How is it that Warren Buffett pays less in taxes (percentage-wise) than his executive assistant? Why is it that Americans often lose their family wealth within 3 generations, while many European families have intergenerational wealth that spans the centuries? It has everything with eschewing the groupthink, and embracing the laws and strategies that are designed to create, secure and transfer wealth.
 
Wealth Myths That Keep You Poor
1. Cutting out café lattes and avocado toast will solve your budgeting problems.
2. Buy and hold is your best retirement strategy.
3. Debt is a four-letter word.
4. Buy your first house as soon as you get your first job.
5. Launch your passion business on credit cards.
6. Hot tips from friends, family and celebrities.
7. Money is private.  
8. I can’t afford college.
9. If I pay my bills on time, my FICO score will stay high.
10. Interest rates are so low that you should buy a home now!
11. Buy FANG* now!
 
*Facebook, Apple/Amazon, Netflix/Nvidia, Google.
 
Below each myth is translated into the truth. Each number correlates with the number above.
 
Prosperity Truths That Create Lasting Wealth
1. The Thrive Budget. 50% to survive affords you 50% to thrive. Limiting your basic needs expenditures and increasing your passive income earning is the only ticket out of living hand-to-mouth.

2. Proper diversification with 1-3 times a year rebalancing is your best retirement strategy. Buy & Hope lost more than half on the equity side in the last two recessions.

3. There is good debt, and there is bad debt. Knowing which is which, and how to leverage safely to a better life, is the ticket out of the rat race.

4. Buying a home is one of the best things you can do to create wealth. However, there are a few simple rules that you must always follow to ensure a gainful, rewarding purchase.

5. Professionals and successful entrepreneurs access other people’s money and talent for their start-ups rather than high-cost credit cards for financing. (That’s why so many tech startups issue stock and stock options to the launch crew.)  

6. Hot tips from friends, family and celebrities are the most common way to lose money. Grade your guru (and friends, family, celebrities) before you listen to anything they say.

7. Intergenerational wealth is kept over the centuries by taking a view 100-years in advance. This includes a wealth plan, governance, appropriate business entities, mentors, board members and financial education.  

8. Education is the highest correlating factor with income. However, there is also over $1.54 trillion in student loan debt. So, getting the best degree you can in a carefully designed plan that costs half of what most people pay is the best approach! It’s hard to get a job in the developed world without a Bachelor’s Degree. It’s easy to be employed with a Masters’ Degree or higher.

9. 30% of the FICO score is based upon your assets to debt. So, your credit can go in the toilet, even if you pay your bills on time, if your debt is higher than your savings and investments. This can happen easily in a recession, if you purchase expensive assets at the top of the market.

10. If you purchase a home that is more than you can afford, or at an all-time high price (which is where most home prices are), then you are putting yourself at risk on many different fronts. Never buy high, even if you think you can make the payment and especially if the mortgage and real estate brokers are trying to hustle you in.

11. FANG stocks have returned 60% since March. However, they also lost 25-40% in the weeks prior to that! FANG stocks are hot, and hot stocks can be overweighted in your diversified plan. Buying high is never a good idea, however. Going all in on any one bet is an easy ticket to the poor house. The adage is buy low, sell high. Use 1-3 times a year rebalancing as a buy low, sell high plan on autopilot.  
 
 
See below for additional color on each point.
 
1. The Thrive Budget. Today’s world doesn’t add up. It requires rethinking the big-ticket items to get to a budget that is workable. That is why there is a growing trend toward intergenerational housing. If you can cut the amount that you spend on housing, transportation, medical insurance, gasoline, debt and utilities, then you’ll save thousands annually that can be invested in your retirement plan, education (college funds), fun and charity. I outline how to save thousands with smarter big-ticket choices in the Thrive Budget section of The ABCs of Money and at my Investor Educational Retreats. Cutting out café lattes and avocado toast might save you hundreds, but it won’t transform your life.

2. Proper diversification with 1-3 times a year rebalancing is your best retirement strategy. Buy & Hope lost more than half in stocks in each of the last two recessions. This time around, bonds are vulnerable as well. Fortunately, getting safe, protected, hot and diversified is easy-as-a-pie-chart. This strategy earned gains in the last two recessions and has outperformed the bull markets in between. You can learn this at my Investor Educational Retreats and read about them in my book The ABCs of Money. You can also call our office at 310-430-2397 to receive an unbiased 2nd opinion that includes an easy-to-understand pie chart of your current plan, side by side with our time-proven plan. You’ll also receive a line-item action plan that you can choose to follow (or not). If you have a lot of wealth in your 401K, retirement plan, brokerage account and investments – even if these plans are actively managed – it’s a good idea to get an unbiased 2nd opinion now.
 
3. There is good debt, and there is bad debt. Education can be good debt, providing you: 1) are conscious of the income-earning potential, 2) keep the debt as low as possible, and, 3) graduate with the best degree for your field. For-profit schools have a very low graduation rate, while nonprofit Ivy League schools have a very high graduation and employment rate. Read  The ABCs of Money for College to develop the educational plan that is right for you. Buying a home can be good debt, too, if you buy what you can afford and purchase your estate for a good price.
 

4. Buying a home is one of the best things you can do to create wealth. However, there are a few simple rules that you must always follow to ensure a gainful, rewarding purchase. In short, you need to buy what you can afford, plan on living there for 7-12 years and apply the 3-Ingredient Recipe for Cooking Up Profits. You should also consider intergenerational housing to keep the wealth in the family. Princes and princesses don’t purchase their own castles! Read housing case studies in the Real Estate section of The ABCs of Money.
 
5. Professionals and successful entrepreneurs access other people’s money and talent for their start-ups rather than high-cost credit cards and debt financing. If you launched your business on credit cards, that is very high-cost capital, which can easily drain your budget and nest egg – particularly in recessions. Rather than hang on and sink your life boat (your retirement plans) to keep an unsustainable business alive, it’s important to look at debt solutions that keep more of your wealth intact. If you are getting your debt strategy from the credit card debt collector, you are getting information that makes them rich at your expense. It’s important to know what is possible and to make an informed decision, putting your best interests at the heart of the matter.
 
6. Hot tips from friends, family and celebrities are the most common way to lose money. When a celebrity claims to have a specialist in a field, they are receiving a large percentage of whatever that “guru” sells you. If someone is speaking on the stage that is sponsored by a bestselling author, the author might receive up to half of the sales. The vetting process is much lighter than you might think. Friends and family are oftentimes receiving no real vetting at all – just blind faith. Once you learn The ABCs of Money that we all should have received in high school, and learn how to grade your guru before you listen to anything s/he says, you’ll never be vulnerable again! You can place wisdom and time-proven strategies at the heart of your investment game plan.
 
7. Intergenerational wealth is kept over the centuries by taking a view 100-years in advance. This includes the wealth plan, governance, appropriate business entities and financial education. As one example, when Prince Charles became the Duke of Cornwall and The Prince of Wales, he took oaths, answered to boards and was educated by his family on how to become a responsible steward of the lands he oversees. Prince Harry didn’t become The Duke of Sussex until he married. Same for Prince William, who is now The Duke of Cambridge. The Duke of Cambridge will become The Duke of Cornwall and The Prince of Wales, when his father is King. These are roles they spend their entire life preparing for. You can invest in the financial literacy and family plan that ensures your family preserves wealth over the centuries, too.
 

8. Education is the highest correlating factor with income. Whether you are interested in a trade or a profession, education is the key to success. However, the route for each, and for each individual, is unique. If you come at this from the angle of the “College Experience,” and attending the place that will accept you, then you are more likely to be caught in the college debt trap. If you read The ABCs of Money for College and practice the exercises and information found therein, then you can design a better degree for half the student loan debt (or more).
 
9. 30% of the FICO score is assets to debt. So, your credit can go in the toilet, even if you pay your bills on time. If you are spending a lot of money servicing your debt, it’s time to design a new game plan that puts earning money while you sleep at the center of your focus. Debt is, at its heart, a budgeting problem. So, any strategy that does not include learning how to save thousands annually with smarter big-ticket choices and increasing your income with passive investing, is not going to be successful.
 
10. If you purchase a home that is more than you can afford, or at an all-time high price (which is where many home prices are), then you are putting yourself at risk on many different fronts. If the prices fall, your mortgage will be underwater, and your FICO score will sink like a rock. If you can’t afford the payments and you fall behind, you risk losing your home. Being property rich and cash poor, or underwater on your mortgage, is very stressful and is difficult on your family. Many times, it can take a decade to extricate yourself from the financial fall-out of those poor choices.
 
11. FANG stocks have returned 60% since March. Stocks are at an all-time high. We are in a recession. In the last two recessions, stocks lost more than half of their value. After the Dot Com Recession, it took the NASDAQ Composite Index 15 years to crawl back to even. The only two times in history that stock prices have been higher were in 1929 (before the Great Depression) and in 2000 (before the Dot Com Recession, when the NASDAQ Composite Index dropped up to 78%).
 
 
Let wisdom and time-proven strategies form the foundation of your life for greater prosperity and abundance for you and your forebreasr to come. Learn more in The ABCs of Money 3rd edition, at my investor educational retreats, by receiving an unbiased 2nd opinion, by watching my videoconferences and by reading my blogs. Call 310-430-2397 or email info@NataliePace.com for help determining the strategy that is right for you.
 
 
 
​Learn the ABCs of Money that we all should have received in high school at our Oct. 3-5, 2020 Investor Educational Retreat. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Families receive a discount for attending together. Call 310-430-2397 or email info@NataliePace.com for to get rates. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.

 

Other Blogs of Interest
Protecting Your Wealth and Home in a Recession.
Technology and Silver are Golden.
The Economy Contracts 32.9% in the 2nd Quarter of 2020.
Real Estate: Feeling Equity Rich? Make Sure That Feeling Isn't Fleeting.
Airline Revenue Plunges 86%. 
10 Questions for College Success
Bank Earnings Season. Crimes. Cronyism. Speculation.
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
The Lyft IPO Hits Wall Street. Should you tak
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
The High Cost of Free Advice. 
2018 Was the Worst December Since the Great Depression. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.

With 17.9 million people (11.2%) unemployed and over 30 million taking unemployment benefits of some kind or another (source: BLS.gov), there are a lot of Americans who have less income this year than just a few months ago in February. (You have to read the fine print to get the accurate numbers.) If it isn’t us personally (thankfully), then it is someone we know. Perhaps the most important things when life shifts so dramatically and so fast is to avoid the common mistakes and embrace fiscal best practices.

​It is also key to band together, and look at the challenge, where possible, as a family challenge. The more that we can help one another in our familial groups, the better off we’ll all be.
 
Common Mistakes

• Draining your retirement to pay bills
• Feeling equity rich and untouchable
• Believing that since the stock market has recovered, your investments are safe

 
Smart Strategies

• Right-size your budget
• Protect your wealth
• Re-evaluate your home situation

 
It’s important to remember that there is no panacea for an unprecedented recession. Just like a healthy diet consists of various types of food, vitamins, minerals and supplements, a healthy fiscal plan will be diversified – while also specialized for your particular age and specifications. Below is a sample pie chart.
 

You can personalize your own pie chart using my free web apps. Go to https://www.NataliePace.com/ or click on the badge below to access. 

Are Hot Stocks Safe?
Technology is up seven-fold since the Great Recession and has gained 57% since March. However, FANG stocks also dropped 25-40% between the highs of February 19, 2020, and the lows of March 23, 2020. Being properly diversified, overweighting tech and having a rebalancing plan helps you to stay on the right side of the trade. (This is something I teach at my Investor Educational Retreats. It’s easy-as-a-pie-chart.) So, rather than invest all you’ve got in technology, make sure that your growth funds are rich in technology, and maybe have an extra slice or two of tech in your hots. Learn more in my Technology blog.
 
During your rebalancing, if the industry has been on a tear, you will trim back, selling high. If stocks have tanked and your slices are now slivers, then you’ll buy more low. This pie chart strategy is a way to earn gains in bull markets, while protecting yourself in bear markets. Since we’re having a rally in a recession, it’s important to incorporate both strategies. Don’t assume that what has come up will never go back down.
 
What About Safe Havens Like Gold?
Going all-in on gold, silver or cryptocurrency can be a problem, too. Learn more in my Gold Blog. When they are hot, nothing can touch them. However, when these commodities crash, they stay low for a very long time. When the U.S. was downgraded to AA+ by Standard & Poor’s, gold soared to its all-time high. That was in 2011. It took nine years to return to that high, squishing the assets of a lot of gold bugs for almost a decade. Just as in technology, if you think it’s hot, have an extra slice or two of the industry.   

Cryptocurrency is still a trader’s platform, not a currency, as you can see in the volatile chart below. Bitcoin has never come close to the December 2017 high of $20,000. 

​Also, due to priority trading of certain individuals, you might have a massive line in front of you when you want to sell high. No individual trader I know was able to sell their Bitcoin at $20,000/coin. If you want to use crypto as a hedge against a stock rout or weak dollar, then consider a hot slice or two in your diversified pie chart, not betting the whole farm.

Traditionally Safe Assets Like Bonds and Money Market Funds are Vulnerable
Many bonds are highly leveraged. Bond funds lost money in late February and early March, and have experienced periods of illiquidity. Many investment grade bond funds allow 20% or more of junk bonds, mortgage-backed securities and other riskier fixed income assets in them. Junk bond funds had to be bailed out by the Federal Reserve on March 15, 2020. Keep the terms short and the creditworthiness very high on any bonds that you have. Learn more in my bond blog.
 
FDIC-insured cash is safer than SPIC or money market funds. Money market funds are now the bank's bail-in plan. So it’s important to double-check your savings, retirement plans and brokerage accounts to see where your cash is being stored. Money market funds have redemption gates and liquidity fees. Learn more in my blogs. Click on the blue-highlighted words to access.
 
However, getting safe is a two-step process. First you want to keep your money (in FDIC-insured cash or short-term Treasury bills). So, remember that liquidity affords you the opportunity to buy low, when everyone else is in a cash crunch. The second step is to look for safe, income-producing hard assets that you buy for a bargain. Hard assets will hold their value better in a world where there is just too much paper floating around.
 
Hard Assets
Safe, income producing hard assets that you purchase for a good price, with a clear vision on what can produce income in a post-pandemic world, is the safest way to preserve the value of your capital, while producing an income. The problem is that real estate is at an all-time high. With high unemployment, you also have to be concerned that your renter may not be able to pay. There is a moratorium on evictions in many cities and states currently. That may be why more families are turning to intergenerational housing to keep the money in the family and reduce expenses. Learn more in my real estate blog.
 
Clean Energy
Solar is the low-hanging fruit on a safe, income-producing hard asset that you purchase for a good price, particularly if you live in a sunny state. The panels themselves are available at historically low prices, and there is still a 24% tax credit available. If you reduce your electric bill from $300/month to $35/month, then your annual savings is over $3,000. That means your solar might be paid off in a few years, and from there on out offers you the equivalent of 15% or higher yield on your purchase. Learn more in my solar blog. This only makes sense if you plan on staying in your home for a few decades.
 
Other Important Considerations
 
Right-Size Your Budget
If you’ve lost your job or reduced your work hours, then it’s important to right-size your budget before things get out of hand. This may require bold choices. However, if you address the big-ticket items first – housing, transportation, medical insurance – then you might find creative solutions that help you to make ends meet, even with a reduced income. Learn more in the Budgeting section of The ABCs of Money. Personalize your own budget with my free web app. Learn ways to reduce your medical insurance costs in my Health Savings Account blog.
 
Don’t Drain Your Retirement Accounts
Do not siphon off your retirement account to fill the holes in an unsustainable budget, or to pay down debt. That’s sinking your own life boat. You wouldn’t chop up your life boat and use it as firewood to warm you up for the day. So, don’t do that to stay temporarily in a situation that you can no longer afford. There are likely to be solutions that you haven’t put on the table yet. Learn more in the Debt and Budgeting section of The ABCs of Money.
 
Evaluate Your Home Equity and Mortgage
Whether you are equity-rich, treading water or underwater on your home mortgage, now is the time to evaluate your housing plan. If you’ve owned your home for 12 years or more, or went through the Great Recession as a homeowner, then put yourself back in that memory. How did it feel to be underwater on your mortgage? How did that impact your life? Do you need to take steps now to ensure that never happens again?

If you purchased your home in the last few years and are feeling rich in equity, how would you feel if that all evanesced? Would your mortgage be underwater if prices trimmed back to where they were in 2011? Can you afford your home or is it eating up 28% or more of your budget? Is this where you want to live for the next 7-10 years? Read my Equity-Rich blog to develop your own recession-proof home ownership plan.
 
Learn more about How to Keep Your Money Safe in a Pandemic and Recession in my What is Safe? Videoconference. Check out my interview with Kathy A. Jones, the Chief Fixed Income Strategist of Charles Schwab, where we discussed bond strategies. Click to access.

We are still fairly early in the recession. The markets have had a nice recovery off of their March 2020 lows. That affords you a 2nd chance to protect your home and wealth before more economic storms hit. If you wait for the headlines that the economy is in trouble, it will be too late to protect yourself.
 
Other Articles of Interest
Recession Proof Your Life 
21st Century Solutions for a Post-Crisis World

​Learn the ABCs of Money that we all should have received in high school at our Oct. 3-5, 2020 Investor Educational Retreat. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Families receive a discount for attending together. Call 310-430-2397 or email info@NataliePace.com for to get rates. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.

Other Blogs of Interest
Technology and Silver are Golden.
The Economy Contracts 32.9% in the 2nd Quarter of 2020.
Real Estate: Feeling Equity Rich? Make Sure That Feeling Isn't Fleeting.
Airline Revenue Plunges 86%. 
10 Questions for College Success
Bank Earnings Season. Crimes. Cronyism. Speculation.
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
The Lyft IPO Hits Wall Street. Should you tak
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
The High Cost of Free Advice. 
2018 Was the Worst December Since the Great Depression. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.

Technology (and Silver) are Golden. Most FANG Stocks Have Doubled Since March.
 
Facebook, Apple, Amazon, Netflix and Nvidia have all doubled off of their March lows.
Technology has scored gains of 58% since the lows of March 23, 2020. That compares to a notable rally of 45% in the Dow Jones Industrial Average. If you’ve attended a retreat, you know now in spades why being overweight in technology, particularly Facebook, Apple, Amazon, Netflix, Nvidia and Google, in the growth funds, and even having an extra hot slice of technology, is advantageous. As you know, this is something that we examined the data on, and it looked like things would go our way. Now, the strategy is showing up in your wallet.
 
 
Technology and Silver are Golden Chart
​

As you can see in the chart above, silver has been the real gold of the Spring Rally (after March showers), having doubled off of its March 2020 lows. That is one of the reasons why silver was the star of my most recent gold blog. (Click to read.)
 
Technology as a Safe Haven Investment
Gold and silver are often thought of as safe haven investments – what investors turn to out of fear, particularly when stocks head south and recessions devalue Main Street wealth and purchasing power. However, when you think about what we can’t live without these days, particularly in a Work from Home and Educate from Home world, it’s technology. Even when cities open up again, we’ll still be hyper connected to our devices.
 
Many technology companies will make Work from Home a permanent option for a large percentage of their work force. That doesn’t bode well for commercial real estate, autos, airlines, hotels, but makes Zoom Video and other websites that keep us connected and sharing indispensable. Click to read my blog on how airline revenue plunged 85% in the 2nd quarter.

There Are a Few Noteworthy Issues, However
So, why not just fill up your 401K with technology stocks and funds? There are many problems with going all in on FANG (Facebook, Amazon, Apple, Netflix and Google) and technology stocks in your wealth strategy. Below are just a few of them.
 
$20 Avocados
Do you like paying five or ten times retail? Most of the technology companies are trading at very high multiples. Yes, Zoom’s revenue grew by 169% in the most recent quarter and the company is on fire. But is it worth a 1400 price-earnings ratio, when the average is 16-17? Apple has surprised investors with its resiliency, increasing revenue 11% in the 2nd quarter to $59.7 billion despite having many retail stores closed. But should a company that earns $55.26 billion annually be worth $1.85 trillion, with a forward P/E of 34? In the next quarter, if Apple’s revenue and income come in at 2Q levels, it will be a contraction of last year’s performance, making the high P/E even more difficult to justify.
 
While we will continue to need our technology, many technology share prices are above even interstellar growth – trading in multiples not seen since the Dot Com Bubble burst. Apple is not the only tech company that will fall short in the 3rd quarter if they stay on course with current revenue and income trends – pushing the lofty valuations even higher. It’s hard to make the case for such irrational exuberance while we’re still in the midst of an unprecedented pandemic and recession.
 
Price-Earnings Ratio (CAPE) vs. Long-Term Interest Rates

A Sinking Tide Grounds All Ships
Technology companies are not immune to downturns. FANG stocks dropped 29% or more in February of this year, along with the rest of the general marketplace. (The Dow Jones Industrial Average plunged 38% in the same period.) The losses were widespread, with losses of -38.6% (Facebook), -31% (Apple), -25% (Amazon), -30.8% (Microsoft), -35% (Netflix), -33.7% (Google) from the highs of February 19, 2020, to the lows of March 23, 2020. Yes, the industry has recovered and then some. However, as S&P500 Senior Index Analyst Howard Silverblatt explained in a note on July 31, 2020, “Fear of losing out by individuals, the need to make the numbers by money managers, and the universal need to believe appear to dominate. As for doomsayers and (shocked) short-sellers, eventually they will be right, but when?”
 
The Paper Money Trail May Result in a Credit Downgrade
The rally was also stoked by the stimulus package, which most technology companies cited as adding fuel to their earnings in May and June, after a troublesome April. The package expired July 31, 2020. Congress is expected to pass another round of relief soon. However, there is a question as to whether it will be as generous as the first round was. There is also 1) a ballooning public debt of $26.5 trillion that puts the U.S. AAA rating in greater peril, 2) alarmingly high unemployment, with 30.2 million U.S. citizens claiming unemployment benefits, 3) over half of the S&P500 near or in junk bond territory, and 4) a prediction of an annual GDP contraction in the U.S. in 2020 of -8.0%. Canada was downgraded by Fitch Ratings to AA+.
 
​Apple’s New iOS 14 Takes a Bite Out of Advertising Reliant Technology
Facebook and Google have warned that when iOS 14 rolls out in the fall, their earnings could be negatively impacted. With the new software, all apps will be required to obtain user permission before tracking.
 
No One is Talking About a V-Shaped Recovery Anymore
Hopes of putting the pandemic in the rearview mirror have dissipated. In the most recent World Economic Outlook, the International Monetary Fund pegged the 2020 global contraction at -4.9%, with the U.S. sinking -8.0%, Europe -10.2%, Canada -8.4%, Russia -6.6% and Latin America -9.4%. China might manage to stay in the black with 1.0% growth. This is substantially lower than the April forecast.
 

In the advance estimate, the Bureau of Economic Analysis reported that the U.S. economy contracted -32.9% in the 2nd quarter of 2020. As Federal Reserve Board Chairman Jerome Powell noted on July 29, 2020, in his press conference, “The contraction in GDP in the 2nd quarter will likely be the largest on record.” Learn more in my blog from July 30, 2020.

Bottom Line
Being properly diversified and overweighting strength, like technology and silver, is a good idea. However, due to the volatility of stocks in general, the intensified risk of funds and fund companies (which is outlined in my gold blog), the unprecedented recession, the pandemic and the massive amount of over-leverage, it’s not going to be a good idea to place all of your eggs in any one basket. A carefully designed and diversified plan that is regularly rebalanced, where you know what is safe and what is hot, is time-proven, at a time when most people are losing more than half of their wealth in each of the last two recessions. Market timing doesn’t work (jumping all in or all out). Buy & Hope has cost investors more than half of their retirement in the last two recessions, where desperate investors must hope and pray the bull markets drag them back to even. FOMO (Fear of Missing Out) doesn’t work. Our easy-as-a-pie-chart nest egg strategies with 1-3 times a year rebalancing have been 21st Century Wealth Preservers.
 
Lean into technology, particularly in your growth funds, in a carefully balanced plan. Consider adding an extra hot slice or two, and dollar-cost-averaging into it so you’re not buying at an all-time high. Know what is safe in a world where bonds are losing money and becoming illiquid, and money market funds have redemption gates and liquidity fees. All of this is easier than you might imagine, when you learn the ABCs of Money that we all should have received in high school. Now is the time to do this. If you wait for the headlines, it’s always too late to protect yourself. As we saw in late February/early March, when the markets plunged without any warning, the smart money always moves first – and fast.
 
Learn the ABCs of Money that we all should have received in high school at our Oct. 3-5, 2020 Investor Educational Retreat. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Families receive a discount for attending together. Call 310-430-2397 or email info@NataliePace.com for to get rates. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.
​

Other Blogs of Interest
The Economy Contracts 32.9% in the 2nd Quarter of 2020.
Real Estate: Feeling Equity Rich? Make Sure That Feeling Isn't Fleeting.
Airline Revenue Plunges 86%. 
10 Questions for College Success
Bank Earnings Season. Crimes. Cronyism. Speculation.
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
The Lyft IPO Hits Wall Street. Should you tak
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
The High Cost of Free Advice. 
2018 Was the Worst December Since the Great Depression. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.

Includes 5 Tips on How to Protect Yourself from Continued Economic Fallout Due to the Pandemic.
​

On July 30, 2020, the Bureau of Economic Analysis announced that the U.S. economy had contracted 32.9% in the 2nd quarter of 2020 (advance estimates). This was the worst quarter in recorded history (at least 70 years). It was widely expected, however the Dow Jones Industrial Average dropped 226 points (just under 1%). The tech-heavy NASDAQ Composite Index actually gained almost half a point. How does that happen? Are investors too complacent for their own good? 

​Very Little Headline Coverage
No televised media website had the -32.9% GDP contraction on the home page, not the left or right wing sites. The news didn’t even make the headline of the business sections of CNN.com or FoxNews.com. Instead attention was diverted to whether or not the White House should have tweeted about delaying the election. Interestingly, Fox News had two headline features of President Obama on the home page (giving the eulogy for John Lewis), with the caption “A Man of Pure Joy,” which is probably the best headline Obama ever enjoyed on the network.

The President didn’t even mention the contraction of -32.9%, but instead unleashed a flurry of Tweets about delaying the election. Of course, his opponent Joe Biden, did mention the historic contraction, tweeting, “The last three months were the worst period for economic growth our nation has experienced in the 70 years since we started measuring it — a drop of nearly 33 percent.” Republican Whip Representative Steve Scalise was silent on the news. There was not a peep on the matter from Senate Majority Leader Mitch McConnell. Federal Reserve Board Chairman Jerome Powell (a Republican) did provide guidance in his press conference yesterday, saying “The path forward for the economy is uncertain. A full recovery is unlikely until people think it is safe to engage in a broad range of activities.”

The V-Shaped Recovery?
In the beginning, before the current surge of COVID-19 cases, there was a lot of talk about a V-shaped recovery. There is now debate about whether or not the recovery will be L-shaped or W-shaped. What’s important to remember about economics, which has a pretty terrible forecasting record, is, as Andrew Lo tells us, “Physics has three laws that explain 99% of the phenomena, and economics has 99 laws that explain 3% of the phenomena.”
 
Temptation Abounds. Price Matters
One thing we do know is that supply and demand are being monkeyed around with. The Federal Reserve Board has been buying up everything from Treasury bills, mortgage-backed securities, bonds, junk bonds, money market funds and even ETFs – keeping demand higher than it would otherwise be. This leads investors to believe that their retirement plans are in great shape, prompting many to adopt a Buy & Hope attitude. Newly minted day traders and younger retail investors are in love with tech stocks. However, recessions tend to educate the uninformed about the lofty prices they paid, and how that fairy tale ends like a Shakespearian tragedy.
 
Stocks have lost more than half in the last 2 recessions. Stock prices are high, price-to-earnings ratios are high, while earnings are imploding. This typically results in a severe adjustment to price.
 
​The Hellish Future of Buying High
In the real estate market, the shadow inventory is ignored while industry economists complain about a shortage in housing. There are 3.6 million homes underwater. Almost 8% of mortgage loans are in forbearance. Websites like RealtyTrac.com and Auction.com list a flurry of bank-owned homes, foreclosures, pre-foreclosures and auctions that are not on the MLS (multiple-listing service).
 
Unsophisticated real estate buyers are being suckered in on the premise of historically low interest rates, and given all kinds of rationale to justify buying high. There are few worse mortal hells than buying real estate high and having the prices fall, leaving you with an underwater mortgage. Your credit score tanks and you’re locked into a purchase that you can’t extricate yourself from without a great deal of time, effort, expense and trouble.
 
Real estate lost more than half in the Great Recession. Areas that didn’t implode were the ones that never saw the housing bubble pre-Great Recession. So, thinking that prices in your area never go down is likely to be an expensive assumption, particularly if prices are unaffordable in your area. (Read my blog on Equity-Rich Home Ownership to learn more.)
 
How Soon Can the Economy Recover?
Unemployment is very high, and has actually been kept lower than it would otherwise be with the Payroll Support Plan of the CARES Act. As just one example, there could be another 750,000 in the unemployment line from airlines alone. American Airlines warned that they have 20,000 more workers than they need for their fall schedule.
 
Additionally, the world has changed. People are working from home, spending less time in their cars and have furloughed their vacations indefinitely. We have learned to bake banana bread and cook our own meals. Some of these changes might eventually come back (hopefully vacations and eating out). Others are likely to be more lasting. Square, Twitter, Facebook and Google have all announced that Work From Home is an option for many of their team.
 
Add to that the amount of leverage (debt) in the S&P500 (over half at near or at junk bond status), and you have a toxic economic cocktail that is going to leave all of us hung over for quite a time. Real estate and stock prices are simply too high and unaffordable to withstand the forbearance, foreclosures, debt restructurings and bankruptcies on the horizon. Recessions typically take 18-24 months to bottom out. The timeline of the recovery doesn’t even begin until, as Powell noted, people start feeling safe. There may be a new normal that we all return to that includes less time in our cars and at the office. We may have an economic impact that further limits our ability to vacation (particularly if we’ve purchased a home at an all-time high or seen half of our retirement plan evanesce).
 
Your Best Strategy Now
Budget: In your budget, make sure that you can afford your life. You want to right-size your expenses and conserve your capital. Read The ABCs of Money, particularly the sections on budgeting and debt, to learn more.
 

Home: If you own your own home, you need to make sure that you can afford it. You should also do an equity check. Learn more in my Equity-Rich Homeowners blog. If you can afford your home, you plan on staying there for another decade and you purchased it before 2013, then chances are refinancing now at a lower interest rate will save you a lot of money on the mortgage payments, which will help your budget.
 
Nest Egg/Retirement/Passive Income: Stocks are very high-priced – way above what would be reasonable compared to their earnings. So, now is a good time to diversify and protect your retirement plan, and to know what you own and why in any liquid assets and brokerage account – even a managed plan. Do not assume that someone else is protecting you.
 
You must be the boss of your money, know what you own and be confident that your plan is recession-proof. Fortunately, this is easy-as-a-pie-chart. You can read about this time-proven strategy in The ABCs of Money. You can call our office at 310-430-2397 to receive an unbiased 2nd opinion and potential action plan. You can join us for our October 3-5, 2020 Online Investor Educational Retreat where you can learn and implement these strategies. (It’s not a good idea to wait until October to know what you own and protect your wealth.)
 
Do not drain your retirement account to support yesterday’s lifestyle if today and tomorrow are seeing less income. Don’t siphon your future to pay off your credit cards. Learn the ABCs of Money now so that you can design a plan that is sustainable in our new world. The sooner you adjust to the New Normal and protect your wealth, the better off your financial future will be.

Learn the ABCs of Money that we all should have received in high school at our Oct. 3-5, 2020 Investor Educational Retreat. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Register by July 31, 2020 to receive the best price. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.
 

Other Blogs of Interest
Real Estate: Feeling Equity Rich? Make Sure That Feeling Isn't Fleeting.
Airline Revenue Plunges 86%. 
10 Questions for College Success
Bank Earnings Season. Crimes. Cronyism. Speculation.
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
The Lyft IPO Hits Wall Street. Should you tak
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
The High Cost of Free Advice. 
2018 Was the Worst December Since the Great Depression. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.

With home prices at all-time highs, if you purchased a home any time after 2009, you’re probably feeling pretty smart about your purchase – even if you’re over-extended on your budget. It’s important to remember that there are more than a few equations to consider when making a successful home investment. Below are a few case studies and evaluation tools to help you make sure that you are on the right side of those equations.

2 Successful Case Studies

Las Vegas to Off-Grid Living in Nature.
Alvin and Jada made a bold choice in 2017 to move to a remote wilderness area in British Columbia. After a hellish winter of living in an RV and using rudimentary toilet facilities, they built their dream-come-true off-grid home. It was a lot of work, but their hearts were calling them to this way of life. (You can listen to them in their own words in the 4-minute Earth Gratitude film. You can read about them in the Real Estate section of my book The ABCs of Money 3rd edition.) All of this was possible due to a very lucrative home investment in Las Vegas in 2011, which doubled by 2017. They essentially bought very low, and sold quite high. Had they purchased in 2005 or 2006 in Las Vegas, they would still be underwater. Buying low was the key to their dreams.

Silverlake to Destination Unknown
During the Great Recession, A&A had to declare bankruptcy in their business. They were able to keep their home and do a loan modification, but the payments were eating up a large chunk of their income. As long as business flows, they can do this without amassing too much debt. However, they understand that a highly leveraged lifestyle isn’t sustainable for them, since their income implodes in recessionary times. Additionally, A&A are in their early 70s . They really should be looking to retirement. However, they still owe $650,000 on their mortgage. The one good thing in their favor was that Los Angeles real estate was on fire.

In July of 2020, after a year of pondering and then planning, A&A sold their home for a million-dollar profit. Their plan is to rent for a year and then move to a more affordable area for their retirement. Their hope is that prices will have tempered somewhat by the time they are ready to purchase again. With their profits, they have plenty of money to retire where they want, in a more affordable area near family, even if they were tempted to buy immediately (which they are not). They feel like they are making all the right moves for the next chapter of their lives, and are grateful to be in a position to design their future – a feeling very different from the defeat and distress of the bankruptcy in the Great Recession.

More Than a Few Decade-Shattering Decisions
It’s important to remember that millions of homes were lost in the Great Recession. For millions of professionals, even those with a very high income, the financial cost of paying off nonperforming, underwater income property was devastating for the past decade.

So, remember that deciding to purchase or keep a home has a minimum of two vitally important questions. 1. Can you easily afford the payments? 2. Are you purchasing the home for a good price, or are you at risk of the home losing value?

Being stuck with a home that is worth less than the purchase price destroys your credit, ruins your opportunities to move for career advancement, weighs heavily on your personal relationships, limits your ability to downsize or right-size your budget and has other devastating effects on your life.  

Analysis for Equity Rich Homeowners.

The New Normal
Work from home is spurring a flight from urban to the suburbs. How will this affect your home equity? Are you on the right side of that trade? Or is your equity rich position under attack? Don’t assume that you are safe. It’s important to do the math. One of the most important equations to consider is affordability. In 75% of the U.S., denizens would have to spend more than 28% to buy a home. That figure is unaffordable – even with interest rates at an all-time low. It portends a weakening in prices.

Work from Home Trends
Unaffordability and the ability to work from home is spurring a flight to the suburbs. This could weaken prices in urban areas and strengthen them in the surrounding community. When you have less demand, due to unaffordability and a flight to the suburbs, high housing costs in the city can drop like a knife. Home prices have dropped 8% in New York City, where it would take 75% of the average person’s salary to purchase a home dwelling. Many people are moving in with family, causing an uptick in intergenerational housing.
 
Inter-Generational Housing.
15% of adult children are now living with their parents, compared to just 2.4% in 2015. 12% of households have their parents living with them. Yes, this is out of necessity. Yes, it keeps more money in the family, instead of making the landlord rich. So, consider this growing trend when you are thinking outside of the box for solutions to live a richer life and weather the economic storms on the horizon – even if you are equity-rich. Conservation of capital, weathering storms, helping out family – all of these things will become popular if the Corona Virus Recession deepens.

Shadow Inventory
More than 3.6 million homes are severely underwater, where the mortgage is 25% higher or more than the value of the home. This statistic has been increasing, even though home prices are higher than ever. This has a lot to do with loan modifications and homeowners who are striking desperate deals with the bank. Getting a loan mod that puts your mortgage far above the value of your home is a temporary solution that puts opportunity on the table for patient buyers. Sadly, the existing homeowner is at risk of having all of her assets and income bled dry, and then ultimately getting foreclosed upon any way.  

Almost 8% of mortgages are currently in forbearance (source: Mortgage Bankers Association). With almost 32 million Americans taking some sort of unemployment (Source: DOL.gov), there could be a lot more payment peril on tap than people realize.

What Year Did You Purchase Your Home? If you purchased your home between 2009 and 2015, and you can easily afford it (i.e. it takes up less than 20% of your income), then you may be able to weather the hardships on the horizon – if your job is secure. You should continue asking the questions below, however.

If you purchased your home in 2016 or after, how much equity do you have? How would you feel if the local housing market dropped by 25% or more, and you owe more than the value of your home? Can you afford (emotionally or financially) to be locked into your current home paying down an underwater mortgage for a decade or longer? Examining your exit routes now, while you have options, is a better idea than getting stuck without many ways to extricate yourself from a tough situation.

Don’t rely on the myth that real estate never goes down in your area. We’re in unprecedented times. There may be more to the analysis than you are considering.

Look at 20-Year Price History.
The Great Recession was in 2008. Between 2007 (the high for real estate on a nationwide basis) and 2011 (the low), many areas, particularly those that soared the highest, saw real estate values sink by more than half. You have to go back 20 years to see what really happened. For instance, Boulder, Colorado never really took off before the Great Recession. Home prices increased only 18.6% between 2002 and 2007 (2.4% annualized). So, there was never a bubble to pop. That has led some people to believe that home prices in Boulder never go down, which is a false assumption when prices become unaffordable to the locals.

According to AttomData.com, it would take almost half of the average person’s wages to purchase a home in Boulder. Prices have dropped almost 1% year over year.
 
You can look at wages vs. prices, and see more data on your city, on AttomData’s interactive map.
 

The Thrive Budget. Is your current home affordable in a post-pandemic world? Will your income be impacted severely (or has it already been reduced)? Base your assumptions on what is likely to happen, not what you hope will happen. Currently, the paycheck protection loans from the US government expire at the end of September 2020. So, a lot of people are at risk of being furloughed. If you are in this position, the sooner you right-size your life, the better off you’ll be. There are solutions.
 
Start by personalizing your own Thrive Budget in my free web app. Read the Thrive Budget section of The ABCs of Money 3rd Edition to get additional information.
 
Time Span? How long do you want to live in your home? Make sure it makes sense for at least the next 8-10 years. Does another area make better sense for your family, for affordability reasons, family needs or career opportunities? Every soul has her own geography. Finding that place you can afford, where you love to wake up each morning, goes a long way to helping you live a richer life, which infuses magic in all you do.
 
If you are getting closer to retirement, can you afford to pay off your mortgage by your retirement date? When you are on a fixed income, every bill you can toss out the window is gold in your wallet.
 
Sanctuary Home. Do you and your family love the home, the neighborhood, the neighbors and everything about where you are? Are the schools good? Is the crime low? In a post-pandemic world, any problems are likely to be magnified, due to higher unemployment. You want to be ahead of any problems that might arise. If there are things you already have a strong dislike about, those emotions may escalate if other areas of stress (less income, higher costs, lower value) emerge.
 
Should You Sell High? If…

• You are over leveraged
• Your home value is too close to the mortgage value
• This is a home that you really cannot afford
• There is some reason why you really dislike the area or home itself

 
Then the right answer could be to sell high, or consider how you can get help with the payment (perhaps through intergenerational housing). Sometimes intergenerational housing and thinking bigger is a better answer than downsizing. Having each family member living in their own tiny cell is a very expensive proposition. If you sell and right-size now, and wait a few years for prices to come down, or if you shop in the shadow inventory now for something that is more affordable, then you could weather this challenging economic time and be in a good seat going forward. Being over-leveraged or upside-down in your budget during a recession is a very bad seat to be sitting in.
 
Income producing in a Post-Pandemic World. If you were relying on Airbnb to make ends meet, it’s, sadly, a new world. There is less travel. The sharing economy has come to a screeching halt (outside of family and intergenerational sharing). With high unemployment and less travel, if you are going to get any income out of your real estate or home, you’ll need to be forward-thinking about it. Many states have put a moratorium on evictions, making it financially perilous to be a landlord these days.  

College Planning. With college loan debt of $1.54 trillion, it’s a great idea to make sure that housing is part of the equation you are considering when you map out your teen’s College Experience. I cover this more in depth in my book The ABCs of Money for College.
 
The Four D’s. In real estate, there are 4 Ds that can cause a homeowner to sell below the market – death, depression, disaster and divorce. To those 4 D’s, we can also add, unaffordability, job loss and underwater mortgages. So, for the patient buyer, the next few years could yield ample opportunity to purchase a great home. If you’re equity-rich, then you want to be sure that you can withstand the 4 D’s, plus UJLUM, if the plethora of challenges brought on by the current pandemic add up to lower home values.
 
The bottom line is that successful investors are always forward-thinking. Don’t look at today and rest on your laurels. Do the math on your area and in your own budget, considering job-security and all of the other points outlined above, to determine if your sanctuary home is where you are now, or where you might be in two years – given a careful strategy.
 
Refinance at The Lowest Rate in History
If you choose to stay after all that analysis, then consider refinancing now at the lowest rate in history. Chances are high you’ll get a substantial reduction on your monthly payment.
 
 
We spend one full day discussing housing, income producing real estate and what's safe at my Investor Educational Retreat. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Register by July 31, 2020 to receive the best price. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.
 

Other Blogs of Interest
Airline Revenue Plunges 86%. 
10 Questions for College Success
Bank Earnings Season. Crimes. Cronyism. Speculation.
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Counting Blessings on Thanksgiving.
Real Estate Prices Decline. 
Hong Kong Slides into a Recession. China Slows. 
They Trusted Him. Now He Doesn't Return Phone Calls.
Beyond Meat's Shares Dive 67% in 2 Months.
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Will JP Morgan Implode on Fairy Tales and Unicorns.
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy.
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Real Estate is Back to an All-Time High. 
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2018 is the Worst December Since the Great Depression. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.
​

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 3rd edition of The ABCs of Money was released in 2020. 

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. ​

​On July 21, 2020, United Airlines reported their 2nd quarter 2020 earnings results, writing candidly that this was “the most difficult financial quarter in its 94-year history.” United posted a net loss of $1.6 billion, and an adjusted net loss¹ of $2.6 billion. (The difference between the two is largely due to the receipt of $1.5 billion in the Payroll Support Plan of the CARES Act.)
 
Airline Revenue is Down 86.4%
American Airlines’ 2Q 2020 revenue was down 86.4%, from $11.96 billion in 2019 to $1.6 billion this year. The net loss was $2.1 billion. Without the Payroll Support Program, $1.8 billion of financial assistance and other special items, American Airlines’ pretax loss was $4.3 billion. The 3rd quarter isn’t expected to be much better. American projects “system capacity” to be down approximately 60% year over year. United, Delta, Southwest and Alaska Airlines all reported year-over-year revenue losses of 81.6% to 88.3%.
 
Loans, Blank Checks and Taxpayer Bailouts
With so many grounded flights and with the Oil Wars that took oil costs negative for a brief period, fuel costs were down almost 90% in the 2nd quarter for the airlines. Labor costs were still high, however, due to the terms of the Payroll Support Program (PSP) of the CARES Act. As Airlines.org President & CEO Nicholas E. Calio wrote on April 14, 2020, the PSP “funding will allow those 750,000 men and women to stay on airline payrolls though Sept. 30, 2020, and out of the unemployment lines.” American Airlines anticipates having over 20,000 more team members on payroll than needed to operate its fall schedule.
 
With over 10 million employees and a combined $1.5 trillion in economic activity in 2019 (per Airlines.org), the aviation industry is a priority for the Treasury Department and Federal Reserve Board’s rescue and recovery plan. However, investors are reticent to buy back into airlines stock, with the exception of Boeing, which has almost doubled since its low on March 23, 2020.
 
Warren Buffett was an avid airline investor pre-coronavirus pandemic. In 2019, Berkshire Hathaway owned 11% of Delta Airlines and 9% of Southwest and United. Buffett dumped all of his investments in airlines in May of 2020 stating, “The world has changed for the airlines. It’s been seven weeks since I had a haircut and more than seven weeks since I put on a tie.” Many of us are rarely leaving home, much less jumping on a plane. Buffett acknowledged that his team had invested $7-8 billion in airlines, and sold for a loss.
 
Work From Home and Restricted Travel
Some corporations, like Facebook, Twitter and Square, have already decided that Work From Home will become a permanent staple of their business. Executives have become more accustomed to video conference meetings. These changes bode well for technology, and less so for airlines, auto manufacturers, commercial real estate, the malls of America, travel, hospitality, retail and the people who work for them. However, with Zoom Video trading with a PE of 1450, Netflix with a PE of 85 and many technology companies at all-time high prices, even the more stable companies and industries are vulnerable to a downturn in stock prices.

 
Liquidity
The airlines have been beefing up their war chests. American ended the second quarter of 2020 with $10.2 billion, and is projecting a U.S. Department of Treasury CARES Act Loan in the amount of $4.75 billion to close in the 3rd quarter of 2020. Will this be enough, when current liabilities are $18 billion and long-term debt and liabilities are $68 billion?
 
Boeing’s liabilities are $152 billion, with $94.5 billion of those current. As of the 1st quarter of 2020, cash and cash equivalents were just $15 billion. The terrible year that airlines are having doesn’t bode well for the already beleaguered Boeing. Boeing announces their earnings the morning of Wednesday, July 29, 2020. With commercial aircraft deliveries down by 60% and Defense Space & Security deliverables down 47%, the report won’t be pretty.
 
Investors won’t be the only ones waiting for this report. The Securities and Exchange Commission has taken an interest in forensically examining Boeing’s financials. On June 2, 2020, the SEC instructed Boeing’s executives to provide more information in the next earnings reports, writing, “As cancellations are now at significant levels, please be sure to include robust quantified and narrative disclosure of the expected impacts to your backlog, results of operations and cash flows in your future filings.”
 
The Paycheck Support Plan is Scheduled to End September 30, 2020
Will Congress extend support to the airlines through March 31, 2021? Should the airlines be allowed to right-size their operations and furlough hundreds of thousands of employees? Unions for airline pilots, flight attendants and support personnel are all asking for continued labor support. Treasury Secretary Mnuchin supports continued aid to the airlines, but the loan covenants are not as strict about targeting the funds to labor as the Paycheck Support Program was. Last week United and American both announced furloughs totaling 61,000.

When will people start flying again? Will we ever return to the same levels of travel? Has work from home and video conference meetings changed the travel industry forever? Would it be better to support American individuals rather than continue to funnel money through the large corporations? The Treasury Department is currently working on getting another $1200 by August to individuals earning under $75,000/annually.
 
2Q 2020 GDP Growth
On July 30, 2020, the Bureau of Economic Analysis (BEA.gov) will release the advance estimate for 2nd quarter GDP growth. The contraction is predicted to be unprecedented. Estimates for just how bad it will be go as low as -35%. Stocks were high-priced before the recession began. The Treasury Secretary, the White House and Republicans all point to a better than expected recovery, rather than the terrible economic news. Is that a good reason to pay twice as much for stocks as normal?
 
A Better Than Expected Recovery?
The headlines have focused on the idea that the astonishingly terrible earnings news in the 2nd quarter of 2020, which is one for the history books, was expected and that we’ve already started a recovery. However, this recovery is based on money magically showing up in the bank accounts of people who are not working, including millions of airline employees. Betting on a V-shaped recovery, when July marked a new spike in the pandemic, could be an expensive proposition. Warren Buffett’s recent sell actions tell you everything about what he believes is the truth of this heartbreaking and challenging time. He didn’t sell everything, and neither should you. Market timing doesn’t work. However, he is well-diversified, and he is overweight in liquidity.
 
The Stock Market is Not the Economy
We all want an economically strong America, and for our lives to be stable and prosperous. However, Buy & Hope has cost investors more than half of their wealth in the last two recessions. Low interest rates create bubbles and over-leverage. Over-leverage in technology companies sparked the Dot Com Recession, with real estate being at the core of the problem in the Great Recession. All assets are trading high and at risk of price correction in the Corona Virus Recession. Bonds and dividends, which are traditionally considered to be safer, are losing money, cutting the yield and have at times been illiquid.
 
Succeeding in the 21st Century requires a new action plan. Fortunately, there is a plan that earned gains in the last two recessions and has outperformed the bull markets in between. Better still, it is easy as a pie chart. Being properly diversified and having enough safe has been a wealth preservation tool. And that is something you should want to get familiar with now before the corporate bankruptcy party moves out of the Retail Apocalypse and into the broader economy.
 
 
If you'd like to protect your wealth now, join me at my next Investor Educational Retreat. Students receive a large discount. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Register by July 31, 2020 to receive the best price. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.

Other Blogs of Interest
10 Questions for College Success
Bank Earnings Season. Crimes. Cronyism. Speculation.
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Counting Blessings on Thanksgiving.
Real Estate Prices Decline. 
Hong Kong Slides into a Recession. China Slows. 
They Trusted Him. Now He Doesn't Return Phone Calls.
Beyond Meat's Shares Dive 67% in 2 Months.
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Will JP Morgan Implode on Fairy Tales and Unicorns.
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy.
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Real Estate is Back to an All-Time High. 
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2018 is the Worst December Since the Great Depression. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.

With $1.54 trillion in student loan debt and a graduation rate of just 60%, it's clear that parents and teens need to have a better game plan for higher education.
 
So, start with the 10 questions below to get on the right track for an extraordinary college experience that should result in you getting a better degree for half of the cost. That’s going to add up to a lot less student loan debt, and an increased chance at real opportunity once you graduate.
 
10 Questions to Put You on the Path for College and Career Success
1.     What is your ideal college experience?
2.     What are you naturally good at? (Talent)
3.     What do you love to create? (Passion)
4.     What is the best university to get a degree in that area of study?
5.     Should you consider a Gap Year?
6.     Where would you like to be in six years and what is the best route to get there?
7.     How are you going to earn money while you are in college?
8.     In addition to scholarships and grants, are there other ways for you to earn passive income?
9.     Is trade school more appropriate for you?
10.  What is the student feedback on your school of choice?
Here is a little bit more color on each point.

1.       What is your ideal college experience? If you are going to college to get away from your parents or to party, then you need a Gap Year. Period. College is far too expensive and demanding to enroll for the wrong reasons. This is the primary reason that the drop-out rates are so high. Flunking out with a $50,000/annual price tag is the ultimate buzz kill.

If you are motivated to learn and achieve, scored high on your SAT and received a scholarship to the university of your dreams, good for you. For most of us, that will not be the case. We will need to design a plan to make sure that we get the degree we want, which will result in a great lifetime career without drowning in debt. (There are ways!)

2.     What are you naturally good at? (Talent) It takes hard work and dedication to rise to the top of your field. There are careers that you will naturally excel in, and others that you might never master. An extraordinary athlete might not make an outstanding astrophysicist. An inspiring artist may not rise to the top of dental school. So, what comes easy for you? How can those gifts and talents be parlayed into income?
 
3.     What do you love to create? (Passion) When you put your heart into something, then time flies. You won’t even notice how long you’ve dropped down the rabbit hole of higher learning on the subject. As Buddha said, “Your work is to discover your world and then with all your heart give yourself to it.”
 
4.     What is the best university to get a degree in that area of study? If astronomy and starships are your passion and talent, then you might be surprised to learn that the University of Arizona is one of the top-ranked schools. So, if your ultimate goal is to graduate from Berkeley, Harvard or Princeton, and you are an Arizona resident, should you start at U of A and transfer into the Ivy League as a Junior? If you kill it at U of A, could you qualify for grants and scholarships to an Ivy League School that might otherwise be out of reach?
 
5.     Should you consider a Gap Year? A Gap Year is highly correlated with success in college. There are many reasons for that. If you do your Gap Year in a foreign country and become fluent in a second language, you’ll have an easy A in one of your classes. If you take an internship or apprenticeship in your field of interest, then you’ll have real world experience that gives you a competitive edge in your book learning. If you sow your wild oats and get away from your parents, you might appreciate the value of education more, and hunker down to study. In Europe, the Gap Year is rather de rigueur.
 
6.     Where would you like to be in 6 years and what is the best route to get there? Rather than a plan that focuses on what university will have you, how can you design a game plan so that you can actually attend your dream come true university? When you set your sites for where you want to be post-graduation, you’re more likely to get there. Part of that 6-year vision should include designing a college plan that will not drown you in debt when you graduate.
 
7.     How are you going to earn money while you are in college? Do you have enough funding from your college savings plan or from your parents to attend without having to work? (Teens/tweens: start your college fund now, with or without your parents!) Grants are typically available, but only cover a small portion of the costs. Scholarships are available, but are very competitive, and often only cover a small portion of the costs.
 
Taking your general education coursework at a local junior college not only cuts your costs dramatically, but might be your springboard to an even better university than you could attract as a freshman. Due to the high drop-out rates, there is more room for juniors. If you’ve excelled at the junior college level, then you might qualify for some lucrative academic-based scholarships. (That is how I was able to attend the University of Southern California!)
 
8.     In addition to scholarships and grants, are there other ways for you to earn passive income? If your money has earned money and compounded gains in a college savings plan, can you purchase a home (with your parents) and rent out the spare rooms to other college students for passive income? Wouldn’t that be a better job than working at the local fast food joint? The more that you can eliminate basic needs bills, and accumulate passive income, the more time you can devote to studying and rising to the top of the class.
 
9.     Is trade school more appropriate for you? If you’re not academically inclined, there are many trades that are in high demand. In fact, solar PV installers and wind turbine technicians are at the top of the Jobs of Tomorrow. In many instances, getting an apprenticeship will pay you to learn and earn your certification, which is a better bargain than a for-profit university with a high drop-out rate. Go to Apprenticeship.gov to learn more about government-based programs. Ask around locally, and within family and friends, for a master tradesman who might be willing to take you under her wing for training and certification.

10.  What is the student feedback on your school of choice? If you search for reviews and ratings by students, faculty and alumni, then you should get the inside scoop on whether the university you’re being courted by is really worth the dime. Those for-profit universities with very low graduation rates are also ranking very low in customer satisfaction. It’s a good idea to learn why before you fall into the same trap. Nonprofit private universities, like Ivy League Schools, have very high graduation rates and receive very high praise from students, faculty and alumni. Having everything turn up roses for you might start with separating the 2-3 stars from the 5-star reviews.

​​
College success is highly correlated with the type of university you go to. Public universities and private non-profit institutions have graduation rates of 60% and 66% respectively, while private for-profit colleges have a graduation rate of just 21%! Females are graduating in greater numbers than males in most halls of higher learning.
 
Once you graduate, you want to be sure that your career of choice pays you well enough to afford your basic needs and your college loan debt. That equation is so out of whack that 15% of adult children are living with their parents. Millennials are delaying purchasing their first home for up to seven years longer than their parents did. This is all attributed to the very high cost of paying back student loans. So, figuring out a course of action that eliminates this possibility is essential to loving your College Experience after you graduate.

Regardless of where you came from, you can step on the path to the career of your dreams. I’m living proof of that, having grown up in quite modest means and going on to graduate summa cum laude from The University of Southern California. While we may think that some universities are out of reach, designing a careful route can yield results that might surprise you. That certainly was the case for me. (I discuss this in greater detail in my College Videoconference.)

For additional information on how you can design a college game plan that leads to the career of your dreams, with less than half of the student loan debt of your colleagues, be sure to read The ABCs of Money for College. Watch my College Success videoconference on YouTube.com/NataliePace.

Don’t miss my next college videoconference where we’ll discuss the mistakes parents make when preparing their kids for college. Email info@NataliePace.com with VIDEOCON in the subject line to be sure that you receive the login instructions, along with the date and time.




Investing smart in your college savings plan can compound gains. If you'd like to learn the ABCs of Money that we all should have received in high school, to up your investing game, join me at my next Investor Educational Retreat. Students receive a large discount. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Register by July 31, 2020 to receive the best price. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.

Other Blogs of Interest
Bank Earnings Season. Crimes. Cronyism. Speculation.
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Counting Blessings on Thanksgiving.
Real Estate Prices Decline. 
Hong Kong Slides into a Recession. China Slows. 
They Trusted Him. Now He Doesn't Return Phone Calls.
Beyond Meat's Shares Dive 67% in 2 Months.
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Will JP Morgan Implode on Fairy Tales and Unicorns.
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy.
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Real Estate is Back to an All-Time High. 
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2018 is the Worst December Since the Great Depression. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.

​What the Big Banks Aren’t Advertising in Their Earnings Reports.
 
 
The headlines this week are celebrating Goldman Sachs and JP Morgan’s 2nd quarter results. Goldman’s total revenue of $13.3 billion is down by 11% year-over-year, with an increase of 2% in net earnings to $2.42 billion. JP Morgan’s revenue was $33 billion (up 15%), with $4.69 billion in net income (down 51% year-over-year). This is better than anyone would have predicted in early March, when the stock market was in a free fall. So, what happened? Are we in a V-shaped recovery? Is the worst behind us?
 

​The Federal Reserve is Buying Up Everything
Prior to the Coronavirus Recession (which started officially on February 19, 2020), over half of the S&P500 companies were heavily leveraged, and were congregated at just above junk bond status – at BBB.
 
Junk Bond Gathering
13 banks are at BBB, with Wells Fargo not far behind.
 

This debt party included a lot of major U.S. banks. By March 15, 2020, when the Federal Reserve Board had their emergency meeting, only the most creditworthy companies were able to borrow money (according to the statement that Jerome Powell made prior to the FOMC press conference). So, the Federal Reserve Board opened up the flood gates and began flushing these illiquid markets with cash. In the July 10, 2020 report to Congress, the Federal Reserve Board revealed that over $107.3 billion had been loaned to prop up the Paycheck Protection Program, bonds, money market funds, ETFs, loans, mortgage-backed securities, corporations, municipalities and the broker-dealers who serve them.

Public debt is now $26.5 trillion, a full $3 trillion above what it was at the beginning of the year.

​

So, all is well, right? Well, this is better thought of as a noble effort to keep things running, so that there can be a more orderly exit into bankruptcy for those firms that are struggling the most. (The same thing happened in the Great Recession.) Retailers continue to file for debt restructuring in droves, with Brooks Brothers and Neiman Marcus succumbing to the Retail Apocalypse this year. Other corporations that were unable to continue operating business as usual, even with the Federal Reserve blank check, include Hertz and Chesapeake Energy. So far, there has been no run on the banks, nor have mutual fund companies activated redemption gates and liquidity fees (as many have in Europe). However, the mega banks do have more than a few phantoms in the closets that are worthy of noting, including speculation, credit loss reserves, Wells Fargo’s dividend rate cut and Goldman Sachs $2 Billion Malaysian Nightmare.
 
According to S&P Global in their latest report on the Federal Reserve’s Bank Stress Test Results, “An idiosyncratic dividend cut by a bank to levels well below peer medians could … have negative rating implications.” Based upon new Federal Reserve Board requirements that dividends do not exceed the average of net income over the preceding four quarters, some banks may need to suspend or cut their dividends. Companies that could fall into this dividend guillotine include: Capital One, Wells Fargo, Ally Financial Inc., Citizens Financial Group Inc., Discover Financial Services, Huntington Bancshares Inc., and KeyCorp.

Wells Fargo Slashes Dividend by 80%
While quarterly revenue was up year-over-year by 15% to $17.8 billion, Wells Fargo reported a colossal net loss of -$4.7 billion. Not surprisingly, in the earnings press release, the company announced they would be cutting their dividend from $0.51/share to $0.10/share – an 80% haircut for fixed income investors (subject to board approval, or FRB enforcement, whichever comes first).
 
Many of the banks that are struggling to keep their net income above their dividend payments advised shareholders on June 30, 2020 that their capital stress test results landed them at the bottom of what is acceptable. All indicated they would maintain their dividend payout at current levels. They, like Wells Fargo, may have to sing a different tune once their 2Q 2020 earnings are announced, however. Below are the companies announcing earnings this week and next.

• Ally Financial and Citizens Financial Groups announce their 2Q 2020 earnings results on Friday, July 17, 2020 (before the markets open)
• Capital One announces on July 21, 2020 at 5 pm ET (after the markets close)
• KeyCorp results will be on Wednesday, July 22, 2020 before the markets open
• Discover Financial and Huntington Bancshares will announce 2Q 2020 results on July 23, 2020 before the markets open

 
JP Morgan’s CEO Jamie Dimon boasted to analysts on the 2Q 2020 earnings call that his bank “can easily get through very, very tough times and never cut the dividend.” Meanwhile, the bank has beefed up its credit loss reserves to $10.5 billion – up $9.3 billion from a year ago. One wonders if that declaration will come back to haunt him.
 
  
Goldman Sachs $3 Billion Malaysian Nightmare.
Speaking of haunting, Goldman Sachs Malaysian nightmare may end in a settlement valued at over $3 billion. The bank has been trying to slink out of a guilty declaration for over a year. Goldman Sachs is accused of misleading bond investors into a $6.5 billion deal, where the funds were misappropriated by former Malaysian politicians. The traders involved have been banned from financial services for life. The court case was stalled out due to the pandemic and a change in leadership in Malaysia. The next hearing is set for September 4, 2020, according to Bloomberg.

​Between the shenanigans, the capital stress test bombs, the dividend cuts and the banks that are congregated just above junk bond status, investors should be wary about swooning over a headline that a bank’s earnings report wasn’t quite as bad as analysts predicted. The world that greets us once the pandemic recedes will be very different from the lifestyles that were so familiar back in February. The trends of Work From Home, Intergenerational Housing and high unemployment will be the New Normal, at least for awhile. A time-proven plan is well-diversified and annually rebalanced. Buy & Hold, jumping in and out of the market or trading on headlines are all at risk of massive losses.
 
As we learned between February 19, 2020 and March 23, 2020, when the Dow Jones Industrial Average dropped 35%, the moves in today’s world are too swift to react to. Having your plan in place now will protect you.



If you don’t know what you own, or how protected your wealth and retirement are, our Investor Educational Retreat or an unbiased 2nd opinion can offer you the information and wisdom you need now. Call 310-430-2397 or email info@NataliePace.com to learn more. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. Register by July 31, 2020 to receive the best price. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.

​Other Blogs of Interest
Real Estate Solutions for a Post-Pandemic World.
Copper and Chile Update.
Gold Soars. Some Gold Funds Tank. 
Will the Facebook Ad Boycott De-FANG Stocks? 
Why Did My Cannabis Stock Go Down? 
Which Countries Are Hot in a Global Pandemic? 
Is Your Financial Advisor Good at Navigating Stormy Seas?
$10 Avocados, Lies, Damn Lies, Statistics & Wall Street Secrets. 
It's Never a Crash.
Work From Home and Intergenerational Housing.
Biotech Races for a Coronavirus Cure. 
Are You Worried About Money? 
May is a Good Time for Rebalancing.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
Why Did my Bonds Lose Money?
Cannabis Update. 
Recession Proof Your Life. Free Videocon Monday, May 10, 2020. 
The Recession will be Announced on July 30, 2020. 
Apple Reports Terrible Earnings. 
We Are in a Recession. 
Unemployment, Rising Stocks. What's Going On?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
21st Century Solutions for Protecting Your Home, Nest Egg & Job.
Wall Street Insiders are Selling Like There is No Tomorrow.
Why Are My Bonds Losing Money?
Tomorrow is Going to be Another Tough Day.
Price Matters. Stock Prices are Still Too High. 
Should You Ride Things Out?
7 Recession Indicators
Corona Virus Update.
The Bank Bail-in Plan on Your Dime.
NASDAQ is Up 6X. 
CoronaVirus: Which Companies and Countries Will be Most Impacted.
Is Tesla Worth GM and Ford Combined.
Artificial Intelligence is on Fire. Is it Time to Buy S'More?
Take the Retirement Challenge.
2020 Investor IQ Test.
Answers to the 2020 Investor IQ Test.
The Cannabis Capital Crunch and Stock Meltdown.
Does Your Commute Pollute More Than Planes? 
Are Health Care Costs Killing Your Budget? 
2020 Crystal Ball.
The Benefits of Living Green. Featuring H.R.H. The Prince of Wales' Twin Eco Communities. 
What Love, Time and Charity Have to do with our Commonwealth. Interview with MacArthur Genius Award Winner Kevin Murphy.
Unicorns Yesterday. Fairy Tales Today. IPO Losses Top $100 Billion. 
Counting Blessings on Thanksgiving.
Real Estate Prices Decline. 
Hong Kong Slides into a Recession. China Slows. 
They Trusted Him. Now He Doesn't Return Phone Calls.
Beyond Meat's Shares Dive 67% in 2 Months.
Price Matters. 
Will There be a Santa Rally? It's Up to Apple. 
Will JP Morgan Implode on Fairy Tales and Unicorns.
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy.
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
What's Your Exit Strategy? 
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth.
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Real Estate is Back to an All-Time High. 
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2018 is the Worst December Since the Great Depression. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
​
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.

​Homeowners, mall operators, landlords, Airbnb hosts, commercial real estate, hoteliers and would-be buyers: know the facts about real estate in a post-pandemic world.
 
We are in a recession. The 2020 GDP contraction is predicted to be -6.5%. Almost 33 million Americans claimed some sort of unemployment last month.
 
Real estate prices are back to all-time highs. Housing is unaffordable in 74% of the major U.S. cities. If you want to buy a home in Los Angeles, California, the average worker would need to devote 62% of her wages to do so.

​In the Great Recession, home prices in the areas that were the most bubblicious saw real estate values plunge by half. The most severe losses were suffered by homeowners in Florida, Arizona, Nevada and Stockton/Bakersfield, California. Detroit, Michigan and other areas that were suffering from high unemployment and job losses were negatively impacted. Nationwide, average losses were 25%.  
 
No matter what you own, or what you are considering buying, it’s very important to ask yourself the following questions, and to formulate your best real estate plan now.
 
8 Important Questions for Real Estate Owners and Buyers
Did you purchase your home or office building within the last few years?
Are you spending more than 30% of your income on your home mortgage?
Is your home or office building producing income?
Is there a way for your home or office building to produce income?
Have you considered the reality of a post pandemic world in your business model?
Do you owe more on your real estate than the value?
Did your loan modification put you severely underwater?
Are you thinking of purchasing a home or real estate?
 
And here is more color on each question…
 
Did you purchase your home or office building within the last few years?
 
If you purchased your home, or real estate of any kind, in the last few years, then you paid a premium price. If real estate prices weaken and your home or real estate is carrying a mortgage, then you could owe more than it is worth. That makes you very vulnerable. If you want to or need to sell the asset in the years to come, you may be unable to do so. You might be locked in for a very long period of time making payments, unable to take advantage of lower prices or new opportunities, waiting for a recovery of your losses.
 
Successful investors care about price. A winning investment requires that you buy low enough that it has a chance to increase in value. While this may seem obvious, and it is certainly a well-worn aphorism, over the past few years many people have been derelict in their duty of pricing. The quicker that you extricate yourself from a money losing proposition, the better. Wisdom and a time-proven plan are always a better strategy then blind faith, prayers and hope.
 
Are you spending more than 30% of your income on your home mortgage?
 
According to Attomdata.com, 74% of U.S. cities are unaffordable to the people who live there. That means that you’d have to spend more than 28% of your income to purchase your own home. If you were already spending above your means before the pandemic, you’re even more vulnerable now – particularly if your income has been negatively impacted.
 
Housing has been unaffordable for a few years for renters and for homeowners, so it is understandable how so many have been suckered into buying high and purchasing more than they can realistically afford. That gives the real estate and mortgage salesmen a good commission.
 
So, what can you do to put the money back into your own pocket?
Intergenerational housing is on the rise. Having each family member live in their own small dwelling is much more expensive than putting the group together under one roof – even if that means getting a bigger place. The savings on lodging are tremendous. However, everyone also saves a lot on food, electricity, Internet and entertainment. When we address the housing situation as a larger family unit, everyone wins.
 
Is your home or office building producing income?
Income-producing real estate that is either paid off or that you purchase for a good price, and is producing an annual yield of 18% or more, can be very valuable now, and in the years ahead. Hard assets will hold their value better than paper assets. Passive income will help to tide over any gaps in earned income. As we get closer to retirement, this becomes essential.
 
However, if we’re going to own income property, we will need to consider a post-pandemic world. Commercial real estate is suffering from the Work From Home trend. Residential real estate owners may have tenants who can no longer afford to pay their rent. It will be difficult to evict the non-paying tenants until the pandemic is over. Courts are closed and/or backlogged. There may be a temporary moratorium on evictions in your area.
 
So, what needs can your property address? Who is the perfect tenant who can and will pay their lease/rent on time? What would an active Boomer, or someone employed in the tech industry, want out of their home?
 
Is there a way for your home or office building to produce income, considering a post-pandemic world.
 
If:
 

• Your home is too big and you’re thinking of downsizing
• You are spending too much of your income on housing
• You can’t afford a home

 
Then rethinking everything, and tossing out the conventional wisdom, can yield the best solution. The low hanging fruit for most housing stress is intergenerational housing, which is why we are seeing such an increase in this trend. As I said earlier, it is very inefficient for each person to have a small housing unit that includes a full kitchen and dining area. When you combine everybody in one large house, the area that each person has privately can actually be more majestic, spacious and perhaps even more private than what they are getting by with and spending through the nose for.
 
By pooling the family assets, and moving into an estate big enough for everyone to enjoy, each family member could potentially have more money in their pocket. Rather than producing income, this solution keeps your hard-earned money in your own home. The ROI shows up in bills that are eliminated, and a monthly budget that now has room for fun, vacations and investing. When you stop making everyone else rich, including the landlord, the utility company, the TV/cable/entertainment provider, with additional savings on food, there is a lot more dough for things that make life worth living.
 
If you own a mini mall, an office building, a boutique hotel or a bed-and-breakfast, then rethinking the usage and income stream for the next few years, at minimum, could be your saving grace. What worked last February may not work in July, or even in 2021. If you would like ideas or business strategies for a post pandemic world call 310-430-2397 or email info@nataliepace.com.

 
Do you owe more for your real estate than the value? Did your loan modification put you severely underwater?
 
If you are highly leveraged on your home or any other real estate, the time to consider your options is now. If real estate values drop, then your options become very limited, and you might be stuck paying off an over-priced asset for decades to come. You won’t be able to move. You won’t be able to sell. It may limit your job opportunities, and perhaps even your ability to retire. If you are draining your retirement account to stay in a home you can’t afford or one that is underwater on the mortgage, then you need to face reality, preserve your life boat (your retirement accounts) and put some real solutions on the table. (I discuss this in greater detail in my book The ABCs of Money.)
 

It’s important to acknowledge that the reason that most people do not buy low is because they can’t buy low. Too many people have their money tied up in an asset that has lost money. They can only hope and pray to recover losses. There is no money left to take advantage of low-priced opportunities. When that happens, the debt to assets ratio explodes, and the FICO score sinks. That limits your ability to borrow money. Seeking solutions for your real estate problem now could position you to sell high, preserve your liquidity, keep your FICO score high and research the kind of asset that will serve you best going forward, in a post-pandemic world.
 
 
Are you thinking of purchasing a new home or other real estate?
 
As I’ve already mentioned, real estate prices are back to all-time highs, and are unaffordable in 74% of U.S. cities. Buying high is never a good idea.

In the Great Recession, the high for real estate was in 2006, and the low was in 2011. Banks don’t foreclose on all of the distressed property at once. So, it does take a period of time for real estate to bottom out. However, if you shop in the shadow inventory, then you might find extraordinary bargains – even today.
 
If you are thinking of purchasing any kind of real estate today, you need to factor in all of the criteria already listed in this blog. The key mantra is that you want to purchase a “safe income-producing hard asset that you purchase for a good price, considering a post pandemic world.” The time you spend developing your plan and formulating an effective buy low strategy is time well spent.
 
I discussed this and more in my Real Estate Video Conference on Thursday, July 9, 2020. You can watch it back on my YouTube.com/NataliePace channel.

 
We spend one full day on real estate, what's safe and other hard assets at our Investor Educational Retreat. Call 310-430-2397 or email info@NataliePace.com to learn more. Click on the banner ad below for additional information on the Oct. 3-5, 2020 Online Financial Empowerment Retreat. 

​​"Many people, including educated men and women, often get into trouble when they 
neglect to follow simple and fundamental rules of the type provided [by Natalie]. 
This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this 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, Chairman, TD AMERITRADE.
​

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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.