Extreme Wealth

Natalie Pace

• Introduction by T Harv Eker
• Natalie Pace

Introduction by T Harv Eker

T Harv Eker: Now, we have an amazing evening, so we have a tremendous, wonderful presenter for you. But before I kind of tell you a little bit about this person, I’m gonna show a little DVD. Would that be okay?

Audience: Yes!

T Harv Eker: Alright. Tony, could you fire that up?

Natalie Pace: I think that people understand now that this is the world we live in. It’s not the end of the world. People don’t panic as much on terrorism. They don’t run out and sell their stocks. My picks are Genentech and Inamed.

Narrator: And Natalie owns both of them.

Natalie Pace: Devaluation is a great danger here but Google’s a stock you’re gonna wanna own. …about five years to take a profit. …that it was up over 20%.

Narrator: Alright, you guys are tough today.

Natalie Pace: It’s tough on me.

Narrator: Did you have hesitation about the...?

Natalie Pace: You know, once I saw the website and got the idea, I thought it was the most splendid idea ever thought of.

Narrator: First, we’re gonna go to Natalie.

Natalie Pace: This is a choppy year for day traders.

Narrator: Thank you very much.

Natalie Pace: You wanna make sure that you’re not overexposed in equities because there is…

Narrator: What’s the proper exposure right now for you?

Natalie Pace: You wanna have at least your age in a protected asset.

Narrator: For me, 29%...

Natalie Pace: Absolutely.

Natalie Pace: Thank you so much.

Narrator: Thank you as well.

T Harv Eker: So, now—hold on, hold on, hold on. There's more. It’s gonna be hard to top that, though. So she’s taken kind of the surprise out of it since now you know who it is, but here’s the thing. Natalie was the best stock picker in the world. Last year, her stock picks earned her and the rest of the people that followed advice over 85% return on their money. How many of you would like to get 85% on the stocks that you picked? How many people in the room currently get 85% on the stocks that they pick? Alright. So maybe there would be something that we could learn from Natalie. Think about that. Almost doubling the investment of all the people that followed her advice last year. As you saw it from the video, she’s been an expert presenter on multiple TV, radio shows, radio hosts. She also has her own show on Forbes.com Video Network. Absolutely tremendous presenter. Now, you know, getting 85% of the stocks, that's gotta be pretty complicated, yes? Natalie’s gonna come up. She’s gonna show you some easy, what’s the word?

Audience: Easy!

T Harv Eker: Some easy strategies for picking winning stocks and sending your investments through the roof. You guys ready for that?

Audience: Yes!

T Harv Eker: Oh, come on. You guys ready for that?

Audience: Yes!

T Harv Eker: Then let's give it up for Natalie Pace!

Natalie Pace

You’re a god. Thank you so much. Woo-hoo! Are you guys awake? Okay, why are you standing? Let's take it down. Keep standing for just a minute. This is my mantra, and I gotta tell you, when I started my business in 2002, I was really a good stock picker for my own portfolio and I kinda got dragged into it. My girlfriend said, “Teach us what you know,” and here I am later.

But this is what it started with for me, was a little simple mantra called “I am, I have, I can,” and I wanna just take a minute. You can do it fast. You can do it slow. You can do it silent. You can do it out loud. And I just wanna hear you say, “I am, I have, I can,” and then we’re gonna stop and I want you to fill in the blank. I am blank, something hugely empowering for you.

I have blank. I can blank. Just hugely empowering, exactly what you want. Okay, let's go. I am, I have, I can. I am, I have, I can. I am, I have, I can. I am, I have, I can. I am, I have, I can. I am, I have, I can. I am, I have, I can. I am, I have, I can. I am rich, I have money, I can do it. I can pick stocks. I am rich, I have money, I can do it, I have stocks, I have peach trees, I have more peaches, I can feed everybody in the whole world.

For some odd reason, and I’m gonna show you a number of charts here and you’re gonna see, there's a myth out there that stocks are dangerous. Over the long-term, stocks are the highest performing asset you can be invested in. Okay? They are not dangerous. They’re no more dangerous than real estate. Over the course of time, real estate is one of the best investments you can make. To live in a home that you own rather than rent, that's a great investment.

There's nothing to be afraid of. So when you have somebody who spits out that old myth that stocks are dangerous or they’re risky or whatever it is, that's your mantra. I want you to just bless them, put a little mental emotional wall and think “I am, I have, I can,” and then come back to some of the real goods that you’re gonna learn today.

So, stock picking is my particular expertise, but on my site I am so blessed that I get all kinds of experts writing for me. Just so you’ll know, and my mentor is a Nobel laureate, so my dreams are really coming true. Okay, average annual returns. This is over the course of 69 years. The real estate data is provided by the National Association of Realtors, a nonprofit organization, and the rest of the data is provided by Ibbotson.

So this is what the reality is. In reality, asset allocation is the ticket. Some years like 2000 to 2005, real estate is doing really well, and you wanna be involved in that. Other years like 1998 to 2000, stocks are on fire, and if you have a little bit of each of these instead of chasing returns, you are diversified so that you can actually welcome in the returns.

And when you have real estate that's gone up a lot, if you decide you wanna take some profits, that's okay. And when you have stocks in 2000 that have gone through the roof and you wanna take some profits and re-diversify, that's a good idea. So just know that the wealthiest people on the planet never invest in just one thing because that makes you vulnerable. I know really wealthy people who only invest in real estate, and the few people I know that only invest in real estate, unfortunately, have been through two bankruptcy cycles.

On stocks, the people who don’t diversify in real estate, they miss out on the beauty of getting all the equity instead of just paying for someone else to get equity. And in the United States, I know it’s different for Canadians, but in the United States, we get that added bonus that the interest is tax-deductible. So you really wanna be diversified. And bonds are a safe, relatively less risky asset class.

So the big thing to remember is that whatever your age is, that percent needs to be safe. You saw that on the video. So if you’re 29, 29% should not be invested in stocks, it should probably be in bonds or in money markets. Money markets are a fancy name for your brokerage account, the savings part of your brokerage account. Okay?

So just remember that. Percentage equal to your age should be safe. And that, my friends, is what allows you to earn stocks on steroid gains like 85%, because you’re not investing everything you own. And the key to good investing is an emotional game. I’m gonna teach you the tricks about how to pick good stocks, but you will only be a great investor if you remember “I am, I have, I can,” you follow my simple investment recipe, and you learn how to be calm, cool, collected. Okay? Is that making sense for you?

When you know that you can dunk a basketball and you can fly and hit the basket, you have a better shot at being Kobe Bryant than if you really don’t even think you can jump, right? Okay. So this is just to let you know that there—and the reason I include this is that if you have somebody who says, “Hey, I earned this return or that return, blah, blah, blah,” there's a number of independent stock rankers, and what they do is every time that I publish anything about a stock, TipsTraders.com logs it into their database and they come up with the ranking like where I am in the stock chart.

So the simplest thing that you can do if someone says, “Hey, I earned 85% gains or blah, blah, blah,” is to say, “Oh, does TipsTraders rank you or Hulbert’s Financial Digest?” And there's one other thing. You might hear, you might even see it like on Motley Fool or other stock newsletters, where they’ll say, “Oh, since 2003, we’ve had 200% gains,” or “for the last 10 years.”

Let's say they say, “For the last 10 years, we’ve had 200% gains.” We have to divide 200 by 10. Does that make sense? Okay. So that's where you get the real rate of return. So you have to kind of be a little bit wise about people that are trying to suck you in with the idea that they’re fantastic, because there's this ability to use what’s called cumulative gains, which means over the course of 10 years, versus annualized, which means every year.

So that 85% that we talked about, that was last year. That's not over the course of 10 years. That's last year. Thanks. Okay. So when I was on the panel last night, Harv said, “Well, who has one thing you can do that’ll make you a millionaire?” This is one thing, and if you have kids, this is one thing your kids should do.

Immediately, and I just say tithe. You know, Harv’s a big fan. Write the first check to yourself into your financial freedom fund. If you set that up into an IRA, an individual retirement account, and they have the same equivalent in Canada, so you are actually getting anywhere from 15% to 33% additional because you don’t have to pay capital gains. So that's my biggest tip to you is tithe to your IRA and as much as you can every single year, and let that be where you do some trading, because that is where you can do it tax-free, and that alone as you can see here, will make you a millionaire.

Even this one on the left where it takes 41 years to become a millionaire, that's with the most low-risk stocks available, low-risk mutual funds out there. You don’t even have to watch them, you can basically just allocate it with your great financial planner, and this is about what it does. This is the lowest rate of return. If you took on a slightly more aggressive approach, you’d get there faster and you’d be up to almost six million.

Okay, so let's just talk for a minute about our rate of return, and the cool thing is, this is the three-ingredient investment recipe that works for stocks, Beanie Babies, bonds, real estate, whatever it is you want to invest in, and look at what it does. And I’m telling you, it is easier than you think.

The hardest part of that investing is overthinking it, and then also being overemotional. So, having too much invested in one thing where either you run out of money and you have to liquidate or you get panicked and you liquidate so you can sleep at night. So, usually these are emotional problems that you have, not problems with the marketplace.

This is last year. I just went and listed every single pick that we had from October to May just so that you can see. So Suntech Power holdings, it’s a solar energy company out of China, doubled. MEMC Electronics, silicon provider, doubled. You’ll see a common theme here. World, Water and Solar, another solar panel that does agricultural films, tripled.

So you see a common theme here, how well alternative energy is doing. So alternative energy was the top performer on Wall Street in the first quarter and the third quarter. It feels, and I’ve heard a lot of people saying it, it feels like personal computers in the ‘80s and Internet in the late ‘90s. Now, I know everybody says, “Oh, there was a big boom,” but we had the Google IPO. We also had Opsware, which launched its IPO in 2002.

So there is, in emerging markets, even when the markets are going down, when there is something that's coming up, if you get in early and you ride out any sort of volatility, there can be tremendous upside. And this is where a good stock newsletter can help you identify emerging sectors.

So just take a look at the difference what happens. Ten percent annualized is fantastic rate of return, especially if you don’t have to worry about it. And again, remember the stocks was 10% annualized for the big ones and about 12% for the smaller companies. So that’s when you don’t even have to worry about it. If you just set up your IRA over the course of 70 years, odds are that stocks are going to do really well.

If you took a smaller portion, I say that should be your nest egg. That should be worry-free. Don’t fret about it. Don’t get too involved in it. Just tithe to it. Feed the kitty. If you take a smaller percent, I call that stocks on steroids, and it’s doing 85% return, just look at how fast. It’s almost doubling every year. Look how fast that compounds.

Again, you don’t want to do this with your entire nest egg because of the volatility. When you have higher rates of return, you have higher volatility and higher risk. With mine, I’m usually early on stuff, so a lot of times people will say, “Oh, well I bought this and then it went down a little bit.” I say, “You know, some of my best performers, we might have listed it here and then it went down here for a year, and then it went up to here.”

So you really have to be patient. You can’t be watching it and thinking, “Oh, it went down this day and oh, it went up this day.” You really have to know the full story, and that's what our newsletter and our support team tries to do and help you do, but never with your whole nest egg.

Okay, just so you know, we did pick Google at the IPO, so when you saw me on television, that was in 2004 and I was really a lone ranger out there saying buy Google now. A lot of people were saying, “Oh, it’s gonna be overvalued,” you know, this “Dutch auction,” “What are they doing? Da, da, da…” I said, “Man, this is a stock you wanna own.”

And that wasn’t based on intuition, by the way. For all the women in the audience, intuition is really complicated pattern recognition. It is not mysterious. It is not mysterious. It’s real. It’s scientific and it’s real. It’s you understanding that you have seen, smelt, felt, heard this story before and knowing that that knowledge can feed into the mosaic of understanding what you should be investing in, whether it’s stocks, Beanie Babies, real estate.

Just know that when your intuition is kind of rearing its head, that's really complicated pattern recognition. It’s something that's happened in the past similar to right now, and it’s trying to inform you. It’s trying to be wise to you.

So buy Google, and as you know, Google’s a rocketship. I think it’s a little bit hard to find an entry point on Google. And the thing about stocks when you’re picking an individual stock is that you have to consider what the stock can do and also what the markets are doing. Does that make sense? So, now I can tell, “Oh my God, this is gonna be too difficult.” Don’t worry, it’s not. It’s my job.

So with my stock newsletter, we picked this company called Taser International as our Company of the Year in 2003, and that was when unfortunately there were a lot of police officers who had fatal shootings, and it was a big deal, and a lot of the police officers wanted to start using less lethal force with people they were trying to bring in.

So my cousin, who is a police officer who orders the weaponry for his department, said, “Listen, everybody I know, all my colleagues are ordering these Taser guns. I think it’s gonna be a rocketship. And so I said, “Oh, I’ll look at it.” You know I looked at it, I interviewed the CEO, I interviewed a bunch of police officers, and I said, “Holy crap. There's orders up the yin-yang. This is gonna go through the roof, right?”

So we listed it in 2003 as our Company of the Year, and look at how the stock performed. So it was low for a year. January 2004, it’s still low, and then it starts getting on CNBC because all the orders that had happened a year before were actually showing up on their earnings reports. It went up 9000%. Okay?

So then, people say, “Oh, how do you know to sell, then?” Well, right there when we said to people, “You know what, we’re taking it off our list, it looks like there may be a few fish in Denmark on this one now.” The insiders were selling, they were having an SEC investigation, there were a lot of things that were big red flags. So the key about picking an individual stock is you do need a good buy-in point and you do need a good sell point.

So if you wanna do that yourself, that's cool. If you need help, then a good stock newsletter like mine, and I have other colleagues that do it as well, that's our job, is to help keep on top of the news and let you know when we think things may be turning.

Okay, so you know now, again, your best friend is gonna be “I am, I have, I can.” That is your best friend. And your nest egg, what do you do? Take a long-term view and feed the kitty. Tithe to the kitty. And then on your stocks on steroids, you might say, “Hmm.” Want the investment recipe? I’m gonna give it to you in a minute. But before we do that, let's just talk for a minute about what it looks like to tithe to your financial freedom fund. And be honest with yourself.

Do you like the idea of, like with my stock newsletter, my subscribers have to read it twice a month. On the first, I come out with a magazine, 12 articles. Each article takes about 15 minutes to read, and there are really only two articles that are mission critical to read. That's the headline that's my feature company, and then the stock report where we report on the 49 companies we follow.

The other 10 are all kinds of other investment advice, usually real estate, business tips, this sort of stuff, maybe some green tips on renewable energy for your home, that sort of stuff. So you’d have to read, on the first, you’d have to read maybe a half an hour, and on the 15th, it’d take you maybe another 10 minutes.

So think about that. Would you really wanna do that or does the idea of just putting 10% into your financial freedom fund and diversifying it with exchange rate funds or mutual funds and not worrying about it, which one of these appeals to you? And I want you to just, if you have a piece of paper, write that down right now, what you’re thinking, what you’re feeling right at this moment.

Like if you were investing 10% of whatever it is you’re taking home right now, write down that dollar amount, your 10% net, you’re gonna stick it in your 401k or your IRA, what are you gonna invest it in? Even if you don’t know, write down “I don’t know.” Just take one minute. What really appeals to you right now comes right up like that. And don’t be afraid to be an and person.

Would it be important for you to pick green stocks, socially conscious, things that make the world a better place? Remember when Harv was talking about people who smoke? I wanted to mention this but, you know, we were talking about other stuff. The four top, most popular, most widely held mutual funds, the top holding is Philip Morris.

So if you actually have mutual funds—how many people have a mutual fund right now? How many of you know what stocks are within those mutual funds? I guarantee you that at least 60% of this audience owns a tobacco company. Now, the easiest way for you to check that out, on my website, in the middle column, there's a company research box, and if you just look on your holding, it’ll have the five characters, the five letters for your mutual fund. If you put it in that box, it’ll take you right to a stock financial page, and then you just click on Top 25 Holdings, and it’ll tell you what you want.

So if you wanna figure that out that's a good thing, because if you don’t wanna be invested in Philip Morris, see how getting smart is gonna recreate the world in the image that you want. Because if you don’t wanna promote tobacco companies, that's one thing you should be doing tomorrow. Or, you know, when you get back home, just take a look at your mutual funds, plug them in on my webpage, and if you own Philip Morris, then you need to have a conversation with your broker that you don’t wanna own it if you don’t wanna own it.

Okay. So investing is as easy as shopping. If you can pick a husband, you can pick a broker. If you can shop, you can invest, and that's Warren Buffet and Peter Lynch, some of the greatest investors on the planet, and actually it’s Bill Gates, too. He invested in what he loved.

How to select winning fruit from the stock market in four easy questions, that's what you’re gonna learn. If you can tithe, you can be a millionaire. You already learned that. Three-ingredient recipe for cooking up profits, and how to invest even when you think you don’t have enough for new shoes.

You know what’s crazy is I did have one year when I launched my business where we were, well, we’ve been cash-negative in the business. We were cash-negative for the first three years. So it was lean times in terms of income, you know I’m still making a good return on my investments, but in income it was leaner times, right?

And what was interesting about it, because my discipline of tithing to my investment fund and tithing for charity, I actually was involved in a charitable organization with a group of a hundred women, each of whom had made a commitment to put in 2000 a year for charity, totaling one million dollars for charity each year, and I was still able to do that even when my company was cash-negative because of the discipline of the investments.

So, you know, you’ve heard Harv’s testimonials. If you have 10 dollars, put one dollar. Just be disciplined. These really do work because it’s the habit. It’s the habit forming. You can’t be thinking I gotta pay down debt, I gotta pay down debt, I gotta pay down debt, because you are habituating that you’re in debt. You can pay down debt in your basic needs column, set it up on a debt repayment schedule, but you still need to be as committed to your financial freedom fund, to charity, to education, to fun, and to long-term fund for yourself.

So if you can pick a husband, you can pick a broker, and what I say, on the website again under NataliePace.com, Investor Edu, there are like 10 easy questions to interview broker candidates with. So when you think of a broker, a lot of people go in and they think they’re interviewing to see if the broker will accept them. Instead, you should be picking the perfect partner. And I say pretend that you are a parent and you’re trying to pick the perfect husband for your only daughter.

This is the person that's responsible for your future lifestyle. Pick them carefully. It’s the second most important decision you make in your life. And if you pick it well, then you could be really in good shape because a good financial planner will help you with, you know, get you in all the tax accounts that you could possibly be in. That’s a great gain right there alone, as you’ve heard from Sandy.

So this is one of the keys. If you go and you’re interviewing a broker, the first question I ask is, “How much of my nest egg should I have invested in stocks?” And if you’re 70 and they say, “All of it.” What do you think you should do? Just walk out. Don’t even go to question number two. Because if you’re 70, you should have only 30% invested in stocks. As you age, you can’t handle the volatility. You need safe, steady yielding returns, right? Because you don’t have that long-term horizon. If you’re 20, you can have 80% invested in stocks because you’ve got all this time to wait it out.

Okay. Here’s my recipe. I recommend that you write it down, and I’ve got it here just so you remember to. So, invest in what you love. A lot of people say invest in what you know. I say invest in what you love, and the reason why, first of all, you’re gonna know it. Secondly, you will know how to value it, and that helps out a lot in the third part of this investing recipe. If you really, really love it, you’re not gonna sell it on the cheap. You won’t sell it cheap. You won’t even be tempted to because you’ll understand the value of it.

Okay, so invest in what you love. This is for individual stock picking. For your nest egg, you diversify and you asset allocate. But in the stocks on steroids, that smaller portion of your stock portfolio where you’re gonna really try for the big gains and pick a few individual stocks or follow a good stock newsletter like mine, invest in what you love, pick the leader in the sector.

Now, in real estate it’s easier. It’s location, location, location. In stocks, there's almost always a clear leader, and you have to remember that, like just because all of a sudden you’re loving gourmet coffee, Peet’s Coffee may be in a position to start outrunning and outperforming Starbucks. So don’t just go and invest in Starbucks. You do have to do your due diligence and figure out who you think is gonna be the leader going forward.

And then, buy low, sell high. You might say, “Oh, oh, that's so obvious, duh!” Right? But it’s counterintuitive because buy low means that when everybody else is saying, “Ahh! The house is burning!” You’re going in there with a fire hose, putting out the fire, and you’re saying, “You know what, I really see potential here. I’m gonna buy it cheap.” Everybody else is saying, “You are crazy. That house just burned down. It’s gonna burn down again tomorrow.” They’re telling you you’re nuts, and you just say, “You know what, it’s okay. I’ll be unpopular.”

Selling high means that you are willing to leave the party sober. I’m telling you, I was the least popular person at Christmas parties 1999 because everybody was like, “Oh my God, my AOL stock went up 9000%,” and I said, “Sell!” And they looked at me like I was crazy. Do you remember these words, “new economy?” Remember that one?

I said, “Well, I kinda know the old economy and I think you have to have profits. Call me crazy.” And you know, I also knew that we were coming out of eight years of prosperity, we were going to have a rookie president, only 50% approval rating, the GDP wasn’t looking as strong, the P/Es were really high, and we’d had five years of negative earnings in NASDAQ.

So I wasn’t popular because people wanted to brag, and a lot of people stayed in when all of the signs were trim it back, take your profits. So I wasn’t very popular, literally. I’m serious. I would find myself drinking all alone, not that I drink—water. Well, it was New Year’s Eve, I did drink champagne.

So that's how a copper miner’s daughter with a BA in Literature becomes one of the top stock pickers on Wall Street. Not because I’m out there with fancy charts and fancy software. Three-ingredient recipe. So my message to you is if I can do it, you can do it. And if you don’t wanna do it, my stock newsletter is a great cheat sheet.

So, just one small story. Peter Lynch, you know, of his many great mantras, and if you wanna read a great book on picking individual stocks, any Peter Lynch book. They’re dated and they talk about companies from 10 years ago, but the fundamental messages are really good in his books. So he’s awesome.

And one quote I loved about Warren Buffet, he said, “Hey, I’m not looking for seven-foot bars I gotta jump over, I’m looking for 2-foot bars I can step over.” He’s sticking to things that he really understands, he really loves, and he’s buying undervalued assets that he knows are gonna lead into the future.

I’ve heard him say that, “Look, I don’t know what this or that thing in technology is gonna be the cool thing next year, but I know that in 25 years, Snickers is still gonna be the number one candy.” Cool, you know? So he’s picking the leader in the sector and he’s definitely a buy low, sell high. He’s using my investment recipe. He just didn’t write it down.

Now, when I picked Google, the reason I got interested in it, first of all, I love it. It seemed like every time someone would say, “Oh, check this out,” and I would even try other search engines, and I always just got more searches back or whatever it was I was looking for on Google. And then of course, everybody would say, “Oh, just Google it.”

So when you find that a company name is becoming a verb, that's a big sign that this is gonna be a leader in the sector, you know? Big, big sign. And that brings me to the fourth question. How many of you can pick what you love? Can you think right now, before we go into the questions, think of—I mean, everybody at some point wants to buy a stock of their favorite company. Everybody wants to do it. I think you’re afraid to, but everybody does.

So write down one or two or three stocks that you really have been interested in because you love the product, you love the service or you love the story or you love the CEO, just three companies right now that you really love.

Alright, let's start applying the questions. So this is pretty easy. Whatever the product or service is of the company that you love, just write it down. What’s the product or the service? And then, think about who the customer is. Is the customer you? You know if it’s obviously some sort of microchip, maybe the customer is gonna be Dell or Apple Computer, or if it’s a silicon manufacturer like MEMC, then the customer is gonna be like Suntech or Sunpower Solar Companies.

Just start thinking about what the product is and who the customers are, and then I want you to write down at least two of the competition of that company’s, if you know it. Write down the competition. Because when you’re picking the leader, it’s always in comparison to who the other people in that same space are. There's always gonna be one that manages to do it better.

I call it—actually, you heard me yesterday saying I wanted to win a Nobel Laureate in Economics. Well, I have this theory called the Theory of Economic Evolution. It’s based on the happiness principle. The happiness principle is that happy people make better products, faster, cheaper.

So, that brings me to the fourth question. Who is running the company? And how motivated are the employees to deliver better product, faster, cheaper? Now, you might think, how can you know the CEO? Like how could you know that Steve Jobs was going to completely reinvent music for all of us? Well, he did it with PCs. He’d done it before.

Or how do you know when you’ve got a Jeffrey Skilling who’s gonna completely bleed a corporation dry like Enron? How do you know, right? And I’m telling you, the Internet is the coolest thing on the planet, and Google makes it really easy because you can actually find out the name of the CEO, and you could do a Google search with that guy’s name and the name of his company and the word speeches, and you get a very good sense of how this person views the world.

When I was looking at metals, it had a huge run-up between 2001 and 2006, and I was looking at which company I wanted—you know, my dad’s a copper miner, so I knew a lot about Phelps Dodge, and I was looking at companies all over the world. And I looked finally because all of them were gonna do great, right?

But I looked finally, like, which one is gonna be my pick? And I read the speeches from the CEO of Rio Tinto compared to the speeches of the CEO of Phelps Dodge, and Phelps Dodge, even though their stock had tripled, the CEO’s speeches were still in debt. He was like, “Oh, my God, we’ve been through 10 years of debt and we’re paying off debt,” and it was blah, blah, blah debt.

And I’m looking at Rio Tinto and they were like, “Yeah, you know, over the past 10 years that was kind of trying, what we would do is we were trimming assets and redeploying income and opening up new minds and doing this.” Who’s thinking forward? It was in one page, you know, two pages speeches. It took me five minutes.

You know, you can see this stuff. So don’t be afraid. Now, you can start thinking of things differently. Call the CEO the soul of the company, so if you really want to be a great, like really take your stock picking to the next level, look at who’s running the company because they are the ones that motivate the people who are actually responsible for making the product.

And if there's a product that you like that's easy to buy and you love it and a lot of other people love it, and it ends up at a price you wanna pay, a thousand things have happened right from the executive suite down to the manufacturing line, to the people who truck it out to the stores, to the stores themselves offering the space, and then to the price you pay. And that's the CEO’s vision. You wanna take a few minutes to think about that with your own stocks? Okay, take two minutes.

So, when I was doing this—how many of you are interested in capitalizing on the growth of China? Good. I mean, we’ve been watching China since I launched my business in 2002, and this particular company really impressed me. I listed this one, I believe it was 2005, October. And it was when a company called Baidu—how many of you have ever heard of Baidu? A few of you. It was really rocketship IPO, and then it came back down and it languished for a while, and then it went back up again.

SOHU is the competitor of Baidu, so naturally when Baidu was launching its IPO, I lined up the competition. It was SOHU, Baidu and SINA at the time. And what really impressed me about SOHU was that this was an MIT professor, he had his Doctorate in Physics, he had funding both from the US and from the Chinese government, and he had helped the Chinese government actually win the bid for the Beijing Olypmics.

That meant that he was very high level, and we actually listed the stock 10 days before the Financial Times named him one of the top 10 CEOs in the world 10 days before they won the bid to be the official website for the Beijing Olympics. But how hard was that to figure out, right?

When you looked at the curriculum vitae, the bios, of the owners of Baidu and the guys who were running Baidu compared to the CEO at SOHU, it was really easy to see who was going to win the bid for the Olympics. And that was gonna be huge because I could see already, and a lot of us were able to see this earlier on, is that the Internet and the television were gonna become combined, so whoever was the Internet site was going to really have precedence.

Now, we listed SOHU at 18. It’s been as high as 60 this year. It’s really been a rocketship for us, and the Beijing Olympics are still what, another eight months away, so it started building momentum a couple of months ago, stayed within a range of 18 to 24 for about a year, and I just kept telling the people on my list, “Be patient. We’re early on this one. You’re gonna be glad.” I wanted to be early because I didn’t know when the story would break.

If it’s on the headline, if you’re trading on headlines, you’re late. What you want to do is you wanna know the story before it becomes a headline, and then when it starts making headlines, you wait and you decide if it’s gonna continue to go forward or not.

Another one was Suntech, and as you know, I’ve been adding a splash of green to Wall Street since 2002 before it was really fashionable, but I always thought, “Hey, you know, we can make a lot of money and we can change the world. And your money, where you put your money, what you spend your money on, that is your vote on what you want your world to look like. So why not vote for solar? Why not vote for companies where the employees are treated really cool? Why not? Why not not vote for tobacco companies?”

That's what I thought. So we’ve been trying to educate people. As you know, I am a journalist, not a broker, so I don’t get money for whatever you guys pick. I don’t get my money there. So there's nobody here that I’m tied by the pursestrings to.

Like brokers a lot of times do make commissions on whatever mutual funds they sell you, so you can also interview them that way and say, “Listen, if I wanna be socially conscious, if I wanna be green, how does that fit into your lifestyle? Like are you gonna go along with that? Do you even know green mutual funds and green socially conscious funds?”

And quite honestly, in the past, the green mutual funds, they did not perform very well, so I can’t really blame a broker for not wanting to put you there. Our stock picks did, however. So there's always a way. There's always a way to do what you wanna do. And the broker’s job is really where they really, really excel, is to make sure that your tax-protected assets, that you’ve got as many great accounts as possible.

They are not paid to be stock pickers, and a lot of brokers can’t be stock pickers. Their broker just won’t allow them to because they want the analyst to do all the analyzing and tell them then which companies that the company recommends as a whole. So just for you to know, and oftentimes, too, brokers have 500 clients that they have to deal with as well, so they really can’t give you personal attention.

What they really, really can do and are very valuable at doing is knowing the best overall plan for you and making sure that you’re overall protected because over the long-term, it works really well if you do it right, and that's their role. So if you pick someone who really gets asset allocation and who really, really understands what your needs and your passions are, then you’re going a long way to finding the best second choice that you make in your life of a partner.

Okay, so Suntech, same thing. I mean, this particular CEO, he had such high-level government relations that the president of China had visited his manufacturing facility and promised to keep them subsidized. You can’t get much better than that. The same year, we were having a solar decathlon in Washington, DC. This was in 2005 when I listed Suntech.

It was right there on the Washington Mall, 20 solar-powered houses, a big competition sponsored by the Department of Energy, and Bush didn’t even go and look at it. And here you’ve got the president of China trekking out on his own to the boondocks to tell a bunch of employees, “Hey, we’re gonna make sure that solar power is gonna be cool.”

And I know everybody’s saying China is very... It is very... It has a lot of problems. Guess what? They’re trying to solve them. They really are. They’ve got a lot to go but they are trying to solve them, and it’s got high-level government official approval, green light for green. So my vote went, “Let's help China,” and you know what? Doubled. You can get really rich doing the right thing.

And think of this, for those of you that still have those old stories about being rich, how it’s evil or whatever, profits are evil, think of it in a different way. What if what we’re doing here is planting trees and that this money that we earn and that we gain is simply a tree planted, and that we, because we have this higher consciousness of 10% for charity, you know because we’re always circulating money, that that means we are sharing our peaches?

We grow more peaches than we can possibly preserve, eat, and we are sending them out to Darfur and all the places across the world that they’re needed. And this is because you guys have taken a step to educate yourself, and education is key. Again, when I do it, and I’m gonna talk a little bit later about the retreat that we do, but we do visioning exercises around exactly how you should be realigning your budget. Ten percent for even education. That's key. Never stop learning.

You know, education is the highest correlating factor with success. Did you know that? Okay, think about it for just a minute. If you’re a doctor and you’ve had that extra 12 years of education compared to a gardener, it makes sense. You get paid more, right? But it works in everything. If you wanted to be a better marketer, the person who has the most information will be more successful. If you wanna be better at picking stocks, the person who spends more time and has a better system is gonna be more successful.

Education works. I educate myself constantly, in a different way now. I go to conferences where I get to, you know, maybe speak on panels with my colleagues. That's an education for me. How great is that? I get to sit there. I get to ask four really smart people a bunch of questions. That's an education, man. That's really good.

Okay, so buy low, sell high. Easy to say, hard to do. It’s completely counterintuitive, and how do you know when stocks are low or when they’re high? With shoes, it’s pretty easy. You know the average price of shoes. They go on sale, you know, okay, they’re on sale, right? Pretty easy. With stocks, well, how do you pick it, right?

That's where it gets trickier because if you’re picking individual stocks, the markets change year by year. Some years, it’s gonna be a great year, and you know what? Crazy as it may seem, the years that have been fantastic like 2003 and 1999 and 2007, has actually been good. We’ve been hearing all these headlines about how horrible 2007 has been. How many of you think the markets are up on the air? Smart people.

Now, this is as of a couple of days ago, and even if the markets went down today, I can guarantee you they’re just gonna be doing this for a little while. The markets, when I checked on November 16th, the Dow was up 6, NASDAQ was up 9, and the S&P 500 was up 2%. So even with all of the histrionic apocalyptic headlines, the market has really performed.

What’s really kind of cool is that when you get great information, we told people last October when I was at Millionaire School that NASDAQ was gonna outperform the Dow Jones Industrial Average, and I had a lot of reasons why. I didn’t have to share them all with them, but I said basically NASDAQ is gonna outperform. Well, 9% versus 6% with Dow, 9% versus 2% over the S&P 500.

So, getting great information, right? This is gonna be key, is that you’re really gonna have to be judicious about your information. And I gotta share just a moment with you about headlines. Again, what did I say about headlines? If you’re trading on headlines, you are late.

The other thing about headlines is this. All of my colleagues, especially in print, the money has been running over to the Internet. The Internet hasn’t figured out how to sell content. The only content that really is sold online is like stock newsletters because we provide value where you can actually make money. Almost all other content, you can get it for free, right?

So there's a big gap there right now between money actually coming in, they’re losing money in print, they haven’t figured out how to get a whole bunch back, it’s getting more from Internet. So, what’s happened is that the writer’s budgeting has cut back. I do investigative financial reporting, and I’m one of the few people out there, my colleagues at Money Magazine and at Forbes, they don’t have the budgets or the time to do half of the research that I’m doing.

Analysts don’t have it, even. So just know that there are certain constraints out there so when you’re reading headlines, these are not investigative financial reporting. A lot of them are just, you know, what’s the news today, what thing happened today? And sometimes, with certain newspapers, they’re really bad about it because they want to sell newspapers so badly and they know that if they scare the hell out of you you’ll buy them.

They’ll take these statistics and make them be much more scary than they really are. So I’ll get to that a little bit later on, but I’m telling you some of the statistics that are out there on the mortgage market are really, really egregious in trying to scare the hell out of people. Just trust me, trust me, and I’ll give you the dope when we get a little bit further on.

So here are a couple of things, and you should get your pencils out, about buy low, sell high. A couple of tricks. Just a couple, but it’s going to pay because every year the markets change just a little bit. It pays to get great information, and I’m just telling you even the best news organizations in the world that are really much better than other ones, they still have limited staff and limited resources right now for deep investigative journalism, which means that whatever’s happening today, you should consider what happened yesterday and what’s likely to happen tomorrow, not just what’s happening right now. Not, what’s happening right now? Let’s scare the hell out of them so they buy a lot of papers.

Santa rally. Santa rally is so reliable. How many of you made money in the stock market in 2001? Few of us. How many of you made money in the stock market in 2001 without shorting? Good. Excellent. Okay. I’m going to give you a slight tip, and it helps you to understand again the buy low, sell high, and also not being overinvested.

Now, in 2001, this is before I launched my business, I was a writer and a part-time schoolteacher trading stocks on the side because writers and schoolteachers don’t get paid very well. And I had a decent amount of money that I had made by selling my condominium in Santa Monica. And I had gone into my broker that was recommended by my bank, and I didn’t know anything about interviewing a broker or anything like that.

You know, I thought they were all geniuses, and I went in and the broker said, “Oh my.” He said, “Well, normally, I need this amount of money but I’m gonna make an exception for you and I’ll take just that amount provided you put in another 500 bucks a month.” I said, “Well, you know, that’s more than my food budget, but maybe if I don’t eat…” No, I didn’t say that.

I looked at him and I was, “Okay.” And then he said, “And then, what we’re gonna do is we’re gonna put all in the stock market.” I was like, “Okay.” And then he said, “And we’re gonna diversify.” I was like, “Sounds good.” I said, “But what are we diversifying into?”

He said, “Ah, we’re gonna do energy anchored by this great company, Enron. And we’re gonna do telecommunications anchored by this fabulous company that had been doing rocketship returns, Global Crossing. We’re gonna do Internet anchored by this company that's done 9000% gains, AOL. We’re gonna do international stocks anchored by a country that's been undervalued for 10 years, Japan.”

If I had invested my nest egg, he wanted every penny by the way, I would have lost 95% of my money. Instead, I said to him, “You know what, I’m working part-time in a telecommunications thing and I think they’re cooking the books.” “Oh, how would you know that?” “You know, it took me six months to get a credit. I think that they’re hanging on to revenue longer in order to make it look good for their earnings reports.”

He was like, “Well, you don’t have to worry your head about that. I’m making this big exception for you. Normally, I don’t even take this,” blah, blah, blah. He started, “You know, dollar cost averaging, here’s the return.” He just started trying to really do the hard sell, and I said, “You know, by the way, NASDAQ, you know, the 9000% gains, I mean, is there any earnings in that company?”

“Well, you don’t have to worry your head about that. Don’t worry about that. I’m making this…” He just kept hammering me. So what I did is I just said, “You know what? I think I have a lunch appointment I’m late to,” and I got out of there. So I kinda made an excuse to get out of there. And I just said, “You know what? I just don’t trust the guy. I don’t believe in what he’s saying. I just don’t feel it. Like all my instincts are telling me exactly the opposite.”

So I stayed out of the marketplace in 2000, and I kept it in what he thought was death. I kept it in a CD at 4%. It wasn’t as low as it got later on but it was like 4.5%. He said, “Oh, you can’t do that. It’s lower than inflation.” Guess what was the top performing asset that year? Cash. My CD was the top performing asset in 2000. In 2002, the top performing asset was bonds.

So anyway, by 2001, after 18 months of really doing my own research on companies that I liked a lot, including a company that was owned by a friend of mine, a company called Opsware. It had launched its IPO, and they had launched right in 2000 when the markets were turning, and they launched it at a 6-dollar price, and by August of 2001, it was down under 2 dollars.

And so all of a sudden, I was like, “You know what? That's a price I like. Those are shoes on sale. I may not know much but that looks like a shoe on sale to me,” right? And so I thought, “You know what? I’m gonna go with this one.” I had really been researching stocks and I really thought I knew something, so in August of 2001, I made a bet on Opsware and a couple of other companies that I really loved.

One was a DNA-based cancer treatment firm called Genentech. It was trading at about $13.50 at the time. It’s now up at 78, just so you know. Opsware just sold to Hewlett-Packard for $14.25, so 690% gain since that moment, but I didn’t hold it that long. I didn’t have to. August of 2001, I bought these stocks. September of 2001 comes, right? September 2001.

Okay, so that's a test. That’s the one that you test yourself. Now, because I knew and loved both of these companies, because I had picked leaders in the sector and I thought I had bought it on sale, I didn’t even look at the price. The markets were closed for three days. They opened on September 14th. I didn’t even look at the price.

I didn’t care because I knew that they would be okay. What I did instead is I researched the reactions of markets in times of war, and what I discovered was that markets typically go down, and within three months they’re back up or higher. So instead of watching like a lot of people do, watching that stock price, “Go, please go up, please go up, please go up, please go up,” I researched what really mattered. What’s the trend here?

And so I said, on my calendar, “I’m gonna look at the stock at the end of December.” I didn’t even know about the Santa rally, but I’m going to give you a tip that would really help you on something like this. I went ahead and on a credit card—I had very little money that year because remember, I was still a teacher, still a writer, don’t get paid very much, trading stocks, hoping to get paid.

I went ahead and bought my son a Christmas gift on a credit card that I really didn’t know if I could pay for. I don’t recommend that, by the way. And on December 27th, I looked at the stocks again, and they had tripled. August to December 27th, tripled with 9/11 in there. Okay? So I’m telling you, that's not Natalie being a genius. That's Natalie doing the three-ingredient recipe right.

That's looking at what really matters and not watching the pot, stirring the pot, “Please, please, get done, get done, get done.” Okay, so Santa rally. This is really helpful, and I didn’t even know about it then. Fifty percent of the market’s gains each year are made in the last quarter. The lowest performing month every year is September. The highest performing month every year on average, historical averages here, a hundred years, January.

So let's just talk about the nest egg. Remember the nest egg. Feed the kitty 10%. Just diversify and don’t worry too much about it. But you should meet with your broker twice a year, at least. I wouldn’t recommend more than that but if you want to you can. Twice a year. I say September meet with your broker, look for things you might wanna buy. Undervalued, on sale, maybe all of a sudden you’re interested in clean energy. Are there any new clean energy ETFs that we can invest in? That might be a good time to buy into them. Come back in January.

How did my new clean energy ETF do? Oh my goodness, it’s 200%? Maybe we should sell some of that. What do you think? “Oh,” the broker might say, “You know what? I’m looking at it and they’re saying this is the beginning of a 10-year trend. I don’t think you should sell yet.” You know, to have these conversations with your certified financial planner. But those two months are great months to look at.

Now, there's one trick, just to let you know, October happens to be the weirdest month. We call it the bewitching month, and that's the one that holds all the crazy days like Black Monday, Black Thursday. Usually, it’s a month that does do gains, but when it doesn’t it’s really awful. Just so you know.

Okay, so Santa rally is a fairly predictable trend. So if, let's say, that you’re invested in something like WorldWater that's already gone up 258% and you’re wondering whether you should sell it or whether it’s the beginning of a trend. Oftentimes, it pays to just wait until the end of December because you’ve got the wave of the market going with you. Okay? Just something to consider. No one has a crystal ball. Just something to consider.

Pre-election year trends. Gosh, there's just so many. Remember how I said—you know, very few people were reporting at the beginning of 1999 that that was gonna be a great year. Very few people at the beginning of 2003, that's gonna be a great year. Completely. I said, “Listen, we are entering a pre-election year.”

Now, who cares? You don’t have to know what this means, but when I say, “Stay all in, we’re entering a pre-election year, just trust it.” We’ve gone back a hundred years and crunched the data, and the year before the election and the year of the election typically produce double-digit gains, whereas the year after the election and the year after that are usually in the single-digit.

So you don’t want to get too fancy but you can wait it a little bit, right? Your nest egg, you might have a little more in stocks in 2003 than you wanna have in 2005. Same thing here. This is a pre-election year. 2007 is a pre-election year, so even with all of the crazy headlines, I still think we’ve got the pre-election year and the Santa rally, and there's a lot of other statistics coming up that would suggest the historical trend will be better in December than we think it’s gonna be right now.

Average P/E and GDP growth. I’m not gonna go into that, but it is something that we teach at our seminar, which is a little bit longer. But the thing to know about P/E is that you can’t just use it to determine whether or not a stock is a good buy. Like the lower the better usually, but if it’s a company like Google, when Google did the IPO, it had a negative P/E because it was still losing money, right? So you can’t always just go by P/E.

And also, in 2000, the average P/E of the whole marketplace was really high, but the reason that we were poised for a recession was because the growth domestic product growth was gonna go down. Does that make sense? And in October of 2002, which was the market low, the P/E was still really high but we were ready to start coming out because the gross domestic product growth was ready to go.

So don’t worry if you don’t understand all this. Give me one more second just on buy low, sell high. This is key when you’re picking stocks. Call it Jabba the Hut versus the Hare. So, who wins the dash? Who can run faster, you think? Jabba the Hut or the Hare? The Hare. Small-capped companies are generally going to outperform big, fat Jabba the Hut companies both in terms of the short-term performance, okay?

So the smaller the company, usually the better the rate of the return. Higher risk, better rate of return. Higher risk because Jabba the Hut can just decide to smash the Hare. “Gonna smash that Hare, you know? I’m sick of that guy winning.” Jabba the Hut can gobble up the Hare. That's a good point. Like Hewlett-Packard gobbling up Opsware, very good. Very good for returns. We loved that.

So Jabba the Hut can buy the Hare, it can smash the Hare, it can eat the Hare. Jabba the Hut is the stabilizing force, however. So you want Jabba the Huts in your nest egg because the chances that they’re gonna die, not that big. If Jabba the Hut loses a little pound here or there, you aren’t gonna notice it, right? It’s just not gonna be noticeable.

So your portfolio becomes more steady and risk-free with the Jabba the Huts, and also, usually they pay dividends. So like Citigroup and, you know, I wouldn’t say General Motors right now, but in the past—and that's the other thing, too, is that the blue chips are changing. Like Google at 134 billion is now Jabba the Hut. I’m not saying you should buy it now, but if you have it you should hold it. It’s a good hold. It’s a Jabba.

Okay. Now, I know I’ve totally freaked you out. Go back to the investment recipe. No matter what you’re doing and no matter how many things people tell you or whatever they tell you, always go back to the recipe because that makes it easy again. Do you love it? Have you picked the leader in the sector? Do you think it’s gonna be the leader going forward? And then buy low, sell high.

Can we pick a good buy low, sell high? Patience on that. Sometimes you can have a shopping list and look at it in September. Nothing wrong with that. And again, remember, let's imagine that learning about stocks is like getting dumped in France and you don’t speak French. So all you know is parlez-vous francais, right?

But eventually, because everybody around you is speaking French, you start picking out words. And you still can’t speak it but you’re starting to understand a little bit more. And then, as you start trying to speak back, like to your broker, like in the beginning your broker will know a lot more than you, and they should. Really, a good broker partner will want you to be educated because if you’re not, and every headline that comes up you’re just clawing at them and screaming at them and crying, that's not fun for them, you know?

So a good broker is gonna want you to be educated so that you’re a good partner with them. And as you start talking about these things, you’re gonna get better. It starts out and you don’t know anything, it’s all gobbledygook, and then you go to information, and then you go to knowledge, and then you go to wisdom.

So as you use information, you actually become knowledgeable, and over the time, you will become wise. Just know it happens, and in the meantime, the nest egg does not require any of this. The nest egg is you and your broker, as much tax-protected accounts as you can possibly qualify for, tithing, diversifying, percent of your age, safe, not into stocks, and that alone.

And then, you know, you can always take all those profits and start diversifying it into real estate as well. The cool thing about stocks is that that can be how you build up whatever it is that you need, the liquidity you need to invest in real estate and start diversifying.

Okay, I’m just gonna go through a few tips of the rich and you can write them down if you want. We’ll be on them pretty fast, so you’re gonna have to write fast. This is something that Sandy brought up and I’m gonna reinforce it. I actually think that you should do as much trading as possible.

If you are gonna be picking stocks, I think you should try to do that with your Roth IRA or in your SEP IRA because you will not have to pay capital gains on it. And that additional 15% to 30% compounds. That's awesome. So that's a definite tact. Ask your brokers about every possible tax-free, and I know this doesn’t apply as much to Canadians in terms of real estate, but I think they have a lot of brokerage accounts in Canada where this does qualify, so ask.

In the US, there are all kinds of new ones opening up like health savings accounts and college funds. So really get to know your broker and ask them to give you every possible option out there that you could trade your portfolio in. And by the way, just so that you know, if you have old 401k with old employers, you can oftentimes roll it into a brokerage, into an individual retirement fund, and then you have more options.

That's the only reason to really do it is that oftentimes if it’s with your employer or with an old employer, you have 10 options to choose from, whereas if you can roll it into the brokerage, you’ve got the whole universe to choose from, and hopefully a good financial partner to help you with that.

So, a lot of people trade on analyst recommendations and it’s not a good idea. It’s not because they’re not smart. They are very, very smart. Analysts are very smart. They do their jobs very well. It’s simple supply and demand. If you’re buying at the same time that everybody else is buying, what happens to the price? It goes up. It’s very high. If you’re selling when everybody else is selling, what happens to the price? It’s low. So you do better by doing exactly opposite what the analysts say. I don’t recommend it. I don’t recommend it because it’s really hard to.

Demand good information. So again, don’t believe everything you see in a headline because it’s usually specific to that day. If you do read good investigative reporting that considers a lot of things, that's very different. Also, nowadays, especially online, there are press releases, and press releases are not articles at all. They’re written by professional writers that are employed by the companies.

So whenever you see anything, first of all, ask yourself if it’s an article, if it’s really just reporting on one bit of news or if it’s taking in everything, and then ask yourself, “What aren’t they telling me?” or “How is the picture bigger?” And again, think of every individual company that you might be interested in investing in like a mosaic. The more tiles you turn over, the clearer that picture gets, right? So if you have one article, that might just be turning over one tile.

Always keep a percent equal to your age safe. Did I say this enough times? This is really key, and not more than 10% of your nest egg in the company you work for. What Enron was doing is that they were paying their employees’ 401ks in Enron stock, and then the employees weren’t diversifying out a bit because they kind of drank the Kool-Aid that Enron was really cool. So, unfortunately, that's where the Enron employees really got bitten, is that a good portion of them had like 58% or more that completely got eliminated when Enron went bankrupt.

So, the current market environment, the things that you should know, and this is provided by the mortgage banking association. Google it. This is where you can get real statistics. The Mortgage Banking Association is a nonprofit organization. They have a chief economist named Douglas Duncan, and these statistics come from his most recent report a few weeks ago. So 35% of people who own a home don’t even have a mortgage. They own it free and clear. Ninety-three percent of all people who do have mortgages are still paying on time.

Foreclosures. This is the big deal. There was a huge headline in one of the national newspapers a couple of weeks ago that said that foreclosures were up 500%. Sounds spooky, right? Well, they were zero two years ago. I mean, you could list your house in a heartbeat, it would sell the next day for 20% above what you listed it at. Nobody was foreclosing two years ago. So it went up from 0 to 1.4%.

Now, that doesn’t mean that we don’t have an issue, especially in subprime. It doesn’t mean that we have a depression where everybody in America is losing their home, and that's what a lot of people are inferring from these histrionic headlines. Now, the other thing to know about that too is that most of these foreclosures are centered in seven states and of those seven states, most of those are states with a higher percentage of subprime mortgages, are not homeowners. It’s their second home or it’s income property.

So even those people, mostly, not all, Michigan is a real problem, but other people, they’re not losing their home. Just something to know. America is not entering like the next depression tomorrow. We’ll check in again next year.

Alright. And also, what’s really interesting and most people don’t know about the stock market, remember how I told you that this year that the NASDAQ is up 9%? That's a pretty good rate of return, by the way, and we aren’t even finished with the Santa rally yet. Over the last two years, NASDAQ is up 18%. The Dow Jones Industrial Average is up 21%. Those are really great returns, and that's far above real estate on the national average. In fact, a lot of real estate has been declining.

So, double-digit earnings grow for the last 18 out of 19 quarters on Wall Street. We’ve had a lot of earnings. Google has 15 billion dollars in cash. Apple has 11 billion dollars in cash. Even if credit tightens up, they have their own war chest that they can buy other companies with. There's a lot of cash. But are you kind of sensing what I’m saying here about who has the cash?

Not 15 billion in General Motors, right? They’re losing 15 billion. I think they lost 30 billion. So, it’s interesting again—in fact, if California was its own country, it would be the sixth largest economy in the world. So there are real earnings in these Internet and technology stocks, and there's a real push towards a different kind of blue chip, something to be aware of. So high-cash levels in these companies.

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Thank you very much for your time.