One Hot, Overlooked Commodity: Sand.

by Natalie Pace.

Includes a Silicon Stock Report Card.

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

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

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

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

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

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

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

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

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

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

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

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

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

Full disclosure: I own shares of Hoku Corporation.

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

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

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

Are Bonds Safe?

by Natalie Pace.

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

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

1. Credit Risk
2. Interest Rate Risk

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

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

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

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

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

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

1. Fiscal Health: Look into the debt and revenue of the underlying country, corporation, municipality or revenue stream that is securing the bond. Don’t simply rely on rating agencies (although that’s a good start). Make your own assessment. Safe bonds have reasonable debt and solid revenue growth. Risky bonds have massive debt and are borrowing more to pay bills. See the Dr. Marc Miles article in this ezine (May 2011) for state ratings.
   
   
2. Bailouts vs. Brides: Separate the bonds that are high yielding (above 8%) from the low-yield bonds. If you have a low-yield bond that passed the fiscal health exam (#1 above) that is maturing in 2-3 years, you can throw that into the bride pile. If you have a low-yield bond that is longer term and has serious fiscal issues, you may be looking at a future bailout and/or default. Remember: if you are going to take on a lot of risk, you want to be rewarded for it. Examine the debt, sales and income of your high yield bonds to determine if you wish to take on that level of risk in what is supposed to be your "safe" money. If you’re able to sell your risky bonds for a good price today, you may be glad that you got out early.
   
   
3. Tax-free Muni’s: Do an extensive analysis of any Municipal Bonds you are holding, particularly of the debt. According to Marc Miles, a global strategist and the former senior economist of the Heritage Foundation, the problems in Greece, Ireland and Portugal are similar to the problems in California, Arizona, Illinois, Michigan, Kentucky, Louisiana, and New Jersey. Include union/pension funding/benefits and other post employment benefit obligations and debt in your evaluations.
   
   
4. Separate the Googles from the GMs: Evaluate your Corporate Bonds using the Stock Report Card and by asking the Four Questions. (These are both outlined in my book, You Vs. Wall Street.) There have already been a lot of bankruptcies (Lehman Brothers, Blockbuster, airlines, automakers and more) and bailouts (all of the major U.S. banks + AIG), and there are a large number of legacy corporations that have a heavy load of debt, pension and Other Post Employment Benefit obligations. Most quarterly earning reports include the pensions, debt and OPEBs at the end of the report in the fine print. However, you may have to go to the Edgar database of SEC.gov in order to ensure that you are completely aware of the load the company is carrying. (Companies that are heavily burdened with debt and obligations, almost to the point of bankruptcy, can still turn a profit for the quarter, so don’t rely just on the headlines.) You can read my full analysis of Google and General Motors (which was written three years prior to the GM bankruptcy) in the chapter "Hitch Your Wagon to a Star" of You Vs. Wall Street.
   
   
5. Water Revenue versus Missing Revenue: Evaluate the Revenue Bonds considering the source of the revenue. Ask yourself, "Will this particular revenue stream be strong if we continue to experience high unemployment?" In tough times, people prioritize their spending. The water bill may be a staple, while the nuclear power plant bond may be a bad bet, particularly given the Japanese nuclear disaster. According to PublicBonds.org, "The largest default in the history of the municipal bond market was the Washington Public Power Supply System's (WPPSS) default on $2.25 billion in bonds. WPPSS launched a risky program to build five nuclear power plants in the 1970s to supply electricity to the Pacific Northwest. Only one of the five planned nuclear plants was ever completed."
   
   
6. Bond Funds. Funds, in general, are a way to overcome risk by spreading your exposure across multiple municipalities and corporations. However, when an entire industry comes under attack, the fund will lose value. Real estate funds lost half (or more) of their value between 2007 and 2009.

Performance of Real Estate Funds Over the Last 10 Years

Source: Money.MSN.com

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

Performance of Bond Funds Over the Last 5 Years

Source: Money.MSN.com

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

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

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

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

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

State Bond Defaults: Today’s Reality.

Op-Ed By Dr. Marc Miles.

Summary

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

Dr. Marc. Miles.

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

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

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

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

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

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

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

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

Worst and Best S&P Bond Ratings Among States
Worst

Best

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

Percentage of Accrued Liabilities Funded
Smallest

Largest

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

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

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

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

Microsoft: Breaking the Cycle of Poverty in Kenya.

by Natalie Pace.

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

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

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

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

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

President Clinton’s Global Initiative

Photo by: Linda Lockhart.

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

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

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

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

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

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

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

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

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

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

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

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

April 20, 2011

Dear Carrie,

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

—A Reader

Dear Reader,

Carrie Schwab-Pomerantz

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

.

Should You Get a Divorce?

by Natalie Pace.

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

Natalie Pace.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

by FINRA.org.

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

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

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

1. Get a Grip on Saving Versus Spending. Individuals who are not balancing monthly income and expenses may find themselves struggling to make ends meet.
   
   - Track your monthly spending. Sixty-one percent of survey respondents reported facing difficulties covering monthly expenses and paying bills. And household expenses have been greater than income for one in five Americans (20 percent). FINRA offers resources to help you calculate monthly cash flows.
   
   - Avoid overdrawing accounts. Over one-quarter (26 percent) of survey respondents with checking accounts reported overdrawing their accounts on occasion. While overdraft protection may seem like a helpful feature on a checking account or debit card, overdraft fees can add up. To protect yourself, balance your checkbook regularly, and opt out of programs that automatically approve ATM and debit card transactions. For more on how to avoid overdraft fees, read the Federal Reserve’s New Overdraft Rules for Debit Cards and ATMs.
   
   
2. Dial Back Your Debt. Sound borrowing practices and management of financial products are crucial to financial capability.
   
   - Handle credit cards wisely. More than two in three (73 percent) of survey respondents reported having credit cards. Of these, most (56 percent) carried a balance and paid interest each month—and as many as 40 percent reported paying only the minimum due. Try always to pay your credit cards in full—and, if you cannot, at least pay more than the minimum due. Every dollar you pay above the minimum payment can dramatically reduce the amount of interest you will pay. Learn more about how to deal with credit card debt.
   
   - Avoid the Money Drains. In the state-by-state survey, almost one in four Americans (24 percent), reported using alternative forms of borrowing, such as auto title or payday loans, advances on tax refunds, pawn shops or rent-to-own plans. These borrowing methods are likely to charge higher interest rates than those charged by banks, credit unions or credit card companies—and they are used disproportionately by the unbanked. To get started with a federally insured account, read FINRA’s Bank Products.
   
   
3. Plan for Known—and Unknown—Expenses. Being able to weather unexpected financial shocks not only contributes to your own financial stability but helps the stability of the economy as a whole.
   
   - Start an emergency fund. The state-by-state survey found that only 35 percent of American adults have set aside sufficient emergency savings to cover expenses for three months in the case of sickness, job loss, economic downturn or other emergency. To get started, aim to set aside at least one month (and preferably three to six months) of your current salary in a federally insured savings account—and don’t touch it unless absolutely necessary. Learn more about creating an emergency fund.
   
   - Take advantage of tax breaks for college savings. While funding a child’s college education is one of the more predictable expenses many families face, the state-by-state survey found that less than one-third (only 31 percent) of respondents with financially dependent children have money set aside for college. Of those who are saving for college, only 31 percent reported having used a tax-advantaged savings account, such as a 529 Plan or Coverdell Education Savings Account. Learn more about smart strategies for saving for college.
   
   - Contribute to a retirement plan. Contributing to a retirement plan, like a 401(k) or IRA, can mean the difference between a financially secure retirement and the specter of running out of money. These plans offer tax benefits and the opportunity for your savings to compound over time. If you have an IRA, you still may be able make a contribution for 2010. If you have a 401(k) plan at work, sign up today and start to save. For more information on saving for retirement, read FINRA’s Smart 401(k) Investing.
   
   
4. Look Around—and Look Out—Before Making Financial Decisions. Taking time to ask questions about and to compare the terms, costs and risks of the financial products and services you use is one of the best ways to protect against costly mistakes.
   
   - Shop around for financial products. When it comes to choosing financial products—such as credit cards, auto loans or mortgages—most Americans either do not comparison-shop or conduct only limited searches for the best prices or terms. For example, 62 percent of survey respondents said they did not compare credit card offers. Whether for credit cards, loans or investments, comparing costs and terms can save you money.
   
   - Guard your wealth. According to the survey, only 14 percent of those who have worked with a financial professional reported that they had checked the professional’s background or credentials with a state or federal regulator.  Investing a few minutes of your time to take this essential step up front could save you time, money and other trouble down the road. FINRA BrokerCheck is a free tool that allows investors to check the professional background of brokerage firms and individual brokers. Learn more about checking out investment professionals.
   
   
5. Know Yourself and Resolve to Keep Learning. Financial literacy strongly correlates with behavior that is indicative of financial capability, including planning for retirement, having emergency savings and minimizing credit card fees.
   
   - Check your credit report and score. You need to do both. Only 42 percent of survey respondents stated that they had obtained a copy of their credit report and only 41 percent had checked their credit score within the past 12 months.  With credit hard to obtain and identity theft a continuing problem, it is critical to verify whether your credit history is accurate and correct any discrepancies immediately. Learn more about how your credit score affects you and what helps and hurts your credit score. For your free credit report, call (877) 322-8228 or visit AnnualCreditReport.com.
   
   - Learn more about saving and investing. On average, individuals answered 3.0 out of five financial literacy questions correctly—and among those aged 18 to 34 year old, the results were grim: only 2.6 correct questions on average.  FINRA has tools and resources to help investors of any age and circumstance get on the right track. Visit the FINRA Investor website today.

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

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

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

The Perfectly Timed 3-Minute Nest Egg.

Investors Ask Natalie About Market Timing and Stop Losses.

Dear Natalie,

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

Signed,

The 3-Minute, Perfectly Timed Nest Egg

Dear 3-Minutes,

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

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

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

Source: Money.MSN.com

The Bottom Line on Buy and Sell Strategies

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

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

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

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

Average Monthly Returns of the S&P500

1991 Through 2010

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

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

The Performance of the Dow Jones Industrial Average and NASDAQ

Ten Years

Source: Money.MSN.com

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

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

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

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

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

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

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

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

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

by Natalie Pace.

General Stock Market Performance

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

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

You can see this illustrated in the below chart.

What Happens to a Million Dollar Portfolio in a Recession

Source: NataliePace.com

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

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

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

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

Wall Street Highs/Lows in the New Millennium:

How does the foolproof plan work?

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

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

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

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

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

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

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

Here are samples of the new 2011 pie charts.

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

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

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

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

by Dr. Gary S. Becker.

Dr. Gary S. Becker.

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

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

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

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

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

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

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

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

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

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

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

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

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

What the S&P Downgrade Really Means for America.

by Natalie Pace.

Includes my Hot News on Cool Stocks Report.

April 28, 2011

General Stock Market Performance

Wall Street Highs/Lows in the New Millennium:

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

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

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

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

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

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

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

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

1. Bad news can come without warning
   Like the Lehman Brothers bankruptcy before it, the S&P debt outlook downgrade came on a Monday, without any warning. Fortunately, investors did not panic this time, as they did with the Lehman bankruptcy. However, it is a reminder that you must always take a balanced approach, and keep enough safe, in your diversified nest egg. If you don’t know how to do this, read You Vs. Wall Street and come to the June 4-6, 2011 Get Rich and Enrich Retreat.
   
   
2. Politicians need to reduce the deficit and debt NOW.
   In 1980, President Ronald Reagan warned that if Medicare and Social Security weren’t fixed, we would have big problems in 2008, when the Baby Boomers started to retire. 2008 was the beginning of the Great Recession, when the Dow lost more than half of its value. 2011 marked the first year that Social Security paid out more than it took in. What started as a warning over thirty years ago, is now a reality. And there is no time left to kick the entitlement issue up the road. When a country has fewer newborns than people and a significant cohort entering retirement that leads to slow or negative growth. The underlying issue must be solved, instead of taking on more debt to keep things status quo.
   
   
3. The economic recovery is on track
   Even with $5.00 gas (in California), oil at almost $113/barrel and a U.S. debt outlook downgrade, the stock market is rallying, up 10% up on the year. The GDP growth in the 1^st quarter, despite all of those enormous headwinds, still managed to pull in 1.8% growth. Sales growth is predicted to be in double digits. And the Federal Reserve Board governors are predicting GDP growth of 3.1-3.3% in 2011. The unemployment rate is expected to lower to 8.5-8.7%. As more Americans get back to work, this recovery reality should start fueling more optimism.
   
   
4. Stimulus spending will have to increase GDP to be viable
   The Obama Administration has been adamant that Stimulus Spending is the key to jobs and economic growth. If the policy is right, then GDP will need to increase. Otherwise, the cost of the program will weigh too heavily on the budget deficit and debt. A downgrade by S&P will make borrowing far more expensive and increase our debt significantly overnight. This must be prevented as our first priority.
   
   
5. Bush tax cut extensions will have to increase GDP to be viable
   The Republican congressmen promote the "Bush-era tax cuts" to keep the money flowing toward job creation and economic growth. There are a lot of economic theories and real-world examples of how keeping taxes low fuels growth. However, the U.S. debt is too large to ignore and raising taxes solves the budget problem. Therefore, policymakers will have to be statisticians in order to prove that their position will work, while at the same time using diplomacy to cut spending enough elsewhere to avoid a downgrade in the U.S. long-term debt.

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

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

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

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

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

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

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

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

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

4 out of 7 Company of the Year selections more than doubled.  My 2003, 2004, 2006, 2007 and 2009 Companies of the Year posted up to 9000% gains (Taser), up to 690% gains (Opsware), up to 215% gains (Suntech Power Holdings), and up to 15X ROI for U.S. Gold, respectively. MySpace, my 2006 Company of the Year, was a large part of News Corp’s success with shareholders that year.   So five out of seven Company of the Year selections were superperformers. That’s the kind of record that puts you on top on Wall Street.  (I launched my first publication on 11.15.02, and featured the first Company of the Year, Taser International, on 1.1.03.)

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

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

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

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

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

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

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

2. Calendar Section: Conferences, Online Chats and more: Check out the Calendar section of NataliePace.com regularly. You will find great opportunities to attend the most exclusive business and Green Conferences, learn about upcoming TV and radio shows and other educational opportunities – many are FREE! Get more information on how to best use our articles in the FAQs article, located under the Investor Edu link on the home page of NataliePace.com.

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

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

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

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

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

Hot News List (highlighted).  Be sure that you are buying low.
Cree (CREE)
ENER1 (HEV)
Galaxy Resources (GALXF)
iShares MSCI All Peru Index Fund (EPU)
Satcon (SATC) added 3.1.11
Trina Solar (TSL) added 3.11.11

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

DELETIONS (Take your profits early and often):
None

HOT NEWS on COOL STOCKS LIST

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

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

Recently Deleted from the Hot News list:
None

Stocks to Watch
Some of these are great companies that we’re thinking of adding to the Hot List and some are stinkers we’re thinking of adding to the Cooling Off List.  Read carefully to identify which is which! Note that right now most of our favorite companies are on the Watch List. Getting the price right is as important as picking the right company. Never pay retail!

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

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

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

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

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

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

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

Deleted 2008-2009:
19 gainers and no losers.

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

IMPORTANT DISCLAIMER (PLEASE READ):
Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in the U.S. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations. ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.

Investors should NOT be using the Hot News on Cool Stocks list or the Cooling Off list to trade their nest eggs. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.

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

NataliePace.com Calendar:

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

The NataliePace.com Calendar section features conferences, teleconferences, retreats, educational opportunities, cultural events, galas, market events and online chats with executives and VIPs. Stay plugged in! We add online chats, article updates, teleconferences, etc. as they are booked, so be sure to visit the calendar section early and often.  Below is only a partial listing of what’s happening this month.

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

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

Berkshire Hathaway Annual Meeting
Saturday, April 30th, 2011
The theme this year is Planes, Trains and Automobiles. This gives NetJets, BNSF and BYD a chance to show off.

Milken Global Conference
May 1-4, 2011
Presidents, CEOs, VIPs, Nobel Prize winners, academics, policymakers. Participants don’t just debate the issues — they help move policy toward realistic solutions in energy, economics, health and more.

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

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

Hang Out Music Fest, Orange County, AL
Friday, May 20th, 2011
Rock on the Alabama Gulf Coast with Foo Fighters, The Black Keys, the Flaming Lips, Cee Lo Green and more. What a better way to support this region after the Oil Spill!

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

Memorial Day
Monday, May 30th, 2011

Tesla Annual Shareholder Meeting
Wednesday, June 1st, 2011
9:00AM through 10:00AM
Tesla will hold their annual shareholder meeting for one hour at the TechMart, 5201 Great America Parkway, Santa Clara, CA 95054.

Step Up Women’s Network Inspiration Awards, Beverly Hills, CA
Friday, June 10th, 2011
11:00AM through 2:00PM PT
A star-studded luncheon where influencers inspire. Proceeds benefit Step Up's charitable programs.

Father's Day
Sunday, June 19th, 2011
Celebrate and honor Dads!

Summer Solstice
Tuesday, June 21st, 2011
The height of summer.

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

Clinton Global Initiative Economic Summit, Chicago
June 29-30, 2011
Join President Bill Clinton as he leads a 2-day economic summit focused on job creation & economic growth in the U.S. CGI America will bring together leaders from business, nonprofits, and government to develop new ideas for generating jobs now in the U.S.

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