What, Why, When

“By three methods we may learn wisdom:  First, by reflection, which noblest, Second, by imitation, which is easiest, and third by experience, which is the bitterest”  – Confucius


We’re all under strict stay-at-home restrictions now and trying to make predictions about an unpredictable situation, which is impossible. In today’s video we take a look at what we are seeing in the market and the economic factors at play; when we might see a rebound and; why we are seeing such a strong impact as a result of an unprecedented health situation.

As you watch, I want you to remember what I say in every video, please stay calm and let’s do our best to look towards the horizon and keep our eyes set on better days.



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

As you can see from the backdrop I am under a stay at home order just like you are so I’m recording this from my home office.  This is my ninth video in the last two months because there’s been an awful lot going on. I’m recording this on Sunday, March 29, in the afternoon.  Normally I wait until the quarter is over to record the video and get the newsletter out to you but frankly, I want to be a couple of days in advance so that I have the recording and the video so that I can get it out to you right away as the quarter ends.

I want to talk today about what, why and when.  Before I do that I just want to share with you a personal anecdote about some of my current thoughts not related necessarily to the market.  I’ve only been out two times in the last week and both times have been to a restaurant.  There’s a number of restaurants that I like here in Boulder and I want them to do well.  While I have lots of food here at home I want to go out and support them so I’ve gone and picked up my food from the takeaway.  When I go in there it’s just really sad.  I go in and all the chairs are up and in both restaurants all the tables were pushed to the side.  I’m not sure if they’re doing deep cleaning or what they are, but it was just so very sad.  Boulder is completely empty.  When I see the photos of New York City and some of the other big cities – San Francisco, Los Angeles, et cetera, it just really makes me sad and it’s just a bizarre time that we’re living in.

But what it does also do is remind me of all the goodness that is in my life.  The fact that I can stay at home and have a wonderful place in the mountains of North Boulder with a wife and dog that I love and I’m safe.  I don’t have to worry about that.  Most of the people that I associate with, the fact that my clients are doing well, I know because frankly, I have a small microcosm.  To be my client you have to be either on your way to reaching your financial goals or have reached them and want to continue to maintain them.  There’s a lot of people who are not in that situation.  The restaurant workers, the servers, all the blue collars, the people with only a high school degree, those with very little college.  There’s a lot of people who are going to be hurt by this.  The small businesses.  This is just really painful and we’re not really sure how this is all going to play out going forward.

The fact that we can have a fridge full of food and a pantry is a great thing.  There’s a lot of people in much of the world who don’t have that option whether you’re in India or Africa or many other places where you have to go and get food every day.  I just can’t help but think about how blessed I am even in a situation that if I allow it, I allow it to get down and it gives me a little bit of perspective.

Let’s talk a little bit about the what has happened over the last couple of months.  I’m going to put up on the screen a chart – the percentage change of an unmanaged stock market index, the Dow Jones industrial average.  What you’re going to see is that it went significantly down since the middle of February all the way up until Monday of this past week and then it had a nice rally this past week as well.  It hit a low on Monday and then by Tuesday, Wednesday, Thursday it started to come back, but it is still over 20 percent down for the year as of Sunday, March 29.

Let me put another chart up on the screen.  This is the S&P 500 which is also an unmanaged stock market index.  You can see that I put a line to where it is right now and that it’s given up a couple of years’ worth of gain.  We worked really hard for all those gains and I’m very happy with all of the gains over the last 10 to 12 years.  We’ve given up a few of those years right there as you can see.  That’s the red line that we’ve got, that horizontal line.

S&P 500 at Inflection Points

The next chart that I’m putting up on the screen are bonds and general bond indexes, unmanaged bond indexes or treasuries and various particular categories of bonds.  They’re doing what they should do which is go positive when the stocks re going negative.  That usually is what happens.  Not always.  Many times they do the same thing if everyone is rushing toward cash.  They are positive for the year and a return that a diversified portfolio will have is dependent upon how much bond, stock – what that allocation is between the two.  If you’re very aggressive and have a high percentage in stocks or equities then, of course, you’re going to be lower now.  You were higher last year.  You’re going to be lower this year.  More volatile.  If you had lots of bonds then, of course, last year in general a diversified portfolio was probably not as high as a stock portfolio, and it’s not as down this year.  That’s really the what has happened so far this year.  And this is just talking about the stock market.  This is not talking about the economy because frankly, that is still to come.

Fixed Income Yields and Returns

Just a few days ago we had the weekly unemployment numbers and they were huge compared to 100,000 or 125,000 it was three million.  Just an absolutely unprecedented number and more is to come.  One of the things that I would say and I’m going to repeat this by the end of the video is I would argue that the stock market and the economy are even more complicated or at least as equally complicated with the number of variables and moving pieces as a pandemic, a virus and how that might move.  Think about how many experts are giving various opinions and they’re not really sure because it’s about the future and nobody knows the future.  We put a huge stock on the economy and that’s going to have some big impacts for quite some time.

Let’s talk about the why.  Well, the why is this virus and the response to it.  Let’s talk about what it wasn’t.  It wasn’t because of an oil embargo.  Quite the opposite.  Oil was at an all time low.  Not an all time low but the lowest we’ve seen in decades.  It’s not because of a tech bubble.  It’s not because of a financial crisis or real estate.  No, this happened because we flipped the switch.  We pretty much put a halt on much of the economy worldwide and this is something that we have not seen before.  The stock market is forward thinking. The stock market is saying how is this going to impact.  And sometimes we get it right and sometimes we get it wrong.  Sometimes we being the stock market and investors.  Sometimes there’s an overreaction, a belief that it might be worse than it is.  Maybe it’s priced it in already.  Time is yet to tell on this.

I want to put up on the screen the price of oil.  You’ll see I’ve circled it.  That’s what I’m talking about.  On the far right hand side is the price of oil and it’s under $25 a barrel.  The demand has completely dried up because we’re all staying at home.  I’ve never filled up my truck as little as I have this month because I’ve only put 10 or 15 miles on it in the last two weeks.  There’s also an awful lot of oil out there.  This video is not about oil, but oil is at a huge decline.

Oil Markets

The next graph that I’ve just put up there is unemployment coming into this particular situation was also at historic lows.  The top line are those without high school education and those are the ones who are going to be the hardest hit.  Not everybody could just work at home.  Not everybody is a white collar worker who can do something like that – a tech or other types of financial workers.  A lot of people have to interact with others and those are the ones who are going to be hardest hit. It’s good for us to know why, but also why not.  I mean let’s talk about before I get into the when because that’s really the big question.  Coming into this situation we were actually in a pretty good spot and we still are for many companies, particularly the large corporations.  When you look at Apple with over $200 billion in cash, when you have Amazon hiring over 100,000 new employees to meet demand.  When you look at some of the other companies – Microsoft with over $100 billion, with Alphabet which is the parent company of Google.  Much of silicon and technology and pharmaceuticals and big companies are going to come through this okay or at least they’re coming into it in a strong position unlike where things were at the last financial crisis which was 2008.

Employment and Income by Education

It’s really good to remember that there’s a lot of reasons to be optimistic because we came into this with a reasonable, many of those companies reasonably over the last ten years said we want to be ready for the next big shock.  Some companies are ready and some aren’t.  One of the things that a situation like this shows are those companies whose balance sheets are not good, and this goes from the big companies, the middle companies all the way down to the small.  What we’re going to see in my opinion in many of our communities is a lot of businesses go out of business whether that’s restaurants or service businesses, et cetera.  Those that were either highly leveraged with lots of debt or they have profit margins that were extremely low and they just couldn’t handle something like this.  So it’s important to always have a good balance sheet and to have strength when the unexpected happens.

The big question – let me pivot now to the when because isn’t that really what we’re always talking about.  If the market loses 20 percent on Monday and comes back on Tuesday, Monday night was really horrible.  But most of the time people don’t mind.  I mean people move on.  They quickly forget.  It’s really how long you are under and the longer from a stock market point of view or portfolio that you’re negative, the longer that timeframe goes, the less comfortable you become because you’re always remembering where it used to be. We call it a high water mark sort of like water in a tub.  You can see the ring and where it used to be and that’s your new base for where you believe that you should be.

One thing that the stock market does is it continually gives us daily prices, and our house we don’t get daily prices because we don’t sell our house every day or other people aren’t buying exactly the same house.  We might have an estimate but we don’t have daily pricing.  The same thing with the economy.  We do not have daily, minute, by the second pricing and so as this dribbles out over the coming months we’re going to have a better and better picture.

I remember back in 2000, 2001, 2002 all the way up to about March 2003 so it was really about March 2000 to about March 2003.  It was a three year timeframe from the last big tech bubble.  It was bad.  Didn’t like it at all.  It was uncomfortable, but it was the length of that where I saw people after a couple of years start to say to themselves wow, maybe this isn’t for me.  I mean really almost the exact time when it was the perfect time to buy, it was that length and that loss of confidence in the plan.

It’s important to remember that when you do a financial plan or some kind of a what do you need in order to meet your financial goals, it’s an average rate of return.  Let’s say it was five percent.  That doesn’t mean that every year you make five percent.  By the way I’m just making up that number.  It means that 50 percent of the years you’re above five percent and 50 percent of the years you’re below five percent.  If one year you had positive 20 (I meant to say negative 20), maybe another year you had negative 15.  It was the average of five and that’s what’s real important is to keep that in mind because you can’t just focus on the negative 15 in my particular example here.

I’m going to a chart up on the screen of some bear markets and subsequent bull runs.  You can see all the way back to 1928 some of those huge declines. And that red line up there at the top is a 20 percent market decline.  What you’ll see is not necessarily just on this chart but I’ve shown other charts that about every year we have a ten percent decline in the market.  About every four years we have a 20 percent decline in the market.  And about every ten years we have a 40 percent or more.  One thing that has been consistent is it has always come back but not always in the timeframe that we would like.  We would like it to come back the next day.  It just doesn’t quite work that way.

Bear markets and subsequent bull runs

I’m going to focus in now, I’m going to zoom in on the bottom left hand side where that circle is.  You’re going to see the last four major corrections and the last one there is the one that we’re in right now.  That number, that duration, the number of months.  Right now we’re one month into it.  See that number one.  The last one was 17 months.  Thirty months, three months in the 1987 crash.  The average was a couple of years.

Bear markets and subsequent bull runs

I’m going to put another chart up on the screen.  You’ve see this before because I keep using this chart over and over again.  If you’re not paying attention well, shame on you.  Pay attention.  If you were 100 percent in the S&P 500, the unmanaged stock market index, it took you five years give or take to break even from the last financial crisis.  It took you either two or three years depending on the allocation of 60/40 stocks or bonds or 40/60 stocks or bonds.  It has always come back not when we want it to, but sometimes it takes a little bit longer than what we would like.  It’s the when that is going to determine your happiness.  And so that’s why I have repeatedly over the last eight, and I say it here again in the number nine, the ninth video in the last two months that it’s the timeframe and the time horizon and your discipline to stay with what you spent years developing and becoming comfortable with.  Know that these things happen.  When it does happen you still stick with your plan.  The people who are going to be, in my opinion, the happiest five and ten years from now are those that look back and say it was absolutely horrible, it was a lesson I wish that I didn’t have to go through but I’m actually wiser because of it and I believe my outcome is better because of it as well.

Diversification and the average investor

I’m going to continue to do the videos throughout the month of April.  Why?  Because lots of stuff happens and I think that this is a great medium in order for you to get clear and concise information from me.  Hopefully non-emotional, non-sensational like you get on TV.  I’m going to try to be as up front and blunt with you as I can.

Mike Brady, Generosity Wealth Management, 303-747-6455.  Thank you.  Have a great day.  Bye.

March 23, 2020 Market Update: Fear

“Alcohol: the cause of, and the solution to, all of life’s problems.” – Homer Simpson

One thing we hear, especially during challenging times like these is, “I just don’t want to lose it all. I’m fearful of losing all of my portfolio.” In a diversified portfolio you are invested in hundreds to thousands of various things whether it be stocks or bonds. Whether you have a conservative portfolio or an aggressive, it should be diversified. So let’s unpack the fear of “losing it all.” What exactly does that mean and is it something that could actually happen? How does one then walk out of that fear and what action is needed to overcome?



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

You can see from the backdrop that I’m still self-isolated at Generosity Wealth North Boulder Headquarters which is also known as my home office.  Hopefully all of you are doing well.  I have some random thoughts today and the first one is something that I periodically hear from prospective clients over my last 30 years which is I want to be invested but I just don’t want to lose it all.  I’m fearful of losing all of my portfolio.  Let’s deconstruct that and talk about that as a fear or as a concern.

In a diversified portfolio, and you should have a diversified portfolio, you’re invested in hundreds if not thousands of various issues.  Whether or not that’s stocks or bonds or whatever that particular portfolio is whether it’s conservative, moderate, aggressive. It’s invested in hundreds like I said, or thousands.  In order for that portfolio, that pool of investments, to go down to zero all of them would have to go down to zero.  All of the manufacturing companies, all the technology, all of the oil, all of the service.  They’d have to go down to absolutely zero.

Can individual sectors go down at certain points?  Absolutely.  Can individual stocks go from something to bankruptcy?  The answer is absolutely.  That’s why you shouldn’t have a portfolio comprised of only an individual stock or just a few stocks or just some specific sectors.  It just doesn’t make sense to be that undiversified.  Having a diversified portfolio does not guarantee against having market ups and downs, and right now we’re seeing some of those market downs.  It does not protect you fully from that, but in order for it to go down to zero all of the underlying investments that comprise that portfolio which would be hundreds and thousands and the most common names and common stocks and companies out there would all have to go bankrupt and down to zero.  Hopefully you can see this is not very probable. If that was to happen we truly would have an Armageddon here in the United States.

The economy and the market are not necessarily the same thing.  In March of 2009, March 9 to be exact, was the absolute low for the stock market.  At that point if I was to say to you over the next eight years we’re going to have two presidential terms, two four-year terms, for the very first time where an economy that’s going to have a sluggish recovery and never be greater in any of those eight years a GDP growth of over three percent. It never happened before.  Two-four year terms for a presidency where the GDP didn’t grow more than three percent.  And it’s not Obama’s fault.  This is not about Obama.  I’m just using that as a benchmark that the economy is going to be sluggish and it’s never going to be over three percent and oh, by the way, the best thing that you can do is invest in the stock market.  You’d say that’s crazy.  The economy is – really, you’re telling me the economy was sluggish and the stock market is going to be great?  The answer is that’s exactly what happened. It was almost a tripling from March 2009, almost a 300 percent increase during the next eight years.  The stock market, the buy market, those unmanaged stock market indexes, the S&P, the Dow Jones, et cetera, they’re what we call forward thinking. What investors believe is going to happen in the future.  And sometimes they get it right and sometimes they get it wrong.

In 2008-2009 I would say that it was oversold because you can see that what they thought was going to happen, that the economy was going to be even worse.  And then they realized wow, we overshot this thing.  We overshot and then it was a buying opportunity.

If I was to ask the person on the street, if I was to ask you who the best investor of all time is most people would say Warren Buffett. I mean Warren Buffett of course.  If you have some longevity in the markets you might remember Peter Lynch who retired about 25 years ago.  You might say Peter Lynch.  He worked at a big mutual fund company.  Both of them believe that, and this is a direct quite from Warren Buffett, “Be greedy when others are fearful, fearful when others are greedy.”  So, I wonder what did they know?  What do I know that they don’t  know if I do the opposite of what they say.

They’re very smart investors.  They believe, and I do as well, that you make decisions with your head and not with your stomach because the stomach when you do that in the midst of difficult decisions you make bad decisions.  That’s why you have a multiyear plan that you stick with that I’ve talked about in some of my previous videos.

It’s just very important that the economy is not necessarily completely indicative of what the stock market’s going to do and that we make decisions with our head and not with our stomach because that leads us down the wrong path.

If we knew, if we had perfect foresight we would know what to do, but none of us have perfect foresight.  I have had it in my mind I’ve thought about that there’s two different types of people in the world and this applies to so many different areas.  When I talk with people about unintended consequences and potential consequences there’s one type of person who says hey, I’m not going to actually do anything until I know it’s going to have a positive outcome.  I want to know not 100 percent but I want to have a pretty high probability that the action I’m going to take is going to have the positive outcome that I want.

There’s a second type of person who says I’ve got to do something.  If it has an unintended consequence and it might even be negative, well at least I’m moving forward.  At least I’m taking action.  And not taking action, particularly when we don’t know the consequences of that action is sometimes the most difficult thing to do is to not do something just so that we can feel that we’re doing something.

If there is an action that someone wants to take it’s a systematic rebalancing.  The problem with that meaning that maybe your stocks or equities have gone down, it’s increasing the equity exposure.  Doing the exact opposite of what your emotions might actually be telling you at this particular time.

So, if there’s some action to do it’s actually to reevaluate.  Maybe my stock and equity portion has gone down.  Maybe it’s time to rebalance to buy more of that.  That is a question that should be asked that you can think of.

I’ve said for many years as part of my random thoughts here I’m just going to go that some of the most difficult times to talk with an investor to make investment decisions is when you’ve made lots of money and you’ve lost lots of money.  It has everything to do with your mindset and the behavior that you’re bringing to the decision.  If you’ve made lots of money you might have just been lucky, but you have overconfidence in yourself, in your decisions.  If you’ve lost lots of money it’s the opposite.  There’s a fear that’s always the way it works and it just doesn’t work that way.

Most years have a 10 percent decline.  I’ve thrown up on the screen not now but in previous videos that you’ll see that’s the normal.  There is a correction of 10 percent I most years.  There is a 20 percent bear market about one out of every four years.  There is a large correction of 30 percent and 40 percent, let’s just kind of look back.  In 1973-74, in 2000-2001-2002, in 2008-2009, that time and then right now.  When we look at all that we’re talking about once a decade.  The 70s, the early 2000s, the late 2000s and now.  About once every decade and in every single time it has recovered.  Maybe not exactly when we wanted it to.  Of course we want it to go away next week, next quarter, next year.  And it might.  I doubt it’s going to happen tomorrow, but it has always come back and it’s about once every 10-15 years.

You’ll notice that I didn’t say 1987 because 1987 was actually a positive year for the unmanaged stock market indexes.  Everyone thinks that it was this, it’s because it happened very quickly.  It just wiped away a years’ worth of gain, but actually ended the year positive.  And then the years after that the next couple of years were positive as well.

So, it’s good to keep everything in perspective.  That’s why I’m always talking about a long term vision.  I said something in my last video about Point A to Point B an the reason why I bring that up is Point B is not retirement.  It’s not outliving  your money. or not outliving your money, you and your significant other’s money.  You might just happen to have a retirement event inside there.  If you’re 60 years old, I’m just arbitrarily picking 60 years old, your point is not 65 years old.  It’s for the rest of your life because you don’t want to outlive your money.  But during that timeframe you just might have some life events that happen – your retirement, perhaps the loss of your spouse or significant other.  There’s lots of major things that happen during your life expectancy or when you add in your spouse or significant other, both of your lives.

It really does boil down to having longer time horizons even when we’re close or already in retirement.  That’s why it’s good to say we had multiyear strategies, it’s good to keep that in mind.  That’s why you do all the work before something like what we’ve seen in this past month which has been very bad, not good at all.  You do it before that happens.  Steel yourself for those decisions and five and ten  years from now you’ll say it absolutely was horrible while I lived through it.  I sure am glad it’s over.  It was a painful lesson.  I hate that. You know what?  The best thing that I did was I did nothing at that point.

Call me at any time, 303-747-6455.  You have a wonderful day.  Bye bye.



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.

2019 Half-Year Report

“Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labor. It’s about stewardship and, therefore, about achieving the good society.” – Robert J. Shiller

This has been an incredible year so far. Pretty much every month in the unmanaged stock market indexes has been positive.
If you remember, last year 2018 was negative and some people have a tendency to allow themselves to get real negative, they extrapolate negative news into “it’s going to be negative forever” or “I told you that it was going to be horrible”  particularly if you have a negative bias. Going back all the way until the 1920s, three out of four years were actually positive, so historically the strong majority is up.  What we have to do is check our first biases; are we a negatively biased person or positively, and is that helping or hurting yourself?
Watch my latest video for a recap of what we’ve seen so far in 2019.



Hi there.  Mike Brady with Generosity Wealth Management; a comprehensive full service financial services firm headquartered right here in Boulder Colorado and here today is actually up in Wyoming.  This is 4th July.  I wanted to record my video.  I’m up here at my cabin.  Hopefully you’re doing something wonderful for Independence Day.  If you were wondering if I’m in front of a green screen and that’s a picture behind me, the answer is no.  That is actually the picture out of the front of my cabin.  That’s what I get to look at all day long up here in Dubois Wyoming and frankly I’m working all week because I’ve got a lot of stuff I’ve got to get done.  But I want to give you the year to date video and the rest of the year preview and going into next year election year.

So, this has been an incredible year so far.  Pretty much every month in the unmanaged stock market indexes has been positive except for the month of May.  If you remember last year 2018 was negative and people have a tendency to get real negative, they extrapolate negative news into it’s going to be negative forever or I told you that it was going to be horrible, particularly if you have a negative bias. Going back all the way until the 1920s three out of four years are actually positive so there is a strong probability of the markets going up, but sometimes it does go down.  And so, what we have to do is kind of check our first biases; are we a negatively biased person or positively.

I’m going to do a video next month actually talking about election years and what are the probabilities of the year before an election, the year of an election, et cetera, and how politics may or may not affect the stock market.  Because the economy and the stock market are also two different things, which I’ll do it in a video going forward.

But let’s talk about 2019.  It came roaring back the first quarter of this year, wiped away in general in the unmanaged stock market indexes in one quarter what we had lost last year in 2018.  We were looking good in April of this past quarter and then May we gave some up.  We never went negative in the unmanaged stock market indexes and all of the losses in May were wiped away in June and then some.  So now, with the unmanaged stock market indexes we are at all time high so people might say to themselves yeah but aren’t you really worried that the market is at a high?  And the answer is if you believe the market is going to go up then it’s always at highs, I mean that’s the point is that you should hope that there’s going to be new highs.  Just because it hits a high doesn’t mean that it’s a ceiling and it can’t go any further, as a matter of fact if you truly believe that why do you have investments at all?  That means that where you are today it’s not going to be higher in the future, which makes no sense.  Why would you have investments if you don’t believe that it’s going to be higher in the future?

So far this year we are in double digit positive returns for those unmanaged stock market indexes.  May was a single digit declines with the S&P 500, which is one of those indexes I talk about, about seven percent decline in the month of May, which we made back up in June.  It is normal for there to be double digit declines.  Most years have double digit declines and we haven’t even seen that.  In 2018 last year we did, we had some real sharp declines.  But that was only one out of the last four or five years where we had those double digit declines, so we have had an unusually unvolatile timeframe in the last two/three/four years.  So, let’s remember that because if you’re investing for the long-term why make any decisions based on short-term trends?

I’m going to put a couple of charts up there.  The first one I want to put up is the earnings per share for the S&P 500 continue to look really nice.  Bonds are up as well for this year, single digits but between five and ten percent depending on what area of the bond market that you are invested in.  So, stocks are up, bonds are up, unemployment is down, earnings per share is up.  I mean if you are a negative person you can try to find something to be negative about, but I would argue that doesn’t serve you any good.

There’s an argument that some people say is like hey better too early than too late in most things.  Because it’s looking so good I should move out because I’ll avoid negative things in the future.  My answer would be no that doesn’t help you because I have seen in my 28 years of doing this since 1991 that getting out might be one thing, but if it continues to go up you never get back in, or if it goes down you have such a propensity to preserve that it’s also when do you get back in?  And so, no, if you’re in this for the long-term, five, 10, 20 years then stay invested, have your plan and stick with it.  If you’re going to have investments for a short-term, you know, one month, six months, 18 months why should you have any money in the markets?  I mean that’s not even a full market cycle.  So, if you judge long-term investments based on short-term trends that’s a recipe for disaster.

The economy, as I mentioned earlier, is not the stock market even though the economy is doing great.  Now, you wouldn’t know that necessarily by watching the news.  If you are getting whipsawed in your emotions by the 24/7 news cycle I would say don’t do that because if you like that, hey great, that’s wonderful, but don’t make any decisions on it and don’t listen to what they have to say about the economy and the stock market because that is going to cause you lots of angst.  For the rest of the year continue to be bullish.  You’ve heard me for the last my gosh five/ten years be bullish and that has served us well.  I see no reason not to be bullish going forward.  As a matter of fact, once again, you’ve got to watch my video next month, but 90 percent, going back to the early 30s of the year before an election, 90 percent of them have been positive and strongly positive.  And so, that doesn’t mean that we should be invested because of that, but all the ingredients are there.

That’s it for right now.  The rest of the year I never answered that thought I never completed that thought.  I don’t know what’s going to happen.  I don’t know any more than you do.  Unlike all those pendants on TV to who say with very little humility that they know what the future is.  You don’t know the future and I don’t know the future, but fortunately we’re not investing for the next six months.  If you are you shouldn’t have investments.  We’re invested for the long-term and I’m going to make the bet that going forward, even if the next six months are down, even if the next two years are down, history has shown that going back to 1950 there’s never been in a diversified portfolio a five year time horizon when you have lost money and so therefore that is a bet that I am willing to take.  Even though it’s possible, absolutely, the future is uncertain.  However, we can’t live our lives running away from things, we have to live our lives and our investments and the future based on the best data that we have and how we feel we’re going to be best served long-term, not short-term but long-term and so that’s what I think going forward.

Stay tune for that video next month.  I have a couple good ones coming forward and I really hope that you watch those and that you have a wonderful – that you had because by the time you get this 4 the July weekend will be over, but anyway hopefully you’re doing well.  Mike Brady; Generosity Wealth Management; 303-747-6455.  Have a wonderful day.  Thanks.  Bye bye.

May 2019: Making Sense of the Market

“Being rich is having money; being wealthy is having time.” –Margaret Bonnano

It is important to take a macro versus micro approach to investments, meaning we have to take a very big, long-term view in order to start to make some sense of the stock market. There are many variables in this equation that we call the market and only by looking at it as we would approach a mosaic by looking back months and even multiple years does it start to make sense.

Listen for more on how to keep perspective when looking at the market.

Watch my short video or read the transcript below.



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

Today I want to talk about making sense of things. I was meeting with a client a week or two ago and he said Mike, it doesn’t make any sense in the stock market. It’s something that I don’t understand. It goes up high one day and down the next day for a reason that I can’t understand. And my answer to him was stop trying to understand it. Stop trying to understand it on a daily basis, a weekly basis, even a monthly basis because I don’t know the future, you don’t know the future and for us to try to guess the emotions, the intents, the actions of millions of other people is very difficult.

We have to take a very big, long-term view in order to start to make some sense of the stock market. If we’re looking at it from a daily basis, one day if you listen to the newscasters or read some article they always have some reason why it went up like they know definitively what millions of people are thinking. The next day it might completely reverse and then they give a different answer that might be very similar. No, not that many people change from day to day. There are many variables in this equation that we call the market and only by looking at it as we would approach a mosaic by looking back months and even multiple years does it start to make sense.

So you have to look at yourself and your own emotions and say wow, am I going to allow myself to be whipsawed from day to day, from week to week, or am I going to take the long-term view. And your bias is very important to know. If you’re a naturally optimistic person I would argue that history has shown you to be a winner in this because three out of four years going back to 1929 the market has been positive. One out of four years have been negative. That doesn’t mean the future is going to be that way. All I can really say is that historically that has been the average when we look at many multiple years, many five-year, ten-year and twenty-year time horizons. Those that are pessimistic and are trying to time the market are worse off than those that say hey listen, I’m going to take a long-term view. On average I am going to be the winner. Sort of like going to a casino and you get to be the house. You don’t get to win every single hand but over time you certainly are the winners.

And so the future is never certain. It could be different in the future but this is what I think would be a better approach for most people.

Mike Brady, Generosity Wealth Management, 303-747-6455. I’m always here if you want to talk. Thank you. Bye bye.