​Dear Natalie:
 
It seems that Trump and the Federal Reserve are looking at a reduction in interest rates, which I believe will extend the bull market in both the stock market and real estate. I'm guessing they're going to try to keep it going until after the US elections in fall of 2020, to keep the illusion of a strong economy going, as this is such a cornerstone of Trump's platform. 
 
We have moved into a cash position, and are being pressured by financial advisors to take advantage of the year and a half of growth to invest the money for higher returns. We are feeling foolish for being cautious, like maybe we should work with this change. At the same time, it feels like a house of cards and there are so many variables that could knock it down, despite the interest rate issue. How significant is the interest rate benchmark, and are we unnecessarily losing out on growth with them backing off from increasing it? Are we wise or foolish to remain on the sidelines, patiently waiting for things to play out (especially given a short time line to retirement, thus having a short time to grow it)? It is hard to be confident in our choices when things are all so uncertain!

Signed, Under Pressure!
 
Dear Step Out of the Show Room:


First off, you are quoting a sales pitch as if it were truth, when the truth is that you’re quoting a sales pitch. The Feds and the White House are not colluding to win an election. In fact, if you’ve been paying close attention, then you’ll recall how absolutely apoplectic #45 is that the Feds aren’t playing his game. The Administration has even looked for ways to replace Federal Reserve Chairman Jerome Powell. The truth lies in the Asset Bubble chart below.
 

The Federal Reserve Board governors know that they kept interest rates too low for too long. Low interest rates create bubbles. Now, if the economy weakens, as it is forecast to do this year, the Feds don’t have enough room to lower interest rates sufficiently to help boost economic growth. So, there is a majority on the Federal Reserve Board who are interested in keeping rates as high as they can for as long as they can. That’s why this week has been so weak on Wall Street – because Jerome Powell in his speech on June 25, 2019 said that “Monetary policy should not overreact to any individual data point or short-term swing in sentiment.”

​As to the other idea that you are missing out on gains, that is why we use a pie chart rather than market timing. You’re never all in or all out of the market. You’re always in at an appropriate level based upon your age. You should also be diversified and have exposure to some hot industries. In a normal world, your safe side would be invested in bonds, and that side would earn a decent return. We’re not in a normal world. We’re in an over-leveraged world. The Bubble Chart above shows you that in black and white. 

​I’m not sure why you have so much cash on the sidelines, however, I’d be more concerned about buying into losses than missing out on gains. As you can see from the charts below, most people lost more than half of their investments in the last two recessions. This was with bonds making money. Bonds lost money in 2018, and due to the amount of high-leverage and low interest rates are too vulnerable to be worth the risk, when you are getting such a low return.

4.5% yield is $4500 on $100,000. If you’d invested in General Electric to get that kind of dividend, you would have lost more than half of your principal. General Electric is not the only company borrowing from Peter to pay Paul. In fact, according to Howard Silverblatt, the senior index analyst at S&P Dow Jones Indices, one out of four S&P500 companies are buying back their own stock to make their earnings look higher and their share price look lower (i.e. financial engineering). Financial engineering is not real growth. Investors were livid when they learned that GE was doing this, but are unaware that it is absolutely rampant on Wall Street these days.
 
Things are always uncertain. The one thing that is certain is that when the markets are at an all-time high, the broker-salesmen get desperate and the sales pitches get more urgent. Your own desires try to push you to believe them because you want to join the party.
 
At the depths of a recession, the broker-salesmen are all jumping ship, and at a loss of what to tell you now that they’ve lost more than half of your assets. The turnover of financial advisors in Great Recessions can be 90%! Your stomach acid is keeping you awake at night. By the time things look the worst, it is usually the time when the economy starts to turn back on track. However, you’re tempted to sell low because you’re not reading data, you’re still reading headlines and looking at a sea of red on your brokerage statements. In other words, listening to salesmen and stomach acid is a losing proposition that tempts you to buy high and sell low. Time-proven systems are always a great plan, and work the best by avoiding losses in recessions and outperforming the bull markets in between. The pie chart system, along with annual rebalancing, pulls the red and green lights out of the planning and encourages you to do what you are supposed to do without the emotional attachment.
 
So, the real question is: why are you listening to salesmen for your information? Isn’t it time to be the boss of your money, and trust data, information and time-proven systems?
 
 
The Bottom Line
If you wait for the headlines that the economy is in trouble, it will be too late to protect yourself. The December drop (which was the worst December since the Great Depression) is a warning shot that now is the time to be sure that your exit strategy is based upon a time-proven system and not Buy and Hope. 



​If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. Click on the flyer link below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more. Register by June 30, 2019 to receive the lowest price and a complimentary 50-minute private prosperity coaching session (value $300). 

I'm also offering an unbiased 2nd opinion on your current retirement plan. Call 310.430.2397 for pricing and information. ​​​​

Other Blogs of Interest
What's Your Exit Strategy? 
Will the Feds Lower Interest Rates on June 19, 2019?
Should You Buy Tesla at a 2 1/2 Year Low? 
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What's Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.

How are you setting yourself up for the win? 

As we enter the 11th year of the current bull market, it’s key to remember that what goes up, can come down – rather rapidly. The 9.2% drop in the S&P500 in December 2018, is a stark warning that when the winds shift it can be too rapidly to properly protect yourself. That is why it is key to have a time-proven plan – one that can withstand financial storms. You don’t want to discover you’ve built your fiscal health with straw, as most people did during the Great Recession, when over 10 million homes were lost and the Dow dropped 55%.
 
So, What’s Your Exit Strategy?
How are you setting yourself up for the win? 
​
Real Estate
Real estate prices are higher than ever, and unaffordable in many cities. This is not a buy and flip environment. And it is definitely not the greatest time to consider buying a new home, even with the massive tax advantages that Americans receive. One of the worst mistakes you can ever make is to buy high in real estate. It can ruin your life for a decade or more. So, if you’re considering buying or selling real estate, you want to learn the most important key to a successful investment. Click to access that blog. 

Nest Egg
Are you suffering from buy high, sell low mentality (click to access that full blog)? Are you tempted to buy stocks now when stocks are back to an all-time high (afraid you’ll miss the party if you don’t)? Did you sell everything in 2009, during the Great Recession? If so, you are letting stomach acid and euphoria – emotions – rule your investing strategy. 

There is a time-proven, easy system that earned gains in the last two recessions and has outperformed the bull markets in between. Yet most money managers don’t use this system. Why? The status quo just isn’t set up to incentivize that. There are some brokerages moving in this direction. However they will attempt to sell you options trading and other high-risk investments to improve their profitability. That is why it is important to be the boss of your money, even if you have someone on staff to “manage” it. This is much easier than you might think, which is why I encourage you to learn the ABCs of Money that we all should have received in high school now.
 
 
The basics of a successful nest egg (401K, IRA, HSA, college fund) system are:

1. Always keep a percentage equal to your age safe,
2. Overweight safe in troubled or perilous times (i.e. now),
3. Know what’s safe in a world where stocks and bonds are in a bubble and money market funds have redemption gates and liquidity fees
4. Diversify your at-risk portion into 10 funds, small, medium, large, value, growth and four hot industries, and,
5. Rebalance at least once a year.

 
Annual rebalancing is one of the most important things that you can do to promote fiscal health. Buy and Hope has been riding the Wall Street rollercoaster, losing more than half in the last two recessions and barely crawling back to even before the next economic storm strikes. Annual rebalancing is a buy low, sell high plan on auto-pilot for your nest egg. Learn more in this blog.
 
​If you need help understanding what you own, call 310-430-2397 or email info@NataliePace.com  to learn more about receiving an unbiased 2nd opinion from me.
 
Trading
Trading stocks in the 11th year of the bull market, when stocks are at an all-time high, is like surfing in a hurricane. If you can’t surf ankle slappers, then you shouldn’t be surfing storms. There are times when any yahoo can pick a stock and make money, and other times when even professionals are hard pressed to eke out gains. The wind is in your face right now. Be careful.
 
Successful trading in individual stocks requires employing my 3-Ingredient Recipe for Cooking Up Profits, which includes using the Stock Report Card and 4 Questions for Picking a Winner. These strategies are outlined in my first book Put Your Money Where Your Heart Is, and taught at my Investor Educational Retreats. Call 310-430-2397 to learn more now.
 
In today’s world, with Tariffs, Trade Wars, Volatility, Astronomical Debt and Political Tensions, buying low and selling high require considering 3 factors:

1. What is the company capable of?
2. What will the industry do?
3. How will the macro economy effect the company?

 
Read more about these factors in my recent blogs on Tesla, cannabis, Zoom, Uber, Boeing, Lyft and Wells Fargo. 

​The Macro Economy
On June 19, 2019, the Federal Reserve Board is scheduled to meet, largely to determine whether or not to cut the interest rate. While some will applaud a cut because companies can continue to borrow money very cheaply, others will understand the risk is that Interest Rates Create Bubbles and the over-leverage party is ready to pop. Additionally, a rate cut signals economic weakness – which is never a good sign. In short, the macro economy could be a severe drag on any high performance of a single stock. Even Apple lost value during the Great Recession, when it launched the Smart Phone that changed our lives and disrupted the phone industry.
 
Additionally, it’s important to remember that Financial Engineering is Not Real Growth. Click to read that blog.
 
The Bottom Line
If you wait for the headlines that the economy is in trouble, it will be too late to protect yourself. The December drop (which was the worst December since the Great Depression) is a warning shot that now is the time to be sure that your exit strategy is based upon a time-proven system and not Buy and Hope. 



​If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. Click on the flyer link below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more. Register by June 30, 2019 to receive the lowest price and a complimentary 50-minute private prosperity coaching session (value $300). 

I'm also offering an unbiased 2nd opinion on your current retirement plan. Call 310.430.2397 for pricing and information. ​​​

Other Blogs of Interest
Will the Feds Lower Interest Rates on June 19, 2019?
Should You Buy Tesla at a 2 1/2 Year Low? 
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What's Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.


​

On Friday, June 7, 2019, the Bureau of Labor Statistics reported that the increase in total nonfarm payroll employment (i.e. jobs) was only 75,000. Although this is bad news because that is less than is needed to employ new Americans entering the work force, the Dow Jones Industrial Average jumped 253 points. Why? Some investors were banking on the Feds lowering interest rates at their next meeting, while others were thrilled that we will not add Mexico to the Tariff List. 

​Why would investors be excited about a rate cut, and are the Feds likely to cut interest rates in 2019?
 
The current stock market rally has been built on corporate buybacks. Companies have been borrowing money very inexpensively, and using those leveraged funds to repurchase their own stock. This has many short-term benefits. It makes the company’s earnings look higher than they are, while pushing the price to earnings ratio down – making the share price look cheaper than it really is.
 
When markets rally, novice investors become more interested. Yes, this really amounts to companies baiting the water so that you’ll jump in and buy.
 
Buybacks are projected to hit an all-time high in 2019.
 

Lower interest rates fuel the buyback fire; higher interest rates make the practice more expensive. So, if the Feds lower the rates, the market rally party might, in theory, continue – even if the economy itself is cooling off. In fact, according to former Federal Reserve Board chairman Alan Greenspan, a 10% rise in stocks equates to a 1% rise in GDP. Clearly business-minded executives will benefit politically and financially if the rally continues, even if, ultimately, borrowing from Peter to pay Paul is not a sound business strategy.  
 
The Feds Are Taking Away the Punch Bowl
So, why is there still a rate raise projected for 2019 and another for 2020? Why would the Feds want to sober investors up, against the desires of the White House and many corporations, who would like to continue the Buyback Party?
 
There are two main reasons: financial imbalances and the Effective Lower Bound rate.
 
Financial Imbalances
Lower interest rates create bubbles. Today, real estate prices are higher than ever, and unaffordable in many major cities to the people who live there. Stocks are near an all-time high. Bonds and loans are highly leveraged, with new money flowing to those companies carrying the highest risk. Over 50% of investment grade companies are at the lowest rung – just one notch above junk bond status. (See the below Asset Bubble Chart.)
 
When bubbles pop, like they did in 2000 and 2008, the downturn can be steep and rapid. As Federal Reserve Board governor Lael Brainard said on March 7, 2019, “Elevated valuations and corporate debt could leave the economy more vulnerable to negative shocks. The market volatility in December is a reminder of how sensitive markets can be to downside surprises.”
 
Federal Policy and Rate Cuts
Another problem with persistently low interest rates is that there isn’t enough room for the Feds to cut interest rates to boost economic growth in a recession. Federal Reserve Board Governor Clarida explained this on May 30, 2019, when he said, “A lower neutral rate increases the likelihood that a central bank's policy rate will reach its effective lower bound in a future economic downturn. Such a development, in turn, could make it more difficult during a future downturn for monetary policy to provide sufficient accommodation to rapidly return employment and inflation to mandate-consistent levels.”
 
As you can see in the chart below, interest rates started out much higher before the Dot Com and the Great Recessions. The Feds had plenty of room to cut rates. And still the recessions were devastating, with the stock market losing more than half of its value. With interest rates starting less than half as high as they were in 2007, the Federal Reserve Board will have to resort to other policy tools to stabilize the economy.
 

​Will the Feds Cut Interest Rates to Let the Party on Wall Street Continue?
Judging from the Federal Reserve Board governors’ own words, there will not be a rate cut on June 19, 2019. However, there could be an abrupt end to the Federal Reserve Board’s deleveraging of its own balance sheet, which is currently scheduled to finish up at the end of September 30, 2019.
 
Governor Randy Quarles, who was appointed by the current President, believes that “monetary policy should be guided primarily by the outlook for unemployment and inflation and not by the state of financial vulnerabilities.” Governor Michelle Bowman, who was appointed on Nov. 26, 2018, might agree with him (and side with the President). However, Governors Brainard and Clarida, along with Federal Reserve Board chairman Jerome Powell, have all gone on record expressing concerns about financial imbalances, financial stability, the Effective Lower Bound interest rate and room to maneuver to boost economic activity in the next downturn. 

As Chairman Powell summed up on May 20, 2019 in a speech:
 
Business debt is near record levels, and recent issuance has been concentrated in the riskiest segments. As a result, some businesses may come under severe financial strain if the economy deteriorates. A highly leveraged business sector could amplify any economic downturn as companies are forced to lay off workers and cut back on investments. Investors, financial institutions, and regulators need to focus on this risk today, while times are good.
 
Bottom Line
The May 2019 jobs report was very weak. However, so was the February jobs report, which prompted the Feds to communicate that they would be patient about rates and would stop deleveraging at the end of September 2019. Prior to that announcement, their economic forecasts were still factoring in getting to a 2.9% Fed Fund Rate in 2019 and 3.1% in 2020. (The current projections are 2.4% in 2019 and 2.6% in 2020.) With 1Q GDP still looking reasonably well, and the 2nd quarter results to be released on July 26, 2019, there can be a lot of reasons to remain “patient” at this meeting.
 
Additionally, even though a mostly Republican Federal Reserve Board would be very interested in keeping the current market rally alive to keep the White House in the next election, the Federal Reserve Board has solid reasons for taking the punch bowl away from the Wall Street party. If the board governors are ruled by the data, and do not succumb to political pressure, then it’s hard to justify letting banks and corporations continue over-leveraging.
 
Forecast 2019
Corporations are still on track to set a buyback record in 2019. This should keep the markets more buoyant than they would otherwise be this late in the business cycle. However, as we saw in December, when companies are too aggressive with their buybacks in the beginning of the year, they find themselves tapped out later on. That is likely what happened in December of 2018, when the S&P500 saw the worst December since the Great Depression.
 
The markets slide at twice the speed when corporations are not buying up their own stock. 

What Should You Do?
The economy is cooling down. That is projected to start showing up in the GDP reports starting on July 26, 2019. Investors are forward looking. So, expect volatility and potential market weakness to show up in advance of that 2nd quarter GDP report. July 2019 could be a very challenging month, unless the corporate CFOs continue their buyback spending spree.
 
What this points to is that now is the time to make sure that you are safe, protected, properly diversified and hot. If your financial plan is longer than just a few pages, if you lost more than 1/3 in the Great Recession and if you haven’t made any changes, then you’re more vulnerable today than you were then. Wisdom is the cure.
 

If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. Click on the flyer link below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more. Register by June 30, 2019 to receive the lowest price and a complimentary 50-minute private prosperity coaching session (value $300). 

I'm also offering an unbiased 2nd opinion on your current retirement plan. Call 310.430.2397 for pricing and information. ​​
​

Other Blogs of Interest
Should You Buy Tesla at a 2 1/2 Year Low? 
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What's Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.

Recently one of our tribe reached out and said she was thinking of buying tesla stock. Earning gains in any investment is never as simple as clicking the buy button. So I encouraged her to make sure that she had an exit strategy and examined how this investment would fit into her overall financial plan. These are two very common problems in investing. When you have a gut feeling about something and pull the trigger before you aim and before you know what you’re shooting at (what your goal and exit strategies are), then you are going to have a hard time being successful – particularly this late in the business cycle.
 
All of this becomes more perilous if you’re running and trying to shoot over your shoulder while being chased by a pack of wild boar, which is kind of like what investing in the 11th year of a bull market is like. Today, the markets are not in a “wind at your back” position. The economic forecast is not clear and sunny with smooth sailing. Rather, we are embroiled in a dark stormy night with lots of phantoms looming in the shadows that you’re probably not even aware of. (See the Asset Bubble Chart at the end of this blog for reference.)

What are the two most common mistakes you might make investing today?

1. Not understanding how this one investment fits into your overall financial plan.

2. Not having an exit strategy.


Individual Stocks Are Not Appropriate for Your Retirement Plan
Individual stocks require babysitting. So they are really not appropriate for your retirement plan, where the goal is to make money while you sleep so that you can earn a good living and live a rich life instead of babysitting your stocks. If you have pages of individual stocks in your retirement plan, you’re probably not as diversified as you think and paying more in fees than you realize. It is also likely that you lost money in 2018.
 
Invest Fun or Education Money (Vegas Money) in Individual Stocks
So if you’re not willing to babysit, and invest fun money or education money, i.e. not your nest egg, then investing in Tesla today at a 2 ½ year low is not the right choice for you. If you do want to invest and babysit then the amount you invest should be limited to the amount that you are willing to lose. Treat the investment like a trip to Vegas. Most investors are not as adept as Warren Buffett at buying low and selling high, and are going to be vulnerable to the person on the other side of the trade, who may be a hedge-fund manager with high-frequency trading systems and software on his side.
 
What’s Your Exit Strategy?
A solid exit strategy requires at least three considerations.
 

1. What can the company do?
2. What can the industry do?
3. What will the macro economy do?

What Can Tesla Do?
Tesla’s next quarterly earnings report, which will be released at the end of July/early August, is expected to be quite strong. In the 1st quarter 2019, Tesla delivered only 63,000 cars; in the next report there should be 90 to 100,000 cars delivered. That’s a lot more revenue for Tesla – with revenue conceivably above $6 billion, compared to $4.5 billion in the 1st quarter 2019 and $4 billion in the 2nd quarter of 2018. That kind of revenue should also put Tesla closer to cash positive again. (Tesla posted net income of $139 million in the 4th quarter of 2018, on $7.2 billion in revenue.) That could excite investors in the short term. However, sophisticated investors will also be looking at the macro economy and the industry itself. The Tesla Model 3 makes up 60% of the electric car market and is the top-selling luxury sedan in the U.S. (source: CleanTechnica.com). Tesla’s Model 3 sales have been so spectacular that GM and Ford have thrown in the towel on sedan manufacturing.
 
The Auto Industry
The auto industry is under attack on many fronts. Tariffs make the cost of steel and other widgets that go into our new smart cars more expensive. This is an industry that is seeing the slimmest profit margins on the planet already, and these new costs could definitely take them all into the red. Check out the Auto Stock Report Card below. 

Additionally, only 25% of 16-year-olds are getting drivers’ licenses today. Gen Z and Millennials prefer living in urban areas close to where they work, and taking a bike or an electric scooter for dinner and other local events. For longer distances, they grab a ride-share, rent a car or fly. So this means softer demand for cars going forward. Tesla actually benefits from that in that the Model 3 has become the fastest selling car in America by far, on consumer choice.
 
Additionally, the company is already a leader in autopilot and artificial intelligence. On his investor call of May 2, 2019, Elon Musk declared that autopilot will transform Tesla into a $500 billion company. Elon is known for hyperbole. However, he’s also known as one of the greatest inventors and CEOs the wold has ever known.
 
It’s important to remember that Tesla has only enjoyed one cash positive quarter in recent memory. Higher costs are going to make it harder for the company to generate cash, unless they are able to dramatically cut costs (which the company has placed as a top priority). That means another capital raise could be in Tesla’s future in the years to come, which is almost always tough on share price. There could be a great number of peaks and valleys before Tesla becomes the next Apple-like behemoth.

The Macro Environment
As we enter the 11th year of this current bull market, the politicians are screaming from the rooftops that the economy is strong and growth is outstanding. However, that message doesn’t seem to equate with how we feel about our lives. What is the disconnect? Housing is unaffordable for most people. Stocks are trading at an all-time high. Bonds have a massive amount of credit risk that’s under-reported. Consumer debt is higher than it was before the Great Recession. Public debt has ballooned to the moon, with $22 trillion in public debt and counting (which doesn’t include state, city or corporate debt and loans). We’ve all become keenly aware of what happens when you borrow from Peter to pay Paul. Sadly, anyone caught on the wrong side of the Great Recession has difficulty trusting what they’re hearing, when what they are seeing and smelling is nowhere near as rosy as the White House Tweets claim. We’ve heard the “Great Economy” rhetoric before – before the Great Recession and the Dot Com Recession and suffered the consequences of drinking the political Kool-Aid.
​
The Bottom Line
Do I think you can make money on investing in Tesla at $200 a share? It really depends upon you. It’s not going to be an easy road ahead. If you make money, it will be because you endure a lot of nasty headlines and stomach churning events and possibly even watching the share price go lower than you bought it for. Tesla is a company that has only two kinds of headlines – doomsday scenarios and heavenly vistas.
 
When you see the headlines turn sparkly and shiny, you may have only a small window before the macro economic reality will cast everything into darkness again.
 
So, what I’m really saying here, is: if you don’t know how to surf in hurricanes, you should not be investing in any individual company in the 11th year of the bull market, not even one you love. Your better strategy is to make sure that you are properly diversified and safe and protected from the next downturn. If you don’t have any hot slices in your nest egg, you might consider a hot slice of clean energy. Many of the clean energy ETFs have Tesla holdings (a small amount). Funds protect you from the volatility of any one company, but they also limit your upside, if Tesla does have a stellar second quarter at the end of July.
 

Full disclosure: I own shares of Tesla. 

If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. Click on the flyer link below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more. Register by June 30, 2019 to receive the lowest price and a complimentary 50-minute private prosperity coaching session (value $300). 

I'm also offering an unbiased 2nd opinion on your current retirement plan. Call 310.430.2397 for pricing and information. ​​
​

Other Blogs of Interest
It's Time To Do Your Annual Rebalancing.
Cannabis Crashes. Should You Get High Again? 
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What's Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.

I recently spoke with someone about rebalancing, and her response was, “I don’t want to day trade.” Annual balancing is not day trading. In fact, it is the most important thing that you can to preserve, protect and grow your nest egg. And here’s why.

1. Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot for Your Nest Egg.
2. This Alone Would Have Protected You From the Devastating Losses of the Great Recession and the Dot Com Recession. You can’t afford to lose more than half of your assets every 8-10 years.
3. What’s Hot and What Safe Change Every Year.
4. You Age a Year Every Year.
5. Your Action Plan Is Obvious Once You Are Properly Diversified.
6. Stick to Your Knitting.
   
   

And here’s additional information on each of these key points.

1. Annual Rebalancing is a Buy Low, Sell High Plan on Auto-Pilot for Your Nest Egg.
Annual rebalancing is not daytrading. It is a simple strategy for always being sure that you have enough safe and are properly diversified. The added benefit of annual rebalancing is that it forces you to do what you should be doing, i.e. trimming back when your assets have had a great run (selling high) and buying more when asset prices go down (buying low). The truth is that buying low and selling high is easy to say and hard to do? Why? Because it is completely against human nature. Also, when you ride the Wall Street rollercoaster up and down, you simply don’t have any money to buy low with. You have suffered so many losses that the only thing you can do is recover. (This happens in real estate, too.)

2. This Alone Would Have Protected You From the Devastating Losses of the Great Recession and the Dot Com Recession.
You can’t afford to lose more than half of your assets every 8-10 years. Annual rebalancing ensures this doesn’t happen to you. Let’s say that you had a spectacular year in 2007. If you use the old-fashioned Buy and Hope plan, then you would have lost 55% in the Great Recession. The losses were even more catastrophic in the Dot Com Recession, when NASDAQ lost 78% of its value (and took 15 years to come back to even).

Annual rebalancing would have ensured that you kept enough safe during both of those downturns. Those people who overweighted safe earned gains in the last two recessions and outperformed the bull markets in between. (On December 24, 2007, I posted a blog encouraging people to overweight up to 20% safe. I am encouraging extra protection again now.)

3. What’s Hot and What’s Safe Change Every Year.
Getting Hot: In 2007, clean energy was the top performing industry, earning 62% gains. In 2008, it was the worst performer. NASDAQ doubled the Dow in the wake of the Great Recession, so adding an extra slice of technology really spiced up the performance of your portfolio.
Getting Safe: In normal times, bonds are an easy way to get safe. However, with so much leverage in the world, bonds are quite vulnerable. Over half of the investment grade bonds are just one downgrade away from junk status. Many bond funds have 20% or more of junk bonds in them. Bonds lost money in 2018 and are vulnerable in the near future. In 2019 (and beyond), it’s very important to educate yourself on how to win in an over-leveraged world where most assets are in a bubble: stocks, bonds and real estate.

4. You Age a Year Every Year.
The basic rule of investing is to always keep a percentage equal to your age safe, and to diversify your “at-risk” investments. See the sample pie charts below.

5. Your Action Plan Is Obvious Once You Are Properly Diversified.
Most people are not properly diversified. Even if you have pages and pages of holdings, you might just have large cap growth and value over and over again. I’ve been doing a lot of second opinions this year, and not one person was properly diversified or had enough safe. Once you trim back all of that nonsense into a sensible, easy plan with ten diversified funds, then each year you simply: 

• Print out the pie chart of what you have,
• Personalize a new pie chart of what you should have (based upon your age, market conditions), and then,
• Make what you have look like what you should have (buying low and selling high)

 
6. Stick to Your Knitting.
This is an age-old adage in investing. If you have a time-proven plan (my easy-as-a-pie-chart nest egg strategy), then you stick to it, no matter what kind of noise you hear in the media. In 1999, you would have heard a lot of self-proclaimed experts claiming we were in a New Economy when Dot Coms didn’t have to make any money at all. In 2007, you were drowned in ads offering no down, Liar’s Loans and easy access to your home equity ATM machine (even though that would send over 10 million homes to auction in the coming years). Today, you’re hearing how great our economy is doing, despite the facts that:

• 2019 is predicted to slow to just 2.1% GDP growth.
• Homes are unaffordable in many U.S. cities,
• Debt is absolutely astronomical,
• Millennials have to delay their home purchase by an average of 7 years,
• Most American households have less than $5000 saved for retirement and are drowning in debt.
  
  

So, now, when the markets are back to all-time highs, before the 2nd quarter 2019 GDP report on July 26, 2019 (which is predicted to reflect slower growth), is a great time to rebalance your nest egg (your 401K, IRA, Health Savings Account, etc.). The slices that have gotten really fat and have earned a lot of games are going to need to be trimmed back to their appropriate size. That’s called selling high. The slices that have gotten super thin because they’ve been underperforming need to be beefed up to the appropriate size. That’s called buying low.

Of course, all of this requires you actually knowing what you own, which is why I began offering 2nd opinions. Call 310-430-2397 to learn more.

Additional Tips About What’s Hot and What’s Safe

1. Bonds are vulnerable.
2. Money market funds have redemption gates and liquidity fees.
3. CDs often have an opportunity cost. Some are not FDIC insured.
4. Getting safe is a two-step process. First you must keep your money, so be sure that your cash is in an FDIC insured account. Then you want to think about safe income producing hard assets that you purchase for a good price.
5. Most hard assets are not a good price right now.
6. However things like solar panels and other energy efficiency upgrades – including perhaps a solar water heater, solar tubes, a gray water system or better insulation in your home, that dramatically reduce your utility bill – could be a great investment right now. The energy efficiency tax credits are set to start expiring at the end of 2019. So that’s low hanging fruit for you.
7. If you start researching now into what safe, income-producing hard asset is right for you, and understand how to do the math and make sure that it is a viable business without taking on a second or third job, then when real estate prices become affordable again, it will be a good time for you to make your move. As they say, when preparedness meets opportunity therein lies success. 
   
8. If you are going to add cannabis as a hot, you will need to select individual companies. The industry is too new to find a reputable fund.  Also, these companies are very volatile, so you’ll have to adopt a strategy of taking your profits early and often (rather than just annually rebalancing them). I added cannabis as a hot slice in October and by March the companies I highlighted had doubled. They then pulled back again. Some, like Tilray and Aphria, are trading near their 52-week lows. Not all cannabis companies are created equal (some are pump-and-dump schemes), so be sure to read my cannabis blogs.
9. Having four hot slices in your nest egg pie chart adds a lot of performance. Many times my hot slices have doubled within one or two years. Again, this is not day trading. It’s maximizing performance.
   
10. If you’re going to buy solar or any other hot asset, then you need to know how to rebalance after you make that hard asset acquisition. Hard assets are not included in your nest egg pie chart, but they are part of your wealth and assets. This is something that we spend a full day on at the Investor Education Retreats. Call 310-430-2397 to learn more. 
     
    
    

 

If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. Click on the flyer link below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more. Register by June 30, 2019 to receive the lowest price and a complimentary 50-minute private prosperity coaching session (value $300). 

I'm also offering an unbiased 2nd opinion on your current retirement plan. Call 310.430.2397 for pricing and information. ​

Other Blogs of Interest
Cannabis Crashes. Should You Get High Again?
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What's Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.

​Each time I do an updated blog on cannabis, there’s an impressive newcomer (Green Growth Brands), a new leader (Aphria) and a former unicorn, who is trading for a song (Tilray). The most important thing to remember about investing in the fastest growing industry in the world is that the share price is extremely volatile. This is not due to the future prospects of the industry. It has a lot more to do with valuation, short sellers, and the rollercoaster nature of equities in the late stage of the business cycle.
 
Check out the 52-week highs/lows below. As you can see, MedMen, Aurora Cannabis, Aphria and Tilray are all trading near their 52-week lows, while boasting explosive revenue growth (light years beyond any other industry).
 

So, what’s the story? Why would these unicorns be thrown under the troll bridge?
 
MedMen: The Cool Store Popping Up All Over Town.
MedMen has had an executive exodus of late, which is typically a terrible sign. The former CFO filed a lawsuit against the company, and accused the co-founder CEO Adam Bierman and co-founder president Andrew Modlin of egregious behavior, ranging from petty bad language to potentially serious financial accounting policies. Three executives, including the COO, followed the former CFO out the door within a few short months. The executive exodus has killed the share price.
 
However, Medmen’s growth is undeniable. There is a line outside their stores from open to close. Former LA Mayor Antonio Villaraigosa is on the Medmen board, alongside many other seasoned executives. Spike Jones filmed a stunning, poignant mini-film marking the monumental progress from Pot Prohibition and the War on Drugs to legalization. 

Aphria: Don’t Mess With Whole Foods
Aphria has successfully rejected a hostile takeover bid by Green Growth Brands, and will even put a little money in its coffers as a result. Under the leadership of interim CEO Irwin Simon (former chairman and CEO of Hain Celestial) and president Jakob Ripshtein (former CFO of Diageo North America), Aphria is expanding and stabilizing at the speed of light. The company just added former co-CEO of Whole Foods Market Walter Robb to its board.
 
Aphria’s share price took a hit because of a massive loss in the most recent quarter. However, as you can see from the Stock Report Card, most companies are reporting losses as they attempt to expand rapidly enough to meet global demand for products. That’s a good reason to lose money.
 
Tilray: The Wounded Unicorn
Tilray’s stock dropped to its 52-week lows in mid-April. As with the volatility in other companies, Tilray’s poor performance has a lot to do with short sellers and lofty valuations. The company is having difficulty meeting demand, but has recently addressed that issue with a spate of acquisitions and expansion plans. Tilray is set to report earnings on May 14, 2019 (after the market close). That report may not look as impressive as it could, due to the supply chain issues. However, the price is already reflecting this.
 
Tilray’s executive team and board of directors are some of the most impressive in the industry. The advisory board includes Governor Howard Dean, the former Vice Chancellor of Germany and other global government leaders. Tilray recently inked a deal with celebrity brand marquise company Authentic Brands Group…
 
Green Growth Brands: The New Secret On the Block
Victoria’s Secret executives think cannabis is sexy. The Green Growth Brands team, which is made up of former Victoria Secret executives, made strong moves very fast, including a hostile takeover bid for Aphria, which failed. That was an expensive lesson, which will likely show up in the 4th quarter fiscal earnings report in late summer/early fall. (The next earnings release at the end of May will report earnings through March 31, 2019, and thus miss the Aphria takeover expiration.) Despite that setback, the acquisitions continue, and the Green Growth Brands website makes cannabis consumption look heavenly. Will an angelic catwalk be in the company’s future?
 
​ 
The truth is that the cannabis industry is so hot that most of these companies are going to see splashy headlines in the months and years to come. However, with such volatility in share prices and the lofty valuations already in play for many of these companies, you’ll be best served to follow the age-old adage Buy Low, Sell High on auto-pilot (with limit orders). Many investors have enjoyed massive returns over the past year using that strategy! The returns on these cannabis companies will get you high, as long as you don’t crash hard when short sellers end the party…
 
 
Also, be careful of penny pot stock scams that are still being heavily marketed by social media scam artists. If you don’t know how to use the Stock Report Card and 4 Questions to evaluate which companies are legit and which are pump-and-dump schemes, then your next move must be education. If you’d like to learn more about these strategies firsthand, join me at my Oct. 19-21, 2019 Retreat.
 

If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. Click on the flyer link below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more. Register by June 30, 2019 to receive the lowest price and a complimentary 50-minute private prosperity coaching session (value $300). 

I'm also offering an unbiased 2nd opinion on your current retirement plan. Call 310.430.2397 for pricing and information. ​

Other Blogs of Interest
Are You Suffering From Buy High, Sell Low Mentality?
Financial Engineering is Not Real Growth
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What's Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.

In the late stage of the business cycle, we start seeing an avalanche of advertising that encourages us to jump into high-priced investments. In 2017, it was Bitcoin at $20,000/coin. In 2007, it was stocks and real estate, and before that the New Economy promised that Dot Coms would be your ticket to Dream Come True Living. Today is no different. People are calling me to brag about their recent real estate purchase, or cryptocurrency, or cannabis, offering a long litany of the merits of the plan, without enough consideration to the price that they are paying.
 
It is never a good idea to buy high. Buying high risks the following.
 

1. Your money is tied up, so you will not be able to buy low when the asset prices correct (which they always do).
2. Your credit score suffers because 1/3 of the score is your assets to debt.
3. Your next decade could be wiped out because the last two recessions have seen drops of half or more in the value of real estate and stocks.
4. Bonds aren’t going to help this time around because there is too much leverage and not enough room for the Feds to lower rates to help the economy when it slows (as the worldwide economy is predicted to do in 2019).

 
It’s important to remember that your strategy for purchasing real estate, stocks and bonds should be based in real data and information, not headlines, ads or the opinion of a “financial expert” who might have incentives to sell you more than you really should take on (at a high price).
 
As you can see in the chart below, real estate and stocks are back to all-time highs, while debt (bonds) has shot to the moon. If you buy today, you are paying a premium over what you would have paid just a few years ago, and likely far above the true value of the asset.  Most of these assets lose value when the economy slows or runs into a recession. 
​

Below are a few key points of how to navigate and think about these assets as we enter the 11th year of the bull market.
 
Fast Facts for Successful Investing in Real Estate, Stocks & Bonds in 2019 & Beyond
 
Real Estate

• Use the 3-Ingredient Recipe for Cooking Up Profits.
• Buy what you can afford.
• Understand the local market.
• Shop in the shadow inventory.
• Wait for your price.
• Align the pay-off date with your retirement date
• Have a 10-year plus horizon.

 
Homeowners are worth 46 times more than renters, so owning your own home is definitely something you want to do. However, purchasing real estate high can destroy your life for a decade or more, so buying for a good price is an essential key in the equation. Millions of homes went to auction, were foreclosed on or sold in short sales during the Great Recession. Most cities saw home prices lose more than half in the Great Recession. If you were on the Buy Side of that equation – buying low in 2009-2011– then you have doubled your money (in many cities).

​

The 3-Ingredient Recipe for Cooking Up Profits

1. Start with what you know and love.
2. Pick the leader.
3. Buy low, sell high.

 
Learn more about the 3-Ingredient Recipe in the chapter of the same name in my first book, Put Your Money Where Your Heart Is.
 
Stocks
There is a lot of risk in stocks these days. Alan Greenspan, Professor Robert Shiller and Warren Buffett have all warned that stocks (and bonds) are in a bubble.
 
Stocks are…

• Back to an all-time high.
• The last two recessions cost most investors more than ½ of their retirement.
• Hot industries, like technology and cannabis, are extremely volatile.
• Market timing (jumping all in or all out) doesn’t work.

 
Proper diversification, keeping enough safe, knowing what’s safe in a world where stocks and bonds are in a bubble, and annual rebalancing works in your nest egg. These strategies earned gains in the last two recessions and have outperformed the bull markets in between.
 
In individual stock investing (something you should not be doing in your nest egg), you need to apply the 3-Ingredient Recipe for Cooking Up Profits, and take your profits early and often. The Stock Report Card and 4 Questions that are outlined in my first book, Put Your Money Where Your Heart Is, can help you pick the leader. When determining the right buy low and sell high prices, you’ll consider what the company can do, what the industry can do and what the general marketplace can do. This is something that I teach in my Investor Edu Retreats.
 
Bonds
There is far too much debt in the world. Companies have borrowed money very cheaply and used that to buyback their own stock. This makes their earnings look stronger than they really are and their share price look lower than it really is. Borrowing from Peter to pay Paul has an expiration date. The leverage in corporates is at an all-time high, and has the Feds concerned.

• Credit risk abounds! About half of the investment-grade companies are at the lowest rung above junk status.
• Interest rates are too low for the Feds to help the economy if it slides into a recession.
• Bond (and dividend-paying stocks) risks include: loss of your yield, loss of your capital, default & illiquidity. You are not being paid for this risk.
• Money market funds have redemption gates and liquidity fees. This is part of the new bank “bail-in” policy – on your dime.
• “I’m more concerned with the return of my money than the return on my money.” Roy Rogers.

 
Financial Engineering
Companies like Apple, Oracle, QualComm, Cisco, Wells Fargo, Amgen, Microsoft, Citigroup, Pfizer, Abbvie and Broadcom all spent more money on buybacks and dividends than they earned in income. Apple spent $88 billion on buybacks and dividends in 2018! The rest of the companies spent between $15 billion and $32.8 billion. This is all money that rewarded investors, but didn’t add employees, invest in R&D or upgrade tools and factories. In other words, it’s a short-term financially engineered fix, rather than a long-term vision and investment toward a better business with innovative products. The last time that buybacks were at an all-time high, before 2019, was 2007. We all know how that story ended...
 
You can educate yourself further by reading my 3 books (links are below), by receiving a 2nd opinion on your current investing plan and by attending my Wild West Investor Educational Retreat. It’s time to mute all of the noise, bad ideas and advertising that you hear constantly in the mainstream media and online. Wisdom is the cure.
 
Listen back to my free teleconference on this subject at BlogTalkRadio.com/NataliePace.

If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. Click on the flyer link below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more. Register by June 30, 2019 to receive the lowest price and a complimentary 50-minute private prosperity coaching session (value $300). 

I'm also offering an unbiased 2nd opinion on your current retirement plan. Call 310.430.2397 for pricing and information. 
 

Other Blogs of Interest
Financial Engineering is Not Real Growth
The Zoom IPO. 
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.

On Friday morning, April 26, 2019, at 8:30 am ET, the Bureau of Economic Analysis will release the 1st quarter 2019 GDP growth advance estimate. 2019 is predicted to slow worldwide, and the U.S. is not immune to that. U.S. GDP growth in 2019 is predicted to slow to 2.1%, as the affects of the tax cut wear off and the problems of tariffs, BREXIT and the late stage in the economic cycle kick in.
 
Estimates for the 1st quarter GDP growth range from 1.4%-2.8%. On the low end, investors will likely take a defensive stand, and stocks could sink. If growth hits 2.8%, sophisticated managers will know that is largely as a result of financial engineering, as the rally in stocks is largely a result of corporate buybacks. So, there is no guarantee than an upside surprise near 3% growth would spark more buying.
 
Financial Engineering is Not Real Growth.
Boeing has borrowed money to buyback its own stock, rather than hire ample staff to do the job right. This rewards shareholders in the short term. However it harms regular folks and the company itself in the medium and long-term. There is no greater tragedy than the loss of 346 innocent travelers.
 
Boeing is trying to buy their way through this crisis, as they work to get the software safety upgrade for the 737 approved and the airplanes delivered. So far Boeing stock has been very buoyant, still trading near an all-time high of $375.46/share, as of April 24, 2019. However, how long can the company borrow to buyback stock? Boeing’s debt/equity ratio is the highest in the industry at 31.44. The company has warned that they will have to restate their 2019 financial guidance at “a later date.” 1Q 2019 revenue was down 2% due to the canceled and delayed aircraft deliveries. (The Ethiopian Airlines crash was on March 10, 2019, so the cancellations and issues will show up more in the next earnings report.)
 
Boeing’s net earnings were down 13%, while the earnings per share took a 10% haircut year over year. Boeing spent $2.3 billion on share repurchases and $1.2 billion on dividends (a 20% increase) in the 1st quarter. This is about $1.4 billion more than the company earned.

General Electric was another company that kept raising their dividends and buying back their own stock, on an unsustainable path to where they are now – with a share price worth less than 2/3rds of what it was a few years ago, and almost no dividend.

Buybacks Hit An All-Time High, Just Like 2007 All Over Again
According to S&P Dow Jones indices senior index analyst Howard Silverblatt, corporate buybacks are at an all-time high, running a whopping 68.6% above last year. Apple spent $88 billion in 2018 on stock repurchases and dividends. The company’s net income was $59.53 billion. Oracle spent $32.75 billion on buybacks, with $3.82 billion in net income. Banks were in the top ten spenders, led by Wells Fargo, with $29.153 billion spent on buybacks and dividends and $20.69 billion in net income. Amgen, Microsoft and Facebook were also big buyback spenders. Amgen’s spending topped its net income by $13 billion, while Microsoft spent almost $14 billion more than it made.
 
Buybacks Were the Fuel Before the Great Recession, Too
The cost of buying into a financially engineered asset bubble is enormous. Stocks dropped by more than half in the last two corrections. Real estate dropped by half or more in many cities (around the world) during the Great Recession, such as Stockton, California, Detroit, Michigan, Las Vegas, Nevada, Miami, Florida and Phoenix, Arizona (to name a few).
 
Low Interest Rates Create Bubbles
Low interest rates create bubbles. As you can see in the chart below, asset bubbles were the rocket fuel of the last two recessions – and the leading indicators of the correction. Inflation and unemployment were both low in 2007 and 2000. The asset bubbles today are even more troubling, particularly when you look at debt and underfunded pensions.
  

Bonds are in trouble this time around due to the amount of credit risk (debt) in the world. Over half of the investment grade corporate bonds are rated at the lowest level. One canceled order or customer could take the company into junk bond status. Also, the Feds don’t have enough room to lower rates and help the economy went it hits troubled waters, as it inevitably does. If the Federal Reserve Board is not able to raise interest rates before the next correction, the correction itself could be longer, deeper and more harrowing.
 
Business cycles are cyclical. This is the late stage of the current expansion by most measurements.
 
Asset bubbles have made real estate and stocks unaffordable for many Americans. (If you’re not aware of the high price to earnings ratio in stocks, it will pay to get educated on this.) According to Robert Shiller, a Nobel Prize winning economist and Yale’s professor of economics, “The only time in history going back to 1881 when [CAPE] has been higher are, A: 1929 and B: 2000.We are at a high level, and its concerning. People should be cautious now.”
 
Retiring Boomers are putting pressure on the entitlement expenditure. BREXIT and tariffs will affect the U.S. economy negatively. (Tariffs have increased our trade deficit and taken it to an all-time high.) As former Federal Reserve chairman Alan Greenspan noted in an interview on CNBC on April 12, 2019, “The CBO is putting out huge forecasts of the deficit and nobody seems to mind. They will mind when it gets monetized [as inflation].”
 
So, what do you do when you see financial storms brewing on the horizon? You fix the roof while the sun is still shining, relying upon time-proven systems that work. Buy and Hope has been riding the Wall Street rollercoaster up and down, losing more than half in each Recession, and then barely crawling back to even again before the next financial crash. You can’t afford those kind of losses this time around, particularly when the solutions are so simple. Wisdom is the cure.
 
 
If you'd like to learn time-proven strategies that earned gains in the last two recessions and have outperformed the bull markets in between, join me at my Wild West Investor Educational Retreat this Oct. 19-21, 2019. I'm also be hosting a Real Estate Master Class in Denver on April 26, 2019 and an Investor Educational Retreat April 27-29, 2019. (You'll have to act fast to join me there!) Click on the flyer links below for additional information, including the 15+ things you'll learn and VIP testimonials. Call 310-430-2397 to learn more and to register now. 

Other Blogs of Interest
The Zoom IPO.
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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.

 

We’ve had a series of Initial Public Offerings recently that would have been better labeled as Liquidity Events. Venture Capitalists and early stage investors (including the founders of the company) need to turn their paper money into real currency and things (like homes & nest eggs). So, they go public. Many of these companies are staples of our new sharing, connected and gaming economy, such as Lyft, DropBox and Snap Inc. (Click on the blue highlights for my original IPO warnings on Lyft and Snap Inc.) However the challenge for investors is often more one of valuation, or profitability. If you get caught up in the story of how the company is transforming the landscape of our lives, and fail to look at the fundamentals of sound business, you might drink the Kool-Aid and wake up with losses.​

So, is Zoom more of a Lyft or more of a Google? Google’s IPO was one of the strongest of all-time. The company had a strong executive team and board, had doubled in revenue growth and was profitable. Google launched in 2004 – just two years into the bull market, so it also had the wind at its back in terms of macro movement. Let’s line up the numbers of Zoom …

Zoom has many strengths. The company is the best-in-class. It is achieving viral marketing of its video conferencing by offering free conferences to everyone (with limited time and number of attendees). Many of those freebies, and the friends they invite in, are becoming paid subscribers. The company is also profitable, bringing in $7.6 million in net income for fiscal year 2019. Revenue doubled year over year (up 118%), to $330.5 million.

Zoom was named #2 Best Company to work for by Glassdoor in 2019, and Eric S. Yuan, Zoom’s CEO has been racking up the awards for his leadership. However, there is an issue with the board. It’s overweighted with finance people, and underweighted with technology leaders, government relations specialists, product visionaries and marketing geniuses. So, whereas Google was finding ways to diversify its revenue stream under the experienced guidance of Eric Schmidt, it appears that Zoom is focused mainly on subscriptions. This will be a problem if the economy weakens, and individuals find that basic expenses outweigh their desire to convene.  

Also, when you get too many finance people in the room, there can be too much focus on monetization, and not enough on innovation. The worst example of this was the Sears Holding Co. board. So far, Zoom is doing everything right. However, Microsoft is likely to awaken and want to make Skype more competitive, and this is where the technology and government relations oversight can be key.

Other Blogs of Interest
10 Rally Killers. Fix the Roof While the Sun is Shining.
Uber vs. Lyft. Which IPO Will Drive Returns?
Boeing Cuts 737 Production by 20%.
Tesla Delivery Data Disappoints. Stock Tanks.
Why Did Wells Fargo's CEO Get the Boot?
Earth Gratitude This Earth Day. 
Real Estate is Back to an All-Time High. 
Is the Spring Rally Over?
The Lyft IPO Hits Wall Street. Should you take a ride?
Cannabis Doubles. Did you miss the party?
12 Investing Mistakes
Drowning in Debt? Get Solutions. 
What Hot in 2019?
The Debt Ceiling Was Hit (Again) on March 1, 2019.
How Bad Will the GDP Report Be?
2019 Investor IQ Test
The State of the Union
CBD Oil for Sale.
The High Cost of Free Advice. 
Apple's Real Problem in China: Huawei. 
2019 Crystal Ball.
2018 is the Worst December Ever. 
Will the Feds Raise Interest Rates? Should They? Learn what you're not being told in the MSM.
Why FANG, Banks and Your Value Funds Are in Trouble.
When the Santa Rally is a Loser, the Next Year is a Bigger Loser. 
Russia Dumps Treasuries and Buys Gold
OPEC and Russia Cut Oil Production. 
Trade Deficit Hits an All-Time High. Wall Street Plunges 800 Points. How to Protect Yourself.
​Rebalance and Get Safe in December. Here's Why. 
The Best Investment Decision I Ever Made. 
What's Safe for Your Cash? FDIC? SIPC? Money Markets? Under the Mattress?
The Real Reason Stocks Fell 602 Points on Veterans Day 2018.
Will Ford Bonds Be Downgraded to Junk?  
6 Risky Investments. 12 Red Flags. 1 Easy Way to Know Whom to Trust With Your Money.
Whom Can You Trust? Trust Results.
October Wipes Out 2018 Gains.
Will There Be a Santa Rally in 2018?
The Dow Dropped 832 Points. What Happened?
​Bonds are In Trouble. Learn 5 Ways to Protect Yourself.
Interest Rates Projected to Double by 2020. 
5 Warning Signs of a Recession.
How a Strong GDP Report Can Go Wrong. 
Should I Invest in Ford and General Electric?

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

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

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

 
Fix the Roof While the Sun is Shining.
The 10 Events That Will Drive (or Tank) the Economy in 2019.

John F. Kennedy Jr. famously said, “The time to fix the roof is while the sun is shining.” As we enter the 11th year of this recovery, it is definitely time to do a full assessment of our roof, testing where the vulnerabilities lie and fixing them now. Most Americans are going to need an outside opinion for this. Why? Would you hire the roof contractor who let the storm flood your home last time?
 
If you lost more than 30% in the Great Recession and you haven’t made any changes to your plan, then now is the time to get an unbiased, second opinion. And here’s why. There are at least 10 areas of economic vulnerability – many which are not in the headlines yet – that make 2019 a rather precarious year for stocks and bonds.
 
The 10 Events That Will Drive (or Tank) the Economy in 2019.

1. Stagnant GDP Growth.
2. The Debt Ceiling Was Hit on March 1, 2019.
3. Will the U.S. Keep AAA Rating with Fitch Ratings?
4. Putin/bin Salman Oil Partnership.
5. China/U.S./EU Trade War & Tariffs.
6. Interest Rates.
7. Flat or Inverted Yield Curve.
8. Escalating Public Debt (and debt of every nature really).
9. Housing Market Slump.
10. Policy Impotence in the 11th year of the Bull Market.

 
And here are the facts on each point.
 
The 10 Events That Will Drive (or Tank) the Economy in 2019.
 
1. Stagnant GDP Growth.
GDP growth in 2018 was 2.9%. 2019 GDP growth is predicted to slide down to 2.1%, with the 1st quarter 2019 GDP growth to fall somewhere between 1.4-2.3% (potentially under 4Q 2018’s disappointing 2.2% growth). The 1Q 2019 GDP growth report will be released on April 26, 2019. Investors aren’t fond of low GDP numbers.
 

 2. The Debt Ceiling Was Hit on March 1, 2019.
The debt limit was hit (again) on March 1, 2019. Most Americans aren’t aware of this, and it was under-reported in the mainstream media. Trying to locate a copy of the letter that Treasury Secretary Mnuchin send to Nancy Pelosi is next to impossible. (Click on Mnuchin to access.) The U.S. public debt is now at $22 trillion. Add in consumer debt, corporate debt and loans and municipal and state debt, and that number skyrockets to over $72 trillion. The U.S. must raise the debt ceiling before it runs out of money to pay its bills, which is predicted to be around September 30, 2019, give or take a few weeks (source: CBO.gov). If the debt limit is not raised before that X date, the U.S. risks a credit downgrade.
 
Wonder who owns all of this debt? You do! Click to read my blog outlining the foreign and domestic holders of the U.S. debt. FYI: Russia sold off almost all of their U.S. treasuries in April of 2018 and has been stockpiling gold.


3. Will the U.S. Keep AAA Rating with Fitch Ratings? During the last Debt Ceiling crisis in 2017, Fitch Ratings warned, “If the debt limit is not raised in a timely manner prior to the so-called “x date” Fitch would review the US sovereign rating, with potentially negative implications.” This possibility was reiterated by Charles Seville, a senior director at Fitch, in January of 2019, during the government shutdown. Both Fitch and Moody’s expect the Debt Ceiling to be raised before the Treasury runs out of money, which is predicted to be sometime in August. (Last time, the White House made a deal with the Democrats, against their own party, to raise the Debt Limit.) In that event, the Debt Limit won’t generate a downgrade, but is a reminder of the unsustainable path of debt that the U.S. is currently teetering on. If X date is hit without a deal, both agencies will likely review the U.S. AAA credit. Fitch is more likely to downgrade than Moody’s.


4. Putin/bin Salman Oil Partnership.
There is a very high correlation between oil prices and recessions. So, the lower prices of gasoline and other petroleum products over the last few years have been helpful to economic growth by giving consumers a little room in their budget for other spending. However, on December 7, 2018, Putin and Saudi Arabia Prince Mohammed bin Salman (the one accused of killing journalist Jamal Khashoggi) agreed to cut oil production. This is intended to increase the price of oil. If it works, this will be a drag on the economy.

5. China/U.S./EU Trade War & Tariffs.
Tariffs hurt economies. Currently, the U.S. government is imposing tariffs on China and has threatened to impose them on Canada and Europe. The auto manufacturing and solar industries have suffered a dramatic increase in the cost of their parts. Farmers have suffered. And the U.S. trade deficit has skyrocketed to heights never seen before.

6. Interest Rates.
Low interest rates create bubbles. Check out the Asset Bubble Chart below.

Low interest rates will also create a massive problem for the Federal Reserve during the next recession. As former Secretary of the Treasury Lawrence H. Summers explains it, “Interest rates are reduced by 5 percentage points to combat recessions” Therefore, in the next recession, we risk “policy impotence” because there just isn’t enough room to lower rates enough to goose growth. Summers doubts that quantitative easing alone can do the trick.
 

7. Flat or Inverted Yield Curve.
An inverted yield curve is 100% associated with recessions for the last half a century. Part of the reason for that, as Liz Ann Sonders, the chief investment strategist for Charles Schwab explains, is that having the short-term rate (the rate at which banks borrow) and the long-term rate (the rate at which banks can lend) be inverted means that banks lose money. So, financials are out of favor at this time, too, from an earnings perspective. However, the banks are buying back their own stock at records not seen since pre-Great Recession. According to Howard Silverblatt, the senior index analyst at S&P Dow Jones Indices, Wells Fargo spent $29.153 billion on buybacks and dividends in 2018, which is $8.46 billion more than the company earned (at $20.69 billion).
 

 

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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.