Is It Time to Invest Abroad?

Have you noticed any economic upheaval lately? The American economy has been sputtering enough to make it easy to wonder: Should you be investing more money abroad?

Why NOT to invest abroad
There are plenty of reasons not to invest abroad, at least not directly. Plenty of Fools have written about them before. A big one is that most of us know much less about goings-on abroad than we do at home. We just don't have a good handle on how well various foreign companies will perform given their local competition, national business laws and accounting practices, and the overall geopolitical stability in the region.

Bill Mann, an experienced international investor, has even warned about it, saying in 2000: "Go forth with care, dear Fools. I do not feel that one should explicitly avoid investing overseas, but you can gain significant international exposure by holding Coca-Cola (NYSE: KO), with 72% overseas sales, AIG (NYSE: AIG), with 58% of sales coming from international spaces, or even Cisco (Nasdaq: CSCO), which sees much of its revenue growth coming from offshore." You may not realize just how many companies derive significant revenues abroad -- eBay (Nasdaq: EBAY), for example, generates 13% of its revenues from Germany alone, with year-over-year revenue growth there around 15% in 2007.

Another reason not to invest heavily abroad is this: Even though we may be in a period of economic uncertainty now, it may simply pass. Economies don't necessarily keep deteriorating. Often, they advance and retreat, and then advance again. America may well maintain or regain its international leadership position in short order. It may be the best place for most or all of your investment dollars.

Why to consider it
All that said, there are still good reasons to contemplate international investment these days. First off, there's the weak dollar, which seems to be on a neverending downward spiral.

Next, while this isn’t meant to be a political article, some political issues do warrant concern -- such as budget deficits, continually growing consumer credit card debt, and our rapidly rising national debt. We're running annual deficits now, with our national debt hitting about $9.5 trillion, with little relief in sight. Further, significant inflation looms as another side effect of attempts to reduce our debts.

It's not that this isn't a great country, or that things can't turn around. Some nations in living memory have gone from pedestals to pits (or vice versa) in fairly short order. But right now, it might be smart to spread a little more of your savings abroad.

Berkshire Hathaway (NYSE: BRK-B) Chairman Warren Buffett has expressed a bearish stance on the U.S. dollar and holds both Canadian and Brazilian currency.

How to invest abroad
If you're now eager to learn just how you might invest abroad, let's review some options.

First, you can let professionals do your international investing for you via mutual funds. Some mutual funds are expressly dedicated to investing in international stocks and/or bonds. And the managers of many other mutual funds have substantial freedom to invest at least some fund money in suitable international investments. Do a little research into funds that interest you and see how their managers are thinking about global economies and how they're investing.

Consider currency funds, which aim to profit as the dollar's value changes. They're risky, though, and may not be necessary if you take other steps, such as those listed above. Another option is buying American Express (NYSE: AXP) travelers checks in euros (or some other currency). But you'll forgo earning interest, which is kind of a big deal.

Finally, remember that there are many good old American companies with substantial overseas operations and revenue. PepsiCo (NYSE: PEP), for example, took in nearly $40 billion in 2007, nearly half of it from outside U.S. borders. A SmartMoney article explained: "Certain sectors and industries that garner a large percentage of overseas sales should benefit more from the dollar's decline. Industrials (aerospace, defense, construction, farm machinery, industrial machinery, air freight), materials (gold mining, metal and glass-container makers), health care (pharmaceuticals, medical-device makers), and consumer-staples companies (soft drinks, tobacco, household products) are among the largest beneficiaries."

The bottom line
So what's the bottom line? Well, it’s impossible to tell the future precisely. After all, the dollar may well be at the beginning of a long climb. So for now, it’s good advice just to keep reading and learning -- and paying attention to the global reach of American companies you’re invested in or could invest in, as that's one good way to benefit from a troubled U.S. economy.


Investment tips for a shaky market

Mattress + money = bad idea.

With the economy in turmoil, stashing your cash under the bed or burying it in the backyard may feel like the safest bet. But experts say there are still investments that make sense.

The most important tip is Investing 101: Think long term. Markets fluctuate every minute and they go through cyclical swings that can last many months. But over time, stock market investing always beats inflation. You have to be able to ride out the volatility.

"Don't panic," said David Campbell, a principal at San Francisco's Bingham, Osborne and Scarborough, which has $1.7 billion under management for high-net-worth individuals. "The smart money never panics; it always looks for opportunity."

He and other financial advisers said withdrawing investment funds in a downturn is often the worst strategy.

"The problem with taking your money out of the market is, we know at some point in time, based on historical data, this market will rally," said Barry Taylor, portfolio manager at the same firm. "If you pull out of the market, you're not going to be there when those losses are recouped. Our recommendation is not to pull out but to stay in and ride it out, wait for the eventual return we know will happen. Markets go through cycles."

Creating a diversified portfolio is one way to be ready to ride out financial storms.

"It's important to stay diversified - well balanced between stocks and bonds within different sectors, maybe different asset classes if you can tolerate the volatility," said Gary Schlossberg, senior economist with Wells Capital Management, the investment-management arm of Wells Fargo.

Hank Herrmann, CEO of Waddell & Reed, a mutual fund company in Kansas with $70 billion under management, said that now can be a time for some people to go bargain hunting in the stock market.

"We've had about a 22 to 23 percent decline," he said. "The average decline for a bear market is 28 percent. If you use that as a rule of thumb, you've got 5 percent more downside. It suggests that most of the damage is done."

Here are suggestions from investment professionals:

Commodities: There's nothing as basic as energy, precious metals, food, etc. "Historically, commodities are a good diversification tool," Schlossberg said. "They're not so much to goose returns, but to stabilize returns."

In fact, a lot of money now looking for a home seems to be being channeled into commodities, as shown by an increase in their prices, he said.

"Gold is always a good barometer for fear and anxiety, and we have plenty of that now," Schlossberg said.

Basic consumer products: "Health care and consumer staples (have) resilience to the business cycles. They are essential items that don't bounce around as much as the economy moves up and down," Schlossberg said. "Health care earnings tend to be stable. Essential consumer items like food, certain types of beverages, personal care products are not terribly exotic but tend to be more resilient to a slowing economy."

Telecommunications is another area that tends to outperform the market during an economic slowdown, he said.

Blue-chip stocks: "For truly long-term investors, it's a great opportunity to buy equities," Herrmann said. "Stocks are on sale now. Stocks are the only thing you can think of that people sell when they go down. Usually when you put something on sale, people rush in to buy, but not with stocks."

Fortune 500 companies are large enough to withstand an economic slowdown, and they derive a large portion of their sales from overseas. That's a double plus: They benefit from stronger growth internationally, as well as from bringing in revenue in currencies that are stronger than the dollar. "It's a nice protection for U.S. investors," Campbell said, naming companies like General Electric, IBM and Hewlett-Packard.

Financial services: With banks, brokerage houses and mortgage lenders imploding on a daily basis, it sounds like heresy to suggest investing in the financial services industry. But the country will still need banks two years from now - and the ones that survive will be stronger than ever.

"If you have confidence some of these will be survivors - Citigroup, Bank of America, Wells Fargo - they're having to float new bonds and securities to raise more capital, and because of the current environment are having to float long-term rates with a very nice yield," said Richard Welty of Welty/Solari Capital Advisers in Lafayette. "I wouldn't put all my money in any one of them, but it's an area that's worth looking at. It's all in the timing."

Timing: You can't time the market just right. But again, experts emphasize, you should use a long horizon when deciding where to invest.

"The question you should ask yourself today is not 'When will the stock market bottom, next year or next month?' " said Jim Paulson, chief investment strategist at Wells Capital Management. "Draw a big circle around where we are today. Ask yourself, 'If I step in and buy something, will I be happy two or three years from now, even if it goes lower in the next six to nine months?' If you ask that question today about stocks in general, the answer is 'Yes.'


Poor financial advice, habits hurt many Hispanics

By TAL ABBADY | South Florida Sun-Sentinel

She's had to take a second job as a maid. To save on gas, she rarely drives her car. And she stands to lose her home.

As a lifetime of hard work crumbles under one bad financial decision after another, Alicia Suarez wishes she and her husband had sought better advice.

"By the time we realized we had no money saved in the bank, we were at rock-bottom," said Suarez, 52, of West Palm Beach, Fla.

Suarez's plight is shared by millions of Hispanics and blacks who have suffered critical setbacks in a shrinking economy, according to recent data from the National Foundation for Credit Counseling.

Debt-counseling services are scarce in low-income neighborhoods, and many financially strapped black families often don't know where to turn for help, according to Emanuel Ridgeway, chief financial officer of the Urban League of Palm Beach County.

"You have a lot of single mothers who live paycheck to paycheck," said Ridgeway, whose agency offers debt management counseling, particularly for first-time homeowners. "Many of them just don't know how to save and put away for a rainy day. There's a lack of resources and education out there."

Among Hispanics, a widespread mistrust of financial institutions in some immigrant communities and the tendency to rely on an informal network of friends and advisors for financial guidance has led many to the brink of ruin.

"They are one flat-tire or emergency-room visit away from disaster," said Gail Cunningham of the National Foundation for Credit Counseling.

Suarez, a Colombian native, said she and her husband quickly built a solid, middle-class existence when they moved to the U.S. five years ago. She got a job in the marketing department of a company that sells health products and he found work as an electrician. They had all the measuring sticks of success: a comfortable, two-bedroom home, two cars and two children assimilating well in school.

But after refinancing their mortgage, spending more money than they had and maxing out their credit cards, the family will likely lose their greatest asset, their home, to a short sale. Suarez said her husband's hours were reduced while gas and food prices rose, worsening their predicament. But she emphasized that irresponsible spending, acquiring four credit cards they didn't need and listening to the advice of friends put her family in a bind.

"We didn't educate ourselves. We simply went to friends who said, 'Refinance your home. It'll give you the power to buy things.' That's true of many people in my community. We're not getting organized and going to a professional for help," she said.

Javier Roca, director of ProColombia Unida, a group that guides immigrants in South Florida through the citizenship application process, said his agency is struggling to meet the growing demands of Hispanics there who need financial advice.

"A lot of people are considering bankruptcy. They simply don't know what to do," he said

In recent years, Freddie Mac and other institutions have partnered with Hispanic organizations around the country to launch bilingual credit education programs. But information about personal finance is not always readily available to new waves of immigrants, for whom the first point of contact in the U.S. are often small, grass-roots groups like ProColombia Unida.

Fabio Andrade, head of the Americas Community Center in Weston, Fla., said his organization, which provides services to immigrants in Broward County, will likely make financial counseling a regular part of its services. The agency caters to many white-collar Venezuelan and Colombian professionals.

"You have a lot of people in our community who wanted to keep up a certain social status," he said. "That meant getting the new car, the bigger house they couldn't afford. Now they're living day to day."


Time to Invest

By James Early


In the middle of 2006, I came across a stock with some unbelievable numbers. Revenue was up more than 80% per year for the past three years. Income had grown 95% over the same time. Return on equity was a robust 47%, and net margins were close to 42%. Plus, it was a player in the growing student loan market. Its name? First Marblehead (NYSE: FMD).

Based on what I knew -- which wasn't much -- I gave First Marblehead a lot of consideration. But did I pull the trigger? First, let me say that even thinking about making an investment without weeks of research is alien to me. I come from a value-focused hedge fund. We had all day to analyze stocks, and we used it, often burning the midnight oil.


Hedge funds have a reputation as the gunslingers of the market, but I assure you, mine was anything but. We held just a handful of stocks, and we knew them cold. But keeping track of them, and finding new ones, took a lot of time. That kind of thoroughness is what The Motley Fool is all about. When it comes to burning the midnight oil, David and Tom Gardner -- Motley Fool co-founders and lead analysts of the Motley Fool Stock Advisor newsletter -- could give the hedge-fund crowd a run for their collective money.

Hidden risks
No, I didn't buy First Marblehead. And I'm glad I didn't, considering the recent credit fears that have spooked investors, and the specter of defaults that has slashed the stock by more than 90%. But I'm not really here to criticize First Marblehead; it suffered from some events outside of its control, and several of my colleagues continue to monitor its long-term prospects.

Regardless, risk exists, and with any investment, it's important to know what you're betting on. No screen or quick peekaboo would warn you of the effect the credit markets would have on First Marblehead, or the significant exposure Merrill Lynch (NYSE: MER), Citigroup (NYSE: C), and Morgan Stanley (NYSE: MS) would have to subprime loans. Then you have companies such as Bed Bath & Beyond (Nasdaq: BBBY) and Blue Coat Systems (Nasdaq: BCSI), which had to take charges recently because of options backdating.

Granted, these risks may all be on the obvious side, but have you ever been burned because you missed a material piece of information? Having the time to do some diligent digging is crucial in avoiding potential blowups.

The "Are you kidding me?" formula
There's more. Years ago, I read a book about theories underlying accounting and financial statements. It spent a lot of pages on a common solvency formula: earnings available to pay fixed charges, divided by those fixed charges. Via several chapters of buildup, it replaced the simple version with a "corrected" formula that made several tweaks to the numerator and denominator. Was it right? Yes -- it eliminated a lot of flaws in the raw accounting numbers. But that accuracy came at the expense of a formula so complex that individual investors would need days to calculate it.

Lack of time tends to pull investors in one of two ways. The first: making futile grasps in a blizzard of information overload. The second: tunnel vision toward stocks you've already researched. Let's face it, either one can burn you.

Having time troubles with your investing?
The best investment you can make is an investment in your time management, and I've got ideas for you. The first is simple: Develop screens and hone your criteria for investments. With 10,000 stocks and a day job, you absolutely have to develop efficient methods for cutting to the ones you're likely to like. Second, spread the load among trusted compatriots. Start an investing club with like-minded investor friends.

Financial advisers offer tips for tough times

By JOE CREWS
Business Writer

With bad financial news flooding the media, consumers can't help but get jittery.

Deciding what to do with your money is always tricky, but especially difficult in poor economic times. There are no one-size-fits-all plans you should blindly follow, other than to focus on your long-term goals rather than the day-to-day vagaries of the financial markets, experts say.

We asked two investment advisers to offer typical strategies at different age levels and marital status. Here are the suggestions of Greg Wynn of Greg Wynn Financial Services in Ormond Beach, an investment adviser with Raymond James Financial Services, and Jeff Ritchey, a financial adviser with an Edward Jones office in Deltona.

SINGLE PERSON: Wynn recommended broadly diversified, international mutual funds that invest in a mix of stocks, bonds and commodities. Ritchey suggested putting the same amount of money each month in mutual funds to take advantage of market volatility over the long term.

YOUNG MARRIED COUPLE: Ritchey recommended sticking with dollar-cost averaging in mutual funds. Wynn said these folks would need to keep some of their personal money in reserve if they plan to have children or buy a house, or take care of their children and home. Their long-term goal should be to continue investing in broadly diversified international mutual funds, Wynn said

MIDDLE-AGE COUPLE: By this stage of life, Wynn said, couples usually will have two distinct "pots of money." Retirement accounts should remain in those international mutual funds, but other money should go into safe investments such as short-term certificates of deposit or money market accounts. Ritchey advised continuing to build up mutual fund investments, contributing the same amount of money each month.

PRE-RETIREMENT BABY BOOMER: Because many people will live 25 to 30 years past their retirement, their money has to be managed with a higher percentage in safe investments, such as CDs or money markets, Wynn said. But some still should be invested in broadly diversified international mutual funds. This is not the time to put your money into narrowly defined niche funds, he said. Ritchey said now is the time for developing a strategy that takes into account your needs, goals, risk-tolerance and time frame for retirement, and making investments in a diversified portfolio with high-quality stocks or mutual funds, bonds or long-term CDs. But you also should have a six- to 12-month supply of cash or CDs readily available, he said.

RETIREE: A guaranteed income stream -- Social Security, a retirement plan or insurance annuity -- is needed to cover the fixed expenses of a retiree, Wynn said. Whatever is left over can be used for the "fun things," and should be kept in short-term CDs or money market accounts. Ritchey recommended sticking with the diversified portfolio and easily accessible cash or CDs.

joe.crews@news-jrnl.com


Spread Your Money Among Several Banks To Stay Fully Protected

BOSTON -- On Monday morning, customers of the failed IndyMac Bancorp Inc. lined up at the thrift's retail branches to withdraw their hard-earned savings, rather than leave it in an institution that was being taken over by the Federal Deposit Insurance Corp.

It was too little too late, closing the barn door after the horses were gone. And their reaction was completely unnecessary.

The biggest irony of IndyMac's failure -- and it was the nation's second-largest independent mortgage lender and the seventh-largest savings and loan -- was that the branches had big signs telling customers "You can count on us," when in fact the only thing those consumers could rely on ultimately was the promise of FDIC insurance.

While it's understandable that consumers would want to get their money out of a failing bank, experts suggest that there is no real reason to make such a move, provided you fall under FDIC protection guidelines -- specifically holding no more than $100,000 per individually registered account.

(If you have two certificates of deposit in your name at the same institution and each is worth $75,000, you have exceeded the protection limit; if one was registered in an individual name and the other was registered jointly, however, the total amount would be protected because neither registration has exceeded the coverage limit.) See related story.

Show and tellers

When regulators stepped in last Friday, IndyMac customers experienced a brief disruption in the ability to get their money. While automated teller machines were working, they also capped the amount that a shareholder could withdraw electronically, limiting it to a few hundred bucks.

That's why customers had to wait around for Monday morning's opening to rush the bank and ask for their cash back.

By then, of course, they had full access to their money, up to the protection limits. If they had balances above the insured level, they could only access up to $100,000, with the rest being frozen until regulators sell IndyMac and see what's left. While the best-case scenario is full restitution and the worst case is a total loss, the truth is likely somewhere in the middle. That means months of foregone interest and lost opportunity, but not necessarily a big loss in principal.

"People rush to the banks out of an irrational fear," says Greg McBride, senior financial analyst at BankRate.com. "Only depositors who had an exposure more than the $100,000 limit really have to worry, because they are going to be standing in line waiting for a payout."

That's important to remember, in light of reports suggesting that the Federal Reserve has almost 100 banks on a "watch list" of potential candidates for the next bank failure/takeover. The list hasn't been released -- because it would spur a run on those institutions -- but analysts are quick to say they do not believe IndyMac was an isolated failure. Things will get worse before they are cleared up.

Safe deposits

As a result, McBride noted that anyone with accounts that top the deposit insurance limits need to remedy that situation now, either re-titling accounts or moving money to stay safe. At a time when some of the biggest financial institutions are in trouble, it may be better to diversify your safe havens -- spreading money into several banks or thrifts -- rather than letting it build in one place, even if it's earning a higher rate of return.

"It's like driving without a seat belt," McBride says. "You have this tool to protect you -- FDIC coverage -- but you drive around without using that protection, figuring it will be all right. And it is, right up to the point where there's an accident. ... Right now, there are a lot of accidents waiting to happen. It's easy to buckle up, and people ought to be doing it."

For consumers who are caught up in the anticipated wave of regulatory takeovers, bailing out after the news surfaces won't make much difference good or bad. There are new checks to buy and any new account fees to be paid if you move your money to a new bank, but that's a small price to pay for the peace of mind from knowing there won't be even a moment when the bank that is supposed to be safeguarding your nest egg is meeting with regulators.

In reality, the only reason to run to your bank is to protect yourself in case the institution fails -- not to get your cash back once failure has happened.


Toyota plans to invest up to $700 million in Brazil

By Rogerio Jelmayer

SAO PAULO (MarketWatch) -- Japanese automaker Toyota Motor Corp. (7203.TO) is planning to invest up to $700 million in Brazil to install a new manufacturing unit, Brazilian Trade and Industry Minister Miguel Jorge said Tuesday.
Toyota will install the new unit in Sorocaba, a city in Sao Paulo state. The unit will have a capacity to produce 150,000 light vehicles per year and will start its operations in 2011.
According to Jorge, Toyota's investment was unveiled by company regional president Shozo Hasebe in a meeting with Brazilian President Luiz Inacio Lula da Silva.
Global automakers are interested in expanding their presence in Brazil to take advantage of record domestic demand.
Surging local demand is being fueled by solid economic growth and economic stability, which has increased household incomes and access to credit.
Domestic auto sales hit a record in the first half of 2008, totaling 1.41 million units, up 30.0% from the same period the year before.


Volkswagen to invest up to $1 billion in new U.S. plant in Chattanooga UPDATE

FRANKFURT (Thomson Financial) - Volkswagen AG (other-otc: VLKAF.PK - news - people ). said it will invest up to $1 billion in a new plant in Chattanooga in the U.S. state of Tennessee.

The factory will at the 'first stage of construction' have an annual capacity of 150,000 vehicles and will start operations in early 2011, the company said in a statement.

The first vehicle to be made at the factory will be 'a new midsize sedan' tailored to the U.S. market, the German carmaker said.

'We will be selling 800,000 Volkswagen per year in the U.S. by 2018, and this new site will play a key role,' chief executive Martin Winterkorn said in the statement.

Volkswagen said it originally short-listed 25 potential sites for its U.S. plant and picked Chattanooga because it 'slightly' outperforms the next-best candidate sites in terms of nearby automotive suppliers, qualified workforce and properties.

maria.sheahan@thomsonreuters.com

mas/sal/mas/sal


IBM to invest $1.5B in New York

The Ottawa Citizen

International Business Machines Corp., the world's biggest computer-services provider, agreed to invest $1.5 billion U.S. for computer-chip manufacturing and research in New York state, creating 1,000 new jobs aided by $140 million in government subsidies. The agreement, announced by the company and state officials, also calls for the company to retain more than 1,000 existing jobs at its East Fishkill research and manufacturing facilities, which are to be upgraded, according to a statement by Gov. David Paterson. New facilities include a semiconductor manufacturing plant and development centre in a still-to-be-determined upstate New York location.







United States: IBM to invest $1.5B in New York

The Ottawa Citizen

International Business Machines Corp., the world's biggest computer-services provider, agreed to invest $1.5 billion U.S. for computer-chip manufacturing and research in New York state, creating 1,000 new jobs aided by $140 million in government subsidies. The agreement, announced by the company and state officials, also calls for the company to retain more than 1,000 existing jobs at its East Fishkill research and manufacturing facilities, which are to be upgraded, according to a statement by Gov. David Paterson. New facilities include a semiconductor manufacturing plant and development centre in a still-to-be-determined upstate New York location.







Asian bourses down on US financial woes

PETALING JAYA: Asian markets went through another turbulent day as investors reacted to the continuing troubles in the US financial system, despite a rescue package for troubled quasi-sovereign mortgage providers Freddie Mac and Fannie Mae.

Investors were also reacting to fears of more bank failures in the US, thereby putting more strain on its financial system, as the Bush administration bailed out California-based IndyMac Bancorp Inc, which had become the biggest casualty of the subprime mortgage crisis thus far.

The KL Composite Index was down in line with the region’s performance. It closed 1.43% lower at 1,127.60, while in Singapore, the Straits Times Index was down 70.74 points at 2,833.38. Hong Kong’s Hang Seng Index tumbled 839.69 points to 21,174.77 while Japan’s Nikkei 225 fell 255.60 points to 12,754.56.

Other markets that were affected included Korea’s Kospi, which was down 49.29 points at 1,509.33, while in China, the Shanghai Stock Exchange fell 98.81 points to 2,779.45. The Stock Exchange of Thailand Index dropped 23.65 points to 693.41, and in Indonesia, the Jakarta Composite Index lost 44.69 points to 2,214.85.

Jupiter Securities Sdn Bhd research head Pong Teng Siew said at this juncture, domestic political troubles were playing second fiddle to global economic problems, especially if taken from the viewpoint of foreign funds.

“These funds are mainly driven by economic issues, I don’t see fund managers reading too much into the political situation unless it gets really bad,” he said.


Rich and poor to live side by side when housing project opens soon

A Dallas Housing Authority project once stuck in the mud for 12 years by construction delays and a court battle with neighbors is finally getting spruced up for a grand opening in about two weeks.

Some of the affected parties gathered yesterday under a big tent – symbolic, perhaps, of the new spirit of cooperation – to dedicate the Villas at Hillcrest, a $4.5 million project in the last stages of development.

Can you believe what's now worrying some of the folks once staunchly opposed to a public housing development being plopped down in the midst of their expensive homes?

Landscaping – or, specifically, whether the DHA will plant lush grass and install sprinklers for the 40 townhomes designed for low-income black residents in Far North Dallas.

Gone is all the strident, loose talk about whether the tenants will drive up crime and drive down property values.That hullabaloo has given way to heated debates about zeroscaping, which could help the DHA keep its water bills and construction costs in check but also may give neighbors a license to say, "See, told you so."

"I'm extremely opposed to zeroscaping," said John Trick, whose Highland Creek home backs up to the townhomes.

Mr. Trick, president of the Highland Creek Homeowners Association, said he and some of his neighbors can't help but wonder if a scaled-back landscaping design is a harbinger.

"The only real anxiety is the issue of a longtime commitment on the part of the DHA, whether it's an issue of landscaping or the condition of the buildings," he said. "Are they going to hold up their end of the bargain and make sure it's properly maintained?"

Before I get to the real crux of this matter – the question of how poor families in one closely watched project will alter the fabric of the neighborhood – let's allow the DHA to explain its landscaping choices.

"There's a big push" to adopt more water conservation efforts such as zeroscaping, which involves using native plants, succulents, rocks and gravel, said Michelle Raglon, an agency spokeswoman. "We're going with landscaping and zeroscaping."

What this boils down to, of course, is that agency heads don't want to spend scarce money installing 40 separate irrigation systems for each unit.

Then again, if you're going to move to an upscale neighborhood where neighbors pay close attention to one another's lawns, you ought to think twice about bucking the trend.

Before we get too bogged down in the fuss over St. Augustine and small rocks, let's be clear about what's important here – the poor black families moving into the Villas at Hillcrest and the richer white families already living nearby.

Working together, they can help ensure that the townhome development lives up to its promise of becoming a pristine model for future housing projects in Dallas and beyond.

Some neighbors already are doing their part by volunteering to help out any way they can.

That's a good start, and it's the way public housing ought to be built – blended in solid middle-class or affluent neighborhoods with viable social and political networks that help stave off neglect of any kind.

The bottom line is that these poor black tenants want the same things as their affluent white neighbors: a decent and safe place to live, challenging schools and good neighbors.