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Vol.7 Issue 8, August 1st, 2010
Send comments and suggestions or get more information at info@NataliePace.com

QUOTE OF THE MONTH:
"The typical financial consultant covers 400-500 accounts. They get paid on the ones that have the greatest assets. They realistically can't get to the majority of their client base."

Joe Moglia, Chairman, TD AMERITRADE.

Don't Get Fooled Again. By Natalie Pace. Are your bonds, bond funds, annuities & pensions as "safe" as you think?
LED Lighting. Clean, Beautiful and the Hottest Thing on Wall Street. By Natalie Pace. Includes a LED Lighting Stock Report Card.
Say Goodbye to Oil. By Paul Woods.
Bull/Bear Standoff. By Liz Ann Sonders, Brad Sorensen and Michelle Gibley, Schwab.com.
How Much Do I Need to Retire? Investors Ask Natalie.
Five Major Defects of the Financial Reform Bill. By Dr. Gary S. Becker.
Prosperity Snacks. 10 of Our Favorite Tips for Getting Through The Tough Times. By Staff.
We Live In A World Of Trust. By Alvin Tam.
There is No Success Without Risk. By Chellie Campbell.
Socially Conscious Investing. By Natalie Pace.
Stock Spams and Scams. A FINRA Investor Alert.
Latin American Funds Doubled in 2009. By Natalie Pace. Includes my Hot News on Cool Stocks Report.
NataliePace.com Calendar: : Most of Wall Street is on Vacation. Hope You Are, Too!

Don’t Get Fooled Again.

by Natalie Pace.

Why your bonds, bond funds, annuities, pensions and other "safe" assets are at risk.

Includes an Insurance Company Stock Report Card.

When you think about the strategies that saved your nest egg in January of 2008, bonds, bond funds and Treasury Bills were top saviors. Others felt secure knowing their pension or annuity was being cared for by their corporation and/or insurance company (except those in the airline and auto manufacturing industries). These traditionally "safe" assets are vulnerable in the coming years, however, due to inflation, rising interest rates, mounting debt and a prolific pool of retirees.

Pensions, Annuities and Insurance Payouts
Did you know that your assets held by insurance companies (such as annuities and Total Control Accounts) are not FDIC-insured or that, while your pension is probably covered by the Pension Benefit Guaranty Corporation (PBGC.gov), the payments are capped at what could be significantly below what you are expecting to receive? Last October, the PBGC announced that "the maximum insurance benefit for participants in underfunded pension plans terminating in 2010 will be $54,000 per year for those who retire at age 65." Many pilots, who lost their pension plan during their airline's bankruptcy and restructuring, were counting on double that amount. According to Howard Silverblatt, S&P Indices, Senior Index Analyst, pension underfunding in the S&P 500 companies this year amounts to $261 billion, with "only 18 issues overfunded in pensions for 2009 compared to 296 issues ten-years ago." That means the vast majority of the S&P500 is underfunded on pensions and other post-employment benefits.

Source: Standard & Poor's

In a world where you can receive half or less of your promised pension and insurance companies, like AIG and CIT Group, have to be bailed out to the tune of $182 billion and $2.3 billion respectively, it is safe to say that pensions, annuities and life insurance policies are not the safe havens they were once considered to be. Earlier this month, MetLife released a statement about their Total Control Accounts (MetLife’s custodial accounts for paid life insurance claims), writing, "While, as our materials to our customers explain, the TCA is not FDIC insured, customers have no reason to doubt the security of their TCA funds." MetLife’s rationale is that "the funds held in TCA’s are fully guaranteed by the financial strength of MetLife, which has been delivering on its promises since 1868." Well, AIG had a legacy dating back to 1926… Clearly, one can’t have blind faith in insurance companies, and for that matter, neither are bonds worthy of that kind of allegiance either.

Most Bonds Performed Great During the Great Recession
Real estate lost 24% between 2007 and 2009 (source: National Association of Realtors), and stocks dropped to half their worth between October 2007 and March 2009. Meanwhile, most bonds and bond funds held strong, earned some gains in principal and paid more yield than FDIC insured bank accounts.

Bonds Versus Stocks January 1, 2007 through January 1, 2010

Treasury Bills Versus Stocks January 1, 2007 through January 1, 2010

However, when interest rates rise, the value of bonds and bond funds falls. According to Rob Williams, the director of income planning at the Schwab Center for Financial Research, "Interest rates must rise-it's inevitable. And if they do, bond prices will fall." Sure, you can carry the bond to term, however, if you have to resell it for any reason, few people will want to buy it and then only if you dramatically lower the price. Why? Because new bonds will be available that are paying a higher percentage rate. Who would want to buy a BP bond at 3% yield when tomorrow they could (potentially) buy a Microsoft bond at 8% yield? (If you have bonds that are yielding 8% and above, those bonds are safer until interest rates rise above that level…)

You’ll hear strategies of "laddering" as one approach and/or just "waiting it out." But if you want to protect yourself from price depreciation (and nest egg deflation), you’ll need to find "safer" areas for your money than bonds, bond funds and Treasury bills now -- before interest rates start to tick up. Below are a few ways of rethinking your assets in order to beautify your bottom line through the bond re-pricing in the years ahead. To learn more Bond Basics, go to Finra.org.

Money Markets
FDIC insured money market accounts are safer and higher yielding when interest rates rise than bonds and bond funds. In a world where banks, brokerages and insurance companies fail, this affords an extra layer of protection. Your money market allocation is as safe as a Certificate of Deposit or a savings account if your account is FDIC insured. Some brokerages are offering FDIC insured money markets, making it easy to reallocate your bond funds to the money markets.

Real Estate and Income Property
With interest rates stalled at a 50-year low, one of the best "safe" investments is a home you can live in or a house someone else can live in and pay you rent on. Be sure to buy something you can easily afford for yourself, and buy income property where the rents can easily pay for mortgage costs, maintenance, insurance, property taxes and a nice yield. If you have a lot of cash and/or bond funds in your 401K, do some sleuth work to discover how you might access some of that and translate it into real estate. Consult your Human Resources person, a great accountant and an experienced Certified Financial Planner to discuss qualifying events that allow you to gain greater control over the assets in your 401K and/or pension. Consider also that if real estate increases in value, while bonds, pensions and 401Ks decline in value, that it might be worth paying some penalties and taxes to access your money.

Gold Vs. Consumer Staples
Consumer staples (food, clothes, shelter, warmth) and other basic needs (which include a cell phone, transportation and energy these days) become the most valuable commodities in tough times, not gold. (Imagine in a worst case scenario how much easier it is to trade a computer than it would be a nugget of gold.) Yes, gold could increase in value because the performance of this precious metal is highly correlated with inflation and lack of consumer confidence. However, the historical trend for gold boom cycles is not stable enough to justify going all in on gold. Last year, most stocks performed better than gold!

For that reason, I put gold in with my "hot industries" allocation (see pie chart below). Consumer staples, telecommunications, natural resources and utilities, on the other hand, might be an easy way to stay "safe," while interest rates rise and bond prices reset themselves. This is especially true if your 401K options are limited to six or seven funds, and bonds and bond funds were traditionally considered to be the "safe" choice. Again, you’ll have more options if you’re able to roll your 401K into a brokerage that offers the universe of ETFs to you, instead of just a dozen limited choices.

Pension Plans
Pension plans are more vulnerable than most people are aware of. With one-third of the population entering retirement, some legacy companies are supporting more retirees than they are workers. Would it be a better idea to take an early payout and translate the money into a hard asset, like income property? Is it possible to roll your pension assets into a self-directed 401K? Only you know what works best for you, but in a world of restructuring and bankruptcies, it is smart to consider that there may be a safer, more profitable plan for your future than the company or union pension plan. Cashing out now could equal tens of thousands (if not more) of dollars (just ask an airline pilot or Delphi parts manager) more than if your company restructures and you have to take PBGC benefits. Consult a trusted financial professional and tax accountant, along with your human resources person to determine if this is right for you.

Annuities and Life Insurance Payouts
Did you receive a life insurance settlement where the money is still in an account controlled by the insurance company? Are you sold on the idea that your annuity will pay you a 4-7% yield on your money, no matter what? Annuities and insurance company holdings are not FDIC insured. Companies are saying that the money is backed by the full faith of their corporation, however, it would pay to know just how healthy that corporation is before relying on their promises. Check out the Insurance Company Stock Report Card (click to access) for details on four major insurance providers, and you will discover that three out of four lost money last year and half were bailed out. Construct a Stock Report Card of your own, paying particular attention to debt, pensions, income and other obligations.

Singapore and Hong Kong
According to global strategist Dr. Marc Miles (who edited the 2006 Index of Economic Freedom), "The key to the 2011 story is debt. Markets will fear default and bonds and equities of large debtor countries will suffer." Dr. Miles named Hong Kong and Singapore as two countries that have avoided taking on excessive debt. Funds, such as the Singapore Fund (symbol: SGF), which was a resilient performer in the Great Recession, might continue to perform strong going forward as well.

Bottom Line
Bonds and bond funds should become attractive again once interest rates rise and start leveling off – but in the coming years, they could be real stink bombs. Real estate will start appreciating in value again (once unemployment stabilizes). Stocks will rally at some point. And in the meantime, in a world where pensions, annuities, insurance companies, banks and bonds have all been sinners, hard assets, consumer staples, natural resources, income property and basic needs will remain the saints of your asset protection plan.

So hunker down, get smart and rebalance your nest egg (again), in order to batten down the hatches and weather the new storms that lie ahead. If you are rich in paper now, while cash and credit are in short supply for most folks, you’ll find that almost everything you wish to own is on sale – even if you have to pay some taxes and penalties to access it.

To learn more about Modern Portfolio Theory made as easy as a pie chart, read my book, You Vs. Wall Street. Jump-start your wisdom by attending a 3-day Get Rich and Enrich Retreat. The next retreat is October 22-24, 2010. You can get more information under the Get Rich and Enrich Retreat banner ad on the home page at NataliePace.com. Please note that early bird pricing is available now through August 15, 2010 ONLY.

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street and host of the Pace and Prosperity radio show on BlogTalkRadio.com/NataliePace. She is a repeat guest on Fox News, CNBC, ABC-TV and has contributed to Forbes.com, Sohu.com and BestEverYou.com and Magazine. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/pages/Natalie-Pace/416616285568, on BlogTalkRadio.com/NataliePace and on YouTube.com/NataliePaceDOTCOM. For more information please visit, http://www.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.

LED Lighting. Clean, Beautiful and the Hottest Thing on Wall Street.

by Natalie Pace.

Includes a LED Lighting Stock Report Card.

When I took my first tour of LivingHomes.net, the first platinum LEED rated home in the U.S., I was thrilled to learn that green could be gorgeous. One of the most attractive features of this solar-powered Ray Kappe home was LED lighting, but at the time, CFLs (compact fluorescent lamps) were stealing all of the thunder in the consumer advocacy ads. Today, however, I’m pleased to report that LEDs are one of the hottest things in home design, city design, university design and even in Habitat for Humanity homes. And of course, when anything gets hot on Main Street, Wall Street wakes up and takes notice.

The living room of the first prefab green LivingHome. A platinum LEED home.
Photo credit - Berg / Divis Photography.

LivingHomes.net – the first platinum LEED rated home in the U.S. (at night)
Photo credit - Berg / Divis Photography.

Cree (NASDAQ: CREE) is one of the leaders in the LED lighting movement, and has established multiple initiatives to promote swift, wide-scale adoption of this cleaner form of lighting, including LEDCity.org and LEDUniversity.org. The city of Raleigh, North Carolina and the University of Central Florida are among the early adopters of LED lighting in the U.S., while Tirupati became the first city in India to join the LEDCity Initiative. California Governor Arnold Schwarzenegger applauded the adoption of LED lighting at the City of Indian Wells and the University of California, Davis for "promoting the kinds of energy-efficiency measures that California needs to meet our aggressive goal of 33-percent renewable energy by 2020." And Cree is donating $1.5 million to put LED lighting in new kitchens of Habitat for Humanity homes. Cities and universities may qualify for Stimulus Funding to upgrade their lighting, so it pays to visit these websites and to encourage your city councils, university and college boards to do so as well.

LED lighting can reduce energy consumption by 85-90%. A Cree LED Lighting product, like the LR6^TM downlight, can replace a 65-watt incandescent bulb while using only 10.5 watts. The LED light will last, on average, 50,000 hours, while a typical 65-watt incandescent light lasts about 2000 hours, meaning you’ll have to replace your energy-guzzling bulb 25 times for the same lifespan of the LED. The extra product purchases and wattage costs mean that you can spend $65 for a CREE lighting product now, or spend $465 (and throw out a lot of waste products) for the same amount of light.

According to the U.S. Department of Energy, 22 percent of electricity used in the U.S. powers lighting. In a world of BP oil spills, global warming (or not), rampant energy waste and toxic garbage (such as the mercury in those CFLs), this is just the kind of revolution that our green Department of Energy Secretary Dr. Steven Chu can get behind. In fact, in a visit to the Cree workplace on March 18, 2010, Dr. Chu and Vice President Joe Biden applauded Cree for using $39 million in tax credits to expand their business. The Stimulus Bill also provides funding for cities to afford Cree LED Lighting. Additionally, Cree just won another $3.7 million Department of Energy grant to develop advanced transistors for electrical substations that can make the electrical grid more flexible and controllable.

Photo courtesy of WhiteHouse.gov

And Cree’s customers are not limited to the U.S. Cree LED lighting products are gaining popularity worldwide, as far reaching as South Korea, Ontario, China, Italy, Germany and, now, India.

Cree has a high profile in the LED movement (and a high price-to-earnings ratio to match it), but there are also a number of semiconductor companies that are servicing this high-growth area, including Advanced Materials (NASDAQ: AMAT), Kulicke and Soffa Ind. (NASDAQ: KLIC), Veecom (NASDAQ: VECO) and KLA Tencor (NASDAQ: LKAC). Each of these companies has more than doubled revenue in the last quarter from a year ago, with Kulicke increasing revenue by over 600% and Veeco up 250%. The semiconductors listed here are all trading at a price to earnings ratio of 10 or under (far beneath Cree’s 35 P/E).

Analysts have expressed concern that these semiconductor companies are ramping up output at a more aggressive pace than their customers and the industry can handle. It is possible, however, that they are underestimating the growth of this industry by focusing more on the LEDs used in televisions and computers and largely ignoring the commercial and housing lighting communities. A handful of cities and universities adopting LED lighting might be a small pool to start with, but, even during tough times, lighting is a basic expenditure and the stimulus grants are aimed right at this marketplace. As Rick Falco, Associate Director Student Union at the University of Central Florida writes, "When you consider the Key West ballroom lights are on for 16 to 18 hours each day, the payback is less than two years." Rick continues, noting that, "The LED lighting also has better light quality—it’s easier on the eyes and it’s dimmable, which gives us greater flexibility for the wide range of events held in the ballroom."

We’re in the middle of the summer doldrums and headed into September and October, which have proven to be challenging months over the last few years. Such high growth with low price to earnings ratios is quite unusual to come by, especially in a Great Recession. However, the markets are volatile and down-trending, in a year that is predicted to be challenging and slow growth, which makes even hot companies in a hot industry more vulnerable.

Kulicke and Soffa Ind., KLA Tencor And Veeco were added to the Hot News on Cool Stocks List today, while Applied Materials and Cree are on the Watch List, anticipating a better buy price in the months to come. If you invest, however, be sure to take your profits early and often, and only invest money you are willing to take a gamble on.

Click on the LED Lighting Stock Report Card to review technical and fundamental information on these companies. If you’re interested in an Exchange Traded Fund concentrated in this area, try the iShares North American Technology Semiconductors (symbol: IGW), at a lower price.

Say Goodbye to Oil.

by Paul Woods.

The Nissan Leaf, 100% electric Zero Emissions car, priced at $33,720

Without a lot of fanfare, there’s a revolution beginning that will produce a dramatic change in one of the largest industries in the world. For a century, the auto industry has relied on cars powered by combustion engines because nothing to date has been able to match the power and range of a tank of gasoline. As a result, we’ve put up with a 19th century technology that has too many moving parts, needs too much maintenance, and requires a toxic fuel that leaves us dependent on all the wrong people in the world.

For everyone fed up with oil, we’re finally on the verge of seeing a viable alternative. The fuel of the future is electricity, and the key to this is the use of lithium for batteries big enough to power vehicles. Unlike previous batteries made of lead or nickel, lithium batteries with the same weight can store 4X more electricity than lead and 2.7X more electricity than nickel.

Although Tesla was the first company to market an electric car using lithium batteries, they offered a small sports car with a high price tag and had limited success. However, they made a very important contribution to the electric car industry by creating the first one that was fun to drive.

Later this year, the first electric car for the rest of us will be offered by Nissan. It’s called the Leaf and, if your stereotype of an electric car is a golf cart, that perception is about to change. Here’s a performance review http://green.autoblog.com/2010/07/27/2011-nissan-leaf-first-driveroad-test-review/#continued.

The Leaf will hold five people and a decent amount of cargo. We’re not at the point yet where the battery can be charged in the time it takes to fill a gas tank, but eighty percent of the battery can be charged in 30 minutes. The battery will carry an 8-year, 100,000-mile warranty.

Initially, the range will be around 100 miles. This may not sound like much, but 2/3 of the people in this country drive 50 miles per day or less and the market for vehicles in the U.S. is around $6 trillion. As a result, the potential market is already enormous.

If charged at night when electricity is cheaper, driving costs will be a few cents per mile.

Depending on where you live, there may also be some free charging stations available.

When compared with combustion engines, electric drives last longer because of fewer moving parts, have more torque (acceleration), and maintenance costs will probably be a fraction of what you’re spending now. Best of all, they’re practically giving them away to get this industry off the ground. The sticker price is around $33,000. However, buyers will qualify for a Federal tax credit of $7,500. If you live in California, you’ll qualify for another $5,000 tax credit. The cherry on the top is that homeowners with attached garages now also qualify for a free charging unit, worth about $2,200.

Although the Leaf has been marketed in only a few states, they already have deposits on over 16,300 vehicles ($540 million in revenues) and another 150,000 people have expressed interest.

Not long after the Leaf hits the market, Ford will be offering a Focus EV in 2011 with a similar price and profile. After that will come a stampede of electric cars from every major automaker.

Once production begins to ramp up, production economies of scale will reduce costs for all electric carmakers. In addition, the march of technology will produce longer ranges and battery charging times that are similar to the few minutes it takes to fill a gas tank. For everyone fed up with oil, this is the light at the end of the tunnel. It’s also a huge potential global market and a very promising investment opportunity.

The Summit Clean Energy Portfolio
The Summit Clean Energy Portfolio invests in companies that produce energy without using fossil fuels as well as companies that help to reduce the demand for fossil fuels. Because this industry is extremely speculative, our goal is not to make it worse. Our primary focus is on companies that are already profitable and industries that won’t need endless subsidies to be viable, and the majority of this portfolio is currently invested in the electric car industry. From its inception in 12/31/05 through 6/30/10, this portfolio produced a return of 8.01% before fees. Its benchmark, the WilderHill Clean Energy Index, was down 50.35% during the same time period.

About Paul Woods
Paul is a Managing Director in the Beverly Hills office of Summit Wealth Management. He currently manages the Summit Clean Energy portfolio and was recently named a Top Gun money manager in the PSN Database, which is the largest database of money managers in the U.S. He has written numerous articles on this industry and been widely quoted. He’s also a member of the Nissan Leaf Advisory Panel.

Information has been obtained from sources believed to be reliable however Summit Wealth Management Inc. does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this material and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Bull/Bear Standoff.

by Liz Ann Sonders, Brad Sorensen and Michelle Gibley, Schwab.com.

	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 30, 2010

Key points

Bulls and bears both have strong cases. With earnings results and economic data indicating continued growth, we lean toward the bullish side—although risks to the bullish case are elevated.
Uncertainty and concern regarding government actions continue to weigh on sentiment, while the Federal Reserve leaves all options on the table.
Some questioned the credibility of European stress tests, but the market responded favorably. Meanwhile, China's growth appears to be moderating but remains relatively robust.

The standoff between the bulls and bears continues and the market remains relatively rangebound. Numerous other standoffs have contributed to this situation as austerity proponents battle Keynesian enthusiasts, the Federal Reserve tries to entice borrowers, small businesses maintain a much different outlook on the state of the economy, and technicians of all stripes argue about various indicators.

This uncertainty has led to rangebound action, resulting in some of the highest correlations among stocks ever seen, according to Ned Davis Research's 63-day correlation measure. The end result of all of this is a potentially difficult and challenging investing environment.

We remain relatively optimistic, but want to remind investors that having a static and dogmatic view without heeding the call of new information can result in being dogmatically wrong. As always, we strongly recommend viewing stock investments over a reasonably long time horizon. Money you might need in the short-term shouldn't be invested in stocks.

Recent action has investors putting more emphasis on technical analysis. We do look at technicals, but not exclusively, as the historical evidence of the accuracy of most technical indicators is spotty—and when effective, they tend to be shorter-term in nature.

One example was the recent media attention on the "death cross" or "dark cross" that occurred in the first part of July—when the 50-day moving average fell below the 200-day moving average—supposedly indicating a pending and sustained downturn in the market. Historical evidence, however, is shaky, given that during the 28 death crosses in the S&P 500 since 1930 (involving a falling 50-day moving average and a rising 200-day moving average when they crossed) showed a very mixed record.

In fact, the market was actually higher three months later in 16 cases. The lesson is to pay attention to technical indicators as potential points of entry or exit, but to use such analysis with caution.

Investor sentiment has a better historical record than many technical indicators. Unfortunately, individual investors tend to be good contrarian indicators—meaning stocks tend to rally after sentiment reaches extremely pessimistic levels, much as we saw to start July as the S&P rallied nearly 7% in a two-week period.

Sentiment had been crushed thanks to the 16% correction that began after the April market highs. You can try to use this to your advantage in this environment as we shift between pessimism and optimism by adding to positions as needed during periods of extreme worry and doubt, and reducing stock allocations as appropriate during times of extreme optimism.

Earnings season and economic data leave questions
Second-quarter earnings season has been largely positive, with the market rallying, although there was still uncertainty surrounding corporate outlooks. For the most part, profits were good and beat expectations as companies continued to hold down costs and are generally seeing demand improving—especially over the year-ago period.

However, revenue results among some companies left something to be desired, as estimates were missed. This fanned some concerns that the economic recovery was fading, and demand for goods and services was falling off.

Recent economic releases did little to clear up the picture, but largely remained supportive of our view that the economy is entering a slower, steadier growth phase. Retail sales (excluding autos and gas) rose 0.1% in June, slightly better than expected, while industrial production also improved slightly.

Additionally, both the Philadelphia Fed Manufacturing Index and the Empire Manufacturing Index (regional surveys that provide a preview to the national Institute for Supply Management Manufacturing Survey) moderated, but remained in territory depicting continued economic expansion. Finally, housing data remained murky as the market continues to stabilize from the expiration of the federal tax credit.

Housing starts fell again, largely due to more-volatile multi-family structures, while the forward-looking building permit number actually rose 2.1%. Pricing continues to firm up relative to a year ago, with the Case-Shiller index showing gains of nearly 5%. We believe future months' housing data will give us a "cleaner" read on the market as we get further away from the tax-incentive period.

Conflict in Washington, while Fed remains flexible
Uncertainty regarding future government actions remains as one of the elephants in the room for the market. Experts continue to argue about the effects of the stimulus package, of which about $480 billion has been spent (according to the Council of Economic Advisors) to mixed reviews, with the remaining $307 billion yet to be spent.

Debates about whether to extend tax cuts on everything from income to dividends to capital gains unnerve investors and businesses, while the recent passage of health care reform and the financial regulatory bill raises concerns that costs for all types of businesses will be increasing. In fact, in the latest National Federation of Independent Businesses (NFIB) survey, small businesses showed reduced optimism, citing concern over increased government involvement in the private sector as one of the major reasons.

Small business optimism needs to improve

Source: FactSet, Federal Reserve as of July 27, 2010.

Small business is vital to the continuation of the economic expansion, as that's where a majority of hiring is expected to come from. Continued cautiousness will likely result in continued disappointing job growth.

The Fed is also dealing with confidence issues. It has flooded the market with money and made it explicitly clear that the fed funds rate will remain near zero. However, that money is not working its way through the economy as had been hoped. Between tighter lending standards among financial institutions and cautiousness among businesses, the money multiplier remains extremely low, blunting the effectiveness of the Fed's policies.

Money not working its way through the economy

Source: FactSet, National Federation of Independent Business, as of July 27, 2010.

As a result, the Fed has been discussing possible options should deflation become more of a concern. Fed Chairman Ben Bernanke's recent Congressional testimony indicated that the Fed doesn't plan to embark on a renewed round of quantitative easing at this point in time, but is keeping its options open.

European bank test "not so stressful"
Mimicking a process already completed in the United States, European regulators put their banks through "stress tests" in an effort to determine the stability of the sector. Similar to some US cases, the European bank stress tests were criticized as not having been stringent enough.

Critics complained that they failed to reflect the possibility of a government debt restructuring and lacked details on foreign household debt holdings. A surprisingly low seven banks failed, having a capital deficiency of 3.5 billion euros ($4.6 billion).

However, with the exception of several German banks, the results provided more transparency than expected. In particular, country-by-country sovereign debt holdings in both the trading book (short-term holdings) and banking book (held-to-maturity holdings) provided investors the ability to make their own assumptions and test the strength of the banks.

According to Citigroup, if losses on sovereign debt were included on the banking book, 24 banks would have fallen below the 6% Tier 1 capital ratio threshold, with a combined capital deficit of 15 billion euros. This is much lower than estimates that ranged from a 40 billion euro to 100 billion euro deficit, and demonstrates that the European banks are better capitalized than expected, primarily because the banks raised more than 200 billion euros in capital during the past 18 months.

The tests were successful in removing a layer of uncertainty and may alleviate concern about the interbank lending market freezing up, which could overflow into the general economy and slow overall growth. Near-term bank sentiment also benefitted after the Basel Committee softened proposed rules on global bank capital, which would have resulted in required increases in capital under the prior proposal.

Lastly, European economic data has been better than expected, exemplified by the euro-zone manufacturing and services Purchasing Managers Indexes increasing in July and German industrial orders unexpectedly rising. European economic forecasts have been cut recently, and it's possible that the easing of bank pressures could result in upward revisions to European growth forecasts.

The euro could have more upside in a "relief rally" and has likely seen its near-term low. However, excessive pessimism has been removed, and the euro seems unlikely to move significantly higher. European government debt auctions continue to experience diminished anxiety, with yields and spreads over the benchmark German bund falling.

European debt fears waning

Source: FactSet, iBoxx, Tullett Prebon Information, as of July 27, 2010.

However, sovereign debt risks remain and will likely continue to flare up. Greece's compliance with International Monetary Fund rules regarding its country's finances will be reviewed during the next few weeks to qualify for August 30 disbursements. The ability for governments globally to execute reform measures will continue to contribute to market volatility.

Chinese economy slowing but market outlook improving
Economic growth is decelerating in China, with second-quarter gross domestic product growth of 10.3% (below the 11.9% year-over-year rate in the first quarter), driven by a moderation in manufacturing. There are indications of further slowing to come, as slower imports in the second quarter point to weaker exports later (because many imports are production inputs for future exports) and as year-over-year growth comparisons get tougher.

However, growth is still above the government's 8% target, and there's no compelling reason to tighten or ease currently; this enables the government to take a "wait and see" approach and maintain flexibility.

The prospect of tightening likely precipitated the decline in the Shanghai Composite in mid-2009, as markets are forward-looking. Additionally, the index is down 20% in 2010, working off 2009's speculative activity, and liquidity declined as capital raising created competition for investor funds.

China begins to outperform as liquidity eases

Source: FactSet, Shanghai Stock Exchange, Standard & Poor's, as of July 27, 2010. Note: Indexed to 100 as of July 27, 2009.

Liquidity started to improve after trading began July 15 for Agricultural Bank of China Ltd., the world's biggest initial public offering (which raised more than $19 billion) in four years. Fundraising and additional IPOs will continue, but the completion of this outsized transaction is notable.

Additionally, policy measures have begun to lean away from tightening, with the announcement of stimulus measures such as infrastructure spending in western Chinese territories and initiatives for clean energy and a property tax reported to be pushed out until 2012.

The Chinese government initially targeted the property market, aiming to slow price appreciation. The culmination of measures by mid-April nearly halted sales in May and prices began to fall. In response to isolated cases of 20% price discounts, media reports noted a "rush of buyers."

Home sales in China continue to fall in July, though at a slower pace. Prices are likely to decline given that a surge of supply is forecasted to come to market in the coming months as projects started more than nine months earlier are completed. As a result, the government could have less reason to deploy measures to moderate prices. For more discussion, see Country Focus: Does China Have a Japan-Style Bubble?

The bear case in China has shifted to Chinese local governments (which receive funding through financing vehicles) being unable to directly issue debt. The concern is that local government-financed projects are not generating enough cash to pay back loans and could default.

Bank balance sheets would be threatened by rising delinquencies, although current readings on non-performing loans are currently low. If banks' ability to issue credit was to become impaired, this could further slow economic growth.

There are no guarantees, but the belief is that the central government would step in to prop up the banking system, the majority of which is state-owned. On balance, we're becoming more optimistic on prospects for the Chinese stock market as a whole, while monitoring bank-lending trends.

Quest for differentiated growth
Emerging markets have been outperforming developed markets due to their better growth prospects and generally lower levels of government debt.

The path of the global economy is uncertain, but India's economy has the potential to grow even if the global slowdown persists (see Michelle Gibley's Country Focus: India's Growth Shines). While Indian stocks could pause with rate hikes, India has a young and growing workforce, rising income levels and a domestic-driven economy. Risks to growth in India include inflation, inadequate infrastructure and the need for government reform.

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 IndexSM 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.

How Much Do I Need to Retire?

Investors Ask Natalie.

Dear Natalie: I am just trying to get a layman’s level understanding. How much money do I need to save to earn a $2,000 monthly residual income for life? What type(s) of safer investments will yield the best results the soonest? I understand there is risk to everything. Essentially I am looking for a place to put money that has moderate risk and a moderate rate of return. I hope that makes sense.

I'm sure this is more complicated than I think, but a brief answer is genuinely appreciated.

Signed,

Late, but On the Money Now

Photo by: Doug Mazell. Mazell.com. 2009.

Dear On the Money Now,
The simple math on this is that $2,000/month to retire on is $24,000/year. 10% returns on a $240,000 nest egg would generate $24,000/year, so that is the first fact to visualize. You’ll want about a quarter of a million in your retirement accounts and to achieve 10% annualized returns to have $24,000 to live on for the rest of your life. If you deposited $10,000 a year and that made a 10% return, you’d amass your quarter of a million dollar nest egg in just a dozen years, so, even if you’re starting late, it’s not too late to get started now.

There are a few complications. Buy and hold, over the last 30 years, generated 11% annual return, which is above the return needed. However, that strategy only generated 3% (or less, depending on how your money was allocated between Blue Chips and small caps and safe) for the last decade.

The good news is that if you were following the easy-as-a-pie chart diversification and rebalancing system outlined in You Vs. Wall Street, then you would be performing double those returns or more. Last year, in 2009, my pie charts generated a total return of 20%, while keeping 50% safe, meaning your income on $240,000 would have been $48,000! In 2008, when I issued a 911 alert telling my subscribers to overweight 20% safe, you would have been protected from the losses of the Great Recession. That kind of strategy and return can get you where you wish to be in less than half the time.

How does this work? As an example, in 2009, Latin American funds doubled, Australia earned 71% gains and even small and mid cap funds outperformed gold, with gains above 35% last year. Technology stocks were another super performer boasting gains of 60%, sixty cents on the dollar. NASDAQ scored 40 cents on the dollar, while gold returns were 26%. Not bad! Diversification can keep you safe, with the ability to earn great gains. Annual rebalancing is key as well, to ensure that you see and capture your gains and are always properly protected.

I know that everyone wants to just hand this over to "a professional," but heed the advice of Joe Moglia, the chairman of TD AMERITRADE. In an interview with me on the Forbes.com Video Network a few years ago, Chairman Moglia said, "The typical financial consultant covers 400-500 accounts. They get paid on the ones that have the greatest assets. They realistically can’t get to the majority of their client base."

What that means is that your nest egg will increase in value as a direct result of your financial wisdom. How empowering! If you find a strategy that works and use it, then you’ll be in great shape. And if you have blind faith in a professional, then, unfortunately, you may be tossed and turned, like so many have been, in the boom/bust cycles of the last decade.

Money is simply gratitude in physical form. The more people are grateful for what you provide, the more "money" they'll give you. Add value; Get richer. Invest in companies that add value, and you will get richer while you sleep. Invest blindly, and you could be sleeping with bailouts and bankruptcies.

This might sound difficult, but it is actually easy as a pie chart. Please feel free to ask me questions. Start on the path by reading You Vs. Wall Street. Jumpstart your wisdom by attending a 3-day Get Rich and Enrich Retreat. The next retreat is October 22-24, 2010. You can get more information under the Get Rich and Enrich Retreat banner ad on the home page at NataliePace.com. Please note that early bird pricing is available now through August 15, 2010 ONLY.

Five Major Defects of the Financial Reform Bill.

by Dr. Gary S. Becker.

Dr. Gary S. Becker.

A 2300 page bill is usually an indication of many political compromises. The Dodd-Frank financial reform bill is no exception, for it is a complex, disorderly, politically motivated, and not well thought out reaction to the financial crisis that erupted beginning with the panic of the fall of 2008. Not everything about the bill is bad--e.g., the requirement that various derivatives trade through exchanges may be a good suggestion-- but the disturbing parts of the bill are far more important. I will concentrate on five major defects, including omissions.

1. The bill adds regulations and rules about many activities that had little or nothing to do with the crisis. For example, it creates a consumer financial protection bureau to be housed at the Fed that is supposed to protect consumers from fraud and other abusive financial practices. Yet it is not apparent that many consumers were victimized during the financial boom years, or that consumer behavior had anything of importance to do with the crisis. For example, consumers who took out subprime mortgages that required almost no down payments and had low interest rates were not victimized since these conditions enabled them to cheaply own houses, at least for a while. The "victims" were the banks, and especially Fannie Mae and Freddie Mac, that were foolishly willing to hold such risky mortgages.

The bill gives the Fed authority to limit interchange or "swipe" fees that merchants pay for each debit-card transaction, although these fees had not the slightest connection to the financial crisis. Such price controls are in general undesirable, and hardly seem to require the attention of the Federal Reserve. The bill also gives the SEC authority to empower stockholders to run their own candidates for corporate boards of directors. Corporate boards often receive some blame for the crisis--mainly unjustified in my opinion-- but stockholder election of some members will not improve corporate governance, and will probably make that worse.

2. The Dodd-Frank bill gives several government agencies considerable additional discretion to try to forestall another crisis, even though they already had the authority to take many actions. The Fed could have tightened the monetary base and interest rates as the crisis was developing, but chose not to do so. The SEC and various Federal Reserve banks--especially the New York Fed--had the authority to stop questionable lending practices and increase liquidity requirements. These and other government bodies did not use their authority to try to head off the crisis partly because they got caught up in the same bubble hysteria as did banks and consumers. In addition, regulators are often "captured" by the firms they are regulating, not necessarily because the regulators are corrupt, but because they are mainly exposed to arguments made by the banks and other groups they are regulating.

Despite the fact that regulators failed to use the powers they already had, the bill mainly adds not clear rules of behavior for banks, but additional governmental discretionary power. For example, the bill creates the Financial Stability Oversight Council, a nine-member panel drawn from the Fed, SEC, and other government agencies, that is supposed to monitor Wall Street’s largest companies and other market participants to spot and respond to any emerging growth in systemic risk in the economy. With a two-thirds vote this Council could impose higher capital requirements on lenders and place hedge funds and dealers under the Fed’s authority. Given the regulators reluctance to use the power they already had to forestall the crisis, it seems highly unlikely that this Council will act decisively prior to the emergence of a crisis, especially when a two thirds majority is required.

3. Insufficient capital relative to bank assets was an important cause of the financial crisis. The bill does reduce the ability of banks to count as bank capital certain risky assets, such as trust preferred securities, and gives the Fed authority to impose additional capital and liquidity requirements on banks and non-bank financial companies, including insurers. I would have preferred a simple rule that raised capital requirements of banks relative to their assets, especially capital of larger and more interconnected banks. As suggested by Raghu Rajan and the Squam Lake group of economists, the bill probably should have required larger banks to issue "contingent" capital, such as debt that automatically converts to equity when the banks are experiencing large losses, or when a bank’s capital to asset ratio falls below a certain level.

4. One of the most serious omissions is that the bill essentially says nothing about Freddie Mac or Fannie Mae. In 2008 these organizations were placed into conservatorship of the Federal Housing Finance Agency. During the run up to the crisis, Barney Frank and others in Congress encouraged Freddie and Fannie to absorb most of the subprime mortgages. In 2008 they held over half of all mortgages, and almost all the subprimes. They have absorbed even a larger fraction of the relatively few mortgages written after 2008. Freddie and Fannie deserve a considerable share of the blame for the crisis, but they continue to have strong political support. I would like to see both of them eventually dissolved, but that is unlikely to happen. Instead we are promised that they will be dealt with in future legislation, but I am skeptical that anything will be done to terminate either organization, or even improve their functioning.

5. Many proposals in the bill will have highly uncertain impacts on the economy. These include, among many other provisions, the requirement that originators of mortgages and other assets retain at least 5% of the assets they originate, that many derivatives go on organized exchanges (may be an improvement but far from certain), that hedge funds become more closely regulated, and that consumers be "protected" from their financial decisions.

Most of these and other changes in the bill are not based on a serious analysis of what contributed to the financial crisis, but rather are the result of political and emotional reactions to the crisis. Usually, such reactions do more harm than good. That is likely to be the fate of the great majority of the provisions of the Dodd-Frank bill.

About Gary Becker:
Dr. Gary Becker is a University Professor, Department of Economics, and Sociology Professor, Graduate School of Business, The University of Chicago. He won the Nobel Prize in Economics in 1992 for his groundbreaking work in "human capital." President George W. Bush awarded him the Presidential Medal of Freedom in 2007.

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

Prosperity Snacks.

by Staff.

10 of Our Favorite Tips for Getting Through The Tough Times.

From welfare to richer than the Queen
"You will never truly know yourself or the strength of your relationships until you are tested by adversity. Rock bottom became the solid foundation upon which I rebuilt my life." J.K. Rowling, author/creator of the Harry Potter books and films

Wisdom from ancient China
"What the caterpillar calls the end of the world, the Master calls the butterfly." Lao Tzu (6^th-4^th century BC, exact dates are unknown)

The Greatest Salesman in the World
"Count your blessings. Once you realize how valuable you are and how much you have going for you, the smiles will return, the sun will break out, the music will play, and you will finally be able to move forward the life that God intended for you with grace, strength, courage, and confidence." Og Mandino, author of The Greatest Salesman in the World (which has sold over 50 million copies and has been translated into 25 languages)

Peace Out (not Time Out)
"Create a Peace Zone, where children sit and think about how they can
make the world a more peaceful place." His Holiness the Dalai Lama, on starting a trend cooler than "time out"

Survivor of the Satanic Verses
"When thought becomes excessively painful, action is the finest remedy. " Sir Ahmed Salman Rushdie, author of the Booker Prize winning novel Midnight’s Children (1981) and the highly controversial The Satanic Verses (1988), which inspired the Supreme Leader of Iran, Ayatollah Khomeini, to order Rushdie’s death in February 1989. Sir Rushdie is the recipient of many awards from France, the US and the UK.

Where Paris, Erotica, Flamenco, Cuba, Henry Miller & WWII Collide
"And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom." Anais Nin

One Reason to Love Adversity
"I will love the light for it shows me the way, yet I will endure the darkness because it shows me the stars." Og Mandino

The Wisdom of Walking
"I believe that there is a subtle magnetism in Nature, which, if we unconsciously yield to it, will direct us aright. It is not indifferent to us which way we walk. There is a right way; but we are very liable from heedlessness and stupidity to take the wrong one." Henry David Thoreau, from his essay on "Walking."

Watering the Seeds of Prosperity (instead of the weeds)
"Chronic anger (complaining endlessly about what is wrong instead of
creating what is right) is like watering the weeds in your garden." Natalie Pace, author of You Vs. Wall Street

Being the Best You
"There is a calling for your life. I go to work. It doesn’t feel like work. It feels like breathing. That’s when you know you’re home." Oprah Winfrey, billionaire, beloved daytime TV host and media entrepreneur

We Live In A World Of Trust.

by Alvin Tam.

After 15 years of professional performing in the circus, I realize that we live in a world of trust. When I perform a high flying act, supported only by cables and carabiners, I trust that the equipment will work. When I tumble across the stage in a rapid succession of back handsprings, I trust that other artists on stage will move on time, and clear the space for me. Others trust me to catch them when I throw them into the air for a double back flip, or to correctly attach their safety lines to their harnesses 60 feet in the air. I trust myself when I light my poi on fire and spin it in rapid arcs around my body. Trust is as palpable and real as the show itself, the glue that holds together a thinly fabricated illusion of seamless choreography, characters, and story line. I am fascinated by how much we trust each other, how much we trust the machines and systems that run our lives, and how horribly denying it is to our spirit to not be able to see the bountiful sea of trust that surrounds us, bathes us, and carries us.

You don’t have to be an acrobat in a dangerous circus show to recognize that trust is everywhere. Consider, and be amazed by, the many and varied acts of trust you perform when you drive to work. First, you trust that your car will start the way it was designed – you expect that the technology inside your vehicle will work correctly, and not detonate in a massive fireball on your driveway. You calmly turn the key despite the fact that you are sitting only a few feet from a bathtub full of gasoline, and that this highly explosive fuel is forcefully funneled through a super heated engine block and deliberately ignited with an electric spark.

As you drive down the road, listening to the radio, observing the weather, reading billboards, checking voicemail, and sipping your morning coffee, be astonished it is not a regular occurrence that no one has yet jumped the yellow line, careening wildly into you in a head-on collision. Be joyful that your fellow comrades on their way to work also acknowledge that they each command a multi-ton weapon of encased metal and rubber, capable of snuffing out the life of any pedestrian nonchalantly meandering across the street – but most of the time, don’t.

And speaking of pedestrians, rejoice in the knowledge that you can cross the street because we all made an implicit agreement that red means stop, and green means go. After all, they are just random colors of the rainbow and don’t have any real meaning, except for the ones we give them.

So your successful arrival at work, or wherever you are going, depends on two things: first, that we give meaning to meaningless things, and second, that we agree to continuously agree to the meaning. What greater daily demonstration of trust is there than to see millions of people consciously stopping their vehicles of mass destruction when they see the color red? Think of the millions of lives that are saved every year by this collective nod.

And this is only the drive to work. Now look inwards and consider what happens within your body on a second-to-second basis. The miracle of life is the miracle of total, complete, and binding trust. Your lungs are expanding and contracting, your heart is beating and pumping, and your eyes are absorbing light patterns while your brain is expeditiously processing trillions of bytes of information. These occurrences happen thousands, if not millions of times a day under the veil of the autonomic nervous system, completely unconscious to your waking thoughts, dutifully performing their life supporting functions without so much of a complaint or gripe. You trust that when you wake in the morning, your blood will still be flowing through your arteries, and your intestinal tract will have processed enough of the late night cheesecake to provide energy for the start of your day. It’s a miracle to think that, at any point, this intricate fabric of interdependent systems can be so easily interrupted, and life as we know it will end.

Living is trusting and is the greatest testament that the values of trust are alive and well. The next time you hear someone, or perhaps yourself say, "I can’t trust…", contemplate the millions of examples that occur every moment that are life supporting and not life taking. Then contemplate how simple it is to cut the thinly attached chords of trust with a benign act, like driving down the wrong side of the road, or throwing bags of trash out the window of your 10th story apartment. And why wouldn’t you? It’s faster than bringing garbage down the stairs, but you don’t because we’ve all agreed to the value of life, which is the value of trust.

You might be silently screaming that mistrust does exist and that horrible trespasses against our collective agreements do occur. People do get run over by cars, murders and wars happen, and hearts cease their vital beating. There is no doubt that the execution of the trust act is not total and all-pervading. Not everyone, or every system functions perfectly.

You may have been lied to, manipulated by, or transgressed upon somehow in the past. The sensation of boundaries crossed and opportunities stolen is weighty and sobering. It is not helpful to simply say that the past is the past because your thoughts happen in the present.

What is helpful then is to remark that your present moment is replete with miraculous illustrations of trust. The question, how to trust again, is also the question of how to live again. And living by being, not thinking, strategizing, doing, or analyzing, is the answer to living again.

Living by being is a daily practice of conscious observation. What are you observing? You are rediscovering that ordinary events that normally occur without so much of a thought are in fact stupendous examples of trust. Begin observing simple, routine acts with an open and curious mind.

When I am on stage and a fellow artist is quick enough to catch me from an accidental fall, or remembers to correctly attach my safety line to my harness, I know that we live in a world of trust. When I drive through an intersection and see all the cars stopped at their red light, or get to work without trying to dodge an oncoming truck, I know that we live in a world of trust. And when I wake in the morning and open my eyes to the sunrise or take a deep breath in, I know that we live in a world of trust.

Bio
Alvin Tam is the founder of Soul Acrobats®, an inspirational products company and Acrofit™, an acrobatic fitness system. He has over 15 years of experience as a circus artist, stuntman, dancer, actor, and coach and has performed for Cirque du Soleil, Notre Dame de Paris, and appeared on CSI. Alvin’s passion is to inspire you to achieve your impossible.

Products
Visit: http://www.soulacrobats.com/products-page/

BOOK: The Art of Impossible

DVD: The Acrofit System Level 1, Expressive Yoga for the Soul

There is No Success Without Risk.

by Chellie Campbell.

Did you know that studies show that people are twice as fearful of losing money as they are hopeful of gaining money?

That means most people hang on to money out of fear when they should be investing money in things that will pay off. Holding on to money doesn’t produce any more money, does it?

Years ago, I heard a woman speak who owned a $3 million per year manufacturing business. I never forgot what she said, "In order to expand a business successfully, you have to become more and more comfortable with bigger and bigger negative numbers."

Oh, that was scary when I heard it! I didn’t want to be in debt!

But as she spoke, I began to understand. Bill Gates didn’t build Microsoft on his personal savings. Nor did Stephen Spielberg, Steve Jobs, or any other successful person who built a big company. They used OPM – Other People’s Money. That means borrowing from banks, investors, family, friends, credit cards. For all the bad press the banks and credit cards have gotten in this economy, they still have made it possible for the small business owner to get access to capital to realize their dream.

If you want to start or build a business, you are going to need money to invest in it. One of the best investments you can make is in yourself! Yes, you could lose money – your first idea might not work. Walt Disney filed bankruptcy several times before he became wildly successful with Disneyland. (He loved his movies, but they were hit and miss financially.) There is always recovery after a downfall - human beings are amazingly resilient.

But there is no success without risk.

If you’re looking for help becoming more successful, making more money, and having more fun at the same time, I know the "Secrets to Sur-thrival" in a down economy. In fact, I created my workshops in the recession of the early 90s, and weathered a number of financial disasters myself. So I know what I’m talking about - this is my expertise and my life’s work, and I would love to share it with you.

The next 8-week Financial Stress Reduction® telecourses start August 9 & 10. Because I give every participant individual attention and the class is extremely interactive, enrollment is limited to a maximum of 10 participants.

For complete information and to register, go to http://www.chellie.com/financial-stress-reduction-telecourse-information.html or call me at 310-476-1622 and I’ll be happy to help you see if this program that has helped thousands of people can help you. I love to be of service.

Love and blessings,
Chellie

About Chellie
Chellie Campbell is the creator of the Financial Stress Reduction® Workshops, and author of The Wealthy Spirit and Zero to Zillionaire. She has been prominently quoted as a financial expert in the Los Angeles Times, Good Housekeeping, Lifetime, Essence, Woman’s World and more than 50 popular books. She can be reached at Chellie@chellie.com

Socially Conscious Investing.

by Natalie Pace.

The Warrior of the Light projects his thoughts beyond the horizon. He knows that if he does not do anything for the world, no one else will. So he fights the Good Fight and he helps others, even though he does not quite understand why.

—Paulo Coelho, author of The Warrior of the Light

According to the Social Investment Forum, $2.3 trillion (out of $24.4 trillion under professional management) were traded with socially conscious criteria in the United States in 2005—nearly one out of every ten dollars. Socially conscious companies embody open and transparent business practices, ethical values, respect for employees, communities and the environment, and have a vision of working for the world at large, as well as shareholders. Whew! Quantum physics might be easier than figuring out which companies are socially conscious! Who has the time? Fortunately, there are a lot of watchdog organizations that make the job easier than it sounds. And, thankfully, there are a number of socially conscious mutual funds available, which can exponentially cut down your research time.

In 2007, the best-known socially conscious fund providers were Domini and Calvert. I’d love to report that being socially conscious was good for your wallet, but over a ten-year period, those funds underperformed. The Wilderhill Clean Energy Portfolio (symbol: PBW) is down 50% from January 2006. Ouch—not the kind of return that socially conscious investors hope for.

Clean Energy Earned Almost 60 Cents on the Dollar in 2007
But there are some bright spots that could spell fireworks in the coming years. The top performing industry in 2007 was alternative energy. There is typically a boom/bust cycle before a nascent industry becomes mainstream. The Internet was a colossal loser for investors from 2000–2002, before Google went on to become the most successful IPO of all time. Apple Computer single-handedly resurrected the music business, at a time when the music companies were trying to sue their customers into paying for downloads and Tower Records had to shut its doors. Don’t be stuck in the past, ever.

Just to illustrate how hot companies are becoming when they take the socially conscious high road, consider some of the top performing stocks over the past few years.

Cree: up 227% this year. Cree makes LED lighting and other clean energy products.
Veeco: up 242% this year. Veeco is a green semiconductor company, supporting the solar and LED industries, among others.
Google: up 571% since its IPO in 2005. Google, a search engine, built one of the largest solar power plants in the US.

With new technology, you have to be cognizant that hot industries soar one year and crash the next, before they become a part of mainstream living (as the Internet has become and as renewable energy is striving to do). That is why applying Modern Portfolio Theory and annual rebalancing is critical (and yes, it is possible to be socially conscious, properly diversified, invested in clean energy and profiting from that).

Green Funds
Interested in socially conscious investing, but feel too vulnerable to invest in a single company? iShares, PowerShares, and many brokerage websites list ETFs, grouped by industry, investment style and other factors of interest. Search for clean energy under the energy industry. Remember to think outside the box a little, and include technology, semiconductors, natural resources and even mining operations that support renewable energy projects (silicon and lithium come to mind). Doing a search for socially conscious mutual funds or ETFs on your favorite engine should also yield results. Calvert and Domini have websites. Also, it’s your Certified Financial Planner’s job to know what funds are out there, so s/he should be helpful in your search as well. Be careful, however, to avoid small companies with new green funds that are very thinly traded.

Lose the Bailouts and Sin Stocks (if you desire)
Even if you don’t want to become an activist investor, what you might not realize is that chances are very high that you are already invested in all kinds of corporations that you may not wish to support. If you have a retirement plan at all—whether it’s a 401(k), annuity, IRA or pension plan—you are invested in mutual funds, and each mutual fund invests in hundreds of publicly traded companies. The most popular funds on Wall Street house some of the most controversial companies. In fact, 13% of the Dow Jones Industrial Average components were bailed out, including Citigroup, Bank of America, General Motors and AIG.

Every wonder how Philip Morris could make it through those decades of lawsuits by the cancer victims? With your money. Philip Morris (also known as Altria) was a Dow component and remains a popular holding in many mutual funds. Ever wonder how Exxon Mobil remains one of the largest corporation in the world with a market value of $304 billion (in August of 2010)? With your money. This is another top holding in funds across America.

I meet people all the time who hate smoking, but invest in cigarette companies because the dividends are so strong (or because they don’t realize it’s a holding in their 401K funds or pension plan). Others complain about a "war for oil" in Afghanistan, but drive gas guzzlers and own oil company stock (some without knowing it).

Is there really any reason to invest in clean energy over oil, defense and tobacco companies? Well, yes. Why not invest in the products and services that are cleaning up our world and will be around tomorrow? You wouldn’t want to invest in the horse and carriage once cars are invented, or the typewriter once everyone owns a computer. Likewise, many of these older companies are more a part of yesterday than tomorrow and your investment gains will be greater with emerging, than dying, industries.

There are a lot of naysayers out there, who pshaw the idea that you should engage your desires and emotions at all in investing, to which I reply, "Good luck." Emotions are the criminals most responsible for stealing your gains. Like it or not, when your stocks go down in value, your blood pressure boils and you want to dump them quickly, and when they rocket up in value, the shock and thrill keep you clinging for dear life, even when it’s a good idea to let go. In other words, your emotions are your own worst enemy when you are invested in things you don’t really like and have no idea how to value. Your emotions can be a great ally when you are invested in things that are enriching the world, and you are confident that those investments will continue increasing in value in the years to come.

Seeing what companies your mutual funds are invested in is as easy as three clicks on your computer. Literally. That easy. Simply go to NataliePace.com. Enter in the 5-letter symbol of the mutual fund you currently own and click on Research Now. You will be directed to a stock page of the mutual fund. From there, simply click on "Top 25 Holdings" to see what companies you own.

If you don’t like what you discover, then simply tell your broker that you want to own funds that are more socially conscious. There are index funds, exchange-traded funds, and tons of easy options for you to choose from that target companies more in your sweet spot. Or, you could create your own socially conscious nest egg with a basket of carefully diversified stocks, with the help of a professional. It’s not that hard, and a good broker will be a valuable asset in this.

The Bottom Line
I’m really glad that I don’t have to ride my horse to New York City, so I’m grateful for the role that oil and gas played (in the past) in making our lives easier. Collectively, our money promotes and creates the products, goods and services in our world. Like it or not, whether you know about it or not, U.S. corporations use your money to decorate our home here on planet Earth. So, why not own and fund and reap the gains of the products of tomorrow’s even more beautiful world.

Natalie’s Three Takeaway Tips

Most people have no idea what they are invested in. If you have a pension or a 401(k) and you don’t know what you own, chances are that you are an owner in the status quo—big oil, big tobacco companies, big defense companies, et al.
Clean energy was the top performing industry on Wall Street in 2007—earning almost 60 cents on the dollar. Energy (oil) came in second at 32 cents on the dollar.
When you realize that our world looks the way it does on your dime, you can start investing in (and reaping the financial and global gains of) products for a new, cleaner world.

Stock Spams and Scams.

A FINRA Investor Alert.

Illustration: Sunil Rampersad

You may have received "spam" or junk email recommending you invest in a stock, perhaps even invest in that stock before it is first publicly offered for sale in an Initial Public Offering (IPO).

There are now federal and states laws designed to protect consumers from misleading and unwanted spam. There are also regulations on the content of these messages that involve securities and what the senders must tell you. In spite of these laws and regulations, stock spams continue to pose a risk to investors. This Investor Alert explains how to spot and protect yourself from spam problems.

What is Spam?
Spam is unsolicited electronic mail sent to a large number of addresses, usually advertising some product, service, business, website, scheme, or strategy. Stock spams are the electronic equivalent of a boiler room sales operation in which someone who doesn’t know you tries to sell you securities, like penny stocks, or puts aggressive—and suspect—messages on an electronic message board to spur your interest in a company.

Is Spam Regulated?
Federal legislation was enacted in 2003 to combat spam and a majority of states now have laws designed to control spam. You should know that although spam is regulated in a number of ways described below, many aspects of it are unregulated.

Federal Laws
The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act) requires unsolicited commercial email messages to be labeled and bans false or misleading header information. It also prohibits deceptive or misleading subject lines and requires that emails give recipients an opt-out option (an ability for the recipient to stop receiving future commercial messages from the sender). The law also requires commercial email to contain clear and conspicuous notice that the message is an advertisement or solicitation, and contain the emailer's valid physical postal address.

State Laws
Numerous states have laws prohibiting unsolicited commercial email and false or misleading routing information. Many states also prohibit the distribution of software designed to falsify routing information. In addition, many states also require that the spam identify the sender and tell how to opt out of getting more spam from that sender.

SEC (Securities and Exchange Commission) Enforcement
The SEC has created the Office of Internet Enforcement specifically designed to fight Internet fraud, including schemes using spam. The SEC requires online communications touting or recommending stocks to disclose the person or entity that paid for the communication, including the amount and type of the payment. The SEC has brought scores of enforcement cases since August 1995 that involve violations of the law using spam. The SEC has investigated a variety of e-mail frauds such as:

"Pump and Dump" scams where messages are sent urging readers to quickly buy a stock, based on a future company or economic development. The message senders may be insiders or paid promoters who gain by selling their shares after unsuspecting investors pump up the stock price.
Pyramid schemes where promoters claim that they could turn a small investment into a large investment within a short period of time, but participants make money solely by recruiting new participants into the program.
"Risk-free" or "guaranteed" investments in exotic-sounding investments. There is no "risk free" investment. Offers of "guaranteed" investments should be viewed very suspiciously.
"Inside information." Someone claims to have inside or non-public information about a company or product that will soon send the stock price soaring. This information is almost always false and designed to get people to invest when they otherwise wouldn’t. In any event, trading on "inside information" can be a violation of the law.
"Off-shore" deceptive investment schemes from another country targeting U.S. investors. Any foreign fraud is difficult for U.S. law enforcement agencies to investigate or rectify.
False promises of pending initial public offerings (IPOs). In one such case, a private company message announced its upcoming SEC-approved IPO. The company raised money fraudulently by offering "free stock" credits if you paid an administrative fee, and said you could redeem your stock credits for common stock when the company completed the IPO. The SEC did not approve the offering and the company never took real steps to issue an IPO.

For more detail on these scams, see the SEC’s "Internet Fraud: How to Avoid Internet Investment Scams."

FINRA
FINRA member brokerage firms or their employees must abide by applicable federal and state anti-spam laws. In any communication with the public, NASD rules require that a member identify itself and that investors be given enough information to make a sound investment. NASD rules prohibit statements making promises.

Remember, though, that FINRA can only regulate the actions of its member brokerage firms and their employees. While all U.S. brokerage firms have to be members of FINRA to do business with the public, most problem spams are likely sent to you by non-regulated businesses or individuals.

Problem Spams FINRA has Seen
Touting a Stock
The most common types of investment-related spam are those touting a stock. Remember that "tout" means to peddle in an aggressive or persistent way, but it also means to give a tip or solicit a bet on. These touts are sometimes made as part of a Pump and Dump scheme. Many touts look like they are giving unbiased news about an investment, but the spammer may own the stock and want others to buy it so the spammer’s stock will go up in price. Absolute strangers will not offer you a genuine "deal of a lifetime."

Touts and Other Spams on OTC Bulletin Board and Pink Sheet Stocks
Most touted stocks are infrequently traded, not well known, and can move up or down in price quickly. They are usually quoted on the OTC Bulletin Board (OTCBB) or in the Pink Sheets. The OTCBB and the Pink Sheets are quotation mediums for broker/dealers that contain quotations for thousands of over-the-counter stocks not listed on any of the major stock markets. Neither the OTCBB nor the Pink Sheets require the companies to meet set minimum assets or revenues. Neither the OTCBB nor the Pink Sheets is an issuer listing service or a stock market, and they should not be confused with The Nasdaq Stock Market or with a national securities exchange. To learn more about the differences, go to the OTCBB website. To learn more about the Pink Sheets, go to the Pink Sheets website.

All companies that are quoted on the OTCBB—but not the Pink Sheets—must file financial and other information with the SEC or another regulatory authority. You can check out an OTCBB company’s SEC information on the SEC website.

Pre-IPO Spam
Many problem spams and other Internet advertising involve IPO and pre-IPO investing. Pre-IPO investing is buying private placements of shares of stock in the hopes of selling the shares for a profit when the company goes public. Many of the statements in pre-IPO spams are promissory—no one knows if the company will actually do the IPO.

Some of the red flags in pre-IPO spams are predictions of large price gains, promising the ability to "get in on the ground floor," and offering examples or projections of very profitable IPOs.

There are many risks of buying privately placed shares, especially when none of the company’s stock is publicly traded. You cannot be certain when or even if the company will ever take steps that could result in a public market for the securities. This means that you cannot be sure that if you purchase pre-IPO you will be able to sell your shares even if the company goes public, since privately purchased shares come with restrictions. It is difficult to determine a fair market value for the investment. Pre-IPO companies are often new and untested companies without revenue, a real product line, or experienced management. So even when they are legitimate, they are highly risky.

Spotting Problem Spam
Problem spams frequently include:

Price targets or predictions of exponential growth in a short period of time.
Rumors of coming major news such as "inside" or "confidential information," an "upcoming favorable research report," a "prospective merger or acquisition," or the announcement of a "dynamic new product." Sometimes spammers say what the "news" is going to be.
Standard corporate developments, like contracting with a supplier, presented as if they are major events.
Mention of large, unnamed corporate partners.
Popular terms, such as Internet or biotech, to increase the impact of the message.
Urgency, such as "You must act now!"
"Guarantees" that you will not lose money on a particular securities transaction.
Unusually high yields or returns—significantly higher than available alternatives—on a dividend or interest-paying instrument.

If You Get Spammed
A high-pressure sales pitch can mean trouble on the phone or on the Internet. Do not believe anyone who tells you, "Invest quickly or you will miss out on a once-in-a lifetime opportunity." If it sounds too good to be true, it is.

Regulators strive to protect investors as a whole and do not start cases for the sole purpose of getting money back to you following a fraud. You can hire a lawyer to try to get your money back, but you need to know that recovery is rare. By far the best protection is to stay away from bad deals in the first place. You, the investor, are in the best position to protect yourself.

Investigate before you invest. Find out who sent the message to you. Ask whether the claims can be documented. Verify whether the claims are true before you send a nickel of your money.

If you are suspicious about an offer or if you think the claims might be exaggerated or misleading, contact the SEC Investor Complaint Center.

You can check out if the firm or individual spamming you is registered with FINRA using FINRA BrokerCheck or by calling our BrokerCheck hotline at (800) 289-9999. If you think that the problem spammers may be registered with FINRA, you can file a complaint at FINRA's Investor Complaint Center.

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

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

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

Latin American Funds Doubled in 2009.

by Natalie Pace.

Includes my Hot News on Cool Stocks Report.

August 3, 2010

General Stock Market Performance

Monday, 1.2.2008	Monday, 1.2.2009	Monday, 1.4.2010	Friday, 8.03.2010	Gains 2-yr, 1-yr & 7 mo.
Dow: 13,044.12	Dow: 9,034.69	Dow: 10,430.69	Dow: 10,636.38	-18% & +18% & +2%
Nasdaq: 2,609.63	Nasdaq: 1,632.21	Nasdaq: 2,294.41	Nasdaq: 2,283.52	-12% & +40% & flat
S&P: 1,447.16	S&P: 931.80	S&P: 1,115.07	S&P: 1,120.46	-23% & +20% & flat

Wall Street Highs/Lows in the New Millennium:

Index	Low	High
Dow Jones Industrial Average	6,547 (3.9.09)	14,164 (10.9.07)
NASDAQ Composite Index	1,114 (10.9.02)	5,060.34 (3.10.00)

Hot News on Cool Stocks Important Data
10X gains on U.S. Gold, our 2009 Company of the Year!
NASDAQ Outscored the Dow Jones Industrial Average, 40% to 15%, in 2009
NASDAQ Outscored Gold in 2009, 40% to 26%
80% of the positions listed in 2008-2010 are in the money. Woo hoo!
Gold returns top stocks, real estate, bonds and T-Bills Over the Last 10 Years… (see below chart)
Real Estate Lost -12.4% in 2009.

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

Market Update:
For Delicious Returns
Add some heat. Spice up your nest egg and experience the giddiness of earning double returns on your dollar. How? Why?

In 2009, Latin America funds doubled, Australia earned 71% gains and even small and mid cap funds outperformed gold, with gains above 35% last year. Technology stocks were another super performer boasting gains of 60%, sixty cents on the dollar. Don’t buy into the gloom and doom touted on TV (with all of the gold ads they hawk in the wake of it). If you do, chances are you’re just falling into the boom/bust trap du jour. This year: gold. 2006: real estate. 2005: copper. 2000: Y2K, the New Economy and DOT COM.

What Latin America, Australia and a lot of the emerging industries (including technology in some cases) have in common are natural resources, which are the building blocks of recovery. Latin America (particularly, Peru, Chile and Brazil) is burgeoning in natural resources of the new economy, including silicon, lithium and ethanol. Australia is another country that is replete in both new materials (lithium and silicon) and legacy materials (iron ore, copper, gold, etc.). The strategic location, near a nouveau riche China, also makes Australia an attractive region of the world today. And technology is using both lithium and silicon, so this semiconductor companies are some of the hottest on Wall Street.

Preparing for a Rainy Day
It’s time to rethink your safe allocations. Yes, we are in a recovery, according to the Federal Open Market Committee, but the economy is still soft and there is still concern of deflation (meaning cash-rich folks who can access money are in a great seat to buy whatever they desire -- on sale). While interest rates are likely to remain low for the foreseeable future (6-18 months), when they rise, there will likely be pressure to be aggressive about the hikes. Therefore, bonds and bond funds, and annuities and pensions (for other reasons) might not be the safest areas for your money. For more information, be sure to read, "Don’t Get Fooled Again," in the August 2010 ezine, volume 7, issue 8.

Reforming Wall Street
President Obama wants your feedback on how much you like (or dislike) your stock broker/Certified Financial Planner and why. This is an important part of financial reform, and the window for your commentary is only 30 days. Please act now! Thanks!

SEC Publishes Public Request for Comment to Inform Study of Obligations of Broker-Dealers and Investment Advisers

Good News for Consumers.
Banks have been charging customers beaucoup bucks (up to $35 and more) each time they overdraft their accounts. However, under new overdraft rules, which take effect on July 1, 2010 for new account holders and August 15, 2010 for existing account holders, your bank must first get your permission to apply its standard overdraft practices to everyday debit card and ATM transactions. Here's a link to a page on the Federal Reserve Board’s website that explains the new ruling in greater detail.

Bad News for Banks.
Why is this yet another death knoll for bank earnings? Overdraft fees were one of the most robust areas of growth for banks (particularly large banks) in the wake of the real estate bubble implosion. When revenue derived from mortgage loans fell off a cliff, overdraft fees were there to buoy up earnings.

It is virtually impossible that the overdraft fee revenue will drop to zero overnight. Not all charges are covered. For instance, monthly auto-debits and checks will continue to incur overdraft charges. And the banks will likely get very creative about how they sell consumers into signing off on the fees ("This protects you so that your transactions will be covered, etc."). However, these and other bank stresses resulted in 108 bank failures so far in 2010 (as of August 3, 2010), 140 bank failures in 2009 and 25 in 2008. So, being alert to ripples in the revenue stream is a good idea.

So what should you do to protect yourself from continued bank problems? A run on the bank is not advisable (the big banks have been and continue to be bailed out and are FDIC insured). However, a review of your funds and nest egg holdings are a very good idea, particularly of your large cap value funds. Because bank share prices have been beaten up, they are trading lower than most stocks and tend to be a large portion of many large cap value funds – i.e. lots of bailouts are littering the large cap value funds. Underweighting vulnerable, out of favor industries (in other words limiting your investments in these large cap value funds) can dramatically increase the performance of your nest egg.

If you wish to know the Top 25 Holdings (i.e. companies) of the mutual funds you own, it’s easy. Simply follow the instructions below:

Go to NataliePace.com
Enter in the 5-letter symbol of the fund you own in the Company Research box, located in the center column, half way down the home page
Click Research Now
Select Top 25 Holdings on the left navigation bar on the fund webpage
Check to see if you like the companies owned in the fund

If you do not know the symbol for your mutual fund or ETF, a search on Google should provide that for you.

When will interest rates rise?
"The Federal Reserve … will have to manage its exit from accommodative policies. As is typically the case in the early stages of an economic recovery, the Bank will have to weigh the risks of a premature exit against those of leaving expansionary policies in place for too long." Chairman Ben S. Bernanke, speaking at the Bank of Korea's International Conference, in Seoul, Korea on May 30, 2010.

What lies ahead for 2010?
"Housing starts remain at a depressed level. Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad. Bank lending has continued to contract in recent months. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time." From the Federal Open Market Committee’s press release on June 23, 2010.

http://federalreserve.gov/newsevents/press/monetary/20100623a.htm

Is the Great Recession Over?
For the record, the National Bureau of Economic Research has not declared the Great Recession to be over yet. In a statement issued in July 2010, NBER wrote, "As of the end of 2009, our FCI showed financial conditions at somewhat worse-than-normal levels. The main reason is that various quantitative credit measures (especially issuance of asset backed securities) remained unusually weak for an economy that had resumed expanding. Thus, our analysis is consistent with an ongoing modest drag from financial conditions on economic growth in 2010."

Goldman Sachs
On July 15, 2010, the Securities and Exchange Commission (SEC.gov) announced the largest fine ever imposed on Wall Street -- $550 million against Goldman Sachs. Goldman Sachs publicly acknowledged that their Collateralized Debt Obligation marketing materials were incomplete and should have revealed Paulson & Co.'s role (he was shorting what they were selling). Now Goldman Sachs can get on with the business of investment banking, under greater scrutiny, however, without taking a major hit to their $50 billion in annual earnings and $11.6 billion in annual income. All of the investment banks have massive liabilities and debts currently, and are liable for financial obligations more than four times the market value of the company (with Morgan Stanley being the most heavily indebted). Click for a Goldman Sachs Stock Report Card that includes JP Morgan and Morgan Stanley.

Citigroup settles with the SEC
On July 29, 2010, the Securities and Exchange Commission charged Citigroup and two executives for misleading statements they made to investors between July and October of 2007. Citigroup settled and will pay $75 million, former chief financial officer Gary Crittenden agreed to pay $100,000, and former head of investor relations Arthur Tildesley, Jr. will pay $80,000. In the "s/he who laughs last, laughs the loudest" department, note that in March 2007, then CEO of Citigroup, Mr. Charles Prince demoted Sallie Krawcheck from her role as CFO and sent her back down to head up the wealth management division — a very public demotion at the time. Tee hee. Always note high profile changes in the executive suite, especially ones that involve people, like Ms. Krawcheck, who have built a reputation on being clean on Wall Street.

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 – in bear and bull market years. 92 positions listed below – 80% -- have delivered impressive gains over the past two years, even while the Dow Jones Industrial Average is trading lower than it was ten years ago! Only twenty-two 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. FYI: If 2010 tracks the historical trend, the summer doldrums and particularly the Hurricane Season could be hard on the markets.

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

4 out of 7 Company of the Year selections more than doubled. My 2003, 2004, 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 10X ROI for U.S. Gold, respectively. MySpace, my 2006 Company of the Year, was a large part of News Corp’s success with shareholders that year. So five out of seven Company of the Year selections were superperformers. That’s the kind of record that puts you on top on Wall Street. (I launched my first publication on 11.15.02, and featured the first Company of the Year, Taser International, on 1.1.03.)

Some of my best picks include: U.S. Gold (UXG) 10X return on investment, Google (GOOG) +585%, Opsware (OPSW) +690%, Rio Tinto (RTP) +145%, Sohu (SOHU) +150%, Suntech Power Holdings (STP) +107%, Taser (TASR) up to 9000% gains. Some of the best picks in 2008 and 2009 were put options – on the Cooling Off list -- which is why I added options training to my 3-day Get Rich and Green Investing Retreat. Look on the Cooling Off list for details on the incredible gains options investors enjoyed (and the losses that average investors avoided as a result of being alerted to the problem) on Wells Fargo, Fannie Mae, Toll Brothers, KB Home, Novastar Financial and more.

This stock newsletter was the first to list the following 911 alerts:

2008 Recession (Get Safe)
Trim back on Faded Blue Chips in 2006
Get out of Dodge (real estate) in 2005
Google at the IPO! (May 2004)
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 10, 2010.

Advance Estimate GDP growth rates for 1Q 2010 were 2.4%, according to the Bureau of Economic Analysis. 1Q 2010 GDP growth was 3.7%. According to the BEA, "The deceleration in real GDP in the second quarter primarily reflected an acceleration in imports and a deceleration in private inventory investment that were partly offset by an upturn in residential fixed investment, an acceleration in nonresidential fixed investment, an upturn in state and local government spending, and an acceleration in federal government spending."

Second Estimate GDP growth rates for 2Q 2010 will be released on August 27, 2010 at 8:30 a.m. ET. These release days tend to be very active on Wall Street. For more BEA release dates, 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 22-23, 2010 FOMC meeting for yourself? You can. The official Federal Reserve document is available online. Click on FOMC, or go to FederalReserve.gov to read! According to the Committee, "Financial conditions have become less supportive of economic growth… The pace of economic recovery is likely to be moderate for a time." There was an unscheduled FOMC meeting on May 9, 2010 to deal with the bailout of Greece and the problems in Europe and Japan.

The tentative FOMC meeting schedule for the 2010-2011 calendar is: August 10 (Tuesday), September 21 (Tuesday), November 2-3 (Tuesday-Wednesday), December 14 (Tuesday), January 25-26, 2011 (Tuesday-Wednesday), March 15, 2011 (Tuesday), April 26-27, 2011 (Tues.-Wed.), June 21-22, 2011 (Tues.-Wed.), August 9, 2011 (Tuesday), September 20, 2011 (Tuesday), Nov. 1-2, 2011 (Tues.-Wed.), December 13, 2011 (Tuesday), January 24-25, 2012 (Tues.-Wed.).

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 1.00% (main refinancing), 1.75% (marginal lending) and 0.25% (deposit facility). The next meeting and interest rate announcement is scheduled for July 8, 2010 at 2:30 p.m. CET. (July 22, 2010 & August 5, 2010 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.
Kulicke and Soffa Ind. (KLIC)
KLA Tencor (KLAC)
Veeco (VECO)

Profit-Taking:
Hoku Corp. (HOKU) +55%
LDK Solar (LDK) +37%
U.S. Gold (UXG) 10X ROI

DELETIONS (Take your profits early and often):
Galaxy Resources (with 48% gains) on 8.1.10
Rio Tinto (with 21% gains) on 8.1.10

HOT NEWS on COOL STOCKS LIST

Company	NP owns?		Symbol	Price when featured	Price 8.3.10	Year High Year Low		Gains since original feature
American Superconductor	No		AMSC	$30.70	$30.17	$43.73 $8.22		flat
Read "The Sunny Side" Vol. 6, issue 3. AMSC should benefit from President Obama’s commitment to build a "a new smart grid to carry electricity from coast to coast." In fact, we know that AMSC is specifically on Obama’s mind, even though investors haven’t caught on yet. 1Q 2010 on July 29, 2010: Revenues for the first quarter of fiscal 2010 increased 33 percent to $97.2 million from $73.0 million for the first quarter of fiscal 2009. Gross margin for the first quarter of fiscal 2010 was 40.1 percent, which compares with 30.9 percent for the first quarter of fiscal 2009. AMSC generated net income of $9.2 million, or $0.20 per diluted share, for the first quarter of fiscal 2010. This compares with net income of $1.8 million, or $0.04 per diluted share, for the first quarter of 2009. Cash, cash equivalents, marketable securities and restricted cash at June 30, 2010 were $120.7 million. This compares with $155.1 million as of March 31, 2010. The decrease was due primarily to some customer payments shifting from June to July 2010, an increase in capital expenditures in line with the company’s plan and changes in the dollar value of cash held in foreign currencies. President Obama mentioned American Superconductor by name in his weekly address of Nov. 21, 2009. In the official transcript, it is written: "If we can increase our exports to Asia Pacific nations by just 5%, we can increase the number of American jobs supported by these exports by hundreds of thousands. This is already happening with businesses like American Superconductor Corporation, an energy technology startup based in Massachusetts that’s been providing wind power and smart grid systems to countries like China, Korea, and India. By doing so, it’s added more than 100 jobs over the last few years."
AOL	No		AOL	$23.00	$21.12	$27.00 $19.61		-8%
Read "AOL" from Vol. 6, issue 12. AOL announces 2Q results on Wed. Aug. 4, 2010 at 8:00 a.m. ET (before markets open). 1Q 2010 results showed a decline in advertising and subscription revenue, which prompted voters to pull back on their support. However, according to Chairman & CEO Time Armstrong, "AOL continues to make progress against our long-term objective of becoming an internet growth company. Our results highlight the accomplishment of our first goal in AOL’s turnaround which was to significantly reduce AOL’s cost structure." To put this in context (and understand why AOL remains on the Hot News List), read the article written at the time of the IPO last December.
Blockbuster	Yes		BBI	$0.34	$0.15	$1.56 $0.15		-56%
Read "Blockbuster’s Second Coming" from Vol. 7, issue 5. 2^nd Q 2010 results will be announced on Thursday, August 12, 2010 at 1:00 p.m. PT (after markets close). A revised press release was issued on July 1, 2010 (after press time), saying that "while the company's proposal to convert each outstanding share of Class B common stock into Class A common stock and the company's reverse stock split proposal each received the overwhelming approval of votes cast, due to a low vote turnout, the proposals did not receive the required affirmative vote of the majority of the votes of the outstanding Class A and Class B shares voting as a single class. Of the approximately 289.9 million total votes outstanding, the conversion proposal received approximately 141.2 million votes in favor (or approximately 48.7%) and the reverse stock split proposal received approximately 126.1 million votes in favor (or approximately 43.4%)." This means a NYSE delisting. As for bankruptcy, the company has been able to negotiate with the people due money on July 1, 2010. The forbearance terms mean that the company now has until August 13, 2010 to pay $24 million due on almost a billion in debt. Jim Keyes, Chairman and Chief Executive Officer of Blockbuster Inc., stated to CNBC that the company is committed to securing their restructuring without bankruptcy, and while he restructures the debt and liquidity of the company, NCR continues to roll out kiosks and the month advantage on 50% of new releases over RedBox and Netflix could keep customers knocking on Blockbuster’s door. The clock is ticking, however, and missing these key votes by such a narrow margin, due to low voter turnout, is a colossal blunder. The potential for bankruptcy on this risky penny stock just got dramatically higher. If you’ve got the stomach and the belief in this management team, you’d buy at this price. But don’t bet the farm. FYI: I confirmed, in a telecom with a company spokesperson, on July 16, 2010 that the Chief Restructuring Officer is in place and that no one in the executive suite has even mentioned the possibility of Chapter 11. Also, seeing Blockbuster on Demand ads with Google’s Droid (as of August 2, 2010). Seems like big companies are comfortable continuing their business ties with the ailing company.
ENER1	No		HEV	$4.33	$3.34	$7.90 $2.75		-23%
Read "Life Begins with (Li) Lithium" from Vol. 6, issue 4. Ener1 develops and manufactures compact, high performance lithium-ion batteries to power the next generation of hybrid, plug-in hybrid and pure electric vehicles. 2Q 2010 earnings will be reported on August 5, 2010 after the markets close (after 4:00 p.m. ET). 1Q 2010 report on May 10, 2010: Net sales were $11 million in the first quarter of 2010 compared to net sales of $8.2 million in the prior year first quarter. Net loss was $15.3 million in the first quarter of 2010 compared to $7.3 million in the 2009 first quarter. EnerDel has been named as the exclusive battery supplier for the Volvo C30 Pure Electric Vehicle, set for production in 2011 and mass release in 2013. According to Chairman and CEO Charles Gassenheimer, "We are truly excited about the C30 program, believing it to be a leapfrog product to a second generation electric vehicle design, currently undergoing the most rigorous set of crash-testing and safety systems in the industry." Check out EnerDel’s batteries at their YouTube channel.
Hoku Scientific Hawaii RISK: HIGH	Yes		HOKU	$8.03 $2.00 (3.2.09)	$3.10	$14.55 $1.90		-61% & +55%
Read "The Sunny Side," Vol. 6, issue 3 and "Solar Giants Tap a Small Hawaiian Company For Silicon," in the Oct. 2007 ezine, Vol. 4, issue 10. 1Q 2010 earnings call on 8.5.10 at 5:00 p.m. ET (after the markets close). 5.26.10 Annual report: Revenue for the fiscal year ended March 31, 2010 was $2.6 million compared to $5.0 million for fiscal 2009. All revenue in fiscal 2010 and 2009 was derived from photovoltaic, or PV, system installations and related services, the sale of electricity, and the resale of solar inventory. GAAP net loss for the fiscal year ended March 31, 2010 was $5.4 million, or $0.23 per diluted share, compared to $3.0 million, or $0.15 per diluted share, for fiscal 2009. Hoku and Suntech have renewed their partnership and revised their agreement… "Suntech is one of the world's leading solar companies, and we are very pleased by the strength of our partnership," said Scott Paul, president and CEO of Hoku Corporation. "We originally signed our polysilicon sales agreement with Suntech in 2007, and -- owing to changes in the polysilicon market, and in our own ramp-up and production schedule -- the original milestones and prepayment schedule had simply become outdated. We are pleased to have found a mutually-beneficial way forward and look forward to many more years of continued partnership, in both our polysilicon and our PV integration business units." Hoku is contracted to start delivering polysilicon to Suntech by June 2011. $48.3 million in financing Hoku’s received $28.3 million from China Construction Bank on June 1, 2010 and $20 million from China Construction Bank on May 1, 2010. Proceeds are to be used to complete the development and construction of the polysilicon production plant under construction by Hoku's subsidiary, Hoku Materials, Inc., in Pocatello, Idaho.
KLA Tencor	No		KLAC	$31.67	$31.67	$37.71 $26.69		--
Read "LED Lighting," from the August 1, 2010 ezine, Vol. 7, issue 8.
Kulicke and Soffa Ind.	No		KLIC	$6.72	$6.72	$9.58 $4.03		--
Read "LED Lighting," from the August 1, 2010 ezine, Vol. 7, issue 8.
LDK Solar GREEN		Yes	LDK	$30.02 $4.94 (3.2.09)	$6.79	$12.15 $4.97		-77% & +37%
Read the articles, "Green" in Vol. 6, issue 2 and "Solar Springs Up Again," in Vol. 5, issue 4. LDK is benefitting from lots of press on China’s renewable energy policy. Announces 2Q 2010 earnings on 8.10.10 at 5:00 p.m. ET (after markets close). 1Q on 5.10.10: revenue was $347.6 million; net income was $7.2 million. LDK Solar ended the first quarter of fiscal 2010 with $347.4 million in cash and cash equivalents and $96.3 million in short-term pledged bank deposits. "Continued momentum in the solar industry drove results for the first quarter," stated Xiaofeng Peng, Chairman and CEO of LDK Solar. "Our efforts to diversify our business within the module market tracked well in the quarter. We brought crystalline module manufacturing in house and signed several module supply contracts during the first quarter. In our wafer business, we continue to closely monitor demand levels to meet our customers’ needs. In April we achieved annualized wafer capacity of 2.0 GW, maintaining our industry leadership as we continue to represent a significant share of global wafer capacity.
MEMC Electronics		No	WFR	$11.99	$9.50	$19.31 $9.19		-10%
Read "The Sunny Side" Vol. 6, issue 3. Acquisition of solar developer SunEdison (announced on 10.22.09) should start putting meat on MEMC’s bottom line in 2010. They now enter solar power generation with an A-list company in that field. Recovering after silicon re-pricing completely threw off their profit margins. Better times going forward. 7.29.10 2Q results: Net sales for the quarter were $448.3 million, up 2.4% from $437.7 million in the 2010 first quarter and up 58.5% from $282.9 million in the second quarter of 2009. Second quarter 2010 results include $30.7 million from the SunEdison business that was acquired in November 2009. Gross profit in the quarter was $76.9 million or 17.2% of net sales, an increase of 29.7% from $59.3 million in the 2010 first quarter and 120.3% from $34.9 million in the 2009 second quarter. MEMC's net income for the 2010 second quarter was $13.8 million, or $0.06 per share, compared to a net loss of $9.6 million, or $0.04 per share, in the 2010 first quarter and a net income of $1.4 million, or $0.01 per share, in the 2009 second quarter. Results in the 2010 second quarter include a non-cash benefit of $15.5 million, or $0.07 per share, resulting from the closure of the 2006 and 2007 IRS audits, and a non-cash $6.8 million loss, or $0.03 per share, associated with the valuation adjustment of the Suntech warrants.
Sunpower	No		SPWRA	$24.83 $13.07 (7.1.10)	$12.78	$34.00 $10.11		-49% & -2%
Read "The Sunny Side" in Vol. 6, issue 3. 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. Announces 2Q 2010 earnings on August 10, 2010 at 1:30 p.m. PT (after markets close). Announced on March 11, 2010 that the company was awarded two grants totaling approximately $1.5 million from the California Solar Initiative Research, Development, Deployment and Demonstration (CSI RD&D) Program. 1Q earnings on 5.11.10: Revenue for the 2010 first quarter was $347 million, which compares to $212 million in the first quarter of 2009 and $548 million in the fourth quarter of 2009. The company's Components and Systems segments accounted for 81% and 19% of first-quarter 2010 revenue, respectively. SunPower has more than 550 large public and commercial solar power systems installed or under contract, representing more than 450 megawatts of solar power generation. March 29, 2010: SunPower Corp. acquired SunRay Renewable Energy, a leading European solar power plant developer with offices in Europe and the Middle East.
Suntech Power Holdings	No		STP	$14.26 $9.51 (7.1.10)	$10.14	$49.60 $5.09		-29% & +7%
Read "The Sunny Side" Vol. 6, issue 3. The world's largest crystalline silicon photovoltaic (PV) module manufacturer. 1Q report on June 3, 2010: Total net revenues were $588.0 million in the first quarter of 2010,representing 0.8% growth sequentially and 86.3% year-over-year. Net income: $20.7 million.
U.S. Gold Colorado USA RISK: VERY HIGH Company of the Year 2009	Yes		UXG	$5.05 $.50 (10.20.08) $2.66 (10.09)	$5.04		$5.44 $2.02	Flat 10X & +89%
Note: U.S. Gold is not producing gold at this time; is it a gold exploration company, based in Nevada. U.S. Gold is an exploration company, not a mining company, meaning that if they strike gold, the stock should spike and if they don’t, you could lose your investment. Very risky. As you can see, U.S. Gold has been a super performer this year. And the news on Forbes.com and Motley Fool is just now heating up. Expect more as Junior Gold Miners capture headlines on strong gains in share price (largely due to the world’s current infatuation with gold). 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. If you believe in this CEO and company, you’ll want to make sure you have shares of U.S. Gold going forward. Gold should be a great hedge against inflation, which is predicted to become an issue once the economy starts to rebound (2010 and forward). Right now, the Feds are still a little concerned about deflation, but inflation could begin on the 12-24 month horizon. This is an exploration company, not a mining company. They don’t produce gold at this time. Began trading on the AMEX stock exchange on 12.11.06. (Also trades on the Toronto Stock Exchange.) Listen to my feature interview with CEO and Chairman Rob McEwen on BlogTalkRadio.com. You can review my original Q&A with Rob McEwen and interview on U.S. Gold in Vol. 4, issue 2. (Feb. 2006).
Veeco	No		VECO	$43.30	$43.30	$54.50 $17.88		--
Read "LED Lighting," from the August 1, 2010 ezine, Vol. 7, issue 8.

Recently Deleted Companies 2008-2010:
Echelon +20%, GE, +13% and +18%, Google, +15% and +31%, Johnson & Johnson +10%, LDK Solar +18%, Microsoft +12%, Satcon +13%, Suntech +35%, Trina Solar +22%, World Water & Solar +22%. Genentech (8.1.08) +40%. Altair (deleted on 8.7.08) posted gains of +3% and +57%. Zoltek (deleted on 8.18.08) lost 30% before being removed. LDK Solar was deleted on 9.2.08 with 46% and 29% profits. U.S. Gold profit taking on 11.6.08 amounted to 72% gains. Conergy gains of 51% were taken on 11.7.08. American Superconductor posted 50% gains between 12.1.08 and 1.14.09. MEMC Electronics (WFR) had 21% gains between 12.1.08 and 12.15.08. STP had gains of 69% between 12.1.08 and 1.2.09. SQM profits 20% on 1.14.09. WWAT was deleted on 2.1.09 with -62% losses. On 2.15.09, AMSC had gains of 65%, MEMC Electronics 26%, Sociedad de Quimica y Minera 48% and U.S. Gold 432%. Citigroup gains of 42% on 3.15.09. Genentech was deleted on 3.15.09 with gains of 29%. OSI Pharmaceuticals was deleted on 3.15.09 with 7% gains. Rio Tinto was deleted on 3.27.09 with gains of 67%. On 3.27.09, the following companies were in the money: ALTI (+48%), AMSC (+51%), eBay (+24%), GE (+40%), HOKU (+38%), LDK (+46%), MEMC (+44%), PBW (+35%), SATC (+42%), SQM (+76%), STP (+211%), TSL (+207%), U.S. Gold (+456%) and WBK (+25%). Profit-taking 4.13.09: ALTI +209%, AMSC +70%, HOKU +32%, LDK +64%, PBW +42%, SQM +42%, UXG+418%. Deleted 4.13.09: eBay, +45%, Eurox -11%, GE +47% & -56%, Google +9%, Maxwell +25%, MEMC Electronics -33% & +49%, Microsoft +24%, SATC +67%. STP +262% & -64%, TSL +216% & -67%, Westpac +42% & -22%. Deleted 5.4.09: FMC Corp. with 19% gains. PZD with losses of -39%. SPWRA with 19% gains. TREMX with 50% losses. WSDT with losses of -59%. Deleted 5.15.09: SQM with gains of 38% and 62%. Deleted 5.31.09: EMKR with losses of 13% and 88% and Melco with losses of 8%. Ener1 with gains of 11% and 17%. Deleted 7.20.09: Conergy with losses of -52-98%. Deleted Smith and Nephew on 8.15.09 with gains of 17% and losses of 28%. Deleted the New Zealand dollar currency ETF by Wisdom Tree with 36% gains on 12.12.09. 12.18.09: Deleted Ener1 with 22% gains and Satcon with 29% gains. 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.

Recently Deleted from the Hot News list:
Galaxy Resources (on 8.1.10)
Rio Tinto (on 8.1.10)

Galaxy Resources RISK: HIGH (off the boards, thinly traded)	No	GALXF	$1.07 0.79 (on 7.15.10)	$1.17	$1.92 $0.79	+9% & +48%
Read "Should You Put the Brakes on Toyota" from Vol. 7, issue 2. Lithium exploration, mining, etc. in Australia and China. Traded off the boards in the US, but is listed on the Australia Stock Exchange. Milestones for the extraction plant in Australia and the lithium processing plant in China are on schedule. Looking good. You can read an update on Milestones on the Galaxy Resources website. The markets could take the share price lower still, but Galaxy has two strong components – Australia-based company in an emerging market – lithium.
Rio Tinto	No	RTP	$44.95	$54.60	$218.15 $30.00	+21%
Gold, copper and other commodities mining. Based out of UK. Mines worldwide, but focused greatly in Australia. Annual general meeting is May 26, 2010 in Melbourne, Victoria. 4:1 stock split took place on April 30, 2010.

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:
Applied Materials (AMAT) (added 8.1.10)
iShares Australia Index (EWA) (added 7.11.10)
Cree (CREE) (added 8.1.10)
Galaxy Resources (GALXF) (added 8.1.10)
iShares Emerging Markets Index (EEM) (added 7.11.10)
iShares JP Morgan Emerging Markets Index (EMB) (added 7.11.10)
iShares North American Tech Semiconductors (IGW) (added 8.1.10)
Federated Prudent Bear Fund (BEARX) (added 7.1.10)
iShares S&P Latin America 40 Index Fund (ILF) (added 7.11.10)
iShares MSCI All Peru Index Fund (EPU) (added 8.1.10)
Rio Tinto (RTP) (added 8.3.10)
Tesla (TSLA) (added 7.1.10)

Recent Deletions:
Ford (F) (moved to Cooling Off list on 8.1.10)

Company

NP owns?

Symbol

Price when featured

Price

8.3.10

Year High

Year Low

Gains since original feature

Applied Materials

AMAT

$11.80

$14.94

$11.48

Read "LED Lighting," from the August 1, 2010 ezine, Vol. 7, issue 8.

Allscripts Misys Healthcare Solutions

MDRX

$19.94

$16.71

$22.21

$9.70

-17%

Read "Health Care Reform" Vol. 7, issue 4. In a press release dated July 27, 2010, Allscripts announced that the company is merging with Eclipsys. As part of the merger, the company is issuing 25 million new shares in a secondary offering that is priced at $16.50/share. (Makes us glad we didn’t put this on the Hot List at $20/share!) Shareholders must approve on August 13, 2010. Framework Agreement was dated June 9, 2010.

Altair Nano-technology

ALTI

$1.16

$0.36

$2.94

$0.30

-69%

Read "Life Begins with (Li) Lithium" Vol. 6, issue 4.

2^nd Q earnings on August 5, 2010 at 11 a.m. ET.

1Q2010 earnings announced on May 6, 2010: For the quarter ended March 31, 2010, Altairnano reported revenues of $1.2 million, up from $0.9 million for the same period in 2009. This increase is the result of a higher level of contract and grant activity with the Office of Naval Research and the Department of Defense compared to 2009 which are expected to continue throughout most of 2010. Operating expenses of $6.4 million for the first quarter of 2010 were down $0.5 million from operating expenses of $6.9 million for the first quarter of 2009. The net loss was $6.1 million, or six cents per share, compared to a net loss of $6.4 million, or seven cents per share, for the first quarter of 2009.

Altairnano's cash and cash equivalents decreased by $5.8 million, from $18.1 million at December 31, 2009 to $12.3 million at March 31, 2010. Altairnano's cash burn rate is about $1.9 million per month.

"We continue to experience an increased level of customer requests for quotes compared to the first half of 2009," said Dr. Terry Copeland, Altairnano's president and CEO. "We are working diligently with these prospective customers to translate this increased sales quote activity into firm orders which will in turn provide us with a larger revenue stream and referenceable customer base."

Was a contender in the lithium ion battery marketplace a few years back, but lost market share, orders and prestige.

NASDAQ extended 180-days for ALTAIR’s share price to get above $1/share before delisting on June 28, 2010. A resolution was recently passed in the Company's May 2010 Annual and Special Shareholder meeting which authorized the board of directors to execute a reverse stock split in the range of 3:1 to 10:1, so company should execute that and be in compliance soon.

iShares Australia Index

EWA

$20.34

$22.02

$25.14

$15.40

+8%

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

Big Lots

BIG

$30.28

$34.18

$41.42

$19.49

+13%

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

Canadian Imperial Bank

RISK: Medium

$65.88

$69.18

$108.79

$30.64

+5%

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

Citigroup

RISK: HIGH

$2.26

$4.13

$5.43

$2.55

+83%

One of the troubled, bailed out banks…

7.16.10: 2Q2010 earnings. Citigroup Inc. today reported second quarter 2010 net income of $2.7 billion or $0.09 per diluted share, on revenues of $22.1 billion, marking a second consecutive profitable quarter. Citigroup earned $7.1 billion of net income in the first six months of 2010.

Revenues declined $3.4 billion and net income was down $1.7 billion from the first quarter of 2010, largely as a result of lower Securities and Banking and Special Asset Pool revenues.

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

CREE

$70.83

$83.38

$31.12

Read "LED Lighting," from the August 1, 2010 ezine, Vol. 7, issue 8.

eBay

EBAY

$16.80

$20.97

$32.10

$9.91

+25%

Etail should perform better than retail in the recession, but eBay is priced higher than I’d want to pay in a vulnerable "jobless" recovery.

Eldorado Gold

EGO

$10.56

$16.50

$18.62

$7.65

+56%

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

2Q 2010 results on 7.26.10:

Eldorado reported net income of $60.5 million or $0.11 per share for the period and the Company generated $92.3 million in cash from operating activities before changes in non-cash working capital.

EGO sold 172,826 ounces of gold at an average price of $1,195 per ounce resulting in a 99% increase in sales over the second quarter of 2009 when the company sold 86,453 ounces of gold at an average price of $927 per ounce.

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.

Galaxy Resources

RISK: HIGH

(off the boards, thinly traded)

GALXF

$1.17

$1.92

$0.79

Read "Should You Put the Brakes on Toyota" from Vol. 7, issue 2. Lithium exploration, mining, etc. in Australia and China. Traded off the boards in the US, but is listed on the Australia Stock Exchange. Milestones for the extraction plant in Australia and the lithium processing plant in China are on schedule. Looking good. You can read an update on Milestones on the Galaxy Resources website. The markets could take the share price lower still, but Galaxy has two strong components – Australia-based company in an emerging market – lithium.

iShares Emerging Markets Index

EEM

$39.58

$42.27

$46.66

$30.30

+7%

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

iShares JPMorgan Emerging Markets Index

EMB

$104.63

$108.38

$108.18

$92.42

+4%

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

iShares S&P North American Tech Semi-conductors

IGW

$45.93

$54.00

$14.03

Read "LED Lighting," from Vol. 7, issue 8.

Federated Prudent Bear Fund

BEARX

$5.42

$5.18

$8.19

$5.05

-4%

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

First Solar

FSLR

$144.76

$126.70

$163.32

$98.71

-12%

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

First Solar joined S&P500 on 10.02.09.

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

FMC Corp.

FMC

$51.36

$63.49

$65.80

$46.25

+24%

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

2Q 2010 earnings announced on 7.28.10: FMC Corporation FMC today reported net income of $65.7 million, or $0.90 per diluted share, in the second quarter of 2010, versus net income of $69.3 million, or $0.94 per diluted share, in the second quarter of 2009. Net income in the current quarter included restructuring and other income and charges of $28.2 million after-tax. Second quarter revenue of $776.8 million was 11 percent higher than $700.3 million in the prior year. Revenue in Specialty Chemicals was $214.6 million, up 11 percent versus the year-ago quarter led by a robust demand recovery in lithium primaries and higher volumes and selling prices in BioPolymer.

FMC is the real winner of the stimulus package because they supply lithium to the battery makers. On the other hand, that is not all that this company manufactures, and sales were off in 2009. Waiting for a better buy-in point.

Google

GOOG

$393.69

$489.83

$629.51

$433.63

+19%

See Vol. 6, issue 5 for "Hulu Your Heroes." Be careful not to buy in too high.

Announced 2Q results on July 15.

Google reported revenues of $6.82 billion for the quarter ended June 30, 2010, an increase of 24% compared to the second quarter of 2009. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2010, TAC totaled $1.73 billion, or 26% of advertising revenues. GAAP net income in the second quarter of 2010 was $1.84 billion, compared to $1.48 billion in the second quarter of 2009.

Cash – As of June 30, 2010, cash, cash equivalents, and short-term marketable securities were $30.1 billion compared to $26.5 billion at March 31, 2010.

The increase in our cash, cash equivalents, and short-term marketable securities balance included cash collateral of $2.9 billion that we received in connection with our securities lending program, partially offset by $1.1 billion of tax payments and $704 million of shares repurchased related to the AdMob acquisition.

In addition, our Board of Directors has authorized debt financings of up to $3 billion through the issuance of commercial paper. In conjunction with this program, we established a $3 billion revolving credit facility. Net proceeds from the commercial paper program will be used for general corporate purposes. No amounts under either program were outstanding as of June 30, 2010.

Headcount – On a worldwide basis, Google employed 21,805 full-time employees as of June 30, 2010, up from 20,621 full-time employees as of March 31, 2010.

Green Dot

GDOT

$41.14

$43.00

$44.93

$41.13

+5%

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

Tough to launch an IPO in late July, during the summer doldrums, but Green Dot managed to pull it off. This is a high growth industry, but Wal-Mart, notorious for squeezing their suppliers, is their biggest customer. Also, as we head into hurricane season, share price is vulnerable.

iShares S&P Latin America 40 Index Fund

ILF

$43.92

$47.38

$50.25

$30.74

+8%

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

Orocobre

OROCF

$1.70

$1.95

$2.72

$0.99

+15%

Read "Should You Put the Brakes on Toyota" from Vol. 7, issue 2. This play is Australian lithium company with a Toyota deal. Began trading on TSX (Toronto Stock Exchange) in June of 2010.

iShares MSCI All Peru Index Fund

EPU

$34.69

$35.95

$27.19

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

PowerShares Wilderhill Clean Energy ETF

PBW

$9.78

$9.24

$11.95

$4.00

-6%

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

Rio Tinto

RTP

$54.60

$62.24

$36.35

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

Ross Stores

ROST

$35.90

$51.93

$58.93

$34.74

+45%

Read "Discount Designer Stores," from Vol. 5, issue 6. Sales have been impressive, especially given the "jobless recovery."

Sociedad Minera y Quimica de Chile

SQM

$36.36

$38.99

$43.93

$30.70

+7%

This is a great company that manufactures silicon for the solar and IT industry. Looking for a better buy-in, after we get through the current down-trending volatility.

Read the article, "Treasure Hunting,," in Vol. 5, issue 10 and the article "Life Begins with (Li) Lithium," from Vol. 6, issue 4. SQM announced on Sept. 30, 2009 that prices for lithium carbonate and lithium hydroxide will be reduced by approximately 20% from current levels for the renewal of all its supply contracts. The purpose is to accelerate demand recovery, create incentives for research of new lithium uses, and contribute to the sustainable long-term development of the lithium market.

2Q results will be announced on August 31, 2010 after markets close.

April 14, 2010: Announced a 5.5% bond due in 2020 ($250 million to be raised). Must be an institutional investor in the US to qualify. For more info:

Patricio Vargas, 56-2-4252485 / patricio.vargas@sqm.com
Mary Laverty, 56-2-4252074 / mary.laverty@sqm.com

1Q earnings on May 25, 2010: earnings for the first quarter of 2010 of US$76.5 million, a decrease of 13.5% with respect to the same period of 2009, when earnings totaled US$88.4 million. Revenues totaled US$388.5 million for the first quarter, representing an increase of 21.0% over the US$321.1 million reported in the same period of 2009.

SQM's Chief Executive Officer, Patricio Contesse, stated, "After undergoing unprecedented economic challenges during 2009, which negatively impacted global markets, the first quarter of 2010 showed strong signs of a transition to pre-crisis levels. We observed positive signs of recovery in all of our business lines with higher volumes in each business segment in the first quarter of the year compared to first quarter of 2009. Although prices in our fertilizer and lithium businesses are lower than the same period last year, they are in line with our expectations for 1Q10. Although there continues to be economic uncertainty in global markets, improved economic conditions and a more encouraging outlook in general have had a positive impact on our businesses, and we expect this positive trend to continue throughout the year."

Sohu (Chinese Co. ADR)

Beijing, China

Small Cap

RISK: MEDIUM

SOHU

$46.54

$47.51

$72.29

$41.02

+2%

See NataliePace.com ezines, Vol. 3, issue 4 and Vol. 2, issue 9 for feature articles on Sohu. Dr. Charles Zhang, the Chairman and CEO of Sohu.com, is one of our CEOs of the year in 2007. Read the articles in Vol. 4, issue 1. You can watch a Q&A with Dr. Charles Zhang in an exclusive interview I did on the Forbes.com Video Network.

Tesla

TSLA

$17.00

$21.95

$17.00

+29%

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

Should you buy now? Very volatile stock. Also, production is just now starting on the new lower-priced sedan. 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 summer doldrums and hurricane season and watching/waiting is what we’re doing for now.

Tidewater

TDW

$41.81

$42.28

$57.08

$40.05

+1%

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

Trina Solar Ltd.

TSL

$35.12

$22.34

$31.18

$11.70

-36%

Read "The Sunny Side" Vol. 6, issue 3. Please note that TSL had a 2 for 1 stock split on 1.20.10. That is why the price looks dramatically different. Investors will note that they should now have twice as many shares…

2Q earnings on 8.24.10 at 8 a.m. ET (before markets open).

1Q earnings 5.25.10: Net revenues were $336.8 million, an increase of 7.5% sequentially and 155.0% year-over-year. Net income was $44.5 million.

Westpac

WBK

$73.54

$110.01

$133.55

$68.75

+50%

Issued it’s half-year results on May 8, 2010. Go to Westpac.com.au to access.

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

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

Highlighted Companies (Cooling Off List):
Baidu (BIDU) (on 8.1.10)
Ford (F) (on 8.1.10)
VMWare (VMW) (on 8.1.10)

DELETIONS:
Applied Materials (AMAT) deleted on 8.1.10

Company	NP owns?	Symbol		Price when added to Cooling Off List		Price 8.3.10		52-week High 52-week Low		Gains/Loss
Amazon	No	AMZN		$121.00		$122.42		$151.09 $75.41		+1%
Read the article "The High Cost of Cheap Tech Products," from Vol. 7, issue 7.
American Express	Yes	AXP		$16.98 $41.56 (11.16.09)		$44.60		$49.19 $22.00		+263% & +7%
2Q 2010 earnings announced on July 22, 2010. Net income of $1 billion, up from $337 million a year ago. Revenue: 8.6 billion. Debt and liabilities of $130 billion (over 2X market value) Read the article "American Express," from Vol. 6, issue 2.
Apple Computer	No	AAPL		$132.07 $268.75 (7.1.10)		$261.93		$279.01 $136.32		+98% & -3%
See archived ezine Vol. 4, issue 2, for the feature article, "Apple Chips." Also read, "The High Cost of Cheap Tech Products," in the July 2010 ezine, Vol. 7, issue 7. 3Q 2010 earnings on 7.20.10 were amazing: Record revenue of $15.7 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share. These results compare to revenue of $9.73 billion and net quarterly profit of $1.83 billion, or $2.01 per diluted share, in the year-ago quarter. Gross margin was 39.1 percent compared to 40.9 percent in the year-ago quarter. International sales accounted for 52 percent of the quarter’s revenue. Apple sold 3.47 million Macs during the quarter, representing a new quarterly record and a 33 percent unit increase over the year-ago quarter. The Company sold 8.4 million iPhones in the quarter, representing 61 percent unit growth over the year-ago quarter. Apple sold 9.41 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter. The Company began selling iPads during the quarter, with total sales of 3.27 million. "It was a phenomenal quarter that exceeded our expectations all around, including the most successful product launch in Apple’s history with iPhone 4," said Steve Jobs, Apple’s CEO. "iPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year." Cash: $9.7 billion. No debt.
Baidu	No	BIDU		$18.32 $74.15 (6.1.10)		$84.79		$84.98 $31.65		+462% & +14%
Leading Chinese website for search (similar to Google). 135 P/E is high for a revenue stream so tied to advertising (during a global recession). (Advertising revenue models tend to suffer greatly in recessions and Google’s P/E is only 23, by comparison, right now.) The primary Risk Factor for Baidu is: We derive revenues primarily from online marketing services, which accounted for 98.9%, 99.8% and 99.9% of our total revenues in 2006, 2007 and 2008, respectively. 10 for one stock split on 5.12.10.
Berkshire Hathaway	No	BRK.A		$97,000 $114,000 (2.12.10)		$119,704		$125,252 $84,600		+23% & +5%
See archived ezine Vol. 6, issue 8, for the feature article, "The Oracle Turns 80." Added to the S&P500 on February 12, 2010. BRK.B did an unprecedented thing. Buffett made the stock affordable, by splitting it 50:1. Anyone can now buy in the $45-$78 range. Many tout triumph, but they may not be aware of the exposure that BRK has to financial giants, Goldman Sachs, Wells Fargo and American Express, among other challenging industries (including insurance).
Capital One Financial	No	COF		$22.29 $43.35 (7.11.09)		$41.93		$47.73 $29.98		+88% & -4%
Read the articles "IPO of the Year," and "American Express," from Vol. 7, issue 3 and Vol. 6, issue 2. COF has a lot of liabilities that are highlighted in the Stock Report Card of the IPO of the Year article from volume 7, issue 3. If you read the SEC filings and realize how much COF has off the books, how much money they’ve had to take from the Feds and much liability they may have for mortgages that second parties want them to be responsible for, you’ll know why COF is on the Cooling Off List. Additionally, S&P rating is BBB with negative outlook (as of the May 2010 earnings report). 2Q Earnings press release of July 22, 2010 looks great, but the SEC filing hasn’t been done yet, to access the fine print (including the current ratings).
Ford Motor Company	No	F		$12.91		$12.91		$14.57 $4.71		--
Read "How Cap and Trade Saved Ford" from Vol. 6, issue 4. Ford is making cars people want to drive, but it owes over $100 billion dollars. Be careful with any investment here. The same conditions that plagued Chrysler and GM are present here – with one exception. Ford built cars that won awards in 2010 (and attracted consumer interest).
Fortress Investment Group	No	FIG		$3.57 $5.37 (8.13.09)		$3.86		$8.30 $1.02		+8% & -28%
2Q results will be released on Aug. 5 before markets open (at 6 am ET). 1Q 2010 results on May 6, 2010: For the quarter ended March 31, 2010, FIG’s GAAP net loss was $261 million compared to a loss of $287 million for first quarter 2009. Excluding principals agreement compensation, first quarter GAAP net loss was $27 million, as compared to a net loss of $52 million for first quarter 2009. (In other words, the principals at FIG are getting paid handsomely to lose their client’s and shareholder’s money for years now…) Daniel H. Mudd, currently member of the Fortress board of directors, became the firm's new CEO effective August 11, 2009. George W. Wellde has been elected to Fortress' Board of Directors. Read the articles, "Cherry Picking the Cherry Bombs" (Vol. 5, issue 12) and "Money Grows on Wisdom Trees," from Vol. 4, issue 3. On 9.22.09: dividend was canceled by Board.
Intel RISK: LOW	No	INTC		$16.66 $20.25 (9.1.09)		$20.87		$25.29 $12.06		+25% & flat
Intel is a great blue chip. But we are in a challenging year.
Maxwell Labs	No	MXWL		$18.05		$12.80		$21.81 $4.50		-29%
Read "Life Begins with (Li) Lithium" from Vol. 6, issue 4. 2Q earnings on 7.30.10: revenue of $29.6 million for its second quarter ended June 30, 2010, up 19 percent over the $24.8 million recorded in the same period in 2009. BOOSTCAP® ultracapacitor revenue increased by 48 percent, to $15.9 million in Q210, compared with $10.7 million for the same period last year. Sales of high voltage capacitor and microelectronics products totaled $13.7 million in Q210, down 2 percent from the $14.0 million recorded in Q209. operating loss for the second quarter 2010 was $3.3 million, compared with an operating loss of $0.9 million in the same period last year. GAAP net loss for Q210 was $2.6 million or $0.10 per share, compared with a net loss of $5.3 million, or $0.22 per share, in Q209. Has made settlement offers to the SEC ($6.35 million) and DOJ (also for $6.35 million), but the offers haven’t been accepted officially (or paid) yet. Cash and restricted cash totaled $28 million as of June 30, 2010, compared with $37.6 million as of December 31, 2009. $44 million in debt, with $8 million due in short-term borrowings, and $36 million owed on accounts payable and employee compensation. (Uh oh!) (No mention of this in the earnings press release. Check the SEC earnings report for more details.)
Medtronic	No	MDT		$33.35 $42.44 (2.12.10)		$37.59		$46.10 $24.06		+13% & -11%
Medtronic’s Infuse Bone Graft product has been at the center of the debate of some controversial deaths, and has investigated by a Congressional Panel, the Justice Department, the SEC and other national, state and local governance officials for issues related to the use of this product and others. Read the earnings report for a complete list of the complaints and current status. The company reports that on August 21, 2009, the Department of Justice decided not to intervene at this time but may intervene at any time for good cause based upon a Court Order entered on August 28, 2009.
MGM Mirage	No	MGM		$26.79		$11.17		$16.66 $5.10		-58%
Get more information in Vol. 5, issue 10 in the "(No) Viva Las Vegas" article. 2Q on 8.3.10: Net revenue improved sequentially to $1.54 billion from $1.46 billion in the first quarter of 2010; Operating loss for the second quarter of 2010 was $1.0 billion (which included the $1.12 billion impairment of the Company’s investment in CityCenter and the Company’s $29 million share of the CityCenter residential impairment charge) compared to operating income of $131 million in the 2009 quarter. Debt is a big issue with MGM. Check the SEC filing. At June 30, 2010, the Company had approximately $13.3 billion of indebtedness (with a carrying value of $13.0 billion), including $3.2 billion of borrowings outstanding under its senior credit facility. The Company has approximately $1.5 billion in available borrowing capacity under its revolver and approximately $570 million of invested cash available for future liquidity needs. Another $3 billion is owed in back taxes and other obligations.
Microsoft	No	MSFT		$29.64		$26.16		$30.53 $14.87		-12%
Read the "AOL" article from Vol. 6, issue 12 to review the Stock Report Card on Microsoft from December 2009. Great blue chip (certainly better than Citigroup, Bank of America, AIG and GM were), if you buy at the right price. Good profit margins. Low debt. Loads of cash. Revenue seems to be coming back. But, headwinds of the marketplace will likely continue now, with hurricane season upon us.
Netflix	No	NFLX		$103.98 $120.69 (6.15.10)		$104.41		$127.96 $36.25		Flat & -13%
Read "Blockbuster’s Second Coming" from Vol. 7, issue 5.
Sears Holding	Yes	SHLD		$52.93 $98.06 (1.11.10)		$71.88		$124.96 $49.80		+36% & -27%
Chairman Eddie Lampert has been dumping shares en masse, to the tune of over $376 million. Consensus insider selling… Announces 2Q on August 19, 2010 before the markets open. Read the articles, "Cherry Picking the Cherry Bombs" (Vol. 5, issue 12) and "Discount Designer Stores," article (Vol. 5, issue 6). Sears is one of the largest, oldest retail chains in the U.S, and formerly, was as American as baseball and apple pie. These days, however, Sears is more of a hedge fund, which might help to explain why you’ve been trying to get that appliance repaired (under warranty) for months or been waiting for a replacement for your coffee pot for so long that you’ve taken up drinking tea. Almost all of the board directors at Sears are in the investment business, not the retail business. In fact, board director Emily Scott, a TV station founder, is the only person on the board without significant investment experience. No one on the Sears board has any experience at all in retail. Still don’t have an official CEO. Bruce Johnson has been the interim CEO and president since January of 2008, which is not just "weird" it’s a BIG FAT RED FLAG! The former CFO Miles Reidy decided late in 2008 that he needed to spend more time with his family rather than to put is name on the 2008 annual report. Another big red flag. 1Q earnings on 5.20.10: Net income $16 million. Total revenues for the quarter of $10 billion in 2010 were flat with the first quarter in 2009. Cash balances were $1.8 billion at May 1, 2010. Debt: $3.2 billion (as of 5.1.10). S&P gives a rating of BB- to Sears. During the 13-week period ended May 1, 2010, Sears repurchased common shares at a total cost of $1 million under their share repurchase program. They have authorization to repurchase up to $581 million of common shares.
Taubman Centers REIT	No	TCO		$24.74 $41.10 (6.15.10)		$43.14		$45.00 $21.85		+73% & +5%
Read the article, "Global Recession," from Vol. 6, issue 6 in June 2009. 2Q on 7.28.10: Revenue of $154 million, with $56 million coming from "expense recovery." Net income was $18.4 million with $7.4 million "attributed to shareholders." "We're pleased with the results for the quarter, which we believe bodes well for the full year," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. "Our net operating income excluding lease cancellation revenue was nearly even with last year and our bankruptcies remained very low for the quarter. Although we remain cautious, we are seeing signs of the economic recovery." Consensus insider selling.
Time Warner	No	TWX		$24.44		$32.36		$50.70 $17.81		+32%
Read the article, "Hulu Your Heroes," from Vol. 6, issue 5 in May 2009. Reports 2Q earnings on 8.4.10 before the markets open. 1Q results on May 5, 2010: In the quarter, Revenues grew 5% from the first quarter of 2009 to $6.3 billion, reflecting increases at the Networks and Filmed Entertainment segments. Adjusted Operating Income rose 37% to $1.4 billion, the highest quarterly Adjusted Operating Income in the Company's history, due to strong results at all of the Company’s segments. Operating Income increased 43% to $1.5 billion. For the first three months of 2010, Cash Provided by Operations from Continuing Operations reached $1.4 billion, and Free Cash Flow totaled $1.3 billion. As of March 31, 2010, Net Debt wasunchanged from $11.5 billion at the end of 2009, due mainly to share repurchases, investment and acquisition spending, as well as dividends, offset by the generation of Free Cash Flow. Turner signed Conan O’Brien to host a late-night talk show on TBS.
Toyota Motor Company	No		TM		$77.05 (2.12.10)		$72.77		$91.97 $51.79		-6%
Read "Should You Put the Brakes on Toyota" from Vol. 7, issue 2.
Transocean	No		RIG		$56.77		$50.39		$94.88 $41.88		-11%
For more information, read the article, "Clean Up," from June 2010 ezine, Vol. 7, issue 6.
VMWare	No		VMW		$70.58		$79.25		$79.94 $25.27		+12%
Read "Health Care Reform" Vol. 7, issue 4. P/E of 114.86.
Wells Fargo	No		WFC		$20.05 $29.21 (10.15.09)		$28.12		$44.69 $7.80		+40% & -4%
2Q 2010 earnings call on July 21, 2010 at 8:00 a.m. ET (5:00 a.m. PT). See "Wells Fargo’s Incredible Exploding Earnings" in Vol, 5, issue 9, and "Wells Fargo’s Great Depression," in Vol. 4, issue 12. Annual report will be issued at the end of Feb. 2010. Wells Fargo Chairman takes early retirement: Dick Kovacevich stepped down as chairman and a director at the end of 2009.
Wynn Resorts	No	WYNN		$95.42		$91.50		$176.14 $18.06		-4%
Check out the article, "(No) Viva Las Vegas" in Vol. 5, issue 10. Watch Steve Wynn discuss Washington, Macau, Vegas, his new Beach Club at Wynn Encore (Las Vegas) and the future of America on CNBC, from a May 28, 2010 interview. "When you ask me about predictability and uncertainty in China compared to Washington, I’d take China. Washington is unpredictable these days… The people who buy our bonds in other countries don’t know what’s next. The uncertainty of the business climate in America is frightening to everybody and it’s delaying our recovery. We’re on our way to Greece in the hands of a confused and foolish government." "People want to grow old ungracefully and at any price cling to immaturity. "There were supposed to be 10,000 rooms across the street and they all went bust. They quit. The strip side of the Encore property was quiet and unanimated… We’re a group with uncompromising dedication to the pursuit of excellence." "We lose money in Las Vegas because of lower room rates. Not enough to bother me because we have such a good capital structure. But Las Vegas is not a profitable city at the moment, and unlikely to become a profitable city right away." 1Q earnings on 4.29.10: Net revenues for the first quarter of 2010 were $908.9 million, compared to $740.0 million in the first quarter of 2009. Net revenues for the first quarter of 2010 were $908.9 million, compared to $740.0 million in the first quarter of 2009. Wynn Resorts also announced today that its Board of Directors has approved a cash dividend for the quarter of $0.25 per common share. This dividend will be payable on May 26, 2010 to stockholders of record on May 12, 2010. As of December 31, 2009, Wynn’s total debt outstanding was $3.6 billion, including approximately $2.5 billion of Wynn Las Vegas debt and $1.1 billion of Wynn Macau debt.
Yahoo	No	YHOO		$15.00		$13.94		$19.12 $13.52		-7%
Read the "AOL" article from Vol. 6, issue 12 to review the Stock Report Card on Yahoo from December 2009.

Deleted in 2008/2009/2010:

Fannie Mae was deleted on 2.11.08 after losing -50% and -56% of its share price value, and then again on 7.1.08, after losing another -40%. (Both puts more than doubled.) Novastar Financial (NFI) was deleted on 6.2.08 with -95% share price implosion. Sears Holding Corp. was deleted on 7.1.08 with 64% gains on the put option. Wells Fargo was deleted on 7.1.08 with 83% gains on the put. Apple was deleted on 8.1.08 with 35% gains on the put. The Google put, deleted on 8.1.08, was another great performer, with over 50% gains. First Solar had gains of over 32-34%. Mentor was deleted on 9.30.08 with 75% gains on the put option (-17% on the share price); Medicis was deleted with gains of over 37% on the share price (down direction). Boston Properties, Las Vegas Sands and Macerich were deleted on 10.9.08 with gains of 16-30%, 66% and 28-42% respectively. Wells Fargo was deleted on 11.6.08 with 35-50% gains on the put and again on 12.1.08 for 50-70% gains. American Express posted 35% gains in just 30 days, between 2.1.09 and 3.2.09. First Solar was deleted on 8.13.09 with 33% gains. KB Home with 74% gains and Toll Brothers with 51% gains on 10.01.09. Deleted AMAT on 8.1.10 with gains of 12.5% & 7% (put gains would be double or more).

Applied Materials

AMAT

$12.76

$13.51 (9.15.09)

$11.82

$14.61

$8.19

-7% &

-12.5%

Believe it or not, I’m so impressed with the restructuring that AMAT is doing that this is ready to go on my Hot News List – at a better price. (It’s been moved to the Watch list for now.)

Read "LED Lighting" from the August 2010 ezine, Vol. 7, issue 8.

IMPORTANT DISCLAIMER (PLEASE READ):

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:

Most of Wall Street is on Vacation. Hope You Are, Too!

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.

Get Rich and Enrich Retreat, Santa Monica, CA
October 22-24, 2010
You spend hundreds of thousands learning how to earn money. Why not spend a fraction of that learning how to invest? After 3 days of learning investing directly from Natalie Pace, you will have a nest egg blueprint that works for the rest of your life. Early Bird Pricing is available now through August 15, 2010 ONLY. Call 866-476-7442 to register NOW! Be one of just a dozen people in a boardroom learning investing (and having a lot of fun).

http://www.nataliepace.com/flyers/YouVsWallStreetSept2010/
SeminarFlyerSept2010.htm

Speak Up About Your Broker-Dealer Experiences
President Obama wants your feedback on much you like (or dislike) your stock broker/Certified Financial Planner and why. This is an important part of financial reform, and the window for your commentary is only 30 days. Please act now! Thanks!

Public Hearing on Mortgage Lending, SF, CA
Thursday, August 5th, 2010
Do you have two cents about the current state of mortgage lending? The Federal Reserve is hosting a public forum in four cities. Public open-mike and you can also submit a written commentary.

FOMC Meeting
Tuesday, August 10th, 2010
The Federal Open Market Committee meets to determine Federal Reserve policy in the U.S. Deflation is a concern again. Analysts predict that interest rates will stay at rock bottom.

Day Without a Drink
Wednesday, August 21st, 2010
Can you go a day without oil, gas, plastic or polyester? Sundown on the 20th to sundown on the 21^st. Some people are driving electric cars to work. Others are sleeping under their desk to avoid the commute. Get creative. See what you discover. And share it with us on the Facebook page. We’ll be doing it again on September 21, 2010 as well.

GDP 2Q 2010 report (2^nd estimate)
Friday, August 27th, 2010
8:30AM ET
The U.S. Dept. of Commerce, Bureau of Economic Analysis (BEA.gov) releases its report on GDP growth in the 2nd quarter of 2010. Advance results for the 2^nd quarter came in at 2.4% GDP growth. Final results for the 1st quarter of 2010 came in at 3.7%.

Labor Day!
Monday, September 6th, 2010
Have a great celebration on the official end of summer fun!

Kitco Metals e-Conference
Saturday, September 11th, 2010
A two-day event showcasing all aspects of the metals industry, with a primary focus on precious metals. Investment and networking opportunities in metals exploration, mining, manufacturing, processing and end-use applications will be presented and discussed.

WITI Annual Conference. Silicon Valley, CA
Sunday, September 12th, 2010
Recognize, honor, and promote the outstanding contributions women make to the scientific and technological communities that improve and evolve our society.

Public Hearing on Mortgage Lending, Chicago, IL
Thursday, September 16th, 2010
Do you have two cents about the current state of mortgage lending? The Federal Reserve is hosting a public forum in four cities. Public open-mike and you can also submit a written commentary.

International Day of Peace
Tuesday, September 21st, 2010
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. This will also be our 4^th monthly Day Without a Drink.

Autumnal Equinox
Wednesday, September 22nd, 2010

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