• Uncategorized

    What Happens Now?

    “It ain’t over till it’s over,” said Yogi Berra, the legendary New York Yankees catcher, and it’s hard to argue with his logic. He, of course, was talking about the 1973 pennant race, but I believe it applies to the economy and the stock markets today: “It ain’t over till it’s over”. There is good news and bad news. First the bad news: The unemployment rate came in at 14.7% with over 20.5 million jobs lost since the pandemic hit. There are over 33 million people who have filed for unemployment. Not since the Great Depression have we seen these types of unemployment numbers. The economy is staggering under the…

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

    The Economy: BC to AC

    It’s time to talk about BC to AC. That is, “Before Coronavirus” to “After Confinement”. The Economist calls it “the 90% economy”.[1] But first, let me take you back in time to give you an example of what may well be in store for some companies in the future. There was a junior clerk at Rochester Savings Bank in 1878 who decided to take a trip to Santo Domingo in the Dominican Republic. This young man wanted to record his trip by photographing it, however, the camera in 1878 was huge, required a tripod to hold perfectly steady, and the picture was recorded on a heave plate that had to…

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

    Oil 2020

    What would you say if someone offered to pay you $37,000 to just take one single contract for 1,000 barrels of oil? All you had to do is find a place to store it. That actually happened a week ago. All you had to do was figure out where to put ten tanker trucks of oil until the market got better, and you would have been paid to take custody of the oil. It doesn’t take a rocket scientist to know that demand for oil fell off a cliff. Airlines were cancelling flights and leaving their planes on the ground. People were being ordered to stay home and shelter, and…

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

    When Is the Best Time to Sell?

    When is the time to sell and liquidate portfolios? Most advisors, according to a recent study by Howard Schneider of Practical Perspectives[1], says most advisors have seen little impact from the stay at home orders and they perceive the market will return to normal in six months. I have considerable concern. Yes, I am staying the course today and am optimistic that we will be back to normal by the end of this year. But I am not blindly staying the course. Usually, I try to accomplish at least five tasks every day. On March 12th, I spent the entire day on one task and that was to determine when…

  • COVID-19,  Current Events

    What Just Happened?

    On Friday, the DOW fell 361 points and then yesterday the DOW gained 1,627 points. That is a sign that the market probably bottomed on March 23 and is beginning a climb back to new highs. It is a pattern that we have seen before. Let me give you the explanation of why I say this. The easiest illustration is Black Monday, October 19, 1987, when the DOW plunged 508 points – 22.6% in one day. People remember Black Monday, but what might have been more important was April 20, 1987. When the markets fall like they did on Black Monday, or over several days in March 2020, almost all…

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

    WHAT TO KNOW ABOUT THIS MARKET SELLOFF

    “History doesn’t repeat itself, but it often rhymes”. I believe there are lessons to be learned from a previous time when the market, during a good economic time, plunged to the worst down day percentagewise in market history. It was the first time that the market plunge spread internationally to the world’s stock markets. There are lessons to be learned from Black Monday back on October 19, 1987. On that day, the market plunged down over 22%! Black Monday is remembered as the worst market drop in history, but it was October 20, 1987 that had the potential to collapse the entire financial system. There is an old saying: “for…

  • COVID-19,  Current Events,  Mile High View

    2020: DOW Down 2,000

    Hello 2018. Yes, 2018, not 2008. The drop has been sharper, but it feels the same. Computers panicked! This drop has been caused by panicked computers, not humans. Between 60 and 70 percent of all stock trades on normal days are made by computers. They can read the news in a fraction-of-a-second, and they have a list of rules on what is good news and what is bad. When the news falls into “bad” parameters, the computers sell. They don’t just sell once, but many times, and they make money on fractions-of-a-dollar, and then cover their sales a short time later – wash, rinse, repeat. The algorithms are not built…

  • COVID-19,  Current Events,  Mile High View

    The Coronavirus Is NOT The Great Recession

    The coronavirus is not the Great Recession. The cause of the Great Recession was a financial crisis whereas the cause of the coronavirus is a biologic crisis. The “cure” for the financial crisis is not going to be the same as the “cure” for the coronavirus. The impact on the market of the Great Recession is not going to be the same impact as the coronavirus. It is best to understand the difference between the two and the difference in strategies. The Great Recession was a financial crisis. It was essentially a worldwide burst of a credit bubble that had been building since the mid-1970s. Prior to the 1930’s Great…

  • 401ks,  Adams Financial Concepts,  Financial Planning,  Return on Investment

    Why Do Financial Plans Fail?

    You have likely heard of Financial Planning, and you may even be using it yourself for retirement planning, building net worth, providing for education, etc. Although it has become a very popular way to design portfolios, I believe that traditional Financial Planning has five specific fatal flaws: Plans do not adequately provide a margin of safety for black swan events. Plans use averages which work well during normal times but are not geared to deliver a margin of safety for times like the Great Recession of 2007-2009 or the high inflation times of the 1970s. Plans use probability models which are not reflective of actual market probability. Probabilities are calculated…

  • Current Events,  Mile High View,  Super Cycle

    What in the World is Happening to the Stock Market?

    Did you know that 60% of the revenues for companies in the S&P 500 are generated overseas, outside the United States?[1] It is important when looking forward to stock market performance in 2020 and beyond to understand what is happening to the world GDP and world economy. This is the first of two eLetters in which I will give you my views on the stock market in 2020. The best analysis I have seen was done in 2011 and is, in my opinion, still valid today. Standard Chartered Bank, a large bank based in London, released a study in which they state that the world is in a “worldwide economic…