I recently did this really awesome educational video for you on Bonds, but unfortunately I described the characteristics of bond mutual funds in layman terms without a bunch of disclosures, and approval from a higher up regulatory agency is required (come to find out). So that got me thinking about rules and regulations. Should we have more or less, are they a cure-all panacea, and most importantly, what are the unintended consequences? Click on the video below to hear my crazy thoughts on regulations. All right, they’re not really crazy, but I think the question of more or less is ... Read More
As volatility has increased in the past 3 weeks, I want to keep you well informed of my thoughts. Are the past weeks normal, have the fundamentals changed, or is this the canary in the coal mine we’ve been waiting for? These questions are answered in my video. Hi, Mike Brady here with Generosity Wealth Management, a comprehensive, full service wealth management firm, headquartered right here in Boulder, Colorado. I last spoke to you a couple of weeks ago and at that time, I talked about the third quarter. I said it’s been a tough quarter, very volatile and it ... Read More
Pimco is a mutual and ETF firm with a huge bond fund that has been the player in that space for the past 40 years. Bill Gross founded the firm in 1971, and it is now around $2 trillion dollars under management. Last week Bill Gross decided to leave the fund and move to Janus. This is important because of the disruption to the bond market as huge sums could (and I say could) move from one firm to another. The bond market doesn’t get as much coverage as the stock markets, but this is a pretty big change, equal ... Read More
Defined: A high paying bond with a lower credit rating than investment-grade corporate bonds, Treasury bonds and municipal bonds. Because of the higher risk of default, these bonds pay a higher yield than investment grade bonds. Based on the two main credit rating agencies, high-yield bonds carry a rating below ‘BBB’ from S&P, and below ‘Baa’ from Moody’s. Bonds with ratings at or above these levels are considered investment grade. Credit ratings can be as low as ‘D’ (currently in default), and most bonds with ‘C’ ratings or lower carry a high risk of default; to compensate for this risk, ... Read More
There is so much in the news right now, most of it about the impending debt ceiling crisis. Most of what you read, hear, and watch is sensationalized (in my opinion), so in this quarter’s video I basically dissect where we are right now, paying attention to the data points that I think are relevant. Being the contrarian I am, I also address some common, assumed facts or assumptions that I simply don’t believe. A longer than normal video, but let me conclude by saying I’m still optimistic, and not freaked out (unlike pundits on TV). Click on my video ... Read More
As I mention in my video, the price of bonds (in general) have decreased causing yields to increase. The above graph shows comments from the Fed which has led so many people to have speculated they’d cut back on the bond buy back. As of last month, the Fed Chairman has stated the bond buy back will stay in place. For more graphs and a discussion, here’s the full article. Full Article and Graphs Read More
An inverted yield curve in the US has predicted 6 out of 7 worsening economic conditions in our country since 1970. In China, we don’t have the same type of statistics because of their young open economy, but recently their yield curve has “inverted”. I’m watching this and realizing it’s just another of many economic indicators out of China pointing towards a slower economy. I really don’t want much (if any) exposure to the Chinese Stock Market. This also has consequences to the whole global trade market as China is the 2nd largest economy right now. We truly are a ... Read More
Italy is as much as financial trouble as Greece. Their money supply is drying up, and unlike in the US, they don’t have the same tools at their disposal that we have (like printing money). The chart at the right is the money supply at the Bank of Italy. Click for Italy’s Crashing Money Supply Read More
What an interesting month! Who would have thought it would turn out to be such a good month just a short 3 to 4 weeks ago? Many people actually, if you seek out alternative voices to that which you see in the daily paper or newscast. I talk about this in this week’s video below. Also, I talk about how you should assess the level of communication in the past 2 to 3 months from your adviser. Did you hear from him/her? You sure as heck should have. Lastly, now is a great time to get back to basics. Click ... Read More
The big question we need to answer is “what happens after a Greek default?”. Lehman’s collapse was a full year before the financial crisis of 2008, and it’s very probable the full impact of Europe imploding won’t be felt for some time. We, as investors, need to stay informed and ready to react. Please continue to read my newsletters and blogs, and have my number in your speed dial. 303.747.6455 CLICK FOR FULL ARTICLE – EUROPE ECHOES OF LEHMAN Read More
One of the effects of a US Government downgrade is a municipal downgrade to follow. If you’ve been following my newsletters over the past few years, you know I’ve advised you to watch your municipal holdings closely if you have any at all. The free (relatively) capital market ultimately determines the cost municipals will have to pay to borrow money. Municipals to be Downgraded? – Link Read More
If the US Gov’t is downgraded (I argue when not if) then 7,000 municipal bonds will be automatically downgraed as well. At least according to Moody’s. This really hurts retirees as they’re the largest part of this market. 7,000 Muni Bonds at Risk of Automatic Downgrade — Link Read More
One of the big drags on the economy in the coming years will be our fiscal deficits and budget problems. I’ll be writing this summer about the US ability (and struggles) to sell bonds and finance the debt, particularly as QE2 ends and the Chinese bubble bursts (at some point in the future). This article talks in depth about an issue we may see more of in the future–US debt being downgraded. This is from a German, not US, rating agency, but it could be just the beginning. LINK TO FULL ARTICLE Read More
I’ve been negative on the finances of state and local governments for some time, and continue to believe it will get worse before it gets better. This article takes a contrarian view, particularly on the debt, which I want to present to you. He argues there are “diamonds in the rough”, which is almost always true. I’m still quite negative on municipals in general, but it’s good to see the other point of view. LINK TO FULL ARTICLE Read More
This week’s video is my 1st Quarter Review and my 2nd Quarter Preview. The first quarter was good (yeah!), and I list the items I’ll be watching and thinking about for the 2nd quarter. A must see video (if I do say so myself). TRANSCRIPT: Hi Clients and Friends, Mike Brady here. This is the first quarter review and second quarter pre-view for 2011. Now, in general, the first quarter was a little bouncy in February, but overall a positive quarter; actually, a very strong and nice quarter. The indexes, which of course you can’t invest in indexes, but they’re ... Read More
I’m a broken record. Europe continues to be sick and will slow down the global economy. The worst with Europe is not over. It’s the end of the beginning, not the beginning of the end. What does this mean for you? I’m not a fan of a large holding in Europe. Internationally, though, I continue to be impressed with some of the emerging markets out there. Irritatingly, Europe is being forced to address many fiscal imbalances we have here in the United States, but they’re just a number of years ahead of us in addressing them. I continue to have ... Read More
Bonds go up and down in value based on interest rates, credit quality, and simple supply/demand. The first quarter was a bumpy ride for US Treasuries (as I mention in my video which you should have listened to already), and essentially ended flat to slightly negative. Much of what will happen in the next quarter will be dependent on the ending of quantitative easing in June and whether the Federal Reserve increases interest rates. What to do? Stay tuned and be diversified. Too much of an allocation to any category can be negative. Too many Treasuries may lead you to ... Read More
You’ll see me in the coming months talk about the bond markets, particularly as the Quantitative Easing (QE2) comes to a close this summer. We have a huge federal deficit. We need people to buy Federal bonds to lend money to the government. With the huge influx of money from the Fed in the past few months, foreign investors were squeezed out. Will they come back? The answer is not as simple as you’d think. I’ll be writing more and more about this as the year goes by, particularly it’s impact on you. CLICK FOR FULL ARTICLE Read More
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The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 large capitalization stocks with dividends reinvested.
The Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged, market capitalization weighted index of 500 widely held stocks, with dividends reinvested, and is often used as a proxy for the stock market.
The Nasdaq Composite is an unmanaged, market capitalization weighted index of stocks listed on the Nasdaq Stock Exchange, and are reported as price return without reinvestment of dividends.
Indexes are often used as a proxy for the stock market and cannot be invested in directly.