Are you a “lane changer”? In traffic, he’s the guy who’s constantly changing lanes, expending a lot of energy but doesn’t really get ahead.
We all know we’re supposed to “buy low and sell high”, but unfortunately your average investor doesn’t do that. When we look at the flows into and out of equity funds we find that people are pouring tons of money in when the markets are high and withdrawing at market bottoms.
Why? By the time people feel comfortable with the direction of the market (investor confidence is increasing), they’re looking at recent past data and many times the “upward movement” has already occurred. A little late. Same deal on market declines.
I happen to believe in active management, but you’ve got to be disciplined and unemotional, and that’s tough to do!
In this week’s video, I expand upon these thoughts and even have some pretty graphs imbedded for you. Watch it please, and don’t be a investment lane changer!!
TRANSCRIPT:
Hi there, Mike Brady with Generosity Wealth Management. And I this week I want to talk about staying the course, OK? About six months ago I did a video about conviction, in which really I asked the question “what do you really believe in?” “What do you really stand for?” What is that line in the stand? And that could be in your own life; that could be in your financial life. It’s really a question that I think could have lots of areas where it’s applicable but right now it’s really about investing.
I’m going to throw a chart up in just a few seconds here, but most people do the wrong thing at the wrong time. And I don’t want you to be that dumb money, I want you to be the smart money. And people always say, “Oh I buy low and sell high.” But frankly most people throw lots of money into funds when it’s at a high, when they feel comfortable, like, “oh, yeah man, the market did so well the last year or two, and I’m going to throw lots of money in…” because they expect it’s going to continue to go up. And they think that the market is actually linear; meaning if it’s gone up, it’s going to continue to go up, or if it’s gone down, it’s going to continue to go down- and that’s just not the case! It goes up, it goes down, it goes sideways! And real people also withdraw money, you know, usually at the bottom. And so this is a good indicator, frankly, when people are taking money out, the contrarian in me, I say, maybe I want to invest in that. That’s a good buying opportunity. Warren Buffet has a famous phrase, “be greedy when others are fearful and fearful when others are greedy.”
And the chart, I’m going to throw it up there right now. You’ll notice, at certain times, I’ve circled them, the market has gone up, that’s the line, and then the bars are the money flows, in and out. And you’ll notice that the bars are the highest when the market is at the highest, which is what you don’t want. And then the, (sorry about that, I just hit my microphone) and then when the market is at a low is when people are taking all their money out- which of course is the exact opposite.
So, have discipline, please. Be the smart money.
I’m happy to help you with that. I talk with my clients all the time and I do these videos and these newsletters to really have good communication, good education, so we can go through this with as little emotion as we can, but of course we’re human. We’re not a bunch of Vulcans running around! But, let’s have our course, we’re at Point A, where are we going to Point B? Let’s go there.
My wife said something the other day at breakfast that I just thought was wonderful, which is, “you know if you’re going down the road, and you’re in traffic, and have you ever noticed that person who’s jumping from one lane to the other, trying to get ahead of everybody else? Well, a lot of time’s they are expending an awful lot of effort and not getting any further.” And it’s so satisfying, frankly, when you’re just sitting there, staying the course, and you just keep passing this guy. Well, I want you to be that person.
So, anyway, 303-747-6455, Mike Brady is my name, I’m the President of Generosity Wealth Management. I serve the Boulder, Denver, Longmont area here in Colorado, but I’m in many different states. Perhaps I’m already registered in your state and have clients in your state, if not, let’s have that conversation. I’m looking to grow my business and I hope to do the best job that I can for you, I really care, I’ll treat you like my family. 303-747-6455. You have a wonderful, wonderful week, thank you, bye bye.
Are you interested in talking with me about your finances and investments but not sure if we’re the right fit?
I have clients of all portfolio sizes, ages, employment, and stages of life.
What I like to do is make a difference in someone’s life. Frankly, it’s just as rewarding for me to work with a young couple who are serious about planning and saving for their future as it is to manage portfolios and wealth for business owners and retirees.
Don’t be shy. If you’re curious about whether we’d be a right fit, give me a call and we can talk. It would be a great honor.
In the movie “City Slickers”, Curly is asked what the meaning of life is. He replies “One Thing”.
It’s my belief that your financial success is so much more than just investments. That’s why I named my company “Generosity Wealth Management” instead of “Generosity Investment Management”. I feel 80% of acquiring and preserving wealth is behavior, not chasing after the home run investment.
A colleague here at the office said “funny, the harder you work the luckier you seem to get”. I couldn’t agree more.
My video this week is about the importance of finding the “one thing” that you’re doing that is holding you back from financial success. It’s also about the “one thing” that you’ve done to make yourself successful–continue doing that!
Hi there, Mike Brady with Generosity Wealth Management, here in Boulder, Colorado. And I this week I want to talk about finding your one thing!
And I was inspired to do this video by a friend who writes a blog, which I think is just wonderful and I’ll post the link up on this video and in my newsletter. But he was quoting City Slickers, where Curley, who’s this kind of older cowboy, and he’s asked what the, you know, what the secret what is the secret of life is, of happiness, and he says, “it’s just one thing.” And the person says, “What is that one thing?” And he’s like, “that’s for you to figure out.”
And it’s my belief that so much of being successful in life and being successful financially is behavioral. You need to find out what you’re doing if you’re already successful, if you’re well on the way to saving for your retirement or you’ve retired, and there’s just, you know, you’re going to be fine for the rest of your life, and because you’ve accumulated a good amount of money for your retirement, then continue doing what it is that’s gotten you this far. If, on the other hand, you are hoping to retire, or you look at your finances and you say to yourself, “gosh, what am I doing wrong? Why is it that I’m making one hundred thousand dollars a year and I have a bunch of credit card debt and I have a piddly saving, and I just can’t seem to get ahead…” Well, you know what, it’s probably not that you’re making the wrong investments, which, that might be one of them. But really you have to ask, why are you spending too much money? OK? And so, inside your life there is probably one, maybe even two things that you’re doing that’s holding you back. You’ve got to figure out what it is.
And I can help you find that out, if you need some guidance. But what is that one thing that’s going to make you successful? What is that one thing that has made you successful? And it’s probably not this investment or that investment, but it was something that you did behaviorally. It was your attitude, it was the relationship that you had with money. It was something that was probably not that sexy. You know everyone likes to talk about this stock and that stock, you know, around the old barbeque, neighborhood barbeque, but you know what really makes you successful, many times, is something that you’re doing, consistently. And you’ve got to figure that out for yourself, and if you need some help, some guidance, in figuring out what that is, what could hopefully propel you towards reaching your goals, please give me a call and we can try to uncover that.
Mike Brady, Generosity Wealth Management, in Boulder. I’m serving the Boulder, Denver, Longmont area in Colorado- although I have clients in probably ten or elven different states. If you’re in another state and you’re wondering if I’m interested in having you as a client, the answer is, let’s have that conversation and I can always get registered in that state. 303.747.6455.
You have a wonderful, wonderful week! I’ll talk to you later, bye bye now.
Continuing the theme from my video, investor behavior has a significant influence on your success.
A recent study found that cells deep in the brain calculate a sort of moving average of past events, giving the greatest weight to the most recent outcomes.
So, even after a long term upward trend, or long term downward trend, a few months in the opposite direction can prompt impulsive investor decisions towards or away from stocks.
The year is almost over and as I prepared for this blog, I thought about a video I did last summer but never shared with you. The summer was so busy and volatile, I wanted to provide you with my current thoughts in such a tough time, so this video (which is one of my favorites) got pushed to the side.
The video is about information: more information doesn’t necessarily mean better information. I remember when having more publicly available information was a competitive advantage, but with free internet news sites with up to the second information, that advantage is not as clear.
Watch my video for my thoughts on More Information:
GWM- Video Transcript- More Information or Better Information
Hi Clients and Friends, Mike Brady here.
This week I’m going to talk about information; are you getting more information or better information? And that is a very key difference. You know I’ve mentioned in previous videos that this summer I’m going to talk about sort of the philosophy of investing and the art of investing. The reason, because, that’s the foundation, that’s the structure; I think it is absolutely essential.
There is a great study out there that I want to share with you about confidence and about accuracy as it relates to information. There were these book-makers, you know bookies, you know, with horses? They had to predict future horse races based on data, on past events. And so, these bookies were given five pieces of information, then they were given ten pieces, twenty pieces, then forty pieces of information, about you know, their weight, and the track; how they’ve done in different types of track; and how they’ve done in different weather conditions, whether it was hot, or cold, or wet, or dry, etc. And if they were given five pieces or forty pieces their accuracy, believe it or not, did not go up very much, I mean, just minimally, their accuracy. But what was remarkable, is that there confidence went up a lot. The more pieces of data they received, their confidence significantly increased whereas their accuracy did not.
In today’s world, we have so many pieces of data that we can look at and we have to discern which are the most important pieces to look at. And also, always check our confidence levels. You’ve heard me talk about this in the past. But, just because you’ve got more information does not necessarily mean that you’ve got better information. And in future videos I’m going to start talking about some of the information that I look at, so you’ll have to stay tuned in regards to that.
And if an investor or a manager is saying “you know what? I have an information edge,” frankly, I’ve come to a couple of conclusions. Number one, they’ve got insider trading knowledge. You know what, I’m uninterested in that. It’s against the law and that’s short-lived and you know what, that’s just not right in our particular day and age.
Number two, they are lying to themselves, or number three they’re lying to you. And you need to know about that. Twenty or thirty years ago having a good computer being able to get data feeds; I remember when I started out twenty years ago some of the data that we had, you could have a somewhat an information edge because you could spend a lot of money for various graphs and charts, etc., more than your common investor who couldn’t afford that. And you know what; all this data is pretty much free on the internet anymore and so that is not necessarily it.
So, the question is; are you getting more information or are you getting better information? And in future videos I’m going to talk about the information, the three or four pieces that I think are key in investing.
So, anyway, my name is Mike Brady; Generosity Wealth Management; 303.747.6455.
I have a thriving, growing business, I’m very proud of that, and so I would love to hear from you if you are not my client. Of course, if you are my client hopefully you are very pleased with our relationship and I do everything I can to have that deep relationship with you. 303.747.6455. I am a registered representative with Cambridge Investment Research, a wonderful broker dealer. And we’ll talk to you next week. Bye, bye now.
John Corzine? John Paulson? Both very wrong in their market calls.
You’ve heard me over past 3 years talk about humility and diversification. My 21 years in the business has taught me that the investment, sector, stock, etc. that I absolutely love is still the one I need to calmly and rationally buy in an amount that I’m willing to be really wrong in and cut my losses quickly if necessary.
