Dear Natalie, I saw the CleanTechnica chart that showed the Tesla 3 becoming the top selling car in the U.S. (by revenue) I have one simple question. Should I invest in Tesla? Signed I.T. Guy
 
 
Dear IT Guy,
 
Gone are the days that you buy a Blue Chip and hold it to will it to your grandchildren. The Wall Street rollercoaster today is nothing like the days of yore. So, this is not a simple question. However, if your goal is Buy and Forget About It, so you can stay focused on your day job, then investing in any individual company is not a good match for you. Having an Easy-as-a-Pie-Chart Nest Egg Strategy ® that you rebalance once (or more) a year will serve you better. Individual companies require babysitting in today’s world of wild market swings. And in the 10th year of a bull market, every stock can be vulnerable. So, having a defensive strategy is far more important than getting more in the game.
 
However, if you have a little fun money, or if you are passionate about promoting electric cars (with a smaller amount of money), below are a few tips to help you evaluate whether or not investing in Tesla (or any other hot individual company) is right for you. Tesla has promised a spectacular 3rd quarter earnings report, and that often does spark investor buying. The next earnings report should be issued around November 1-2, 2018.
 
Checklist for Investing in Individual Companies
Consider The Company’s Potential.
Factor in What the General Marketplace Is Likely To Do
Are You Willing to Babysit?
What’s Your Exit Strategy?
 
And here’s a little more color on each point…
 
Consider The Company’s Potential.
You’ll need to do a Stock Report Card ® and Ask the Four Questions  ® before you can be sure that you have picked the leader in the industry*. Then you need to apply the rest of the 3-Ingredient Recipe for Cooking Up Profits ® to make sure that you are buying the stock at a bargain*. Never pay retail! Tesla scores very high in revenue growth, and is on the right side of electric vehicles, which are the fastest growing vertical worldwide. No other U.S. car company comes close to Tesla’s growth rate and global expansion plan.
 

So, the only question is price. Today’s price is $299/share. The all-time high was $387/share. Are you willing to purchase near the all-time high, hoping the price goes higher?

*The strategies that I used to become a no. 1 stock picker are outlined in my first book, Put Your Money Where Your Heart Is.
 
Factor in What the General Marketplace Is Likely To Do
It’s the 10th year of the current bull market, making this the longest bull market in history. So, by the numbers, the market is very high. We should be closer to a correction point than a rally.
 
Are You Willing to Babysit?
Last week, CleanTechnica released the news that the Tesla 3 became the top-selling car by revenue. A few days ago, the headlines were about the Justice Department investigating Elon Musks’ personal tweets about the “taking Tesla private” scandal that never played out. In 2019, the Tesla tax credits start phasing out. Will Tesla have to lower its prices to keep sales strong? Additionally, the steel tariffs are predicted to increase the costs of auto manufacturing – further weighing on profitability going forward.
 
The share price has dropped as low as 37% off of its high this year. If you can’t stomach that kind of volatility, and are going to be tempted to trade on every headline, then investing in Tesla is not right for you.
 
What’s Your Exit Strategy?
The wiggle room between the 52-week high and low is only about 58%. The wiggle room between today’s price and the high is only 30%. Are you going to capture your gains at 30%? Or are you hoping for an outstanding 3rd quarter earnings report and want to see if the stock shoots the moon? Even great companies are retreating and then rallying on a fairly regular basis this year. So, a smart exit strategy is going to be key to your successful investment.
 
If you’re not sure about any one of these things that I’ve outlined, then your next investment should be in learning how to invest! You wouldn’t bake bread without a recipe, and it’s not a good idea to try and make some dough in stocks without learning my 3-Ingredient Recipe For Cooking Up Profits. We focus on Hot Stocks (and avoiding the Bailouts) for one full day of my 3-day Investor Educational Retreats. Call 310-430-2397 to learn more.
 
 
Do you have a question for me? Please email Info@NataliePace.com, or post it on my Twitter or Facebook pages. Our team will add your question to my Ask Natalie blog topic list for possible inclusion in this ongoing blog series.

Other Blogs of Interest
Cryptocurrency Scams Posing as Elon Musk, Your Friends/Family and Government Agencies.

Back to School Stock Sales.

Should You Buy Tesla Stock?

Russia is Dumping U.S. Treasuries and Buying Gold Instead.

Are Electric Cars Safe? from May 20, 2018

Odds of an Interest Rate Hike are Above 90%.

5 Harbingers of Recessions

How a Strong GDP Report Can Go Wrong.
 
Unaffordability: The Unspoken Housing Crisis in America
 
Social Security and Medicare Warn of Depletion.

 

Crytpocurrency Scams and Phishers Posing as Elon Musk, SpaceX, Tesla, Your Friends and Family and More.
 
Pages and Profiles Impersonating Elon Musk, SpaceX, Tesla, or a Friend or Family Member Are Offering Free Cryptocurrency, Free Government Money or Threatening You With Fines and Fees. Beware and be informed!
 
Some very aggressive scams are targeting crypto and Elon Musk fans, impersonating Elon, SpaceX and Tesla, and even showing up as a friend or family member. Your best defense is to know the red flags of a scam and avoid the ruse altogether. If you spot a fake page or profile report it immediately to the social network, to the Internet Crime Complaint Center and to the FTC. (Click on the blue-highlighted links to access.) Share this blog with your friends and family members because as soon as one page or profile is reported, another one is created. Below are a few ways to spot scams before you hand over your information.
 
Red Flags of a Scam
Very aggressive scams, set up on pages and profiles that look legitimate, are targeting cryptocurrency fans. Phishers and scam artists use all kinds of ruses to lure in unsuspecting victims, including posing as a friend or family member, as your bank, as a lottery win, or as a sure-shot, can’t lose investment. Below are a few questions to ask yourself before you hand over any personal information or money. Most scams are alike in that the devil is in the details. If you look closely enough, the cracks in the façade of the fraud are quite visible.
 
Remember that if it sounds too good to be true, it probably is.
 
Red Flags

1. Pushy salesman or person.
2. Email or URL looks fake.
3. Misspelled words.
4. Promises of fast, easy, often free money.
5. Comes in as a phone call, email or shared on a friend’s timeline.
6. Guarantees that you can’t lose.
7. Require you giving personal information.
8. Require you giving money first.
9. Website doesn’t have a physical business address.
10. 800 phone number and fill-in-the-blank contact form, instead of a staff member and real email address to contact.

 
Before buying anything from anyone you don’t know, or sharing any of your personal information, you need to check out a few more things.
 
1. Find out who owns or leads the company. Read their bio and then Google that person with the phrase “SEC fines lawsuits scams” and see what turns up.
2. Click on the Contact Us link. If you don’t see a physical address and phone number, that is a red flag. If there is only an 800 number and a fill-in the form email submission, the warning bells and whistles should be going off for you.
3. About Us. What do you see on the About Us page? A legitimate corporation will list the executives and their bios. A questionable enterprise will have a video and sales pitch, with stock photos and no mention of who is running the company and how you can get in touch with someone there.
4. Referred by a Friend or Family Member? Sadly, this is the most common way for people to get roped into scams and losses. Many people fell for Madoff in this manner.
 
Below are two screen shots from pages that are impersonating Elon Musk and SpaceX.
 
The Fake Elon Musk Tweet
If you look closely on this page, you’ll see that the official Elon Musk account replied to Tech Girl. Right below that a fake account with Elon Musk’s name and the same profile picture replies again offering a sweetened deal. Further in the thread the same scam artist offers free Bitcoin and Ethereum, and even a chance to win a Tesla. However, there is no “official” check mark next to the scam artist’s profile, and the “real name” shows up on the right as GizeMyOrgun.

​The Fake SpaceX page.
If you look in the comments on the screen shot below, you’ll see that there is a “huge giveaway for our community!” The page is set up to look like it is run by SpaceX. However, on the About page, you can see that the page is actually run through a URL m.me/spacexpage. Even the “Official: SpaceX” Facebook page is not really official. Both Facebook and Twitter make it easy to spot verified pages with their blue check marks. If you see the word “official” without the check mark, chances are it is a fraud.  

​Private Message from a Friend or Family Member on Social
Last week, someone set up a fake account of my aunt, using her family pictures. They sent me a friend request, which I immediately accepted. Then they sent me a message about something very important that they’ve been wanting to get in touch with me about. The scam artist asked if I had heard of grants from the Health and Human Services. “My aunt” then told me that it was completely legitimate and $100,000 had shown up in her bank account. At that point, I reported the profile to Facebook. I noticed that other relatives had accepted the friend request. Facebook was very quick about deactivating the account (within minutes!).  
 
It’s clear that there is a very aggressive campaign of fraud going on right now, through multiple channels. So, protect yourself. Never give out any information to anyone who contacts you online, by phone or through email. If you worry that your bank needs something from you, go visit your local branch.
 
If you are worried about your finances, your budget or your investing strategy, or if you have lost a fortune on cryptocurrency or gold, it pays to get The ABCs of Money that we all should have received in high school. I just published The ABCs of Money, 2nd edition last month on Kindle. It’s updated with 2018 data, statistics and information, and costs only $3.99.
 

​If you want to make sure you are safe and protected in your nest egg before the next market correction, call 310-430-2397 or email info @ NataliePace.com to receive an unbiased second opinion on your current strategy. You can learn to save thousands annually in your budget when you stop making the billionaire corporations rich at your own expense. If the myth that you can make ends meet by cutting out café lattes and avocado toast worked, then you wouldn’t still be in debt. It’s the big-ticket bills that are sucking the health out of your husbandry, and there are solutions. Our easy-as-a-pie-chart nest egg strategies earned gains in the last two recessions, at a time when most people lost more than half, and have outperformed the bull markets in between. Call 310-430-2397 to learn more now. 

Other Blogs of Interest
Back to School Stock Sales.

Should You Buy Tesla Stock?

Russia is Dumping U.S. Treasuries and Buying Gold Instead.

Are Electric Cars Safe? from May 20, 2018

Odds of an Interest Rate Hike are Above 90%.

5 Harbingers of Recessions

How a Strong GDP Report Can Go Wrong.
 
Unaffordability: The Unspoken Housing Crisis in America
 
Social Security and Medicare Warn of Depletion.

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.
 
 
​Shares and Retweets do not mean that I endorse a product. Ever. I do not receive marketing commissions, so I never have skin in the game. 

Wall Street is still trading near its all-time high, and gold is near a 9-year low. So, are there any back-to-school stock sales for you to buy before the Santa Rally? Or should you be getting defensive (and getting a second opinion) on your financial plan? I have found a few areas of opportunities that are worth a look, and a few warnings that are worth paying attention to.
 
Here’s What I’ll Cover in this Blog
1. U.S. Stocks
2. Electric Cars
3. Gaming, Artificial Intelligence, Virtual Reality and Autonomous Cars
4. Chinese Technology
5. Gold Miners
6. Lithium
7. Clean Energy (LEDs, solar +)
8. Micro Mobility
9. Facebook, Snap, Weibo and Social Media
10. Red Flag Industries: REITs and Retail
 
And here’s more info on each… Click on the highlighted words to access a longer article on that company or topic.
 
1. U.S. Stocks
U.S. stocks are a tale of two indices. The NASDAQ Composite Index leans toward younger companies with great earnings, that are overpriced. The Dow Jones Industrial Average hosts legacy brands, many of which are weighed down by pension promises, health care costs and debt, but are using financial engineering and cheap, easy, borrowed money to make their earnings look better than they are. They are also overpriced.
 
Companies like Advanced Micro Devices, Facebook, Nvidia have sales growth of 40% or more, with net profit margins of 5%, 39% and 36%, respectively! Turtle Beach’s sales growth was 218% in the last quarter! On the other hand, many of the Dow companies have low or negative growth with high debt and high price to earnings ratios, like American Express (2.67 D/E, 28 P/E), Home Depot (11.60 D/E, 25 P/E) & IBM (2 D/E, 26 P/E).
 
2. Electric Cars. 

​The Tesla 3 was the #1 selling car in the U.S. in August. Tesla production is expected to double in 3rd quarter over the 2nd quarter. That is great news for Tesla and EVs. The not so good news for Tesla is that the $7500 tax credit per vehicle ends in 2018. How will that impact sales? Will Tesla have to lower its prices next year, and get squeezed on profit margins, just when it is finally making money? The impact of the tax credit won’t start showing up until the 1st quarter 2019 earnings report in late February 2019, however.

3. Gaming, Artificial Intelligence, Virtual Reality, Augmented Reality and Autonomous Cars.
Nvidia continues to be a NASDAQ and FAANNG superstar, with 40% sales growth and 36% net profit margin. Turtle Beach keeps revising earnings and profits upward. Nvidia is trading at an all-time high, with a 40 P/E. Turtle Beach’s P/E is 13.55, with a price range of $1.64-$36.50. Today’s price is $22.40.
 
4. Chinese Technology.
Chinese technology is even hotter than U.S. technology, with 68% sales growth & 32% profit margin in Weibo, and 61% growth and 21% profit margins in Alibaba. The issue is the trade war and headlines. Alibaba had $12.2 billion in sales and $1.2 billion in profits in the 2nd quarter of 2018. However, since the net income was half of last year’s, investors gave the stock a beating. Jack Ma announced on Sept. 10, 2018 that he will retire as Alibaba’s chairman in one year, on Sept. 10, 2019 (Alibaba’s 20th anniversary). By the book, Chinese technology is on fire. However, the P/Es reflect their heat, with Alibaba at 50, Weibo at 33 and CTrip at 46. Even with the pullbacks in the share prices of late, many Chinese technology companies are trading near their all-time highs.
 
5. Gold Miners
Gold is trading near a 9-year low. Gold miner ETFs are currently trading at a discount off 70% of their all-time highs. The price of gold is down 37% from its all-time high. Once gold prices start to go up, the miners have more upside potential, due to the sell-off. Gold tends to be a good hedge against a downturn.
 
6. Lithium
With the explosion of electric vehicles, lithium mining companies are doing quite well, which is why FMC is spinning off its lithium division, Livent, into an IPO. Livent’s sales are up 51% year over year in the first 6 months of 2018. Remember that pricing is everything, so don’t buy in just to buy in, without knowing if you are getting a bargain. SQM has a 25 PE, with Albermarle at a 33 PE.
 
7. Clean Energy.
The U.S. solar industry has been heavily impacted by the Chinese tariffs because the silicon ingots and other parts are a global marketplace. It’s something to embrace as a homeowner/consumer if you are living in a sunny state, particularly now when the 30% tax credits are in place. Most homeowners with solar enjoy utility savings of up to 90% on their neighbors. The savings can be even more if you are powering your own EV with solar, and cutting out your gasoline bill. However, as an investor, I’d avoid the solar space for now. LEDs are increasing in popularity, as are electric vehicles. Clean energy ETFs are trading at an all time low. The performance of the solar companies will weigh heavy on the funds, while the growth of LED lighting, lithium and EVs could lift the share prices.
 
8. Micro Mobility.
Companies like Bird and Lime are transforming the last mile in the inner city with electric scooters. Millennials love this easy, affordable solution to expensive parking, cars and gridlock. The companies are still private, but it pays to put this emerging trend on your radar.
 
​9. Facebook, Snap, Weibo and Social Media
As I mentioned above, the technology companies in China, like China’s “Twitter” Weibo, have faster sales growth and higher profit margins than the U.S. competition. In the U.S., Facebook (owner of Instagram) is the clear leader. However, even with the Cambridge scandal, the company is still trading near an all-time high. Twitter has finally figured out how to make money ($100 million in the 2nd quarter of 2018), and has sales growth of 24%. But the share price is high (P/E is 95).
 
It was easy to see before Snap Inc.’s IPO that the company hadn’t figured out their product or how to profit from it. (Click to see my blog.) The company lost $3.45 billion in 2017, and just lost a key C-level executive in Imran Khan this week. Facebook and Weibo would be on my Stock Shopping List, waiting for a better bargain.
 
10. Red Flag Industries: REITs and Retail.
Nike is doing great, as are other athleisure brands like Lululemon (but not UnderArmour). However, there have been dozens of retail bankruptcies over the last few years. Unless you are a powerful analyst, retail is a dangerous dark alley to avoid. Most mall owners, like Simon Property, Taubman and Macerich are overleveraged, have expensive share prices, owe a massive amount of money, are losing revenue and many are barely breathing in terms of profits. The mall REITs are keeping investors in with high dividends. However, the adage from Will Rogers is pertinent here: “I’m more concerned about the return of my money, than the return on my money.” Don’t reach for yield! The higher the dividend, the higher the risk. Even a 5% yield is quite risky in today’s world.
 
The over-riding macro sentiment is that stocks are very expensive, and this is the 10th year of the bull market. There are more pressures weighing the macro economy down than there are balloons still lifting stocks. Free, easy, borrowed money, decent (not stellar) GDP reports, low inflation and low unemployment were all present before the Dot Com crash and the Great Recession. What was troubling then were the asset bubbles, which are higher today than ever (and are the reason the Federal Reserve Board is raising interest rates). Earnings support a Santa Rally this year, more in the NASDAQ Composite Index than the Dow Jones Industrial Average, if the interest rate hikes don’t spook investors.
 
There are a lot of ifs in those sentences, so the most important stance for the Santa Rally is a defensive one. Make sure your assets are protected, that you have enough safe and that you know what is safe in a world where bonds are in a bubble. It’s never a matter of jumping all in or all out. My time-proven easy-as-a-pie-chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. Call 310-430-2397 or email info @ NataliePace.com to learn how to get safe and protected, and to get a second opinion on your current plan to see exactly where you stand. Most people are far more at risk than they realize. If you lost 1/3 or more in the Great Recession, and you haven’t made any changes, then it would be smart to learn more now.
 
I’ll address the Santa Rally in my October 2018 monthly teleconference. Be sure to tune into that teleconference on Oct. 11, 2018 (Thursday) at 9:00 am PT (noon ET). Click here for the call-in phone number and to listen back 24/7 on demand. If you’d like to listen to further commentary on the Back to School Stock Sales, listen to my September 13, 2018 teleconference at BlogTalkRadio.com/NataliePace.

​Here’s a calendar of the major events coming up.

Other Blogs of Interest
Should You Buy Tesla Stock? from August 9, 2018

Russia is Dumping U.S. Treasuries and Buying Gold Instead.

Are Electric Cars Safe? from May 20, 2018

Odds of an Interest Rate Hike are Above 90%.

5 Harbingers of Recessions

How a Strong GDP Report Can Go Wrong.
 
Unaffordability: The Unspoken Housing Crisis in America
 
Social Security and Medicare Warn of Depletion.
 
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.
 
Full Disclosure: I own some, but not all, of the stocks mentioned in this blog.

​Dear Natalie: I Sold My Facebook and Bought Gold.
Signed, What a Waste!
 
Dear What a …!
 
Successful investing is never about looking backwards, and is always about diversification, asset allocation, balance and using data, statistics and time-proven systems to determine what the best return on investment will be going forward. That may sound like a lot, but, it’s actually easy as a pie-chart. You’ll also need to think more like an Olympian. Champions focus on winning. Obstacles are part of the game.
 
Show me an investor who claims to have never been “down,” and I’ll show you Bernie Madoff. It’s what your aggregate overall return is that counts. That and sticking to a winning game plan, using a time-proven system, and not veering off with wild abandon every time there is a move up or down, which happens frequently in today’s volatile market place. If you let your fear (or irrational exuberance) do your trading, you’ll regret it.
 
I was chugging along at 4.5% in Certificates of Deposit for most of 2000 and 2001. I wasn’t interested in buying stocks at the top of an overvalued market. Cash turned out to be the top performing asset in 2000. Then, I almost tripled my money in three short months at the end of 2001. (Yes, right after 9/11.)
 
If you look at your entire investment strategy, you’ve been doing quite well in returns, too. If you have been following the pie chart faithfully since you first came to my Investor Educational Retreat in 2011, then you actually have been invested in Facebook – in your nest egg large cap growth funds. By leaning into technology and NASDAQ (i.e. getting hot and avoiding the bailouts), you have tripled your money in the NASDAQ Composite Index (the exchange where Facebook is traded) since you 2011. The Dow Jones Industrial Average performed well, too, but was completely dusted by the NASDAQ.
 
Here are just a few ways that I would reframe my thinking from “What a Waste” into “What an Opportunity,” “What a Lesson,” and even “Congratulations.”
 
What an Opportunity.
If you believe in a company or an asset, and the price goes down, that’s an opportunity to buy low. So, if you were rebalancing your nest egg right now, the massively large slice of your large cap growth stocks is telling you to trim back and sell high. The slimmer slice of gold could be telling you to buy low, unless you believe that gold has had its day and will never come back.
 
What a Lesson.
It’s never all or nothing. Market timing just doesn’t work. Hail Mary investments, going all on in what you have been sold as a sure shot, more often crash and burn. In truth, if you were following my pie chart system to a Tee, you have been very invested in Facebook and have benefitted over the last decade from the Facebook run-up safely – in funds, along with over great performers, like Amazon, Google and Nvidia. You have also limited your exposure to gold to just a slice of your portfolio.
 
What a Growth Experience
You are now feeling in spades what I’ve been telling you for years. It takes time, experience, wisdom and discipline to get to the point where buying low is your first, and pleasurable, thought. Most people freak out and sell low. You’ll never become a champion investor unless you lean into wisdom and time-proven systems and stop whining about market volatility, which isn’t going away. Exercise your emotional investment muscles! You’ll become a much stronger investor if you do.
 
Celebrate Your Victories.
Before the PIIGS bond crises, I talked about safe, income-producing hard assets that you purchase for a good price as holding their value better than bonds. Real estate was still selling near ten-year lows from 2009-2012. You heeded that and purchased a home, which has likely increased in value tremendously. Many homes have doubled in value since the real estate lows in 2009, particularly those along the coasts and other cities with job growth. (The chart below is a nationwide average.)
 
Conversely, between 2005 and 2008, I was screaming from the rooftops not to buy real estate – something that I’m back to bellowing again. Over 10 million homes went to auction in the wake of the Great Recession. Real Estate prices are higher than ever today, and unaffordable to the majority of denizens in many cities. Rising interest rates will limit the buying pool even further. So, home buyer be aware!
​

Counting your victories is important because it helps you to douse the stomach acid and apply reason to whether or not you should be buying more gold at a lower price, waiting for it to increase in value or getting out, even at a loss. There are a few blogs below that might help you to use data, statistics and probability to inform your decision.
 
Work Out and Get Stronger
If you expect your investments to increase in value 100% of the time, then you’re setting yourself up for a lot of anger. The markets are volatile. No one is perfect and no one bats a thousand. That’s why you diversify, keep enough safe and rebalance annually in your nest egg, instead of stewing over it all the time. (How many superstar athletes spend a great deal of time complaining and worrying about a loss?) A good plan protects you from downturns, avoids the bailouts, keeps you hot, and earns gains when most people are losing more than half of their retirement. Stick to your game plan, and work out your emotions to become a stronger investor athlete. Let smart discipline be your investment strategy, and you will be a lot more successful than if you succumb to anger, sadness, regret, stomach acid or euphoria, or if you let any hormone color your focus. 
 
In the short run, Wall Street is a popularity contest. But in the long run, it’s always back to fundamentals. There is a lot more volatility today, due to the influence of high frequency traders and hedge funds. So, today’s vanquish can turn to tomorrow’s victory more rapidly than you might think. In that scenario, any moment wasted on worry is just that, a waste.
 
Lastly, I want to thank you for volunteering at the retreats so many times. Your presence in the room is always welcome. We love having you there!


If you'd like to learn these easy-as-a-pie-chart nest egg strategies, how to protect your assets, earn gains in recessions (like Nilo Bolden did), reduce debt faster than any other fix and even learn to save thousands of dollars every year in our Stop Making the Billionaires Rich at your own expense plan, then call 310-430-2397. We've got two retreats coming up. The sooner you get this information, the faster your life transforms. Click to see Nilo Bolden's testimonial. Click on the flyers below to learn the 15+ things you'll learn, check out pricing and see even more testimonials. 

 
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.
 

​Did Nike Drop From $500 to $80/Share on the Kaepernick Ad? Investors Ask Natalie.
 
Dear Natalie:
 
A friend is suggesting that I buy Nike stock, which he says has fallen from $500 to $80 because of the ad featuring Colin Kaepernick. What do you think?
Signed, A Little Help from My Friends
 
Dear Friend,
 
Wow. This is the best example of why you should never act on a hot tip from a friend that I’ve ever seen! As you can see in the chart below, Nike stock is trading at an all-time high at $80/share! I have no idea what your friend’s motivation is in trying to get you to buy Nike right now, but I can tell you that she’s no Warren Buffett! If this was a tip from a financial planner, then she has just tipped her hand that she's a salesman after her own interests above yours. In that situation, it's time to get an unbiased second opinion on your entire financial plan as soon as possible. (Call 310-430-2397 to learn more about how to receive my unbiased second opinion.)
 

On September 4, 2018, Nike stock dropped about $2/share, but it’s still very pricey. I don’t see any compelling reason to jump in at a 68.50 price to earnings ratio, in the 10th year of the bull market. If you like the ad, a better investment would be to support the company’s controversial decision by buying Nike’s shoes and clothes… I’d wait for a truly (not hearsay) better price before buying the stock.


If you'd like to learn how to access this simple data, and use the tools for evaluating investments that earned me the ranking of #1 stock picker, join me at one of my Investor Educational Retreats. Call 310-430-2397 to learn more. 
 

​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.

Has Elon Musk Lost It?
 
Dear Natalie: Do you think Tesla is going to rise again? I’m trying to decide whether to buy more, while it’s low, or get out. Elon seems like he’s lost it.  Signed Tesla Fan?
​

Dear Tesla Fan:
 
Investing in one individual company is a risky bet. You should not be gambling your nest egg, retirement or future on individual stocks until you get as good at stock picking as Warren Buffett. Invest only fun money that you are willing to lose. That’s the first and most important consideration.
 
When I’m evaluating an individual stock I use three tools. The Three Ingredient Recipe for Cooking Up Profits ® is the template. My Stock Report Card ® and 4 Questions ® help me pick a leader, which is the second ingredient of the recipe. (These strategies are all outlined in my 1st book Put Your Money Where Your Heart Is.) This system works better than reading headlines. If you just read headlines and articles about a company and invest, you’re always going to be late. Also, articles tend to be hyperfocused on one newsworthy event, rather than taking that event and putting it into context. The endless rehashing of Elon’s recent attempt to take Tesla private is like looking at one-piece of a 100-piece puzzle. My system turns over the majority of the pieces so you have a better picture of what you’re looking at. When you are just reacting to the news, more often than not, you are on the sell low or buy high side of the equation – in other words a losing strategy.
 
Another problem is that most people buy without ever considering what their exit strategy is, or how the general market place will perform (Ingredient #3 of my recipe).
 
So, here’s a thumbnail analysis of Tesla using my system.
 
The 3-Ingredient Recipe for Cooking Up Profits.
 
1. Start with what you know and love. What do you really know about Tesla products? Do you own a Tesla? Have you test driven a Tesla car or done enough research to know what sets Tesla apart from the competition? 
 
2. Pick the leader. Tesla’s revenue jumped 43% year over year in the 2nd quarter. By comparison Ford and GM car sales are down year over year. Tesla is projecting to be cash positive this year. With a 8,000 cars per week being produced (6,000 Model 3 and 2,000 Model S and X), the next two quarters should look spectacular – barring any force majeure (according to the 2nd quarter earnings letter). So, why are Tesla vehicles so popular? Because the car is outstanding, and also because electric cars have become the fastest growing vertical in auto manufacturing. If you haven’t driven a Tesla or freshened up on the cars’ safety ratings, then you need to jump back up to Ingredient #1 and do more research.

 
3. Buy low; sell high. Tesla’s price on Friday, August 31, 2018 was $300/share. Tesla’s 52-week low is $245/share. In 2013, you could have bought the stock for half that price. The general marketplace is trading at an all-time high in the 10th year of a bull market. So, before you buy more Tesla stock, make sure that you have an exit strategy that can gain before the general market weakens. Successful investing in the 10th year of a bull market means considering what the company can do, and also what the general stock market will do. When Elon announced that Tesla was going private at $420/share that was an easy proposition. However, Tesla announced last week that it would remain public.
 
An outstanding 3rd quarter earnings report in early November could definitely spark the Tesla share price. However, if the general stock market is going down, it tends to drag down the share price of all stocks – even great companies, with rare exception. The U.S. economy will report a second quarter GDP growth report in the range of 4% at the end of September. But the 3rd quarter, which reports on October 26, 2018, is expected to be lower – with the New York Federal Reserve Bank forecasting 1.98% GDP growth. So, the micro analysis of the Tesla company looks very promising, but the macro analysis of stocks is quite problematic. (Read some of my macro economy blogs listed below for additional information.)
 
If you’re interested in purchasing a Tesla vehicle, it pays to buy in 2018. The $7,500 U.S. tax credit will phase out in 2019.
 
If you’d like to research Tesla or any other stock more, then join me at my next Investor Educational Retreat in Arizona in October or www.nataliepace.com/valentine-retreat-2019Santa Monica next February 2019. We spend one full day identifying great companies to invest in, and also noting big losers to be sure to avoid. This can up the performance of your investments significantly. Call 310-430-2397 to learn more about our next retreats.
 
Other Blogs of Interest
Should You Buy Tesla Stock? from August 9, 2018

Are Electric Cars Safe? from May 20, 2018

Odds of an Interest Rate Hike are Above 90%.

5 Harbingers of Recessions

How a Strong GDP Report Can Go Wrong.
 
5 Harbingers of Recessions. And how you can protect yourself.

Cut Your Healthcare Costs in Half
 
Interest Rates Keep Rising. Should you lock in a fixed?
 
Social Security and Medicare Warn of Depletion.
 
Warren Buffett on the Sidelines. GE Investors Lose Half.
 
Can the American Consumer Carry This Economy.
 
4 Things the 1,175 Dow Drop on Monday Taught Us. 

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.
 
 

Odds of an Interest Rate Hike September 26, 2018 Are At 90%.
And other important take-aways from Federal Reserve Chairman Jerome Powell’s speech on August 24, 2018 at Jackson Hole, Wyoming and the FOMC minutes of the August 1, 2018 Meeting.
 
According to the minutes of the July 31-August 1, 2018 Federal Open Market Committee meeting, the Fed Funds futures contracts put the odds of a Fed Funds rate increase at the September 26, 2018 meeting at higher than 90%, even though the yield curve has flattened. If Federal Reserve Chairman Jerome Powell raises rates, as is expected, this will be in direct opposition to the Tweets of the President. So should interest rates rise, or is this slaying the 10-year old bull market before its time?
 
There are many takeaways from Federal Reserve Chairman Jerome Powell’s speech on August 24, 2018 at Jackson Hole, Wyoming and the FOMC minutes of the August 1, 2018 Meeting that explain why the Feds are raising the Fed Fund rate at this time. For a more additional information on the case for raising interest rates, refer to my blog, “The Federal Reserve vs. The White House.”

Jerome Powell explained why he and his colleagues are looking beyond just unemployment and inflation as harbingers of the next recession in his speech at Jackson Hole on August 24, 2018, saying, “In the run-up to the past two recessions, destabilizing excesses appeared mainly in financial markets rather than in inflation. Thus, risk management suggests looking beyond inflation for signs of excesses.” This is easily seen in the chart below. 

​Before the Dot Com Recession and the Great Recession, unemployment was historically low (below 5%) and inflation was also low (at 2.5% or below). However, there was a lot of free, easy money flowing into asset bubbles. Low interest rates create bubbles. In 2000, it was the Dot Com Bubble. In 2008, it was the housing bubble. Today the asset bubbles in stocks, bonds and real estate are more troublesome than they were in 2000 or 2008, and debt has become absolutely astronomical. This has been something the Feds have been concerned about for at least two years. At a special meeting of the Federal Advisory Council and the Board of Governors on September 7, 2016, it was recorded that “If rate normalization happens in a steady and more predictable approach, the economy can incorporate this change in rates and psychology and make investment decisions based on the best allocation of capital to productive sources versus riding the asset bubble being generated by the easy-money policies around the globe.”
 
Rate hikes have caused market volatility (on the downside) this year, so it is likely that September 26, 2018 will be an active day – or before, if the “smart money” starts its move early. Will this kill a Santa Rally? Or will it just be a temporary blip? One could make a case either way.
 
However, the 10th year of a bull market is a very good time to get defensive, and make sure that you have enough safe and know what is safe in a world where both stocks and bonds are in a bubble (according to Alan Greenspan, Warren Buffett, Robert Shiller and multiple economists). It’s never a good idea to go all or nothing, or try market timing. My easy-as-a-pie-chart nest egg strategies work great, having earned gains in the last two recessions and outperforming the bull markets in between. (Call 310-430-2397 to learn more about these time-proven strategies.)
 
Here are a few more take-aways from the August 1, 2018 Federal Open Market Committee meeting and Jerome Powell’s speech of August 24, 2018.
 
1. The strong 2Q 2018 GDP report was bumped up (temporarily) as much as 1% by a rush to avoid tariffs. Exports, led by “agricultural products (particularly soybeans) and capital goods, increased strongly and imports increased only modestly. In June, however, advance data suggested that nominal goods exports fell and imports rose,” according to the FOMC minutes. GDP growth for the rest of the year is expected to cool off from the 2Q GDP growth of 4.1%. 2.8% is the expected full-year 2018 GDP growth rate. We’ll see if the estimates change at the Sept. 26, 2018 FOMC meeting. 
 
2.  The Flat Treasury Yield Curve. “Every U.S. recession in the past 60 years was preceded by an inverted yield curve,” according to Michael D. Bauer and Thomas M. Mertens of the San Francisco Federal Reserve Bank. Every rate hike takes the data closer to an inversion. So, why not do everything in your power to avoid that? During the August 1, 2018 FOMC meeting, some participants said, “Inferring economic causality from statistical correlations was not appropriate.” They noted that a worldwide desire for safe assets and central bank asset purchases could be responsible for the Yield Curve phenomenon and that it just might not be relevant this time. The more likely reason for ignoring the Yield Curve is that keeping interest rates low and letting the asset bubbles grow even more out of whack would only create a longer and more severe recession. The last two recessions have been more like depressions in terms of their losses to household balance sheets. The Dot Com Recession saw losses of 78% in the NASDAQ, which took 15 years to crawl back to even. The Great Recession saw losses of 55% in the Dow Jones Industrial Average, and over 10 million homes went to auction. 

​
3.  Asset Bubbles. The most telling phrase of monetary policy was buried in the FOMC minutes section on financial stability: “Vulnerabilities associated with asset valuation pressures continued to be elevated, with no major asset class exhibiting valuations below their historical midpoints.”
  
The job of the Feds is to correct imbalances before they erupt into a catastrophe. In this period, which has now been labeled The Global Financial Crisis, reading the tea leaves of indicators beyond inflation and unemployment is critically important. Asset Bubbles were not properly addressed before the Dot Com Recession (“irrational exuberance”) and the Great Recession (using your home as an ATM machine). Jerome Powell is reading data and white papers from history, which appear to be determining his Fed Fund rate policy more than Presidential Tweets. Powell also warns that Federal Monetary policy cannot do much about wage stagnation, the federal deficit or economic mobility – all American problems that have been on an unsustainable path for over a decade.
 
Jerome Powell ended his speech at Jackson Hole, saying, “The economy is strong. Inflation is near our 2 percent objective, and most people who want a job are finding one. My colleagues and I are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent.”
 
Click to access the FOMC Minutes and the speech from Federal Reserve Chairman Jerome Powell from Jackson Hole, Wyoming on August 24, 2018.
 
Other Blogs of Interest
It's Fun to Buy Gold Low. 

Russia is Dumping U.S. Treasuries and Buying Gold Instead.

The Federal Reserve Vs. The White House.

How a Strong GDP Report Can Go Wrong.
 
5 Harbingers of Recessions. And how you can protect yourself.
 
Social Security and Medicare Warn of Depletion.
 
Warren Buffett on the Sidelines. GE Investors Lose Half.
 
Can the American Consumer Carry This Economy.
 
4 Things the 1,175 Dow Drop on Monday Taught Us. 
 
 
​If you want to make sure that you are safe and protected before the next recession and stock market downturn, come to my next Investor Educational Retreat. Call 310-430-2397 or email info @ NataliePace.com to learn more now. 

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.
​

Dear Natalie,
In 2015 I purchased two gold mining ETFs as my “hot slices” of my nest egg. They doubled, but are now trading closer to my purchase price. Should I have sold the slices when they doubled? Is gold a loser? Should I dump the gold funds now, and try for something else? Signed: It Was Fun While It Lasted.
 
Dear It’s Fun,
 
I know it feels like there is something wrong with an industry when the price falls out of favor. However, it’s actually fun to buy gold low, if you think that the price is going to explode going forward. That’s the real question here: “What’s the outlook for gold? Will it rally or sink further?” Below are a few tips to help you get to that point.
 
Why Did Gold Drop?
Gold dropped because there were more sellers than buyers in the gold ETF market in the U.S. In the U.S., the stock market is near its all-time high and the dollar has been strong. So, American gold ETFs lost strength on that news. At the same time, gold is becoming more and more popular with China, Russia, Turkey and Kazakhstan, as these countries trim back their U.S. treasury holdings. There is a move away from the “dollar monopoly” by Russia, China and other countries. (Here’s a link to a blog on that.) So, the rest of the world isn’t quite as optimistic about the future of U.S. stocks and the dollar as Americans are.
 
What’s In Store For the Future?
The truth is that when an investment rides higher than it has ever been and is stretched out beyond the scope of reason and fundamentals, it is likely that you are seeing a high and perhaps a bubble. Alan Greenspan, Warren Buffett and multiple economists have all said that stocks (and bonds) are in a bubble. Gold is a good hedge against a drop in the stock market or the dollar’s strength.
 
Should I Buy More or Sell My Gold?
The maxim is buy low; sell high. So, if the price drops, then you definitely want to consider buying more at a lower price -- if you believe that the fund is still hot. Once you gain greater experience in rebalancing once a year, then you’ll be on a buy low; sell high system on auto-pilot. Remember that the gold is a slice or two of your “at-risk” portion of your nest egg pie chart, not the only investment you want to own. Diversification is key in today’s world of low-interest rate fueled booms and busts, which we’ve seen in stocks, real estate, gold and more since 2000.

Annual Rebalancing.
Annual rebalancing of your nest egg is also key for maximizing gains, and would have helped you to capture some of the profits you saw in 2016 in your gold fund slices. Start by printing out a pie chart of what you have. (If you need help with this, call our office at 310-430-2397 to inquire about my second opinion, which includes a pie chart of what you currently have.) Print out a pie chart of what you should have. (You can personalize your own sample nest egg pie chart with my free web app.) Make what you have look like what you should have – a safe, diversified plan that is appropriate for your age and the market conditions. You can learn more about my nest egg pie charts in the revised 2nd Edition of The ABCs of Money and at my Investor Educational Retreats in Arizona and California.
 
Buy Low; Sell High
When a fund slice gets smaller (because the fund price became more affordable), you buy more at a lower price. When a slice gets nice and fat, that’s your signal to sell high and trim back to a normal-sized slice. Annual rebalancing makes buy low; sell high easy as a pie chart (rather than the outdated Buy and Forget About It that hasn’t worked since 2000).
 
Rebalancing is what you missed out on in 2016 with the hot gold funds. That’s okay. Don’t expect yourself to be perfect. You did the right thing to ask now before acting because following your instinct in investing is often just following your fear and stomach acid and selling low. It takes time and experience to get excited about buying low; most people want to sell when the price drops. Wisdom, right action and sound information will always yield a better investment outcome. These are all things we go over in my 3-day Investor Educational Retreat. It might be time to immerse yourself in more learning. Call 310-430-2397 to learn more about my 3-day Financial Empowerment retreats. As Ben Franklin says, “An investment in knowledge pays the best interest.”
 
Other Blogs and Links of Interest
Russia Dumps T-Bills and buys Gold
 
The Nest Egg Pie Chart Web App

Unaffordability: The Unspoken Housing Crisis in America

How a Strong GDP Report Could Go Bad.

5 Harbingers of Recessions. And how you can protect yourself.

Cut Your Health Care Costs in Half.

Interest Rates Keep Rising. Should you lock in a fixed?

Social Security and Medicare Warn of Depletion.
 

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

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

In February of 2013, Russia was one of the top holders of U.S. treasury securities, with $165 billion invested. China was number one at $1.252 trillion. As of June 2018, China is still the top foreign holder of U.S. treasuries with $1.179 trillion. However, Russia has dumped virtually everything, with only $15 billion in U.S. Treasuries remaining.

At the same time, both China and Russia have been on a gold buying spree for the last decade. As you can see from the chart below, both countries have almost tripled their gold reserves since 2009. (If you are interested in reading more about gold and the top holders in the world, read my updated 2nd Edition of The ABCs of Money, which was just released this month.)

According to the Q2 2018 Report from the World Gold Council (Gold.org), “Russia’s voracious appetite for gold is strategic – amidst  geopolitical tensions it looks to diversify away from the US dollar.” On May 8, 2018, Russian President Vladamir Putin said that he wants to break away from the dollar to establish “economic sovereignty.” Selling Russia’s U.S. T-bills is only part of that strategy. Putin wants to take the oil trade off of the dollar standard as well. “The whole world sees the dollar monopoly is not reliable; it is dangerous for many, not only for us,” according to Putin. (Click to see a video with subtitles.)
 
China is very interested in trading oil with Russia (and others) in yuan instead of U.S. dollars, as well. Reuters reported on March 29, 2018, that China is launching a Pilot Program to pay for oil in yuan. China is the world’s largest oil importer (and 2nd largest consumer behind the U.S.). China imports most of their oil from Russia, Angola and Saudi Arabia. The pilot program with Russia, Iran and Angola could launch anytime now. To make the trade more attractive, China is offering to convert their currency into gold on demand. As the trade war heats up with China, there is also concern about what China will do with their U.S. Treasury holdings.
 
The Grand Total of the foreign T-Bill holdings as of June 2018 was $6.212 trillion. The total U.S. public debt is currently $21.4 trillion. So, who holds the majority of the debt? Actually, it is us (U.S.). If you check your retirement account, you probably hold Treasury bills there. Additionally, $5.7 trillion has been borrowed from the “intragovernmental holdings” such as the Social Security trust, Medicare, Federal Employees, Disability, Unemployment and others. 
 
So should you be following Russia’s lead and trading in your T-bills for gold? I will examine that in greater detail an upcoming blog. However, for the past year, we’ve had two slices of gold in our hot funds diversification, and have emphasized having a 2-step process for the safe side of your nest egg. Step 1 is to hold your “safe” money in FDIC-insured cash, and then to consider what safe, income-producing hard assets that you might purchase for a good price. (There are a few to consider right now!) In a world where major world powers are dumping U.S. treasuries, and there is far too much U.S. debt floating around, hard assets should hold their value better than paper assets. Since we hold the majority of our own debt (71%), government policy and political rhetoric can keep the value of T-bills stable – even while Russia dumps the U.S. like a bad date. However, if China dumps T-bills, too, that could make headlines. 
 
Bonds, including T-bills, remain vulnerable to capital loss and illiquidity, which takes them out of the safe category. If you want to be sure that you keep your nest egg intact and protect your assets, then it is definitely time to replace blind faith and hope with time-proven systems and real data. You have to be the boss of your money in a world where stocks and bonds are both in a bubble and vulnerable to capital loss. Call 310-430-2397 or email Heather @ NataliePace.com to learn more about our time-proven systems that earn gains in recessions and outperform the bull markets in between.
 

Other Articles of Interest 
Pensions in Peril.

Unaffordability: The Unspoken Housing Crisis in America

How a Strong GDP Report Could Go Bad.

5 Harbingers of Recessions. And how you can protect yourself.

Cut Your Health Care Costs in Half.

Interest Rates Keep Rising. Should you lock in a fixed?

Social Security and Medicare Warn of Depletion.


If you'd like a second opinion on your current budgeting and investing strategy, call 310-430-2397. Attend Natalie Pace's next life transformational Investor Education Retreat to protect what you have, earn money while you sleep and save thousands annually with smarter big-ticket choices. Watch how fast your life transforms when wisdom and time-proven strategies are the foundation of your fiscal health! Call 310-430-2397 or email Heather @ NataliePace.com to learn more now.


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.

Pensions In Peril. Verizon & AT&T Top the Underfunded OPEBs List. Teamsters & UFCW. New Jersey, Kentucky & Illinois.
 
The Pension and Health Care Crisis. Are You Banking on a Broken Promise?
 
160 multiemployer pensions have received notices from the Department of Labor notifying the trustees that the plans are in critical or endangered status, with some plans predicted to dry up in just a few years. (Click to check if yours is one of them.) The Pension Benefit Guaranty Corporation, the U.S. government agency that steps in when plans fail, is also expected to become insolvent in just a few years – by full year 2025 (7 years). S&P500 Corporations are underfunded on their Pension and Other Post Employment Benefits by almost half a trillion dollars, at $453.6 billion (source: S&P Dow Jones Indices). Social Security and Medicare have also announced insolvency dates of 2034 (16 years) and 2026 (8 years), respectively. So, are you banking your future on a promise that is likely to be broken?
 
2017 was a great year for stocks. The Dow Jones Industrial Average rewarded investors with over 25% returns. That improved things somewhat, but not as much as you might expect out of the longest bull market ever.

This year, so far, the returns have been rather tepid, at just 2.5% in the DJIA, as of August 10, 2018. That and actuary projections have prompted many pension funds to lower their expectations for returns going forward, with CalPERS planning on 6.2% annualized returns over the next decade. Lower returns mean that increased employer contributions have to pick up the slack, which might actually exacerbate the problem. According to a CalPensions press release on April 16, 2018, “The new rates may force some service cuts, employee reductions, tax increases and test the “sustainability” of current pensions.” CalPERS services 3000 local governments – over half of which are schools.

Another problem is that if your fund does fail, and the PBGC picks up the slack, your benefits are likely to be cut dramatically. United Airlines pilots discovered this in 2005. The maximum monthly payment for 65-year-olds of a single-employer plan is $5,420 in 2018. If you are in a multiemployer plan, like the Teamsters or the Radio Television and Recording Arts Pension Fund, the PBGC payout for 30 years of service is substantially lower, at a paltry $12,870 per year or less. So, it pays to make sure that your union’s pension is not on life-support. Once it is, you will not be able to receive a pay-out, and may receive a very large pay-cut. 
 
In addition to the pension problems, there is even greater underfunding in Other Post Employment Benefits, such as health care. Pensions in the S&P500 were 85.6% funded in 2017, while OPEBs were only funded at a level of 32%. The companies most underfunded on their Other Post Employment Benefits in 2017 were: Verizon ($18.3 billion), AT&T ($18.1 billion), Exxon Mobil ($7.7 billion), General Motors ($6.4 billion) and Ford ($6.2 billion).
 
The public sector is in an even more perilous situation than the private sector. Only Wisconsin is fully funded on its pension promises. New Jersey, Kentucky, Illinois, Connecticut and Colorado had less than 50% in their coffers for pensioners in 2017 (source: Bloomberg). 
 
Politicians are trying to find piecemeal solutions for the endemic crisis that stems from people living longer, with medical care costs that have soared astronomically since 1980. The pension system was created after World War II, when the average life expectancy was 65 in the U.S. Today, people are living to 78 on average in the U.S. (Higher in Canada). Corporations have given up making these promises, leaving individuals with the task of funding their own self-directed retirement plans. It is the older corporations, the public sector and the union-based multiemployer plans with legacy promises that are struggling, and sometimes failing, to keep their pension and OPEB promises.   
 
What can you do about this crisis? Perhaps one of the most important remedies is to start funding health savings accounts and retirement funds for yourself and for the younger generation, who will have little to no safety net going forward. Educate them on the importance of this, and how the tax credits can lower their tax bill (meaning this is not an extra burden on their budget). Downsize now to make sure that your lifestyle is sustainable with less income. (You can learn how to save thousands in your budget with smarter big-ticket choices in my books, my coaching and at my retreats.) Consider supporting legislation that eliminates the current age limits on contributing to your own traditional retirement and health savings accounts*. You might also weigh the benefits of taking a buyout from your pension provider, if it is still possible.
 
According to the LA Times, LAPD police chief Michel Moore received a $1.27 million DROP payment for retiring as chief of operations, then returned to the same job at the same pay a few weeks later, before he accepted the top position at the police force. If he had not done this, he would have had to choose between accepting the million-dollar-plus retirement package or becoming police chief. There are arguments made for both sides of this dilemma. However, clearly if everyone gamed the system in this way, pensions and OPEBs only race more recklessly toward demise.
 
“For individuals, the impact of personal wealth depletion – via diminished home equity, low-yield savings and fixed income investments, prolonged high unemployment, lower paying jobs and reduced pensions and OPEB – has left retirees with little ability to retire,” according to Howard Silverblatt, the senior index analyst of S&P Dow Jones Indices. Howard disclosed in this year’s pension report that he has his two kids contributing to their Roth IRAs already, in preparation for a future without a public safety net.
 
 
 
*You can contribute to a 401k and a Roth IRA, regardless of age. You can’t make regular contributions to a traditional IRA in the year you reach 70½ and older. After retirement, and beginning with the first month that you are enrolled in Medicare, you are no longer eligible to make contributions to an HSA.
 
Other Articles of Interest
Unaffordability: The Unspoken Housing Crisis in America

How a Strong GDP Report Could Go Bad.

5 Harbingers of Recessions. And how you can protect yourself.

Cut Your Health Care Costs in Half.

Interest Rates Keep Rising. Should you lock in a fixed?

Social Security and Medicare Warn of Depletion.


If you'd like a second opinion on your current budgeting and investing strategy, call 310-430-2397. Attend Natalie Pace's next life transformational Investor Education Retreat to protect what you have, earn money while you sleep and save thousands annually with smarter big-ticket choices. Watch how fast your life transforms when wisdom and time-proven strategies are the foundation of your fiscal health! Call 310-430-2397 or email Heather @ NataliePace.com to learn more now.