Grow Your Portfolio the Intelligent Way

March 2006 Issue

By Richard C. Young

A Chocolate City…

New Orleans’ Mayor Ray Nagin, at an M.L.K. Day speech, predicted in his very best George Clinton fashion that N.O. would be a “chocolate
city.” Mayor Ray told a mostly black audience that God was mad at America and that God surely doesn’t approve of us being in Iraq under false
pretenses. The Mayor can be forgiven for his moment of stress. Hurricane Katrina put New Orleans on its back. Since his incendiary speech, Mr. Nagin
has offered, “I said some things that were totally inappropriate.” I’ve never met the Mayor, and it’s true that on more than
one occasion he has become untethered from his mayoralty mooring. Nonetheless, my inclination is to like Mayor Ray, who has worked hard for the folks
of New Orleans with his arm-bending trips to Washington and firsthand meetings with a sympathetic President Bush.

It’s All About the Oil

Let’s focus on the mayor’s comment on Iraq. It’s a view shared by other Americans, and, given a detailed look at the reality in Iraq,
your investment portfolio is center stage. Let me be clear here. It’s all about the oil. Forget all the subterfuge created by the media. In 1973,
the U.S. imported 35% of its oil. Today, we import over 55%. The reality is that the U.S. imports more oil annually than the next three oil importers
combined (Japan, Germany, and S.K.). In 2005, we imported about 12.2 million bbls/day. U.S. production is declining while demand is increasing, and U.S.
imports are climbing steadily. No new oil refineries have been built in the U.S. in 30 years. Under current conditions, we will need to import nearly
70% of our oil by 2025.

India’s Oil Dependence

In Chart #42 in my Economic Supplement, I show you China’s disastrous consumption/domestic production gap. And as to India, its annual crude oil
output has leveled off at less than one-third of the country’s consumption. Paris-based International Energy Agency forecasts that by 2030 India
will be 90% dependent on imports for its oil needs. At that point, I would note, India’s population will be greater than China’s. In India’s
fiscal year ending March 2005, India’s oil import bill was up by a shocking 40% in a single year. Who is going to get the oil?

The Squeeze Is On

Today, we consume more oil than the next five biggest consumers combined (China, Japan, Russia, Germany, and India). No country has the oil thirst we
have—nothing close. For Americans, transportation is all about oil imports. Little oil is used for electricity generation. Where do we get the
massive volume of oil imports required today, and what happens tomorrow as China’s and India’s demand soars? And what does it all mean to
you as an investor?

U.S. Imports Nearly 60%

In the January to August 2005 period, almost 60% of our oil needs came from abroad. Here’s the supply mix. Overall, the top oil suppliers of crude
oil to the U.S. during January to August 2005 were Canada 1.6 million/bbl, Mexico 1.6, Saudi Arabia 1.5, Venezuela 1.3, and Nigeria 1.0. Note how important
our Canadian and Mexican neighbors are and that the Middle East grabs only one in five top slots. Also note how important volatile Venezuela has become
to the U.S.

And, as you probably know, China has made aggressive forays into Venezuela to meet with radical leader Hugo Chavez on a Venezuela/China oil deal.
Two things here: (1) I wouldn’t be stocking up on any green bananas were I Senor Chavez; and (2) I’m not clear on what China could have in
mind regarding Venezuela’s mud-thick heavy crude. To my knowledge, China does not have the refineries to handle heavy crude.

Focus on Iraq

I want to bring the Iraq situation into focus because the intelligence I have for you is vital. Any country’s production capacity is a function
of a country’s existing proven reserves, its potential reserves, and the rate at which those potential reserves become proven reserves.
In the proper environment and with a substantial infusion of capital and expertise (both to be supplied by the U.S.), it appears that Iraq could ramp
up to a production capacity of 10 million to 12 million bbls/day.

Given Iraq’s previous norm production level of 3–3.5 million barrels, Iraq probably has over 350 years of remaining production life. That
assumes that Iraq has potential oil reserves, as I believe, on the order of 325–350 billion barrels. At a minimum, there is little question
that Iraq’s potential oil reserves are second only to Saudi Arabia’s.

In any type of normalized economic climate, Iraq clearly could become America’s biggest supplier of oil. Here’s how things stand today with
Iraq’s oil: Through the first 10 months of 2005, Iran pulled up 1.92 million bbls/day. That is a drop of 91,000 bbl/day from the 2004 average.
Through the first nine months of 2005, Iraq was exporting on average 929,000 bbls/day to more than 15 countries. And who is Iraq’s #1 customer?
Why the U.S. at 525,000 bbls, or over 55% of Iraq’s total exports. And Iraq’s exploration program is just in its infancy.

Let’s Not Be Naive

OK, so it is all about the oil after all, as it has been from the start. Let’s not naively lose sight of the big picture here. And let’s
not let political posturing and media histrionics cloud the purpose of the real mission. No oil imports, no U.S. transportation. No oil imports, no U.S.
economy. Things would slow to a literal and figurative crawl. It is just that simple. Maintain focus.

What Price Oil

Don’t look for oil prices to stay at current
levels indefinitely. Yes, oil prices long-term will go higher, but short-term, supply/demand and pricing are out of whack. Check out my Charts #39 and
#40. These are the best and most useful charts you will find outlining the basics for oil.

In Chart #39, I give you a theoretical price for oil based on oil demand coverage and oil inventories as well as upside and downside boundary lines
for two standard deviations. The actual price of oil should fall within the standard deviation error band 95.5% of the time, which, with the exception
of the current spike, has indeed been the case. Oil prices have blown past the fundamentals. Chart #40 shows just how far oil and for that matter gas
have blown off course. In terms of energy costs per million Btu’s, coal and uranium are dirt cheap today versus oil and gas.

Oil prices, long-term, will surge for any one of three obvious reasons: (1) Chinese and Indian demand; (2) terrorist-based oil supply disruption; or
(3) an eventual decline in worldwide oil production. In any event, the long-term view is for higher oil prices.

Four Vital Factors

In the interim, a lot can and will be done to drop the price of oil back well within the two standard deviation bands outlined in Chart #39. Here are
some powerful considerations for you to factor into your investment thinking.

(1) At $40/bbl for oil, shale oil is economical. There is estimated to be about as much oil recoverable from the shale rocks in the Rockies as in all
of OPEC’s oil fields.

(2) Theoretically, there is enough wind power flowing across the country to supply all of our electric needs. North Dakota is the Saudi Arabia of wind
and alone could supply over 40% of the nation’s electricity. Adequate winds for commercial power production are found at sites in 46 states. Wind
power makes economical sense at about $41/bbl oil.

Amory Lovins, CEO of the Rocky Mountain Institute, is the world’s foremost authority on energy efficiency. As Mr. L will tell you, the U.S. is
overly reliant on big centralized energy facilities such as power plants, pipelines, and refineries. Here’s what A.L. advises instead.

(A) Vastly improve energy efficiency for vehicles. In 2002, A.L. outlined how adding 2.7 mpg to the average U.S. car and light truck could eliminate
as much oil as the U.S. imports from the Persian Gulf.

(B) Expand the use of small, diverse, widely distributed energy sources like natural-gas-fired micro-turbines and wind farms. Model AIR, from Southwest
Windpower in Flagstaff, Arizona, is by far the world’s #1-selling small wind turbine.

(C) The U.S. is the Saudi Arabia of coal. We have about 25% of the world’s coal reserves, and over 50% of our electric generation is from coal.
By 2012, we will add over 70 new coal-fired plants, India will add over 200 plants, and China over 500 plants. A process labeled “integrated gasification
combined-cycle” generates clean energy from coal. The process all but eliminates the greenhouse gases linked to global warming. It’s a great
new technology.

(D) Oil from tar sands is economically feasible at $25 to $30/bbl oil. Alberta, Canada, is the Saudi Arabia of tar sands. It’s thought that as
many as 300 billion recoverable barrels and another trillion plus barrels could one day be within reach using new retrieval methods.

Other energy programs are on the drawing boards, including expensive solar (economically feasible at over $100/bbl oil), nuclear (little if anything
will happen in the U.S. pre 2015), fuel cells powered by hydrogen, and ethanol. All offer great long-term promise.

Saudi of Ethanol

Brazil is the Saudi Arabia of ethanol. Sugar plantations are big business in Brazil, which already has over 300 bio-fuel plants based on sugar. Brazil,
thought to be the low-cost producer, sells ethanol for less than half the current price per barrel of oil. As a result of its worldwide leading effort,
Brazil is now basically energy-independent. Incredible, isn’t it? And the U.S. is still held hostage to foreign oil.

Thailand is also keen on sugar-based ethanol. In a matter of a few years, Thailand will supply most of its local gas stations with ethanol.

High-Tech Oil

Then there is always the Digital Revolution to the rescue. High-tech oil recovery has the potential to double today’s known oil reserves. For
example, super computers built by Silicon Graphics provide oil-field simulations, offering the ability to find oil deposits previously missed.

What Now?

So how do you invest to protect yourself from the vagaries of oil prices and the potential for higher oil prices long-term? Remembering that oil, as
well as gas, is today dramatically overpriced based upon supply and demand fundamentals, here’s a solid
battle plan. At the core of your strategy is a natural resources fund heavy on energy. I’ve owned T. Rowe Price New Era Fund for decades and have
long advised that you make this fund a dominant building block in your own portfolio. At my family investment management company, New Era is our #1 equities-oriented
holding. Last year alone with my advice, you made nearly 30%. Your three-year average annual return has been an even higher 32+%. And this year—in
a single month—you are already ahead 11%, giving you an average three-year total return of 36.4%! Pretty shocking, isn’t it? Continue to
invest in this energy/metals counterbalancing proxy.

New Utility Additions

I’m adding four dividend-paying utilities to my utilities group on page 4 of my Monster Master List. Each has a vital commitment to alternative
energy.

(1) Cinergy (NYSE: CIN) (dividends since 1853!) is a coal-reliant Midwest utility with a planned merger with Duke Energy. CIN’s
units, Cincinnati Gas & Electric and PSI (former Public Service Company of Indiana) purchase over 25 million tons of coal annually. CEO James E.
Rogers is on record as being behind integrated gasification combined-cycle plants. This technology has the ability to capture carbon before combustion.

(2) FPL Group (NYSE: FPL) (Florida Power & Light; dividend since 1944) has a strong commitment to wind-powered energy. Today, only
1% of U.S. energy consumption comes from wind. The company’s unit FPL Energy is America’s largest operator and developer of wind farms and
turbines. The company’s 45 U.S. wind facilities command an estimated 40% of America’s wind market.

(3) Xcel Energy (NYSE: XEL) (dividend since 1910) is the combined company of Northern States Power and New Century Energies. The combo
owns four utilities serving electric and gas customers in 10 western and northern states. Today, Xcel Energy purchases the second-largest amount of wind
power in the nation.

(4) Puget Energy (NYSE: PSD) (dividend since 1943) is the holding company for Puget Sound Energy, the largest electric and natural
gas utility in the state of Washington, and InfrastruX Group, a construction services company. Last fall, the company acquired the development rights
to the 229-megawatt Wild Horse Wind Power Project in eastern Washington. By the end of 2006, the
company hopes to service over 70,000 homes with low-cost wind-generated electric power.

Two Add Backs

I’m adding back Royal Dutch (NYSE: RD) and British Petroleum (NYSE: BP) to my Monster Master List as a way to help you develop exposure to alternative
energy under the umbrella of huge dividend-paying blue chips. The time to overweight your portfolio in oil is during the next correction in oil prices.
At that point in the cycle, you will be able to add BP and Royal Dutch’s oil exposure and pick up each company’s sizable bets on alternate
energy really for nothing.

BP has set up a brand-new alternative energy operation called, not shockingly, BP Alternative Energy. BP plans to initially spend $8 billion over 10
years on carbon-abatement technology, wind, solar, and hydrogen. Management is targeting a 15% return on capital in investments in combined-cycle gas-fired
generation, hydrogen, solar, and wind. BP today projects a worldwide peak in oil production in 2020 and plans to be geared up in its other alternatives
as its next grand step forward. The company is now using a catch phrase “beyond petro” to label itself.

GE Joins the Greens

Next up is Dow powerhouse General Electric (NYSE: GE) (dividend since 1899). CEO Jeff Immelt is as committed to energy efficiency as any CEO in the
world. Immelt is targeting $10 billion to $20 billion in “green” products within five years. These are all potential high-growth businesses.
GE bought its wind unit from Enron at a fire-sale price of $358 million. Sales have tripled since purchase, making it today a $2+ billion business. GE
is now well-known worldwide for its giant turbines for offshore wind farms. Each of these giants is projected to generate enough electricity to power
up to 2,100 homes a year.

On the coal-gasification front, GE has purchased Chevron’s coal-gasification unit. GE is now working with China, which, as I pointed out earlier,
has over 500 coal plants on the drawing boards.

GE’s giant Evolution series locomotive is super powerful as well as 15% more fuel efficient than current engines. It also exceeds all stringent
EPA emissions standards. Look for these gas/electric behemoths to hit the tracks in 2007. Buyers will include my highly favored and hot-performing Norfolk & Southern (NYSE:
NSC) and Union Pacific (NYSE: UNP) (buy both).

GE’s Global Research Center, overlooking the Mohawk River in New York (with satellite offices in Bangalore, Shanghai, and Munich), employs over
300 researchers. The focus is on goals and deadlines. We’re not talking pie-in-the-sky dreamland and wasted money. The headman at GE’s Global
Tech Center has referred to the quest for clean
sustainable energy as “the biggest question for mankind in this century.” GE researchers are laser focused not only on wind, but also on
hydrogen, photovolactics, and clean coal.

Over the next decade, Jeff Immelt expects to generate as much as 60% of GE’s revenue growth from developing countries. GE will be selling its
turbines and efficient engines in high-growth China and India. As J.I. points out, India is only at the beginning of its growth cycle. And need I emphasize
China’s drastic need to deal with its foul water situation? Clean sources of water are badly needed, and GE has the required solutions.

You may never have heard of GE Money, GE’s consumer finance arm. GE is moving big and moving fast in the gigantic Asian financial marketplace.
After just two years in India, GE Money is already the #2 credit-card issuer—maybe because GE was able to team up with the State Bank of India.
Look for huge growth at GE Money. And, of course, buy GE.

Finally on my energy track, a few years ago the American Wind Energy Association called Texas’ renewable energy program “the most effective
renewable energy policy in the country.” And the CEO for this terrific achievement was none other than then Governor George W. Bush.

Still hot on the subject of natural resources, I’ve included a set of charts (page 5) for you on the real price of cotton, sugar, wheat, soybeans,
and corn, all in the soft commodity sector. I’ve included a similar chart on lumber. What can we conclude? Wow, are these things cheap. What happens
when demand in China and India really heats up? Looking at these charts, it’s hard to see this group heading much lower. I can’t think of
any group of investments I’m more bullish on. On the timber front, I’ve long advised you to make Plum Creek (NYSE: PCL)
and Rayonier (NYSE: RYN) top holdings. Over just the last 36 months, you have averaged over 20% with Plum Creek and 48% with Rayonier.

PIMCO Real Commodity Return gives you nice exposure in soft commodities even though it’s heavily overweighted in energy. The
next time oil drops back into our chart-listed trading band, load up on this fund. Meanwhile, be darn glad for what you already own.

Your Control Factors and Benchmarks

Here’s a look at some control factors and benchmarks vital to your investment success. I’m making the case that politics rank #1 on your
list of concerns as to potential success in the stock market in any given year. Since I graduated from Shaker Heights High School in Ohio in 1959, the
stock market has risen in every year leading up to a presidential election—no exceptions. The record is a startling 12 and 0.

Note that in four of those 12 years, the annual gain was in excess of 20%. In the year of a presidential election, the record is an almost as powerful
10 and 2, with only a single year of double-digit declines. Overall, the year before a presidential election and the year of a presidential election
add up to a record of 22 and 2. You will find it hard if not impossible to find any guidance to short and intermediate stock market performance stronger
than the presidential election cycle. In the other two years of the Presidential Cycle (2005 and 2006 in the current cycle), it’s a strictly mixed
bag, with 11 years up and 11 down.

Conservative investors will want to look at 2006 with caution while they prepare for the probability (all things equal) of two good years in 2007 and
2008. What two factors will most strongly influence the stock market in support of the historical pull of the four-year Presidential Cycle? The two most
dominant influences are (1) momentum in interest rates and (2) momentum in the economy. Lower interest rates and a strong economy almost certainly translate
into a solid year for the stock market, and the reverse is also likely to be the case.

Today, interest rates are at a dangerous level. Chart #18 dramatizes the big-time change in course for the key 10-year T-note/Fed funds differential.
The spread has totally collapsed to the point that the Fed has pushed the funds rate up to the point that it is about to rise above the yield on 10-year
Treasuries. Since graduating high school, there is no example of a recession that was not preceded by an inversion of the 10-year/Fed funds yield curve.
No example to the contrary. Pretty powerful statement, wouldn’t you say?

What about this time? Well, there is yet no inversion. Close, real close, but the 10-year T-note is still 10 basis points above the Fed funds rate.
Next look at Charts #1, #3, and #4, all clearly pointing to an economic growth slowdown. Yet I cannot envision a recession as long as my proprietary
Moving the Goods Chart (#7) maintains its current look. A recession is deemed as in place with two negative back-to-back quarters of GDP. As Chart #7
shows, there has not been one down quarter, never mind two. Let’s not get edgy about an “R” until we can project at least one down
GDP quarter.

Clinton Recession

Check out the Clinton recession of March 2001 to November 2001. While there were not two consecutive down quarters, as would be the norm, there were
three down quarters over a five-quarter period. And take a gander at the cratering in the coincidents Chart #3; industrial production #4; employment
#5; bank credit #9; and capacity utilization #10. All five were savaged during the Clinton recession. The current environment shows scant resemblance,
so at this point in the cycle, I’m not yet concerned about the yield curve inversion or an immediate recession.

Your Best Stock Market Chart

I’ve graphed the Dow for you (Chart #45) in log terms to portray percentage change rather than change in points and have included upside and downside
boundary lines for two standard deviations. You can expect the Dow or any normalized data series to stay within the two standard deviation boundaries
95.5% of the time. This is the empirical rule.

It’s the Fed’s Move

The Fed is in a position to help effect change in economic momentum and the stock market. One more 25-basis-point increase in the funds rate will most
likely lead to an inversion in the yield curve. And as I’ve shown, such an inversion historically leads to recession. Further increases in the
funds rate are unlikely to be a plus for the housing sector, which in recent years has been a big driver for the economy. Chart #6 gives a feel by tracking
new housing building permits. The peak is most likely past, but so far there has been no real cooling off. That could change with additional hikes in
the Fed funds rate.

Take a look at Chart #10 on capacity utilization. My rule here is that the Fed will be inclined to increase rates until utilization levels off or even
declines. We may be seeing a plateau here. OK then, the Fed may well be able to sit on its hands here, especially with the leaders (Chart #1), the coincidents
(Chart #3), and industrial production (Chart #4) all flashing warning signals. All in all, there is not yet any significant negative influence
on the stock market from interest rates or economic momentum.

Your Investments

How have you been doing? The average investor has had a tough go of it this century. Since year-end 1999, the NASDAQ is down 44% and the S&P 500
14%. A portfolio divided 50/50 NASDAQ and S&P is down about 30% this century. Fixed income and dividend-paying stocks help insulate portfolios from
such a debacle. All conservative investors over 50 years of age want a fixed-income component of at least 30% and potentially as high as 75%, depending
on age. I want you to turn to the last page of my Economic Supplement. I’m pointing you to Charts #50, #51, and #52. Chart #50 shows you that in
every year (one mini exception) since 1950 (Ivory Joe Hunter, Little Esther, and Johnny Otis were topping the R&B charts) fixed income, as represented
by Treasury notes, was up when stocks were down. Talk about armor plate. Chart #51 on Vanguard’s Wellesley Income Fund shows increases in 86% of
years, including every year this century, while the S&P 500 and NASDAQ got killed. And look, not a single disaster year—not one double-digit
decline. Wellesley is 60% to 65% fixed income. As such, the defensive properties are strong. Chart #52 is a 50/50 mix of equities and fixed income. You
will note no down year in the last decade. Hard to hate, isn’t it?

What do you want for fixed income? In Chart #14, I give you the 90-day T-bill yield. In the 2002–2004 period, rates were actually negative in
real terms. Real bad news for savers. Now the real yield has popped up to 2%. I’d like to see 3%, but a 2% to 3% range is what you should expect
in normal times. Although I don’t think the Fed needs to raise rates again, it is still a 50/50 bet that another hike is left in the cycle. Keep
the duration of your portfolio short—about five years. I make an exception for retired investors seeking current income and investors compounding
preferred dividends in a tax-deferred account like an IRA. Here I like high-yielding investment-grade preferred stocks.

I’ve recently added the new Morgan Stanley Trust Preferred VI (no call for five years and rated A1/A-) with a yield of about
6.5%. Add this name to your list. Given the current 18.6% P/E for the Dow and the Dow’s 2.33% yield, a normalized average annual total return for
stocks of 7.7% might be anticipated. As such, a 50/50 portfolio mix of Dow blue chips and investment-grade preferreds with a 6.5% average yield offers
the potential for an average annual portfolio total return of 7.1%. No problem drawing 4% in retirement.

Along with preferreds, stick to (1) full-faith-and-credit U.S. Treasuries and STRIPS; (2) AAA-insured municipal bonds; (3) no-load, low-expense mutual
funds mostly from the Vanguard Group, the undisputed leader and champion of “bond funds that work.”

Equities, Funds, Stocks.

Last year, you scored huge with Vanguard Precious Metals & Mining. Your one-year gain was an astounding 43.8%. This year the fund is already ahead
a striking 14.5%, giving an average three-year gain of 37.4%. Pretty hard to beat. But look, gold prices are at 25-year highs, and precious metals across
the board, including platinum and silver, have been on a long pull. To have missed this virtually free lunch has been a black sin. Chart #24 offers perspective
on gold as a monetary asset. In order to back all of the world’s foreign exchange reserve assets with gold, gold would need to trade at about $4,670/oz.
IMF data is kept in SDRS, so I get my number by converting to dollars (1 SDR = 1.46 US$). Today’s big number shows you how paper assets in the
form of foreign exchange have piled up. Remember, these assets have absolutely zero intrinsic value. Each piece of paper is simply an I.O.U. And over
the ages, it has been the history of currencies to depreciate in value, most often to zero. Many years ago, I had the extreme pleasure of meeting in
length with renowned currency expert Dr. Franz Pick. Dr. Pick used to say that through history an ounce of gold could always be counted on to buy you
a fine suit. I’ve never forgotten the many lessons I learned from this distinguished, dapper gentleman, and the gold/suit analogy is one of my
favorites.

Chart #29 on the real price for gold shows that gold has just gotten under way. The two-decade bull market in bonds that sent the real price of gold
into a nosedive is over. Chart #27 on the U.S. dollar versus the yen and Chart #24 on the monetary price of gold indicate that you want to continue to
invest in Vanguard Precious Metals & Mining.

On the international front, continue to add hot-performing Canadian General Investments, up over 50% last year and already ahead over
11% YTD. iShares Singapore, Hong Kong, and Australia all had good years last year
and are off to a great start in 2006. Buy all three. Finally, Fidelity International Real Estate is already up by over
5% YTD. It has a strong foothold in the hot Hong Kong market. Add this excellent counterbalancer.

Monster Master List Stocks

Harley-Davidson (NYSE: HDI) recently announced its 20th record year in a row. Cash flow from operations increased by over 15% to $960 million.
Revenues increased 6.5% (my target 7%) to $5.3 billion. Harley shipped 329,017 bikes last year, up 3.7%, and Buell shipments were up 13%. Capital expenditures
totaled only 20% of operating income. That leaves a monster pile of cash to improve the interest of shareholders by reducing the number of shares outstanding
and increasing the dividend at a healthy rate. Harley’s $960 million from operating earnings allowed the company to buy in over 20 million shares
of stock and reduce the number of shares outstanding by a whopping 7% in just a single year. The company paid out $174 million in dividends in 2005,
versus $119 million in 2004. Looking ahead, management projects unit growth of 5% to 9% (my target 7%) and EPS growth of 11% to 17% (my target 11%, and
I believe H-D will cut its target range). And H-D expects to ship 348,000 to 352,000 Hogs in 2006. If H-D can even hit the low end of this range, it
would be terrific. My target for Harley is $72/share in three years based upon $4/share in earnings (probable in 2007) and an 18XE. I expect the targets
to be hit. Continue to buy America’s most prestigious and honored basic manufacturing company.

Retirement Compounders Foundation

All of my common stock advice in these strategy reports is based on Young Research’s Retirement Compounders program research list. Last
year, the in-house Young Research model was up 9.56% (unaudited) versus a mini decline for the Dow. This year, the Retirement Compounders model is already
ahead by 6.14% (unaudited). All the Retirement Compounders stocks pay dividends, and many names are foreign. I advise all conservative investors to stick
100% with dividend-paying stocks. The current yield for the Retirement Compounders program model is 3.44%, versus the Dow’s yield of 2.33%, so
you can see my emphasis on dividends for you. Not every name on the Monster Master List and Top 10 Countdown is dividend-paying, but the majority are.
Go to my Top-10 Countdown on the last page of my Economic Supplement as your first place for new names to add to your list. This month, you’ll
find GE, covered earlier; my two favored apartment REITs, Archstone-Smith (NYSE: ASN) and Equity Residential (NYSE: EQR); Delta and Pine Land (NYSE:
DLP), a cottonseed company; McCormick (NYSE: MKC), a spice company; Plum Creek and Rayonier, forest REITs; Union Pacific; and finally my U.S. manufacturing
icons Harley-Davidson and Polaris Industries (NYSE: PII).

Although not quite making my Top 10 with Carl Icahn and Lazard’s Bruce Wasserstein chewing their backsides, I see Time Warner (NYSE:
TWX) trading higher. Should be a lock. Buy it.

Today, international diversification is a vital component of your portfolio strategy due to the New World Order of terrorism and the massive U.S. trade
and budget deficit. There is a group of real nasty folk called maras (gangs). I’m talking about one of the biggest criminal groups in the Americas.
Easily spotted by a series of grotesque tattoos (often three dots), the gangs, based largely in El Salvador, Honduras, and Guatemala (do not travel),
are now festering like rabid rats. And now the maras are widely prevalent in L.A., N.Y., and Washington, D.C, to name three. Frequently affecting a freighting
clown-type face, the maras are well-organized, using the Internet and throwaway mobile phones to operate. The maras are especially likely to be found
in areas heavily populated by Salvadorans. Al Qaeda is far from our only terrorist threat.

Australia is ranked by IMD as the most resilient economy in the world and a bastion for international diversification. I’ve regularly advised
my favored mining giants BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RTP), and want you to buy each along with iShares
Australia. Also high on my list, Singapore, with its hard-line government, makes a great shelter in any international storm. The country survived
the Asian financial crises of the late 1990s in fine style. And you don’t want to get caught selling drugs in Singapore. Since 1991, over 400 folk
have been hanged, mostly for drug trafficking. Singapore has the highest execution rate in the world relative to population.

Finally, my favored GE did more than $5 billion in sales in China last year, and is one way for you to participate in China while avoiding Chinese stocks
and direct investment there.

This month’s issue is dedicated to the memory of La Mont “Sonny” Stanton and Wilson Pickett. R.I.P. to two unique American musical
contributors.

Warm regards,

Richard Young signature

Richard C. Young

P.S. Conservative Indiana Rep. Mike Pence is making waves in his party as a dynamic force for budget restraint. A committed supply-sider and Ronald
Reagan free-market proponent, Rep. Pence counts Milton Friedman and Friedrich Hayek among those who have influenced him. The third-term Congressman is
a taxes-are-too-high proponent and is looking at the Fair Tax. Pence correctly fought the No Child Left Behind Act and the Medicare prescription benefit
program (both income-redistribution bureaucratic, socialism disasters). I would much like to see this former talk radio host follow in Newt Gingrich-type
footsteps and get drafted for the Speakership of the House. Pence’s Republican Study Committee is a powerful force among the 231 House Republicans.
Just thinking out loud as to what type of nationwide draw a Condi Rice/Mike Pence ticket in 2008 would have. My quick guess is unbeatable.

P.P.S. I’ve made changes in my Website (www.youngresearch.com) so you can now access a lot more info, including my latest musical picks,
my Sonny Stanton “sketch,” a recent CD from Wilson Pickett, and a great New Orleans musical video featuring Allen Toussaint (my #1 guy from
N.O.), Bonnie Raitt, Earl Palmer, Lloyd Price, the Neville Bros, and many more. I’ve also listed all state income tax rates and estate tax rates—a
must for each of you. And I’ve archived that stunning piece on cholesterol I mentioned several months ago. Check it out.

P.P.P.S. I’ll soon have some neat backup stuff on my Website on preferreds, along with regular info on my Retirement Compounders program. Next
month, I’ll have more on my highly favored Fidelity International Real Estate (already up 5.4% YTD) before it closes and you get locked out (get
in on this now!). I’ll be broadening my coverage on China (a lot not to like), India (more upside than China), Taiwan, Singapore, and Hong Kong.
In advance, I strongly suggest you get James Clavell’s Noble House. I just
completed my second reading of this Hong Kong-based classic novel. You will gain valuable insights into the relationship between Hong Kong, mainland
China, Russia, and the U.S. Don’t miss out.

Richard C. Young’s Intelligence Report® (ISSN 0884-3031) is published monthly by Phillips Investment Resources, LLC, 9420 Key West Ave., Rockville, MD 20850. Please write or call if you have any questions. Phone: 301/424-3700 or 800/301-8968. E-mail: service@intelligencereport.com. Web address: . Editor: Richard C. Young; Group Publisher: Michael Bell; Chairman: Thomas L. Phillips; Associate Editor: Deborah L. Young; Marketing Manager: Jim Brinkhoff; President: John J. Coyle; Research Director: Jeremy Jones, CFA; Sr. Managing Editor: Shannon Miller; Business Manager: Thomas C. Burne; Research Associate: Rebecca L. Young; Editorial Assistant: Danielle Hart; Sr. Vice President: Christopher Marett; Subscriptions: $249 per year. © 2006 by Phillips Investment Resources, LLC, Founding Member of the Newsletter Publishers Association of America. Photocopying, reproduction or quotation strictly prohibited without the written permission of the publisher. While the information provided is based upon sources believed to be reliable, its accuracy cannot be guaranteed, nor can the publication be considered liable for the investment performance of any securities or strategies mentioned. Subscribers should review the full disclaimer and securities holdings disclosure policy at /disclosure.php or call 800/219-8592 for a mailed copy. Periodicals postage rates paid at Rockville, MD, and at additional mailing offices. Postmaster: Send address changes to Richard C. Young’s Intelligence Report, Phillips Investment Resources, LLC, 2420A Gehman Lane, Lancaster, PA 17602.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Search