After this week’s pullback, you might be hoping for a Spring Rally. The NASDAQ Composite Index is down 6.4% since March 1, 2021. However, many of the fundamentals behind the rout of this week are going to remain a factor in all asset prices this year. In short, we have to whirl the effects of hope, hot air, handouts, the vaccine, pandemic hangover, inflation, asset bubbles and financial instability into our crystal ball, and see what materializes. As MIT professor Andrew Lo has famously said, “Physics has three laws that explain 99% of the phenomena, and economics has 99 laws that explain 3% of the phenomena.” (Lo is the author of many books on the financial markets and leads the MIT Laboratory for Financial Engineering.)
Will:
 

• hopes of a vaccine,
• predictions that the economy will open up, and,
• projections that people will begin traveling again, going out for dinner, buying clothes and doing more of the things that we all took for granted in 2019,

 
Add up to a Spring Rally? Everyone is hoping that the economy will strengthen and stocks will soar. But has the good news already been priced in?
 
How high can equities fly? What might crash land them? Below are eight things we must consider when thinking about a Spring Rally, and making projections about just when our lives will return to normal. It’s probably better to think about this as a New Normal of a Post-Pandemic World.
 
8 Factors that Could Prompt or Pop a Rally in Stocks
Hope
Hot Air
Handouts
The Vaccine
Pandemic Hangover
Inflation
Asset Bubbles
Financial Instability
 
And here is a little more color on each issue.
 
Hope
People just want a happy ending. We’ve been living in a nightmarish time-warp, where long, sequestered days of repetitive hibernation has us all stir-crazy. Perhaps it is always darkest before the dawn? Maybe we’ll walk outside in Spring and the sun will shine again. Our wealth will do what it usually does in the Spring Rally – increase. There’s at least one dark cloud in the sky of this Eden – the specter of last March, when the Dow Jones Industrial lost 35% before most of us knew we were in a pandemic. (The WHO declared COVID-19 was a pandemic on March 11, 2020. The low on Wall Street was March 23, 2020.) 
 
Hot Air
Hope and optimism has brought in a new type of investor – one who wants to shoot the moon and become an instant millionaire. There are plenty of predators waiting in the wings to pounce on this prey. Reddit bulletin boards and Robinhood investors have been piling into troubled companies like GameStop, AMC, Bed, Bath & Beyond and Blackberry, sending their share prices soaring. Sadly, the zenith flashes and crashes typically within a few short minutes. Check out the share price trajectory of these stocks over the last month. As you can see, they look more like Pump & Dump Schemes than opportunities.

Memes stocks and other marketing and promotional campaigns have wiped out newbie investors, who get gassed up on the promise of becoming rich overnight. Reading these marketing blogs can be a little intoxicating. However, a quick look at the trajectories of past meme stocks is sobering. So be cautious, particularly if you are trading on margin.
 
Handouts
The $1400/person check that the Biden Administration is close to handing out should help the economy. Prior to the pandemic, consumer spending made up 70% of GDP in the U.S., with $13.3 trillion spent. In 2020, that figure dropped by half a trillion to $12.5 trillion. The Brookings Institute predicts that it will take until 2022 for consumer spending to return to 2019 levels. For those sectors most hard hit, such as hospitality, hotels, casinos, travel and health care (non-COVID-19 related), the full recovery may not occur until 2023 or 2024, according to Brookings.
 
​Will stocks soar on increased consumer spending in 2021? Many companies already have the recovery priced in. As you can see in the average P/E chart below, which is provided by Robert Shiller, Yale professor of economics, the average price to earnings ratio is very high. In fact, the only two times in history when P/Es were higher was in 2000 and 1929.

The Vaccine
The COVID-19 vaccine might be distributed to all of American adults by early summer. Will that mean an opening up of the economy, a rebound in spending, travel and eating out and La Vie en Rose again? On one hand, as Federal Reserve Board Chairman Jerome Powell has been pointing out repeatedly: a return to normal is unlikely until people feel safe congregating again. I’m in Manhattan now and what I’m seeing is that there are places where people are fine mingling and other places where they are not. While this is still early in the vaccine distribution, the trends reflect some biases that stem from self-interest.
 
Airplanes. I recently had to fly to Arizona for a memorial service. The plane was at or near 100% capacity. There was no social distancing, although everyone was required to wear a mask.
 
Grocery stores try to limit the amount of people inside and encourage everyone to social distance. However, if someone stands too long in front of the organic tangerines, she’s going to attract a crowd around her, reaching in to grab and go. In other words, when you have to sit or stand next to someone for something essential, people are already doing it.
 
The Office. Now that we know how easy it is to host meetings online in our yoga pants (with appropriate looking business attire on top) will we want to go back to the office? How many of us want to add a daily commute back into our lives? For New Yorkers, San Franciscans and other city dwellers, the commute might be the queue at the elevator. Elevators are one place that people are still social distancing – at least in Manhattan. This impedes a return to the office, if it’s located on the 63rd floor. The office building is still a question mark in the pandemic recovery. Do we really need two places, or can we  live and work at home?   
 
Now that businesses know we can be productive from home, will reducing the office space be low-hanging fruit to make up some of the financial challenges of 2020? Has there been a structural shift in the way we work? Many technology companies say, “Yes.” Of course, there will always be businesses and services that require having a shop.
 
Travel & Entertainment. Hotels, events, cruise ships and casinos saw their revenue drop by up to 90% in 2020. How fast will the vacationers and conventioneers return? Has there been a structural shift in how we host conferences and launch events? Will the convention business come back? Many businesses have been forced to conserve capital due to revenue losses, while taking on more debt to survive the pandemic. Hosting meetings and conventions online is a lot more cost-effective than travel, airfare, per diems and hotels.
 
Over 19 million Americans are taking some form of unemployment (compared to 2 million a year ago). This could also put a damper on discretionary spending. Even those with a job might be more discerning and conservative about when and how they have fun, preferring to save for a rainy day.

Pandemic Hangover. The vaccine should make it possible to visit foreign countries again. Cabin fever has us all ready to hop on a plane for a week in the Caribbean. However, astronomical personal debt, a fragile economy, a volatile stock market, unaffordable housing, high unemployment, and all of the budget nightmares that go along with this pandemic hangover may slap down our dreams. Just how much of a factor will excessive debt play in the recovery of countries, cities and businesses that are heavily reliant upon travel and tourism?
 
Real estate prices are at all-time highs and stocks are near their apex. However, so is debt on every level, consumer, corporate, municipal and sovereign. Fitch Ratings has a negative outlook on the U.S. AAA credit rating. If Fitch decides to downgrade the U.S., they may do it over the summer, as Standard and Poor’s did in 2011.
 
Inflation. The Dow Jones Industrial Average dropped 346 points on March 4, 2021 after Jerome Powell affirmed that the Federal Reserve will keep interest rates low, even if inflation starts creeping in. Powell said, “We expect that as the economy reopens and hopefully picks up, we will see inflation move up... That could create some upward pressure on prices.” Gold and silver prices tumbled in tandem with stocks on the news. Cannabis and Tesla were some of the hardest hit.
 
Asset Bubbles. The last two recessions, pre-COVID-19, were characterized by financial instability and asset bubbles. Today, the prices are even higher, while the debt has entered the intergalactic realms. See the Asset Bubble Chart below.

Should a company like Tesla that makes less than half $1 billion in net income be valued at almost $900 billion, as Tesla was in January of 2021? Investors are enthusiastic with Tesla’s growth (at 45.5% year over year) and potential. However, experience tells them that getting out over your skis too early can be deadly. Pricing today for tomorrow’s (or next decade’s) potential can be an expensive lesson. Almost every company on Wall Street was trading at half the price (or lower) on March 23, 2020 than it is today. Tesla traded at $70/share, compared to $621/share on March 4, 2021.
 
Tesla’s share price is down 31% since the January 2021 highs. Nvidia’s share price is off 19.5%. Amazon is down 16%. Apple, a company which repurchased $24.8 billion of its stock in the last quarter of 2020, has lost 17% of its value. Even with those price corrections, the P/Es of these companies are 74, 72 and 33, respectively. The average P/E is 16-17.
 
Overvalued Commercial Real Estate Implodes
According to Bloomberg, Jared Kushner’s Times Square building was valued at $470 million in 2016. It sank to $92.5 million in 2020 and is currently in the process of foreclosure, with over $370 million in arrears. We’ve seen asset prices implode with unprecedented speed in today’s world.

​​Financial Instability
Over half of the S&P500 is at or near junk bond status. That includes a lot of banks and financial services companies. Many of these companies have exposure to the weakness in commercial real estate.  

 
Margin debt just hit an all-time high. Speculation is rampant on Wall Street. If investors get into trouble, the brokerages might as well.

Financial instability increases the likelihood of a more severe and extended drop in asset prices, as occurred in the two previous recessions (Dot Com and the Great Recession).
 
Talk on the Street
We’re hearing a lot of pundits talk about the strength in stocks, the sizzling and spectacular returns of cryptocurrency, and the specter of inflation. Does that mean that technology is weak? Nope! It’s simply means that people are taking profits in what they perceive to be in overheated market. It’s hard to imagine a future without a smart phone, gaming, Whole Foods, movie streaming and ordering everything you need online. That’s why the pie chart system works better than trying to jump in and out (market timing).
 
Will Bitcoin be the only currency when the dollar disappears? Unlikely. If someone is telling you that, beware. There are a lot of crypto-criminals and fraud in this space. Cryptocurrency is currently a trader’s delight. You can’t have a currency that is worth $20,000 one month, and drops to under $5,000 just a few months later. Yes, Bitcoin just hit $57,489 earlier this month, for some of the best returns to be had. Here again is an example of how having a slice of Bitcoin is a better strategy than going all in.
 
Knife-Like Drops
Debt, leverage, valuations and financial instability are all a concern. The pandemic recession has been characterized by knife-life corrections (such as in the Times Square building mentioned above). February 19, 2020 to March 23, 2020 was the swiftest that a bull market had ever become a bear – with losses of 35%. Yes, we’ve seen a robust recovery. However, financial instability was already a concern before the pandemic and has only become more problematic. In the words of Jerome Powell from the FOMC press conference of December 16, 2020, “The current economic downturn is the most severe of our lifetimes. It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of [2020].”
 
Bottom Line
Asset prices are inflated. The Spring Rally and vaccine are already overpriced in. Add in inflation and a move to a perceived stronger bond market (it’s not), and you’ve got a potential for a nasty surprise. Hot air is taking meme stocks to the moon, only to see them crash land in a matter of minutes. Few pundits are featuring leverage, debt and financial instability, which were the sinkholes of the two previous recessions. Most Americans are worth less today than they were worth in 1995.

​Your best strategy, is a diversified plan that factors in what is safe in a world full of financial instability. Market timing doesn’t work. Overweighting safe, underweighting leverage, leaning into hot industries (including technology), and reading the fine print on anything you think is safe (but probably isn’t) will afford you the grace and gains of rising above the Wall Street rollercoaster.
 
Buy & Hope cost investors half or more of their wealth in the two previous recessions, and then they must hope and pray to recover losses in the bull markets. It took 15 years to recover from the Dot Com losses and seven and a half years to come back from the Great Recession. So, if you’re banking on a Spring Rally to keep sending stocks to the moon, and you’re not properly protected in case this March looks a lot like last year, then you are gambling.
 
A properly diversified and protected plan protects your wealth from downturns, and allows you to build wealth in the bull markets. You lean into areas of strength and hot industries, so that when rallies occur, your wealth grows at twice the speed. You rebalance regularly, so that you keep your gains instead of watching them evanesce in the next downturn. This is a buy low, sell high plan on auto-pilot for your nest egg, which is the soundest strategy in the late stage of a secular, overpriced bull market, in the middle of the most challenging economy of our lifetime.
 
This is something we teach at my financial empowerment retreat. The next one is April 24-26, 2021. It’s online so you can join us from anywhere.

​Will Cannabis Companies Shoot the Moon Again?
The fundamentals behind many cannabis companies are strong. Not all cannabis companies are created equal, however. For instance, I have yet to see more than a handful of customers in Medmen’s 5th Avenue store in New York City. (I take daily walks for exercise on 5th Avenue.) There will be some that hope to rise with the tide, and others that are sailing with the wind at their back with seasoned navigators and a mother lode of exceptional goods on board. As I mentioned in my blog of December 5, 2020, after the House decriminalized cannabis, Aphria (combined with Tilray) is in the strongest position, particularly after Aphria’s clever purchase of Sweetwater Brewing.

Once we hear a more definitive date for the decriminalization of cannabis in the U.S., you can expect increased investor interest in cannabis. Any rapid rise, however, can be short-lived again, due to profit-taking, the downward pressures of overvaluation and, potentially, general market weakness. (We’re still in the most challenging peacetime economy since the Great Depression.)

Valuing Tilray/Aphria/Sweetwater
The completion of the reverse acquisition of Tilray (which will look more like Aphria in terms of leadership and power) is expected to happen in the 2nd quarter of 2021. Last year’s combined revenue was $685 million – before considering revenue brought in by the Sweetwater Brewing acquisition.  Cash burn is still a consideration. Aphria lost -$120.6 million in the 1st quarter of 2021, with $320 million of pro forma cash on hand.

With the expected right-sizing and redundancy trimming that should accompany the merger, the combined cash could be enough to get the company through 2021. However, at the current cash burn, it would be flying a little close to the trees.
​
The 10X Power of Innovation
In a nascent industry, the company that comes up with the best product can instantly become 10 times more valuable than the competition. Recently we saw that phenomenon with Zoom Video, which beat out Microsoft’s Skype, Facebook Live and Google Chat to become the videoconferencing software most used and beloved. Investors rewarded the company by sending Zoom’s stock to the moon.

If you'd like to learn how to invest in Shoot the Moon stock picks like Aphria/Tilray, join us for our 3-day Investor Educational Retreat this weekend. Call 310-430-2397 or email info@NataliePace.com to learn more. Check out testimonials and discover the 15+ things you'll learn in the flyer below. 

​Other Blogs of Interest
Hot ETFs Return Up to 50% Since October. 
​Investor IQ Test 2021.
Investor IQ Test Answers
​Shoot the Moon Stock Picks
​2021 Crystal Ball.
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
Can Medmen Avoid Bankruptcy?
​Bitcoin is Back, Baby!
Real Estate Prices are Going Up. And Down.
Movie Theaters are in Trouble
Airbnb Should Have a Spectacular IPO Today.
​Cannabis is Decriminalized. Stocks Triple.
Airbnb's IPO. Should Hosts Invest?
Gifts Under $5 and Free.
Thanksgiving in a Pandemic. The Sustainability Silver Lining.
Secretary Mnuchin Halts Bailouts
Money Stress Killed My Friend
Real Estate and Housing 2021. Challenges & Opportunities
​Real Estate in a Pandemic. Interview with Mike Fratantoni, the Chief Economist of the Mortgage Bankers Association.
​Bonds are Illiquid & Negative-Yielding.
Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot.
5 Red Flags of a Financial Implosion
Will Regeneron Be Approved Before the Election?
​Tesla Will Have an Outstanding Earnings Report
Should You Wait Until After the Election to Fix Your Wealth Plan?
​The October Surprise
​Is Your Bank a Junk Bond
Do Stocks Fare Better Under Democrats or Republicans?
Put Your Money Where Your Heart Is.
Crystal Ball for the Remainder of 2020 (Including the Election). 
Microcap Gaming Company Doubles 2Q 2020 Revenue.
​Apple & Tesla Stock Splits.
Schwab's Chief Fixed Income Strategist on What's Safe.
China's Tesla (Nio). 2Q Sales Soar.
Why Are You Still Renting? (Errr. There is More Than This to Consider!)
MedMen's Turnaround Plan Attracts A-List Board Members.
​Wealth Myths That Keep You Poor. Prosperity Truths That Make You Rich. 
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. 
​
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 4th edition of The ABCs of Money was released on October 17, 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. ​

Dear Natalie:
 
I was listening to an “expert” giving a presentation about ETFs. All of the funds he mentioned seem to be up at least 50% since October. I was wondering if the fact that they’re smaller funds translates to liquidity concerns. I noticed one had a trading volume of just 13.1k. Are these really winning ETFs that I should be adding to my nest egg portfolio?
 
Signed: Looks Too Hot to Be True
​

​Dear Looks Can Be Deceiving,
 
As you know, our pie chart system includes four hot slices. So, this expert is right in telling you to put performance in your portfolio. Doing so can be very rewarding. Cannabis was a hot we’ve been featuring for a few years. This year our featured company, Aphria, shot the moon, soaring from $2/share in February of 2020 to up to $32/share this year. Silver is up. Technology, particularly FANG and AI, have led the bull market. Biotechnology firms that were focused on the pandemic, such as Vir Biotechnology and Adaptive Biotechnologies (which were featured prominently in our Investor Educational Retreats), are up three and four-fold off their lows.
 

However, picking the right ETF, and just as importantly the right fund company, is essential. The funds this “expert” is mentioning might be more of a marketing ploy than an opportunity. I’m concerned that this presenter could be being compensated on the backend for mentioning these specific funds and companies. (Higher risk funds often pay higher commissions or marketing fees.) So, the first lesson here is to remember to always Grade Your Guru before you listen to anything he says. You want to know if there is any bias or conflict of interest before you even tune into the talk. Is this presenter a “marketing guru” or a Certified Financial Planner? (Both could be paid on the backend.) Oftentimes a simple search on the presenter’s name to see his background for the last 15-20 years will reveal all you need to know in order to invest your time and money elsewhere.

​All of the funds you sent over are offered by new financial services companies that are not publicly traded (ROBO and EMQQ), or have shown severe signs of distress (WisdomTree and Direxion) over the past year. A safer bet would be to purchase the same type of ETF from a highly rated, highly liquid financial services company. You don’t have to go with unproven companies with liquidity concerns.
 
Liquidity concerns are a big deal today. Over half of the S&P500 is at or near junk bond range, and that includes a lot of financial services companies and banks. Direxion’s hedged ETFs all took a dive – even the gold funds – and haven’t recovered since oil dropped into negative range on April 20, 2020. (Some of the funds you sent over are owned by Direxion.)
 

​

All of the ETFs that I list below as an alternative choice have a stronger financial foundation and most have performed better to boot. (The superstars listed below, many of which smashed the performance of the ETFs you sent over, are all ETFs and companies we have featured at our Investor Educational Retreats over the past few years.)

ROBO underperformed IRBO (owned by BlackRock's iShares). The ROBO fund company has only been around since 2013. ROBO ETFs also own THNQ.

​HTEC. As an alternative, look at IBB, or the two hot biotechs we discovered  in the retreats – Vir Biotechnology and Adaptive Biotechnologies.

​EMQQ and WisdomTree’s XSOE. Compare with CQQQ, a Chinese Technology ETF.

​Direxion’s MOON: Compare with Nio (it’s major holding) – a company we first featured in October of 2019, when Nio was trading under $2/share. (Direxion’s fund didn’t even start until Nov. of 2020, missing out on most  of Nio’s “shoot the moon” performance from $2 to $60/share.)
 

​Direxion comes up with hot sounding names, like (WFH) Work from Home. However, after burning investors with its hedged ETFs, I wouldn’t be very interested in any of their funds. Gold is trading near all-time highs, but look what happened to Direxion’s 3X Gold Bull Fund (which became a 2X Gold Bull Fund when the fund suddenly took a nose dive in March 2020). Investors haven’t come close to recovering their losses, which weren’t prompted by a change in gold prices, but were likely tied to the company’s hedged oil funds.
 

Cannabis
One last comment. Sometimes there is a hot industry, like cannabis, where the only fund options are young companies with questionable liquidity, volume and timespan. In that instance, it’s a better choice to just create your own fund, using companies you identify as the leaders of the industry (something you learned on Day 2 of the Investor Educational Retreat). Aphria, the company our team has been interested in since Irwin Simon became the CEO and Walter Robb joined the board, hit $32/share this month after dropping to $1.95 in 2020.

​

​Biotechnology
With biotech, the two hottest companies we identified – Vir Biotech and Adaptive Biotech – weren’t heavily represented in any of the funds offered at the time. So, here’s another case when leaning into individual companies might be a good option. Again, learning how to evaluate the holdings will make quite a difference in the performance of your hot choices for the nest egg pie chart system.
 
Bottom Line
Fund companies are not created equal. It is important to pick funds offered by reputable financial services providers that have been around for at least two decades (not ones that were founded after the Great Recession by professionals who dusted themselves off  from the Lehman Bros. bankruptcy or Merrill Lynch implosion to find a new career). However, you can have your cake and eat it, too, when you pick hot industries that are offered by a fund company with a high credit rating and good liquidity. This adds an extra, essential layer of protection to your investment in today’s overleveraged world.
 
 
 

Are you an Einstein in investing? A complete novice? Check your Investor IQ with the 26 questions below.
 
If you score 21 correct answers or higher, then you’re in great shape! If you score 18, then you are C-level. Below 18 correct indicates that you are in need of a refresher course in life math. (So, consider joining us at our next Investor Educational Retreat.)
 

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

 
 
Answers are listed in the article "Investor IQ Test Answers 2021" in my blog at NataliePace.com.
https://www.nataliepace.com/blog/
 
Email info @ NataliePace.com or call 310-430-2397 if you have any questions about this test, or about the answers, or if you are interested in learning time-proven investing, budgeting, debt reduction, home buying solutions that will transform your life.
 

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 4th edition of The ABCs of Money was released on October 17, 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. ​

If you score 21 correct answers or higher, then you’re in great shape! If you score 18, then you are C-level. Below 18 correct indicates that you are in need of a refresher course in life math. (So consider joining us at our next Investor Educational Retreat.)
 
1. What is the most important question you should ask your Certified Financial Advisor before hiring him/her?

"How much of my portfolio should I keep safe?" This question will help you to determine whether you are dealing with a trusted professional who is looking after your best interest, or a salesman who is looking to make a quick buck. The answer to this question is, "A percentage equal to your age.” As we are currently in the most challenging economic environment since the Great Depression, it would be even better if s/he adds, “But given the pandemic and problematic economy, we should consider overweighting even more safe."
If they just sidestep this question and redirect you to a risk tolerance questionnaire, that is a red flag.

One more important thing. Bonds are highly leveraged, subject to credit risk, vulnerable to capital loss and are illiquid to boot. So, you need to understand what’s safe, rather than just relying upon bonds to keep you safe.

Now is the time to clearly know exactly what you own and why. Consider getting an unbiased 2nd opinion. Call 310-430-2397 or email info@NataliePace.com for pricing and details.  

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

• Check your March 2020 statement and compare it to your January 2020 statement. If you lost 35% or more, then your plan rides the Wall Street rollercoaster. Don’t confuse a bull market with wisdom. Everyone has made money since March 23, 2021. Buy & Hold investors are worth less today than they were in 1996. INSERT GRAPH
  
  
• If you have more than just a few pages of holdings in your financial plan, your gains might be negatively impacted by fees and commissions. You are not as diversified as you believe, as pages and pages of holdings can still just be the same type of holdings over and over again. You’re more at risk than you know.
  
  
• The NASDAQ has increased is ten-fold over the low of March 9, 2009. The Dow Jones Industrial Average is up about four-fold. If your returns over the last decade are tracking the DJIA (or lower, due to fees), your plan needs reviewing.

 
Remember: Your nest egg recovered in the pandemic because the wind has been at your back. The economic storms are still on the horizon. When/if the tides turn, losses can incur quite swiftly. (The 35% plunge between February 19, 2020 and March 23, 2020 was the fastest that any bull market had ever about-faced into a bear.) Wisdom and time-proven systems are the cure. (Our easy-as-a-pie-chart nest egg strategies, with annual rebalancing, earned gains in the last 3 recessions and have outperformed the bull markets in between.)


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

A percentage equal to your age. Consider overweighting more safe when the economy is stumbling or in a pandemic. In today’s world, it is important to know what’s safe. Bonds are losing money and are illiquid, which makes them substantially riskier than most investors realize. Money market funds have redemption gates and liquidity fees.

4. What's safe?

Hard assets will outperform paper assets in a world where there is too much paper money, financial inequality and broken promises floating around. So, the mantra is “safe, income-producing hard assets that you purchase for a good price.” You have to also consider what will safely produce income in a post-pandemic world. Real estate is at an all-time high in the U.S., so it’s difficult to purchase for a good price in 2021.
You don’t want to be all in on hard assets because you also need liquidity and cash flow. That is why some of the best hard asset investments are those that reduce your monthly expenses (for life).
I spend one full day on What’s Safe at the Investor Educational Retreats. Educate yourself now on the best income-producing hard assets that are right for you now, so that when prices are more attractive, you know what you want and have the means to take action and close the deal. Call 310-430-2397 to learn more.

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

Large cap stocks earned 13.0% annualized over the last decade and 10.7% over the 30-year period. Small cap stocks performed at 10.09% and 12.35%, respectively. (Asset performance graphs, and more, are available to Retreat Attendees.)

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

Gold returned 2.05% annualized over the 10-year period and 5.1% over the last 30 years. Gold mining stocks doubled in 2016, dropped by 75% in 2017 and are currently worth double their 2017 lows again. The all-time high for gold of $2,067.15 was hit on August 6, 2020. The last high of $1,895/ounce in gold occurred in September of 2011, the month after S&P Global Ratings stripped the U.S. of its AAA credit rating. Fitch Ratings currently has the U.S. on a negative outlook, meaning the AAA rating from Fitch could be downgraded this year. (Moody’s still has a stable outlook for the U.S., as of February 17, 2021.)

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

Over the last decade, real estate has performed at 7.90% annualized. (The devastating losses of the Great Recession are no longer included in this statistic.) Over a 30-year period, real estate increase 6.4% annualized.

Real estate prices are higher today than they were before the Great Recession – meaning real estate is largely unaffordable to many Americans. According to AttomData, average income-earners are unable to purchase in their community in 55% of U.S. cities. 3.2 million U.S. homes are still underwater – even with prices higher than ever. (This is largely due to loan mods.) This creates a little opportunity in the shadow inventory. There is nothing worse than buying high in real estate, and watching the value of your home sink below the amount that you owe on it! It can ruin your life for years, if not decades.

8. What was the top performing investment in 2020?

Bitcoin gained 346% in 2020. The NASDAQ Composite Index scored 43.6% gains, with gold polishing up a performance of 22.3%. Oil prices were the biggest losers of 2020. In April of 2020, oil prices went negative. Oil companies were overstocked and had to pay to have oil taken off of their hands. Bonds performed pretty poorly as well, with negative yields and illiquidity issues.   
​
9. How long will it take for you to have a nest egg as big as your annual salary if you put 10% of your income into a tax-protected (and financial predator proof) individual retirement plan and invest in stocks and bonds*?

7 ½ years. This is based upon 10% average annualized returns of stocks and bonds over a 30-year period, which is about what those assets have done over the 30-year period, from 1991-2020.

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

25 years. Based upon 10% average annualized returns of stocks and bonds over a 30-year period, which is about what those assets did from 1991-2020.

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

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

Most, but not all, hard assets are overpriced right now. If you are equity-rich, you still want to do the analysis to make sure that remains the case if real estate asset prices decline in value, as they did in the Great Recession. (Click for a blog that will help you to do this.)

There are some excellent hard assets that are worth considering now, which is why I spend one full day on this topic at the Investor Education Retreats.

Value capital preservation more than reaching for yield. It will allow you to buy low when things are on sale.  

12. Which countries hold the most gold? 

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

13. Are annuities safe?

Insurance products, including life insurance and annuities, aren't insured by the FDIC. If we had not bailed out AIG in 2007, more than 50 million annuity holders would have been in real trouble. Your annuity product is only as safe as the insurance company that is selling it to you. Recessions are hard on insurance companies, so we may see some troubled insurance companies (as we did in the Great Recession). Getting on the other side of the most challenging economic environment since the Great Depression will take time.

Insurance products are like being a renter. If you can’t pay, you get tossed out. Many people pay for life insurance their entire working life, and then can’t pay when they retire – when they are really most in need. If you put that money into your own tax protected account, you could save on taxes, compound your gains, and it would be there for you when you retire, even offering some income, in addition to the capital. You can be a better steward of your wealth than any insurance company. It’s time to be the boss of your money. 

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

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

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

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

October through December – the Santa Rally – performed the best over the 20-year period, but saw greater volatility in the 5-year trend. October saw negative returns of -1.48% over the 5-year period. December 2018 was the worst performing December in history, killing the historical returns of the Santa Rally that year.

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

16. What was the worst investment in 2020, NASDAQ, gold, the Dow Jones Industrial Average, bonds, cannabis, oil or real estate?

Oil was by far the worst investment in 2020, offering negative returns on the oil price of -23% on the year. Bonds were pretty poor performers, offering limp returns and very low liquidity. The Dow Jones Industrial Average was another underperformer. While the NASDAQ scored 43.6% gains, the Dow limped along at just 7.2% gains. Last year’s loser, cannabis, was up more 1000% in February of 2021 on news that the U.S. might decriminalize cannabis, and fueled by Reddit bulletin boards and Robinhood investors.

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


17. Which year is expected to perform better, 2021 or 2022, based upon historical returns of election years?

2021 is a post-election year. Over the last 10-30 years, post-election years post gains in double-digits, while the second year of the new Administration averages in the low single-digits. Economic forecasts from the Federal Reserve Board support this trend as well. 2021 is  projected to have 4.2% GDP growth, while 2022 could be just 3.2%.

Historically, election years were strong performers, with pre-election years earning the highest score of the entire Presidential Cycle. However, the 10 and 20-year election returns were wiped out due to the 2008 Great Recession (losses of 55%) and the 2000 Dot Com Recession (losses of up to 78% in the NASDAQ). 2020, another election year, saw a plunge of 35%  in stocks between February 19, 2020 and March 23, 2020, due to the pandemic. Stocks recovered for 2020 gains of 16.26% in the S&P500! This has made stocks in 2021 quite pricey, which could mute gain possibilities this year.

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

30 companies. Many are household brands. And many are carrying far more debt than the value of the company. Leverage has begun to concern economists. Over 50% of the corporate bonds are at the lowest rung, just above junk bond status. This includes a lot of banks. Ford Motor Company was downgraded to junk bond status in September of 2019. (We've been warning of this in our retreats and books for over a decade.) If you don’t understand how much debt corporations are holding, it’s time to learn The ABCs of Money that we all should have received in high school.

General Electric isn’t the only blue chip that had to slash its dividend and lost substantial market value as a result. Debt and leverage, along with subdued sales, are the main reasons why the DJIA has underperformed the NASDAQ Composite Index in the 21st Century. Click to access the names of the 30 companies. The Dow Jones Industrial Average was launched in 1896.


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

Most don't realize that 20% of the companies of the Dow (6 companies: AIG, American Express, Bank of America, Citi, JP Morgan and General Motors) were bailed out or went bankrupt in the Great Recession. Others, like General Electric and Ford, received support. New Chips, like Apple, Google, Amazon, Facebook, Nvidia and Netflix, are far safer, and higher performing, than Blue Chips, both in terms of growth, but also in terms of the fiscal health of their balance sheets. You’ve probably heard the acronym FANG. 

Learn more about how to add in performance and avoid the bailouts in your funds and retirement account at the Investor Educational Retreat and in The ABCs of Money. Since the Great Recession, the NASDAQ Composite Index has offered far superior returns than the Dow Jones Industrial Average, even factoring in dividends. In fact, the higher the dividend, the higher the risk (read the chapter of the same name in The ABCs of Money for additional information.


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

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

Investors haven’t fully recovered from these routs. According to Pew Research, most Americans are worth less today than they were in 1995.

​

You can’t afford to lose more than half every 8-10 years, crawl back to even, only to lose more than half again. It’s time to step off of the Wall Street Rollercoaster and into time-proven, easy systems that work. Buy & Hope is a last century plan that hasn’t worked in the New Millennium and will not work going forward. The quick pandemic recovery in 2020 is an anomaly that is not supported by the economic conditions.  

23. Does Buy & Hope work? If not, what does?

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

Our easy-as-a-pie-chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. Working off of the pie charts, instead of the brokerage statement, allows you to take the emotions out of the plan, and rely, instead, upon a time-proven system. This pie chart system, with annual rebalancing, is a buy low, sell high plan on auto-pilot – prompting you to do what you should be doing each year. Email info@NataliePace.com or call 310-430-2397, if you’d like to customiz your own sample pie chart.

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

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

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

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

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

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

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

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

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

In Put Your Money Where Your Heart Is (aka You Vs. Wall Street in paperback), I used these questions and tools to compare two companies. Google scored an A (in 2006, when it had only been publicly traded for 2 years). The Wall Street Blue Chip that I gave a D- to went on to declare bankruptcy (General Motors). FYI: Using the Stock Report Card and 4 Questions, I identified both of these trends years before these major events occurred. The book was written in 2006, three years before GM went bankrupt. In fact, I applauded Google on national television before its IPO, when most pundits pooh-poohed it. This is the power of asking the right questions, rather than just listening to the mainstream media.

So, are you an Einstein in investing? A complete novice?
 
If you scored 20 correct answers or higher, then you’re in great shape! If you scored 18 right, then you are C-level. Below 18 correct indicates that you are in need of a refresher course in life math. (So, consider joining us at our next Investor Educational Retreat.)
 

Call 310-430-2397 or email info@NataliePace.com to learn now.

​Are you an Einstein in investing? A complete novice? Check your Investor IQ with the 26 questions below.
 
If you score 21 correct answers or higher, then you’re in great shape! If you score 18, then you are C-level. Below 18 correct indicates that you are in need of a refresher course in life math. (So, consider joining us at our next Investor Educational Retreat.)
 

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

 
 
Answers are listed in the article "Investor IQ Test Answers 2021" in my blog at NataliePace.com.
https://www.nataliepace.com/blog/
 
Email info @ NataliePace.com or call 310-430-2397 if you have any questions about this test, or about the answers, or if you are interested in learning time-proven investing, budgeting, debt reduction, home buying solutions that will transform your life.
 

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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.

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 4th edition of The ABCs of Money was released on October 17, 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. ​

​Over the past year, our Shoot the Moon Stock Picks have included:

·      Veritone at $2 in February 2020. Current value $49.
·      Nio* at $1 in October of 2019 (found by MM in a retreat). Current value $63.
·      Zoom $90 in March of 2020. Current value $432.
·      Aphria at $1.95 in March of 2021. Current value $27.
​
*Nio was found at our October 2019 Investor Educational Retreat by Mitchell Marcy, who was using our Stock Report Card, 4 Questions and 3-Ingredient Recipe for Cooking Up Profits.

​There is a fundamental difference between these Shoot the Moon Stock Picks and GameStop, which has lost almost 90% of its value over the last two weeks. Gamestop is a retailer who is struggling financially, losing sales and revenue and taking on debt to survive. Veritone, Nio, Zoom and Aphria are companies with increasing revenue that are investing in ways to keep up with high demand.

The Difference Between GameStop and Veritone, Nio, Zoom and Aphria.
Any investment that is promoted can be very popular today and completely out-of-favor quickly – unless there is a fundamental reason why this company and its products are rapidly increasing in sales and revenue. (This applies to real estate and other assets, as well.) During the Gamestop Short Squeeze, Brendan Kennedy, the Tilray CEO, discussed how the same tactic took his company’s share price to $300 on September 19, 2018, after which the stock dropped precipitously. Tilray’s stock was trading at $2.43/share in March 2020, and had been trading well under $40/share from May 2019 until yesterday.
Sometimes the promotion is an intentional pump-and-dump scheme. The promoter and/or his client already hold positions. They get a frenzy worked up on social media or through an online advertising or email campaign. As the stock soars, the insiders sell at the highest price possible, causing a knife-like drop in the share price and massive losses for those who purchased after the promotion. There were penny pot stock scams and pump-and-dump schemes galore in 2017 and 2018, leading up to Canada’s decriminalization of cannabis.

GameStop’s trajectory over the last few weeks bears the hallmark of a pump-and-dump scheme. Someone made a lot of money selling GameStop high. One thing the Reddit moderators weren’t telling their fans is that the only way you keep your gains is to sell high. Any reader who bought above $60/share and held the line has lost money. Some have lost quite a lot. Hopefully nobody gambled with their rent money.

Typically, this kind of share price manipulation occurs on the penny stocks that are trading off the boards. This is another educational tool that you need to be aware of because companies that are trading on the pink sheets carry exponentially higher risk than publicly traded companies.

How to Tell the Difference Between Great Companies and Promotional Advertising
If you want to invest in individual companies, then it pays to learn how to properly evaluate them. If not, since one person is buying and the other selling, then it is akin to you stepping on a tennis court to challenge Serena Williams to a game. Serena has spent quite a lot of time practicing her tennis. You don’t have a shot against her, just as your shot against professional traders is slim if you don’t know what you’re doing.

If you happen to know something they might have overlooked or haven’t factored in yet, that’s when you can find a Shoot the Moon stock. And, yes, that’s possible when you use the right tools and ask the right questions. Things always happen before they show up on an earnings report. The 10Q tells the story of what happened in the last quarter (trailing earnings).

Discovering something that wasn’t yet making headlines in the mainstream, using the tools outlined in my bestseller Put Your Money Where Your Heart Is (also known as You Vs. Wall Street in paperback) and taught at my Investor Educational Retreats, is what happened with each of the companies above. When you find one of these, and then Reddit or Motley Fool or Jim Cramer discovers what you already know and starts crowing from the rooftops about the investment, you’re the one riding the wave to the moon and benefiting from the promotion.

·      Veritone had an edge in artificial intelligence with its facial recognition software. They were partnering with Oracle and Microsoft to get it to government agencies on the national and local levels. This company was first featured in February of 2020.

·      Nio was selling electric vehicles in China – where there was a strong incentive for consumers to purchase EVs – for a lower price than Tesla. This company was identified in the October 2019 Investor Educational Retreat.

·      Zoom was already a great videoconferencing company – beating out Facebook Live, Google’s Chat and Microsoft’s Skype – before the pandemic. Once the pandemic hit, Zoom became so popular that people started calling their videoconferences “Zooms.” This was a company I was happy to purchase at 1500 P/E in March of 2020.
​
·      Aphria was making all of the right moves under the aegis of chairman and CEO Irwin Simon and board member Walter Robb. Simon was the founder and former CEO of Hain Celestial. Robb is the former co-CEO of Whole Foods. The recent cannabis decriminalization passed by the House, and the assumption that The MORE Act will pass in a Blue Senate, added fuel to a company that was already on fire. When the share price fell to $1.95/share in March of 2020, it became a massive buying opportunity.

​FYI: Put Your Money Where Your Heart Is was written in 2006. I leave the old-school examples in there because you can now see clearly the outcomes that I describe in the book. I was looking in the crystal ball, using data and my systems, to predict the future. It is easy now to see how accurate those predictions were, including that GM would go bankrupt, Google would shoot the moon, Apple’s iPhone would become the dominant smart phone, and Blackberry would slide into chaos. There’s even a picture of a Tesla Roadster in there – pre-Tesla IPO! However, at the time, it was very early in the process and the only way of seeing what would happen in the future was to employ a solid methodology.

Below are a few Cliff Notes to get started on the right path.

What Can the Company Do?
Start with the 3-Ingredient Recipe for Cooking Up Profits. Employ the Stock Report Card and ask the 4 Questions for Picking a Leader as tools to determine the Leader in the Industry. Clearly, you’re going to have to understand what the company does and who their customer is. Once you find a clear winner, ask, “Is this company trading for a good price? Is now a good time to purchase, or should I place this on my Stock Shopping List?”
 
Knowing which stocks are hot and having a Stock Shopping List can make it easier if the markets tank and everything goes on sale. You’ll still want to refresh the Stock Report Card and polish up your data-based Crystal Ball before diving into the purchase. You should always do the same thing before hitting the sell button.
 
What Can the Industry Do?
Can the industry thrive in an environment of high debt, over-leverage, financial instability and high unemployment? Real estate, the auto industry, the airline industry, retail, casinos, travel, hospitality, oil companies and more typically lose revenue when the economy is in trouble.
 
What Will the Market Do?
“The only time in history going back to 1881 when [stock prices] have been higher are, A: 1929 and B: 2000. We are at a high level, and its concerning. People should be cautious now.” Robert Shiller, Nobel Prize winning economist and Yale professor of economics. Are you paying $50 for your grande latte? Learn more in my blog.
 
Bottom Line
The markets are high. However, they are being fueled by stimulus checks, Millennial and Gen Z interest and the GDP recovery of the 2nd half of last year. All of this could help Shoot the Moon Stocks (that are not already soaring at interstellar heights) between now and the end of the Spring Rally (which is a pretty reliable Wall Street phenomenon). The Crystal Ball becomes less clear for what happens at the end of April when the 1st quarter 2021 GDP is announced.
 
Join me for my Free Shoot the Moon Investing Videoconference on Thursday at 5 pm PT (8 pm ET). Email info@NataliePace.com with VIDEOCON in the subject line for logon instructions.
 
 

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 4th edition of The ABCs of Money was released on October 17, 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. ​

Wondering where real estate, stocks, Bitcoin, cryptocurrency, bonds, gold, the U.S. dollar and the economy are headed in 2021? Learn what's in and what's out, so that you can make your best move now, while asset prices are at all-time highs (for many of the assets).
 
Economic Recovery in 2021?
The economy is predicted to have contracted about -2.4% in 2020. (We’ll get the first look at this on Jan. 28, 2021.) If the current projections turn out to be right (and the vaccine curtails the pandemic), then global growth could be about 4% in 2021 (source: The World Bank). The Federal Reserve Board governors believe that the U.S. will achieve 4.2% GDP growth in 2021. GDP growth above 4% has only happened once in the past decade, in the 1st quarter of 2015. Of course, it’s hard to imagine any year worse than 2020. The bounce off the bottom should help 2021 look better than 2020 – particularly if we are successful in reining in the pandemic.

China is predicted to ring in 8.2% GDP growth in 2021 (source: IMF). As you can see in the graph below, the strongest growth will be in China and southern Asia.

2020 has been a very difficult year, but you wouldn’t know it by looking at asset prices. Bitcoin, stocks, real estate and gold are all at all-time highs. It’s tempting to think that all you have to do is buy in and you get a trip to the moon. Bitcoin has doubled in just one month! Since the Nov. 3, 2020 election, the Biden Rally has pushed the NASDAQ Composite Index up 20%.
 
​However, the problem with soaring fast and high is that the crash can be a killer. You only have to look back to March, and the last two 21st Century Recessions, to sober up. The Dow Jones Industrial Average dropped 35% between February 19, 2020 and March 23, 2020. That was the fastest about-face from bull to bear in history. Even though 2021 should be a recovery year (if we tame COVID19), that premise has already been priced into most assets. That is why “stretched asset valuations” are listed in the top 5 Potential Shocks by the Federal Reserve Board of Governors in their most recent Financial Stability Report.

While it is certainly possible that blue skies continue for investors in 2021, there are a lot of economic storms on the horizon. What could possibly go wrong? Our worst nightmare never seems to end. Many of the potential shocks cited above have already become realities, including political uncertainty, business stress, COVID resurgence and stretched asset valuations.
 
We are embroiled in a troublesome 2nd wave of COVID19 that has many European nations and some U.S. states locked down. A spike of cases in the U.S. has severely and negatively impacted non-essential corporations, along with small and medium businesses. The Retail Apocalypse has been joined by a host of other industries in peril, such as airlines, casinos, commercial real estate, oil and gas companies and more. PPP loans and bond purchases helped get us through 2020, but how long can we keep printing cash like there is no tomorrow?

Given that we enter a recovery year in 2021 with “stretched” asset valuations, it will be difficult to know which way the investment winds will blow. That is why most investors will benefit  from battening down the hatches of their financial home. Protect your wealth from a downturn, while being properly diversified, with some hot industries, if assets continue a bull run into the recovery year.
 
I will teach this time-proven strategy at the Jan. 16-18, 2021 Investor Educational Retreat this weekend. Call 310-430-2397 or email info@NataliePace.com to register. You can try our free web apps to get started. Just click on the button on the home page at https://www.NataliePace.com/.
 
 
Stock prices. Would you pay $50 for a café latte? Stocks are in bubble territory. Yes, they can go higher. However, when bubbles pop, the drop is far and fast. As you can see in the chart below, the only two times in history when stock prices have been higher than they are today was in 1929 and 2000. 1929 was the year before the Great Depression. 2000 marked the zenith before Dot Com stocks dropped up to 78%. Click to read a blog that explains this in greater detail.

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Bonds are illiquid and negative yielding. Bonds are losing money. The safe side of your portfolio isn’t supposed to put your principal at risk. Think like Roy Rogers, who once said, “I’m more concerned with the return of my money than the return on my money.” Click to read a blog that explains this in greater detail.
 
Money market funds have redemption gates and liquidity fees and they are not FDIC-insured. Additionally, because it is a fund, it can lose value. Again, the safe side of your portfolio is not supposed to have capital risk. Click to read a blog that explains this in greater detail. Even if you have a 401K and believe your options are limited, there are likely solutions that you haven’t put on the table.
 
Gold prices are near an all-time high. Silver, which typically shadows gold, is still trading quite low, however. What are the problem areas of gold, and is silver the opportunity? Learn more in my Gold and Silver blogs.
 
Real estate prices are unaffordable in 59% of US cities. Buying high in real estate can be a decade-long nightmare it. If you’re purchasing a home, you need to make sure it is affordable, that you are buying it for a good price and that you are looking at a 7-10-year horizon, at minimum. If you are buying real estate, you owe it to yourself to get this process right. Don’t just trust the broker-salesman to have your best interests at heart. It’s your life and livelihood that can be heaven or hell, not the realtor’s.
 
Join me at my Real Estate Master Class on Jan. 23, 2021. Call 310-430-2397 to register now. Click to read a blog that explains real estate in greater detail.

Bitcoin is on fire. It is more of a trader’s platform than a currency, however. You can’t have a currency that is worth $40,000 one month and $4000 just a few months prior. Additionally, there is a lot of sketchy activity, and downright ruses, in this space. Ripple isn’t the only (alleged) crypto criminal. Click to learn more.
 
Cannabis was decriminalized by the House on Dec. 4, 2020. Over the last few months, cannabis  companies, like Aphria, have quadrupled  in price. With a Blue Senate, will the U.S. legalize weed, like Canada did, and Mexico is in the process of doing? Will we have a North American continent that considers the herb on par with alcohol? That will be a positive for all cannabis companies. The company that has the best hot product will shine like a star above the rest, however. Learn more in this blog.
 
The U.S. dollar is predicted to weaken against other currencies. The slide has already started.
 
Fundamental Shifts
Below is an In and Out List. So much has changed over the past year, many of which could turn out to be lasting and fundamental lifestyle and business modifications. These shifts will impact industries and the economy, offering a new set of winners and losers.
 

What’s On Your In & Out List?
Tag us on social with your suggestions at https://twitter.com/NataliePace, https://www.instagram.com/NatalieWynnePace/ and https://www.facebook.com/TheABCsofMoney/. We’d love to see your observations.
 
 
The Bottom Line
As Jerome Powell stated quite candidly on Dec. 16, 2020 in prepared remarks during the FOMC press conference, “The current economic downturn is the most severe of our lifetimes. It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year, and it may take continued support from both monetary and fiscal policy to achieve that.” Rather than bet on a continued bull market, or lay odds on the Apocalypse, a more prudent plan would be to protect your wealth from economic weakness, while keeping an appropriate amount at risk that is properly diversified. Underweight weak, out-of-date industries and lean into innovation and strength (like technology). This plan, when rebalanced 1-3 times a year, is a buy low, sell plan on auto-pilot that outperforms bull and bear markets.
 
Now is the time to know what you own and why. If you wait for the headlines, it’s always too late. Call our office at 310-430-2397 or email info@NataliePace.com to learn more about how you can receive a 2nd opinion, join our next retreat or, at minimum, read the 4th edition of The ABCs of Money.
 
 

Other Blogs of Interest
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
Can Medmen Avoid Bankruptcy?
​Bitcoin is Back, Baby!
Real Estate Prices are Going Up. And Down.
Movie Theaters are in Trouble
Airbnb Should Have a Spectacular IPO Today.
​Cannabis is Decriminalized. Stocks Triple.
Airbnb's IPO. Should Hosts Invest?
Gifts Under $5 and Free.
Thanksgiving in a Pandemic. The Sustainability Silver Lining.
Secretary Mnuchin Halts Bailouts
Money Stress Killed My Friend
Real Estate and Housing 2021. Challenges & Opportunities
​Real Estate in a Pandemic. Interview with Mike Fratantoni, the Chief Economist of the Mortgage Bankers Association.
​Bonds are Illiquid & Negative-Yielding.
Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot.
5 Red Flags of a Financial Implosion
Will Regeneron Be Approved Before the Election?
​Tesla Will Have an Outstanding Earnings Report
Should You Wait Until After the Election to Fix Your Wealth Plan?
​The October Surprise
​Is Your Bank a Junk Bond
Do Stocks Fare Better Under Democrats or Republicans?
Put Your Money Where Your Heart Is.
Crystal Ball for the Remainder of 2020 (Including the Election). 
Microcap Gaming Company Doubles 2Q 2020 Revenue.
​Apple & Tesla Stock Splits.
Schwab's Chief Fixed Income Strategist on What's Safe.
China's Tesla (Nio). 2Q Sales Soar.
Why Are You Still Renting? (Errr. There is More Than This to Consider!)
MedMen's Turnaround Plan Attracts A-List Board Members.
​Wealth Myths That Keep You Poor. Prosperity Truths That Make You Rich. 
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. 
​
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.

​Would you pay $50 for a grande latte? How about paying $115 for a burrito at Chipotle? When we look at price this way, in a quotidien context, it’s easy to see when prices are outlandish. This is exactly what is happening today on Wall Street. Starbucks is trading at a price-earnings ratio of 135. Chipotle’s PE is 164. Tesla’s price-earnings ratio is 1377! The average PE is 16-17.

​Average PE
As you can see in the chart below, which is provided by Nobel Prize winning economist Robert Shiller, there are only two times in history when price-earnings ratios were higher than they are today – in 2000 and in 1929. History books are full of pages on the Great Depression. However, are you aware that the NASDAQ Composite Index lost 78% from the March 2000 highs to the October 2002 lows (the last time PEs were this high)? NASDAQ took 15 years to crawl back to even.
 

​Stocks didn’t fare well in the Great Recession either. The Dow Jones Industrial Average slid 55%. 
 
The Dow Jones Industrial Average
Oct. 2007-April 2009

Businesses are Borrowing from Peter to Pay Paul
Outside of essential businesses and technology, there are many industries that have suffered during the pandemic. Sales are down 8% at Starbucks. Airline revenue is off by 80% or more. Casinos are ghost towns, with revenue losses of 80-90% year over year.
 
Even before the pandemic, over half of the S&P500 had allowed their credit score to fall to the lowest rung of investment grade, or even into junk bond status (where Ford, many airlines, casinos and hotels, and even Netflix, Advanced Micro Devices and Yum! Brands are currently). That includes many banks and financial services corporations. According to the Federal Reserve’s Financial Stability Report from November of 2020, “Leverage at life insurance companies are at post-2008 highs and remain elevated at hedge funds relative to the past five years.” Additionally, “Prime [Money Market Funds] and fixed-income mutual funds remain vulnerable to funding strains and sudden redemptions, as demonstrated during the acute period of extreme market volatility and deteriorating asset prices earlier this year,” according to the report.

Electric vehicles are on fire. Tesla’s sales growth was 40% in the most recent quarter. However, car sales typically don’t do well when people are out of work. GM and Chrysler declared bankruptcy in early 2009, during the Great Recession. Should Tesla, a company that lost almost a billion dollars last year and has annual sales of about $28.2 billion, be worth $669 billion – particularly in a pandemic? Toyota was the Tesla of the Great Recession, with its game-changing Prius hybrid. Toyota’s share price fell by 52% in the Great Recession.  
 
​If You Wait for the Headlines, You’re Late
21st century investors are actually worth less today than there were in 1999, according to research provided by the Pew Research Center. So, while it’s tempting to buy stocks when you hear the markets going up every day, it’s also important to know when you are overpaying. The age-old investing aphorism is: Buy low, sell high.
 

Today, people are buying high, hoping to sell higher, or are using a Buy & Hope strategy. That’s a very risky game for more than a few reasons. As you can see in the chart above, if you lost more than half in each of the last two recessions, and then were forced to hope and pray to recover from your losses in the bull markets, you are now worth less than you were two decades ago.
 
In addition, when you lose more than half of your wealth, your credit score implodes. Financial hardship can destroy your health and is hell on your relationships. 21st century recessions have forced many North Americans to forego retirement, take on a 2nd job or move in with family. Intergenerational housing is higher today than it was in the Great Depression. Debtors get eviscerated by vicious debt collectors who want a pound of flesh. With consumer debt at an all-time high, learning from the past two downturns could be key to your fiscal, emotional and physical health.
 
Another major problem with Buy & Hope, the Wall Street rollercoaster and buying high is that when the headlines hit and Main Street investors become aware of what is going on, the gap down has already occurred. Most people don’t even think about selling until the majority of the losses have already happened. The insider money always moves first. Congressional representatives sold stock after the January 2020 White House COVID-19 update – two months before the first stay-at-home order. Wall Street executives retired in droves.
 
Stocks hit an all-time high on February 19, 2020. However, in an abrupt, effective-immediately, manner, Bob Iger, the CEO of Disney, gave the top job to Bob Chapek on February 25, 2020.  On March 13, 2020, Bill Gates resigned from the Microsoft board. On March 16, 2020, Marilyn Hewson, the CEO of Hewlett Packard, stepped down. All of this happened before California issued the U.S.’s first stay-at-home order, on March 19, 2020. The crash from the February 19, 2020 highs to the March 23, 2020 lows was the fastest in history, with a drop of 35%. Yes, stock prices have recovered, but the economy itself still has many trouble areas, including the persistence of the pandemic.
​
The 21st Century is Very Different from Last Century’s Economy
On August 27, 2020, Federal Reserve Board Chairman Jerome Powell gave a revealing speech in Jackson Hole, Montana. He said:
 
Before the Great Moderation, expansions typically ended in overheating and rising inflation. Since then, prior to the current pandemic-induced downturn, a series of historically long expansions had been more likely to end with episodes of financial instability, prompting essential efforts to substantially increase the strength and resilience of the financial system.
 
We are currently in an episode of financial instability, which the Feds are trying to get us through by printing dollars and buying up everything in sight. That has resulted in an explosion of debt that was already unsustainable. The majority of this will have to be paid back. Some will be restructured.   

Economic Storms are Still on the Horizon
We’re still in a pandemic, though thankfully there might be an end in sight thanks to the vaccine. Once the pandemic is over, things won’t return to normal immediately. There have been some structural changes in how we live and work. Borrowed money will have to be paid back. There are a lot of people out of work. Housing remains unaffordable in 65% of the U.S. And those $50 Latte and $115 burrito stock prices are very frothy.

21st century history tells us that when asset bubbles pop, the downturn is devastating. In the November 2020 Financial Stability Report, the Feds warned, “Asset prices remain vulnerable to significant declines, given a high degree of uncertainty around the course of the pandemic and the pace of the recovery.”
 
Fix the Roof While the Sun is Still Shining
While it’s tempting to party on Wall Street while everyone else is self-isolating from the virus, a  better strategy is to have a sober plan that protects your wealth, is properly diversified, leans into the industries of tomorrow, underweights overleveraged, last-century dinosaurs and rebalances annually to keep things properly allocated. That time-proven, 21st century strategy is easy-as-a-pie chart. You can read about it in my books, learn them firsthand at my Jan. 16-18, 2021 Retreat or ring our office for an unbiased 2nd opinion and action plan. Call 310-430-2397 or email info@NataliePace.com to learn more.
 
Buying high, Buy & Hope, or trying to jump out now and back in later (market timing) are all money-losing tricks that only novices attempt. Seasoned investors adopt a time-proven, 21st century strategy and then stick to their knitting. Wisdom is the cure and the time is now.


Are you interested in learning an easy-as-a-pie-chart nest egg strategy that earned gains in the past two recessions and has outperformed the bull markets in between? Call 310-430-2397 or email info@NataliePace.com to register for our Jan. 16-18, 2021 Online Investor Educational Retreat. 

​

 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 4th edition of The ABCs of Money was released on October 17, 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. ​

Over the past few weeks, there has been a flurry of activity at MedMen corporate. The beleaguered cannabis retailer, which was attempting to become profitable after ousting its founders and CEO in January of 2020, has been navigating employment lawsuits, executive exodus and boardroom in-fighting, with a dollop of weak sales and pandemic protocol on top. The interim CEO Tom Lynch, who was appointed on March 30, 2020, began beefing up the board with A-list members from Whole Foods, the Coffee Bean and Tea Leaf and Salesforce. In the 1st Quarter (fiscal) 2020 earnings report that was released on December 7, 2020, Tom Lynch assured investors, writing, “With the strength of our team and support of our capital partners, we are ahead of schedule with respect to our turnaround plan. As we get closer to achieving company-wide profitability, we remain committed to growing the MedMen brand and maintaining our position as the leading cannabis retailer in the U.S.”
 
While that statement sounds pretty exciting, there are quite a number of red flags that seem to be pointing in the opposite direction, including executive exodus, weak sales, flying pretty close to the trees (low cash) and a painfully weak share price (under 14 cents today).
 
Executive Exodus
On December 18, 2020, CFO Zeeshan Hyder was replaced by Reece Fulgham as Interim Chief Financial Officer. What does Fulgham have that Hyder doesn’t? Restructuring experience. It takes a certain type of skillset (and stomach) for a contentious battle with founders, shareholders, creditors and bondholders. It’s also possible that Hyder just wanted out – to put the whole debacle behind him. Additionally, both Lynch and Fulgham have SierraConstellation Partners as their main gig. SCP is the firm engaged by MedMen to turn the company around. Lynch offered praise to former CFO Hyder, writing, “His steady hand and deep industry knowledge were vital during our turnaround.”
 
On December 16, 2020, two days before Hyder was replaced, Tom Lynch was elected as the MedMen Chairman of the Board. Ben Rosehas resigned as the chairman and from the board effective immediately. In addition to  being the former executive chairman of MedMen, Ben Rose is the Chief Investment Officer of Wicklow Capital, a capital investor in MedMen. The abrupt departure signals discord behind the scenes. Did Hyder resign out of loyalty to Rose?
 
Andrew Modlin (a MedMen co-founder) lost his Class A super voting shares on Christmas Eve (12.24.2020).
 
Executive exodus is a red flag, particularly when the CFO and COB depart at the same time.  
 
1Q 2021 (Fiscal) Revenue
In the quarter ending September 26, 2020, MedMen revenue was up 35.1% sequentially, but down 10.13% on the year. Revenue was $35.6 million for the quarter ending September 26, 2020, compared to $39.7 million for the same period in 2019.
 
How will the last quarter of 2020 fare? The pandemic came roaring back this fall. While many stores remained open, with social distancing and mask-wearing policies in place, there just wasn’t a lot of customer traffic. I made repeated visits to the “flagship” 5th Avenue MedMen store in Manhattan in December and the Venice, California stores in October and November. In every case, the stores were bereft of customers, with no delivery bikes in sight. Weak cash-flow could present a problem for an out-of-court turnaround.  
 
Cash
MedMen had $10.3 million in cash and cash equivalents as of September 26, 2020. The net loss in the most recent quarter was -$30.2 million compared to a net loss of -$83.4 million in the same period last year. While this was an improvement, perpetual fundraising is an expensive proposition, particularly when your share price is in penny stock range ($0.139 USD).
 
The U.S. House of Representatives Decriminalized  Cannabis
Cannabis is becoming more legal in the U.S. The U.S. House of Representatives decriminalized cannabis on December 4, 2020. It’s not law yet, however, because the U.S. Senate hasn’t voted. The House approval sent shares in cannabis companies like Aphria soaring up to 3-fold off of their March lows. (Read my Dec. 5, 2020 Cannabis blog for additional information.) By contrast, MedMen shares have stayed stubbornly close to their all-time low.  

Is Restructuring Imminent?
Because cannabis is still a problem in most countries – with the exception of Canada, Uruguay and a handful of others –  whenever a cannabis company wants to borrow money, they must pay a higher interest rate. Since the terms and conditions of previous fundraising efforts have been disastrous for MedMen capital investors (including Wicklow Capital and Gotham Green Partners), Lynch and Fulgham have their work cut out for them. Skirting bankruptcy, even with these financial engineering masters at the helm, might be impossible.

Remember: you won’t get prior notice. If MedMen does indeed declare Chapter 11, the already low share price will likely gap down overnight, before you can sell. (Bad news of this nature is typically announced after the markets close.)
 


Are you interested in learning how to pick great stocks and avoid the losers, or in an easy-as-a-pie-chart nest egg strategy that earned gains in the past two recessions and has outperformed the bull markets in between? Call 310-430-2397 or email info@NataliePace.com to register for our Jan. 16-18, 2021 Online Investor Educational Retreat. 
​

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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.

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 4th edition of The ABCs of Money was released on October 17, 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. ​