Vol.1 Issue 31 June 1 st. , 2003

Send comments and suggestions. or get more information at info@NataliePace.com

MISSION: To build a global investment community by providing easy access to important financial news, by promoting a dialogue between members and industry professionals and by supporting ethical business practices.

QUOTE OF THE WEEK:
"We were lucky enough to grow up in an environment where there was always much encouragement to children to pursue intellectual interests, to investigate whatever aroused their curiosity. In a different kind of environment, our curiosity might have been nipped long before it could have borne fruit."
- Orville Wright .

CONTENTS
  • SUCCESS SECRETS OF CEOs: Have a cup of clean air with your morning java, courtesy of Dr. Richard Sandor, the Chairman and founder of the Chicago Climate Exchange. Dr. Sandor has convinced Ford, Dupont and thirteen other corporations to voluntarily reduce greenhouse gas emissions and to reforest Brazil. He's a visionary with a plan to improve our WORLD, ONE BREATHE and ONE TREE AT A TIME.
  • WINners Circle! In praise of the fifteen companies which are leading the U.S. in voluntary emissions reduction.
  • WIN 10: LEAN, GREEN & WICKEDLY STYLISH… Good news for socialites across the nation. If your environmental consciousness ends at your ego, the BMW 325i is 90% cleaner than the average 2003 new automobile. Get the skinny on the new eco-friendly cars you'll love to be seen in…
  • Stock Report Card: Car manufacturers, highlighting those companies that fare better on the Green, according to the Environmental Protection Agency, alongside the facts and figures of the companies' fiscal health.
  • Do you have the stomach for success? Wonder how some CEOs succeed where others stumble? Their strategies will undoubtedly inspire you, but you may be surprised at the hardships these executives have endured to achieve what they dared to dream.
  • Girl's Guide to the Market: Lose Weight FAST! In stocks, losing is disastrous! Avoid the ten COMMON INVESTMENT MISTAKES that are made EVERYDAY!
  • MONEY ISN'T EVERYTHING, but IT HELPS TO FUND SOME VERY BASIC NEEDS. Many arts programs, such as the California Poets in the Schools poetry enrichment program, were the first to go when the state and local education budgets were squeezed. How can you help? Donations keep these programs alive, and they're also tax deductible.
  • Hip Happenings: Gain While You Sleep! Two events designed to jumpstart your personal and business profitability.
  • Companies in the News… Forget about headlines (unless you're a day-trader who uses the daily fluctuations for profit taking). The facts are found in the fine print. Who has time to read it all? We do! Here are the highlights from the New York Times, Money Central, Reuters, Bloomberg, CNBC and more. .
  • Correction to the Mike Milken article: Michael Milken did not have a "highly publicized trial." There was no trial at all. A settlement of his case was negotiated.


 

ÈSUCCESS SECRETS OF CEOs:

Dr. Richard Sandor, Chairman and founder of the Chicago Climate Exchange

Have a cup of clean air with your morning java, courtesy of Dr. Richard Sandor, the Chairman and founder of the Chicago Climate Exchange. Dr. Sandor has convinced Ford, Dupont and thirteen other corporations to voluntarily reduce greenhouse gas emissions and to reforest Brazil. He’s a visionary with a plan to improve our WORLD, ONE BREATHE and ONE TREE AT A TIME. Interview by N.W. Pace, founder of the Women’s Investment Network

Our world is changing and the pictures that prove it are startling. In 1890, the state of Parana, Brazil was covered in rain forests. By 1997, the rainforests had almost all disappeared. In March of 2002, Antarctica lost an ice sheet bigger than the size of Rhode Island (source: NY Times). Steven Chu, a Nobel laureate in physics and the Chair of the Department of Physics at Stanford, says, "Over the last 44 years, the amount of CO2 in the atmosphere has increased dramatically. CO2 has just done a spike, which we have never seen in the last half a million years. We know that CO2 is a green house gas... We don’t know what is going to happen… The polar caps are melting… People are talking about a passage to Asia through Canada because that ice is now melting.. Bangladesh [could] go underwater.. There are a lot of unknowns."



The United States is by far the biggest contributor to greenhouse gas emissions, generating 25% of the annual global CO2 emissions worldwide, 6.5 billion tons of the 26 billion tons (source: Energy Information Association: Dept. of Energy). Electric generation sources annually emit more than 2 billion tons. Transportation is the other top emissions offender. The Kyoto Protocol, which President Bush refused to sign, required nations to commit to reducing emissions to 5% below the 1990 levels by the year 2012. Without mandatory reductions, the Pew Center on Global Climate Change, estimates that the U.S. emissions of greenhouse gases will GROW by 12% by 2012. Will Bangladesh fall into the sea before the world wakes up?

Think that American business is just carrying on as usual until regulations force them to change their ways? Think again! Dr. Richard Sandor, the Chairman and founder of the Chicago Climate Exchange, has convinced fifteen of the leading international corporations and the City of Chicago to sign onto the Chicago Climate Exchange’s voluntary, but binding commitment to reduce greenhouse gas emissions by 1% below baseline for 2003-2006, and by 4% below baseline by 2006. He’s in talks with 80 other corporations, as well. How did Dr. Sandor succeed where the Kyoto Protocol failed, what are carbon rights and how do you commoditize and price natural resources? Read WIN’s interview with Dr. Sandor to learn how founders get innovative, untested ideas--like creating markets to protect natural resources--off the ground.

(WIN Note: The 15 Founding and Charter Members of the Chicago Climate Exchange are: American Electric Power, AEP, Baxter International Inc., the City of Chicago, DuPont, Equity Office Properties Trust, Ford Motor Company, International Paper, Manitoba Hydro, MeadWestvaco Corporation, Motorola, Inc., Roanoke Electric Steel Corporation, STMicroelectronics, Stora Enso North America, Temple-Inland Inc. and Waste Management, Inc.)


N.W. Pace—Americans see startling photos of deforestation and melting ice sheets, yet so many of us continue with old habits. What does it take to convince consumers and companies to give up a little comfort now for the sake of our children?

Sandor-- What kind, if any discomfort, results from lower greenhouse gas emissions? Is it possible to have a net gain? We are in the business of trying to develop financial institutions and infrastructure to deal with pricing carbon. The debate can’t be brought to an adequate conclusion until we know what the price of carbon is. We’re here to inform the debate more than anything else. Rather than, basically, hypothesize or build models, we really need to be Orville or Wilbur Wright. We need this thing to fly for 56 seconds to prove that you can use the price system to effectively allocate air, water, etc. That’s the part of the debate that we’re participating in.

N.W. Pace--Are the technology and development needed to reduce emissions prohibitively expensive for companies, particularly now, when so many corporations are suffering? How do you tempt cost-cutting corporations to sign on? Are the 15 Founding and Charter Members signing on for altruistic or commercial reasons?

Sandor--I think they’re signing on for both of those reasons. They’re signing on because, as one of the companies said it, "We really want to learn about energy efficiency and carbon pricing and how they’re related." When asked, what side of the debate he was going to be on, he justifiably answered, "It depends on what the price is." It depends upon the company’s abilities to learn and what incentives are provided. We’ve got to paint the picture. Another motivation is that corporations see a trend among their shareholders. Over $2 trillion is environmentally screened in the U.S. capital markets. There’s a school of thought that companies have a 1-2% "sustainability" premium in their stock price. There seems to be customer demand on that side. Some people may be able to be low-cost providers of carbon credits. Another facet of the issue is a desire to participate in the policy debate, to learn what kinds of things should be included in the trading systems, and what form that debate takes. [Corporations] want to have an opinion that is based upon experience and data, and to advocate their positions with solid information. And a very important reason is that pro-active action on climate change is being perceived as the right thing to do. There is growing scientific evidence suggesting there is a significant problem, and they want to be seen to be on the right side of the issue. There are also threats to shareholder value in the form of growing demand for corporate disclosure on climate change action, shareholder resolutions and increased liability. You have risks and rewards driving the process, as well as people believing in the right thing. So, the primary incentives are:

    1. Increased shareholder value and demand from stakeholders;
    2. Threat to shareholder values; and
    3. The desire to be on the right side of an issue with potential global implications.

N.W. Pace--Your company literature quotes the Economist as projecting that "carbon credits" will have an annual trading volume of $60 billion to $1 trillion? What is a carbon credit? Please explain how these credits will be traded, and when those projected numbers will become a reality?

Sandor---A carbon credit is an allowance. This is going to be a system of allowance and offsets. Like the Sulfur Dioxide trading program, you would be allowed to emit a certain amount, then you would have a targeted reduction. Let’s say it was a million tons, and you promised to get it down to 990,000 tons. If you knock it down to 980,000, you have 10,000 allowances or credits. Those extra allowances can be sold to somebody that hasn’t met their commitment. The result of this will be that the people who can cut most efficiently will do so. They’re incentivized to do so because they can sell their excess cuts. Those people who can’t are going to buy them. That will be the cheaper cost to society of reaching the lower level systematically.

N.W. Pace--What lessons do you draw from the U.K., Denmark, Massachusetts and New Hampshire’s attempts to implement their own greenhouse gas markets? Just how is the Chicago Claim Exchange poised to address the problems of environmental pollutants BETTER than the public sector?

Sandor--We believe in free markets, and we believe that the government shouldn’t be in the chip, semiconductors or financial exchange business. The right comparison is that this is a voluntary approach. We’re multi-sector. None of the other emerging carbon markets has the involvement of the agriculture or forestry sectors. We’re multi-national. It’s apples and oranges. We have looked at these markets, and there are lessons to be learned from them. This is just one more evolutionary step to a full-scale market.

N.W. Pace-- Just how does the Chicago Climate Exchange bring sustainable farming and forestry practices into the equation? What are your plans for Brazil, and what other areas globally do you believe are ripe for replanting?

Sandor--The other systems only allow you to buy or sell credits that come from emission reductions elsewhere in the system. We allow offsetting behavior. For example, if you are a utility, you can reduce net emission in your entity by doing offsetting behavior, such as planting trees or changing soil practices. In a hypothetical example, you can eliminate a million tons out of the smokestacks, or you can sequester 20 million by bringing in carbon sequestration from reforestation. Agriculture and forestry--we think that these are beneficial effects to society, in addition to the carbon in the trees, wetlands, etc., in the form of improved soil and water quality.

N.W. Pace--Describe the reforestation deal that you coordinated with the Montana Indian Bureau, how it works and what the results so far indicate.

Sandor—This was a deal coordinated by our predecessor firm--Environmental Financial Products. It’s written up in the Missoulian, a Montana paper.   We were engaged by the Salish and Kootenai tribes. They had lost some forest area to fires. We represented them and we sold the future carbon that would come from reforesting parts of their land. They took the proceeds and bought seedlings.  The buyer was a European firm that wanted to own carbon credits.  It was a novel, cross-border trade.

(WIN Note: The purchase of "greenhouse gas emissions offsets," aka reforestation, was a coordinated effort between Dr. Sandor, then Chairman of Sustainable Forestry Management, the Confederated Salish and Kootenai Tribes of Montana and the Montana Carbon Offset Coalition. Mr. Tom Corse, Supervisory Forester for the Montana Tribes was pleased to be part of the "win-win" deal, saying, "This first project will set the stage for a process that will help fund chronically under-funded tribal reforestation projects…and start the ball rolling on market-based solutions to global warming.")

N.W. Pace--The fifteen companies that make up the Founding and Charter members of Chicago Climate Exchange have carbon dioxide emissions of 275 million tons annually, which is half of the annual CO2 emissions of the U.K. Is the commitment that they’ve signed, binding them to reduce emissions by 4% by 2006, enough?

Sandor--Again the purpose of this is a pilot program. It’s a demonstration project. The job is to build the institutions. It’s like saying to the Wright Brothers, "You only flew for 56 seconds. You couldn’t even carry mail on that plane, so what good is it?" We want to build the institutions. Markets are like personal computers. What Steven Jobs had in the garage in Berkeley was a very rough copy of what you have today. Financial innovation is like industrial innovation. It occurs with a big idea and then subsequent refinements. We hope to prove that it will fly. You can build the banking, verification, monitoring, protocol, and prove that the system works and will evolve over time.

N.W. Pace--Julie Deardorff of the Chicago Tribune characterized this voluntary program, saying that companies "swap the right to pollute." According to Frank O’Donnell of the Clean Air Trust, the cap and trade program you designed to reduce acid rain (sulfur dioxide) reduced emissions nationwide by +30% from 1990 levels, which, in our estimation, is worthy of note. However, in certain states, like Southern California, New Jersey and Michigan, the emissions increased and were a threat to local health. What do you say to naysayers who believe the CO2 program will have the same affect of overburdening some local communities?

Sandor--It’s called global warming, and so Michigan doesn’t warm any more or less. When you put up a ton of carbon, it doesn’t matter where you emit it. It has a global impact. Carbon dioxide is a global pollutant, whereas sulfur dioxide is a local pollutant. The argument isn’t relevant there, but with regards to sulfur dioxide, it’s a reasonable concern. Under the Clean Air Act of 1990, states can have local ambient air standard. New York is now tightening up. States can have prevailing law that may have been missed by the national program.

 

If you have more questions about this novel new program, how it works or which additional corporations Dr. Sandor is trying to sign up, the Women's Investment Network is hosting an online chat with Dr. Richard Sandor. Chairman and Founder of the Chicago Climate Exchange on Wednesday, June 11, 2003 from 8:45-9:15 a.m. (PST).

Will Dr. Sandor convince most of the 80 corporations that he’s in contact with to sign on to his novel greenhouse gas emissions Exchange, save the world and win a Nobel prize to boot? Will Americans catch on to the hybrid craze, started by Cameron Diaz, Harrison Ford, Susan Saradon and Robin Williams, who showed up at the Oscars this year in their new Toyota Prius? You know that your gas-guzzler is so last year, when Ford has three cars on the EPA’s Top Ten Green Cars list!

È WINners Circle!
In praise of the fifteen companies that are leading the U.S. in voluntary emissions reduction. Can you believe that Ford and DuPont are two of the 15 innovative trendsetters who are Charter and Founding members of the Chicago Climate Exchange? See below for the great fifteen who have signed on to not only reduce carbon dioxide emissions, but to also reforest areas, like Brazil.

American Electric Power
Baxter International Inc.
the City of Chicago
DuPont
Equity Office Properties Trust
Ford Motor Company
International Paper
Manitoba Hydro
MeadWestvaco Corporation
Motorola, Inc.
Roanoke Electric Steel Corporation
ST Microelectronics
Stora Enso North America
Temple-Inland Inc.
Waste Management, Inc.

È WIN 10: LEAN, GREEN & WICKEDLY STYLISHÉ

Good news for socialites across the nation. If your environmental consciousness ends at your ego, the BMW 325i is 90% cleaner than the average 2003 new automobile. Get the skinny on the new eco-friendly cars you’ll love to be seen in…

The BMW 325i, along with models made by Ford, Honda, Nissan, Toyota, Volkswagen and Volvo, qualifies for the California Partial Zero Emissions Vehicle (PZEV) credit. You might be surprised at just how hip being eco-friendly can be! See below for the makes and models receiving the EPA’s top score for clean and green. For a complete list of the EPA’s Green Vehicles, go to: http://www.epa.gov/greenvehicles/all-rank-03.htm.

As a bonus, WIN is also including a few additional tips on reducing pollution, one person at a time. With just a little extra effort and a few easy, important choices, each of us can effectively improve the air we breathe, the water we drink and the food we depend upon.

  1. BUY AN ELECTRIC CAR. You’re not only helping the environment, but if you buy an alternative-fuel car, you can apply for a permit to drive in the carpool lane (at least in California, check the Air Resources Board in your state) AND park in prime designated parking spaces! Hybrids, like Honda Insight and the Toyota Prius, don’t qualify for the carpool lane, but they are great for the environment. For a list of vehicles that do qualify and a link to the on-line application, go to: http://www.arb.ca.gov/msprog/carpool/carpool.htm
  2. BUY A NEW BEEMER 325i (or Ford, Honda, Nissan, Toyota, Volkswagen or Volvo). Cars by these manufacturers were rated tops by the EPA in terms of green, and qualify for the California Partial Zero Emissions Vehicle (PZEV) credit. For more information on PZEV vehicles, go to: http://www.arb.ca.gov/msprog/ccbg/2003pc.htm
  3. Top 13 Green Vehicles: BMW 325 ci, BMW 325i, Ford Focus, Hyundai Elantra, Honda Insight, Honda Civic Hybrid, Honda Civic and Honda Accord. Nissan Sentra, Toyota Prius & Toyota RAV4EV, Volvo S60 & Volvo V70. (WIN Note: Volvo cars are now manufactured by Ford.)
  4. DON’T TOSS THE TELE! Old televisions, computers, cell phones, VCRs, DVDs and other electronic devices leech lead, chromium, and other materials that are not eco-friendly into the soil. Almost all of the components of electronic devices are recyclable (from the plastic, metal and wiring to the CRT glass and monitors).

    Options:
    1. Donate! Your old TV, computer or cell phone might be someone else’s upgrade! You’d be surprised how starved public schools are for good electronics equipment. Likewise, you might have a friend, a niece or nephew, or an employee in need.
    2. Recycling offers cash back for your used electronic device! Best Buy, Dell, Epson, Hewlett Packard, Gateway and Sony all have electronics recycling programs. You may even get a small cash rebate for trading your old device in for the new one! Go to the following link for access to their respective web-sites: http://www.ciwmb.ca.gov/Electronics/Recovery/
  5. STOP SMOKING INSIDE (and don’t let your friends do it either). As Douglas Durst pointed out in his December 2002 interview with the Women’s Investment Network, " It doesn't just help clean up the air in the buildings. The smoke makes things dirty. It makes it more expensive to clean." Cleaning supplies contain toxic chemicals, which leech back into our water and soil. If you still need to smoke (and give your hard-earned money to tobacco companies), at least do it outside.
  6. CHOOSE EMAIL and electronic delivery when possible and save countless trees! (You can save your documents to ZIP DISCS for record keeping…) When you must print, consider printing and/or photocopying on both sides of the paper.
  7. TURN OFF THE LIGHTS when you leave a room. Electricity generation is one of the largest contributors of carbon dioxide in the atmosphere.
  8. REDUCE/ REUSE/ RECYCLE. We all do this, right?
  9. TURN OFF THE WATER WHILE YOU BRUSH. INSTALL LOW-FLOW showerheads and toilets. While most of us ADORE a nice hot shower, how about a short, stimulating shot of warm water every now and again. Think of the GALLONS of water that you’ll save and the amount of electricity that you’ve conserved.
  10. Just think about a 4% reduction in your personal pollution habits. Corporations are not the only ones emitting greenhouse gases. They supply the products that we, as consumers, use. As Dr. Sandor says, "We’re the biggest emitter in the world by far, so even a small percentage change becomes significant." (The Economist, 10.18.2002)

È Stock Report Card: Car manufacturers

Highlighting those companies that fare better on the Green, according to the Environmental Protection Agency, alongside the facts and figures of the companies' fiscal health.

This week, it's just the facts, ma'am, laid out side by side. General Motors and Ford are seriously in debt, but both are actively engaged in turnaround plans, including greener vehicles. (Are they trying to catch up to Honda and Toyota's obvious lead in that area?) We weren't that surprised to learn that Hyundai, Nissan Sentra and Toyota were green, but BMW's 325i is also rated as 90% more fuel efficient and eco-friendly than most 2003 models, as are two Volvo models (Volvo autos are now manufactured by Ford). Though the American car market is suffering, many car companies are positioning themselves in China, a car market that is predicted by some to grow at a "blistering" pace (especially once SARS abates). Car manufacturing has truly gone global, and green to boot! Click here for a side-by-side comparison of the companies.

È Do you have the stomach for success?

Do you have the stomach for success? Wonder how some CEOs succeed where others stumble? Their strategies will undoubtedly inspire you, but you may be surprised at the hardships these executives have endured to achieve what they dared to dream.

1. When Door-to-Door didn't work, she hit up American ExpressÉ

Iris Burnett, the co-founder and board member of Count Me In for Women's Economic Independence, a national non-profit organization that offers small business loans to qualified female entrepreneurs, went door to door, trying to collect $5.00 a person, in hopes of building a community of women who would want to support female business owners. "We didn't have as great as success with that campaign as we hoped to, but corporations came in with funding. American Express was our first corporate sponsor. They really got it." From WIN e-zine, issue #14, 10.14.2002.

NOTABLE QUOTE: "An American woman might talk about horrible genital mutilation is, but the African woman's perspective is that women in the U.S. mutilate their bodies by choiceÑwith breast implants." Iris Burnett

Count Me In offers small business loans to qualified female entrepreneurs. For more information, go to: www.count-me-in.org. Iris Burnett has been instrumental in many human rights issues. She helped to create the Emmy and CableACE award winning Erase the Hate campaign, the White House Women's Office and the President's Interagency Council for Women (under President Clinton). She was also the U.S. representative at the U.N. Commission on the Status of Women and the U.N.'s Fourth World Conference on Women in Beijing, where 35,000 women braved nonstop rain in the middle of nowhere to share experiences.

2. A Dream Nine Years in the MakingÉ

When Kay Koplovitz, the founder of USA Networks, had the idea for expanding programming beyond what was available on the broadcast networks, back in 1968, satellites hadn't yet been approved for commercial use. She honed her idea and knowledge of the industry for the next nine years by working in media. In 1977, just two years after satellites were approved for commercial use, Ms. Koplovitz launched Madison Square Garden Sports. "Entrepreneurship takes focus, drive and persistence," according to Kay Koplovitz. Waiting nine years to launch her dream was peanuts compared to the next entrepreneurial lesson Kay would learn about ownership. When USA Networks was sold in 1997 for $4.5 billion, guess what her take was? Zero. Zippo. Nada. While reports today of executive excess are abundant, Ms. Koplovitz received no equity in the company that she founded and built. Her book, Bold Women, Big Ideas: Learning to Play the High-Risk Entrepreneurial Game, teaches you the lesson no entrepreneur wants to learn firsthand, and receives a 5-star rating from the readers on Amazon. It's a must read for any woman who aspires to owning her own company. Click here to check it out.

Ms. Koplovitz's current project is Broadway Television Networks, which brings the energy of New York City theatre to television, video and DVD. (Great holiday gift ideas!) See below for the product that is currently available, and to order, go to: http://www.broadwayonline.com/shopping/products.asp .

Videos and DVDs that are currently available:

Smokey Joe's Cafe received a Grammy Award as well as seven Tony Award® nominations, including one for "Best Musical," and is the longest running musical revue in Broadway history. Smokey Joe's Café's Tony Award® nominated cast performs 4O songs penned by the legendary songwriting team of Jerry Leiber and Mike Stoller, including "Jailhouse Rock," "Hound Dog,""Treat Me Nice," "Stand By Me," "Spanish Harlem" and "On Broadway".

Jekyll & Hyde was the Broadway debut of international television star David Hasselhoff. This DVD is a must-have for any television junkie, to archive next to the David Soul album. Hey, if Hutch can sing, Hasselhoff can act, right?

Putting It Together is a celebration of award-winning composer/lyricist Stephen Sondheim. The musical review features Carol Burnett, George Hearn, Bronson Pinchot and the West End's very own Ruthie Henshall and John Barrowman. Songs featured are from: "A Funny Thing Happened On The Way to the Forum", "Anyone Can Whistle," "Company," "Follies," "A Little Night Music" and "Sweeney Todd," to name but a few.

NOTABLE QUOTE: "While in people's minds there may be a monster lurking behind every balance sheet, the preponderance of businesses have operated in the appropriate manner for their shareholders." Kay Koplovitz

3. Everyone said there wasn't a marketÉ

Her card reads, Lisa Berman, Visionary proprietor. Sounds a little arrogant? Well, you try fusing contemporary art and jewelry when everyone is telling you you're nuts, and launching a gallery when you have to beg artists to be in your shows! Four years later and Lisa Berman, founder and CEO of Sculpture to Wear, "can't imagine doing anything else." Once she "had to beg eight artists" to let her feature them. Now she personally selects award-winning artists to be featured from a worldwide talent pool. The jewelry that her gallery features are unique pieces of wearable art, unlike anything you have ever dreamed of owning or wearing. To be amazed, go to: www.sculpturetowear.com. From WIN e-zine #17, 11.4.2002.

NOTABLE QUOTE: "My work is truly a party on the playground of my soul." Lisa Berman

4. And then there was the great NASDAQ crashÉ

Gary Kennedy adheres to the Warren Buffett idea that investing in what you know pays off because "focus creates interest and applied interest increases knowledge." What Gary knows and loves, however, is technology! Acckkk!! For the past three years, until recently, technology was the curse word of investing! While Gary Kennedy admits that his choices might not appear to be the best, based upon looking at his 2002 portfolio, he is convinced that, "over time, knowledge is the most important criteria a potential investor has, and that although economic cycles may seem drastic, if someone invests in what they truly know, they will end up with profile gains." From WIN e-zine #18, 11.11.2002.

NOTABLE QUOTE: "The fact that Home Depot stores are always packed, that they have taken service to a new level, and that they are building many new stores should be more interesting to an investor than a stock analyst's report, particularly if the analyst works for Home Depot's investment banker." Gary Kennedy

5. Burning through $38 million a quarterÉ

Opsware, Inc. started out as Loudcloud, a competitor of Electronic Data Systems with some very high-profile clients, including CNN and Nike. On the strength of their last company, their management, their technology team and Marc Andreessen's name, LoudCloud managed, with much difficulty, to launch a lackluster IPO in March of 2001 with a share price of $6.00/share. Just a year and a half later, by October 8, 2002, the company was trading at 52 cents/share, was in danger of being delisted, and was burning through cash to the tune of $38 million per quarter. What did CEO Ben Horowitz do? He negotiated a deal to not only sell off the cash-bleeding portion of the business to his main competitor, EDS, for over $63.5 million, but pulled in an additional $52 million, in a guaranteed contract for the automated software. Now cash rich, and trading at $3.87/share, Ben is looking to the future when Opsware is a huge success and he can brag that the "whole thingÑselling the business to EDS and becoming a software companyÑ[was] planned." For more information about Opsware, go to: www.opsware.com. From WIN e-zine #20, 3.12.2003.

NOTABLE QUOTE: "Management is hard to learn in school because most of the people teaching haven't managed a fruit standÉ It's kind of like playing football. You can read all the books on it, but it's not much use unless you actually throw the football." Ben Horowitz

6. Sometimes it's the most obviousÉ

Daniel Laikin, the COO of National Lampoon, a company with 93% name recognition, actually had to change the name and symbol of his publicly-traded company back to National Lampoon (NLPN), from J Two Communications (JTWO), but first he had to gain enough power in the company to do so. JTWO's namesake, who happened to be the president of the company, was quite happy with the existing company name and symbol. The wrestle for control in the executive suite resulted in a delisting from NASDAQ (missed shareholder meetings and concerns over the independence of the board and audit committees) in 2002. NLPN is still trading off the boards, though NLPN's COO, Daniel Laikin, has placed relisting as a priority, and is working to resolve NASDAQ's concerns. In the meantime, Mr. Laikin and his team have purchased a college network, inked deals for two new television movies, featured stars like Shaq and Tara Reid in a rock Ôn roll cooking show and launched a new game show (to begin airing on the Game Show Network on June 15, 2003). National Lampoon's new Funny Money game show, features a fresh approach to stand-up comedy and a chance for contestants to transform bazillions of funny money into real currency. For more information on National Lampoon, go to: http://www.nationallampoon.com. From WIN e-zine, issue 11, 9.23.02.

NOTABLE QUOTE: "We're not really looking for the company to be profitable over the next twelve months. That's not really our goal. Our goal is rebuilding the brand. We expect our top-line revenue to grow substantially." Daniel Laikin

È Girl's Guide to the Market: Lose Weight FAST!

In stocks, losing is disastrous! Avoid the COMMON INVESTMENT MISTAKES that are made EVERYDAY! These ultra-high risk are like mirages. They may lure many an unsuspecting investor to a dry, disastrous end. (Don't worry, friends, this article will not plod through desperation and despair forever. At the end, treats! Where to find the real goods.)

  1. Trading on Analyst Recommendations. If you thought Jack Grubman and Henry Blodget were just flukes, guess again. Researchers at the University of California and Stanford found that, in the year 2000, the most highly rated stocks had a -31% return. Those least favored soared an annualized 49%. This study examined 40,000 stock recommendations from 213 brokerages. The analysts may not all be criminals, but they are definitely not fortune-tellers!
  2. Bankruptcy Buying. Think buying Kmart at seven cents a share when you are POSITIVE that they will come out of bankruptcy is a BRILLIANT idea? Guess again. The reorganization plan (that was filed on 4.14.03) called for the CANCELLATION of the existing common stock, with holders thereof receiving NO distribution. (Translation: your stock becomes toilet paper). Common stock shareholders are commonly wiped out during bankruptcy because they are last on the priority list with claims against the company's assets. Global Crossing shareholders and employees had their assets completely wiped out after the bankruptcy filing in January 2002, as did Enron, U.S. Airways & World Com shareholders.


  3. Free Fat. Fat may taste good, but too much of that fat good thing is definitely horrible for your health, just as buying in after a company has fattened up its share price can be catastrophic. It's very tempting to buy stock AFTER shareholders have earned seven thousand times their investment, but that is called CHASING MONEY. There were people, lots of them, who bought AOL Time Warner and Priceline at peak share prices, near $90, in 2000, thinking that heavenly heights could last forever. Too bad losing weight isn't as easy as losing money.

  4. Hot Tips on the Bulletin Boards. Pump and Dump schemes abound on the bulletin boards, where shareholders (and scam artists) can ANONYMOUSLY talk up stocks for their own gain. When the story sounds UNBELIEVABLE and you think you have to ACT NOW to get it before the rest of the world finds out, you could save yourself a big NIGHTMARE by peeking under the corporate financial sheets. Boots and Coots, a darling of the BBs last month, on rumors that they would get the subcontract to put out oil fires in Iraq, yo-yoed from a low of six cents to a high of two dollars and fifty-five cents. While volume spiked with manic investors trying to buy in quickly before the BOOM, Prudential SOLD 12 million shares at 80 cents per on 3.28.03, anticipating the BUST. Bottom line: Boots and Coots was on the brink of Chapter 11, heavily burdened with debt and payments that it had ALREADY missed making. WEL got the subcontract from Kellogg Brown & Root, but, though the current management is trying to reorganize debt and expand their markets, the windfall contract to rebuild Iraq may not be enough to put out the company's own internal fire.

  5. Headlines. Headlines are usually not written by the writers who pen the story. They are written to catch your eye. If you don't read the fine print, you could be missing the most important information. Before United declared bankruptcy, investors gobbled up shares of UAL shares on the headline that United had received $1 billion in promised concessions from its unions. A key consideration was hidden on the inside pages, howeverÑthat the Federal Loan Guarantee required $1.5 Billion in union labor concessions. The Loan Guarantee application was subsequently rejected and United Airlines was forced into Chapter 11 only a few weeks after that headline appeared in the New York Times, one of the nation's most respected news sources. The headlines of less respected news sources can be even further from the truth found in the fine print.

  6. Press Releases. Press releases are written by professional writers, who are employed by the company that they are writing about. Additionally, press releases are not held to the same standards as the official corporate filings that public companies must make with the SEC. A company can talk about an increase in revenue without ever mentioning that increased revenues don't mean the company is PROFITABLE or that, due to cash constraints, the company's fiscal health is on the ropes. American Technology Corporation's stock fell on 12.31.02 on news that independent auditors had "substantial doubt" about their future. The company had been losing money for the last three operating years, and, according to Bloomberg News 12.27.02, needed to raise more capital to meet operation costs. Elwood Norris, CEO, made no mention of the auditors' concerns or the capital crunch in his holiday letter to shareholders, however. Instead, he wrote that ATCO was experiencing its 3rd straight quarter of revenue growth, and that the convertible subordinated promissory notes that were due on 12.31.02 had been extended to a repay date of 12.31.03.


  7. Relying too heavily upon the advice of your broker. If your broker has handled your account beautifully through the market downturns, and/or over the past few decades, just skip this one. You're lucky to have a partner who cares about your future and has the knowledge and expertise to get you there. Many investors don't understand that the broker is the entry-level position in the business, and place far too much faith in their knowledge, morals and information. Most brokerages, especially over the last three years, have extremely high broker turnover. Some brokers are hocking stocks based upon sales commission incentives. Finally, brokers don't have to have a college education or experience in the field (although they do have to pass a series of tests.)
  8. Buy and Hold. Most financial professionals, especially today, prefer the mantra, "Buy low, sell high." Day trading may not be your bag, but senior financial planners recommend at least re-examining your stocks routinely (once a quarter), or at specific buy/sell target points. Enron and Global Crossing are bankrupt. AT&T, Tyco, AOL Time Warner and Ford Motor Company are trading at historic lows. Buy and hold strategies, or ignoring your portfolio, resulted in monumental portfolio losses over the last three years.


    9.
  9. ROULETTE: Placing all your chips on one sector. Even the most stable stock is considered to be high-risk. Additionally, all markets are cyclical. Lynn Newman, CFP, warns that if everything in your portfolio is doing poorly, you're not well diversified. Conversely, if everything is going great, look out!!


  10. If you can't blindly trust analysts, or brokers, or long-term strategies, or headlines, or hot tips, or press releases, or past winners, just what is left to judge a stock by? PLENTY! If you love the product or service, that's a good start. Follow that passion up with information on market data, reliable news sources (read the entire article) and the observations and knowledge of people whom you know and trust. In the WIN newsletter #30, we spelled out William J. O'Neil's system for picking market winners (CANSLIM). Newsletter #29 featured WIN's own Winsider® Stock Report Card and a HOW TO GUIDE. On-line, WIN features the Member Mosaic®, another trademarked stock research strategy. Click on Member Mosaic, and learn while you play!

Please note: the NataliePace.com does not act or operate like a broker. We are a media and information center. 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/or consult an experienced, reputable financial professional before buying or selling any stock.

È MONEY ISN'T EVERYTHING, but IT HELPS TO FUND SOME VERY BASIC NEEDS.

Many arts programs, such as the California Poets in the Schools poetry enrichment program, were the first to go when the state and local education budgets were squeezed. How can you help? Donations keep these programs alive, and they're also tax deductible.

Congratulations to Santa Monica High School sophomore, Julian Turner, whose poem has been selected for publication in the 2003 CPITS Student Poetry Anthology. Julian believes the California Poets in the Schools program not only "teaches you how to become a better writer, but it'll make you like to write more!" Julian's SAMOHI English teacher, Anoushka Franke, found the poetry enrichment program especially valuable because not only did it stimulate her more ambitious students, such as Julian, but inspired some of her most reluctant writers as well. Unfortunately, due to budget constraints in the arts and in education, Santa Monica schools, like Santa Monica High School, John Adams and Lincoln Middle School, were forced to cut the poetry enrichment program from their curriculum.

"I think this world would be unlivable without art." Steven Soderbergh, Academy Award Acceptance speech, March 25, 2001

How can you help? Contributions are tax deductible. California Poets in the Schools serves over 42,000 public school students in California. They raise $450,000 annually. 87% of the funds go directly to the students (classes), with only 13% spent on administrative costs. This is one of the most efficient operating percentages in the nonprofit world. Contact CPITS at:

CALIFORNIA POETS IN THE SCHOOLS
on the web at: www.cpits.org
Mail Address:
870 Market Street, Suite #1148
San Francisco, CA 94102

Phone: 415.399-1565
Fax: 415.399-1566
Toll Free in CA: 877-274-8764 (877-CPITS'64)

* * * * * * * * * * * * * * * * * * * * * * * * * * * *

Watch how an apple rots.
It looks more and more like the moon.

-- Josh Tshihamba, First Grade
MacGregor Primary, Albany, California
Judith Tannenbaum, poet-teacher
Published in CPITS 2000 Statewide Anthology, 100 Parades.

È Hip Happenings: Gain While You Sleep!

Two events designed to jumpstart your personal and business profitability, and one to promote a better world.

1. FREE TO Women's INVESTMENT NETWORK MEMBERS: The Women's Investment Network is hosting an online chat with Dr. Richard Sandor. Chairman and Founder of the Chicago Climate Exchange on Wednesday, June 11, 2003 from 8:45-9:15 a.m. (PST). Everything you ever wanted to know about the nation's first voluntary emissions reduction program, designed to clean up our water, air and trees. Be sure to log in early. You'll need your password and user i.d. If you've forgotten them, you can use the following: USER ID: Angel PASSWORD: Investor.

2. NEW Entrepreneurs: Media Exposure Seminar, in Santa Monica, California, on Thursday night, June 5th, from 6:30 to 9:30 p.m.

Learn how to generate media exposure, how to become a repeat guest, what producers care about (and what they don't) and the pros and cons of hiring a publicist vs. pitching yourself. $28 Members Pre-Paid / $33 at the door. Non-members are welcome, but pay slightly extra. For more information, go to: www.newentrepreneurs.com and click on Meetings.

3.GAIN WHILE YOU SLEEP! Most retirement plans are 401ks, and most 401ks lost over half of their value in the last three years. What you don't know about stocks could destroy your future.  N. Wynne Pace's seminar gives you the information you need to make more informed investment choices. If you spend more time selecting fruit than stocks, you might end up with lemons! Learn to gain while you sleep, in N.W. Pace's "Women's Guide to Getting Rich Through the Stock Market." Monday, June 16, in Los Angeles, from 6:45-9:30 p.m. Price ranges from $39-$49, with best deals available online at www.learningannex.com. Call the Learning Annex at 310.478.6677 to register by phone.

Seminar participants will not only learn, but practice, successful investment strategies, including:

  • How to use the facts, wisdom and success strategies of the most successful stock pickers ever.
  • Why Headlines and Hot Tips suck
  • How to Find Facts Fast
  • What to look for in a Broker, and why you should listen to your own instincts.
  • Strategies for buying low and Selling High.
  • How to Grades Companies in a Stock Report Card!
  • Turning Play Money into a Portfolio

"With every sentence she educates, motivates, and inspires; making an once-impossible goal seem not only feasible but in reach." Jane Kennedy, Personal Portfolio Manager and Stay-at-home Mom

"WIN's investment style and the Member Mosaic are exciting concepts that, if used properly, help individual investors better discern the health of large corporations." Gary Kennedy, entrepreneur, former president of Oracle USA."

È Companies in the News...

Forget about headlines (unless you're a day-trader who uses the daily fluctuations for profit taking). The facts are found in the fine print. Who has time to read it all? We do! Here are the highlights from the New York Times, Money Central, Reuters, Bloomberg, CNBC and more.

Boots and Coots (WEL) has generated a FAQs page for investors to answer many ongoing concerns. The answer to a question on WEL's future reads, "Until we remedy our liquidity issues, the potential for bankruptcy exists, although we are pursuing alternatives to avoid a bankruptcy filing." For more information, go to: http://www.bootsandcoots.com/faq.htm.

Genentech (DNA). The biotech sector spiked in share price on Friday, 5.23.03, on rumors that Genentech might acquire IDEC Pharmaceuticals, a company that it partners with on many drugs. (NYT 5.26.03)

Jet Blue has released their 2003 Proxy Statement, which lists the salaries of their executives. WIN decided to do a side-by-side comparison with JBLU's competition, Southwest, and another ailing airline, AmericanÉ

Company/Title/ Name

2002 Salary

2002 Bonus

All Other Compensation

Stock Value

Jet Blue CEO

David Neeleman

200,000

90,000

37,279

$21,507,930

796,590 shares + 7.7% of company

Jet Blue President & COO

200,000

90,000

39,705

$3,239,190

119,970 shares

+1.2% of company

Southwest CEO

James F. Parker

305,241

187,000

54,000

705,675 shares

*American Airlines

Donald Carty (former CEO)

$1.3 million (in 2001)

$6 million

(in 2001)

Unknown

Unknown

(source: Company proxy statements)

*American Airlines' former CEO Donald Carty came under so much flack for not disclosing the executive retention bonuses and $41 million protected executive pension plan that he is no longer the CEO of AMR, the parent corporation of American Airlines. Carty's 2001 compensation was reported by Jon Talton of the Arizona Republic. WIN could not verify the amount. Executive compensation was not included in American's annual 10-K report, with the following disclaimer printed in lieu of numbers. "Omitted under the reduced disclosure format pursuant to General Instruction I(2)(c) of Form 10-K."

XM Satellite Radio. Shares are up almost 500% off of the low of $3.18, at $10.00. The new, inexpensive, home version of satellite radio, SkyFi, is one of the "coolest consumer electronics item" available in store today, according to Jon Markman, CNBC commentator. New vendors include Wal-Mart, Toyota, Acura, Audi and Avis. According to Markman, XMSR is on track for sales of $85 million in 2003, up from $20 million in 2002. Don't count Sirius SR out of the game, however. Although Sirius took a serious stock price plunge to 38 cents/share this year, there have been recent announcements that the service would be installed in almost all of the 2004 models by Mercedes-Benz (a division of DaimlerChrysler), in BMW's hot new MINI Coopers, in Ford's Mustang, Thunderbird, Lincoln and Mercury lines and in Hertz rental cars. Sirius shares are now trading at $1.32/share (as of 5.23.03). Both companies are still operating with negative earnings. At the moment, XMSR appears to be in the lead, but some analysts predict that the market will split 50/50 between the two companies. Markman, a senior investment strategist and portfolio manager at Pinnacle Investment Advisors, predicts that manic price gains in satellite radio may occur, as the market heats up. (http://moneycentral.msn.com/content/P48071.asp, 5.21.03)

È Correction to the Mike Milken article:

Mike did not have a "highly publicized trial."  There was no trial at all.  A settlement of his case was negotiated.

 

VISION: To build a global community of female investors through seminars, a world-wide web-site and, ultimately, television.
GOAL: Working change: To promote successful investing and ethics in business.
MISSION: To build a global women's investment community by providing easy access to important financial news, by promoting a dialogue between members and industry professionals and by promoting ethical business practices, products and services.
PHILOSOPHY: The W.I.N. philosophy centers around five principles: Ongoing Education, Monthly Commitment, Diversified Portfolio, Ethical Business Practices, Pooled Resources.
For more information on W.I.N. contact us at info@NataliePace.com

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