the large corporations that were founded before 1980 and still carried defined-benefit pension and health care plans, saying, "Blue Chips and pension plans are becoming endangered species these days, and those of you who work for companies founded before 1980 may be at risk of eating cat food in retirement, if you don't protect (roll over) your retirement plan now. (From the article, "Celebrities, Style and Parties: While You Dream of the Good Life, Your Future Could be Cat food." Vol. 2, issue 11.)

I’ve heard pundits say, "Don’t even open your 401(k) or IRA statements." I say, "Open them immediately." If you are over 25 and you lost more than 20% of your portfolio, your nest egg was cracked to begin with. If you are over 50 and you lost more than 11%, you were not properly protected. If you want to resurrect your nest egg and protect it against further losses next year, you need to get a better blueprint right now. You can’t even wait another 30 days because the next tsunami to hit Wall Street could be hedge funds imploding.

Buy my book, Put Your Money Where Your Heart Is as a start NOW. Call 866.476.7442 or email Heather@NataliePace.com now to register to attend my next retreat. Tell your friends. Come with them. (You get a huge discount when you come with a friend.) Heather@NataliePace.com. 866.476.7442.


6. What tips do you have for choosing a competent broker?
   BROKERS AND LOVERS IT PAYS TO PICK A GOOD ONE! If you lost more 20% then you need to shop for a better one -- someone who is commission-free, knows Modern Portfolio Theory and has the good sense to get information from great news sources, like my ezine. There’s a chapter in my book on how to select the perfect certified financial life partner, along with questions you need to ask to select someone who is a right for you. Interview the broker as if your life depends on it because your lifestyle does.
   
   
7. What’s the Billionaire Game?
   HOW WOULD YOU LIVE IF YOU HAD ALL THE MONEY IN THE WORLD? Why not live that life now? Why not take ownership of your investments instead of relying upon blind faith and a whistle and a prayer? Imagine how fast our world becomes more beautiful when we invest only in the products, goods and services that we want to own and buy, instead of putting our money in a collective pot, which brokers sell off to the highest bidder?

In yesterday’s model, protestors of the war in Iraq actually owned the oil fields and people who lost a family member to cancer owned stock in Phillip Morris Tobacco Company. In the world of tomorrow, if you like Priuses more than Hummers, you own Toyota instead of GM. You can get rich while enriching our world. Today, GM and Ford combined are worth less than 1/10 of the market value of Toyota Motor Company.

Putting your money where your heart is would have made you a lot richer over the last five years. Handing your hard-earned dough over to your employer (for your pension plan) or your insurance provider (your annuity) or your broker (for mutual funds) to invest for you has cost you dough, decreased your net asset value, funded a lot of the things that you don’t want to flourish in our world and given you heart burn.

8. What socially conscious businesses might make the best long-term investments?
   Socially conscious companies always make the best long-term investments because happy people make better products faster cheaper.

Google launched the most successful IPO in the history of Wall Street in 2005. GM and Ford insisted on making SUVs and gas guzzlers while Toyota shifted to hybrids (switching production lines and retraining their employees) and are today faded blue chips that are worth less than $5 billion each. Toyota is the number one auto manufacturer in sales, profitability and market value and is currently valued at almost $100 billion. Now GM and Ford were also strangled with costs far above their competitors, but they lost market share because people didn’t want to drive their vehicles and preferred what other corporations were putting out on the market.

9. What lessons can be learned from such companies as Enron and WorldCom?
   That your intuition is really complex pattern recognition and that our world does not support the violation of human and/or investor rights for long.

As a consumer, you can sniff out the evil companies! When long distance rates drop from 25 cents to 4 cents, the company can’t keep having increasing earnings! The analyst who reads the earnings reports might buy this nonsense, but you, the consumer, know better!

When grandmothers are dying of heat exhaustion while energy traders are laughing their way to the bank, the company will not be in business very long! If Enron hadn’t imploded under the weight of its’ own accounting lies, it would have been sued to oblivion by the State of California for price gouging, market manipulation and carpet bagging.

I outline these lessons in my book in the chapter, "Top 10 Signs the CEO is Rolling in Your Dough."

10. What are the biggest mistakes made by new investors?
    Listening to money managers and/or brokers who were actors or rodeo riders or mortgage brokers or car salesmen only six months ago. Trading on headlines or analyst recommendations. Buying options software packages that claim to trade with 80% accruacy (with accuracy misspelled). There are 11 common mistakes listed in my book. That chapter alone could save you tens of thousands of dollars!

Believe it or not, in today’s marketplace, where stocks are only earning 4% each year (the returns of the last ten years, according to Hulbert’s Financial Digest), having 30-years of experience in stocks could be a bad thing, rather than a good thing. Judge your CFP based upon the performance in 2008. If you lost more than 20%, your money manager is not knowledgeable enough about defensive strategies to help you. My book outlines strategies that you can rely on for top performance in bull and bear markets.

11. How can you know your heartfelt choice will be profitable?
    You don’t. That’s why you have a long-term strategy for your nest egg and don’t trade individual stocks in your Buy My Own Island Plan unless you are Natalie Pace or Warren Buffett! If you want to trade individual stocks, you have to consider your level of experience. If you’re Warren Buffett, that’s one thing. But most people don’t have that much experience trading individual stocks successfully.

I’m not saying don’t try to learn. I’m saying that learning something requires you set aside "fun" or "education" money – i.e. money that you can afford to lose. The Buy My Own Island fund is money you want to make while you sleep, with the emphasis being on sleep! Low-risk, steady performance, twice a year rebalancing, tithing once a month, etc. Individual stocks require more work than that. And of course, they can also be more rewarding when you invest in them successfully.

My book outlines some easy, effective strategies for anyone who wants to have some fun investing in individual stocks. I developed these strategies and used them to earn my reputation as a number one stock picker. So, you can definitely improve your gains by incorporating them!

Pre-order Put Your Money Where Your Heart Is now on Amazon.com.

Be blessed. Be bold. Shine!

Natalie Pace

 

Get Rich and Enrich Workshop Truly Makes a Splash in Santa Monica

... for Sixty Plus Lucky People (Including Lucky Me)!

by Shelley Silver Whizin.

11/23/08. Santa Monica, CA.
WOW! That about sums it up.

Yep, Natalie has done it again! She has taken sixty people on a journey of showing them how to save their financial "ass-ets" during this "recession".

Natalie is probably one of the smartest, most intuitive investigative financial journalists in today's economic community (not just my opinion). She tells it like it really is, without the hype. No wonder she has been a number one stock picker for some time. Natalie has a sure grasp on the stock market, the economy in general, and knows excellent ways to hedge bets in the "worst possible financial climate".

"In today's economy, NOT LOSING IS WINNING," Natalie emphasizes. "These are very different times. We cannot do things in the same way we always have, nor can we look at the stock market the same. The markets return 12% a year in the past, but for the last ten years, only 4% per year, only slightly above the returns of Treasury bills at 3.3% (with almost no risk)." In Natalie’s model, however, investors are able to capture their gains, rely on a blueprint that is appropriate to their age and always keep a percent equal to their age safe. In fact, her strategies are "enthusiastically" recommended by Nobel Laureate winning economist, Dr. Gary Becker, a professor at the University of Chicago. Despite the blue chip endorsement, Natalie’s goal is to make investing as much fun as shopping and to get rich while enriching the world – to enjoy life, know what you own in your retirement plan and make the world around you more beautiful in the process.

Sixty of us were sitting in the room at the beautifully remodeled Sheraton Delfina Hotel in Santa Monica. Nine of us were volunteers, assisting the participants in Natalie's amazing process of teaching subjects on (to name a few):

• The basics of the stock market
• The language of the investment industry
• Modern Portfolio Theory, ETFs and rebalancing twice a year (easy!)
• How to know what you own and own what you love (and get rich in the process)
• The secret formula of how and why to keep your "nest egg" safe, with a portion invested in the stock market and a portion in safer financial vehicles
• How to grade stocks in her trademarked STOCK REPORT CARD
• What "stocks on steroids" are and how they can play an important part of your educational and fun portfolio
• How to simplify, diversify and rebalance your Buy My Own Island Plan
• How to talk to your broker, what to look for in hiring a new one, and how brokers get paid
• How to make great returns while you sleep
• How to "float downstream catching fish" (profit in bear markets)
• The differences between mutual funds and exchange traded funds and why "ETF's" are the wave of the future
• The importance in having your money invested in tax protected structures
• The best international investments
• What the up and coming hot industries are
• Why clean energy is the wave of the future and how to profit now
• How the new democratic government will effect the markets

Natalie revealed one of her jewels: "Look at your investments like a pie, " she explained. "Make sure that whatever age you are, have that amount invested in "safe" financial instruments, then add another twenty percent to the "safe" category just during this recessionary time. You can re-allocate it later when the tide turns. Cash is king and you’ll be in the best seat for returns going forward if you protect and diversify now."

Sound advice for sure. This is one smart, beautiful woman. Her words rang true in everyone's ears. I have to admit, as I sat in the room, I observed everyone's faces and energy (I'm like that woman on Star Trek that senses emotions). A light kept clicking on in each person's eyes at different times. I could almost "hear" them saying, "Wow, I get it. I understand what I need to do. I am so relieved."

Yes, we were given a LOT of valuable information to take in. Yes, it all seemed overwhelming at first (especially for the first timers, like myself in the previous workshop...I was like a deer caught in headlights). But, more importantly, everyone KNEW they were taking control of their own financial futures...standing up and taking charge, one by one. It was wonderful to witness. For some participants, it was an eye opening, heart-awakening experience. For others, it was a matter of fine-tuning the knowledge base they walked in with...leaving with a more in-depth understanding of their own circumstances and WHAT TO DO about their financial circumstances.

This was no ordinary "dry" financial three-day workshop. This "Get Rich and Enrich Retreat" was a spiritually-infused, heart-warming, intuitive rally...raising everyone's consciousness to their own endless possibilities.

Natalie does not "just" cover statistics, nor does she "just" teach the language of the stock market industry. Natalie does much more. She gets to the HEART of WHY we want to make money in the first place from a soul perspective (my favorite motivating factor, by the way). And, she presents analogies of those models who have MADE billions of dollars, like Bill Gates, Steve Jobs, Warren Buffet and Oprah Winfrey. She created and offered a brilliant process, called the "BILLIONAIRE GAME", designed to challenge us to think BIGGER...to expand our level of awareness and to literally step out of our comfort zone into a world maybe we never took the time to IMAGINE. So, ask yourself this question: "How would you live if you had all the money in the world?"

When we got back in the room, Natalie showed us that by stepping into that picture we envisioned today we don't have to wait until we "make all that money"...We just have to live it NOW and scale it back. Simple and profound? Absolutely. (And believe me, "stuff" came up for everyone, especially for those who believe that it's not okay to "make money." Natalie calls these people the "philanthropist mentality"). Let me tell you, "stuff" really did come up (even for me, who was facilitating my group. Thank you guys for creating such a safe environment to reveal each other's deepest unspoken thoughts).

For lucky me, by volunteering my time, I got to help others learn Natalie's systems, (which as you all know, is the best way of learning and reinforcing something yourself). I shared with everyone what a great mentor of mine once told me years ago, that "an expert is someone who knows just a little bit more than someone else." We all laughed at that one. Then throughout the seminar, when everyone broke up into partners to do STOCK REPORT CARDS, each person helped another and they instantly became "experts". You could feel the joyous energy in the room.

Each day we walked away with precious gems from the mine of Natalie's brain. We were given the resources for finding particular pertinent information online. (Thank God for computers, we all had our laptops and information was simply a "click" away. What did we ever do before laptops? Well, that's another story). Anyway, we were taught how to navigate the Internet for those resources she gave us and how to use her brilliantly conceived (and user-friendly) website to access the information necessary to learn about the companies we were researching for our stock report cards.

Offering simple recipes, Natalie has a way of getting to the point and sharing her philosophy of investing:

Always Remember:
1. Stick with what you know and love. When companies are socially conscious, they do their best. When you invest in the world of TOMORROW (and NOT THE PAST), and you fuel desire with dollars, you invest in a greener and cleaner world.

2. Pick the leader in the sector. (In real estate, it’s location, location, location!)

3. Buy low and sell high. (This sounds obvious, but knowing when the low is low and the high is the high is another story).

So, the "RICH AND ENRICH RETREAT" is over and we are fully equipped to know what to do and how to do it with regards to our investments and in addition, what we have walked away with is the knowledge that living a life of BEING ENRICHED starts NOW. No one has to "wait" until they manifest ooh-gobs of money (and maybe you don't even want ooh-gobs of money, that's not the point).

Just playing the "Billionaire Game" gave us the tools of imagining ourselves with all the money in the world and what it feels like to live the life of BEING ENRICHED RIGHT NOW! I think I can speak on behalf of all the participants, we are ENRICHED, feel GRATEFUL and look FORWARD to making our lives even better than they are now.

I would highly recommend that EVERYONE sign up for her next retreat in February. (Details are posted on the home page at NataliePace.com under the Get Rich and Enrich Retreat banner ad). Only twelve (12) people will be allowed to attend. And believe me, if you are one of the lucky twelve, you will thank your lucky stars that you signed up and attended. Save your "ass-ets" NOW before you watch your boat sink to the bottom with the low tide. I'm sure glad I attended. It has changed the way I THINK about my finances and how I can truly make a difference in our world of TOMORROW. Thanks Natalie!

Shelley Silver Whizin is an "Eclectic Renaissance Woman." She has training as a certified yoga teacher, as well as a master results coach, and NLP practitioner. While her background is as a marketing designer Shelley is a professional speaker and trainer bringing illumination to those looking for success in the arenas of health, finance and relationships. Shelley has traveled worldwide and studied a multitude of cultures and traditions, and as a result she has always felt naturally inspired successfully imparting spirituality and integrating the spiritual substance of life—the soul of living—into the personal and professional lives of those she touches. Her aspirations include creating a non-profit organization acknowledging those who actively do something to make a difference in this world.

A Universe Within: How to Reduce Stress and Depression and Gain Mental and Emotional Balance.

by Dr. Dennis Maness, HealthWalk MindSoul Division

The noise surrounds you. The crowd, the barking dog, the lawn mower, the roar of the loud motorcycle and those sounds in your mind which scream the loudest, often even drowning out the voices of those speaking to you and just a few feet away.

As the sounds engulf you, you walk toward the door ready with your key. You place your key in the door and walk in. As the door closes behind you, you feel as if you have stepped into another world.

You look around and see a well-organized place; the air is filled with soft music; music as smooth as silk gently dancing on your senses. You almost feel uncomfortable as your senses melt into a state of relaxation. For in this moment, you have transformed from the world that just a few minutes earlier crowded your mind and senses to serenity and focus. Now that you are in this room, relax. Let it all go. You are safe, alone. As you begin to feel secure, you begin to notice your surroundings. Where is this place you ask; so pleasant, so calm, so relaxing? Welcome to the world of you.

Most of the world doesn’t even know this place exists as anything but a state experienced shortly as our mind and body drifts off to sleep. This special place we are discussing is not a place for sleep but a refuge where we find balance. This world is one that you may enter and exit anytime, 24 hours a day.

Stress, depressive symptoms, ADHD, multiple competing priorities, attention, and focus can be controlled from the inside of this room.

Designing A Mental Environment
To help you develop a strong and balanced mental environment, we will follow three people who found lasting relief when they learned how to step away from stress, depression, cognitive and memory issues into this room. Sue came into HealthWalk’s MindSoul Technology office and soon teared up explaining how depression had been a constant visitor since she was a child. Victor had ADHD, dyslexia and was quick to anger. David had been in a serious accident that crushed his skull, which in turn caused cognitive and memory difficulties.

This special place of mental transformation and balance is developed by creating a safe mental environment. Clients of HealthWalk’s MindSoul Brain Technology often fall asleep shortly after the treatment begins as they sit comfortably in our zero gravity chairs. I prefer this process over meditation or standard relaxation techniques because as good as these methods may be, they are also limiting. Relaxation may be one of the least understood concepts in applied psychophysiology due to both therapist and client misconceptions about it. I don’t want you "only relaxed;" I want you relaxed and in control.

While the client is sitting in the zero gravity chair, I dim the lights and begin a lobe specific mapping of their brain and then start a relaxation procedure using specific sound envelopes. As they begin to relax, I would touch them gently on the forehead and ask them to concentrate on my touch. This leads their thoughts away from the state of fight or flight and moves their focus to frontal lobe brain activity. During this exercise, I measure their thoughts and subconscious thoughts and teach them how to close thoughts up and devote all their attention to one single thought so that they can come to a point of total focus / total attention.

Upon learning these techniques, Sue, Dave and Victor were able to find the place within their minds where they could go to regain control. For each of them, they have been able to enter and exit this state of mind for over six months. Victor is doing great in school with no more dyslexia symptoms and is controlling his own ADHD with his thought control. Sue has not experienced the bad bouts of depression since her MindSoul Brain Technology sessions and Dave is back at work and doing quite well.

The formula is simple. Find that private place where you can be alone without disturbances for at least one hour. Turn off the telephone, radio, television and other potential disturbances. Do a model relaxation exercise. While relaxed, close your mind to all thoughts, create a mental flush of all mental activities; develop this mental state so that gradually you can maintain it for five, ten, fifteen minutes. Get to know this quiet place and go there often.

These relaxation exercises may help you transfer relaxation skills to your everyday environment helping you develop this special place where you can go within your mind to de-stress, manage multiple competing priorities, focus and improve memory and attention. It is all within you. If you need support to get started, please come to visit us at HealthWalk. We are here to work with you to find that special place within you so that you have control over your thoughts, moods and focus.

HealthWalk™ offers customized, non-invasive and effective support to enable your body’s own innate powers to regain and enhance health, performance and healing. HealthWalk is dedicated to supporting and empowering you to achieve and maintain vibrant wellness. HealthWalk is a non-invasive, integrative healthcare facility with a global umbrella of leading edge technologies, services, natural supplements and products backed by over 20 years of research. HealthWalk is based in Carlsbad, CA. www.healthwalk.com

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.

MindSoul Brain Technologies
MindSoul Brain Technologies creates a brain map of the brain’s neuro pathways which shows the imprints in the brain that an individual experiences as memories, trauma, thoughts and experiences. MindSoul Brain Technologies supports the rebalance of the misfiring, blocked or damaged neural pathways to restore homeostasis and balance to the brain and to reduce or eliminate negative symptoms associated with emotional and physical stress and trauma, memory issues, addictive behavior(food, smoking, drugs etc), ADHD, ADD, dyslexia, autism, loss of mobility due to stroke, physical trauma etc. Some of the symptoms may include the inability to focus, frustration, anger, headache, hyper vigilance, impaired memory, multiple competing priorities, stress-related illness, weight gain or loss, gastro intestinal discomfort, mood swings, insomnia, depressive symptoms, fight or flight response, physical movement impairment etc.

A thorough assessment Mind Map and a series of ten sessions - $1,500

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.

Call HealthWalk at 877-255-4703 or email info@healthwalk.com

www.healthwalk.com

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. HealthWalk is a separate entity from NataliePace.com and NataliePace.com offers no guarantees of, nor do we endorse, their products and/or services.

Clean Energy, Clean Coal or Just Coal in Your Stocking?

by Natalie Pace.

Includes my Hot News on Cool Stocks List.

December 1, 2008

General Stock Market Performance

The markets have been volatile and down-trending, meaning that it’s difficult to make money if you are trying to buy low and sell high. The only way to do that this year was to pay close attention and take your profits early and often – often between issues of the Hot News on Cool Stocks list. So, unless you are willing to monitor your investments daily, you shouldn’t be investing in individual stocks at all.

If you don’t know how to read this article, you shouldn’t be investing in individual stocks at all. Come to the retreat and learn how to invest and how to read the article first!

The easiest profits have been made on put options and shorting. So, this is the first year in a long while where you’ll see most of the companies I’m featuring monthly are the biggest losers – companies that I expect to go DOWN in value.

Options are Investing 102, so, again, your first investment should be in education – my retreat – if you wish to learn and do this successfully.

The News, Information and Education you Need to Succeed
There are 11 other articles in the NataliePace.com ezine that are designed to help anyone who has a job to get rich and enrich the world. Be sure that you are reading those! Some of the most important information I’ve ever written is found there.

The headline on the LA Times last week was about insiders cashing out of now defunct New Century Mortgage Co.  Imagine if investors were getting that info in 2007 — before the company went bankrupt.  Or in 2005, before housing started to collapse.  As you know, that is the beauty of forensic, investigative financial reporting, which is my area of expertise since 2000.

The headline on Yahoo Finance on December 1, 2008 read, "Panel Says U.S. Has Been in a Recession Since December 2007." On February 1, 2008, I wrote an article, entitled, "Recession Proof Your Portfolio," which included strategies that would have saved your nest egg from the big cracking it has received this year. Some people told me that we weren’t in a recession. I said we were, but that it wouldn’t be called that for about a year. Bingo.

Google, MySpace, Sohu, Suntech, Taser International, Rio Tinto, Opsware, Goldcorp and more: I found them first before they went on to earn gains between 100% and up to 9000% in the case of Taser International. I also warned to get Fannie Mae out of your mutual fund holdings in 2003, to get GM out in 2004, that housing was a house of cards poised to collapse in 2005 (when insiders at KB Home and Toll Brothers were cashing in hundreds of millions of dollars of their own stock) and to avoid Lehman Brothers in my stock report of June 2006. (Bear Stearns was so bad, it didn’t even make the grade to be included on the stock report card.)

If you want to learn these strategies for yourself, or if you want to take three days to set up your nest egg with a blueprint that adjusts to your age and risk tolerance and market conditions forever going forward, please come to my February 10-12, 2008 retreat. Only a dozen people will be there. We’ll have a blast while we transform your life forever and fill up your wisdom bank with a great investment plan that works for real estate, stocks, bonds, Beanie Babies, classic cars, postage stamps and anything that you can think of.

Investor Alerts: Fortress Investment Group (FIG) and Sears Holding Company (SHLD)
On November 11, 2008, I issued an alert on Sears Holding Company and Fortress Investment Group, both of which are publicly traded and operated, essentially, like hedge funds. Since Fortress announced earnings on November 13, 2008 and Sears was expected to release earnings before the end of November, I added both of these companies to the Cooling Off List on the 11^th, anticipating that there would be significant losses at one or both companies and that the share prices would suffer as a result. Sears announces earnings tomorrow (Tuesday), so check your mutual funds, annuities, IRAs, etc. now to see if you have exposure there. Sears is a major mutual fund and institutional fund holding in Vanguard, SPDR, Janus, Fairholme, Legg Mason, Davis and more.

U.S. Gold:
U.S. Gold was highlighted as within buying range at 60 cents on November 1, 2008 and removed (for a hefty gain) at $1.03 on November 6, 2008. See the Alert on the Sharing Wisdom bulletin board. (Check the Sharing Wisdom bbs for updates early and often.)

Ask Natalie:
Dear Ms. Pace,

You tend to always refer to your "winning" stock picks, which reminds me of the gambler that tells you how much they won but, will never will divulge what they lost. My sister-in-law called and sent email messages out to her entire network of family an friends last week ecstatic over the fact she had won a little over $31,000 playing the slot machines that Wednesday, but didn't mention she is over $60,000 in debt from her gambling habit. So, Ms. Pace, please tell us what your record is for the past four months.

Signed: Skeptical

Hi Skeptical,

Good for you for questioning the performance of your guru! That's what everyone should be doing.

In answering your questions, I’m curious as to whether or not you read my Hot News articles because there, in every single issue, I "divulge" the performance of every company that I report on, listing both those that doing fantastic as well as those that are not doing well. Additionally, I list every ezine I’ve ever published since May of 2003 in the archives on my website. So, when I say that I first warned of Fannie Mae and Freddie Mac in September of 2003, you can actually go back and read that article firsthand. When I say that I listed Google at the IPO, you can read the exact article that I wrote and published in May of 2004 before the Dutch Auction. You can create charts on MoneyCentral to see that Taser did indeed post up to 9000% gains from the time I first featured it as 2003 Company of the Year.

But, even more important than the performance of the individual stocks that I’ve listed, which has been overwhelmingly positive (more details to follow below), was that I warned everyone to "Recession Proof" their nest egg in February of 2008, spelling out the exact formula of what to keep safe and where and why and how to diversify the remaining nest egg. That was a huge call and it turned out to be critically important. Those who heeded the call are dancing on the ceiling. Those who didn’t are dazed and confused of where to turn. If you are in the dazed and confused category, do yourself a favor and read my "Resurrecting Your Nest Egg," article in the November 2008 ezine and pre-order my new book Put Your Money Where Your Heart Is on Amazon.com.

It’s very important to remember that the Buy My Own Island nest egg plan (i.e. your 401k, IRA, annuity, etc.) is THE MOST IMPORTANT stock investment, and getting the right blueprint and rebalancing twice a year are KEY to its success. If you are 50, your total losses to date would not have been more than 11%, so if you lost more than that, your nest egg was cracked to being with. It’s not a lot of work, but it does require wisdom and rebalancing and to know what good strategies are. Many, but not all, Certified Financial Planners are rewarded for selling you things, instead of doing a great job for you, which is why it is critically important that you get your information from a tried and true source. I am proud to have worked so hard to earn the distinction of the most trusted name in financial news. You are the architect of your future and if you want to create a great future for yourself, come to my February 2009 Get Rich and Enrich Retreat. Get more information and register at the JOIN NOW link at NataliePace.com and at the Get Rich and Enrich banner ad on the home page.  

As for the "stocks on steroids" trading portfolio, no one has a better track record than me – especially this year. Below is just a brief overview.

On November 1, 2008, I added Rio Tinto and U.S. Gold to the Hot News on Cooling Off List. As of November 4, 2008, just four days later, Rio Tinto jumped from $138/share to $200/share. U.S. Gold jumped from 60 cents to over a dollar on Thursday that week.

In September of 2008, I added MGM Mirage, Wynn Resorts and Las Vegas Sands to my Cooling Off List. (These companies were added on September 1, 2008 and the article outlining all of the problems was published on October 1, 2008.) Each of those stocks dumped dramatically and anyone who had a put option on them would have more than doubled their money in under 30 days. Wells Fargo was also added to the Cooling Off list on September 1, 2008. As of November 6, 2008, the put had earned over 35%.

In August of 2008, First Solar was added to the Cooling Off list. It lost over $100 off the share price, more than doubling in gains for the put option. In fact, the only company that I feature in my monthly headline articles that went in the opposite direction of what we were expecting was Melco, the 6-star casino resort in Macau that is owned by Stanley Ho’s son, Lawrence.

So, for the last four months, I’m almost batting a thousand and investors are doing quite well for their "Stocks on Steroids" account, if they are reading the NataliePace.com ezine and investing in put options.

It is important to remember that the Stocks on Steroids account should only be a small percentage of the nest egg and should be limited to your experience and wisdom. In other words, if you have never traded individual stocks, then you should not use any nest egg money there at all. You should use "education" or "fun" money – that you can afford to lose while you learn. And yes, the top individual performers of 2008 were "puts" and "shorts" so if you wish to learn effective options strategies, again, come to my February 2009 retreat.

My track record of featuring great companies to invest in (or gain when the share price goes down) has been consistently above my peers since I began publishing in 2002, averaging almost 50% of the companies that I feature doubling or more in value. You can read the Hot News on Cool Stocks list for a list of all of the gains that have been made this year alone, as well as a report of what happened since 2002 (almost half of the companies featured doubled or more in value). I will be running a more detailed report on my features in the January 2009 ezine.

The "Resurrect Your Portfolio" article in this month’s ezine outlines a new "napkin" pie chart strategy for your asset and industry diversification, now that the big hit has occurred. The new strategy will be different going forward than it was before the big drop. Be sure to read it. If you do not diversify properly or protect at least a percent equal to your age, then you are vulnerable to even more losses, without the potential for much upside. If you stick everything into Treasuries and bonds, you’re not positioned to recover well and you have just sold your nest egg on the cheap. And if you stick your head in the sand and keep things exactly the way they are, you could be left in the dust of dying industries and corporations, while others are profiting.

If you have a degree and certainly if you have an advanced degree, you have spent a quarter of a million or more learning how to earn income. No one ever taught you how to invest that money. As a result, unfortunately, last week you may have lost half of your nest egg. If you did lose that, or anything close to that, then you need to shift into the new paradigm NOW and you need someone to guide you into that new territory. For less than one percent of what you spent to get your degree, you can be well on your way to earning gains in your nest egg while you sleep – and having a more restful night during the hard days ahead. This financial crisis is not over yet – not by a long shot. If you didn’t get the wake up call at the NASDAQ DOT COM bust of 2000-2002, then I certainly hope you hear the call this time.

Sign up NOW for the February 10-12, 2008 retreat at the Join Now link on the home page at NataliePace.com.

Again, please forward this article to at least a dozen friends that you wish to empower.

Track Record of our Reporting
While the markets have fallen in 2008, the Hot News and Cooling Off lists below have a winning track record – in bear and bull market years. 36 positions listed below – 59% -- have delivered impressive gains this year, even while the Dow Jones Industrial Average is down -32% over the past year! Only twenty-five of our listings went in the opposite direction of the reporting, which is quite impressive given the horrible market drop of this fall. Yes, many, but not all, of our top performers were shorts, which is why we added options training to the retreat, but today you’ll see more companies highlighted on the Hot News list, since the prices are lower than they’ve been in many years. Remember that the trading portfolio should be a small portion of your nest egg, equal to your experience. If you’re new, you should be using education or fun money, not your nest egg, to learn on. Take your profits early and often in this volatile, down-trending year.

Even during the flat year of 2007, our featured companies had outstanding performance between Oct. 2006 and June 2007! 4 out of 9 companies – almost half – doubled or more from the time they were featured to the time they were taken off of the list. 48% of the companies featured in my stock newsletter between 2002 and 2005 – 25 out of 52 companies – DOUBLED as well, and the majority of the remaining 52% well outperformed the marketplace. (See the chart in the article, "25 of Our Companies Have Doubled," from vol. 4, issue 4, the April 2007 ezine, for a listing of companies.)

3 out of 6 Company of the Year selections more than doubled.  My 2003, 2004 and 2007 Companies of the Year have posted up to 9000% gains (Taser), up to 690% gains (Opsware) and up to 215% gains (Suntech Power Holdings), respectively.  MySpace, my 2006 Company of the Year, was a large part of News Corp’s success with shareholders that year.   OSI Pharmaceuticals, my 2005 Company of the Year is back on track for gains and we still believe that Suntech Power Holdings, which is the market leader in solar panels, will be a big winner!  So three out of six are superperformers, one performed well above the market and two are down (in a recession). That’s the kind of record that puts you on top on Wall Street.  (I launched my first publication on 11.15.02, and featured the first Company of the Year on 1.1.03.)

TipsTraders.com continues to list me as a Highly Recommended Stock Picker, with their independent ranking system, where I’ve repeatedly occupied the #1 position. Some of our best picks include: Bioteq Environmental (BQE) +144%, Blockbuster Video (BBI) +82.5%, Genentech (DNA) +415%, Google (GOOG) +545%, Las Vegas Sands (LVS) +139%, LifeCell (LIFC) +180%, Macerich (MAC) +150%, Opsware (OPSW) +690%, Rio Tinto (RTP) +145%, Sohu (SOHU) +150%, Suntech Power Holdings (STP) +107%, Taser (TASR) up to 9000% gains and World Water & Solar (WWAT) +181%. (Some of the best picks in 2008 were put options – on the Cooling Off list. Look there for details.)

Market Movers:
The Federal Open Market Committee and Monetary Policy
The Fed funds rate was cut on October 29, 2008 to 1 percent. In the 10.29.08 press release, the Federal Reserve Board further elaborated on the reasoning behind the rate cut, writing: "The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."

Preliminary GDP growth rates for 3Q 2008 were released on November 25, 2008 at 8:30 a.m. ET.  The BEA preliminary estimates were negative, at -.5%. These numbers are preliminary and are subject to change over the next month.

Final GDP growth estimates for 3Q 2008 will be released on Tuesday, December 23, 2008 at 8:30 a.m. ET. For more BEA release dates, go to the BEA.gov website and be sure to visit the NataliePace.com calendar section often. There can be quite a big change from advance to preliminary reports, so this report could carry a lot of weight and volatility into the marketplace.

EDUCATIONAL OPPORTUNITES AND INFORMATION:
1. FOMC Information: Interested in reading the minutes of the October 29, 2008 FOMC meeting for yourself? You can. The official Federal Reserve document is available online. Click on FOMC, or go to FederalReserve.gov to read!

The tentative FOMC meeting schedule for the 2008-2009 calendar is: December 16-17, 2008 (Tuesday-Wednesday), January 27-28, 2009 (Tuesday-Wednesday), March 17, 2009 (Tuesday), April 28-29, 2009 (Tuesday-Wednesday), June 23-24, 2009 (Tuesday-Wednesday), August 11, 2009 (Tuesday), September 22, 2009 (Tuesday), November 3-4, 2009 (Tuesday-Wednesday), December 15, 2009 (Tuesday).

2. Calendar Section: Conferences, Online Chats and more: Check out the Calendar section of NataliePace.com regularly. There are many wonderful opportunities to chat one-on-one with millionaire money managers, life coaches, economists, respected money gurus, real estate veterans and CEOs! Be sure to check out the dates of the mid-month Hot News on Cool Stocks Update and the publication date of our next ezine. Get more information on how to best use our articles in the FAQs article, located under the Investor Edu link on the home page of NataliePace.com.

3. Survey Results: What are the best gifts this holiday season? Vote so others know what you want and check out others responses for great ideas on what to give. Simply click on the survey that is currently on the home page, and you will be taken to a page with all three of the current surveys. Cast your vote there!

4. Euro interest rates: At the European Governing Council meeting on November 6, 2008, it was announced that the ECB would lower rates by 50 basis points to 3.25% (main refinancing), 3.75% (marginal lending) and 2.75% (deposit facility). The next meeting and interest rate announcement is scheduled for December 4th, 2008 at 2:30 p.m. CET.

Hot Stocks List
Investors who "never pay retail," note that the BOLD highlighted stocks are trading at their 52-week lows or near the price featured in NataliePace.com’s article. This may be a good buying opportunity. (If the stocks are not highlighted, then in our estimation, this is not a good time to buy. Reasons are explained in the news commentary.) The companies that are listed below which are not highlighted may not be in a good buying range, but they appear to be poised to continue performing well (if you have already purchased them). There are never any guarantees in life, and all stocks are risk-based investments. Consult your certified financial planner before making any changes to your investment strategy. And remember that these "Stocks on Steroids" are not intended to be part of your nest egg strategy. If you’ve never traded individual stocks before, this is your "fun" or "education" money. You should not stake your future on anything that you don’t have mastery over.

Hot News List (highlighted).  Be sure that you are buying low.
Altair Nanotechnology (ALTI)
American Superconductor (AMSC)
Conergy (CEYHF)
Emcore (EMKR)
HOKU Scientific (HOKU)
Kinetic Concepts Inc. (KCI)
LDK Solar (LDK)
MEMC Electronics (WFR)
New Zealand Dollar Currency (BNZ)
OSI Pharmaceuticals (OSIP)
PowerShares Wilderhill Clean Energy Portfolio (PBW)
Rio Tinto (RTP)
Satcon (SATC)
Smith & Nephew (SNN)
Sociedad Minera y Chemica de Chile (SQM)
Suntech Power Holdings (STP)
Trina Solar Limited (TSL)
Westpak Bank (WBK)

DELETIONS:
Conergy (sort of). If you purchased the stock at $4.50, then you should have taken your profits of 51% at the Nov. 7, 2008 price of $6.80.

HOT NEWS on COOL STOCKS LIST

Recently Deleted/2008 Companies featured:
Echelon +20%, GE, +13% and +18%, Google, +15% and +31%, Johnson & Johnson +10%, LDK Solar +18%, Microsoft +12%, Satcon +13%, Suntech +35%, Trina Solar +22%, World Water & Solar +22%. Genentech (8.1.08) +40%. Altair (deleted on 8.7.08) posted gains of +3% and +57%. Zoltek (deleted on 8.18.08) lost 30% before being removed. LDK Solar was deleted on 9.2.08 with 46% and 29% profits. U.S. Gold profit taking on 11.6.08 amounted to 72% gains. Conergy gains of 51% were taken on 11.7.08.

Deleted from the Hot News list:
Short term gains on U.S. Gold and Conergy.

Stocks to Watch
Some of these are great companies that we’re thinking of adding to the Hot List and some are stinkers we’re thinking of adding to the Cooling Off List.  Read carefully to identify which is which! Note that right now most of our favorite companies are on the Watch List, anticipating continued weakening of the stock market, and share prices.

Recent Additions:
None

Recent Deletions:
Genentech (added back to the Hot News list on 10.10.08)
EUROX Mutual Fund (added back to Hot News list on 10.10.08)

Cooling Off Stocks List (may be Poised for a Decline in Share Price).
Note: The companies listed in bold have recently been added to this cooling off list and/or may be currently poised for a decline in value. Investors who have them in their portfolio should read the recent news and consider whether it is time to sell and take profits, dump losses, short the position and/or simply weather the storms, while keeping the company in their long-term portfolio. At any rate, always consult your certified financial partner before making adjustments to your portfolio. (Again, note that the stocks on this chart are expected to go DOWN in price.)

Highlighted Companies (Cooling Off List):
None

Recent Deletions:
Boston Properties (on 10.9.08)
Las Vegas Sands (on 10.09.08)
Macerich (on 10.09.08)
Wells Fargo (11.6.08 and 12.1.08) 

Recently Deleted in 2008:
Fannie Mae was deleted on 2.11.08 after losing -50% and -56% of its share price value, and then again on 7.1.08, after losing another -40%. (Both puts more than doubled.) Novastar Financial (NFI) was deleted on 6.2.08 with -95% share price implosion. Sears Holding Corp. was deleted on 7.1.08 with 64% gains on the put option. Wells Fargo was deleted on 7.1.08 with 83% gains on the put. Apple was deleted on 8.1.08 with 35% gains on the put. The Google put, deleted on 8.1.08, was another great performer, with over 50% gains. First Solar had gains of over 32-34%. Mentor was deleted on 9.30.08 with 75% gains on the put option (-17% on the share price); Medicis was deleted with gains of over 37% on the share price (down direction). Boston Properties, Las Vegas Sands and Macerich were deleted on 10.9.08 with gains of 16-30%, 66% and 28-42% respectively. Wells Fargo was deleted on 11.6.08 with 35-50% gains on the put and again on 12.1.08 for 17% additional gain.

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.

NataliePace.com Calendar.

Pre-order Natalie Pace’s new book, Put Your Money Where Your Heart Is now on Amazon.com. It hits bookstores on December 23, 2008 for a New Year; New You release. It’s a great gift for anyone who wants to resurrect his/her nest egg and/or anyone with a job who plans on buying her own island in the future!

The NataliePace.com Calendar section features conferences, teleconferences, 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.

Put Your Money Where Your Heart Is by Natalie Pace
Natalie Pace's first book is available for pre-order now! Be the first to own it!

Get Rich and EnRich Retreat, Santa Monica, CA
Tuesday, February 10-12, 2009
3-day retreat with Natalie Pace. Resurrect Your Portfolio, while keeping it recession-proofed. Learn how to profit in downtrending, turbulent times. Invest in the companies of tomorrow and avoid dying industries. Early bird registration NOW through December. 15, 2008 ONLY. The October and November Retreats SOLD OUT, so be sure to ACT NOW to ensure your seat at this life-changing, transformational, educational retreat. Only one dozen people will be in the room! Imagine getting such intimate, personal hands-on training with one of the most successful financial pundits this year!

21-day Get Rich and Enrich Coaching Call Series
Monday, December 1st, 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. (value: $595). Get information on how to call into the call series on the Sharing Wisdom bulletin board at NataliePace.com.

Transportation Conference and Expo in DC
Tuesday, December 2nd, 2008
An open forum for research and development of electric drive including: battery, plug-in, hybrid, and fuel cell. researchers, educators, designers, policy makers and end-users to promote sustainable vehicles.

Premium Subscriber Teleconference with Natalie Pace
Thursday, December 11th, 2008
5:00PM through 6:00PM PT
Wonder how to resurrect your portfolio? Want to hear more details about the strategies that saved Bill and Nilo Bolden's portfolio. To date, they haven't lost anything. If you lost more than 20% of your portfolio and you are over 25, your nest egg was cracked to begin with. You need a better Buy My Own Island blueprint!

Federal Open Market Committee Meeting
Tuesday, December 16th, 2008
8:00AM through 5:00PM
The Feds meet for one-day to determine whether or not to increase, pause or lower the Fed funds rate. Is the Santa Rally in full swing this election year?

Hanukkah
Monday, December 22^nd – 30th, 2008
Hanukkah means "dedication" and is also referred to as "The Festival of Lights."

Put Your $ Where Your Heart Is by Natalie Pace!
Tuesday, December 23rd, 2008
Natalie Pace's first book will be released just in time for Christmas and the New Year, New You gift-giving. Pre-order now!

GDP 3Q 2008 (Final)
Tuesday, December 23rd, 2008
8:30AM through 8:45AM ET
The U.S. Dept. of Commerce, Bureau of Economic Analysis (BEA.gov) releases its final report on GDP growth in the 3rd quarter of 2008. Preliminary numbers for 3Q GDP growth came in at -.5%.

Christmas
Thursday, December 25^th, 2008
Celebration of the birth of Jesus Christ.

Kwanzaa: a Celebration of family, community and culture.
Friday, December 26th, 2008 through January 1, 2009
This year’s focus is on repairing and renewing the world.

New Year's Meditation Retreat, Joshua Tree, CA
Monday, December 29th, 2008
Letting go of the past and greeting the New Year in the silence is a tradition at Agape International Spiritual Center. Join Michael Bernard Beckwith in meditation and Dr. Rickie Byars Beckwith in sacred song and chanting.

LA Opera: The Magic Flute
Saturday, January 10th, 2009
7:30PM through 10:00PM
The Magic Flute is both a fanciful fairy tale and an allegory hinting at deeper mysteries at the same time. This ever-popular work has enchanted young and old alike for over two centuries.

Get Rich and EnRich Retreat, Santa Monica, CA
Tuesday, February 10th, 2009
9:00AM through 11:00PM
3-day retreat with Natalie Pace. Resurrect your nest egg. Recession Proof Your Portfolio. Learn how to profit in down trending, turbulent times. Clean and Green, not dying industries. Only 12 people at this intimate retreat!

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