2019 Year-End Review

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch


The big lesson for 2020, because it is an election year, is to keep our politics out of our investments.  We give whoever is in power, our particular politicians and our president too much credit and too much blame.  In this video we’ll take a look at 2019 and how it’s been in comparison to years previous. Don’t expect any predictions about 2020, I don’t know the future any more than you do.  The best thing that I can do is counsel you on how we can increase the probability of positive outcomes.  How can we set things up to take full advantage of the favorable conditions if they’re forward, watching and keeping control of our emotions if they’re not.

Check out my full video review:



Hi there. Mike Brady with Generosity Wealth Management, a comprehensive, full-service financial services firm headquartered right here in Boulder, Colorado. Recording this on the evening of Friday, December 27. It’s my year end video and there’s still one and a half business days left – Monday and Tuesday, but I figured we were close enough. Assuming nothing major happens on the last day and a half we’re good to go for a good conclusion for 2019 which is one of those years that we all live for.

As we look back at the unmanaged stock market indexes over the last three or four years we had 2015 positive, 2016 positive, 2017 positive, 2018 negative and 2019 positive. Historically for a four-year presidential, the year that’s the election year it has historically been positive, more than 50 percent, but more subdued than the other three years. Who knows? I mean that’s the thing is you’ve got to have a long-term strategy. You don’t do things month by month or year by year.

As a matter of fact I would say that the big lesson for this next year because it is an election year is let’s keep our politics out of our investments. If you are pleased with the current president, you’re happy and you’re saying it’s a big mandate on his policies of 2017 but then in 2018 it flipped–it was sharply negative. And then 2019 it’s sharply positive. I mean I think that we give whoever is in power, our particular politicians and our president too much credit and too much blame. I can have that argument with you not today over this video. All I can really say is when you’re watching news all day long you’re going to come away thinking that everything is politics and it’s just not true. There’s a bigger world than that. And you’re going to come away thinking that everything has an answer. You look up at the clouds in the sky and our mind looks for patterns, makes that bear or that nice sheep up in the sky when it really isn’t there. Well, journalists have a tendency to say the reason why this happened – it went up, it went down, whatever, it was volatile, nonvolatile was because of this. Take it with a grain of salt. It’s just not quite as simple as they would led you to believe in the few minutes that they have on TV.

I’ve got lots of charts today that I want to share with you because it is the end of the year. This is a chart I’m putting up on the screen for the last number of years since 1996. You’re going to see I did a couple of circles on the far right-hand corner. You’re going to see a huge runup going all the way up from 2009 to the present. You can see that I did it in blue there. There were a couple of years where it was kind of stagnant and then we had a big upswing again. And then you can see there in 2018 it was kind of sideways again.

S&P Index at Inflection Points 2019

If you only focus on those as your whole focus, your investment strategy is to avoid the downturns then you’re never going to have the upturns in my opinion. So, you can’t look at it that way. I mean who goes into a friendship saying well, I don’t really want to have this person as a friend with all the good times because I’m worried that we might have an argument. I mean that’s ridiculous. Don’t treat investments the same way. You don’t go in so fearful of some of the negative things when on balance I would argue the positives outweigh the negatives.

This next screen you’re going to see is corporate profits are positive so I just want to talk about how 2019 was an incredible year and the corporate profits continue going forward and with the earnings estimates as well. You’re going to see that the S&P valuation level – this next chart on the far right-hand side – it’s nowhere near where it was in the late 1990s. I’ve heard a few pundits on TV talking about is this right before a big bubble and the huge valuations after a big runup in the stock market. The answer is they’re nowhere nearing that. From my point of view it’s trying to compare apples and oranges, make a story where there is no story.

Corporate Profits

The next graph I’m going to throw up on there is on the right-hand side you’re going to see that bottom line there. That shows our current economic expansion after a recession compared to many, many different recessions going back 60, 70, 80 years. What it shows is that we’ve had in comparison to other recessions since 2008 a relatively mediocre recovery from an economy point of view even though we’ve had a great stock market. The economy is not the stock market. I’ve made that argument in previous videos but from an economy point of view it has been relatively mediocre, not quite as hot as previous recoveries but it has been longer than the other ones as well.

S&P 500 Valuation measures

So, maybe that’s better. I mean frankly when we add it all up when we have a recession in the future we’ll look at it and historians will say wow, it was warm but much longer, twice as long. Maybe that’s better than having it super-hot for a shorter amount of time. Only time will tell but that’s what we have right now and have had for the last 11 or 12 years or so.

The length & strength of expansions

Right now look at this next chart. You’re going to see unemployment and wages on the far right-hand side. We are at a historically very low unemployment which is a great thing. Just a decade ago we were at ten percent unemployment and now we’re at two or three percent. This is a great thing. And over the last seven or eight years or so we have had wage growth increase, particularly in the last two or three years. That’s just kind of the way it works out. I definitely don’t give any party in power all that credit. It just doesn’t work out that way.

Unemployment and wages

The next chart up there I want to talk about is the interest rates and inflation. You’re going to basically see that we have inflation at incredible lows right now which is a good thing. And the last thing that I want to show before I get into a little bit of analysis is the yield curve. The reason why I want to show this yield curve to you is all summer for two months all we heard about is a yield curve and how the sky is falling and how it’s the most important thing in the world. And when is the last time you’ve heard someone talk about the yield curve? It’s quite frustrating from my point of view at times when I hear these pundits or when I hear people talk about the pundits is that they’re always coming up with predictions and many of them are wrong, and yet people still listen to these particular pundits.

Interest rate and inflation

Yield Curve

One of my colleagues said something I thought was pretty funny the other day. He said yes, sometimes they’re right, sometimes they’re wrong but they’re always certain. And that’s so true. They’re always so confident in their prediction where I believe the long term from an investing point of view and reaching your financial goals you need to have some humility. Hey, I believe this is what’s going to happen. There’s lots of different variables in the equation but you know what? Maybe I’m wrong. That’s the point.

Getting back to long-term success, it’s not just one year. I mean while this is my 2019 year end review listen, we’re not investing for a year. We’re investing for multiple years. I don’t care if you’re in your 70s or 80s. Hopefully you’re not going to die in the next year. I mean you still have to ensure that you don’t outlive your money. So we have long-term strategies and you’ve got to look at it that particular way as well. Here we are talking about one year but goodness, it needs to fit into a whole strategy.

One of the things that I do for all my clients is a financial plan. Where are we going? How are we going to get there? What are the variables we can control and what are the variables that we think we can control but we really can’t. A great example would be we can control how much we save. We can control when we retire. We can control on what income we retire at that point. How much we want to draw out in the future, what kind of a lifestyle.

Things that we don’t control are when we’re going to die. We think we’re going to maybe live 15 and we live 25. We think we’re going to live 25 and we live 15. We don’t know that. While we try to control the rate of return and there’s so much focus on it, that is something that we don’t have control over. We can try to control the band, the upper limit, the lower limit. We’re going to try to control that with various risk levels and investments and a balanced portfolio, et cetera. But that’s something that we just don’t have control over.

I like to focus clients – and I’m going to continue this next year on focusing on what are the variables that we have control over to increase the probability that we’re going to meet our particular financial goals whatever they might be. That’s it.

One thing you’ll notice is that I’m not giving any prediction about 2020. The one thing I’m going to give a prediction on is sometimes the market will go up and sometimes it will go down. We’re going to talk about politics all year long and half of America is going to be happy at the end of the year and half are not. That’s about as close to predictions as I can give this year. I don’t believe that it’s in your best interest to become – I could sit here and give a falsely positive of course it’s going to go up and this is the reason why. And that might be what you want to hear, but I would be disingenuous if I did that. I could be very negative this year but why would I want to do that. Three out of four years historically have been positive. I could be negative. I could get you fearful. I could get you in defensive strategies and things of that nature. But you know what. I don’t know the future any more than you do. The best thing that I can do is counsel you on how can we increase that probability. How can we set things up to take advantage of things. The favorable conditions if they’re forward, watching and keeping control of our emotions if they’re not.

Mike Brady, Generosity Wealth Management, 303-747-6455. You have a wonderful day and a wonderful 2020 year. Bye bye now.

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

“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

“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

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

“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.