Here are my current thoughts after 2 volatile days
TRANSCRIPT:
Hi there, Mike Brady with Generosity Wealth Management, I am recording this on a Tuesday afternoon, kind of late Tuesday afternoon. I promised that I would communicate as much as possible to share with you some of my thoughts and that’s the purpose for this video.
Yesterday’s video was about 13 ½ minutes, and I definitely am going to make today’s much shorter and pithier, I think, as much as I can.
Monday was a very bad day and we can’t isolate that day and say every day afterwards is going to be horrible. Just like today, Tuesday, the market, it was the best day, single percentage gain since May of 2010. We can’t sit here and say, “OK, everything going forward is going to be perfect; hunkey-dorey, roses all over the place.”
I think what we’re seeing, we’re seeing, kind of a tug-of-war between people covering their short positions; people who are panicking and trying to get out, with those that have money on the sidelines wanting to poor back in, saying, “Wow! These stocks are a bargain now! I think that the market is undervalued!” And so I think we are having that tug-of-war. Which one’s going to win out? I’m not sure exactly. But we’re going to continue to see some volatility I believe, in the next week to two weeks, as we go forward.
I believe that what some people are, what is causing some of this market uncertainty is actually uncertainty in the markets, in the, you know, the United States, about the economy. That the gains we have made, are you know, back sliding on it.
I know that there’s been an awful lot of focus on the indebtedness of our country and the S & P down grading, etc. Frankly, none of that was a surprise. But what was I think, brought to people’s attention were the GDP numbers which were really horrible, some of the unemployment issues, the continuing unemployment issues. And I think that’s really causing a level of pessimism that is not helpful in the market going forward.
I have looked every single client’s portfolio, if you’re one of my clients, and want to let you know you are where I think you ought to be.
Let me just look at my notes here, there are a couple of things I wanted to address real quickly.
I believe that international is something that should have a very minor position in your portfolio. Just to kind of reiterate how some of the other countries have done, I mean we call them the BRIC countries; Brazil, Russia, India, China, they’re down, their indexes are down between 20 and 33 percent. So they’ve done very poorly.
I said yesterday that I thought municipals would be downgraded at some point. Today there were a significant number of municipals that were downgraded. This is just kind of the start, I believe of, kind of the downward slope of some of the government securities.
Gold is continuing to do quite well. I do believe that that makes sense to have in some of your portfolio.
Let’s see, I think that’s it for right now. I’m going to continue to watch things on a daily basis. I will probably do a video tomorrow or the next day- just to kind of let you know what I’m reading and how I’m interpreting some of the data as it’s played out.
I want you to call me if there are any concerns you might have, 303.747.6455, I’m Mike Brady with Generosity Wealth Management.
And you know, I’m here, I’m here to assist you, for us to get to your goals, for you to achieve your goals with some assistance.
I am a comprehensive, integrative wealth management firm. Mike Brady is my name, 303.747.6455. And we will talk to you again soon, bye, bye now.
Debt Ceiling, Greek and European debt issues, bad global recession…..
Should you freak out? Time to move the cash to the mattress? I don’t think so.
Here are my current thoughts……..
TRANSCRIPT:
Hi! Welcome to the Generosity Wealth Management weekly Video/ Newsletter.
And this is the last week of July and what is really hot topic in the news right now is the debt ceiling negotiations; you know, should you panic, should you freak out, should you change your portfolio? And I have to tell you that I am actually more optimistic than pessimistic; which is in favor right now. That is kind of the easy thing to do. I mean we joke in our industry that economists have predicted ten of the last two recessions, and I don’t want to be that guy.
We’ve spent the last ten weeks downgrading the S&P 500, earning expectations, and we’ve heard from about 2/3 of the S&P 500, for the second quarter and surprise- 75% of them have exceeded those pretty low expectations. Right now companies have a huge amount of cash that they’ve been hording. Cash is ridiculously cheap right now. You’ve got earnings, their efficiencies are good. I continue to be somewhat optimistic about the second half of the year. I said that three weeks ago and I have not changed my opinion that we’re looking at some big abyss, some crevasse that’s going to hit us. I just don’t see that.
We’ve got three things that I’m really kind of paying attention to; we’ve got the GDP that’s coming out this Friday; we’ve got more earnings estimates that are coming out; and then we’ve got this debt ceiling.
If I have to guess on the debt ceiling-we’re going to kick the can down the road for a bit. It’s going to be relatively short to mid-term increase in the debt. Just enough to keep the newspapers in business with headlines. You know we’re going to be hearing about this for the next six to twelve months, irritatingly. But it is what it is.
The market as a whole is pretty much back to where it was in April before this correction. And with all these other things it’s actually surprisingly held its own. And as I mentioned we’re going to be looking at the GDP, we’re going to be looking at the debt, we’re going to be looking at the earnings. The earnings are looking good. The debt, I think, when the world doesn’t end on August 2nd, is going to be less of an event than what you’ve been led to believe.
And then going back to the GDP estimate, which is not really sure what. It’s been having some bad numbers, frankly, in the last couple of months. But the others are looking good.
Plus, I mean, the opportunities, just abysmal opportunities in bonds, kind of leads me to, and all the cash that been kind of on the side lines, kind of leads me to believe that this is going to be a good thing for August, September- not necessarily a bad thing.
So I’m going back to feeling good about my assessment at the beginning of the quarter.
Anyway, my name is Mike Brady. I am an integrated, holistic, comprehensive wealth management firm, here in Boulder, Colorado, but I have clients throughout the United States. My phone number; 303.747.6455. You have a wonderful week, and I’ll talk to you later.
As I mention in my video above, Greece is a fascinating story unfolding. I wish it was only Greece, but we have a few other countries in Europe that will be following it in the headlines over the coming year.
This is a good article on a few dissimilaries between Greece and the United States.
Why do you care?
When you’re at a summer BBQ, some know-it-all guy is going to start getting all apocalyptic on the US. You need the ammo to refute that.
I’ve been talking about the problems with the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) for over a year now. Greece in particular has been very prominent in the news recently.
Has this been a slow train wreck? Yes. Has our investment markets continued to go up during that time frame? Yes. Will our markets continue to go up? That’s always the question, and a harder one to answer. One of the things I’m trying to do is guide you and my clients to that answer, knowing of course the future is unknown.
Anyway, this week I discuss what I believe is another bubble ready to burst–China. I’ll be following up over the summer with technical reasons why structurally and euphorically (if that’s even a word), China is someplace to be cautious.
TRANSCRIPT:
Hi Clients and Friends, Mike Brady here.
This week I’m thinking about some of the similarities between China, right now, and the U.S. right before our stock market crash in the late 20s, frankly. So does that mean that I think that China is going to have this huge implosion? No. Do I think that China is a bubble? The answer is absolutely yes. Tread lightly, as it relates to China.
One similarity is just a massive disparity between, in income, and in wealth, and in education; China now, the United States back in the late 1920s.
There’s the rapid industrialization; huge boom in the last 10 to 15 years in China, very similar to the rapid industrialization in the United States.
Opaque and misleading economic data and fiscal data- very big similarity. Massive buildup of leverage amongst the rising class. Credit and leverage is, has, had increase significant in China just like we had in the 1920’s.
And kind of the last thing, is bubbles, in both residential real estate and infrastructure. What they have done, they being China, in the last fifteen to twenty years is just unbelievable. But this has also led to an incredible infrastructure bubble and real estate bubble over in China. And when that thing bursts, we just saw it back in 2008; it can have some pretty dramatic effects on the economy and on the stock market. And that’s what I’m greatly concerned about right now.
I haven’t really thrown out a bunch of statistics and reasons for why I’ve come to these conclusions. But if you want to give me a call and I’d be happy to talk to you about them, 303.747.6455. My name is Mike Brady; my company is Generosity Wealth Management.
The reason why it’s called Generosity Wealth Management is I believe that if we put together some of your investments, and your tax and your retirement, and your estate planning; all these kinds of silos together that you can start to be generous with yourself, your family and the causes you believe in. I want to help you learn to be generous. So I am a registered representative with Cambridge Investment Research. And you have a wonderful, wonderful week and I’ll talk to you later. Bye bye.
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.
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 a minimal to zero exposure to Europe for my clients.
