It Is Never a Crash.

Dear Natalie:
 
The market lured me in so I have less, but still substantial, cash. Stocks may be overpriced, but they certainly aren’t signaling to exit. Markets are hard, and trying to wait for a "crash" is hard as well. Lately the bounces have been so fast, it is done before you blink.

​Signed: Waiting for a Crash

---

​Dear Waiting is Not a Strategy,
 
If you bought on March 23 (doubtful) then you could be rebalancing now to capture some gains. It’s a very good idea to rebalance your nest egg one to three times a year. At the end of April, if there has been a Spring Rally, you often have beefed up slices that can be trimmed back (selling high). At the end of September (if the current recession deepens), you might find that the slices have slimmed down, at which point you can buy more low.

Click to try Natalie Pace's free, 5-minute Nest Egg Pie Chart (r) and Thrive Budget (r) web apps.

If you bought recently then you could be suffering from buy high, sell low syndrome. Please take a moment to read my blog on that.
 
Pie Charts with Annual Rebalancing
 
The long and the short of it is that market timing doesn’t work – not on the entry or the exit. Our easy pie chart plan with annual rebalancing is a buy low, sell high plan on auto pilot. Also, working with the pie chart system pulls the emotions out of it. That’s one of the reasons why this strategy earned gains in the last two recessions, and has outperformed the bull markets in between.
 
The plan also benefits from adding in hot industries, being properly diversified and by knowing what is safe in a world where bonds and money market funds are very vulnerable. Both of those assets, and others, were bailed out by the Federal Reserve in March 2020, so you don’t have the luxury of ignorance these days. If you want to be the boss of your money, and adopt a strategy that works, you must know the basics – what I call The ABCs of Money that we all should have received in high school.
 

The ABCs of Money that we all should have received in high school, 3rd edition, by Natalie Pace.

It’s Never a Crash
 
Also, the markets never “crash.” It’s always a series of unfortunate events, followed by mini-rallies. By the time you think we’re in the Apocalypse, that’s usually pretty close to the market bottom. As you can see in the two charts below, it took almost a year and a half for the Great Recession to bottom out, and over two years for the Dot Com Recession to “plunge” to its depths.


​

Performance of the Dow Jones Industrial Average October 2007 to March 2009, during the Great Recession. Chart by Money.MSN.com. (c) 2020 Microsoft. Used with permission.

Performance of the NASDAQ Composite Index from March 2000 to October 2002, during the Dot Com Recession. Chart by Money.MSN.com. (c) 2020 Microsoft. Used with permission.

The general trend was downward in both recessions. However, each “event” caused a knife-like drop, with a mini-rally thereafter. The "smart" money typically moves a few months before the headline. Before the first Safer at Home Order was issued in the U.S., a boatload of CEOs had already resigned their positions. Wall Street was on a selling spree for four months before Bear Stearns collapsed. If you wait for the headlines, you'll always be late. (That's where a balanced plan and annual rebalancing protect you, while allowing you to capture your gains.) Wall Street insiders already know that the recession becomes official on July 30, 2020, with the final revision at the end of September 2020. 

There was a Santa Rally after 9.11 that posted 10.4% returns. Bear Stearns collapsed on March 16, 2008, after a multi-month market plunge that began in November 2007 and cost investors -15.5% in losses. Wall Street then attempted another little rally, with April and May posting 5.84% gains. That seduction was quite expensive, however. The Dow Jones Industrial Average ultimately bottomed out at 6537 on March 9, 2009, with losses of -55% from the top in October 2007 to the bottom. The losses in the Nasdaq Composite Index during the Dot Com Recession were 78%. It took that index 15 years to crawl back to its March 2000 highs.
 
So, it’s best not to be
 
* Seduced by the Wall Street rollercoaster
* Lured into another high-risk venture by fright from the Bitcoin and Gold Bugs
* Googly-eyed over a get-rich-quick scheme involving AI or cannabis
* Suckered into an “income-producing” (but capital-losing) dividend fund
 
It is far better to let wisdom and time-proven systems be your guide. You can invest in things you believe are hot, within reason. There is a plan that allows you to play the hots, earn an income (safely, without capital loss) and even save thousands annually by adopting the wealth strategies of the rich.
 
Call 310-430-2397 or email [email protected] to join us at our June 13-15, 2020 Financial Empowerment Retreat. Get the best price when you register by May 31, 2020.
 
One more thing. It’s a good idea to watch (or review) my interview with Howard Silverblatt, the senior index analyst of the S&P500®. His quote is: “As far as P/E goes, let me get a tissue because I think I’m going to have a nosebleed. We’re so high now.”
 
 

Bill and Nilo Bolden write about how Natalie Pace drew a pie chart on a napkin before the Great Recession, which saved her nest egg.

Natalie Pace Online Financial Empowerment Investor Educational Retreat. June 13-15, 2020. Call 310-430-2397 or email [email protected] to learn more and to register now. Register by May 31, 2020 to receive the best price.

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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.