Downgrade and Default.

by Natalie Pace.

Uncovering the Bipartisan Truth.

The fate of the U.S. is in our hands. Credit rating agencies want $4 trillion in budget savings over the next 10 years. The Budget Plan misses the mark by almost two trillion dollars. Please read this important report and contact your Congressional leaders now.

President Barack Obama makes a statement in the Brady Press Briefing Room at the White House announcing a deal in the ongoing efforts to find a balanced approach to the debt limit and deficit reduction, July 31, 2011. (Official White House Photo by David Lienemann)

The ratings agencies couldn’t be more clear about the message they have sent to Washington D.C. There are three distinct outcomes on the table for the U.S. credit rating, according to Standard and Poor’s, and each scenario is tied directly to the actions of the leadership in the White House and Congress.

Possible Outcomes for the Current Debt Impasse

1. Get your act together now, and we’ll take you off credit watch.
2. Raise the debt ceiling without a credible long-term plan and we’ll downgrade you – and fast. Within weeks. In early August.
3. Let the U.S. default on its debt and you’ll push the U.S., and the world, back into the Great Recession.

By the publication of this article, Congress may have already raised the debt ceiling. However, the future of the United States requires more than that, and lies in the hands of your elected officials. And what the elected officials have been instructed to do (by the rating agencies) requires give and take on both sides of the aisle. So, if you want them to do the right thing, be sure to send them an email today that says something to the effect of:

If Congress does not create a credible debt reduction plan, the U.S. credit rating will be downgraded. The rating agencies have been clear about what they believe is a credible plan, and you are aware that this includes concessions on both sides of the aisle. So stop the politics and cut $4 trillion from the budget, to be implemented over the next 10 years.

You can find your Representative’s web page at http://house.gov/.
You can find your Senator’s web page at http://senate.gov/.

Below is a breakdown of what the rating agencies want to see, in order for the United States to maintain an AAA rating and be taken off of Credit Watch.

Long Term Budget and Debt Reform
According to David T Beers, Beth Ann Bovino and Curtis Moulton of the Standard and Poor’s Sovereign Debt team, "If the opposing camps agree to raise the debt ceiling before the deadline and come to terms on a long-term debt-reduction plan, Standard & Poor's would likely affirm the U.S. ratings and remove them from CreditWatch." Of course, the rating agencies will have to be assured that the plan will actually be implemented in a timely fashion as well. What does that credible plan look like?

Government Spending Has to Continue for now
According to Standard and Poor’s, "Any significant slowing of government spending would have generally negative implications for the economy broadly." Spending must be cut, but not at the expense of GDP growth. So Obama’s Stimulus Plan, according to Standard and Poor’s, should remain in tact for now. Dr. Gary Becker, Nobel Prize winning economist and University of Chicago professor, believes that the United States needs "to cut back some of the sizable expansion of federal spending since 2007." However, not all spending is spending. Some spending is an investment in future industries and growth (just as the U.S. invested in the Internet in the Clinton era). In an interview on April 4, 2011, Dr. Becker told me, "It's important to support alternative energy, but don't call it a stimulus. Call it an investment in trying to get us less dependent on oil, on global warming and all of these issues."

Entitlements
Moody's (another rating agency) "does not take a position on what measures should be included in any deficit reduction package." However, in order "to retain a stable outlook," the U.S. needs "a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years," according to the rating agency. As you can see clearly from the interactive budget map on the White House’s Office of Management and Budget website, government spending is concentrated in four areas – Medicare, Medicaid, Social Security and Defense.

Dr. Gary Becker advocates gradually increasing the age for Social Security to age 70, which he says is "not an unreasonable age with modern health." Dr. Becker would make Medicare means-tested. He would give the states block grants for Medicare. And he would wind down the war in Afghanistan. Click to read more about Dr. Becker’s Roadmap for the U.S. Recovery, on my HuffingtonPost.com blog.

Taxes
Standard and Poor’s baseline scenario includes a "post-2012 phase-out of the December 2010 extension of the 2001 and 2003 tax cuts." If the tax cuts remain in place now, it is generally agreed by economists that this will help to keep the tenuous economic recovery pushing forward. Having a post-2012 phase-out also means that Congress is serious about balancing the budget and reducing the debt. Of course, there are many economists, including Dr. Becker, who believe that a major reform of the tax code is in order. Dr. Becker would make the tax base flatter and the income base wider. According to Becker, "That would be lower taxes for most people, higher taxes for some people and generous no taxes for lower-income people."

GDP Growth
GDP Growth needs to be near 3% for the U.S. to start making gains on the debt-to-GDP ratio. Congress probably got the memo on Friday, July 29, 2011 that America has a lot of recovery left to do. The Bureau of Economic Analysis released the advance report of the 2^nd quarter 2011 GDP growth, which was a 1.3%. If you think that’s a limping recovery, it gets worse. 1^st quarter 2011 GDP growth was revised downward to a barely breathing 0.4%.

America has a lot more rowing to do before we escape the Great Recession. Budget reform has to include provisions that will fuel economic growth, moderate oil prices (which killed GDP growth in the 1^st quarter of 2011) and strengthen the dollar. Some good news did occur last week. American automakers agreed to raise the average MPG to 54.5 by 2025. Consumers will save $1.7 trillion at the pump, which can be spent fueling industries and companies other than just oil.

How Much Needs to be Cut?
The magic number that Standard and Poor’s wants to see is budget savings of $4 trillion phased in over 10-12 years. And they want to be assured that "agreement would be enacted and maintained."

If the U.S. defaults or if the credit agencies downgrade the U.S. credit rating, the interest the nation will have to pay on its existing debt will become egregious. President Obama has rightfully called this a "tax" on the American people.

The stakes couldn’t be higher. If Congress fails to act quickly to raise the debt ceiling and implement $4 trillion in budget savings over the next ten years, the ramifications will be dire – and not just for the U.S., but for all of our international partners, suppliers and customers.

Congress understands clearly that a default or downgrade will thrust the U.S. back into a recession. Equity markets will plunge. Interest rates will soar. The value of the dollar will drop another 10%. Oil prices will spike again. And consumers and businesses will stop spending.

It’s hard to imagine that the politicians would do that to the American people. Standard and Poor’s borrowed a quote from Winston Churchill to sum up their belief that Congress will, at the last hour, do the right thing, writing, ""The Americans can always be counted on to do the right thing…after they've exhausted all other possibilities."

Let’s hope that’s the case.

The fate of the U.S. is in our hands. I encourage you to contact your Congressional leaders now, and to email this article and information to your friends and family without delay.

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.

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.

Short and Long Term United States Fiscal Crises.

by Dr. Gary S. Becker.

Short and Long Term United States Fiscal Crises.

Dr. Gary Becker.

The US faces a rather easy to manage short run fiscal crisis, and very challenging long-term fiscal and growth problems. The short-term crisis is due to the rapid growth of federal debt outstanding that will soon hit the ceiling set by Congress. I have no doubt that Congress will, and should, vote to raise the ceiling. The only major uncertainty about this is whether that will be tied to presidential and congressional actions to try to reduce the long-term fiscal crisis.

That Congress will have to raise the debt limit this summer is a no-brainer since revenues are not anywhere near large enough to cover government spending. Without a boost in the ceiling, the federal government will be unable to pay its bills, including pay to federal employees. Since both Republicans and Democrats know that, and since Republicans are likely to be blamed if the ceiling is not raised and the federal government "shuts down", congressional Republicans cannot credibly threaten not to agree to raising the ceiling. This is true even if they do not receive major concession on government spending from President Obama and congressional Democrats. Since many House Republicans oppose voting for substantial new taxes in order to gain Democratic support for spending reductions, prospects for an agreement before the debt-ceiling deadline on spending cuts and revenue increases are not good. Therefore, the best approach at present for Democrats and Republicans is to agree to an increase in the ceiling, and then afterwards try to work on a serious plan to meet the long-term spending-taxes-growth challenge.

However, contrary to much that is written, the US is not in any long-run real danger of explicitly defaulting on the federal debt, assuming debt limits are raised. If revenue is needed to pay Medicare and Medicaid expenses, purchase military equipment, pay interest on federal debt in the hands of the public, or finance other spending, the federal government can always resort in effect to printing money. To do this the government need not actually print dollar bills, for the federal government can issue enough new debt to cover its expenses that are not met by tax revenues. This is how the federal government financed its rapid increase in spending during the past several years.

If there were not enough demand by private investors and foreign governments like China for the new federal debt, the Fed would help out, to avoid explicit federal default, by buying government debt. In this way, the government could always get additional revenue to pay its bills. Of course, this approach carries major risks because banks get reserves when the government receives the "high-powered" money supplied by the Fed as it absorbs debt. Under normal economic conditions, the banks would spend most of their new reserves by extending loans to businesses and households, and by increasing their demand for assets paying higher returns than reserves do. The banks’ spending increases the money supply in the form of additional currency, demand deposits, and other highly liquid assets. In effect, the Fed would "monetize" the debt issued by the federal government to finance the government's shortfall in tax revenue.

This growth in the money supply would increase inflation in the United States, and reduce the value of the dollar in international transactions. Inflation also reduces the real, as opposed to nominal, value of the US debt in the hands of the public. In effect, the US could avoid bankruptcy and a default on its debt by inflating away some or most of the real value of its debt. The government has the power to inflate away its debt because the debt is denominated in a currency that it controls, namely dollars, as opposed to gold or another currency.

This option to use inflation to reduce the real value of its debt is not available to states like California because the Fed will not purchase their debt. Nor is it available to countries like Greece, Portugal, and Italy because their debt is denominated in Euros. These countries cannot print Euros, nor do they have unlimited capacity to issue government debt that would be bought by the European Central Bank.

However, the impact of rapid inflation on the American economy, and America’s reputation for fiscal responsibility, could be disastrous. Moreover, the government might be forced to increase the money supply, and hence inflation, at faster and faster rates in order to finance growing federal spending. So while default on government debt is not a likely prospect, avoiding the cost of growing rates of inflation does require resolution of America’s long-term fiscal situation. This is why the looming fiscal problems are a potential crisis of the first order.

The components of a solution to this crisis are clear. One major needed reform is a significant slowdown in the long-term growth of entitlements, especially Medicare and Medicaid, because entitlement growth is the main component of the long-term spending problem. A resolution of the long-term crisis also requires tax reforms that would broaden the tax base by reducing various subsidies and exemptions from the base, but would also lower marginal tax rates on most corporations and households. A broader and much flatter tax structure would raise taxes on some families and businesses, but it would bring in more revenue while causing much less harm to the economy.

What matters for the wellbeing of future generations is the long-term growth rate of the economy. The growth of the economy also determines the real burden of the debt since it is the ratio of debt to GDP that determines whether a fiscal crisis develops. In an earlier post (see "An Economic Growth and Deficit Reduction Agenda for Congress and the President", 11/07/10) I spelled out some steps to allow America to regain its long-term growth rate of GDP of 3% per year. I hope the country can even do better than that. These steps include radically slowing the long-term growth of federal spending on entitlements, tax reform of the kind mentioned in the previous paragraph, more open immigration, especially of skilled individuals, free trade agreements, improved K-12 school systems, and a sensible and reduced regulatory structure.

All these and other reforms are feasible, but whether they will be implemented depends on whether both Republicans and Democrats put aside some of their partisan differences over spending, taxes, immigration, trade, and other policies. The present loud squabbling in Congress and by the president does not boost one’s confidence in this happening.

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.

Murdoch’s Humble Pie.

by Natalie Pace.

Includes a News Corp. Stock Report Card.

For decades, Rupert Murdoch has been one of the most powerful media moguls in the world. Presidents and Prime Ministers wined and dined Murdoch. British Prime Minister David Cameron has admitted to meeting with Rupert Murdoch 26 times since he took office on May 11, 2010 -- on average every other week. Cameron is now turning the transcripts of those meetings over to Parliament.

However, things changed dramatically on July 19, 2011. This day was, by Murdoch’s own admission, the most humble day of his life. Murdoch submitted to questioning by the British House of Commons over the phone hacking that occurred at his tabloid, News of the World. In the days before Murdoch’s testimony, executives from News of the World were arrested, top executives at Scotland Yard resigned and allegations of hacking into a murdered girl’s cell phone were headlines worldwide. Click over to a HuffingtonPost article for a rundown of the ten people from News of the World and News International who have been arrested so far in the scandal.

In response, Rupert Murdoch shuttered the doors of the 169-year old tabloid -- faster than most people shut off the TV before bedtime. He accepted the resignations from two of his top executives – Rebekah Brooks, who was the editor at News of the World when Milly Dowler’s phone was hacked, and Les Hinton the CEO of The Wall Street Journal and Dow Jones & Company. (Hinton was the executive chairman of News International in the UK during the time of the hacking.) But will this be enough to protect Murdoch’s $43 billion corporation -- News Corp?

Media reports in the U.S. assure investors that News of the World wasn’t a large piece of News Corp.’s revenue. And the "phone hacking" moniker makes the "crime" seem more like tabloid shenanigans, than criminal activity. So, just how concerned should investors be?

A Corruption Scandal, Not Just Phone Hacking
The gravity of this scandal is best summarized by John Whittingdale, the Chair of the House of Commons’ Culture, Media and Sport Committee. On July 19, 2011, Whittingdale stated, "In our report last year, we stated that we thought it was inconceivable that only one reporter had been involved... It is also clear that Parliament has been misled."

What began as a phone hacking scandal has become a corruption scandal, with toxic tentacles that interconnect politicians, police and tabloid executives. The former editor of News of the World, Andy Coulson, went on to become British Prime Minister David Cameron’s communications chief – after one of his reporters was convicted for phone hacking. That puts Cameron in the hot seat at Parliament, particularly since the corruption scandal has cost the two top executives at Scotland Yard their jobs. News Corp. lost their bid to take ownership of BSkyB. And the fires of official inquiries, testimonies and potential criminal charges are still raging.

British Prime Minister David Cameron threw down the gauntlet publicly to Rupert Murdoch, saying in front of Parliament on July 13, 2011, "The people involved, whether they were directly involved for wrongdoing, whether they sanctioned it or covered it up, however high or low they go, they must now be brought to justice. They must have no future role in running a media company in our country."

James Murdoch, Rupert’s son and the chairman and CEO of News Corp, Europe and Asia, has had his testimony challenged outright by Former News of the World editor Colin Myler and News International legal manager Tom Crone, who claim that James Murdoch knew that phone hacking was pervasive throughout the tabloid and that payoffs were made to cover it up. Labour MP Tom Watson wants a police probe into the discrepancy. And Prime Minister Cameron has stated specifically that he expects more answers from James Murdoch, commenting, "Clearly James Murdoch has got questions to answer in Parliament and I'm sure he will do that."

You can watch Prime Minister David Cameron’s July 20, 2011 statement to Parliament on the matter, on the BBC’s website.

As you can see from the Media Stock Report Card (click to access), even before this scandal, News Corp.’s profit margins and earnings growth were lagging most of the competition. News Corp. lost revenue in the last quarter, while Disney, Viacom and Time Warner all increased sales.

MySpace was number one in social networking before News Corp. purchased the company in 2006. As a News Corp. company, MySpace floundered and lost key executives, while Facebook took the lead and became the #1 social networking site. Now Facebook, valued at $85 billion, is worth twice as much as News Corp., which has a market value of $43 billion. AOL, Turner Digital and Viacom score in the Top 10 most trafficked sites in the U.S., well above Fox Interactive Network and MySpace. See below for the ComScore rankings.

Another concern is nepotism. Lachlan Murdoch, Rupert’s eldest son, began his executive career at News Corp. at the age of 22 – just one year out of college. Lachlan, now 39, has resigned from the company, but remains on the board. James Murdoch is the head of Europe and Asia and is a News Corp. board member. Three out of 17 News Corp. board members are Murdochs (Rupert, Lachlan and James) and eight, almost half, are family or staff. With the board stacked pro-Murdoch (rather than pro-News Corp.) it is not surprising that one of the acquisitions in the last quarter was The Shine Group, whose chairman and CEO is Elisabeth Murdoch (Rupert’s daughter). News Corp. paid $480 million for Elisabeth’s company, threw in an additional $135 million for debt and then assumed all of Shine’s liabilities. Elisabeth’s personal take of the bounty was $214 million. Don’t be surprised if she ends up on the board, too.

The News Corp.’s website still boasts that the company is "creating and distributing top-quality news, sports and entertainment around the world." The News of the World website claims that it is "The World’s Greatest Newspaper." Will Murdoch’s empire crumble as a result of the News of the World scandal? The company’s fate may well lie in the hands of Scotland Yard and the British Parliament, particularly since broadcast licenses are at stake. U.S. investors should be aware that the storm is still brewing across the pond, even if the waters are calm here in the U.S. (for now).

I alerted subscribers that I was placing News Corp. on the Hot News on Cool Stocks List on Saturday, July 23, 2011.

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.

Education Pays.

by Natalie Pace.

Discover where the jobs are, and what you can do to get them.

Many Presidents ride into the sunset of their life, after four or eight years of public service, content to build a Presidential Library and play golf without the weight of the world ruining their swing. Not the Job Creator in Chief, however. The President who has the distinction of creating the most jobs ever of any President – 22.5 million – and the lowest unemployment rate in 40 years, at 4%, isn’t content to sit back and let President Obama solve the unemployment challenges that America faces alone. On June 29-30, 2011, President Bill Clinton brought together over 750 CEOs, NGOs, Nobel Prize winners and young entrepreneurs at his Clinton Global Initiative America conference to figure out how to put America back to work.

According to President Clinton, "I believe that in a free society where people have choices to make and options to choose, but there is not perfect knowledge of all of those options, creating more knowledge, disseminating it and inspiring people to make those decisions can make a real difference."

There are three million jobs that are unfilled today. Filling those existing positions would go a long way to putting America back to work. So, what’s missing? Mostly skills and education.

One central theme emerged again and again at the conference—the value of education. Americans without an education are seven times more likely to be without a job. There is 15% unemployment among Americans without a high school diploma. Meanwhile, almost everyone with a doctorate is working -- with only 1.9% unemployment among PhDs. As you can see, education pays in dollars, too. PhDs earn almost four times as much as someone without a high school diploma.

While not all jobs require a degree, new jobs quite often require acquiring new skills. Of the 3 million jobs that remain unfilled at this time, lower-skilled work, like construction, manufacturing and entertainment remained the weakest areas of the labor market.

In some states, the public and the private sector are working hand in hand, to provide workers with new skills. Georgia Works is a private/public collaboration created by Michael L. Thurman, Georgia’s former labor commissioner. GeorgiaWorks allows employers to recruit, train and then hire staff. As Thurman explains, with this initiative, the employer gets to "audition" the employee. During the training period, the employee is unpaid, and, if there is a match at the end of the training period, the employee is hired. Thurman notes that this program reduced the cost of unemployment in the state of Georgia, while creating jobs and empowering business leaders to fuel the job growth in that state.

The Bay Area Medical Academy takes welfare recipients and others on the fringe of society and teaches them to become medical assistants in the San Francisco area. The Green City Force trains and hires young workers to paint rooftops white in New York City. This simple strategy reduces the temperature on the roof by up to 40 degrees and can cut the energy bill in the building by up to 18%.

During President Clinton’s time in office, in the 1990s , small business, the Internet and technology fueled jobs and economic growth. So, what innovation will lead America out of the Great Recession? Clearly, biotechnology, technology, smart phone products, cloud computing, health services and engineering remain strong, further underlining the need for a strong STEM (science, technology, engineering and math) curriculum in high schools. However, if Secretary of Energy Dr. Steven Chu and President Obama have their way, clean energy will become a major driver of American competitiveness on the world stage, as well. And not just to reduce global warming. This focus on clean energy is intended to put the U.S. in the forefront of one of the strongest new growth industries in the world, while reducing America's dependence upon foreign oil.

According to Secretary Chu, "The world will demand clean energy and high energy products. This is an international competition. We still generate the best ideas in the world." Currently, clean energy companies in the U.S., like Applied Materials, KLA Tencor and Veeco Instruments, are leading Wall Street in revenue growth, having more than doubled sales over the past two years, with 80% of the revenue coming from Asia. All three of these companies are profitable, with low price to earnings ratios (around 10).

At CGI America, Secretary Chu announced that Atlanta, Los Angeles and Seattle had stepped up to President Obama’s Better Building Partners Challenge, pledging to reduce energy consumption by 20% over the next decade. According to Secretary Chu, buildings consume 40% of the energy in America and a simple "tune-up" can cut the waste, create jobs, put more money in the pockets of American business owners, while creating greater energy independence and security. Retrofitting buildings to be more energy efficient also puts construction workers back into the labor force – with new skills. Something all three cities are eager to do.

As President Clinton pointed out, "We’re spending too much money on today and yesterday and not enough on tomorrow." Once the 51 commitments made at CGI America on June 29-30, 2011 are fully funded and implemented, 124,000 jobs will be created, 364,000 people will have access to job training, and entrepreneurs can tap into $265 million in investments or loans. This is a big start toward re-igniting the American Dream for the millions of Americans who just need new skills, or a better education, to get a job.

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.

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.

Lessons in Design from Nature.

by Sunil Rampersad.

William McDonough signs copies of his book Cradle to Cradle at the Dwell on Design conference.

This year’s Dwell on Design conference took place in downtown Los Angeles, drawing thousands of home design professionals and enthusiasts. It’s an Eco-friendly crowd with one whole stage devoted to sustainable living. Naturally, greenie luminaries, such as Ed Begley Jr., were there.

However, another, powerful force in sustainability was also present -- William McDonough, who was the keynote speaker of the conference. McDonough was named Time Magazine’s "Hero of the Planet" in 1999, its "Hero of the Environment" in 2007, and is the co-author (with chemist Dr. Michael Braungart) of the book, Cradle to Cradle: Remaking the Way We Make Things.

Currently a cradle-to-grave philosophy governs products in our society, with most products ending their lives in landfills. To reduce waste, the prevailing idea has been to simply use less. However waste continues to pile up and it is clear that using less is no longer enough. Anyone who’s seen the recent proliferation of digital devices won’t have any trouble believing the World Resources Institute projection of a 300% rise in energy and material use, as population and economic activity increases in the coming 50 years.

McDonough’s cradle-to-cradle philosophy asks, "What if we approached design not with the aim of being "less bad" but rather "more good"? He proposes we seek to emulate nature, where there is no waste.

McDonough’s cradle-to-cradle plan puts products into one of two cycles, the cycle of nature and the cycle of industry. Here’s how it works:

A product designed for the cycle of nature would provide food for living organisms. An example of such a product is a fabric created by McDonough and Dr. Braungart that decomposes to provide nutrients for the soil.

In the cycle of industry, when a product reaches the end of its life it should provide "nutrients" for other products. Shaw industries (the world’s largest producer of commercial carpet) has created an infinitely recyclable carpet, which is manufactured in their solar powered plant. It’s made with a material called Nylon 6, which can be easily extracted from old carpet and used to create new ones.

This example brings up one of the main tenets of the cradle-to-cradle philosophy -- easily retrievable materials. Usually when materials are mixed to create a product they can’t be recycled and those that are, are used to make a lower quality product – in effect, downcycled. McDonough sees the process as beginning with several companies agreeing to phase out environmentally dangerous materials like the "poison plastic" PVC (polyvinyl chloride, or vinyl). These visionary companies would collaborate to create products made from a pool of ‘cradle-to-cradle materials,’ which are designed for disassembly, in order to provide ‘nutrients’ for other, new products.

As an architect, McDonough has incorporated cradle-to-cradle philosophy in his building design. Green roofs are one of his favorite building features, such as the one on the Gap Inc.’s San Bruno corporate campus (one of the most energy efficient buildings in California). The Gap’s roof grows coastal savannah, just like the vegetation that the building sits on. The plants and soil absorb storm water, filter the air and provide thermal and acoustic insulation.

Economically if the products you create do "more good" than "less bad" then the old idea of environmental regulation being a hindrance becomes a moot point since the more you produce, the more good you’re doing.

And if this all sounds like a pipe dream then I quote John Stuart Mill who said, "If a man's reach does not exceed his grasp -then what is Heaven for?" McDonough’ cradle-to-cradle ethos is inspiring greenies around the globe, and his design is proving that installation can be cost-effective and easy to implement. Just look at the marquise customers on McDonough’s site, including Ford, BASF, DesignTex, Spire, The Gap and the City of Chicago. As Time Magazine writes of McDonough, "His utopianism is grounded in a unified philosophy that – in demonstrable and practical ways – is changing the design of the world."

About Sunil Rampersad:
Sunil Rampersad is a graphic designer and writer from Los Angeles, California. His work has appeared in print, in the online magazine Evil Monito, and he currently writes for the DnA blog (Design and Architecture radio show on KCRW) and DVProfessional.

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Do You Really Know Who Your Online Friends Are?

by Mary Mwende.

Mary Mwende with Nobel Peace Prize winner Wangari Maathai

My guy, Framo, is a tea fanatic. Like honesty, you can never have an excess of tea, he insists.

Honesty is an important facet of moral character to Framo. It is who you really are.

A fortnight ago, I was chatting with an online friend. His name was weird. But I did not mind. We held inconsequential, momentary conversations. I mean, it was so insignificant that I never pondered over the true identity of the said friend, or whether he was hiding behind an alias name. I assumed he was a guy, without even thinking about it.

It’s just one of those things you look forward to every morning. The person, let’s call him ‘you-don’t-know-who’ is perchance comical and makes your morning or evening. It may be at your workplace or at home. And you end up being subconsciously and instinctively close to ‘you-don’t-know-who’.

At the time, I didn’t consider that it’s rather hazardous and a tad too risky. This avatar can compel you to open up to him, even more than the people who matter the most in your life. You share deeply. Finally, ‘you-don't-know-who’ ends up being a drug. You need a dose every day or else you will be disoriented, and eventually you reveal details about your life that make you an easy to track prey.

The miniscule things we deem inconsequential can indeed pile up into mountains. This is what happens when we get to the web-sphere. We forget ourselves, just jump onto the online highway and hand over life’s steering wheel to a stranger. We progressively forget who we are and our fundamental principles. It is conceited of us to claim to be frank and upright, while we allow such to happen. We deny the people close to us the vitality of knowing us. We may even hide ‘you-don’t-know-who.’

Framo walked in one Friday night and found me entertaining ‘you-don’t-know-who’. He was incensed and resembled a wounded bull about to charge at a plus-size ‘beefy’ matador. I immediately made him a mug of tea, which didn’t do much. He still raised a storm in a teacup. All other fun had to be set aside, so that Framo could take me through what he called the ‘the rules of social networking’. I sat there, listened and digested what he said.

Now it’s your turn. Sit back, relax and let me properly enlighten you too.

Social media attempts to mimic real life relationships, Framo told me. However, would you share deeply with a person in real life, if you did not even know their name? Would you speak so intimately with a stranger? I got more interested.

Framo proceeded to assert that clear introductions and honest identities of your online friends are critically important. Why is this person adding you as an online friend? Did they see something interesting? Do they really know you?

Social networks are platforms to cantilever communications between trusted friends. You can certainly make new friends (of friends), but why would you entertain one with a fake identity? That’s synonymous to the six-year old who has imaginary friends from Mars. If ‘you-don’t-know-who’ desires honest, innocent friendships, why is he faking his identity online? "Real relationships are formed and exist through honesty," Framo said, finally taking his first sip of tea.

"Don’t you think it is strange to chat with a stranger for such a long time?" Framo asked. "Times have changed and people are increasingly more malicious. The good, the bad and the evil exist. You render yourself vulnerable to tremendous harm when you display yourself out there to a myriad of strangers whose true intentions you’re not privy to," Framo warned me.

Framo asked me how much I knew about ‘you-don’t-know-who’ and it dawned on me. I knew nothing about ‘you don’t know who," and yet I was so willing to reveal so much of myself to him! The longer the cyber-friendship continues, the more likely it is that this stranger will learn aspects of my life that my closest friends wouldn’t know. I couldn’t help but feel cheated.

At the time of my social networking education session with Framo, I had over 3000 friends on my Facebook page. After listening to him and thinking about it, I made mad use of my delete button. I removed all of the people I didn’t know. I am still using the delete button, even though the strange friendship requests keep increasing by the day.

Thanks to Framo, I finally realized just how important it is to know the people you are interacting with. I needed to be more selective about adding a new Facebook friend. At least we should have a common understanding or common friends. What could I possibly have in common with a faked identity user?

It is up to me to manage and maintain meaningful online relationships, and to avoid potential predators by being as wary of ‘you-don’t-know-who’ online as I would be in real life.

Now that I have used my delete buttons to remove all the ‘you-don’t–know-whos’ on my list, I encourage you to do the same. And then, sit down, as I did, and have a long sip of honesty... and tea. With someone, like Framo, whom you really value and care about.

About Mary Mwende.
My name is Mary Mwende Alex. I am currently a second year Finance student, studying at the American University in Dubai as a Clinton Scholar (as in President Clinton). I am a former student of the Starehe Girls’ Centre in Nairobi, which I attended by scholarship, too. I have been able to acquire my own education through charity, and I know that in the future I will be actively involved in creating educational opportunities for other underserved children – particularly the girl child.

Despite the difficulties of trying to make ends meet, I am very persistent and patient. Above all, I am a bee. I work as much as I can in any given moment. I work hard, and aspire to perfection. I give everything my best shot and leave the rest to God.

The Global Give Back Circle
Mary Mwende is a member of the Global Give Back Circle, a nonprofit organization founded by Managing Director Linda Lockhart. The Global Give Back Circle (GGBC) is an Empowerment and Enablement Process whereby disadvantaged girls are guided, inspired, encouraged and motivated through a Mentoring Model and Methodology that facilitates Gratitude, Goals and Giving Back. Kenya's GGBC connects over 535 disadvantaged girls to mentors from nine different countries, including Kenya. Through a structured Five-Phase Mentoring Process, that includes Workshops, Journaling, Letter Writing and Personal Visits, the girls are guided to articulate their goals and dreams and supported to make them realities.

Visit the GlobalGiveBackCircle.org website to sponsor or to mentor a young woman in Kenya to become financially and socially independent.

Hello Freedom. Good-Bye Debt.

by Natalie Pace.

Debt is the biggest game out there. Credit card companies can lend money to you, and then charge you interest upon interest, compounding the original amount borrowed over and over again until you can’t see beyond the wall of debt you owe. Then, they get to hound you daily until you set up a payment plan, and the calls are so incessant and threatening that many people are paying their debt FIRST before they address their own needs.

Debt collectors will threaten to take you to court, get a judgment and put a lien on your income if you don’t pay up monthly and stick with it, and that fear can easily rule your decision-making, if you let it. However, placing compounding debt as the master of your finances only ensures indentured servitude. Whereas paying yourself first is the ticket to freedom.

You must ensure that your health savings accounts, retirement accounts, back to school funds and more– all investments that have a chance to compound returns for you and increase your income and assets -- are receiving your hard-earned cash FIRST. Otherwise, you are just making the banksters and bill collectors rich at your own expense!

Why?

Credit card companies use compounding to entrap people in the cycle of debt. Investors use the power of compounding to liberate themselves from the shackles of borrowing and overspending.

How?

You will probably have to address other areas of your income and expenses to get your budget in balance, but that is far more important than giving all your money to debt collectors to stop the pain of them hounding you daily. Start by having investor consciousness and understanding that your well being, your ability to earn income and your ability to retire are all key to your ability to pay down debt in the first place.

The thinking that you should get out of debt before you start investing is flawed thinking. Debt and spending are nothing more than habits and your life as a debtor is a reflection of focusing your attention there. Additionally, the debt game is designed to ensnare and enslave you with compounding debt. Saving and investing are also habits, and the sooner you focus on compounding returns, the sooner you’ll have the income and assets needed to negotiate better terms on your debt, and protect your money from debt collection and liens. You will also shift out of the habit of borrowing and spending more than you earn, which was probably completely out of control when you suffered from debt consciousness.

Compounding Gains and Increased Assets
Here’s how compounding your gains works. If you simply save $4,000/year for 30 years, at the end of that time, you have saved $120,000. If you invest $4,000/year for 30 years and that earns 10% annualized (what stocks and bonds have done for the past 30 years), then you will amass $723,776. By year 40, your nest egg will be worth over $2 million. In short, compounding your investment gains is your ticket to freedom! Here’s another way to think of it. If you invest 10% of your income and that earns a 10% gain each year, you’ll have more money in your retirement account than you earn within seven years and your money will make more than you do within 25 years. Investment therapy will make you far happier than retail therapy (which makes the credit card companies very happy)! And if you start at the age of 20, you’re ready to retire by 45. (If you started using credit cards at 20, you’re likely still in debt at 45, saying that you’ll start investing when you get out of debt.)

If you are drowning in debt and signing over your income to the credit card companies each month, you can’t blame the credit card companies. All they want is your money. Taking your money is their job. It’s not their job to advise you on what is the most sound financial plan for you. The best plan for them keeps you:

If you are in trouble on your mortgage, the bank can foreclose and resell the property to a new borrower, keeping all of the money you paid to them. (They win either way.) If the bank and credit card company are charging you a high interest rate or penalties, the amount you owe may be increasing exponentially, even as you attempt to "pay it down." And as long as you keep paying monthly, without negotiating better terms or setting up a Debt Management Plan, the penalties, compounding and fees keep increasing and increasing until you declare bankruptcy or give them double, triple or even ten times the amount you borrowed.

Meanwhile, you’ve assumed that since you’ve made your payments timely, your FICO score will improve, when your credit score has gone into the toilet because you owe too much. And you probably also assumed that the credit card company will be so happy with your timely payments that they will strike a good settlement with you when you have the extra dough to strike a deal (which you haven’t even been amassing). In fact, if you falter in the least, the debt collector will seek a judgment against you for the full amount, including fees, compounding and interest, as quickly as possible to get a judgment and file a lien against your income and unprotected assets.

If you are spending all your income and draining your retirement plan and assets to pay the debt collector, you better pray that nothing happens to you because the debt collector is not going to take up a collection for you if you lose your job or are forced to retire or have a health issue arise. So, if you’re not funding your own retirement plan and health savings account first – before you pay the bill collectors – you are literally sinking your own lifeboat. (Money in qualified retirement plans is yours to keep no matter what. Even in a personal bankruptcy, your personal retirement plans cannot be taken away from you.)

That is why it is so important to have reason and sound strategies ruling your lifestyle, rather than fear of the debt collector’s next call.

Here’s what has to change. You have to shift out of debtor and spender consciousness and into investor consciousness. And as you start changing your thoughts, your actions have to change, too. You’ll have to replace all of the thoughts and actions that didn’t work, with sound strategies that have stood the test of time.

The Hello Freedom! Mindset
The Hello Freedom! Mindset means that you will use the Thrive Budget, limiting your basic needs expenditures to 50%, so that you have 50% left to thrive on. You will invest, rather than spend. You will separate work accounts and money from personal life. You will course correct when you make a mistake. You will use a qualified counselor to help you set up a Debt Management Plan, if that is the best way forward, and you will consider the possibility of foreclosure and bankruptcy, if your debts are eating you out of house, retirement and home. (Remember how quickly Rupert Murdoch, the chairman and CEO of News Corp., closed down News of the World during the phone hacking scandals?) You will verify, analyze and put things in writing.

Debtors and spenders focus on paying down debt before increasing their assets. They spend more than they earn. They have blind faith in the integrity of others. They think that working harder and earning more income will solve the problem. If the accountant or money manager or business manager or partner makes bad choices and loses too much money, they then feel like a victim and whine about it.

Whereas the Hello Freedom! person would never rely on blind faith, and would understand, approve and take responsibility for the actions of the people who work for her. Investors know that assets and return on investment solves the problem, and education and wisdom are better strategies for money than having blind faith in others to manage their money for them because no one is going to care about their personal assets more than they do.

Which one are you? Take a look at the various areas below and rank yourself as having the Hello Freedom! mindset and skill set or that of the Debtor or the Spender.

Once you understand how your thinking has trapped you in a cycle of over-spending and debt, you can start planning and acting more like an investor who is taking ownership of her life and is determined to get financially free. You will shift out of debt consciousness and into prosperity and abundance. Out of victim mentality and into ownership. Out of trying to appease the credit card companies, banks, debt collectors and others who hound you for a payment and into a workable Debt Management Plan that allows you to contribute to your own Retirement Plan and basic needs, while you pay off a reasonable, renegotiated debt load. You will transform out of depression, disgust, rage and/or helplessness and into being a conscious creator of your world and the world at large.

There are all kinds of ways that people get into debt, but all of these ways stem from the same mind traps, financial predatory scams and fiscally unhealthy actions. By adopting the mindset and daily habits of a savvy, confidant owner/investor, you will say Good-Bye to Debt and Hello to Freedom. In short, you must invest in yourself and in your future FIRST. And then determine the best course to increase your income (including return on investments), alleviate your debt and get your spending under control.

Be sure to tune into my Hello Freedom! Good-bye Debt Radio Show on Wednesday, August 10, 2011 at 9:00 a.m. PT (noon ET). Call in at: (347) 215-7305. Log onto: BlogTalkRadio.com/NataliePace. It’s free, so be sure to invite your friends, too.

http://www.blogtalkradio.com/nataliepace/2011/08/10/from-buried-alive-in-bills-to-thriving

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.

Should You Do the Unthinkable?

by Natalie Pace.

Should you short sale, foreclose, declare bankruptcy or hang on?

Are you making the banksters and credit card companies rich on their compounding interest, while you bankrupt yourself?

You might be one of the more than 50 million Americans who are spending more than their income. Or, like almost 40% of homeowners, you might owe more than the value of your home. Or you might be one of the nine million people who lost a home between 2007 and 2011. Or one of four million who were seriously delinquent on their mortgage (in July of 2011). Or one of the 105 million Americans who carry a balance on their credit cards.

Clearly, the Great Recession and real estate downturn put a lot of Americans in a bad spot. And if you are one of the vast majority in this position, it is critically important that you get the help you need now, before you burn through your life savings and bankrupt yourself. If you have already burned through everything and are trying to recover, then be sure to read the article on switching your thinking from debt consciousness to the Hello Freedom! ‘money while you sleep’ mentality, so that you can put the power of compounding to work for you (instead of letting the debt collectors use the power of compounding to bury you in bills and drown you in debt).

Below are some important strategies to help you determine the magnitude of your debt and the best recourse based upon the prognosis of your current debt disease. Many Americans are just paying their bills, in the hopes that will keep their credit score high. What most people don’t realize is that when the value of their assets shrink, their FICO score goes down any way – even if you are making payments on time.

Below are the 5 components that figure into your score. As you can see, the Assets to Debt ratio is weighted almost as high as your payment history. "Amounts Owed" accounts for 30% of your score. So, if the value of your home is dropping or if your debt is compounding, then your FICO score is sinking, even if you are making payments religiously and on time.

Credit Scoring:

You can access your Credit Report for free once a year from all three credit agencies (Equifax, TransUnion and Experian) at AnnualCreditReport.com. The free report will allow you to see if there are any dings on your credit that you should dispute and just how much debt collectors are claiming that you owe. You will have to purchase your "credit score," if you wish to see where you stand on the continuum. Only 20% of the population is in the 780+ range, with the bottom 20% of the population scoring below 620.

Should you Short Sale, Foreclose, Declare Bankruptcy or Hang on?
Now that you know the truth about your credit score, you should look at your debt with a more sober eye. Below we’ll deal with mortgage debt and next month we’ll talk about credit card debt, debt consolidation, Debt Management Plans and personal bankruptcy options. For the purposes of this article, there are two main considerations if you owe more than the value of your property.

Is this your home or is this income property?
One is personal and the other is strictly business.

If this is your home, then your cost/benefit analysis will include the following:

1. Do you love this home? Is it your sanctuary?
2. Is paying the mortgage cheaper than renting the same home?
3. Are you benefiting from the mortgage interest deduction?

OR...

4. Is this more home than you can afford?
5. Is the home too big or too expensive for your current needs?
6. Are you draining all of your income, credit and retirement plans to keep it?

If you are planning on living in this home for the rest of your life, and the mortgage payments are within your budget, and the mortgage, insurance and maintenance are less expensive than you could rent a home for and you are benefitting from the mortgage interest rate deduction on your taxes, then hanging on might be a great idea. If you give the home back to the bank, then you will have to wait 5-7 years (or longer) before you can buy another house (unless you can pay cash for it). Once you factor in that you’ll be paying a lot more in taxes as a renter (when you lose the mortgage interest write-off), you might not be saving anything at all by giving your home back to the bank. If you determine that keeping your home, even though you currently owe more than it is worth, is the best idea, then lock in a fixed, low-interest rate loan (any way that you can) and enjoy your home. Also, consider filing for a reassessment of the value, so that you can reduce your property tax.

If your home is more than you can afford, and you are tapping every amount of income you’ve got (including your retirement accounts), and taking on expensive, compounding credit card debt to stay in it, then you must sober up and start looking at ways of adopting a more sustainable budget and lifestyle. The "unthinkable" is not the only solution. Can you rent out this expensive home and cover your costs, while you move into a more affordable place? If the answer is yes, and you’re willing to be a landlord, then you might have found a viable solution, which provides some extra income for you. Can you hang on and sell the home for a profit in a few years? Be sure to include a reasonable timeframe for the real estate recovery and all of the costs to carry the property in the cost/benefit analysis, including mortgage payments, insurance, maintenance and property taxes. If the answers to these questions are no, then you are back to square one – spending a lot of dough on something that is ruining your budget, your credit, your health, your lifestyle and your life.

Yes, it is possible that you will take a hit on your credit score if you short sale or foreclose. However, if you are severely underwater on your mortgage or if the payments are bankrupting you and you are draining all of your assets to make payments, then it is more likely that your credit score will improve with a bankruptcy, foreclosure or short sale. If the asset is declining in value, the longer you hang on, the worse your cash bleed, assets to debt ratio and credit score become. Even if you give the home back or declare bankruptcy, you can keep your retirement plans, so tapping those accounts is a no-no. They are your lifeboat.

If You Are Underwater On Income Property
If you are underwater on income property, then you have to do a cost and benefit analysis on the investment, just like any business owner would. Because it is a business.

Business Considerations for Income Property that is Underwater

1. Consider the marketplace.
2. Consider your costs to carry.
3. Consider when/if you can sell the investment for a profit.
4. Consider whether or not your money could be invested elsewhere for a superior return.

In 2008, a couple came to me with a problem. A relative had convinced them to purchase a second home in 2006, right before real estate collapsed. This relative (who was getting a commission on the sale) convinced them that they were getting a great deal, even though they were losing $600 a month on the investment. (The renter was paying $600 less than their mortgage.) Additional costs of insurance and property taxes meant that this couple was spending at least $10,000 a year to keep the place. Meanwhile, the value of the home was dropping, which meant they couldn’t re-finance or sell to cover the mortgage.

1. Consider the marketplace. The statistics were dismal. We were in the middle of a Great Recession. Unemployment was almost 10%. Foreclosures were at a record high and everyone knew someone who was getting foreclosed on. At least fifteen million people were in danger of losing their homes. All signs were that the market value of real estate in that area was going to continue to decline. The correction was predicted to be significant, and to continue at least through 2012. Since the average return of real estate is 5.3%, I estimated that a decline of 25% in real estate could take five years to recover. If the conditions of the marketplace and my math turned out to be accurate, the couple would have to hold their property until 2017 before the value returned to their purchase price.
   
   
2. Consider your costs to carry. If my estimates were right (and so far they have been spot on), then the couple would be flushing over $110,000 down the drain over an 11-year period, with little opportunity to sell the property or increase the rent. If they needed to replace a roof, or had mold issues (it was on the beach), or if there was an earthquake or fire, then their losses could be significantly higher (there are high deductibles on disaster insurance). And if the renter moved out or didn’t pay rent, there was more exposure for losses as well.
   
   
3. Consider when/if you can sell the investment for a profit. Once you add $110,000 in "costs to carry" to the property value, they could be adding another 3 years to recover their investment. 14 years underwater is a long time. It’s easy to see that this money could be better invested elsewhere, particularly since the partners were nearing 50 – at an age when they need to squirrel away funds for retirement.
   
   
4. Consider whether or not your money could be invested elsewhere for a superior return.
   $10,000 Year Invested + 10% Return
   
   

   Year	Deposit	10% Gain	Year End
   1	$10,000	$1,000	$11,000
   2	$10,000	$2,100	$23,100
   3	$10,000	$3,310	$36,410
   4	$10,000	$4,641	$51,051
   5	$10,000	$6,105	$67,156
   6	$10,000	$7,716	$84,872
   7	$10,000	$9,487	$104,359
   8	$10,000	$11,436	$125,795
   9	$10,000	$13,579	$149,374
   10	$10,000	$15,937	$175,311
   11	$10,000	$20,384	$205,695

   
   If the money were invested and achieved a 10% gain each year, the couple would double their dough over the 11-year period. Instead of being negative $100,000, they would be positive $205,695. And, if they gave the place back to the bank in 2008, their credit score should be fully recovered within 5-7 years, as well. Since the bank can resell the property, what sounds horrible -- "foreclosure"-- is actually a win-win for everyone.

Is 10% Gain Achievable?
NASDAQ earned 75% gains between 2009 and 2011. At that pace (37.5% Annualized Return on Investment), the couple would over $1 million at the end of eleven years, instead of losing $100,000 or more. They could have purchased five homes in many parts of the United States with cash! (The average home price in June of 2011 was $184,300.) As you can see from the chart below, stocks and bonds averaged more than 10% annualized over the past 30 years. So, a 10% gain, provided you are invested wisely for the long term, is definitely achievable.

Of course, before choosing foreclosure, short sales or personal bankruptcy, you need to explore your rights with legal counsel and your tax ramifications (phantom income, etc.) with an accountant. You want to make sure that the shortfall isn’t sold to a debt collector, that the taxes on phantom income don’t bury you or that your income isn’t levied. You cannot trust the bank or debt collector to look out for your best interests or even provide you with accurate information. A fair agreement needs to be spelled out in the contract and you need to clearly understand exactly what the terms of the contract are before signing it.

Don’t let the FICO Score Myth keep you swimming in the rip ride of compounding debt. Sometimes going underwater and waiting out the wave – doing the unthinkable – is the best way to save yourself from drowning.

Be sure to tune into my Hello Freedom! Good-bye Debt Radio Show on Wednesday, August 10, 2011 at 9:00 a.m. PT (noon ET). Call in at: (347) 215-7305. Log onto: BlogTalkRadio.com/NataliePace. It’s free, so be sure to invite any friend or colleague who is underwater on a loan or drowning in debt, too.

http://www.blogtalkradio.com/nataliepace/2011/08/10/from-buried-alive-in-bills-to-thriving

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.

Debt Collection FAQs: A Guide for Consumers.

By the Federal Trade Commission.

If you’re behind in paying your bills, or a creditor’s records mistakenly make it appear that you are, a debt collector may be contacting you.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Here are some questions and answers about your rights under the Act.

What types of debts are covered?
The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.

Can a debt collector contact me any time or any place?
No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

How can I stop a debt collector from contacting me?
If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:

Make a copy of your letter. Send the original by certified mail, and pay for a "return receipt" so you’ll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.

Can a debt collector contact anyone else about my debt?
If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

What does the debt collector have to tell me about the debt?
Every collector must send you a written "validation notice" telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.

Can a debt collector keep contacting me if I don’t think I owe any money?
If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

What practices are off limits for debt collectors?
Harassment.
Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:

• use threats of violence or harm;
• publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
• use obscene or profane language; or
• repeatedly use the phone to annoy someone.

False statements.
Debt collectors may not lie when they are trying to collect a debt. For example, they may not:

• falsely claim that they are attorneys or government representatives;
• falsely claim that you have committed a crime;
• falsely represent that they operate or work for a credit reporting company;
• misrepresent the amount you owe;
• indicate that papers they send you are legal forms if they aren’t; or
• indicate that papers they send to you aren’t legal forms if they are.

Debt collectors also are prohibited from saying that:

• you will be arrested if you don’t pay your debt;
• they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
• legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

Debt collectors may not:

• give false credit information about you to anyone, including a credit reporting company;
• send you anything that looks like an official document from a court or government agency if it isn’t; or
• use a false company name.

Unfair practices.
Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

• try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
• deposit a post-dated check early;
• take or threaten to take your property unless it can be done legally; or
• contact you by postcard.

Can I control which debts my payments apply to?
Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. Equally important, a debt collector may not apply a payment to a debt you don’t think you owe.

Can a debt collector garnish my bank account or my wages?
If you don’t pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.

Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.

Can federal benefits be garnished?
Many federal benefits are exempt from garnishment, including:

• Social Security Benefits
• Supplemental Security Income (SSI) Benefits
• Veterans’ Benefits
• Civil Service and Federal Retirement and Disability Benefits
• Service Members’ Pay
• Military Annuities and Survivors’ Benefits
• Student Assistance
• Railroad Retirement Benefits
• Merchant Seamen Wages
• Longshoremen’s and Harbor Workers’ Death and Disability Benefits
• Foreign Service Retirement and Disability Benefits
• Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
• Federal Emergency Management Agency Federal Disaster Assistance

But federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.

Do I have any recourse if I think a debt collector has violated the law?
You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.

What should I do if a debt collector sues me?
If a debt collector files a lawsuit against you to collect a debt, respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers to preserve your rights.

Where do I report a debt collector for an alleged violation?
Report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.

For More Information
To learn more about debt collection and other credit-related issues, visit www.ftc.gov/credit and MyMoney.gov, the U.S. government’s portal to financial education.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, "How to File a Complaint" at FTC.gov/ Video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Structured Notes With Principal Protection:

A FINRA.org Investor Alert.

Note the Terms of Your Investment.

The retail market for structured notes with principal protection has been growing in recent years. While these products often have reassuring names that include some variant of "principal protection," "capital guarantee," "absolute return," "minimum return" or similar terms, they are not risk-free. Any promise to repay some or all of the money you invest will depend on the creditworthiness of the issuer of the note—meaning you could lose all of your money if the issuer of your note goes bankrupt. Also, some of these products have conditions to the protection or offer only partial protection, so you could lose principal even if the issuer does not go bankrupt. And you typically will receive principal protection from the issuer only if you hold your note until maturity. If you need to cash out your note before maturity, you should be aware that this might not be possible if no secondary market to sell your note exists and the issuer refuses to redeem it. Even where a secondary market exists, the note may be quite illiquid and you could receive substantially less than your purchase price.

While structured notes with principal protection have the potential to outperform the total interest payment that would be paid on typical fixed interest rate bonds, these notes also might underperform a typical fixed interest rate bond and could earn no return for the entire term of the note, even if you hold the note to maturity. Their terms and structures also can be more complex than traditional bonds, making them more difficult for investors to evaluate. Finally, as with structured products generally, structured notes with principal protection may have hidden or imputed costs that can be relatively high and difficult to understand.

FINRA and the SEC’s Office of Investor Education and Advocacy are issuing this alert to make investors aware of these risks and to help them better understand how structured notes with principal protection work. The alert includes questions investors should ask when considering structured notes with principal protection and provides links to helpful resources, including a recent FINRA Regulatory Notice on these products. In particular, the terms related to any protections to or guarantee of your principal require a careful review.

What Are Structured Notes With Principal Protection?
For the purposes of this alert, the term "structured note with principal protection" refers to any structured product that combines a bond with a derivative component—and that offers a full or partial return of principal at maturity. Structured products in general do not represent ownership of any portfolio of assets but rather are promises to pay made by the product issuers. Structured notes with principal protection typically reflect the combination of a zero-coupon bond, which pays no interest until the bond matures, with an option or other derivative product whose payoff is linked to an underlying asset, index or benchmark. The underlying asset, index or benchmark can vary widely from commonly cited market benchmarks to foreign equity indices, currencies, commodities, spreads between interest rates or "hybrid" baskets of various asset types. For example, a note might be based on the performance of an equally weighted basket composed of the Russell 2000, an exchange-traded fund tracking a real estate index, the Brazilian Real-U.S. Dollar exchange rate and the price of copper. These products are designed to return some or all principal at a set maturity date—typically ranging up to 10 years from issuance. The investor also is entitled to participate in a return that is linked to a specified change in the value of the underlying asset.

How Do These Notes Protect My Investment?
If you hold a structured note with principal protection until maturity, you typically will get back at least some—and perhaps all—of your initial investment, even if the underlying asset, index or benchmark declines. Be aware that protection levels may vary. While some products return 100 percent of principal at maturity, others return as little as 10 percent. In some cases, the principal protection does not apply unless some contingency is met—sometimes called "contingent protection"—so it may provide no protection at all, even if the sales materials suggest otherwise.

Also, any guarantee that your principal will be protected—whether in whole or in part—is only as good as the financial strength of the company that makes that promise. In other words, the principal guarantee is subject to the creditworthiness of the guarantor, which is generally the securities firm that structures and issues the note. In the event the issuer goes bankrupt, investors who hold these notes are considered unsecured creditors and might recover little, if anything, of their original investment. This is what happened to investors who purchased structured notes with principal protection issued by now bankrupt Lehman Brothers Holdings.

How Do Structured Notes With Principal Protection Calculate the Return on My Investment?
Some structured notes with principal protection make periodic interest payments while others don’t. The return on your investment—over and above any principal guarantee and assuming you hold the note to maturity—will depend on a host of factors, including the method the issuer uses to calculate gains (or losses) linked to the performance of the underlying asset, index or benchmark (the "market-linked" returns), the note’s participation rate and any minimum guaranteed return.

Market-linked gains (or losses).  As with other complex financial products, there can be varying and often complicated methods of calculating a market-linked gain or loss. For example, one product might compare the change in an index at two discrete points in time, such as the beginning and ending dates of the note’s term (point-to-point). Another product might look at the index value at various points during the life of the investment, for example at annual anniversaries, and then compare the highest value with the value of the index level at the start of the term (high water mark). Some products base your return on the number of days during the holding period that the underlying index stayed above (or below) a pre-specified level (accrual)—or within a range of pre-specified levels (range). And still others use complex, conditional formulas that allow you to participate in some or all of the index’s gain up to a set level—but significantly limit your return if, at any time during the holding period, the index rises above that level (shark fin).

Participation rates.  A participation rate determines how much of the gain in the underlying asset, index or benchmark will be credited to the note. For example, if the participation rate is 75 percent, and the asset, index or benchmark increases 10 percent, then the return credited to your note would be 7.5 percent.   

Minimum guaranteed returns. If a structured note with principal protection offers a "minimum guaranteed return," be sure to carefully read the prospectus to understand how the issuer defines that term. In some instances, the term includes not only the principal guarantee but also a fixed overall investment return. For example, a note with 100 percent return of principal at maturity and a 2 percent minimum guaranteed return would pay out 102 percent of your initial investment at maturity, regardless of how the underlying asset, index or benchmark performed. In other cases, however, an issuer might use the term to refer only to the level of principal protection.

The bottom line for investors is that structured notes with principal protection can have complicated pay-out structures that can make it hard to accurately assess their risk and potential for growth. In addition, depending on how the note is structured, the distinct possibility exists that you could tie up your principal for upwards of a decade with the possibility of no profit on your initial investment. While your principal might be returned at maturity, that might be all you get back after this lengthy holding period—and, in the meantime, inflation could erode your purchasing power.

The chart below illustrates a hypothetical example of one of the more complex pay-out structures, sometimes referred to as a "shark fin" pay-out. 

Shark Fin Pay-Out Assumptions:

• Principal protection of 10 percent of initial investment
• 100 percent participation in index gains up to 40 percent, so the maximum return is 140 percent of principal
• Automatic 110 percent return at maturity if the index gains more than 40 percent at any time during the life of the note.

In other words, the performance of the underlying asset impacts what the investor gets as follows:

As the shark fin hypothetical above demonstrates, a note might be structured in a way that your upside exposure to the underlying asset, index or benchmark is limited or capped, which is generally a tradeoff for offering the principal protection. Although it might seem counterintuitive, in the example above, a 40 percent gain in the underlying index results in the return of 140 percent of principal invested, while a 41 percent gain (achieved at any time) would automatically result in the return of only 110 percent at maturity. This shows why reading and understanding the terms of these notes is so important.

Can I Get My Money When I Need It?
Potential lack of liquidity is one of the disadvantages of structured notes with principal protection. These products tend to be longer-term investments, tying up your money for several years. Some issuers might allow investors to redeem their notes before maturity under certain circumstances, such as expiration of a "lock-up period" (a period of time during which you cannot access your funds), payment of a redemption fee or both. Other issuers might (but are not obligated to) provide a secondary market for certain notes. However, depending on demand, the notes might trade at significant discounts to their purchase price and might not return the full guaranteed amount. In addition, the value of the note before maturity might be difficult to calculate and can vary depending upon a wide array of factors (including prevailing interest rates and the volatility of the underlying asset, index or benchmark). You might also have to pay a penalty for early redemption, further reducing any return of your principal.

Be aware of call risk. Call risk refers to the possibility that the issuer could call or redeem your note before maturity. This generally happens when it is in the issuer’s—rather than the investor’s—best interest to do so, such as when interest rates fall. While the bond's principal is repaid early, you might be unable to find a similar investment with as attractive a yield.

Do Structured Notes With Principal Protection Have Fees?
Yes, even if the sales materials suggest otherwise. Virtually every investment has either implicit or explicit fees, whether they are described as selling commissions or concessions, management fees, structuring fees, early redemption fees or by some other term.

What Other Costs or Tradeoffs Are Involved?
Depending on their terms and the way they are put together, structured notes with principal protection can have hidden or imputed costs, which in some cases may be relatively high. These stem from the way a product is "bundled" or "packaged." At issuance, any given note will have an estimated fair value based on its structure. The issuer generally raises this value by a spread to arrive at the offering price of the product, which captures costs to the issuer associated with the note over its life, such as costs of hedging, as well as the issuer’s profit. The hidden costs of purchasing virtually any structured product include the possibility that you could have assembled a similar bundle of investments on your own at a lower cost—and potentially with higher returns. The maximum return of any particular structured note with principal protection will typically reflect (and account for) the issuer’s costs of manufacturing and maintaining the note as well as its own profit margin. These costs generally are not transparent to investors.

Other costs of investing in structured notes with principal protection include the opportunity cost involved with sacrificing a potentially higher yield to obtain some downside protection. It is also important to note that the principal protection generally relates to nominal principal and does not offer inflation protection. And, for any underlying investment that would ordinarily pay dividends, structured notes, like other equity or index-linked investments, typically exclude dividends.

How Are These Products Taxed?
In most cases, if you invest in a structured note with principal protection, you must pay federal taxes while you own the product, even before maturity or during any lock-up period and even if you haven’t received any cash payments. This can occur if the interest on the product’s zero-coupon bond holdings (resulting from the principal guarantee) is considered to be imputed interest for federal income tax purposes. You should read the tax consequences description in the prospectus and consult your tax advisor to know how a particular structured note might be taxed and when you must report any income or loss.

What Questions Should I Ask Before Investing?
When you evaluate a structured note with principal protection, be sure to do your research to find answers to the following questions, among others, or ask your investment professional:  

• How do I know whether this product is appropriate for me given my overall investment objectives?
   
• What is the level of principal protection offered? There is a big difference between 100 percent return of principal and 10 percent return, or something in between. Know your protection percentage.
   
• Are there conditions to the principal protection? For example, is the protection contingent on the occurrence of specified events?
   
• What are the fees and other costs? Products offering principal protection can be expensive. You should pay particular attention to the fees of any product you invest in, including those that offer principal protection. Ask your investment professional to explain all of the fees and costs associated with the investment. 
   
• How long will my money be tied up? Structured notes with principal protection are meant to be held to maturity and are often designed for long-term investors. If you need your money back early, you could pay a significant penalty. Furthermore, any downside protection offered might only kick in after a long lock-up period—or it might require you to hold the note until maturity.
   
• Can I sell or liquidate before the maturity date? While it is easy to turn many investments into cash, liquid markets for some structured products might not exist. If you need to sell your structured note with principal protection before it matures, you might have to do it at a price less than the amount you paid for it, or you may not be able to sell it at all. This is true even if the product has a ticker symbol or has been approved for listing on an exchange.
   
• Is there a call feature? If so, be sure you understand what can trigger the call and when is the earliest the investment may be called. You will also want to ask your investment professional what might be your game plan in the event your note gets called.
   
• Are potential gains limited? Some structured notes with principal protection may have limits or caps on the gains you can earn based on the performance of the underlying asset, index or benchmark.
   
• What are the tax implications? You might wish to consult with a tax advisor to understand the consequences of any particular investment, including imputed interest and any foreign tax consequences.
   
• How does the pay-out structure work? Is it possible to lose money, or not have any gain at all, even if the underlying asset, index or benchmark goes up? Purchasing a structured note with principal protection does not guarantee positive returns. For example, the underlying asset, index or benchmark might not increase in value—or even if it does, there may be conditions, which in some cases can be counterintuitive, that limit your gains. And, if the entity backing the principal protection at maturity goes bankrupt, you could lose your entire principal.
   
• What unique risks will I take on as a result of being exposed to the underlying asset, index or benchmark?
   
• What is the credit risk of the note? Remember that any principal guarantee is subject to the creditworthiness of the guarantor, which is generally the securities firm that structures and issues the note. Be sure to find out as much as you can about the financial condition of the issuer and read its disclosures as carefully as you would for any other bond investment.
   
• What other risks are associated with this particular product? Be sure you understand how the derivative component of the note impacts the pay-out structure—and ultimately your return.
   
• What other investment choices are available to me? Carefully consider what might be a good fit for you, and whether there are alternatives to the product you are considering. 

Even the simplest sounding products can be pretty complex. Always read a product’s prospectus or disclosure statement carefully. If you can’t understand how the product works, ask your investment professional for help. If you still can’t understand the product, you should think twice about investing in it. 

Additional Resources

• FINRA Regulatory Notice 09-73
• FINRA Alert, Principal-Protected Funds – Security Has a Price
• FINRA Smart Bond Investing
• SEC Fast Answer, Equity-Linked CDs

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.

Schwab Market Perspective: Earnings Heat Up.

by Liz Ann Sonders, Brad Sorenson and Michelle Gibley.

Liz Ann Sonders, Chief Investment Strategist.

Liz Ann Sonders,
Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.,

Brad Sorensen
CFA, Director of Market and Sector Analysis, Schwab Center for Financial Research, and

Michelle Gibley
CFA, Senior Market Analyst, Schwab Center for Financial Research 

July 15, 2011

Key points

• Earnings season is heating up and will provide a status update on the "soft patch" and where companies' confidence level lies. Stocks have been more volatile but are they telling us something about potential future direction?  
• Debt ceiling talks continue in Washington, with a deal still likely to come in the final days before the supposed August 2 deadline. The make-up of spending cuts, tax changes, and any entitlement reform may be key to longer-term market reaction. 
• Contagion fears are growing in Europe and solutions are difficult to come by. International exposure, however, remains important and we suggest investors look toward markets such as China, Japan, Canada, and Germany. 

Stocks have been more volatile, rallying strongly, while bonds fell, before moving lower again as uncertainty grew over the job market and debt problems in the United States and abroad.

What is the market telling us?

Source: FactSet, Standard & Poor's, Federal Reserve. As of July 11, 2011.

The market has returned to "risk on, risk off" trading, with the focus on the debt crisis in Europe and the US debt ceiling deadline. From the chart above, stocks and yields headed lower as risks of a Greek default grew, but reversed course once an agreement was reached and the austerity package was passed, and again switched direction on renewed Italian debt fears. But is that all there is to it? We don't believe so. Remember that the stock market is a forward-looking mechanism and we believe the action in stocks and bonds is also at least partially indicative of the US economic outlook for the second half of the year. We continue to believe the softness we’ve seen over the past couple of months is largely attributable to temporary factors, and that a recovery is likely in the second half.

In choppier markets we suggest investors who need to add to their equity exposure use any weakness to add to positions as we continue to believe the trend through at least year end will be higher.

There could be continued near-term volatility, however, with second quarter earnings season heating up. With new disclosure rules and crackdowns on perceived inside information being given to analysts, visibility is perhaps more opaque than it has been in years, leading to the possibility of more surprises. Expectations have been ratcheted down a bit over the past month as analysts attempt to factor in the impact of the soft economic data, but Bloomberg reports analysts are forecasting a still-robust 13.3% year-over-year gain for S&P 500 earnings. As usual the focus will be on the commentary accompanying the profit announcements. We are watching to see if companies indicate they have plans to put some of their massive cash balances to work through hiring more workers, and/or investing in capital projects to take advantage of the accelerated depreciation incentive in the tax code for 2011. Corporate confidence remains key to accelerating the economic recovery and we'll be watching for signals that businesses are becoming more comfortable with the outlook going forward.

Soft-patch ending?
Economic data remains relatively soft but there are glimmers of hope. The ISM Manufacturing Index rose from 53.5 to 55.3, with both the new orders and employment components posting modest gains. However, the gain in the headline number is tempered slightly as it was influenced by a jump in inventories. Meanwhile, the ISM Non-Manufacturing Index remains solidly in expansion territory, and even though new orders fell modestly, employment moved slightly higher.

Focus remains on the jobs picture, which has taken a hit over the past couple of months. It continues to appear that the labor market's weakness has been largely influenced by temporary factors. You can see from the chart below that jobless claims, the most leading of the various labor statistics, moved above the important 400,000 level soon after the disaster in Japan.  

Claims moved up following earthquake

Source: FactSet, U.S. Dept. of Labor. As of July 11, 2011.

As production and supply chains are coming back on line in Japan, we believe claims will move back below 400,000, indicating an improving labor market. We've seen a bit of positive news as Automatic Data Processing (ADP) reported that private payrolls jumped from a gain of 36,000 in May to 157,000 in June. Unfortunately, the Department of Labor payroll report showed that only 18,000 jobs were added and the previous two months' gains were revised lower by 44,000, while the unemployment rate moved from 9.1% to 9.2%. Also, average hourly earnings were flat. The latter report was undoubtedly disappointing, but it is important to remember that it's a lagging indicator and we would expect claims to improve before the payroll report.

US debt ceiling remains in focus
The elephant in the room continues to be the ongoing debate in Washington with regard to the debt ceiling. The ceiling was actually hit back in the middle of May, but accounting maneuvers allowed the supposed "drop dead" date to be extended to August 2. Even that is a bit of a misnomer as the United States; would continue to have various options to shift money around in order to continue to pay its dept obligations on time and in full but there is little doubt that going past that date would cause significant problems in the marketplace.

We continue to strongly believe that an agreement will be reached in the days before August 2 and that the United States will avoid the more nasty scenarios being suggested. However, the details of that deal may be important to market performance going forward. If the bond market judges the deal too weak in addressing the longer-term deficit and debt, we could see yields rise and ratings agencies make more noise about downgrading US debt. Conversely, if the agreement takes too much money out of the economy in the very near term through spending cuts and tax hikes, stocks may have a more difficult time as growth could be dented.

We continue to advocate solutions with an eye toward promoting economic growth. To us, that means spending cuts, regulatory reform, passing trade deals that have languished for far too long, structural changes to entitlement programs, and a revamp of the tax code on both the corporate and personal fronts. How far down the road we get on these issues during this debate will likely frame the direction we head in through at least the November 2012 elections.

Similar issues overseas: reduce debt
The Greek vote didn't end the eurozone debt crisis, which is at risk of morphing into a new, concerning phase that could ensnare Spain and Italy.

Contagion still a risk

Source: FactSet, iBoxx. As of July 12, 2011.

At this point, continued lack of decisive steps by policymakers has let confidence slip so far that it may be difficult to rein it back in; and Greece, Portugal and Ireland are becoming increasingly tethered, despite different problems and levels of severity. Greece has had the most severe problems and has missed fiscal targets, but Greece alone is small and is mainly a concern due to its interconnectedness and threat to the union that uses the euro. Inability to stabilize Greece does not give markets confidence policymakers can address other crises that may crop up in the future.

Investors have been further spooked by plans to involve private sector participation in a second Greek bailout, making a return to capital markets more difficult for both Portugal and Ireland as well, which may end up needing second bailouts of their own.

We are concerned about potential for contagion to Spain and Italy, due to their large debt burdens. Why is Italy being drawn in to the fray? Despite keeping fiscal spending generally in check, Italy has the world's third largest public debt load, at over $2 trillion, and a fragile sentiment environment has pushed rates higher. At high debt levels, continuing to refinance debt at rates in excess of potential economic growth is unsustainable.

However, Italy has some things going for it other peripheral countries don't:

• the banking system is in better shape because unlike Spain and Ireland, Italy did not have a housing bubble,
• unemployment is falling,
• debt is primarily held domestically due to high levels of private savings, and
• Italy has a fiscal surplus before factoring in debt service.

A new austerity budget is underway, but there may be ongoing lapses in confidence if political pressure ahead of 2013 elections results in modifications. Additionally, Italian banks are thinly capitalized and own a high percentage of capital in government debt, compromising their stability, and are rumored to be less enamored with holding Italian debt.

Ultimately, we view the differences as significant enough that we don't believe Italy (or Spain) need bailouts, but further lack of market confidence could put contagion at risk.

There is no magic bullet for stabilizing the eurozone debt crisis, only choosing between two unappealing choices—take losses now, or take them later. The threat of contagion and insistence of private sector participation has increased the possibility of recognizing losses now. Meanwhile, peripheral nations also need to address growth by making moves to improve labor market productivity and flexibility, and encourage development of new businesses and industries.

The bottom line? Economic growth in the eurozone may be hindered as we believe eurozone banks need more capital and may raise lending rates and/or scale back credit extension.

Should we reduce international allocations as a result of European headwinds? In a word, no. We view an allocation to international stocks as an important diversification tool for investors, as there is the potential to gain access to differentiated growth and currency diversification. We are positive on the developed markets of Canada and Japan, and believe a renewal of growth in China and Japan could be positive not only for the Asian region, but also export-oriented countries such as Germany.

Will debt in China create a bank crisis?
Part of the bull case for China is that growth has not been fueled with debt, with lower levels of debt at both the government and household level than many developed markets. At the central government level, debt-to-GDP in 2010 was reported at 18%, low relative to the 92% level in the United States, 77% in the United Kingdom and 84% in Canada.

Meanwhile, local government debt in China is subject to much debate, even among government sources. The most recent estimate came from the National Audit Office, of 10.7 trillion RMB ($1.65 trillion), or 27% of GDP, which differs from a previous estimate by the central bank of approximately 14 trillion RMB ($2.15 trillion), and the banking regulator earlier said the amount was 9.09 trillion RMB. A Moody’s study using the three government estimates and making delinquency assumptions estimated future potential non-performing loans (NPLs) at 8-12% of loans. Meanwhile, BCA Research in July indicated NPLs would increase to 4% for two years if the bad loans hit across 2012 and 2013.

Why the scrutiny on debt?
Infrastructure and property construction contribute over 50% of China’s growth, and if growth has been fueled by reckless lending, this would raise questions about the sustainability and quality of growth.

While we acknowledge some of the debt likely financed questionable infrastructure projects and may have been involved the property boom, we view sentiment toward China as overly pessimistic. In our Bears vs. Bulls article in May, we used a 10% NPL rate and put potential losses at 5.2 trillion RMB, or $800 billion. This is large but manageable, as the government has over $3 trillion in foreign exchange reserves at their disposal.

Meanwhile, a tightening cycle to rein in property speculation and lending may be in late innings. Home sales have stabilized after plunging, and construction has restarted, particularly for the government's affordable housing program. Liquidity in the banking system is tight and credit access is restrictive.

While inflation may still rise and additional tightening measures could still be implemented, we view a hard landing, or severe slowdown in growth, as unlikely. The Chinese government can quickly introduce policy to reaccelerate growth, and has already begun new stimulus and the injection of money into the banking system.

Local Chinese investor sentiment improving

Source: FactSet, Shanghai Stock Exchange. As of July 12, 2011.

Local investors in China have prompted a rise in the Shanghai Composite. The Chinese stock market has been a forward looking indicator for both global growth and emerging markets, and while an upward move may indicate global growth may be on the mend, we remain neutral on emerging markets at this point.  

Visit Schwab.com/onInternational for more international perspective. 

Important Disclosures
The MSCI EAFE® Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States and Canada. As of May 27, 2010, the MSCI EAFE Index consisted of the following 22 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

The MSCI Emerging Markets Index^SM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of May 27, 2010, the MSCI Emerging Markets Index consisted of the following 21 emerging-market country indexes: Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey.

The S&P 500® index is an index of widely traded stocks.

Indexes are unmanaged, do not incur fees or expenses and cannot be invested in directly.

Past performance is no guarantee of future results.

Investing in sectors may involve a greater degree of risk than investments with broader diversification.

International investments are subject to additional risks such as currency fluctuations, political instability and the potential for illiquid markets. Investing in emerging markets can accentuate these risks.

The information contained herein is obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation or a recommendation that any particular investor should purchase or sell any particular security. Schwab does not assess the suitability or the potential value of any particular investment. All expressions of opinions are subject to change without notice.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

(0711-4619)

Bonds: Armed (with a Downgrade) and Dangerous.

by Natalie Pace.

Includes my Hot News on Cool Stocks List.

August 1, 2011

General Stock Market Performance

Monday, 1.2.2008	Monday, 1.2.2009	Monday 1.3.2011	Friday, 8.01.2011	Gains 3-yr, 2-yr & 8 mo.
Dow: 13,044.12	Dow: 9,034.69	Dow: 11,577.43	12,145.06	-7% & +34% & +5%
Nasdaq: 2,609.63	Nasdaq: 1,632.21	Nasdaq: 2,676.65	2,746.33	+5% & +68% & +3%
S&P: 1,447.16	S&P: 931.80	S&P: 1,257.62	1,288.32	-11% & +38% & +2%

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 18X gains on U.S. Gold, our 2009 Company of the Year!
NASDAQ Doubled the Dow Jones Industrial Average gains from 2009-2011
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:
Pundits are already assuming that the U.S. debt will be downgraded by the credit rating agencies no matter what, however, as I indicate in my article, "Downgrade and Default. Uncovering the Bipartisan Truth," there is nothing further from the truth.

The credit rating agencies have been clear about what Congress needs to do to avoid a downgrade. According to David T Beers, Beth Ann Bovino and Curtis Moulton, of the Sovereign Debt team at Standard & Poor’s, in a report issued on July 21, 2011, "If the opposing camps agree to raise the debt ceiling before the deadline and come to terms on a long-term debt-reduction plan, Standard & Poor's would likely affirm the U.S. ratings and remove them from CreditWatch." The magic number is $4 trillion in budget savings over the next decade.

Unfortunately, the Budget Plan falls short of this mark, according to the analysis of the Congressional Budget Office. That is why it is so critical that Americans contact their Congressional leaders now to demand that the budget savings meet or exceed this $4 trillion mark. If Congress does not have a credible plan, then the downgrade will likely come in "early August" according to Standard and Poor’s.

What happens if the U.S. is downgraded?
Dr. Gary Becker, University of Chicago economics professor and Nobel Prize winner, points out that the debt rating is "self-enforcing." In an interview from April 4, 2011, Dr. Becker warned that if the U.S. is downgraded, "The interest rates that we have to pay on the debt goes up. It becomes more expensive...That’s how countries like Greece get into trouble."

As you can see from the White Office Budget Office’s budget map, interest is already one of the biggest line items in the budget. The last thing the U.S. needs is something that compounds and increases outside of our control, which is exactly what happens with a downgrade. We’ll have compounding debt to deal with, in addition to war, entitlements and health care costs that are increasing at triple the rate of inflation.

http://www.whitehouse.gov/omb/budget

What About Bonds?
There are two primary things that impact the value of bonds: credit risk and interest rate risk. In a world where NGEs (Non-Government Entities), like Fannie Mae and Freddie Mac, and legacy corporations, like AIG and General Motors, have been bailed out, bond investors have to evaluate the credit risk of the bond with a forensic eye, with complete and full knowledge of the debt of the underlying municipality or corporation. In general, the higher the yield, the higher the risk.

Since bonds are traditionally considered the "safe" part of your portfolio, ask yourself whether or not you want to be taking on higher risk for just a couple of percentage points! If you are not adept at evaluating and understanding credit risk, steer clear of individual bonds. The problem with investing in bond funds is that interest rate risk puts them in the category of things that are vulnerable to a decline in principal value, too.

Taking on higher risk on the safe side can be catastrophic to your fiscal health, whereas a zero percent return, with no loss of principal, can be critically important. Why? A 10% return on $10,000 is $1,000, whereas a 10% return on $5,000 is only $500. That means that if your assets implode by half, it can take years, if not decades, to recover your losses. The "safe side" of your nest egg is intended to keep your principal in tact, so that the "at risk" side of your nest egg can increase the value with capital gains. So, if you have a high-risk bond, that should be thrown over to the "at-risk" side of your portfolio in your annual rebalancing evaluation, rather than be considered safe.

Are Bonds at Risk of Default?
While the risk of "default" in the U.S. or even most of the corporations is still very low, the risk of devaluation is high. When interest rates rise, the value of the bond goes down. If you can hold the bond to term and the municipality or corporation pays back the principal, then you’re going to be fine. However, in the meantime, if you need to sell the bond to cover expenses, you may have to sell it for less than you paid for it and in some cases, you might not be able to sell the bond at all. There might not be any buyers willing to purchase your bond, especially when they can purchase other bonds with a much higher interest yield. Bond funds also fall in value when interest rates rise.

Typically, people think that the only way interest rates go up is if the Federal Reserve increases the rate. Since the Feds have indicated economic conditions "are likely to warrant exceptionally low levels for the federal funds rate for an extended period," many bond investors have a false sense of comfort in their bonds and bond funds. However, the threat of a downgrade adds interest rate risk now.

A downgrade of the U.S. from AAA to AA could have a quite large ripple affect. Any municipality, corporation or Non-Government Entity (NGE) that relies upon the U.S. government for a portion of its revenue will be impacted. According to Beers, Bovino and Moulton, of the Sovereign Debt team at Standard & Poor’s, "While banks and broker-dealers wouldn't likely suffer any immediate ratings downgrades, we would downgrade the debt of Fannie Mae, Freddie Mac, the 'AAA' rated Federal Home Loan Banks, and the 'AAA' rated Federal Farm Credit System Banks to correspond with the U.S. sovereign rating. We would also lower the ratings on 'AAA' rated U.S. insurance groups."

There are four U.S.-based corporations with AAA ratings, which Standard and Poor’s said will not be affected by a U.S. downgrade – namely, Automatic Data Processing, Exxon-Mobil, Johnson & Johnson and Microsoft. The Army & Air Force Exchange Service, the Marine Corps Community Services, and the Navy Exchange Service Command would be downgraded, however, which could ripple into corporations that supply these government entities with products and services.

While most people are assuming that the debt ceiling will be raised and there will be no default on any bills, if that is not the case, then there will be a severe, systemic shock that will not be easy to recover from. According to Standard and Poor’s Credit Analysts John J. Bilardello, Ronald M. Barone and David Tesher, "The bottom line is that any sustained systemic shock at this time could quickly undermine corporate operational performance and free cash flow. Combined with a freeze in the debt markets, this would likely have a severe effect on corporate liquidity and ratings stability, and, in our opinion, ultimately negatively affect nearly all corporate sectors." If that doesn’t get you to call and write your Congressional leaders right now, to demand that the budget savings over the next ten years exceed $4 trillion, I don’t know what will!

What remains clear is that the day I’ve been warning about has finally arrived. Bonds and bond funds are no longer the safe asset of choice. Therefore, investors must navigate the risk in the bond market, which is heightened, with great skill and wisdom – or choose other "safer" vehicles to protect your principal.

I encourage you to read all of the Bond articles in the May 2011 ezine. And to consider coming to the next Investor Education Retreat (the Fall Equinox Retreat), in order to get the ABCs of stocks, bonds, gold, real estate and investing. More than anything, wisdom is what you need to profit in today’s volatile marketplace. The old strategies, of buy and hold, and the new strategies, of red light/green light investing, have cost investors quite a lot of money over the last decade, whereas my easy-as-a-pie-chart investing strategies have been working wonderfully through bull and bear markets for over 12 years now.

Investor Edu Retreat:
There is a way to profit in bull markets, while protecting yourself from losses in bear markets – to have the best of both worlds with a sound plan that earns money while you sleep. This strategy saved Bill and Nilo’s best egg in the Great Recession and had novice investors doubling the returns of the Dow in 2009. Call 310-430-2397 NOW to learn more.

Investor Alerts:

1. OPEC & a Basket of Currency: OPEC has released a new Long Term Strategy report. There is speculation that OPEC will be going from the U.S. dollar valuation to a "basket of currency," though the Report doesn’t state this explicitly. If true, this will be distressing to U.S. investors, once they learn about it.

2. Debt: Standard & Poor’s and Moody's have indicated that they will lower the U.S. debt rating from AAA status if Congress does not come up with a credible $4 trillion budget savings plan. The Budget Plan of August 2, 2011 falls short by almost $2 trillion. Read my HuffingtonPost.com blog and write your Congressman now! A lowered debt rating means we pay more interest -- a lot more -- which makes it even more difficult to balance the budget and spark GDP growth.

3. Real Estate: There were 2.9 million foreclosure filings in 2010. According to RealtyTrac CEO James J. Saccacio, on May 12, 2011, "Data from the Mortgage Bankers Association shows that about 3.7 million properties are in [a] seriously delinquent stage." 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 means that there will no upside in real estate prices (except in certain cities) until 2013. If you know a homeowner in trouble, be sure to forward my Real Estate pod cast to them. Therein is a lot of very essential information on loan mods, short sales, foreclosures and bankruptcy. Go to BlogTalkRadio.com/NataliePace now to access.

4. 911 Investor Alert: Bonds and Treasury Bills Inflation and interest rates have yet to weigh on the bond market (preview of coming attractions), however debt (credit risk) 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. Read up on how to understand the risk in bonds and select high quality safe areas for your money in two featured bond articles in the May 2011 ezine (Volume 8, issue 5). In the meantime, low-risk, cash-positive hard assets are King (and no, I’m not suggesting to go all in on gold, see below).

5. Gold: If you purchased gold at $850/ounce in 1980, you had to wait 26 years for the value to return. Most of the time, gold seesawed between $250-$350 an ounce over that period. Now, with prices at $1500/ounce, large holders of gold, including the United States, Brazil and more, could 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 18X 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. 61 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.) 13 million homes (or more) will 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. 106 positions listed over the last four years – 75% -- 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 thirty-five 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.)

Half of My 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 18X ROI for U.S. Gold, respectively. Applied Materials, 2010 Company of the Year, and MySpace, my 2006 Company of the Year, were both super performers within a few short months of their listings.   So seven out of nine Company of the Year selections were the best Wall Street has to offer. That’s the kind of record that made me a #1 stock picker.  (I launched my first publication on 11.15.02, and featured the first Company of the Year, Taser International, on 1.1.03.)

13 out of 14 companies featured in the Company of the Month articles in 2010 earned gains – 93%! Some other big hits were Google at the IPO (over 7X gains), Rio Tinto (tripled in value) and shorts like Fannie Mae (in 2003), real estate (2005), General Motors (2005) and Las Vegas (2008).

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 August 9, 2011.

GDP Growth Rates: The advance estimates of 2^nd quarter GDP growth are anemic, at 1.3%. But what is even more startling is that 1^st quarter 2011 GDP growth rates have been revised downward to 0.4% (blame the high price of oil). 2^nd quarter 2011 (2nd estimates) will be released on August 26, 2011 at 8:30 a.m. ET. 4Q 2010 growth was 2.3%. 3Q 2010 GDP growth was 2.6%. 2Q 2010 was 1.7%.  1Q 2010 was 3.7%.

The Federal Reserve Board member and bank presidents released their economic projections on June 22, 2011. Revised 2011 GDP growth estimates are 2.7-2.9%, down from forecasts of 3.1-3.3% earlier this year. At the current pace, that means that GDP growth will need to average 4.55% in the coming quarters (in the 2^nd half of 2011).

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 minutes of the June 21-22, 2011 FOMC meeting for yourself? The official Federal Reserve document is available online. Go to FederalReserve.gov to read! According to the Committee, "The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan... "
   
   The tentative FOMC meeting schedule for the 2011-2012 calendar is 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. Cast your vote on our survey page.

4. Euro interest rates: ECB rates are at 1.50% (main refinancing), 2.25% (marginal lending) and 0.75% (deposit facility). The next meeting and interest rate announcement are scheduled for August 4, 2011 at 2:30 p.m. CET. (September 8 & 21, 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.
Allscripts (MDRX) added on 8.1.11
American Superconductor (AMSC)
AOL (AOL)
Applied Materials (AMAT)
iShares China Small-Cap Index Fund (ECNS)
Cree (CREE)
ENER1 (HEV)
Galaxy Resources (GALXF)
Green Dot (GDOT)
KLA Tencor (KLAC)
MEMC Electronics (WFR)
Powershares Lux Nanotech (PXN)
Powershares Wilderhill Clean Energy Fund (PBW)
Satcon (SATC)
Suntech Power Holdings (STP)
Trina Solar (TSL)
Veeco (VECO)

DELETIONS (Take your profits early and often):
Peru Index Fund (EPU) moved to Watch list on 6.13.11

HOT NEWS on COOL STOCKS LIST

Company	NP owns?	Symbol	Price when added to Hot News List	Price 8.01.11	52-week High 52-week Low	Gains/Loss
Allscripts Healthcare Solutions	No	MDRX	$18.01	$18.01	$23.13 $15.65	--
Read "Health Care Reform" Volume 7, issue 4. Reports 2nd quarter 2011 results after the markets close on Tuesday, August 2, 2011. Allscripts Healthcare Solutions, Inc., formerly Allscripts-Misys Healthcare Solutions, Inc. (Allscripts), is a provider of clinical software, services, information and connectivity solutions that are used by physicians and other healthcare providers to improve the quality of healthcare. Added four strong executives to the team in July 2011. Cliff Meltzer, a veteran development leader for Apple, Cisco, IBM and most recently CA Technologies, joined Allscripts as Executive Vice President, Solutions Development, with responsibility for product development company-wide. Steve Shute, a veteran sales leader, will be joining Allscripts as Executive Vice President, Sales. Mr. Shute has held numerous executive leadership positions at the IBM Corporation. Jackie Studer joined Allscripts as Senior Vice President and General Counsel; she comes from GE. John Guevara, a seasoned leader with extensive success leading mission-critical operations for Microsoft and other top technology companies, joined Allscripts as Chief Information Officer.
American Super-conductor	No	AMSC	$27.77 $7.77 (6.13.11)	$7.16	$38.88 $11.00	-74% & -8%
Read "The Sunny Side" Volume 6, issue 3. The company has not yet announced the date of the 4Q and full year earnings report, although they did issue a press release announcing preliminary results of restated earnings for 3rd and 4th quarters, which are not as horrible as you might expect. In a press release issued July 11, 2011, the company stated, "The company expects that revenues for the fiscal quarters ended September 30, 2010 and December 31, 2010 will be reduced to approximately $98 million and $43 million, respectively. For the fiscal year ended March 31, 2011, the company expects that revenues will be approximately $307 million." Full year revenues for 2010 came in at $316 million. The company is going to a cash-based accounting method, rather than the previous method whereby they booked revenue once product was shipped. NASDAQ has given AMSC until August 16, 2011 to file the report or submit a plan outlining details of remaining in compliance with NASDAQ listing requirements (according to June 21, 2011 AMSC press release). On June 30, 2011, AMSC amended the terms of their acquisition of a Finland company. The acquisition must be complete by Sept. 30, 2011, and in the meantime, AMSC is raising the capital to complete the acquisition (now that they are in a cash crunch as a result of the Sinovel customer payment issues). 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. IBM mentioned AMSC by name in their press release of April 18, 2011, honoring the 25th anniversary of high-temperature superconductivity, pointing out that AMSC’s high temp wire is the wave of the future in energy. On 4.21.11 American Superconductor Corporation announced that its high temperature superconductor wire is being used in an electrical substation in China. The Tres Amigas power substation in New Mexico will be a new source of revenue and jobs, once this project clears all of the environmental and regulatory hurdles to break ground. Though no groundbreaking date has been set, on December 23, 2010, Tres Amigas LLC and the State Land Office signed a 99-year lease agreement. And AMSC is a company that has been supported by President Obama and Energy Secretary Dr. Steven Chu over the past few years.
AOL	Yes	AOL	$21.22 $19.37	$16.93	$29.45 $16.87	-20% & -13%
Read "AOL" from Volume 6, issue 12 and "Is GroupOn the Next Google?" from Volume 8, issue 7. 1Q2011 earnings on May 4, 2011: revenue was $551.4 million, down 17% from a year ago. Net income was $4.7 million, down 86% from a year ago. Restructuring charges totaled $27.8 million. 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. Sales for AOL is $2.30 billion annually, but there is plenty of room for this company to come closer to Yahoo’s $6 billion in annual revenue and take a bite out of Google’s $31 billion. "Part of the reason that I got out of my chair at Google and went to AOL is that you have a company with a $2 billion valuation. The next closest competitor has a 10X market cap, and they don’t have 10X the users we do. The leader in this space has a 50-60X market cap. If we are able to translate our 118 million people in the U.S. and 250 million people globally with a business model around high-scale advertising and services for them, the market cap is not going to be $2 billion," Tim Armstrong, CEO, AOL.
Applied Materials 2010 Company of the Year	No	AMAT	$13.10	$12.33	$16.94 $10.27	-6%
Read "Let There Be Light" and "LED Lighting," from the December 1, 2010 and August 1, 2010 ezines, Volume 7, issue 12 and 8. 2010 Company of the Year!
iShares MSCI China Small Cap Index Fund	No	ECNS	$48.38 $46.61 (6.24.11)	$46.88	$58.80 $45.81	-3% & flat
Read "Travel Rewards," from Volume 8, issue 7.
Cree	Yes	CREE	$52.10 $32.23	$32.79	$83.38 $30.17	-37% & +2%
Read "Let There Be Light" and "LED Lighting," from the December 1, and August 1, 2010 ezines, Volume 7, issue 8. Love the company. Revenue growth is solid. Sales to Asia are strong. Future likes bright! And the price is finally right. 4Q And FY 2011 earnings should be released in mid-August, 2011... President Obama visited CREE on June 15, 2011 to discuss policies to spur economic growth. In his remarks, President Obama stated, "So today the small business that a group of N.C. State engineering students founded almost 25 years ago is a global company…Next month, your new production line will begin running 24/7. So you're helping to lead a clean energy revolution. You're helping lead the comeback of American manufacturing. This is a company where the future will be won." 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.
Eldorado Gold	No	EGO	$15.48 $14.11 (6.13.11)	$17.36	$20.23 $13.93	+12% & +24%
Read "Investing in Gold" from Volume 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.
ENER1	Yes	HEV	$3.68 $1.06 (6.1.11)	$0.90	$5.90 $0.76	-76% & -15%
Read "Earth Hour" in Volume 8, issue 4 and "Life Begins with Li (Lithium)" from Volume 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 on May 10, 2011: Total consolidated revenue for the quarter was $23.1 million, an increase of 110% over the first quarter of 2010.  Consolidated gross profit margin improved to 24%, compared to 10% in the year-ago quarter.  Due primarily to an impairment charge, the company reported a net loss of $84.7 million, or diluted net loss per share of $0.51 for the quarter.  The impairment charge represents a $69.4 million increase in net loss, which represents a one-time $59.4 million impairment recorded during the first quarter to write down the company's investment in Think Holdings and a $13.9 million loss on financial instruments, which is primarily attributable to the impaired value of the investment.  The impairment charge and loss on financial instruments totaled $73.3 million, or $0.44 per diluted share, for the three months ending March 31, 2011.  This compares to a net loss of $15.3 million, or diluted net loss per share of $0.13, during the same period last year.   According to Ener1 Chairman and CEO Charles Gassenheimer, "We have laid a strong foundation within our grid energy storage business, and we anticipate rapid revenue growth in the second half of 2011.  We are also seeing positive revenue growth from our industrial small pack business, and we have repositioned our transportation business to attack the medium- and heavy-duty markets.  In addition, we expect our joint venture with Wanxiang to come on-line in the second half of 2011 adding to our growth trajectory this year."  Investors have been concerned about ENER1’s stake in THINK EVs, causing the current pullback in interest. However, the new industry-wide MPG standards of 54.5 MPG (by 2025) should directly help companies like HEV gain sales, both here and abroad. Learn more on the White House Blog from July 29, 2011.
Galaxy Resources RISK: HIGH (off the boards, thinly traded)	No	GALXF	$1.18 $0.88	$0.76	$1.80 $0.72	-36% & -14%
Read "Should You Put the Brakes on Toyota?" from Volume 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 aspects – Australia-based company in an emerging market – lithium. Annual meeting was held on Friday, May 13, 2011 at 10 a.m. in Perth, Australia. Loss for 2010 was $29.6 million. Had $28 million in cash before the $120 million private placement in April 2011. 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 $32.85 (6.24.11)	$31.22	$65.10 $29.38	-24% & -5%
Read "IPO of the Year" from Volume 7, issue 3. 1Q results on April 28, 2011: Total operating revenues increased 26% from a year ago, to $117.3 million. Net income was $12.7 million for the first quarter of 2011 compared to $12.8 million for the first quarter of 2010. Gross dollar Volume increased to $4.6 billion this quarter, up from $2.8 billion in 2010. 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 -33rd to the 4th quarter. 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 Corporation RISK: HIGH	No	HOKU	$8.03 $1.75 (3.15.11)	$1.53	$14.55 $1.41	-81% & -13%
Read "One Hot, Overlooked Commodity: Sand," Volume 8, issue 5, "The Sunny Side," Volume 6, issue 3 and "Solar Giants Tap a Small Hawaiian Company For Silicon," in the Oct. 2007 ezine, Volume 4, issue 10. 1Q earnings will be announced on August 11, 2011 at 5:00 p.m. ET, after the markets close. 4Q and FY 2010 earnings on 6.9.11: Revenue for the fiscal year ended March 31, 2011 was $3.6 million compared to $2.6 million for fiscal 2010. Revenue in fiscal 2011 and 2010 was derived primarily from photovoltaic, or PV, system installations and related services, the sale of electricity, and the resale of solar inventory. GAAP net loss was $11.8 million. Scott Paul, chief executive officer of Hoku Corporation, said, "Our increase in revenues compared to the prior fiscal year reflects our focus on the commercial, industrial and institutional PV markets. That said, we viewed fiscal 2011 as a year to reset our priorities, clarify our strategy, and develop a solid plan for future growth. As our focus on developing large-scale PV projects begins to pay-off, I believe Hoku Solar is positioned well to be a stronger competitor going forward." Tianwei has invested more than $129 million of its own capital in Hoku, and they have provided support for another $244 million in debt financing from banks in China. Tianwei continues to support the financing required to bring HOKU’s 4,000 metric ton polysilicon facility online. HOKU will be supplying a 2.25 MW PV facility for Forest City Sustainable Resources in Oahu.
KLA Tencor	No	KLAC	$40.59 $38.85	$39.91	$51.83 $26.69	-2% & +3%
Read "LED Lighting," from the August 1, 2010 ezine, Volume 7, issue 8. With revenue double over last year, profit margins of 20%, and a forward P/E of 9.53, even at a price that is near the 52-week high, KLAC seems undervalued. On July 7, 2011, the Associated Press reported that, "UBS Investment Research analyst Stephen Chin said in a note to clients that the Milpitas, Calif., company is well positioned to keep sales up even as the semiconductor market hits bottom early in 2012." KLA-Tencor will be able to reap more revenue once the market turns around. Chin’s new target price for KLAC is $49.50. Watch my 2.3.11 report on the LED marketplace on CNBC, or by visiting my YouTube channel at YouTube.com/NataliePaceDOTCOM.
LDK SOLAR	No	LDK	$30.02 $4.94 (3.2.09)	$6.79	$15.10 $4.97	-77% & +37%
Read the articles, "One Hot, Overlooked Commodity: Sand," Volume 8, issue 5, "Green" in Vol. 6, issue 2 and "Solar Springs Up Again," in Volume 5, issue 4. 1Q 2011 earnings were announced on June 7, 2011. Quarterly revenue of $766.3 million, a decrease of 16.8% sequentially and an increase of 120.5% year-over-year; Net income was $135.4 million. FY earnings on 5.2.11: Net income of $296 million, compared to a net loss of $234 million a year ago. Sales were $2.5 billion, compared to $1 billion in 2009. In the 20-F filing, which was uploaded to the SEC website on 5.2.11, LDK states "We are operating with a significant working capital deficit; if we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern." Just how serious is it? The capital deficit was $1.6 billion, with cash of only $202 million. It appears that LDK has raised the capital needed, however investors should be aware that LDK’s debt, including short-term debt that is due now, is high. That means risk on this investment is much higher than MEMC Electronics, which is a LDK competitor with much lower debt. Here’s the LDK explanation in their 1Q 2011 Earnings press release. ""We remain focused on managing our operations to drive profitability.  Going forward, we expect to continue to use free cash flow to pay down debt, while also continuing to evaluate opportunities to convert short-term to long-term obligations," said Xiaofeng Peng, Chairman and CEO of LDK Solar.
MEMC Electronics	Yes	WFR	$11.99	$7.35	$19.31 $7.26	-39%
Read "One Hot, Overlooked Commodity: Sand" Volume 8, issue 5 and "The Sunny Side" Volume 6, issue 3. 1Q earnings on May 4, 2011. GAAP net sales of $735.9 million, an increase of 68% or $298.2 million from $437.7 million in the first quarter of 2010.   MEMC reported a GAAP net loss for the 2011 first quarter of $4.5 million, or $0.02 per share, compared to net income of $12.6 million, or $0.05 per share, in the 2010 fourth quarter and a net loss of $9.6 million, or $0.04 per share, in the 2010 first quarter.  Non-GAAP net income for the 2011 first quarter was $21.5 million, or $0.09 per share. First quarter earnings per share was negatively impacted by $0.07 of charges related to the Japan earthquake ($0.02) and unfavorable net legal verdicts and settlements ($0.05), primarily due to the previously announced Semi-Materials case. MEMC ended the 2011 first quarter with cash and cash equivalents of $684.1 million excluding $61.0 million of restricted cash.  Total company debt, including non-recourse project debt and capital leases, was $1,229.1 million at quarter end.  Non-recourse project debt and capital leases were $616.2 million, and there was no short-term borrowing under the company's corporate revolving credit facility as of March 31, 2011. The Japanese earthquake, tsunami and nuclear crisis interrupted operations at MEMC Electronics Utsunomiya facility between March 11, 2011 and early April 2011. This factory is 130 miles away from Sendai, so no one was hurt and there is expected to be no real damage. On July 1, 2011, MEMC terminated their wafer supply agreement with Suntech. "We are pleased to have reached a mutually agreeable conclusion to our 2006 solar wafer supply contract with Suntech," commented Ken Hannah, President of MEMC Solar Materials.  "In early 2009 we began to diversify our solar wafer customer base, such that wafer sales to Suntech have gone from over 50% of our Solar Materials business in 2009 to just over 2% in Q1 2011 and 0% in Q2 2011.  By putting this behind us, we look forward to establishing a new and beneficial commercial relationship with Suntech.  MEMC's overarching strategy in solar, which includes wafer production, a diversified wafer customer base and a strong downstream pipeline through SunEdison, remains unchanged." Wafer sales at MEMC has doubled over the last year and was up 17% quarter over quarter, so this terminated agreement doesn’t seem detrimental to MEMC. According to Suntech, "In total, Suntech expects to incur $212 million of expenses related to the terminated supply agreement in the second quarter of 2011, of which $67 million will be additional cash outlay. As a result of the termination, Suntech is no longer required to purchase approximately 4.6GW of wafers between 2011 and 2016. This will allow Suntech to optimize its silicon sourcing strategy, including maximizing internal wafer production, and lead to estimated cost savings of over $400 million in the next five years."
Microsoft	No	MSFT	$24.88 $23.71 (6.15.11)	$27.18	$29.46 $22.73	+9% & +15%
Watch my appearance on CNBC, outlining the reasons Skype is a very hot acquisition for Microsoft, and read my article, "One Very Hot IPO" from the September 1, 2010 ezine, Volume 7, issue. 9. Microsoft purchased Skype on May 10, 2011 for $8.5 billion in cash. I added Microsoft to the Hot News list on 5.15.11.
PowerShares Lux Nanotech	No	PXN	$8.87 $8.40 (6.24.11)	$8.17	$10.85 $7.74	-8% & -3%
Potential hot industry for your pie chart. Read the 2010 Company of the Year article from December 2010 ezine, Volume 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.
PowerShares Wilderhill Clean Energy Portfolio ETF	No	PBW	$9.91 $8.69	$8.27	$11.42 $8.08	-16% & -5%
Read "$100/Barrel Oil" from the March 1, 2011 ezine, Volume 8, issue 3.
Satcon 2011 Company of the Year	Yes	SATC	$3.77	$1.85	$5.51 $1.85	-51%
Read "2011 Company of the Year," from Volume 8, issue 4 and "$100/Barrel Oil" from the March 1, 2011 ezine, Volume 8, issue 3. On 5.23.11: Satcon announced that it had achieved the number one position in market share for the North American solar inverter market. 2Q 2011 preliminary earnings on July 5, 2011: Satcon expects second-quarter 2011 revenue will be between $45 million and $47 million, compared with its previously announced guidance of $50 million to $60 million. The narrowed revenue range reflects the continued impact of changes in government incentives in the company’s higher margin markets in Europe as well as delays on a few projects that have been pushed into the third quarter. This is still 63% higher than a year ago. Additionally, the company has reduced their worldwide workforce by 15% and raised an additional $16 million through convertible notes that are due on July 1, 2013 (with a private, accredited investor). Satcon 1Q earnings on 4.27.11: Revenue for the first quarter of 2011 was $62.0 million, an increase of 321% oer 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." On 5.13.11 Satcon announced that Aaron M. Gomolak has replaced Donald R. Peck as Satcon’s Executive Vice President, Chief Financial Officer and Treasurer. This was a last minute shuffle. Not a good sign.
Sunpower	No	SPWRA	$24.83 $13.07 (7.1.10)	$19.15	$23.36 $9.61	-24% & +46%
Read "The Sunny Side" in Volume 6, issue 3. 1Q 2011 earnings on May 12, 2011. $451 million in revenue, an increase of 30% over the previous quarter. Net loss of $2 million. $368 million in cash on hand. Long term debt and liabilities of $1.8 billion. On May 3, 2011, Total (a French company) offered to purchase up to 60% of shares at a price of $23.25 per share. On May 9, 2011, the FTC granted approval of the deal. 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.
Suntech Power Holdings (solar)	No	STP	$14.26 $7.16 (6.13.11)	$7.37	$15.55 $7.05	-48% & +3%
Read "The Sunny Side" Volume 6, issue 3. The world's largest crystalline silicon photovoltaic (PV) module manufacturer. 2Q earnings will be announced at the end of August. 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. 1Q 2011 earnings were reported on May 25, 2011. Total net revenues were $877.0 million in the first quarter of 2011, representing a sequential decrease of 7.2%, and an increase of 49.1% year-over-year. Net income was $31.9 million. "Our recently acquired silicon ingot and wafer facility is now fully integrated and operating smoothly. We expanded annualized wafer production capacity to 1GW and are on track to reach 1.2GW in the second half of 2011. The increasing output of internally produced wafers will drive progressive reduction in wafer costs through 2011. We also continued to expand our cell and module capacity and achieved 2.2GW of capacity by the end of the first quarter of 2011," according to Dr. Zhengrong Shi, Chairman and CEO. 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 $19.11 (6.13.11)	$18.36	$31.89 $16.60	-34% & -3%
Read "The Sunny Side" Volume 6, issue 3. 1Q earnings on 5.17.11. Gross profit was $151.3 million, a decrease of 25.0% sequentially and an increase of 45.1% year-over-year. Net income was $47.7 million, which included a net foreign currency exchange loss of $24.1 million, compared to net income of $145.3 million in the fourth quarter of 2010 and $44.5 million in the first quarter of 2010. 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. Holders of Senior Notes due 2013 have the right to exercise their "put" option through August 9, 2011.
U.S. Gold	Yes	UXG	$5.57	$6.63	$9.87 $2.02	+19%
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. Added back to the Hot List on June 8, 2011 (in a special Subscriber Only Alert). 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, Volume 6, issue 10.
Veeco	Yes	VECO	$42.74	$39.05	$56.05 $29.54	-9%
Read "LED Lighting," from Volume 7, issue 8 and 2010 Company of the Year from Volume 7, issue 12. VECO was added on 7.6.11, with a special alert sent to subscribers at that time. Watch my 2.3.11 report on the LED marketplace on CNBC, or by visiting my YouTube channel at YouTube.com/NataliePaceDOTCOM. Reported 2Q on 7.28.11. $265 million in revenue for the 2Q, up 19% from a year ago, when revenue was compared to $221.4 million. Net income of $19.2 million, compared to $50 million last year. What happened to the income? Veeco took a $51 million loss in asset impairment and restructuring charges related to the CIGS Solar Systems business. This unprofitable business will be discontinued. Assets and personnel have been transferred to the College of Nanoscale Science and Engineering (CNSE). Quarter-end backlog was $558.2 million. Cash on hand is $198 million. John R. Peeler, Veeco’s Chief Executive Officer, commented, "LED & Solar revenues were $219 million, including $206 million in MOCVD, and Data Storage revenues were $46 million, the highest quarterly level in five years. Veeco met our quarterly guidance, yet timing of revenue continues to be impacted by the longer order-to-revenue cycle times associated with the high percentage of MOCVD business currently coming from China, primarily due to customer facility readiness and credit tightening." Mr. Peeler added, "We have seen spectacular customer reaction to our new MaxBright MOCVD system – in the second quarter we booked over $100 million of MaxBright systems – 40% of our total MOCVD bookings. We believe customers are clearly recognizing that MaxBright is simply the best tool on the market to drive down LED manufacturing costs." During the second quarter, under its Board authorized share buy-back program, Veeco purchased $7.8 million in stock at an average price of $46.91 per share. Veeco also completed the redemption of its outstanding Convertible Subordinated Notes for $98.1 million aggregate principal amount and completed the purchase of a privately-held company which supplies certain critical components to our MOCVD business for $28.3 million. Veeco purchased an additional $71.9 million of stock, at an average price of $42.21 per share, so far during the month of July (as of 7/26/11). Since the $200 million buy-back program was authorized last August, Veeco has repurchased a total of 3 million shares for $117.8 million.

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. 6.13.11: EPU with flat performance.

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

Recently Deleted from the Hot News list:
Peru ETF (EPU) moved to Watch List on 6.13.11

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:
Africa & Middle East Fund (GAF) added 6.13.11
Indonesia Fund (EIDO) added 6.13.11
Ishares MSCI All Peru Index Fund (EPU) added on 6.13.11
Orocobre (OROCF) added on 6.13.11
Priceline (PCLN) added on 6.13.11
Shutterfly (SFLY) added on 6.13.11

Recent Deletions:
Allscripts (MDRX) moved to the Hot List on 8.1.11
Applied Materials (AMAT) moved to the Hot List on 7.11.11
Priceline (PCLN) moved to Cooling Off List on 8.1.11
Tesla Motors (TSLA) moved to Cooling Off list on 6.13.11
Veeco (VECO) Moved to the Hot list on June 29, 2011

Company	NP owns?	Symbol	Price when added to List	Price 8.01.11	52-week High 52-week Low	Gains/Loss
S&P Emerging Middle East and Africa Fund	No	GAF	$73.75	$73.62	$79.97 $57.00	flat
Read "Travel Rewards," from Volume 8, issue 7.
Amazon	No	AMZN	$168.07	$221.00	$227.20 $105.80	+32%
Hot company. Buy at a good price. P/E ratio is very high, at 98 on August 1, 2011.
Apple	No	AAPL	$351.99	$397.19	$404.50 $235.56	+13%
Hot company. Buy at a good price. Also, be aware that Steve Jobs is on medical leave of absence. Tim Cook, current COO, has been running company many times over the years during Jobs’ medical leaves and investors may be accustomed to having him run the show, if Jobs should announce his resignation. 3Q results were announced on July 19, 2011: The Company posted record third quarter revenue of $28.57 billion and record second quarter net profit of $7.31 billion, or $7.79 per diluted share. These results compare to revenue of $15.70 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share, in the year-ago quarter. The Company sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter. The Company sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. Apple sold 7.54 million iPods, a 20 percent unit decline from the year-ago quarter. "We’re thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent," said Steve Jobs, Apple’s CEO. "Right now, we’re very focused and excited about bringing iOS 5 and iCloud to our users this fall." Revenue and profits are expected to pull back in the 4th quarter, however. According to Peter Oppenheimer, Apple’s CFO, "Looking ahead to the fourth fiscal quarter of 2011, we expect revenue of about $25 billion and we expect diluted earnings per share of about $5.50." How much of a threat are the competing Smart Phones to the iPhone? Since iPhones and iPads are primary drivers of revenue for Apple, it pays to compare...
iShares Australia Index	No	EWA	$20.34	$25.24	$28.36 $19.94	+25%
Read "Hot Funds," from Volume 7, issue 7. This fund was a rock star on Wall Street in 2009-2010. There are a few factors that might pull back share price in the short term (which we are waiting for). The Queensland floods, the Japanese tsunami (Japan is a big customer of Australia) and a policy change in China and potential slowdown in that economy. Love the long-term prognosis of this commodity-rich country. Also read, "Commodity-Rich Countries" by Michelle Gibley, CFA, Schwab, from Volume 8, issue 6.
Baidu	No	BIDU	$124.96	$158.84	$165.96 $76.00	+27%
Hot company. Buy at a god price. P/E 104 on 8.1.11.
Berkshire Hathaway	No	BRK.B	$85.30	$74.93	$87.65 $73.25
Warren Buffett’s company has more exposure to the bank bailouts (Wells Fargo and American Express to name just two) than most investors realize. And, contrary to what he used to say, the company engages in active trading and hedging. Plus, he’s 82 and doesn’t have a clear, young successor in place. (Last one, David Sokol, had to resign on March 30, 2011.) 1Q 2011 (announced on 5.6.11): Net earnings were less than half of a year ago, at $1.5 billion compared to $3.633 billion.
Canadian Imperial Bank RISK: Low	No	CM	$65.88	$76.16	$88.76 $61.12	+15%
Refer to the "Debt World" article in Volume 8, issue 2 for details. Canada’s banks were ranked #1 by the Milken Institute for global capital in 2009; Australia was #2. Canada has a higher debt to GDP ratio than the U.S., however, so don’t dive in without testing the water first. Check out the article.
iShares Chile Fund	No	ECH	$71.21	$71.00	$80.38 $61.62	Flat
Read "Hot Funds," from Volume 7, issue 7 and "Latin American Funds Doubled" article from the August 2010 ezine, Volume 7, issue 8.
iShares Emerging Markets Index	No	EEM	$39.58	$47.05	$50.30 $39.31	+19%
Read "Hot Funds," from Volume 7, issue 7.
iShares JP Morgan Emerging Markets Index	No	EMB	$104.63	$111.59	$114.14 $104.12	+6%
Read "Hot Funds," from Volume 7, issue 7.
First Solar	No	FSLR	$144.76	$117.39	$175.45 $111.40	-19%
See "Solar Springs Up Again," article in Volume 5, issue 4. Announces 2Q earnings on 8.4.11. First Solar uses cadmium telluride instead of silicon to transfer sunlight into useable energy. First Solar’s sales are flat, whereas sales with the silicon-based solar suppliers are up 80-100% year over year. The shift to silicon is occurring 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	$88.35	$89.28 $55.64	+73%
Read "Life Begins with Li (Lithium)" from Volume 6, issue 4 and "Should You Put the Brakes on Toyota?," from Volume 7, issue 2. 1Q earnings on May 2, 2011: net income of $94.0 million, or $1.30 per diluted share, in the first quarter of 2011, versus net income of $77.4 million, or $1.06 per diluted share, in the first quarter of 2010. First quarter revenue of $795.0 million was 5 percent higher than $756.5 million in the prior year.   Pierre Brondeau, FMC president, chief executive officer and chairman, said, "The year is off to a good start as each of our business segments delivered strong profit gains.  Agricultural Products’ earnings were driven by broad-based sales growth in North America, Latin America and Asia.  Specialty Chemicals’ performance was led by robust earnings gains in lithium."
Ford Motor Co.	No	F	$14.55	$12.35	$18.97 $4.71	-15%
Read "How Cap and Trade Saved Ford" from Volume 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).
General Motors	No	GM	$33.11	$27.97	$39.48 $27.31	-15%
Read "One Very Hot IPO," from the September 1, 2010 ezine, Volume 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 very slim at 4%. Old GM began selling their 10% of GM on May 23, 2011. Click to access an excellent article by the Associated Press that outlines the $276 billion in claims that old GM had to settle in bankruptcy. FYI: The U.S. government still owns 1/3 of the new GM. No surprise that shares in GM are down today. While the selling continues, there will be a downward drag on share price.
Google	No	GOOG	$600.05	$604.60	$642.96 $447.65	flat
See Volume 8, issue 2 article, "Big Bites Out of Apple and Google," and Volume 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 lost its leader on April 1, 2011. Larry Page became the CEO, 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." 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. Share price value is off by 20%. Oracle is suing saying that Android used Java without permission. Oracle wants "billions." Announced 2Q results on July 14, 2011. Google reported revenues of $9.03 billion for the quarter ended June 30, 2011, an increase of 32% compared to the second quarter of 2010. Net income was $2.51 billion, compared to $1.84 billion a year ago. Cash – As of June 30, 2011, cash, cash equivalents, and marketable securities were $39.1 billion. Headcount – On a worldwide basis, Google employed 28,768 full-time employees as of June 30, 2011.
Kulicke & Soffa	No	KLIC	$8.71	$9.27	$12.72 $5.27	+7%
Read "Let There Be Light" and "LED Lighting," from the December 1, 2010 and August 1, 2010 ezines, Volume 7, issue 12 and 8. Announced 3Q earnings on August 2, 2011. 2Q earnings report on 5.3.11: Net revenue of $206.7 million and net income of $39.9 million, higher than expected. 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 MSCI Indonesia Index	No	EIDO	$30.72	$34.64	$32.92 $22.80	+13%
Read "Travel Rewards," from Volume 8, issue 7.
iShares S&P Latin America 40 Index	No	ILF	$43.92	$49.61	$55.38 $39.21	+14%
Read "Hot Funds," from Volume 7, issue 7 and "Latin American Funds Doubled" article from the August 2010 ezine, Volume 7, issue 8.
Oracle	No	ORCL	$33.47	$30.11	$36.50 $21.24	-10%
Read "Big Bites out of Apple and Google" from the February 1, 2011 ezine, Volume 8, issue 2.
Orocobre	No	OROCF	$2.35	$2.26	$4.03 $1.29	-4%
Read "Should You Put the Brakes on Toyota?" from Volume 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.
iShares MSCI All Peru Index Fund	No	EPU	$40.73	$43.12	$51.35 $29.79	+5%
Read "Hot Funds," from Volume 7, issue 7 and "Latin American Funds Doubled" article from the August 2010 ezine, Volume 7, issue 8. Left-winger Ollanta Humala, a career military man who has moderated his anti-capitalist views since narrowly losing the 2006 election, won the Presidential election and has become the President-Elect. Humala notes that Peru has had economic growth of 7-8% for 8 years. He calls the Peruvian economy "solid." While Humala promises that the poor will receive more of the country’s profits, he also says that his central bank will be run by an independent and that he wants to work closely with the United States. Check out this video interview with Humala by Reuters.
Rio Tinto	No	RIO	$54.60	$70.29	$76.67 $39.30	+28%
Gold, copper and other commodities mining. Based out of UK. Mines worldwide, but focused greatly in Australia. 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	$76.31	$83.11 $48.71	+112%
Read "Discount Designer Stores," from Volume 5, issue 6. Sales have been growing steadily in this discount marketplace, especially given the "jobless recovery." Profit margins are slim, however, 7%.
Shutterfly	No	SFLY	$51.19	$53.62	$66.70 $18.43	+6%
Read "Diamonds or Scrapbooking," from the November 1, 2010 ezine, Volume 7, issue 11. PE is 126 – far too high for our taste – especially for a company that posted a loss in the most recent quarter. 2Q Earnings will be announced on July 27 at 2:00 p.m. PT (after markets close). 2Q 2011 results on July 27, 2011. Net revenues increased 62% year-over-year to $75.8 million (largely due to an acquisition). GAAP net loss was ($3.6) million, compared to ($5.9) million in Q2 2010. At Juen 30, 2911, cash and cash equivalents totaled $75.9 million, less than half of what the company had on March 31, 2011 – at $216.3 million. High P/E of 86 on 8.1.11.
Sociedad Minera y Quimica de Chile	No	SQM	$36.36	$65.47	$67.75 $37.07	+80%
This is a great company that manufactures lithium for the electric car & IT industry and potash for agriculture. Businesses include: Specialty Plant Nutrition, Iodine and Lithium. Looking for a better buy-in. Read the article, "Treasure Hunting", in Volume 5, issue 10 and the article "Life Begins with Lithium," from Volume 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.
Sohu (Chinese Co. ADR) Beijing, China Small Cap RISK: MEDIUM	No	SOHU	$46.54	$80.01	$109.37 $44.81	+72%
Chinese based Internet portal. Growing and profitable, with 32% net profit margins. This company is more like the Forbes and Yahoo of China, while Baidu is a competitor for search (like Google).
iShares S&P North American Tech Semi-conductors	No	SOXX	$45.94	$52.41	$64.19 $40.95	+14%
Read "LED Lighting," from Volume 7, issue 8 and 2010 Company of the Year from Volume 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.
VMWare	No	VMW	$83.26	$99.95	$111.43 $71.04	+20%
Read "Health Care Reform" Volume 7, issue 4. P/E is high, even for this great company! Love the company – at a better price... Announced 2Q results on July 19, 2011: Revenues were $921 million, an increase of 37% from the second quarter of 2010. Net income for the second quarter was $220 million, or $0.51 per diluted share, compared to $75 million, or $0.18 per diluted share, for the second quarter of 2010. Cash, cash equivalents and short-term investments were $3.7 billion and unearned revenue was $2.1 billion as of June 30, 2011.
Wells Fargo	No	WFC	$32.25	$27.90	$34.25 $23.02	-12%
3.9 million people are over 90 days late on their mortgage. 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 allowing banks to carry their losses off the books. Which means that earnings reports are fairy tales. See "Wells Fargo’s Incredible Exploding Earnings" in Vol. 5, issue 9, and "Wells Fargo’s Great Depression," in Vol. 4, issue 12.
Westpac	No	WBK	$73.54	$112.99	$138.58 $91.75	+54%
Issued it’s half-year results on May 4, 2011. 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 debt is quite high, at 4.34 X equity (on 5.15.11). Key financial highlights (comparisons are with prior year): • Cash earnings $3.2 billion, up 7% • Statutory net profit of $4 billion, up 38% Westpac’s Chief Executive Officer, Gail Kelly, said: ""Key indicators were generally positive during the half with the economy generating good growth, low unemployment and moderate inflation. Despite this, both consumers and businesses remain relatively cautious and while confidence is expected to pick-up, lending growth is likely to be moderate in the immediate future."

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 entering the Summer Doldrums of a pre-election year. GDP growth is expected to pick up in the coming quarters and debt ceiling being raised may spark love among investors, so may not be the best time to initiate a short position. Some of the stocks on the list below are here simply to keep you from buying them high.

Highlighted Companies (Cooling Off List):
LinkedIn (LNKD)
News Corp (NWSA) on 7.23.11
Priceline (PCLN) on 8.1.11
Taubman (TCO)
Tesla (TSLA)
Toyota (TM)
Wynn Resorts (WYNN)

DELETIONS:
None

Company	NP owns?	Symbol	Price when added to Cooling Off List	Price 8.01.11	52-week High 52-week Low	Gains/Loss
LinkedIn	No	LNKD	$102.54 $100.55 (7.15.11)	$104.05	$122.70 $45.00	+1% & +3%
Read my article, "Should You Link In?" from the June 1, 2011 ezine, Volume 8, issue. 6.
Netflix	No	NFLX	$258.62 $296.26	$263.38	$304.79 $98.54	+2% & -11%
Read "Blockbuster’s Second Coming" from Volume 7, issue 5. 67 P/E is too frothy for our taste, especially while Netflix’ content continues to lag behind the competition. Great, innovative company, with a lot of competition. 2Q results announced July 25, 2011: $789 million in revenue; $68 million in net income. 75% of new subscribers are streaming video. Netflix has over 25 million global subscribers, up 70% from 15 million a year ago! This is all great news. The problem is the worldwide recession (which continues despite what economists say), the competition heating back up and a very high price to earnings ratio (67 on 8.1.11). 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. Unfortunately, with Blockbuster’s exclusive access to first-run movies and Dish Networks reach, Netflix is likely to take a big hit. According to Ira Bahr, Chief Marketing Officer for DISH Network. "DISH Network now offers more than twice as many movie choices as any other TV provider. If you love movies, you're going to love DISH Network." New DISH subscribers now receive 3 months of Blockbuster by mail free.
News Corp.	No	NWSA	$16.42	$16.10	$18.35 $11.91	-2%
Read my article, "Murdoch's Humble Pie," from the August 1, 2011 ezine, Volume 8, issue. 8.
Priceline	No	PCLN	$538.41	$538.41	$561.88 $220.00	--
Read the article "The Priceline Negotiator," from Volume 7, issue 10. Great company. Not a short. Just don’t want people buying in high. And if you made a healthy gain, considering capturing profits. 2Q results will be announced on August 4, 2011. With high gas prices and consumers pulling back on spending, these results could be lower than expected. With a P/E of 48, investors are expecting nothing but good, and if that doesn’t come, there could be a lot of profit-taking. 1Q 2011 results on May 5, 2011. Revenue was $809 million, up 38.5% year over year. Net profit was $105 million, down from the 4Q net profit of $175 million, but double the net profit of one year ago.
Rochester Municipals Bond Fund	No	RMUNX	$14.86	$15.53	$16.91 $14.49	+4%
Read "Bond Beautification Project" from Vol. 7, issue 10 and "Bonds, Bond Funds and T-Bills: The Next Disaster," from Volume 7, issue 9.
Taubman Centers	No	TCO	$24.74 $61.32 (7.15.11)	$59.55	$62.63 $21.85	+138% & -3%
Read the article, "Global Recession," from Volume 6, issue 6 in June 2009. 2Q earnings on July 19, 2011: As of June 30, the loans on both The Pier Shops and Regency Square are in default. The company is working with the respective special servicers to transfer title of both properties as soon as possible, however, the holding periods remain uncertain and could be extended periods. The non-cash impact of owning these centers (including anticipated default interest) is expected to result in an incremental FFO charge of approximately $(0.20) per diluted share for The Pier Shops and $(0.04) per diluted share for Regency Square for the full year 2011. CFO dumped $240,000 in shares on 8.1.11. Liabilities exceed assets by about $500 million. Over the past six months, TCO has distributed "dividends in excess of net income," amounting to almost $2 billion. Net income in the 2Q was $20 million. Paid down debt with a new stock issuance. Malls are not doing well in general, with consumer spending off in the U.S.. Taubman is doing some very creative accounting and funding tricks and using some potentially misleading language on their earning reports. Such as, "We’ve now experienced an unprecedented six quarters of double digit sales increases," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "This is contributing to a robust leasing environment in our centers... The fundamentals of our business are extremely strong." 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, lower occupancy and declining real estate value.
Time Warner	No	TWX	$24.44	$35.08	$59.37 $17.81	+46%
Read the article, "Hulu Your Heroes," from Volume 6, issue 5 in May 2009.
Toyota Motor Company	No	TM	$77.05 $83.50 (7.15.11)	$81.77	$93.74 $67.56	+6% & -2%
Read "Should You Put the Brakes on Toyota?" from Volume 7, issue 2 and "One Very Hot IPO" from Volume 7, issue 9. Expect 1Q results the first week of August 2011. FYI: Honda results on 8.1.11 dropped off of a cliff! Net income decreased 88%, down to $394 million. Sales were down 27.4%, at $21.2 billion. Toyota June sales were off 24% from a year ago, at 110,937 units. The earthquake and nuclear crisis in Japan is weighing heavily on Toyota. 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 26 P/E is a little high for a slow growth industry – especially given the unfortunate disaster that just occurred in Japan, where Toyota is based. FY earnings report on 6.24.11 was flat, but profitable: Net revenues for the fiscal year ended March 31, 2011 totaled 18.993 trillion yen, an increase of 0.2 percent compared to the previous fiscal year. Net income* increased from 209.4 billion yen to 408.1 billion yen. Vehicle sales decreased in Japan, North America and Europe, but increased in Asia, Central and South America and Africa. Commenting on the results, TMC President Akio Toyoda said, ""We finished the fiscal year to March 31, 2011 with improved operating income of 468.2 billion yen as a result of our efforts on marketing and cost reduction despite a negative impact of around 100 billion yen from the Great East Japan Earthquake. Our business environment continued to be challenging due to Yen appreciation among others. Nevertheless, we managed to improve our profit structure even further thanks to the support from all our stakeholders, in particular our customers."
PowerShares Treasury Bill Index Fund	No	PLW	$30.02	$29.12	$30.02 $26.30	-3%
Read "Don’t Get Fooled Again," from Volume 7, issue 8. When interest rates rise, bonds and bond funds fall in value. Time to find another "safe" place for your assets.
Tesla	No	TSLA	$28.48	$28.77	$36.42 $14.98	flat
Read "Tesla Trades on NASDAQ" from Volume 7, issue 7. 2Q results will be announced on August 3, 2011, after the markets close. Tesla shareholders are being diluted. On June 3, 2011, Tesla announced an offering of 5,300,000 shares of common stock, plus an additional 795,000 shares at $26.72/share. Goldman Sachs is handling the sale. Elon Musk, CEO and Blackstar Invesco LLC are purchasing 2 million of the shares. Tesla held 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, but also 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. 1Q results were announced on May 5, 2011. Revenues increased to $49 million, 35% higher than a year ago. Net loss was $48.9 million. According to Elon Musk, CEO of Tesla Motors, "Our Model S alpha build proceeded as scheduled during the quarter. In fact, our engineering and manufacturing teams have now completed the construction of all of our Model S alpha vehicles, having finished the final alpha in April. These vehicles are successfully undergoing the planned cold weather brakes testing, ride and handling evaluation, safety validation, electrical integration, and noise, vibration and harshness evaluation," continued Musk. "As has been our plan, we will continue testing this quarter with a particular focus on durability and systems integration as we prepare for our beta build later this year. Overall, we remain on track for first customer deliveries of the Model S in mid-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." Tesla has now delivered over 1,650 Roadsters around the world. Roadster owners have driven almost 11 million miles. In addition, Tesla has now received over 4,600 reservations for the Model S. The 300-mile version of the Model S will be the first version to be delivered to customers in mid-2012. In April, Tesla opened its first interactive store in the high-traffic Santana Row retail center in San Jose, California. The store features a new retail experience in which Tesla customers can learn about electric vehicles, explore Tesla’s innovations, and configure their cars through hands-on interactive touchscreens. Very exciting car company. But very early stage, and in need of raising more and more dough to stay on production track. Be careful.
Wynn Resorts	No	WYNN	$149.80 $71.00 $159.17 (7.15.11)	$154.76	$172.58 $79.89	+3% & +118% & -3%
Check out the article, "(No) Viva Las Vegas" in Volume 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 Hangover sparked a Vegas renaissance last year. The new Wynn pool scene is hot. Buying a vulnerable company with a high price to earnings ratio is not. Increased cash flow has improved Wynn’s debt rating. On July 8, 2011, Fitch raised its rating on Wynn Resorts Ltd and subsidiaries, including Wynn Las Vegas LLC and Wynn Resorts (Macau) SA to "BB" from "BB-" and it gave a positive outlook for the ratings.

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 with12% gain (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. 6.13.11: LinkedIn was deleted with 25% gains, Orocobre with 18% gains, Shutterfly with 20% gains, Priceline with mixed performance and eBay was deleted with flat performance. 6.23.11: Yahoo was deleted with 12% gains.

Deleted 2008-2009:
19 gainers and no losers.

Recently Deleted:
None.

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.

NataliePace.com Calendar:

Will Congress Cut $4 Trillion or Let the U.S. be Downgraded? The Deadline is August 2, 2011.

Senate Majority Leader Harry Reid (D: Nev.) and House Majority Leader John Boehner (R: Ohio).

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.

U.S. Surpasses $14.3 Trillion Debt Ceiling
Tuesday, August 2nd, 2011
Today is the day that the Congressional Budget Office predicts the U.S. will exceed $14.3 trillion in debt.

FOMC Meeting
Tuesday, August 9th, 2011
The Federal Open Market Committee meets to determine Federal Reserve policy in the U.S.

Hello Freedom. Good-bye Debt. Radio Show
Wednesday, August 10th, 2011
9:00AM through 9:30AM PT
Many Americans are spending more than they earn and are drowning in credit card debt. There have been 9.3 million foreclosure filings since 2007 with 3.7 million more expected in 2011-12. Get help NOW! Call in #: (347) 215-7305. Yes, there are things you can and MUST do now.

NASA IT Summit, San Francisco
Monday, August 15th, 2011
Topics will range from Mission IT, Security, Green IT, and Collaboration to developing our future workforce. Get the latest on IT innovation and jobs! Aug 15-17, 2011.

2^nd Quarter 2011 GDP Growth Report (Second Estimates)
Friday, August 26th, 2011
8:30AM ET
The U.S. Dept. of Commerce, Bureau of Economic Analysis (BEA.gov) releases its second estimate on GDP growth in the 2nd Quarter of 2011. GDP growth in the 1^st quarter of 2011 was barely breathing, at 0.4%.

Labor Day
Monday, September 5th, 2011

Good Food Festival. Santa Monica, CA
September 14-18, 2011
Join leading chefs, farmers, food leaders and other organic experts during the Good Food Festival and Conference. Sept. 14-18. Promote good food!

FOMC Meeting
Tuesday, September 20th, 2011
The Federal Open Market Committee meets to determine Federal Reserve policy in the U.S.

International Day of Peace
Wednesday, September 21st, 2011
The UN's International Day of Peace is a global holiday when individuals, communities, nations and governments highlight efforts to end conflict and promote peace.

Fall Equinox
Friday, September 23rd, 2011
Fall begins!

Fall Equinox Retreat. Santa Monica, CA
September 23-25, 2011
Sept. 23-25, 2011. Use the power of compounding gains to create the life of your dreams. Learn real estate, stock, bond and gold+ investing. Adopt the Thrive Budget and discover how to live as if you have all the money in the world. Call 310-430-2397 to learn more now.

Solar Decathlon 2011!
September 23 - October 2nd, 2011
20 university teams compete for the coolest (energy wise), hottest-looking, most efficient solar-powered home. View the results at the National Mall in DC. Sept. 23-Oct. 2, 2011.

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