What does overweighting safe mean? You should always start your plan by keeping a percentage equal to your age out of stocks, and in a place that won’t lose principal. It’s very important to know what is safe in a Debt World. That’s tricky. Because in your retirement plan, if you overweight safe you might be in a money market fund. Money market funds can lose value. They have redemption gates and liquidity fees. They are not federally insured. Bonds are illiquid, highly leveraged and negative-yielding. Your best plan is knowing how to properly diversify and how to get as safe as you possibly can in a world where that is difficult.
 
By 2023, yields may be high enough that you can take on a midterm creditworthy bond that pays you a nice dividend of at least 5% or 6%. If you try to get a 5%-6% yield in today’s world, you have to go into junk bond territory, where your principal is at risk.
 
You can read about our time-proven 21st-century strategies in The ABCs of Money, or you can learn and implement this time-proven plan by attending our February 11-13, 2022 Financial Empowerment Retreat. A small investment of time and money could save your nest egg! These time-proven 21st Century strategies earned gains in the Dot Com and Great Recessions, and outperformed the bull markets in between.
 
Call 310-430-2397 or email info@nataliepace.com to learn more now. You can also click on the banner ad below to get testimonials, to learn the 15 things you’ll learn at the retreat, and to get pricing and hours information. It’s going to be conducted online, so it feels like it’s you and I talking directly in your living room. It’s a great way to learn, and you have no travel or lodging expenses.
 

2022 Investor IQ Test
 
Are you an Einstein in investing? A complete novice? Check your Investor IQ with the 26 questions below.
 
If you score 21 correct answers or higher, then you’re in great shape! If you score 18, then you are C-level. Below 18 correct indicates that you are in need of a refresher course in life math. (Even math geniuses might not know the basics of Wall Street…) So, consider joining us at our next Investor Educational Retreat.

1. What is the one question you should ask your Certified Financial Advisor before hiring him/her?
2. What are 3 red flags that your financial plan is in on a Wall Street rollercoaster and at risk of losing half or more of its value?
3. How much of your nest egg should you keep safe?
4. What's safe?
5. What is the average return of stocks over the last 10 and 30 years?
6. What is the average return of gold over the last 10 and 30 years?
7. What is the average return of real estate over the last 10 and 30 years?
8. What was the top performing investment in 2021? 
9. How long will it take for you to have a nest egg as big as your annual salary if you put 10% of your income into a Buy My Own Island Fund and invest in stocks and bonds*?
10. How long will it take for your nest egg to earn more than you earn, if you you put 10% of your income into a Buy My Own Island Fund and invest in stocks and bonds*?
11. What’s the safest investment in a slow-growth, high-debt world?
12. Which countries hold the most gold? 
13.  Are annuities safe?
14. What were the top performing and the worst months for stocks over the past five years? 
15. What was the top performing 2-month period for stocks over the past twenty years?
16. What was the worst investment in 2021, NASDAQ, gold, the Dow Jones Industrial Average, bonds, Bitcoin, cannabis or real estate?
17. Which year is expected to perform better, 2022 or 2023, based upon historical returns of election years?
18. How many companies are in the Dow Jones Industrial Average?
19. How many Dow Jones Industrial Average companies were bailed out or went bankrupt in the Great Recession?
20. Which index has performed better since the COVID-19 pandemic hit in February of 2020, the Dow Jones Industrial Average or the NASDAQ Composite Index?
21. How much did investors lose between February 19, 2020 and March 23, 2020?
22. How much did investors lose during the Great Recession and the Dot Com Recession?
23. Does Buy & Hope work? Why or why  not?  
24. Why is it that so many investors are unable to Buy Low and Sell High?
25. What is the 3-Ingredient Recipe for Cooking up Profits? 
26. What are the Four Questions for Picking Winning Stocks?

 
 
Answers are listed in the article "Investor IQ Test Answers 2022" in my blog at NataliePace.com.
https://www.nataliepace.com/blog/

 
 
Email info @ NataliePace.com or call 310-430-2397 if you have any questions about this test, or about the answers, or if you are interested in learning time-proven investing, budgeting, debt reduction, home buying solutions that will transform your life.

Answers to the 2022 Investor IQ Test. by Natalie Pace.
 
If you score 21 correct answers or higher, then you’re in great fiscal shape! If you score 18, then you are C-level. Below 18 correct indicates that you are in need of a refresher course in life math. We’ve hosted attendees with a Ph.D. in math or computer science, with MBAs, options traders and other Wall Street pros. Our strategies are enthusiastically recommended by Nobel Prize-winning economist Gary Becker, former TD AMERITRADE chairman and CEO Joe Moglia and thousands of Main Street investors. So, consider joining us at our next Investor Educational Retreat.
 
1. What is the most important question you should ask your Certified Financial Advisor before hiring him/her?

"How much of my portfolio should I keep safe?" This question will help you to determine whether you are dealing with a trusted professional who is looking after your best interest, or a salesman who is looking to make a quick buck. The answer to this question is, "A percentage equal to your age.” As stocks are trading at elevated prices and bonds are illiquid and negative-yielding, it would be even better if s/he adds, “But given the valuation and leverage concerns, we might consider overweighting more safe." If they just sidestep this question and redirect you to a risk tolerance questionnaire, that is a red flag.

One more important thing. Since bonds are highly leveraged, subject to credit risk, vulnerable to capital loss and are illiquid to boot, you need to understand what’s safe, rather than just rely upon bonds or money market funds. Now is the time to clearly know exactly what you own and why. Consider getting an unbiased 2nd opinion. Call 310-430-2397 or email info@NataliePace.com for pricing and details.  

2. What are 3 red flags that your financial plan is on a Wall Street rollercoaster and at risk of losing half or more of its value?

• Check your March 2020 statement and compare it to your January 2020 statement. If you lost 35% or more, then your plan rides the Wall Street rollercoaster. Don’t confuse a bull market with wisdom. Everyone has made money since March 23, 2020. However, Buy & Hold investors are worth less today than they were in 1996. 
  
  
• If you have more than just a few pages of holdings in your financial plan, your gains might be negatively impacted by fees and commissions. You are not as diversified as you believe, as pages and pages of holdings can still just be the same type of holdings over and over again. You’re more at risk than you know. Ask for the performance of your portfolio compared to the S&P500 for the last 15 years. Many of these type of portfolios shadow the market, but perform about 2% under due to the fees.
  
  
• The NASDAQ has increased nine-fold over the low of March 9, 2009. The Dow Jones Industrial Average is up about five-fold. If your returns over the last decade are lagging the S&P500, your plan needs reviewing.

 
​Remember: Your nest egg recovered in the pandemic because the Treasury printed up $5.4 trillion and threw free, easy cash at everyone. Student loans, foreclosures and evictions were paused. The wind has been at our backs. 2022 will be slower and more challenging than 2021. When/if the tides turn, losses can incur quite swiftly due to the high valuations. (The 38% plunge between February 19, 2020 and March 23, 2020 was the fastest that any bull market had ever about-faced into a bear.) Wisdom and time-proven systems are the cure. (Our easy-as-a-pie-chart nest egg strategies, with annual rebalancing, earned gains in the Dot Com and Great Recessions and have outperformed the bull markets in between.)


3. How much of your nest egg should you keep safe?

A percentage equal to your age. Consider overweighting more safe when assets are overpriced, the economy is stumbling, a pandemic is closing borders or you are nervous. Again, in today’s Debt World, it is important to know what’s safe. Bonds are losing money and are illiquid, which makes them substantially riskier than most investors realize. (Our safe side isn’t supposed to lose money!) Money market funds have redemption gates and liquidity fees, are vulnerable to capital loss and are not FDIC-insured. Annuities are more vulnerable than most investors know because insurance companies are carrying a lot of risk and leverage, and annuities are not federally insured.  

4. What's safe?

Getting safe is a two-step process. First, you must keep your money, which means that you want to have as much of your cash as you can in federally insured accounts, such as FDIC or CDIC. Liquidity allows you to buy low, when everyone else is cash-strapped.
Hard assets will hold their value better than paper assets in a Debt World. So, the mantra is “safe, income-producing hard assets that you purchase for a good price.” You have to also consider what will safely produce income in a post-pandemic world. Real estate is at an all-time high in the U.S., so it will be difficult to purchase for a good price in 2022.

You don’t want to be all in on hard assets because you also need liquidity and cash flow. That is why some of the best hard asset investments are those that reduce your monthly expenses (for life).

We spend one full day on What’s Safe at the Investor Educational Retreats. Educate yourself now on the best income-producing hard assets that are right for you, so that when prices are more attractive, you know what you want and have the means to take action and close the deal. Call 310-430-2397 to learn more.

Interest rates will rise in 2022 and 2023, so there will come a time when you can get a creditworthy mid-term bond that pays you for the risk you take on. In the meantime, if you’re sold into something it could lose money and also carry an opportunity cost by tying your money up.

5. What is the average return of stocks over the last 10 and 30 years?

Large cap stocks earned 16.55% annualized over the last decade and 10.65% over the 30-year period (source: Morningstar). Small cap stocks performed at 13.69% and 12.05%, respectively. (Asset performance graphs, and more data and resources, are distributed to Retreat Attendees.)

6. What is the average return of gold over the last 10 and 30 years?

Gold returned 0.68% annualized over the 10-year period and 5.31% over the last 30 years. Gold mining stocks doubled in 2016, were flat in 2017 and were worth almost double their 2018 lows by Jan. 17, 2022. The all-time high for gold of $2,089.20 was hit on January 5, 2021. The last high of $1,895/ounce in gold occurred in September of 2011, the month after S&P Global Ratings stripped the U.S. of its AAA credit score. Fitch Ratings currently has the U.S. on a negative outlook, meaning the AAA rating from Fitch could be downgraded this year. (Moody’s still has a stable outlook for the U.S. AAA, as of Dec. 1, 2021.)

7. What is the average return of real estate over the last 10 and 30 years?

Over the last decade, real estate has performed at 9.6% annualized. (The devastating losses of the Great Recession are no longer included in this statistic.) Over a 30-year period, real estate increased 8.0% annualized.

Real estate prices are at an all-time high. However, the trend has been down since October. Real estate is largely unaffordable to many Americans. According to AttomData, average income-earners are unable to purchase in their community in 77% of U.S. counties. Rising interest rates will make this problem even more pronounced. 1.9 million U.S. homes are still underwater – even with prices higher than ever. (This is largely due to loan mods.)

There is nothing worse than buying high in real estate, and watching the value of your home sink below the amount that you owe on it! It can ruin your life and FICO score for years, if not decades. Be sure to read the Real Estate section of the 5th edition of The ABCs of Money. There are at least seven real-world case studies to inform your real estate decisions.

8. What was the top performing investment in 2021?
Bitcoin gained 57% in 2021. Oil came in second, with gains of 55%. The NASDAQ Composite Index scored 21.4% gains, with real estate soaring 14.45%. Oil prices were the biggest losers of 2020. In April of 2020, oil prices went negative, for an all-time low price of -$37.63/barrel. (Futures investors were paying not to take delivery!) Bonds performed poorly as well, with negative yields and illiquidity issues. The total bond fund return was -3.3%. (Again, the safe side of your nest egg is not supposed to lose money.)

9. How long will it take for you to have a nest egg as big as your annual salary if you put 10% of your income into a tax-protected (and financial predator proof) individual retirement plan and invest in stocks and bonds*?

7 ½ years. This is based upon 10% average annualized returns of stocks and bonds over a 30-year period, which is about what those assets did between 1992-2021.

10. How long will it take for your nest egg to earn more than you earn, if you put 10% of your income into a tax-protected (and financial predator proof) individual retirement plan and invest in stocks and bonds*?

25 years. This is based upon 10% average annualized returns of stocks and bonds over a 30-year period, which is about what those assets did between 1992-2021.

11. What’s the safest investment in a slow-growth, high-debt world?

Hard assets hold their value better than paper assets when there is too much paper floating around. However, pouring everything into real estate can be vulnerable, as you still need liquidity. It’s not a good idea to just put everything into cash and real estate. So, learn how to diversify properly (you don’t need 18-pages of holdings), avoid the Bailouts, add in hot industries, keep enough safe, overweight safe in volatile times and rebalance 1-3 times a year. Market timing doesn’t work. This may sound complicated, but it is actually easy-as-a-pie-chart, once you learn our strategies.

Most, but not all, hard assets are overpriced right now. If you are equity-rich, you still want to do the analysis to make sure that will remain the case if real estate asset prices decline significantly in value, as they did in the Great Recession. Be sure to read the Real Estate section of the 5th edition of The ABCs of Money.

There are some excellent safe, income-producing, value-priced hard assets that are worth considering now, which is why we spend one full day on What’s Safe at the Investor Education Retreats.

Think capital preservation. Liquidity will allow you to buy low when things are on sale. In other words, don’t be suckered into a risky investment with the idea that you are earning nothing on the safe side. You have to take on a lot of risk to earn anything when interest rates are at zero – which isn’t safe.

12. Which countries hold the most gold? 

The United States is the top holder of gold worldwide, by far, with 8,133.5 tons, followed by All ETFs, Germany, the International Monetary Fund, Italy, France, Russia and China. China and Russia have been on a gold buying spree since 2008. Reports are that they are trading oil and other commodities using their own currency backed by gold, in an effort to break free from the dollar hegemony. Additionally, there were multiple reports between 2011 and 2017 that the U.S. banks and brokerages were selling their client’s gold assets (sometimes without permission) in a price fixing scandal, which kept gold prices in the U.S. and Europe lower than the rest of the world. Deutsche Bank settled a lawsuit, and agreed on Dec. 2, 2016 to name names of other banks that were price-fixing gold.

© The World Gold Council at Gold.org. Used with permission.


13. Are annuities safe?

Insurance products, including life insurance and annuities, aren't insured by the FDIC. If we had not bailed out AIG in 2007, more than 50 million annuity holders would have been in real trouble. Your annuity product is only as safe as the insurance company that is selling it to you. According to the Federal Reserve Board’s Nov. 2021 Financial Stability Report, leverage is high at insurance companies.

Insurance products are like being a renter. If you can’t pay, you get tossed out. Many people pay for life insurance their entire working life, and then can’t pay when they retire – when they are really most in need. If you put that money into your own tax protected account, you could save on taxes, compound your gains, and it would be there for you when you retire, even offering some income, in addition to the capital. When you can no longer contribute to it, it supports you. You can be a better steward of your wealth than any insurance company, once you learn the ABCs of money that we all should have received in high school. It’s time to be the boss of your money. 

14. What were the top performing and the worst months for stocks over the past five years? 

April, November, July and January performed best over the 5-year period (in that order), on average. February, March and September were negative months.

Retreat Attendees receive charts of the top-performing months and election year trends. If you’re interested in learning more about our 3-day, life transformational investor educational retreats, call 310-430-2397 or email info @ NataliePace.com.

15. What was the top performing quarter for stocks over the past twenty years? 

October through December – the Santa Rally – performed the best over the 20-year period, but saw greater volatility in the 5-year trend. December 2018 was the worst performing December in history, killing the historical returns of the Santa Rally that year.

Understanding seasonal trends can help you with your annual rebalancing in your nest egg, and with your selling strategy for your trading. We spend one full day on what’s hot, teaching you how to identify the best investments of the year, in our Investor Educational Retreats.

16. What was the worst investment in 2021, NASDAQ, gold, the Dow Jones Industrial Average, bonds, cannabis, oil or real estate?

Cannabis was by far the worst investment in 2021. As one example, Tilray soared to $67/share on February 10, 2021. It was trading at $6.86 on Jan. 14, 2022. Gold lost money, too, with prices down 7.1%. Bonds were pretty poor performers, offering limp yields and capital losses. Will the U.S. decriminalize cannabis? Will cannabis stocks shoot the moon again, fueled by Reddit bulletin boards and Robinhood investors?

Stay tuned into my blogs and videoconferences for ongoing news, analysis and vital investor information. Email info@NataliePace.com with VIDEOCON in the subject line to receive the logon information for the next monthly videoconference.


17. Which year is expected to perform better, 2022 or 2023, based upon historical returns of election years?

2022 is a mid-term year. Over the last 10-20 years, mid-term years have been the worst performers, with annual gains of 1-5%. 2022 GDP growth could be just 4.0%, lower than the GDP growth of 2021 (which is expected to come in at about 5.0%). Pre-election years (2023) can be some of the strongest in the election year cycle with annualized gains of 11.6%-16%. However, 2023’s GDP growth is predicted to slow to just 2.2% (as interest rates rise), which is a negative for returns.

U.S. stocks in 2022 are quite pricey, which could mute gain possibilities this year. Having expensive stocks and real estate, as government support is pulled back, will increase the volatility on Wall Street. There could be some wild rides this year.

18. How many companies are in the Dow Jones Industrial Average?

30 companies. Many are household brands. Most have been around for over half a century, and many are carrying far more debt than the value of the company. Leverage has begun to concern economists. Over 50% of the S&P500 corporate bonds are at the lowest rung of investment grade, or at junk bond status. This includes a lot of banks, brokerages, financial services and insurance companies. Ford Motor Company was downgraded to junk bond status in fall of 2019. If you don’t understand how much debt corporations are holding, you can learn how to use this valuable tool to increase the performance of your nest egg on the 2nd day of the Investor Educational Retreat.

Debt and leverage, along with subdued sales, are the main reasons why the DJIA has underperformed the NASDAQ Composite Index in the 21st Century. Click to access the names of the 30 companies. The Dow Jones Industrial Average was launched in 1896.

19. How many Dow Jones Industrial Average companies were bailed out or went bankrupt in the Great Recession?

Most people don't realize that 20% of the companies of the Dow (6 companies: AIG, American Express, Bank of America, Citi, JP Morgan and General Motors) were bailed out or went bankrupt in the Great Recession. Others, like General Electric and Ford, received support. New Chips, like Google, Amazon, Nvidia, Meta and Zoom, are far safer, and higher performing, than the debt-laden Blue Chips, both in terms of growth, but also in terms of the fiscal health of their balance sheets. (Apple and Microsoft are now a part of the DJIA.) You’ve probably heard the acronym FANG. We’ve now changed it to ZANA MAD MAAX. (Click to read that blog.)
​

Learn more about how to add in performance and avoid the bailouts in your funds and retirement account at the Investor Educational Retreat and in The ABCs of Money. Value was such a dismal performer over the past few years that Wall Street is coming up with a new definition for this style of investing. (What’s of value when stocks are trading at all-time highs?) Remember: the higher the dividend, the higher the risk (read the chapter of the same name in The ABCs of Money for additional information).

20. Which index has performed better since the COVID-19 pandemic hit in February of 2020, the Dow Jones Industrial Average or the NASDAQ Composite Index?
 
The NASDAQ scored 43.6% gains in 2020, with the DJIA limping along at 7.2%.
 
21. How much did investors lose between February 19, 2020 and March 23, 2020?
 
Both the Dow Jones Industrial Average and the NASDAQ Composite Index dropped 35%. Some of the hottest stocks, including Nvidia (-38%), lost even more. However, technology stocks surged, once everyone started working and doing everything from home.
​
22. How much did investors lose during the Great Recession and the Dot Com Recession?

The Dow Jones Industrial Average lost 55% in the Great Recession. The Dot Com Recession saw a drop in the NASDAQ Composite Index of up to 78%. It took the NASDAQ 15 years to crawl back to even. Investors haven’t fully recovered from those ruts. According to Pew Research, most Americans are worth less today than they were in 1995.

You can’t afford to lose more than half every 8-10 years, crawl back to even, only to lose more than half again. It’s time to step off of the Wall Street Rollercoaster and into time-proven, easy systems that protect your wealth, while outperforming the major indices.

23. Does Buy & Hope work? If not, what does?
Buy & Hope lost more than half in 2000 and 2008 and 35% (or more) between February and March of 2020. Due to the amount of debt and leverage, and the slow rate of growth, Buy and Hold will not work going forward (until those problems are dealt with and cycled through). That is why Buy & Hope investors are worth less today than they were worth in 1995.

Our easy-as-a-pie-chart nest egg strategies earned gains in the Dot Com and Great Recessions and have outperformed the bull markets in between. Working off of the pie charts, instead of the brokerage statement, allows you to take the emotions out of the plan, and rely, instead, upon a time-proven system. This pie chart system, with annual rebalancing, is a buy low, sell high plan on auto-pilot – prompting you to do what you should be doing at each rebalancing session. Email info@NataliePace.com or call 310-430-2397, if you’d like to customize your own sample pie chart. (We teach you this at the Investor Educational Retreat.)
 
One more thing: low interest rates create asset bubbles. That is one of the reasons why assets drop so severely and swiftly in 21st Century recessions. Having the right amount safe is our best protection.

24. Why is it that so many investors are unable to Buy Low and Sell High?

Buy low, sell high is a mantra that everyone knows. So, why do so few investors do it? There are a few reasons…

• They are employing Buy & Hope in their nest egg, or have selected a Target Date Retirement Plan based upon the year they wish to retire (another Buy & Hope strategy that is riding the Wall Street rollercoaster).
• Buy low, sell high is easy to say and hard to do. When stocks drop, like cannabis stocks did in 2019 and again this year, the average person believes they’ve made a “bad investment” and are tempted to sell low. When stocks are high, like U.S. stocks are today, investors get complacent, or even antsy to buy more, under the delusion that things will keep going up, up and up. In other words, stomach acid, FOMO, YOLO, HODL and emotions work against the time proven mantra.
• Finally, most people don’t buy low because they can’t. When you ride the Wall Street rollercoaster or buy real estate high, the only option available to you after you’ve lost a substantial amount of money is to ride out the downturn and pray for recovery. Enlightened investors who have a time-proven plan, who have preserved their capital and are properly diversified, are in a great seat to buy low when the opportunity presents itself because they have liquidity. They haven’t lost everything in the  downturn.

25. What is the 3-Ingredient Recipe for Cooking up Profits? 

1. Start with what you know and love
2. Pick the Leader
3. Buy low; sell high (easy to say; hard to do)

This recipe, along with my Stock Report Card, Four Questions, market strategies and data drilling, is how I earned the ranking of number one stock picker. The recipe is easy. Learning how to use these tools requires practice. You must begin by locating and analyzing data, which is actually less time and far more informative than reading blogs, which have a fraction of the information and might be written by a novice. Come to our next Investor Educational Retreat to learn firsthand how easy and effective this strategy is, and why it has worked through bull and bear markets for more than two decades now. Call 310-430-2397 or email info@NataliePace.com to learn more.

26. What are the Four Questions for Picking Winning Stocks?
The Four Questions for Picking Winning Stocks.

1. What’s the product?
2. Who’s the customer?
3.  Can the company continue to make a superior product going forward and get it to their customer at the best price before the competition?
4. Who’s the CEO and can s/he motivate the employees to make the best product faster, better and cheaper than the competition?

As you can see, three out of four questions can be answered by being a good customer of the company. The 3rd question will benefit from you completing a Stock Report Card, and understanding how to use the data. So, the more you know about a company (ingredient #1 of the recipe for Cooking Up Profits), the easier it is to pick the leader.

In the 2nd edition of Put Your Money Where Your Heart Is, I used these questions and tools to compare two companies. Google scored an A (in 2006, when it had only been publicly traded for 2 years). The Dow Component that I gave a D- to went on to declare bankruptcy a few years after this prediction was made (General Motors). Using the Stock Report Card and 4 Questions, I identified both of these trends years before these major events occurred. The book was written in 2006, three years before GM went bankrupt. In fact, I applauded Google on national television before its IPO, when most pundits pooh-poohed it. This is the power of asking the right questions and relying upon the data, rather than just listening to the mainstream media. (We also warned about General Electric years before it was booted from the DJIA.)

So, are you an Einstein in investing? A complete novice?
 
If you scored 21 correct answers or higher, then you’re in great shape! If you scored 18 right, then you are C-level. Below 18 correct indicates that you are in need of a refresher course in life math. (So, consider joining us at our next Investor Educational Retreat.)
 
Call 310-430-2397 or email info@NataliePace.com to learn more.
 
The High Cost of Free Advice
A few years ago, our team was told yet another story about someone who lost a substantial amount of money by trusting the "free" advice of a financial advisor. Learn the truth about commissions & conflicts of interest & how to get a 2nd opinion now in the guest blog “They Trusted Him." Now He Doesn’t Return Phone Calls.” Know what you own. Protect your future now!

Data Sources:
(c) 2020 Morningstar Direct and The National Association of Realtors. All rights reserved. Used with permission. The information contained herein: (1) is proprietary; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar, the National Association of Realtors, the World Gold Council, Natalie Pace, nor any content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
 
Learn time-proven 21st-century strategies, at our February 11-13, 2022 online Investor Educational Retreat. Call 310-430-2397 or email info@nataliepace.com to learn more now.

​

​Other Blogs of Interest
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
​Investor IQ Test 2021.
Investor IQ Test Answers
​2021 Crystal Ball.
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

Let’s start with the good news. The median price of a single-family existing home was $353,900 in November 2021 (source: National Association of Realtors). (This is lower than it was in June, when prices hit an all-time high of $362,800.) Interest rates are at rock-bottom. Student loan payments were recently paused through May 1, 2022. Low interest rates, government support, Work From Home, and a flight to more affordable suburbs lit housing on fire in 2020 and 2021. What will 2022 bring?

The U.S. Economy in 2022
2021 GDP growth should come in at 5% or may be slightly higher. The 4Q 2021 GDP growth could actually be 4.7% or higher, which is a great deal better than 3Q’s 2.3%. When this is reported by the Bureau of Economic Analysis on January 27, 2022, investors might get happy again. We certainly have seen a lot of volatility on Wall Street, with the NASDAQ Composite Index down 6% on the year, as of the Jan. 14, 2022 close. How will Main Street homeowners react to the news? Home sales could continue to remain strong – until student loans must be paid, lenders rein in their loan approvals and interest rates rise, in May/June of this year.

We’ll get our first look at the 2022 economy at the end of April, when the 1Q 2022 GDP is reported. Predictions are that 2022 GDP growth will be around 4.0%.

It’s important to remember that investors are forward thinking. Institutional money is aware that the Fed Fund Rate is expected to rise on June 15, 2022, and again on September 21, 2022. The Fed Fund Rate is projected to be close to 1% by the end of 2022, and at 1.75% by the end of 2023 – unless inflation forces the Federal Reserve to act more aggressively. So, while housing might remain strong until summer, publicly-traded homebuilders might find themselves out of favor a few months before. (If you haven’t locked in your personal mortgage fixed rate, now is a great time to do so.)
 
Unaffordability is Another Headwind for Housing
77% of counties are registering in the unaffordable price range, according to Attomdata. With housing taking up 25.2% of wages for homebuyers, on average, lenders are likely to be a lot pickier about who is approved for a mortgage. It’s also important to note that consumer debt hit an all-time high of $15.24 trillion in the third quarter of 2021. Add inflation to the mix of rising interest rates, the end of government support, unaffordable housing and tighter bank policies, and we could be seeing a dramatically reduced pool of buyers for real estate.
 

Homeowners
I’m hearing first-time homebuyers talking about purchasing now to “lock in the low interest rates.” However, it’s even more important to understand what happens if you buy high, and the price of your home drops dramatically. When you have an underwater mortgage, your credit score plunges. You could be locked into a home that you can’t sell, with a lousy credit score, for up to a decade. The cycles in real estate are long. The high before the Great Recession was in 2006. The low occurred in 2011, and the recovery to 2006 prices didn’t happen until 2015.
 
If you or someone you care about are thinking of buying a home at this time, it’s very important to go through the checklist that is outlined in the Real Estate section of the 5th edition of The ABCs of Money. It would also be a good idea to read the case studies that are listed there. One example illustrates a person who watched too many get-rich-quick ads and lost everything in 2008-2009, while another features a family that purchased low in 2011, doubled their money by 2017, and then used the proceeds to build an off-grid solar home.

Homebuilder Stocks
 
Homebuilders, such as Hovnanian, Toll Brothers, KB home and Beazer Homes are all below investment grade, with very high debt. That means that few of these companies pay dividends. Their share prices soared in 2021 because housing was on fire. Hovnanian stock was trading at $6.44 in April 2020. It closed on January 14, 2022, at $120/share. KB home was it $12/share on March 23, 2020, and is now at $49. If you purchase these stocks now, you’re buying at a 4-year high.
 
Could the stocks go higher? Homebuilders traded much higher in 2005, during the last housing heyday. Most of these homebuilders have a very large backlog. However, they are also affected by a supply shortage in building materials. (Supply chain issues hit Beazer Homes revenue in the 3rd quarter of 2021.) Most homebuilders are reporting extremely low cancellation rates – another good sign. But it is important to remember that cancellation rates were as low as they are now back in 2006, at 15%, but jumped to 42% by the end of 2008.
 
The Optimism (Delusion?) of Commercial Real Estate CEOs
 
In the 3Q 2021 earnings call, Boston Properties CEO Owen D. Thomas predicted that “It's only a matter of time before employers more strongly encourage their teams to return to in-person work.” Meanwhile BXP‘s leading region is New York City, and it is only 52% occupied. San Francisco is a ghost town with only 18% occupancy. Subleases are elevated and are going for under the market rate. Technology CEOs are embracing Work From Home. And Citrix did a survey with Millennials and Gen Z that showed 90% do not want to return to the office full-time and half wish to work from home full-time. One of the biggest reasons why the two largest working demographics don’t want to return to the city and the skyscraper office is that cities are just too expensive to live in.

It’s important to remember that long-term leases are keeping the revenues at these office buildings stable. If a company wants to break the lease, there are punitive fees to pay. WeWork is perhaps the biggest red flag in this industry. The company took on long-term leases and required only a short-term commitment before Work From Home became a trend. It is believed that a great deal of the subleases on the market in NYC are from WeWork. (Building owners aren’t disclosing which tenants are subleasing.) WeWork recently went public via a SPAC. The company has a CCC+ rating with a negative outlook, lost $844 million in the 3rd quarter and has lower revenue in 2021 than it did in 2020 (by -18.5%).

Judging from the surveys conducted by Citrix, Work-From-Home is a structural shift that is not going to go away. The Great Resignation that is currently happening has shifted the power from employers to the employed. Companies are forced to raise salaries, increase benefits and make concessions (such as flexible schedules and WFH) to attract talent.

Private Placement REITs
Private placement rates are even more troublesome. Many of these companies are cash negative and have been for quite a while. They pay a high yield to investors and a very high commission to broker-salesmen. If you’re being sold into these products as a safe way to earn income, then you better read D&T’s story. They fell for that sales pitch, and lost 18% of their principal. One of the most important market aphorisms is this: the higher the dividend, the higher the risk.

https://www.nataliepace.com/blog/they-trusted-him-now-he-doesnt-return-calls

Malls
Malls are reporting 90% occupancy. However, a walk through the mall yields different results, with far more than 10% of the storefronts papered over with advertising or just glaringly empty. How are malls are coming up with their numbers? It could have something to do with accrual accounting or leases, even though the actual store fronts are shuttered. However, when the story that you hear doesn’t add up to what you’re seeing, that’s a red flag. Some of the biggest mall REITs pay 3-4% yield. You’re not getting paid very much at 3-4%, particularly if your principal investment is at risk of evanescing.

Rising Interest Rates and Recessions
At his confirmation hearing, Federal Reserve Board Chairman Jerome Powell made it clear that interest rates must rise to cool off inflation. The Summary of Economic Projections revealed that most of the Federal Reserve Board Governors believe interest rates will be closer to 2% by the end of 2023. That’s a lot higher than it is now, at zero.
 
​The chart below reveals just how correlated recessions are with rising interest rates. (The gray lines indicate the recessions.) The Federal Reserve Board will try to negotiate a soft landing – to raise rates without triggering a plunge in asset prices. However, as was mentioned in the Financial Stability Report released in November of 2021, “Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall.” 2022 isn’t expected to stall, but it is expected to slow down.

​“As the pandemic arrived our immediate challenge was to stave off a full scaled depression,” according to Jerome Powell. During the pandemic, stocks and real estate prices soared, while debt became absolutely astronomical. A depression was averted. However, it will take decades to pay off the trillions that have been borrowed.

​The combination of expensive assets and overleverage are two of the reasons why we see such outsized and swift corrections in 21st-century recessions. Below are stock charts from the last three recessions. As you can see, the S&P 500 dropped 38% in the 2020 pandemic. The Dow Jones Industrial Average sank 55% in the Great Recession. It took 6 years to climb back to the 2007 highs (by 2013). The NASDAQ Composite Index plunged 78% in the Dot Com Recession, and took 15 years to recover.

​Now would be a very good time to know what you own, and to begin underweighting real estate. It’s very important to understand what a properly diversified portfolio looks like, and not just rely upon somebody else to do this for you. If you had the nerve to lean into housing at the bottom in March 2020, then you have done quite well. Now is a great time to take your profits. If you’re interested in a 2nd opinion on your current plan, email info@NataliePace.com with 2nd opinion in the subject line to receive pricing and information.

You can learn the ABCs of money that we all should have received in high school, including time proven 21st-century strategies, at our February 11-13, 2022 online Investor Educational Retreat. Call 310-430-2397 or email info@nataliepace.com to learn more now.
 

Other Blogs of Interest
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
​Investor IQ Test 2021.
Investor IQ Test Answers
​2021 Crystal Ball.
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.
​

Is it Solar’s Turn to Shine?
Will the Winds Blow Favorably for Clean Energy?
 
 
After COP26 in November 2021, the Glasgow Climate Act warned that greenhouse gas emissions must fall by 45% from 2010 levels by 2030 (just 8 years from now) in order for global warming to be maintained at 1.5°C above preindustrial levels. Why is this so important? 40% of Americans who experienced a climate emergency in 2021 understand, as do 80% of the country that experienced unprecedented heat waves. Imagine what happens as the world gets hotter and hotter. Global warming will end lives. Species will go extinct. Sea levels will rise. Storms will become more fierce and frequent, as will fires and droughts.
 
Under the existing emissions reduction pledges agreed to act COP26, emissions will be nearly 14% higher in eight years. If countries do not meet their 2030 targets, we’re on track for temperatures to rise 2.4°C above preindustrial levels by the end of the century. There is a tipping point where we’ll all need to be much better swimmers and desert survivalists. This is not something in the distance (of 8 years). Here and now, climate disasters cost lives and a lot of money. Swiss RE projects that climate change will reduce the global economy by up to 18%. The National Flood Insurance Program is underwater again after being bailed out in 2017, when Congress canceled $17 billion of its debt.
 
The leaders at COP26 all know what’s at stake, as do CEOs, Senators, Presidents and NGOs. So, will countries meet their targets? Will an emphasis on clean energy mean that it is solar power’s time to shine? Will the winds blow favorably for other renewable energy projects, such as wind, anaerobic digestion, biofuel and more?
 
To see how clean energy stocks might receive tailwinds from climate action, I took a brief look at the policies of Canada and the United States. Currently, the U.S. and Canada have some of the highest CO2 footprints in the world, at 14 metric tons per person. Australia’s is 15 per capita. That compares to 4.85 in the United Kingdom (and most of Europe), 2.8 for Mexico and under 1 for most of Africa. China is the world’s biggest polluter (with 7.4 metric tons per capita), followed by the U.S. and India (1.77 per capita). If Europe can have a CO2 footprint that is 65% lower than the U.S. and Canada per person, clearly there is a great need for reducing our reliance on fossil fuels. 
 
We can’t see what happens in the rooms where decisions are made, but we can follow the money, and dig into the comments of the Joes who are in charge of climate policy. Here in the U.S., climate change policies have been hindered by one senator, namely Joe Manchin. Joe Manchin is the Democratic senator from West Virginia. West Virginia has the dirtiest electrical grid in the United States with about 93.5% of its electricity derived from fossil fuels. West Virginia’s grid is powered 88.3% by coal, with natural gas at 4.9% and petroleum at 0.3%. Clean energy makes up just 6.4% of the grid with hydro & wind.

Senator Manchin makes a lot more money from the coal industry, through his investments, than he does by being a Senator. Additionally, since coal is one of the main drivers of the West Virginian economy, he’s beholden to a lot of fossil fuel business leaders, including the billionaire coal baron who happens to be the governor of West Virginia, Jim Justice. Governor James "Jim" Justice (R) was worth $1.2 billion in 2020, according to Forbes. Justice is West Virginia’s only billionaire. In April 2021, he agreed to pay the federal government $5 million for coal mine violations (source: Forbes).
 
When asked about his recalcitrance to champion clean energy projects, particularly since Manchin is the chairman of the Senate's Energy and Natural Resources Committee, Senator Manchin told CNN on Oct. 19, 2021, "The transition's already happening. So, I'm not going to sit back, and let anyone accelerate whatever the market's changes are doing.” Manchin has been quoted as saying that clean energy is unreliable and will cost ratepayers more money.
 
Thankfully a lot of clean energy solutions come at the state and local level. There are incentives for utilities to increase the renewable mix, and there are tax credits for homeowners to power with solar and to improve the energy efficiency of their homes (26% this year and 22% in 2023). State level solutions are why California is powered 43% by renewables and Oregon’s grid is almost 70% clean, while many Gulf States and West Virginia are still heavily reliant on fossil fuels.

Despite Congressional gridlock, Richard Sansom, the Head of Commodities Research at S&P Global Market Intelligence, believes that 2022 will be a big year for clean energy. In a report released on November 10, 2021, Sansom wrote, “It’s going to be a record year for renewable energy development in the U.S. in 2022, with 44 GW of solar and 27 GW of wind power set to be installed alongside more than 8 GW of battery storage.”

Canada’s Clean Energy Commitment
Steven Guilbeault is the Canadian Minister of Environment and Climate Change. Guilbeault was a director and campaign manager for Greenpeace for 10 years, and is a founding member of Quebec’s largest environmental organization. It’s not too difficult to bet that Canada reaches its climate targets before the United States does.
 
Leadership can make swift and powerful changes. Uruguay went from having its electric grid only 40% clean a decade ago to almost 100% today. Costa Rica is 95% powered by renewables. Sweden has a goal of being the world’s 1st fossil fuel free nation.
 
Power to the People
While leaders can shape policy and fund projects, consumers have more power than we realize. We could switch off the electricity when we don’t need it and save a lot. We could take public transportation and micro mobility for at least our local errands. We could work from home. We can make a commitment to stop being addicted to oil and gassing up so frequently. We can even install our own rooftop solar, particularly if we live in a sunny state. When the pandemic forced us to stay home, global CO2 emissions dropped further than any time since World War II, at -7% below 2019 globally and down -12% in the U.S.
 
Tax credits make rooftop and commercial solar far more affordable. Some solar companies, such as Sunpower, are providing the financing for the project. Prices are low. The benefits are fantastic for homeowners who live in sunny states (who can save thousands annually on their electric bill) and for the planet (lowering CO2 emissions might heal our home).
 
If you’re interested in greening your portfolio, many solar and wind companies are trading at very low prices, especially compared to last year. Below is a quick rundown of the companies and what they specialize in, along with some of the math on their business. If you’d like a copy of my Solar & Wind Stock Report Card, simply email info@nataliepace.com with Solar & Wind Stock Report Card in the subject line.
 
Daqo (symbol: DQ) is a polysilicon manufacturer based out of China. Sales growth is an astonishing 367% year over year. Their products are in very high demand. Meanwhile, the share price is the $40 range, whereas it traded above $130/share last year. Having a company with this kind of astronomical growth trading at a price-earnings ratio of just 4 is a rare and potentially wonderful buying opportunity.
 
Sunrun (symbol: RUN) is a rooftop solar provider based in San Francisco. California is a sunny state, so it’s not surprising that sales are more than doubling year over year. Sunrun’s share price is trading at a discount of 2/3 from its 52-week high.
 
Renesola (symbol: SOL), based out of Connecticut, is a global solar provider. The company handles both large and community-based solar projects in the United States, Europe, Canada and China. Renesola’s sales are up 57% year over year, while the share price is down over 80% from its 52-week high. If S&P Global’s projections that solar power generation will increase by 44 GW turn out to be accurate, Renesolar should benefit.
 
Canadians might prefer to bet on the domestic solar provider Canadian Solar (symbol: CSIQ). (Americans can invest, as well.) Canadian Solar’s revenue growth is about 36% year over year. However, with a new Canadian climate czar in charge, CSIQ should see brighter days. Canadian Solar has a very low price-sales ratio and is trading at a 52-week low.
 
AMSC (symbol: AMSC) is a company that specializes in wind power, among other product lines. Wind had a challenging 2021. However, in AMSC’s most recent earnings call, AMSC’s CEO Daniel McGahn said, “We are in position for growth through the reemergence of our wind business, which we see coming as early as next fiscal year.” One of AMSC’s other divisions is its Resilient Electric Grid technology (REG). As McGahn explains it, “The REG system can be a critical asset for utilities in helping them deal with an evolving and more complex distribution grid” (a grid where multiple different sources are providing the power). AMSC’s REG system is in place in Chicago, with the potential to expand into other major utility providers. AMSC sales were up about 32% in the most recent quarter compared to the prior year. AMSC’s share price is down by 2/3.
 
An additional 27 GW of wind power generation in the US in 2022 will also benefit TPI Composites (symbol: TPIC), a maker of wind turbines that is based out of Scottsdale, Arizona. Supply chain issues continue to be headwind for this company. The company sales are flat year-over-year. However, if the wind business accelerates and supply chain bottlenecks get unclogged, TPIC could see a better second half of 2022. TPIC’s share price is down 80% on the year’s high, and is trading at a very low price-sales ratio.
 
Sunpower (symbol: SPWR) is the #1 U.S. solar company, with over 35 years in the industry. The company is vertically integrated, with a solar panel manufacturing division, rooftop solar installation, homeowner financing and large-scale projects. The company’s panels are highly efficient and have helped many collegiate teams win the Solar Decathlon over the years. The company also powers commercial campuses for Toyota, Johnson and Johnson, JFK Airport and Mt. Rushmore.
 
Sunpower’s year-over-year sales growth was 18% in the most recent quarter. Having a marketing specialist as their new CEO could bode well for the company’s rooftop expansion – particularly now that they have their own financing division. Homeowner solar tax credits are 26% in 2022 and 22% in 2023. If their sales team is successful, Sunpower could shine in 2022. Sunpower is another clean energy company that has seen its share price sink by 2/3 from its 52-week high.

If you’re more interested in dividends, then you might look into a few utilities that have been leading the clean energy revolution for many years – National Grid (symbol: NGG) and Portland General Electric (POR). Both companies have share prices near their 52-week highs. (So, have a dollar-cost-averaging plan for your purchase.) National Grid’s dividend is a little higher.
 
Sunpower, National Grid and Portland GE all have elevated debt. I didn’t mention Enphase, First Solar or JinkoSolar in this blog. However, I did include them in the Stock Report Card.

I'm also giving away 21 Days of Green video coaching (free) to anyone who is interested in living a more planet-friendly life and reducing your personal CO2 emissions. Email info@NataliePace.com with 21 Days of Green for your free gift from us. 
 
Full Disclosure: I have investments in some of the companies mentioned in this blog.
 
If you're interested in protecting your wealth, earning money while you sleep, the power of compounding gains, how to invest tax-free or how to construct and evaluate your own Stock Report Card, join us for our Financial Empowerment Retreat February 11-13, 2022 online. Email info@NataliePace.com with Retreat in the subject line or call 310-430-2397 to learn more and to register now. Access additional information, including pricing, curriculum and testimonials, by clicking on the banner ad below. 

​

Other Blogs of Interest
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
Will There Be a Santa Rally?
The Dangerous Debt Ceiling Game
The Robinhood IPO.
Will the Crypto Crash Hit Tesla, Square & Coinbase?
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
2021 Financial Freedom Sweepstakes
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
Will Cannabis be Decriminalized This Summer?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
​Beyond Meat, Oatly & The Very Good Food Co. 
Is Cryptocurrency the New Gold?
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Tesla & Nio Will Report Spectacular Earnings.
The Coinbase IPO.
Restore Our Earth on April 22nd (and Every Earth Day).
Should You Sell in May and Go Away? 
Adding Shoot the Moon Performance to Your Nest Egg.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Kushner's Times Square Building Plunges 80% in Value.
Will There be a Spring Rally?
Cannabis and the Road to Decriminalization in the U.S.
Hot ETFs Return Up to 50% Since October. 
​Investor IQ Test 2021.
Investor IQ Test Answers
​Shoot the Moon Stock Picks
​2021 Crystal Ball.
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
Can Medmen Avoid Bankruptcy?
​Bitcoin is Back, Baby!
Real Estate Prices are Going Up. And Down.
​Cannabis is Decriminalized. Stocks Triple.
Thanksgiving in a Pandemic. The Sustainability Silver Lining.
Money Stress Killed My Friend
Real Estate and Housing 2021. Challenges & Opportunities
​Real Estate in a Pandemic. Interview with Mike Fratantoni, the Chief Economist of the Mortgage Bankers Association.
​Bonds are Illiquid & Negative-Yielding.
Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot.
​Is Your Bank a Junk Bond
Put Your Money Where Your Heart Is.
Schwab's Chief Fixed Income Strategist on What's Safe.
China's Tesla (Nio). 2Q Sales Soar.
Why Are You Still Renting? (Errr. There is More Than This to Consider!)
​Wealth Myths That Keep You Poor. Prosperity Truths That Make You Rich. 
Technology and Silver are Golden.
Real Estate: Feeling Equity Rich? Make Sure That Feeling Isn't Fleeting.
Airline Revenue Plunges 86%. 
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

​In a year when the S&P500 is boasting almost 25% gains year-to-date, the ARK Innovation ETF (ARKK) is down -23% on the year and -40% from its high of $159.70 set on February 12, 2021. Check out the chart below. ARRK's downward trajectory is in neon blue. The strong performance of the S&P500 is in orange.

​Many meme stocks have fallen hard from their soaring prices at the beginning of the year (following the Stimmy checks). Gamestop traded at $158 on Dec. 17, 2021, after summiting at $483/share on Jan. 27, 2021. AMC rests at $32 after soaring to $72.62 on June 2, 2021. Blackberry traded at $9, after spiking at $29 on Jan. 27, 2021. Tilray got high on $67/share on Feb. 10, 2021, and now sells for under $8/share.
 
What is happening? Which of these funds/stocks are a value now, if any? What lessons can be gleaned from the rollercoaster ride?
 
We’re going to look at the culprits that keep coming up over and again, namely: price, sales, P&L (profits and losses) and popularity (marketing/pump & dump).
 
Ark Innovation ETF (symbol ARKK)
What’s going on with ARKK? Price matters.
 
All of the top holdings of this fund, with the exception of Teladoc, are still trading at astronomical multiples, even after the drop of 40% in the fund. Yes, the top holdings are all innovating. Sales growth is impressive. But the prices are just too high.
 
One of the top holdings in the ETF is Tesla. Tesla’s sales growth was 57% year over year. That looks amazing compared to General Motors and Ford. Those companies saw declines in sales growth of -24% and -5%, respectively. However, the Chinese electric vehicle makers are doubling and tripling sales year over year. Many Chinese EVs are going to sell into the European market and compete with Tesla there, in addition to China. So, should a company like Tesla that earned less than a billion dollars last year be worth almost a trillion? Tesla’s price earnings ratio is 300. An average price earnings ratio is about 17.
 
Most of the top holdings of the ARK Innovation Fund have less than a billion in earnings, or are losing money. Yet, almost all enjoy market values of close to $50 billion, or in the case of Tesla, $913 billion.
 
Popularity Wanes
Many people were very tempted to buy into ARK funds at their zenith. Ark ETFs benefited from a lot of media coverage when the company’s funds soared. Catherine Woods and her crew now face stinging criticism and pressure from the broadcasts and blogs about how poorly the funds have done in 2021 – losing money, while the S&P500 raked in the dough.
 
Professional investors sell high – particularly when things get frothy. (Large investors are given priority treatment in trade order. Many use algorithms and high-frequency trading, in addition to professional analysts and researchers, to assist them.) Traders who follow headlines and charts are easy prey to the professionals because headlines most often put you on the wrong side of the trade – buying high and selling low – and charts rarely predict a reversal of fortune when the trendline keeps busting through the ceiling.
 
Another concern is that Ark Funds is a relatively new fund company – founded in 2014. In a high-leveraged world, it’s safer to stick with fund companies that have been around a lot longer, have a high credit rating and are well-capitalized. You can access funds with targeted innovation and other desirable industries and specialties in through fund companies that have been around a lot longer than ARK. As just one example, iShares U.S. Technology Breakthrough ETF is up 18% on the year, even with the current sell-off in technology. (iShares is owned by Blackrock – an AA- rated company.)
 
As I mentioned above, Teladoc is oversold. Investors were willing to pay $308 a share for Teladoc in February 2021. It’s now at about $95 a share. With growth expected to be about 43% in the fourth quarter and 2021 revenue doubling what 2020 was, it appears that Teladoc could be ripe for purchasing.
 
Cyber Security
Crowdstrike, Cloudflare and Okta are all trading 30-40% lower than their 52-week highs. This is another case of price and profitability matters. All of these companies had net losses last year, with noteworthy sales growth ranging from 50-65%. However, the price-sales ratios are 50 for Crowdstrike and 100 for Cloudflare – even after the rout.
 
Elevated prices make professional investors skittish at the first sign of a data breach or resurgence in the pandemic. News of Omicron emerged in late November and cybersecurity firms have been on the selling block since.
 
These companies are in demand. Once their prices come back to reality, there could be some excellent buying opportunities.
 
Cryptocurrency
Bitcoin is down -32%. It was trading at $46,829 a coin on December 19, 2021. On November 9, 2021, you could’ve sold your bitcoin for $69,000 a coin. The biggest issue in the crypto-world is the disconnect between investor hopes and reality. Crypto gurus convince their devotees to buy and hold, while whales trade. The average holding time for the most popular coins is under 90 days. (Bitcoin: 75 days, Ethereum: 69 days, Solana: 30 days, Cardano: 73 days, Dogecoin: 48 days.) You can’t have a currency that squirrels around with such nutty price fluctuations. Cryptocurrency is a trading platform where everyone is hoping to get rich and quit their day job.
 
The other issue with Bitcoin and Ethereum is that they are energy hogs. According to energy experts, mining these OG crypto coins takes up far more energy than running a data center, and data centers are a real problem for technology firms that are trying to reduce their CO2 emissions. Tesla very famously used this excuse to get out of accepting Bitcoin for their products back in May 2021. A lot of Millennials and Gen Z, who are the most interested in cryptocurrency, are also the people who are the most concerned about healing our planet. What happens when their conscience weighs more heavily in the balance than fear and greed? That leads me to be more interested in altcoins, such as Cardano.
 
Whatever coin we choose, in today’s Wild West World, we have to be an active trader, rather than a Buy & Hold investor. There may come a time when cryptocurrency is something that we use on a regular basis. However, for now it’s still the pot of gold at the end of the rainbow.
 
It’s also very important to be diversified. Don’t place all of your eggs in the cryptocurrency basket. A hot slice or two to increase your portfolio performance may be appropriate, if you’re willing to babysit these investments.

​Meme Stocks
With regard to meme stocks, it appears that at least some were pump and dump schemes. Bed Bath and Beyond and Blackberry’s prices have a giant knife-drop bisecting their year. After shooting the moon, both of these stocks plunged by more than half within a week. Tilray’s trajectory looks similar. However, Tilray’s sales growth is up 53% year over year, whereas Bed, Bath and Beyond and Blackberry sales have sunk by 32% and 26%, respectively.

GameStop and AMC are still trading a lot higher than they were a year ago. However, they are also well off their 52-week highs. Both of these companies were problematic before the pandemic. AMC’s sales growth looks spectacular this year compared to last year, and was up 539% in the 3rd quarter. However, that is still quite dismal compared to 2019. AMC’s sales were $5.471 billion in 2019, $1.242 billion in 2020, and are on track for $2 billion in 2021. Even with $5.5 billion in sales in 2019, AMC lost -$149.1 million. 2020 saw net losses of -$4.6 billion, with as much as -$1.5 billion on track to be lost this year.
 
Gamestop has a similar issue. Sales are far below what they were in 2018 and 2019. The company has been cash negative since 2018. Gamers are not shopping at Gamestop today as they did in yesteryear.
 
 
Bottom Line
Price matters. Knowing how to price stocks is a lot trickier than normal shopping on sale. Additionally, regular rebalancing will help you to be on the right side of the trade and prompt you to sell high rather than watch your gains plummet.
 
It’s also important to always keep a proper amount safe – an amount equal to your age. (Knowing what’s safe in a Debt World is going to be key.) Our stock portfolio is actually our “at risk” side. If we’re keeping enough safe and we are not losing money on the “low risk” side that is our biggest protection against losses. It also affords us the ability to buy low. (Most people don’t buy low because they can’t. They’ve lost too much money and don’t have any liquidity.)
 
When we are properly diversified in the “at risk” stocks and funds (equities) side, we have large, mid and small companies. We are not over concentrated in one sector or style, whether it is technology, value (out of favor right now) or dividends. Then, when stocks soar, our slice becomes too large, or sometimes even two or more slices, and it prompts us to sell high. When our slice gets too small, it’s prompting us to buy low (or replace the slice with something better). So, the Nest Egg Pie Chart System (that we teach at our Investor Educational Retreats) is itself helping you to become more professional. All you have to do is learn the ABCs of Money that we all should have received in high school.
 
If our strategy only works when stocks are high or are always going up, then we have a flawed strategy. Buy & Hold is a last century strategy that hasn’t worked very well in the 21st-century. It’s time to update the software with a 21st Century time-proven plan.
 
If you're interested in seeing the Stock Report Cards that informed this blog, email info@NataliePace.com with SRCs from 20211221 in the Subject Line. 

​February 11-13, 2022 Online Financial Empowerment Retreat
Early Bird pricing ends Dec. 24, 2021

This year, our team is pleased to offer you a free holiday gift, stocking stuffers that are under $10 and a last-minute deal that is guaranteed to arrive on time. If you and your loved ones are interested in prosperity and sustainability, then these opportunities could be the perfect present.
 
Free
Join Natalie Pace in 21 days of prosperity, abundance and sustainability. There will be 21 days of video coaching designed to transform the holiday spirit into a New Year New You that is ready to shine and heal the planet in 2022. Simply email info@NataliePace.com with FREE HOLIDAY GIFT in the subject line. You will begin receiving your gift on Boxing Day (Dec. 26, 2021). Enjoy 21 days of video coaching from Natalie Pace that will break down the walls that keep you stuck in a rut. Activate abundance, while also increasing your environmental awareness and reducing your CO2 footprint.
 
“Just following the 21 days changed my mindset so much that my business went from just barely profitable to reaching record sales and profits 2 months later! I have now played The Gratitude Game a second time and intend to play it at least once a year! Thank you, Natalie!”
Suzie
 
 

 
The ABCs of Money (5th edition) offers the ABCs of money that we all should have received in high school in real estate, stocks, bonds, gold, debt reduction, the Thrive Budget, cryptocurrency and much more. This book remained in the top 10 on Amazon in its vertical for over 3 years with an average 5-star rating (mode).
 
"The ABCs of Money will teach you how to stop getting buried in debt and start scoring gains for the home team. The more you score, the more you'll win financial freedom and enjoy your life. College students need the information before they get their first credit card. Young adults need it before they buy their first home. Empty-nesters can use the information to downsize to a sustainable lifestyle, before they get into trouble."
Joe Moglia, former Chairman & CEO, TD AMERITRADE
 
Put Your Money Where Your Heart Is (2nd edition) is an original ESG investing book that also outlines the strategies Natalie Pace developed and used to become ranked a #1 stock picker (above over 835 A-list pundits).
 
“Many people, including educated men and women, often get into trouble when they neglect to follow these simple and fundamental rules. That is why I recommend this book with enthusiasm.”
Professor Gary S. Becker
Gary Becker won the 1992 Nobel prize in economics. 

The ABCs of Money for College teaches your tween or teen how to get a better degree for up to half the cost. Student loan debt is a crisis in the U.S., with 40% of loans in forbearance. Parents: start the process of college planning when your kids are young, and the entire family will enjoy a fruitful journey creating the career path of your dreams. This guide also includes the Jobs of Tomorrow, from trade positions to Ph.D.s, and the unique trajectory that is appropriate for each individual. 
 
“There are many strategies in Natalie Pace's book, The ABCs of Money for College, that prepare families - remember education is a family journey - to uplift and educate their children. Natalie also shares strategies for students who are not well-supported at home to create their own pathway to success. Given the central role that investments in the human capital of our children will play in the success of our children and our country, Natalie's book could not be more timely or important.”
Kevin M. Murphy, McArthur “Genius” Award winner.  
George J. Stigler Distinguished Service Professor of Economics, Department of Economics,
The University of Chicago Booth School of Business
 
February 11-13, 2022 Online Financial Empowerment Retreat
Early Bird pricing ends Dec. 24, 2021
Bring a friend or family member for a price that is so low you have to go to the flyer to see it (or peek at the group pricing at the end of this blog).
 

Learn time-proven, 21st Century wealth strategies at the February Retreat, including:

* Performance enhancing strategies, including Shoot the Moon stocks
* Easy-as-a-Pie-Chart Nest Egg Strategies that earn gains in recessions and outperform in bull markets
* Investing in cryptocurrency (Bitcoin, Ethereum, Cardano, Dogecoin and beyond), FANG, cannabis and other hot industries
* What’s Safe in a world where bonds are negative-yielding, losing money & defaulting, and money market funds have redemption gates and liquidity fees.
* What’s Hot and how to invest in industries and companies with interstellar upside
* 1-3 Times a Year Rebalancing for a buy low, sell high financial plan on auto-pilot
* Why Buy & Hope is riding the Wall Street rollercoaster, costing most Main Street investors more than half of their wealth in every recession, and using the bull markets to crawl back to even. 
* How a time-proven 21st-Century plan can earn money while you sleep (with no more stress).
* How to protect your wealth from stock market volatility and bond market illiquidity
* The hottest industries and countries in the world
* Learn how to put your money where your heart is & profit, ESG investing
* Discover how to divest your retirement from polluters and companies that are destroying our planet
* Why Growth stocks have almost quadrupled the returns of value over the past 3 years
* Take our Rebalancing IQ Test (click to access)
​
 
Testimonials
“I am so grateful to have this opportunity and knowledge that allows me to feel empowered rather than paralyzed and fearful. Thanks to you, Natalie!”
SM
 
"Stocks and investing are no longer rocket science. We give thanks just about every day that we met Natalie. I feel like I live on a different planet. I'm so grateful. Thank you for changing our lives, our peace of mind, our future and our vision of what is possible. We made a tectonic shift with you."
AC & AM 

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner."
CM

"Thank you, Natalie, for saving my retirement."
Nilo Bolden.
 
I met a new financial advisor/money manager, David, at a conference. I wanted to trust someone since my knowledge was lacking in this arena. I asked David if he was a fiduciary. He said he was, that everything he did was for us. David had put us into a variety of high-risk investments that were good for him, in that they paid him a high commission! Many of these companies have been cash negative for years, borrowing from one investor to pay off another, and paying brokers a high commission to do that. We put in the paperwork last year to cash out of these. Nothing!!! Then we redid the paperwork in August. We did everything by the book. Waiting… waiting… nothing. David, the salesman who put us into these investments, is not even returning our calls!!!!  Now, we’re in the process of filing complaints with FINRA, the SEC and the FTC on all of those involved. If I can impart any wisdom to you, it is to remember that “financial advisors” are sales people. They know how to listen and manipulate to serve their best interests, all the while making you believe that they truly are your friend. I am so angry at this system!!!! It is still hard for me to accept David’s lack of integrity and respect in not responding. I am grateful we are now educating ourselves. Studying with Natalie Pace is giving us this opportunity. I wish everyone could take these workshops. It would be great if this was taught in schools.
D&T, Indiana
Read their full story here
 
Groups of 5 Pay Just $368.80/Person* to attend the Feb. 11-13, 2021 Retreat
Ensure that everyone you love has the financial foundation necessary to successfully navigate a post-pandemic world by registering for the Feb. 11-13, 2022 Retreat as a group. We’ll help you achieve that goal by giving you an unbelievable price. The individual rate to attend (in the Early Bird pricing period) is $695. (An in-person retreat would normally cost $995-$1650/person, so this is already incredible savings.) A group of 5 will pay just $368.80/person – cutting the individual price almost in half. You must register by Dec. 24, 2021 to receive these dramatic cost savings.
 
2nd Opinion on Your Current Wealth Strategy
If you were worried about your strategy in March, or missed the opportunity to enjoy FANG stocks dropping by more than half in March of 2020, consider getting an unbiased 2nd opinion on your current wealth strategy from Natalie Pace now. A good plan protects you from downturns, while allowing you to profit in the bull markets. It also has you leaning into the hottest areas, while avoiding the money pits. Whether you are thinking of purchasing (or selling) a home, wondering which boxes to check off in your retirement plan, worried about how to protect your wealth from another downturn or sick of making everyone else rich with the high cost of everything in your life, Natalie Pace’s life math blueprint offers you a time-proven, 21st Century action plan.

Testimonials
“We asked Natalie Pace for a second opinion on our investment portfolio. She researched and reviewed each stock and fund. She then explained to us in plain English how we were positioned in the market and how high our risk exposure was. Her knowledge was so profound that we decided to take her retreat in Arizona. My husband was still quite skeptical, but 20 minutes into the retreat he turned to me and said, ‘Thank you.’ It's been a summer of miracles.  
Natalie contributed greatly to this. She added sanity and peace to my life. I am forever grateful.”
 
AC & AM


 
*These special offers are good through Dec. 24, 2021 only.
​

​Other Blogs of Interest
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
Will There Be a Santa Rally?
The Dangerous Debt Ceiling Game
The Robinhood IPO.
Will the Crypto Crash Hit Tesla, Square & Coinbase?
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
2021 Financial Freedom Sweepstakes
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
Will Cannabis be Decriminalized This Summer?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
​Beyond Meat, Oatly & The Very Good Food Co. 
Is Cryptocurrency the New Gold?
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Tesla & Nio Will Report Spectacular Earnings.
The Coinbase IPO.
Restore Our Earth on April 22nd (and Every Earth Day).
Should You Sell in May and Go Away? 
Adding Shoot the Moon Performance to Your Nest Egg.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Kushner's Times Square Building Plunges 80% in Value.
Will There be a Spring Rally?
Cannabis and the Road to Decriminalization in the U.S.
Hot ETFs Return Up to 50% Since October. 
​Investor IQ Test 2021.
Investor IQ Test Answers
​Shoot the Moon Stock Picks
​2021 Crystal Ball.
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
Can Medmen Avoid Bankruptcy?
​Bitcoin is Back, Baby!
Real Estate Prices are Going Up. And Down.
​Cannabis is Decriminalized. Stocks Triple.
Thanksgiving in a Pandemic. The Sustainability Silver Lining.
Money Stress Killed My Friend
Real Estate and Housing 2021. Challenges & Opportunities
​Real Estate in a Pandemic. Interview with Mike Fratantoni, the Chief Economist of the Mortgage Bankers Association.
​Bonds are Illiquid & Negative-Yielding.
Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot.
​Is Your Bank a Junk Bond
Put Your Money Where Your Heart Is.
Schwab's Chief Fixed Income Strategist on What's Safe.
China's Tesla (Nio). 2Q Sales Soar.
Why Are You Still Renting? (Errr. There is More Than This to Consider!)
​Wealth Myths That Keep You Poor. Prosperity Truths That Make You Rich. 
Technology and Silver are Golden.
Real Estate: Feeling Equity Rich? Make Sure That Feeling Isn't Fleeting.
Airline Revenue Plunges 86%. 
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.

The volatility that we’re experiencing on Wall Street recently is not just about the new Omicron variant of the coronavirus. Yes, that is of concern. However, it’s not the only spark that is causing the fiery swings. Here are a few of the other important considerations which you should be factoring into your nest egg.
 
The U.S. Markets are Overvalued
Congress Must Raise the Debt Ceiling Again Now
GDP was Revised Down Again to 5.0% (from 7.0% earlier this year)
Inflation Is Not as Transitory as the Feds Said
Over Half of the S&P500 is at or near Junk Status
Corporate Buybacks
 
And here is a little more information on each point.
 
The U.S. Markets are Overvalued
If you don’t understand price-earnings ratio, historic price-earnings ratio, and where we are in the cycle today, the chart below should give you the visual reflection alarms that you need. As you can see, the only time when stocks were more expensive was before the Dot Com Recession, when the NASDAQ Composite Index dropped by 78% (source: Shiller CAPE ratio). The Great Depression has now fallen to the 3rd most speculative time for stocks. You can also learn more by listening to my “Wall Street Secrets” and “What’s Safe in a Debt World” videoconferences. Click on the blue-highlighted links to access them. Subscribe at YouTube.com/NataliePace to be sure that you catch my videoconferences when they happen.

Congress has a habit of bickering and procrastinating until the last minute before raising the Debt Ceiling. Politicians know that a default in the U.S. could plunge the world into a recession and disrupt global financial functioning. So, while investors create volatility in the stock market to indicate their displeasure with the way that Congress is handling their business, in general everyone expects for the Debt Ceiling to be raised in time. That is why we are seeing selling activity one day, and buying activity the next. If investors really thought Congress wasn’t going to raise the Debt Ceiling, there would very likely be a swift race for the sidelines (a plunge in the stock market).
 
It's important to remember that Congress did indeed raise the Debt Ceiling in time to avoid a default, on August. 2, 2011. However, that wasn’t enough to save the U.S. AAA credit rating with S&P Global. Fitch Ratings currently has the U.S. AAA rating on a negative outlook. Moody’s indicated that a failure to raise the Debt Ceiling would be a global crisis.
 
The last time the U.S. credit was downgraded, on August 5 of 2011, gold and silver soared to all-time highs, and stocks fell. Stocks recovered pretty quickly, as investors clung to the Moody’s and Fitch Ratings AAA credit scores. During the next credit downgrade (in 2022?), the most popular cryptocurrencies could benefit, as crypto is the “new gold” for Millennials and Gen Z. The altcoins are a better bargain than Bitcoin and Ethereum.
 
GDP was Revised Down Again to 5.0% (from 7.0% earlier this year)
The 3Q 2021 GDP growth came in at 2.1%, after 6.7% and 6.3% in the 1st and 2nd quarters, respectively. Some economists, including the Atlanta Federal Reserve Bank’s GDPNOW, are predicting a great 4th quarter of GDP growth – above 8.0%. However, with the new 5.0% number being reported by Federal Reserve Board Chairman Jerome Powell (in his testimony to the U.S. Senate Banking, Housing and Urban Affairs Committee on Nov. 30, 2021), it’s possible that 4Q 2021 GDP will come in under 5.%.
 
That’s still respectable, particularly given the pandemic, and one of the strongest annual GDP experienced by the U.S. in decades. However, it’s difficult to justify lofty price-earnings ratios when the GDP growth keeps getting revised down. This is why investors are so skittish and the swings are so dramatic.
 
2022 GDP growth is expected to come in at 3.8%, according to the Summary of Economic Projections (SEP) from the September 2021 Federal Reserve Board meeting. New economic projections will be released on Dec. 15, 2021, at the conclusion of the FOMC meeting.

Inflation Is Not as Transitory as the Feds Said
The Federal Reserve Board has been stressing that 2021 inflation is temporary. It was their belief that they needed to let inflation run up a bit to pull persistently low inflation into their target range. In Powell’s testimony on Nov. 30, 2021, he indicated that inflation could remain elevated throughout much of 2022, though forecasters continue to believe that “inflation will move down significantly over the next year.”
 
What does that mean for investors? Interest rates are likely to tick up, at least twice, in 2022. By 2024, the Fed Fund rate is expected to have jumped from zero (where it is currently) to 1.8%. We’ll know how nervous the Feds are about inflation on Dec. 15, 2021, when the new SEP is released.
 
This is not favorable for existing bondholders, and will put pressure on some of the most highly-leveraged firms on Wall Street, particularly those that are suffering most from the pandemic, including commercial real estate, airlines, travel, hospitality, casinos, etc.
 
Over Half of the S&P500 as at or near Junk Status
That includes a lot of banks, financial services companies, insurance companies and essentially all of the institutions that hold our future in their hands. Now is the time to know what kind of safeguards are in place for your cash, annuities, bonds, munis, CDs, and other assets that you have been told are “safe.” There is an entire chapter on “What’s Safe in a Debt World” in the 5th edition of The ABCs of Money. (At under $8 for the ebook, this makes a great stocking stuffer.)
 
With U.S. equities overpriced and leverage quite high, value funds are not a value. Value funds are getting trounced by growth.
 

The Growth-Rich NASDAQ Composite Index Compared to the Debt-Laden Dow Jones Industrial Average over the past 3 Years (Dec. 2019-Dec. 2021)

​Corporate Buybacks
The one bright spot for Wall Street is that corporate repurchases of their own company stock is on fire. According to Howard Silverblatt, the senior index analyst of the S&P500®  (and other S&P Dow Jones indices), the 3rd quarter of 2021 set a new record for corporate buybacks, at over $225 billion, and 2021 is expected to replace 2019 as the highest dollar amount of stocks repurchased within a year. Apple leads the charge with $85.5 billion worth of share repurchases in the first 3 quarters of 2021.

Corporate buybacks are the primary reason why the U.S. equity markets have typically recovered the day after a sell-off, and also why equities are so overvalued. As long as the debt ceiling is raised on time, this is expected to continue. However, if Congress gets too close to the X date of defaulting on our payments, and Fitch or Moody's responds with a downgrade, all bets on the buybacks are off. 
 
The next Federal Reserve Board meeting will be Dec. 14-15, 2021.
 
Bottom Line
The Omicron Variant is sparking volatility because of the leverage and overpricing that is happening in the U.S. markets. Other countries are not as overvalued, including many countries with GDP above that of the U.S. (This is something that I will cover in the Dec. 2021 free videoconference. Email info@NataliePace.com if you’d like to join us on Thursday, Dec. 16, 2021 at 5 pm PT. If you’re already on the list, you don’t need to email.)
 
What should you do to protect yourself from the pandemic and all of the other concerns listed above? Consider:
 

• Incorporating value replacements,
• Diversifying by country,
• Underweighting bonds,
• Overweighting a little safe,
• Knowing what you own and why,
• Understanding what is safe in a Debt World (rather than having blind faith in a broker-salesman),
• Getting an unbiased 2nd opinion on your current plan,
• Joining us for our Feb. 11-13, 2022 Online Financial Empowerment Retreat

 
Your best strategy is not trying to market time, or jumping out of the market and into something you think is a hot safe haven. Never invest on headlines or with your emotions. Proper diversification with regular rebalancing protects your wealth and keeps an appropriate amount at risk, so that you can participate in the gains of the stock market, which are an impressive 21.6% year-to-date, after an equally stellar 16.3% gains in 2020. Stocks are typically the best game in town. This system is also a Buy Low, Sell High plan on auto-pilot that takes the emotions out of the mix, if you do it properly.

If you’d like pricing and information on an unbiased second opinion, email info@NataliePace.com with Second Opinion in the subject line. You might also consider joining us for our Financial Empowerment Retreat February 9-11, 2022 online. Email info@NataliePace.com with Retreat in the subject line to learn more and to register now. Access additional information, including pricing, curriculum and testimonials, by clicking on the banner ad below. 
 

Other Blogs of Interest
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
Will There Be a Santa Rally?
The Dangerous Debt Ceiling Game
The Robinhood IPO.
Will the Crypto Crash Hit Tesla, Square & Coinbase?
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
2021 Financial Freedom Sweepstakes
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
Will Cannabis be Decriminalized This Summer?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
​Beyond Meat, Oatly & The Very Good Food Co. 
Is Cryptocurrency the New Gold?
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Tesla & Nio Will Report Spectacular Earnings.
The Coinbase IPO.
Restore Our Earth on April 22nd (and Every Earth Day).
Should You Sell in May and Go Away? 
Adding Shoot the Moon Performance to Your Nest Egg.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Kushner's Times Square Building Plunges 80% in Value.
Will There be a Spring Rally?
Cannabis and the Road to Decriminalization in the U.S.
Hot ETFs Return Up to 50% Since October. 
​Investor IQ Test 2021.
Investor IQ Test Answers
​Shoot the Moon Stock Picks
​2021 Crystal Ball.
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
Can Medmen Avoid Bankruptcy?
​Bitcoin is Back, Baby!
Real Estate Prices are Going Up. And Down.
​Cannabis is Decriminalized. Stocks Triple.
Thanksgiving in a Pandemic. The Sustainability Silver Lining.
Money Stress Killed My Friend
Real Estate and Housing 2021. Challenges & Opportunities
​Real Estate in a Pandemic. Interview with Mike Fratantoni, the Chief Economist of the Mortgage Bankers Association.
​Bonds are Illiquid & Negative-Yielding.
Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot.
​Is Your Bank a Junk Bond
Put Your Money Where Your Heart Is.
Schwab's Chief Fixed Income Strategist on What's Safe.
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Why Are You Still Renting? (Errr. There is More Than This to Consider!)
​Wealth Myths That Keep You Poor. Prosperity Truths That Make You Rich. 
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The Bank Bail-in Plan on Your Dime.

​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.
​

Zana Mad Maax
Zoom. Alphabet. Nvidia. Amazon. Meta. Alibaba. Daqo. Microsoft. Apple. Adobe. Xpeng.
 
FAANNG had to be trashed after two of the companies changed their names (Google to Alphabet and Facebook to Meta). The above acronym – Zana Mad Maax – is quite a mouthful. However, the companies are noteworthy, and certainly merit the effort it requires to remember their names.
 
There is one fly in the soup. Most of these companies are trading at all-time highs. So, a measured approach to getting invested is better than diving all in. On the other hand, there are a few superstars on the list that are still flying under the radar of investors and are trading at very low price-earnings ratios.
 
So, here’s a brief overview of each of the companies. More key data can be found in the Zana Mad Maax Stock Report Card. It’s too lengthy to attach here. If you’d like a copy, just email info@NataliePace.com with ZANA MAD MAAX in the subject line.
 
I’ll also be hosting a free videoconference on this topic soon. If you want to attend live, just send an email to info@NataliePace.com with VIDEOCON in the subject line. (If you’re already on the VIDEOCON list, you don’t need to send an email.)
 
​Zoom (symbol: ZM): We used to meet over coffee or at the water station. We now meet over Zoom. “Zoom me” has become a thing. When a noun becomes a verb, it’s ingrained in the culture. Enough said about how Zoom has become a part of our lives. If Work-From-Home continues, and surveys of Gen Z and Millennials indicate that it will, Zoom is here to stay. It’s understandable that the company’s revenue grew by 54% in the 2nd quarter and is projected to have 31% revenue growth in the coming quarter. Future growth may require an acquisition, and accelerated geographic and product expansion. Zoom’s P/E is very lofty at 81, with a forward P/E of 55. Ease into ownership.  
 

​Alphabet (symbol: GOOG) companies have made themselves the ABCs of our daily life. From Google maps, to Gmail, to search and even YouTube, chances are most of us are using quite a few of Alphabet services multiple times daily. Alphabet’s earnings growth and profit margins are quite impressive for a company valued at almost $2 trillion. The P/E is high at 28.
 
Nvidia (symbol: NVDA) is a very prolific artificial intelligence company, with AI products including self-driving, cryptocurrency, gaming, data centers and more. It was always included in my version of FAANNG. With 50% year-over-year revenue growth, it continues to be the Lord of the AI space. The company is projecting 48% annual revenue growth in the 4th quarter. Earnings should be announced at the end of February 2022. If you thought Zoom’s P/E was interstellar, Nvidia’s is 90, with a forward P/E of 70.
 
Amazon (symbol: AMZN) has become essential to what we eat, drink, wear and watch. This company has the slowest growth and profit margins, at 15% and 6% respectively, with a very elevated P/E of 69. If you already own it, then you might be looking to rebalance (i.e. capturing gains). If you don’t own the company yet, then develop a strategic plan and shopping list that allows you to buy in at a better price. (For example, Amazon’s price dropped to $1785 in March of 2020. Its current price is $3696.)
 
Meta Platforms Inc. (symbol: FB): You might be disgusted with Facebook, but chances are you’re using at least one of the other Meta businesses. If you have friends or family abroad, it’s difficult to live without WhatsApp. Instagram has become one of the most popular social media platforms. Gaming has always been part of the Metaverse, and the company is expanding into VR headsets with Project Cambria and Oculus. Meta has impressive growth and profit margins, at about 34%. The price-earnings ratio is not outlandish (though high) at 24. Be aware, however, that if you buy today, you’re purchasing close to an all-time high, in the hopes that the company’s share price goes higher. A strategic buy-in, or rebalancing if you’re already in, is a sound plan. The Facebook troubles are not over yet, and bad news can drag the share price of a good company down.
 
Alibaba (symbol: BABA) is the Amazon of China. People really can’t live without it there. It also has much higher revenue growth (34%), higher profit margins (19%) and a very low PE (19) when compared to Amazon. Alibaba, like most Chinese stocks, plunged when the prior White House Administration threatened to delist Chinese companies from American stock exchanges. That hasn’t happened. Many investors were chomping at the bit to buy Alibaba in January at  $319/share. Today’s price is just $144.
 
Daqo (symbol: DQ):is a leader in polysilicon and wafers, based out of China. Their solar products are needed in a world that is committing to renewable energy, which is why the company’s annual sales growth was 367% in the last quarter. This is another Chinese company that’s trading at a very low price-earnings ratio, at 11, with a forward P/E of just 6.
 
The polysilicon industry is seeing prices soar. Production remains strong, even though there are energy quotas in China. 4th quarter production might be slightly lower than the 3rd quarter, even though demand is high, while the company works through the red tape to expand their operations. However, if polysilicon and wafer prices and demand remain elevated, which they are expected to, then the revenue could come in close to 3Q revenue of $585.8 million, an increase of 136% over the 4th quarter 2020 revenue of $247.7 million.  
 
The 4th quarter results should be announced the 1st week of March 2022.

Microsoft (symbol: MSFT): I am using Word to write this blog. I frequently use Excel for accounting and data. Here again is a daily need. Microsoft is a business staple/technology company. The P/E is elevated at 38. The profit margins and growth remain impressive, particularly for a $2.6 trillion company, at 36% and 22%, respectively.
 
Apple (symbol: AAPL): Apple is another business staple/technology company that we can’t live without. Apple has a finger in music, streaming and AI, as well as connectivity. Apple’s revenue growth was 29% with 26% profit margins. Apple and Microsoft are the two most valuable companies in the world, at $2.6 trillion. However, Apple’s P/E is slightly more palatable, at 27.
 
Xpeng (symbol: XPEV): XPeng is taking on Tesla’s Model 3 in China. The XPeng P7 received the highest safety rating of all EVs scored in China (source: CleanTechnica.com). Xpeng’s revenue growth soared 537% in the 2nd quarter, and should be almost triple the revenue of 2020 in the 3rd quarter, as well. XPeng posted a net loss of $185 million in 2Q 2021 – normal for an early-stage, high-growth company. 3Q 2021 vehicle deliveries were up 48% sequentially and 199% year over year.
 
XPeng will report 3Q 2021 results on Tuesday, Nov. 23, 2021, before the market opens.
 
Bottom Line: All of these ZANA MAD MAAX companies should continue to dominate in 2022. You’ll want to develop a plan to own them. Many of the Chinese stocks are trading at half the prices they were trading at in January of this year. U.S. stocks are, generally, trading near all-time highs, with elevated price-earnings ratios.


Full Disclosure: I own many of the stocks featured in this blog. 

If you'd like to learn how to pick stocks, how to properly set up your retirement plan and how to protect your wealth, join us for our Feb. 11-13, 2022 online Financial Empowerment Retreat. Email info@NataliePace.com to learn more. 

About Natalie Pace
Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. 

Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. ​