2018 Year End Review

2018 Year End Review

“It’s the steady, quiet, plodding ones who win in the lifelong race.” – Robert W. Service

The year 2018 is over, and what is most interesting is how different it was from the previous year 2017.  This is a good reminder that every year is different, and 2019 will not necessarily follow the negative and volatile 2018.

When I write or say something like that, I inevitably hear from someone who says “yeah, but it’s different this time.  Everything has changed because of X, Y, and Z”.  In my almost 28 years working with clients, the fundamentals of diversification,time horizon, and complementary financial decisions around your portfolio have remained the same.  And no, it’s not different this time.  I’ve been hearing that for 28 years.

Watch my video and/or read the transcript.  It’s less than 10 minutes, and will give you a good big picture perspective on how I see things.



Hi There.  Mike Brady with Generosity Wealth Management; a comprehensive financial services firm headquartered right here in Boulder Colorado.  2018 is behind us.  Thank goodness.  Forget about it.  2019 let’s hope for a very happy and profitable one.  I’m going to put up on the screen the unmanaged stock market index the Dow Jones industrial average, the one that you hear about the most on TV.  What you’re going to see is the first quarter was negative, the second and third quarters were positive and that’s where we wished that the year has ended.  But then we had the fourth quarter and it took it all away.  In particular December very volatile and very negative month right there month of December.

Depending on what stock market index you want to look at you’re looking at the negative five, negative six percent for the year.  When you get a little bit more non-common ones like the SMP mid cap, the small cap and you’re looking at the Russell 2000’s you’re looking at the negative double digits, the negative teens, the negative 12, negative14, 15, 16.  And when you look at the international markets, whether it’s Europe, whether it’s pacific they were negative double digits as well, the negative teens depending on what particular country and what particular index.  Very few places to hide in 2018.  When we look over at the bonds the unmanaged bond indexes you’re looking at negative as well, negative single digit, negative one and negative six depending the percent that you’re looking at for that particular area and that’s kind of a unique situation, but with rising interest rates that’s just what happened for 2018.

Let’s think about it though for 2017, 2017 I sat here 12 months ago and talked with you about 2017.  At that point what I said is wow this was an incredibly nonvolatile year, I mean pretty much every week every month was positive and it was a banner year, yay 2017, but it’s not real.  Go back 12 months ago and watch that video and that’s what I said I’m like this isn’t reality guys, this is a unique situation that very low volatile no volatile year practically was then followed by an extremely volatile year, which is 2018.  So we have these two contrasts two extremes right next to each other, which should remind us that every year is different.  Every year is different and in 2019 it could be someplace in between.  So let’s not extrapolate out and say wow 2018 was negative and really volatile so therefore 2019 is going to be negative and really volatile.  It just doesn’t work that way.

There are many variables in the equation that go towards an economy, currency markets, stock markets, bond markets, et cetera, and anyone on TV or who is filling a headline in the newspaper or magazine that says this is the reason why the number one reason or this is the sole reason is fooling themselves and they’re fooling you and don’t listen to it.  There are a number of factors in a multiple trillion-dollar economy and world market and it’s simply not as simple as this is the reason.  When we are creating a portfolio, when you as an investor are trying to reach your financial goals it is important that we stack the odds in our favor to the degree that we can.  Absolutely nothing is guaranteed in this world.  I just want to say that.  But what we can do is look at history and say how can we stack things in our favor knowing that the future might be different?  And I’m going to say that there’s three things that we can do: number one, stay diversified, have the right timeframe and then look at all the things that are around it surrounding all those decisions.  Let me break each one of them apart.

Number one, stack in our favor with the timeframes.  Talk about that first.  On a daily basis the market is going to be up or it’s going to be down.  That’s it. That’s a very short timeframe and I don’t know on a day-to-day basis anymore than you do whether the market is going to be up or it’s going to be down.  When we look out to a year we zoom out like a mosaic we kind of get a little bit more perspective, we step back from the wall and we look at a year we say okay going back to 60, 70, 80 years of market data three out of four were positive, one out of four were negative and sometimes those negative years were strung together.  I mean I remember in my career 2000, 2001 and 2002 were three negative years right next to each other.  Now I will tell you that 2004 and 2005 were good years.  I know because I was there.  But 2000, 2001, 2002 were negative years, but three out of four are positives.  So when we look at on a yearly basis we’re starting to stack things in our favor if what has happened historically was to continue in the future.

When we look at five years has there ever been a time horizon were a diversified portfolio, 50 percent of an unmanaged bond index, 50 percent of an unmanaged stock index together has lost money?  The answer is no.  I’m going to put that chart up on the screen.  When we look out five years, ten years, 20 years now historically the odds have been in our favor when we can hit our particular mark.  So it’s important for us to remember that the future could be different, I just want to let you know that.  Having a diversified portfolio does not guarantee market losses in a declining market.  I just want to say that.  But we’re looking at the right time horizon for what you’re looking at from a client point of view.

Diversification, I said that that was very important.  That is important.  When you see on TV people who have lost everything that makes great news; oh my gosh little older lady lost all her money in this particular stock or this particular shopping mall or scheme, et cetera. That’s why it’s important to not invest in one individual stock or just a few stocks or a shopping mall or whatever it might be, they make great spectacular horrible stories that’s why you avoided them.  A diversified market, diversified portfolio, even when we look back at 2008 the recovery period was two to three years.  That was the absolute worst that we keep talking about the great recession was two to three years.  And when I explained just a minute or two ago about the five-year and the ten-year time horizons that’s important to remember.  Even in the worst situation when we kept our eye on the big picture reaching our financial goals that’s how we were successful.

The third thing is what are all the decisions around it?  It doesn’t matter if the market is up if you haven’t save enough money.  It’s that simple.  It doesn’t matter if the market is up if you’re withdrawing too much money.  It’s that simple.  So you’ve got to know what your withdrawal rate is and what your deposits rate is depending on which cycle of life you are in.  If you are older 60, 70, 80, listen I’m hoping you still have a long time horizon.  Hopefully you have a time horizon of five, ten, 20 years, maybe longer depending on what your age is.  Perhaps you’re investing the money for not just yourself but for your heirs, that’s important to remember that the time horizon then becomes a longer time.

So every year is different.  I’m not going to sit here and tell you that 2019 is going to be positive or it’s going to be negative, I don’t know.  But what I do know is that I’m a believer in the economy, I’m a believer in the United States for one thing, and I’m also a believer in a diversified portfolio for the long-term is going to be a wonderful thing for the vast majority of people, but only you can really decide whether the time horizon that you have and a portfolio that we’ve crafted together or that you’ve crafted with your financial advisor, if you’re not a client of mine you should give me a call, is appropriate because volatility and risk in my mind are two different things.  The risk of you not having enough money, you not saving enough or you withdrawing money or not reaching your goals those are risks.  A subset of that risk is volatility and volatility is always going to be there, particularly when we’re looking at things from a short-term. Short-term means days, weeks, even months, but when we start to look at longer multiple year strings together, string the years together, the volatility starts to tamper down because then we can get some perspective of how it fits towards the end goal.

Mike Brady; Generosity Wealth Management; 303-747-6455.  Give me a call at anytime. Bye bye.

2018 3rd Quarter Review

2018 3rd Quarter Review

“Learn from yesterday, live for today, hope for tomorrow.” – Albert Einstein

The third quarter of 2018 has already come to a close and as we look forward to the end of the year, I see no reasons to be concerned.  While the first half of the year was a little shaky depending on your investment plan, we’ve seen some very positive rebounds that have served as a great reminder to stay the course.

In this edition of my video blog, I discuss the newest piece of the puzzle and why it’s important to remain calm in regards to your financial plan. You don’t want to make short-term decisions for a long-term goal. Keep the big picture in mind, here’s why:

2018 1st Quarter Review

2018 1st Quarter Review

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, dream, discover.” – Mark Twain

The 1st quarter of 2018 is already over and it was an interesting 3 months to say the least. If we look at 2017, the fact that we had only a little bit of volatility is the exception. Most years there’s over ten percent declines at some point during the year. Which is something we’ve about hit already this year. That’s the normal and not anything to be freaked out about – listen to find out why.

Transcript of the video:

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

I’m here to talk about the first quarter review and the rest of the year preview.  Charles Dickens in a Tale of Two Cities started off by saying it was the best of times and it was the worst of times.  I suppose maybe we could start off that way with the first quarter as well.  January for the unmanaged stock market indexes was a continuation of a strong upward movement that we saw in 2017 with very little volatility.  That’s really one of the big stories as far as I’m concerned is that 2017 was so low volatile and that was the unique situation.  All the way up to about January 26 of this year when volatility decided to come back.  And so we definitely saw that in February.  March looked like it was starting to come back up again and then we gave it away in the third week of March.  And so the quarter ended a nine out of the eleven major S&P sectors, 9 of them were negative and two of them were positive.  And those two that were positive was actually information technology and consumer discretionary.  And so that’s kind of interesting. 

Of the indexes, pretty much all of them were negative except for emerging markets and actually the NASDAQ.  The NASDAQ unmanaged stock market index was positive.  But even those that were negative in the U.S. here, not counting – I mean when you look at Japan and you look at some of the others abroad they were actually down quite a lot at negative seven percent or so.  We were down one-and-a-half to two-and-a-half percent.  That’s really breakeven in my mind, particularly when you can make a one percent move in a day which we definitely had some more one percent moves this past quarter than we had in quite some time in the last couple of years. 

So it’s good to put this in perspective.  The way I look at investments is that it’s three steps forward, one step back and maybe sometimes it’s two steps back.  And if you focus so much on the negatives, on the steps back, then you’re never going to have the steps forward as well.  And so when all this volatility is happening and let’s look at that chart that I have up on the screen.  So you’re back to where you were three-and-a-half months ago. This is not that you’re back to where you were ten years ago. 

Let’s put everything in perspective.  As a matter of fact, it is normal for there to be volatility.  It is normal for there to be declines.  And with the number, the DOW being 25,000 and 26,000, 500 and 1,000 point movements are less significant as a percentage.  So we have to look at things in percentages.  I remember back in 1987, you know, I’m 49 years old right now and at that time I was a freshman in college when the October 1987 crash happened and that was 500 points.  Well that was 20 to 25 percent of the whole market.  Well, 500 points on 25,000 is not that statistically significant like it was 20 to 30 years ago.  So the numbers get magnified just like our portfolios.  The larger the numbers, of course, a percentage change one way or the other can be thousands, tens of thousands, maybe hundreds of thousands of dollars.  And so we have to keep it in perspective from a percentage point of view. 

I continue to be optimistic and that means not that I guarantee it, absolutely not.  There’s no guarantees in this world.  Life is not a guarantee.  Investments are not a guarantee.  I’m actually going to do a follow up video to this about how investing is like poker, not chess. 

Just to give you a little preview of that.  There are unforeseen things in poker and there is a certain amount of luck involved in poker whereas chess is all strategy.  The better person should always win whereas that’s not the case in poker and that’s not the case in investments and that’s not the case in life.  There are things that are unforeseen, things that we can do the best that we can.  We can increase our probabilities of success.  And so as I look towards the rest of the year I see lots of profitability with companies, I see lots of technical change continued.  I believe that the tax change that just happened was a very favorable thing, at least in the short run and the short run being the next one to three to four years or so as cash comes back I’m sure, and we reinvest some of that cash as well.  Other people might have a different point of view and that’s absolutely fine.  That’s what’s great about America is that we can have different points of view. 

You have to remember though that from a long term point of view which is the way we have to look at it, things are complicated.  There’s many different variables that determine this.  And so you might place a higher value on the variability of chaos as you might see it.  You might place a higher value on tariffs and say wow, this is a bad thing.  I don’t place that as high of a concern but maybe I’m wrong.  Maybe you’re right, maybe you’re wrong.  Maybe you get it.  I just read this morning how Elizabeth Warren is in favor of the tariffs in China just like President Trump.  I never thought the two of them would agree but there we go. 

So it’s very interesting that there’s all these different variables.  We have to remain long term investors because I can go back 25 years, I’ve been doing this 27 years, and go back my entire career and there’s always been a reason to be pessimistic.  There’s always reasons to be optimistic and so the question is over a longer term – three years, five years, ten years, et cetera, what’s in your best favor because it’s very hard to read the tea leaves on a shorter term basis. 

I’m optimistic.  I continue to be so.  I believe that there’s a greater than 50 percent probability that things are going to continue to work out fine.  Maybe there’s going to be some increased volatility which is normal.  The fact that we had only a little bit of volatility last year is the exception.  Most years there’s over ten percent declines at some point during the year.  And so we about hit that this year.  So that’s the normal and not anything to be freaked out about. 

Mike Brady, Generosity Wealth Management, 303-747-6455.  Give me a call at any time.  Thanks.  Bye bye. 



2017 Review and 2018 Thoughts

2017 Review and 2018 Thoughts

Happy Families are all alike; every unhappy family is unhappy in its own way
– Leo Tolstoy in Anna Karenina


There is plenty to be happy about this year, as almost across the board the unmanaged stock and bond market indexes were up.  International markets as well.

I get asked all the time “when is the market going to crash?” and “how bad will it be?”.  They’re the wrong question.

And I use an analogy of a marriage and disagreements to make my point.

Below is my end of the year video, where I outline my thoughts on 2017, and also what current conditions might mean for 2018.

I highly recommend you watch it, and if you have any questions, please don’t hesitate to give me a call.  I’m here to help and serve.

2017 3rd Quarter Review

2017 3rd Quarter Review

“To know what you know and what you do not know, 
that is true knowledge” – Confucius


The 3rd quarter of 2017 is over, and it was another good one.


Practically every non-managed stock market index was up, in almost every sector.  The markets perform in one of three ways — up, down, and sideways.  After a few years of a sideways market, since the election we’ve seen a fairly steady and consistent up market, reaching new highs almost daily.

In my video, I address the need to ignore negative naysayers, as there are always doomsday prophesiers willing to say “it’s at all time highs, this is why it will crash.”


Ups and downs are normal, but the successful people are those that have a plan and stick with it.


Check out my video above.
2017 2nd Quarter Review

2017 2nd Quarter Review

“If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people” – Confucius


The 2nd quarter of 2017 is over, and it was a good one.


Practically every non-managed stock market index was up, in almost every sector. The markets perform in one of three ways — up, down, and sideways. After a few years of a sideways market, since the election we’ve seen a fairly steady and consistent up market, reaching new highs almost daily.

Periodically I hear “the market is at highs and it can’t possibly go any higher”. Hmmm, I’ve heard that every year for the past 26 years, so let’s step back and think about it.


If you believe that long term the market will go up (and you must, otherwise why have money invested in it) then market highs are a good thing and something to celebrate. Even if the market only made 1% per year (hypothetically for discussion purposes), then every year it has reached a new high.  So new highs are normal, and a good thing. If you’re trying to wait for it to fall and then invest, you could be waiting a long time and miss the upward in the meantime.


Anyway, watch my video above.


In my 2nd quarter review, I include my anecdotal “5 traits of successful clients”, and you’ll find they all have to do with behavior.


It’s my belief that an investor’s mental attitude (discipline, control of emotions, etc.) trumps almost everything else. Because of these “soft” but simple traits, it leads to making the right decisions at the right time.


Check out my video above.  It’s my favorite one I’ve done since my last video.  🙂

Read more from the 2017 Second Quarter Review Newsletter