It’s been another tumultuous week with what looked like a healthcare crisis, rapidly bleeding into what could be a serious financial crisis. From our last video not even 7 days ago, things within our economy have come to a screeching halt and rebounding from this could present another challenge in itself. This is what you’ll see me discuss in the latest video in this growing saga:
Hi there. Mike Brady with Generosity Wealth Management, a comprehensive, full service financial services firm headquartered right here in Boulder, Colorado.
It’s been another tumultuous week. Remember how two or three weeks ago I said that we’d been lulled over the last three to four years with low volatility. We became accustomed to that thinking that was the normal. Frankly, I would love some of those days. Every day is an adventure and a bad adventure at that. I also said in my last video that this is a healthcare crisis and not a financial crisis and I’m here to say that it’s definitely looking more like the healthcare crisis over time could turn into that financial crisis. That’s absolutely disturbing to me just the way that we have stopped. Even from my last video not seven days ago our economy is screeching to a halt. And so to just restart something like that at all levels is going to be very difficult so I want to talk about that here today.
I want to put up on the screen a chart. This is the Dow Jones Industrial Average which is an unmanaged stock market index. You’re going to see that it’s about 30 percent down. I’m going to put another chart up on the screen and this right here is multiple years, multiple decades of the S&P 500. What you’re going to see is we’ve given up a couple of years’ worth of gain that we’ve worked very hard for, very frustratingly, very hard for had been given up in a relatively short amount of time. One thing that you’ll see in that particular chart there are times where it appears like it’s going to continue going up forever or going down forever and neither of them are the truth. It is not a linear equation. Things that go up don’t go up forever. Things that go down don’t go down forever either. That’s why I stress continually the multiple year.
I’m going to put up on the screen a chart that you’ve seen from me before. What you’re going to see on the first three bars there are one year since 1950. That’s 70 years’ worth of an unmanaged stock market index, an unmanaged bond index and then a combination of the two. The first year you can see huge ups and huge downs as we go out 5 years, 10, years, 20 years the lows get closer to the breakeven point. The highs come down as well. Those are rolling like a rolling five year, like the very best and the very worst five years and that range in between.
What you’re gong to see is a diversified portfolio has actually never lost money although it could in the future. That’s one of the reasons why we have a diversified portfolio that although it does not guarantee against market declines I believe that a diversified portfolio makes sense because it might increase our probability of what you’re seeing right there which is what has happened over the last 70 years.
Five, 10, 20, if you were in your 60s or 70s I’m hoping that you’re going to live, statistically speaking you’re going to live more than five years, hopefully even more than ten years and even into the 15 and the 20. It’s not just you but it’s also your significant other, your spouse or whoever that significant other might be. We think that we might have a short time horizon and yes, as we get older our life expectancy naturally through the natural process of aging and mortality does get shorter, but it is still not like hey, my timeframe is next year. If that’s the case you should never have any money in the markets and you’ve heard that from me time and time again and every time you ever talked on the phone about additional money.
I’m going to put another chart up on the screen. What you’re going to see is 2008. You’re going to see there was a 50 percent decline give or take a few percent back in 2008. So we are not at that. Also, after that decline to all the way back up to breakeven was about five years for the S&P 500. It was about two or three years if you had a diversified portfolio. Of course you didn’t go down like the 50 percent either. So it was a lower down and a quicker back up. That’s one of the reasons why you have a diversified portfolio.
You’ve heard me talk for many years about the completely logical and rational response to 2008 that are big companies. And when I say big companies, big public companies. They kept lots of cash on their books. They would from some people’s point of view hoard it. Why don’t they distribute it to us. As an example when Apple gets over $100 billion or other companies have billions and billions of dollars in cash. They were fortifying themselves from an absolutely horrible situation so that they did not get into a cash crunch like they did 12 years ago.
A week ago I mentioned at the beginning of this video that it was a financial crisis 12 years ago where the banks were in trouble. Today they’re coming into to a month ago in good financial situation. Big companies are still in a good financial situation. It’s only been a relatively short amount of time. But that doesn’t mean that it’s going to stay that way. The people that they sell their goods and services to might be okay for the first week or two. It’s almost like a vacation. This goes on for a month, two through the rest of the year which there are ranges all over the place about how long this could last. That’s a problem and it’s a problem long term. Nobody, me included, knows exactly what the impact of that will be.
What do we do here as investors? What do we do? Many of the managers have increased their cash over the number of weeks. However, I would say almost everybody has been negatively impacted by this and so whether it’s in your personal life, in your financial life, in so many different areas this has not been a good time whatsoever.
One of the things that you’ve heard me say before is it’s easy to be – I use a friendship as a great example. It’s easy when things are going well and easy to remain friends. A true friend and you know the depth of their conviction, the depth of their values as a person and their principles is when things are rocky who’s standing right there next to you.
I used an analogy about week and a half ago about an airplane ride. You’re going from Point A to Point B and you’re inside that plane. Now, of course, if it was a really short ride you shouldn’t be in the plan to begin with. That’s why you drive the car or you walk or you take a bicycle. But you’re in a plane and you’re going from Point A to Point B and it’s very rare in today’s world for there to be huge turbulence, not like there was 50 years ago in different types of planes. Technology allows us to have lower turbulence, but it sometimes happens. You don’t get out of the plane. You stay in the plane until you land at Point B. And so the way that we approach our particular financial goals is no different. We’re going from Point A to Point B. We have unexpected, unpleasant turbulence that we wish that we did not have. And if we could wish it away we would. But it’s there, nonetheless. What do we do? Do we scream? Do we shout? No, we sit right there, wait for it to get over so that we can get to our Point B.
Mike Brady, Generosity Wealth Management, 303-747-6455. I’ll check in with you again later this week or frankly, more often if something big is happening I’m here to communicate with you. Thank you. Bye bye.
“Bear Markets are periods when stocks are transferred from weak to strong hands, as does wealth when recoveries occur.” – Buckingham Strategic Partners
I promised in my last video (March 12th) to have a longer discussion about the current economic and financial situation. You’ve got it right here! And with graphs!
Hi clients and friends. Mike Brady here with Generosity Wealth Management, a comprehensive full service financial services firm headquartered right here in Boulder, Colorado. As you can see from the backdrop I am back in my office here in Boulder. The last two videos I did from Orlando. I’m going to make today’s video a little bit longer. When I’m traveling it doesn’t matter with today’s technology except when you want to do a newsletter with big video files and transfer, et cetera, and that gets a little irritating I assure you.
Lots going on in the world and in the markets and I want to talk about some of the implications. Let’s first put up on the screen a graph. On the left hand side that is the unmanaged stock market index, the Dow Jones Industrial average. The left access is percentage rate of return. And what you’ll see is for the first one-and-a-half months of this year it was positive, and then it took a huge sharp downward over the last three weeks or so. It is rebounded slightly because of the nice Friday that we had. However, it is definitely near the bear territory. It dipped into it which means a negative 20 percent decline. So it dipped below and then it’s kind of popped back up, but it is right there at that cusp of what we technically call the bear. Not good at all.
One thing that is important, we always talk about from a military engagement point of view that everyone’s always fighting the last war. Every general is fighting the last war or it seems since the Vietnam War everything is always compared to Vietnam. Well, we now seem to compare everything to the 1987 decline and the 2008 decline. I’m going to talk here in a few minutes about why it’s not 2008.
Before we move on though I want to talk a little bit about bonds. Bonds have done well. I’m going to put another chart up on the screen. What you will see is they have done what they’re supposed to do which is go up when stocks go down. The correlation meaning it’s very highly correlated if they do the same thing as the stock market. It is negatively correlated if it does the opposite. And what you’ll see is a portfolio of stocks and bonds. The stocks have gone down but the bonds have gone up. And whether or not a particular portfolio has gone up or down is how much of the mix you have. I’ve said in previous videos that over the long term it’s my belief that you’ll be happier over ten years the more aggressive that you are, but that doesn’t mean on a short-term basis whether that’s months. In this case it’s been weeks, even days frankly, but on a year-by-year basis you’ll be unhappy because the volatility increases.
I’m going to put one more chart up there. The third chart is over the last 20-30 years.It is since 1980 and what you’ll see is the bottom numbers or the red numbers, those are the intra-year declines, the declines that happen within the year. And then you’ll see that the gray number,I’m not sure how it’s going to show up on the screen, is what it is the year and the data. And, of course we’re just starting off the year not even three months in. One thing that’s important to note is 1987 which people talk about all the time that actually was a positive year. Most people think that it was some huge negative year for the stock market when it actually had made lots of money through the first two-and-a-half quarters and then it gave it all up in a spectacular fashion over a day or two. But it actually ended the year positive.
So far this year we’ve had a very dramatic three weeks. That does not, of course, mean that the entire year is for naught. This is a little bit different than 2008 for the simple fact that we started the year in a very high economic and positive nature. Unemployment – I’m going to put a graph up on the screen and what you will see is that unemployment was at an all time low and we had incredible labor force participation with wages rising in the last year or so. Just absolutely wonderful.
This is not a financial crisis. This is a healthcare crisis. Healthcare crises we’ve had before. This is a particularly bad one. We have survived the SARS. We’ve survived some of the other, the Ebola scare and other things in the last 10 to 20 years. But we haven’t seen anything like this and particularly the concern and the scare. I’m not an expert on how this crisis will play out as it relates from a healthcare point of view. There’s enough experts on Facebook that you can watch who are all your friends who used to be experts in something else. Now they’re experts in this. I admit that I don’t know and I know that there are many scientists who admit that they don’t know as well. They have models which are projections which might have some degree of probability, but this is a healthcare crisis, not a financial crisis.
Our banks were not in a strong position back in 2007 and 2008. Now they are in a very good position on strong holding. I’m going to put a chart up on the screen.What you’re going to see is interest rates. The Fed and interest rates are very high. Sorry, are very low. And the projected, that one higher number was what they projected that they would raise interest rates. Now it has been adjusted so that we will have some interest rate declines which is a good thing. That pumps money into the economy. This is a good thing. It will help governments, consumers and corporations refinance debt with lower debt burdens with those sectors of the economy.
I’m going to put up on the screen another chart which is oil prices. You’re going to see a collapsing of oil prices which is effectively a big tax cut for consumers and companies that are heavy energy users like airlines and things of that nature. This is bad for oil producers. There’s going to be winners and losers in pretty much anything that happens in the economy, but this is a “huge tax cut” if you want to say. I’m doing air quotes if you’re watching the video for the consumer. And so this is a good thing unlike what the price was back in 2008 which was significantly higher than what it is today.
The U.S. has the highest – I’m going to throw another chart up on the screen. We are less dependent than many other countries on our imports and exports. I’m going to put up on the screen a list of all the companies, their imports and their exports as a percentage of their GPD. So that means that as a percentage of what they produce when you add up all the goods and services within a country what percentage of imports and exports as a percentage of what they produce both like I said goods and services. You’re going to see that when we flip through that first screen and a second screen you’re going to see I’ve just highlighted what the world average is. The U.S. is near the very bottom. That is because we are actually a pretty well contained goods and services producer and user. There are many countries that are in a world of hurt if the global imports and exports and trade dramatically change. We’re at the very, very bottom and in comparison to the rest of the world that is a good thing. It is not however, good for us because we are, I mean completely good for us. Everything is relative. When the global economy slows down we slow down as well.
And I am just as worried about our local businesses. We’ve talked about the health of our citizens, our fellow man, our fellow woman, our fellow person and we should be concerned about that. Don’t get me wrong. But just as concerning to me are those people who are from an economic point of view more vulnerable than others. Not all of us can work at home. I mean I’m very fortunate that I get to. I’m in a white collar job. There’s an awful lot of blue collar people out there. Your servers, people who are in the service industry or in manufacturing that you can’t work from home. We should be worried about them as well. And so from a good point of view today versus where we were back in 2008, the consumer debt is much, much lower.
I’ve got the screen here and I’m going to put it up on the screen. The consumer debt is significantly lower. I’m going to put it up there on the screen and what you’re going to see is consumer debt is significantly lower than where it was. Household debt service is at 9.7 and not at 13.2 where it was back in 2007 and 2008. This is a good thing that we have much less debt from a consumer point of view than where we were back in 2008.
I was having a conversation with someone at my particular gym, my dojo, and they were talking about hey, wait a second. I’m in my 60s, I’m in my 70s. Will I have enough time, we talk about the longevity in the markets and the answer is I would hope so. I’m going to put up on the screen and particularly on the left side is the probability of reaching ages 80 and 90. If you are 65 years old you still have, particularly if you’re a couple, you have a 90 percent probability that one of you will reach age 80. You have a 50 percent probability that you will reach age 90. Yes, five and ten year time horizons even if you’re 75 and 80, particularly if you’re a couple. Now let’s say that you’re single. I would hope that you’re not going to die next year or the year after. Longevity is still something that you have to keep in mind. And so just throwing it into a mattress, throwing it into a money market or a savings account will almost guarantee you that you won’t reach some of your goals if you need income from it. And so we need to watch out for the longevity. We don’t know. Every person is individual in their particular portfolio and that’s why when I throw a word guarantee it’s if you have a certain rate of return that you have to achieve then there’s a balance between having the safety that you desire by not participating in something and then, of course, along that spectrum of where can I stay with my particular plan and reach those percentage rates of return that I’m hoping from the long term. And we’ve got to be in this for the long term.
There’s a quote that I read in an article and I want to make sure that I get it right. “Bear markets are periods when stocks are transferred from weak to strong hands as does wealth when recoveries occur. We’ve recovered from every past crisis which we tend to experience with great frequency about every two or three years there’s something that causes some dis-ease and right now there is some and a lot, but we too will recover from this.”
Mike Brady. Generosity Wealth Management, 303-747-6455. Give me a call at any time. Thank you. Bye bye.
“Stop a minute, right where you are. Relax your shoulders, shake your head and spine like a dog shaking off cold water. Tell that imperious voice in your head to be still.” – Barbara Kingsolver
Turbulence in a plane is normal, and so it is in the markets. This is the biggest turbulence we’ve seen thus far, and in 11 or 12 years. Painful! But that doesn’t mean you change a long-term decision on short-term emotions. In my opinion, the ones fives years from now who are the winners are the ones who are in control today. That was true in the past, and I believe in the future. I’ll continue with videos and newsletters as every day seems to be important. Due to regulatory requirements it takes a while from recording it to out to you, but I’ll do my best! Watch our video to hear more!
Hi clients and friends. Mike Brady with Generosity Wealth Management; a comprehensive full service financial services firm headquartered in Boulder Colorado. As you can see from the backdrop I am still at my hotel room leaving in about 45 minutes for the airport. I spoke at a financial conference actually a couple of days ago and with today’s technology it doesn’t really matter. I have the office here as if I was right there in my Boulder office with today’s, like I said, technology and Internet and everything else.
So, so much is going on. Every day is exciting. I’m assuming that you are paying attention to the news and watching everything and anyone who tells you how it’s going to play out in any aspect of the world at any time, not just today but in any time of the world is just lying and I’m not sure why they think that forecasting the future is helpful or even possible.
Reaching your financial goals and the best way to reach those goals is clearly defining your goals and having a plan for how to get from point A to point B. I think of it as riding in an airplane, from point A to point B there might be some turbulence, nobody likes it. The better the airplanes that we get the less turbulent things become, they’re able to buffer them so that you don’t see and feel what’s happening. But sometimes there is turbulence in the airplane, which is, of course, where I’m going with turbulence in the market. But in the plane it happens, it’s absolutely horrible but you know that periodically it does happen. Hopefully it doesn’t preclude you from taking that next plane ride because your life is much richer when you’re able to travel from point A to point B.
The market is no different, investments no different. Sometimes there’s turbulence. This happens to be a particularly difficult air pocket. I cannot believe the oversold indicators that I’m seeing. It’s quite remarkable. There are certain times in our lives where we’ll look back on it and say remember that time? And in most recent it was, of course, 2008. Another really bad selloff that was very precipitous was when the S&P downgraded the U.S. government in 2011. Maybe you remember that. Both of these incidents were recovered. They were painful both of them. We might remember them.
If you’ve been watching my videos I’ve been talking about the unnatural nature, the unusual nature of our calmness over the last two/three/four years that we’ve become lulled into expecting that that’s always the way it is there’s no volatility, very little volatility in the markets so I highly recommend you do that. I did a great one last summer August or September talking about the number of positive plus or minus one percent days in the year was remarkably low but most people perceived it as being particularly high but that actually wasn’t true. And it’s one of the ways that I would argue news media can really provide a picture that’s not statistically true or maybe completely accurate without emotion. These things do happen, like that turbulence on the plane the turbulence in the markets do happen, they are absolutely uncomfortable when they happen but that’s why it’s good to take a step back and say okay let’s be calm and remember that this is part of the plan, that I knew it was going to happen and then it did happen. I mean it’s just completely unpleasant but a part of that journey from point A to point B.
I mentioned something earlier about being oversold, yeah I watch a lot of technical indicators. At the end of the day my training almost 30 years ago was in technical trading. That’s when you’re doing various charts and things of that nature and the oversold nature of this is mind boggling to me. I’m very much looking forward to when it would turn around and that can be later today, tomorrow, next month, next year, I don’t know. But that’s the reason why oversold from my point of view leads to a very good market and that’s why we then have long-term investments along the way so that we can benefit from that when it happens at some point in the future when I don’t know when it is. I mean that’s why you have to kind of deal with things now and the best thing you can do is have control of your emotions.
Anyway, I’m going to continue to have these videos periodically when I’m back in my office I have a little bit more charts and things of that nature so I might get a little bit more technical for those of you who might want more technical. Anyway, 303–747–6455. Mike Brady. Thanks. Bye bye.
“If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes.” – Warren Buffett
Right now, no one knows how the financial markets are going to completely react to the Coronavirus epidemic and with this recent and most particularly painful downswing it is helpful to take a step back and refocus on the long-term. It’s moments like this that remind us why we keep diversified portfolios and that we shouldn’t make short-term decisions based on long-term goals.
Mike Brady here. I am recording this on midday Tuesday, March 10. I’m going to get this out to you as quickly as I can get it through compliance. I’m going to continue with regular updates to you because no matter where I am in the world I’m always working and I’m always paying attention to things. You can tell that I’m in a hotel room right now as I spoke at a conference earlier this morning.
Very spectacular news. It’s kind of hard to miss it. It’s sort of like driving to the airport or being on a plane. Accidents happen all the time in a car so that’s a great risk to you, but what really makes the news is the spectacular nature of an airplane crash. In the last two-and-a-half weeks we’ve had quite the spectacular news – very huge volatility. In the world that is volatility risk adverse it’s really quite painful. Those that have a short-term vision or have a long-term plan but then see things through a short-term viewfinder, that’s not very comfortable. We can’t be that way.
You’ve heard me and I feel like I repeat many of the same messages over and over, but the better way to approach things is to look at things from okay, I’ve just given up and now I’m back to where I might have been ten months ago, eight months ago, a year ago, et cetera. But my path is for the next 10, 20, 30 years. My path is for the next five years, et cetera. That’s why you have diversified portfolios. Because things do happen in a three steps forward, one step back and sometimes two steps back. If there is no belief that things will be better in the future then you shouldn’t have investments to begin with.
When the market goes down that is many times for some people a buying opportunity. What’s interesting is that I’ve been doing this for almost 30 years and I hear so much of the same thing over and over again. That’s one of the unique situations that I find myself in is that I get to speak with investors and clients and professionals all the time and so I’m always listening to different perspectives. When the Dow Jones which is an unmanaged stock market index was at 10,000 points I heard that oh, no way will it go up to 12,000. Or when it was at 18, they’re like well, when it gets to 20 that’s going to be at a top or aren’t you concerned it’s feeling pretty much at a high, it’s pretty obvious. Or when it was at 21 or 22 or 23 it’s always at a top. Yes, we went all the way up past 29,000 and now it has had a pretty spectacular in a relatively short amount of time a decline.
That does not mean that we then go the other way and say well, it’s obviously going to go all the way back down. That’s why we have diversified portfolios. That’s why we have a long-term vision, a long-term plan, et cetera. Because on the way up we were always worried about it getting too high. Then it goes up, it goes down. Now we think it’s all going to go down and neither of them are true.
About three out of four years are positive. That means one out of four are negative. The question you might have is what’s my bias? Is my bias to be an optimistic person or a negative person? And optimism, in my opinion, is in your favor. Why have investments if you don’t believe that it’s going to be higher in the future. Why have investments if you need the money in the short term. You shouldn’t have it in the short term. You should make short-term decisions based on long-term goals and plans and things of that nature.
I was just talking this morning as part of the conference to this man who’s an ultrarunner. He’s about to do the Leadville 100 which is a 100 mile race. One of the things that was interesting about our conversation is he was saying hey listen, if I have a bad five miles I don’t give up the race. I’ve got a 100 mile race that I’ve got to run. If I’m 40, 50, 60 miles into it, no. If all of a sudden I start slowing and I walk, I don’t go backwards, I continue plodding along toward my goal. And I couldn’t help but think wow, that’s a good way to think about it because we are actually in a long marathon, a long ultra-run and not every mile goes the way we would like. Sometimes we stop and we take a little rest. Sometimes we might walk instead of run, but we always go toward our goal and it’s no different than what is happening right now.
I believe that a lot of what’s happening is computer driven. I think that once the big boys come back in, those people who are individuals handling billions and trillions of dollars, that’s when we will see the bottom of this particular market. I don’t know if that’s going to be tomorrow. I don’t know if that’s going to be next month, next year. Anyone who will say that they know how the Corona virus fear or concerns, preparedness, virus, et cetera, is going to turn out is lying to you. Anyone who says that they know how the financial market is going to react and the oil and this and that, all these things are going to play out the variables in the long equation are lying to you as well. Don’t listen to them. Don’t listen to the people on the news because most of the people who know something aren’t saying anything and those that are saying something don’t know anything. That’s just my belief.
Relax. That’s why we have a long-term strategy for you and these things happen. They happen periodically. This happens to be a particularly painful one and particularly spectacular very quick on the down, but these things do happen. I’m not sure that I would jump out the window yet.
My number is 303-747-6455, Mike Brady. You have a wonderful day. I will continue to update you as things go through over the days and weeks ahead. Thank you. Bye bye.
“Worry does not empty tomorrow of its sorrow, it empties today of its strength.” – Corrie Ten Boom
There’s an old adage that says that the market takes the stairs up and the elevator down. And what that means is that there are sometimes in history spectacular events that have become noticeable that become memorable like this past week or so when we’ve seen some double digit declines. But stay calm, your long-term investment strategy should remain unshakeable.
Hi there. Mike Brady with Generosity Wealth Management; a comprehensive full service financial services firm headquartered right here in Boulder Colorado. I’m recording this Friday afternoon after a pretty eventful week. A very interesting week hence the reason why I’m doing this video. If you look at the background it’s not my normal one, I happen to be at a conference so this is my hotel room, but it was so important I felt to get to you as quickly as possible that I decided to do it right here in my hotel room. Fortunately, the way I look at it I’m never working and I’m always working. When you love what you do you never work a day so I love what I do.
So, there’s an old adage that says that the market takes the stairs up and the elevator down. And what that means is that there are sometimes in history spectacular events that have become noticeable that become memorable like this past week or so. The market has pretty much every day this week had very memorable, you know, the Dow, which is an unmanaged stock market index, decline of the hundreds if not even over a thousand points. And what that has done is brought us back to where we were eight months ago. I mean let’s remember that this doesn’t mean you lose all your money that you can market has gone down to nothing, this is back to the beginning of June.
I’m going to put a chart up on the screen. One of the reasons why I continually talk, both in these videos and with my one on one client meetings, is that if your time horizon is six months, 18 months you should have nothing in the market. One of the problems with big events like this is it really brings people’s attention to it and they start to question in a one week’s time what a two, five, 20, 30 year goal is, which makes no sense to me. The reasons why you have investments is because you don’t need it in the short-term after a one week, one month, 18 months, two years, et cetera. And even when we look at, I’m going to put a chart up on the screen in just a second, even when we look at the absolute worst time on most of our lives history back to 2008 your breakeven point was depending on whether you were 40 percent stock and 60 percent bond, indexes, that would have been a two-year breakeven or three years if you were 60 percent stock index and 40 percent bond index you would be three years or 100 percent in the stocks your breakeven is five years. Now, that doesn’t mean that the five years is necessarily pleasant or the two years or the three depending on what the mix is, but we can have investments that are short-term. I mean just like when we look back to where we were about eight months ago most of us were feeling great we’re like oh my gosh this is wonderful the market I even heard some people say it must be at a top, it must be at a top, whereas here we are eight months later saying oh my God it’s Armageddon. And neither of them are true, they are both points in time along the path of the multiple year strategy.
If someone is only now paying attention that’s less helpful. There’s another adage that says that worry doesn’t change the future and worries the present and so that’s not very helpful. The reason why we continually talk about in our professional meetings and conversations hopefully if we’re talking to ourselves as investors is hey I’ve got this point in the future that I need to go to and that I want to get to for my financial goals and it’s not next week, it’s not hopefully today. If so you’ve certainly shouldn’t of had any money in the market.
So, the question is how do short-term events impact long-term strategy? And the answer should be not at all. That’s why you do it in advance. That’s why my example of perhaps a fire in a house that’s why you have fire drills in a school, in a house, in a building beforehand because if fire is actually happening it’s too late. And so, we hit certain themes, we being financial advisers, me as your financial advisor, the professionals who was doing this for years and for decades of experiences of seeing this we say this is going to happen.
I’m going to put a chart up on the screen.What you’re going to see is those numbers, double-digit declines, are the normal. The actual unique event is that we haven’t really had many of them in the last two, three, four years. Now, it usually doesn’t happen in one week. That’s interesting. That’s a very newsworthy event, but that’s actually the normal is for there to be double-digit declines intra-year within the year. So, what we’re seeing here I don’t know what next week will bring, but I do know that the strategies that were sound two weeks ago are still ones that are sound today. And so, rest easy knowing that we’re here on this path of two steps forward maybe one step back, but we don’t have the two step forward without periodically having the steps back as well.
Mike Brady; Generosity Wealth Management; 303-747-6455. Have a great weekend. Bye bye.
“By staying calm, you increase your resistance against any kind of storms.” – Mehmet Murat Ildan
Every single year there is some kind of market volatility. It is normal for there to be ups and downs. Therefore, preparing ourselves for it early on is the key. We know it’s going to happen, so we will have a multiple year strategy in mind at all times. And if there are any concerns, of course, you’ll call your favorite financial advisor Mike Brady!
Hi there. Mike Brady with Generosity Wealth Management, a comprehensive, full-service financial services firm headquartered right here in Boulder, Colorado.
Last month I did the year end review and it was a little bit longer so this time I thought I would talk shortly about a topic that I know is going to happen in 2020 which is volatility. I’m big into setting up expectations. I’m big into controlling our emotions and having a plan. The reason why I bring that up is in 2020 like every single year there is some kind of volatility. It is normal for there to be drops in the market. There are ups, there are downs.
I’m going to put a chart up on the screen which shows the market going back decades, and you’ll see on the bottom below the axis there are red numbers. Those are the intra-year declines and it is normal for there to be intra-year, within the year, declines in the stock market, the unmanaged stock market indexes, of double digits or more, 10 percent or more.
I’m recording this at the very end of January and, of course, you’ll get it the first part of February and nothing has happened so far this year. However, we have 11 more months. We have an election. We have many different things. We have a global economy that’s very complex. But one thing that I can almost guarantee is that the market will go up and down at various times. And our reaction to it is going to be much more impactful to reaching our financial goals than that actual event of the ups and the downs. That’s my opinion at least.
Therefore, setting ourselves up now and saying okay, great. I know it’s going to happen. I’m going to be cool. I’m going to have my multiple year strategy in my mind at all times. And if I ever have any concerns, of course, I’ll call my favorite financial advisor Mike Brady.
That’s what I want to talk about this year so when it happens don’t be surprised. With the market as high as it is right now, hundreds of points on the unmanaged stock market index, the Dow Jones Industrial Average doesn’t mean as much as it used to frankly, 5, 10 and 20, 30 years ago. We look at the percentages, we know it’s going to happen but we keep the long term vision in mind. What I believe is one of the key ingredients to long term success is keeping our emotions in check, keeping the big picture in mind and really looking at how are we going to reach our financial goals not only with our investments but with all the financial decisions that are going on in our lives.
Mike Brady, Generosity Wealth Management, 303-747-6455. Thanks. Bye bye. Have a wonderful week, a wonderful month. We’ll talk to you in a month. Bye bye.
