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Vol. 8 Issue 5, May 1st, 2011
Send comments and suggestions or get more information at info@NataliePace.com

QUOTE OF THE MONTH:
"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable."

Nikola G Swann, CFA, FRM
Standard and Poor's
On the downgrade of the U.S. debt outlook from stable to negative
April 16, 2011


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One Hot, Overlooked Commodity: Sand.

by Natalie Pace.

Includes a Silicon Stock Report Card.

Summer’s here and I’m ready to hit the beach, but, as an investor, I’m also ready to hit the sand – silicon that is. Where else can you find the lowest price to earnings ratios with the highest growth on Wall Street?

MEMC Electronics saw its 4th quarter sales double, up to $850.1 million from $356.7 million a year ago, while LDK Solar tripled their revenue, to $920.9 million in the 4th quarter of 2010 from $304.6 million in 2009. Yet both high-growth companies are trading at low forward price to earnings ratios of 9.38 for MEMC and 3.80 for LDK. What gives? Investors, who were burned in 2009 during the Great Recession, when sales slumped by half, are wary about stepping back out on the sand, even if the skies are clear and the water is warm.

Other storms that should bring investors back to the sanctuary of clean energy are outlandishly high gas prices, the one-year anniversary of the 2010 Gulf Oil Spill and the nuclear crisis in Japan. Natural and man-made disasters tend to fuel interest in powering our planet with more animal and plant friendly energy, like solar, wind and geothermal. Our Department of Energy Secretary Dr. Steven Chu is a Nobel Prize winning physicist who wrote many white papers on global warming and is a clean energy proponent. On April 5, 2011, Secretary Chu announced $112.5 million over five years for funding to "help the solar power industry overcome technical barriers and reduce costs for PV installations, help the U.S. regain the lead in the global market for solar technologies, and provide support for clean energy jobs for years to come".

So which company is the best bet?
Both LDK and MEMC are well positioned to capitalize on the worldwide interest in solar energy, and each has their own competitive edge. MEMC is a low-debt, efficient, high-growth, vertically integrated company with worldwide manufacturing facilities and marquee clients. LDK is a Chinese manufacturer, based out of the Cayman Islands, with high debt (almost $4.5 billion in debt and liabilities), high growth and marquee clients.

For fiscal 2011, LDK Solar expects revenue in the range of $3.5 to $3.7 billion, wafer shipments of 2.7 to 2.9 gigawatts (GW), module shipments of 800 MW to 900 MW, in-house polysilicon production of 10,000 MT and 11,000 MT, in-house cell production between 500 MW and 600 MW, and gross margin between 24% and 29%. For the full year of 2011, MEMC expects non-GAAP sales in the range of $3.4 - 3.7 billion and earnings per share of $1.00 to $1.30.

MEMC’s company SunEdison doubled its project pipeline in 2010 to 1.4 gigawatts. Samsung and MEMC are partnering on a new polysilicon manufacturing facility in Korea that will start out producing 10,000 MT of high purity polysilicon, with the potential to expand production.

One head wind for MEMC is their Japanese manufacturing facility. On April 12, 2011, MEMC resumed production in its factory, which is 130 miles away from Sendai, after having operations suspended for a month. No MEMC employees were hurt, however, the extent of the damage from the earthquake and nuclear crisis has not yet been fully reported. MEMC has advised that some production is being moved to Malaysia and that power availability is improving. Even if the outlook is wonderful, there could be a hit to earnings in the 1st and 2nd quarter earnings. Additional information will be provided in the May 4, 2011 1st quarter earnings report.

The Little Company that Wants to Compete
Hoku Corporation broke ground on its new polysilicon manufacturing facility in Pocatello, Idaho on March 27, 2007, after collecting $140 million in prepayments from six of the largest solar panel makers in the world – including Suntech Power Holdings, Tianwei New Energy and Jinko Solar. The plan was to build a new plant and start spitting out polysilicon within two years. But a little thing called a global financial meltdown, which decimated the clean energy industry in 2008 and 2009, got in the way. That, along with a few missteps by an inexperienced, though visionary, CEO – Dustin Shinto -- meant that the construction process was launched and paused, launched and paused, while engineering plans and executives changed.

Now, under the leadership of CEO Scott Paul, and newly hired President "Jeremy" Xiaoming Yin, PhD, the first silicon has been produced and most of the capital to finish the plant has been secured. Even a few institutional investors have tiptoed into the water. In the last part of 2010, BlackRock, Goldman Sachs and Guggenheim all made small investments in Hoku.

In January 2011, 16 polysilicon reactors were installed, and in April, Hoku showed photos of finishing work being done on the reactor building. The company forecasts that polysilicon production will start adding to their revenue by fall of 2011, with a capacity of 4,000 MT produced annually. The real question is whether or not the clients that prepaid for polysilicon can be dealt with appropriately. If they demand their money back, so that they can purchase the polysilicon elsewhere, Hoku doesn’t have the cash flow to handle the calls. Hoku will rack up $700 million in debt before the project is finished.

Hoku is receiving substantial capital support from Tianwei, Hoku’s majority shareholder. The real question is can this relatively small, new player position itself for profitability after so many false starts over the past few years, during a time when silicon prices have gone down and production worldwide has ramped up?

Hoku is a high-risk investment that might pay off, mainly because the share price is trading at a 75% discount. While Hoku struggles to produce its first shipment of polysilicon, big competitors like MEMC and LDK are turning a profit and expanding to meet demand. Beware of existing Hoku shareholders jumping ship if the Hoku share price rises. Four years in the doldrums is longer than most investors’ attention span these days.

MEMC Electronics and LDK Solar are the surest bets in the marketplace. Having said that, the damage in the MEMC Japanese facility might spook investors in the short term, so I’d be careful buying into MEMC before the May 4, 2011 update. And LDK recently trimmed back its first quarter revenue projections to $745 to $755 million from $800 to $850 million, so the official first quarter earnings report release (in May) could create a buying opportunity.

Full disclosure: I own shares of Hoku Corporation.

 

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on Facebook.com/NWPace and on YouTube.com/NataliePaceDOTCOM. For more information please visit NataliePace.com.

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 all in on any asset class or individual stocks. 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.  

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.


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Are Bonds Safe?

by Natalie Pace.

The answer is yes and no. If you purchase a bond, hold it for the duration of the term, receive an interest rate that pays you a nice income and the borrower doesn’t default, then bonds are safe. However, there are a lot of ifs in that sentence. And those if’s can slide down a slippery slope into illiquidity, payment delays and/or default in times like we are seeing today.

There are two main risks in bonds, and both are present in today’s bond market.

1. Credit Risk
2. Interest Rate Risk

1. Credit Risk:
In short, the higher the interest rate, the higher the risk that you are taking on. If most bonds are in the 3% range and you are offered an 8% rate, then you need to seriously examine the income, debt and outlook of the entity you are lending money to. As Ted Hampton, an analyst for Moody’s Investor Service says, "Unfunded pension liabilities have become more pronounced and unmanageable. In Illinois, they literally can't pay for them. They are issuing bonds two years in a row."

What happens in the worst-case scenario? Bankruptcy and/or default. Such as we’ve seen in Chrysler, General Motors, Delta Airlines, U.S. Air, United Airlines and even New York City (1975), Cleveland (1978) and Orange County, California (1994). Bondholders negotiate a settlement in bankruptcy court, but typically receive far less than they are owed, far later than they were promised.

What happens in the second worst scenario? Illiquidity. If Illinois is issuing bonds every year, they have to raise their interest rate in order to attract new lenders. That means that no one will want to buy your 3% bond from you when they can buy a new bond that offers a 5% yield. If you are able to hold the bond to term and the entity doesn’t default, you’ll be okay. However, if an emergency occurs (loss of income, health expenses, etc.) and you have to sell the bond, you may have to liquidate for pennies on the dollar – that is if you are lucky enough to find a buyer at all.

2. Interest Rate Risk:
When interest rates rise, the value of your bond goes down (and vice versa). Interest rates in the U.S. are at rock bottom, lower than inflation, which means that at some point, they will have to rise. In fact, Canada, China and the European Union have already started to raise interest rates. According to Jean-Claude Trichet, President of the European Central Bank, "Price stability is of extreme importance for growth and job creation." This puts pressure on the U.S. Federal Reserve to raise rates as well, although as of April 27, 2011, the Feds are still claiming that the rates will remain low "for an extended period." Meanwhile, the riskiest bond issuers are forced to raise rates, due to the credit risk, to attract new borrowers.

Keeping on the Safe Side of Bonds
Today, we have an environment where central banks are starting to increase interest rates, meaning that soon the bonds that you currently own will decrease in market value and fewer buyers will be available to purchase them from you, should you desire to sell them. We also have an environment where countries, municipalities and corporations are carrying very high debt, and many are operating at a budget deficit (borrowing to pay bills). Even though states can’t declare bankruptcy, they can default on their bonds, as Dr. Marc Miles outlines in his article in this ezine. (May 2011).

Below are six considerations to help you evaluate the fiscal health of your bond portfolio.

  1. Fiscal Health: Look into the debt and revenue of the underlying country, corporation, municipality or revenue stream that is securing the bond. Don’t simply rely on rating agencies (although that’s a good start). Make your own assessment. Safe bonds have reasonable debt and solid revenue growth. Risky bonds have massive debt and are borrowing more to pay bills. See the Dr. Marc Miles article in this ezine (May 2011) for state ratings.

  2. Bailouts vs. Brides: Separate the bonds that are high yielding (above 8%) from the low-yield bonds. If you have a low-yield bond that passed the fiscal health exam (#1 above) that is maturing in 2-3 years, you can throw that into the bride pile. If you have a low-yield bond that is longer term and has serious fiscal issues, you may be looking at a future bailout and/or default. Remember: if you are going to take on a lot of risk, you want to be rewarded for it. Examine the debt, sales and income of your high yield bonds to determine if you wish to take on that level of risk in what is supposed to be your "safe" money. If you’re able to sell your risky bonds for a good price today, you may be glad that you got out early.

  3. Tax-free Muni’s: Do an extensive analysis of any Municipal Bonds you are holding, particularly of the debt. According to Marc Miles, a global strategist and the former senior economist of the Heritage Foundation, the problems in Greece, Ireland and Portugal are similar to the problems in California, Arizona, Illinois, Michigan, Kentucky, Louisiana, and New Jersey. Include union/pension funding/benefits and other post employment benefit obligations and debt in your evaluations.

  4. Separate the Googles from the GMs: Evaluate your Corporate Bonds using the Stock Report Card and by asking the Four Questions. (These are both outlined in my book, You Vs. Wall Street.) There have already been a lot of bankruptcies (Lehman Brothers, Blockbuster, airlines, automakers and more) and bailouts (all of the major U.S. banks + AIG), and there are a large number of legacy corporations that have a heavy load of debt, pension and Other Post Employment Benefit obligations. Most quarterly earning reports include the pensions, debt and OPEBs at the end of the report in the fine print. However, you may have to go to the Edgar database of SEC.gov in order to ensure that you are completely aware of the load the company is carrying. (Companies that are heavily burdened with debt and obligations, almost to the point of bankruptcy, can still turn a profit for the quarter, so don’t rely just on the headlines.) You can read my full analysis of Google and General Motors (which was written three years prior to the GM bankruptcy) in the chapter "Hitch Your Wagon to a Star" of You Vs. Wall Street.

  5. Water Revenue versus Missing Revenue: Evaluate the Revenue Bonds considering the source of the revenue. Ask yourself, "Will this particular revenue stream be strong if we continue to experience high unemployment?" In tough times, people prioritize their spending. The water bill may be a staple, while the nuclear power plant bond may be a bad bet, particularly given the Japanese nuclear disaster. According to PublicBonds.org, "The largest default in the history of the municipal bond market was the Washington Public Power Supply System's (WPPSS) default on $2.25 billion in bonds. WPPSS launched a risky program to build five nuclear power plants in the 1970s to supply electricity to the Pacific Northwest. Only one of the five planned nuclear plants was ever completed."

  6. Bond Funds. Funds, in general, are a way to overcome risk by spreading your exposure across multiple municipalities and corporations. However, when an entire industry comes under attack, the fund will lose value. Real estate funds lost half (or more) of their value between 2007 and 2009.
Performance of Real Estate Funds Over the Last 10 Years

Source: Money.MSN.com

Bonds are just beginning to experience a squeeze in both interest rate and credit risk, and bond funds have already began to dip. You’ll notice the big dip that occurred between January 2008 and March 2009, when credit risks became bankruptcies, bailouts and defaults in major corporations, like General Motors, Chrysler, Lehman Bros., AIG, Bear Stearns, Washington Mutual and hundreds of U.S. banks.

Performance of Bond Funds Over the Last 5 Years

Source: Money.MSN.com

In general, there are safer investments today than paper assets – like cash-positive hard assets. You need to be smart about the headwinds in the bond marketplace. If you do wish to hold bonds, keep the term short, the credit-worthiness high and scrutinize your holdings like a father evaluating the fiancée of his only daughter.

Other Articles of Interest:
"The Gold Crash of 1980." By Natalie Pace. A Brief History of Gold.
"Bonds, Bond Funds and T-Bills: The Next Disaster." By Dr. Marc Miles and Natalie Pace.
"Don't Get Fooled Again," from Sept. 2010 ezine, vol. 7, issue 8.

 

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on Facebook.com/NWPace and on YouTube.com/NataliePaceDOTCOM. For more information please visit NataliePace.com.

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 all in on any asset class or individual stocks. 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.  

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.


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State Bond Defaults: Today’s Reality.

Op-Ed By Dr. Marc Miles.

Summary

• Unlike municipalities and other government entities, states cannot declare bankruptcy. Yet states can default and even repudiate their bonds, and when they do bondholders have little if any legal recourse to recoup their losses.
• Even dramatic policy reductions in state pension promises are unlikely to eliminate underfunded liabilities, meaning many states are closer to default than the market believes.

Dr. Marc. Miles.

Recent headlines have documented the budgetary plights of Greece, Ireland, Portugal and Spain, their EU bailouts, and the impact on their bond markets. However, the same problems are looming closer to home. States like California, New York, and Illinois are attempting to claw their way out of seemingly bottomless budgetary pits. Illinois recently raised state income taxes to partially close their budget gap, while legislators decided to just borrow the rest in the bond market. Economic theory implies that the tax rate increase could boost the prospects of neighboring Wisconsin and Indiana at the expense of Illinois as more businesses and people respond by drifting away from the tax hike. More borrowing simply kicks the can down the road, making future solutions even harder.

California is facing a $26.6 billion deficit in fiscal 2012. Governor Jerry Brown is hoping that first the legislature and then the residents of California will approve a five-year continuation of "temporary" tax hikes to accompany promised spending cuts. According to static revenue projections, the higher rates would add about $11 billion to state revenues. The governor also wants an additional $3 billion in tax increases. The actual revenue impact, however, is likely to be considerably less as incentives shift more economic activity to other states just as in the Illinois case. The remaining $15.6 billion deficit would be covered by a promised reduction in general fund spending through program cuts, borrowing and fund shifts.

The hope of many residents is that if states fail to reconcile their budget gaps, pushing borrowing to the limit, the United States government will jump in to bail them out. (Something similar happened during George Washington’s administration, when Alexander Hamilton convinced Congress to assume the Revolutionary War debts of the 13 colonies.) Not likely.

Today the U.S. government is already spending the equivalent of the total tax receipts at the federal, state and local levels in the U.S. There’s nothing left over for a bailout. At best the U.S. could borrow to bailout the states, but that’s just trading one form of debt for another, threatening higher interest rates on the entire U.S. debt and redistributing the burden to the grandchildren in all states, not just the offending one. Watch the political fallout/revolt should that occur!

So states may be left with only one option should they fail to bite the bullet and clean up their mess – default on their obligations. If so, what can we expect?

State Protection From Bondholders
One thing that will not happen is a state declaring bankruptcy. State defaults are different from those in municipalities and smaller government entities. While the Municipal Bankruptcy Act of 1937 provided municipalities protection through Chapter 9 of the Bankruptcy Code, there is no equivalent protection for states, for that would violate the Tenth Amendment’s guarantee of sovereign powers of the states.

Instead of declaring bankruptcy, states can default on or even repudiate their debts. The most likely option if a state is unable to continue servicing its debt is for the state to defer payments, extending the original length of the bond. Moreover, because states are sovereign, suing them for restitution is quite difficult, if not impossible. Thus bondholders have very limited recourse. Should a state default on its debt, there may not be a way for bondholders to sue effectively, but as voters, bondholders have more leverage to throw out the rascals responsible for the default. No politician wants to face such angry voters!

The Best and the Worst
California has the worst bond rating of any state. S&P’s best and worst ratings among states are shown below. Notice that California and Illinois are the only two states with a version of single A ratings. There are four states (New Jersey, Michigan, Kentucky and Louisiana) with the next lowest AA- ratings. There are 18 states with AA ratings and 12 states with AA+ (these are not shown).

Worst and Best S&P Bond Ratings Among States
Worst

State

Rating

California

A

Illinois

A+

New Jersey

AA-

Michigan

AA-

Kentucky

AA-

Louisiana

AA-

Arizona

AA-

Best

State

Rating

Delaware

AAA

Florida

AAA

Georgia

AAA

Indiana

AAA

Iowa

AAA

Maryland

AAA

Minnesota

AAA

Missouri

AAA

North Carolina

AAA

Utah

AAA

Virginia

AAA

States’ Ticking Time Bomb
States’ general obligation bonds are only one possible source of default. Another prominent problem is the inability to pay retirees promised pension, health care or other benefits. The Pew Center on the States analyzed the fiscal shape of just the pension promises in 2008 for all 50 states. In terms of defined benefit promises alone, the states with the largest underfunded liabilities were Illinois and Kansas, both with less than 60 percent of the required assets to meet their long-term pension liabilities. These were followed by six other states (Connecticut, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia) that had slightly better funding, but still less than two-thirds of that required.

Percentage of Accrued Liabilities Funded
Smallest

State

Percentage Funded

Illinois

54

Kansas

59

Oklahoma

61

Rhode Island

61

Connecticut

62

Massachusetts

63

Kentucky

64

West Virginia

64

Largest

State

Percentage Funded

New York

107

Florida

101

Wisconsin

100

Washington

100

North Carolina

99

Delaware

98

South Dakota

97

Tennessee

95

Idaho

93

Georgia

92

Nebraska

92

Texas

91

Four states (Florida, New York, Washington and Wisconsin) had fully funded pensions. 37 other states had funding above the recommended 80 percent.

Altogether the underfunded liabilities in this study total $1 trillion dollars. The Pew Center pointed out that this total is a conservative number. Subsequently Joshua Rauh of the Kellogg School of Management Northwestern University and Robert Novy-Marx of the Simon Graduate School of Business University of Rochester estimated just how conservative the number is. Their primary point is that most state pension funds use a discount rate of 7.5 – 8.5 percent. This assumption is clearly unrealistic given today’s low interest rates. Instead they recomputed the net liabilities using two potential, more realistic measures – the taxable municipal bond yield curve for each state and the Treasury yield curve. Using data for June 2009, they estimate that the $1 trillion underfunded figure grows to about $1.8 trillion using the muni curve and balloons to about $3 trillion with Treasury rates.

Conclusion
It is too late for even drastic reforms to eliminate the country’s state pension problem. Given that bankruptcy is off the table, the most likely option if a state is unable to continue servicing its debt is for the state to defer payments, extending the original length of the bond. States in the worst shape may legislate large tax increases in an effort to shore-up their financial position. When taking into account the financial position of some states, and their likely response to serious budget problems, the probability of a state default in the most indebted states of some form is quite high.

 

About Dr. Marc Miles
Marc Miles is the former Editor of the annual Heritage Foundation/Wall Street Journal Index of Economic Freedom.  Prior to that he spent almost 20 years advising large institutional money managers on changing trends in the U.S. and global markets.  He holds B.A., M.A., and Ph.D. degrees from the University of Chicago and a M.Sc. degree from the London School of Economics.


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Microsoft: Breaking the Cycle of Poverty in Kenya.

by Natalie Pace.

The more you learn; the more you earn. It’s easy for anyone to understand that a surgeon makes more than a gardener. However, like most "easy" things, the devil is in the details. How does a disadvantaged teen, who is living in a lean-to in a remote village in Kenya, gain access to a college education, when most of her peers become parents in high school? How does the family, who is accustomed to having the kids do daily chores, invest in a future job that is ten years away from earning its first dime?

Fortunately, there are corporations and executives who are committed to solving these challenges and who are making it possible for smart, motivated, but disadvantaged teens around the world to get the education they need to transform their lives and families.

Meet Khadija Said
Two years ago, Khadija Said, a teenager from the slums of Mombasa, rapped about the empowerment of girls before President Obama graced the stage of the 2009 Clinton Global Initiative Meeting in New York City. Khadija was there as a scholar/member of the Global Give Back Circle. She was just one of 35 girls who had received the mentors, shoes, feminine products, workshops and funding that the Global Give Back Circle provides in order for their scholars to excel in high school and transition into college graduates (and future benefactors of other young women).

Photo: Khadija Said shakes the hand of President Clinton, with Linda Lockhart, the founder and executive director of the Global Give Back Circle and Caroline, another GGBC member, looking on.

Khadija was thrilled to be onstage, but equally worried that when she went back to Kenya, in just a few days, she would watch so many of her sisters walk back into the circle of poverty because they did not have the support that she had to go straight to college. As you can imagine, many young women never return to college after the gap year back home, finding themselves young mothers, trapped in the same cycle of poverty they were born into.

 

 

 

 

 

President Clinton’s Global Initiative

Photo by: Linda Lockhart.

Magic happens when opportunity meets ability, and there is no place that facilitates more magic than President Clinton’s annual meeting of the Clinton Global Initiative in New York City every September. There the world’s largest corporations -- like Microsoft -- take meetings with the world’s most innovative social entrepreneurs -- like Linda Lockhart, the founder and executive director of the Global Give Back Circle -- to create powerful results. This is where Khadija’s opportunity was born.

According to President Clinton, "I launched CGI in 2005 to help turn good intentions into real action and results." In less than six years, CGI commitments have improved the lives of nearly 300 million people in more than 170 countries. When fully funded and implemented, these commitments will be valued at $63 billion. From clean water, to education, to health care, to clean energy, CGI partners reforest, build computer labs and solar power plants, create jobs, empower young women and much, much more.

As Pamela Passman, Corporate Vice President and Deputy General Counsel for Microsoft's Global Corporate Affairs, explains, "A couple of years ago, we were at the Clinton Global Initiative and I got a note that Linda wanted to meet with us about her program. I met with her in New York City, and then simply handed the information to our local team in Nairobi. Nine months later, Linda sent me a note to let me know the amazing things that our team in Nairobi had done."

The Microsoft Internet Lab in Kenya provides nine months of Internet training to the Global Give Back Circle’s high school graduates, who would otherwise be returning to their villages for their gap year. Thanks to Microsoft and a small note slipped by Pamela Passman to her team on the ground in Kenya, the GGBC scholars now spend their gap time learning Internet skills, writing scholarship applications, winning full-rides to universities around the world, conducting HIV/AIDS awareness clinics in their villages and preparing to become doctors, computer programmers and CEOs. Some even enjoy a luncheon with President Clinton, like Khadija Said did this April in San Diego, at the Clinton Global Initiative University.

If the collaborative projects that are germinated at CGI are successful, then more money typically follows. And fast... Khadija is on the Dean’s List at the American University in Dubai, where she is a Clinton Scholar with two of her colleagues, Mary and Caroline. 77 GGBC scholars are in college and 60 are currently in the Microsoft IT Course. Girl retention is 90%, mentor retention is 85% and private sector retention is 100%. The results of the Global Give Back Circle, thanks in large part to corporate sponsors, like Microsoft, have been so impressive that the GGBC program in Kenya (implemented by the Kenya Community Development Foundation) recently was awarded a $3.5 million USAID sponsorship to increase the number of scholars to 535 (from an initial 35 girls in 2008). The next country of focus, according to GGBC founder Linda Lockhart, will be Haiti.

However, Khadija is not content to stop there. The Global Give Back Circle vision is to turn beneficiaries into benefactors, and each young woman takes an oath to do just that when they come into the program. Khadija has become so confident in her IT skills, that she, along with other scholars in the Global Give Back Circle, is launching a new website, called Hey Sister: Get Clued Up. This website is a Clinton Global Initiative University commitment, and the GGBC scholars are looking for a corporate sponsor to help them build and maintain it. The site will be a resource and networking center for Kenyan girls, with a focus on financial literacy, health and social networking etiquette, so that more Global Give Back Circle scholars can become the voice of their village, as Khadija is.

Linda Nyakundi, Wilkista Onyango, Khadija Said and Vivian Onano Global Give Back Circle members.

So, behind the scenes, there are many people, many corporations, many nonprofit organizations, many world leaders, many mentors and a lot of time, talent and money working hand in hand to make the simple idea, "the more you learn; the more you earn," possible for young, underserved women, like Khadija. And if Khadija and her Sisters are successful in launching the Hey Sister: Get Clued Up! website, then another 10,000 young Kenyan women will climb on board the fast track to prosperity within the next year.

Another Article of Interest:
"Clinton’s Final Four." By Natalie Pace. HuffingtonPost.com/Natalie-Pace.

 

 

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on Facebook.com/NWPace and on YouTube.com/NataliePaceDOTCOM. For more information please visit NataliePace.com.


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Self-Employed? There's More Than One Way to Save for Retirement.

by Carrie Schwab-Pomerantz, CFP®, President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.

April 20, 2011

Dear Carrie,

I'm 42 years old, self-employed and just starting to save for retirement. Are there limits on how many IRA accounts allowed? I'm considering a SEP. What is the contribution limit and is it based on my gross income or net income?

—A Reader


Dear Reader,

Carrie Schwab-Pomerantz

First, kudos for getting serious about saving for retirement. At age 42, you've still got lots of earning years ahead of you, but no time to waste, either. Assuming you'll want to retire in about 20 or 25 years, and then live off your savings for 30 years after that, you need to think about saving about 25 percent of your annual income.

This is a tall order, no doubt. But the good news is that because you're self-employed, you have lots of options available to you. Let’s take a look.

How a SEP-IRA works

One great option is a Simplified Employee Pension Plan (SEP-IRA), which is specifically designed for self-employed individuals and small business owners who want to save more but keep paperwork to a minimum. It's easy to open and lets you make fairly high annual contributions. It also gives you the flexibility to vary contributions—or skip them entirely—according to your yearly business needs.

You don’t say if you have employees, but if you do, you will need to make equivalent (percentage-wise) contributions on their behalf. So be sure to factor that in.

A big plus of a SEP-IRA is that it allows you to sock away a significant chunk of money; after a fairly convoluted calculation, the maximum works out to be 20 percent of your net income after subtracting self-employment tax—but no more than $49,000 for both 2010 and 2011 (up to the due date of your return, plus extension). While there are online calculators to help you determine your maximum contribution, it's probably wise to get your exact figure from your accountant.

Once your SEP is up and running, it works like an IRA. Contributions are tax deductible, earnings grow tax-deferred, and you won't pay income tax on either until you withdraw them. And just like an IRA, you can make withdrawals penalty-free at age 59½.

A couple of other choices
You might also look into an Individual 401(k). Your yearly contribution could potentially be higher and you're allowed to borrow against your balance within certain limitations.

If you have employees, A SIMPLE IRA (Savings Incentive Match Plan for Employees) allows both employees and employers to contribute to traditional IRAs set up for employees. It's ideally suited as a start-up retirement plan for small businesses. Your tax advisor can help you weigh the pros and cons of your different choices.

Adding another IRA
Having a small business retirement plan doesn't prevent you from opening an individual IRA. Depending on what you qualify for and what makes the most sense tax-wise, you could also make a maximum total yearly contribution of $5,000 to either a traditional IRA, a Roth IRA or a combination of the two.

You can contribute to a small business plan and still get a full tax deduction for a traditional IRA contribution as long as your income falls within a certain range. For single filers in 2010 and 2011, adjusted gross income must be $56,000 or less. The tax deduction phases out between $56,000 and $66,000. For married filing jointly, the limit is $89,000 in 2010 ($90,000 in 2011) with the phase out between $89,000 and $109,000 (and between $90,000 and $110,000 in 2011).

As you may know, there's no upfront tax deduction for contributions to a Roth, but withdrawals at age 59½ are tax-free. However, your eligibility also depends on income. The income limit to make a full Roth contribution in 2010 is $105,000 ($107,000 in 2011) for singles, $167,000 ($169,000 in 2011) for married filing jointly.

If you expect to be in a lower tax bracket later on, a traditional IRA probably makes the most sense. On the other hand, if you expect to be in a higher tax bracket at retirement time—and you qualify—a Roth is a choice worth considering.

Crunching the numbers
Bottom line, while there's no specific limit on the number of accounts you can have, there is a limit on the amount of tax-advantaged contributions you can make each year. So I'd first talk to your accountant or tax advisor to see what combination of accounts gives you the best savings and tax advantages. Then make a commitment to fund them to the maximum you can afford.

If you can save beyond the limits of your retirement plan and individual IRA, open a taxable brokerage account and ramp up your savings even more. You've got a bit of catching up to do, but it sounds like you're ready to get started. Good luck!



Important Disclosures
The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review a security transaction and investment strategy for his or her own particular situation. Data contained here is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.

.


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Should You Get a Divorce?

by Natalie Pace.

"You need trust in any relationship, much less a marriage," actress Eva Longoria, speaking about her divorce from Tony Parker, on the Piers Morgan show, April 7, 2011.

Natalie Pace.

Should you get a divorce? Some experts (mostly religious) would say, "No. Never." On the other hand, in some countries, you can get a divorce simply by saying "I divorce you" three times (if you're a man). So the range of divorce runs very extreme -- from extremely difficult to far too easy -- and knowing whether or not your issues rise to the level of ending the solemn vow, ‘til death do us part,’ is a choice no one should take lightly.

Below are eight considerations that help you to determine what is normal in the ebb and flow of long-term companionship or whether it’s time to leave. Divorce is one of the most difficult things you’ll ever do, but sometimes that is exactly what is necessary to raise healthy children and live a worthwhile life.

1. Domestic Violence
This is a very easy call. If your partner has hit you, screamed at you or stalked you, it’s time to get educated on domestic violence, even if it has not (yet) risen to the level of injury. Why? Because abusers are trapped in a cycle of abuse, remorse, and recurrence, and the episodes tend to become more frequent and violent if action is not taken. Abuse can be physical, verbal, emotional, psychological, spiritual, monetary or sexual. If you don’t know whether your spouse’s frequent bad moods are warning signs of coming horror show attractions, then check out the Ocean Park Community Center’s website at OPCC.net. There are a lot of resources there.

One thing for sure, if your spouse is loving and honoring you, then you would not be questioning whether or not s/he is abusing you.

2. Constant Bickering
We’ve all known The Bickersons – that couple you never want to get caught in the middle of at a party. Some of them are passionate allies who love a heated debate, while others are in serious trouble in their marriage. Bickering is a symptom, but it is not the problem. (Yelling, hitting and demeaning are a problem. That’s abuse.) What’s key is to discover what it is that you are arguing about all the time and determine, with the help of a professional and additional resources, whether that dis-ease in the marriage can be cured or not.

3. Lackluster Love Life
If everything else is going right in your marriage, but the love life is on the ropes, then, believe it or not, there is still hope. Passion is a casualty of routines and the tedious discussions about who left the toilet seat up, who didn’t get the OJ after work, who will drop the kids at soccer practice, who forgot to pay the cell phone bill, etc... Date nights once a week are a great start (where there is no discussion of the kids or bills). But if you really want to improve your sex life, start by improving your relationship with your own mind and body. Start dancing, exercising, working out, etc. and you’ll find that feeling better and looking better are closely aligned with having more fun between the sheets. If you are already in great shape, it may be your soul/heart that needs more of a workout, so try a new hobby, job or charity. When you feel great about yourself, that is very sexy. If your partner doesn’t notice the shift, then there is very likely another problem in the mix.

And, if the issue is clinical, take Tony Curtis’ advice. There are more than 50 ways to please your lover.

4. Cheating
Believe it or not, although adultery is one of the Ten Commandments, traditional wedding vows say nothing about being monogamous. Various sex surveys have claimed that about 28% of married men are cheaters, while 18% of women are. So, is this a deal breaker for you? If you are religious, then it probably is and you should have no problem filing for divorce and getting the emotional support that you need from your community and family. With a cheater, you are at greater risk for sexually transmitted diseases (STDs) than a monogamous couple is and that is a big consideration. However, there are high profile people worldwide, throughout history, who have had very public bouts with their cheating spouses, and have opted to stay in the marriage. (Secretary of State Hillary Rodham Clinton comes to mind.) Why? Some do it for the sake of the kids. Others for the public, financial and social benefits. The Duchess, a film, tells the story of the Duke and Duchess of Devonshire, and Lady Elizabeth, from 18th century England, while Why I Stayed by Gayle Haggard tells the story of a preacher’s wife who chose not to leave her cheating husband. If you have a cheater, however, then chances are you are dealing with other problems as well...

5. Financial Infidelity
The money habits of your spouse can gravely impact your life – more than almost anything else, so this is one of the most serious considerations for divorce, outside of domestic violence. Are you living with a spendthrift or a gambler? A person who hides money from you, won’t let you buy anything or keeps you living in poverty or at an income level that is lower than his/hers? The sad truth is that single mothers are the biggest group living in poverty in the United States, and too many abused women are afraid to leave because they feel that they can’t afford to. Community property is handled differently state to state, but at minimum, it is very important to have a bank account in your own name, to have your name on the family real estate, to have your own Individual Retirement Account (s) and 401Ks and to approve all of the investments that your spouse is plunking down money for. It is also important that each of you has money of your own that you can spend (within reason) without getting approval from the other.

Stay-at-home spouses are usually the most vulnerable and undervalued in the marriage, so if you are a stay-at-home spouse, it is even more important that you value yourself, the contributions you make to the marriage and that you put your name on what is rightfully yours. After all, if the stay-at-home spouse were paid for all of the jobs s/he performs as Chief Everything Officer of the family – cook, personal shopper, tutor, nanny, housecleaning, accounting, valet service and more – the family couldn’t afford him/her. And no person in the family should be living at an income level below the breadwinner. The sad truth is that the spouse who treats you sub-class in the marriage is also more likely to leave you within nine years, due to the 10-year rule.

6. The 10-Year Rule
If your marriage is long-term, defined by many states as 10 years or longer, then the spouse that earns more money might end up paying alimony for life, or until the ex re-marries. If your spouse is itching for a divorce after 9 ½ years of marriage, it could be the 10-year rule they are trying to duck under, to minimize the alimony. So, be aware of what the laws are in your state because divorce laws vary widely across the nation. Many states have general divorce guidelines available for free online.

7. Religious Considerations
If you are religious, then chances are you will consider your priest, bishop, preacher, etc. to be the supreme authority. If serious conditions are present -- such as domestic violence, which most abusers will lie, lie, lie about until they die – then you owe it to yourself to get educated and informed by a professional as to the probability of having a happy ending to your very real problem.

8. Addiction
Whether you are dealing with drug, alcohol, sex, bro-mance, porn, Farmville or gambling addiction, addictive personalities will create all kinds of problems in the marriage. Many times, you get the trifecta -- they cheat, gamble and abuse you. The success rate for rehab is low, but not zero. If you’ve already tried getting help multiple times, and you are trapped in the cycle of abuse, regret, apology and recurrence, then, at minimum, it is time to separate. If kids are involved, the biggest consideration is breaking the generational cycle – creating a healthy home for the family that is not centered around the drama and tragedy of the addict. If you don’t have kids, you have to ask yourself why you want to have a home polluted by addiction instead of a sanctuary where your soul can rejuvenate daily. If the addict is serious about keeping the family together, then s/he will need to address her problems and mend her issues outside of the family home. Setting ground rules before the addict returns, and consequences for breaking the rules, is important to make sure you don’t fall back into old patterns. Getting emotional support for yourself, to ensure that you don’t adopt a new addict to cure, is also paramount.

There is a big difference between all and nothing. For most people, the only way they can objectively contemplate whether or not a permanent break – divorce – is the right answer is by having time apart first. Be aware, however, that once you separate, it may be your spouse who wants to put the divorce into hyper-drive. Which is why you need to evaluate whether or not your bickering is normal (and curable) or symptomatic of a toxic home life, which needs a complete remodel, before you do anything.

There are some essential actions you should do prior to leaving, if you determine that is the best choice, and I’ll address those in another article. Of course, if you or a family member has been harmed, then you need to get safe, have the abuser arrested (so that anger management will be addressed) and consider filing a restraining order.

 

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on Facebook.com/NWPace and on YouTube.com/NataliePaceDOTCOM. For more information please visit NataliePace.com.


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Take Control of Your Financial Future: Tips to Think About at Tax Time and Beyond.

by FINRA.org.

During tax filing season, many of us spend a great deal of time focusing on our finances—and we are not always happy with what we see. According to the FINRA Investor Education Foundation’s recently released State-by-State Financial Capability Survey, only one in six (16 percent) reported being satisfied with their current financial condition. 

The survey closely examined how Americans save, borrow, plan for the future and make financial decisions. It also measured financial literacy, including facility with numbers. Across each of these five dimensions, survey findings underscored the need for all Americans to take greater charge of their financial well-being. 

No matter the season, now is the time to take stock of your finances. Here are some tips you can use:

  1. Get a Grip on Saving Versus Spending. Individuals who are not balancing monthly income and expenses may find themselves struggling to make ends meet.

    - Track your monthly spending.
    Sixty-one percent of survey respondents reported facing difficulties covering monthly expenses and paying bills. And household expenses have been greater than income for one in five Americans (20 percent). FINRA offers resources to help you calculate monthly cash flows.


    - Avoid overdrawing accounts. Over one-quarter (26 percent) of survey respondents with checking accounts reported overdrawing their accounts on occasion. While overdraft protection may seem like a helpful feature on a checking account or debit card, overdraft fees can add up. To protect yourself, balance your checkbook regularly, and opt out of programs that automatically approve ATM and debit card transactions. For more on how to avoid overdraft fees, read the Federal Reserve’s New Overdraft Rules for Debit Cards and ATMs.

  2. Dial Back Your Debt. Sound borrowing practices and management of financial products are crucial to financial capability.

    -
    Handle credit cards wisely. More than two in three (73 percent) of survey respondents reported having credit cards. Of these, most (56 percent) carried a balance and paid interest each month—and as many as 40 percent reported paying only the minimum due. Try always to pay your credit cards in full—and, if you cannot, at least pay more than the minimum due. Every dollar you pay above the minimum payment can dramatically reduce the amount of interest you will pay. Learn more about how to deal with credit card debt.

    - Avoid the Money Drains. In the state-by-state survey, almost one in four Americans (24 percent), reported using alternative forms of borrowing, such as auto title or payday loans, advances on tax refunds, pawn shops or rent-to-own plans. These borrowing methods are likely to charge higher interest rates than those charged by banks, credit unions or credit card companies—and they are used disproportionately by the unbanked. To get started with a federally insured account, read FINRA’s Bank Products.

  3. Plan for Known—and Unknown—Expenses. Being able to weather unexpected financial shocks not only contributes to your own financial stability but helps the stability of the economy as a whole.

    - Start an emergency fund. The state-by-state survey found that only 35 percent of American adults have set aside sufficient emergency savings to cover expenses for three months in the case of sickness, job loss, economic downturn or other emergency. To get started, aim to set aside at least one month (and preferably three to six months) of your current salary in a federally insured savings account—and don’t touch it unless absolutely necessary. Learn more about creating an emergency fund.

    - Take advantage of tax breaks for college savings. While funding a child’s college education is one of the more predictable expenses many families face, the state-by-state survey found that less than one-third (only 31 percent) of respondents with financially dependent children have money set aside for college. Of those who are saving for college, only 31 percent reported having used a tax-advantaged savings account, such as a 529 Plan or Coverdell Education Savings Account. Learn more about smart strategies for saving for college.

    - Contribute to a retirement plan. Contributing to a retirement plan, like a 401(k) or IRA, can mean the difference between a financially secure retirement and the specter of running out of money. These plans offer tax benefits and the opportunity for your savings to compound over time. If you have an IRA, you still may be able make a contribution for 2010. If you have a 401(k) plan at work, sign up today and start to save. For more information on saving for retirement, read FINRA’s Smart 401(k) Investing.

  4. Look Around—and Look Out—Before Making Financial Decisions. Taking time to ask questions about and to compare the terms, costs and risks of the financial products and services you use is one of the best ways to protect against costly mistakes.

    - Shop around for financial products. When it comes to choosing financial products—such as credit cards, auto loans or mortgages—most Americans either do not comparison-shop or conduct only limited searches for the best prices or terms. For example, 62 percent of survey respondents said they did not compare credit card offers. Whether for credit cards, loans or investments, comparing costs and terms can save you money.

    -
    Guard your wealth. According to the survey, only 14 percent of those who have worked with a financial professional reported that they had checked the professional’s background or credentials with a state or federal regulator.  Investing a few minutes of your time to take this essential step up front could save you time, money and other trouble down the road. FINRA BrokerCheck is a free tool that allows investors to check the professional background of brokerage firms and individual brokers. Learn more about checking out investment professionals.

  5. Know Yourself and Resolve to Keep Learning. Financial literacy strongly correlates with behavior that is indicative of financial capability, including planning for retirement, having emergency savings and minimizing credit card fees.

    -
    Check your credit report and score. You need to do both. Only 42 percent of survey respondents stated that they had obtained a copy of their credit report and only 41 percent had checked their credit score within the past 12 months.  With credit hard to obtain and identity theft a continuing problem, it is critical to verify whether your credit history is accurate and correct any discrepancies immediately. Learn more about how your credit score affects you and what helps and hurts your credit score. For your free credit report, call (877) 322-8228 or visit AnnualCreditReport.com.

    - Learn more about saving and investing. On average, individuals answered 3.0 out of five financial literacy questions correctly—and among those aged 18 to 34 year old, the results were grim: only 2.6 correct questions on average.  FINRA has tools and resources to help investors of any age and circumstance get on the right track. Visit the FINRA Investor website today.

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

 

About FINRA:
The Financial Industry Regulatory Authority (FINRA), is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,800 brokerage firms, about 170,400 branch offices and approximately 643,000 registered securities representatives.

FINRA believes investor protection begins with education. Using the Internet, the media and public forums, we help investors build their financial knowledge and provide them with essential tools to better understand the markets and basic principles of saving and investing.


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The Perfectly Timed 3-Minute Nest Egg.

Investors Ask Natalie About Market Timing and Stop Losses.

Dear Natalie,

Another Wall Street guru told me to sell on April 30th and buy back on October 1st. Does he mean that I should be trading the mutual funds in my IRA this way? He also talked about setting stop losses to limit my losses. How do I determine the best price point to set the stop loss at?

Signed,

The 3-Minute, Perfectly Timed Nest Egg

 

Dear 3-Minutes,

I recently read a report that the average stock was being held for less than a minute, so your market timing strategy may be longer than most folks these days, but it will not give you a tasty nest egg. I’ll explain why in greater detail below, but before I do, let me give you the 411 on stop losses.

Set Stop Gains
With regard to stop losses, why in the world would you desire to lock in your losses? Why not set stop gains instead? As you can see in the below chart, the markets are extremely volatile. If you are setting stop losses, then you are going to get stopped out quite a lot (i.e. lose your money), whereas if you waited a few days, you’d be in the money. On the other hand, if you are setting stop gains, you have multiple profit-taking strategies! Which is the best way to make money?

 

 

 

The Performance of the Dow Jones Industrial Average and NASDAQ
January 1, 2011 to April 27, 2011

Source: Money.MSN.com

The Bottom Line on Buy and Sell Strategies

  1. For your investments in individual stocks, take your profits early and often. Set stop gains, not stop losses.
  2. For your nest egg, diversify, keep at least a percentage equal to your age safe, know what is safe (i.e. not stocks or bond funds), add in hot industries, avoid the bailouts and rebalance 1-3 times a year.

Stocks on Steroids
With individual stocks, the primary concern is "picking the frog that can jump" and then buying low and selling high.  I outline this strategy extensively in my book You Vs. Wall Street, so if you want to learn the perfect formula for picking winners and making profits, read the chapters on "The 3-Ingredient Recipe for Cooking Up Profits," "The Magic of Stock Report Cards," and "Hitch Your Wagon to a Star."  There are also a number of chapters on buying and selling strategies that include the best months and seasons for buying and selling, in general.

I disagree with your guru on the April 30 sell date, especially now, because May has been one of the top performing months of the last decade.  May earned 5.31% in 2009, 3.27% in 2007, and 3% in 2005. I would rather see you "taking your profits" at the end of May, rather than the beginning.

Additionally, January and February were two of the worst months of the last decade, so evaluate your SOS profits in mid-January, rather than waiting for the end of May.  If the markets drop significantly in Jan and Feb, as they have been doing for the last decade, then you are in a position to do another short-term profit-taking trade by selling in January, buying low at the end of February and then taking your profits again at the end of May.

Average Monthly Returns of the S&P500

1991 Through 2010

Month

20 years

10 years

5 years

January

0.09%

-1.61%

-2.89%

February

-0.56%

-2.37%

-2.75%

March

1.28%

1.05%

3.19%

April

2.01%

2.71%

4.23%

May

0.96%

0.66%

-0.46%

June

-0.66%

-2.26%

-3.15%

July

0.605%

0.062%

2.12%

August

-0.40%

-0.18%

0.65%

September

-0.07%

-0.94%

1.86%

October

1.61%

1.44%

-0.23%

November

0.54%

1.66%

-0.95%

December

2.00%

1.25%

1.9%

Source: Standard and Poor’s data, Natalie Pace data crunch © 2011

Annual Rebalancing
With regard to the funds you hold in your nest egg, I prefer what I call "rebalancing" to outright selling.  The market timing suggested by your friend was a strategy that worked okay last century, but has been killed in the new millennium. October 2007 was the beginning of the Great Recession and a slide down to a new 10-year low, set on March 9, 2009. If you sold at the end of April, near the lowest point the market had been at in over a decade, you would have locked in 30-50% losses, at the worst moment possible. Your nest egg would have to crawl back at half the speed of someone who had simply reduced losses by keeping enough safe. (This is outlined in greater detail in my article, "NASDAQ is Trading at a 10-Year High," in this ezine.)

The Performance of the Dow Jones Industrial Average and NASDAQ

Ten Years

Source: Money.MSN.com

Your guru is right to note that buy and hold doesn’t work anymore and cannot be relied upon, but neither does market timing. Buy and hold investors have a stock portfolio worth less today than it was 10 years ago. Not a good plan! What does achieve superior results is: 1) keeping a percentage to your age safe, 2) diversifying with 10 funds – small, medium, large, value and growth and 4 hot industries, 3) avoiding the bailouts, and 4) annual rebalancing. This may sound complicated, but it is easy as a pie chart.

Essentially, if you have a nest egg (IRA) that is properly diversified and you have rebalancing appointments at the end of May, at the end of September and again in the beginning of January, then you can easily see where you need to take your profits and where you need to buy a little more to beef up your slice of the pie.  During recessions, when stocks will lose value, you will be buying low to fill in the slices of your pie chart that have slimmed down too much. During bull markets, you will be taking your profits, so that you can put more of your money safe. In that way, annual rebalancing is an easy way to buy low and sell high in your nest egg and achieve superior gains.

Once a year, you decide what the new hot industries are (say in October), and then 2-3 times a year, you simply make what you have look like the pie chart you are supposed to have.

For additional information, read You Vs. Wall Street. Also, I want to point out that the most important part of your nest egg today is the safe part, and that is becoming very vulnerable. Be sure to read my article, "Are Bonds Safe?" in this ezine, too.

FYI: If you wish to learn and implement these strategies right away, I have a retreat June 4-6, 2011 in Santa Monica, CA.  Get more information at the Get Rich and Enrich flyer on the home page at NataliePace.com.  Early Bird pricing is now through April 30, 2011 only, and you save $500 when you bring a friend!

 

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on Facebook.com/NWPace and on YouTube.com/NataliePaceDOTCOM. For more information please visit NataliePace.com.

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 all in on any asset class or individual stocks. 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.  

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.

 


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NASDAQ is Trading at a 10-Year High. So Why Isn’t Your Nest Egg?

by Natalie Pace.

General Stock Market Performance

Monday, 1.2.2008

Wednesday, 4.27.2011

Gains

Dow: 13,044.12

Dow: 12,647.29

-3%

Nasdaq: 2,609.63

Nasdaq: 2,855.58

+9%

 

NASDAQ is higher than it was before the Great Recession and the Dow is almost back in the black, too. So why is your nest egg still in the red?

Because 10 percent return on ten dollars is a dollar, whereas 10 percent return on five dollars is only 50 cents. So, if you lost half in 2008, you are crawling back at half the speed of someone who kept a percent equal to their age, or more, safe.

You can see this illustrated in the below chart.

What Happens to a Million Dollar Portfolio in a Recession

Year

Dow

NASDAQ

Fool-Proof Nest Egg

2008

$1 million

$1 million

$1 million

2009

$690,000

(-31%)

$630,000

(-37%)

$944,697

(-6%)

2010

$793,500

(+15%)

$882,000

(+40%)

$1,128,726

(+19%)

2011

$904,590

(+14%)

$1,040,760

(+18%)

$1,266,659

(+12%)

TOTAL 3-Year Gains

-10%

+4%

+27%

Source: NataliePace.com

As you can see from the chart above, NASDAQ is recovering at twice the speed of the Dow Jones Industrial Average, however, because you were earning gains on a smaller principal, your million dollar account is barely above even. The Dow Jones Industrial Average is almost back to even as well, but the million-dollar DJIA nest egg is still down $100,000. By comparison, the foolproof, recession-proofed nest egg avoided losses, capitalized on the recovery, and is 27% higher than it was before the Recession.

How do you adopt a foolproof nest egg?
Fortunately, there is an easy as a pie chart way to achieve those returns in bull and bear markets.

In 2008, bonds performed very, very well, serving the dual role of preventing losses and achieving gains safely. Those 50-year-olds who overweighted 20% safe into bonds, as I warned to do in January of 2008, earned a steady gain on 70% of their holdings. The total maximum losses were limited to less than 15% (or half of the 30% they had at-risk) compared to others of the same age who lost up to half of all of their assets. When you factor in the gains made from gold, bonds and the other hot industries, the losses were limited even further.

This is why it is so important to have a diversified nest egg, to always keep a percent equal to your age safe (at least), to add in hot industries, to avoid the bailouts and to rebalance at least once a year. If you do that, then your gains will average 10% or more annually, which is all you need to become financially free. Whereas, if you simply buy and hold, chances are your nest egg is worth less today than it was 10 years ago, and still struggling to catch up. The NASDAQ has never fully recovered from the Dot Com bust, and is still 44% below the high of 5060, set on March 10, 2000.

Wall Street Highs/Lows in the New Millennium:

Index

Low

High

Dow Jones Industrial Average

6,547 (3.9.09)

14,164 (10.9.07)

NASDAQ Composite Index

1,114 (10.9.02)

5,060.34 (3.10.00)

How does the foolproof plan work?

Foolproof Nest Egg Strategies
1. Always keep a percent equal to your age safe. Each year, you get a year older. By protecting a percent equal to your age, you ensure that by the time you are set to retire, your income is stable. During recessions, overweight more safe. During bull markets, you might want to put a small percentage more into the hottest industries.

2. Know what is safe. Bonds are traditionally safer than stocks, but they are not safe in today’s high debt, rising interest rate marketplace. So, you have to pick bonds judicially and also select shorter terms, in order to be most safe. For more information, read the article, "Are Bonds Safe?," in this ezine (May 2011). FDIC insured money market accounts are safer than bonds this year and cash positive hard assets (like rental income property) that are purchased for a song might be an even better choice.

3. Diversify into 10 funds, 6 by size and style and 4 hot industries. By having small, medium and large, as well as value and growth stocks, you are ensured of providing stability and performance to your nest egg, as well as buying the value stocks at a good price. Jabba the Hutt companies, like $300 billion Apple and $83 billion Amazon are not likely to go out of business tomorrow, while the nanotech companies that are doubling revenue can also double their share price. Gold was hot during the Great Recession and helped to add gains. Clean energy was the top performing industry in 2007 and could be again in 2011. NASDAQ doubled the Dow in 2009. Australia and Latin America -- countries that are rich in natural resources -- have led the world in stock gains over the last few years. So, add some heat – some hot industries -- to spice up your returns.

4. Avoid the bailouts. Most investors know the Dow Jones Industrial Average as the leading blue chip index. Few know that AIG, General Motors, Citigroup, Bank of America, American Express, Philip Morris, JP Morgan Chase and General Electric, all companies that received bailouts and subsidies from the government, have been components of the 30-company DJIA index. That is why I’ve renamed it the Bailout Index and advise against blind faith investing here. Your broker may say otherwise, because the brokerage pushes these companies and/or because s/he is paid high commissions to sell you these stocks.

5. Rebalance annually. Annual rebalancing achieves the age-old success formula of investing – buy low and sell high. If you are still using the old Buy and Hold strategy, then you are holding losses, since NASDAQ is still 44% lower than its 5000 high and the Dow is still off by 3%.

With annual rebalancing, you are assured of capturing gains near the highs. Also, during recessions, when stocks will lose value, you will be buying low to beef up the slices of your pie chart that have slimmed down too much. In that way, annual rebalancing is an easy way to buy low and sell high in your nest egg.

This is strategy is a key part of what I teach at my Get Rich and Enrich Retreats. The next one is June 4-6, 2011. Get more info at the banner ad at NataliePace.com.

Here are samples of the new 2011 pie charts.

 

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on Facebook.com/NWPace and on YouTube.com/NataliePaceDOTCOM. For more information please visit NataliePace.com.

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 all in on any asset class or individual stocks. 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.  

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.



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Paul Ryan’s Roadmap for America’s Budgetary Future.

by Dr. Gary S. Becker.

Dr. Gary S. Becker.

The recent agreement between the Republican House leadership and President Obama to cut $38.5 billion from the federal budget during the rest of the year is a small step in the right direction of bringing federal spending under control. Since spending skyrocketed during the past several years from about 20-22% of GDP to its present level of 25% of GDP, much more has to be done to bring federal spending back to its longer term share of GDP. (For a way to approach this problem during next few years, see the Wall Street Journal April 4th op ed "Time for a Budget Game-Changer" by George Shultz, John Taylor, and myself).

A much bigger problem is presented by the expected growth in government spending on medical care and retirements during the next several decades. This growth is the main subject of Representative Paul Ryan’s recently released 70+ page "Roadmap" for entitlement control, and, to a lesser extent, tax reform. The report also includes cuts in defense spending and domestic discretionary spending that would help in taming the budget during the next half dozen years.

Ryan's Roadmap is bold, creative, politically risky, and clearly highly controversial. On the whole, the Roadmap contains excellent proposals that, if enacted, would greatly improve the long-term budgetary situation of the federal government of the United States, and the long-run prospects for the American economy. I will briefly evaluate the main changes in health care spending.

1. The Roadmap proposes to provide a $2300 health insurance tax credit for individual tax filers, and a $5700 tax credit for joint and family tax filers. This tax credit would substitute for the present tax exclusion of employer provided group health insurance from employees’ taxable income. This is quite close to a proposal made by Senator McCain during his campaign for president.

The present system of tying health insurance to employment through special tax advantages is both expensive and wasteful. It also discourages job turnover by employees because they have to obtain new coverage after changing employers or taking time off from work. Eliminating the tax exclusion of employer health coverage would break the artificial advantage given to employer health insurance compared to other group plans and to individual coverage. My main objection to the plan is that tax credits eliminate an important source of taxable income, so it would be better that the $2300 and $5700 government transfers be tax deductible rather than tax credits. Since individuals and families with low incomes and low marginal income tax rates would benefit little from a tax-deductible transfer, they should be helped through special provisions.

2.     The Roadmap would reform Medicaid for older recipients partly by substituting block grants to the states for the present system of matching state spending on Medicaid. This would force states to pay 100% of their expenditures in excess of their Medicaid grants rather than sharing these additional expenses with the federal government. The Roadmap would provide younger Medicaid recipients with health care debit cards that could be used only to purchase health care services and supplies. Families with incomes below 100% of the official poverty level would receive $5000 into their debit accounts (in addition to the proposed tax credit), while higher income families would receive smaller amounts. Both reforms of Medicaid are in the right direction because they introduce greater incentives to economize on medical spending by states, and by individuals and families on Medicaid.

3.     Medicare is the most rapidly growing entitlement program, and the most difficult to reform of all the entitlements. Unfortunately, to make it more politically acceptable, the reform proposed in the Roadmap will only start after 2021 when 55 year olds today will be 65. It would have been much preferable to have it start in five rather than ten years. Under the Ryan plan, seniors would no longer enroll in a government health care program, but instead they would buy health insurance from private insurance companies that would compete for their business. To help them do this, seniors would receive federal subsidies in amounts that would depend on their incomes. For example, couples with incomes below $160,000 would receive the full standard amount, whereas couple with incomes between $160,000 and $400,000 would receive only half the standard. The standard payment would be the average amount Medicare currently spends per beneficiary, adjusted for health risk, for inflation, and for increases in the medical cost index.

There are several advantages to these proposals for Medicare compared to the present system. Competition among insurance companies will increase efficiency in the delivery of medical care, and thereby keep costs down. The subsidies will help lower-income seniors afford decent medical coverage, but higher income seniors would have to pay more of their own money for insurance rather than taxpayers’ money. In addition, individuals and families could buy more expensive coverage beyond the basic plans financed by the proposed Medicare grants, but they have to pay for that additional coverage themselves.

A major weakness of the American health care system is that out of pocket expenses are such a small percent of total medical spending. This proposal helps to correct that distortion.

The Roadmap has the potential to bring major savings as well as better care to the market for health care. I do not believe that the sizable growth in the fraction of GDP spent on health care in the United States (and also in other countries) has been a waste of money. Both the young and old attach very high value to improvements in the quality of their life, and in their life expectancy. However, substantial efficiencies are certainly available through proper reforms in the health delivery system.

Politicians have been afraid to touch medical care as they call it part of the "third rail" of politics, which would involve monkeying with benefits to the elderly. Representative Ryan and his committee deserve great credit for putting forward a bold and specific plan. It can be improved, but if the main parts were adopted, it would be a big help to reining in long term medical expenses.

 

About Gary Becker:
Dr. Gary 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." President George W. Bush awarded him the Presidential Medal of Freedom in 2007.

To keep track of Dr. Becker's continuing research and commentary, visit his website and blog.


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What the S&P Downgrade Really Means for America.

by Natalie Pace.

Includes my Hot News on Cool Stocks Report.

April 28, 2011

General Stock Market Performance

Monday, 1.2.2008

Monday, 1.2.2009

Monday 1.3.2011

Friday, 4.28.2011

Gains 3-yr, 2-yr & 3 mo.

Dow: 13,044.12

Dow: 9,034.69

Dow: 11,577.43

Dow: 12,763.31

-2% & +41% & +10%

Nasdaq: 2,609.63

Nasdaq: 1,632.21

Nasdaq: 2,676.65

Nasdaq: 2,872.53

+10% & +76% & +7%

S&P: 1,447.16

S&P: 931.80

S&P: 1,257.62

S&P: 1,360.48

-6% & +46% & +8%


Wall Street Highs/Lows in the New Millennium:

Index

Low

High

Dow Jones Industrial Average

6,547 (3.9.09)

14,164 (10.9.07)

NASDAQ Composite Index

1,114 (10.9.02)

5,060.34 (3.10.00)

Hot News on Cool Stocks Important Data
Up to 15X gains on U.S. Gold, our 2009 Company of the Year!
NASDAQ Doubled the Dow Jones Industrial Average gains from 2009-2011
NASDAQ is as Hot as Gold 2009-2011, 70% NASDAQ gains to 68% in gold
13 out of 14 Company of the Month features from 2010 posted gains. Woo hoo!
Gold tops stocks, real estate, bonds and T-Bills Over the Last 10 Years.

Compare those returns to the returns of stocks, real estate, bonds, Treasury bills and gold over the last 30 years.

Market Update:
What the S&P Downgrade Really Means for America.
On April 18, 2011, Standard and Poor’s shocked investors with a downgrade of the outlook of long-term U.S. debt, from stable to negative. This rating agency is the first of the Top 3 to warn Americans that, relative to other AAA countries, our budget deficits are too high and our reform, so far, is too weak. Standard and Poor’s believes there is material risk that U.S. policymakers will not take meaningful measures to reduce the debt and deficits prior to 2013. According to Nikola G Swann, the lead analyst with Standard and Poor’s, "Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable."

This debt outlook downgrade comes on the heels of somewhat upbeat data from the Standard and Poors Indices division. On April 8, 2011, Senior Index Analyst Howard Silverblatt wrote that sales in 2011 will achieve double-digit gains, which should lead to more goods being produced, more staff hired, more people working, consumers spending again, companies producing more and the business cycle turning up.

China, the European Union and Canada have all begun raising interest rates to offset inflation, with the first EU uptick on April 7, 2011. However, on April 26, 2011, the Federal Reserve downplayed inflation and kept interest rates at rock bottom, predicting rates will remain there for an extended period.

That’s a lot of rollercoaster, back and forth, news for an investor to stomach, and the markets responded with volatility, but a decided uptrend. The Dow dropped 140 points the day of the S&P downgrade, but is up over 500 points since then (as of today) and is up 10% on the year.

So what does all of this mean? In short, The S&P's downgrade of the U.S. debt, from stable to negative, is a warning, more than anything. The message is that if the U.S. policymakers do not address the deficit and the $14 trillion debt now -- before 2013 -- then the U.S. could lose our AAA ranking. (We still have the ranking for now, however.) If dramatic cuts are made to the budget deficit, GDP growth is stimulated and unemployment drops, Standard and Poor’s will not downgrade the U.S. debt, and they may even upgrade the outlook. So, keep your eyes and ears on that for the next 12 months.

Even now, however, there are lessons to be learned from the downgrade, which investors would be smart to take note of.

  1. Bad news can come without warning
    Like the Lehman Brothers bankruptcy before it, the S&P debt outlook downgrade came on a Monday, without any warning. Fortunately, investors did not panic this time, as they did with the Lehman bankruptcy. However, it is a reminder that you must always take a balanced approach, and keep enough safe, in your diversified nest egg. If you don’t know how to do this, read You Vs. Wall Street and come to the June 4-6, 2011 Get Rich and Enrich Retreat.

  2. Politicians need to reduce the deficit and debt NOW.
    In 1980, President Ronald Reagan warned that if Medicare and Social Security weren’t fixed, we would have big problems in 2008, when the Baby Boomers started to retire. 2008 was the beginning of the Great Recession, when the Dow lost more than half of its value. 2011 marked the first year that Social Security paid out more than it took in. What started as a warning over thirty years ago, is now a reality. And there is no time left to kick the entitlement issue up the road. When a country has fewer newborns than people and a significant cohort entering retirement that leads to slow or negative growth. The underlying issue must be solved, instead of taking on more debt to keep things status quo.

  3. The economic recovery is on track
    Even with $5.00 gas (in California), oil at almost $113/barrel and a U.S. debt outlook downgrade, the stock market is rallying, up 10% up on the year. The GDP growth in the 1st quarter, despite all of those enormous headwinds, still managed to pull in 1.8% growth. Sales growth is predicted to be in double digits. And the Federal Reserve Board governors are predicting GDP growth of 3.1-3.3% in 2011. The unemployment rate is expected to lower to 8.5-8.7%. As more Americans get back to work, this recovery reality should start fueling more optimism.

  4. Stimulus spending will have to increase GDP to be viable
    The Obama Administration has been adamant that Stimulus Spending is the key to jobs and economic growth. If the policy is right, then GDP will need to increase. Otherwise, the cost of the program will weigh too heavily on the budget deficit and debt. A downgrade by S&P will make borrowing far more expensive and increase our debt significantly overnight. This must be prevented as our first priority.

  5. Bush tax cut extensions will have to increase GDP to be viable
    The Republican congressmen promote the "Bush-era tax cuts" to keep the money flowing toward job creation and economic growth. There are a lot of economic theories and real-world examples of how keeping taxes low fuels growth. However, the U.S. debt is too large to ignore and raising taxes solves the budget problem. Therefore, policymakers will have to be statisticians in order to prove that their position will work, while at the same time using diplomacy to cut spending enough elsewhere to avoid a downgrade in the U.S. long-term debt.

Investor Alerts:
1. OPEC & a Basket of Currency: On October 14, 2010, OPEC released a press release stating that they had agreed upon a new "long term strategy." The details of that strategy were scheduled to be released at the December 11, 2010 OPEC meeting in Quito, Ecuador, but were not. OPEC never responded to my inquiry requesting details and/or the summary of the new LTS (which was sent on December 11, 2010). There is speculation that the strategy will be going from the U.S. dollar valuation to a "basket of currency."

2. Debt: Refer to the CIA’s World Fact Book for a listing of debt to GDP ratio by country. The U.S. isn’t in the worst shape, but we are adding to the deficit every year and approaching levels that were problematic for PIIGS (Portugal, Ireland, Italy, Greece and Spain), Japan and other countries. Current debt to GDP (excluding $4.5 billion held by our federal government) was 63.6% in 2010, according to the U.S. Office of Management and Budget. It would be near 100%, if all of the government debt was added to the equation. On April 16, 2011, Standard & Poor’s lowered the U.S. Debt Outlook to negative from stable. This is a big warning to U.S. policymakers to cut spending and reduce the budget deficit and national debt.

3. Real Estate: There were 2.9 million foreclosure filings in 2010. Foreclosure filings in 2009 were 2.8 million, with 2.3 million in 2008 and 1.3 million in 2007. 13 million homes could change hands before this real estate correction is over, as foreclosures are predicted to continue apace in 2011 and 2012. This likely means that there will not be much upside in real estate values until 2013.

4. 911 Investor Alert: Bonds: Inflation and interest rates have yet to weigh on the bond market (preview of coming attractions), however debt has already begun to take its toll. Don’t be suckered into muni bonds or any other bond before understanding the debt load of the entity and the fiscal health/capacity to make good on the bond. I have penned multiple articles and interviewed countless experts on bonds over the last two years. Peruse the archives of 2010 and 2011 and read all of them!

5. Gold: The International Monetary Fund sold 403.3 metric tons of gold on the open market between September 2009 and December 2010. Other large holders of gold, including the United States, Brazil and more, could also be tempted to sell high. For a brief history of gold and information on which countries are the biggest holders of gold, read, "The Gold Crash of 1980," from the September 2010 ezine, volume 7, issue 9.

So is There Anything Good Out There?
Yes, believe it or not, there are some excellent areas in the economy. My 2009 Company of the Year, U.S. Gold, has posted up to 15X gains. Applied Materials, the 2010 Company of the Year, posted 25% gains within a few months of being named. 13 out of 14 Companies featured in my Company of the Month articles in 2010 were winners. Your nest egg has almost fully recovered from the Great Recession. If you have a great credit rating and can get a loan, there are areas of the country where you can buy cash positive, low risk income property. And even if you’re in trouble, in doubt, losing a home or declaring bankruptcy, there are some very important things to do to squirrel away as many assets as possible. The best way to learn about these things is to read this ezine top to bottom, read You Vs. Wall Street and register to attend the next Get Rich and Enrich Retreat. Once you have the wisdom and education that you should have received in high school, all of this will be easy and can be set up on auto-pilot. Until then, you are vulnerable to more boom/bust markets.

Banks Are Still Failing
There were 157 bank failures in 2010, 140 bank failures in 2009 and 25 in 2008. 34 banks have already failed in 2011 (source: FDIC.gov). Don’t be seduced by the banks reporting record earnings! Most of them are fairy tales. (Nonproducing loans are carried off the books; TARP and other Federal Reserve swaps are about as easy to figure out as the origin of the life.) However, the $600 billion that the Federal Reserve is putting in the mega-bank coffers between November 2010 and May 2011 should help their earnings reports shine up real nice. 13 million homes could be lost between 2007 and 2012 and not all of them hitting the financial statements with as much force as they should...

Track Record of our Reporting
While the markets are still down significantly since their high in October of 2007, the Hot News and Cooling Off lists below have a winning track record before, during and after the Great Recession – in bear and bull market years. 100 positions listed over the last four years – 78% -- have delivered impressive gains, even while the Dow Jones Industrial Average is still trading lower than it was in 2007 (when it cracked through 14,000)! Only twenty-eight of our listings went in the opposite direction of the reporting, which is quite impressive given the market gyrations of more than 7000 point swings since 2008.

Remember that the trading portfolio should be equal to your experience, and should not be part of your nest egg. (The nest egg is money you earn while you sleep, not while you day-trade.) If you’re new, you should be using education or fun money, not your nest egg, to learn on. Take your trading profits early and often in these volatile, whip-sawing years. (Your nest egg is better off just rebalancing once or twice a year, not trying to market time.)

4 out of 7 Company of the Year selections more than doubled.  My 2003, 2004, 2006, 2007 and 2009 Companies of the Year posted up to 9000% gains (Taser), up to 690% gains (Opsware), up to 215% gains (Suntech Power Holdings), and up to 15X ROI for U.S. Gold, respectively. MySpace, my 2006 Company of the Year, was a large part of News Corp’s success with shareholders that year.   So five out of seven Company of the Year selections were superperformers. 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, Taser International, on 1.1.03.)

Some of my best picks include: U.S. Gold (UXG) 15X return on investment, Google (GOOG) +585%, Opsware (OPSW) +690%, Rio Tinto (RTP) +145%, Sohu (SOHU) +150%, Suntech Power Holdings (STP) +107%, Taser (TASR) up to 9000% gains. 13 out of 14 companies featured in the Company of the Month articles in 2010 earned gains – 93%!

The NataliePace.com ezine was the first to list the following 911 alerts:

  1. Muni bond and bond funds 911 Investor Alert in Sept. 2010.
  2. 2008 Recession (Get Safe)
  3. Trim back on Faded Blue Chips in 2006
  4. Get out of Dodge (real estate) in 2005
  5. Google at the IPO! (May 2004)
  6. To get Fannie Mae and Freddie Mac out of your 401(k) in 2003

Market Movers:
The Federal Open Market Committee and Monetary Policy
The Fed funds rate continues to be "0 to ¼ percent." The next FOMC meeting takes place on June 21-22, 2011.
GDP Growth Rates: Advance estimate 1st quarter 2011 GDP growth came in at 1.8% (blame the high price of oil). 1st quarter 2011 second estimates will be released on May 26, 2011 at 8:30 a.m. ET. 4Q 2010 growth was 3.1%. 3Q 2010 GDP growth was 2.6%. 2Q 2010 was 1.7%.  1Q 2010 was 3.7%.

These release days tend to be very active on Wall Street.  For more information on GDP growth and other important economic statistics, go to the BEA.gov website and be sure to visit the NataliePace.com calendar section often.

EDUCATIONAL OPPORTUNITES AND INFORMATION:
1. FOMC Information: Interested in reading the press release of the April 26, 2011 FOMC meeting for yourself? Want to see the first ever press conference by a Federal Reserve Board Chairman? You can. The official Federal Reserve document is available online. Go to FederalReserve.gov to read! According to the Committee, "Information received since the Federal Open Market Committee met in January suggests that the economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually... The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations."

The tentative FOMC meeting schedule for the 2011-2012 calendar is June 21-22, 2011 (Tues.-Wed.), August 9, 2011 (Tuesday), September 20, 2011 (Tuesday), Nov. 1-2, 2011 (Tues.-Wed.), December 13, 2011 (Tuesday), January 24-25, 2012 (Tues.-Wed.), March 13, 2012 (Tuesday), April 24-25 (Tuesday-Wednesday), June 19-20 (Tuesday-Wednesday), July 31 (Tuesday), September 12 (Wednesday), October 23-24 (Tuesday-Wednesday), December 11 (Tuesday), January 29-30, 2013 (Tuesday-Wednesday).

2. Calendar Section: Conferences, Online Chats and more: Check out the Calendar section of NataliePace.com regularly. You will find great opportunities to attend the most exclusive business and Green Conferences, learn about upcoming TV and radio shows and other educational opportunities – many are FREE! 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.

Don’t miss the Pace and Prosperity Show with Natalie Pace on BlogTalkRadio.com. Check BlogTalkRadio.com/NataliePace for upcoming shows and call-in and log-on instructions and to listen back to any shows that you might have missed. These shows are pod casts and are FREE!

BlogTalkRadio offers a Q&A format, where you can call in with your most pressing questions. Be sure to keep a list of your questions as they come up, and join our ongoing dialog on peace and prosperity, getting rich and enriching, green investing, the Thrive Budget and more on Facebook at http://www.facebook.com/NWPace.

3. Survey Results: Each month we have three new surveys so that we can stay in touch with your needs and desires. This month, we want to know about your broker experience. Do you love your broker, or did your nest egg crack? Cast your vote on our survey page.

4. Euro interest rates: ECB rates are at 1.25% (main refinancing), 2.00% (marginal lending) and 0.50% (deposit facility). The next meeting and interest rate announcement are scheduled for May 5, 2011 at 2:30 p.m. CET. (May 19, 2011 after that.)

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 at all – not even for "pros." 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.
Cree (CREE)
ENER1 (HEV)
Galaxy Resources (GALXF)
iShares MSCI All Peru Index Fund (EPU)
Satcon (SATC) added 3.1.11
Trina Solar (TSL) added 3.11.11

Profit-Taking:
LDK Solar (LDK) +123%

DELETIONS (Take your profits early and often):
None

HOT NEWS on COOL STOCKS LIST

Company NP owns? Symbol Price when featured

Price

4.28.11

Year High

Year Low

Gains since original feature

American Super-conductor

No

AMSC

$27.77

$24.28

(3.14.11)

$11.75

$38.88

$11.50

-58% &

-52%

Read "The Sunny Side" Vol. 6, issue 3.

AMSC is a leader in renewable energy, providing proven, megawatt-scale wind turbine designs and electrical control systems. The Company also offers a host of Smart Grid technologies for power grid operators that enhance the reliability, efficiency and capacity of the power grid, and seamlessly integrate renewable energy sources into the power infrastructure. These technologies include superconductor power cable systems, grid-level surge protectors and power electronics-based voltage stabilization systems. The Company operates in two business segments: AMSC Power Systems and AMSC Superconductors.

AMSC issued an earnings warning on April 5, 2011, and short sellers pounced on the stock, to the tune of 57 million shares being traded on April 8, 2011 and a closing price that was off by half of the day’s open. I wish I could say that Sinovel is remorseful for refusing the shipments and paying AMSC late for products already shipped, but their website is bereft of any explanation, and as of press time, no response has been received from the media department. I’ll keep you informed, as Sinovel is AMSC’s biggest customer, it is hard to highlight this company as a good buy, even at this extremely low price, until we have further word as to Sinovel’s intentions. However, if you are brave and a bit of a gambler, you might see gains on the Spring Rally alone.

According to the 4.5.11 AMSC press release:

On March 31, 2011, Sinovel Wind Group Co., Ltd. (Sinovel) refused to accept contracted shipments of 1.5 megawatt (MW) and 3 MW wind turbine core electrical components and spare parts that AMSC was prepared to deliver. AMSC believes that Sinovel intends to reduce its level of inventory before accepting further shipments.

 

These delayed shipments are the primary cause for lower-than-anticipated financial results for AMSC's fourth quarter and full fiscal year 2010. AMSC currently expects total revenues for its fourth fiscal quarter will be less than $42 million and that it will generate a net loss for the fourth quarter on both a GAAP and non-GAAP basis. As a result, AMSC currently expects its full year fiscal 2010 revenues to be less than $355 million. This compares with the company's prior forecast for fiscal 2010 revenues of $430 million to $440 million. AMSC also expects that its GAAP and non-GAAP earnings for full year fiscal 2010 will be well below the company's previous forecasts.

On 4.21.11 American Superconductor Corporation announced that its high temperature superconductor wire is being used in an electrical substation in China.

3Q 2011 released on 2.3.11:

$114 million in revenues, an increase of 42% over last year. Net income tripled, from $5 million a year ago to $16 million.

AMSC still has $240 million in cash, cash equivalents & marketable securities, as of 4.5.11.

As of March 31, 2011, AMSC had backlog of approximately $588 million. The increase in backlog was primarily the result of a substantial new order received from AMSC’s largest customer, Sinovel Wind Co., Ltd. ("Sinovel"), a manufacturer of wind turbines based in China.

73% sales are derived from one customer – Sinovel, increasing risk level.

AOL

Yes

AOL

$21.22

$19.37

$20.65

$29.45

$18.51

-3% &

+7%

Read "AOL" from Vol. 6, issue 12.

1Q2011 earnings will be released on May 4, 2011 at 8 a.m. ET.

AOL purchased Huffington Post for $315 million in Feb. 2011 (Huff generates upwards of $50 million). Perhaps the biggest value is that AOL will have Arianna’s personal vision overseeing the integration of the sites’ content on its various sites and holdings. AOL owns Moviefone, Mapquest, among other popular destinations.

Per Nielsen Net Ratings, AOL is the 10th most trafficked "web parent companies" in the United States, with more time online than the other top 9, at 51 minutes per person.

While Tim Armstrong has his work cut out for him redefining this brand, he has made great strides to increase profitability and improve the customer experience on AOL. One subtle change that AOL is using includes folding ads into the headlines in a fairly unobtrusive way. Campbell’s is now offering Campbell’s Kitchen, with Sunday Dinner Recipes and a recipe featured on the home page/headline slot. The 1st 6 of 13 headlines on AOL are headline articles, while thereafter the ads start kicking in, too. (There were five ads interspersed with 13 total headlines on 2.11.11, including a Chevy Volt ad.) According to CEO Tim Armstrong, speaking in an interview with CNBC on Feb. 2011, the day AOL purchased the Huffington Post, "AOL is planning on becoming the largest premium content company on the Internet. We are going to deliver the best content experience for consumers."

AOL announced 4Q and FY results on Feb. 2, 2011. Full Year Revenue was $2.4 billion, down 26% from a year ago. Net loss was $782 million. (Most of this Net loss was $1 billion in 2Q 2010 – restructuring related.)

AOL renewed and expanded its global partnership with Google for the provision of search services to AOL Properties. AOL and Google agreed to work to expand the partnership to include mobile search and Google will feature AOL content on YouTube.

AOL (and its properties including Moviefone and Mapquest) is in the top 10 trafficked sites in the U.S., next to Google, Microsoft, Yahoo, Facebook, eBay, News Corp. and Interactive Corp. The fairly new CEO is a former key player in Google’s massive growth. Can the company create money out of traffic?

"AOL is working hard to redefine the consumer experience on the Internet,"said Tim Armstrong, Chairman and Chief Executive Officer. "In Q3, AOL continued on the path towards better health through targeted acquisitions and smart dispositions, meaningful product improvements, site relaunches, and strategic partnerships, all of which will enable us to execute more quickly against our strategy."

Cree

Yes

CREE

$52.10

$45.26

(4.1.11)

$40.39

$83.38

$31.12

-22% &

-11%

Read "Let There Be Light (Emitting Diodes)" and "LED Lighting," from the December 1, and August 1, 2010 ezines, Vol. 7, issue 8. Love the company. Revenue growth is solid. Sales to Asia are strong. Future likes bright! And the price is finally right.

3Q 2011 earnings on 4.19.11: Cree, Inc. CREE, a market leader in LED lighting, today announced revenue of $219.2 million for its third quarter of fiscal 2011, ended March 27, 2011. This represents a 6% decrease compared to revenue of $234.1 million reported for the third fiscal quarter last year and a 15% decrease compared to the second quarter of fiscal 2011. GAAP net income for the third quarter of $18.9 million, or $0.17 per diluted share, decreased 58% year-over-year compared to GAAP net income of $44.6 million, or $0.41 per diluted share, for the third quarter of fiscal 2010.

Cree announced on 3.21.11 that Bruce Renouard will join the company as senior vice president – sales and business development – a new position.

"We continue to be a leader in LED lighting and remain confident we are on the right track as we look forward to further disrupting the market and leading the LED lighting revolution in the years ahead," Chuck Swoboda, Cree chairman and CEO said, in a press release.

ENER1

Yes

HEV

$3.68

$2.55

$5.36

$2.50

-30%

Read "Earth Hour" in Vol. 8, issue 4 and "Life Begins with Li (Lithium)" from Vol. 6, issue 4. Ener1 develops and manufactures compact, high performance lithium-ion batteries to power the next generation of hybrid, plug-in hybrid and pure electric vehicles.

1Q earnings will be released on May 10, 2011, after the markets close.

4Q Earnings on March 10, 2011: Net sales were $33.1 million in the year's final quarter, an increase of 202% over net sales of $11.0 million in the fourth quarter of 2009.  For fiscal year 2010, net sales were $77.4 million, an increase of 122% over net sales of $34.8 million for 2009.  Net loss for the year was $69 million.

On 1.18.11: Ener1 announced a JV deal with Wanxiang Electric Vehicle Co. to produce 40,000 battery backs in China by 2014. ENER1 owns 40% of the venture and will contribute intellectual property and technical expertise. Wanxiang will contribute the factory and labor (in China). China has set a target to produce 500,000 electric vehicles by the end of t2012, so the tea leaves look very favorable for ENER1.

Ener1 signed a $40 million supply agreement with a wholly-owned subsidiary of the Federal Grid Company (MICEX: FEES) for a bulk energy storage program. Systems will be delivered and installed at the end of the first quarter in 2011 and commissioned in the second quarter of 2011. $36 million of revenue is expected to be recognized in the first half of 2011, $4 million of revenue in 2012.  Basic and diluted net loss per share was $0.18 in the third quarter of 2010 compared to $0.14 in the third quarter of 2009.

Investors are concerned about ENER1’s stake in THINK EVs, causing the current pullback in interest. However, the government backing, sales and more remain strong for ENER1.

Galaxy Resources

RISK: HIGH

(off the boards, thinly traded)

No

GALXF

$1.18

$1.18

$1.80

$0.79

--

Read "Should You Put the Brakes on Toyota?" from Vol. 7, issue 2. Lithium exploration, mining, etc. in Australia and China. Traded off the boards in the US, but is listed on the Australia Stock Exchange.

Galaxy has two strong components – Australia-based company in an emerging market – lithium.

Annual meeting will be on Friday, May 13, 2011 at 10 a.m. in Perth, Australia.

Announced private placement of $120 million at $1.10 share on April 14, 2011. The issue was substantially oversubscribed with strong interest coming out of Europe, Asia, US and Australia.

Galaxy wholly-owns and operates the Mt. Cattlin mine, which is currently producing spodumene concentrate. Galaxy’s Jiangsu lithium carbonate plant, once completed, will have a design capacity of 17,000 tpa of lithium carbonate, which Galaxy expects would make it one of the largest plants in China converting hard rock lithium mineral concentrates into lithium compounds and chemicals.

Lithium compounds such as lithium carbonate are forecast to be in high future demand due to advances in long life batteries and sophisticated electronics including mobile phones and computers.

Galaxy Resources has positioned itself to meet this lithium future by not only mining the lithium, but also by downstream processing to supply lithium carbonate to the expanding Asian market.

Green Dot

Yes

GDOT

$41.25

$47.97

$65.10

$41.13

+17%

Read "IPO of the Year" from Vol. 7, issue 3.

1Q results will be announced April 28, 2011 at 4:30 p.m. ET.

On March 21, 2011, Green Dot announced that board member W. Thomas Smith, Jr. will not be running for re-election to the board due to his commitments to his firm Total Technology Ventures, LLC.

Shares plunged earlier in the month after Janney Capital Markets analyst Thomas McCrohan issued a Sell rating on Green Dot, with a target price range of $40-$48. Institutional buyers moved in fast to pick up the shares at a 52-week low.

Revenue grew 41% in 2010, however the pace was much more slow toward the end of the year, with sequential growth of only 3% from the 3rd to the 4th quarter.

On 9.20.10, the Los Angeles Business Journal named Green Dot CFO John Keatley CFO of the Year.

4Q 2010 Earnings (Feb. 10, 2011): Total operating revenues increased 32% to $91.8 million for the 4Q of 2010 from $69.6 million for the 4Q of 2009. GAAP net income increased 14% to $7.9 million from $6.9 million one year ago. $167.5 million cash on hand.

"We have continued our mission of providing Americans with access to safe, low-cost, FDIC-insured banking products to handle their daily transactional needs," said Steve Streit, Green Dot’s Chairman and Chief Executive Officer. "We made further progress expanding our distribution channels beyond retail when we were selected to serve as a program manager for a U.S. Department of Treasury pilot program whereby Americans can receive their federal tax refunds via direct deposit to a prepaid debit card."

Cool progress and steady, though not stellar growth, in a space that is bound to see a lot more competition (from MasterCard and Visa to name two). WalMart is a partner and investor.

Hoku Scientific

Hawaii

RISK: HIGH

Yes

HOKU

$8.03

$1.75

(3.15.11)

$1.95

$14.55

$1.90

-76% &

+11%

Read "One Hot, Overlooked Commodity: Sand," Vol. 8, issue 5, "The Sunny Side," Vol. 6, issue 3 and "Solar Giants Tap a Small Hawaiian Company For Silicon," in the Oct. 2007 ezine, Vol. 4, issue 10.

Expect the annual report in mid-June.

3Q 2010 earnings on 2.10.10: Revenues for the quarters ended December 31, 2010 and 2009 were $1.2 million and $259,000, respectively. Net loss was $3.0 million.

Summarizing the Company's progress during the quarter, Scott Paul, president and chief executive officer of Hoku Corporation, said, "We now expect to incur approximately $600 million of capital costs before we can commence operation of the first 2,500 metric tons of production capacity. With this investment we will also have substantially completed our onsite TCS production facility. From there, we expect to invest up to an additional $100 million to complete the second phase of construction, which will allow us to commission our onsite TCS plant and add an additional 1,500 metric tons of manufacturing capacity. Thus, our revised capital budget for the full, planned 4,000 metric ton plant is now approximately $700 million." HOKU expects to commence shipment of its own material in the second half of calendar year 2011, using 3rd party trichlorosilane (TCS), but "after commissioning our first phase of installed equipment, we expect to pursue three objectives in parallel," according to Paul. "First, we will manufacture and ship polysilicon using 2,500 metric tons of operational production capacity. Second, we will continue construction activities at our on-site chemical plant with the goal of manufacturing our own TCS on-site by the end of calendar year 2011. Finally, we will continue with our second phase of construction, installing deposition reactors and support equipment until we reach our full, planned 4,000 metric tons of production capacity," he wrote in the 1st Quarter 2011 press release.

Hoku’s Chief Technology Officer and co-founder Karl Taft resigned on 11.16.10.

LDK Solar

GREEN

No

LDK

$30.02

$4.94

(3.2.09)

$11.14

$15.10

$4.97

-63% &

+123%

Read the articles, "One Hot, Overlooked Commodity: Sand," Vol. 8, issue 5, "Green" in Vol. 6, issue 2 and "Solar Springs Up Again," in Vol. 5, issue 4.

LDK is benefitting from lots of press on China’s renewable energy policy and massive revenue growth of 3X year over year. However, the recent updated sales outlook could bring the share price down, once 1Q earnings are released (expected to be around the 10th of May 2011)...

On 4.26.11, LDK announced: For the first quarter of 2011, LDK Solar expects to report revenue in the range of $745 to $755 million, wafer shipments of 625 to 635 megawatts (MW), module shipments of 109 MW to 114 MW, in-house polysilicon production of 2,450 MT to 2,470 MT, in-house cell production between 44 MW and 46 MW, and gross margin between 30.0% and 31.0%.  The Company's prior guidance for the first quarter was revenue of $800 to $850 million, wafer shipments of 610 MW to 660 MW, and module shipments of 120 to 140 MW, in-house polysilicon production between 2,300 MT and 2,400 MT, in-house cell production between 45 MW and 50 MW, and gross margin between 27.0% and 29.0%.

On Feb. 10, 2011, LDK announced they will be selling senior debt notes to pay off prior debt. This will be available in China only (not in the U.S.). (This is likely due to a number of factors, including the relative ease of raising the capital in China and the regulatory environment of the U.S. SEC, which could delay or slow down the raise.)

On January 6, 2011, LDK purchased 70% of Solar Power Inc. for $33 million.

"We are very pleased with this new strategic relationship," said Xiaofeng Peng, Chairman and CEO of LDK Solar. "We have known the SPI team for several years and have been very impressed with the quality of their work and the caliber of the customers they serve. We look forward to working closely with the team that is responsible for outstanding solar projects such as the Staples Center and the Aerojet solar farm," Chairman Peng stated. "This transaction also expands our downstream vertical integration opportunities and provides LDK Solar and SPI the opportunity to jointly explore opening manufacturing operations in the U.S. to further enhance SPI's competitive advantage in North America."

On February 1, 2011. LDK closed a follow-on offering of 13.8 million shares at a price of $12.40/share.

3.17.11: 4Q earnings were outstanding. Record quarterly revenue of $920.9 million, an increase of 36.3% sequentially and 202.3% year-over- year; Net income was $145.2 million. LDK Solar ended the fourth quarter of fiscal 2010 with $202.1 million in cash and cash equivalents and $503.7 million in short-term pledged bank deposits.

MEMC Electronics

No

WFR

$11.99

$11.00

(2.1.11)

$11.19

$19.31

$9.19

-7% &

+2%

Read "One Hot, Overlooked Commodity: Sand," Vol. 8, issue 5 and "The Sunny Side" Vol. 6, issue 3.

1Q earnings will be May 4, 2011 at 5:30 p.m. ET.

The Japanese earthquake, tsunami and nuclear crisis have interrupted operations at MEMC Electronics Utsunomiya facility. This factory is 130 miles away from Sendai, so no one was hurt and there is expected to be no real damage. However, MEMC has suspended operations at the plant, pending "conclusion of building and equipment safety inspections and an analysis of potential damage," according to a press release from March 15, 2011. No update as of April 10, 2011.

On Feb. 25, 2011 it was announced that SunEdison was awarded an additional 31 MW (AC) of Solar Projects by the Ontario Power Authority.

2.9.11: SolarParking Canopy will provide 25-30% of Cal State Bakersfield energy. The 1.2 MW solar parking canopy will generate over 1.6 million kilowatt hours (kWh) of clean energy in the first year of operation and produce over 30 million kWh over 20 years. That is enough energy to power more than 3,100 average U.S. homes for one year. The solar parking canopy will offset more than 29 million pounds of carbon dioxide over the initial 20 years of operation – the equivalent of taking 2,800 cars off the road.

"SunEdison continues to provide smart solar solutions to universities and school systems across our nation," said Jaime A. Smith, U.S. Vice President of Commercial Systems for SunEdison.  "By bringing together our strong financing capabilities along with cutting-edge technologies, SunEdison makes affordable solar solutions a reality for universities like CSUB."

SunEdison said Feb. 2, 2011 that it has agreements in place to install more than 1,400 megawatts of solar panels, doubling its pipeline of projects from 700 megawatts of projects a year ago.

FY results were released on Feb. 1, 2011 at 5:30 p.m. ET. For the full year, GAAP net sales were $2,239.2 million, an increase of 92% from $1,163.6 million in 2009.  GAAP net sales include $420.5 million in 2010 and $3.8 million in 2009 from the SunEdison business. MEMC's GAAP net income for the fourth quarter was $11.4 million, or $0.05 per share, compared to a net income of $17.6 million, or $0.08 per share, in the third quarter and a net loss of $7.1 million, or $0.03 per share, in the prior year quarter.

MEMC ended the fourth quarter with cash and cash equivalents of $707.3 million excluding $62.5 million of restricted cash.  "Our fourth quarter results extended MEMC's recent trend of steady improvement, with SunEdison delivering its strongest quarter to date," said Chief Executive Officer Ahmad Chatila. "While semiconductor and solar end markets are dynamic, we are improving our execution while continuing strategic initiatives that will catalyze our growth in 2011 and beyond."

iShares MSCI All Peru Index Fund

No

EPU

$40.72

$40.72

$51.35

$29.79

--

Read "Hot Funds," from Vol. 7, issue 7 and "Latin American Funds Doubled" article from the August 2010 ezine, Vol. 7, issue 8.

PowerShares Wilderhill Clean Energy Portfolio ETF

No

PBW

$9.91

$10.18

$11.42

$4.00

+3%

Read "$100/Barrel Oil" from the March 1, 2011 ezine, Vol. 8, issue 3.

Satcon

2011 Company of the Year

Yes

SATC

$3.77

$3.16

(3.15.11)

$3.00

$5.51

$2.22

-20% &

-5%

Read "2011 Company of the Year," from Vol. 8, issue 4 and "$100/Barrel Oil" from the March 1, 2011 ezine, Vol. 8, issue 3.

Satcon 1Q earnings on 4.27.11: Revenue for the first quarter of 2011 was $62.0 million, an increase of 321% over the same period last year. Net loss was $2.14 million.

North America continued to be the company’s strongest performing region, representing 76% of total sales. Asia contributed 22% of sales, while Europe represented 2%. During the first quarter, the company shipped 276.5 MWs of its industry-leading PowerGate® Plus, Prism®, and Solstice® solutions. Satcon's utility scale solutions, of 250kW and above, continued to be the company’s strongest performing offering, shipping over 240 MW, and representing 87% of total units shipped in the quarter.

At March 31, 2011, the company's backlog, which consists of purchase orders from its customers, was $72.2 million. Backlog from North America represented 78.5% of orders to be delivered. Asia contributed 14.7%, while Europe contributed 6.8%.

According to Satcon’s president and CEO Steve Rhoades, "For the second quarter of 2011 we believe the markets in North America and Asia will remain strong and that Germany and Italy will define their long-term FIT strategies. We expect Q2 revenue to be in the range of $50 to $60 million."

Sunpower

No

SPWRA

$24.83

$13.07 (7.1.10)

$16.08

$19.88

$9.61

-36% &

+23%

Read "The Sunny Side" in Vol. 6, issue 3.

1Q 2011 earnings will be released on May 12, 2011 at 1:30 p.m. PT (after the markets close).

Sunpower panels are the most efficient in the world and have helped countless Solar Decathlon teams win the competition. This year’s #2 and #3 teams (Illinois and California) both used Sunpower panels.

FY earnings on 2.18.11: During fiscal 2010 and 2009, Sunpower’s total revenue was $2,219.2 million and $1,524.3 million, respectively, an increase of 46% year-over-year, and the company expects their total revenue to increase in 2011 as compared to 2010 as they continue to expand their sales across their UPP and R&C Segments. Net income was $179 million. Cash on hand $762 million. 71% of sales were outside of the U.S.

Suntech Power Holdings

No

STP

$14.26

$7.24

(12.1.10)

$9.03

$15.55

$7.05

-37% &

+24%

Read "The Sunny Side" Vol. 6, issue 3. The world's largest crystalline silicon photovoltaic (PV) module manufacturer. 3Q will be announced Nov. 17 before the markets open.

Suntech began manufacturing in the US on Oct. 8, 2010, at its Goodyear, AZ HQ. Dept. of Energy Secretary Steven Chu visited Suntech and reported on it to The National Press.

4Q and FY 2010 earnings (final) were reported on March 8, 2011.

Total 4Q revenues were $945.1 million in the fourth quarter of 2010, representing growth of 27.1% sequentially and 61.9% year-over-year. Full year total net revenues were $2.9019 billion in 2010, representing 71.4% growth year-over-year. Net income for the year was $262.3 million.

Guidance for 2011 is expected to be $3.4-$3.6 billion revenue, with margins increasing to 12%-14%.

David King was named CFO on March 28, 2011. Amy Zhang, the former CFO is resigning to pursue "other opportunities."

On March 21, 2011, Suntech announced a new solar installation on "the roof of the world," in Tibet. The project should be complete by the middle of the year and generate 20,000 MWh annually for Tibetan residents. "With intense sunlight and cool temperatures, Tibet is extremely well-suited for the utilization of advanced photovoltaic technology," said Dr. Zhengrong Shi, Suntech's Founder, Chairman and CEO. "We're proud to invest in preserving the region's fragile ecosystem by providing an economically-viable and sustainable solution for electricity generation. From the desert sands of Arizona to the peaks of the Himalayas, anyone can look up and harness nature's cleanest and most abundant energy resource."

Trina Solar Ltd.

No

TSL

$27.92

$27.92

$31.89

$14.85

flat

Read "The Sunny Side" Vol. 6, issue 3.

4Q & FY earnings announced on Feb. 22, 2011: Total net revenues were $1.86 billion, an increase of 119.8% from 2009. Net income for the full year was $311.5 million, an increase of 223.7% from 2009. This is a company that has one of the highest revenue growth and the lowest price to earnings ratios on Wall Street.

The SEC launched an inquiry in 2010 into the way that Trina is booking revenue that hasn’t yet been received, but, on January 2011, the SEC issued a letter saying they had no further comments at this time.

 

Announced an agreement to supply solar modules to SunEdison, a subsidiary of MEMC Electronic Materials, Inc. ("MEMC"). Under the terms of the agreement signed with MEMC, the Company is expected to supply SunEdison with approximately 35 MW of PV modules over the remainder of 2010.

 

 --   Announced the signing of a Letter of Agreement with the Massachusetts Institute of Technology ("MIT") to become a member of its Industrial Liaison Program, a program devoted to promoting university-industry collaboration, innovation and technology sharing

"We are very pleased with our outstanding performance in the fourth quarter, which saw record shipment volume and resulted in our exceeding previous guidance for both the fourth quarter and full year 2010," said Mr. Jifan Gao, Chairman and CEO of Trina Solar.

Deleted Companies 2010-2011:
Deleted 1.11.10: KCI with 88% gains! Deleted 8.1.10: Galaxy Resources with 48% and 9% returns and Rio Tinto with 21% gains. Deleted 9.13.10: American Superconductor (flat) & AOL (flat). 10.1.10: Blockbuster busted out in bankruptcy on 9.28.10. KLAC was deleted with 11% gains. 10.15.10: ENER1 was deleted with flat performance. 11.11.10: ENER1 was deleted with 37% gains. VECO was deleted with 2% & 41% gains. 12.1.10: KLIC was deleted with 12% gains. 1.14.11: Advanced Materials was deleted with 30% gains. 2.2.11: BEARX with losses of 14%. 2.14.11: U.S. Gold with 14.5X gains.

Deleted Companies 2008-2009:
60 winners and 9 losers.

Recently Deleted from the Hot News list:
None

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. Getting the price right is as important as picking the right company. Never pay retail!

Recent Additions:
Amazon (AMZN) on 3.15.11
Apple (AAPL) on 3.15.11
Ford (F) on 3.2.11
Google (GOOG) on 3.2.11
Kulicke & Soffa (KLIC) on 3.15.11
Sears (SHLD) on 3.1.11
Shutterfly (SFLY) on 3.1.11
VMWare (VMW) on 3.15.11
Wells Fargo (WFC) on 3.15.11

Recent Deletions:
Galaxy Resources (GALXF) Moved to the Hot List on 4.28.11
Shutterfly (SFLY) moved to the Cooling Off List on 4.28.11

Company

NP owns?

Symbol

Price when featured

Price

4.28.11

Year High

Year Low

Gains since original feature

Allscripts Misys Healthcare Solutions

No

MDRX

$19.94

$20.62

$22.55

$15.65

+5%

Read "Health Care Reform" Vol. 7, issue 4.

Applied Materials

2010 Company of the Year

No

AMAT

$15.32

$15.71

$16.94

$10.27

flat

Read "Let There Be Light" and "LED Lighting," from the December 1, 2010 and August 1, 2010 ezines, Vol. 7, issue 12 and 8. 2010 Company of the Year!

Amazon

No

AMZN

$168.07

$194.89

$191.60

$105.80

Hot company. Buy at a good price.

Apple

No

AAPL

$351.99

$347.05

$364.90

$199.25

Hot company. Buy at a god price. Also, be aware that Steve Jobs is on medical leave of absence. Tim Cook, current COO, has been running company many times during Jobs’ leaves and investors may be accustomed to having him run the show, if Jobs should announce his resignation. Also be aware that there have been a few scandals of late with regard to the Chinese manufacturing facilities of Apple. At least 58 workers in China claim to be poisoned and are seeking redress from Apple. Get more information at the below Chinese website.

You can read the report entitled "The Other Side of Apple" at http://business-humanrights.org/.

iShares Australia Index

No

EWA

$20.34

$28.35

$26.36

$15.40

Read "Hot Funds," from Vol. 7, issue 7.

Baidu

No

BIDU

$124.96

$148.27

$154.89

$54.98

Hot company. Buy at a god price.

Berkshire Hathaway

No

BRK.B

$85.30

$83.03

$87.65

$68.48

Hot company. Buy at a god price.

Big Lots

No

BIG

$30.28

$40.79

$43.38

$27.82

Read "Discount Designer Stores," from Vol. 5, issue 6.

For a more impressive discount retailer, check out Ross Stores.

Canadian Imperial Bank

RISK: Medium

No

CM

$65.88

$85.01

$87.26

$61.12

Refer to the "Banking on Iraqi Dinars" article in volume 5, issue 2 for details. Financial markets are under duress. Avoid most banks for now. Canada’s banks were ranked #1 by the Milken Institute for global capital in 2009; Australia was #2.

iShares Chile Fund

No

ECH

$71.85

$77.21

$80.38

$50.48

Read "Hot Funds," from Vol. 7, issue 7 and "Latin American Funds Doubled" article from the August 2010 ezine, Vol. 7, issue 8.

Citigroup

RISK: HIGH

No

C

$2.26

$4.56

$5.15

$3.53

+100%

One of the troubled, bailed out banks…

It’s important to remember that we don’t really have a clue how deep and wide the losses at these bailed out banks are. Most of this is still hidden and the Feds are not releasing the info, nor are the banks…

Eldorado Gold

No

EGO

$10.56

$17.90

$20.23

$11.88

 

Read "Investing in Gold" from Vol. 6, issue 9.

Eldorado is a gold producing, exploration and development company actively growing businesses in Brazil China, Greece, and Turkey and surrounding regions. We are one of the lowest cost pure gold producers.

iShares Emerging Markets Index

No

EEM

$39.58

$49.69

$50.30

$35.21

+25%

Read "Hot Funds," from Vol. 7, issue 7.

iShares JPMorgan Emerging Markets Index

No

EMB

$104.63

$107.38

$114.14

$92.42

Read "Hot Funds," from Vol. 7, issue 7.

First Solar

No

FSLR

$144.76

$145.00

$163.32

$98.71

 

See "Solar Springs Up Again," article in Vol. 5, iss 4.

First Solar uses cadmium telluride instead of silicon to transfer sunlight into useable energy. This was a huge competitive advantage when silicon was hard to get at a reasonable price. That is shifting, however, for two reasons. Silicon manufacturing is heating up and costs are lowering as a result, and cadmium telluride isn’t as abundant or as efficient a power source as silicon. Read the article for more details. They still list CdTe as the semiconductor of choice on their website, citing old data from 2004 that this is a good strategy. Be forewarned!

FMC Corp.

No

FMC

$51.36

$87.80

$88.67

$55.64

 

Read "Life Begins with Li (Lithium)" from Vol. 6, issue 4 and "Should You Put the Brakes on Toyota?," from Vol. 7, issue 2.

1Q earnings will be released on May 2, 2011 (Monday) after the markets close. The webcast and call will be Tuesday, May 3, 2011 at 11:00 a.m. ET.

4Q & FY 2010 earnings announced on 2.7.11: FMC Corporation reported net loss of $53.5 million in the 4th quarter of 2010, versus net income of $62.1 million a year ago. 4Q revenue of $810.5 million was 12 percent higher than the prior year.

Pierre Brondeau, FMC president, chief executive officer and chairman, said, "Our fourth quarter results provided a strong finish to a record year for FMC. Agricultural Products realized higher sales in all major product lines and most key regions. Specialty Chemicals' performance was driven by broad-based volume growth and operating cost reductions in lithium. Industrial Chemicals' performance met expectations and is now strategically realigned and well positioned to deliver sustained higher margins, greater earnings stability and superior return on net assets."

Ford Motor Company

No

F

$14.55

$15.47

$18.97

$4.71

 

Read "How Cap and Trade Saved Ford" from Vol. 6, issue 4. Ford is making cars people want to drive, but it owes over $100 billion dollars. Be careful with any investment here. The same conditions that plagued Chrysler and GM are present here – lots of debt, pensions and Other Post Employment Benefit Obligations. Ford built cars that won awards in 2010 (and attracted consumer interest). And for that they get a big bravo…

Ford’s total debt is over $100 billion and their credit rating is below investment grade, at BB- (as of 2.1.11, by S&P).

On March 15, 2011, Ford is planning to reduce the "automotive" portion of their colossal debt by another $3 billion by redeeming all of the outstanding 6.50% Cumulative Convertible Trust Preferred Securities (liquidation amount $50 per trust preferred security) (NYSE: F PR S) of its subsidiary trust, Ford Motor Company Capital Trust II, at a redemption price of $50.33 per trust preferred security, plus accrued and unpaid distributions of $0.5416667 per trust preferred security. Instead of cash, securities holders may opt for 2.8769 shares per trust preferred security, which amounts to bond holders converting to stock at a price of $17.88/share. The move should save $190 million per year in interest charges. Ford will take a $60 million charge in the 1st quarter as a result of the redemption.

3.1.11: February sales were strong. Ford is offering $204 million in shares to employees as long term incentives.

General Motors

No

GM

$33.11

$31.85

$39.48

$33.07

-6%

Read "One Very Hot IPO," from the September 1, 2010 ezine, Vol. 7, issue 9. Chevy Volt won Motor Trend’s 2011 Car of the Year, but can GM regain market share from worldwide market leader, Toyota? GM may have shed a lot of debt in the bankruptcy filing, however, the company’s profit margins remain less than 1%, at 0.27%... Toyota is almost seven times as profitable, at 1.81% profit margins, with 64% more sales, at $56 billion in sales in the 3rd quarter, as compared to $34 billion in quarterly sales for GM. Nonetheless, the Motor Trend award may lure investors in this year.

Google

No

GOOG

$600.40

$537.97

$642.96

$433.63

See Vol. 8, issue 2 article, "Big Bites Out of Apple and Google," and Vol. 6, issue 5 for "Hulu Your Heroes." Excellent company and great anchor for your large caps in the nest egg, with one huge hitch – the company has just shaken up the board room, appointing Larry Page as the CEO (effective April 1, 2011), moving Dr. Eric Schmidt, whom everyone considers to be the mastermind from Google the search engine to Google the ubiquitous Internet and phone behemoth, to executive chairman. Sergey Brin will handle "strategic projects" without a real title, except "co-founder." Consensus, colossal insider selling has ensued since the announcement.

Commenting on these changes, Dr. Eric Schmidt said: "We've been talking about how best to simplify our management structure and speed up decision making for a long time. By clarifying our individual roles we'll create clearer responsibility and accountability at the top of the company. In my clear opinion, Larry is ready to lead and I'm excited about working with both him and Sergey for a long time to come."

Meanwhile, the top 3 former triumvirate, Schmidt, Brin and Page have been selling en masse. Almost a billion dollars in sales has being racked up (already) in the first four months of 2011 by these three alone.

Sorry, I just don’t believe that this level of a shake-up, occurring so quickly without warning, is a good sign. Executive exodus has begun, but hard to tell how far-reaching it will be. Be careful with your investment here! SVP of marketing and product development Jonathan Rosenberg left Google in April 2011.

On Nov. 30, 2010, The European Union opened an inquiry into Google, investigating whether or not Google violated antitrust laws with their search dominance.

Announced 1Q results on April 14, 2011.

Google reported revenues of $8.58 billion in the first quarter of 2011, representing a 27% increase over first quarter 2010 revenues of $6.77 billion.  53% of total revenues came in from international markets. GAAP net income in the first quarter of 2011 was $2.30 billion, compared to $1.96 billion in the first quarter of 2010.

Cash – As of March 31, 2011, cash, cash equivalents, and marketable securities were $36.7 billion.

Headcount – On a worldwide basis, Google employed 26,316 full-time employees as of March 31, 2011, up from 24,400 full-time employees as of December 31, 2010.

KLA Tencor

No

KLAC

$47.54

$43.01

$51.83

$26.69

-8%

Read "LED Lighting," from the August 1, 2010 ezine, Vol. 7, issue 8. With revenue double over last year profit margins of 20%, and P/Es of 15.70, even at this price KLAC seems undervalued. However, in such a volatile market as we’re in, buying low is critically important to ROI. Stays here for now.

Watch my 2.3.11 report on the LED marketplace on CNBC, or by visiting my YouTube channel at YouTube.com/NataliePaceDOTCOM.

Kulicke and Soffa Ind.

No

KLIC

$8.71

$8.76

$10.58

$4.03

Flat

Read "Let There Be Light" and "LED Lighting," from the December 1, 2010 and August 1, 2010 ezines, Vol. 7, issue 12 and 8. 2010 Company of the Year!

1Q earnings report on 2.1.11: Net revenue of $148.9 million and net income of $15.1 million. 4Q 2010 revenue was $259.3 million and net income was $56 million. This was expected and announced (which is largely why the company was placed on the Cooling Off list).

KLIC has a new CEO & CFO, is moving offices to Singapore and offered earnings guidance of $125 million – down almost 50% from the 4th quarter. Yikes! As might be expected, there is consensus, colossal insider selling…

Consensus colossal insider selling on Nov. 4, 2010.

iShares S&P Latin America 40 Index Fund

No

ILF

$43.92

$53.37

$55.38

$39.21

Read "Hot Funds," from Vol. 7, issue 7 and "Latin American Funds Doubled" article from the August 2010 ezine, Vol. 7, issue 8.

PowerShares Lux Nanotech

No

PXN

$9.80

$9.67

$10.85

$7.74

Potential hot industry for your pie chart. Read the 2010 Company of the Year article from December 2010 ezine, Vol. 7, issue 12. Watch my 2.3.11 report on the LED marketplace on CNBC, or by visiting my YouTube channel at YouTube.com/NataliePaceDOTCOM.

Netflix

No

NFLX

$200.88

$233.31

$254.98

$62.08

 

Read "Blockbuster’s Second Coming" from Vol. 7, issue 5. 80 P/E is too frothy for our taste, especially while Netflix’ content continues to lag behind the competition. Great, innovative company. Not a short. Just don’t want people buying in high.

1Q 2011 on 4.25.11: $719 million revenue; $60 million net income. Content deals are increasingly large and complex and competition, particularly in streaming (from rivals, like Hulu) is heating up.

As Netflix acknowledges in their earnings report:

Over the past 12 months, both Hulu Plus and free video on Amazon Prime have launched. Dish Networks is likely to launch a substantial subscription streaming effort under the Blockbuster brand. Netflix’s competitive strategy relative to other streaming services is simply to grow as fast as the company can, so they can afford more content, more marketing, and more R&D than the competitors.

Oracle

No

ORCL

$33.47

$35.24

$35.29

$21.24

Read "Big Bites Out of Apple and Google" from the February 1, 2011 ezine, Vol. 8, issue 2.

Rio Tinto

No

RIO

$54.60

$72.76

$76.67

$39.30

Gold, copper and other commodities mining. Based out of UK. Mines worldwide, but focused greatly in Australia. Annual general meeting is May 26, 2010 in Melbourne, Victoria. 4:1 stock split took place on April 30, 2010.

FY 2010 released on Feb. 10, 2011. Record underlying earnings1 of $14.0 billion, 122 per cent above 2009. Net debt reduced to $4.3 billion at 31 December 2010, from $18.9 billion at 31 December

2009. $5 billion share buyback program now through year end 2012. Net earnings are up to $14 billion in 2010, over $4.9 billion in 2009. Chairman Jan du Plessis said “This year’s record results reflect a combination of strong commodity markets, first class assets and excellent operational performance at our managed operations.

Prices improved for nearly all of Rio Tinto’s major commodities: copper prices were up 47 per cent, molybdenum prices were up 45 per cent, gold prices were up 26 per cent and aluminium prices were 31 per cent higher than 2009. Demand and prices for diamonds and minerals improved significantly as the worldwide economy emerged from the global financial recession.

Ross Stores

No

ROST

$35.90

$74.02

$71.81

$45.65

Read "Discount Designer Stores," from Vol. 5, issue 6. Sales have been growing steadily in this discount marketplace, especially given the "jobless recovery." Profit margins are slim, however, 7%.

Sears

No

SHLD

$83.42

$87.26

$125.42

$59.21

Sears is more of a hedge fund than a store these days.

Skype

No

NA

IPO

IPO

NA

--

Read "High Debt Vs. High Risk," from the September 1, 2010 ezine, Vol. 7, issue 9. Still a-waiting for this IPO... Most recent report from Wired and the Wall Street Journal says the IPO will drop in the second half of 2011. Meanwhile, LinkedIn, GroupOn and Facebook could join the IPO party.

http://www.wired.com/epicenter/2011/01/skype-ipo-delayed-wsj/

Sociedad Minera y Quimica de Chile

No

SQM

$36.36

$57.88

$60.33

$30.70

 

This is a great company that manufactures lithium for the electric car & IT industry. Looking for a better buy-in, after we get through the current down-trending volatility. Announces 4Q 2010 results on March 1, 2011 after the markets close.

Read the article, "Treasure Hunting," in Vol. 5, issue 10 and the article "Life Begins with Li (Lithium)," from Vol. 6, issue 4.

SQM began paying a dividend in 2010. The annual dividend was US$0.72592 per share, with US$0.30798 per share to be paid on May 11, 2011.

4Q and FY earnings on March 1, 2011. Revenue was $1.8 billion, 27% higher than $1.438 billion a year ago. Net income was $382.1 million, 13% higher than 2009. Cash on hand = $525 million. $1.7 billion in debt.

Businesses include: Specialty Plant Nutrition, Iodine and Lithium.

Sohu (Chinese Co. ADR)

Beijing, China

Small Cap

RISK: MEDIUM

No

SOHU

$46.54

$106.14

$106.14

$40.05

 

Chinese based Internet portal. Growing and profitable, with 32% net profit margins.

iShares S&P North American Tech Semi-conductors

No

IGW or

SOXX

$45.93

$60.57

$64.19

$14.03

Read "LED Lighting," from Vol. 7, issue 8 and 2010 Company of the Year from Vol. 7, issue 12.

Watch my 2.3.11 report on the LED marketplace on CNBC, or by visiting my YouTube channel at YouTube.com/NataliePaceDOTCOM.

Tesla

No

TSLA

$25.75

$27.66

$36.42

$14.98

Read "Tesla Trades on NASDAQ" from Vol. 7, issue 7.

Tesla will hold its annual meeting of shareholders on June 1, 2011 at 9 a.m. at the TechMart in Santa Clara, CA for one hour. Can you say, "We don’t really want you there," three times very fast? (There was no press release issued, although investors did receive notice on the website.)

Should you buy now? Very volatile stock. Also, beta models of the new sedan are just rolling out and production is in the early phase. It’s at a former Toyota factory, which places a lot of ducks in a row, however, ramping up for production is something that can be wrought with delays and other unexpected kinks. Combine that with competition for the Leaf and the Volt, and you have a more vulnerable company. The Leaf is lower-priced and has a lot less battery power and distance. The Volt is a hybrid, more like the Prius. However, the Volt just won the 2011 Car of the Year Award! Another concern is that Tesla CEO, product architect and Chairman Elon Musk is also the CEO and CTO of SpaceX and the chairman of SolarCity.

FY results were announced on Feb. 15, 2011. On a full year basis, 2010 revenues were $116.7 million as compared with revenues of $111.9 million reported in the prior year. Gross margin improved to 26% for the full year 2010, up from 9% for 2009. Net loss for the year was $154.3 million as compared to $55.7 million in 2009.

According to Elon Musk, CEO of Tesla Motors, the Model S "is well on its way toward becoming the vehicle of choice for 2012."

Panasonic purchased 1,418,573 shares of Tesla for $30 million (about $21/share). According to the Tesla press release, "Tesla and Panasonic are continuing their development of next generation battery cells designed specifically for electric vehicles."

Tidewater

No

TDW

$41.81

$58.84

$63.55

$37.99

Read "Clean Up" from Vol. 7, issue 6.

3Q on Feb. 4, Revenues of $271.8 million, compared to $286.5 million a year ago. Net earnings were $34.4 million, compared to $60 million a year ago. Included in net earnings for the September 30, 2010 quarter was a $4.35 million ($4.35 million after-tax, or $0.09 per common share) charge included in general and administrative expenses related to an agreement in principle with the United States Department of Justice to resolve the previously disclosed Foreign Corrupt Practices Act investigation.

Tidewater was the hero of the BP oil spill. Thanks to the rapid response of Capt. Alwin Landry and his crew of 12, the loss of life on April 20, 2010 was limited to 11. 115 workers were rescued, cared for and shipped 110 miles to dry land. Tidewater’s share price has taken a hit as a result of having losses from "seized assets" and unpaid accounts receivable in Venezuela and a fine/agreement involving a SEC investigation into U.S. Foreign Corrupt Practices Act. Tidewater Inc. owns 384 vessels, the world’s largest fleet of vessels serving the global offshore energy industry.

U.S. Gold

Colorado USA

RISK: VERY HIGH

Company of the Year 2009

No

UXG

$7.23

$9.11

$9.87

$2.02

Note: U.S. Gold is not producing gold at this time; is it a gold exploration company, based in Nevada and Mexico which has begun the process of filing for production permits, with a goal of producing gold by 2014.

U.S. Gold announced on Valentine’s Day that they intend to offer 15 million shares, plus an over-allotment of 2.25 million additional shares. CEO and Chairman Rob McEwen will purchase $20 million. (The overall raise should be in the $124 million range.) The funds will be used "to complete feasibility study work and acquire long lead-time capital items for the El Gallo Project in Mexico, complete pre-feasibility and feasibility work at the Gold Bar Project in Nevada, continue ongoing aggressive exploration programs in Mexico and Nevada and for general corporate purposes," according to the company. At that time, we removed U.S. Gold from the Hot News List, meaning that we believed the share price would be under pressure. On February 18, 2011, U.S. Gold announced that the share price for the offering would be $6.50/share (and we sent out a note to subscribers).

What does this mean for you, the investor? As the company enters into pre-production mode, the share price becomes more vulnerable. U.S. Gold veteran Rob McEwen proved he could find gold and silver. Now he has to prove that he can build a mine and extract it from the ground. As with any construction project, that means lots of forms, inspections and rigmarole. Gold prices can continue to rise and I also have faith in the vision of veteran gold mining CEO Rob McEwen. However, the pre-production phase of any company is one where the share price can lag on investor concerns of timelines, delays, etc. It is your call whether or not you wish to keep a skin in the game during this period or not. Ultimately, U.S. Gold could become as great of a company (and as valuable) as Goldcorp did under McEwen’s leadership. The share price has fluctuated over the past year, however, going as low as $5.35/share in November of 2010, and it did take Mr. McEwen 18 years to make Goldcorp the great company that it is today.

U.S. Gold began trading on the New York Stock Exchange on Nov. 2, 2010, and has a goal of qualifying for the S&P 500 by 2015. Added to the S&P/TSX Global Gold Index and S&P/TSX Global Mining Index on 9.15.09. Added to the Chicago Board of Options Exchange on July 19, 2010. Began trading on the AMEX stock exchange on 12.11.06. (Also trades on the Toronto Stock Exchange.)

According to the press release issued on 2.7.11, "Baseline environmental studies have been initiated and permitting for full mine operations is scheduled to be completed concurrently with the feasibility study. The project is currently estimated to reach commercial production in early 2014." Average annual silver production is expected to be 5 million, with 50,245 ounces of gold annually.

U.S. Gold was the 2009 Company of the Year. The article was featured in the October 2009 ezine, Vol. 6, issue 10.

Veeco

Yes

VECO

$44.08

$50.35

$54.50

$29.54

Read "LED Lighting," from Vol. 7, issue 8 and 2010 Company of the Year from Vol. 7, issue 12.

Watch my 2.3.11 report on the LED marketplace on CNBC, or by visiting my YouTube channel at YouTube.com/NataliePaceDOTCOM. 1Q earnings should be released at the end of April 2010. (See below for important details.)

Reported 4Q and FY 2010 results on 2.7.11. $300 million in revenue for the 4Q, compared to $119.1 a year ago. Net income of $96.7 million, compared to $16 million last year.

John R. Peeler, Veeco’s Chief Executive Officer, commented, "The fourth quarter of 2010 was the best in our history, and we are extremely proud of our performance. These results were achieved through a combination of world-class products, a focus on high-growth market opportunities, operational excellence, our flexible manufacturing strategy, and a deep commitment to satisfying our global customers... Veeco will help enable the industry’s transition to LED lighting."

Quarter end backlog was $555 million.

1Q 2011 guidance: "Q1 2011 revenues will be lower than Q4 2010 because we are planning to ship 12-20 MOCVD reactors in the new MaxBright "cluster" format, and will not be recording any revenue on these systems in the first quarter. Timing of revenue is also being impacted by the longer order-to-revenue cycle times associated with the high percentage of business currently coming from China, primarily due to customer facility readiness. The average time to convert orders to revenue is currently several months longer in China than in other regions."

Peeler sold $2.6 million of stock on 2.11.11 ( a few days after earnings) at $52.82.

VMWare

No

VMW

$83.26

$95.77

$99.19

$51.23

Read "Health Care Reform" Vol. 7, issue 4. P/E is high, even for this great company! Love the company – at a better price...

Wells Fargo

No

WFC

$32.25

$29.27

$34.25

$23.02

I can’t tell you how many people I know who haven’t paid their mortgage in six months (or longer) but are still in their homes. Bank earnings statements right now are the biggest fairy tales ever told. Additionally, WFC credit card holders report getting charged 29.9% interest rates, while class action lawsuits against WFC continue to mount. However, the Feds keep giving the banks money and the SEC keeps allowing banks to carry their losses off the books. Which means that investors could still be suckered into owning bank stock.

See "Wells Fargo’s Incredible Exploding Earnings" in Vol. 5, issue 9, and "Wells Fargo’s Great Depression," in Vol. 4, issue 12.

Wells Fargo Chairman takes early retirement: Dick Kovacevich stepped down as chairman and a director at the end of 2009.

Westpac

No

WBK

$73.54

$138.43

$133.55

$85.72

Issued it’s full-year results on Nov. 3, 2010. Go to Westpac.com.au to access. Australian banks fared far better than the rest of the world banks. So did Canadian banks. P/E is good, but the price is high compared to the 52-week trend.

Key financial highlights (comparisons are with prior year):
• Cash earnings per share of 197.8 cents, up 21%
• Final dividend of 74 cents, bringing fully franked total dividend to 139 cents, up 20%
• Impairment charges of $1,456 million, down 56%
• Statutory net profit of $6,346 million, up 84%
• Cash earnings of $5,879 million, up 26%

Westpac’s Chief Executive Officer, Gail Kelly, said: "Westpac has nearly three billion shares on issue and over 560,000 shareholders. We are very conscious of the role we play in the secure and stable national banking system that underpinned Australia’s strong performance through and after the global financial crisis. We also know the important contribution our shares, and particularly our dividends, make to the retirement savings of so many Australians.

"It is in that context that I am very pleased with this year’s result, demonstrating further improvement in the Group’s businesses as we move into the third year of implementing our customer centric, multi-brand strategy."

Net profit of $2,875 million, up 32% from a year ago.

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.)

ALERT: We are in the middle of the 2011 Spring Rally. Not the best time to initiate new short positions, outside of shorting the Bears and muni bonds. Many of the NASDAQ stocks on the list are here simply to keep you from buying them high.

Highlighted Companies (Cooling Off List):
Orocobre (OROCF) added on 4.1.11
Priceline (PCLN) on 4.28.11
Shutterfly (SFLY) added on 4.28.11
Taubman (TCO) on 4.28.11

DELETIONS:
Amazon (AMZN) on 3.11.11
American Express (AXP) on 3.11.11
Apple (AAPL) on 3.11.11
Baidu (BIDU) on 3.15.11
Berkshire Hathaway (BRK.A) on 3.15.11
Capital One (COF) on 3.15.11
Ford (F) on 3.11.11
Intel (INTC) on 3.15.11
Kulicke & Soffa (KLIC) on 3.15.11
Netflix (NFLX) on 3.14.11
PIMCO Muni Bond Fund (MUNI) on 3.15.11
Transocean (RIG) on 3.15.11
VMWare (VMW) on 3.15.11
Wells Fargo (WFC) on 3.15.11

Company

NP owns?

Symbol

Price when added to Cooling Off List

Price

4.28.11

52-week High

52-week Low

Gains/Loss

eBay

No

EBAY

$29.36

$33.96

$35.35

$19.06

+16%

Think etail will perform better than retail going forward, but concerned about investors expecting too much from these companies in an overbought marketplace – even if the Feds are pushing people out of treasuries.

Orocobre

No

OROCF

$2.62

$2.88 (4.1.11)

$2.71

$4.03

$1.29

+3% &

-7%

Read "Should You Put the Brakes on Toyota?" from Vol. 7, issue 2. This is an Australian lithium company with a deal with Toyota to supply lithium for lithium ion batteries. Began trading on TSX (Toronto Stock Exchange) in June of 2010 and trades on the Australian Stock Exchange as well.

Orocobre issued almost 7 million new shares in the price range of $3.20 Canadian on Feb. 25, 2011 to fund ongoing design work, pilot plan operation and other activities in relation to the construction of the Salar de Olaroz.

Recent trouble: On March 7, 2011, Orocobre announced that the Argentinian government is slowing down the permit process for the proposed lithium potash project in NW Argentina. On March 4, 2011, the local government declared lithium to be a strategic mineral resource and introduced a secondary approvals process. According to the decree, additional approval will be required for both the Olaroz lithium-potash project for which the Company has already received approval of its development and production EIS, and the Cauchari lithium-potash project, for which an exploration EIS has been submitted. This new process does not affect the Company’s program at Salinas Grandes, which is predominantly located in Salta Province.

The company is based in Brisbane, Queensland, which had extensive flooding. The company’s projects are located in South America, so it’s possible that the floods won’t impact this company severely. Lithium production isn’t projected to begin until 2012 and with the new developments in Argentina, this could be further delayed.

Orocobre Limited is listed on the Australian Securities Exchange and Toronto Stock Exchange (ASX:ORE, TSX:ORL) and is the leading lithium-potash developer in the lithium and potassium rich Puna region of Argentina. For further information, please visit www.orocobre.com.

Rochester Municipals Bond Fund

No

RMUNX

$14.86

$14.79

$16.91

$14.49

Flat

Read "Bond Beautification Project" from Vol. 7, issue 10 and "Bonds, Bond Funds and T-Bills: The Next Disaster," from Vol. 7, issue 9.

Priceline

No

PCLN

$337.82

$437.99 (1.14.11)

 

$549.55

 

$549.55

$173.32

+63% &

+25%

Read the article "The Priceline Negotiator," from Vol. 7, issue 10. Great company. Not a short. Just don’t want people buying in high.

1Q 2011 results will be released on May 5, 2011 at 4:30 p.m. PT (after markets close).

2.23.11: Released 4Q and FY earnings: 4Q revenue was $731 million; net profit was $175 million.

Shutterfly

No

SFLY

$63.49

$63.49

$63.49

$18.43

--

Read "Diamonds or Scrapbooking," from the November 1, 2010 ezine, Vol. 7, issue 11. PE is 108 – far too high for our taste – especially for a company that posted a loss in the most recent quarter.

4Q and FY earnings was released on Feb. 2011. Net revenues increased 27% in the 4th quarter 2010, to $166.2 million. GAAP net income for the full year was $17.1 million, compared to $5.9 million a year ago. Cash on hand is $252 million.

1Q 2011 results on April 27, 2011. Net revenues increased 25% year-over-year to $57.2 million (but down from $166.2 million in the 4th quarter). GAAP net loss was ($7.8) million, compared to ($4.7) million in Q1 2010. At March 31, 2011, cash and cash equivalents totaled $216.3 million.

Taubman Centers REIT

No

TCO

$24.74

$55.47

(3.1.11)

$58.43

$58.43

$21.85

+134%

+5%

Read the article, "Global Recession," from Vol. 6, issue 6 in June 2009.

1Q earnings on April 20, 2011. "We’re very pleased with this quarter’s performance, in particular the momentum of our tenant sales growth," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers.  "Our earnings growth was largely driven by increased rents and net recoveries, partially offset by the expected decrease in lease cancellation income."

I searched the EDGAR database on the SEC.gov site and could not find a detailed P&L for Taubman. This is a red flag!

Taubman Centers is a real estate investment trust engaged in the development, leasing and management of regional and super regional shopping centers. Taubman's 26 U.S. owned, leased and/or managed properties, the most productive in the industry, serve major markets from coast to coast. Taubman Centers is headquartered in Bloomfield Hills, Michigan and its Taubman Asia subsidiary is headquartered in Hong Kong.

Mall owners are hit with the quadruple whammy of sluggish retail sales, high turnover, high occupancy and declining real estate value. Much of Taubman’s earnings have been from canceled contracts.

Time Warner

No

TWX

$24.44

$31.78

(9.11.10)

$37.23

$50.70

$17.81

+54% &

+16%

Read the article, "Hulu Your Heroes," from Vol. 6, issue 5 in May 2009.

Toyota Motor Company

No

TM

$77.05 (2.12.10)

$79.50

$93.74

$67.56

+3%

Read "Should You Put the Brakes on Toyota?" from Vol. 7, issue 2 and "One Very Hot IPO" from Vol. 7, issue 9.

The earthquake and nuclear crisis in Japan could way heavily on Toyota. On april 8, 2011, the company advised investors that their will reopen their factories at half capacity from April 18 to April 27. There is a pre-scheduled spring holiday from April 28 through May 9, 2011. Toyota is evaluating how to handle production after the holiday, and is currently doing an evaluation of the part supply chain. 233 parts out of 300,000 parts will be actively produced controlled for now, until production returns to normal.

Toyota continues to be the #1 automaker and a fave among greenies. The industry is vulnerable, however, and investors should be aware of the price and that 55 P/E is very high for a slow growth industry – especially given the unfortunate disaster that just occurred.

3Q earnings report on 2.8.11 was strong: Consolidated vehicle sales for the nine months amounted to 5.517 million units, an increase of 322 thousand units compared to the same period last fiscal year. Net income* increased from 97.2 billion yen to 382.7 billion yen. Net revenues for the nine-month period totaled 14.351 trillion yen, an increase of 5.0 percent compared to the same period last fiscal year.

PowerShares Treasury Bill Index Fund

No

PLW

$30.02

$27.81

$30.02

$26.30

-7%

Read "Don’t Get Fooled Again," from Vol. 7, issue 8. When interest rates rise, bonds and bond funds fall in value. Time to find another "safe" place for your assets.

Wynn Resorts

No

WYNN

$95.42

$118.81

(1.14.11)

$145.71

$149.80

$71.00

+53% &

+23%

Check out the article, "(No) Viva Las Vegas" in Vol. 5, issue 10.

Wynn is a great marketer and capital raiser. However, Vegas is one of the worst places for real estate in the U.S. and the city has taken a huge hit as a convention center as well. Be very careful here.

The new Wynn pool scene is hot. Buying a vulnerable company with a high price to earnings ratio is not.

Yahoo

No

YHOO

$15.00

$16.98

(12.15.10)

$17.51

$19.12

$13.52

+17% &

+3%

Read the "AOL" article from Vol. 6, issue 12 to review the Stock Report Card on Yahoo from December 2009.

Deleted in 2010-2011:
Deleted AMAT on 8.1.10 with gains of 12.5% & 7% (put gains would be double or more). 8.30.10: Deleted FIG (-10% & -40%), MXWL (-37%), MDT (-4% & -24%), MSFT (-20%) -- all for gains. Deleted MGM 9.13.10 for 61% gains. Deleted Tesla on 1.14.11 with 20% & 24% gains. 3.1.11: Deleted Shutterfly with -12% performance (cooling off gain) and Sears with mixed results (up & down). 3.11.11: Deleted PIMCO Muni Bond fund with flat performance. Deleted Amazon, American Express, Capital One, Ford, Kulicke & Soffa, Netflix, Taubman, VMWare with mixed results. Deleted Apple, Baidu, Berkshire Hathaway, Intel, Transocean & Wells Fargo with losses. 4.28.11: ABAT with 51% gains.

Deleted 2008-2009:
19 gainers and no losers.

Recently Deleted:
Advanced Battery Technologies, Inc. (ABAT) on 4.28.11
Amazon (AMZN) on 3.15.11
Apple (AAPL) on 3.15.11
American Express (AXP) on 3.2.11
Baidu (BIDU) on 3.15.11
Berkshire Hathaway (BRK.A) on 3.15.11
Capital One (COF) on 3.15.11
Ford (F) on 3.2.11
Google (GOOG) on 3.2.11
Intel (INTC) on 3.15.11
Kulicke & Soffa (KLIC) on 3.15.11
PIMCO Muni Bond Fund (MUNI) on 3.15.11
Tesla (TSLA) on 1.14.11
Sears (SHLD) on 3.1.11
Shutterfly (SFLY) on 3.1.11
Transocean (RIG) on 3.15.11
VMWare (VMW) on 3.15.11
Wells Fargo (WFC) on 3.15.11

Advanced Battery

Technologies Inc.

No

ABAT

$3.69

$1.82

$4.35

$1.51

-51%

Read the "Earth Hour" Stock Report Card from the April 2011 ezine, Vol. 8, issue 4, where we warn that this company is really a holding company within a holding company, with very sketchy information. This report was published on March 31, 2011. On April 6, 2011, Variant View analysts issued a long screed about some of the acquisitions that were announced by this company. Advanced Battery and Variant View are currently in a PR battle of words, however, in the meantime, the stock is vulnerable. The company has a lot to prove before they should attract your investment.

 

IMPORTANT DISCLAIMER (PLEASE READ):
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.


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NataliePace.com Calendar:

Party in the Gulf to Rejuvenate the Region (after the Oil Spill). Billionaires Buffett and Milken Host Their Annual Money Fests.

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! We add online chats, article updates, teleconferences, etc. as they are booked, so be sure to visit the calendar section early and often.  Below is only a partial listing of what’s happening this month.

To access links to the event website and registration, go to the Calendar section at NataliePace.com.

Kate Middleton becomes HRH!
Friday, April 29th, 2011
11:00AM London Time
The Royal Wedding between Princess Williams and Kate Middleton begins at Westminster Abbey at 11:00 a.m.

Berkshire Hathaway Annual Meeting
Saturday, April 30th, 2011

The theme this year is Planes, Trains and Automobiles. This gives NetJets, BNSF and BYD a chance to show off.

Milken Global Conference
May 1-4, 2011

Presidents, CEOs, VIPs, Nobel Prize winners, academics, policymakers. Participants don’t just debate the issues — they help move policy toward realistic solutions in energy, economics, health and more.

Mark Morris Dance Group, LA, CA
Thursday, May 5th, 2011
The Mark Morris Dance Group With Handel's pastoral ode as the musical landscape, and set to the poetry of John Milton, along with sets inspired by William Blake's later watercolors... at LA Opera.

Mother's Day
Sunday, May 8th, 2011
Celebrate and honor Moms!

Hang Out Music Fest, Orange County, AL
Friday, May 20th, 2011

Rock on the Alabama Gulf Coast with Foo Fighters, The Black Keys, the Flaming Lips, Cee Lo Green and more. What a better way to support this region after the Oil Spill!

GDP 1Q 2011 (2nd Est.)
Thursday, May 26th, 2011
8:30AM through 8:45AM ET.
The U.S. Dept. of Commerce, Bureau of Economic Analysis (BEA.gov) releases its 2nd estimate on GDP growth in the 1st Q of 2011.

Memorial Day
Monday, May 30th, 2011

Tesla Annual Shareholder Meeting
Wednesday, June 1st, 2011

9:00AM through 10:00AM
Tesla will hold their annual shareholder meeting for one hour at the TechMart, 5201 Great America Parkway, Santa Clara, CA 95054.

Step Up Women’s Network Inspiration Awards, Beverly Hills, CA
Friday, June 10th, 2011

11:00AM through 2:00PM PT
A star-studded luncheon where influencers inspire. Proceeds benefit Step Up's charitable programs.

Father's Day
Sunday, June 19th, 2011

Celebrate and honor Dads!

Summer Solstice
Tuesday, June 21st, 2011

The height of summer.

FOMC Meeting
Tuesday, June 21st, 2011

The Federal Open Market Committee meets to determine Federal Reserve policy in the U.S. Two-day meeting June 21-22, 2011.

Clinton Global Initiative Economic Summit, Chicago
June 29-30, 2011

Join President Bill Clinton as he leads a 2-day economic summit focused on job creation & economic growth in the U.S. CGI America will bring together leaders from business, nonprofits, and government to develop new ideas for generating jobs now in the U.S.



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PHILOSOPHY: Member Mosaic. Piecing together a more complete picture of the publicly traded company, one tile at a time, by valuing firsthand consumer experience, conducting evaluations of the executive team and lining up the numbers of the publicly-traded company with its competitors in a Stock Report Card.
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