​IRAs Offer More Safety and Freedom Than 401ks.
Should you roll over now, even if you’re still working?
 
I recently had a coaching session with someone who had just retired. Prior to retirement, she had attempted to get the majority of her money safe in what seemed like the best option – a so-called “Capital Preservation” fund. However, when we looked at the performance of the fund, it was losing money on par with the S&P500. Since the safe side is where you are supposed to keep your money (not lose it), the plan was not doing what it advertised or what it should be doing. I’ll explain why that is below. However, there are plenty of questions to answer about 401ks, IRAs, HSAs and whether or not you can (or should) roll over.

Invest 10% of Your Income into Tax-Protected Retirement Accounts (Not Just Your 401k)
Your wealth plan could ideally be a combination of accounts. The sooner you start with this, the better. Consider contributing up to your employer’s match into the 401k (free money). If you’re healthy, don’t spend an arm and a leg on health insurance. Open a Health Savings Account, with a high deductible health insurance plan. Americans can save thousands annually (or more), while also developing your best long-term health care plan. Also, consider maxing out your Roth IRA contribution each year. The IRA could be where you invest in hot industries, companies or countries that are not offered in your 401k. IRAs typically offer thousands of investment choices.
 
Learn more about how Health Savings Accounts can save you thousands annually, and how proper diversification and regular rebalancing earns gains in recessions at our Investor Educational Retreats. The next one is Oct. 8-10, 2022.

Capital Preservation Plans are Losing Money

Capital Preservation and bond funds are losing money because there is an inverse relationship between bonds and interest rates. Normally when the economy weakens, the Federal Reserve Board cuts interest rates to boost economic growth. That makes existing bonds (that are paying a higher premium) more valuable. Unfortunately, in the current cycle, the Federal Reserve Board is rapidly increasing interest rates – something that reduces the value of existing bonds. That means that most bonds and bond funds are losing value.
 
Credit risk is also a problem. The yields are too low to compensate for the risk or the losses that bond investors are bearing. Currently, over half of the S&P500 is at or near junk bond status. You can learn more about why bonds, bond funds, annuities and money market funds are all vulnerable to capital losses in my blog, “What’s Safe in a Debt World.” (Click to access.)
 
So, how can you protect your 401k from losses?

IRAs Have Better Safety Measures
Some brokerages offer FDIC-insured cash. While you might not be earning much, capital preservation is important on the safe side of your portfolio.
 
IRAs Have Greater Freedom
Diversification and Target Industries
Most 401ks have very limited options. You might only have a few large caps, growth, value, international and bond funds to choose from. Getting access to industries that might perform better during a weak economy is almost impossible. Getting safe is also an issue, as I’ve already mentioned. IRAs might have a universe of industries, countries, individual stocks and size/style options, along with better strategies for capital preservation (depending upon the brokerage you choose).
 
Three IRA Tips
1. I like to put my hot industries and stocks in my Roth IRA. According to ProPublica, Peter Thiel has over $5 billion in his Roth IRA. That’s the power of compounding without paying capital gains, with the added benefit of not having to pay income tax when the money is withdrawn.
 
2. You should be able to keep contributing to your 401k even if you are doing annual rollovers from your 401k into a Roth IRA.
 
3. Pages and pages of holdings is often not as diversified as our simple, 10-fund pie-chart strategy. It’s important to know what you own, and how well-diversified you truly are, rather than having blind faith that hundreds of holdings are protecting and diversifying you. I’ve done a lot of 2nd opinions on these types of plans. Most consist of large caps with bonds, are missing hot industries and proper protection, and are vulnerable to losing half or more in recessions.
 
Rollover Rules
You may be able to do a rollover even if you’re still working. Some employers make this very easy, offering a “self-directed” option. The clickable link might be so small that you’ve overlooked it in the past.
 
If your 401k doesn’t offer a self-directed option, then ask your Human Resources executive if you can take an “in-service” distribution. You must make sure that you get the rollover done in a 60-day period in order to qualify for a tax-free distribution. It might take some convincing to get this done. (If you are 59 ½ or older, persistence could pay off.) Be sure to follow the IRS rules about rolling over your 401K into a self-directed IRA.
 
If you don’t have a self-directed option and your employer is refusing an in-service distribution, then consider taking a personal loan from your 401k. You’ll need to pay it back within 5 years in order to avoid the distribution penalty, or to use it to buy a home. However, if a loan allows you greater freedom in keeping your money safe, it might be worth crossing the t’s and dotting the i’s to do it.
 
Choosing the Right Brokerage
You’ll need to select a brokerage and open up your Roth IRA for the 401k rollover. In general, it’s easier to start the process at the place where you want your money to end up, rather than start with your employer. The person who is getting your money is likely to be a lot more helpful than the person who is losing it. Below are a few things to consider when selecting the brokerage that is right for you.

1. FDIC-insured for the cash portion of the IRA
2. Strategy of Regular Rebalancing (not a last-century Buy & Hope ethos)
3. Low trading fees
4. Good selection of low-commission ETFs
5. Well-known, publicly traded broker with a good credit rating

 
So What is Safe in a Debt World?
Currently, 2-year Treasury Bills are paying a higher premium than 10-year bills, at about 3.5%! There’s a 9.62% Treasury I Savings Bond. However, there are also some safe, income-producing hard assets that you can purchase for a great price that most people should be considering now. Learn more in the What’s Safe section of The ABCs of Money 5th edition and at our Financial Empowerment Retreat (online Oct. 8-10, 2022). We spend one full day at the retreat offering strategies for safety.

​Bottom Line
It’s difficult to get properly protected and diversified in a 401k. Consider setting up an HSA and Roth IRA, in addition to your 401K to have greater freedom and control over your money. Also think about rolling over your 401k into a tax-protected IRA (or taking that personal loan from it) that offers FDIC-insured cash on the safe side, and a universe of options for your at-risk allocations.
 
No matter what kind of accounts that you have, it’s essential to set-up a diversified plan that is properly protected. Our books outline that time-proven, 21st Century strategy, while our retreats ensure that you learn and implement the plan. Buy & Hold is a last-century strategy that has been a disaster in the 21st Century (stagflation). Over the extended secular bull market, it’s been easy to earn gains. That is unlikely to be the case in the years to come. It’s easy to win in a bull market and easy to lose (a lot) in a recession. If you’re interested in an unbiased 2nd opinion of how well protected and diversified your plan is, email info@NataliePace.com with 2nd opinion in the subject line for pricing and information.


​
If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master, to get pricing information and to read testimonials Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
 

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

Other Blogs of Interest
Will There Be a Santa Rally 2022?
What's Safe in a Debt World? Not Bonds. 
Will Your Favorite Chinese Company be Delisted?
75% of New Homeowners Have Buyer's Remorse
Clean Energy Gets a Green Light from Congress. 
Fix Money Issues. Improve Your Relationships. 
24% of House Sales Cancelled in the 2nd Quarter.
3 Things to Do Before July 28th. 
Recession Risks Rise + a Fairly Safe High-Yield Bond
DAQO Doubles. Solar Shines. Which Company is Next in Line?
Tesla Sales Disappoint. Asian EV Competition Heats Up. 
10 Wealth Strategies of the Rich
Copper Prices Plunge
Colombia and Indonesia: Should You Invest?
10 Misleading Broker/Salesman Pitches.
Why are Banks and Dividend Stocks Losing Money?
Beyond Meat: Rare or Burnt?
Netflix Streaming Wars End in a Bloodbath.
Elon Musk Sells $23 Billon in Tesla Stock and Receives $23 Billion in Options.
Are You Gambling With Your Future?
ESG Investing: Missing the E.
Moderna & Biotech Trade at 2-Year Lows.
Bitcoin Crashes.
Crypto, Bold and Stocks All Crash.
The Economy Contracted -1.4% in 1Q 2022.
The Dow Dropped 2000 Points.
Is Plant-Based Protein Dying?
Should You Sell in April? 
The U.S. House Decriminalizes Cannabis Again.
Chinese Electric Vehicle Market Share Hits 20%.
The Risk of Recession in 6 Charts. 
High Gas Prices
How Will Russian Boycotts Effect U.S. Multinational Companies?
Oil and Gas Trends During Wartime
Russia Invades Ukraine. How Have Stocks Responded in Past Wars?
Zombie Companies. Rescue, Rehab or Liquidate?
Spotify: Music to my Ears. 
​Cannabis Crashes. 
2022 Crystal Ball in Stocks, Real Estate, Crypto, Cannabis, Gold, Silver & More. 
Interview with the Chief Investment Strategist of Charles Schwab & Co., Inc.
Stocks Enter a Correction
Investor IQ Test
Investor IQ Test Answers
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

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

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

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

​Is There Any Hope for a Santa Rally 2022?
Should you be looking for September Back to School Stock Sales or Bracing Yourself for a Long, Cold Winter?
 
September is historically a down month on Wall Street. So, should you be stocking up on Back to School stock sales at the end of this month, in anticipation of a Santa Rally? Or do recession years act differently? Is this the beginning of a more severe downturn? Let’s take a look at the three past recessions of the 21st Century to see what history teaches us.
 
Pandemic
The pandemic was officially the shortest recession in history, with a peak on February 19, 2020 and the bottom on March 23, 2020. That was the result of the U.S. (and the world) printing up trillions of dollars and handing it out like candy to everyone with a pulse. This was intentional, as the alternative would have been a disaster unlike anything the world has seen since the Great Depression.
 
As a result of that flush of money into the system, inflation, leverage, speculation and debt became elevated. Stocks and home prices soared. Rents went through the roof.
 

​The personal savings rate looked healthier than it had ever been with all of the PPP loans, handouts, student loan and mortgage pauses, and the prohibition on evictions and foreclosures. However, the personal savings rate disappeared just as rapidly as it soared, and has fallen to pre-pandemic lows.

Stocks wobbled a little in September and October of 2020, with losses of -3.92% and -2.77%, respectively. However, the 2020 Santa Rally gave investors plenty of gifts in November and December, with gains of 10.75% & 3.71%. 2021 was one of the most spectacular years that the U.S. stock market has ever seen with annual gains of 26.6% in the S&P500®.
 
The 2022 Inflation Recession (assuming one is named this year) won’t be the same as the 2020 Pandemic Recession. The Federal Reserve Board is tightening up the money supply and jacking up interest rates to fight inflation (taking money away from us). They are intentionally slowing the economy down. There are caps on the Debt Limit, so any requests to print up money and add to the public debt would have to be approved by Congress. The Feds have made it clear that we’re going to all have to endure some pain. They are ending the party, at least for now.
 
The Great Recession (2008)
The National Bureau of Economic Research (NBER) didn’t call the Great Recession until December 1, 2008, even though Wall Street share prices peaked in October of 2007 – a full year before the announcement. The Bureau is notoriously slow. That was just three months before the bottom (March 9, 2009)! So, investors didn’t receive any warning that the Santa Rally was called off in 2007 and 2008, but instead received a lot of false assurances that the failures of Countrywide, Washington Mutual, Bear Stearns, Lehman Bros, etc., were not endemic to the financial system.
 
November and December 2007 had losses of -4.40% and -0.86% in the S&P500. 2008 was far worse, however, with losses of -16.94% in October, -7.49% in November and only a whimper of a recovery of less than 1% in December.

​Between October of 2007 and March of 2009, the Dow Jones Industrial Average dropped 55%, to a low of 6547, with the majority of those losses occurring before the recession announcement. While the DJIA recovered within 6 years, one’s portfolio takes quite a bit longer to crawl back to even. A 10% return on a million dollars is $100,000, while a 10% return on $450,000 is only $45,000. You can do the math on how many years it will take to make up $550,000 in losses. (Incidentally, those investors, like Bill and Nilo Bolden, who used our easy-as-a-pie-chart nest egg strategy earned gains in the Great Recession, while their friends and colleagues lost more than half.)

​Dot Com Recession
Between March of 2000 when the NASDAQ Composite Index soared to a high of over 5,000 and October of 2002 when it dropped to a low of 1114, the NASDAQ lost -78%. Most of the drop happened before 911. The NASDAQ had already plunged to 1805 (-64%) by the end of August 2001. However, the recession wasn’t proclaimed official until Nov. 26, 2001. (When you wait for the headlines that we’re in a recession, it’s too late to protect yourself.)
 
There wasn’t a Santa Rally in 2000. Even though the recession hadn’t been named yet, there were a lot of cash-negative Dot Coms that were going belly-up, and there was a general consensus that many NASDAQ-listed companies were severely overvalued. Wall Street acted, while many Main Street investors waited for the official announcement.
 
As you can see in the chart below, stocks were very overpriced in early 2000, and are even more speculative now. As one example, even with a pullback of 34%, Tesla’s price-earnings ratio is 98. Tesla’s market value is $860 billion on net income of just $5.5 billion.

​

The U.S. also had a protracted period of stress with hanging chad voter ballot recounts that extended from the election day on November 7, 2000, until Dec. 12, 2000, when the Supreme Court declared that George W. Bush was the electoral winner of the Presidential election. (Al Gore won the popular vote.) 2000 saw losses of 8% in the S&P500 in the last quarter.
 
After 911, everyone thought the U.S. markets would take a nosedive. However, there was a robust Santa Rally of 10%! It was a brief respite from an otherwise quite miserable 3-year period.
 
October 2002 was the low point of that business cycle. Investors had taken such a bath (beginning in March of 2000) that many were disgusted with investing. (It’s common to want to sell low after enduring such losses for such an extended period of time; emotions are not a friend of the successful investor.) After a year of losses culminating in the S&P500 being down -32.68% by the end of September 2002, Wall Street attempted a Rally in October and November of 14%, only to see December slide again by -6%.
 
The NASDAQ Composite Index finally rallied 55% in 2003. Google had one of the most successful IPOs of all-time in 2004. However, there were a lot of people who didn't have the liquidity or the stomach to participate in either. 
 
Bottom Line
Santa Rallies are rare in recession years. Buy & Hope investors, or anyone who waits for headlines, often endure severe downturns that require hoping and praying to crawl back to even during the majority of the bull market. That’s not a successful strategy. Recessions are not just hard on your fiscal health. They can delay your retirement, elevate stress and impact your family and partnerships.
 
This year, instead of thinking about Back to School Stock Sales, I’d be more concerned about investors getting coal in their holiday stockings. Now is a good time to get defensive and make sure that you have protected as much of your wealth as possible, in anticipation of continued weakness on Wall Street (and around the world). We are overweighting an additional 20% safe in our sample pie charts. Market timing doesn’t work, so it’s never advisable to jump all in or all out.
 
It’s just as important to know what’s safe in a Debt World because bonds are losing money, annuities are not FDIC-insured and money market funds have redemption gates and liquidity fees. (Click to access that blog).
 
If you would like to know what you own, and how you might be better protected, consider receiving an unbiased 2nd opinion. In that analysis, you’ll learn what is toxic in your plan, what is sound but perhaps overweighted, and what a better strategy looks like. Email info@NataliePace.com for pricing and information.
 
You can also attend our Oct. 8-10, 2022 Financial Empowerment Retreat to learn and implement these strategies yourself. It’s important to be the boss of your money, rather than relying on blind faith that someone else is protecting your wealth and future. Most managed plans, especially Buy and Hope plans, ride the Wall Street rollercoaster and are at risk of losses of 50% or more in recessions. Register for the Oct. 8-10, 2022 Retreat now to receive a free 4-part webinar on how to protect your investments and budget immediately. (If you are a busy professional and you’d just like our step-by-step Wealth Protection plan, then the 2nd opinion is right for you.)
 
Testimonials
​​"Many people, including educated men and women, often get into trouble when they neglect to follow simple and fundamental rules of the type provided [by Natalie]. This is why I recommend them with enthusiasm." 
Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human 

"College students need this information before they get their first credit card. Young adults need it before they buy their first home. Empty nesters can use the information to downsize to a sustainable lifestyle, before they get into trouble." 
Joe Moglia, Chairman, TD AMERITRADE.
 

If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master, to get pricing information and to read testimonials Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
​

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

Other Blogs of Interest
What's Safe in a Debt World? Not Bonds. 
Will Your Favorite Chinese Company be Delisted?
75% of New Homeowners Have Buyer's Remorse
Clean Energy Gets a Green Light from Congress. 
Fix Money Issues. Improve Your Relationships. 
24% of House Sales Cancelled in the 2nd Quarter.
3 Things to Do Before July 28th. 
Recession Risks Rise + a Fairly Safe High-Yield Bond
DAQO Doubles. Solar Shines. Which Company is Next in Line?
Tesla Sales Disappoint. Asian EV Competition Heats Up. 
10 Wealth Strategies of the Rich
Copper Prices Plunge
Colombia and Indonesia: Should You Invest?
10 Misleading Broker/Salesman Pitches.
Why are Banks and Dividend Stocks Losing Money?
Beyond Meat: Rare or Burnt?
Netflix Streaming Wars End in a Bloodbath.
Elon Musk Sells $23 Billon in Tesla Stock and Receives $23 Billion in Options.
Are You Gambling With Your Future?
ESG Investing: Missing the E.
Moderna & Biotech Trade at 2-Year Lows.
Bitcoin Crashes.
Crypto, Bold and Stocks All Crash.
The Economy Contracted -1.4% in 1Q 2022.
The Dow Dropped 2000 Points.
Is Plant-Based Protein Dying?
Should You Sell in April? 
The U.S. House Decriminalizes Cannabis Again.
Chinese Electric Vehicle Market Share Hits 20%.
The Risk of Recession in 6 Charts. 
High Gas Prices
How Will Russian Boycotts Effect U.S. Multinational Companies?
Oil and Gas Trends During Wartime
Russia Invades Ukraine. How Have Stocks Responded in Past Wars?
Zombie Companies. Rescue, Rehab or Liquidate?
Spotify: Music to my Ears. 
​Cannabis Crashes. 
2022 Crystal Ball in Stocks, Real Estate, Crypto, Cannabis, Gold, Silver & More. 
Interview with the Chief Investment Strategist of Charles Schwab & Co., Inc.
Stocks Enter a Correction
Investor IQ Test
Investor IQ Test Answers
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

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

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

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

What’s Safe in a Debt World? Not Bonds.
“I’m more concerned with the return of my money than the return on my money,” Will Rogers.
 
Bond funds reported their biggest weekly outflow in eight weeks last week, according to Reuters. The Pimco Active Bond exchange-traded fund (Symbol: BOND) is down 15.2% over the last year, with losses in tandem with the S&P500®.

​The safe side of our portfolio is supposed to protect our wealth – something that really isn’t happening with bonds or bond funds these days. Why? There is too much risk in the world – both credit risk and interest rate risk. Bonds have an inverse relationship with interest rates. As interest rates rise the value of your bond decreases. There is also a great problem with leverage and debt. We’ve never seen these levels in the United States. Ever.
 
Over half of the S&P500® companies are at or near junk bond status. This is not a statistic investors are seeing in the headlines.
 

Here's another bit of news that rarely makes the news cycle. There is over $9 trillion in debt loans outstanding in the U.S. As you can see from the graph below, this is off the charts in terms of historical leverage. 
​

Below are 12 essential strategies to protect your wealth from the economic storms on the horizon. Multiple economists are now in consensus that the US will experience a recession in 2022. We may already be in a recession now. (Click to learn more.) According to The Conference Board, “Economic weakness will intensify and spread more broadly throughout the US economy in the second half of 2022. [We expect] a recession to begin before the end of the year.” 

12 Essential Strategies for Protecting Wealth in 2022
 
1. Bonds are Illiquid and Negative Yielding.
Underweight bonds. Keep the terms short and the creditworthiness high.
Traditionally bonds are considered the area of safety. These are what broker-salesmen offer anyone with a low risk tolerance for losses. However, clearly, that is not what is happening. As mentioned above, Pimco’s bond fund has been losing money in tandem with the stock market.  
 
Lack of liquidity is a big problem because if we wish or need to sell the bond, there might not be any buyers, or we may have to drop the price (lose money). Some people are purchasing bonds that will last longer than they will live. (Are you a senior purchasing a 40-year bond?) As mentioned above, over half of the S&P500® is at or near junk bond status. There aren’t a lot of creditworthy companies asking for money.
 
2. Money Market Funds Can Lose Money, and Have Redemption Gates and Liquidity Fees.
Money market funds are another traditionally safe asset. In many 401(k)s, this is one of the few options for safety that we can select. However, money market funds are funds, and they can lose value just like every other fund can. Additionally, if the fund company itself has liquidity problems, or too many people want redemptions at the same time, there are policies in place that allow the fund company to stem that flow by imposing a redemption gate or a liquidity fee. That means that you may have to pay to have access to your money, or you may not be allowed access at all for a period of time. These funds are quite a bit riskier than most people realize. Additionally, when you factor in the expenses, the yield they offer for that risk is rather anemic.

3. Annuities have Surrender Fees, Hidden Fees and Are Not FDIC-Insured.

One of the most highly leveraged industries in the U.S. is the insurance industry. According to the Federal Reserve Board’s Financial Stability Report, which was released in May, “Leverage at life insurers remained near its highest level of the past two decades. Life insurers continued to invest heavily in corporate bonds, collateralized loan obligations (CLOs), and CRE debt, which leaves their capital positions vulnerable to sudden drops in the value of these risky assets.”

Annuities are not FDIC-insured. Many times they have hidden fees. And they are one of few investments that loses 9-10% the minute you purchase them (those surrender fees). If you want or need access to your money over the next decade, you’re going to take a big haircut.
 
It’s also important to remember that AIG would’ve gone bankrupt if the US had not bailed the company out in 2008. AIG is the biggest annuity provider. Many companies with different names are actually owned by AIG. If you are going to own an annuity, it would be important to know the company’s credit rating, as well as to look deep into the fine print to make sure that you’re not being eaten alive by fees. Broker-salesmen make a good commission (up to 10% annually) for selling individuals into annuities.
​
4. Dividends Don’t Pay When Your Principal Plunges.
I was recently on stage with someone at a major conference who “specializes” in high-yield stocks for the income. He said that the share price always sorts itself out, if you just buy and hold.
 
That’s simply not the case. Warren Buffett famously sold all of his General Electric stock just a few months before the company cut its dividends. The stock market is still trading close to an all-time high. However, GE is still down over 2/3 from its $243 highs of late 2016.

 
It’s never a good idea to lose principal in the hopes of earning a small amount of “income.” The higher the dividend, the higher the risk.
 
5. Capital Preservation.
A lot of people are being sold into risky, money-losing assets as “safe” with the sales pitch that if you don’t try to earn some income, your money is losing buying power, and you’re not keeping up with inflation. What they’re not telling you is that you are at risk of losing money in addition to buying power, and are not getting much of a return to take on that risk.
 
It is important to preserve your capital in recessions. When you lose too much money, your credit score plunges, your lifestyle changes, your relationships suffer and you might have to take on a 2nd job or delay retirement.

6. Liquidity Affords Us the Opportunity to Buy Low.

Most people don’t buy low because they can’t. When we lose too much money in a recession, we have to hope and pray that our investments crawl back to even, rather than being one of the few who preserve their capital and can go on a buying spree at a very reduced price. So rather than get sold into risky, money-losing assets with the fear of inflation hanging over our heads, our mantra should be to preserve our capital because it affords us the ability to buy low. (There are tricks to reducing the impact that inflation has on our lives. Learn more in the Thrive Budget section of the 5th edition of The ABCs of Money.)
 
7. Keep a Percentage Equal to Our age Safe.

I do a lot of unbiased 2nd opinions. There is not one that I’ve done where people have the appropriate amount safe. The standard rule is to keep a percent equal to your age safe. The closer we get to retirement, the less time we have to recover from losses. This is another reason why it’s important to know what safe in a Debt World. When bonds are losing money, or annuities are reducing in value due to the hidden fees, we need to have a different plan for the safe side of our portfolio. That is why we spend one full day on What’s Safe in our Financial Empowerment Retreats. Email info@NataliePace.com with Retreat in the subject line to learn more.

8. Overweight Safe During Times of Economic Hardship.

We are overweighting 20% safe in our sample pie charts due to the risk of recession. This one simple trick is how people earned gains in the Great Recession and the Dot Com Recession. If you’re 50 and you’ve overweighted 20% safe, if the stock market loses half, your losses are only about 15%. The bonds earned gains in the Great Recession and the Dot Com Recession, making up for the losses on the equity side.
 
It is more difficult to get safe this time around. However, liquidity is one of the essential elements of weathering the economic storms on the horizon.

9. Keep the Money in the Family.
One thing that separates very wealthy families from the rest of us, is that they tend to think multi-generational. They plan 100 years in advance. They educate their children in financial matters. They don’t spend a lot of family money on rent and landlords.
 
I am sure that Millennials and Gen Z are very sick of living with their parents, and vice versa. However, there are many solutions to consider when you think outside the box, and make keeping the money in the family a top priority. Check out our real estate blogs, podcasts and videoconferences, as well as the Real Estate section of the fifth edition of The ABCs of Money.

10. Safe Income Producing Hard Assets That You Purchase for a Good Price.
One area of safety is to purchase safe, income-producing hard assets that you purchase for a good price. When we first introduced this mantra in 2011 (when real estate was at a decades-low price), only those with liquidity (money) could take advantage of it. Most of those people have seen the value of their investments more than double. Now, with real estate at an all-time high, it’s difficult to purchase anything for a good price.
 
However, there are other low hanging fruit. If you live in a sunny state, then solar panels can save thousands annually. The payback time can be as low as 4-7 years. Be sure to get your megawatt usage down as low as possible before you get the quote. (Learn more in The ABCs of Money.) If you don’t live in a sunny state, then insulating better and using LED lighting can also save thousand annually. Energy efficiency upgrades offer tax credits up to 26% in 2022.
 
Also, think about how you can reduce the amount you spend on gasoline. Can you ride a bike, walk or take public transportation more? Should you consider moving closer to work? The average person spends almost $8000 a year owning a car, when you factor in the car payments, car insurance, maintenance, parking, tickets and gasoline. What kind of investment can you make to lower that CO2 footprint, which can also give you more room in the budget for things you like more than gas stations? Would a solar-powered electric vehicle be right for you? There are tax incentives of up to $7,500 to purchase certain qualifying models. (Click to access information.)
 
11. Proper Diversification.
Proper diversification is really important. Most people don’t have much diversification at all. We have the same type of holding over and over again. Even if we have 18 pages of individual stocks, we might be concentrated only in large-cap stocks, with just a smattering of diversity. Our sample pie charts have 10 funds: small, medium, large, value and growth, and four hot slices.
The hot slices allow you to get invested in things that can remain more buoyant in recessions, such as consumer staples or utilities, or might even be good hedging tools that could increase in value.
We spend one full day on the nest egg pie chart strategy in our Investor Educational Retreats. Our next one is October 8-10, 2022 online. (You can attend from anywhere, in the comfort of your own office or living room.) Register now and receive a free 4-part webinar on how to get safe, which you can enact now, before the retreat.

12. Regular Rebalancing.
Regular rebalancing is essential for protecting our wealth. If we are not rebalancing at least once a year, then we are at risk of riding a Wall Street rollercoaster. During the Dot Com Recession, the NASDAQ Composite Index lost 78%, and took 15 years to recover. That means that a million dollars sank to just $220,000. Everyone who was partying on their AOL gains in 1999, were in big trouble at the bottom in 2002 – except those of us who rebalanced at least once a year.
 
During the Great Recession, the Dow Jones Industrial Average lost 55% and took about 7 1/2 years to recover. We don’t want to use bull markets to make up losses. Simple rebalancing is one of our best tools to prevent that, along with keeping the right amount safe, diversifying and knowing what is safe in a Debt World.
 
Bottom Line
It’s important to know what is safe in a debt world. This basic financial literacy allows us to be the boss of our money, rather than having blind faith that someone else is doing this for us. It’s time to employ a time-proven, 21st Century system (listed above) to protect our wealth now.


If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
​
 
 

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

Other Blogs of Interest
Will Your Favorite Chinese Company be Delisted?
75% of New Homeowners Have Buyer's Remorse
Clean Energy Gets a Green Light from Congress. 
Fix Money Issues. Improve Your Relationships. 
24% of House Sales Cancelled in the 2nd Quarter.
3 Things to Do Before July 28th. 
Recession Risks Rise + a Fairly Safe High-Yield Bond
DAQO Doubles. Solar Shines. Which Company is Next in Line?
Tesla Sales Disappoint. Asian EV Competition Heats Up. 
10 Wealth Strategies of the Rich
Copper Prices Plunge
Colombia and Indonesia: Should You Invest?
10 Misleading Broker/Salesman Pitches.
Why are Banks and Dividend Stocks Losing Money?
Beyond Meat: Rare or Burnt?
Netflix Streaming Wars End in a Bloodbath.
Elon Musk Sells $23 Billon in Tesla Stock and Receives $23 Billion in Options.
Are You Gambling With Your Future?
ESG Investing: Missing the E.
Moderna & Biotech Trade at 2-Year Lows.
Bitcoin Crashes.
Crypto, Bold and Stocks All Crash.
The Economy Contracted -1.4% in 1Q 2022.
The Dow Dropped 2000 Points.
Is Plant-Based Protein Dying?
Should You Sell in April? 
The U.S. House Decriminalizes Cannabis Again.
Chinese Electric Vehicle Market Share Hits 20%.
The Risk of Recession in 6 Charts. 
High Gas Prices
How Will Russian Boycotts Effect U.S. Multinational Companies?
Oil and Gas Trends During Wartime
Russia Invades Ukraine. How Have Stocks Responded in Past Wars?
Zombie Companies. Rescue, Rehab or Liquidate?
Spotify: Music to my Ears. 
​Cannabis Crashes. 
2022 Crystal Ball in Stocks, Real Estate, Crypto, Cannabis, Gold, Silver & More. 
Interview with the Chief Investment Strategist of Charles Schwab & Co., Inc.
Stocks Enter a Correction
Investor IQ Test
Investor IQ Test Answers
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

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

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

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

For most of the 21st Century, the U.S. has been hot on China – hosting IPOs left and right. Baidu (China’s search engine) went public on the NASDAQ Stock Exchange on August 5, 2005. Alibaba listed on the NYSE on Sept. 19, 2014. “As of March 31, 2022, there were 261 Chinese companies listed on the U.S. stock exchanges with a total market capitalization of $1.3 trillion,” according to the U.S.-China Economic and Security Review Commission.

Chinese companies saw their shares fall out of favor with American investors beginning in February of 2021. On August 3, 2022, a bombshell was dropped. The U.S. SEC issued a rather stark Investor Bulletin, warning investors that, “You should be aware that the securities of a Commission-identified issuer will be subject to a trading prohibition in the United States if the company is so identified for three consecutive years.  This could result in the securities becoming illiquid and potentially losing value significantly.” While the current law requires that foreign companies (mostly Chinese) must comply with the SEC’s audit requirements by 2024, SEC’s Chair Gary Gensler wants a deal in place this year, as Congress is trying to move up the deadline for audit compliance to 2023.

Money & Politics
Why would the SEC want U.S. investors to pull financial support away from Chinese companies? While Congress and the SEC claim that it is all about proper auditing, could it have anything to do with politics? With Russia’s invasion of Ukraine and China staging war games in Taiwan, is the U.S. employing financial saber-rattling? Are they serious about delisting Alibaba and other popular Chinese equity investments? Or are they forcing financial hardship on these firms (and the American investors who bought into them) as an aggressive wooing and reminder of how the U.S. consumers and investors have helped China’s rise to become the strongest economic power in the developing world?
 
It’s important to remember that the U.S. and Europe are two of China’s biggest customers and investors. At the same time, China and Russia have grown closer over the past few years. China and Russia will be conducting joint military exercises from August 30 to Sept. 5 (just as they did last year). China’s Ministry of Defense issued a statement that the participation “is unrelated to the current international and regional situation.” China appears to have taken a neutral stance in the invasion of Ukraine (so far).  
 
2022 & 2023 are Critical
Many analysts are confident that the 3-year time frame allows ample time to resolve these issues. (H.R.6285, the new bill that proposes to push up compliance to 2023, was referred to the House Committee on Financial Services on Dec. 14, 2021.) They are telling their clients that China is serious about resolving these issues and that the talks are continuing. Charlie Munger & the Daily Journal Corporation still had $34 million invested in Alibaba as of the last 13F report on July 6, 2022.
 
 
In his speech on July 27, 2022, the SEC’s Gary Gensler affirmed that, “The SEC and the PCAOB have been negotiating with Chinese authorities on a Statement of Protocol to govern inspections and investigations of registered public accounting firms on the ground in China and Hong Kong.” However, Gensler also said that the Statement should be completed this year, since Congress wants to accelerate the timeline for compliance from three years down to two years. His message to The Chinese authorities was firm: “I look forward to ensuring key investor protections in our markets — with China-based issuers, if the law is followed; or without China-based issuers, if it is not.”
 
Which Companies are on the HFCAA List?
Since March 30, 2022, the SEC has been adding Chinese based companies to their HFCAA list (Holding Foreign Company Accountable Act). (Click to see if your company is there.) There are over 150 companies listed on the SEC’s HFCAA webpage – the majority of the 261 Chinese companies publicly listed in the U.S. If you own a Chinese equity, chances are your company is on the list, including the name brands, like Alibaba, Nio, Xpeng, Li Auto, and a few surprises, like Canadian Solar.

​

​Alibaba
Alibaba was added to the “provisional” HFCAA list on July 29, 2022. The company responded by issuing a statement to the Hong Kong bourse, writing "Alibaba will continue to monitor market developments, comply with applicable laws and regulations and strive to maintain its listing status on both the NYSE and the Hong Kong Stock Exchange." On August 4, 2022, the company added two new independent directors, with expertise in finance and auditing. Irene Yun-Lien Lee is the chairman of Hysan Development Company Limited and the independent non-executive chairman of Hang Seng Bank Limited. Albert Kong Ping Ng is the former chairman of Ernst & Young China.

Are There Any Reasons to Invest in China?
China’s economy has slowed, but is still growing. Goldman Sachs is projecting 3% GDP growth for 2022, compared to the Federal Reserve Board projection of 1.7% GDP growth in the U.S. The U.S. economy contracted for the first half of 2022, which is commonly assumed to mean that the country is in a recession. The NBER has not yet made that announcement, however.
 
Chinese companies have seen their revenue growth slow, as well. Weibo’s year-over-year growth was only about 5.6% in the 2nd quarter, while Baidu and Alibaba were flat. Profit margins are also lower. It wasn’t uncommon for Chinese companies to have double digit profit margins that were above 20 or 25% last year. Today Alibaba and Baidu’s profit margins are modest at 3.84% and 6.1%, respectively. However, the 2nd quarter included a two-month lockdown in China. So, brighter days may lie ahead – though dimmer than the halcyon days of yore.
 
​Share prices for companies like Alibaba and Weibo are at all-time lows that have not been seen since their IPOs. If there are signs that China is moving to a more friendly stance with the West, or if these Chinese companies start allowing audits, their share prices could recover very rapidly. Alternatively, if China invades Taiwan, you’re likely to see investments in Chinese companies plunge. The stock market reacts quickly to political vicissitudes, and especially to war. U.S. investors in Chinese equities could either have a fantastic Santa Rally or a lump of coal in the stocking…
 

​Daqo
The exception to the slower trend would definitely be Daqo. Daqo is a polysilicon provider for the solar industry. The year-over-year sales growth is 182%. Profit margins are 51%. The P/E is only 3. It’s truly rare to see a company that is so much in demand with its customers, which is so out of favor with investors.
 
Daqo is also on the HFCAA list. Unlike Alibaba, which made it clear that they will try to keep their NYSE listing, Daqo’s press release was more ambiguous. The company wrote, “The Company has been actively exploring possible solutions to best protect the interest of its stakeholders.” At this point, Daqo has until 2024 to get its books audited (unless the deadline is moved up to 2023). Learn more about Daqo in my July 10, 2022 blog.

Bottom Line
Investing in Chinese equities got a lot riskier in 2022. We have removed Chinese funds from our Hot Country list, as there is just too much political heat and pressure for most passive investors to handle. However, if Chinese and American relations improve or if these Chinese companies allow auditing access, investors should get very excited about these companies again. The ones that will recover the fastest are the ones that are the most undervalued, and are showing the most promising revenue growth. Daqo is the poster child of that.
 
If you choose to take on higher risk for potentially higher gain, you can’t just buy and hold. Investing in Chinese equities requires that you stay plugged into developments on the SEC’s auditing demands – particularly toward the end of this year. Investors must babysit their Chinese equities, know when their exit strategy is going to be, and pay close attention to whether or not hundreds of Chinese companies are going to be delisted in 2024 – or possibly earlier, in 2023, if H.R. 6285 passes Congress.

Taking profits early and often is never a bad plan in volatile markets. Regular rebalancing (1-3 times a year) is a critical component of our time-proven, 21st Century wealth plan.


If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.

​

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

Other Blogs of Interest
75% of New Homeowners Have Buyer's Remorse
Clean Energy Gets a Green Light from Congress. 
Fix Money Issues. Improve Your Relationships. 
24% of House Sales Cancelled in the 2nd Quarter.
3 Things to Do Before July 28th. 
Recession Risks Rise + a Fairly Safe High-Yield Bond
DAQO Doubles. Solar Shines. Which Company is Next in Line?
Tesla Sales Disappoint. Asian EV Competition Heats Up. 
10 Wealth Strategies of the Rich
Copper Prices Plunge
Colombia and Indonesia: Should You Invest?
10 Misleading Broker/Salesman Pitches.
Why are Banks and Dividend Stocks Losing Money?
Beyond Meat: Rare or Burnt?
Netflix Streaming Wars End in a Bloodbath.
Elon Musk Sells $23 Billon in Tesla Stock and Receives $23 Billion in Options.
Are You Gambling With Your Future?
ESG Investing: Missing the E.
Moderna & Biotech Trade at 2-Year Lows.
Bitcoin Crashes.
Crypto, Bold and Stocks All Crash.
The Economy Contracted -1.4% in 1Q 2022.
The Dow Dropped 2000 Points.
Is Plant-Based Protein Dying?
Should You Sell in April? 
The U.S. House Decriminalizes Cannabis Again.
Chinese Electric Vehicle Market Share Hits 20%.
The Risk of Recession in 6 Charts. 
High Gas Prices
How Will Russian Boycotts Effect U.S. Multinational Companies?
Oil and Gas Trends During Wartime
Russia Invades Ukraine. How Have Stocks Responded in Past Wars?
Zombie Companies. Rescue, Rehab or Liquidate?
Spotify: Music to my Ears. 
​Cannabis Crashes. 
2022 Crystal Ball in Stocks, Real Estate, Crypto, Cannabis, Gold, Silver & More. 
Interview with the Chief Investment Strategist of Charles Schwab & Co., Inc.
Stocks Enter a Correction
Investor IQ Test
Investor IQ Test Answers
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

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

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

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

75% of New Homeowners Have Buyer’s Remorse. Real Estate Prices Drop as Sales Plunge.
Should you buy, sell, hold or wait? Learn where interest rates and home prices are headed over the next few years.
 
According to Zillow, 75% of new home owners are regretting their purchase. Some are facing more maintenance, upkeep and remodel costs than they anticipated. Others wish they’d taken more time to weigh their options. Home sales dropped 20% year over year in July, and prices were down 3% from June’s high of $416,000, to a median existing home sales price of $403,800. Those who were already regretting their purchase are experiencing heightened stress now.
 
If you’re thinking about purchasing a home, be sure to read the information below before you throw your hat in the ring. (It’s a realtor/broker/salesman’s job to sell you a home and get the commission – not to weigh all of the budget, market, investment and lifestyle consequences of your purchase.) If you’re wondering whether or not you have overextended yourself and should be exiting your recent purchase, consider the points below, read the case studies outlined in the Real Estate section of the 5th edition of The ABCs of Money, and join me on Thursday, August 25, 2022 for my free videoconference and podcast. I host a short Q&A at the end of each webinar.
 
One of the most painful lessons any of us can endure is to buy real estate at the top of the market or to purchase more home than we can afford. That can create hardship for a very long time, while also tanking our credit rating. The sooner we face the facts, the better off we’ll be.
 
Buyers are Backing Out
D.R. Horton, an American homebuilder, reported that 24% of buyers were backing out in the 2nd quarter, using inspections and other escrow loopholes to back out of the deal. Some weren’t able to move forward due to higher interest rates. They no longer qualified for a loan. Many new homeowners are stretching above what their budget can really bear. The unaffordability of housing has drained the savings of many Americans. The pandemic support is already gone, while consumer debt (including mortgage debt) rang up to an all-time high of $16.15 trillion in the 2nd quarter of 2022. This is an indicator that Americans are burning through savings and taking on debt to make ends meet.
 

Interest Rates Are Rising
This won’t affect fixed rate mortgages.
One bit of good news is that the vast majority of mortgages and refinances over the last few years were fixed rates. That will help to prevent a real estate meltdown such as occurred in 2008. There were just too many ARMs (Adjustable Rate Mortgages) then. When the monthly payment jumped, there were too many people who couldn’t pay. There was also a great deal of speculation in the Great Recession. This time around lending standards were higher, with the majority of new homeowners having prime credit scores, according to the Federal Reserve. Most people were buying a home they were intending to live in. Just 14% of purchasers were investors or 2nd home buyers in July of 2022, according to the National Association of Realtors.

The real concern is that there is a great deal of people who are spending most of their income on housing, particularly between the ages of 25 and 40. According to the National Association of Realtors, millennials and Gen Z are spending 23% of their income on a mortgage and 50% or more on rent. This may seem like an obvious reason to buy a home, and is the fuel that fed the fire of home price jumps during the pandemic. However, it’s important to remember that buying high in real estate does not go well if prices weaken, which is already happening.
 
The Federal Reserve Board is counting on homeowners to “weather the storm” if a recession brings home prices down. However, distressed homeowners who are already spending too much on housing will be cash-strapped and trapped, with a credit score that plunges and wipes out the option to borrow until better times return. Living through an underwater mortgage is a difficult financial burden that can elevate stress, health and relationship problems.
 
The 4 D’s of Real Estate
 
If you are itching to buy or sell a home right now, then it’s a good idea to learn more about the 4 D’s of real estate: divorce, death, depression and disaster. When any one of the 4 D’s occur, homeowners might be forced to sell. There are far fewer buyers today, and we’re entering a seasonally slower season for real estate. So, if a homeowner is desperate to sell, the price has to drop. That works to the advantage of the patient buyer. Shopping in the shadow inventory means you might find deals that are 35% or more off the retail price. This is something we’ll discuss in great detail at my upcoming Real Estate Master Class, to be held online on Oct. 15, 2022. (Click to learn more.)

What About Interest Rates?
Rising interest rates make buying a home more difficult and expensive. The Fed Funds rate is predicted to rise to 3.4% this year, 3.8% in 2023 and then retreat back to 3.4% in 2024. The longer run expectation is 2.5%. If the economy hits a recession and prices weaken, the Federal Reserve Board will cut rates. This isn’t expected to happen until 2024. However, economic and inflation indicators will determine the policy. Right now interest rates on a 30-year fixed mortgage are 5.13%, up 88% from a low of 2.73% in January of 2021.
 
Home Builders, Mortgage Companies & REITs
 
We are underweighting real estate in our sample pie charts. Commercial real estate is suffering from the Work From Home trend. There are high vacancies in many office buildings and malls. It's important to remember that the higher the dividend, the higher the risk of losing your principal. 
 
Storage, data centers and industrial real estate are still holding strong. However the strength is already built into the share prices.
 
Email info@nataliepace.com if you would like a Home Builders and Mortgage stock report card. Both industries are seeing sales/revenue slump as buyers dry up. Incidentally, the distress in real estate in the Great Recession started with bankruptcies in the mortgage banking sector as early as April of 2007. The stock market kept rising through October, before plunging throughout 2008 and landed at a bottom on September 9, 2009. On that date, the Dow Jones Industrial Average hit 6,547 (-80% from today’s range of 33,705). The recent median low price for homes was $166,100 in 2009 (down -60% from the June 2022 high and -25% from the 2006 high of $221,900). Incidentally, almost 20 million homes were lost to foreclosure between 2006 and 2019 (19.6 million).

No one is predicting that kind of implosion. However, it is common for stocks and real estate prices to plunge far and fast in 21st Century recessions. It’s important to protect our wealth before the bad headlines – which is why we are also overweighting 20% additional safe in our Sample Pie Charts. You can learn our time-proven 21st Century wealth strategies at the Oct. 8-10, 2022 Online Financial Empowerment Retreat. Register now and receive a free 4-part webinar on how to protect your wealth from a downturn and your budget from inflation.
 
Bottom Line
If you’re itching to buy, it’s a great idea to take your foot off the gas and start evaluating real estate with a different lens than the sales speak offered by your realtor broker-salesman. There’s an entire section on real estate in The ABCs of Money 5th edition. The book includes a checklist of considerations that every prospective homeowner should consider before buying a house.
 
If you’re thinking about selling, there are also many considerations to evaluate before you sell. Real estate can be a great way to hold wealth, particularly during a time when paper assets and fiat currency are losing value, and especially if you can find a way to gain some income out of it. There are multiple real-life case studies outlined in the Real Estate section of The ABCs of Money 5th edition that will help you to expand and broaden your vision so that you won’t be one of the 75% of new homeowners who have buyer’s remorse.
 
If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

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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.

​Solar is shining and clean energy is fired up. July’s Wall Street Rally was a robust 9.11%. Some of the companies mentioned in the blog below, like Sunpower, have already soared up to 46% over that same period. Part of this was increased anticipation for the Inflation Reduction Act. However, sales were on fire for many companies, even before the passage of the Act in the U.S. Senate today. Learn more below.
 
Is the Inflation Reduction Act of 2022 Law Yet?
The Senate just passed the Inflation Reduction Act, which includes a great deal of incentives for clean energy and climate action. According to the Congressional Budget Office, it also includes a “net decrease in the deficit totaling $102 billion over the 2022-2031 period.”
 
H.R. 5376 is expected to pass The U.S. House of Representatives and be signed into law, which means blue skies and smooth sailing for a lot of clean energy companies (once it happens). So which of the following segments and companies will benefit most?
 

Solar
The word solar is mentioned 36 times throughout the text of the Inflation Reduction Act. There are a lot of incentives for homeowners, apartment buildings and commercial buildings to power with solar, wind and hydro, and become more energy-efficient. This could really benefit companies like Sunpower that focus on rooftop solar, and Renesolar that focuses on medium-sized grid solar projects. Sunpower’s sales have already soared, with a 60% increase year over year. According to Sunpower’s CEO Peter Faricy, homeowners are buying rooftop solar for three reasons: to save on their utility bill, to be a part of the climate solution, and for peace of mind, if the grid fails. There is a 26% federal tax credit available for residential solar in 2022.
 
 
One of Sunpower’s most popular new products is their Sunvault energy storage system. Renesolar’s projects are expecting to start showing up in revenue in the 2nd half of 2022.
 
A renewed worldwide focus on solar will also benefit Daqo, a Chinese based polysilicon provider (a key raw material in the solar photovoltaic supply chain). (Click to learn what other global clean energy initiatives are gaining momentum.) Daqo saw revenue growth of 182% in the most recent quarter. With silicon prices elevated, Daqo’s Forward Outlook is extremely good. The company just increased their guidance, and is expecting annual production volume to increase to 129,000 to 132,000 MT from 86,587 MT in 2021. That’s a jump of 52% on the upper side of the guidance.
 
In 2Q 2022, the average selling price for polysilicon was about $33.08 per kilogram. According to BernReuter.com, today’s prices are $38.86/kg. With increased production and higher prices, robust revenue growth should continue for Daqo.

​What’s even more amazing is that Daqo’s bright future is not baked into the share price. The company is currently trading at a price earnings ratio of just three, according to MSN’s money site. It’s very rare to see such an amazing growth story with such an affordable price – and this key inflection point rarely lasts for long.
 
SunPower and Renesolar were cash negative in 2021. Both companies have a higher price to sales ratio than Daqo. If you’d like to see the Solar Stock Report Card, just email info@NataliePace.com with Solar SRC in the subject line.
 
Wind
The turbine industry benefits from investments in onshore and offshore wind. This should play to the strengths of American Superconductor (symbol: AMSC) and TPI Composites (symbol: TPIC). The wind business at AMSC accounts for just 13% of total revenues. However, their revenues in the wind unit increased 49% in the most recent quarter, without the help of the IRA 2022 bill. TPI Composites shut down its Ohio factory late last year, and advises that it could take a minimum of 6 to 9 months to restart the factory to serve US based contracts.
 
AMSC’s 2nd quarter revenue was down -10.67%, while TPI Composites reported a drop of -1.41%. Both companies are projecting continued weakness in the coming quarter. However, AMSC’s CEO is excited about the “tailwinds” for his business. His team should start translating their backlog, which increased by 30% in the quarter, into revenue toward the end of 2022.
 
International wind companies include Gamesa and Vestas based out of Denmark. Vestas is trading off the boards in the US. Gamesa is a division of Siemens Energy, a German company.
 
Regenerative Agriculture and Healthy Soil
The IRA 2022 Bill is focused on reducing waste, while sequestering carbon. The IRA 2022 Bill provides funding for following the science for forest, crop cover and soil solutions. Farmers are incentivized to plant cover crops. There are also funds for farmers transitioning to organic production. There is money for planting trees in urban communities.

Energy Efficiency
There is a big push in the bill for energy efficiency. This impacts everything from energy auditing, home energy smart systems, retrofits, insulation and much more. Google and Amazon both have smart home energy systems. ITron does this for cities and utilities. Itron is having serious supply chain issues that are impacting the company’s ability to translate a $4.1 billion backlog into revenue. The company expects to have flat year-over-year revenue in 2022.
 
The good news for homeowners and business owners, and even school principals and CEOs, is that simple, affordable energy efficiency fixes can result in substantial savings on power bills. So filling out the paperwork for federal funding is a step towards fiscal health, in addition to being part of the solution for healing our planet.
 
Clean Energy Funds
Most people are going to be better served by investing in a clean energy ETF, than by gambling on an individual company. Individual companies require babysitting, particularly in a contracting economy, with a recession on the horizon. I would steer clear of E.S.G. funds. Most are missing the E. They have no solar, wind or EV companies, and include a lot of oil, gas, plastic and other petrochemical providers. I would also want to be assured that the fund company itself is creditworthy (as many financial services companies are at the lowest rung of investment quality). One of my favorite clean energy funds is the iShares Global Clean Energy Fund, with the symbol ICLN.
 


​

Climate Action
Governments around the world are leaning into clean energy, both as needed for healing the planet, and also to become energy independent and less reliant on hostile regimes. However, as we discovered at COP26, the commitments made are not enough to prevent a climate disaster. Individuals must be the change we wish to see. So, please read, share, like and comment on The Power of 8 Billion: It’s Up to Us.
 
In this book’s pages, you’ll find the how-to guide for reducing our personal CO2 footprint and healing our planet. The good news is that it is a quadruple win of healthy planet, healthy budget, healthy body and happy life. The challenge is for each of us to reduce our personal CO2 by 30% this year, next year and every year until we’re back on track for a healthy Earth. In the meantime, each one of us can save thousands of dollars on things we like a lot more than the utility bill, the gas station and car insurance.
 
Bottom Line
We have one to two slices of clean energy in our sample pie charts these days, as one of the bright spots of a challenging economy. Remember that your best strategy against a bear market is proper diversification, regular rebalancing, overweighting safe, and knowing what is safe in a world where over half of the S&P500® is at or near junk bond status. You can read about these time-proven, 21st Century, wealth strategies in my bestselling book The ABCs of Money fifth edition. You can learn and implement these strategies at our online investor educational retreat. You can also call our office for pricing and information on receiving an unbiased second opinion and a step-by-step blueprint that protects your wealth from recessions, while outperforming the bull markets in between.

If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

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The Bank Bail-in Plan on Your Dime.

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

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

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

​Fix Your Money. Improve Your Marriage/Partnership.
5 ways to improve your love relationship by solving some of the core issues that cause fights.
 
If we’re arguing about money a lot more these days, we’re not alone. Inflation has made life very stressful for most of us. Waiting for politicians to fix things can be a very frustrating endeavor. Fortunately, there is more power in our hands then we might realize.
 
Below are five ways to improve our money challenges, so that we can enjoy a summer of love, instead of bickering and stress.
 
1. Working & Commute Costs
2. Getting a Raise & Promotion
3. Budgeting
4. Investing
5. Should You Have Your Own Money and Accounts?
 
You’ll notice below that I include multiple options in each of these points. That’s because each situation is unique. While there may be suggestions that aren’t appropriate for your circumstances, there are likely to be at least a few that are worth mulling over. In tough times, those who look for the out-of-the-box solutions are going to be happy they did. It’s easy to just keep moving in the same, old familiar direction – even if inflation has now made that route untenable, or the risk of recession has made asset prices vulnerable. So, let’s summon the courage to consider how we can stop making everyone else rich at our own expense – including the landlord, the mortgage company, the bank, the gas station, the utility, Wall Street and the insurance companies – by adopting a better game plan (instead of just complaining and feeling victimized).
 
And here is a little more information on each topic.
 
1. Working & Commute Costs
There are a lot of expenses associated with working. If you have to be there physically, your commute may be siphoning off your take-home pay. If you have kids, does all of one parent’s income go for childcare?
 
Reducing the Cost of the Commute
Is there some way that you can reduce your commute? Can you work from home at least a few days of the week? Can you take public transportation, ride a bike or carpool? Should you consider moving closer to work, if it’s a high-paying career that you really love?
 
Curtailing the Cost of Childcare
If one parent’s salary is going for childcare, have you considered just having that person stay at home? Once the kids are in school, it’s much easier for both parents to work. Until then, if parents can find alternative solutions to high-cost childcare – including free preschool programs or enlisting the grandparents – the savings can be astonishing. If a parent can stay home with the kids, s/he will likely find other ways to cut costs, including by cooking healthy meals.
 
Have you networked with other local parents, looked into hosting an au pair or considered a cooperative child-care arrangement? Get creative.
 
 
2. Getting a Raise & Promotion
Increasing income is one way to solve a budgeting problem. If you’re hitting your head on the glass ceiling, education might be the answer. If you have an MBA, it’s going to be easier to climb the career ladder. Nurse practitioners get paid more than nurses. Education is the highest correlating factor with income, and is the easiest way to get a raise and promotion.

3. Budgeting
When I talk about budgeting, most people immediately say, “I’m very frugal. I’ve cut out everything!” However, few of us are shopaholics, and that isn’t the reason that life doesn’t add up for most of us. The real problem isn’t that we’re drinking too many café lattes or eating too much avocado toast. (If you are, then you could save hundreds by making these at home.) It is that the cost of basic needs has spiraled into the nethersphere.
 
Rethink Our Transportation
So how do you fix that? Time-proven systems and bold choices are the only way to fix a world that just doesn’t add up. As one example, did you know that the average person spends about $7,500 per year owning a car, including the car payment, the insurance, the maintenance and the gasoline? Carpooling, working from home, commuting by bike or taking public transportation mean we have a lot of money for things we like a lot more than gassing up our vehicles – even if we do have to take a taxi or rent a car occasionally. Many cities have bike lanes.
 
Health Insurance
Are you spending an arm and a leg on health insurance? If you’re healthy, you could get a high deductible plan and save thousands annually (sometimes tens of thousands). You can also open up a Health Savings Account, where you sock away the savings and take a tax credit for your contributions. Once you get a couple of years’ worth of deductibles in the HSA, you can even start investing. HSAs are the best long-term health care plan in the U.S.   
 
Save Thousands With Smarter Energy Choices
If you own your own home, smarter energy and water choices can save you tens of thousands of dollars every single year. Homeowners with solar often pay just $35/month on their electric bill. LED lighting saves 85% of lighting costs. Insulation, a timer on your water heater and smarter usage of large appliances can also dramatically cut the cost of our electric bill. Grey water can hydrate our landscapes, and native plants can reduce the amount of water needed. Many cities offer incentives to reduce water usage, and to replace the water-hogging lawn for something that is more appropriate for the climate we live in.
 
Some of these fixes require only a small investment to achieve a great deal of savings. Others require a smart plan, so be sure to read The ABCs of Money 5th edition for the resources and tips you’ll need to successfully embark on your home improvement journey.
 
This might sound like a long list of things to fix. However, once you do it, it becomes the way life is – with much more room in your budget for adventure, date nights and yoga.
 
Housing Costs
Is there any way to monetize your home? Should you consider building an additional dwelling unit in your backyard and moving your parents in or renting it out? (That might also help out with childcare.) Think about keeping the money in the family, looking out a few generations. Very wealthy people have always planned generations in advance, and are keenly aware of keeping the money in the family, rather than making the landlord rich.
 
Rent is even more expensive than home ownership these days. So what is the solution? Be careful here. There are few experiences worse than purchasing real estate at an all-time high. There might be better buying opportunities in a year or two. While interest rates are rising in 2022 and 2023, it is expected that they will go back down again in a few years.
 
Is there a way that you can downsize now so that you can save up for a down payment, and purchase real estate if prices drop? Home prices sank by half or more in many markets in the Great Recession and the Dot Com Recession. That isn’t the current projection. However, if there are homeowners who are desperate to sell in the coming years, they might be forced to take less. That is already happening in overheated markets. Click to read my blog “24% of Home Sales Cancelled in the 2nd Quarter.”

Thinking bigger is key. The nuclear family is a thing of the past. Having your own small dwelling is very expensive. Getting a much larger place to share can actually save everybody money. That’s why intergenerational housing is higher today than in the Great Depression.
 
Get more tips in the Thrive Budget section of The ABC’s of Money. Be sure to get the most recent edition by visiting NataliePace.com and clicking on the book cover there.
 
4. Investing
It’s easy to make money in bull markets, and it’s easy to lose money in recessions. If your wealth plan only works when stocks rise or you are counting on recovering very quickly if they go down, you are far more at risk than you might realize. Buy & Hope is a last-century strategy that has been a disaster in the 21st Century. Additionally, with rising interest rates and also because there is so much debt and leverage in the world, traditionally safe investments are vulnerable and losing money. Be wary of bonds, annuities, high-yield investments and even money market funds (redemption gates and liquidity fees).
 
Now is the time to know exactly what you own and why, and to be the boss of your money – particularly if you have lost more 6% on your plan since January (a red flag that you are not properly protected and diversified). You can read about our time-proven, 21st-century investing strategies in The ABC’s of Money. There is an entire section devoted to stocks and bonds. You can learn and implement these strategies at our next investor educational retreat. Go to NataliePace.com to see what’s coming up.
 
If you’d like to know exactly what you owe now, and which assets are very vulnerable to losses, then get an unbiased 2nd opinion from me personally. Simply email info@nataliepace.com with 2nd Opinion in the subject line. It’s difficult to be the boss of your money if you don’t understand what you own, the risk level of your assets and what a better plan looks like (what the 2nd opinion can provide you with). If we were concerned about our physical health, we’d want to understand the diagnosis and treatment well, so let’s be as concerned about our fiscal health.
 
5. Should You Have Your Own Money and Accounts?
A lot of couples ask whether or not they should have separate bank accounts and retirement plans. With regard to retirement plans, the answer is, “Yes.” The more money that you can get into tax-protected vehicles, the better. So maximize everything that you can (including the HSA) for each family member who qualifies. There is a 9.62% yielding Treasury I Savings Bond that many couples are getting for each family member.
 
Wealthy people understand that earned income pays the highest taxes. Passive income is much lower, and can even be zero. As one example, ProPublica reported that Peter Thiel has over $4 billion in his Roth IRA. He didn’t have capital gains taxes, nor will he have income taxes. So, get as much of your investing capital into retirement accounts and college funds as you can, where the capital gains will not be taxed. Once your teen starts working, you can even open up a dependent IRA for her.
 
Bottom Line
You might be amazed at how much your love relationship improves by finding the solutions to the things that you’re arguing about, and by adopting a budgeting, investing and earning plan that works in the 21st Century. However, if you also need help on communication and other issues, be sure to watch my interview with relationship guru, Allana Pratt, at YouTube.com/NataliePace.
 
Wisdom and right action are essential now to rise above the challenges of inflation and a weak economy. The sooner we make brave choices to reduce our big-ticket budget expenses, and to stop making everybody else rich, the sooner we will have room in our budget for the experiences that make life worth living. When we wait for the headlines that the economy is in trouble, it’s too late to protect our wealth. So, now is the time to fix the roof and prepare for the economic storms on the horizon – while the sun is still shining.


If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
​

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

Other Blogs of Interest
24% of House Sales Cancelled in the 2nd Quarter.
3 Things to Do Before July 28th. 
Recession Risks Rise + a Fairly Safe High-Yield Bond
DAQO Doubles. Solar Shines. Which Company is Next in Line?
Tesla Sales Disappoint. Asian EV Competition Heats Up. 
10 Wealth Strategies of the Rich
Copper Prices Plunge
Colombia and Indonesia: Should You Invest?
10 Misleading Broker/Salesman Pitches.
Why are Banks and Dividend Stocks Losing Money?
Beyond Meat: Rare or Burnt?
Netflix Streaming Wars End in a Bloodbath.
Elon Musk Sells $23 Billon in Tesla Stock and Receives $23 Billion in Options.
Are You Gambling With Your Future?
ESG Investing: Missing the E.
Moderna & Biotech Trade at 2-Year Lows.
Bitcoin Crashes.
Crypto, Bold and Stocks All Crash.
The Economy Contracted -1.4% in 1Q 2022.
The Dow Dropped 2000 Points.
Is Plant-Based Protein Dying?
Should You Sell in April? 
The U.S. House Decriminalizes Cannabis Again.
Chinese Electric Vehicle Market Share Hits 20%.
The Risk of Recession in 6 Charts. 
High Gas Prices
How Will Russian Boycotts Effect U.S. Multinational Companies?
Oil and Gas Trends During Wartime
Russia Invades Ukraine. How Have Stocks Responded in Past Wars?
Zombie Companies. Rescue, Rehab or Liquidate?
Spotify: Music to my Ears. 
​Cannabis Crashes. 
2022 Crystal Ball in Stocks, Real Estate, Crypto, Cannabis, Gold, Silver & More. 
Interview with the Chief Investment Strategist of Charles Schwab & Co., Inc.
Stocks Enter a Correction
Investor IQ Test
Investor IQ Test Answers
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

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

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

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

Sluggish isn’t a term we’ve associated with housing for a few years, but that was the characterization used by FreddieMac on July 21, 2022.  The company wrote, “Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand. As a result of these factors, we expect house price appreciation to moderate noticeably.” Few economists are expecting an implosion of home prices, though we are seeing sellers drop their prices in the places that were the most popular during the Pandemic. According to Redfin, the cities leading the price drops were Provo, Boise, Salt Lake City, Sacramento, Ogden, Tacoma, Denver, Portland, Indianapolis and Philadelphia.
 
Cancellations
D.R. Horton (a publicly traded American home builder) advised that the company’s cancellation rate was 24% in the 2nd quarter of 2022, up from 17% a year ago. On July 11, 2022, Redfin warned that 60,000 home-purchase agreements were torn up in June. At 14.9%, this was the highest percentage of buyers backing out of deals since 2017. Many potential home buyers are taking advantage of inspection and appraisal contingencies to run for the exits. Some are forced to walk away when they no longer qualify for a loan or can’t come up with a down payment.
 
Mortgage Rates
A jump in mortgage costs, combined with the highest home prices ever, are the culprits in the declines. On January 7, 2021, mortgage rates were at a historic low of just 2.65% for a 30-year fixed. In June of this year, rates soared above 6% for the first time since the Great Recession. The current rate is 5.54%. Rates could jump again after the FOMC meeting on July 26-27, 2022, when the Federal Reserve Board governors are expected to turn up the heat on the federal funds rate by another 75 basis points.
​

Prices
Housing affordability is a nationwide crisis. Home prices soared to a new record in June, to $416,000 for the median existing-home price. That’s up 13.4% from the same time last year.
 
Rent is even more expensive than a home purchase. According to the press team at the National Association of Realtors, in May of this year, 25- to 40-year-olds were spending 50% of their income on rent, while homeowners of the same age were spending just 23%. Household savings are getting burned up by astronomical housing, transportation and medical costs. All of the savings from the Pandemic support are gone.

Recession?
Economists are mostly in agreement that higher interest rates are needed now and quickly to combat inflation, even though that is likely to spark a recession. The justification is that there will be some pain while we take the medicine necessary to fix the economy. (Of course, the pain always falls on the middle and lower classes.) Financial indicators are ringing the alarms that the U.S. will indeed hit a recession. We’ll know on July 28, 2022 at 8:30 am ET, when the 2Q 2022 GDP is announced, if it has already arrived.
 
Will home prices stay buoyant, or will they sink in a recession? As mentioned above, prices are already softening, particularly in the pandemic hot spot regions. However, so far this is more a moderation of an unsustainable escalation of prices, rather than a panic drop.
 
Homeowners will jettison a lot of goods and services in order to keep their home. However, when a quarter or half of our income is eaten up by the mortgage, homeowners are vulnerable – particularly if the labor market weakens. There is also a risk that some buyers may have taken on more home than they could really afford, or purchased a 2nd home with a business model that isn’t panning out. About a third of the purchases were from first-time buyers in June, while 16% of home purchases were from investors and 2nd home purchasers, according to the National Association of Realtors. There has been a lot of chatter about people buying new homes with the hope of getting rich on AirBnb short-term rentals.
 
Joblessness and weakness in hospitality businesses are hallmarks of recessions. The Feds want to keep the labor market strong. However, we are already starting to see some layoffs. Tesla announced that they are reducing their workforce by 3.5%. Ford is letting 8000 workers go. It’s important to note that the labor shortage is concentrated in lower-paying jobs – not the kind of employment that can keep people in their new homes. Few economists are predicting a Great Recession type drop in home prices, largely because the speculation is lower and underwriting standards are higher this time around. However, the risk of home prices plunging increases if unemployment rises.
 
Home Builders
Beazer Homes reported revenue in the 2nd quarter that was 7.3% lower than last year due to a 22.3% decrease in home closings. As reported at the top of the blog, D.R. Horton saw cancellations of almost 25%, but was still able to report revenue that was 20.7% higher than last year, largely due to the price increases. With interest rates and mortgage rates predicted to keep rising, this could stifle the performance of home builders in 2022 and 2023.
 
Many home builders have a lot of debt and a low credit rating. Some may not be fully factoring in the cancellations into their forward projections. For instance, in the 2nd quarter 2022 KB Home earnings call, chairman and CEO Jeff Mezger told analysts, “We believe the factors underlying long-term demand continue to be healthy, particularly with respect to demographics and the work-from-home trends, coupled with an ongoing under-supply of new homes and low existing home inventory.”
 
Meanwhile, we’re starting to see insider selling at some of the publicly traded home builders. Jeff Mezger has sold almost $40 million in KB Home stock over the past year, as has Toll Brothers co-founder and chairman emeritus Robert Toll.
 
 
 
 
Email info@NataliePace.com if you’d like to receive a copy of our Home Builders Stock Report card.
 
 
Bottom Line
High mortgage rates, high home prices, unaffordability, FUD (fear, uncertainty and doubt) and low cash reserves are limiting the number of buyers on Main Street these days. While home prices continued to soar in the first half of 2022, that is not expected to be the case going forward. Don’t purchase hoping for last year’s Return on Investment. If you’re selling, the right price could be key to closing the deal – particularly with the cancellation rates we’re seeing. Gone are the days of multiple bids above the asking price.
 
If you’re considering a purchase, be sure to check out my housing webinar and podcast before entering the marketplace. There are few things worse than buying more home than you can afford when prices are at an all-time high. First-time (inexperienced) buyers are more vulnerable to this devastating money mistake. The equation has to include more than just trying to avoid high rent costs. (There are solutions for all of this that don’t lock you into buying a home at an all-time high price and being a slave to your mortgage for the next decade.)
  
If you’re invested in REITs, now is a good time to be sure that you are not vulnerable to capital loss. Remember: the higher the dividend, the higher the risk. This is an industry that I’d underweight in my portfolio. (Remember that we also are overweighting an additional 10-20% safe in our sample pie charts.) We teach how to protect wealth from recessions at our Investor Educational Retreats. Email info@NataliePace.com to learn more.
 

​​If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.

​

​3 Things To Do Before July 28th.
This should take you less than five minutes to read, so that the focus can be on action rather than reading. You can take any of these action points deeper with other blogs/podcasts/webinars on each topic (links below).
 
Why do I say to act before July 28th? The U.S. will know whether or not the country is in a recession at 8:30 AM Eastern time on July 28, 2022. (When the U.S. sneezes, the world catches a cold.) At this point it’s less a question of “will we?” and more a question of when? If we wait for the headlines that we’re in a recession, it can be too late. Learn the rising risk of a recession in my blog from July 13, 2022. 
 
The Bear Market
If we have lost more than 6% that’s a red flag that our wealth plan is not properly diversified and protected. While we might think that we’ve already lost a lot, most 21st-century recessions have dropped by more than half. The S&P500 is currently down about 18% from its January 2022 highs, so the bottom could be a lot further down. If our portfolio is down 18% or more, it signals that we don’t have enough safe – that our plan is not well-designed for the bear market.
 
When someone tells us to just hang on because the markets always come back and we’ll just be selling low if we make changes now, that is not the truth of 21st Century recessions. Buy & Hope worked well in the last century, but has been a disaster since 2000. The next bear market recession will not be a repeat of the Pandemic Recession, which was the shortest in history. We can’t print up almost $6 trillion and give it to everybody to save the day. In fact we’re doing the opposite. We are tightening up the money supply. Many people and corporations don’t have access to loans, and if they do, they’re paying a lot more in interest. Instead, we’re seeing savings dwindle and the markets weaken, which is a recipe for more trouble ahead. Federal Reserve Board Chairman Jerome Powell and others have gone on record a lot this year talking about taking our medicine and the pain that most of us are going to experience this year.
 
So here’s our 3-step action plan that we should get started on now – before the 2Q 2022 GDP is announced on July 28, 2022.

• Know how much we’ve already lost
• Diversify and protect our wealth
• Know what is safe in a debt world

 
And here is more information on each line item.
 
Know How Much We’ve Lost
It’s essential to know where we stand right now because this is an indicator of whether or not our plan is properly designed. If most of our wealth is in our retirement account and/or brokerage account, then it’s as simple as just looking at the statements from today comparing them to the statements from January of this year. You might ask your broker-salesman for a chart of your current plan’s performance compared to the S&P500 for the last 15 years (or at minimum 3 years). If you’ve lost as much or more than the S&P500, then it’s time to learn and implement a Wealth Protection strategy. That will require getting solutions from someone other than the person who designed the losing plan. We’re here to help with time-proven, 21st Century solutions. Email info@NataliePace.com or call 310-430-2397.
 
Diversify and Protect Your Wealth
A properly designed wealth plan protects us from losses in recessions and allows us to soar in bull markets. A lot of people check multiple boxes in their 401K, or have 18+ pages of holdings, and hope that they are properly protected and diversified as a result. 99% of the time, that is not the case. We must know what we own and why, and why it fits into the easy-as-a-pie-chart nest egg strategy. This easy plan with regular rebalancing earned gains in the Great and Dot Com Recessions (when most people lost more than half of their wealth) and outperformed the bull markets in between. (Click to learn more about regular rebalancing.)

Know What is Safe in a Debt World
While bonds are normally put on the safe “fixed income” side of the equation, today bonds are losing principal, while also being illiquid and negative-yielding. (Click to learn more in my podcast and webinar.) Many traditionally safe, fixed-income products are vulnerable or losing money. Regulators have claimed that Celsius Network’s promises that depositors were FDIC-insured were illegal. (Click to learn more about the Crypto Crash in my podcast and webinar.)
 
So, who can you trust to protect your money – at a time when inflation is limiting our buying power?
 
The safe side of your wealth plan is not supposed to lose money. As we age and get closer to retirement, we can’t afford to risk losing half or more of our wealth. So, the first step is to keep at least a percentage equal to your age safe. (We’re overweighting 20% safe due to the recession risk.) The second step is to consider safe, income-producing hard assets that you purchase for a good price. Believe it or not, there is some low-hanging fruit here (not high-priced real estate).
 
You can read about What’s Safe in a Debt World in that section of The ABCs of Money 5th edition. You can learn and implement a safer strategy by attending our Financial Freedom retreats. You can also reach out for an unbiased 2nd opinion on your current plan to receive color-coded, step-by-step analysis of what you currently have and what a safer plan looks like. When our physical health is at risk, we get a second opinion. So, let’s be sure to do that for our fiscal health and future, too.
 
Why Bonds, Money Market Funds and Annuities are Vulnerable
In most recessions, the Federal Reserve Board will cut interest rates to spark economic growth. That action actually makes existing bonds with a higher interest rate more valuable. When the FOMC raises rates, the existing bond value (with a lower interest rate) goes down. Today, there is credit risk, in addition to interest-rate risk, and also duration risk and opportunity costs. Annuities are not FDIC-insured (so vulnerable, just like the Celsius Network deposits were). Money market funds have redemption gates and liquidity fees, and can lose money.
 
 
Bottom Line
It’s time to know exactly what we own and why, and to protect our fiscal health. We can’t just have blind faith that some financial professional is doing this for us, particularly if we have more than 10% in losses to date. Take this July 28 deadline date seriously. Consider registering for the October retreat now, so that you get immediate access to the four-part webinar series. If you have a lot at stake, email info@NataliePace.com to learn about getting an unbiased 2nd opinion from me personally on your current wealth plan.
 

If you're interested in learning 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price when you register with friends and family. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
​

Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

Other Blogs of Interest
Recession Risks Rise + a Fairly Safe High-Yield Bond
DAQO Doubles. Solar Shines. Which Company is Next in Line?
Tesla Sales Disappoint. Asian EV Competition Heats Up. 
10 Wealth Strategies of the Rich
Copper Prices Plunge
Colombia and Indonesia: Should You Invest?
10 Misleading Broker/Salesman Pitches.
Why are Banks and Dividend Stocks Losing Money?
Beyond Meat: Rare or Burnt?
Netflix Streaming Wars End in a Bloodbath.
Elon Musk Sells $23 Billon in Tesla Stock and Receives $23 Billion in Options.
Are You Gambling With Your Future?
ESG Investing: Missing the E.
Moderna & Biotech Trade at 2-Year Lows.
Bitcoin Crashes.
Crypto, Bold and Stocks All Crash.
The Economy Contracted -1.4% in 1Q 2022.
The Dow Dropped 2000 Points.
Is Plant-Based Protein Dying?
Should You Sell in April? 
The U.S. House Decriminalizes Cannabis Again.
Chinese Electric Vehicle Market Share Hits 20%.
The Risk of Recession in 6 Charts. 
High Gas Prices
How Will Russian Boycotts Effect U.S. Multinational Companies?
Oil and Gas Trends During Wartime
Russia Invades Ukraine. How Have Stocks Responded in Past Wars?
Zombie Companies. Rescue, Rehab or Liquidate?
Spotify: Music to my Ears. 
​Cannabis Crashes. 
2022 Crystal Ball in Stocks, Real Estate, Crypto, Cannabis, Gold, Silver & More. 
Interview with the Chief Investment Strategist of Charles Schwab & Co., Inc.
Stocks Enter a Correction
Investor IQ Test
Investor IQ Test Answers
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
From FAANNG to ZANA MAD MAAX
Ted Lasso vs. Squid Game. Who Will Win the Streaming Wars?
Starbucks. McDonald's. The Real Cost of Disposable Fast Food. 
​The Plant-Based Protein Fire-Sale
​What's Safe in a Debt World?
Inflation, Gasoline Prices & Recessions
China: GDP Soars. Share Prices Sink. 
The Competition Heats Up for Tesla & Nio. 
How Green in Your Love for the Planet?
S&P500 Hits a New High. GDP Should  be 7% in 2021!
Will Work-From-Home and EVs Destroy the Oil Industry?
Insurance and Hedge Funds are at Risk and Over-Leveraged.
Office Buildings are Still Ghost Towns.
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
2021 Company of the Year
​Almost 5 Million Americans are Behind on Rent & Mortgage. Real Estate Hits All-Time High.
Rebalancing Your Nest Egg IQ Test.
Answers to the Rebalancing Your Nest Egg IQ Test.
Videoconferencing in a Post-Pandemic World (featuring Zoom & Teladoc).
Sanctuary Sandwich Home. Multigenerational Housing. Interview with Lawrence Yun, the chief economist of the National Association of Realtors. 
10 Budget Leaks That Cost $10,000 or More Each Year.
The Stimulus Check. Party Like It's 1999. 
Would You Pay $50 for a Cafe Latte? Is Your Tesla Stock Overpriced?
10 Questions for College Success.
Is FDIC-Insured Cash at Risk of a Bank Bail-in Plan?
8 Money Myths, Money Pits, Scams and Conspiracy Theories.
Why Are My Bonds Losing Money?
The Bank Bail-in Plan on Your Dime.

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

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

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

Ugly Bank Earnings, Recession Risks Rise + a Pretty Safe High-Yield Bond
The risk of recession is rising. Granted, we have to read tea leaves until the official 2Q 2022 announcement on July 28, 2022. However, there certainly are a lot of messages floating to the surface. The silhouette is taking shape, and the phantom is concerning. As Jerome Powell admitted in his interview with Kai Ryssdal on May 12, 2022, “The process of getting inflation down to 2% will include some pain.”
 
GDPNow is Forecasting a Recession
GDP Now is anticipating a contraction of -1.2% in the second quarter of 2022. Since the 1st quarter was a contraction of -1.6%, that would mean that the U.S. is in a recession. If the data comes in flat or above the line, then the U.S. will have averted a recession for now.

​How Accurate is GDPNow?
GDPNow typically comes in higher than the results. The week before the 1Q 2022 GDP growth results were released, GDPNow projected growth of 1.3%. We discovered on April 28, 2022 that the economy had actually declined.
 
Powell Speak, Yet Another Recession Indicator
So what are some of the other tea leaves out there? Lawrence Summers has gone on record saying that a recession is almost inevitable. Jerome Powell has stopped defining a soft landing as avoiding a recession. Instead he said his team will try to keep the labor market strong. That’s a pretty big red flag, even though Powell also drops caveats that no one is very good at predicting recessions. (History shows us that fast rate hikes = recessions). When Powell speaks, every word is a sign, as is every word that’s omitted. Inflation was repeated incessantly throughout the most recent FOMC minutes, while the word recession was avoided.
 
What About Other Forecasts?
The Conference Board went on record yesterday writing that they believe the economy is not in a recession. However, their projections are for flat growth of just 0.8%. As long as the data is above zero, the U.S. will technically avert a recession for now. However, as we saw in the Great Recession, that doesn’t mean that we’re out of the woods. (Keep reading…)
 
2Q GDP Growth Advance Report on July 28, 2022
We will know definitively where we stand on July 28 at 8:30 AM ET, when the advance report of the 2nd quarter GDP growth is released by the Bureau of Economic Analysis, (bea.gov).
 
It’s a good idea to make sure that we have at least a percentage equal to our age safe now, before the report is released. When we wait for the headlines, it’s like trying to catch a falling knife. It can be too late to protect ourselves. In our sample pie charts, we are overweighting an additional 20% safe, based on the heightened risk of a recession. If you’re 50, consider having 70% safe. If you’re 30, consider having at least half of your wealth safe. As you will read below, it is also important to know what’s safe in today’s Debt World.
 

Bank Earnings Could Be Nasty Starting Tomorrow
Mortgage banks are suffering. Rapidly rising interest rates have slowed housing sales by 8.6% year over year. Many mortgage banks have seen their revenues fall by more than 40%. Email info@NataliePace.com if you'd like to receive a Bank Stock Report Card. 

The decline in mortgage originations will also affect large banks, at a time when they are also experiencing fewer M&As, bond and IPO transactions. Last month, JP Morgan’s CEO and amateur meteorologist Jamie Dimon warned that there is a hurricane on the horizon. It could strike land as early as tomorrow with JP Morgan’s earnings report at 8:30 am ET. Citigroup and Wells Fargo report on Friday. Citigroup also has a Russian exposure problem, with up to $10 billion in exposure. (Click to read my blog on banks from June 5, 2022.) Investors are already anticipating a rotten report from Citigroup. Citi’s shares are down almost 40% from their 52-week highs.  

Inverted Yield Curve
As you can see from the graph below, an inverted yield curve is 100% correlated with recessions. (The grey lines indicate recessions.) Short-term (2-year) bonds are offering a higher yield than 30-year bonds. This has a lot to do with the rapid increase in the Fed Fund rate, and the disinclination of investors to take on the risk of long-term, negative-yielding fixed-income investments. Bonds are losing money, annuities are not FDIC-insured, and money market funds have redemption gates and liquidity fees, which is why it’s essential to know what is safe in a highly-leveraged world. (We spend one full day on this topic at our Investor Educational Retreats.)

A Pretty Safe Bond That’s Earning 9.62%
The Treasury has a pretty safe Inflation-linked bond that is currently pegged at 9.62% (for six months). The rate resets Nov. 1, 2022 and is tied to inflation, which just came in hotter than expected today, at 9.1%. This bond requires a minimum of a one-year commitment. There are other terms and conditions, including an annual investment cap of $10,000/person. Click on the blue-highlighted words to access the TreasuryDirect web page with additional information.

​What’s at Stake? Up to Half of Your Wealth
Between October 2007 and March 2009, the Dow Jones Industrial Average dropped 55%. It took six years to crawl back to even. It took even longer to recover from the Dot Com Recession, when the NASDAQ Composite Index sank up to 78% and took 15 years to recover. This time assets are even more overvalued than they were in the Dot Com Recession, according to Warren Buffett’s favorite valuation tool – the value of all stocks compared to GDP. If equities are as expensive as these and other charts indicate, protecting our wealth now is of the utmost importance.
 
Don’t try market timing. It rarely works. The pie charts with regular rebalancing is a time-proven, 21st Century plan.
 

Buy & Hope Doesn’t Work in the 21st Century
Buy & Hope plans have ridden a Wall Street rollercoaster in the 21st Century. Getting your pie chart set up (keeping the right amount safe and diversifying properly) and rebalancing regularly (1-3 times a year) means that you protect your wealth in recessions and outperform the bull markets in between, instead of using the majority of the bull market hoping and praying to make up losses. This plan is easy as a pie chart, which is why we call it the life math that we all should have learned in high school.
 
Email info@nataliePace.com or call 310-430-2397 to receive a 2nd opinion, including a pie chart of what you currently own, compared to a sample pie chart of our time-proven, 21st Century plan. You can also learn this strategy at our retreat or in my book The ABCs of Money.
 
As we get closer to retirement, we have less time to make up those losses. Since our credit score tanks with our losses, it’s important to get the plan set up now, even if we’re a young HENRY (High Earner, Not Rich Yet). It’s never a good time to lose half of your wealth. A time-proven plan is always the best strategy.
 
What Happened in the Early Days of the Great Recession?
In the 4th quarter of 2007 and the 1st quarter of 2008, growth was flat, at 0.6% and 0.9%, respectively, despite the collapse of Bear Stearns in March of 2008. The 2nd quarter of 2008 even registered economic growth of 3.3%, despite continuing bankruptcies in a number of mortgage banks and the forced marriage of Countrywide to Bank of America. Americans didn’t know the economy was in a recession until the 3rd quarter GDP was reported at the end of October – when the White House team raced to Congress for a bailout to prevent a global financial meltdown. When we wait for the headlines or for politicians to admit what’s really going on, it’s too late.
 
This time around, we haven’t seen a lot of bankruptcies, largely due to the amount of cash that flooded companies and individuals during the pandemic. In fact, bankruptcies are near a historic low. However, as money tightens up, that could change rapidly. Industrials and consumer discretionary continue to be the most vulnerable industries, followed by healthcare. However, mortgage banks were the first to show distress in the Great Recession, and this time, they are again experiencing a lot of pain.
 
If you're interested in learning stock and 21st Century time-proven investing strategies for protecting your wealth and managing the bear market from a No. 1 stock picker, join us for our Oct. 8-10, 2022 Financial Freedom Retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master. Get the best price and a free 4-part Protect Your Wealth Now webinar that will get you started immediately when you register before July 15, 2022.
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Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

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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.