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Utilities: At the Center of the Natural Disaster Storm.

13/5/2025

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Palisades Fire as seen from Venice Beach on Jan. 7, 2025. Photo by: Arkadiynight. Wiki Commons. Used with permission.

Utilities: At the Center of the Natural Disaster Storm.
Is This Industry a Good Hedge Against Market Volatility? What about water, consumer staples or even cybersecurity?

PG&E declared bankruptcy in 2019 after the Camp Fire. Southern California Edison is facing at least 40 lawsuits tied to the 2025 Eaton Fire. In the past, utilities were buoyant in bear markets. In hard times, people still need water and electricity and continue paying their bills. However, in today’s world of unprecedented natural disasters and the plethora of lawsuits that land on utility companies, are there better hedges against stocks going south? Could water, consumer staples or cybersecurity companies provide better protection?
 
Below are the things we’ll cover in this blog.
 
Southern California Edison Sued. PG&E Bankruptcy.
Low Credit Quality, High Debt with Slow Growth
Pandemic Lows, The Great Recession, Valuations and Share Price Volatility 
Water Utilities 
Consumer Staples
Cybersecurity
 
And here is more information on each point.
 
Southern California Edison Sued. PG&E Bankruptcy.
On March 5, 2025, Los Angeles County filed a lawsuit against Southern California Edison alleging that the company’s equipment started the Eaton Fire that decimated Altadena in January of 2025. More than 40 lawsuits have been filed against the company. Edison International’s share price plunged from a high of $88.77 on Nov. 27, 2024, to a low of $49.06 (Feb. 10, 2025). The current price of $56.97 is still down -35.8%. The total damage of the Eaton Fire has been estimated at $25 billion. The market value of Edison International is $21.93 billion.


In early 2019, PG&E filed for bankruptcy due to an alleged $30 billion in financial liabilities stemming from Southern California wildfires in 2017 and 2018, including the 2018 Camp Fire that killed 85 people and destroyed the town of Paradise, California. The share price is still down -75%. (This was one of the few corporate restructurings where the share price wasn’t wiped out completely.)
The litigious frailty of utility companies in today’s world of expensive, devastating wildfires and storms makes these equities some of the riskiest in today’s world. Dividends aren’t worth such devastating loss of principal. The lawsuits and liability of utility companies are compounded by high debt, regulated rate increases and low credit quality.
 
Low Credit Quality, High Debt with Slow Growth
Utility companies tend to be racked with debt. Many utilities are ranked at the lowest rung of investment grade, with some already in speculative territory. PG&E is rated BB Positive (speculative). Edison International is BBB with a negative outlook. A credit downgrade almost always drags the share price down with it.
 
Regulations prevent willy-nilly rate increases on utility bills. So, revenue growth rates are restrained. It’s rare to see anything more than single-digit sales growth in a utility company.
 
Pandemic Lows, The Great Recession, Valuations and Share Price Volatility 
Dividend-loving investors are often sold into utilities – pushing the share price above reasonable valuations – something Edison International enjoyed before the January 2025 wildfires in Southern California. All the other companies on my Utility Stock Report Card are boasting very high valuations (for such a slow-growth industry) – with P/Es in the 24-27 range. Email [email protected] if you’d like to receive a Utility Stock Report Card.
 
Expensive share prices invite volatility. During the Great Recession, National Grid sank from $92.17/share on Nov. 30, 2007, to $40.18/share by Jan. 30, 2010. In 2022, when the S&P500 dropped -19.44%, the iShares Global Utility ETF (JXI) dropped in tandem between January and November.
 
While funds can smooth out the volatility of any one utility company’s troubles, the last-century idea that utilities’ investors remain cool-headed when volatility heats up isn’t true in a world that seems to be on fire.
 
Water Utilities 
Water is essential to life. It is in high daily demand, with a limited supply of fresh, potable H2O. Limited supply and massive demand often make the case for a great investment – until you look deeper into the well. Water, like electricity, is highly regulated and controlled. Farmers in Duncan, Arizona (including a family friend) had their wells sealed. Nevada has a “grass ban” for non-functional lawns. There are laws in drought-ridden states that govern rainwater harvesting.
 
Like electric utilities, many water companies are highly regulated, tend to have a lot of debt and a low credit score, and currently have an expensive share price (as measured by price-earnings ratio). Email [email protected] if you’d like to receive a Water Stock Report Card.
 
So, what about other industries, like consumer staples and perhaps cybersecurity as hedges against a decline in stock prices?
 
Consumer Staples
By the book, consumer staples should be a way to ride steady on the waves of Wall Street. We continue to eat, wash our hair and go to the bathroom during economic downturns. However, the retail apocalypse has changed the game for brick-and-mortar and tariffs could erase the already thin profit margins (often 3%) of many consumer outlets. One look at the five-year high and low of Walmart, Target, Amazon and Temu (PDD Holdings) tells us all we need to know about the volatility of investing in this industry, with share swings that can double or even quadruple. Valuations are high in many of the companies. Amazon earned $59 billion in net income last year but has a market capitalization of $2.24 trillion. In 2022, Amazon’s share price fell by half. (The S&P500 dropped -19.44%.)
                                                     
Cybersecurity
Cybersecurity is a basic need for all governments and online businesses. It’s an expense that can’t be eliminated no matter how much belt tightening a company or country must do. The revenue growth rates are impressive – with almost all the companies enjoying a double-digit year over year increase in sales. Many cybersecurity companies are GAAP cash negative, as this nascent industry invests to keep ahead of the hackers.
 
The great news about the industry is already priced in. Even Crowdstrike, the company at the center of the Blue Screen crash that grounded Delta Airlines last July 2024, is trading close to an all-time high.
 
While this industry is a part of my personal portfolio, if I were adding it to my age-appropriate, diversified plan, I’d dollar-cost average in. If you added this industry years ago when we first featured it, it’s probably a good time to consider profit-taking. After the Spring Rally (now) is an ideal time to do our regular rebalancing. (Click to take our Rebalancing IQ Test.)
 
Email [email protected] if you’d like to receive a Consumer Staples or Cybersecurity Stock Report Card.
 
Bottom Line
The best hedge against a downturn on Wall Street is to overweight safe in our age-appropriate, properly diversified plan – to act a little older than we are. In our sample pie charts, we’re overweighting 20% safe. (Email [email protected] to receive a link to our free web app, where you can personalize your own pie chart.) Capital preservation (assuming you know how to do this without the paper losses) assures that we limit any losses, while also keeping us invested. Rebalancing 1-3 times a year smooths out the volatility of the Wall Street rollercoaster, allowing us to capture and keep our gains. There are a few more adjustments we are making in our sample pie charts to manage for an overpriced marketplace, as we enter a period that might suffer from stagflation or even a recession.
 
If the above paragraph sounds like an alien language, it’s time to learn the ABCs of Money that we all should have received in high school. Having blind faith that someone else is protecting our future and wealth doesn’t work well in downturns. Managed plans tend to do whatever the market does, and many conservative investors are suffering from paper losses. (Our educational guidance on safety has protected fixed income investors from paper losses.) Again, our time-proven, 21st Century strategy makes investing as easy as a pie chart. Join us at the June 6-8, 2025 Online Financial Freedom Retreat.  
 


Join us at our online Financial Freedom Retreat June 6-8 2025 where you'll learn how to protect your wealth, save thousands annually in your budget and how to green your money. The following Saturday on June 14, 2025, at our Real Estate Master Class. you'll discover the 10-point checklist for home buyers and sellers, as well as some overlooked areas of opportunity. If you'd like a life-changing adventure of a lifetime, be our guest at a royal manor house in Cornwall, England, March 12-19, 2027. (With just eight rooms available, this exclusive, private, bucket-list adventure sells out a year in advance!) Call 310-430-2397 or email [email protected] to learn more. The 2025 Restormel Retreat was a magical and royal experience. Click to learn more. 

Your friends and family can get the best price for the Financial Freedom Retreat June 6-8 2025 when they register by May 15, 2025. Request testimonials at [email protected]. You can also view some on the flyer page of the retreat. 

Learn how to:

* Invest in hot industries, such as Nvidia, artificial intelligence, and quantum computing,
* 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, quantum computing and crypto),
* Evaluate stocks,
* Avoid capital gains and financial predators,
* 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. 

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Email [email protected] or call 310-430-2397 to learn more and register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register with friends and family to receive the best price. 
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"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.


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Visit NataliePace.com to learn more. Call 310-430-2397 or email [email protected] for pricing, additional information and to register. Early Bird pricing ends May 15, 2025.
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Join us for our Restormel Royal Immersive Adventure Retreat. March 2027. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. Register now to receive the best price, the best room and eight private, prosperity coaching sessions. There are only 8 rooms available. This retreat includes an all-access pass to all of our online training for a full year for two. Considering the perks, you're receiving a 70% discount to learn the life math that we all should have received in high school, and the room is free! Email [email protected] to learn more. The best rooms at the 2025 retreat were sold out in 2024! Yes, it's a great idea to register and start transforming our lives now!
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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and 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 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) 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.​​


Check out Natalie Pace's Substack podcast on Apple and Spotify.
Watch videoconferences and webinars on Youtube.

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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, funds or projects 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 an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are 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, patience and diversified strategy.  
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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.

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    Natalie Pace is the co-creator of the Earth  Gratitude Project and the author of The Power of 8 Billion: It's Up to Us, The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She is a repeat guest & speaker on national news shows and stages. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999.

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  • Store
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  • About Natalie Pace
  • Books by Natalie Pace.
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  • Media Images
  • Natalie Pace Coaching Calendar
  • Calendar of Events
  • Restormel Retreat 2027
  • Wealth Secrets of the 1% Fireside Seminar
  • Real Estate Master Class
  • Natalie Pace Oct. 11-13, 2025 Financial Freedom Retreat. Online.
  • Bond Master Class 2025
  • Rebalancing Master Class Jan. 18, 2025
  • Stock Master Class 2025
  • Options for Beginners Master Class
  • Sustainability Summit
  • Restormel Retreat 2025