“Knowledge is of no value unless you put it into practice.” Anton Chekhov
30 years ago, financial advisors were the primary source for market information, such as how things are performing, statistics, etc. Access to the information was not readily available to the general public and it was a financial advisor’s job to communicate specifics with clients.
Now, thanks to the internet, anyone can access pretty much any information they want, any time they want. Thus, we generate much more value by showing you what to do with all this free flowing knowledge and analysis.
Watch as Generosity Wealth Management founder, Michael Brady, explores two questions he receives frequently: Why do you focus more on the non-technical; Is the market at a high?
Hi there. Mike Brady with Generosity Wealth Management; a comprehensive full-service financial services firm headquartered right here in Boulder Colorado.
Today I wanted to address a couple of questions that I get periodically from people and one of them is around these videos. Somebody said to me “Hey Mike, I’ve been watching your videos for a really long time and I realize that you talk about some of the soft stuff, some of the non-technical. You don’t put charts up on the screen and do all kinds of lines and sit here and talk about this company’s PE ratio or somebody else’s sales earnings, et cetera.”
So, I’ve been doing this for about 30 years, and 30 years ago we had an advantage, we being the professionals, over your average person because we had more information than they did. We were able to pay for Bloomberg Terminals. I remember going to this Bloomberg Terminal, you would have to wait for it to be available because there was one for this entire office of 15 people or so. Or I would go to a paper copy of Morningstar, and I would sit there and photocopy it, and when you showed a client to it was like, oh my gosh there’s so much information here. That of course moved to monthly updates on CD ROMs and then the Internet came around, and then all of a sudden there was too much information. The information was not the deciding factor it was what do you do with that. It was almost too much. It was chaos. It was too much noise.
I’ve got to tell you, right now that when you watch TV, whether it’s one of the 24/7 news channels or the 24/7business channels, you’ve got all the internet blogs, et cetera, you can sit here and get all of the technical analysis that you desire. So, that’s not where I’m going to add value in my opinion; I’m going to instead add the value of what do you do with it.
So, if you’ve been watching my videos, you know that periodically I bring up poker because I’m a pretty big fan of the concept of poker. Believe it or not, I actually don’t like to play poker necessarily, but I appreciate the game and what it takes in order to be good. If you’re not a poker player, you think that it’s well all the cards are random, and it’s just kind of the luck of the draw. Nothing could be farther from the truth. If you’ve done any analysis into professional poker players, you will find that they ascribe success to the experience.
You’ve got to play thousands and tens of thousands of hands before you become really good. You’re getting instant feedback on your decisions. It is incredibly mathematical. It is money management. I mean, yes, it’s random how the cards are going to be played out, but you’ve got your hand, you’ve got cards that you might see, what are the odds against somebody else. It’s money management, meaning well I’m sort of in a good position so I’ll not put too much money on the table, or I’ll take some money off, et cetera. It is as much control of your own emotions, mathematics, and of course, experience to understand that.
In an uncertain game, and we can apply this lesson that I’ve just talked about to an uncertain world, which is what we’re talking about when we talk about the future and your financial plans.
So, those guys on TV they get to sit here and do all of the sexy stuff about this stock or that stock or this chart but they don’t really have to live with the consequences like you do. Have you ever noticed that they talk about their winners but they don’t talk about their particular losers? So, that’s something I think is very, very important.
Kind of a second question I wanted to address here today is around “is the market at a high?” I get asked that question or hear other people, you know, I might be in the locker room, and someone will say “well, the market is obviously at a high”. And I always think to myself compared to what? Compared to 20 years ago? Yes, it is at a high. Compared to ten years? Yes. Five years? Yes. That’s the wrong question. You can’t go back in time 5 and 10 and 20 years from now, all we can do is say today is day zero. Today is today.
So, the question is “is it at a high in comparison to where it will be or in our probability, in our estimation where it will be 5, 10, and 20 years from now?” So, that’s the question. Not it’s obviously at a high right now. Okay. Compared to where it was in the past. Sure. That’s actually a good thing, right? I mean don’t you want it to go higher? The question is what are we going to do today in comparison to where it might be in the future? I, of course, make my own analysis. I talk with clients about that I do believe it’s a very high probability in my judgment, in my estimation of the future, which is uncertain and unguaranteed that it will be higher in the future because why else would you have investments?
I sit here and emphasize duration all the time, meaning what is your time horizon? Because if you’re trying to get is it going to be higher in one month, six months? That’s flip of a coin. Sorry, it’s not going to be high probability of one way or the other.
So, I think that these soft things some of the best decisions that you’ve probably heard in the last year as we’re coming up on one year of this whole COVID, remember a year ago the market was just plunging 20, 30, 40 percent. The best advice was not mutual fund A or mutual fund B or this exact stock or that exact stock, it was stay invested. That was probably the best advice that you could’ve heard either from me or from somebody else. It’s those things that you know when you look back at many different data points, when you have lots of experience, when you work with someone who has lots of experience so that you can learn from them not only what to do but what not to do. And that’s really what I’m here to do.
So, anyway, Mike Brady. Generosity Wealth Management. 303-747-6455. Have a wonderful day. Have a wonderful week. Bye-bye now.