November, 2004 Meeting!

The next meeting of the AAII - West Suburban Sub-Group will be on Thursday evening, November 18, 2004.

Our featured guest speaker comes to us from Oberweis Securities whom many of you may know specializes in small-cap stocks. However, I have asked them to brief us on Micro-Cap stocks as well because the micro-cap arena is where you can make some very serious money in a rather short span of time - provided that you know what you are doing and have done your homework well!

As usual, we meet from 7:00 to 9:00 PM at DePaul University in Naperville, Illinois - which is located at 150 West Warrenville Road (at the intersection of Warrenville and Herrick Roads) in Naperville.

There is a $5.00 charge for guests as well as former members. Annual membership remains at $15.00 per year, and we meet monthly throughout the year.

If you need further information, please contact Bob Moser at:
rwm123@hotmail.com

Thank you.
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The Hidden Desire of Investors

What is the most important question for a stock market investor?

* Whether the market is undervalued or overvalued? No!
* Whether interest rates will go up or down? No!
* Whether a particular company is undervalued or overvalued? No!
* Whether you should buy ABC or XYZ? No!
* Whether Joe Bloggs, the great analyst, says it is a great buy? No!

All these questions are useless! There are whole office buildings full of people pumping out answers to these questions. They are not trying to mislead you. They are just trying to supply answers to these questions because people keep asking them and are willing to pay large amounts of money for the answers.

Even if they could be answered, the answers will not help you reach your financial goals... Why?... Because they are the wrong questions!

Focusing on these questions will give you the illusion that you are a serious investor. Long hours spent in reading all the articles and books, perhaps even poring over charts and financial reports, will only keep you locked in the system of struggle and mediocre success.

For others, the questions will give you an illusion of confidence and comfort because you are acting on the advice coming from the latest Wall Street hotshot.

But illusions hold you in bondage. As Morpheus, in the film The Matrix explains, "Like everyone else, you were born into bondage. Born into a prison that you cannot taste or smell or touch. A prison...for your mind!"

Chasing answers to these questions will keep you in this prison. At best, you may from time to time do better than the S&P 500 or some other index. At worst, you will see your money slipping away with poor returns and excessive fees.

Consider the case of trying to determine whether a company is undervalued or overvalued. It may turn out to be undervalued using some academic model. And there are hundreds of books describing such models. But if it stays undervalued for the next 10 years then it is not going to be much of an investment!

Even the whole notion of what is value is flawed. Suppose you go into a jewellery store and decide to buy an emerald ring for $2,000. The jeweller assures you that it is really worth a lot more and even arranges to get an insurance certificate for $4,000. Great! You are now congratulating yourself for buying something that is valued at 100% more than you paid for it.

Then what if you split up with the person you were going to give the ring to. No worries, you are thinking. "I'll just sell it back to the store." But when you go back in you are told that they will only pay $1,000 to buy it back. What you thought you were getting for 50% of its true value turns out to be overvalued by 100%.

All the other questions asked above can be dealt with in a similar manner. For example, Warren Buffett said that he has no idea what the market is going to do and whether it is undervalued or overvalued, whatever that may mean. What is more, he is not interested in knowing.

The same applies to interest rates. Buffett once said, "If the Federal Reserve Chairman Alan Greenspan were to whisper to me what his monetary policy was going to be over the next two years, it wouldn't change one thing that I do."

There is only one question. Underneath it all, there is only one desire. What is my profit rate or percentage return?

The core activity of an investor is to estimate with confidence the percentage return over a specified holding period when buying stock in a company. And you want to be able to do this based on numbers that you can see and adjust such as the growth rate of earnings.

When you can do this with a range of companies, you then have a rational basis for deciding when to buy stock in a particular company; as well as when to hold, and when to sell. You can decide between companies. You can even decide whether to invest in a particular company or in bonds instead.

You are in control. The market is now working for you instead of against you. And because you know the expected return on a range of quality companies, you can wait until Mr. Market offers to sell you stock in one of these companies that will give you the return that you want!

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Here's a little quiz for you!

This being the "political season," it's very interesting to observe the rhetoric being offered up by both the Democrats and the Republicans. And it is also very important that we not forget a few facts of history on election day; so I wonder if you are aware of under which political party was the following done while it was in the seat of power in Washington?

1. Took Social Security out of the independent "Trust Fund" and placed it into the General Fund so that Congress could spend it!

2. Eliminated the income tax deduction for payments (FICA) the people make into Social Security!

3. Started taxing Social Security annuities!

4. Enacted a law giving SSI Social Security payments to immigrants who never paid a dime into it!

HINT: It wasn't the Republican Party!

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Worldwide IRS Proposed by France!

French President Jacques Chirac has repeated his call for an international tax aimed at "reducing global poverty" during a United Nations summit in New York.

Chirac has been a long-standing advocate of a worldwide tax, and earlier this year appointed a panel of experts including economists, business leaders, government officials and activist groups to examine the issue.

The 150 page report produced by the panel has suggested a number of different revenue-raising ideas including taxes on emissions of greenhouse gases, certain financial transactions, arms sales, airline tickets, credit card purchases or shipping.

The document also contained proposals for a levy on multinational firms and the creation of an international lottery.

It is thought that a global tax system could build a pot of around $50 billion to be used in programs designed to reduce poverty.

The panel has declined however, to name their preferred method of taxation, although the report claimed that each levy is "technically feasible."

This is a view echoed by Chirac, who, according to Reuters, believes that the recommendations are "technically realistic and economically rational solutions."

While the proposals may be realistic in the technical sense, from a political standpoint they are unlikely to be practical, especially in the face of vehement opposition from the United States government.

Summing up the American view on the matter, U.S. Agriculture Secretary Ann Veneman argued that global taxes are "inherently undemocratic." And, "implementation is impossible," she added.

Note: This report first appeared on the Tax News web site which can be reached at:

www.taxnews.com

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Re: Our October 21st meeting!

What a wonderful time we had and what an interesting and informative evening Ms. Gwendolyn Kirkland presented to us!

For those of you who would like to contact Ms. Kirkland, here is her web site where you may do so:

www.KirklandTurnbo.com

And I'm certain that we can invite her back again at some point in the future if you would like us to do that!
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For those of you who may be interested in following the goings-on as relate to the NAIC situation, thanks to member Erik Berg, there is a web site where you may go to read further particulars and that is:

http://moneycentral.msn.com/content/CNBCTV/Articles/TVReports/P96559.asp

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The reasons why most people will never get rich!

It is only when you really understand what self-made millionaires do that you get to become one of them. If you don't understand, and do what they do, you don't get to become one. It's really that simple!

Here are the five main reasons why most people will never get rich, and how to make certain that you do:

Reason #1: Waiting too long to start.

While most people can't wait for success to 'happen' to them, at the same time, they are willing to wait before getting started on the road to that success - completely forgetting the fact that the longer you wait to get started, the longer it will be before you achieve the money and the lifestyle that you seek!

No race has ever been won, or finished, by someone who never even left the starting gate!


Reason #2 - Being financially illiterate.

The very cornerstone of all wealth lies in your ability to understand the difference between assets and liabilities. And the difference is this: Assets put money IN your pocket, while liabilities take money OUT of your pocket.

Most people in our society think that their home, their car, or other possessions are assets. But, the truth is that in most cases those things take money out of your pocket. They COST you money. They don't MAKE you money. And therefore, by definition, those things are all liabilities.

When you have more money coming IN from real assets than you have going out to pay for liabilities, it is at this point that you begin to become financially free. And there is only one way to do this and that is explained in the next reason.


Reason #3 - Focusing on linear income instead of passive income.

Linear income is what you derive from working at a job. It's a situation where you work for an hour and get paid only one time for that one hour's work. And that's it!

Passive income on the other hand is when you work once, but continue to get paid over and over again from work you're no longer doing.

Either investing in, or creating real assets that provide passive income for you is your true ticket to wealth!


Reason #4 - Not understanding or using systems for making money.

A system for making money is anything that allows you to make money without your own effort. In essence, it's much like an automated way to make money. And all true assets are simply systems of one sort or another.

Once you create or invest in a proven system for making money, there is simply no limit to the amount of money you can make. And by becoming a master of money systems, you can ensure for yourself a steady stream of riches beyond your wildest dreams!


Reason #5 - Not being persistent or patient enough.

In order to finish any race, you must first leave the starting line and then follow through to the finish line. But most people really aren't even in the race. They create their own failure by either not getting started or by not following through, or both!

To become rich, successful, and happy, you must acquire the patience and the persistence necessary to cross the finish line. You must not only get started, but you must also follow through.

This may sound obvious, and yet, it is the main cause of most failure!

Only by joining the small percentage of people who are willing to do those things that are outlined in the five 'reasons' stated above will you have the greatest chances for wealth and happiness.

It's really quite simple... Decide to do these things that most people fail to do and you can get rich too. However, if you don't do them, then like most people, you too may never become rich.

Decide now to master the ideas contained in these five 'reasons.' Begin your road to success now. Then follow through and watch the difference that it makes. And believe me, the results that you will obtain by consciously following these ideas are far more rewarding than any alternative!

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Next meetng on Thursday, October 21, 2004

Our meeting will feature as guest speaker Ms. Gwendolyn Kirkland, who is principal at Kirkland, Turnbo & Associates of Matteson, Illinois. The topic is, "Who Wants To Be A Millionaire?"

We meet at DePaul University in Naperville. The location is 150 West Warrenville Road (at the intersection of Warrenville and Herrick Roads).
The meeting runs from 7:00 to 9:00 PM. The room number will be posted on an easel near the reception desk in the main lobby.

There is a $5.00 fee for visitors and/or members whose dues are not paid up to date by meeting time. Present membership fee is still $15.00 for one year.

For any further information please contact Bob Moser via e-mail at:
rwm123@hotmail.com

Thank you.

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What If...?

What if there is a bank that credits your account each morning with $86,400. It carries over no balance from day to day. Every evening, it deletes whatever part of the balance you failed to use during the day. What would you do?...Draw out ALL OF IT, of course!

Well, each of us has such a bank. Its name is TIME. Every morning, it credits you with 86,400 seconds. Every night it writes off, as lost, whatever of this you have failed to invest to good purpose. It carries over no balance. It allows no overdraft.

Each day, it opens a new account for you. Each night, it burns the remains of the day. If you fail to use the day's deposits, the loss is yours.

There is no going back. There is no drawing against the "tomorrow."
You must live in the present on today's deposits. Invest it so as to get from it the utmost in health, happiness, and sucess!...The clock is running. Make the most of today.

To realize the value of ONE YEAR, ask a student who failed a grade.

To realize the value of ONE MONTH, ask a mother who gave birth to a premature baby.

To realize the value of ONE WEEK, ask the editor of a weekly newspaper.

To realize the value of ONE HOUR, ask the lovers who are waiting to meet.

To realize the value of ONE MINUTE, ask a person who missed the train.

To realize the value of ONE-SECOND, ask a person who just avoided an accident.

Treasure every moment that you have!...And treasure it more because you shared it with someone special, special enough to spend your time.

And remember that time waits for no one. Yesterday is history. Tomorrow is a mystery. Today is a gift. That's why it's called the present!

Friends are a very rare jewel, indeed. They make you smile and encourage you to succeed. They lend an ear; they share a word of praise, and they always want to open their heart to us.

-Author Unknown

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Individual Investors Are About To Get Clobbered!

This is the alarming message that I received today from the editor-in-chief of a certain financial newsletter. He goes on to say, "The period we're about to enter is likely to be as dire as any in our nation's financial history. What can investors expect over the next few months as the bubbles begin to burst...and our financial system begins to implode?"

"First, I need to tell you what has already happened. The news I bring you may be a bit unsettling...but it's absolutely necessary in order to understand the full impact of the disaster that looms. The fiscal position of the United States is much worse than anyone suspects -- and this is the case at three levels: personal, corporate, and federal."

"Individual investors are about to get clobbered. Rising interest rates -- caused primarily by our own government's betrayals -- will burst the enormous housing bubble that has created so much artificial wealth in our country. Imagine your neighbor's surprise when in just a matter of days, his home's value has fallen by more than 50%...his retirement account has plummeted thanks to a stock market collapse...and his interest payments have doubled, thanks to that adjustable-rate mortgage he used to refinance his home."

"Corporate America has already seen what can happen to debt-riddled companies in down cycles. The coming bear market in stocks -- which will take place soon after the housing market begins to collapse -- virtually guarantees that corporations will have to deal with higher borrowing costs, and lower profits. That means those corporations, overloaded with debt -- and there are thousands -- will begin defaulting and be forced to shut their doors...If you thought the Enron 'scandal' was bad, this scenario will be exponentially worse; imagine if a thousand Enrons went bankrupt overnight. Literally thousands of companies would be forced to close their doors, leaving hundreds of thousands of unsuspecting employees scrambling for jobs and unemployment benefits."

"At the federal level is the biggest bombshell of them all: the financial destruction of the U.S. dollar. The fact of the matter is that foreign interests now own more than 50% of U.S. Treasurys. So the United States is - for all practical purposes - at the mercy of these nations."

"What will happen next is that these foreign nations - particularly Japan and China - will begin getting out of the U.S. dollar. They may do so simply because they need to trade their financial reserves for 'real' assets. Or, their bailing out on the U.S. dollar may come in response to some terrorist act that sends the oil market reeling. But no matter if it happens over the couse of several months - or in the span of just a few days - it's going to happen!...Foreign nations will soon begin dumping U.S. Treasurys. That much is now certain...and the result will be disastrous!"

"Interest rates will rise at a much faster pace than anyone imagined. Homeowners - especially those who have grown used to borrowing against their home - will lose their shirts. And the stock market will take a nose dive of historic proportions."

But again, here's the thing to remember about the importance - and immediacy - of the problem in the United States right now:
Over 35% of U.S. Treasury debt has a maturity date of less than one year.
That means any rise in interest rates makes it almost instantly more expensive for the government to borrow money. Bottom line: The interest expense of the federal budget - already more than 20% - is about to skyrocket. Thus, the financial future of the United States is anything but bright. And it really doesn't matter who wins the election on November 2nd, because the country is destined to go bust no matter who sits in the Oval Office!"

Ed Note: There is much more to that message, but I have given you the essence of what that writer has to say. I believe there is much food for thought contained in those paragraphs, and one fact that stands out in my mind from reading his statements, is the idea that now more than ever is the time to avoid debt, and to be most prudent in making future investment decisions!

Bob Moser
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AAII - NAPERVILLE NEWSLETTER

Welcome to our new source of information concerning the latest news of interest to the members and friends of The West Suburban Sub-Group,
part of the American Association of Individual Investors.

We meet monthly on the third Thursday, and our location is DePaul University - Naperville Campus. Located at 150 West Warrenville Road in Naperville, Illinois.

For further details, you may send an e-mail to: RWM123@hotmail.com
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Our next meeting will be on Thursday, October 21, 2004
The meeting lasts from 7:00 to 9:00 P.M., and the room number will be displayed near the reception desk in the main lobby.

Our guest speaker this month is Ms. Gwendolyn Kirkland, who is a principle at Kirkland, Turnbo & Associates in Matteson, Illinois.
The topic will be, "Who Wants To Be A Millionaire." Ms. Kirkland has appeared on numerous radio and TV investment programs; she is a very fascinating person as well as a dynamic speaker and we are very fortunate to have her address our group. So you will thoroughly enjoy this speaker!
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Again this reminder that as we begin our tenth year, we have instituted a change in our fee structure. While membership remains at $15.00 per year, beginning this month there is a $5.00 fee for attendance at each meeting by either visitors, or those whose membership has lapsed and not been renewed. These changes are necessary in order for us to maintain a healthy financial position; also to allow us to provide the active members with important financial information in printed form from time to time.

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