Apple has been the fuel of this bull market for years. Apple’s share repurchases are astonishing. The company bought back $74.2 billion of its own stock in 2018, compared to $34.4 billion in 2017. The closest buyback competitor in 2018 was Oracle, with $29.3 billion in share repurchases.  Apple remains on track for another record buyback year, with almost $42 billion repurchased in the first half of 2019.
 
However, rather mysteriously and without any explanation, Apple share repurchases dropped by half in the 4th quarter of 2018 (source: S&P Dow Jones Indices. In the first three quarters of 2018, Apple’s share repurchases averaged $21.4 billion per quarter. In the last quarter of 2018, buybacks abruptly stalled to a mere $10 billion.
 
That was still higher than its peers. However, in a bull market driven by companies buying back their own stock, such a drastic policy shift can quickly impact into the broader market.
 
December 2018 was the worst stocks have seen since the great depression. The S&P500 lost 6.4% in 2018, with losses of 12.31% in the last quarter. Last year’s Santa Rally was coal in the stocking. Most Main Street investors saw losses of 9% or more in their nest eggs, with losses on both the stocks and bonds side of their liquid assets.
 
Performance of the Dow Jones Industrial Average
Oct. 2018-Oct. 2019

The real question here is why did Apple stop repurchasing shares in December 2018, when they had plenty of cash on hand, and over $60 billion left in their buyback authorization? Was it simply a matter of price? In October of 2019, Apple stock was trading near its all-time high. Today, Apple’s stock price is even higher, at $241.83. Many companies have rules about pricing with regard to their buyback authorization. There can be other parameters, as well. (Apple hasn’t provided an explanation for the dramatic halt in share buybacks last December.)
 
Another explanation for last year‘s cessation of share repurchases in December at Apple could be in anticipation of a very weak earnings report in January. Companies often have quiet periods before earnings, particularly if the news is not going to be good. We will know Apple’s forward outlook when they report earnings today, after the markets close. (I’ll update this in the comments section of this blog at that time.)
 
In the 2nd quarter of 2019, Apple logged in as the #3 smart phone provider in the world, behind Samsung and Huawei (source: IDC.com). The 3rd quarter results will likely be released tomorrow. 

The Federal Reserve Fed Fund Rate
Wonder why this year’s Santa Rally is more reliant upon Apple than the Federal Reserve’s Board decision? This is largely due to the Effective Lower Bound interest rate, which has already been hit. There comes a point when lower interest rates just can’t inject adrenalin into the late stage of the bull market’s life, even though Wall Street is practically demanding a rate cut today.
 
As Nobel Prize winning economist Robert Shiller explains it, “It’s like your doctor giving you a strong anti-depressant for your mental condition. You think, ‘I must be really mentally ill if he gave me that.’” The economy grew at mere 1.9% in the 3rd quarter of 2019, according to the Bureau of Economic Analysis.

Interest rates have been so low for so long that almost everything that can be leveraged responsibly has been. Below are a few examples.
 

• Over 50% of corporate bonds are at the lowest rung, just above speculative status. The poster child of this was the recent Ford downgrade to junk status.
• Consumer debt is higher than ever, at almost $14 trillion.
• Public debt is higher than ever, at just under $23 trillion.
• All debt is now astronomical, with corporate, state, municipal debt ($45.8 trillion) and loans ($27.7 trillion) soaring to heights never seen before ($73.5 trillion). 

​Incidentally, even though interest rates have been falling again and home prices have still been rising, the number of mortgages that are severely underwater has grown this year. This has a lot to do with the recent trend of loan mods that have so many fees and unpaid interest tacked onto the new principle owed. I’ll be looking into this in the coming weeks. If you are a homeowner who is underwater on your home, it’s in your best interest to seek solutions outside of those being offered by the people you owe money to. Reach out to our office at 310-430-2397, or by email at info@NataliePace.com, with any questions and/or if you are in this position.
 
Bottom Line
Apple had almost $100 billion left in its buyback facility as of June 29, 2019. The share price is back near its all-time high, at $241.83 today, vs. an all-time high of $249.75. (The 52-week low of $142/share occurred on January 4, 2019.) Apple is projecting flat to tepid revenue growth of $61-$64 billion, vs. $62.9 billion a year ago. Results will be announced today after the markets close.
 
With Apple’s share price back to an all-time high, if Apple’s forward outlook is weak, we may be looking at the perfect storm that restrains the company from buying back its own stock in the coming months. That was devastating last year. The enlightened investor will take note of the trend, which runs counter to the normal Santa Rally trend, to protect their assets and remain on the right side of the trade.

Other Blogs of Interest
Will JP Morgan Implode on Fairy Tales and Unicorns.
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Tesla's 3Q 2019 Deliveries Could Hit 100,000.
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
​The Winners and Loser of a Clean Energy Policy. 
Make the Climate Strike Personal. 
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
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.

It has been a year rife with IPO losses, with the We Co. (WeWork) on the ropes, Uber losing $5.2 billion in the 2nd quarter of 2019 and Lyft shares down over 50% since its first day of trading. How much of that will impact the banks this earnings season? We’ll know by 7 am, when JP Morgan releases its 3rd quarter 2019 earnings report.  
 
Looking at bank fundamentals and analyst ratings (Buy buy buy!), one might be enticed to lean in for more financials exposure. The price to earnings ratios look fair, between 8 and 15. The profit margins range from 18% (Goldman Sachs and Morgan Stanley) to 31% (JP Morgan and Bank of America). Sales growth is holding steady, even though many of the banks have virtually stopped lending to homeowners, due to the low margins. As Jamie Dimon, the chairman & Chief Executive Officer of JPMorgan Chase & Co. explained in the company’s 2nd quarter 2019 earnings call, “It simply does not make sense to own home mortgages when you're constrained by standardized and you can't securitize.”
 
However, past earnings are like looking in the rearview mirror. When driving for gains, it’s a better idea to polish up the crystal ball and look out on the horizon.
 
The WeWork IPO Implosion
Morgan Stanley should be clear of this one, having exited the fray when they were denied the lead on the IPO. However, sources, including The New York Times and the Financial Times, peg loss exposure in the hundreds of millions on both Goldman Sachs and JP Morgan. SoftBank reportedly has at least $11 billion in equity investments in the We Co. JP Morgan is believed to have loaned former CEO Adam Nauman hundreds of millions personally against his equity ownership in the company.
 
When a company’s value gets written down to $10 billion from $47 billion, wiping out 79% of the assumptions every pre-IPO investor was banking on, that’s going to scar an earnings report. In fairness, we just don’t know the We Co.’s value at this time. However, investors balked at buying in for even a $15 billion valuation. And Fitch downgraded WeWork’s credit rating to CCC+ this month after the IPO was pulled, putting the company’s bonds firmly in junk-bond territory.
 
According to The New York Times, there are two competing plans to take over the company, one from SoftBank and one from JP Morgan. Meanwhile the We Co. lays on the ropes in a cash-crunch coma.
 
One of the fundamental toxins in the We Co. business plan is that the company signs on for long-term leases, while accepting short-term contracts with its customers. Another poison was not having a clear path to profitability, and being astonishingly steeped in nepotism and hubris, while short on business acumen. The We Co. lost $905 million in the first six months of this year.
 
Since the IPO was pulled on September 30, 2019, the last day of the third quarter, the full financial accounting of the We Co. debacle is more likely to play out in the months ahead. It’s also possible that the company will want to rip the band-aid off and just put it behind them. However, that’s more likely to happen in the 4th quarter 2019 earnings than in tomorrow’s report. Another negative omen is that there have been other IPOs that sank in share price upon hitting the big boards this year, including Uber and Lyft. Any pre-IPO bank investments will have to be written down at some point, which may impact earnings.

The Poor Performing IPO Class of 2019, combined with a flat yield curve and the overnight stress in the repo lending market are all signs that there is more going on behind the scenes in the financial industry than is being fully accounted for in the earnings reports and headlines. Will this quarter’s earnings reveal more weakness than investors are anticipating? Are financial storms on the horizon? Tomorrow will tell, as will the advance report of U.S. 3rd quarter GDP growth, which will be released on Oct. 30, 2019.
 
3rd Quarter 2019 GDP Growth
With the full year 2019 GDP growth expected to be restrained to 2.2%, many economists are expecting a weak showing on Oct. 30, 2019.

Banks have been the most aggressive buyers of their own stock. So, it’s not a great idea to bet against these juggernauts. JP Morgan repurchased $5 billion shares of its own stock in the 2nd quarter of 2019, with a total of $7.5 billion returned to shareholders in stock repurchases and dividends.
 
However, it’s clear that institutional investors are sobering up and demanding profitability and reasonable valuations. The WeWork IPO and other financial hits will have to be accounted for. If not in the 3Q 2019 earnings season, then perhaps beginning as early as Christmas.
 
Remember last Christmas was the worst December in stocks since the Depression. The S&P500 dropped 9.2%. That phenomenon was pegged to Apple pulling back on its astonishingly aggressive buyback pace. Apple cut its repurchases by half in the 4Q 2018, to $10 billion, from an average $21.4 billion in the three quarters preceding that.
 
JP Morgan and Wells Fargo both increased their share buybacks in the last quarter of 2018. However, that wasn’t enough to save the day last December.
 
The Late Stage of the Business Cycle
This kind of race to monetize and capitalize cash-negative “unicorn” IPOs is a hallmark of the late stage of the business cycle. Inverted yield curves are 100% associated with recessions over the last half century. So, now is the time to stop looking back at how far this bull market has come, and start battening down the hatches to prepare for rougher seas to come.



 
Learn how to save thousands annually in your budget with smarter big-ticket energy choices, and how to invest in your nest egg with a time-proven strategy that earns gains in recessions and outperforms the bull markets in between. Join me at one of my upcoming Investor Educational Retreats. You have 3 to choose from below. 

Arizona is my most affordable retreat. Students register for 1/2 off!
Anyone who registers for the Florida or England Retreat by October 31, 2019 receives the lowest price. 

​Call 310-430-2397 or email info@NataliePace.com to learn more now. 

Other Blogs of Interest
Harness Your Emotions for Successful Investing.
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Tesla's 3Q 2019 Deliveries Could Hit 100,000.
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
​The Winners and Loser of a Clean Energy Policy. 
Make the Climate Strike Personal. 
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
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.

Discover why pie charts, not just account summary pages, are essential to successful investing. This strategy taps your emotions to work for you rather than against you. If you are looking at statements and adhering to a Buy and Hope plan, your feelings are jacked between euphoria, desperation and indigestion, and are very likely demanding that you do the wrong thing. Most investors have lost more than half of their nest egg in the last two market contractions. Our nest egg pie chart and annual rebalancing plan earned gains in the last two recessions and have outperformed the bull markets in between. So, in addition to this being an emotionally healthy plan, it’s also time-proven.


Recently someone reached out to my office for some private coaching and a second opinion. Heather, my assistant, asked if they had mocked up their holdings into a pie chart. The response was, “No, I don’t need a pie chart. I’m just going to ask her what she thinks of my stocks.” This is the wrong approach for many reasons. And here’s why.

Harnessing the power of your emotions
When you look at summary pages, your emotions are going to be working against you, quite powerfully. The summary page will show gains and losses in your positions. The losses will be in red. The games will be in green. Most of us associate red with stop and green with go. If you use stop losses or sell when something loses value, then you are adopting a sell low plan. If you applaud your gains and hit the gas on the green light, rather than capturing your gains, then you might watch them skid into losses at the next red light. You are also more likely to buy high. Buying high and selling low is the exact opposite of what successful investors do.
 
Our emotional response to losses is fear and loathing. Our emotional response to gains is jubilee. So, in addition to the rote response we have to red and green lights, we’ve now got adrenalin fueling us in the wrong direction.


The Power of a Simple Pie Chart
When we put our holdings into a pie chart everything changes. What was a liability becomes an asset. If you have a fund that has lost money, the pie chart slice will be thinner. If you have a fund that has massive gains, the pie chart slice will balloon in size. The visual prompts you to do what you’re supposed to do, which is to buy low and sell high. You have to buy more of the thin slice in order to be properly diversified. You’ll be capturing gains (selling high) in the funds that have rocketed up in share price, so that you will not be overleveraged in them.

Annual rebalancing is a Buy Low and Sell High Plan on Auto Pilot for Your Nest Egg
At my retreats, I teach that rebalancing your nest egg 1-3 times a year is an essential part of a successful strategy in today’s Debt World. Rebalancing is easy. Simply mock up what you have into a pie chart. Mock up what you should have into another pie chart. Then make what you have look like what you should have. Always take the time to freshen up your pie chart with current data before you consider what action you are going to take. The visual itself will be your guide.

Get an Unbiased 2nd Opinion
Some people have trouble mocking up what they have into a pie chart, and that is where my 2nd opinions can be helpful. Once you know how to do this, by observing how I did it, then your rebalancing will be easy and efficient. Sadly, you cannot rely upon your broker to do this for you. The pie charts supplied by most brokerages is not an accurate picture of what you own.

The Pie Chart You Receive from your Brokerage Won’t Help You
I’ve been doing 2nd opinions for over a year now. To date, I have not found one summary page with a pie chart on it that was an accurate representation of what the person really held. If you have pages and pages of holdings, and particularly if you have a lot of individual stocks, if the brokerage does supply a pie chart, they are likely just going to lump all of the stocks into “equity” and then put your bonds into “fixed income.” This is not helpful because you cannot see and capture your gains, as you can when you know clearly which funds are small, medium and large, and which are value and growth. Also, this type of plan is often just the same types of holdings over and over again, so you are not properly diversified, even if you have pages and pages of holdings. (In fact, this is a red flag that you’re getting killed in brokerage fees.)
 
If you have less than a few hundred thousand dollars in your 401K, IRA or brokerage account, you may only own one or two funds. The pie charts supplied will try to show that the one or two funds you own are diversified by mocking up the various holdings within that fund. However, annual rebalancing doesn’t work when you have one or two “everything and the kitchen sink” funds because you can’t see and capture your gains. You have an amoeba type situation. You never know which areas of your plan are getting thinner or bigger (with losses and gains). Even if you did you would not be able to rebalance it because the fund manager has complete control over the holdings. You own one big glob of a fund that you basically have to just watch go up and down on the Wall Street rollercoaster that most investors have endured since 2000. 
​

​Most Main Street investors are not properly diversified – not in their 401K, IRA or their managed account. Most of the plans that I’ve reviewed have no exposure to hot industries. Few people are aware of the risk that lies on the “safe” side of their portfolio this year.

What is Hot and What is Safe Changes Every Year
What’s hot and what is safe changes annually. So, when you’re doing your annual rebalancing, it’s important to consider both of these areas carefully, based upon data and information from a trustworthy source with an impeccable track record. Friends, family and your financial advisor qualify only if they have a Ph.D. in results for a minimum of 15 years. Many bloggers and writers don’t qualify at all.
 
For instance, Chinese technology  was the hottest thing going a few years ago. When FANG (Facebook, Apple, Netflix and Google) was scoring big-time, smart investors were also looking at BAT (Baidu, Alibaba and Tencent), where the gains were even more impressive. This year, with the trade war between China and the United States, Chinese stocks have suffered. If you had captured your gains in 2017, when these stocks doubled, then you’d be on the right side of this trade.  
 
You are expecting higher performance in the four hot slices of your nest egg. This is the place for experimenting, within reason, with the assets, industries and countries that you believe will outperform everyone else.
 
As another example, gold mining ETFs have doubled over the past year. However, they are still down significantly from their all-time highs which were in 2012. Gold is a good hedge against a market downturn. If confidence in the economy and stocks weaken, that should be positive for gold. So, this year, even though those funds have doubled. you might want to take your profits and keep a slice or two in this area, rather than sell off the entire position.

As I’ve mentioned many times, most people lost more than half of their assets in the last two recessions. This pie chart system far out performs the market, protects your assets (if you adopt this year’s safest strategy), limits any losses and offers a time-proven plan that ensures you can sleep at night. It costs less time and money than your current plan. The only real question is how are you going to learn The ABCs of Money that we all should have received in high school, so that you can be the boss of your money, instead of having to operate with blind faith?
 
 
Learn how to save thousands annually in your budget with smarter big-ticket energy choices, and how to invest in your nest egg with a time-proven strategy that earns gains in recessions and outperforms the bull markets in between. Join me at one of my upcoming Investor Educational Retreats. You have 3 to choose from below. 

Arizona is my most affordable retreat. Students register for 1/2 off!
Anyone who registers for the Florida or England Retreat by October 31, 2019 receives the lowest price. 

​Call 310-430-2397 or email info@NataliePace.com to learn more now. 

Other Blogs of Interest
What the Ford Downgrade Means for Main Street.
The Dow Dropped Over 1000 Points
Tesla's 3Q 2019 Deliveries Could Hit 100,000.
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
​The Winners and Loser of a Clean Energy Policy. 
Make the Climate Strike Personal. 
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

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

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

What the Ford Downgrade Means. Main Street Investors Ask Natalie.
 
Dear Natalie. These may be ignorant questions. Am I correct in thinking these bonds are issued as money raisers? I would have presumed that's what stocks were for. Also, is junk bond status something negative? I’m wondering what this means for the overall economy, and for me personally. 
​Signed: Feeling a Bit Clueless
 
 
Dear Getting Clued In:
 
Never be embarrassed about asking these kinds of questions. Until we get The ABCs of Money and life math taught in high school and college, most of us are clueless.
 
Stocks raise money by asking people to become a shareholder (i.e. owner). Bonds raise money by borrowing from banks. The banks then sell those bonds to regular folks as "safe" fixed income products that will pay a dividend and then repay the principal at the end of a certain period of time. When bonds are investment grade, then pensions and institutions purchase them. Main Street investors might opt for individual bonds or bond funds, thinking they are safe from a downturn in the stock market. Many Main Street investors hold bonds in their retirement, pensions, 401Ks, mutual funds, annuities, insurance products, etc. without really realizing it.
 
The Ford downgrade is a symptom of a much more widespread problem. There is too much risk in the investment grade bonds for that asset to be considered safe. Over 50% of corporate bonds are at the lowest rung, just above junk status. So, they are just as vulnerable as Ford is to a downgrade.
 
Borrowing from Peter to Pay Paul
The economists contributing to the Financial Stability Report are also concerned about the leverage in corporate bonds and loans. In the May 2019 report, the Feds wrote, “Borrowing by businesses is historically high relative to gross domestic product (GDP), with the most rapid increases in debt concentrated among the riskiest firms amid signs of deteriorating credit standards.” In my August 2019 interview with Liz Ann Sonders, the Chief Investment Strategist at Charles Schwab Inc., she warned that “This highly indebted, weak component of the corporate sphere will mark the end of this cycle in some way.” 

​Corporate Bonds Lost Money in 2018
Last year, corporate bonds lost money in tandem with stocks. Finally, interest rates are starting out too low for the bond market to be of much help in the next stock market correction. Bonds, particularly corporate and muni bonds with credit risk, could lose value in the next downturn (and always lose value in a downgrade), meaning that investors will lose principal on the “safe” side of their nest egg, in addition to the “at risk” side.
 
Being downgraded to “junk” bond status is negative. It means that the bond has been downgraded to speculative and is a higher risk. The ultimate risk is that the company may have to restructure their debt, meaning that bondholders will not receive all of their money back, and will also lose the income they were expecting. After Greek bonds were cut to junk status, MF Global went bankrupt (in 2011).
 
Junk status also means that the next time Ford needs to borrow more money, the company will have to pay a higher interest rate. So, it cuts into Ford’s profits.
 
Many pension funds, bond funds and institutions limit the amount of speculative junk bonds that they hold, in their bylaws. So, junk bonds can become illiquid, which means that investors won’t be able to sell them to someone else. Many Ford bonds are 30-year bonds. That’s a long time to bet that Ford, which has over $220 billion in liabilities, including debt, pensions and other post-employment benefits, will not have to use bankruptcy to restructure. General Motors and Chrysler declared Chapter 11 in 2009. No one will be interested in taking a junk bond off of your hands, unless you take a large haircut on your investment – if you can get anyone to buy it at all.


Stock Investors and Bond Investors Lose When a Company is Downgraded
The bottom line is that when a company is downgraded, investors lose money on the stock and the bond side of the equation. Since 50% of corporate bonds are at the lowest rung, just above junk bond status, this is one of the riskiest areas of the market to be in. If you have high-yielding dividend stocks or bonds, then you are taking on a lot of risk for a very small return (under 5%).
 
GE and Ford are the poster children of what happens to companies that keep borrowing from Main Street to buy back their own stock, while taking on unsustainable debt and short-changing their pension plans. (GE just froze the pension plans of over 20,000 employees this week.) However, they are not the only companies that have bought into this practice. In fact, corporate buybacks have been the fuel of the current bull market. My warnings on GE and Ford began years ago. Click on the blue highlights to see a few of those blogs.
 
Learn Life Math Now
If you don't invest the time and money to get financially literate, then you are vulnerable to the leverage in the world during the late stage of this business cycle... The upside is that if you do become financially literate, you can stop making everyone else rich at your own expense, start living a richer life, provide far better for your own future, protect your assets and even save thousands of dollars annually in your budget with smarter big-ticket choices. Wisdom is the cure. The time is now! Call 310-430-2397 to learn The ABCs of Money that we all should have received in high school. I also offer an unbiased 2nd opinion on your current investing plan. Call or email for pricing and information.
 

Learn how to save thousands annually in your budget with smarter big-ticket energy choices, and how to invest in your nest egg with a time-proven strategy that earns gains in recessions and outperforms the bull markets in between. Join me at one of my upcoming Investor Educational Retreats. You have 3 to choose from below. 

Arizona is my most affordable retreat. Students register for 1/2 off!
Anyone who registers for the Florida or England Retreat by October 31, 2019 receives the lowest price. 

​Call 310-430-2397 or email info@NataliePace.com to learn more now. 

Other Blogs of Interest
The Dow Dropped Over 1000 Points
Tesla's 3Q 2019 Deliveries Could Hit 100,000.
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
​The Winners and Loser of a Clean Energy Policy. 
Make the Climate Strike Personal. 
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
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.

Since September 13, 2019, when the Dow Jones Industrial Average was at 27,219, the Dow has plunged over 1500 points. Today’s low was 25,743.46, but settled back in to close at 26,201. Is this weakness due to the impeachment investigation? Are there underlying fundamentals that point to a correction? Will there be a Santa Rally in 2019?  
 
 
12 Market Indicators. Examined.

1. Stocks are Expensive. Today’s stocks carry a very high price. The CAPE ratio (an average of the price to earnings of stocks over 10 years) is 28/29, vs. 17 historical. (It soared as high as 46 in 2000.) Valuation is the primary concern in stocks today – i.e. that equities are too expensive… WeWork was just revalued in the $10 billion range, after investors refused to buy into an IPO valued at $47 billion a couple of weeks ago. Netflix will be a part of our lives for the foreseeable future, but do you need to buy it at a 108 PE ratio?  
2. Leverage is a leading indicator. Ford was downgraded to junk status by Moody’s last month. Over 50% of corporate bonds are at the lowest rung, just above speculative status.  Corporate bond funds lost money in 2018, in tandem with stocks. This means that you have to be careful on the safe side of your nest egg, too. In an interview last week, Nobel Prize winning economist Robert Shiller told me, “I am concerned because there is a debt/liquidity cycle and a leverage cycle. We’re seeing corporate balance sheets being leveraged. I don’t like to use the words leading indicators loosely, but it has been a sign of approaching recession.”
3. Signs of a slowdown in housing.  The S&P CoreLogic Case-Shiller Index dropped to 3.4% growth in May of this year. Seattle’s home price index is 1.2% lower than a year ago, which is the first negative year over year change in a major city in a number of years.
4. Manufacturing recession. The Institute for Supply Management’s September Manufacturing ISM Report on Business was the weakest the U.S. has experienced in a decade (yup, since the Great Recession, June 2009). September was the second month of contraction -- marking the official start to the 2019 Manufacturing Recession. We had a manufacturing recession in 2015 that didn’t lead to a full-blown economic recession. I discussed this (and more) in my interview with the Chief Investment Strategist at Charles Schwab Inc. Liz Ann Sonders a few weeks ago. (Click to access.)
5. Tariffs “protect less competent business,” happen due to “bribery,” and are widely attributed as a cause of the Depression, according to Nobel Prize winning economist Robert J. Shiller. U.S. corporate costs are higher due to tariffs, and some of those costs will be passed along to the consumer. (Click to access my interview with Professor Shiller.)
6. Late stage of the business cycle. What does this term mean? It means that in the 11th year of this bull market, there are many indicators that we are entering economic headwinds. It’s a good idea to fix the roof of your financial house, while the sun is still shining.
7. 3rd Quarter 2019 GDP will be announced on October 30, 2019 at 8:30 am ET. The 2nd Quarter was 2.0% while the 1st Quarter was 3.1%. The full year of 2019 is expected to top out at 2.2%, according to September 2019 projections by the Federal Reserve Board. That means that the Tax Cut, which is generally good for business, has not been properly paid for with economic growth, as was promised. The U.S. Treasury Secretary Mnuchin assured Americans that having less revenue flowing in to the government would be easily paid for by 3% or “much” higher annual GDP growth, which would be fueled by the tax cuts. (Economists warned that the GDP growth projections used to support the Tax Cut were flawed.) 2018 GDP growth was 2.9%.
8. Why isn’t the tax cut generating stronger growth? Tariffs are a tax on business. You’ll be hard pressed to find an economist who makes an empirical case for tariffs. Get the take of Liz Ann Sonders and Robert Shiller by reading my blog interviews.
9. Public debt has soared to $22.8 trillion – almost $3 trillion higher since the current Administration took office. This is astronomically high, as you can see in the Asset Bubble chart listed below. 

 
12. Christmas Eve 2018 low of 21,712.53. December 2018 = worst performer for stocks since Great Depression. 2018 was a loser for stocks and corporate bonds. It’s a reminder that if you wait for the headlines that stocks are in trouble, it’s too late to protect yourself. 

 
What’s Your Best Plan?

1. Stick to your knitting. Market timing doesn’t work. Make sure that you continue forward with a nest egg that is properly diversified, that keeps enough safe, that adds in an appropriate amount of hot industries and that is appropriately protected from the overleverage and low yields in bonds. (Bonds are vulnerable, as are money market funds, annuities and specialty bank products like high-yield Certificates of Deposit.)
2. Pie Chart Strategy. Read The ABCs of Money, get an unbiased 2nd opinion or attend one of my Investor Educational Retreats to learn and implement this time-proven strategy that earned gains in the Great Recession and has outperformed the bull markets in between. Email info @ NataliePace.com or call 310-430-2397 to learn more.
3. Annual Rebalancing. Annual rebalancing is a buy low, sell high plan on auto-pilot for your nest egg. When a slice of your nest egg pie chart gets thin, it’s signaling you to buy more at a lower price. When a slice gets beefed up, it’s an indication to trim back and sell high.
4. Only experienced traders should be involved in individual stocks. Period. If your plan has pages of individual stocks, you’re probably not well-diversified, and you are taking on far more risk than you realize. Your returns might also be getting killed in brokerage fees. Many managed retirement/investment portfolios are suffering from high fees, and are performing below the markets, as a result. The markets themselves are on a Wall Street Rollercoaster, losing more than half in the last two recessions.
5. Get an Unbiased 2nd opinion. Email info @ NataliePace.com or call 310-430-2397 for pricing and information. Knowing what you own, and what a healthy nest egg looks like, allows you to be the Boss of Your Money. Buy and Hope hasn’t worked in the New Millennium and will not work going forward.   
6. Know what’s safe in a world where Ford was just downgraded to junk, and over 50% of corporate bonds are at the lowest rung, just above speculative status.
7. Hot industries. Hot industries enhance the performance of your portfolio, but must be done within reason and in industries with true potential (not viral hype). It’s easy to see now that the crypto craze of 2017 was viral hype, which wiped out speculative currency traders. However, if you still wanted to wade in, then having a slice, instead of betting the farm, limits your losses. Incidentally, our hot funds of gold and cannabis doubled this year. That adds a lot of heat to your gains.

 
Here are sample Nest Egg Pie Charts.
They will make more sense after you attend a retreat, receive a 2nd opinion or assiduously read, comprehend and apply the strategies in my 3 bestselling books. 

If you are going to trade, then you must apply an additional quantitative measure to your buy low/sell high analysis, after you have incorporated the 3-Ingredient Recipe for Cooking Up Profits, the Stock Report Card and the 4 Questions (all of which are outlined in my 1st book, Put Your Money Where Your Heart Is). Basically, in many industries (but not all), you are buying high, hoping to sell higher. That is why I’m discouraging trading, and encouraging that you stick to your knitting.
 
Additional Quantitative Measure for the Late Stage of the Business Cycle.

1. What can the company do?
2. What can the industry do?
3. What is the market likely to do? The wind is in your face now, making it harder to be on the right side of a trade.

 
 
Additional Information on Unicorn IPOs, Gold, Cannabis, Tesla and More
I continue to report on hot industries and companies (and toxic ones, too) in my blog. To stay plugged in, simply visit NataliePace.com regularly and scroll through my Twitter feed, which is posted on the home page. You can also go to the end of any recent blog, where you will find an index of past articles. Simply click on the blue highlights of the company or industry that you are most interested in.
 
If you’re interested in any of the experts, companies and industries I’ve mentioned in this blog, click on the blue highlights to check out recent reports.
 
Surgical robotics, artificial intelligence, cryptocurrency, a potential FitBit acquisition, GoPro and clean energy are on my radar. I  will be featuring blogs on them soon. Stay tuned. Email or call if you have a hot tip that you’d like for our team to research.
 
 
Bottom Line
There are times when the wind is at your back, and others when the wind is in your face. Today, almost all of the leading indicators point to economic storms on the horizon. It’s time to fix the roof while the sun is still shining.
 
If you’d like to listen back to my free monthly teleconference, where I include additional information not found in this blog, go to BlogTalkRadio.com/NataliePace. I’ll host my next free monthly teleconference in November.
 


If you're interested on how to save thousands annually in your budget with smarter big-ticket energy choices, and how to invest in your nest egg with a time-proven strategy that earns gains in recessions and outperforms the bull markets in between, then join me at one of my upcoming Investor Educational Retreats. You have 3 to choose from below. 

Arizona is my most affordable retreat. Students register for 1/2 off!
Anyone who registers for the Florida or England Retreat by October 31, 2019 receives the lowest price. 

​Call 310-430-2397 or email info@NataliePace.com to learn more now. 

Other Blogs of Interest
Tesla's 3Q 2019 Deliveries Could Hit 100,000.
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
​The Winners and Loser of a Clean Energy Policy. 
Make the Climate Strike Personal. 
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
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.

This blog was updated at 4:55 p.m. PT on Oct. 1, 2019. The Tesla 3 was the #1 vehicle in the U.S. by revenue and the #5 by unit sales in August of 2018. In the 2nd quarter of 2019, it was the #9 bestseller by unit sells. 



​The 2Q 2019 Tesla Vehicle Production and Deliveries report was outstanding. The one tomorrow should be even better.
 
After Tesla reported on July 2, 2019 that the company had delivered 95,356 vehicles in the 2nd quarter of 2019, the share price popped from $224 to $265 over the next few weeks. Investor euphoria proved to be very short-lived, however. On July 24, 2019, when Tesla reported their 2nd quarter earnings, which included a net loss of $408 million, the previous share price gains were completely wiped out.
 
This time around, Tesla stock is starting out slightly higher, at $243.43 (on a day when the Dow Jones Industrial Average has been down 324 points). If the stock rises to $265 again, that’s only a 9% gain. However, a leaked report from Elon Musk has investors believing that Tesla’s Delivery Report for 3Q 2019, which could be released as early as tomorrow, “has a shot” at being outstanding – above 100,000 vehicles for the first time in the company’s history.
 
Having an outstanding delivery report right now, while Ford and General Motors are struggling, could attract investors who are looking for something to believe in. Ford bonds were just downgraded to junk by Moody’s. General Motors is entering the 3rd week of a company-wide strike.
 
Tesla is aiming for cash positive in the 3rd quarter 2019 and believes the company can be self-funding now, after a $2.4 billion equity and convertible bond raise in the 2nd quarter that left the company with $5 billion cash and cash equivalents on hand. The company is expanding rapidly: building the Shanghai factory, a Model Y factory and an expansion of the Gigafactory. So, there will likely still be cash negative quarters going forward, particularly around product launches. This means Tesla stock could easily continue the rollercoaster ride, even though the general trend in worldwide sales is stellar.
 
Tesla Sales are on Fire Worldwide
Tesla was the #1 bestselling car in the U.S. by revenue, and was in the top 5 by unit sales in August of 2018. In the 2nd quarter of this year (2019), the unit sales had slipped, and the Tesla 3 was in the 9th position. The company is the #1 bestselling car in Norway, with 11,517 cars delivered in August. Tesla is the #1 bestselling car in The Netherlands, with 10,000-11,000 cars sold in September. The company soared to #3 bestseller in the United Kingdom. Tesla is enjoying a meteoric rise in every market where it delivers. (Sources: InsideEVs.com and CleanTechnica.com).

Next Stop: China.
Tesla is targeting production at their new Shanghai Factory by the end of this year. Analysts are a little wary of that target. However, Tesla sales are already exploding in popularity, with up to 6400 vehicles delivered in China in the 3rd quarter (source: JL Warren Capital). A new Chinese tax break for electric vehicles, amounting to about $14,000 U.S., should keep Tesla sales in high demand.
 
If Musk is to be believed, the 3rd quarter 2019 earnings report shouldn’t crash into cash negative, unless there is a significant, unexpected event, which of course can always happen with factories, particularly ones that are getting up and running as fast as Tesla’s are. The earnings report should be released in the 3rd week of October, around October 24, 2019.
 
The one bugaboo to investing in this strong company is you must factor in the marketplace itself. This is the late stage of the business cycle (i.e. at some point stocks will weaken). The Institute for Supply Management’s September Manufacturing ISM Report on Business was the weakest the U.S. has experienced in a decade (yup, since the Great Recession, June 2009). September was the second month of contraction -- marking the official start to the 2019 Manufacturing Recession.
 
Investing in the Late Stage of the Business Cycle
There are certain times when the wind is at your back in trading, and others when it’s in your face. For the last decade, stocks have made money. You didn’t have to be a great stock picker. You just had to be invested. When stocks weaken, however, even great stock pickers can be eaten alive. Most stocks will head south in a general downturn, just as they did in 2009.
 
Apple iPhone was on fire in 2009, after a game-changing launch in 2006. The company had figured out how to charge a lot for a phone (over $600), and still give it away for free via the wireless carrier. And yet the stock still tanked after the Lehman Brothers, General Motors and Chrysler bankruptcies in 2008-2009. 
​

​So, in 2019, even with an outstanding company like Tesla, which is leading one of the fastest growing industries in the world (electric vehicles), you still have to ask these three questions before investing.
 
What can the company do?
What can the industry do?
What will the general market do?
 
And if you do invest, and you find yourself on the right side of the trade, it’s a good idea to take your profits early and often. There have been multiple opportunities to trade Tesla “around the core” over the past few years.

Other Blogs of Interest
Do We Talk Ourselves into Recessions? Interview with Nobel Prize Winning Economist Robert J. Shiller.
​The Winners and Loser of a Clean Energy Policy. 
Make the Climate Strike Personal. 
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
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.  

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​An interview with Nobel Prize winning economist Robert Shiller, who is the author of the new book Narrative Economics and the iconic book Irrational Exuberance. Shiller discusses how the stories we tell one another drive the economies of the world – sometimes into bubbles, sometimes into tearing down walls (like the Berlin Wall in 1989), and other times into depressions.
 

On September 25, 2019, Professor Shiller and I spoke about his new book, Narrative Economics, and what some of the stories that are currently in circulation say about where the economy is headed. Is a recession, or a continued rally, on the horizon? Below is a transcript of our conversation.  
 
 
Natalie Pace: How can the study of stories help the economic profession to better forecast events, and perhaps even mitigate their severity?
 
Professor Robert J. Shiller: The economics profession has had some success in forecasting economic events. But there has been a tendency to miss some of the most important factors, which are changes in the way people are thinking, that they get from each other through a kind-of contagion. The problem is that human conversation hasn’t in the past been largely recorded and available for searching. It’s getting a lot better. We can start to see what people are thinking, and how it’s changing. This will bring a revolution in economics.
 
NP: As you noted in Narrative Economics, the frugality consciousness after the Great Depression may have contributed to the very rough decade that folks experienced in that era. Is there any mindset that is going on now that you believe we should be observing and discussing more?
 
RJS: There are some that are obvious: Donald J. Trump and other populists like him, in other countries. Everyone is talking about it. I can’t add to it in any significant way, other than to say that it has really dominated our talk. It comes up with such regularity, and it’s polarizing. There are other narratives that are not thought of as narratives. One of them is the artificial intelligence narrative – stories about particular inventors and machines that will replace human intellect. That’s one that is lying in wait to affect our confidence. It’s definitely there, but I can’t claim that it has reduced our GDP yet.
 
NP: I just saw an ad for Super Store where one of the employees screams that robots are coming to take our jobs. Does this fear act like a deer in the headlights for our psyche, stopping our confidence in our ability to earn income, which puts the brakes on our purchases, which knocks down GDP?
 
RJS: That’s how it happened in the past. In the Great Depression, there was a lot of talk of robots replacing jobs. It’s not part of our conventional history of the Great Depression. The word robot was invented in 1920. In the Great Depression, when people saw unemployment going up, they blamed it on robots. They didn’t have robots that walked around and talked, but they had plenty of machines. It could happen again because artificial intelligence is such a stunning development, with things like driverless cars and pilotless ships. Artificial intelligence looks like it’s going to have an impact on our jobs.
 
NP: In the wake of the Great Recession, did credit return more quickly to the consumer than it did in the Great Depression? How much of the recovery that we’ve seen was just access to money? Many of our banks and insurance companies wouldn’t even be in existence if we hadn’t bailed them out. Obama famously told bankers that he was all that stood between them and the pitchforks.
 
RJS: Our credit markets have developed a lot since the Great Depression, and they are regulated better. In the early years of the Great Depression, there was no Securities and Exchange Commission. There was no Financial Stability Board. There was no Consumer Financial Protection Bureau. We learned, and things are better. We still are vulnerable to a consumption pullback, even though interest rates are low. People can afford to consume more because the cost of borrowing to do that is lower. Right now, consumption demand is holding up in the U.S. That could change though.
 
NP: Credit card debt and consumer debt is higher than it has ever been. Businesses can still borrow at very low rates. However, I hear from small business owners who borrow on their credit cards to float their commerce. Those rates are exorbitant – usury rates.
 
RJS: You don’t hear that word usury so much these days. There have been variations in people’s willingness to borrow. It’s not just due to the interest rate. It’s because of a story of prudent living – a narrative again.
 
NP: Corporate buybacks have really driven this bull market. Main Street has been rather skeptical, up until 2016. What are your thoughts on the stories being told today about stocks?
 
RJS: One thing that is happening is that there is a shading of the worry about crash. The lowest ebb for safety in the market was right at 2009. Although the market had gone down 50% in real terms, people thought it would go down even further. They were talking about 1929 in exorbitant levels. Now that narrative is fading. However, we still call that recession the Great Recession, which is a play on the words Great Depression, so it’s still on our minds. The recovery that we’ve seen since then is partly due to just forgetting about the stories that we heard about people losing their houses and suffering under unemployment. They are not fresh in our memory anymore. It may be that more than any new narrative.
 
It’s also the Donald Trump narrative, which provides a script for a new way of living – more ostentatious. You may feel more embarrassed about being poor. Trump talks about losers. He’s very harsh in his judgment of some people. That affects our thinking. We have to keep up with the Joneses. They used to say that in the Depression, but they said it pejoratively.
 
NP: The shift toward nationalism that began with the new Administration is not just in the U.S. There are a lot of countries grappling with this. You noted that this mindset was viral before World War II.
 
RJS: I’m worried about the polarization in our societies and the rise of primitive nationalism. Part of my theory is about stories going viral. But it is also about stories that are forgotten. One of the powerful narratives that is being forgotten is World War II. That was such a nightmare. For a long time afterwards, people were much kinder to one another and supportive. That’s fading. We’re slipping back into our tribal past, and it’s worrisome.
 
NP: What are the impacts historically of trade wars? Are tariffs an effective tool to stoke economies, or is it the exact opposite?
 
RJS: Ever since Adam Smith, who wrote The Wealth of Nations in 1776, economists have a visceral negative reaction to tariffs. They think it is just protecting less competent businesses. It happens because of bribery of one sort or another. A lot of people during the Great Depression believed that the Trade War, created by the Smoot-Hawley Tariff Act in 1930, was the cause of the depression. It didn’t work. The economy just sank into the worst depression ever experienced by 1933. It’s an old narrative that is recovering today, and it may have an even worse impact on our economy.
 
NP: Part of the trade war sloganeering to the populace is to protect jobs and bring manufacturing back.
 
RJS: We do have a problem of rising inequality. A couple of our Democratic candidates seem to be addressing it. However, it may be a better election strategy to focus on immigrants as a threat to our jobs. However, this is potentially damaging to the economy.
 
NP: So, the Great Depression experienced a toxic cocktail of frugality, nationalism and tariffs? Were there other contributing factors that we need to be looking at today as well.
 
RJS: One important factor in the Great Depression was that people were thinking more about confidence and the confidence of others. It was a general trend early in the 20th century that people were reading more about psychology. They thought depression referred to a mental state, but it also occurred in the economy. Now we have these confidence numbers talked about all the time. We have the stock market reported every day, as if that was a measure of confidence in the economy. Actually, it is a measure of confidence in something more narrow than the whole economy. However, we’re accustomed to thinking of that as a barometer of our national psyche.
 
NP: The White House has been very vocal about zero interest rates. The Federal Reserve had 3 dissents in the last meeting, when they lowered interest rates. There is a very wide-ranging view of what the policy should be. The market is expecting another cut in December. What are the problems with pervasively low and zero interest rates?
 
RJS: It’s a complicated decision. That’s why there is dissent at the Federal Open Market Committee. Part of the reason that it is ambiguous is that it involves human psychology and human narratives. The idea of cutting interest rates all the way to zero as a dramatic stimulus measure… I’m more than a little uncomfortable with that because it’s like your doctor giving you a strong anti-depressant for your mental condition. You think, “I must be really mentally ill if he gave me that.” It harms your psyche. It reminds them of the famous narrative of the Lost Decade in Japan, which is really decades, after they cut interest rates to zero. It didn’t work for Japan either.
 
NP: Are you concerned about asset bubbles and financial instability? More than 50% of the corporate bonds are just a hair above speculative, and Ford was just downgraded to junk by Moody’s.
 
RJS: Yes, I am concerned because there is a debt/liquidity cycle and a leverage cycle. We’re seeing corporate balance sheets being leveraged. I don’t like to use the words leading indicators loosely, but it has been a sign of approaching recession. There is also a question of how big and how strong. We will have a recession eventually. I don’t know if it will be in 2020. But if memories of the 2008-2009 financial crisis come back, that could harm confidence.
 
NP: You’re saying that just the narrative itself could actually create a deeper recession than needs to be…
 
RJS: That’s the idea that I’m promoting in my book Narrative Economics, that stories are causal elements. Narratives are like diseases, like influenza. Influenza lies relatively tame until suddenly there is a big epidemic. Or maybe it’s not so big. It depends upon mutations in the influenza virus and maybe something like weather conditions. The same thing is true with narratives. The artificial intelligence narrative doesn’t seem to be scaring people, but it’s there. It could come back into a big scare.
 
NP: You point out that stories can evolve just like viruses. In the Dot Com Recession, the artificial intelligence narrative was not a scare, but something that everyone wanted to profit from.
 
RJS: That’s right. And then the Dot Com thing came to an end right around the time that Barron’s published an article called “Burning Up,” which documented how many of those Dot Com companies were close to insolvency. It became a sudden narrative that: “This is it.” [The Dot Com Recession] also came after the New Millennium. We heard all of these expansive stories about the future, and here we are in 2000, and it’s looking kind of iffy. Maybe we were suffering a hangover after our New Millennium party.
 
NP: What do you think about the Sharing Economy and Micro Mobility, which are hallmarks of Millennials and Gen Z. Is this a new modesty craze that might spark frugality?  
 
RJS: The bike craze happened before. During the Great Depression, a lot of stores set up bike racks because there was a big switch to riding a bike. Right now, this isn’t associated with poverty, but it could become associated with that. Bikes are relatively cheap.
 
NP: Interesting. Cheap bikes and e-scooters, which are getting popular out of necessity, can play into the Donald Trump “I’m winning” narrative, without being seen as frugality…
 
RJS: The problem with narratives is that they are so subtle. You can’t just focus on a word. Ultimately it reflects humanity, and the deep complexity of our minds and our emotions. So, the idea is that some kind of new narrative just gets started. It goes like wildfire. It can stimulate demand, and it can contract demand. It’s not something that we can view at this point from a purely mathematical viewpoint. We have to look at the content of the story, and what is it that makes it so contagious.
 
NP: Let’s talk about the rescue last week of the overnight repo market, which popped from 2 to 10% interest.
 
RJS: Monetary experts view that as a glitch that will be handled by the Federal Reserve. The 10% interest rate was momentary. It disappeared quickly. It could get magnified. The question is, “How is the story received by the public?” For example, in October 19, 1987, we had the biggest stock market one-day drop ever. It was over 22% in the Dow in one day. There was talk of the Great Depression then, but it just didn’t register. There was no recession after that. People thought it was just some technical glitch. At another time, the story could take another dimension. It’s really hard to predict.
 
NP: Ronald Reagan was very good at slogans. Do you think there was some slogan that he pulled out that people just bought into?
 
RJS: I’m thinking it was a Reagan joke. He was great at jokes. The Reagan jokes were generally about the Soviet Union, and they were very effective.
 
NP: OK. Let’s hear one.
 
RJS: A man just bought a new car in the Soviet Union. The salesman is drawing up the final papers and he says, “Funny thing. I see that your car will be delivered on today’s date exactly ten years from now.” The buyer says, “Morning or afternoon?” The salesman responds, “It’s ten years from now. How can you care whether it is morning or afternoon?” The buyer says, “Well, the plumber is coming by in the morning.”
 
NP: Apparently those jokes were so effective they could tear down walls.
 
RJS: Those big changes in the Soviet Union were narrative induced. When I visited Moscow in 1989, I was struck at how people would talk against the government. I thought this was not allowed. Of course, you didn’t see this in the newspapers. I had a tour guide, an official tour guide, who showed me around the Kremlin. She said, “I think civil war is coming to Russia.” That was 1989, before the Internet and with no newspapers reporting on this.
 
NP: But there might have been some sort of economic recession that preceded that mind shift?
 
RJS: Yes. We went into a department store and they had nothing there. There were long lines. I asked someone what he was standing in line for and he said, “Soap.” Things weren’t working right. They sensed hypocrisy. They wanted a change.
 
NP: There’s an ancient Chinese saying that the Emporer stays in power as long as the economy is good. When an economy tanks, there is a divine authority and a change in leadership.
 
RJS: I hadn’t heard that.

NP: I remember it from a Chinese culture survey course at USC.
 
RJS: See, we remember the jokes and the narratives easily…
 
NP: The housing market appears strong. The unaffordability index is starting to look problematic. Do you see potential problems or warning signs here?
 
RJS: We have our own S&P CoreLogic Case-Shiller Home Price Indices. With our latest data, prices seem to still be going up, nationwide, in most places. However, it’s going up at a much lower rate. It used to be in double digits, shortly after the bottom of the market, in 2012. On the national index, it’s about 3% now, which is much lower. That is a sign of weakness. This market is different than the stock market. It has much more momentum to it. If we are losing momentum, it could have a drop-off like we saw in 2006, before the financial crisis.
 
Home prices are a lot higher than they were in 2012. You could easily imagine that we could see a drop. I’d hate to suggest that it will be anything as dramatic as what we saw 10 years ago. That was unusual. That was the most dramatic drop in real home prices that we’ve ever experienced.
 
NP: There are far fewer liar’s loans and extreme overleverage, like there was before the Great Recession.
 
RJS: We have regulation that discourages overleverage. Also, people are more careful now. There is still a fear of debt, oppressive debt. It’s an old narrative that goes way back to Thomas Jefferson – even before.
 
NP: Where does the CAPE ratio currently stand? What are the risks and indications of where stock prices are today?
 
RJS: The CAPE ratio is between 28 and 29, or there about. That is high by historical standards. The historical average is about 17. But it’s not as high as it has ever been. We had a price earnings ratio of 46 in the beginning of 2000. That is more than 50% higher than it is now. So, we could keep going up and not break any records. But it is a concern. I think the expected return on the stock market isn’t as good now.
 
NP: However, Main Street investors also have to be careful on the “safe” side, since there is so much leverage in the bond market…
 
RJS: If you’re thinking of pulling out of the stock market and going into the bond market, you’ve got a problem. The bond market has very low yields. So, it’s not clear what to do. Be careful about over-investing in the U.S. market. Consider investing in stock markets around the world to diversify. There’s no reason to panic right now that I see. We’ll find out.
 
NP: Do you have any last thoughts on the economy today?
 
RJS: The economics profession is changing with the times, and particularly with the availability of data. We have digitized texts with all sorts of human exchange, talk and conversation. It will take decades for the economics profession to sort this out. With modern computers, which will be an essential element of the research, we should be able to classify and organize our thinking about narratives. Narratives repeat themselves in history, but you have to have them up to date. There are so many narratives that it is hard to summarize the effect of all of them. I think we’ll get there.
 
NP: But there are some pervasive, over-riding themes to our stories, right?
 
RJS: That’s right and they can come back. There are enough people who remember [the old stories] that they provide a background from which to take off again. And the stories may have a human-interest component that is very strong. Any narrative around some people making a lot of money fast tends to be contagious. That’s why we have bubbles.  
 
There are also narratives that have a different emotion attached to them, not so much glory and making a lot of money, but it can also be anger at other people and the willingness to boycott something – some nation or some product.
 
NP: All of that played into cryptocurrency.
 
RJS: That’s right. It was an anarchist sentiment. The anarchist narrative goes back to the early 19th century. Hatred of government, in the sense that if government didn’t exist, we’d be fine. One of the reasons that cryptocurrencies have been so popular is that they seem to suggest a route toward a cutting off of government influence, that we cosmopolitans can run our business quite well, thank you. We don’t need the government regulating us.
 
On top of that, we had this nice mystery story about Satoshi Nakamoto who is the supposed inventor of Bitcoin. Nobody can find him. Nobody knows who he was. Maybe it was some committee that wrote the code. That actually adds to the narrative. People like mystery stories. Whenever someone comes forth claiming to be Satoshi Nakamoto, it’s like Anastasia or Delphine. When someone can’t be found and imposters keep coming up, that’s a great story.
 
NP: You’re not seeing doom and gloom on the horizon here. You say there might not even be a recession in 2020…
 
RJS: Right. There’s also a question of how bad a recession it will be when it does come. A lot of recessions have been mild. Let’s hope for the best.

​
 
Click to listen to my full interview with Professor Robert Shiller on BlogTalkRadio.com/NataliePace. Watch Professor Shiller talking about Narrative Economics in the video below. 

About Robert Shiller
Professor Robert Shiller is one of the leading economists of today. His work on inefficient markets earned him a Nobel Prize in economics in 2013. He is the author of many bestselling books, and is a frequent guest on television and at major economic conferences worldwide. Professor Shiller is the Sterling Professor of Economics at Yale University. 

​

Is Greta Thunberg funded by a clean energy cartel that is underpinned by greed rather than altruism?

On September 23, 2019, I posted a link to Greta Thunberg‘s five-minute diatribe at the United Nations. I was immediately hit with conspiracy theories about her. How did she get to New York? Who is funding her?
 
Is Greta Thunberg the highest paid activist (or perhaps even actress) in the world, with links to George Soros? Who are the winners and losers of a worldwide clean energy policy? Where does the money trail lead?
 
Let’s Examine the Affect that Clean Energy Policy Has On…

1. Consumers and citizens
2. Government subsidies
3. Fossil fuel companies: oil, coal and natural gas
4. Nuclear energy
5. Utilities
6. Automobile manufacturers
7. Politicians
8. 16-year old Greta Thunberg

And here are details on each.

1. Consumers and citizens win big-time when they embrace cleaner solutions. Gasoline costs and utility costs are thousands of dollars annually. By kicking the gas guzzler to the curb and opting for an electric car, you’ll cut your gasoline costs in half – more if prices at the pump jump. If you change your commute altogether and take public transportation or ride a bike, then you’ve got thousands in savings annually that you can spend on things you enjoy more than paying bills – like vacations. Who doesn’t like more money?
 
The same holds true with your electric bill. Most Americans spend hundreds per month and thousands per year keeping the lights on at home, along with all of the other appliances (this can be in the millions for businesses). With smarter energy choices, those costs can be cut in half. If you live in a sunny state and install solar, the payback can be as low as four years, with annual savings in the thousands that amount to a 25% yield or higher. No bond in today’s world comes close to that Return on Investment.
 
Even if you don’t install solar, simply adopting passive house standards (insulation, passive solar), switching to LED lighting, installing an on/off switch on your water heater, using big appliances less and during off-peak hours, and turning the air conditioning off when you aren’t home can slash your electric bill in half or more. Many electrical engineers and astute handymen have electric bills of under $50/month with smarter choices.
 
The 30% solar tax credits are still in effect through the end of 2019. Go to EnergyStar.gov and IRS.gov to learn more. 

2. Government subsidies. The U.S. government subsidized the energy industry with $15 billion in 2016 (the most recent reports available). This is less than half of the subsidies and support spent in 2010 ($38 billion). Of that, $7 billion (45%) was spent on renewable energy (source: The U.S. Energy Information Administration at EIA.gov.) So, when anyone screams that clean energy is receiving all of the subsidies, this is simply untrue. More than half of the money (55%) is flowing elsewhere. 

3. Fossil Fuel Companies: oil, coal and natural gas. According to ExxonMobil’s own website, the company has been actively involved in climate science for four decades. Their web page on climate change says clearly, “We believe that climate change risks warrant action.” So, why does it take four decades to act? This is a classic case of actions speaking louder than words.

It’s not easy to replace your own cash cow business model. There is a planetary addiction to fossil fuels that is a multi trillion-dollar industry. This highlights the need for individuals to take ownership of their own lifestyles and habits, and start putting their own money where their picket signs are. (Greta Thunberg did just that when she took a zero-carbon sailboat to the United States from Sweden to speak at the United Nations, rather than a gasoline-powered airplane.) As long as consumers demand gasoline, oil companies will explore and drill to profit from that demand.

The U.S. electrical grid is still 62% powered by fossil fuels. 

Some states, like Florida and Colorado are much higher than that, with 83% and 77% fossil fuel generation, respectively.

Clean energy to the grid is definitely on the rise, but the increase has been rather glacial nationally (and pretty much non-existent in states where oil and natural gas are a primary industry, like Florida and Colorado). California is adopting renewable power much faster than the national average. California has 38% of its electrical generation sourced from fossil fuels, with 42% from renewables and hydro. 

​
If you want to check up on your state go to SpotforCleanEnergy.org.
 
4. There are currently 21 nuclear power plants that are in the decommissioning process in the U.S., according to NRC.gov. Part of the problem is that solar and wind have gotten so inexpensive that they are more affordable than nuclear (and new natural gas projects). Also, as we saw in Japan at the Fukushima power plant, when things go wrong with nuclear, it bankrupts the company that owns the asset. The formerly flourishing Japanese sea towns are now ghost towns. 

Fukushima reminds us that nuclear energy is not clean energy, once you factor in active rods that have to be stored in a toxic dump forever, and the price of a nuclear meltdown. Whenever we see reports that wind turbine blades cannot be recycled, or solar panel manufacturing has pollutants, we have to also match this up against the toxic cost of nuclear meltdown, the respiratory and other illnesses that are caused by air pollution and oil spills, the damage to habitat and wildlife…
 
All of this should also remind us that energy efficiency must be a top priority for everyone, whether it’s in your home, or the office building that you work in, or the hotel that you sleep in when you travel out of town. Video conferencing should be an option considered far more often for business meetings in place of air travel.
 
Take the stairs, rather than the elevator. Turn off the lights and air conditioning in hotel rooms. Open the curtains and use sunlight instead of electric light as much as possible. There is so much we can change just be being more mindful of coal miners, fracking and nuclear meltdowns whenever we turn on a light switch. Even with all of the decommissioning, nuclear power is still almost 19% of the grid.

5. Utilities have had to rethink their business model and investments. Encouraging energy efficiency means that utilities reap less revenue per person – a losing proposition for profits. So how do they keep their shareholders happy and continue to pay those high dividends? There are utilities that are still very much entrenched in the old ways of doing things, and others that are investing in the clean energy of tomorrow. Many utility companies now make it easy for consumers to choose clean energy with a simple check on one of their utility bills. So, it’s worth it to read the fine print and check the box.
 
6. Automobile Manufacturers. In 2004, the Toyota Prius won Motor Trend’s Car of the Year. U.S. gasoline prices were on the rise from $1/gallon in 2002, to over $3/gallon by October of 2005 and an all-time high of $4.70/gallon in July of 2008, due to the cost of fighting two wars. (Add a dollar per gallon in California.) Toyota soared to become the #1 auto manufacturer in the world, and has a current market valuation of $194 billion, compared to General Motor’s $52.50 billion. Ford just had its bonds downgraded to junk by Moody’s. It’s clear to see that fuel efficiency is a winning proposition in the auto industry, and has cost the laggards tens of billions in market share, sales and profits.
 
​Electric cars are the new game in town. In July of 2018, the Tesla 3 became the bestselling car in the U.S. by revenue. In August 2019, the Tesla 3 was the #1 bestselling car in Norway, #3 bestselling in the United Kingdom and The Netherlands, and #7 in Switzerland. Last week Mary Barra, the CEO of GM, told Bloomberg News that General Motors will sell a million electric vehicles a year, and is committed to winning, not just competing in, the electric and autonomous markets. “Once you start to believe in the science of global warming and look at the regulatory environment around the world, it becomes pretty clear that to win in the future, you’ve got to win [with electric and driverless vehicles],” she said. “This is… the future of transportation.”

GM has a substantial investment in Lyft. Ford Motor Company purchased an e-scooter company, Spin, in 2018 for $100 million. So, the Big Auto manufacturers are also aware of, and investing in, the trend toward ride-share and micro mobility.
 

7. Politicians. 57% of Americans believe that climate change is a major threat to the well-being of the U.S. This average is composed of 84% of Democrats and 27% of Republicans. However, we are not as far apart on this topic as the above data would indicate, and we all lose when politicians try to divide us. When you remove the politically charged words “climate change,” you find a lot more consensus.
 
Take this real-world example. A conservative person follows me on Twitter. My account is used for business, not for politics. However, as I mentioned above, I posted a link to Greta Thunberg’s UN speech. Here’s how the dialog went.
 
Conservative: How did she get to NYC?
NP:  Greta Thunberg took a zero-carbon sailboat from Sweden to the United Nations in New York City.
Conservative: Who is funding her?
NP: Whatever she might be "funded" or "compensated" would be a rounding error equivalent of the multi trillion-dollar fossil fuel industry, utilities, nuclear & other businesses that profit from attacking a teenager, rather than letting the substance & truth of her words be the focal point.
Conservative: What I mean is, where does the money trail lead?
NP: I’ll look into it.
Conservative: Are you getting into politics now?
NP: Sustainability is not political. Most Americans are concerned about air and water pollution. 2 out of 10 Republicans think climate change is a top priority. 97% of climate scientists are ringing the alarms about fossil fuels and the damage they do to the atmosphere and ecosystem.
Conservative: I’m concerned about air, water and pollution! Watching and listening to Greta only made me think “crazy”! I am very open to level discussions and listening to common sense dialogue, but there is so much more about this coming across as Hollywood drama!
 
It’s important for each of us to remember that on social media today we are all siloed. If you get the chance to share information across borders of belief, act as civil as if that person were standing in front of you, having a two-way conversation. You might be very surprised just how many areas of concern you have in common. By listening, we can also discover problems in pockets of society that are on the losing side of a clean energy policy, which really must be addressed if we are going to act fast, together.  

8. So… Is Greta Thunberg funded by a clean energy cartel that is under pinned by greed rather than altruism? Nope. The photos of Greta Thunberg with George Soros are doctored, and the photo of her on the cover of People With Money is also fake (source: Snopes). According to the team at Snopes, “Like other young people who have come forward to take on causes that immediately affect their lives, she has been subjected to a barrage of bullying, trolling, and conspiracy theories by adult media personalities.” 

Thunberg did just win the alternative Nobel Prize, the 2019 Right Livelihood Award, and has been nominated for a Nobel Peace Prize. (Announcements are made the first week of October). The Right Livelihood Award announcement came a few days after Thunberg’s emotional chastisement of world leaders on the United Nations stage, on September 23, 2019. Her winnings amount to about $103,000.
 
How did it all begin for Greta? Thunberg started weekly school protests outside Swedish Parliament a year ago, which snowballed into a worldwide movement.
 
The Bottom Line
The scientific data is clear. Climate scientists are in unanimous agreement, at 97%, that climate change is caused by mankind and that we are getting very close to the tipping point where there will be nothing we can do about it. “Climate-warming trends over the past century are extremely likely due to human activities,” according to NASA’s Climate Consensus page.
 
Together We Win. Divided We All Lose.
It’s heartbreaking to see unemployment in states like West Virginia, where the coal industry has suffered so greatly. However, the solution is not to continue to destroy our planet with the burning of fossil fuels and to have short-sighted vision. The truth is we are all losers if we are not able to drink healthy water, breathe clean air and live in planetary balance. As Deepak Chopra said so eloquently in the Earth Gratitude e-book Future Earth, “Earth sustains us every moment of our life… She nourishes our existence… Let us work to keep her sustainable, so we may in turn be nourished and sustained.”
 
Making smart energy choices will put a lot of money in your own budget now, and give us a shot at preserving this beautiful blue ball that we call home for our grandchildren. Sounds like a win-win to me. 


If you're interested on how to save thousands annually in your budget with smarter big-ticket energy choices, and how to invest in a clean energy economy, join me at one of my upcoming Investor Educational Retreats. You have 3 to choose from below. 

Arizona is my most affordable retreat. Students register for 1/2 off!
Anyone who registers for the Florida or England Retreat by September 30, 2019 receives the lowest price and a complimentary private prosperity coaching session (value $300). 

​Call 310-430-2397 or email info@NataliePace.com to learn more now. 

Other Blogs of Interest
Make the Climate Strike Personal. 
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
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.

Tomorrow will be one of the most important days of our children’s lives, when our collective voices will be heard and powerful change will shift from the wind of our words to the substance of our actions. However, as we march to make our voices heard, there is a large piece of the solution that is personal. If we really want to stop polluting and destroying our planet, we have to be smarter consumers and investors of clean energy. We must commit to understanding which approaches work, and which proposals and ideas are driven more by greed than green. And we must slough off old habits that are harming the environment, and embrace bold, new, clean choices. As the Earth Day Network pointed out in a Tweet today, “Recycling won’t cure our reliance on plastics. We need to find alternatives and devote more time to the other Rs: Refuse. Reduce. Reuse.” 

​Say No to Plastic and Single Use Everything
There are quite a number of ways that each one of us can Just Say No to Plastic. There is no excuse for single use. Ever. So, greet the day prepared with your own coffee mug, your personal to go container and your canvas bag or backpack for all shopping. Have a travel pack that includes your canteen, silverware and a reusable metal straw.
 
Reduce Your Carbon Footprint with Smarter Electricity Choices
The grid in the U.S. (and most of the world) is still majority powered by fossil fuels. 

​Florida’s power is 83% natural gas, coal and petroleum. Colorado’s grid is 77% powered by the same mix. 

So, every time we turn on a light switch, take an elevator, fire up the air conditioning, fuel up our gas guzzling vehicle, do a load of laundry or take a hot shower, imagine that coal miner, that fracking operation, or even that Gulf Oil Spill. That will remind us of where all of our conveniences really come from. It will add a deeper meaning to why we:
 
* turn off lights when we leave a room,
* putt an on/off switch on our hot water heater, so that we’re not heating water 24/7,
* turn the air conditioning/heating off when we go to work,
* take the stairs instead of the elevator, and
* walk or bike to the local market, shop, café or park, instead of driving.
 
There so much that each one of us can do to live more in harmony with Mother Nature, which will go a long way to cleaner air, healthier ecosystems, more robust wild and ocean life, cultivating more trees (the lungs of our planet), enjoying adventures and so much more. It’s time to look in the mirror, and understand the power of cleaning up our own life, even as we also demand solutions from our elected leaders.
 
As individuals, can each one of us reduce our personal carbon footprint by 30% or more by the end of next year? We can indeed, with smarter choices.   
 
Below are a few more ways to easily and affordably break old habits and replace them with planet-friendly practices – with the added benefit that these smarter quotidian activities can add up to savings of thousands of dollars in your budget annually. (That’s a bucket list vacation every year!) If you go to EarthGratitude.org, you can download two free, picturesque ebooks with wisdom from the world’s leading experts, including HH The Dalai Lama, HRH The Prince of Wales, the Earth Day Network, Elon Musk, the NRDC, Global Green and many other sustainable organizations and VIPs.
 

Whether you are interested in:
 
* planting a garden at your child’s school,
* greenlighting micro mobility on your city streets,
* reducing food waste,
* saying no to plastic,
* saving elephants, rhinos and other endangered species,
* greening the grid,
* installing solar panels, or
* driving an electric car,
 
You will find very helpful tips from the experts in the Future Earth and Clean Living  ebooks.

A Climate Strike is a fantastic collective experience to wake us all up – not just the politicians and powers that be. We can be the sustainable change that we wish to see. Residential solar has been around for decades, still offers 30% tax credit (through 2019), and is cheaper than ever. Electric cars are the future of automobiles. Micro mobility, including bike share, e-scooters and pedestrian-friendly walkways, is transforming our cities and solving the Last Mile challenge between public transportation and your ultimate destination.
 

What changes have you already made? What new trends are you willing to champion? Will you commit to reducing your own carbon footprint, at home, on the commute and at the office, by 30% by the end of next year?
 
We’ve got this.
 
I’d love to hear your success stories, including the surprising ways that helping Mother Nature afforded you treasures and unexpected delights. (If you start riding a bike to work, you’ll have the unexpected delight of a healthy, sexier body, at minimum.)
 
“I'm starting with the man in the mirror
I'm asking him to change his ways
And no message could have been any clearer
If you want to make the world a better place
Take a look at yourself, and then make a change.”
From “Man in the Mirror” by Glen Ballard and Seidah Garrett. Made popular by Michael Jackson.

If you'd like to learn how to put your money where your heart is, and green your investments, join me at my next Investor Educational Retreat. Choose from 3 locations below. Call 310-430-2397 or email info@NataliePace.com to learn more. Click on the banner ad to discover the 15+ things you'll discover and master, and to read testimonials from VIPs and Main Street folks who have transformed their lies using our time-proven strategies. 
​

Other Blogs of Interest
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

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

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

​The Chinese solar company SPI Energy Co., headquartered in Hong Kong and with a Santa Clara, California location, saw its share price soar 67% on Sept. 18, 2019, on the news that it was launching a CBD and hemp business. Its partner is the Navajo Nation, according to the company’s press release. What’s interesting about this is that the share price lift-off comes at a time when popular publicly traded cannabis companies, like Canopy Growth, Tilray, Aphria, Cronos and more, are trading near their 52-week lows. So what resonated with investors about the SPI transaction?
 
As the company started to increase in share price, the story went viral on SeekingAlpha and Yahoo Finance (and more media outlets) with headlines like, “Tiny Solar Stock is Leading NASDAQ with Legal Weed.” A microcap with only $27 million in value (red flag) can jump far and fast with those kinds of headlines. But is the substance of this company as good as the story? Should you tame your racing heart, which wants to jump in and join the party, while you read between the lines?
 
Here’s where a simple Stock Report Card, 4 Questions and the 3-Ingredient Recipe for Cooking Up Profits are essential. If you’re just chasing headlines and price jumps, that’s a recipe for being on the wrong side of the trade – on the Buy High, Sell Low side. SPI affords a fantastic opportunity to see how the company shapes up with real world analysis.
 
The 3-Ingredient Recipe For Cooking Up Profits. (Take each ingredient/step in order.)

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

 
As you can see in the recipe above, price is not helpful in picking a leader. However, once you’ve picked your leader, the price, along with other valuation analysis, can help you to be on the right side of the trade.
 
The Stock Report Card and the 4 Questions are key to picking the leader. In my 1st book Put Your Money Where Your Heart Is, which I wrote in 2006, I compared Google and General Motors as examples of how to use the Four Questions for Picking a Winner. Google (now Alphabet, Inc.) received an A, while GM received a D-. Google went on to become one of the most valuable companies in the world, with a current market capitalization of $855 billion (almost a trillion). General Motors declared bankruptcy in 2009. The company recently exited the sedan business, and is in the 4th day of a company-wide strike by the United Auto Workers Union. GM’s market capitalization is $55 billion, compared to Toyota’s $194 billion.  
 
As you can see from the Stock Report Card below, there is a lot of information which is difficult to obtain from SPI Energy. On the SEC Edgar platform, the last filing was in 2017. Morningstar is showing net losses for at least a decade for the company. Even when there is data, the Four Questions can be very revealing, particularly when a solar company is getting high (literally) on hemp (at least temporarily, in its share price). When there is no supporting earnings reports, then these questions are essential to ask. 

 
The Four Questions for Picking a Leader

1. What’s the Product?
2. Who’s the Customer?
3. Why do people like the product better than the competition? Can the company continue to maintain that competitive edge?
4. Who’s the CEO? What is his/her track record?

 
And here is how SPI Energy (Smart Power Innovation) measures up.
 
The Four Questions for Picking a Leader

1. What’s the Product? On SPI’s website, in their Company Overview, they state that the company “is a global provider of renewable energy solutions and crypto-miner hosting services.” The Sept. 18, 2019 press release claims that the company is now launching its hemp and CBD business in partnership with the Navajo Nation. On May 14, 2019, SPI announced a new Cayman Islands partnership to develop cotton, alfalfa and other agriculture products in Arizona, along with up to 5 MW of solar.  
2. Who’s the Customer? Hmmm. The solar customer is a very different person than the cryptocurrency miner, although the crypto miner might be very into the CBD products. Farming seems pretty far afield from all of this… Who can possibly be great at all of these diverse products?
3. Why do people like the product better than the competition? Can the company continue to maintain that competitive edge? If Morningstar is correct that SPI Energy has ten years of cash negative operations, then the company is not making a better product with more efficient operations. Since it is so difficult to find any earnings reports, it’s impossible to determine if sales are increasing or declining. The Investor Relations and annual reports tabs on the SPI website have nothing available. This is a giant red flag, and could result in a delisting from NASDAQ. SPI did a 10 for 1 reverse merger on Nov. 15, 2018 in an attempt to keep their NASDAQ listing. However, they’ll need to file an earnings report as well.
4. Who’s the CEO? What is his/her track record? In 2008, before the clean energy market tanked, the CEO of SPI Energy, Xiaofeng Peng, was ranked #13 on the Forbes Chinese Billionaire List, with wealth of $1.4 billion. By Nov. 18, 2015, LDK Solar, Peng’s solar company, had collapsed into a bankruptcy and liquidation of assets. In August of 2018, it was reported that Peng had been accused of swindling investors and that the Chinese police have launched a “global manhunt” to arrest him.  

​The Bottom Line
Never use share price to determine whether or not a company is a good or bad investment. It will almost always put you on the wrong side of the trade (i.e. losing side). If you pick a winner before the market does, and buy low, then once investors hear the news that you’ve discovered before the headline, they’ll jump in, pushing your investment into gains. That’s a winning formula. At that point, when everyone else is just getting started (and buying in much higher than you did), you’ll be determining whether or not it’s time to capture gains, hang on for more, or a combination of both.  
 
While we didn’t do a full analysis of First Solar and Canadian Solar, both companies have been around for a while and have impressive growth in their sales. First Solar has a backlog of orders through 2020, and is expecting revenue growth of 68% this year. That has already been priced in, however. As you can see, the forward price-to-earnings ratio of First Solar is still 27.16, which is high in this late stage of the business cycle. Canadian Solar had a great quarter, but is forecasting flat growth for the rest of the year.
 

If you'd like to learn how to evaluate individual stocks and your nest egg strategies, join Natalie Pace at an upcoming Investor Educational Retreat. Call 310-430-2397 or email info @ NataliePace.com to learn more now. 

Other Blogs of Interest
Ford is Downgraded to Junk.
From Buried Alive in Bill to Buying Your Own Island.
The Manufacturing Recession. An Interview with Liz Ann Sonders.
Gold Mining ETFs Have Doubled. 
The Gold Bull Market Has Begun. 
The We Work IPO. 
The Highs and Hangovers of Investing in Cannabis. 
Recession Proof Your Life. 
China Takes a Bite Out of Apple Sales.
Will the Dow Hit 30,000? A Check Up on the Economy
Red Flags in the Boeing 2Q 2019 Earnings Report
The Weakening Economy. 
Think Capture Gains, Not Stop Losses. 
Buy and Hold Works. Right?
​Wall Street Secrets Your Broker Isn't Telling You. 
Unaffordability: The Unspoken Housing Crisis in America. 
Are You Being Pressured to Buy a Home or Stocks?
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. 
​
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.