Taken from “Reading Performance Charts”



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To provide an avenue, of creating a process / environment of learning principals and values to enhance one’s ability to improve their investment skills while minimizing risk and maximizing profits with the highest level of integrity.

February Paragraphs

“Reading Performance Charts”, Family Money Magazine, Gloria McAuley

Submitted by: Felicia Ware-Joyner

General risks taken on investment options are broadly categorized as “stable, conservative, moderate, aggressive or dynamic. Risk means volatility, or the degree of short-term change in value. Stable investments usually have the least volatility, but their longer-term returns may be lower than more risky options. Conservative options generally include bond, mortgage and other interest-earning options. The moderate category includes specialty investments and balanced investments, which invest in both stock and bonds, and stocks of large U. S. companies. Aggressive options include stocks of medium and small U.S. companies. Dynamic investment options include stocks of companies headquartered outside of the U.S. Stocks are volatile. Evan stocks of large, established companies could change substantially in value over a short period of time. Dividends are not guaranteed.

“High Finance on a Low Budget”, Authors: Mark & JoAnn Skousen

Submitted by: Bernice Pressley

It is estimated that more than 30% of Americans waste money paying too much taxes. The main reason why most people overpay taxes is because of a lack of knowledge about the tax laws. Government has made laws so complicated that many tax attorneys find it difficult to estimate the amount of taxes their clients must pay. Another reason people overpay is their fear of being audited. Given the fact that the IRS has a sparse number of agents, it is unlikely that no more than 2% of people who submit returns each year will be audited. Even so, the idea of being audited should not be fearful if precise records are maintained. Some of the best ways to save taxes are through owning a home or business and retirement plans.

“START INVESTING: The #1 mistake beginning investors make”, MSN MoneyCentralInvestor

Submitted by: Mary M Jones

You don't need a bunch of names to build a diverse portfolio. Instead, watch for overlap and don't spread yourself too thin. Start Investing Community who post the portfolios and invite comment from the rest of us on their choices nearly every one of these investors makes the same mistake: They have too many investments, too many stocks and too many funds with $300 here and $150 there.

“2001 Fool’s Errands”, Newsweek, February 12, 2001, By Dave Marino-Nachison

Submitted by: Ed Tulauskas

We offer a brief look at three New Economy sectors: online retailing, wireless service providers and biotechnology-materials companies. The three sectors might be thought of as representing the past, the present and the future of hot industries. How does this relate to us? We must first identify which market segments we wish to invest in. For example, look at CTS, an electronics supplier for the automotive, wireless and telecommunications industries. Second, pick the top 10 companies in each industry. And Lastly, after applying the NAIC philosophy, which companies are in the ‘buy zone?” It is a lot of work, research, SSG’s and sound judgment to make a successful portfolio.

“Get 1/2 Internet Equity Commissions For 3 Months When You Open An Account”, Ameritrade

Submitted by: Mary and Plummer Jones

Fire up your future. You'll be off and running when you get half-price internet equity commissions for three months - up to 50 trades. Just open an Ameritrade cash account with $500 by February 27, 2001. You'll get customer service 24 hours a day, 7 days a week, access to free research, and free e-mail alerts. Of course, commissions for Internet equity market trades are always just $8 plus $1.75 per contact. Stop and limit orders are just $5 more. An exercise and assignments are only $23. On the Move? You can access your account from anywhere via web-enabled phone or PDA. Don't let this pass you by. Open your account and start trading the same market day.

“Fool Tools, Cool Tools”, Better Investing November 2000, Pgs:22-23

Submitted by: Tanya Hill

Selena Maranjian a representative of The Motley Fool summarizes some of the most important tools that one can use when doing stock research. The tools that will stand the test of time are your brain, a little math and eyes and ears. The new tools fall into the category on the online tools. The include (company financial statements); better- (NAIC web site which has several options); and (The Motley Fool also has several options as well)

Excerpt: “The Keys to Stock Market Success”, Investing for Dummies/Chapter 6

Submitted by: A.L.Shuler

Anybody, no matter what their educational background, IQ, occupation income, or assets, can make good money through stock investments. Over long periods of time, you can expect to earn an average 10 percent per year total return by investing in stocks.

Don’t try to time the markets. Anticipating where the stock market and specific stocks are heading is next to impossible, especially over the short term. Economic factors, which are influenced by thousands of elements, as well as human emotions, determine stock market prices. Be a regular buyer of stocks with new savings. Buy more stocks when they are on sale and market pessimism is running high.

Diversify. Invest in the stocks of different-size companies in varying industries around the world. When you assess the performance of your investment, look at your whole portfolio at least once a year and calculate your total return after expenses and trading fees.

Keep trading cost, management fees, and commissions to a minimum. These represent a big drain on your returns. If you invest through a broker or “financial advisor” who earns a living on commissions, odds are high that you’re paying far more than you need to be and you’re likely receiving biased advice.

Pay attention to taxes. Like commissions and fees, federal and state taxes are another major investment “expense” that you can minimize. Contribute most of your money to your tax-advantaged retirement accounts. You can invest your money outside of retirement accounts, but keep an eye on taxes. Calculate your annual returns on an after-tax basis.

Don’t overestimate your ability to pick the big winning stocks. One of the best ways to invest in stocks in through mutual funds, where you can hire an experienced, full-time money manager at a low cost to perform all the investing grunt work for you. If you want to invest in individual stocks, stay clear of initial public offerings, particularly trendy popular ones and ones that are issued during times of an overheated stock market.

March Paragraph Submissions

“Beating the Street”, Peter Lynch

Submitted by: Ed Tulauskas

Peter Lynch talks about a principle worth sharing:

“Never invest in any idea you can’t illustrate with a crayon”

This rule ought to be adopted by many adult money managers, amateur and professional, who have a habit of ignoring the understandly profitable enterprise in favor of the inexplicable venture that loses money. Surely it would have kept investors away from Dense-Pac Microsystems, a manufacturer of “memory modules,” the stock of which, alas, has fallen from $16 to 25 cents. Who could draw a picture of a Dense-Pac Microsystem?

April Paragraph Submissions

“Take Advantage Of Stock Market Corrections”, Investor's Business Daily

Submitted by: Ed Tulauskas

Though painful, stock price corrections are a fact of stock-market life. They happen for a slew of reasons. Perhaps the firm's earnings are sagging, or it's made an acquisition traders don't feel is in its best interest. Or maybe a few large investors simply decided to lock in their profit and others followed suit. These days, the most likely culprit is the market itself. After all, three out of four stocks tend to follow the path of the major indexes. Whatever the reason, downturns shouldn't be cause for panic. Like winter turning into spring, from every correction sprouts a new crop of powerful stocks building solid bases. Use this period as an opportunity to find the next great winners. A stock's price must head south in order to build the left side of its base. The best stocks will bottom and recover near their highs. When the market finally shakes free of its funk, these stocks are in a prime position to head to new highs. In a normal market correction, growth stocks can fall 1 1/2 to 2 1/2 times that of the major indexes and still have the power to reach new highs. So if the market corrects 20%, a good growth stock can fall as much as 50% and still have the muscle to form a good base. However, this rule of thumb is most useful in normal bear markets. In today's extremely vicious downturn, where the Nasdaq is off more than 60%, some old highfliers have dived as much as 90% from their peaks. Stay away from such stocks. Granted, they might have made tremendous gains before topping, but institutions have sold these names hard. As a stock forms the left side of its base, several weeks of large price drops on heavy volume are signs of trouble. It can take years for a stock damaged this badly to recover and hit a new high, if ever. On the other hand, don't lose sleep over more moderate corrections. They're normal as a stock makes a large, long climb, allowing the stock to shake out weak investors who might be prone to selling. Once they're gone, there's little resistance in the way of the next big upward price move. Consider the 95 best small and mid-cap stocks of 1996-97. They gained an average of 421% from pivot to peak. They also fell 25.1% on average in their largest corrections during the course of their runs. The 25 top-performing large-cap stocks saw somewhat milder price swings. On average, they contracted 20.6% during their largest correction. But their overall gains, from breakout to peak, were also smaller on average, at 248%. As most people are painfully aware, markets themselves are also capable of correcting. When these downturns grow to more than 20%, they're labeled a bear market. The Nasdaq crossed that threshold in April a year ago.

Excerpt taken from MONEYScope "Staying the Course"

Submitted by: Bernice Pressley

Given the volatility of the stock market over the past year, many Investment Clubs are taking advantage of the turbulence, and see it as an opportunity to invest in great stocks at bargain prices. Many clubs have invested in the usually profitable technology stocks and have seen them fluctuate from record highs to record lows in recent months, yet they have maintained the buy-and-hold attitude recommended by the NAIC.

Also, the NAIC's Top 100 Index, which measures the top 100 stocks held by NAIC investment clubs, has outperformed both the S&P 500 and the Dow Jones Industrial Average for the 3, 5, and 10 year periods. However, that index is under performing in the 1-year and 1-month periods. The top five most widely held stocks by investment clubs in 2000 were Intel, Lucent, Home Depot, Cisco, and Merck.

MUTUAL FUNDS: “Paying taxes on stocks when you have not sold any shares in the fund”, , Submitted by: Plummer & Mary M. Jones

When you buy mutual funds, you give up direct control over your investment. That includes losing some control of your tax situation. Mutual funds build up taxable gains when stocks in the fund's portfolio go up in value and the fund manager sells them. By law they have to distribute theses gains to shareholders in the fund. The fund does not have to figure out whose money was in when and who should be given the gains; they just distribute them to all the shareholders equally. Generally at the end of the fund's fiscal year (which can be anytime). If you buy a fund that has gains to distribute at the wrong time of the year, you'll have a tax liability, even though you haven't made any money in the fund. Before buying into a hot fund, it's is a good idea to call them up and check on their plans for dividend distributions. If you find out these are going to be soon, consider putting off the investments for a bit, or buying the fund in your IRA tax deferred account (while the dividend won't matter). Uncontrollable tax liabilities are one of the few negatives of mutual fund investing.

“Stocks vs. Bonds”

Submitted by: Shane and Sharon Benjamin

The bond (or fixed income market) made a comeback in 2000 due to interest rate hikes, slowing economic growth and inflation increases or inflation indices remaining constant. Bonds were the better investment in 2000 as opposed to stocks. Market timing re: asset reallocation especially in view of the deteratering economic conditions is now a concern for many. Market timing involves moving assets into and out of the stock market based on perceptions of where the market is headed. When to get out and when to get in are the questions / concerns of many and many have not done so well in the past in predicting the right answers. Seems that there is an inverse relationship between the fixed income market and the equity market between stocks and bonds. When one is up, the other is in decline and vice versa.

May Paragraph Submissions

"What retirees can learn from the slide”?

Submitted by: Arthur Shuler

Market declines are an opportunity for savers, because they can pick up stocks at a low price," says Henry Hebeler, author of "J.K. Lasser’s. Your winning retirement plan." But they're a disaster for retirees. If your stock portfolio went down 30%, you withdrew 7% and you lost 3% to inflation, you're down 40%. The pain isn't over yet. It's been more than 13 months since Standard & Poor's 500-stocks index peaked, and the index is still 18% below last year's all -time high. Shareholders, I suspect, may not fully recoup their losses until 2002 or possibly later. Even then, retirees would want to wait before selling stocks, so that they have some gains to show for all their suffering.

Liggett Parent’s 1st-Quarter Profit rises to $2.5M (from The Herald-Sun, 5/16/01)

Submitted by: Mary M. Jones

The parent company of Liggett Group reported a profit of $2.5 million or 8 cents per share, in the first quarter of 2001. That’s an improvement from the previous first quarter when the cigarette maker produced a profit of $1.3 million, or 4 cents per share. Miami-based Vector Group, the parent of Liggett, and the company produced first-quarter revenues of $158.8 million. That’s a decline from the $178.2 million in revenues the company reported during the first quarter of 2000, but last year’s figure included revenues from operations of Liggett-Ducat, the company’s Russian tobacco business. Vector sold Liggett-Ducat last year. For the first three months of 2001, Liggett had revenues of $137.1 million, compared with $106.9 million, for the first quarter of 2000. Leggett moved its cigarette manufacturing operation to Mebane, NC in 2000.

Article: “Great Stocks for This Market by Jon Birger & Lisa Gibbs,” Money Magazine, 12/00

Submitted by Felicia Ware-Joyner

I found the December 2000 issue of Money Magazine while working out at the YMCA. I was interested in seeing what stocks the authors picked. I am also interested to do some armchair quarterbacking. As they say, "Hindsight is 20/20". Since this is an old issue, I want to see if the stocks they recommended are performing as the authors expected. Below are their picks and some of the financial data:

Company |Ticker |Price |52-wk HI |2000

Return |Price/Earnings

5-Year Average (%) |P/E

Ratio |5 Yr Future

Growth Rate |PGE

Ratio |Author’s Comments | | | | | | | | | | | | |Apple |APPL |$20.50 |$75.00 |-60% |18 |53 |15% |1.2 |Its huge cash position means you are really paying just 6 time earnings | |Chase |CMB |45.75 |67.25 |-9 |11 |13 |12 |0.9 |Investors shouldn't be so nervous about it's Manhattan pending merger with private banker J.P. Morgan | |Gap |GPS |24.50 |53.75 |-47 |17 |30 |20 |0.9 |The fashion missteps are behind it, but Wall Street has been slow to fall back into the Gap | |HomeDepot |HD |44.00 |70.00 |-36 |31 |41 |24 |1.3 |The home improvement chain has been unfairly hammered, says Tom Marsico. We agree | |McDonalds |MCD |31.75 |49.50 |-22 |19 |25 |12 |1.6 |Big Mac attacked by falling Euro but it's currency-adjusted sales growth remains strong. | |Motorola |MOT |24.50 |61.50 |-50 |20 |50 |20 |1.0 |Yes we've said MOT's cheap before. But it's on the mend | |Texas |TXN |46.75 |99.75 |-3 |29 |42 |25 |1.2 |Less than a quarter of biz is cell phone chips yet it got crushed when Nokia reported a slowdown | |Worldcom |WCOM |19.00 |61.25 |-64 |9 |64 |23 |0.4 |Sure it owns MCI, but WCOM is not your father's phone company. The current price makes no sense. | |

“The Wealthy Barber”

Submitted by: Ed Tulauskas

This book describes basics of investing and how a barber became a multimillionaire. The three basic points in this short book are:

1. Pay yourself first; at least 10% monthly of your total income, into some kind of investment program

2. If needing life insurance, get Term and “Invest the Difference”. Variable Life Insurance is a possible option.

3. For Mutual Funds, invest in the basic S&P index (approx. 50% of your total portfolio). It has outperformed the best-managed funds 95% of the time, plus has the lowest expense ratios. Hence, your money grows faster.

Investment Digest 2000

Submitted by: Bernice Pressley

Small and madcap funds may provide the growth answer. The terms small, medium and large go beyond describing the amount of fries ordered with a take out order. Indeed, in the financial services realm these words are used to distinguish the various market capitalizations’ have any given security, stock or mutual fund.

You may want to consider market capitalization defined as the number of outstanding shares multiplied by the current share price - When evaluating equity mutual funds for your investment program. Capitalization along with many other characteristics may help you approximate a fund’s risk and return potential.

June Paragraph Submissions

BI Stock to Study: Cisco Systems. Inc., From the July 2001 Better Investing Magazine

By Felicia Ware-Joyner

Cisco Systems is a company that provides end-to-end Internet and computer networking solutions to educational institutions, government agencies and corporations. Many of these corporations are Information service providers – telecommunications carriers (AT&T, MCT, etc), Internet service providers (AOL, WorldCom); Cable Companies (Time Warner); Wireless communications providers (Sprint, GTE). Cisco sells routers, and switches and other networking products. Throughout the 1990’s Cisco’s revenue growth was more than 40% (1998 was an exception, when it only grew 31%). They hold no long-term debt. They hold cash and investments totaling $17 billion. They have had a history of stock splits annually since they went public in 1991. Cisco Systems is one of the most widely held stocks by NAIC Clubs.

However, the current outlook for Cisco and the telecommunications industry is not so rosy. Cisco predicted this spring that revenues for its third quarter (ended April 28) would be about 30 percent lower than the $6.7 billion reported for the second quarter. Cisco plans to improve its bottom line by cutting its workforce by about 19% (about 8,500 positions) for annual savings of $1 billion. Including the force reduction, the company reported it would take restructuring changes totaling $800 million to $1.2 Billion. Cisco lent some of its customers the funds to purchase Cisco products. This can artificially boot demand. It also backfired on Cisco because several of its customers went out of business, or had other problems repaying the loans. Value Line’s Telecommunications Analyst predicts that the outlook for telecommunications industry will get worse before it gets better. There has been a falloff in demand from the telecommunications industry and Internet Service Providers. Companies in these markets have slashed their capital-spending budgets in light of the uncertain domestic economic outlook.

Cisco has compelling long-term recovery potential at its depressed recent price. This core technology holding could do quite well once the current economic environment stabilizes. One of the SSG’s we will complete will be that of Cisco Systems. I plan to continue to watch for signs of recovery and be prepared to make a purchase recommendation at that time.

Additional Educational Opportunities Through NAIC

NAIC Online Discussions

Each Monday Night 10 p.m. ET in the NAIC Yahoo! Chat Room, Classes are open to all. A schedule with updated topics, login instructions and more information can be found at chats/chat.html. Class handout materials for each event are normally available at the same location a day or two before the event. Investors unable to attend on Monday nights can still benefit from these classes by signing up to receive notice of when class transcripts are available. To receive this notice, send an e-mail to: chat-transcripts-suscribe@lists.better-

July 16: Introductory Course: Overview of the SSG

Instructor: Bert Raulerson, NAIC Investor’s School instructor. Learn the simple principles behind the SSG and how to interpret them. This is an ideal beginner’s class.

July 23: BI Stock to Study: Cisco Systems. Inc.

Instructor: Laura Berkowitz, NAIC Investor’s School Instructor. This beginner’s-level class will complete a Stock Selection Guide on the July BI Stock to Study

July 30: Exploring Business Models

Instructor: Mark Robertson, NAIC director of online resources & senior contributing editor, Better Investing Magazine. Not many investors know that Section 2A used to be on the front side of the Stock Selection Guide. Using the Preferred Procedure, participants will discover that Section 2A is the core of the SSG.

“Asset Allocation”, by Richard Eisenberg, The Money Book of Personal Finance

Submitted by: Mary M. Jones

When deciding how to invest your money, you want to maximize yield and minimize your risk. You can do this through diversification.

1. Buy stock from different industries; buying stock from utility, automotives, computer, and fast food companies entails less risk than buying stock only in computers.

2. Put your money in different types of investments: investing in stocks, bonds, and cash presents less risk than investing only in stocks.

Keep in mind that the higher the yield, the higher the risk. The longer your time frame, however, the more risk you can take in the short run. You must decide how much risk you are willing to accept and invest accordingly. Diversifying too much can reduce your earnings but not diversifying enough increases your risk. Here are some ways to allocate your assets:

a. The conservative investor: 50% stocks. 20% bonds, 30% cash. This mix will probably lose no more than 4% in a bad year.

b. The moderate investor: 60% stocks, 20% bonds, 20% cash. This combination will yield 7.5% annually on average and will loss no more than 6% in its worst year.

c. The aggressive investor: 80% stocks, 10% bonds, 10% cash. Investing your money this way will probably yield 9% annually, with a worst-year loss of 15%.

“A Motley Fool Lesson in Sales Growth”

Submitted by: Ed Tulauskas

Sales growth is the most fundamental indication of an expanding business. While net profit growth is important too, it can be the result of cost-cutting measure rather than pure business growth. Cost cutting is all fine and well, but we want to isolate a company’s ability to sell more and more of its stuff year after year. And that’s exactly what sales growth tells us. We are looking for companies that are growing sales (a.k.a revenue) by at least 10% per year. This metric is easy to calculate. Using a company’s income statement, simply divide the current year’s sale by the previous year’s sales and subtract one.

For example, Intel Fiscal Year 2000

2000 Sales: $33.7B

1999 Sales: $29.4B Growth: 14.6%

PLANNING TO REACH YOUR GOALS, CH Business Owners ToolKit

Submitted by: Gloria McAuley

Most financial plans are geared to what will happen in the future such as plans for your child's education or plans for retirement. Since the costs associated with such things goes up over time, you must invest your savings so that they increase in value as time goes on. To estimate what you might need for a particular goal:

* Estimate the cost of the goal by taking the current cost and adjusting it for inflation.

* Take your current savings and determine the growth rate.

* Add your projected investments as of the date you wish to attain the goal and compare it to the amount of your projected cost of the goal.

* If the amount of your projected investments is greater than the amount of the projected cost, your plan should work to allow you to reach the goal.

* If the cost of the goal exceeds what your savings and investment will generate you need to determine what changes need to be made to reach your goal.

* Go through this exercise for each of your future goals. Consider what you have now, what you want in the future. Make your goals measurable and set a deadline for attaining them. An honest appraisal and thoughtful projection will allow you to closely estimate how and whether you will reach the goals that you have set.

Black Enterprise (March 2001)

Submitted by: Jean Baird

Glossary of Terms

Capital gains: The profit that results when the proceeds for the sales of a security are higher than the security's cost basis.

Capital loss: The loss that results when the proceeds from the sale of a security are lower than the security cost basis.

Cost basis: The price, for tax purposes, paid for a security, including commissions, markups, and other cost adjustments.

Day order: An order to buy or sell securities without a time notation. If it is not executed or canceled, it expires at the end of the trading session during which it was places.

Limit order: An order to buy or sell stock immediately at the best available market price. No price is specified by the customer placing this order.

Market order: An order to buy or sell immediately at the best available market price. No price is specified by the customer placing this order.

Open order: An order that remains valid until it is executed or canceled.

Stop order: An order that becomes a market order to buy (buy stop) or sell (sell stop) when a stock trades at a specified price known as the stop price, also called a stop-loss order.

"Black Enterprise" May 2001, by Donald Jay Korn

This was very interesting to me he says.

"When you're sick, You’re sick. No matter what the economy is doing, you are still going to see you doctor". Healthcare is growing at nearly 10 percent to 12 percent per year, much faster than the overall economy. People want to live longer so they're willing to spend money there.

The article included information on Pfizer, GlaxoSmithkline, Eli Lilly, Merk, Abbott Laboratories etc.

“P/E Ratios”

Submitted by: Arthur Shuler

An excellent starting point for understanding the valuation of a stock is the price-earning ratio (P/E). Divide the stock price per share by the company's earning per share to calculate the P/E ratio. Please note that the absolute stock price per share of the leading Internet companies in the late 1990s was meaningless. The P/E ratio is what mattered.

Repair Shop, Better Investing July 2001

Submitted by: Bernice Pressley

Members of the Women’s Investment Network were unhappy with the results of their investments. To prevent dropouts or dissolution of the club (usually what happens), members resolved to go back to the basics by reviewing all the fundamentals of investing to ensure they are doing the job right. Some actions taken by the club:

• 3 month moratorium on buying and selling stocks

• Revisited the Stock Selection Guide to make sure everyone fully understands the process

• Devoted one full meeting to PERT analysis

Warm Spirit,

Submitted by: Shane Benjamin and Sharon Benjamin

Warm Spirit Inc is a 25 employee direct sales marketing company that registered sales of $350K in 2000. It hopes to reach sales of $1M in 2001 in the following ways: 1. Increasing the size of its sales force and 2. Increasing its presence on the website. In addition it intends to increase its presence by placing its products in spas and salons.

Warm Spirit sells herbal-based health and beauty products for black woman. It also sells through catalogs. It was initially started with a $50K investment, followed by a $2M investment by co-founder, Daniel Wolf. No information regarding its current stock performance was available at the time of this report. However, a web site could provide more info.

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