4th Quarter Preview

The 3rd quarter was good, essentially across the board.

However, I’m concerned about some leading indicators that are slowing and indicating a tough economy ahead (notably Chicago PMI) and I’m factoring that in.

That being said, I’m still looking for a nice finish to the year, but watching this next quarter very closely.

If it’s weak, then I’m concerned about 2013.

I’ll keep you posted throughout the quarter, but watch my video now to get my current thoughts.

3rd Quarter Preview – Heading into the Election

The 2nd quarter distinguished itself by significantly increased volatility and ultimately seeing the unmanaged stock market indexes down.

Those same market indexes are still up for the year, and it’s my belief they will end the year positive, but with continued volatility.

November is the big election here in the United States, and regardless for whom you feel is better and hope will win, the market likes a reduction in uncertainty. At that point, at least some semblance of planning can be done for a few years by the private sector as it analyzes the tax and regulatory environment it may find itself.

Europe is unwinding, unemployment is still high, and Asia is slowing down. Profitability is high in our largest companies, cash balances on large multi-national corporations are huge, and creative destruction is in full bloom.

All adds up to some volatility.

Watch my video for a more detailed discussion



Happy 4th of July to you! Mike Brady speaking to you from Generosity Wealth Management here in Boulder, Colorado; and happy summer to you. Here for the second quarter review and the third quarter pre-view. Second quarter was a difficult quarter, okay? I don’t want to minimize that impact. May was just an absolutely brutal month. June recovered from some of that but not enough to make the unmanaged stock market indexes positive for the second quarter.

If you look back three months ago, one thing that I said is that I believed that volatility was going to increase, and it did. It did in fact increase; we saw a much more erratic market in the second quarter than we did in the first quarter. The unmanaged stock market indexes are still positive for the year. Three months ago, six months ago, I said that I believed 2012 was going to end as a positive year for those stock market indexes and I still believe that is true today. That does not mean you should not have a well-diversified long term strategy in your portfolio- you absolutely should. I think that’s important for every client.

Now as I look forward to the third quarter, there’s going to be a lot going on, particularly as we lead up into the election. The election is, of course, the first week of November, so we’ve got the third quarter leading up to it with the convention and all kinds of hype. But we also have, if you’re looking for things to be negative about; you’ve got the looming Iran crisis; you continue to have Europe problems with Spain and Italy; you’ve got China showing a slow-down and many analysts saying they’re going to have a huge correction at some point in the future; (who knows if it’s going to be third quarter or not.) But the you also have, not this quarter but in December, you’ve got the expiration of Bush Era tax rate cuts. And so they’ve been extended and now it’s come due again and it’s going to be in that after-the-election-but-before-the-inauguration and that’s kind of a big thing going on this year, between now and the end of the year.

On the flip side though, companies have huge cash balances, companies have been very successful at reducing their costs. So one of the positives of being very lean and mean and efficient from a company point of view is some of their fixed costs, like a decline in oil in the gas prices, can have a major impact on their profitability. And so I believe that’s a positive trend for these companies. Plus, they’re dealing with lower expectations. There’s a lot of bearish sentiment out there, so that’s lower expectations that they have to meet. One of the most recent studies has shown that potentially the housing crisis has hit a bottom, the prices. And so I think that it’s going to kind of stoke the stock market a little bit more.

I do continue to believe that the end of the year is going to be volatile, but it is going to end positive. You’ve got to remain diversified. I believe you should meet with your advisor and hopefully that’s me if you’re one of my clients, to find a portfolio that works well for you, that meets your long-term goals. I’ve said this time and time again, that one of the best things that you can do, and hopefully you can do that with your advisor, is figure out, you’re at point “A”, where is point “B”? How do you get there? What plan works for your risk level? With all the variables, so that you can have the life style that you want upon retirement. Or if you’re already in retirement, that you can not out-live your money. All the kinds of variables add up together. If you do have a long term strategy, frankly, month-by-month, quarter-by-quarter, these things are just data points and so I hope that you are sleeping well at night because someone is worrying about it on your behalf.

You are always welcome to give me a call, Mike Brady, 303.747.6455. My e-mail is mike@generositywealth.com www.generositywealth.com is my web site, I’d love for you to go see that. Hope you have a wonderful 4th of July. Not sure exactly when this video is going out, hopefully it is going out Monday afternoon, maybe it’s going Tuesday, I’m not sure but I’m recording it Monday, July 2nd. And like I said, I hope you have a wonderful 4th of July. We will talk to you later, bye, bye now!











Winners and Losers for the 2nd Quarter 2012

Much of the unmanaged stock market index gain for 2012 was in January, April, and June. May was brutal.

In my opinion, you must have a well diversified, long term strategy for your portfolio and for reaching your financial goals.

Do you have a plan and strategy you’re comfortable with? If the answer is “no” in any form, I encourage you to call me so we can discuss what needs to happen in order for you to emphatically answer “yes!” to that question.

Full Article on Winners and Losers for the 2nd quarter at the link below.

Click for Full Article


Thoughts After a Tough Month

Sorry in advance for a longer than usual video this month (7.5 minutes), but I have some charts and graphs in there to provide some context for the slow ride down in the un-managed stock market indexes that we saw for May.

The question we always have to ask ourselves is “what is this telling us?” and “what does this mean for the future?”.

Click to watch my video.



Good morning, Mike Brady with Generosity Wealth Management speaking to you from Boulder, Colorado. And today I want to talk about what’s been going on in the markets; what’s happening in Europe, how that’s affecting things in the United States; kind of the United States by itself. But really, kind of what’s happened in the markets in the last month or so. I mean the unmanaged stock indexes in the last month or so are down about ten per cent and this is the third time in twelve months that we’ve seen within the space of a month a ten per cent decline, or so.

One thing that makes this May different is that it was a kind of slow steady decline versus lots of volatility. I mean if we look back to just last summer, remember when there were four and five and six hundred point swings on a daily basis. We just didn’t have that this past May.

Unfortunately, the last month has wiped out some of the gains that we had accumulated in the first quarter of this year. Just to provide some context the markets are actually still positive for the year, the unmanaged stock market indexes. So, the question you might ask yourself is, OK, we’ve had low volatility in May, it’s been a decline in the month. The optimist in you might say, well, the market is reading this, the market has actually done quite well over the last three or four years since March of ’09, and this is just kind of a step back, and it’s reading the market and it’s not freaking out. The pessimist in you might look at Europe and all the bad news there, how is that summer of discontent going to affect the global markets, the U.S. markets and what’s going to happen with the European Monetary Union, our continued bad job markets throughout the summer leading up in to the election etcetera? And say, “Wow, this is just the beginning. I’m looking at a big crevice before us, I’m looking at the abyss and I certainly don’t like it and I feel uncomfortable with it.”

One of the reasons we have long term diversified strategies, and hopefully you have one, is because that’s an investment, a conscious investment, in the future, saying that “I’m going to take three steps forward and one step back.” Maybe five steps forward and three steps back, however it is. But over the … why would you invest in something if you believe that long term that it’s not going to be greater in the future than it is now? Now I could sit here and show all kinds of studies which show that having exposure, having a well-diversified portfolio, is in the investor’s best interest as you’re reaching your retirement goals or as you’re in retirement, maintaining your principal and some income going forward.

But as we look at that, I’m going to throw up a chart here, on the screen and what you’ll see is intra-year declines are something that have always happened. And it’s not uncommon for there to be double digit returns. I’m going to circle a couple of them up on the screen. But what you’ll see is that does not mean that the year ends negative. So don’t write off this whole year just because it’s June and the markets, although they’re only slightly positive they’re not double digits or maybe what you would like. And so there’s more than fifty per cent of the year before us even though May has not been very favorable.

I happen to be a contrarian at heart and one thing that…, I’m going to throw a chart up here, is the equity allocation, the recommended equity allocation when it’s very high percentage, you’ll notice that it is kind of market tops, there at about 2000. A lot of times when people do not want to have an equity allocation, like March of ’09, is exactly when you want to do it. Let’s keep it in perspective that since March of ’09, the market, as of last quarter was up well over 100 per cent in an unmanaged stock market index.

One thing that you want to consider as well is having a very well diversified portfolio, including bonds both government and corporate. They have a tendency to reduce your volatility, of an individual portfolio. That’s why you have an asset allocation. That’s why you have a diversification. But you make various “tilts”, I might say, throughout the year. And that’s what I do on my clients’ behalf.

So, let me summarize here real quickly; the market in May has been very difficult. The question we have to ask ourselves is, “what does that lead us, what conclusion does that lead us through the summer and through the rest of the year?”

I stand by my conviction, which I gave at the beginning of the year, this is going to be a positive year. And the reason why I do that, even with all the negative information out there, OK, I hear it OK? And I certainly hope I don’t give off the impression that I’m stubborn. It’s like, “No, no, Mike won’t… data’s changing and he’s not changing.” Which at my last video I said, “Hey, I’m really concerned about things going forward.” And I think I was right in the last two or three weeks or so that there has been a weakening. But the reason why I am optimistic is still because of the strength, as I see it, in our companies that have fortified themselves against very uncertain times and some bad information going forward, OK?

If I am wrong, that’s why we remain diversified. And that’s why we keep our eye on the long term goal and have diversification, OK? You’ve got to have a good portfolio. But that being said, I don’t think I’m wrong. Why would I say something if I thought I was wrong? But I also have to have the humility, and every investor needs to have the humility, and you don’t bet all on one particular thing.

So, I am still optimistic for the year. I’m not changing my allocations in general at this point. I am not freaked out as in; the world is going to end this particular summer. I do believe the volatility is going to continue to be greater now than it was in the first quarter of this year. But I don’t believe, as I see it, as I do my analysis, that we’re going to see the kind of volatility that we saw last August.

There is a lot of data that’s going to come out this summer. Europe is still going to be the big news and so we have to watch that but we also have to keep it [take it] with a grain of salt; about how that’s going to affect us.

One thing that I continue to be concerned about is the coupling of Europe, the disappointing news out of Europe, and the disappointing economic, kind of macro-economic news out of the United States. I think that that’s a real disturbing trend. And of course, I continue to watch China as their numbers have faltered as well.

That being said, I’m holding true right now with the allocations that I have for my clients. If you need assistance, if you want a second opinion, I’m happy to give that to you. I certainly hope that you have a plan as well, that’s a multiple year plan about how to reach your goals and kind of live, reach your goals. Live within retirement at the lifestyle which you would like.

Anyway, Mike Brady, Generosity Wealth Management. Sorry this video’s been a little bit longer but hopefully I’ve given some good data in there as well and some good thoughts for you. Give me a call if you have any questions, 303.747.6455, and we’ll talk to you later, thanks, bye bye.











Current Thinking with Uncertainty in the Air

There are few things the stock and bond markets hate more than uncertainty. Currently, part of that uncertainty is the unraveling of the European Monetary Union and the impact that will have on us here in the United States.

Since the beginning of the year (see January and April videos in particular) I have been optimistic, but I have to say my enthusiasm for this market is waning. The summer months, historically difficult in themselves, have me concerned with lower GDP numbers, continued unemployment leading to the election, but most importantly concerns about the debt problem in Europe and domestically.

I’m adjusting my portfolios accordingly.

Click to watch my video.


Good morning, Mike Brady with Generosity Wealth Management speaking to you from my offices in here Boulder, Colorado. And I’m recording this on a Friday evening, originally I had a couple of topics I wanted to talk to you about but so much has been in the news recently about consistently down days in the market; J.P. Morgan Chase losing two billion dollars on their propriety trading desk; Europe, France just had an election. Then I wanted to share with you my analysis, kind of my thoughts about that because up till now I’ve been optimistic and data changes, it’s not that I’m not optimistic. As a matter of fact I’m still feeling very good about getting rid of that uncertainty of the presidential election one way or the other. But this summer some more uncertainty has been introduced, I think, to the system, to the world, to our analysis that causes me to really look at things very closely. And this is what I’ve been doing in the last week or so, and will be continuing in the near future.

One of the reasons why I was optimistic is increasing profit margins in our businesses, kind of corporate America. Their very large cash balance sheets ready to deploy when they feel there will be less uncertainty. Because they will deploy in research and development and new staff and new infrastructure but they’ve got to have some kind of confidence that will come back to them in a rate of return. Completely reasonable.

But right now Europe really is becoming a sore spot and that has me concerned as we’re going into the uncertain months of summer. Spain, just to give a little bit of perspective; it’s the fourth largest economy in Europe and the twelfth largest in the world. It currently has twenty-four percent unemployment, and among Spanish youth over fifty percent unemployment. How is this really going to affect Europe? And how is Europe really going to renegotiate some of the arrangements of the European Monetary Union, etc., in the coming months? I don’t know. I don’t know any more than you do but what I will say is I’m reading this stuff and I’m analyzing it very closely and I’m coming to some conclusions that—the uncertainty has me concerned. So I’m decreasing my percentages in the international in general and it’s something I’m watching very, very closely. And I’ll continue to report to you how I’m thinking.

Just to put some perspective on where the markets have been, I’m going to throw up on the screen there (a chart) the Dow Jones for about the last twelve months. And what you’ll see is that although the last four to six weeks have been down and volatile and increased volatility etc. In a long term diversified portfolio, having that strategy- you’re still positive for the year in an unmanaged index.

It’s good to have that because these things that are happening right now, most recently, are always going to happen. The market is cyclical and we can’t get too concerned, too freaked out when it does happen but what we can do is reassess with new data coming in—where should we go? And where should we be, where should we tilt, one way or the other as we’re going forward?

Anyway, if you’re my client you know I talk to you all the time. Of course I want to hear from you if you have any questions or concerns after my video here today. If you’re not my client, if you want a second opinion on what you’re doing I’d be happy to do that. It would be my pleasure.

Mike Brady, Generosity Wealth Management, 303-747-6455, you have a wonderful week. Thanks! Bye, bye.