Conviction, Humility, Knowledge
This video covers a range of thoughts
* Conviction — what do you believe in?
* Humility — the market doesn’t care what you think
* Knowledge — If you do action A, is B the outcome?
I hope you click on my video and watch–I try to make it the best 3 to 5 minutes of your week. Okay, maybe that’s stretching it, but worthwhile nonetheless.
Hi there, Mike Brady with Generosity Wealth Management, and this week I’m going to talk about two or three different things, one is conviction, the second is humility and another is just knowing what… oh, the answers to everything, which I guess kind of gets down to humility as well.
I last did a video about a week and a half ago and at that time I said “Gosh, I hope you’re not hearing from me every day”, that means things have calmed down just a little bit. And what has happened in the last week and a half is we’ve had, mainly, some one percent days plus or minus. Which in an environment where it is three to five percent in a day, that actually seems quite calm. But we’d have one percent, one percent, one percent, and then a big three percent drop. What’s very interesting is that although that three percent drop might just give away what you’ve gained over the last three days it seems so dramatic, so huge, when in fact if had been less one percent, less one percent, a slow dribble, it’s not quite as shocking to the system.
And this kind of gets down to a little bit of humility and kind of knowing everything. The market is a very complicated organism, OK? And the only people who understand exactly what is going to happen, there are some people like that, they’re called analysts and journalists, OK? And it is my belief that, many different factors go into what happens on a given day, a given week, a given month, into the particular market.
Let me just step back for a minute and talk about my philosophy in general; about the chaos theory. Things are very complicated- and sometimes things just happen. If A happens B does not necessarily happen. And sometimes B happens and there are a number of things that lined up for B to happen. The market is no different.
In an economy, or a country, let’s just say, in order for it to go from a developing country to a developed country, there are a lot of things that have to happen; you have to have an educated work force, you’ve got to have good governance, and confidence in the judicial system, you’ve got to have an economic system that is free and fair… There’s a number of different things that have to happen in order for a country to really move forward. And if one or two of them are happening, but not all the others, then you’re really not hitting all the cylinders. And so, it kind of gets to my belief in investing that you’ve got to have a conviction.
What do you believe in? Do you believe that the United States is what your bet is long term; whether it’s one year, five years, ten, thirty years. If not, you know, then I might question whether all of my discussions about the stock market are really for you. And if that’s the case we can talk about it, and give me a call; because there might be other non-equity, non-U.S. things that you should gravitate towards. What do you believe in? If you believe in nothing you’re going to be pulled one way or the other and all of these journalists who give you exact answers, which is what we wish that we would have about why a certain event happens. You’re going to be persuaded by one over the other, left and right, etc.
That boils down to my last topic- which is really humility. We have to understand that sometimes things just happen and what we believe is going to happen doesn’t always turn out the way we want it.
You know, I still have a conviction that this a market that I want to participate in but I’m still diversified. I still have some hedging positions. And the last three or four weeks, I have to absolutely admit it is much more drastic that what I had, you know, forecast four weeks ago. But that being said, the conviction is the same but I also have to remember that the market doesn’t really care what Mike Brady thinks; doesn’t care what Generosity Wealth Management thinks; doesn’t really care what you think. So therefore, we have to continue to change our beliefs. And so I have made some changes in the last three or four weeks. I’ve shared them with you over the video as things have progressed. But we also have to have conviction, but we also have to have some humility and also understand that sometimes things, and particularly on some of these days just knee-jerk happens. And so we have to kind of help smooth those things out, try to keep them out of our mind and not let them completely throw us off base.
I’m recording this on a Friday morning, Bernanke just spoke a little while ago and the market knee-jerked down then knee-jerked back up. And so, you know, those things are going to happen, it’s just part of it and we have to stay true to what we believe.
Going forward, I mentioned this at a previous video, that I’m going to have dynamic asset allocation as one of my offerings for my clients and my management system because I do believe that there’s a way that we can keep to our conviction, stay invested most of the time and strategically choose one sector over another. And it’s something that I’m very excited about. It’s something I’ve been working on for a very long time and I’m just about to kind of, offer it to all of my clients.
Anyway, Mike Brady, Generosity Wealth Management, 303.747.6455.
Eeeh, I’m supposed to smile! My mom tells me that I don’t smile enough in these videos but you know, I take this stuff very seriously, and so maybe that seriousness comes out in my lack of smiling here. But anyway, I hope you have a wonderful weekend and we’ll talk to you later bye bye.