This blog was amended on 1.3.2023 to link to the EV tax credit information on the IRS.gov website and to correct the information on GM, Tesla & Toyota tax credit eligibility under the Inflation Reduction Act. 
​
Tesla’s $644 Billion Crash From Mars.
 A Tale of 2 Cs and one P/E: Covid, Competition, insider selling (by Musk) and a lofty valuation caused a crash landing from Tesla’s trillion dollar valuation (on Oct. 26, 2021). With a value of just $356 billion, is it time to buy the world’s most popular electric vehicle manufacturer?
 
 
 
If you ask most people to name an electric vehicle, chances are they will immediately retort, “Tesla.” Tesla is as synonymous with EVs as Heinz is to ketchup – not just in the U.S., but all over the world. Models S3XY (sexy) are on the roads in Europe and China, with factories in Shanghai and Berlin. Year-over-year sales growth was an impressive 56% in the 3rd quarter of this year. So, why have investors dumped their Tesla shares?
 
Who is Selling Tesla?
Elon Musk is the biggest seller, having sold almost $40 billion over the last year (source: Bloomberg). While that doesn’t explain a drop of over $600 billion, it does send the wrong signal to investors.
 
Is Elon protecting his wealth against a potential recession? Not necessarily. All billionaires are interested in diversifying their revenue streams. Also, Musk had to sell Tesla stock in order to buy Twitter. In Tesla’s 3rd quarter 2022 earnings call, Musk said that he believes Tesla is “recession-resilient” because “the public realizes that the world is moving toward electric vehicles, and that it's foolish to actually buy a new gasoline car at this point because the residual value of that gasoline car is going to be very low.” 
 
The EV Competition
Of course, Tesla isn’t the only EV available. There are many challengers to Tesla’s stellar first-mover advantage, including in the world’s largest EV marketplace – China. A partial list of competitors includes: BYD Auto (the #1 EV automaker in China), GM (going all electric), XPeng, Nio, Genesis (Hyundai), Vinfast, Li Auto, Mercedes and Lucid.
 
The publicly traded Chinese EV makers have had their share prices destroyed this, largely because China has been out-of-favor. There has been a great deal of pressure to get U.S. audits of their financial statements. That process has begun, and the outcome will likely be significant. In the event of good news, there could be a massive relief rally. In addition to selling cars in China, Nio has expanded into Norway and Europe.
 
China: The #1 Electric Vehicle Market in the World (by far)
China’s appetite for electric vehicles is ravenous. The China Association of Automobile Manufacturers projects that sales of electric cars and plug-in hybrids will reach 6.7 million units this year, up from 3.5 million units in 2021 (source: China Daily). See below for the country comparison of BEV and PHEV sales in the first half of 2022 by CleanTechnica. Forecasters are predicting that passenger car sales in China will be on par in 2023 compared to 2022, with EVs continuing to take up more of the pie.

 
There has been a lot of news about Tesla lowering prices in China. This has a lot to due with the competition and also the COVID lockdowns. However, delivery snafus are also an issue. Tesla reported that deliveries were lower in the 3rd quarter because there were vehicles in transit that didn’t make it to the buyer in time. The same challenge is expected to be in play in the 4th quarter.
 
According to the China Passenger Car Association’s November 2022 sales report, in November 2022, Tesla was #2 in sales of new energy passenger cars in China (by units), behind BYD.

​

​About a quarter of Tesla’s revenue came from China in 3Q 2022.

Inflation Reduction Act EV Tax Credits
EVs come with up to $7,500 in tax credits thanks to the Inflation Reduction Act. The lower-priced models of Tesla and GM models that previously didn't qualify, as the companies had already reached their 200,000 vehicles per manufacturer limit, are now allowed. Mercedes, Honda, Nissan, BMW, Ferrari, Fisker, Lucid and Toyota also should have models that qualify. (Some, like Toyota and Mercedes, were still pending as of the writing of this blog.) Mercedes might be one to watch, as the company began rolling out its mostly all-electric fleet this year. Click to check the IRS list for cars that meet the requirements.

Growth & Valuation Concerns
When Tesla sported that trillion dollar valuation, the price earnings ratio was over 400. The company was earning less than $5 billion, and its company value was over $1 trillion. This was during the Shoot the Moon Stimmy check phase – a runup caused by infatuation with Ark Investments and little regard for fundamentals. That was Fantasyland. Today, Tesla’s price-earnings ratio is 35 – still quite lofty, particularly given the natural gas crisis and recession in Europe, the COVID crisis in China and the slowdown (and potential recession) in the U.S.
 
Tesla’s net profit should ring in about $15 billion in 2022, and the market value is still $384 billion. By comparison, General Motors could bring in around $12 billion, and the company’s market value is only $48 billion. Tesla’s valuation is still higher than the combined value of GM, Ford and Toyota combined.
 
There is been concern that Tesla won’t meet analyst expectations in the 4th quarter. Zachary Kirkhorn, Tesla’s CFO, advised in the 3rd quarter earnings call that there were a lot of cars in transit that were being tied up in Shanghai harbors, and also due to local trucking issues in the U.S. While the company is clearly working to solve those bottlenecks, and to keep the materials supply chain from limiting production, the November COVID lockdowns and current COVID crisis in China have the potential to further complicate the problems.
 
Tesla would have to deliver almost half a million vehicles in the 4th quarter of this year in order to meet the “almost 50% delivery growth” cited by Kirkhorn. That would represent a 44% increase in deliveries over the 3rd quarter’s 343,830. The production and deliveries report should be released on January 2, 2023, with the earnings report on or around Jan. 25, 2023.
 
EVs are the hottest ticket in car sales, and Tesla has always performed impressively when the company is on the ropes. However, it doesn’t seem realistic that that many cars can be delivered in the last quarter of 2022. (Thus, the investor selloff of stock when Tesla started marking down the price in China.)
 
Bottom Line
Tesla is still the EV that people around the world want to own. However, there are a lot of options now, and a great deal of financial incentives (that Tesla is locked out of) that could start cutting into market share going forward (and is already impacting sales in China). Tesla’s $1 trillion fall from grace had a lot to do with being severely overvalued in the first place. This is why Tesla owners, and all shareholders, really need a “capture gains” rebalancing strategy (something we teach at our Investor Educational Retreats). Buy & Hope hasn’t worked well in the 21st Century, and has been spectacularly terrible in recessions – even with great companies that have become imbedded in our daily lives.
 
Would I be buying Tesla right now? Weakness in stocks, combined with the potential of missing expectations are both negative for a rise in share price. Car sales slow way down in recessions. (Remember the bankruptcies of GM and Chrysler in 2009?) The trend toward EVs is likely to continue. However, if unemployment rises, car sales will falter. If I owned Tesla and had ridden the rollercoaster up and down, then I’d be looking at adopting a strategy that allowed me to retain ownership, while also keeping my portfolio in balance (a capture gains plan). We discuss this at our Financial Freedom Retreats and also in my private coaching. Email [email protected] to learn more.
 
FYI: We had multiple alerts that Tesla was overpriced over the past year, including at $362 on March 31, 2022 and $272.24 on July 7, 2022, (Click to access the original blogs.) We’ve also been warning this in every retreat since the trillion dollar valuation. (You’ll learn how to do this yourself at the retreat.)
 
Email [email protected] with Auto Stock Report Card in the subject line, if you’d like a copy of our updated Auto Stock Report Card.
 
 
 
Full Disclosure: I own shares of Nio and Xpeng.
 

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

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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 Quiet Rally of Silver.
 
 
Silver has soared 35% since its low in October, in a quiet rally that hasn’t made headlines – yet. Over that same period of time, the Dow Jones Industrial Average crawled back 16% (but is still down 10% from the January high), and gold is up about 11%. 

Even with this recent strength, silver is still a bargain compared to gold. At $22/ounce, silver is less than half of its recent high of $48.70 (on April 28, 2011). Gold hit $2,089/ounce on Jan. 5, 2021, and is down 14%, at just under $1800/ounce.

 
Will Precious Metals Shine in 2023?
While stocks weakened in 2022, the dollar increased in value against other currencies. A strong dollar can be negative for safe havens. The U.S. Fed Fund rate soared from zero to 4.5%, making short-term bonds and Treasury bills more attractive, with far less volatility than precious metals. Cryptocurrency has been pulling the younger crowd away from gold and silver for most of the past decade. So there were a lot of things working against gold and silver, and the returns reflect this. Gold was the worst performing asset of the decade.

 ​

Crypto is in the midst of a crash that has wiped out FTX, Voyager Digital, 3 Arrows, Alameda Research, and is threatening exchanges like Gemini and Binance. The coins themselves have given up most of their pandemic gains. Bitcoin has lost about 75% over the past year. The cryptocurrency turnaround can’t begin until the fallout ends. In the meantime, safe haven seekers might become more interested in gold and silver again. Stocks are predicted to soften in the first half of 2023, which is also positive for precious metals.
 
With the US protected (somewhat) from the European natural gas crisis, the Russian/Ukrainian war, and China’s Covid outbreak, the dollar is predicted to maintain its strength in 2023. Despite that forecast, many of the big bank analysts are bullish on gold and silver with some saying the rally could become “supercharged” if the U.S. enters and recession and the Federal Reserve has to cut interest rates. That’s not predicted to happen until the 4th quarter of 2023 or 2024. However, anything is possible in this crazy world.

Will There Be a Recession? 
The Conference Board is predicting a recession. The Federal Reserve Board is predicting flat growth. There is a small number of analysts, who believe that a soft landing (no official recession) is possible. Many equity seers are predicting rough times for stocks in the first part of the year, testing the 2022 low again. There is also consensus belief that the S&P 500 will rally back to 4000 by the end of 2023, which is 4% above where it is now.
 
Nobody knows for sure which way GDP is going. One thing that is almost assured, however, is that 2023 is unlikely to be calm, cool and collected. FUD and volatility all play into safe havens. Since gold and silver seem to be the only safe haven in town (until cryptocurrency thaws out of its winter), silver could be the shooting star, given that it is the more undervalued.
 
Copper
Copper has been coined as the “new oil,” by Goldman Sachs due to the commitment to electrification that is happening worldwide for transport, cooking and heating, powered by renewables, as a cleaner alternative than fossil fuels (oil, natural gas and coal). However, this transition does not afford a reliable rally for copper, safe from sinkholes. Many analysts predict weakness in the first half of the year, with copper testing the 2020 lows, and a robust rally only after the economic storms batter the metal, potentially beginning late 2023 and 2024. Building materials, such as copper and iron tend to suffer early in recessions, and then rally strong once rebuilding begins.
 
Is Crypto in the Crypt for Good?
I’ve published many recent blogs about the crypto winter, the bankruptcy of FTX, Voyager Digital, LUNA, et al., and other weaknesses in cryptocurrency, including important information that any claims of FDIC-insurance are probably not true, and red flags to help you avoid the riskiest ventures. It is very likely that more companies will bite the dust. Gemini has frozen customer assets in the Earn program (estimated at $900 million). Their “stablecoin” GUSD has 100% selling activity with no buyers. Binance has exposure to FTX. Email [email protected] if you’d like to get links to those blogs.
 
The bottom line is that right now if you’re being approached to invest in cryptocurrency with the words Defi, Blockchain and a worthless dollar dangling on the rod, it is possible that you are being targeted by a ruthless marketing/salesperson, who is getting paid a lot to to sell you something. (Kim Kardashian isn’t the only celebrity who has been fined for taking money from pump-and-dump scam artists.) No matter what the promises and claims are, you could potentially lose money. The harder the sales tactics and the more Fear, Uncertainty and Doubt the salesman tries to whip up in you, the more likely it is that you are getting rooked.  
 
There are many red flags around crypto right now because the space is rife with new money, inexperienced executives, scams, sharks and pay-to-promote celebrities. It doesn’t mean that there isn’t a place for blockchain, decentralized finance and cryptocurrency in the future. Avoiding the flotsam and jetsam to reach the halcyon shore will be tricky. For anyone who already owns crypto, now is the time to know exactly what you own, where it’s held, how much risk you have and to consider adopting a strategy that allows you to profit during the booms, while protecting you from the busts. (Our easy-as-a-pie-chart nest egg strategy works great for this.)
 
Safe Havens Aren’t Always Safe
Gold, silver and crypto can have spectacular runups, but they also have extended periods of almost dead. As I mentioned above, gold was the worst asset to own over the past decade. Anybody who bought high in 1980 had to wait a quarter of a century to claw back to even. The easy-as-a-pie-chart nest egg strategy works well for gold, silver and crypto. Regular rebalancing prompts us to sell high when the shoot the moon rally happens, and buy low when the fallout occurs.
 
Right now, people are more interested in bonds than gold and silver. However, bonds are tricky. Email [email protected] with Bonds in the subject line if you’d like to get links to some important blogs. There’s an entire section on bonds in The ABCs of Money, 5th edition, and we spend one full day on this topic at our Jan. 20-22, 2023 Financial Freedom Retreat.
 
Inflation. Recession. Tricky Bonds. Wall Street Rollercoaster.
There are economic storms on the horizon. Trying to outsmart the Federal Reserve, politicians, and Wall Street is a losing battle. However, there are some safe, income-producing hard assets that offer a great ROI, which are not in the headlines or on the radar of a lot of folks. We spend one full day offering options for protecting your wealth at our Jan. 20-22, 2023 Financial Freedom Retreat. Most people earn back the price of the retreat within just a few months with the thousands that can be saved annually in the family budget. If you protect your retirement plan, brokerage account and future, that could be worth substantially more. (See the testimonials on the retreat flyer. Click to access.)
 
Join us online. You can attend from the comfort of your living room in your pajamas, and save the cost of travel and lodging. Learn how to get rid of bills, keep the money in the family, stop making everybody else rich at our expense, and step into living a richer life. There are solutions. Wisdom, time proven, 21st century systems and right action are the cures 
 
 
Bottom Line
The best safe haven is the money that we don’t spend, particularly with runaway inflation. However, adding a slice or two of silver now and potentially copper if prices tank early next year could be a rewarding way to diversify the at-risk side of our financial plan. 
 
 
 
New Year, New You Financial Freedom Retreat
If you're interested in learning 21st Century time-proven investing strategies for building and protecting your wealth, investing in renewable energy, saving thousands in your budget with smarter energy choices, and managing challenging economic times (from a No. 1 stock picker,) join us for our Jan. 20-22, 2023 Financial Freedom Retreat. Email [email protected] to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master, to get pricing information and to read testimonials Get the best price when you register with family and friends. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
​
​​

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

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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.
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The Real Reason Why OPEC Cut Oil Production.
The Inflation Buster Budgeting and Investing Plan.
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How Will Russian Boycotts Effect U.S. Multinational Companies?
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The 12-Step Guide to Successful Investing.
​Gardeners Creating Sanctuary & Solutions in Food Deserts.
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​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

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

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

Free Holiday Gift. Stocking Stuffers Under $10. Last-Minute Deals.
 
 
This year, our team is pleased to offer you a free holiday gift, stocking stuffers that are under $5 and a last-minute deal that is guaranteed to arrive on time. If you and your loved ones are interested in prosperity and sustainability, then these opportunities could be the perfect present.
 
No matter what gifts you find under the tree or in your stocking, we wish you love, peace and prosperity now and always. We remain committed to offering solutions to today’s troubled times and economic storms.
 
 
Free
Join Natalie Pace in 21 days of prosperity, abundance and sustainability. Step into 21 days of video coaching designed to transform the holiday spirit into a New Year New You that is ready to shine, save thousands of dollars annually, protect your wealth and heal the planet in 2023. Simply email [email protected] with FREE HOLIDAY GIFT in the subject line.
 
You will begin receiving your gift on Boxing Day (Dec. 26, 2021). Activate abundance, while also increasing your environmental awareness and reducing your CO2 footprint. You can give this gift to your friends and family members, too. (They don’t have to know it’s free.)
 
“Just following the 21 days changed my mindset so much that my business went from just barely profitable to reaching record sales and profits 2 months later! I have now played The Gratitude Game a second time and intend to play it at least once a year! Thank you, Natalie!”
Suzie
 

Stocking Stuffers For Just $5-$10
The Power of 8 Billion: It’s Up to Us is Natalie Pace’s new book. The Power of 8 Billion presents inspiring stories of individuals, organizations and metropolises around the world who are coming together to replant rainforests, sequester carbon, reduce their own CO2 footprint, power the grid with renewables, and promote micro mobility and mass transportation solutions. The ebook is just $2.95.

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“There are many strategies in Natalie Pace's book, The ABCs of Money for College, that prepare families - remember education is a family journey - to uplift and educate their children. Natalie also shares strategies for students who are not well-supported at home to create their own pathway to success. Given the central role that investments in the human capital of our children will play in the success of our children and our country, Natalie's book could not be more timely or important.”
Kevin M. Murphy, McArthur “Genius” Award winner. 
George J. Stigler Distinguished Service Professor of Economics, Department of Economics,
The University of Chicago Booth School of Business

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​Natalie Pace updated two of her bestselling books in 2021, The ABCs of Money (5th edition) and Put Your Money Where Your Heart Is (2nd edition). Both ebooks are just $7.99.
 
The ABCs of Money (5th edition) offers time-proven 21st Century strategies for real estate, stocks, bonds, gold, debt reduction, the Thrive Budget, cryptocurrency and much more. This book remained in the top 10 on Amazon in its vertical for over 3 years with an average 5-star rating (mode).
 
"The ABCs of Money will teach you how to stop getting buried in debt and start scoring gains for the home team. The more you score, the more you'll win financial freedom and enjoy your life. College students need the information before they get their first credit card. Young adults need it before they buy their first home. Empty-nesters can use the information to downsize to a sustainable lifestyle, before they get into trouble."
Joe Moglia, former Chairman & CEO, TD AMERITRADE
 
Put Your Money Where Your Heart Is (2nd edition) is an original ESG investing book that also outlines the strategies Natalie Pace developed and used to become ranked a #1 stock picker (above over 835 A-list pundits).
 
“Many people, including educated men and women, often get into trouble when they neglect to follow these simple and fundamental rules. That is why I recommend this book with enthusiasm.”
Professor Gary S. Becker
Gary Becker won the 1992 Nobel prize in economics. 

​Jan. 20-22, 2023 Online Financial Empowerment Retreat
Bring a friend or family member for a price that is so low you have to go to the flyer to see it (or peek at the group pricing at the end of this blog). This offer is valid now through Dec. 24, 2022 midnight only.
 
 
Learn time-proven, 21st Century wealth strategies at the Retreat, including:

* How to protect wealth in a recession.
* Performance enhancing strategies, including dividends
* How to navigate the tricky Debt World of bonds and win
* Easy-as-a-Pie-Chart Nest Egg Strategies that earned gains in the Dot Com and Great Recessions and outperformed the bull markets in between
* Investing successfully in DeFi & cryptocurrency (Bitcoin, Ethereum, Cardano, Dogecoin and beyond), MAMAAN, cannabis and other hot industries that are currently oversold
* What’s Safe in a world where bonds are negative-yielding, losing money & defaulting, and money market funds have redemption gates and liquidity fees.
* What’s Hot and how to invest in industries and companies with interstellar upside
* 1-3 Times a Year Rebalancing for a buy low, sell high financial plan on auto-pilot
* Why Buy & Hope is riding the Wall Street rollercoaster, costing most Main Street investors more than half of their wealth in every recession
* How a time-proven 21st-Century plan can earn money while you sleep (with less stress, time & money).
* How to protect your wealth from stock market volatility and bond market illiquidity
* The hottest industries and countries in the world
* Learn how to put your money where your heart is & profit and why ESG investing is false advertising
* Discover how to divest your retirement from polluters and companies that are destroying our planet
* Take our Rebalancing IQ Test (click to access)

Groups of 5 Pay Just $399/Person* to attend the Jan. 20-22, 2023 Retreat
Ensure that everyone you love has the financial foundation necessary to successfully navigate a post-pandemic world by registering for the Jan. 20-22, 2023 Retreat as a group. We’ll help you achieve that goal by giving you an unbelievable price. The individual rate to attend is $895. (An in-person retreat would normally cost $995-$1650/person.) A group of 5 will pay just $399/person – cutting the individual price by more than half. You must register by midnight Dec. 24, 2022 to receive these dramatic cost savings.
​

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

Other Blogs of Interest
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
Investor IQ Test
Investor IQ Test Answers
​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.

Cash Burn & Inflation Toasted the Plant-Based Protein Companies
Kim Kardashian, the Chief Taste Consultant for Beyond Meat, hasn’t saved the day. Yet…
  
During the early days of the pandemic, there were production problems at many of the meat factories. Meat prices soared. The grocery shelves were bare. Consumers wanted to stockpile their freezers with something, and plant-based proteins began flying off the shelf.
 
Today the tables have turned. Now the price of plant-based protein is a lot higher than meat, and consumers have ample choices. That has caused the sales of plant-based protein to plunge. As Ethan Brown, the president and CEO of Beyond Meat noted in the company’s 3rd quarter 2022 earnings call, “As consumers intensify focus on making ends meet, health and environmental considerations take a back seat.”
 
Because plant-based protein companies experienced such explosive growth in 2020, they invested in expansion, which now has them out over their skis, as sales contract. Cash negative operations combined with lower revenue is a recipe for disaster, one that has companies like The Very Good Food Company on the ropes. Companies have been forced to quickly pivot to streamline production and to outline a pathway of profitability. Investors have fled in droves.
 
However, planet-conscious and vegetarian consumers still love the mission and the taste of these products. Many are very interested in reducing their CO2 footprint by embracing plant-based proteins solutions for most, if not all, of their protein needs. So, if the purveyors can find a price point that consumers love and get the word out about the ramifications of buying and consuming cheap meat, the product should become popular again.
 
Below is additional information on the industry and two select companies, Beyond Meat and The Very Good Food Company.
 
 
2020’s Golden Moment
Cheap Meat
Opportunity
Pathway to Profitability
Competition
Reviews
The Very Good Food Company
Beyond Meat
 
And here is additional information on each point.
 
2020’s Golden Moment
The real question is, “Will there be another golden moment for plant-based protein?” The COVID-19 vaccine and more effective treatments have made it less likely that there will be pandemic-related supply chain disruptions. However, there are other factors at play, such as the flooding of cheap meat on the market, where that meat originates from and the ramifications of supporting toxic livestock practices.
 
Cheap Meat
Are we eating rainforest beef and Cancer Alley chicken?
Many of us think there’s very little we can do to help save the rainforest in Brazil, without ever realizing that we’re the reason they’re being destroyed in the first place. Brazil is the top exporter of beef. The US, China and many other countries are the top consumers of Brazilian rainforest beef. If you want an inside look at the thrash and burn going on, check out the documentary The Territory, available now on Nat Geo (Disney Plus).
 

Transporting beef and poultry around the world requires a lot of gasoline. Slashing and burning old-growth forests means there are fewer trees to photosynthesize the CO2 into the air we breathe. Grain, potash, petrochemicals, hormones and antibiotics quickly fatten up animals that are intended to be grazing on grass, but destroy the soil and have contributed to a crisis with antibiotic-resistant bacteria. Not only is industrial livestock production unhealthy for the planet, it’s also toxic for the animals and for the people who eat them.
 
Cheap chicken and agriculture run-off is correlated with the Dead Zone in the Gulf of Mexico. If you have never learned about the Dead Zone or Cancer Alley, Google them. You can discover more facts about why it is important to eat local and organic meat products and produce in The Power of 8 Billion: It’s Up to Us. There is a general consensus that reducing meat consumption is healthy for both the planet and individuals. Plant-based protein is an important part of that plan.

Opportunity
Right now it doesn’t look like there are many opportunities for proteins to become a star on the meat shelf again. (They are often stored in a separate area.) However, there are a lot of things that play to a more favorable outcome. There are many people in the world who are interested in reducing their consumption of meat. There is definitely an increased focus on reducing CO2. If consumers become aware of the environmental footprint of factory-farmed sheep, meat and chicken, and that they might be eating rainforest beef, this could play into a renaissance for plant-based proteins. (Livestock is an important piece of the regenerative agriculture puzzle.)
 
That requires a strong push in awareness to counter the misinformation attacks that are more prevalent today on social media. That might seem like an insurmountable task at this moment when so much of the news on plant-based proteins are negative. However, things can change quickly, once the word catches the wind. We used to all smoke regularly and see smoking in films. Will we kick Cancer Alley chicken and Rainforest beef in the same way?
 
Pathway to Profitability
It’s quite common for innovations to have a boom and bust cycle. This phenomenon wipes out a lot of companies. In the wake of the fallout, the companies that survive become stronger and more efficient, and their products become more affordable. The strong ones will become the name brands of tomorrow. We’ve seen it happen with Google after the Internet bust, with Bitcoin through at least four crypto winters, and with Tesla, as it battled to transform the gas guzzling empire of ancient auto manufacturing.
 
The Very Good Food company is quite vulnerable at this moment. They are low on cash and may not make it through the end of the year. Beyond Meat is in a better seat. (Keep reading.)
 
Competition
There certainly is a lot of competition in the freezer for plant-based protein. All of the old-school food service providers, including Tyson, Kellogg and ConAgra, have a plant-based protein product. However, meat alternatives compete with meat, as well. Currently the biggest competition is coming from lower-priced meat and chicken.
​
​Reviews
Beyond Meat, Impossible and The Very Good Food Company all enjoy great reviews. I have tasted both Beyond Meat and Impossible, and it’s truly uncanny that the taste is so delicious and the texture is so meat-like. The Very Good Food Company’s products get very high reviews, and boasted the most explosive growth in sales, before their company had a liquidity crisis.

​
Very Good Food Company
Because its products were so popular and the growth was so stellar in 2020, The Very Good Food Company focused on keeping up with demand. The company opened up new factories. This worked while it was easy to bring in new cash and posting year-over-year sales growth of 300%.
 
Smaller companies began having a difficult time raising capital in 2021, which quickly plunged cash-negative companies like The Very Good Food Company into a liquidity crisis. Within a few months, the company did not have enough capital to pay their monthly expenses.
 
The co-founders (one who was the CEO) were canned in April of 2022. Since then, The Very Good Food Company has scrambled to keep people in the C-Suite and on their board. The company has warned that if they don’t raise more capital before the end of December, they could be forced into debt restructuring (bankruptcy). At the same time, the company has also signed new deals with grocers, including Albertson’s. I checked at the local Erewhon in Santa Monica, which still had their products available in-store.
 
This is a very high risk investment. Most investors have already lost most of their capital. The Very Good Food Company still has far more obligations than capital. The unlikely turnaround will be impressive, if they are able to spring it. Something like this has happened before. LoudCloud was able to morph into Opsware and soar to a $14 billion valuation, after sinking to rock bottom in the Dot Com Recession. I wouldn’t hold my breath. However, as was the case with LoudCloud, The Very Good Food Company’s products are well-liked by its customers.
 

Beyond Meat
Beyond Meat is another company whose share price has been destroyed. The company is losing product sales, facing foreign exchange headwinds and having to mark down prices. The largest drop was in the international marketplace, with retail pounds sold sinking by 37% year over year. International food service was also down 22%, while U.S. food service increased by 32.2%. Beyond Meat has partnerships with McDonald’s, Kentucky Fried Chicken, Pizza Hut, Taco Bell and Panda Express. The company has recently added Beyond Steak, Beyond Chicken Tenders, Nuggets and Popcorn Chicken to their retail line in the U.S., at Kroger, Walmart and Albertson’s.
 
Beyond Meat’s third quarter’s revenue dropped 22%. The fourth quarter is expected to come in even worse, perhaps plunging 40% from the same quarter in 2021. The company is letting go of staff and streamlining production, in an effort to conserve their $390 million in cash.
 
Beyond Meat’s share price is trading -80% from its 52-week high. Things could get worse before they improve for Beyond Meat. The major inflection point for Beyond Meat and other plant-based protein companies will be when consumers start voting with their dollars and promoting the message of the importance of plant-based protein. Grocers could help by putting plant-based protein back in the Meat section (like it was in the pandemic when meat was scarce).
 
Email [email protected] with Beyond Meat SRC in the subject line, if you’d like a copy of our plant-based protein stock report card.
 
Bottom Line 
Plant-based products are quite tasty, and definitely have a lower carbon footprint than most meat production, which is industrialized. Consuming less factory-farm raised beef, chicken and pork, while increasing the consumption of local, organic and plant-based protein is important to protecting and healing our own health and that of our planet. Are consumers aware of this? Will this awareness be enough to entice them to overlook the price differential? Will the companies streamline operations, overcome the liquidity crisis, find a way to profitability that includes a more competitive and affordable product, and start gaining in popularity? Which companies will survive, which will merge and which will go out of business?
 
The next few months will be very telling. One thing is for sure. The long-term appeal of a planet-friendly, healthy, tasty protein option remains appetizing for many, particularly Millennials and Gen Z. When these very large demographics jump back on board, there should be a halo effect for this industry and the companies that survive.
 
 
 
New Year, New You Financial Freedom Retreat
If you're interested in learning 21st Century time-proven investing strategies for building and protecting your wealth, investing in renewable energy, saving thousands in your budget with smarter energy choices, and managing challenging economic times (from a No. 1 stock picker,) join us for our Jan. 20-22, 2023 Financial Freedom Retreat. Email [email protected] to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master, to get pricing information and to read testimonials Get the best price when you register with family and friends. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.

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

Other Blogs of Interest
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
Investor IQ Test
Investor IQ Test Answers
​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.

Here Comes the Sun
The sun is a great source of heat and light that is free and renewable. There is so much we can do, even without solar panels. Shades can keep rooms cool in the summer, while letting the sun shine in can heat up a space. If we’re working from home, we might find that certain rooms offer natural lighting at various times of the day. Heating and cooling are energy hogs, while lighting can be an energy vampire.

Many homeowners with solar panels have electric bills under $50/month. There are a few important steps to take before you get your quote. Check to see what kind of tax credit might be offered by your local, state and/or federal government. In the U.S., the solar tax credit is 30% of the installation costs. Some companies, including Sunpower which offers some of the most efficient solar panels, offer financing with little or nothing down. I encourage you to read The Power of 8 Billion: It's Up to Us to learn how to reduce your MW usage prior to purchasing your solar. Feel free to contact our office at 310-430-2397 or [email protected] if you have any questions. 
 
​

There is No Excuse for Single Use
How many drink and toss containers do we destroy every single day? 
 
Industry is the 3rd largest contributor to CO2. So buying less of everything can be one of the best things we can do to heal the planet. We can make our own coffee at home. A French press has less waste than Keurig or coffee filters. Many cafes are defaulting to the disposable, unless we specifically ask for our fix “for here.” (Starbucks, Dunkin and McDonald’s, are still showing disposable cups in their ads. Grrr…)

While detoxing from our wasteful habits won't generate thousands annually in savings, it's important to understand that drink or eat and toss is not free. Even if Starbucks, McDonald's, Dunkin Donuts and a million other fast casual spots are pushing their disposable packaging on us, we can place our own reusable mug on the counter or simply as them to use one of their ceramic mugs "for here."

​One more thing, many of us are flushing forests by not choosing recycled toilet paper. 
 

​

Commercial and Residential Buildings are the Next Largest Contributor to CO2
Once we’ve done an energy audit of our own home, it’s a good idea to do one of other buildings that are near and dear to our hearts, like our kids’ school, the university that we went to or the churches we pray in. Schools, businesses and religious organizations that spend less on electricity can invest more in staff, books, instruments and beneficial resources. Smarter construction choices, like insulation and fixing leaks, can go a long way.
 
Agriculture Produces About 10% of the CO2 in the Atmosphere Annually
There’s a large difference between factory-farmed livestock and monoculture horticulture, and regenerative farming practices that include livestock as an important part of soil and seed maintenance. Diversified, organic farms can sequester carbon in the soil, and are a huge part of the climate solution. So, one of the most important things that we can do as a consumer is to buy local and organic, and to support community and school gardens. Buying cheap mass-produced meat, fruit and vegetable products has a huge cost for humanity.
 
There have also been multiple studies about how the body craves nutrients, not calories. Local and seasonal food is more likely to be rich in nutrients. The added benefit is that you are also reducing the CO2 emissions from the transportation sector, when you support your local farmers. Learn more about regenerative agriculture in The Power of 8 Billion: It's Up to Us and at KisstheGround.com. 
 

​

The Cleanest Energy Is…
The energy that we don’t use.
 
While the CO2 footprint of renewable energy is much lower (and lower cost) than fossil fuels, most clean energy sources have an environmental downside (outside of passive solar, which is free and clean, but underutilized). As one example, I toured an anaerobic digestion power plant in Poundbury, England that is fueled with maize. The biogas-to-grid utility provides all of the heating and cooking fuel for the township and much of the surrounding area, with the added benefit that the region isn’t reliant on Russian natural gas (as many European countries are). However, when maize is grown as a monoculture crop, the land is depleted of its healthy biome, and the soil erodes, which can cause loss of top soil and flooding. There are clear costs to this energy solution, though they are not as expensive as being beholden to the energy conflicts and high prices of oil and natural gas.  
 
Lithium is mined for electric vehicle batteries. Silicon is manufactured for solar, and giant windmills are assembled for wind energy. Most clean energy uses copper and rare earth minerals, which are all mined. All of this obstructs the land and can destroy the wildlife in the surrounding area. Mining and manufacturing are energy hogs, and there isn’t yet a virtuous cycle for the end-of-life usage of the products themselves.
 
While cleaning our grid with renewable energy is a step in the right direction, not enough emphasis is being placed on the benefits of reducing energy usage (where we can also save thousands annually in our budgets). Some cities, like Manhattan, give energy efficiency grades to buildings and require improvements. However, most homes and businesses in the U.S. have never done an energy audit. That requires understanding where and how we are personally contributing to CO2, and making the changes necessary to reducing it. Individuals in the Middle East, Australia, Canada, the USA and Russia have the highest CO2 footprints in the world. Most European countries do a much better job. So, each of us can go a long way to healing our planet by making smarter energy choices.
 
​

​Bottom Line 
​It’s very popular for us to blame corporations and politicians for the climate crisis. Some of us have extreme anxiety, thinking that we have no way of changing the course that we’re on. But the truth is that the power lies in our hands and in our choices. Corporations and politicians are quick to point out that they are just giving us what we are asking for and need to lead our daily lives. Every time we…
 
·      fuel up our gasoline-powered car,
·      drink or eat and toss a single-use plastic or paper container,
·      fill our homes with new stuff, which becomes old junk over the years,
·      buy the cheapest meat and produce no matter where it comes from,
·      heat and cool empty homes, while we’re at work or on vacation…
 
Every time we mindlessly live in our old patterns, we are the ones that are consuming the wasteful products, energy and services that are pumping CO2 into the atmosphere at unprecedented rates with unparalleled consequences.
 ​
Let’s be the change our planet needs to heal. Let’s do a personal, home and business audit of our surroundings. Let’s change our habits, and walk and ride bikes more, especially for local errands. All of this is better for our bodies and our budgets. It’s time to stop making the gas station, the electric company, the plastic companies, Big Ag, chemical companies, oil refineries, and other entrenched, multinational, multibillion-dollar companies, rich at our own expense, and at the expense of the planet.
 
We hold the future in our hands and in our choices. My book The Power of 8 Billion: It’s Up to Us offers science-based solutions from leading authorities, and challenges each of us to put this knowledge into action. The Power of 8 Billion also presents inspiring stories of individuals, organizations and metropolises around the world who are coming together to replant rainforests, sequester carbon, grow their own food, reduce their personal CO2 footprint, power the grid with renewables, and promote micromobility and mass transit solutions.


​New Year, New You Financial Freedom Retreat
If you're interested in learning 21st Century time-proven investing strategies for building and protecting your wealth, investing in renewable energy, saving thousands in your budget with smarter energy choices, and managing challenging economic times (from a No. 1 stock picker,) join us for our Jan. 20-22, 2023 Financial Freedom Retreat. Email [email protected] to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master, to get pricing information and to read testimonials Get the best price when you register with family and friends. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.

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

Other Blogs of Interest
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?
Beyond Meat: Rare or Burnt?
Netflix Streaming Wars End in a Bloodbath.
Elon Musk Sells $23 Billon in Tesla Stock and Receives $23 Billion in Options.
Are You Gambling With Your Future?
ESG Investing: Missing the E.
Bitcoin Crashes.
Crypto, Bold and Stocks All Crash.
The U.S. House Decriminalizes Cannabis Again.
Chinese Electric Vehicle Market Share Hits 20%.
The Risk of Recession in 6 Charts. 
High Gas Prices
How Will Russian Boycotts Effect U.S. Multinational Companies?
Oil and Gas Trends During Wartime
Russia Invades Ukraine. How Have Stocks Responded in Past Wars?
2022 Crystal Ball in Stocks, Real Estate, Crypto, Cannabis, Gold, Silver & More. 
Interview with the Chief Investment Strategist of Charles Schwab & Co., Inc.
Stocks Enter a Correction
Investor IQ Test
Investor IQ Test Answers
Real Estate Risks.
​What Happened to Ark, Cloudflare, Bitcoin and the Meme Stocks?
Omicron is Not the Only Problem
​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.

Is Your FDIC-Insured Cash Really Safe? Better Double-Check.
 
Crypto bankruptcies hijacked cash deposits that were promised FDIC protection. Is an FDIC-Insured or CDIC-insured Cash Deposit Safe at any Brokerage? (There are loopholes that we all need to be aware of that apply to all brokerages, even ones that don't deal in crypto.) Which company will be next to fall? Could it be a major crypto exchange or a traditional brokerage? 
 
Blockfi, Voyager Digital, FTX and Gemini Earn All Hijacked Customer’s Cash.
Blockfi, FTX and Voyager Digital have all declared bankruptcy. In each case, account holders had their assets frozen. Gemini Earn investors have just seen their accounts frozen. Will Gemini be the next crypto company to fall?
 
Voyager Digital told depositors that their cash was FDIC-insured. However, the company has received a Cease & Desist Order from the FDIC on those claims. The implications of a brokerage going belly-up reaches beyond the crypto platforms and into traditional financial services companies, too. Robinhood has a relationship with banks and advertises that depositors are FDIC-insured (as do many other brokerages). Will Robinhood fall into the FDIC loophole, if Robinhood gets into trouble? (Yes, keep reading.) Which brokerages and exchanges are most vulnerable to bankruptcy? What should depositors and traders be wary of? Could the Crypto Winter take down more popular sites, like Coinbase, Robinhood, Gemini and Binance? 
 
Below is a look at these questions and more, with particular emphasis on crypto-heavy companies. (Most brokerages don’t support crypto trading yet.) I’ll also address the FDIC pass-through quandary in greater depth in my Dec. 8, 2022 Videoconference. Email [email protected] with VIDEOCON in the subject line, if you’d like to join us live (or watch it back). You can also visit YouTube.com/@NataliePace to watch that and other videoconferences.
 
Before we jump into the nitty-gritty, I want to offer 4 tips to navigate the volatile world of all things coin. This industry is vulnerable to wild swings in value. Betting the farm is never a good idea. Also, the industry is still relatively new, and is rife with ruses, scam artists and poorly-run companies (which have multiple red flags that anyone doing the smallest amount of due diligence can see before the implosion). Start educating yourself on the warning signs by reading my FTX blog.

4 Tips for Crypto Trading
1. Treat crypto as a hot slice or two of your nest egg pie chart system, not as your entire financial plan. (Learn proper diversification and regular rebalancing at our New Year, New You Financial Freedom Retreat.) This is as true of crypto today as it was for meme stocks in 2021, clean energy in 2007 and the Internet in 2000. Hot new industries are volatile.

2. Regular rebalancing will help you to capture gains at the high and add more when prices dip, while the pie chart system itself will keep you from being over-exposed to this volatile asset. Our plan helps to put you on the right side of the trade, and provides a framework for taking on high risk for potentially high reward, without betting the farm.

3. Be wary of claims that your cash deposits are FDIC-insured. (Learn more here and in the FTX Failure blog.)

4. Crypto is an ocean full of whales (large investors) hunting for gains. Trading is active. Crypto is rarely being used as money, outside of the limited world of NFTs. HODL is a myth. The average holding time for Bitcoin & Ethereum is just 4-5 months, and can be much shorter when prices soar and for smaller coins.
 
FDIC-Insurance Loopholes
Many brokerages offer FDIC-insurance on their cash deposits through a pass-through relationship that they have with an FDIC-insured bank. What happened at Voyager Digital could happen to many brokerage clients because FDIC-insurance only covers the insolvency of an FDIC-insured bank. Many crypto traders moved from Coinbase to Voyager Digital thinking their money was safer because Voyager assured customers that they were FDIC-insured, while Coinbase spells out the details of how pass-through FDIC insurance actually works.
 
Despite the assurances, Coinbase is still in business, while Voyager clients are panicking. It’s more important to know just how fiscally healthy the firm that holds your dough is. (Getting your paper assets safe is so tricky that we spend one full day on the topic at our Financial Freedom Retreats.) If you’d like to learn more about FDIC policy, FDIC coverage and pass-through loopholes, check out the government agency’s podcast of Nov. 29, 2022. (Click to access.)

​Below is a Crypto Brokerage Stock Report Card, and more details on the companies themselves.

Robinhood
Robinhood is a publicly traded brokerage known for gamification, meme stocks, fractional shares, free trading and crypto. All of this initially made the company popular with Millennials and Gen Z, until the GameStop fiasco. This young brokerage lost $3.69 billion in 2021 and is still cash negative. Revenues were down -1% year over year in the most recent quarter with transaction revenues down -22%. As of September 2022, Robinhood reported $6.2 billion in cash and cash equivalents. Robinhood is a young, cash-negative company that has a market cap of $8.5 billion (compared to Schwab’s $154 billion). Brokerages don’t fare well in recessions, particularly smaller, new kids on the block. (Even giants like Merrill Lynch, Bear Stearns, Smith Barney and other brokerages had to be bailed out in 2008.)
 
Coinbase
Coinbase is the OG of crypto companies. The company is publicly traded, with a market cap of $10.4 billion. Revenues were down -55% year over year in the most recent quarter. S&P Global rates Coinbase’s debt at BB (junk) with a negative outlook. Having burned through about $2.1 billion in the first nine months of 2022, the company has $5.6 billion in cash + $483 million in crypto. If the weakness in crypto continues, this will be hard on Coinbase.
 
Coinbase rides the cryptocurrency rollercoaster. In 2021, Coinbase made $3.6 billion in net income and had a market value of $80 billion (Nov. 2021). To his credit, Coinbase’s chairman and CEO Brian Armstrong has successfully navigated the company through four boom and bust crypto cycles, since 2012. However, if you have a lot of cash or crypto at Coinbase, it’s a good idea to learn the pie chart system, and consider an FDIC-insured bank for the fiat currency.
 
Binance
Binance claims to be the largest crypto exchange by trade volume. In a Special Report issued on June 6, 2022, Reuters accused the company of allowing hackers, fraudsters and drug traffickers to launder at least $2.6 billion between 2017 and 2021 (when the company launched its ICO). There have been multiple reports that the SEC is investigating the BNB IPO and potential money-laundering, while the IRA is looking into tax evasion.
 
Since it is still privately held, financial information is very hard to find. Binance’s CEO Changpeng Zhao says the company has no headquarters. Binance is building a full-service crypto company, with a crypto VISA and ATM withdrawals, in addition to trading and wallets. However, who is going to use crypto as a currency when Bitcoin was worth $69,000 last November and is just $17,000 today (perhaps hackers, fraudsters and drug traffickers)? While stablecoins have potential as payment, they are largely not being used as money. Additionally, LUNA, Blockfi and FTX are reminders that the Crypto Winter can freeze stablecoins, too.

​The risks to Binance are an extended period of crypto weakness, government scrutiny, regulation and fines, and potential contagion from the other crypto bankruptcies. Binance’s CEO Changpeng Zhao disclosed losses from FTX on Twitter (without providing details). $1.35 billion of crypto assets were withdrawn from Binance on Nov. 12, 2022 after the collapse of FTX, according to CryptoQuant.
 
Binance offers a potentially exciting business model that will have to make it through the Crypto Winter to be viable. However, there are still questions about the shady nature of its clients (which can land the company is severe hot water). Binance’s CEO CZ is a rock star in the industry. Unlike SBF, Zhao had successful ventures prior to Binance. However, despite the efforts of CZ to calm his clients, there is no guarantee that Binance can survive the continued fallout of FTX and crypto.

In the event of a Binance bankruptcy, cash deposits will not be FDIC-insured. This is another bank pass-through arrangement.
 
SoFi
Sofi is a small, young, cash-negative, publicly-traded financial services company, with a market value of under $5 billion. The company experienced 56% year-over-year revenue growth in the 3rd quarter, largely as a result of a large increase (71%) in personal loans, to $2.8 million. However, the company lost $484 million last year, and only has about $1.26 billion in cash (some restricted). They offer crypto trading with no fees and fractional shares, in addition to many other traditional banking services, including personal loans, student loans, checking and savings.
 
SoFi’s investing web page clearly states that SoFi Invest accounts are not FDIC-insured. (The company offers FDIC-insured checking and savings accounts with 3.25% interest through their bank.)
 
Gemini
Founded in 2015 by Cameron and Tyler Winklevoss, Gemini offers an exchange to trade crypto, a credit card, staking, NFTs and a place to store your fiat currency. On Nov. 16, 2022, the company suspended customer redemptions of its “Earn” cash product. This news is buried, so new customers might not even be aware of this. However, if you link to the Tweet below, you’ll see plenty of grief and heat in the responses from harmed depositors, who are still waiting (and praying) to withdraw their money.

​

New Gemini clients are enticed through an affiliate program, where approved affiliates receive a commission for new active customers. So, if you have someone recommending the company, they could well be doing so for their own benefit. Another red flag is the lack of transparency of the company. Finding out who runs and oversees Gemini should be as easy as a few clicks on the company website. Good luck finding out who sits in the Executive Suite with the Winklevoss brothers. Employees voting on Comparably gave the company’s management team a D. The more red flags, the greater the risk.

Schwab & Fidelity
Currently these brokerages do not allow cryptocurrency trades on their platform, though investors may be able to purchase ETFs with crypto holdings (many of which are put together by young, underfunded, cash negative, small cap fund companies). Schwab is a publicly traded, large cap company, while Fidelity is privately held (FMR LLC). Schwab and FMR both have credit ratings of A- by S&P Global. Both offer FDIC-insured cash deposits through pass-through banking policies.
 
Schwab and Fidelity both have FDIC-insured banks. An inquiry with the FDIC to discover whether or not the brokerage and bank relationship is a pass-through agreement, or if the brokerage is FDIC-insured by nature of the banks owned, yielded a response that the agency doesn’t comment on “open and operating institutions.” During the financial crisis of 2008, Fidelity took TARP money, while Schwab did not.
 
Interactive Brokers
Interactive Brokers is a publicly traded, large cap company with a credit rating of A- by S&P Global. Interactive Brokers allows crypto trading in Bitcoin, Ethereum and Litecoin, in addition to the universe of stocks, options, futures and more. Interactive has a much higher debt-equity ratio than Schwab (3.6 compared to 0.78) with a much lower market value (just $34 billion). The company’s FDIC-coverage is another bank pass-through plan.

What About Just Holding the Keys to Your Own Hard Wallet?
The biggest danger is that you’ll lose your key or have it stolen. If you lose the key, you can’t access your crypto. (This happens.) The other downside is that hard wallets are designed for a long-term HODL, which means that you’re riding the waves of volatility, oscillating between lavish wealth and penury. If you look at the average holding period of your favorite coin, you’re bound to discover that you’re the only one HODLing.
 
The idea that crypto will be the only thing of value when fiat currency is worthless is an effective marketing campaign, but has little probability of happening. If we enter an Apocalypse, it will be easier to rent a room in your home or barter food than to bargain with a hard wallet full of hard-to-access digital coins. Safe havens like crypto today and gold/silver in yesteryear, are highly volatile and tend to underperform assets over the long-term.
 

 

Bottom Line
While this may seem like a lot to keep track of, using the pie chart system with regular rebalancing (1-3 times a year, not more or less), and sticking with well-capitalized, well-run crypto companies with experienced executives who have been successful in business for more than a decade should put you on the right side of the trade and in a seat that is less likely to get frozen in the Crypto Winter. For cash assets, FDIC-insured bank deposits are going to be safer than pass-through brokerages. There are also some creditworthy, rewarding bonds and other nontraditional safe, income-producing investments to consider. Money market funds are vulnerable, TIPS and bond funds are losing value, and bonds are tricky, which is why we spend one full day discussing what’s safe in our Financial Freedom Retreats.
 
 
​New Year, New You Financial Freedom Retreat
If you're interested in learning 21st Century time-proven investing strategies for building and protecting your wealth, and managing challenging economic times (from a No. 1 stock picker,) join us for our Jan. 20-22, 2023 Financial Freedom Retreat. Email [email protected] to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master, to get pricing information and to read testimonials Get the best price when you register with family and friends. Register now to access your free 4-part Protect Your Wealth Now webinar that will get you started immediately.
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Check out Natalie Pace's Apple Podcast.
Watch videoconferences and webinars on Youtube.

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

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

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