• Adams Financial Concepts,  Current Events,  The Investment Industry

    The Biggest Stock Market Loss Ever

    Archegos, a $10 billion fund, may have lost $100 billion. The final number is not yet settled and may not be for several months, but the loss is huge and it all seems to have happened within 48 hours How did it happen and who is Archegos, anyway? And how could a fund worth $10 billion lose $100 billion? Archegos is a Greek word for “one who leads the way”, and what a way it turned out to be. Archegos was founded as a family office by Bill Hwang. Hwang cut his teeth as one of the so-called “tiger cubs” of investing. Julian Robertson ran the very successful Tiger Management…

  • Adams Financial Concepts,  COVID-19,  Current Events,  Mile High View,  Return on Investment,  Super Cycle,  The Investment Industry

    Do You Believe It?

    Peter Lynch said, “If you cannot convince yourself ‘When I’m down 25 percent, I’m a buyer’ and banish forever the fatal thought ‘When I’m down 25 percent, I’m a seller’ then you’ll never make a decent profit in stocks”.[1] Lynch was one of the greatest investors of all time. He was, of course, talking about a single stock, not an entire portfolio. But in a concentrated portfolio, a stock down 25% can drag down the short-term performance. For the first quarter, I expect that the total of my client portfolios will be roughly flat. That is after a 77% gain in 2020 and 40% gain in 2019. None of the…

  • Adams Financial Concepts,  Current Events,  Mile High View,  Return on Investment,  Super Cycle,  The Investment Industry

    Should We Be Worried?

    What a week it was for the market! Up one day, down the next. Back up and then down and then down again! So what gives? Should we be worried? The latest data indicators painted a gloomy picture. If you assume the severe winter storms, including snow and freezing temperatures across much of the United States, are going to continue through the summer, and if you think no one is going to spend their stimulus checks, then things do look pretty bad. But the weather changes, bringing with it summer’s new perspective, and most recipients of stimulus checks and monthly child benefits are going to spend them. From that perspective,…

  • Adams Financial Concepts,  COVID-19,  Current Events,  The Investment Industry

    Are Stocks Overvalued?

    Are stocks overvalued? Any number of “experts” are concluding that they are indeed overvalued. But are they? Really? When I was a rookie stockbroker back in 1987, I cold called a prospect who told me the market was overbot and overvalued. The DOW at that time had broken through 1,700, and this prospect had pulled his money out of the market a month earlier and was waiting for the DOW to drop off to 1,300. I never talked to him again. I don’t know if he is still waiting after 34 years for DOW 1,300. Those of us who stayed in the market have ridden that growth to 32,000. I…

  • Adams Financial Concepts,  COVID-19,  Current Events,  Mile High View

    Is the Bear Growling?

    There is a lot of talk today about the Buffett Indicator. The Buffett Indicator is the ratio of the market cap of all publicly traded stocks to GDP. Pessimists are saying the Buffett Indicator is predicting a bear market or even a crash. According to the indicator today, stocks are overvalued. There is no question that Warren Buffett has been a brilliant investor, but should we really use this indicator? He is a “bottoms-up” investor, as I am. But there are more problems with the Buffett Indicator. Almost half the revenues of all publicly traded companies come from overseas sales. The United States represents just 16% of worldwide GDP. So…

  • COVID-19,  Current Events,  Financial Planning,  Mile High View,  Super Cycle,  The Investment Industry

    Don’t Be Fooled!!

    The rapid recovery of the market in 2020 was exceptional. Don’t count on a repeat during the next big sell off. Instead, plan for a “Margin of Safety” in your portfolio. The bounce back of 2020 is the shortest on record. Most market recoveries take a lot longer. If counted in inflation adjusted terms, the drop that began in 1966 did not recover for 30 years. Stocks hits 1,000 on the DOW in 1966 and then bounced up and down for 16 years before going on to new highs. But inflation roared during that time and devalued the dollar by 70%. It took three times as many dollars on the…

  • Current Events,  Financial Planning,  Mile High View

    Inflation: Now Is the Time to Prepare

    Beware the slow “creep” that could devalue your investments. In their book, The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival, Charles Goodhart and Manoj Pradhan make the point that changing demographics has the potential to reduce the value of your portfolio.[1] Since the end of World War II, there have been several major changes in the supply of labor. First, there were the baby boomers born from 1946 to 1964; eighteen years later, they powered a surge of 75 million new young fresh faces that led a migration from cities to suburbs and prompted a building boom in housing, schools, fast food, and shopping malls. They…

  • Adams Financial Concepts,  COVID-19,  Return on Investment

    Following 2020, A Little January Dip

    Almost three times the original investment in ten months! Check the graph! Three new profit-sharing accounts and a little dip. Mid-February both the Profit Sharing and Growth Accounts are up double digits according to internal estimates. We are off to what appears to be another very good year. Given the probable passage of the $1.9 trillion stimulus package, the increasing vaccinations, the reduction of COVID-19 cases, and the reopening of the economy, I am guardedly optimistic for 2021. I spent considerable time reviewing the 2020 77% increase in the composite of client growth accounts following the 40% increase in 2019. I reported my findings in a previous newsletter. Both look…

  • Adams Financial Concepts,  Financial Planning,  Mile High View,  Return on Investment,  The Investment Industry

    How We Achieve High Returns

    Peter Lynch called them “10 baggers”. Some people call them “home runs”. Some authors describe them as “long tails”. They have been called “high-fliers”.  What are they? They are stocks that will grow ten-fold or more. The strategy at Adams Financial Concepts, LLC (AFC) and for Mike Adams, even before founding AFC, has been to search for those companies with the potential to be 10-baggers and to do that in portfolios with a limited number of total holdings. When there are 300 stocks in a portfolio the 10-bagger will make little difference on the total portfolio performance. But in a portfolio of eight to ten stocks, one high flier can…

  • Current Events,  The Investment Industry

    GameStop – What Happened?

    “Things that have never happened before happen all the time,” wrote Scott Sagan, and while he was referring to mismanagement of nuclear materials, I think his words are certainly applicable to recent market events.[1] There are two lessons, maybe three, we ought to learn from GameStop’s shocking rise last week. First, that unexpected “black swans” seem to happen almost on a regular basis. In the last 40 years, the market dropped 22.6% in one day, October 19, 1987. In 2000, the dot-com crash took the NASDAQ down 80%. In 2008-09 the Great Recession took the market down 37%. And, of course, 2020 saw the pandemic. Things that have never happened…