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By Ian Wyatt, NewsletterAdvisors.com |
STI | Jan 14, 2009 |
Natalie Pace, author of Put Your Money Where Your Heart Is, is adding a splash of green to Wall Street and transforming lives on Main Street. She is the founder and CEO of one of the most respected independently owned financial news organizations in the world. She has been ranked by TipsTraders.com as a No. 1 stock picker and has partnered with Forbes.com. She has repeat guest appearances on Fox News, Good Morning America, Time Magazine, More Magazine, USA Today, NPR and Kiplinger’s Personal Finance. She currently lives in Southern California.
Natalie, I see by reading your book, Put Your Money Where Your Heart Is, that you were named the No. 1 stock-picker in the United States by TipsTrader.com. To what do you attribute this honor?
Half of my "Companies of the Year" have doubled or more in value, and 70% of the companies featured in 2008 earned gains. So, it’s an honor that you earn by reporting on companies when it is a great time to buy them, before they go on to extraordinary gains. My 2003 Company of the Year, Taser International (Nasdaq:TASR), went on to earn up to 9,000% gains. So, a $12,000 investment would have made you a millionaire! I picked Google (Nasdaq:GOOG) on Fox News at the IPO, and even with the current market implosion, Google is still up 370%, meaning a $10,000 investment is now worth $37,000.
In 2008, many of my top picks were shorts, but even if you don’t know how to buy put options, if you had just avoided those companies in your nest egg, you would have done great. I warned to pull Fannie Mae out of the nest egg in 2003. I also warned investors to avoid General Motors (NYSE:GM) in 2004 (it went on to lose over 90% of its value); that real estate was overvalued in 2005; and to beware of Lehman Brothers in June of 2006!
What are the five most important lessons you want readers of your book to come away with?Great question!
#1: Always keep a percent equal to your age safe, i.e., invested in Treasury Bills, high-rated bonds (not bond funds), Certificates of Deposits, money markets and savings. Treasury Bills and high-rated bonds that you have owned for awhile are the safest today.
#2: Brokers and lovers: it pays to pick a good one! Interview your certified financial life partner as if your life depends on it because your lifestyle does.
#3: You should be diversified into about 10 exchange-traded funds and rebalancing once or twice a year in a pre-set "Buy My Own Island" pie chart. Using this strategy, you could have identified and captured your gains during the dotcom extravaganza of 2000, during the real estate bonanza of 2002 to 2005 and during the Dow Jones Industrial Average explosion through 14,000 in 2007. In other words, you would be getting rich on Wall Street stocks, instead of watching your nest egg binge and purge and earn nothing.
#4: Invest in emerging industries not dying corporations.
#5: You are a creator of our world. When you realize the power of your money and investments as tools to make you rich and to also enrich our world, your life will change immediately, and this world will become a much more beautiful place.
What makes your strategy/technique for picking stocks unique?
My investment recipe for cooking up profits is:
1) Start with what you know and love
2) Pick the leader in the sector
3) Buy low; sell high
In every industry, there are leaders and laggards. You need a hot industry and then to pick the best company that is poised to lead the pack in order to have the best shot at the greatest, sustained gains.
Buy low; sell high is very easy to say, but extremely hard to do. When there is bad news, your stomach acid will prompt you to sell low. When there is great news and a huge run-up, you will want to party until there’s no tomorrow and forget about selling high.
Though the recipe looks simple, learning the essential tips behind these simple words is the difference between winning and losing. As Gustave Flaubert writes, "God is in the details."
What was your motivation for writing "Put Your Money Where Your Heart Is?"
I love my job of adding a splash of green to Wall Street and transforming lives on Main Street! Imagine how cool it is to save Bill and Nilo Bolden’s nest egg; or how satisfying it is to watch a certified financial planner get the information on green investing that allows her to better serve her clients; or what an honor it is to show your theory of economic evolution to some of the most respected economists and have them nod approvingly. I’m living a dream. I love my job!
What three stocks would you buy today and why?
Green is good! Clean energy is trading on the cheap (as of early January - check the forward P/E) and should continue to have robust sales as there is a worldwide push for these products. China has to go green. Many European countries are leading the world in powering the grid with renewable energy.
The leaders in this very hot sector, in my view, are Suntech Power Holding (NYSE:STI) (my 2007 and 2008 Company of the Year), Trina Solar Ltd. (NYSE:TSL) and MEMC Electronics (NYSE:WFR). A buy today would ensure that you are buying low. It’s a volatile, downtrending marketplace out there, so most stocks are positioned to lose value in 2009, in my view.
Full disclosure: I own shares in Suntech Power Holdings.
What do you think it’s going to take for some normalcy to return to today’s economy and markets?
Stocks returned less than zero over the last 10 years. The old, normal way is gone, which is why "buy and hold mutual funds" have been replaced with "keep a percent equal to your age, diversify the remainder in 10 ETFs and rebalance once a year, based upon a pre-set pie chart."
Our underlying economics have changed dramatically from the past. Pensions were invented when the average age of death was 64. Now 60 is the new 40! Retirement is a lie.
How do you think your book could help readers get through times like these?
The books of yore are part of the old way that doesn’t work. Banks and century-old brokerage houses are failing because the economic fundamentals are different today. If you had decades of experience riding the Pony Express, you’d still need to take piloting lessons once the airplane was invented. My book outlines Modern Portfolio Theory, rebalancing and exchange-traded funds in easy-to-understand and easy-to-implement pie charts.
If you had an average investor standing in front of you, what would you say to him/her to ease concerns and raise confidence in the economy and markets?
America is the land of the free and the home of the brave! We invent the products that power the world of tomorrow because we value education, innovation, free speech and thought and the entrepreneurial spirit so much. I don’t see anyone packing up to move to the Middle East - mostly because human rights, universal education and freedom are not as developed in those countries. Even with the financial challenges facing us, we will continue to attract the best and brightest minds on the planet, as long as we hold fast to our greatest assets. Sergey Brin, one of the founders of Google, is an immigrant! America is still a great place to live and thrive!
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