Stocks Keep Hitting New Highs! Are You Thinking “Capture Gains?”

Natalie Pace at the Ritz Carlton in Powerscourt, Ireland. Photo by: Marie Commiskey.

Stocks Keep Hitting New Highs! Are You Thinking “Capture Gains?”
 
Wall Street keeps hitting new highs. What we’re feeling right now is a classic case of why buy low, sell high is so easy to say, and so hard to do. Everyone wants to buy Nvidia, AI and real estate today. Why weren’t we feeling that way in March of 2009, when everything was on sale? Because in the depths of a recession, we are worried that things will only get worse. Oftentimes, we’ve lost so much money that we can’t buy low.
 
If we shouldn’t let our emotions be in charge of our investing, what’s a better idea? Check out the tips below. These are part of a time-proven 21st century strategy that has worked brilliantly since 1999, through three major recessions, when most people lost more than half of their wealth. It’s important to remember that 20 million Americans lost their home in the Great Recession – and those folks felt as exuberant about their winning equity lottery tickets then as homebuyers do today.
 
Are You Tempted to Buy High, or Excited About Capturing Gains? 
Know What You Own and Why
Rebalance
Track Record Counts
Blind Faith is Expensive
Practice Makes Perfect. Stick to Your Knitting.
10-Point Checklist
The Inflation-Busting Thrive Budget
What’s Safe in a Debt World?
Should You Buy a Home Right Now?
 
And here’s more color on each point. 
 
Are You Tempted to Buy High, or Excited About Capturing Gains? 
When we have employed a time-proven system through good times and rough times, we will start noticing that we’re less emotional about things. A great deal of that has to do with the fact that we are in a much better financial position than everyone around us is. When most people are distressed over their losses, we’re grateful that we kept enough safe. We have a clear head, when most people want to party until dawn.
 
A diversified plan protects us from losses before a recession, and allows us to have fun in the bull markets. The sample pie charts that we teach people at our retreats encourage us to get a lot more diversified and protected than most managed plans are. We’ve also been encouraging people to lean into technology, and underweight the Dow Jones Industrial Average. That has paid off in spades. The Magnificent 7 doubled our money last year, whereas the Dow Jones Industrial Average was up less than 14%, far less than the S&P500's 26.3% total return. Technology is more concentrated in the NASDAQ Composite Index than in the debt-laden DJIA. The returns on Wall Street continue to be heavily concentrated in the Fantastic 5 (all technology companies). 

Source: MSN.com. (c) Microsoft. Used with permission.

Know What You Own and Why
A lot of managed plans are not performing as well as the S&P500. The reason for that is that they are underweighted in large cap growth. The Magnificent 7 (now Fantastic 5) are all very large, many of them are trillion dollar plus companies, and are categorized as growth (not value). So, if we have a plan that is geared towards value, we’re getting the Dow Jones Industrial Average. If we ask for a conservative plan, not only are we missing out on the gains of Amazon, Alphabet, Meta, Microsoft and Nividia, we might have exposure to long-term bonds, which have lost money on the safe side of our plan, where our principal is supposed to remain intact. Long-term government bonds lost even more than stocks did in 2022.

It’s very important to know exactly what we own and why, rather than just having blind faith that we are properly diversified and protected. A lot of us are being told that our losses on the safe side are just paper losses. However, how many of us are going to live another 30 or 40 years to get the principal back on our long-term bonds? Are we aware that over half of the S&P 500 is at or near junk bond status, which increases the risk that we will have to take a big haircut on the principal? There is a great deal of credit and duration risk in today’s Debt World. Sadly, if we ask for a conservative portfolio, we might be overexposed to this.
 
The truth is in the brokerage statements. However, if we’re just listening to what we’re being told and not doublechecking the fine print, we might not be aware of it.
 
Rebalance
When stocks are hitting all-time highs, it’s a great time to rebalance our nest egg, and capture those gains. It’s never all or nothing. As I outline in my private coaching, and in our 2024 Rebalancing IQ Test blog, we want to check in once, twice or three times a year to make sure that we are still properly diversified and protected. (Assets increase and decrease in value.) Using our pie chart system is quite easy, once we learn the life math that we all should have received in high school and college. It’s a buy low, sell high plan on autopilot, which puts our emotions on the right side of the trade.

We offer a Rebalancing Master Class every year. The next one should be in early 2025. Prerequisite: Financial Freedom Retreat. I offer pie chart analysis and rebalancing support with my unbiased 2nd opinion and private coaching. These strategies are outlined in my books and blogs, as well.
 
Track Record Counts
Ask your financial planner or HR person for the track record of your plan’s performance compared to the S&P500 for the last 20 years. (You want to be sure to include what happened in the Great Recession.) Most people are performing on par with the index, but about 2% lower due to fees. (If your plan is performing below that, then it’s a good idea to know why, and see if you can safely improve the performance.)
 
If we are riding the Wall Street rollercoaster, we are very vulnerable in recessions. Most people lose more than half in 21st Century recessions, and then spend most of the bull market trying to make up losses. Even in the pandemic, the S&P 500 lost over 35% in just one month. We don’t normally print up $4.2 trillion to avoid a recession. So it’s quite important that we are properly protected and diversified before the economy weakens.

​There is no recession on the horizon at this point. However, economists are terrible at predicting them, and policymakers don’t admit that we are in a recession until well after most of the losses have already occurred. See the charts below, and you’ll notice that the recession wasn’t officially announced until stocks had lost 40% or more in value.

Blind Faith is Expensive
The truth of what we own is in our brokerage statements. However, how many of us are really reading these reports. How many of us really understand them? You might have 18 pages of holdings and are being told that you are properly diversified and protected, when what you have is mostly large cap value and long-term bonds. (I do a great deal of unbiased 2nd opinions on wealth plans, and I have yet to find one that is properly diversified and protected.)
 
As we age, we can’t afford to lose principal. If we’re properly diversified, we’re already invested in AI and large cap technology companies. Instead of being tempted to jump in now at such a high price, we’re in a financial and emotional position to capture gains, while also continuing to profit if the prices continue rising. If we missed the party, we can dollar-cost-average in, instead of arriving drunk on expectations (buying too much at too high of a price). 
 
Practice Makes Perfect. Stick to Your Knitting
So how good is your own track record? Nobody bats 1000, not even Warren Buffett. However, that’s where the pie chart system comes to our aid. Instead of going crazy and all in on crypto, gold, cannabis, or anything else that we thought was hot a few years ago, we might consider them to be a hot slice of our diversified plan (not betting the entire farm). That gamble might not be as hot as we thought it was, or it might shoot the moon and then fall to Earth again. Clean energy tripled from the bottom of the pandemic (March 23, 2020) to January 8, 2021, and is back near a 5-year low. Bitcoin was at $69,000 in late 2021, and then plunged to a value of under $16,000 in late 2022. It's under $58,000 today. 

In 2012, when gold and silver hit all-time highs, so many were clamoring to put every cent they had into precious metals. They were the worst performers in the decade that followed. Silver is still down -38% from its 2011 high of $49.81, though it has rallied strong this year, with gains of 30.2%. 
 
Rebalancing helps us to manage the volatility and be on the right side of the trade. When one slice of Bitcoin becomes 5 or more, it’s begging to sell high. When a slice becomes a sliver. It’s prompting us to buy low.
 
A 10% annualized return doesn’t mean that every slice is going to earn 10% and never go down. It means that the goal is an aggregate 10% annualized. Some slices will outperform, while others might be laggards. Thomas Edison said that success is 10% inspiration and 90% perspiration. There’s a saying that practice makes perfect. On Wall Street, they say, “Stick to your knitting.” (Don’t be influenced by the noise. Keep to the plan.)

What is that plan? Act age-appropriate. Diversify. Know what's safe in a Debt World. Rebalance.
These are a few of the key points. Of course, the devil is in the details. 
​
10-Point Checklist
Below is a 10-point checklist that is very useful for wealth-building. Click over to the blog where I explain many of these points in greater detail. This is also something that we teach in our Financial Freedom Retreats. The retreat is a complete money makeover. Many people report earning back the price of the retreat in the first few months in budget savings alone. Email [email protected] or call 310-430-2397 to learn more.

 
The Inflation-Busting Thrive Budget
There are so many ways that we are making billionaires rich at our own expense. Smarter choices in investing, health insurance, utilities, transportation, and housing, could mean that we stop making landlords, the taxman, the utility company, the gas station, the insurance salesman, etc. rich, and start living a rich life. There is an entire section on the Thrive Budget in my book The ABCs of Money. FYI, I’m currently updating the 6th edition, and plan to publish it within the next few months. Keep your eyes out for that. Make sure you’re always getting the most recent edition of my books by visiting https://www.nataliepace.com/#/.
 
What’s Safe in a Debt World?
We can receive a 5% yield today. However, it is tricky. We have to navigate between the heavily indebted, low credit quality, long-term bonds, and the newer issuances that pay higher yields for a shorter term (less risk), and oftentimes have higher credit quality, to boot. We spend one full day on What’s Safe? in our Financial Freedom Retreats. (The next one is Oct. 18-20, 2024. Get the best price when you register by July 31, 2024.)
 
FYI, in the wake of the Great Recession, when interest rates dropped to zero, we were warning people not to take on the risk of long-term bonds. We weren’t getting paid unless we went into speculative status. Instead, we encouraged people to find ways to invest in real estate and income property. That paid off in spades.
 
Getting safe in today’s world is tricky, but doable. We need to have a plan that makes sense for the next decade, not just for today.
 
Should You Buy a Home Right Now?
Survey after survey keep showing up that buyer’s remorse is rampant among post-pandemic homebuyers. According to Clever, 82% of buyers in 2023 and 2024 have regrets about their purchase. 44% have had to take on additional debt, and 43% have struggled to pay their mortgage on time. If you’re tempted to purchase a home right now, read my blog from earlier this year. There is a Real Estate section in The ABCs of Money that includes case studies of smart and not-so-wise choices made in real estate. (The 6th edition is forthcoming.)
 
Bottom Line
Can stocks and real estate prices keep going higher? Anything is possible. However, the Federal Reserve Board and FOMC are working hard to tame inflation, part of which means taming shelter inflation (the cost of buying a home is included in this). Unemployment is still quite low, however, there are signs that more layoffs could be on the horizon. The personal savings rate is at an all-time low, while consumer debt is at an all-time high. All of these problems accelerate if the economy slows down or falls into a recession. Again, if we wait for the headline that we’re in a recession, we’ll be late in protecting our wealth. If we chase gains, we could be on the wrong side of the trade. The pie chart system allows us to do both – protect our wealth and participate in hot trends. The sooner we adopt a time-proven system, the faster our life transforms.
 
 
Join us at our online Oct. 18-20, 2024 Financial Freedom Retreat. Learn how to:

* Invest in hot industries, such as Nvidia and artificial intelligence,
* Hedge against a weaker dollar,
* Invest and compound your gains,
* Green your retirement plan,
* Easy and efficacious nest egg strategies,
* Get hot and diversified (including in artificial intelligence and EVs),
* Evaluate stocks,
* Keep an age-appropriate amount safe, and,
* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
​
Email [email protected] to register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register by July 31, 2024 to receive the best price. ​

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM

If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.
​

Join us for our Online Oct. 18-20, 2024 Financial Freedom Retreat. Email [email protected] or call 310-430-2397 to learn more. Register by July 31, 2024 to receive the best price. Click for testimonials, pricing, hours & details.

Join us for our Restormel Royal Immersive Adventure Retreat. March 7-14, 2025. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. There is very limited availability. Register by August 15, 2024 to ensure that you get the exact room you want. (There may not be an opportunity to register after August 15, 2024.) This retreat includes an all-access pass to all of our online training for a full year for two, and three 50-minute private, prosperity coaching sessions. Much more affordable than you might think. Email [email protected] to learn more.

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​

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

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

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