Natalie Pace Blogs
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 Hundreds of Thousands of Dollars in Losses. Investors Ask Natalie. Recently our team received an email from someone who had over one hundred thousand dollars of losses over the past year and a half. She had been referred by someone who received a 2nd opinion from me back in 2018, who is grateful that our strategies have protected her wealth and given her “sanity and peace.” The request was to help her understand why she was losing so much money, and how to prevent further losses – particularly as she had previously always just invested in whatever her father’s advisor told her to. Are You in a Similar Position? Have you lost $100,000 or more in your retirement plan, or your managed brokerage account? Have you checked on the performance of your portfolio? Are you afraid to face the truth? Are you hoping that someone else is protecting you, without any checks and balances or oversight? 2022 Was a Terrible Year for Stocks and Bonds With long-term government bonds losing -26% and stocks losing -20% last year, a $1 million portfolio could’ve lost $200,000 or more. If this is what happened to your plan, then it’s riding the Wall Street rollercoaster – winning in bull markets and losing a lot in bear markets. (There’s a better plan. Keep reading.) While it’s tempting to just want to hang on and hope to make up losses, history teaches us that recessions cost investors a great deal more than that. (There is a recession predicted in 2023. The powers that be always say that it will be mild, until, of course, banks start failing and contagion sets in.) The Dot Com Recession shaved 78% off of the value of the NASDAQ Composite Index 78%, and then took 15 years to recover.  Source: MSN.com. (c) Microsoft. Used with permission. The Great Recession cost the Dow Jones industrial Average 55% of its value, and then took about seven years to recover.  Source: MSN.com. (c) Microsoft. Used with permission. During the pandemic, the S&P500 dropped 38% in less than five weeks. What Works in a Recession? During the Dot Com and the Great Recessions, simply overweighting safe allowed investors to earn gains instead of losing more than half of their wealth. Bonds were performing quite well, and kept the portfolio buoyant.  This time around, bonds are losing even more than stocks, which makes a potential recession even more problematic for investors. (Bond and mortgage-backed securities losses have played a large role in the failures of Silicon Valley Bank, Signature Bank, First Republic Bank and Credit Suisse, and could start impacting insurance companies, hedge funds and other financial services corporrations.) Though protecting our wealth on the safe side is tricky, it is doable. A carefully crafted plan will also help us to save thousands annually in our budget, to boot. 2023 Recession-Proof Strategies to Protect & Outperform So, what can we do to protect our wealth, even if we have already experienced losses in our portfolio. Is it too late? It’s no fun to have losses of 20%. However, doing nothing could put half of our wealth (or more) at risk. The truth is: the sooner that we adopt time-proven strategies, the better. Rather than rely on a whistle and a prayer, or blind faith that somebody else is protecting our wealth for us (when the losses suggest otherwise), we can learn the life math that we all should’ve received in high school, and create a future that is healthier for us personally, as well as our collective well-being. Below are just a few ways that we can do this. Adopt a Thrive Budget® Protect and Diversify Our Retirement Plan Know What We Own and Why Know What is Safe Anticipate Volatility And here is more information on each of these points Adopt a Thrive Budget® The Thrive Budget® is rather easy to follow in terms of the math, but requires brave choices. If we want to fly in this life, we have to lighten our load. The truth is, if we follow the conventional path of getting a college degree, securing a job, buying a house, paying our student loan debt, investing in our 401(k), then buying life, car and home insurance – our budget doesn’t add up. We might have to put food on credit cards. Did you know that most people under 40 are spending 30-50% of their income on housing alone! That is unaffordable and unsustainable. A lot of conventional personal finance books chastise us for buying too many café lattes and avocado toast, while overlooking the fact that basic needs in today’s world just don’t add up. Of course, if you’re drinking a $5 coffee every single day, you could save over a thousand dollars a year by not doing that. However, the real problem is the tens of thousands of dollars (or more) that we spend on health insurance, housing, transportation, gasoline, utility bills – basically all the things that we think of as our basic needs. Many of us are essentially slaving away at our jobs to make the landlord, the tax man, the gasoline station, the health insurance company, the insurance salesman, the utility provider, the car manufacturer and other companies rich, while we spin on the hamster wheel of life not getting ahead. HENRY (High Earner, Not Rich Yet) has been coined to describe this sad phenomenon. Smarter choices on the big-ticket spending allow us to clean up this Augean Task. You can read about the various tools that promote our fiscal health, and lead to living a richer life in the Thrive Budget® section of The ABCs of Money, 5th edition. I will be hosting a special free videoconference on this topic, June 8, 2023, at 5 PM ET, 2 PM PT. If you’d like to join us live, just email [email protected] with VIDEOCON in the subject line. You can watch it back at https://www.youtube.com/nataliepace. Whether we are a young professional, a college student, parents who are living in the sandwich generation, or someone who is getting ready to retire, now is the time to set up our financial house, so that we can withstand any economic storms on the horizon. Protect and Diversify Our Retirement Plan A properly diversified investment plan protects us from losses, while allowing us to participate in bull runs and hot trends. If your portfolio lost 20% or more last year, that’s a sign that your portfolio is not properly protected and diversified. Our time-proven, 21st-century strategies actually earned gains in the Dot Com and the Great Recession, and outperformed the bull markets in between. It’s a little trickier this time around with bonds being the worst performers on Wall Street. However, while tricky, it is doable to protect your wealth from losses, especially if there’s a recession, by making some strategic adjustments to your plan now. This plan is less time and money than most of us spend worrying and obsessing over the dire headlines, or being enticed by too-good-to-be-true schemes. Our time-proven, 21st Century strategy is literally easy-as-a-pie-chart, with regular (1-3 times a year) rebalancing.  You can read about these strategies in the Stocks and What’s Safe sections of The ABCs of Money, 5th edition. You can learn them and implement them at our next Investor Empowerment Retreat, which is scheduled for June 10-12, 2023. You can also reach out and get your own unbiased 2nd opinion. Email [email protected] for pricing and information. The June Retreat will likely be the last retreat before October. Summers are typically weak on Wall Street. So it’s a good idea to batten down the hatches of our financial house before we head out on vacation, so that we can have a great time, free from worry and stress, and return home, knowing that we don’t have a giant problem waiting for us. Testimonial "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." Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics Know What We Own and Why Learning the life math that we all should’ve received in high school means that we don’t have to have blind faith that somebody else is protecting our wealth for us. Most managed brokerage accounts ride the markets. It’s easy to make money in bull markets and easy to lose a lot very quickly in bear markets. Once we know the basics of a healthy investment strategy, then the foundation of our wealth plan is established. We can keep building and learning throughout our lives, knowing that the base is solid and secure. Learning the ABCs of money that we all should’ve received in high school is easier than algebra. It allows us to be the boss of our money. Whether we start with an unbiased 2nd opinion on our current plan, or with the 3-day retreat, as Benjamin Franklin said, “An investment in knowledge pays the best interest.” When everything is at risk, we can have devastating losses. Those losses affect everything we own. FICO scores plunge, causing interest rates to soar – if we can get any loan other than on a credit card. The reason most people don’t buy low (a well-known investment rule) is that they can’t. They lose too much money in the recession and are barely hanging on. Buying low is out of the question. Did you know that over 20 million homes were foreclosed on directly before and after the Great Recession?  When we wait for the headlines that the economy has turned, it is too late to protect our wealth. Typically, we’re much closer to the bottom of the bear, so acting at that time would be selling low. It’s a much better idea to fix the roof while the sun is still shining. Know What is Safe At a time when banks are failing, when insurance company products, like annuities, are not FDIC-insured, and bonds are losing more than stocks, it’s important to have a carefully designed strategy for protecting our future. The safe side of our plan is not supposed to lose principal value, and yet, as mentioned at the top of this blog, long-term bonds were the worst performers on Wall Street in 2022. Protecting our wealth by knowing what is safe in a Debt World where there is far too much leverage, assets are overvalued and financial services companies are vulnerable is tricky, but doable. That’s why we spend one full day on what’s safe at the Investor Educational Retreat. Anticipate Volatility Recently, one of my coaching clients talked to me about the stocks in his portfolio. He had lost about $30,000 of his $3 million in liquid assets. It’s easy to look at the red minus signs, and fret that we’re a terrible stock picker and perhaps shouldn’t invest at all. However, when we put the $30,000 in stock losses in context of his entire portfolio, he lost 1% of his portfolio, at a time when many folks lost 20% or more. Having the appropriate amount invested (and overweighting safe) protected him from losses, while positioning him to buy low. (Market timing doesn’t work. Most people are too late getting in or out, and end up buying high and selling low.) A properly diversified plan is one where we don’t expect to be perfect. We anticipate that equities might be weak in a recessionary year, and overweight an additional amount safe as protection against a downturn. This preserves our capital for future purchases, and protects us from losses. We are currently overweighting 20% safe in our sample pie charts. We must also understand why banks are failing, why insurance companies could also be a problem, and protect our safe side from weakness in all of the financial services providers. This plan takes us out of FUD (Fear. Uncertainty. Doubt.) and into a successful strategy. The task then becomes to drown out the nonstop financial noise, and focus on staying true to the plan – to “stick to our knitting.” We offer free Thrive Budget® and Easy-as-a-Pie-Chart® investing web apps. Just email [email protected] to receive the links. Bottom Line The price of 21st Century recessions can be devastating. Hoping to earn back losses in the bull market isn’t a smart idea; it’s just riding the Wall Street rollercoaster. This could be a disaster at any stage in life, but is particularly problematic the closer we get to retirement. Fortunately, a time-proven, 21st Century strategy that earns gains in recessions and outperforms the bull markets in between is easy as a pie-chart (which is why it is enthusiastically recommended by Nobel Prize winning economist Gary S. Becker). Email [email protected] or call 310-430-2397 if you are interested in learning time-proven investing, budgeting, debt reduction, college prep, ESG and home buying solutions that will transform your life and heal our planet at our next Financial Freedom Retreat. We spend one full day on what's safe, helping you to protect your wealth and reduce money stress.  Join us for our Online Financial Freedom Retreat. June 10-12, 2023. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. This is likely the last retreat before Oct. It's a great idea to protect your wealth before you go on summer vacation.  Join us for our Restormel Royal Immersive Adventure Retreat. March 8-15, 2024. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. Early Bird pricing ends May 30, 2023. There is very limited availability.  Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. Check out Natalie Pace's Apple Podcast. Watch videoconferences and webinars on Youtube. Other Blogs of Interest Artificial Intelligence Report. Micron Banned in China. Intel Slashes Dividend. Buffett Loses $23 Billion. Branson's Virgin Orbit Declares Bankruptcy. Insurance Company Risks. Schwab Loses $41 Billion in Cash Deposits. The Debt Ceiling Crisis. What's at Stake? Fiat. Crypto. Gold. BRICS. Real Estate. Alternative Investments. BRICS Currency. Will the Dollar Become Extinct? Empty Office Buildings & Malls. Frozen Housing Market. The Online Global Earth Gratitude Celebration 7 Green Life Hacks The Debt Ceiling. Will the U.S. Stop Paying Bills in June? Fossil Fuels Touch Every Part of Our Lives Are There Any Safe, Green Banks? 8 Fires the Federal Reserve Board Needs to Put Out. 7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure. The 2 Best Solar Stocks Which Countries Offer the Highest Yield for the Lowest Risk? Rebalance By the End of March Solar, EVs, Housing, HSAs -- the Highest-Yield in 2023? Are You Anxious or Depressed over Money? Why We Are Underweighting Banks and the Financial Industry. You Stream all the Channels. Should You Invest, Too? NASDAQ is Still Down -26%. Are Meta & Snap a Buy? 2023 Bond Strategy Emotions are Not Your Friend in Investing Investor IQ Test Investor IQ Test Answers Bonds Lost -26%, Silver Held Strong. 2023 Crystal Ball for Stocks, Bonds, Real Estate, Cannabis, Gold, Silver. Tilray: The Constellation Brands of Cannabis New Year, New Healthier You Tesla's $644 Billion Fall From Mars Silver's Quiet Rally. Free Holiday Gift. Stocking Stuffers Under $10. Cash Burn & Inflation Toasted the Plant-Based Protein Companies Save Thousands Annually With Smarter Energy Choices Is Your FDIC-Insured Cash Really Safe? Giving Tuesday Tips to Make Your Charitable Contribution a Triple Win. Is Your Pension Plan Stealing From You? The FTX Crypto Fall of a Billionaire (SBF). Crypto, Gold, Silver: Not So Safe Havens. Will Ted Lasso Save Christmas? 3Q will be Released This Thursday. Apple and the R Word. Yield is Back. But It's Tricky. The Real Reason Why OPEC Cut Oil Production. The Inflation Buster Budgeting and Investing Plan. No. Elon Musk Doesn't Live in a Boxabl. IRAs Offer More Freedom and Protection Than 401ks. 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? ESG Investing: Missing the E. Bitcoin Crashes. Crypto, Gold and Stocks All Crash. The U.S. House Decriminalizes Cannabis Again. 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? 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 What's Safe in a Debt World? 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. The Bank Bail-in Plan on Your Dime. Rebalancing Your Nest Egg IQ Test. Answers to the Rebalancing Your Nest Egg IQ Test. 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.  AI-generated art of 1960's art of cow getting abducted by UFO in midwest. Author: Encik Tekateki via DALL-E. Wiki Commons. Used with permission. Artificial Intelligence Report. Micron Banned by China. Intel Slashes Dividend. Artificial intelligence is one of the hottest industries in the world today. ChatGPT dropped November 2022, and since then has spread like wildfire. For many entrepreneurs, our virtual assistant has become as indispensable as the C-Suite executive secretary. At the same time, Intel slashed their dividend by 66% in February, and on Monday Micron Technology was banned in China. Revenue is plunging for all AI companies. So, how does AI look for investors? Is this an industry you should be leaning into or underweighting? Are AI stocks on sale or overpriced? Is the revenue rout temporary, or will it be reversed? Micron Technology Micron was banned in China on Sunday, May 21, 2023. The company said that it expects a revenue impact in the single digits. However, the CFO Mark Murphy also indicated that about a quarter of Micron’s revenue comes from companies headquartered in China, either directly or indirectly. The Chinese ban comes at a time when Micron was already losing revenue, with the 1st quarter revenue down -53%. Before the ban, the company was projecting $3.7 billion in revenue for the June quarter of 2023. That’s likely to be a miss now. Revenue could plunge by -60% or more year over year. Micron has a lot of cash on hand – $9.8 billion as of March 2, 2023. However, they burned through $2.3 billion in the first quarter. Will the company have to slash their dividend (like Intel) to conserve capital through the challenging climate they find themselves in? The share price has held strong since the unexpected news of the Chinese ban. Micron shares, like other high-profile technology companies, are still very expensive, with a price/earnings ratio of 48. TikTok Banned by Montana It is worth noting that Micron was banned just a few days after TikTok was banned in Montana (on May 17, 2023). Details of whatever the Micron security breach is that the Chinese regulators are concerned about have yet to emerge. However, we are seeing continued stress between Chinese and U.S. relations, which is still weighing on Chinese equities that are traded on the NYSE or NASDAQ stock exchanges. Intel Intel cut its dividend by 66% on February 22, 2023, slashing it from 36½ cents per share to 12½ cents. According to the Intel press release, “The improved financial flexibility will support the critical investments needed to execute Intel’s transformation during this period of macroeconomic uncertainty.” Intel is another company that saw revenue decline year over year. In the most recent quarter, revenue was down -36%. The 2nd quarter projections are for $11.5-$12.5 billion in revenue, -18-25% lower than last year’s $15.32 billion. The results should be announced around July 27, 2023. Advanced Micro Devices AMD is projecting lower revenue in the 2nd quarter as well, down -20-24% year over year, from $6.6 billion in 2022 to $5.3 billion. The biggest weakness came from AMD’s client processor business, which saw revenue decline by -65%. Gaming revenue declined by -6%. Meanwhile, this company is trading at a very elevated share price. With net income of just $1.32 billion last year, AMD is valued at $174 billion by Wall Street investors. Will Nvidia Stop Buying Back Its Own Stock? Nvidia will release its earnings report tomorrow, May 24, 2023, after the markets close. The company is projecting that revenue will decline by -21.6%. This will mark the 3rd straight quarter of revenue and net income declines. However, the company is still trading at an all-time high, with an outlandish price/earnings ratio of 179. Nvidia has been a darling on Reddit for over a year and a half. However, the resilience of the stock, and its meme stock throne may be coming to an end. Nvidia has been on an aggressive stock buyback spree. Between May 23, 2022 and January 29, 2023. Nvidia repurchased $17.12 billion of their own stock. After that flurry of shopping, they are left with only $7.23 billion authorized to repurchase stock through the end of 2023, unless the board authorizes more. With revenues down by -21% percent and net income down by -53% in the first quarter of this year, the company may be lucky to hang onto their modest annual dividend of $0.16. It’s unlikely they’re going to be able to authorize more share repurchases, unless the economy and revenue rally unexpectedly. Should a company that earns less than $5 billion a year in net income be worth $763 billion? ChatGPT ChatGPT is an OpenAI project that made headlines in November – with not all of them being good. Though the AI chatbot can write term papers for students, it can also have a rather cavalier attitude about outrageously inaccurate information. These “hallucinations” have also been racist, misogynistic and misguided. The valuation of OpenAI is about $29 billion. Elon Musk was a board member, and Microsoft has invested $19 billion in the nonprofit/for-profit hybrid endeavor (according to Wikipedia). What About an AI ETF? Investing in individual companies that are offering artificial intelligence could prove to be a problem. Many of the stocks are still very expensive. Most of the companies are losing revenue and net income, and burning through cash, at a time when borrowing is cost-prohibitive. On the other hand, artificial intelligence is here to stay. It’s become embedded and essential in so many of our products, from gaming, to smart phones, automobiles, marketing, law-enforcement, data centers and beyond. The Artificial Intelligence ETF offered by iShares, symbol IRBO, is currently trading in the range of $30 a share. It hit its high of 51 in February 2021. If we invested in IRBO previously, chances are that the slice has gotten smaller, as the share price plunged. (This is why rebalancing is so important. If your slice becomes two, sell one high!) Rather than just fill up the slice now to be fully invested, with a recession on the horizon and continued weakness in AI projected, a better strategy might be dollar cost averaging. Basically, whatever the amount is that you would have in your slice, divide that by 12 and do a monthly purchase, or divide it by three and do a quarterly purchase. That way, if the value of the ETF weekends, you’re are buying more at a lower price, rather than just watching your investment go down. If you’d like to add a slice of artificial intelligence to your diversified plan, the same strategy might be a good idea. Take it slow and easy. Bottom Line AI is here to stay. Dividends, however can be here today and gone tomorrow, such as we saw with Intel in February 2023. Share prices can plunge as well, as we saw in the pandemic recession, when most of the AI companies dropped to prices that are half or more below where the shares are trading today. Nobody is predicting the 2023 recession to be as terrible as the pandemic, due to a tight labor market, and continued consumer spending. However, we’re taking a cautious approach, nonetheless, and overweighting 20% additional safe in our nest egg pie chart strategy.  If you’d like to mock up your own personalized pie chart, email [email protected] with Free Web Apps in the subject line. Our web applications are complimentary to you. We’re happy to send you a link so that you can start learning how to protect and grow your wealth with time-proven, 21st Century strategies. Email [email protected] or call 310-430-2397 if you are interested in learning time-proven investing, budgeting, debt reduction, college prep, ESG and home buying solutions that will transform your life and heal our planet at our next Financial Freedom Retreat. We spend one full day on what's safe, helping you to protect your wealth and reduce money stress.  Join us for our Online Financial Freedom Retreat. June 10-12, 2023. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. This is likely the last retreat before Oct. It's a great idea to protect your wealth before you go on summer vacation.  Join us for our Restormel Royal Immersive Adventure Retreat. March 8-15, 2024. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. Early Bird pricing ends May 30, 2023. There is very limited availability.  Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. Check out Natalie Pace's Apple Podcast. Watch videoconferences and webinars on Youtube. Other Blogs of Interest Buffett Loses $23 Billion. Branson's Virgin Orbit Declares Bankruptcy. Insurance Company Risks. Schwab Loses $41 Billion in Cash Deposits. The Debt Ceiling Crisis. What's at Stake? Fiat. Crypto. Gold. BRICS. Real Estate. Alternative Investments. BRICS Currency. Will the Dollar Become Extinct? Empty Office Buildings & Malls. Frozen Housing Market. The Online Global Earth Gratitude Celebration 7 Green Life Hacks The Debt Ceiling. Will the U.S. Stop Paying Bills in June? Fossil Fuels Touch Every Part of Our Lives Are There Any Safe, Green Banks? 8 Fires the Federal Reserve Board Needs to Put Out. 7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure. The 2 Best Solar Stocks Which Countries Offer the Highest Yield for the Lowest Risk? Rebalance By the End of March Solar, EVs, Housing, HSAs -- the Highest-Yield in 2023? Are You Anxious or Depressed over Money? Why We Are Underweighting Banks and the Financial Industry. You Stream all the Channels. Should You Invest, Too? NASDAQ is Still Down -26%. Are Meta & Snap a Buy? 2023 Bond Strategy Emotions are Not Your Friend in Investing Investor IQ Test Investor IQ Test Answers Bonds Lost -26%, Silver Held Strong. 2023 Crystal Ball for Stocks, Bonds, Real Estate, Cannabis, Gold, Silver. Tilray: The Constellation Brands of Cannabis New Year, New Healthier You Tesla's $644 Billion Fall From Mars Silver's Quiet Rally. Free Holiday Gift. Stocking Stuffers Under $10. Cash Burn & Inflation Toasted the Plant-Based Protein Companies Save Thousands Annually With Smarter Energy Choices Is Your FDIC-Insured Cash Really Safe? Giving Tuesday Tips to Make Your Charitable Contribution a Triple Win. Is Your Pension Plan Stealing From You? The FTX Crypto Fall of a Billionaire (SBF). Crypto, Gold, Silver: Not So Safe Havens. Will Ted Lasso Save Christmas? 3Q will be Released This Thursday. Apple and the R Word. Yield is Back. But It's Tricky. The Real Reason Why OPEC Cut Oil Production. The Inflation Buster Budgeting and Investing Plan. No. Elon Musk Doesn't Live in a Boxabl. IRAs Offer More Freedom and Protection Than 401ks. 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? ESG Investing: Missing the E. Bitcoin Crashes. Crypto, Gold and Stocks All Crash. The U.S. House Decriminalizes Cannabis Again. 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? 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 What's Safe in a Debt World? 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. The Bank Bail-in Plan on Your Dime. Rebalancing Your Nest Egg IQ Test. Answers to the Rebalancing Your Nest Egg IQ Test. 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.  Cosmic Girl Virgin Orbit 747. Source: TMedia1. Wiki Commons license. Used with permission. Virgin Orbit filed for bankruptcy on April 4, 2023. Bankruptcies Soar. Insurance Company Risks. Buffett and Branson Losses. Insurance companies are taking on high risk, according to the Federal Reserve’s Financial Stability Report, which was released on May 8, 2023. Warren Buffett (Berkshire Hathaway) lost almost $23 billion last year. Virgin Orbit filed for bankruptcy on April 4 (Richard Branson’s company). Discover how all of this ties together. It’s hard to invest successfully when everything is going down in value. Warren Buffett lost almost $23 billion last year. Virgin Orbit filed for bankruptcy last month. According to S&P Global, U.S. corporate bankruptcy filings are the highest this year that they’ve been since 2010.  I mention all of this for a multitude of reasons. It’s important for us personally to protect our wealth, in a world where banks are failing, stocks are falling, bonds (traditionally considered safe) are illiquid and losing value, with the added risk that our insurance and annuity policies are not as safe as many of the policyholders are banking on. All of this is interrelated because the weakness in banks is as a result of lending to businesses that are up against the ropes, and holding long-term bonds that are losing value. Which Businesses are the Most Impacted by the Bankruptcies?  As you can see in the chart above, consumer discretionary has seen the most companies go belly-up so far in 2023, with Bed, Bath and Beyond (a former meme stock darling) being one of the more high-profile. Industrials (like Virgin Orbit), financials (SVB, Signature, First Republic, Credit Suisse) and health care have significant insolvencies, too. So far, real estate looks pretty safe. However, empty office buildings, particularly in metro areas like San Francisco and New York City, are a looming threat. As I mentioned in my Real Estate blog a few weeks ago, it’s no accident that Silicon Valley Bank and First Republic (both San Francisco area based) and Signature Bank (based out of Manhattan) were the first to be seized by the FDIC. This is a problem for life insurers (who also sell annuities) because many are heavily invested in real estate mortgage loans, including partially empty office buildings. The Risks to Insurance Companies According to the Federal Reserve’s Financial Stability Report, “Life insurers continue to allocate a high percentage of assets to instruments with higher credit or liquidity risk, such as high-yield, corporate bonds, privately placed corporate bonds, and alternative instruments. These assets can suffer sudden increases in default risk, putting pressure on insurer capital positions.“ If Warren Buffett can lose $23 billion in a year, how creditworthy is the life insurance company that is in charge of our annuity and or life insurance? How much did they lose last year or are at risk of losing this year and going forward? Are insurance companies, including Berkshire Hathaway, at risk of failing in 2023, like some banks have? What happens when they do? Is there a federal agency that protects insurers like the FDIC protects depositors? How Healthy are Insurance Companies? The earnings in most insurance companies are starting to show weakness. Some companies like Berkshire Hathaway, Prudential Financial and Lincoln National lost a lot of money in 2022. Others, including AIG, Lincoln National and Corebridge have seen their income and earnings plunge in the most recent quarter. You have to wade through a lot of cheerleading in the AIG 1st quarter 2023 results before you get to page 3, where they admit that their pre-tax loss was $231 million compared to pretax income of $5.7 billion a year ago. AIG is the parent company of various life insurance companies. It’s a good idea to check just which company, and their credit rating and earnings outlook, owns our future. Exposure to Long-Term Bonds, Commercial Real Estate & Mortgage-Backed Securities The losses at AIG came from investments, rather than sales of their insurance retirement and annuity products. According to the 1Q earnings report, AIG’s total invested assets amount to about $285.2 billion. (The company’s market value is only $38 billion.) Of that total, commercial mortgage loans total about $34 billion, with $8.6 billion invested in office loans. Almost half of AIG’s office exposure is in NYC, which is one of the areas where companies are reducing their office space and/or attempting to sublease unused floors.  Source: AIG 1Q 2023 earnings presentation. It’s common for insurance companies to have large holdings of corporate bonds, mortgage backed securities, real estate, and other alternative investments. This worked in a low-interest rate, low-default environment, but can become very problematic in a Work-From-Home, inflationary, high vacancy, expensive borrowing, potential recession year. Again, in the Financial Stability Report, the writers stress, “Life insurers continue to have elevated liquidity risks, as the share of risky and illiquid assets remained high.” Which companies are the Most at Risk? Lincoln National, AIG and Corbridge are all at the lowest rung of investment grade, just above junk-bond status. The other insurers on our stock report card are rated A or A-. At minimum, it’s important to know the credit rating of your insurance company. However, it’s also prudent to be aware that First Republic Bank was rated A- before it failed. It went directly to junk without warning. If you’d like to receive my Insurance Company Stock report Card, just email [email protected]. Not FDIC-Insured Life insurance products are never FDIC-insured. They are backed solely by the company. AIG and other insurance companies had to be bailed out in 2008. Will they be bailed out in the next crisis? Will insurers be short-changed? Is this a risk you wish to take? Now would be a very good time to rethink our exposure to insurance, annuities and other products offered by life insurance companies – before they face trouble and start making headlines. The exposure to default is not the only risk one takes on with insurance companies. There might be hidden fees. There can be fine print where our benefits might be reduced, while our premiums increase in certain circumstances. (One of my friends had a million dollar life insurance policy that over time was reduced to just $250,000. They were paying $20,000/year in premiums for more than 15 years – money that could have been compounding, if invested, instead of siphoning off their wealth.) The older you get, the higher the premiums soar, and the greater risk of a reduction in benefits. Of course, if the unfortunate happens early on in the policy, it is a windfall. Annuity products are one of the few investments where your money goes down by 9% or more the minute you buy the product. They call it a surrender fee. (Gold and silver coins, and new cars fall into the money pit of losing a lot at the purchase point, too.) We might think, “Well, if I just hold it for a decade, then I’ll have made XYZ annualized return.” However, are we factoring in that the company itself might get into trouble before then, or that life might hand us an opportunity or a challenge where the money might be put to better use or needed elsewhere? FINRA.org does a very good job of talking about the pluses and drawbacks of annuities. Click to access their information and education. Also, read the fine print and factor in the risk of turning over your future without having a safety net, like the FDIC. Safety nets are a good idea in the Debt World that we find ourselves in. Warren Buffett’s Attitude about the Losses A couple of times in the Berkshire Hathaway 1Q 2023 earnings report the executives write that they “believe that investment gains and losses on investments in equity securities …are generally meaningless.” It appears that at least part of the losses in 2022 were from put options, which have expired. So, that chapter might be behind them. In the most recent quarter, earnings are up 21% year over year. Berkshire Hathaway is a very diversified company, with ownership in Geico car insurance, railroads, Heinz, energy, Apple, utility projects, and other equity investments. Their stock portfolio includes a lot of banks. So continued weakness in banks will definitely impact Berkshire Hathaway. However, the company has a $125 billion cash cushion, so they can buy time through troubled periods. Additionally, Berkshire’s diversification model and emphasis on safety above yield is a time-proven, recession-proof strategy. I wouldn’t put all of my eggs in the Berkshire basket, particularly at this moment when the company is trading near its all-time high. However, even with the risk and weakness of most insurance companies, one could make a case of having a slice of Berkshire – for the investor who is okay with owning a company that invests in fossil fuels and plastic chemicals. Bankruptcies Are at a 13-Year High Again, with:
Now is the time when we really have to batten down the hatches on our financial house, to make sure that our wealth is protected from the economic storms on the horizon. A forensic assessment must include our insurance products, in addition to how we’re going to protect the wealth stored in our retirement plan. You can read about our time-proven, recession-proof budgeting and investing strategies in my books. You can learn and implement them by attending our June 10-12, 2023 online Financial Empowerment Retreat. Or, you can engage me personally for an unbiased 2nd opinion through my private coaching practice. Email [email protected] to learn more. Email [email protected] or call 310-430-2397 if you are interested in learning time-proven investing, budgeting, debt reduction, college prep, ESG and home buying solutions that will transform your life and heal our planet at our next Financial Freedom Retreat. We spend one full day on what's safe, helping you to protect your wealth and reduce money stress.  Join us for our Online Financial Freedom Retreat. June 10-12, 2023. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details.  Join us for our Restormel Royal Immersive Adventure Retreat. March 8-15, 2024. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. Early Bird pricing ends May 30, 2023. There is very limited availability.  Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. Check out Natalie Pace's Apple Podcast. Watch videoconferences and webinars on Youtube. Other Blogs of Interest Schwab Loses $41 Billion in Cash Deposits. The Debt Ceiling Crisis. What's at Stake? Fiat. Crypto. Gold. BRICS. Real Estate. Alternative Investments. BRICS Currency. Will the Dollar Become Extinct? Empty Office Buildings & Malls. Frozen Housing Market. The Online Global Earth Gratitude Celebration 7 Green Life Hacks The Debt Ceiling. Will the U.S. Stop Paying Bills in June? Fossil Fuels Touch Every Part of Our Lives Are There Any Safe, Green Banks? 8 Fires the Federal Reserve Board Needs to Put Out. 7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure. The 2 Best Solar Stocks Which Countries Offer the Highest Yield for the Lowest Risk? Rebalance By the End of March Solar, EVs, Housing, HSAs -- the Highest-Yield in 2023? Are You Anxious or Depressed over Money? Why We Are Underweighting Banks and the Financial Industry. You Stream all the Channels. Should You Invest, Too? NASDAQ is Still Down -26%. Are Meta & Snap a Buy? 2023 Bond Strategy Emotions are Not Your Friend in Investing Investor IQ Test Investor IQ Test Answers Bonds Lost -26%, Silver Held Strong. 2023 Crystal Ball for Stocks, Bonds, Real Estate, Cannabis, Gold, Silver. Tilray: The Constellation Brands of Cannabis New Year, New Healthier You Tesla's $644 Billion Fall From Mars Silver's Quiet Rally. Free Holiday Gift. Stocking Stuffers Under $10. Cash Burn & Inflation Toasted the Plant-Based Protein Companies Save Thousands Annually With Smarter Energy Choices Is Your FDIC-Insured Cash Really Safe? Giving Tuesday Tips to Make Your Charitable Contribution a Triple Win. Is Your Pension Plan Stealing From You? The FTX Crypto Fall of a Billionaire (SBF). Crypto, Gold, Silver: Not So Safe Havens. Will Ted Lasso Save Christmas? 3Q will be Released This Thursday. Apple and the R Word. Yield is Back. But It's Tricky. The Real Reason Why OPEC Cut Oil Production. The Inflation Buster Budgeting and Investing Plan. No. Elon Musk Doesn't Live in a Boxabl. IRAs Offer More Freedom and Protection Than 401ks. 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? ESG Investing: Missing the E. Bitcoin Crashes. Crypto, Gold and Stocks All Crash. The U.S. House Decriminalizes Cannabis Again. 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? 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 What's Safe in a Debt World? 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. The Bank Bail-in Plan on Your Dime. Rebalancing Your Nest Egg IQ Test. Answers to the Rebalancing Your Nest Egg IQ Test. 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.  Source: S&P Global. Schwab Loses $41 Billion in Cash Deposits. Brokerages: Are They the Next Financial Services Companies to Fail? History teaches us that recessions are tough on all financial services companies. Banks (pretty much all of them), brokerages (Bear Stearns, Merrill Lynch, Smith Barney and more) and insurance companies (AIG+) were bailed out or rescued in the Great Recession. Lehman Bros. went out of business. During that period, the online discount brokerages, including Charles Schwab and TD AMERITRADE (now owned by Schwab), skirted the riskiest SIVs, and fared the crisis better than many of their legacy competitors (although TD AMERITRADE was sued by the SEC for selling its clients into high-yield money market funds that were represented to be “safe”). However, Charles Schwab’s most recent earnings report revealed that the company had seen an outflow of $41 billion in cash deposits. That was more than all of the banks listed in the chart below, with the exception of First Republic Bank (which failed, and is now owned by JPMorgan). Is this cause for alarm?  Source: Reuters. www.nataliepace.com/blog While many pundits are telling us that the 2023 recession should be mild, with banks failing, should we believe them? Or should we examine the creditworthiness and fiscal health of every bank, brokerage, insurance company or credit union that is entrusted with protecting our money? That would be a smarter plan than just reading a headline and jumping to a false conclusion, or burying our head in the sand. (We’ve already discussed a bank and bond strategy in previous blogs and videoconferences, and we educate attendees on a time-proven wealth plan for cash, stocks, bonds, real estate, debt reduction and the Thrive Budget® at our Financial Empowerment Retreat and in my private coaching practice.) Brokerages differentiate themselves through their products, their customers, their value proposition, their track record and their creditworthiness. So, let’s examine some of the top brokerages, including Charles Schwab, considering all of those criteria. Here are a few of the topics we’ll dive into. Futures, Options, Crypto and the Brokerages That Sell Them Cash Reserves Wall Street Casino: Zero-Day-to-Expiry Option Trading The Crypto Winter Hedge Funds Credit Ratings Financial Stability Futures, Options, Crypto and the Brokerages That Sell Them FTX and Voyager Digital went bankrupt. Binance is being sued by the Commodity Futures Trading Commission. Some brokerages offer Buy & Hope products, while others empower the Main Street investor, and encourage diversification and regular rebalancing. Robinhood introduced the gamification of trading, while Interactive Brokers is championing hedge funds, and futures and options traders. It’s important to understand the business model of the brokerage you’re entrusting your future to, so that you are aware of the kind of products that are going to be sold/offered to you. Trying to force a Modern Portfolio Theory approach onto a Buy & Hold brokerage invites constant conflict. An active trader platform is likely to steer you toward charts and technical analysis. In all cases, it’s easy to make money in bull markets, and easy to lose in bear markets. So, knowing what we own and why now is key. There have been many instances where broker-salesmen put their clients into products they promised were safe, which went on to lose a lot of money. Losses tend to happen without forewarning, which is why it’s important to be ahead of the economic storm, particularly in a world where we are seeing misrepresentations of what is protected and what is not. (Voyager Digital promised depositors their funds were FDIC-insured. They were not.) Cash Reserves On the face of it, the plunge in cash deposits at Charles Schwab looks alarming. However, according to Schwab’s CFO Peter Crawford, it isn’t a cash flight, it’s a cash “realignment.” (This characterization aligns with what I’m seeing in my private coaching practice as well.) In his CFO commentary, Crawford wrote, “The balances are staying at Schwab and they are being redeployed by clients into other products across the firm to help them meet their financial goals. While Bank Sweep Deposits plus BDA balances are down $104 billion year-to-date, select yield products (including certificates of deposit, purchased money market funds, and fixed income securities) have increased by $194 billion over the same period.” While Schwab is sweeping their clients out of cash and into other yielding products, Interactive Brokers is offering 4.6% on the cash in their accounts (above $100,000). However, it’s important to remember that the cash held at brokerages is not FDIC-insured, unless it is swept over into an FDIC-insured bank – and, even then, there can be complications. Wall Street Casino: Zero-Day-to-Expiry Option Trading The popularity of 0DTE (Zero-Day-to-Expiry) option trading is playing into the success of Interactive Brokers and other online discount brokerages that cater to options trading. While Interactive Broker’s Chairman Thomas Peterffy believes that 0DTE options trading is “very sustainable” because the products are inexpensive, analysts are concerned about a “potential volatility shock that could ripple out to the broader stock market.” J.P. Morgan notes that the daily volume for 0DTEs is now about a trillion dollars. A large intraday market move could expose options traders to large losses. A brokerage with large exposure to margin loans could be vulnerable in that scenario. The economic outlook couldn’t be more different from the mouth of the Interactive Brokers chairman Thomas Peterffy, compared to Charles Schwab’s co-chairman and CEO Walt Bettinger. Bettinger began his comments in the Schwab 1st quarter 2023 earnings press release with a throwback to the Great Recession. He talked about a bearish investor sentiment. In the Interactive Brokers 1st quarter 2023 earnings call, Thomas Peterffy reported that, “more and more investors are looking to the markets to earn a return that will allow them to build their wealth beyond the level of inflation.“ The question is which captain do you believe will steer their ship best through the economic challenges we are facing? Will the ride under their aegis be challenging and stormy, smooth sailing or a wild ride? If our cash is being stowed in their ship, we must believe in the navigation and the final destination, and understand what remedies are available should the ship wreck. Hedge Funds Some brokerages cater to hedge funds. Others to 401(k)s. Some are expanding into high net worth. Of all of these categories, the hedge funds tend to have the greatest risk. According to the Financial Stability report that was just released by the Federal Reserve Board on May 8, 2023, hedge fund leverage is elevated. According to the earnings call transcript of Interactive Brokers, their hedge fund clients have a mixed record of success. According to Thomas Peterffy, “quite a lot of them lose money, and quite a few of them make money. So some of them drop out, and some of them become large.” According to SEC chairman Gary Gensler, private funds, like hedge funds, now account for $25 trillion in gross assets, which is above the $23 trillion U.S. banking sector. Fast money is one of the reasons why we’re seeing such volatility on Wall Street. The shortest bear market on record (in March of 2020) followed the quickest period that a bull became a bear (in February of 2020). This is yet another reason why it’s important to have a solid plan in place before headlines, rather than waiting and reacting on a whim. When we wait for the headlines, we’re too late. The Crypto Winter Some brokerages cater to crypto clients. Those sadly are the ones that look pretty ugly on the stock report card. This has a lot to do the series of crypto-related bankruptcies, including FTX, Voyager Digital, 3 Arrows and more, and the contagion of those toxic assets and even so-called stable coins, like Terra Luna.  Data provided by MSN.com. Data crunch by Natalie Pace. All rights reserved. 2023. The real question here is, “When will crypto become popular again?” The crypto winter has lasted for over a year. However, since, the beginning of 2023, Bitcoin has moved from $17,000 to $28,000. So can Coinbase and Robinhood, two brokerages that cater to crypto clients, start recovering? Though Coinbase has a low credit rating, it also has experience getting through 4 crypto winters without going belly up. With Bitcoin showing signs of life again, and if there is investor uncertainty around the debt ceiling, bank failures, stock volatility, etc., there could be more interest again in cryptocurrency. Of course, there are a lot of ifs in that sentence. However, we certainly have seen a rebound in prices, and that bodes well for Coinbase – if the rally continues. Credit Ratings I’ve included the credit ratings of a few of the brokerages in the stock report card listed above. While many banks are at the lowest rung of investment grade, at BBB, Interactive Brokers, Charles Schwab, and even Franklin Resources are still rated A. However, First Republic Bank was also rated A- when it got into trouble and was downgraded to junk without forewarning.  While I’d want my brokerage and my bank to have a high credit score, it is also important to understand where cash is protected and where it is not, and how to get a safe yield, without taking on high risk, illiquidity or even losses. Again, this maneuvering is so tricky that we spend one full day discussing it at the Investor Empowerment Retreat. The June 10-12, 2023 retreat is the last retreat before October. Since September can be the worst performing month of the year, it’s a good idea to protect our wealth before we go away on summer vacation. Financial Stability Few people believe we’ve seen the last of the banking crisis. However, the Federal Reserve facility that has been set up to help banks deal with unrealized losses in their long-term bonds allows the banks to not have to mark those assets to market and declare losses on their earnings reports. In short, their financials are not fully indicative of the liabilities that the companies are holding. So while the Feds will tell us not to panic, it’s important not to be complacent as well. For that reason, it’s key to have a plan for diversifying the safe side of our portfolio to make sure that it actually does stay safe in the event of more bank failures, a recession or other economic uncertainty. Incidentally, liquidity risks for life insurance companies are also elevated, according to the Financial Stability Report, as the share of illiquid and risky assets that insurers hold continued to edge up. So it’s not just our bank deposits that we want to be protective of, but also our annuities and life insurance policies, particularly since these products are never FDIC-insured. Bottom Line Where we bank and where we do our trading matters quite a lot. We want to know how creditworthy, trustworthy and compatible they are. At the same time, even if all of those things line up, it’s still important to be the boss of our money, and to know exactly what we own and why. Clients tend to love their financial planners in bull markets, while bear markets bring on broker churn and client dissatisfaction. Why? Because most managed plans merely ride the waves of Wall Street, soaring in bulls and sinking in bears. Riding on top of the waves without getting crushed by them requires a time-proven, 21st Century strategy – something we’ve been proud to offer since 1999. That system is less time and less money than most people spend, and is easy-as-a-pie-chart – literally. It’s easy in today’s world of inflation, where so many things just don’t add up, to not want to have one more thing on our to-do list. However it’s always a good idea to fix the roof while the sun is still shining. There are economic storms on the horizon. It is unlikely that the banking crisis is over. Therefore, a little Spring cleaning now could mean that we have a lot more fun over the summer on our vacation, and come home ready for a Fall harvest, rather than just a fall. Email [email protected] or call 310-430-2397 if you are interested in learning time-proven investing, budgeting, debt reduction, college prep, ESG and home buying solutions that will transform your life and heal our planet at our next Financial Freedom Retreat. We spend one full day on what's safe, helping you to protect your wealth and reduce money stress.  Join us for our Online Financial Freedom Retreat. June 10-12, 2023. Email [email protected] to learn more. Register by May 15, 2023 to receive the best price. Click for testimonials, pricing, hours & details.  Join us for our Restormel Royal Immersive Adventure Retreat. March 8-15, 2024. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. Early Bird pricing ends May 30, 2023. There is very limited availability.  Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. Check out Natalie Pace's Apple Podcast. Watch videoconferences and webinars on Youtube. Other Blogs of Interest The Debt Ceiling Crisis. What's at Stake? Fiat. Crypto. Gold. BRICS. Real Estate. Alternative Investments. BRICS Currency. Will the Dollar Become Extinct? Empty Office Buildings & Malls. Frozen Housing Market. The Online Global Earth Gratitude Celebration 7 Green Life Hacks The Debt Ceiling. Will the U.S. Stop Paying Bills in June? Fossil Fuels Touch Every Part of Our Lives Are There Any Safe, Green Banks? 8 Fires the Federal Reserve Board Needs to Put Out. 7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure. The 2 Best Solar Stocks Which Countries Offer the Highest Yield for the Lowest Risk? Rebalance By the End of March Solar, EVs, Housing, HSAs -- the Highest-Yield in 2023? Are You Anxious or Depressed over Money? Why We Are Underweighting Banks and the Financial Industry. You Stream all the Channels. Should You Invest, Too? NASDAQ is Still Down -26%. Are Meta & Snap a Buy? 2023 Bond Strategy Emotions are Not Your Friend in Investing Investor IQ Test Investor IQ Test Answers Bonds Lost -26%, Silver Held Strong. 2023 Crystal Ball for Stocks, Bonds, Real Estate, Cannabis, Gold, Silver. Tilray: The Constellation Brands of Cannabis New Year, New Healthier You Tesla's $644 Billion Fall From Mars Silver's Quiet Rally. Free Holiday Gift. Stocking Stuffers Under $10. Cash Burn & Inflation Toasted the Plant-Based Protein Companies Save Thousands Annually With Smarter Energy Choices Is Your FDIC-Insured Cash Really Safe? Giving Tuesday Tips to Make Your Charitable Contribution a Triple Win. Is Your Pension Plan Stealing From You? The FTX Crypto Fall of a Billionaire (SBF). Crypto, Gold, Silver: Not So Safe Havens. Will Ted Lasso Save Christmas? 3Q will be Released This Thursday. Apple and the R Word. Yield is Back. But It's Tricky. The Real Reason Why OPEC Cut Oil Production. The Inflation Buster Budgeting and Investing Plan. No. Elon Musk Doesn't Live in a Boxabl. IRAs Offer More Freedom and Protection Than 401ks. 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? ESG Investing: Missing the E. Bitcoin Crashes. Crypto, Gold and Stocks All Crash. The U.S. House Decriminalizes Cannabis Again. 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? 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 What's Safe in a Debt World? 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. The Bank Bail-in Plan on Your Dime. Rebalancing Your Nest Egg IQ Test. Answers to the Rebalancing Your Nest Egg IQ Test. Important Disclaimers Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations. ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience. Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  The Debt Ceiling Crisis: What is at Stake? According to Treasury Secretary Janet Yellen, the Debt Ceiling must be suspended or raised by June 1, 2023 to avoid a default. Given that Memorial Day weekend is at the end of this month, that means that Congress must resolve the matter by Thursday, May 25, 2023, if members want to go home for the holiday. Wall Street believes they will, though a bipartisan deal has yet to materialize. Congress has become infamous for last-minute deals, so there will be no nail biting. Tuesday, May 30, 2023, will either bring a sigh of relief, or, as JP Morgan CEO Jamie Dimon puts it, a “catastrophic” panic in stock and Treasury markets. (A Relief Rally is not expected with stocks trading fairly high and a recession on the horizon.) Since Main Street has little say in the matter, it’s easy to want to just “wait and see.” However, there are steps we can all take to protect our wealth from any crisis that might come in 2023, whether it is a Debt Ceiling debacle, a recession or more bank failures. Below are ways to protect our: · Retirement Plan · Cash · Budget · Home, and · Future And here is additional information on each front. Our Retirement Plan: 401(k) or RSP The financial chaos that would ensue if the United States defaults on its financial obligations for the first time in U.S. history would be alarming, and the contagion could easily spread worldwide. Stocks are still very strong in the U.S. because investors are anticipating that the debt ceiling crisis will be resolved with a suspension or a raise that is sufficient enough to get us through the next election.  Source: MSN.com. copyright 2023 Microsoft. Used with permission. If that is not the case, investors are likely to sell stocks and the Treasury market could freeze up. (This happened in the Great Recession.) 21st Century recessions and bear markets tend to be terrible. The S&P500 dropped 34% in just four weeks during the pandemic. The Dow Jones Industrial Average sank 55% in the Great Recession, and took years to earn back the losses. The NASDAQ Composite Index plunged 78% in the Dot Com Recession, and took 15 years to crawl back to even. That’s quite a rollercoaster, where investors spend most or all of the bull market earning back losses – with the exception of the pandemic, which is an anomaly. As we get closer to retirement, we simply can’t afford to suffer those kinds of losses. We don’t have the time to make them up again. However, even if we are just now entering the workforce, it’s important to protect at least a portion of our wealth from losses. A general rule of thumb is to always keep a percentage equal to our age safe, not invested in stocks, stock funds or equities, and to overweight an additional amount safe in times of economic turmoil (such as is happening today). In 2023, we are overweighting 20% additional safe in our sample nest egg pie charts. The problem today, however, is that it is difficult to get safe in any paper asset. Typically, you’d be safe by investing in investment grade bonds. However, long-term government bonds lost more than the S&P500 in 2022.  So, we must know what is safe in a Debt World. (We spend one full day on how to get safe in our Investor Empowerment Retreats. The next one is June 10-12, 2023.) While tricky, there are a few things that we can do (which are explained in greater detail at the retreat). 2023 Bond Strategy Here are a few tips that will assist us in protecting the safe side of our nest egg. 1. Terms short 2. Creditworthiness high 3. Ladder 4. FDIC-insured cash 5. No concentration in any one bank, brokerage or account (including 401k or RSP) 6. Don’t put all of your eggs in any one basket (#5 emphasized) Most employer retirement plans have only a few options on the safe side to choose from. Selecting the safest option requires a forensic analysis. However, there is another tool that can help. Setting up individual, self-directed retirement accounts, in addition to our employer-based one, offers greater freedom and control over our money. If you would like to personalize your own pie chart, email [email protected] with “free web apps” in the subject line. We are happy to send you these free tools to assist you on your journey to greater financial freedom. Our Cash Investors and bondholders have lost money on the banks that have failed so far. The shares of Silicon Valley Bank, Signature Bank and First Republic Bank are worthless. However, depositors have been protected – even uninsured depositors – under a special exclusion, called the Systemic Risk Exclusion. In the case of First Republic Bank, JPMorgan assumed responsibility for all of the depositors, rather than having the FDIC impose the systemic risk exclusion. It is not guaranteed that that exclusion will be used going forward because a special assessment on banks is required to cover the costs when it is imposed. It is also not guaranteed that the banking crisis is over yet. Therefore, the best protection is still FDIC-insured cash levels, rather than relying upon exemptions to safeguard our uninsured deposits. Of course, for big businesses this gets quite tricky. Mega multinational corporations stash cash all around the world, in various types of fixed-income vehicles. Canadian and Australian banks have a higher credit rating than the U.S. banks. Ireland has become a capital hub for U.S. multinational corporations. Anyone who is worth a few million or less can protect the “safe” side of their wealth through a carefully designed plan that includes short-term, creditworthy bonds and FDIC-insured cash. (If you’re interested in a forensic analysis of your wealth plan through my private coaching, email [email protected] for pricing and information.) It’s important to be the boss of our money and to know exactly what assurances and risks are spelled out in the fine print of all of our cash and investment products. Our Budget Financial chaos and recessions are huge problems for our personal budgets. Prices fall, which would be a welcome end to inflation. However, what is good for consumers is a problem for businesses, which results in layoffs. In the Great Recession, unemployment soared to 15% for some cohorts.  So, our budget is at risk because our employment stability is at risk, which can be further exacerbated if our retirement plan loses a great deal, and the value of our home drops. Home prices and stock prices plunged in the Dot Com and the Great Recession. This can also put our home at risk. Our Home As you can see in the chart below, over 20 million homes were foreclosed on during the Great Recession.  If you purchased a home that you can afford at a price that was reasonable, and have a low-interest fixed rate, then you’re in a good seat, particularly if your job is stable. However, with consumer debt at all-time high, and a lot of folks with buyer’s remorse, especially those who purchased more recently, and more than 30% of a lot of folks’ income going towards housing, this does not bode well for the real estate market in the next recession. Real estate prices are very high, according to various measures, from the May 2023 Financial Stability Report to unaffordability measures and price histories. Since prices tend to plunge in bubbles, now is the time to make sure that you do a full analysis of your shelter costs, your home affordability, and your resilience to withstand weakness. It’s a very good idea to think outside the box and to have a recession-proof plan in place before trouble hits.  Real estate prices are already down 10% nationwide. However, that is much better than the performance of stocks and bonds. Hard assets tend to hold their value better when there is too much paper money floating around. So, even if it’s time to downsize, selling is just one option of many that we should consider. If we purchased recently at a very high price, or if we’re not happy with our real estate purchase for another reason, then, the sooner we identify the best plan, the better. As credit conditions become tighter, the options to extricate ourselves from a bad situation become scarcer. The real estate section of The ABCs of Money presents case studies and tips to help us to think creatively for solutions that could protect our wealth, provide shelter and keep more of our money in the family. Our Future The best protection against an uncertain tomorrow is to adapt our entire financial life for the challenges of the 21st century. The following tools will help. · The Thrive Budget® · Easy-as-pie-chart nest egg strategies® · Regular rebalancing, once, twice or three times a year · Knowing what is safe in a debt world · Knowing how to protect our cash at a time when banks are failing You can read about these strategies in my bestselling books. You can learn and implement them by attending our Financial Empowerment Retreat. The next one is June 10-12, 2023. This is very likely to be the last opportunity to attend our 3-day money makeover before October. Since September can be the worst performing month of the year, now is the perfect time to protect our wealth before we go on our summer vacation. If you would like more personalized attention, email [email protected] for pricing and information on my unbiased 2nd opinion and private coaching. Bottom Line Everyone is counting on a Debt Ceiling deal happening in time. If it doesn’t, the results are likely to be so dire that it is difficult to imagine, as it will impact stocks, Treasuries and markets around the world. However, even if a deal does materialize, with all of the debt and financial storms on the horizon, it’s a good idea to do a complete money makeover now, to ensure that our retirement plan, cash, budget, home and future are as secure as they can be. It’s always a great idea to fix the roof while the sun is still shining. Email [email protected] or call 310-430-2397 if you are interested in learning time-proven investing, budgeting, debt reduction, college prep, ESG and home buying solutions that will transform your life and heal our planet at our next Financial Freedom Retreat. We spend one full day on what's safe, helping you to protect your wealth and reduce money stress.  Join us for our Online Financial Freedom Retreat. June 10-12, 2023. Email [email protected] to learn more. Register by May 15, 2023 to receive the best price. Click for testimonials, pricing, hours & details.  Join us for our Restormel Royal Immersive Adventure Retreat. March 8-15, 2024. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. Early Bird pricing ends May 30, 2023. There is very limited availability.  Natalie Pace. Photo by Marie Commiskey. Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. Check out Natalie Pace's Apple Podcast. Watch videoconferences and webinars on Youtube. Other Blogs of Interest Fiat. Crypto. Gold. BRICS. Real Estate. Alternative Investments. BRICS Currency. Will the Dollar Become Extinct? Empty Office Buildings & Malls. Frozen Housing Market. The Online Global Earth Gratitude Celebration 7 Green Life Hacks The Debt Ceiling. Will the U.S. Stop Paying Bills in June? Fossil Fuels Touch Every Part of Our Lives Are There Any Safe, Green Banks? 8 Fires the Federal Reserve Board Needs to Put Out. 7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure. The 2 Best Solar Stocks Which Countries Offer the Highest Yield for the Lowest Risk? Rebalance By the End of March Solar, EVs, Housing, HSAs -- the Highest-Yield in 2023? Are You Anxious or Depressed over Money? Why We Are Underweighting Banks and the Financial Industry. You Stream all the Channels. Should You Invest, Too? NASDAQ is Still Down -26%. Are Meta & Snap a Buy? 2023 Bond Strategy Emotions are Not Your Friend in Investing Investor IQ Test Investor IQ Test Answers Bonds Lost -26%, Silver Held Strong. 2023 Crystal Ball for Stocks, Bonds, Real Estate, Cannabis, Gold, Silver. Tilray: The Constellation Brands of Cannabis New Year, New Healthier You Tesla's $644 Billion Fall From Mars Silver's Quiet Rally. Free Holiday Gift. Stocking Stuffers Under $10. Cash Burn & Inflation Toasted the Plant-Based Protein Companies Save Thousands Annually With Smarter Energy Choices Is Your FDIC-Insured Cash Really Safe? Giving Tuesday Tips to Make Your Charitable Contribution a Triple Win. Is Your Pension Plan Stealing From You? The FTX Crypto Fall of a Billionaire (SBF). Crypto, Gold, Silver: Not So Safe Havens. Will Ted Lasso Save Christmas? 3Q will be Released This Thursday. Apple and the R Word. Yield is Back. But It's Tricky. The Real Reason Why OPEC Cut Oil Production. The Inflation Buster Budgeting and Investing Plan. No. Elon Musk Doesn't Live in a Boxabl. IRAs Offer More Freedom and Protection Than 401ks. 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? ESG Investing: Missing the E. Bitcoin Crashes. Crypto, Gold and Stocks All Crash. The U.S. House Decriminalizes Cannabis Again. 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? 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 What's Safe in a Debt World? 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. The Bank Bail-in Plan on Your Dime. Rebalancing Your Nest Egg IQ Test. Answers to the Rebalancing Your Nest Egg IQ Test. 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. Fiat. Crypto. Bank Failures. Gold. BRICS. Real Estate. Private Equity. Alternative Investments.8/5/2023
 Fiat. Crypto. Bank Failures. Gold. BRICS. Real Estate. Private Equity. Alternative Investments. We are all alarmed about the bank failures, and few of us are reassured that the worst is over. So what is the solution to protect our personal wealth? Should we be withdrawing all of our cash from the banks and putting it into crypto, gold, real estate, BRICS currency or private equity? I will be examining alternative investments in greater detail in my videoconference this Thursday at 5 PM ET. If you’d like to join us, simply email [email protected]. I’ve also outlined a few of the pros and cons of these strategies below. Let’s examine: Crypto Gold and Silver Real Estate Banks and FDIC-insured Cash Private Equity BRICS Economies and GDP Innovation and freedom Debt and Bonds Equity Prices And here are important details to factor into your alternative investing strategy… Currency: Full Faith and Credit When we talk about crypto, fiat currency or any kind of token that we barter with, we’re really talking about faith. We have to believe that the value of that token will not fluctuate dramatically – that it will be worth what we exchanged it for. Of course, we have seen inflation reduce buying power around the world of various currencies. However, while inflation above 5% is considered too hot, we have cryptocurrency fluctuations of that have been coined as Crypto Winters, for the extended period of hibernation and destruction that devotees must endure. Bitcoin hit an all-time high of $69,044 on Nov. 10, 2021. For the past year, cryptocurrency has been trading at less than half that value – in a range of $15,000-$35,000. Bitcoin actually fell below $4,000 in March of 2020, during the pandemic. Imagine if your dollar was worth less than a dime.  That’s one of the main reasons why crypto has not been used as a currency (outside of the criminal and shadow markets). You can’t have a currency that’s worth $69,000 one day, and only $15,000 or $4,000 a few months later. Cryptocurrencies are largely a YOLO* platform, where everyone hopes to get rich quick. *You Only Live Once. Whenever you hear someone talking up a coin or ICO or even taking a bet that Bitcoin is going to go to $1 million, it’s tempting to want to buy into that fever. However, we’ve seen time and time again that celebrities are paid massive amounts of money, from hundreds of thousands to hundreds of millions to promote various crypto currencies, many of which have gone completely bankrupt. FTX is one, with paid promoters including Tom Brady, Gisele Bundchen, Stephen Curry and Larry David. Kim Kardashian promoted an EthereumMax pump and dump scheme, and was fined $1.26 million by the SEC.  The so-called stablecoin TerraLuna is worthless, after a value of $115 in April 2022. FTX declared bankruptcy on Nov. 11, 2022. FTX’s former CEO is being charged with a 12-count indictment, including fraud, bribery and money laundering. Binance, the largest crypto exchange, has halted Bitcoin withdrawals twice this year. The company and its CEO, Changpeng Zhao, have been charged by the Commodities Futures Trading Commission with dodging regulations, including compliance practices that prevent terrorist financing and money laundering. Voyager Digital promised that depositors were FDIC-insured before the company declared bankruptcy. However, brokerages are not banks, and thus deposits were not protected. In other words, there are quite a few problems and potholes to maneuver if you’re thinking to dump your fiat currency and drive into the sunset with crypto. Here are 6 Red Flags to Heed Before You Invest. What About Gold or Silver? Gold and silver have been the worst performers for the last decade in terms of investments.  One might argue that prices have been relatively stable over the last decade, and therefore may be better than fiat currency. However, gold, too, has volatile price swings historically. After hitting a high of $800/ounce in 1980, gold sank to the $250-$350/ounce range, and stayed there for about a quarter of a century. After hitting a high of $48.70 on April 28, 2011, silver slumped and has been trading $18-$28 since. Gold and silver coins tend to be even more problematic than the precious metals themselves. Most coins are marked up well beyond their value in bullion. Often the minute we purchase one of these coins it has to increase in value by 55% or more in order to break even. Real Estate and Shelter Inflation Real estate prices are down -10% nationwide in the United States. (The high was June of 2022.) The areas that went up the fastest are the ones that are plunging the most. However, that compares with long-term government bonds losing -26% in 2022, and the S&P 500 losing -19.44%.  In a world where many assets are losing their value, hard assets, like real estate, are holding value better than paper assets are. Whether we are thinking of buying, selling or holding real estate, it’s a very good idea to address the 7 tips and the 10-point Checklist for Homebuyers that I go over in my Real Estate Master Class. Join us on June 3, 2023 online, from wherever you are. Holding real estate can be a great way to build wealth and keep it over the generations. However, since 20 million homes were lost in the Great Recession, it’s also important to get the fundamentals right.  One of the big problems with inflation in the United States and in other parts of the world is shelter inflation. Buying or renting a home has become unaffordable. Businesses in expensive cities are having difficulty hiring people, especially for the low-income jobs, largely because no one can afford to live where they work.  Unaffordable housing also effects prices. When real estate becomes unaffordable the buying pool is dramatically reduced. This is why it is extremely important to have a multiyear plan rather than a short term fix. It’s a good idea to have a plan for our cash as well because being property rich and cash poor can make us vulnerable. There are expenses that come with being a homeowner and landlord. Banks and FDIC-Insured Cash One of my more recent video conferences was “How to Stash Your Cash.” We also cover this topic for a full day on day three of the Financial Edu Retreat. Our next Financial Empowerment Retreat is June 10-12, 2023 online. Email [email protected] to learn more and to register. Bank failures make it important for us to know our cash is safe and secure. Many banks have allowed their credit rating to fall to the lowest level of investment grade, and have higher risk, particularly for uninsured depositors, than most Americans are aware of.  Therefore, in addition to considering FDIC-insured limits, diversifying our cash, and knowing the best strategies for bonds, we also want to know the credit rating of the bank we’re doing business with. At the June Retreat, we’ll also talk about diversifying our at-risk portfolio away from U.S. financials, and into other countries where the credit ratings are higher, and the yield is, as well. Private Equity Private equity placements become tempting when the broker salesman promises that they are safe, and that you’re going to earn a very good income. (The highest risk investments often pay the highest broker commissions.) Sadly, we have seen cases of members of our community who did not do their proper due diligence and lost a lot of money, while investing in something that they were told was safe and would provide them with a high yield. (Click to read one couple’s experience.) With regard to private equity anything, we must do ten times the amount of research, while combing through and understanding P&Ls and other financial documents that you might have difficulty getting access to. There are probably some great opportunities to be had – in a more normal world. However, in a world where so many assets are overvalued, there is elevated risk. BRICS, GDP & Economy There really isn’t a BRICS currency yet. The person touting the development is a friend of the Russian President. The Chinese yuan is still less than 5% of the global reserve currency basket. If you’d like to learn more about BRICS, click to read my blog. In addition to these facts, we might also consider the broader implications of investing in the currency of Brazil, Russia, India, China and South Africa. What natural resources, products and businesses underpin these economies? Do they align with our values? Do we want to get rich on oppressive regimes? The U.S. has a diversified economy. We tend to dream up a lot of the inventions of the world, including leading in Internet technology. Over the past year, the U.S. has been instrumental in selling natural gas to Europe, so those countries could become less reliant on imports from Russia. The Russian economy is heavily tied to its oil and gas exports, and also to its military industrial complex. China is the factory to the world. Brazil exports iron, soybeans, oil products, poultry and beef. China tends to be the top consumer of rainforest beef. However, there have been certain periods when the US imports a lot as well. (Eating local and organic helps to ensure that we’re not contributing to the Dead Zone in the Gulf of Mexico or to the destruction of rainforests in Brazil.) India and China have some of the most polluted cities on the planet. I mention all of this because when we think of a BRICS currency, it’s important to understand what underpins their economies and what we’re supporting, in addition to whether or not we’ll get rich. Do we want to invest in freedom and innovation, or do we want to support oppressive regimes that are harming our planet? Innovation and Freedom Happy people make better products, faster, and cheaper. One of the reasons that the United States is a leading innovator of the world is because of our policies of freedom. We try to make it easy for people to start their own businesses. Our universities are strong and desired around the world. Many are hubs of geographic areas of innovation such a Silicon Valley, with its proximity to Stanford and the University of California, Berkeley. That doesn’t mean that the U.S. is skipping along some golden brick road without any troubles. However, the ideals of freedom, self-determination and innovation are fundamental to the American ethos, and that is not necessarily the case in other countries around the world. Debt and Bonds The United States, like most of the world, has a debt problem. The losses in long-term bonds are central to many of the bank failures. The new Federal Reserve facility allows qualified banks to avoid declaring the losses of their long-term bond portfolio on their financial statements, which means that financial statements and quarterly earnings can be deceiving. We aren’t getting advance notice of trouble before the bank is on the ropes. As just one example, First Republic Bank was rated A- before it got into so much trouble that it was downgraded to junk without warning. There are ways to protect our wealth. However, relying upon the strategies of yesterday, or the verbal promises of the Federal Reserve and Treasury, or the assurances of our financial advisor are risky. History shows us that Main Street is advised of trouble near the bottom, after most of the losses have already occurred. When we wait for the headlines that the U.S. is in a recession, or that the bank failures are endemic and widespread (as they were in the Great Recession), we’ve already been swallowed up and are sinking in our home value and equity portfolio losses. A good strategy protects our wealth before the plunge happens, which is what our easy-as-a-pie-chart nest egg strategies have done in all of the 21st Century recessions – at a time when most investors have lost half or more of their wealth, and then had to hope and pray to earn back losses in the bull market. The world is still reeling from the pandemic, and the colossal debt that was amassed to try to keep the world from plunging into a prolonged depression. Protecting our future requires time-proven solutions, rather than blind faith that someone else is protecting our wealth. Equity prices While fiat versus crypto, gold and silver and other hedges is at the top of everyone’s mind, equity prices should be as well. As you can see in the chart below, which is Warren Buffett’s favorite valuation tool, equity prices today are higher than they’ve been in half a century.  When prices soar so high, the crash tends to be more severe and swift. The S&P500 lost -34% between February 19 and March 23, 2020. We got out of that mess by printing out trillions of dollars and giving a little to anything that moved (though most flowed to the wealthy corporations). The current tightening cycle is the opposite of that. Money is harder to access and a lot more expensive to borrow. So, in addition to protecting our cash, it’s also important to know exactly what we own in our retirement accounts, as well as our managed brokerage accounts. This is one reason why I offer an unbiased second opinion. I am able to give my private coaching clients a clear understanding of what they own and what a better plan looks like, so that they can be the boss of their money. It’s important to not just have blind faith that someone else is protecting our future for us, even if the last decade has gone quite well. Never confuse a bull market with wisdom. Most managed plans perform with the market, rising in bull markets and sinking like a rock in recessions. As I mentioned previously, most investors lost more than half of their wealth in the Great and Dot Com Recessions. This time could be as bad or worse, since the “safe” side (bonds) have been losing even more than the at-risk side (stocks and funds). Bottom Line A well-diversified plan can include a hedge against recession, bank failures, a weakness in the dollar, and a plunge in equity prices. However, doing this without taking on the risk of any one of the options mentioned above requires implementing a solid strategy, complete with entry and exit plans. If you would like to learn and implement these strategies now, join us at our June 10-12, 2023 Financial Empowerment Retreat. That will be a complete money makeover in time for you to protect your wealth before you go on vacation. I have included links to various blogs and video conferences on the topics discussed above. Click on the blue highlighted links. I’ll also be hosting a free videoconference this coming Thursday. Watch it back at YouTube.com/NataliePace. Email [email protected] or call 310-430-2397 if you are interested in learning time-proven investing, budgeting, debt reduction, college prep, ESG and home buying solutions that will transform your life and heal our planet at our next Financial Freedom Retreat. We spend one full day on what's safe, helping you to protect your wealth and reduce money stress.  Join us for our Online Financial Freedom Retreat. June 10-12, 2023. Email [email protected] to learn more. Register by May 15, 2023 to receive the best price. Click for testimonials, pricing, hours & details.  Join us for our Restormel Royal Immersive Adventure Retreat. March 8-15, 2024. Email [email protected] to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. Early Bird pricing ends May 30, 2023. There is very limited availability.  Natalie Pace. Photo by Marie Commiskey. Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021. Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden. Check out Natalie Pace's Apple Podcast. Watch videoconferences and webinars on Youtube. Other Blogs of Interest BRICS Currency. Will the Dollar Become Extinct? Empty Office Buildings & Malls. Frozen Housing Market. The Online Global Earth Gratitude Celebration 7 Green Life Hacks The Debt Ceiling. Will the U.S. Stop Paying Bills in June? Fossil Fuels Touch Every Part of Our Lives Are There Any Safe, Green Banks? 8 Fires the Federal Reserve Board Needs to Put Out. 7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure. The 2 Best Solar Stocks Which Countries Offer the Highest Yield for the Lowest Risk? Rebalance By the End of March Solar, EVs, Housing, HSAs -- the Highest-Yield in 2023? Are You Anxious or Depressed over Money? Why We Are Underweighting Banks and the Financial Industry. You Stream all the Channels. Should You Invest, Too? NASDAQ is Still Down -26%. Are Meta & Snap a Buy? 2023 Bond Strategy Emotions are Not Your Friend in Investing Investor IQ Test Investor IQ Test Answers Bonds Lost -26%, Silver Held Strong. 2023 Crystal Ball for Stocks, Bonds, Real Estate, Cannabis, Gold, Silver. Tilray: The Constellation Brands of Cannabis New Year, New Healthier You Tesla's $644 Billion Fall From Mars Silver's Quiet Rally. Free Holiday Gift. Stocking Stuffers Under $10. Cash Burn & Inflation Toasted the Plant-Based Protein Companies Save Thousands Annually With Smarter Energy Choices Is Your FDIC-Insured Cash Really Safe? Giving Tuesday Tips to Make Your Charitable Contribution a Triple Win. Is Your Pension Plan Stealing From You? The FTX Crypto Fall of a Billionaire (SBF). Crypto, Gold, Silver: Not So Safe Havens. Will Ted Lasso Save Christmas? 3Q will be Released This Thursday. Apple and the R Word. Yield is Back. But It's Tricky. The Real Reason Why OPEC Cut Oil Production. The Inflation Buster Budgeting and Investing Plan. No. Elon Musk Doesn't Live in a Boxabl. IRAs Offer More Freedom and Protection Than 401ks. 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? ESG Investing: Missing the E. Bitcoin Crashes. Crypto, Gold and Stocks All Crash. The U.S. House Decriminalizes Cannabis Again. 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? 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 What's Safe in a Debt World? 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. The Bank Bail-in Plan on Your Dime. Rebalancing Your Nest Egg IQ Test. Answers to the Rebalancing Your Nest Egg IQ Test. 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. |
AuthorNatalie Pace is the co-creator of the Earth Gratitude Project and the author of The Power of 8 Billion: It's Up to Us, The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She is a repeat guest & speaker on national news shows and stages. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999. Archives
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