• 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,  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…

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

    5 Lessons from 2020 Hindsight

    Do you know of anyone who predicted the pandemic? Anyone who guessed we would enter 2020 and within months see a pandemic that would result in over 1.6 million deaths? Who could have predicted that the United States would be the country with the highest number of cases and the highest number of deaths? Who could have predicted the market would drop 34%, only to recover to an almost normal ~14% gain by the end of the year? Frankly, no one. Looking back on 2020, here are five important lessons that I and all investors should learn: 1. Black Swans happen. Every so often in a bevy of white swans,…

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

    Climate & Migration

    No matter what you think of climate change, some facts are undeniable. That is to say, there are going to be investment opportunities, and if you want to benefit your investments by investing on the long side in those companies with the best chance to succeed and short those that won’t rise to the challenge, then I believe what I am about to share is important to understand. You have likely experienced a microcosm of how the greenhouse effect works in your daily life. During the summer, you have the air conditioning running in the car even when the temperature outside is a moderate 75⁰ F. Inside the car, you…

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

    Four Truths No Matter Who Wins the Election

    There are dozens of pundits and talking heads making claims about what happens to the stock market depending upon who wins the 2020 Presidential Election. Some claims are outrageous. Some claims are fantasy. Some claims are straight-up weird. So, what should investors make of all this? Here are four truths I believe will hold no matter who wins the election. 1. The stock markets have done well under both Democrat and Republican Presidents. I realize some of the presidential terms have been eight years and, in the case of Presidents Ford and Trump, less than four years in length. But the point is this: stock markets have done well under…

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

    Why the Market Drop?

    You’ve heard the expression “The market is telling us … [fill in the blank]”. The reality is that the market cannot talk, cannot do a ZOOM meeting, cannot send us an email. It is not the market talking, it is the investors – human investors and  computer algorithms. To understand why this market drop I believe it begins with the process. When you buy a stock, you buy it with the expectation that it will rise in value. When you sell short a stock, you sell with the expectation the stock price will sink. Financial companies and institutions hire analysts whose job is to forecast future revenues and income. They…