Will the Correction Become a Bear?

Will the Correction Become a Bear?

 
The S&P500 is down -12.8% from the all-time high set on Feb. 19, 2025, as of April 11, 2025. Just a few days before, on April 8, 2025, the index closed 1% above the official point of a Bear Market. The correction (-10%) will become a bear market (-20%) if the S&P500 closes at 4,915.32.
 
Will stocks rally again? What are the economic challenges that lie ahead? Can an emergency interest rate cut put everything back on track? What's the best wealth strategy for 2025? Check out my free videoconference at YouTube.com/NataliePace.
 
Here are the things I’ll cover in this blog.


Is a Recession or Bear Market in the Cards for 2025?
VIX: 41 Pretty High.
Oil is Below Break Even
The Magnificent 7 Becomes the Fantastic, but Expensive, 5
Will Stocks Rally Again?
Emergency Interest Rate Cut?
Best Wealth Strategy for 2025?
 
And here is more information on each point.
 
Is a Recession or Bear Market in the Cards for 2025?
Economists have been increasing the odds of a recession. JP Morgan‘s puts the odds of a recession in 2025 at 60%.
 
Just two weeks ago, the Federal Reserve Board’s Summary of Economic Projections had the U.S. GDP growing by 1.7% in 2025. That was lower than their December projection. Since then, Jerome Powell has indicated that the impact of the tariffs is “significantly larger than expected.” In a speech on April 4, 2025, he said that the economic effects will include higher inflation and slower growth.
 
While nothing is guaranteed, the odds of a recession occurring have certainly increased. The important thing to remember is that if we wait for the headlines, we’ll always be late. It’s important to adopt an age-appropriate, properly diversified wealth plan as early as possible. (Last year, we were warning everyone to fix the roof while the sun is still shining.)
 
VIX: 41 Pretty High.
The CBOE market volatility index, commonly known as VIX, closed at 41 on Friday, April 11, 2025. That’s pretty high. This fear gauge soared to 85 in March 2020, during the pandemic. There is a strong correlation between market plunges and investor fear. Between February 19 and March 23, 2020, the S&P 500 sank as much as 38% in just one month’s time.
 
Oil is Below Break Even
“Drill Baby Drill” has been a mantra in the current Administration, as they seek to lower oil and gas prices. However, as I indicated in my Oil blog of March 31, 2025, oil executives could go into the red if they drill new wells with oil prices under $70 a barrel. Prices were at $60 a barrel on April 10, 2025. If prices remain this low, the next quarterly earnings reports for the industry will be disappointing for investors, with revenue down and net losses instead of profits.
 
While lower gasoline and oil prices are great for the owners of ICE (Internal Combustion Engine) vehicles, it’s not great for their 401(k) or stock portfolio, as oil companies will have to layoff personnel and cut back on production with prices where they currently are. Between now and when the 2nd quarter earnings are announced in July, investors could experience losses, unless oil prices rally soon.
 
The Magnificent 7 Becomes the Fantastic, but Expensive, 5
Recently, one of my coaching clients asked me if they would have lost money if they had invested in the Magnificent 7. Even with the Magnificent 7 leading the stock market plunge over the last month and a half, those seven companies are still performing impressively over the 2 1/2 year period. Even with the current pull back, gains on the Magnificent 7 companies since January 2023 range from a low of 47% to a high of 637%.

As you can see in the Magnificent 7 Stock Report Card below, most of these companies are experiencing robust year-over-year sales growth, with notable profit margins. The exceptions are Apple and Tesla, which had very tepid annual sales growth and face fierce competition, particularly in the Chinese market.

The spectacular performance of technology stocks is one of the reasons why we need a diversified wealth plan that includes a large cap growth fund, and potentially an additional hot slice of technology. This is something we go over in detail during our Financial Freedom Retreat. The next one is April 25-27, 2025, online (in the comfort of your own living room). Email [email protected] for pricing and information. 
 
Will Stocks Rally Again?
Corrections and bear markets can have mini rallies in them. However, those relief rallies can be a temporary blip in the overall downward trend. Bear market rallies can be bear traps. On April 8, the S&P 500 was flirting with a bear market, closing just 1% above that milestone. The following day, on April 9, 2025, stocks enjoyed a massive rally, the best the S&P500 had seen since 2008. However, the gains didn’t hold. On April 10, 2025, the market dropped again. We’re still down -12.8% from the February high.
 
When the economy slows down (as it currently is doing) and when we have recessions (the probability of this has increased over the past two weeks), stocks drop. The drop can be more problematic if stocks were very expensive, as is currently the case. However, it is rarely a “crash.” It is, rather, a series of unfortunate events. In the Financial Crisis and Great Recession, we saw the Bear Stearns crisis, followed by the Lehman Bros. liquidation, only to experience the bankruptcies of General Motors and Crysler, followed by the cities of Detroit, Stockton and others declaring bankruptcy. In between those events, we saw relief rallies that were quickly erased by another horrible event. A similar trend played out in the Dot Com Recession before that, when the cash-negative Dot Coms lead the bankruptcy trend, but were followed by the telecom industry and Enron.
 
Hoping for some kind of relief such as we saw in the pandemic is likely to be a fool’s journey. We just can’t print up trillions of dollars every time we get into trouble, especially as we are now on a path that is economists agree is unsustainable. Recessions and bear markets are a normal occurrence in the business cycle. When financial engineering prevents them from happening (as occurred in the Great Recession) worse things build up (like inflation and stagflation).
 

Emergency Interest Rate Cut?
 
When unemployment rises, the Federal Reserve Board will typically respond by cutting interest rates. Sadly, many economists are now predicting a period of stagflation, where the economy contracts and unemployment rises, but inflation remains persistent. As Jerome Powell explained in his April 4, 2025, speech, tariffs are likely to stoke inflation, and that complicates the equation. Interest rates must remain restrictive in order to get inflation down. (Drop down the rabbit hole on Paul Volcker and the 20% interest rate of June 1981 for a lesson on fighting stagflation.)
 
In the March 18-19, 2025, meeting, the FOMC participants projected a couple of rate cuts this year, from the current 4.25-4.50, down to 3.9%. The market expects the Feds to pause (keep rates where they are) at their May 7, 2025, FOMC meeting. We’ll get the next Summary of Projections at the June 18, 2025, FOMC meeting.
 
Best Wealth Strategy for 2025?
We are currently overweighting safe in our sample pie charts due to the heightened risk of a recession. (By comparison, in 2021, when we were predicted to have a gangbuster recovery, we were encouraging everybody to act their age and potentially take on a little more risk.) Acting our age and having a properly diversified wealth plan protects our wealth in recessions. That is how Nilo Bolden earned gains in the Great Recession, while most everyone around her lost more than half of their wealth.
 

​A solid financial plan protects us from losses while also allowing us to participate in bull markets. As we get closer to retirement, we cannot afford to lose half of our wealth; we must cut back on the amount that we have at risk. So, the first step of a solid wealth plan in 2025 is to make sure that we have an age-appropriate, properly diversified plan that is potentially overweighted an additional 10-20% safe. (Email [email protected] if you’d like pricing and information on receiving an unbiased 2nd opinion from me personally.)

 
Another challenge in 2025 is that we are live in a Debt World. There is heightened credit and duration risk on the fixed income side of our wealth plan. That’s typically where most of us are expecting to preserve our principal and keep our money, while earning some income. However, many managed plans are experiencing paper losses, which are a lot more problematic than we are being told.
 
Bottom Line
We must be the boss of our money. We cannot simply have blind faith that someone else is protecting our future for us. You can read about our time-proven strategies in The ABCs of Money 6th edition. You can learn and implement them at our Financial Freedom Retreat. Or you can contact [email protected] for an unbiased 2nd opinion, where you will learn exactly what you own, which assets are risky, which you have too much of, which you don’t have enough of, and a blueprint of a much better strategy. Again, our easy-as-a-pie-chart nest egg strategies earned gains in the Dot Com and Great Recessions and have performed the bull markets in between.
 
It’s easy to make money in a bull market – and we’ve been in a secular bull market since 2009. It’s easy to lose a boatload of money in bear markets. That is why it’s important to adopt a time-proven strategy early in the correction. If we wait for the headlines that we’re in a recession, we could be closer to the bottom, having lost 40% or more of our wealth. At that time, all we can do is hope and pray to recover from our losses. It took 15 years for Dot Com investors to recover.
 

Join us at our online Spring Financial Freedom Retreat April 25-27, 2025 (online) and our Stock Masterclass (learn the strategies that earned me the ranking of #1 stock picker) on May 3, 2025. 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 nine 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 April 25-27, 2025 Retreat when they register together. 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. ​

"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 Spring Financial Freedom Retreat April 25-27, 2025. Email [email protected] or call 310-430-2397 to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details.

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 9 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!

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.​​

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Check out Natalie Pace's Substack podcast on Apple and Spotify.
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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.