A Strategic vs. Tactical Look at 2020 and 2021

“What the new year brings to you will depend a great deal on what you bring to the new year.” – Vern McLellan

2020 was a rollercoaster of huge declines followed by a huge recovery, with ultimately happy investors at the end of the year. 9 months ago however, we didn’t know this would be the case. We were filled with uncertainty about the global health crisis and the ramifications it would have on financial health. For that reason we talked strategy such as keeping your emotions in check, remaining long term focused, having humility, knowing your bias, et cetera.

Listen as Generosity Wealth Management founder, Michael Brady, compares having a strategic versus tactical look at 2020 and what that means for the new year.


Hi there.  Mike Brady with Generosity Wealth Management and I am here to talk about 2020 and looking at 2021.  I want to talk more strategic versus tactical today.  I want to give some good beliefs that I have that I think are very helpful and really the reason why I talk about strategic versus tactical.

Let’s just talk real briefly about 2020.  Personally, I have had some highs and lows.  I know after talking with many of you, you had some personal highs and lows, but the markets did as well with investments.  If we look back just nine months ago it was significantly double digits, bear market, very sharp, very under water and very pessimistic with a lot of fear going forward.  Very few pundits at that point would have said, “Oh yes, it’s going to end the year positive.”  But you know what?  That’s where the unmanaged stock market index is and the unmanaged bond indexes went as well.  When you look at bonds, when you look at stocks they all pretty much from a market index ended the year positive, with some ups and downs.  One of the things that we can learn from that, of course, is about ourselves.  What is our emotional control?  What is our humility and what is our risk and tolerance which I’ll talk about in just a little bit.

2020 Dow Jones Industrial Average Index

I talk an awful lot on these videos strategically.  Let me tell you why I do that and how I define strategy versus tactical.  Let’s pretend you want to lose some weight.  How you view yourself is a strategic decision, but so many people spend all their time on what is exactly the perfect weight loss program.  Is it Weight Watcher’s?  Is it Jenny Craig?  Is it something else?  What’s the perfect exercise?  I the meantime they have paralysis of analysis and they don’t stick with it.  They don’t view, they don’t spend enough time on the strategic where they say I view myself as an athlete.  I view myself as someone who doesn’t eat that chocolate cake.  It’s not a big twist, not a big struggle to not eat that chocolate cake.  It’s hey, that’s incompatible with who I am and the image I have of myself.  So the strategic part is incredibly important.

A lot of what I do in these videos is talking about the strategic because I have come to the conclusion that a lot of people spend time on the tactical.  And all those pundits on TV are talking about the tactical.  This stock, that bond, short-term decision this, short-term decision that.  Where 80 percent of reaching your financial goals is clearly defining them and having a plan for how you get there, and keeping certain things in mind as you go along.  The tactical decision of your investment strategy is not of zero importance.  It is only of lesser importance and not as important as the sum of the strategic decisions that you proactively make every single day.  Going forward from day one but, of course, reiterating that to yourself as the years go by.

I want to knock off a couple of them right now.  I’ve got a list here.  Your attitude and your behavior is incredibly important.  Number one, humility will lead to diversification.  Humility means that we don’t know the future.  You may notice that when I sit here and talk on these videos I’m like, “Well, I believe this and I have a high confidence that this will happen.”  But the moment that I ever say, “This is absolutely what’s going to happen,” stop watching and fire me because nobody knows the future and what I have found is that the less data they have it feels like the more confident they are in that prediction going forward.  Pundits on TV do that all the time.  And what good humility leads to is diversification knowing that you don’t know exactly what the future is so you try to increase your probability of that desired outcome by being under the bell curve.  A bell curve looks like this and we want to get right there.  We’re not shooting for the stars.  We’re certainly trying to not have a disaster.  Therefore, we’re shooting for the middle so that we can increase that probability and that leads to diversification.

The second thing that I would like to say as a good strategy, good belief is know your biases.  One of the biases I’d like to highlight today – because there’s actually quite a lot of biases – overconfidence, confirmation bias, et cetera.  Today what I would like to talk about is all you see is all there is.  That’s just not true.  If you hear three pieces of facts and say well, it’s all fact based.  There it is.  That’s the conclusion.  You know what?  There might be another side of the story to that.  Everything coin has two sides and so when we find the conclusion from the facts that are laid before us, we have to continue to look at the facts.  We have to look at the other side.  If every pundit is saying that it’s going to go up, try to read things that say why it’s going to go down.  And, of course, vice versa.  Frankly, I find this in discussions that I have with friends and family and things of that nature is listen, just because you’ve just given me some facts there, there might be some extenuating circumstances.  What’s the content?  What’s the intent of what you’ve just displayed from an argument point of view?  That’s the reason why if you ever watch any TV shows or been in court there’s a prosecutor and a defender.  The prosecutor lays out facts and then the defendant lays out facts as well.  They, of course, have different views on perhaps the exact same facts.  It is the same thing when we are looking at our financial plans and, of course, our investment strategy.

The third thing is emotional control.  If that wasn’t tested this year I don’t know what was.  I am very pleased that the people that I associate with the most had a great emotion between the greed and the fear that is natural as human beings.  Those people who do the middle way as I like to say it.  They don’t get too excited one way.  They don’t get too depressed the other way.  They understand that emotions sometimes lead us to do things that are not in our best interest.  It is emotional control.  And hopefully when you talk with me, when you meet with me, when you watch these videos you can understand that while I have enthusiasm, I’m an emotional guy.  I like to hug people.  I’m by no means a robot.  I certainly don’t let myself get caught up in the moment and I don’t let myself be controlled by my emotions.  Acknowledging that I have them, but not being controlled is the path that I believe.

The next thing I have is being default aggressive.  That is a military term.  When you don’t know what to do, do something.  A good plan today is better than a great plan forever in the future which may be never.  Not forever but never, and so default aggressive.  That means something different for everybody.  What I mean is if you don’t know what to do, doing nothing might not be the right thing.  Moving to cash is probably not the right approach for most people.  That’s doing nothing.  That’s when you don’t know what to do.  History has shown that over a long time horizon one of the best things to be is to be in the market and to be invested, fully invested at all times.  And so it’s important keeping in mind that you’ve got the emotions as well.  You’ve got to find the one that is right for you.  Of course, you can’t be too aggressive, but you can’t be too passive. Everybody has their special place on that spectrum from conservative to aggressive, but you’ve got to do something and that’s just one of my beliefs.

The very last piece of advice I have is to think long term.  You don’t let short-term decisions dictate long-term decisions and plans, et cetera.  If you are 70 years old I hope that you’re going to live many five and ten year periods between now and when you leave this Earth.  If you’re 80 years old, the same thing.  If you’re retiring, if you’re in your 40s and 50s, historically the longer you wait – I’m going to put a chart up there a little bit later in this video.  The longer that you are invested you have a higher probability of having that desired outcome. I’m going to put that up in a chart.  You’ve got to have control of your emotions.  You’ve got to think long term along the way.  And, of course, the news I’ve got to just tell you – I don’t watch news and CNBC and all those things.  It’s just my opinion because do you leave that hour program or whatever it is that you’re doing more informed or emotionally charged one way or the other?  If you’re watching the evening news or during the day 24/7, do you leave charge because they’ve reached your emotions or have they reached your intellect?  And I certainly will say it’s probably the former.  Are they there to inform you or to get you emotional and to elicit some kind of a response.  I find it not helpful whatsoever.

So, one thing that I want to talk about is every once in a while I hear someone say well, the market, the Dow Jones which is an unmanaged stock market index, it’s obviously at a high.  My answer is obviously?  I mean what does that mean?  Yes, it is obviously at a high compared to where it was five years ago.  That is a true statement.  It is not necessarily obviously at a high from where it will be five years from now which is all I care about.  If I wasn’t invested five years ago and I’m only now deciding whether to invest, it doesn’t matter where it was five years ago.  It only matters what it will be in the future.  And so if you believe long term that the market is going to be lower – and long term is multiple years then yes, you should not have investments that are at risk in any way from a volatility point of view.  But if you’re long term the only thing that matters that’s obvious is that where it was in the past, in the future it is unknown.  And I will be very confident in my own thinking – and history has shown this – it is good to have investments for the long term.  I’m now reaching my thirtieth year of meeting with clients.  I got my license in 1991 and now it’s 2021.  When it was 5,000 on the Dow people said it’s obviously a high.  And then it was 10,000.  Well, when it hits 10,000 that’s a real emotional mark.  It’s going to have a hard time going above that.  And then it was 15,000 and then it was 20,000 and then it was 25,000.  Then 30,000.  Now it’s over 30,000 and so why would we say it’s obviously at a high.

So, just one or two more things and I know this is a long video but we have a lot to do and I think it’s important because of the incredible year that we’ve just had.  Up on the screen is the S&P 500 which is an unmanaged stock market index.  You’re going to see and I’ve just put a circle around it, that’s what happened last year.  A huge decline, huge recovery, everybody’s happy at the end of the year.  Nobody was happy nine months ago. It’s just that simple.  It is the reason why we keep in mind many of those strategic beliefs that I have been talking about for the last 11 minutes about keeping your emotions in check, keeping long term, having humility, know your bias, et cetera.

S&P 500 Index at Inflection Points December 31, 2020

The next thing I put up on the screen is corporate profits, up on the right-hand side, all those blue ones.  That’s 2020, 2021, 2022.  They’re all positive.  I think that’s a good thing.

S&P 500 Earnings By Share Corporate Profit

The next thing is unemployment.  You’re going to see that we are now back after that huge spike in the second quarter of this year.  We’re back to the 50 year average for unemployment.  Now is it where it was a year ago?  No, it’s not.  Is it an absolute disaster?  No, it’s not.  Could it be in the next year or two as various stimulus plans go away?  Yes, it could.  It doesn’t mean that we don’t go forward with our particular investment strategy.

Unemployment & Wages

The last thing I want to point out on the screen and I alluded to it earlier in the video which is this chart right there.  Time diversification of volatility of returns.  There’s a bunch of different graphs there.  It’s three bars together, that’s one year.  The next grouping is five years, ten and 20.  What that means is the first of those three bars is 100 percent stock market index.  The next middle one is 100 percent unmanaged bond index and the next is a blend, 50-50 of the two.  When you look at the second setting of the five year rolling there going back 70 years to 1950, we never had a time horizon when a 50-50 stock and bonds has lost money over five years.  Could it in the future?  Absolutely.  Nobody knows the future.  But you know what?  I feel good about that.  I feel that of all the choices available to me, perhaps that’s one that’s worth exploring very deeply.

Range of stock, bond and blended total returns

Mike Brady, Generosity Wealth Management.  A little bit longer video than normal but I had a great time doing it and hopefully you had a good time listening to it.  I’m always here to answer anything.  Thank you for being my friend, my client and you have a wonderful day. Bye-bye now.



Don’t Miss the Forest for the Trees: End of 3rd Quarter Market Update

“Every word matters. Don’t make the simple complicated, make the complicated as simple as it can be. You’re not finished when you can’t think of anything more to add to your document; you’re finished when you can’t think of anything more that you can remove from it.” – Ruth Bader Ginsburg

Don’t miss the forest for the trees. While some say timing is everything, with investing, it’s long-term goals to have in mind. The length of the long-term may vary, however the focus is the same- keep your eyes forward and don’t let it stray towards little ups and downs along the way. It’s often three steps forward and one step backwards, so don’t make long-term decision based on short-term feelings.

Listen as I review the 3rd quarter.


Hi there.  Mike Brady with Generosity Wealth Management, a comprehensive full-service financial services firm headquartered in Boulder Colorado.  And this is my last video that I’m doing from my cabin up in Dubois Wyoming.  Quick little jaunt down to Boulder but I’ve pretty much been here since mid-May.  It has been wonderful.  I’ve had the opportunity to take some time to reflect.  I think I told you that at the beginning of the summer that I believe in deep work meaning deep focus and I’ve made some huge changes this year kind of behind the scenes hopefully you’ll see.  All good, of course, things that I’ve been thinking about.  Also looked at some managers and got rid of a couple of managers and added a couple of managers.  This has for me personally been one of the best summers of my life up here continuing to run the business.  Many of you I’ve had meetings with via Zoom or on the phone.  I’ve continued to add new clients.  I’ve had some of the best projects and most fun projects in a long time and it was nice to have  less hustle and bustle because I’m 30 minutes outside of a 900 person town and so I might go into town once, maybe twice a week but other than that I’m in this beautiful cabin with five acres right next to two million acres of forest land and that affords me the opportunity to really focus and to concentrate and work on kind of big picture things, which I think is very helpful to me and hopefully helpful to you as well.

So, I’m recording this on Friday in the evening after the market has closed on September 25th.  You’re going to get this hopefully, if everything works out okay, right at the end of the quarter September 30th, October 1st give or take.  And so, I’m not exactly sure what the numbers are but I do know that I’m going to put a picture up on the screen, this is the unmanaged stock market index the Dow Jones, you’re going to see that January getting into February it was up and then February and March were absolutely horrible; that’s when the impact of COVID started to be felt.  At that time if you recall and go back to the videos that I made I believe that it was oversold and I’m like wow this is a huge reaction we’ve got to see how things play out.  And then what we saw is April, May, June, July, August, five months of a very quick recovery.  February through March was one of the quickest and deepest declines ever in kind of recent history.  Of course, the recovery has also been one of the quickest and sharpest recoveries.  The month of September wasn’t good for the unmanaged indexes; it’s that simple.  But you know what?  Every month isn’t going to be positive and that’s the way it works.  You take three steps forward two steps back at points and if you only focus on the steps back then you don’t have the steps forward.

DJIA 2020 3rd Quarter Tear to date

There are people that I talk to you every once in a while who are so focused on buying at the right time that they actually never do anything they never really invest because they’re so focused on well I might buy in or invest at the wrong time and then it will go down and that’s a very short-term thinking.  If you’ve been paying close attention there are certain themes that I repeat over and over again in my videos and one of them, of course, is you don’t make long-term decisions based on short-term feelings or short-term information.  In my experience has been if you’re so focused on what’s happening in the short-term you miss the big picture, you know, he trees in the forest if you’re so worried about the various trees you’re going to completely miss the entire forest and then it’s too late.  I don’t know what else to say.

I believe that our emotions are very important to keep in check.  You’ve heard me over the last year or so say that if you’re watching the news, it’s my belief, particularly if you’re watching the news it’s not there to inform you, it’s to incite your emotions.  And so, I say that because over the next one to two months in particular in a political year your emotions might be even more vulnerable than normal.  And so, keep that in mind and protect yourself.  It’s one thing to have the emotion, it’s another to act upon it so it’s better to not have it but if you’re going to have it at least don’t act on it and so that’s one of my big pieces of advice.

I had this kind of ah-ha moment here at the cabin.  We built a deck, we did a foundation for a shed, we do various things and it’s kind of interesting that I have anxiety about those projects.  Are they going to get done right?  Are they going to be done on time, et cetera.?  And mainly my participation in it.  I mean maybe there’s a good reason why I’m not a doctor because sometimes I’m working on a project and something happens and I’m not quite sure how to get myself out of it.  That’s why I say something about a doctor maybe the patient is open and they started bleeding I’m not sure I would stay calm and know what to do.  But then I also look at what I do for a living.  I basically invest and watch over people’s entire life savings, their retirement, their kids and their grandkids and I don’t bat an eye.  I mean right now I’m actually working on some really interesting situations for some existing clients and brand new clients that are really kind of complicated and quite large amount of money but I don’t bat an eye.  I mean it’s completely fun and wow this is a great puzzle that I get to solve.  I’m quite grateful.  And unlike when I’m out working it’s like wow I’m not sure how to get out of this.  So, a lot of it I think it has to do with experience and what you’re comfortable with.  For me I’ve done what I’m doing so many times that I have a certain intuition.

I’m reading a book right now called Thinking, Fast and Slow or thinking slow and fast I can’t quite remember, but they said something that I thought was really good.  They’re all talking about intuition and they say that intuition is really just recognition that you are recognizing something from before, a pattern or whatever so that really boils down to experience.  Intuition is really just recognition even if you don’t know it.  And so, I recognize that in myself I’ve done it so many times I have an intuition about what the answer might be and of course I’ve got to check that because sometimes you have biases as well.  I’m a big believer in knowing what your biases are and being mindful of them, but it’s also important to know that experience means a lot.

So, we’ve just come through a deep downturn earlier in the year, we have just experienced a huge recovery and I think everybody was surprised by how quickly it recovered.  That is not normal.  Let’s remember how we felt this year.  Let’s remember the decisions we made so that we can remember it the next time it happens again.  Remember, the market sometimes goes down so let’s not freak out when it does because we know it’s going to.  Once again, it’s good for us to remember this so that pretty soon we too start to recognize the pattern of wow it goes down, it goes up but the reason why I’m invested is because it’s for the long-term.

One more thing I want to say before I say goodbye is I’m also a huge believer in knowing what your timeframe is.  Absolutely essential.  One week is completely different timeframe than ten years.  Two or three weeks ago the NASDAQ, which is an unmanaged stock market index, was really going down.  And so, my friend said I’m totally getting killed, I’m just losing so much money.  And I couldn’t help but wonder really in one day or two days when it’s just come up tens and tens percentage points in the last for five months you’re going to decide your happiness for the day based on one day or even one week?  It’s good to know and keep in mind the long-term picture.  Absolutely essential.

Mike Brady, Generosity Wealth Management 303-747-6455.  Quarter end statements will be going out very soon.  I think you’ll be very pleased.  We have one more quarter in the year and as always I always am very optimistic and really looking forward to hopefully a good end to the year.  If not it’s okay we don’t make decisions based on one quarter or even one year.  Have a great, great day, great week.  Bye-bye.

2020 Third Quarter Update: Confident or Unsure?

“The greatest enemy of knowledge is not ignorance; it is the illusion of knowledge.” – Daniel J. Boorstin

No one could have predicted the rollercoaster we’ve experienced this year. From scary drops to tremendous rebounds, we’re reminded that diversifying your portfolio is a much sounder strategy than continually preparing for the worst case scenario.

Listen as we talk confidence, the past 3 quarters and finishing the year.


Hi there.  Mike Brady with Generosity Wealth Management, a comprehensive, full-service financial services firm headquartered in Boulder, Colorado.  With today’s technology you can never tell when someone is standing in front of a green screen with a background and this is actually live.  This is real.  The reason why I chose this spot, I’m here in northern Wyoming at my cabin which you know that I do even though I’m having Zoom meetings with existing clients and potential clients all the time.  I’m so proud of this deck.  Felicia, my assistant, who so many of you have worked with, she and her husband came out for a week vacation and I put them to work.  Her husband builds decks and fences for a living and this is really nice.  You can see a decking board and then half a decking board.  The pattern is really beautiful and I love it.  You also see in the background it’s pretty gray and hazy.  We are getting unbelievable smoke from California fires.  I know in the front range you’re getting them from western Colorado and maybe from California as well but we are getting it big time from California and it’s all hazy.  Otherwise, you’d be able to see some beautiful mountains there in the background.

Unsolicited deck pick

Today I want to talk about where we are currently year-to-date, but I also want to talk about what lessons we can take from it.  You’ve heard me in the past talk about emotions and the things that we can control, the things we can’t control, et cetera.  And now that we’ve just come through a pretty difficult time, now is the time to reinforce and remember how we felt before, how we felt during and what we can take going forward.

First, a little bit of an update on where we are year-to-date.  Stocks are up and bonds are up.  I mean the unmanaged stock market indexes had a very hard time in February and March and I’m being kind when I say that.  Every single day it seemed like it was newsworthy, a huge decline.  Everybody in the world it seemed was freaking out and it felt like at the time when you look at the news that they’re projected that this is an apocalypse that will last forever and ever.  If you look back at my videos from March which I was putting out practically every other day and definitely once a week, I said that I felt that it was an overreaction, it was an oversold situation, but I had humility.  I didn’t know.  I said let’s stay the course.  Let’s remember what it is that we can control which is our portfolio, our diversification and let’s control our emotions.  Nobody, including me, saw the huge rebound that we have seen in April, in May, in June, July and now in August.  I’m recording this on Sunday morning, August 23, and I’m amazed at what has happened over the last four or five months to wipe away the declines that we saw in the unmanaged stock market indexes in February and in March.

The bonds are also up for the year.  Bonds many times do opposite of what stocks do and they continued to do really well during the big decline.  There was a flee to bonds in many situations, but stocks now have recovered and so stocks and bonds are both highly positive for the year, both of them being unmanaged indexes.

So what can we take from this?  You’ve already heard me talk about our emotions, the importance of that.  I was never in the military, but what I’ve read is that it is normal for a soldier going into battle to feel fear.  That’s a human emotion.  As a matter of fact, we don’t want soldiers who have no fear because they might do very unwise things.  The true successful soldier is one who acknowledges that they have fear, but they move through it.  They know how to control that particular fear.

Seth Godin is someone who I think very highly of.  You’ve heard me talk about him in the past.  One of the reasons why I like him is he articulates in a very nice way what I’m feeling and thinking but maybe I can’t articulate it as nicely as he does and maybe that’s why he’s a world famous author and blogger and I’m not.  He wrote something that I want to read here word for word.  It’s the opposite of confidence.  The opposite of confidence.  “It’s not anxiety.  It’s not panic.  The opposite of confident is not confident, it’s unsure.  Being unsure can be healthy.  It can help us focus on how we can make our work more likely to become the contribution we seek, but anxiety and panic have nothing to do with an informed understanding of how the world is unfolding.”

King of Marketing, Seth Godin

That, of course, leads me to the serenity prayer.  God grant me the serenity
to accept the things I cannot change; courage to change the things I can;
and wisdom to know the difference.  The reason why I bring this up is let’s focus on the things in the world that we can control. We control the portfolio that we create.  We control how diversified we are.  We don’t control certain things that we get so upset about and some people, I would say the unsuccessful investors, are those that allow their emotions to control themselves or stay up at night.

Right now we’re almost to September.  September 1st is just a week away and some investors have the same portfolio meaning that they have the same – <<camera falls down> I’m going to move that back up, just move that down.  That’s what happens when you have a windy day out here.  <<camera adjusted back up>> We might be at the same situation, but some people had a pleasant ride and some worried the entire time.  That worry was not helpful.  Worry is fear about the future 95 percent, 99 percent of which never occurs.  So let’s not worry.  Let’s stick to our game and to the time true of diversification,  having a portfolio, having the risk level that works for you that allows you to stick with the game because that’s what’s going to, in my opinion, allow you to be successful.

This is the way I like to think of it.  We’re all at some point leaving our house and going to the grocery store.  We’re all going to get there and 99.99 percent of us are going to get there without an accident.  But some people might be so fearful of an accident that might happen.  The probability is greater than zero.  They’re looking at the worst case scenario.  They entirely situate their life around the worst case scenario, obsess over the worst case scenario and they buy a tank.  They are now more secure going from their house to the Safeway with that tank.  But, you know what?  They can’t complain if it’s very expensive, it takes them a long time to get there and the gas eats up all the gain.  They’re going to be secure, but it’s going to take them a long time to get there.  They have positioned themselves for that very, very unlikely situation that they’re going to have a catastrophic accident.

Others might be quite unwise, very foolish.  They’re going to drive a convertible 100 miles an hour from their house to the grocery store.  You know what?  The truth is probably something in between.  We all have seatbelts, we all have airbags.  You’ve got to buy the car that you feel comfortable with, but you know what?  Buying the car for the unlikely and positioning and, of course, the analogy is as we do our portfolio.  Do we make a portfolio for only the worst case scenarios when historically if you have a diversified portfolio it doesn’t mean that you’re not going to have volatility.  That does not mean that.  But historically it has come back over time.  If you position your entire portfolio around the worst case scenarios I just don’t think that’s a wise way to do it.  If you allow your emotions to control your actions, short-term feelings to dictate your long-term vision, your long-term plan, I don’t think that’s very wise.

The reason why you’re my client is because I hit these points over and over again and when you might find yourself slipping it’s my job to remind you of what I’ve just talked about here right now.  Warren Buffett always says to be “greedy when others are fearful and fearful when others are greedy.”  Let’s remember that.  I hit these points over and over again because when things are going well we have to remember yes, sometimes things go down, but we position ourselves, we create a fortress, we create the portfolio with the risk level so that you don’t have to make it up on the go.  Other people are reading the news, watching the news and the purpose of that news and that newscaster is not always, in my opinion, to provide you with news.  It’s to elicit emotion from you.  And if that information doesn’t allow you to change that situation anyway, it’s useless information as far as I’m concerned.  Use information.  Use news that you can change.  Use information that is helpful to you to make better decisions, not to elicit some emotional reaction from you.

Mike Brady, Generosity Wealth Management, 303-747-6455, call me anytime.  Email me at any time, mike@generositywealth.com.  I’d love to talk with you more about this.  I’m probably going to stay up here.  Frankly, all the clients, all of you are expecting Zoom meetings so I may as well just do them right here from my cabin.  I’m going to put some more pictures of my lovely deck in the newsletter so be sure to check those out as well.  Mike Brady, 303-747-6455.  Have a wonderful week, a wonderful Labor Day.  We’ll talk to you soon.  Bye bye.

2020 Second Quarter Market Update

“In politics, stupidity is not a handicap.” Napoleon Bonaparte

We have a complex world, especially with the current tumultuous ripples of the pandemic. As we seek to make sense of the ups and downs we tend to assume a binary stance- it must be good or bad. But really it is a complicated formula with lots of different variables within the economy and of course how that relates to particular investments. We’ve gone from devastating declines to roaring rebounds – but why?

Listen for a full review of the second quarter.



Hi there.  Mike Brady with Generosity Wealth Management; a comprehensive full-service financial services firm headquartered right here in the Boulder Colorado.  Although you can tell by the background that I am still at the cabin in Wyoming.  If you’re going to be stuck inside may as well be stuck inside at 8500 feet with beautiful wilderness all around you while you’re working.  I’m recording this on June 30.  It was three months ago that I stood before you like I am right now to give a first quarter update and at that time February/March had been absolutely devastating, the biggest decline in a very long time, definitely since 2008 but also the worst kind of quarter because it was a very rapid decline very sharply and very rapid.

Who would’ve known, and this is where humility comes into it, that the very next quarter it would be roaring back and one of the best quarters in decades.  It has been remarkable.  Now what many people are trying to answer is why is that?  This is probably my 12th or 13th video so far this year and there’s a theme that’s in these videos, which is we’re many times looking for simple answers to complex problems.  I believe that it’s just sort of the way we’re wired, the way that we kind of evolutionarily, you know, it’s fight or flight that’s very simple.  You don’t sit there and say well I wonder what the intent is of that thing who is chasing me.  No, you have to make a couple of choices very quickly.  Today we have a complex world and a lot of times we’re looking for well is this good or is this bad, it’s very binary in that regard. when really it is a complicated formula with lots of different variables into the economy and of course how that relates into particular investments.

I’m going to put up on the screen a chart; that is what the unmanaged stock market index has done for the last quarter.  And then I’m going to put another chart on; you can see the context of the last six months the year to date and then the last 12 months.

It’s important to remember how our time horizon and what’s happening today are interrelated.  If we make long-term decisions based on short-term trends, short-term emotions that is a recipe for disaster.  You’ve heard this from me in other videos, you’re hearing that from me today.  So, it’s important for us to really let that sink in and ask ourselves how are we making decisions?  Are we making things because of a story that we’re telling ourselves about what’s happening maybe to justify the feeling that we’re having or are we having a long-term more logical approach to it, which I believe is the better approach.  I’m going to put up on the screen a chart.  You’ve seen this before because it is such an important chart I think that it bears repeating.

The columns on the left-hand side going back to 1950, that’s 70 years, 70 years, that first column is 100 percent stock market index, the S&P 500 unmanaged, the next one is an unmanaged bond index, and then a blend of 50 percent of these two.  You can see that they have high highs and low lows, that’s in one year looking back 70 years.  When we look at rolling five year time frames since 1950 I want to highlight the third bar there, which is there has never actually been with a 50 percent stock and bond mix a year going back 70 years where you haven’t at least broke even or may just a little bit on average per year.

The future could be different.  Absolutely.  Anyone who says that they know the future completely 100 percent is fooling you and you shouldn’t believe them.  However, for me if I’m investing long-term I think that it makes a lot of sense to be in the market and be diversified.  It is also a wonderful time for us to have sort of, you know, in a Super Bowl or in a football game you have a half time and you take a break, you go get a hotdog, a hamburger and maybe a Coke.  At the time you can reflect on the first half of the game and then talk about the second half.  This might be a wonderful opportunity to make sure some of the area, other areas of your life are together: your retirement analysis, if you’re my client I’ve done one for you.  If you feel like now is the time to talk about it again, you feel uncomfortable, you’re wondering what it might look like might need a refresher, give me a call and we can go over that.  Life insurance because the loss of a spouse or significant other can be devastating, no matter what great planning you’ve done in other areas that loss of income or that lose can be just absolutely devastating.  Loss of your ability work.   There’s many things that we can look at.  Estate planning, when’s the last time you‘ve done your estate planning?  If it was gosh I don’t remember maybe ten years, you’ve got a problem in my opinion.  You’ve got to look and keep those things updated.  Now might be a wonderful time to make sure those things are in order as well.

As we look towards the third quarter I think it’s going to be one of the most not memorable, the most important quarters in a very long time.  We’ve just had a huge shock to the system from an economic point of view.  In June we had some strong recovery numbers but the question is will that continue?  Will the third-quarter be a very sharp reversal of the slowdown that we saw in April and May?  There’s a lot of economists out there that believe that the third-quarter will be incredible.  Of course, there are many who believes it will not.  So, you’ve got to listen to both sides and make up the choice and the decision for yourself.  However, I think that what this next quarter kind of how it unfolds may be very important to how the short-term future when we’re looking out six months and 12 months unfolds.  The first quarter in my opinion was a huge overreaction, a huge oversold, very emotional to something that was unknown.  It was that fog of war that they talk about.  I think in April and May there was a realization that that might have happened, maybe things weren’t as we’re looking to the future not quite as bad as what it might have seemed like and February and March.  But the real test I think is going to be this next quarter so I’m going to be standing in front of the camera here talking with you again three months from now and, of course, I’ll have videos along the way as well whenever something important happens or I’m just giving some words of advice that I want to share with you.  This is what you should expect from your financial advisor if we’re on the same team.  I’ve used the analogy of a fitness coach, I’m your financial coach, it’s the same type of thing you’ve got to have good communication.  But I’m going to be here three months from now we’re going to see what this next quarter looks like.  I hope that it’s good because I think that that will be really important for the long-term.  But that being said, I think that long-term diversification, having the right time horizon with the right investments for that time horizon is very, very important, probably the most important thing.  Michael Brady, Generosity Wealth Management; 303-747-6455.  You have a wonderful day, wonderful weekend and, of course, let’s all hope for a wonderful quarter.  Bye-bye now.

Updates & Principles

“A cynic is not merely one who reads bitter lessons from the past; he is one who is prematurely disappointed in the future.”-Sydney Harris

My mission is to live a generous rewarding and enriched life and to help others do the same.  I apply this to so many areas of my life: personal, business and philanthropic. Today I want to focus a little bit more on the financial aspects of this mission and the principles I use to guide my own investments and those of my clients. Even in times of uncertainty, my philosophies remain steadfast.

Watch for more on recent events and how strong principles can help you weather any storm.



Hi there. Mike Brady with Generosity Wealth Management, a comprehensive full-service financial services firm headquartered right here in Boulder Colorado. Although you can see from my backdrop I am actually up at my cabin in Dubois Wyoming where I spend every summer, I continue to work here, I have wonderful views, as a matter of fact I was going to record this video outside of our rustic cabin but it was too sunny and I kept squinting. So, I’m going to put up on the screen a couple of photos that I’ve taken this morning so you can get an idea of what I look at when I’m looking outside of the windows of my office up here. It’s wonderful. I hope that you also have an opportunity to get away. Frankly, I was stay at home anyway in Boulder so we may as well do the stay at home here with quick jonts down to Boulder as needed.

Generosity Wealth Management Dubois Wyoming Retreat

Today I want to talk about, of course, the current situation and put that, of course, into context, but I also want to talk about some key principles. Because one of the books that I have really liked over the years was the Millionaire Next Door. And what he talked about in that book is there are certain key, how can I say, attitudes and behaviors of millionaires that we can all learn from. And I’m going to take that and I’m going to take it also kind of on the flipside of some key things that I’ve seen that we should avoid so I’m going to talk about some key principles. I sound like a broken record many times, particularly if you listen to my videos a lot because these key principles sneak into every single one of my videos it feels like because they are foundational and a basis for long-term, in my opinion, getting to where you want to be with your financial goals.

Now, so far this year we’ve had an unbelievably good couple of months. I’m recording this on Thursday I think it’s the 11th or the 12th, I think that’s the 11th, and nobody saw this happening so quickly two months ago. And one of the key principles that I have is humility. It’s amazing to me that when people talk about the future or they hear someone talking about the future they talk with such confidence that they almost believe that it’s going to happen and then when it doesn’t they somehow forget and then the next person around gives them such confidence about what is the future and that’s not very helpful so I’m going to come back to this key principle.

Up on the screen I have shown over the last 25 years the ups and downs in the S&P 500, which is an unmanaged Stock market index.

Now, while we have gone through a couple of really difficult times like 2008 and of this year, which was very sharp, very painful in a very short amount of time, I would argue that someone who has been around for 30 years doing this professionally working with clients, et cetera, is 2000, 2001 and 2002 were some of the most difficult years, not because they were the lowest but because it was one year followed by another by another. Duration and losing the faith after a while is what really dooms many people in my experience. Those people who lost the faith and then went in to go into money market or CDs around 2002/2003 did not see the nice upswings that happen over the next ten or 15 years. Up on the screen you’re going to see an arrow next to where we are now.

I think nobody foresaw the sharp upswing in the stock market over the last two, two and a half months or so. I’m recording this on Thursday and so yes today is a down day, yes it’s going to get lots of good news coverage and very newsworthy. There’s an old adage that the stock market takes the stairs up and the elevator down and that just means that it’s kind of 200, 300 points et cetera, et cetera, and then it gives it up very quickly. One of my key principles, which I’m going to get to in a minute, is being overly optimistic or being overly pessimistic. If only you look at the negatives you’re doing yourself a disservice and I think that you’re going to be unhappy along this path.

Let’s go to another chart.

This is a chart that shows since the last major financial crisis in 2008. And there were ten major pullbacks along that, ten major pull backs of which the worst one was this last March. It is important for us to remember that it is a long-term strategy, you don’t take short-term events and extrapolate them into long-term decisions if your goals are long-term. Now, one thing that people periodically say to me is hey I’m 70 years old, maybe I’m 75 years old I’m always looking short-term. I remember my grandmother she was in her 80s and she was very feisty and she says Mike, I’m not buying green bananas, which I always thought was very funny and I still do. You still have a long time horizon I would argue because you don’t want to outlive your money and unless you know you’re going to die in the next six to 12 months let’s all hope that you’re living five, ten, 20 plus years even if you are of course retired and living off your money. Most people that I meet with don’t want to outlive their money and they want to pass on the most that they can to the charities they care about or their heirs. And so, we can still invest for a multiple year time horizon therefore we should not allow our emotions to be controlled on a daily, weekly or even a monthly basis so it just is not helpful to you and it’s going to make you very unhappy.

On the screen though I am showing where we are right now.

Nobody saw two/three months ago what we have now and so now I’m going to start pivoting over to some key principles, which is the first one of humility. Anyone who talks absolutely about the future is crazy or a fool and I don’t want you to be that person if you’re listening to them. We can say hey I think this is what’s gonna happen, I want to increase my probability of the desired outcome that I have in the future so I do everything I can in order to situate in a certain way, but there’s no guarantees absolutely about the future in any aspect of our lives and finances are no different. So, humility is the first one. The second is having to understand everything. I don’t know about you but every day there’s always a reason why the market goes up or down and it vasawaits [ph] every day, the market is up it’s renewed optimism, the next day its down it’s real new pessimism about deaths, I mean all in 24 hours? That’s crazy. The mind is very logical and patternmaking and we look up at the clouds when we’re on a wonderful pasture and we see patterns. Our mind put together that that cloud is absolutely a sheep or a car or whatever it might be when of course our logical brains tell us that’s not the case. And so, many times our brain also starts to control the emotions and things that are going up we believe will always go up or things that are going down will always go down even if we look at the history of the unmanaged stock market indexes, unmanaged bond indexes that are diversified and that’s never always been the case. As a matter of fact, I’m going to put a chart up there, you’ve seen this before from me; a 50-50, and I’m circling it right now, a 50-50 stock and bond going back to 1950 has a 100 percent break even over five years. Yes a loss in one year, yes a loss in two or three years, but over five years a 50 percent of the S&P 500 and 50 percent of a bond index, which you should always be diversified and it was probably a bumpy ride along the way, is a 100 percent breakeven, although the future could be different. I have that humility as well that no one knows the future, but you know what, that’s something that I’m very interested in and when you find yourself being overly fearful or overly pessimistic it’s good to remember that and that’s why we have diversified portfolios.

The third thing is what is your conviction? That is a key principle. Are you invested for the long-term or the short-term? And it’s okay to be invested for the short-term, you just got to know which one it is. And if you are invested for the long-term, and in my mind I think of long-term of being two, three, five, ten years. If you are invested for the long-term then you’ve got to believe that the market is going to be higher over that long-term timeframe or otherwise why do you have any investments? I mean that makes no sense. Why would you invest in something if you truly believe that in a longer timeframe it’s going to be negative, you should just put that in your mattress or a safe or something some safety deposit box. So, what is your convection and stick to it; very important. Number four is being overly optimistic overly pessimistic. Bull markets many times turn into bubbles and add are people who are being overly optimistic. On the flipside there are overly pessimistic individuals as well and you take three steps forward two steps back, all they talk about are the two steps back. That’s not the full picture, that’s not the context and if we’re going to use logic and we’re going to use some rational thinking in approaching the problems that you have then you’ve got to be aware of the two, find something in between. That’s why I try to not be overly emotional in these videos. Every once in a while someone will come to me and say gosh this big event just happened one way or the other and you were so even keeled. And the answer is well yeah. One, I’ve seen pretty much, it feels like I’ve seen everything of the last 30 years so it’s hard to surprise me anymore. But even then I’m approaching things from a rational point of view in order to get to that end result. I see variables in an equation and I am focused on what is the solution that we want and I have yet to find that being emotional about it helps me with any of those variables and getting to the solution.

And then kind of the last thing is overly complicated and looking for quick and easy solutions. What do I mean by that? Have you ever found someone who wants to lose weight or get in shape and they have this really complicated system, they’re going from one diet to the next diet to the third diet and they just won’t stick with it or they’re looking for some get thin quick scheme, whether it’s this pill or that liposuction or something that’s ThighMaster whatever it might be they over complicate it, burn more calories than what you take in. Exercise X number of minutes, you know, 45 minutes every day or three times a week, do something that works for you but also don’t over complicate it. I had a situation where someone was referred to me, and by the way you should always refer people to me even if we’re not right for each other long-term, that’s for us to determine, but I always try to give them complementary advice and point them in the right direction. And this was actually someone who had been referred to me a long time ago and it’s very painful because they just can’t seem to make good decisions. Like the millionaire next-door they’re the opposite. There is something that this person brings that is really holding them back and I try to point that out to them. I’m sure that we all know someone who has just been unlucky in love and maybe they’re your best friend from when you were five years old and you look back at their life and like yeah he or she always seems to pick the wrong guy or gal and they just can’t quite, you know, there’s a behavior, there’s an attitude that they bring that’s obvious to you that might not be obvious to them. And what I find is many times people who are later on in life, they have certain habits or attitudes that are holding them back and so one of the purposes of my videos here is to talk about what is that bias? What is that attitude and behavior that might be holding us back and how does that apply in a logical format? Being emotional, having biases, all that absolutely common to being a human being and I would want it no other way, but it doesn’t mean it’s got to rule our lives and not everyone can do that.

There’s not necessarily easy answers, I mean there are different types of people. Some people have a wonderful experience at the grocery store, they get up, they pay for their food, they get in line and then they leave and they say wow that was really fun. Other people go and get their groceries and they’re obsessing of which line to get into, they’re swapping lines, they’re going from this one to that one to this one. I have to tell you I watch people sometimes at the TSA getting through the conveyor belt deal and some people are swapping from line to line to try to find the absolute best and others are just totally chill just waiting their turn and going right through. Everybody gets to the plane at the same time. I mean at the end of the day one person had a good experience, one person had a stressful experience. They might have gotten to the same spot two different experiences.

Generosity Wealth Management Principles

That’s it. That’s all I’ve got for today. I’m going to have another video coming out to you by the end of the month all ready for July 1 the end of the quarter. Between now and the end of the quarter if something huge happens of course I’ll get one out even quicker to you. Volatility has not gone away even if it’s gone to bed for a little while, let’s keep our eye on the big picture. Just because it’s giving up some in one day or maybe two days or a week I don’t know what it’s going to do at this point, it’s a good thing that I don’t need the money tomorrow or you don’t need the money tomorrow or next week because you would have no money in the market. That’s why we have to keep in mind the context of what we’re doing. Michael Brady, 303-747-6455. Have a wonderful, wonderful day. See you. Bye-bye.

Math and Humility

“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” – Ernest Hemingway

The market took a deep dive as the Coronavirus pandemic broke loose, but contrary to what many pundits believe would happen, the market is rebounding quite well so far. We have regained a significant amount of what was given up at that time. Let’s take a look at the math, it’s important to know how it works. And we’ll also talk humility – the future; it is inherently unknowable.


Hi there. Mike Brady with Generosity Wealth Management, a comprehensive, full service financial services firm headquartered right here in Boulder, Colorado.

It’s about five or six weeks into our stay at home order. Hopefully you’re doing well. I like short hair and my hair is feeling long to me, but other than that I’m doing well and I certainly hope that you’re doing well as well. I am going to make this a relatively short video I just want to talk about where things are currently, what’s kind of happened in the last couple weeks since I last spoke with you. A little bit of humility speaking about the importance of humility and then we’ll kind of wrap things up for today.

So, up on the screen is a chart as of today and what you’re going to see is in the last month, you know, four/five weeks ago we were at our lowest for the year and at that time there were lots of pundits who were saying that the market is going to continue to go down and down and down and, of course, they were wrong. We’ve regained very quickly a significant amount of what was given up at that time. I think I mentioned if you go back to my video at the end of March and the beginning of April I talked about that when things are the most uncomfortable is when some of the most successful investors invest; Warren Buffett says to be greedy when others are fearful. And at the end of March was a very fearful time and really, at least so far from what we’re seeing in that on my stock market index, a great time for you to have bought in.

DJIA April 20, 2020

From a math point of view it is important to know kind of how the math works. If you have $100 and you lose 50 percent, that’s $50 left. In order to get back to you even you have to make 100 percent, $50 on the $50, just to break even. If you lose 20 percent, in order to break even to go back up you have to make a 25 percent. This is important because we went down almost 40 percent. It’s going to take quite a number of percentages if you’re just adding the percentages per day in order to break even. We are definitely on the right track. The momentum is there. There’s been an awful lot of reasons given in the last month for the market to recover how nicely how it has done. None of them are exactly right and none of them are exactly wrong so this really leads into my conversation around humility.

I watch the news all day long, I mean on the screen, I don’t watch it on a TV I watch it and I read it. And the headlines and the reasons I see them change all day long every single day and because of that I’m cynical that anyone has exactly the answer. If we went back I could sit here and show you day by day how the market is up because of renewed optimism and then the next day the market might go down a little bit and it’s like renewed pessimism. I mean really all in the same day? Within a day or two? That’s ridiculous. I think that it is more important to stick to the plan, have that long-term and get out of the way than it is to have an exact reason or an exact answer for why something went one way or the other. When you’re investing for a week or a month or even a quarter you’ve got to be right. You’ve got to call that thing correctly. When you’re investing for multiple years, five years, ten years, 20 you don’t have to be quite as accurate in the short-term. Of course it’s better to have good luck and get it at the bottom and the low and that adds to it, don’t get me wrong. But it’s important to be invested in it as well, particularly when you look back from two, three, five, 20 years from now.

So, having humility is very important. If I was to say exactly what the weather is going to be like next week you would say “Mike you might have a good idea but you’re crazy.” Why? Because I’ve seen weathermen be wrong so many times before. Well, I’m just telling you that people who tell you exactly what’s going to happen are also like the weathermen who profess to know with great confidence exactly what the future holds. I’m just saying I don’t buy into that and hopefully you never hear that from me as well. I always hedge my language by saying this is what I believe, here’s what I think and that kind, but it’s about the future; it is inherently unknowable.

Mike Brady, Generosity Wealth Management, www.Generositywealth.com. Have any questions any concerns give me a call.

I will send another video out in a week or two or if something really big happens. Always stay tuned because if something momentous happens I want to be there in order to explain it and kind of get through all of the noise of the TV and all that chaos to say this is what it really means and this is why it may or may not be important. Thank you. You have a wonderful day. Bye bye.