The Dow is Down Over 1000 Points Since Mid-September.

The New York Stock Exchange on Wall Street, New York City. Photo by: Massimo Catarinella, Dec. 12, 2008. Wiki Commons public license. Used with permission.

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. 

Natalie Pace's (r) Nest Egg Pie Chart Strategies. All rights reserved. Visit NataliePace.com or call 310-430-2397 to learn more.

Natalie Pace's (r) Nest Egg Pie Chart Strategies. All rights reserved. Visit NataliePace.com or call 310-430-2397 to learn more.

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 [email protected] 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.