Oil Prices Skyrocket. Stocks Sink.

0:00Hi, this is Natalie Pace and today's video conference is about the war in Iran. So oil prices are skyrocketing, stocks are sinking, what should you do about it, should you be running into oil and defense stocks, should you be underweighting airlines, autos and housing, how do you protect your wealth, could there be a recession? All this and more in today's free video conference, you can access it as a podcast on Sub-Stack and it's free, so please share with your friends. If you have any questions or you'd like information about our financial freedom retreat or my private coaching where I offer an unbiased second opinion and a blueprint to a much better plan, do email us at info at NataliePace.com. Alright, so let's get started. Oil prices are skyrocketing, every time I look at them they're higher and the Qatar minister has said he's concerned that oil prices may in fact hit $150 a barrel.

1:08That would be an all-time high and that's a big problem. So let me show you why, I'm going to go ahead and share the screen. Americans are highly correlated with high oil prices. So what you might see here is that every time the oil prices really spike, we have a recession that's the gray lines there. So this one is in 1990, this one was in 2001 and this one was in 2008. July of 2008 was actually the all-time high and of course you remember in the Great Recession the Dow Jones industrial average dropped 55% and it took over five and a half years to crawl back to even. In the dot com recession the NASDAQ composite index dropped 78%, so a million dollars went down to $20,000 and it took 15 years to come back. So this is not a buy on the dip moment in 21st century recessions and it's important

2:14because we haven't really had a recession since 2008, the law was actually in 2009, we bought our way out of a recession and the pandemic essentially printing up $4 to $5 trillion more than that over the course of everything. So what should you be doing now? All right, let's talk about this seriously and I'm going to show you a few slides to help you to understand the most important thing right now. It's not jump in, jump out. It's not go in for oil and defense or you know underweight airlines or even short the markets because we don't know how long this war is going to be. I just saw a quote of President Trump to Reuters where he said, look as soon as this war is over oil prices are going to sink again and if they go a little high now you know he's not that concerned about it. Now of course we are but he's right. If the war ends quickly and the Strait of Hormuzones opens up and all the trading of

3:14the oil starts happening again, oil prices will drop because demand has been dropping. This has a lot to do with everybody moving and shifting very rapidly, including China, the biggest consumer of electric vehicles but people are choosing more energy efficiency and their auto choices which is you know part cutting into the profits. In fact I do want to show you what I'm talking about. Let me show you a couple of the stock report cards here real quickly. Let's see which one pops up first. So this is on airlines. Airlines were already not doing well. They didn't hedge against oil prices probably because oil prices are largely expected to be weak outside of war. War makes them escalate you're seeing why. Even though the US is energy independent we produce more oil than we consume. It is a worldwide market and of course natural gas is highly correlated because a lot of

4:15the people that are drilling for oil are also the ones that are fracking for natural gas as well. So it's just important to know that if the war is prolonged because the airlines have not hedged against higher oil prices, this could be devastating for an industry that is already low, very low credit quality, very low profit margins, very low year over year sales growth and extraordinarily high debt. Let's see what's underneath that one. Here's our oil prices one. So as you can see you know we're not going to see these oil prices that are sky high until they report their first quarter earnings. So we're seeing last quarter earnings that would be the December quarter and as you can see because the prices are weaker they have actually lost year over year sales growth. That's because the price of oil has been weak and their profit margins are pretty low and this is another industry where you know revenue is down the 2022 was their banner

5:19year because that's when oil prices were high and gasoline prices were high. So I wouldn't necessarily bet on oil A because we don't know if this is going to be a prolonged war or not and B because of you know they do have another underlying trend. It's not just that people are trying to buy electric vehicles. If the war continues and oil prices are high that can plunge us into our recession. So it could be good for oil companies in the near term very bad for them in you know the six month or longer term because if we hit a recession then people won't take their summer vacations they won't be driving as much all of this is going to happen and that will hit oil prices too because demand will sink. We actually saw negative oil prices in the pandemic of course we're not going to have a shutdown. Now defense defense arm I looked I did this is an updated stock report card if you would

6:23like access to these stock report cards just email info at NataliePace.com we're happy to email them to you but I did update all of these most of them either today or a few days ago. The defense industry is definitely enjoying a heyday but its price earnings ratios are really really high and where unless it's a very long prolonged war they are not experiencing a massive increase in revenue growth okay and it's I think that what you need to be a little concerned about is that the wars are already priced in so the minute that we took over Venezuela everything shot to basically all time highs and we're also seeing very high price earnings ratios if you don't know what a price earnings ratio is you should especially if you're trying to invest in individual stocks but these are extremely high and yeah they aren't we are seeing some year over year sales growth and this was before

7:24either one of these wars right because Venezuela was January that hasn't been that quarter hasn't been reported yet so we're seeing a little bit but it's not outstanding maybe the next quarter will be outstanding but you are seeing that it seems to be very priced in with these extremely high price earnings ratios so I would if I were in your shoes and I had defense I might consider profit taking now the way that our system works is that you always are age appropriate properly diversified and you rebalance once twice or three times a year if you have a slice so if you liked defense before the pop up and now you have two slices because they've gone so high you can actually sell one and keep it if you still think that you know defense can do well or you could sell both and say great I doubled my money I'm happy with that I don't you know take a bet that it's knocking the wars not gonna last so it's completely up to you but we always have

8:27four hot slices in our sample pie charts and in fact those were the super performers of 2025 our silver hot slice tripled our Peru hot slice doubled and clean energy was up 55 percent so we really and this was far far and above I think magnificent seven was closer to like 30 percent and Google was the main draw of that so you can have hot industries but I do think it's important to use the pie chart system because it's gonna prompt you to sell high and by low if you just think oh we're in a war I'm gonna buy defense you're buying high right now all right I want to show you a few other things this one is the auto manufacturers they weren't doing well before the war when people have to spend more on gas they have less money to spend on everything else in high gas prices we saw the auto manufacturing industry in 2008 had a complete

9:28meltdown we had bankruptcies of two out of three of the major auto manufacturers in 2009 and they all are all at very low credit quality they have year-over-year revenue growth is lower and a lot of this has to do with you know the Chinese are building their own electric vehicles and selling them in China and in other countries as well including Mexico and potentially even Canada so we're getting stiff competition in the hottest area of the auto market which is electric vehicles by the way high gas prices will make everybody want to buy an EV even more so that could be potentially okay for Tesla if it weren't so expensive already so Tesla is a company that also had year-over-year sales growth that was lower that has a lot to do with them having to lower the prices in order to compete they have very low profit margins as well and it's a company that made seven billion dollars

10:32that's less than half of what they did just a few years ago that's worth 1.5 trillion a 369 price earnings ratio is just really outlandish especially for a company that you know is losing revenue so be cautious of the auto industry now again this is that chart i just showed you where recession high gas prices are highly correlated with recessions we averted one in 2022 but that's kind of a question mark because we did have two quarters of negative revenue growth and in a normal world that would have been called a recession but they didn't and you know we actually had with AI and data centers surprising growth since then so basically let me go through a few more things about what you know what i think about oil defense auto airlines housing etc and let me see if there's anything else underneath here i want to show you okay so part of the

11:38challenge is that we we have stocks at an all-time high even with the pool back they're still very close to that we have outlandish debt in the united states and over half of the s&p 500 is at or near jump on status we are actually overweighting 20% safe in our sample pie charts so what that does is if you're 50 and you're overweighting safe you have only 30% at risk now the safe side we've been seeing all kinds of shenanigans going on their private credit paper losses all this so we spend one full day on what safe at our online financial retreat the next one's in April it's April 24 through 26th if you want to get safe before then again our strategies on the safe side are earning a competitive yield market yield and no paper losses so it's a really easy strategy but doing it is tricky because there's a lot of conflict of interest if you have a managed plan

12:41so i do think it's important for you to know exactly what you want and why make sure you have an age appropriate properly diversified plan and that you know what's safe in a debt world so you are not being put into risky things reaching for yield high yield it's like half a percent higher than the market yield of safe so again don't reach for yield especially in a high debt world again we're overweighting safe because of the massive amount of debt and also because equities are just very expensive too expensive for a recession that that's when things drop far and fast and then take a long time to recover is when we get um you know that combination and we have seen it in the dark conversation and in the great recession and now we've really got outlandish debt and very elevated prices so i also wanted to show you the performance by sector so that you could see what i was talking about when i said that you know we had uh i had very few companies that i actually picked um but first majestic was one of them uh picked that one and

13:47it's really been up this is since we featured it um make you and mining has been doing well but that's because of gold and silver right also copper but we bet on Peru and Peru did much better than copper prices copper was up 32 percent but our Peruvian fund doubled and again clean energy was up 60 percent so um i do encourage you to check out some blogs i will be linking to them in the description of this video conference so uh 15 rules of the rich that's just standard stuff that you should know and apply um our bragging rights with more information on our hot slices ai says there's a 70 percent chance of a correction in 2026 that's based on uh trends of midterm elections not factoring in this war which uh and especially high oil prices which definitely ups the probability so again email info at natalypace.com make sure that you know what you own and why

14:54don't just have blind faith and don't and don't just be um appeased with fancy words you really have to know what you own and why and i know a lot of people are like well it's too complicated i don't understand it okay well you know that's what i do my private coaching for that is what learning them a life mass through our financial freedom retreat is all about this is something we all should have learned in high school it's not rocket science it's not even as hard as algebra and once you learn it then you have a good financial house you can still have a financial advisor but i wouldn't have blind faith because that can be a problem so um that's you know one of the biggest things that i talk about in my blogs is that you shouldn't be having blind faith about this stuff um right so we've seen way too many times we're trusting that you're going to be okay or reaching for yield has ended up with you know Ponzi schemes and corporate

15:55collapses and by the way when we do have over half of the s and p 500 at or near jump on status that's a lot of risk out there that a lot of americans don't even know about even even really highly educated ones so important to know exactly what you own and why whether you attend the retreat read my books or get an unbiased second opinion it can more than pay for itself it it's not that expensive so again email info at natalie pace.com here's my homepage you can also follow me on social media for our daily money tips this is our next financial freedom retreat and it's online so you have no travel or lodging expenses uh you can find out more including testimonials uh Gary Becker Nobel Prize-winning economist enthusiastically has recommended these strategies a long time ago when he wrote the forward to my first book and uh we have many testimonials from people who you know

16:59always think us uh for learning this information so again call or email info at natalie pace.com and just you know again you don't have to try to market time it or know exactly whether or not this war is going to keep going or end quickly what you really want to do is again have some large cap girls have some large cap value have four hots have some mid cap girls mid cap values small cap growth small cap value so have yourself diversified but age appropriate and you might even consider overweating safe a little bit all right so if you overweight safe what that means is that you are less likely to be caught off guards if the markets go down all right thanks again call call us or email info at natalie pace.com if you would like an unbiased second opinion a blueprint for a better plan or to attend our spring financial freedom retreat