Market headlines can feel overwhelming—especially during periods of volatility. But not all market movement is cause for concern.
In this latest quarterly update, Michael Brady shares a grounded perspective on what’s happening in today’s market, what a “correction” actually means, and why long-term investors are better served by focusing on what they can control rather than reacting to short-term noise.
If you’ve been feeling uncertain about recent market activity, this is a helpful reminder of what truly matters—and what doesn’t.
Transcript
Hi there. Mike Brady with Generosity Wealth Management, where we align wealth with purpose and possibility. I’m here with my first quarter review, the rest of the year preview video, and newsletter.
I’m asked every once in a while why I don’t get more technical. I touch upon technical topics in my videos, but I don’t go very deep, to be honest. One reason is that when I started 35 years ago, having a technical advantage was the big thing. Now there’s so much information on the internet, on TV, on the radio, discerning what’s important and what isn’t is more difficult.
As I view the world now, we are close to a correction at the time I am recording this video. A correction is a 10% drop from the most recent high. It doesn’t mean a 10% loss for the year. It doesn’t mean 10% like you’re never going to get it back. It’s a 10% drop in an unmanaged stock market index. As of this moment, the S&P 500 and the Dow are flirting around with it: 8%, 9%, 10% depending on the day. Most corrections, when you look back over a long period of time, last between three and eight months before they recover. It’s not three to eight years. It’s three to eight months. They’re usually relatively short in duration.
On the screen, you’ve seen me show this before. It is normal for most years, as seen in the red numbers below the x-axis, for there to be corrections of double digits or more during the year. The numbers on the top of the x-axis are what the year ended at, and it does not mean that it ends the year negative. I like to get back to the basics, which is our attitude, whether we’re paying attention to the right thing, and what our particular biases are.
I like to think of the difference between complicated and complex. Complicated is a rocket to go to the moon: A plus B plus C. It has a million different parts, and if you follow the directions, you can duplicate these rockets and build ten of them one after another. Complex is raising a child. You think you do A, and they come back with B because that’s what they did the last ten times. But sometimes they come back with C or D or something else. They come back with an answer you weren’t expecting, and then you respond in a different way, and so on. That’s complex. Human relationships are complex. If I do a certain thing all the time, someone else may respond in a certain way, but then my reaction to their reaction is different, and it continues. That’s complex. It’s not necessarily complicated.
I bring this up because I get tired of the news saying the market went up because of A, or down because of B, as if that’s the whole reason. It’s not that simple. We need to look at it not as static but as dynamic. If I do something, someone else changes their behavior. If I’m selling hamburgers for $10 and I want to increase my profit, I don’t just double the price, because people will buy fewer hamburgers. So when I impose something on the consumer, they react accordingly. The markets are quite complex, and I believe a diversified portfolio is incredibly important. I don’t believe in individual-issue risk, such as focusing on a single stock or bond. I don’t believe that’s the best way for an investor or client to reach their financial goals over the long term.
I also believe that matching the diversified portfolio with the duration or time frame of your goals is crucial. The money you need in three months is different from the money you need in 30 years. If you’re 60 years old, I hope you know that you have a 30-year time horizon. We have to think about that. If you’re in your 50s, 60s, or 70s, you still have many five- and ten-year time horizons, while you might also have short-term needs, like your monthly income.
For today’s review, it’s been volatile in the first quarter, and that’s unpleasant. Nobody likes it when it goes down. We have risk aversion, meaning we feel more pain with a 5% loss than happiness with a 5% gain. That’s human nature. We have to acknowledge that risk aversion. We have to stay calm, rational, and in control of our emotions. Looking at the rest of the year, I don’t know what will happen. My crystal ball isn’t perfect. But if we have a good diversified portfolio, I think it’s the best way to live in an uncertain world, because the future isn’t always known. It’s always uncertain, even if we don’t always notice it.
Let’s keep the buckets in mind: things we can control, things we have some control over, and things we have no control over. Let’s not spend all our time on the things we can’t control. Let’s spend the majority of our time on the things we can control, like how much we save, when we retire, how much we retire on, and some elements of our portfolio and financial goals. That’s my first quarter newsletter and video. I’m always here if you need anything, even if I’m traveling or in Boulder or heading up to Wyoming for the summer. I can run the business from up there, near Yellowstone in Dubois, Wyoming. My number is 303-747-6455.
Mike Brady. I’m always happy you’re my client. If you’re not my client, consider becoming one. Thank you.
Recent headlines about global conflict and market volatility can make investing feel uncertain. When emotions rise and news cycles move quickly, it’s easy to feel pressure to react.
In this video, Michael Brady of Generosity Wealth Management shares a timeless perspective on navigating moments like these. Drawing on decades of experience, Mike explains why emotional control and discipline are two of the most important ingredients for long-term financial success.
Markets will always experience ups and downs. Geopolitical events will always occur. The key is not predicting every headline, but building a thoughtful plan and maintaining the perspective to stay on course.
Mike also shares a helpful reminder: intra-year market declines are normal, even in years that ultimately end positive. Long-term investing is about progress over time — not reacting to every moment of uncertainty.
At Generosity Wealth Management, the goal is to align wealth with purpose and possibility, helping clients live well today while preparing confidently for the future.
Transcript
Hi there. Mike Brady with Generosity Wealth Management, a comprehensive full-service financial services firm headquartered in Boulder, Colorado. Although I am in Michigan right now, if you’re ever wondering what my childhood backyard looks like, that is it. My mother’s in assisted living. She moved there over the summer, and I’m doing the last little bit in my childhood home. My parents have had this house for 50 years, and I’m helping do the last little bits in order to put it on the market and close that chapter.
I did a video about a week ago that was going to go in this newsletter. But it did not get sent out because I’m replacing it with this video. While we were editing the newsletter, the Iran–Middle East conflict came up, and I thought I’d be a little more timely and remind you of certain lessons that are tried and true.
One of them is that we have emotional control at all times. If you want to be successful in the financial world and reach your financial goals, it is my opinion that one of the first things you do is have emotional control. Remember that the media—whether it’s print, scrolling, or TV—often tries to elicit emotion from you, not necessarily inform you. If you’re getting excited or upset, check yourself.
One thing we can do is ask, “How am I feeling right now? What’s causing that? If it’s not helping me, stop doing it.” It’s just that simple.
The other is discipline. Have the discipline to know what our plan is and move towards it. Periodically I hear people say, “Well, we’re obviously at a high.” First off, when the word “obviously” is in anything in our industry, you know it’s not obvious. But the question is, are we at a high in the unmanaged stock market indexes? The answer is, we might be at a high from where it was 5, 10, and 20 years ago. I certainly hope it’s at a low in comparison to where it will be 5, 10, and 20 years from today. That’s all that really matters, because we can’t live in the past, but we certainly can live, and we will hopefully live, the future. Why else would we have investments if we didn’t believe that they would be higher 5, 10, and 20 years from now?
Up on the screen is something that I like to remind people of: the numbers below the X axis are the intra-year decline, and it is normal for there to be declines throughout the year. It doesn’t mean that the end of the year ends negative. It is normal for there to be declines.
Someone asked me the other day, “Mike, your videos are not very technical.” And my answer is yes, that’s by design. If you want technical, you can go to any business news channel and get that technical analysis. You can open up print media or a business magazine or newspaper and have all kinds of technical analysis. Twenty or thirty years ago, I could wow you with that information and charts. Today it’s all free and available. But what is more important than all of that technical data is what it actually means. What are the ingredients for success that they might not be talking about in the media or that you might not see others talking about in your neighborhood or community? That’s what I’m here to present: what I believe, and my beliefs have come from decades of experience in discipline and emotional control.
Know your liquidity, have your duration in mind, and then execute properly. Money that you need in two weeks is certainly different from money that you need in five, ten, or twenty years. Even if you’re in your 60s or 70s, we hope that you will have many five- and ten-year timeframes going forward.
I want to bring us back to the fact that geopolitical events will always happen. The market will always go up and down historically. The way I believe is that if you’re so averse to risk or so afraid of any kind of decline, you’re not going to get the ups. It’s three steps forward, maybe two steps back. Three steps forward, two steps back, but you’re progressing along a path. It’s no different than if you’re so afraid of a relationship—friendship or romantic—of being hurt that you’ll never find true love. It’s the same when trying to reach your financial goals. We need to mitigate risk; we can’t eliminate it.
We have to ask, “What’s our duration?” Are the investments we’re in consistent with what we want to do? Can I keep my emotional control, and am I disciplined when things happen that I know are going to happen, like the market going up and down or geopolitical issues or things in the news or in our own country? These things have always happened, and they will continue to happen. How am I going to react?
Is the purpose of my money to make me happy? I would say yes, to live your life so you’re not a burden on others. Your purpose and possibility is really what we talk about—Generosity Wealth Management aligns wealth with purpose and possibility. If that’s the case, then let’s get immune to those external things and stay with our plan. Be peaceful and calm in sometimes non-peaceful situations in the world, but we can be our own oasis.
So, Michael Brady, 303-747-6455. Give me a call or send me an email if you ever feel like you want to talk about something. Let me know, and we can have that communication. Have a great rest of the day, great week. Bye.
2025 reminded us of something easy to forget in noisy markets: certainty is an illusion. With 24/7 news, constant opinions, and confident predictions everywhere, it’s tempting to believe someone knows exactly what comes next.
They don’t.
At Generosity Wealth Management, we believe the real value isn’t prediction — it’s perspective.
Transcript
Hi there. Mike Brady with Generosity Wealth Management, a comprehensive, full-service financial services firm headquartered right here in Boulder, Colorado. It is the end of 2025. So this is my 2025 review, and I would say it’s more lessons learned, because you can have all the technical information about 2025. You can read it, you can watch it on TV. I mean, when I started in this industry 34 years ago, you know, it was hard to find that information. People genuinely didn’t know. Now we have 24/7 news and the Internet, and I’m just telling you, you can read more analytical stuff than I can provide you in this particular video and this newsletter. So I want to do it at a high level, but I also want to do the 2026 preview, which is very light because I don’t believe in that. I believe that the future is inherently unknown. And so we’d better have some conviction, some foundation, some base that is, you know, key that we need to remind ourselves about. And that’s more important to spend that money than trying to guess what 2026 is. Because frankly, I could flip a coin, you could flip a coin, and one of us is going to be right. I mean, it’s that simple.
The problem with many pundits is that they are trying to be very exact about something impossible to be exact about. The way I like to think of it is the economy and the stock market. It’s not math, it’s not physics. It’s more like biology. Math is A plus B equals C. Physics is, hey, these are the rules of physics. Biology, that’s the economy, and that’s the investments. You know, even the smartest doctor is not quite sure what’s going to happen because it’s so complex. There’s so many variables. Well, wow, the other people I gave this poison to, they died, but you’re doing okay. Or the other way around. An antidote that might work for you doesn’t work with somebody else. And side effects and counteracting. That’s why anesthesiologists get paid so much money, is they have to keep all these different—you know, this thing helps and this thing hurts—and you know, on balance, this is the way, you know, hit these dials to help a client out.
So, you know, the economy, the investments, they’re like biology. It’s like a body. It’s a very complex system. And so, I’m hoping that one thing that we will take away from 2025 is some humility up on the screen.
I have shown the intra-year, and I’ve just circled it: all those red numbers, that’s how much a decline was within that year. And you’ll see that it is normal for there to be a decline of over 10%. Double-digit declines. That’s normal. And this year was no different. The S&P 500, which is an unmanaged stock market index, was down 19% at one point this year, but the year did not end with a negative 19%. You can see throughout the graph that, on average, three out of four years are positive, and one is negative. Okay, sometimes they’re strung together, you know, negative, negative, and then positive, positive. There’s a whole number of different ways that it can play out. But on average, when you hold it for a long time, three out of four are positive, and one out of four are negative. But almost every year has a negative decline throughout the year, so we shouldn’t be surprised when it happens. What’s very frustrating about this year is that the sky-is-falling crowd comes out, as it did in March and in April, but with so much confidence. Not the, well, I think this is going to happen, I think this is going to be the impact—it’s definitive statements of it will, and that’s just not true. I hope that we take away from this year that that which you hold with such conviction is sometimes wrong.
I have humility in what I do with clients all the time. Now, I might hide it. Okay, I mean, those of you who know me well saying, wow, he talks with a lot of confidence. Well, I talk with some confidence because I’ve seen it, 15,000 trading days since I started. When I started back in 1991, in August of 1991, the Dow was at 3,000. And then I heard people say, wow, it could never get above 5,000, never get above 10,000, 20,000, 30,000, 40,000. I mean, every single time it’s obviously at a high; well, it obviously can’t get any higher. Well, you know what, I’ve heard that my entire career as it went from 3,000 to 5 to 10 to 15 to 20, all the way up to where we are today. The Dow Jones, which is an unmanaged stock market index. This year, almost every one of those unmanaged stock market indexes were positive across the board—S&P 500, bond indexes, international, you name it. It was a very good year, despite what all those people on TV and all—if you’re doom scrolling on your Internet news feed—say how everything is going to be absolutely horrible. Many of those same people might be saying the same thing in 2026. They’re just trying to be right. Oh my gosh, I can’t say that I was wrong, it just hasn’t happened yet. Well, whatever.
I believe that if you don’t think that five years from now the market is going to be higher than it is today, why would you have any investments? If you don’t believe that, move it in cash, for goodness sakes. Okay? So I don’t know if this next year, 2026, will be negative. I don’t know if 2027 will be negative. But I feel with high confidence—but no guarantee—and I feel with high confidence through my experience and the experience of others over a hundred years that it’s a good bet that I will win on that if I have investments properly matched to me and my emotional level, my goals, okay, my risk level, that five years from now it’ll be higher. Whatever mix that I do, why else would I have investments? Let’s keep our eye on the ball. What happens in a month and a quarter doesn’t really matter. We keep our eye on that ball.
So one of the things that I recommend and I repeat over and over again is emotional control. If you don’t have emotional control, I don’t know what to tell you. People are going to whisper in this ear, and they’re going to whisper in that ear, and you’re going to move this and this and this, and you’re going to be so flexible that you’re really bendable, and you’re not going to be happy. The way I like to describe it is, you know, one person worried every day throughout the year, another person didn’t. The returns are exactly the same. One person just had a very poor journey, the other one believed in the system, had their thing, and executed it. So knowing what your purpose is—I mean, Generosity Wealth Management, I want to be very clear on this: we align wealth with purpose and possibility. What that means is we use wealth to help you. What is your purpose? What do you need today? What do you want to have happen so that you can be generous with yourself? What’s your purpose with your family? What’s your purpose in your community? What’s your purpose maybe in the future, but what’s also possible that you haven’t even imagined yet? Okay, so let’s have that conversation. That’s what the value is of Generosity Wealth Management. We help explore that and bring alignment of wealth with purpose and possibility, and we do that in a number of different ways.
I want to talk about one of some of the things I’m very proud of in 2025 is we really upped our game as it relates to retirement analysis. You need to know what your number is. You need to know how these balls in the air come down into an equation that leads to the outcome you want. And hopefully it’s positive; let’s try to avoid the negative. But what can happen proactively so that’s not just chance? What are the things that we can control? What are the things that we can’t control? And the wisdom to know the difference. We really upped our game as it relates to tax planning so that we can provide you with our thoughts, some talking points that you could have with your tax professional. I’m not a CPA. But I work and brainstorm at a very high level with you and with your CPA, because I believe that this is something—it’s most people’s single biggest expense: taxes. So you’ve got to be an expert in it. Retirement accounts outside of your house—it’s most people’s single biggest asset. I have to be an expert in it. I joined the Ed Slott Elite Advisors, and I’m very proud of that. My knowledge has dramatically increased. And of course, you’re the benefactor of it. And I want you to ask me tough questions. I want you to talk about me with your friends and work colleagues so that they know that they’ve got an expert that they can come to. I work with business owners, I work with people who are retired and not retired. I want to work with good people who I like, like you, if you’re my client already. Because I got to tell you, this is the truth: there’s not a single client that I have that I don’t like, that I don’t kind of look—and there’s no client that is like, oh God, I got to pick up the phone, or I got to give them a call. No. Okay, they weed themselves out. I spend a lot of time at the beginning of a relationship to find the people that maybe were not a right fit, and that’s okay. I want to attract the right people. I don’t chase people, I attract the right people, and then we kind of date. We decide we’re going to be right for each other, but if for some reason we screwed up, I kind of help you find that, or you find out on your own that maybe we’re not right for each other. So I want to work with people that I have lots of chemistry with, they have problems that I can help, that I can provide value to you first, so that of course, you can see the value in what I’m bringing as well.
2026 I want to summarize. I don’t know if it’s going to be up or down for the unmanaged stock market indexes, but I do know the value of diversification. Knowing what your purpose is and what the duration of your money is, is important. I know that discipline, okay, whatever that discipline, and emotional control, I know that these things—every year, I could say 2026 or I could say 2023 or the year 2000—they’re the same throughout the years of my career. These things I keep coming back to, and also, of course, humility. Hey, we don’t know everything, so let’s do the best job that we can and keep control of our emotions as we move forward.
I do want to have more clients. So if you—my client, who I love, all right, who I am willing to jump on a phone call and a Zoom with and give you the best advice that I can, and the experience of what has worked and not worked with other people—if you know friends, family, work colleagues that are just like you, I want to replicate you. Then have them contact me, and we’ll determine independently if it works out. I am going to expand my business. We’ll talk about it—not today—but I have new and fun and cool things that are in the pipeline that you will hopefully see, and I’ll roll out to you in 2026 and even into 2027, and that is all in service of the client, because when the client sees the value, if I make you a raving fan, then you will talk to other people, and that’s how my business grows. And of course, as I bring in other junior advisors and replicate some of the knowledge that’s in my head with them, to serve you continually, that’s how we can be of benefit to the community. And you’re part of the Generosity Wealth Management community. Felicia and I, Sarah Cassidy, we thank you for being our clients, and we just really want to have a wonderful 2026, and we’re glad that we’re doing that together. So, Mike Brady, 303-747-6455.
As 2025 nears its end, Generosity Wealth Management founder Michael Brady takes a moment to pause — not just to reflect on a strong year for markets, but to share insights on what truly drives long-term financial success.
In his latest video update, recorded just before Thanksgiving, Michael discusses why patience, emotional control, and thoughtful planning often matter more than the latest market move. He also highlights his recent speaking engagements in Las Vegas and Austin, where he explored how technology like AI can deepen advisor-client relationships and how tax-smart retirement strategies can build wealth that lasts.
Because at Generosity Wealth Management, it’s not just about managing investments — it’s about aligning your money with your goals, your time horizon, and the life you want to live.
Transcript
Hello clients and friends. Mike Brady here with Generosity Wealth Management, a comprehensive full-service financial services firm headquartered here in Boulder, Colorado. Today I’m recording this right before Thanksgiving. Not sure when you’re going to get the newsletter, as I’m writing the rest of it and adding this video, but it’s been going really well.
From an investment perspective, the unmanaged stock market index is really on a tear. I think that it’s important for us to remember that, from a market point of view, it is normal for the unmanaged stock market indexes to have a double-digit decline that happened earlier this year. Who knows how the rest of the year is going to turn out? But I am always keeping clients focused on what their time duration is and making sure that it matches up with what their goals are. Because, frankly, the investment management part of what I do feels like the simplest part:
Where do you want to go?
Which tool in the toolbox helps you get to what your financial goals are?
What’s your time horizon?
Can you keep your emotions in check?
And of course, avoid stupid stuff.
I made plans for people 20 or 30 years ago, and some met their goals and some didn’t. It usually had nothing to do with investment A or investment B, but it did have to do with some of the abstract, some of the satellites around that core of having good investments, which is you got excited about your brother-in-law’s Chihuahua farm or you did some other investment that sounded great at the time but really didn’t help you achieve your goals. Or it was that you simply didn’t save enough, or you had some other unfortunate incident happen in your life, unable to work, loss of your spouse, things of that nature. That’s why I really want to keep all those things in mind.
Today, though, I wanted to pivot from the investments, which are going great this year, and I’m hoping that 2025 ends in as good a situation as it is right now here in November.
But I want to talk about some of the things that have been going on from a seminar perspective. I just spoke in Las Vegas recently, which was great, and in my newsletter, I’ll talk a little bit about that. I was talking about how I use my note-taking AI to help me be more efficient and stay present in every client meeting. I’ve had clients for 20 years, 30 years, and of course, I’m always bringing on new clients as well. So thank you to those of you who continue to refer your friends, family, and acquaintances to me so that I can help them out. I use my AI note taker because it hears things I might have missed. It really helps me be present in the meeting when you and I are talking, so I can hear what the problem is, what the issue is, and what your emotions are, so I can then, of course, come back with the best recommendations for you. I was honored to be a part of that panel there in Las Vegas, talking about how I believe AI is going to revolutionize the relationship that advisors like me can have with our clients, can go even deeper, and really understand where you want to go so that we can come up with the solutions in order to get there.
I was also recently in Austin, Texas, at an Ed Slott Elite Advisor seminar, and that was training for me. Most people’s single biggest expense, aside from everything else, is taxes. Most people’s single biggest asset outside of their house is their retirement account. So I have to be an expert in everything retirement accounts, and I have to be an expert in taxes, even though I’m not a CPA. I’m not going to do your taxes, but I work at a high level with your tax planner. Now, here’s one thing I like to tell people: do you have a tax preparer or a tax planner? A tax preparer costs you money; that person is a historian. They take your number in that box, put it on that line, and provide very little proactive guidance. A tax planner helps save you money. They are working with you throughout the year and proactively giving you advice. They are in the wealth-maximization business, like I am, not necessarily in the tax-minimization business. I think that’s a really key distinction: they are there to sometimes say, maybe we pay a little bit more taxes this year, but over your lifetime or over multiple years, this is in your best interest. You’ll actually be wealthier in the long run if we pay a little bit more in taxes right now.
This leads to my next conversation, which is satisfaction and gratification. There’s this old study called the marshmallow study, where they had a bunch of kids, around 6 years old, brought into a room and put a marshmallow in front of them. They said, “You can have the marshmallow now, but I’m going to be back in six or seven minutes, and if you wait that long, I’ll give you another marshmallow.” All they had to do was delay their gratification for a few minutes, and they would get twice the reward. Those kids who were able to delay gratification tracked better throughout their lives than the control group, who needed instant gratification. They found that those who delayed gratification had greater life satisfaction, greater career satisfaction, were married longer, had higher incomes, and had higher net worth—all of the things we want in our lives. They were able to do it because they were in control of their emotions and delayed the gratification.
One of the things I talk with clients about all the time is what’s right for you. Is it a Roth IRA, a Roth 401(k), where you pay the taxes now but delay the gratification for the tax-free income all along the way and the tax-free withdrawals? Or do you want that instant hit right now, which is a tax saving today? It’s really an individual choice. We have to individually do the math, but this is something I want to work with you on, and I want to work with your CPAs. My ask of you is that I want to grow my business. I want to help your friends and family and acquaintances, and one of the value adds that I bring is that I really listen to you. I use the AI in order to help my notes—the boring part—so that I can truly be present and hear what you want to do and match up those investments. Here’s the value add: I’m going to really look at what your assets are and position them accordingly, and be an expert in them. Like I said, that’s why I’m continually traveling to go to seminars, to be the absolute expert in your biggest types of assets, and also work with your CPA on your biggest expense, which is your taxes.
If we manage and control that expense and hopefully minimize it over multiple years and over your lifetime, then you’re going to be better off. That’s what I want to do with clients. With that extra money, with those extra assets, what do you do with it? That’s where the generosity comes in, so that you can be generous with yourself, with your family, and if you believe it’s in your best interest and the community’s best interest, you can be generous with your community, both local and global. That’s really what I’m about, and that’s why I’m saying to you: I want to be that trusted advisor. If we keep some of these key things in mind, then I believe that you’re better off, the community is better off, and your family is better off if we keep some of these fundamentals in check.
Michael Brady, Generosity Wealth Management, 303-747-6455. You have a wonderful rest of the year. You’ll hear from me again in January as I recap what happened in 2025 and, of course, as we look forward to 2026. Thank you.
Year’s end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us. – Hal Borland
As we close out an eventful and rewarding 2024, Mike Brady, founder of Generosity Wealth Management, shares his insights into the past year’s financial trends and the fundamentals that continue to guide successful investment strategies. From market highs to economic shifts, Mike offers a thoughtful analysis of the forces shaping our financial landscape and provides a forward-looking perspective on what 2025 may bring. Whether you’re focused on long-term goals or navigating short-term challenges, this year-end review is packed with valuable insights for investors at every stage of their journey.
Transcript
Mike Brady with Generosity Wealth Management, a comprehensive, full-service financial services firm headquartered in Boulder, Colorado although we have offices in Fort Collins as well and clients throughout the whole United States. I’m coming to you right now from Boulder.
This is the yearend video. It’s been a wonderful 2024. I’m recording this video right before Christmas and I’m sitting here thinking to myself I’d like to get the video done so what exciting thing could happen between now and the end of the year. Of course, the market drops 1,000 points in one day, but the year is not just one day. It’s 365 days, it’s many weeks and from an investment point of view it’s many years strung together.
This really boils down to some of the fundamentals that I repeat over and over again which is you’ve got to know what your duration is and what your time horizon is for your money. If it’s long that’s completely different than if you need money next week, next month or even next year. That is one of the most important and deciding factors in your investment decisions as you reach your financial goals.
I always like to think of this as what are those fundamentals. We get into the weeds sometimes and I’m going to get into them here as part of my review and a little bit of hey, what are the variables that we’re going to watch going forward. I’m going to come back time and time again throughout this video about what are the fundamentals which is to be invested.
The very first graph that I’ve got up there is by decile. The last 96 years of the S&P 500 which is an unmanaged stock market index. If you look at all those you’re going to see that there’s a skewness, a preference for positive returns. Actually, 73 percent of the returns are positive, whereas of course 28 percent are not positive so zero or down. That’s important because we had better ask ourselves hey, do I have my investments and always worried about the steps back? Do we take three steps forward and one step back? Or do I worry so much about that step back that I also give up the three steps forward? There’s only one percent of the time that it’s been more than 40 percent. As a matter of fact, there’s only six percent where it’s been really horrible and nobody likes those.
Then when we look at all the others it’s painful. That’s why I get back to one of the fundamentals. If you need the money in a short term – a year, two or three – absolutely you should think about the risk level and whether or not that’s something that you would be willing to take.
We have a skewness towards the positive in the markets and in 2024 it was very positive across the board whether it is the unmanaged stock market indexes, domestic or international or the bond index. So, just a wonderful year.
The next chart I want to point out is that’s what we’re looking at from an investment point of view. You’re going to see that last little bit there is 2024. We’ve had a wonderful runup even with you consider 2020. We’ve had a wonderful runup and we’ve got a P/E ratio of about 22 right now. Many times people say well, with a P/E ratio of 22 that means that the markets might come down. I’m going to show this next graph her and it is above average the 22. However, there’s two ways that it can revert to the mean. One is that the prices come down or the earnings go up. I’m going to make a proclamation here today that I believe that the earnings are going to go up to make that number go down and that the price is going down.
I think there are some fundamental shifts going on from an economic point of view, an economic point of view, that we haven’t seen in 30 years. It is all of the advances in technology, especially as it relates to artificial intelligence, the large language models and how that’s going to seep into everything that our economy is doing.
I remember when I was in college in the late 1980s and I used to write out in long form my papers. We also used to have to add and subtract on a piece of paper. Now we have spreadsheets, now we have Microsoft Word or Pages in the Apple world, and how efficient that has made so many businesses that have just propelled the earnings ratio for companies. I think we’re going to have the same revolution going forward in that and we’re just scratching the surface. It’s going to be my belief and what I’m going to say to you is the price going to go down or the earn is going to go up to meet those prices and to justify those prices. I believe it’s going to be the latter.
The Magnificent Seven which are some of the biggest technology firms have done very well. I’m highlighting it there right now which are the profit margins and I believe they are going to continue to stay very nice, if not go higher. This bodes well for those of us that have that long term time horizon.
I want to take a break here for a second. If you say to yourself hey, I don’t have a long term time horizon. My answer would be you probably do. Even if you are 65 years old and you’re about to retire you hopefully have many decades statistically to live. You’ve got to remember that there’s many five and ten year time horizons until you and your significant other, if you have one, might pass on.
If you say I don’t want to take any risk. Even though the probability is historically that it’s going to be positive and not negative and I don’t want to take that risk. Give me a call because there are some investment vehicles out there, some products I suppose, that do have floors so we can find something that might work for you. I don’t read minds so if your mind has changed, your mindscape, your belief, your risk tolerance has decreased or changed in some fashion you’ve got to let me know so that we can adjust accordingly.
Inflation has gone down, which is wonderful. It has gone down and I believe it’s probably going to continue to go down but that’s what the Fed is working on right now. They have just made a proclamation that they’re going to maybe slow down in 2025 and the rate decreases. We’ll see how it plays out. It’s hard to predict out a whole year but, of course, we don’t change our philosophy on what the Fed says in one day for one year. I don’t believe we’re going to see a zero interest rate environment like we have right after the great recession.
As you can see there that I’ve circled and highlighted it has continued to go down over the last couple of years and is expected to continue to go down and I would think that as well. That’s good especially for mortgage rates for those of you who want to buy and sell a house, real estate, people who have existing bonds that’s a good thing as interest rates go down and prices have a tendency to go up for existing bonds so that’s a good thing, especially when we have a portfolio that is stocks and bonds put together.
You’re going to see here especially on that righthand side that bonds had a tough year a couple of years ago – a tough couple of years. The last couple of years have been positive of the unmanaged aggregate of the Bloomberg U.S. aggregate for the bond indexes, but it’s still been pretty lame this year especially compared to what the equity markets have done. It still makes sense to mesh them together because as interest rates continue to go down it’s my belief that the bonds will go up. In the right portfolio it still does make sense. Let’s not get too negative about them going forward.
I think this is one of the key and fundamental charts that we always have to keep in mind. On the one year on the lefthand side is the range going back 50-60 years to 1950 – so I guess that’s over 73 years. The green is 100 percent U.S. unmanaged stock market index. The bond is the middle one, that blue one. The gray is 50/50 unmanaged stock market index and unmanaged bond index shoved together. What’s important is when you look at the 5, 10 and 20 year how the highs go down and the lows come up. We’ve had a 50/50 blended portfolio. There actually has never been a five year time horizon going back 73 years where you haven’t at least broken even and even made one percent. So, that’s what we’ve got to keep in mind. Has there been one year where a blended portfolio has lost money? Absolutely. We can see that by those bars on the lefthand side. If we blend them together we start to have at least historically something that has the worst has not been that bad so that’s what we’ve got to keep in mind.
That being said, 2024 was a wonderful year across the board which follows up to 2023 which was a great year even though 2022 was horrible. We’ve got now that horrible year in 2022, but 2023 and 2024 have been wonderful. In 2025 we have a new administration but let’s not forget the president is not all powerful. I think getting back that the technology changes that we’re going to see filter through from the technology firms, through all of manufacturing and service businesses and changing our daily lives is going to be a motivating factor in 2025, 2026 and going forward as well, but we will see. We don’t change our portfolio for one year. We don’t change because of a new administration. We don’t let our politics dictate our investment philosophy, but it is good to know what the long-term trend might be and I believe the technology advances that we’re seeing is going to be one of the most important variables in the foreseeable future.
Michael Brady, Generosity Wealth Management, 303-747-6455. I hope you have a wonderful new year and have had it by the time you get this, and that we have a wonderful 2025. Take care.
“Life is really simple, but we insist on making it complicated” – Confucius
The first half of the year is over, and the year has been up and down on an almost weekly basis.
There are reasons to be positive, and pessimistic.
In this month’s video, I outline why you should be optimistic, and reasons why you can be concerned. In most areas of life there are pros and cons, but the question is which one wins out on balance.
In this case, and I outline this in my video, the positives outweigh the negatives.
But that being said, the fundamentals of reaching your goals remain the same–diversify, have a long term vision, and keep your emotions in check.
Hi there. Mike Brady with Generosity Wealth Management; a comprehensive full-service financial services firm at headquartered right here in Boulder Colorado, although I’m recording this video from our cabin in Wyoming. Hopefully you had a wonderful 4th of July, maybe you took the whole week off. I came up here for the whole week it’s kind of an annual tradition and it allows need to get some business projects done, but even more importantly to get away from the hustle and bustle of the daily life, get my emotions in check, which is of course one of my big recommendations for my clients and for investor.
I’m going to cut right to the chase of today’s video because it’s going to be a mid year report, but the fundamentals of investing and being successful in my opinion have stayed the same, which is to stay diversified, be long-term and keep your emotions in check. That’s one of the fundamentals and I just think that that’s absolutely important.
Today I do want to talk about what’s happened so far and talk about the reasons for being optimistic or pessimistic for the rest of this year. Nobody knows the future. I certainly don’t so this is my analysis so this is one of the reasons why those three that I brought to you, be diversified, long-term, keep your emotions in check are so very important because when someone says they know absolutely what’s going to happen, the impact of this policy or that policy they know exactly what’s going to happen they’re lying to themselves, they’re lying to you and so I don’t think that anyone is well served by that particular approach. So here so far this year the market was up pretty dramatically in January, continuation of low volatility and good market in 2017 coming into 2018; February and March very difficult. And then the second quarter recovered as some of that, but really was really more in general in the unmanaged stock market indexes and bond indexes basically a flat year so far. Plus or minus a couple percent in my mind is flat.
I’m going to throw a chart up on the screen where you’re going to see is we’re in a consolidation period. The markets go up, down and sideways and so far this year it’s a sideways. It’s always irritating to have; everybody wants the up with no volatility and that’s just not the world that we live in. What we’re seeing right now is a time where patients makes a lot of sense. Those are the people who are rewarded long-term and so remember that as you look at your particular investments and your particular approach.
Now, I’m going to put a number of charts up on the screen and I’m going to talk about some of the reasons to be optimistic, some of the reasons that things could look very good. So let’s go through them. The first one is strong U.S. economy and that’s shown a really above average pace with tax cuts, higher government spending, ultra low unemployment rate, the biggest increase in business investments in years, we’ve had an earnings per share that’s very high and the Fed is normalizing monetary policy, and the last is equity valuations are not as pricey as they were just a couple of years ago. And so this is a good reason to be optimistic and in my opinion, I’m not going to lie to you, the pros outweigh the cons. Here are some of the cons: The price of the oil is back up high in the last year or two; it’s around $75 for a barrel. However, I will also put it into context that it is where it was three years ago and lower where it was four years ago and I don’t remember the stock market being horrible during that time frame. Always up and down that’s just part of the deal, but it is not a travesty. Excessive fiscal stimulus in a full economy could lead to an overheat. Got it. And then the third is the tariffs, which I want to talk about here today.
Tariffs over the last number of administrations they have talked about how the barrier to entry, some of the costs of doing business with other countries is greater than it is here. It’s easier for people to import it into the United States than it is for us to export to other countries. That’s what the tariff discussion is all about. So the discussion is out there, has been out there for a long time, the question is what do you do with it? So one of the reasons why, and I’ll jump to the conclusion on this too, while it’s an irritation it’s a wrench into all of the pros that I just brought up it’s not necessarily a deal killer and the U.S. could actually win on it. Some people say they know absolutely this is horrible for the U.S. or they say it’s absolutely horrible for other countries. The bet that President Trump is making is that others will blink before the U.S. will or before he will. And so one of the reasons why that might be the case is the reliance that other countries that we have had these discussions with and imposed some tariffs on are much more vulnerable than we are. Their stock markets are not doing as well as ours are and their economies are not doing as well as ours. We are the strongest out of all those that we have imposed these tariffs on. Our exports are 12 percent of our economy, whereas in China it’s 20 percent, in Canada it’s 1/3 and in Germany it’s 50 percent. They’re much more reliant on exports to us and to other countries as we are exporting to others. So we only do 12 percent of our economy is based on exports from the United States because we have such a big country, we have such a vibrant interstate commerce from city to city state to state that we are less vulnerable than many other countries.
And so that’s why when I weigh something negative like the tariff discussion and wars against all of the positive it’s the net still going towards the positives than it is on the negative. If you’re only focused on the negative, sorry you’re going to be very disappointed and of course you’re quite dark about that. I on the other hand want to balance both of them and that’s why I’ve come out net on the positive. So I’m optimistic for the rest of this year. I’m not making any changes wholesale in client portfolios, in my discussions with clients, et cetera. Sticking with those particular fundamentals it’s served us well the first half of the year, I think it’s going to serve us well the second half as well. Be diversified long-term, be cool, cool as a cucumber.
Mike Brady; Generosity Wealth Management; 303-747-6455. Give me a call at anytime. Thanks. Bye bye.
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I think this is one of the key and fundamental charts that we always have to keep in mind. On the one year on the lefthand side is the range going back 50-60 years to 1950 – so I guess that’s over 73 years. The green is 100 percent U.S. unmanaged stock market index. The bond is the middle one, that blue one. The gray is 50/50 unmanaged stock market index and unmanaged bond index shoved together. What’s important is when you look at the 5, 10 and 20 year how the highs go down and the lows come up. We’ve had a 50/50 blended portfolio. There actually has never been a five year time horizon going back 73 years where you haven’t at least broken even and even made one percent. So, that’s what we’ve got to keep in mind. Has there been one year where a blended portfolio has lost money? Absolutely. We can see that by those bars on the lefthand side. If we blend them together we start to have at least historically something that has the worst has not been that bad so that’s what we’ve got to keep in mind.