Welcome to my 2002 e-seminar: Profiting From Change! I'm glad to
have you with us. Over the next few weeks I'm not only going to show
you how to buy and sell stocks wisely in the year ahead, but I will
also show you how to identify the stocks with the fastest growth
potential before Wall Street does. Plus, I'll show you how to profit
from the transformational change the economy is undergoing in
today's post-Sept. 11 market.

We don't have much time to lose. Institutions have now recognized
the profound shift in investor psychology that hit the market over
the past few months. The shock of the Sept.11 events, and the
plurality of our national response has kicked us out of our
post-bubble depression and reinvigorated our desire to look forward
and dream a little.

What does that mean for investors? Simple: Expect a huge year in
2002. But, waiting for the official proclamation of the beginning of
the end of the post-bubble recession, could cost you 50% to 150%
gains on the top aggressive growth rebound stocks of 2002.

Think of this Profiting From Change e-seminar as your "manifesto"
for making 2002 the comeback year you've been waiting for. I believe
more strongly than ever that the odds of building true wealth
through stocks in 2002 will benefit those investors who are first to
recognize transformational change, and can quickly determine true
investable change from the so called imposters.

You and I will start this e-seminar with the basic concepts and
strategies necessary for you to become a first class "change
analyst," which is crucial to your success in monster stock hunting.
Then I'll teach you the basics of tactical, aggressive growth
portfolio management to help you make 2002 the comeback year you
have been waiting for!

Remember, the express goal of ChangeWave Investing is to help you
profit from change. When you succeed, we succeed, too. So let's get
started!

ChangeWave Investing is a philosophy, a growth-stock-picking
strategy and portfolio-management system rolled into one. The basic
philosophy is simple: I believe the greatest power driving the
future appreciation or depreciation of business value (in other
words, future amount of profitability) is transformational change.

That means, incidences of transformational change at the industry or
corporate level are the most accurate leading indicators of future
stock appreciation.

I've found from my years of research into the dynamics of change and
stock prices that transformational change, and how a company does or
does not embrace and leverage it, largely determines the
profitability, and thus the appreciation potential of a company,
more than any other business or analysis factor. Stock market
bubbles notwithstanding, my research says that, in today's world,
creating and managing transformational change and innovation IS the
strategy of building the economic value of a business--everything
else is just tactics.

The primary takeaway from this entire course is this: If you are
lucky enough to have found genuine transformational change beginning
to explode within an industry or company, you've found a genuine
investment opportunity. An investment opportunity that just could
change your financial life forever.

Because, when you find genuinely transformational change, you find
big winners and big losers. What the ChangeWave strategy helps you
do is:

a.. Find the highest magnitude (read "most profitable")
transformational changes occurring within industries and companies
and;


b.. Locate the sweet spots of investment opportunity (read: "best
performing market spaces") within these waves of transformation we
call ChangeWaves and;


c.. Put your money on the winning stocks within these hot market
spaces and keep it away from the losers.
In other words, ChangeWave Investing helps you get "luckier" than
most investors will ever be.

We use a set of simple rules to search for and analyze the magnitude
of changes occurring in our economy to gain a relative context. This
set of rules acts like a "change analysis prism" to determine the
biggest potential winners and losers in our perpetually changing
world.

In a nutshell, I describe the strategy as learning how to analyze
the dynamics of rapid, structural transformational change--i.e.
"investable change"--through an imaginary "lens" or prism composed of
the unchanging laws or elements of human behavior.

In ChangeWave Investing, we use fixed laws of human behavior to put
the blurry snapshots of rapidly changing world into focus. When you
apply the virtually never-changing laws of human behavior to a
rapidly or radically changing business situation, repeatable
patterns emerge which can significantly enhance your investment
returns.

Ironically, it's the unchanging laws of human behavior that give us
the best tool to understand the hidden value of industries and
companies undergoing transformational change.

This lens or analytical prism acts like radar does for a pilot
landing in a blur of fog. Rapid rates of change create a fog-like
condition where it is very difficult for most investors to get their
bearings. Our prism helps us see through the fog and see the value
hidden to most investors.

YOU AS MASTER CHANGE ANALYST

The focus of ChangeWave Investing is to show you how to become a
successful change analyst. When you become one, you'll be able to
apply your knowledge into making more money in your stock portfolio
than you ever have before.

What you actually become good at is separating TRUE investable
change from its lower-magnitude, less-profitable cousins. (FYI: This
skill is also quite good for helping improve your business and
career decisions, too.)

The key advantage ChangeWave investors hold is developing high
levels of confidence in reading and reacting to rapidly transforming
industries and companies a little earlier and a little better than
everyone else does. Our ChangeWave portfolio management strategies
also help you hold on to these winners during market turbulence when
others sell prematurely.

YOUR EDGE ON THE MARKET

In investing, you only need a little edge to outperform the market
as a whole. The effectiveness of the ChangeWave Investing strategy
in everyday buying and selling of stocks proves that our edge is
real.

How effective? Well, the application of the strategy and
buy/sell/hold tactics has resulted in buying and selling stocks that
have delivered on average 75% a year growth for me since 1995.
Including the Nasdaq Crash of 2000-2001.

We'll start with the basic concepts and strategies necessary for you
to become a first-class "change analyst," which is crucial to your
success in monster stock hunting. Then we'll get into the blocking
and tackling of Growth Appropriate to the Business cycle portfolio
management ChangeWave style.

But before we get to the strategy and tactics, given the crazy stock
market of the 21st century so far, perhaps we should start with why
you should bother investing in growth stocks in the first place?

You and I stand at a moment in time where a century of progress and
transformational change will occur before our very eyes in the just
the next 20 or so years.

But many investors today are still fighting the New Economy/Old
Economy fight while they lick their deep wounds from the last bear
market. Many investors are caught up in dismissing the latest new
leg of the modern industrialism as a one-time aberration--a fluke of
economics or a one-time only event.

These misguided souls are bound to miss the big picture and the
immense profits ahead. I don't want you to be one of them.

THE DAY THE NEW ECONOMY WAS BORN AND DIED

Listen, when I wrote my best selling ChangeWave Investing: Picking
the Next Monster Stocks of the New Economy two years ago, we were
still fighting the "New Economy versus Old Economy" fight. What
happened in 24 months? How did a formerly difficult-to-win argument
become a non-argument?

The argument died the day that ALAN GREENSPAN finally got what the
New Economy really was.

I can even name the flash point: October 19, 2000, Greenspan's
speech at the Cato Institute in Washington. No cameras, no press. It
was the moment when I knew deep in my heart we were not in Kansas
anymore.

Although his comments received virtually no media coverage (the
press focused primarily on his remarks to Cato concerning oil
prices), their implications for what I have called the Real Economy
argument were CRUCIAL. From that evening on it became clear that
without compelling evidence convincing him otherwise, Mr. Greenspan
was finally persuaded that sustainable productivity gains are
capable of supporting GDP growth rates well in excess of 4%.
Throughout our economy--Old and New combined.

He went on to support this thesis in classic Greenspan speak:

"... [Economic models] are a major simplification of the many
forces that govern the functioning of our system at any point in
time. ... Obviously, to the extent that these constructs ... fail to
capture critical factors driving economic expansion or contraction,
conclusions drawn from their application will be off the mark.

"With the virtually unprecedented surge in innovation that we have
experienced ... many of the economic relationships embodied in past
models no longer project outcomes that mirror the newer realities.

"When confronted with a period of structural change, our policy
actions must be based on identifying emerging trends from surprises
and anomalies in the data, and then carefully drawing their
implications. It would be folly to cling to an antiquated model in
the face of contradictory information."

What did Greenspan mean? He meant that when the Internet and
information technology--the ultimate deflationary tools--are embedded
in the corporate world it means that inflation over the long term is
tamed and productivity is structurally improved for the better.
Forever.

Just the inflation and productivity implications of an economy-wide
transition to 24/7 real-time computing itself is incredibly bullish
for equity investing over the long term. But it gets much better.

THE BEST WEALTH-BUILDING OPPORTUNITIES ARE YET TO COME

I am personally convinced you and I have before us, over the next
decade, the greatest long-term investment opportunity of any
generation in history.

I come to this conclusion simply because we are so early in the next
great wealth-creation shift in human history. Since around 1995, the
basis of wealth creation has shifted irreversibly
FROM the last great value creation paradigm of manufacturing and
transportation of goods TO value and wealth creation primarily made
by information, knowledge and connectivity values added to basic
services and products (i.e., leveraging the EverNet).

Think of it. When James Watt perfected the steam engine in 1769, the
basis for both value creation (i.e. how you add economic value to
raw materials) and wealth creation shifted irreversibly. It shifted
from the ownership of land, to manufacturing and transportation,
both made possible by the steam engine (and later the development of
the internal combustion engine and the electric motor in the 1870s).

As leading growth fund portfolio manager Robert Loest, Ph.D., CFA
points out, "For the first time in history, one could buy a measly
acre of land, put a manufacturing facility on it, and make physical
goods in large numbers and higher quality. This created value
totally independent of the ownership of land! One could also build a
steamship, and ship enormously more goods and types of goods,
including fresh produce, in a fraction of the time required by
sailing ships. This expanded international trade and wealth, and
created enormous value, all without the ownership of land. Amazing."

And just like the early investors who profited greatly from the last
great shift from an agrarian economy to an industrial economy, you
and I are fortunate enough to be alive and investing at the dawn of
this new and extraordinary wealth-creation cycle.

Even better, history shows us that a disproportionate amount of new
wealth is created in the beginning stages of these rare economic
transformations.

WHAT'S NEW ABOUT WEALTH BUILDING TODAY?

The key to building wealth TODAY is substituting knowledge and
information for physical assets. Most new wealth in our economy is
being created by applying and leveraging rich information and
creative brainpower. Cisco or Intel or Microsoft consume few scarce
resources making products. They mostly consume ever-expandable
resources, such as ideas, computer power and real-time customer
feedback.

Consider the great paradox of the wealth creation: Bill Gates, the
king of this new digital knowledge economy, owns virtually no land,
gold, or industrial processes. The book value (i.e., tangible
financial and physical assets) of Microsoft is near $49 billion, yet
the market value is near $380 billion, as of this writing.

Incredible Divergence

How does one explain this incredible wealth-creation divergence? Is
it an anomaly?

How does one account for the trillions of dollars of market
valuation of thousands of companies, driven primarily by ideas and
brain-powered "knowledge capital," which enjoy market values 100 to
1,000 times their book or physical asset value?

The answer comes from a quick and painless economics lesson which
Tom Petzinger Jr. discussed in The Wall Street Journal. In his
insightful analysis, he asks us to think of an economy as the sum of
every action people take to provide themselves and others more with
less. In one way or another, wealth-creating innovations have always
substituted knowledge or capital for energy, materials or labor.

But there are bigger forces at work here that make you and me even
more fortunate.

The combined effect of the new lead technologies of the 21st century
culminating in what I call the EverNet, that creates the most
bullish scenario of all for investors…

The long-term wave of infotech-based GDP growth is quickly changing
the fundamental nature of our economy massively … for the better.

Up to 40% of U.S. GDP growth over the last few years has come from
infotech-related industries, services and natural resource spending.
This number is all the more compelling in that infotech's share of
our entire GDP is less than 15%--for now.

Even without the overspending in infotech and telecom technologies
during the 1996-2000 tech-spending orgy, corporate capital
expenditures budgets continue to average over 50% on information
technology in 2001. And according the infotech research group
Gartner, this figure will grow to 70% by 2010.

The key premise of our bullish outlook for continued economic growth
and significantly higher future equity valuations comes from the
irreversibly higher trajectory of the infotech ecosystem's growth
versus non-infotech industrial growth over the next decade. The only
question is, "How long is this historic transition going to take?"

According to JP Morgan statistics, the majority of profit generated
within the seven largest industrial powers, since 1990, has already
shifted to the United States. Today the U.S share of corporate
profits is TWICE its share of world GDP.

And this world profit shift is accelerating--even with the 2001
recession.

THE ECONOMIC LAWS OF THE TECHONOMY

Moore's Law--states that the number of transistors on a
microprocessor will double every 18 months. (I would add, as a
result, the cost of computing power drops every year.)

Gilder's Law--states that bandwidth (the amount of data you can
move through a circuit in a second) grows THREE times as fast as
Moore's Law.

Packet Switching--the amount of data packets transmitted, doubles
every 12 months while the cost drops 100% per year

Optical Fiber--capacity doubles every 6 months while cost measured
by bandwidth drops 200% per year.

Basic Worldwide Demand Internet

Users--double in 12 months, 100% per year
Data Bits--double in 7.5 months, 300% per year
Internet Core--doubles in 4 months, 1,000% per year

The net result? According to Dr. Joe Davis at Seagate Technology, if
one is to assume that infotech industries only represent just 25% of
GDP by the end of the decade (a very conservative estimate).
Assuming a 4% unemployment rate and 4% growth rate, inflation will
be REDUCED by 7.5% to 12.5% over our entire economy. In other words,
deflation.

And this simple equation does not count productivity increases baked
into this the new Techonomy. (That's because, as I pointed out
earlier, no economist or statistician in the Fed has a clue yet on
how to measure productivity in most infotech industries.)

What this new Techonomy means is that standards of living improve
dramatically for millions. For example, infotech product and service
employees earn 73%, on average, more than private sector employees
today. They also produce up to 100 times more per employee in
profits than old economy industries averaging 2-5% employee earnings
growth. Nor does this forecast factor in that U.S.-based companies
own virtually ALL the key patents behind 90% of the most key
enabling technologies behind the Techonomy explosion.

Bottom line: What the emerging Techonomy means to you and me as
investors is that the economic future of the U.S. and other emerging
techonomies is INCREDIBLY BRIGHT. The productivity embedding itself
within our economy will make fools out of those stopped-clock bears
who disregard the incredible power of compounding growth combined
with the ascension of declining-cost industries. Ralph Waldo Emerson
told us years ago, "Not in his goals, but in his transitions man is
great."

MOORE'S LAW APPLIED TO THE U.S. ECONOMY

In a low-inflationary environment, capital goes to growth stocks
because that's where it earns the best overall after-tax,
after-inflation returns. With low inflation comes lower interest
rates, which make the present value of a company's future earnings
power more valuable because investors discount those future earnings
at lower discount rates.

But why does our Techonomy forecast make the risk of economy-wide
inflation (forget about short-term swings in energy or food price
inflation) and stifling interest rates so benign?

Simple: What's happening to make our economy grow at significantly
higher rates without debilitating inflation is that Moore's Law will
soon become applied to a majority of the economy. As technology
investing expert Mike Murphy says in his book High-Tech Investing,
"think of this phenomenon as ‘learning curve' economics. When you
add new information/knowledge to intellectual-property based
products and services, the new information gets into the economy
primarily by lowering production and material costs."

Moore's Law--the prime rule of semiconductor technology that
postulates that computing power doubles every 18 months. At 30%-50%
lower cost every year, it will soon extend to a majority of our GDP.
What this means is:

A majority of our GDP is going to soon come from DECLINING-COST
industries.

When declining-cost industries represent a majority of our economy,
our economy becomes structurally embedded with substantially higher
rates of growth and productivity with significantly lower price
inflation.

Thus, the emerging Techonomy is simply the most ideal environment
imaginable for investors in Techonomy-related stocks. It means that
we have a future that will be more profitable with less inflation
than we can realistically imagine.