Current Events
Mike discusses current events and how they could be affecting your investments - or more likely, your perception.
-
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,…
- 401ks, Adams Financial Concepts, COVID-19, Current Events, Financial Planning, Return on Investment, The Investment Industry
Do you know how much money you need to retire?
Will you have enough money to retire and not reduce your quality of life? Big question. Here is a table that gives some idea of what your nest egg would be at retirement if you had saved ten (10) times your earnings. Of course, this table must assume the following: You will only live to age 85, or you will run out of money. You will only need 80% of your income in retirement and that you stay healthy until you die Inflation of 3% or less The accepted wisdom that your nest egg need be only 10 times your current income is based on data collected forty years ago.…
- Adams Financial Concepts, Current Events, Financial Planning, Mile High View, Return on Investment, The Investment Industry
Higher Returns
I believe that higher returns do not mean higher risk. Let me say it again: I believe that higher returns do not mean higher risk. Albert Einstein stated: “No matter how, where or when or by whom measured the speed of light in a vacuum is constant.” That sums up the scientific method. There are no exceptions. NONE! If someone were to find an exception, the whole theory is invalid. Since Irving Fisher in the 1920s, economists have been trying to find the theories and laws that govern the stock market. The “Efficient Market Curve” has been proposed and is generally accepted as rational and logical. It is the concept…
-
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…
-
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…
-
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…
- Adams Financial Concepts, COVID-19, Current Events, Financial Planning, Mile High View, Return on Investment, The Investment Industry
Is It Luck or Skill?
Doesn’t it make you feel comfortable to live in an orderly and predictable world? Isn’t that especially true when it comes to investments? Haven’t you heard that the markets do not like uncertainty? But isn’t it also true that the only constant in the world is change? In spite of that, our human brains have evolved to downplay the role of luck in our lives. That is why most investors like a financial plan that lays out the next 20 or 30 or 40 years of our financial lives. There in black and white, or more probably in a rainbow of colors, is the map of our financial future. It…
-
Change Is Difficult
The question is this: does the value you are receiving now justify staying put. After all, change is usually difficult. Have you really evaluated what value you are receiving right now? Do you remember Harry Truman: not President Truman, but Harry Randall Truman? Harry Truman lived on the south end of Spirit Lake at the base of Mount St. Helens. He had owned and operated a recreation and fishing lodge for decades. He called the mountain his friend and claimed a deep relationship with it. He had watched the puffs of ash and had become an expert in the earthquakes. Those tremors had become more frequent in 1979 and 1980.…
-
SHOW ME THE MONEY!
One of the most famous movie quotes comes from Jerry Maguire: “Show me the money”. In my industry, I hear so many stories about making money in stocks that make me want to shout at the teller “Show me the money!” I want the authors or story tellers to show me their strategy really works. Recently, I received a new white paper from Northern Trust that was titled “Getting Paid to Lower Your Risk”.[1] The authors were credentialed (PhD and CFAs); These are intelligent people. I wanted to see how Northern Trust was paying their clients to lower their risk. I custody my client accounts at Interactive Brokers, who started…
- 401ks, Adams Financial Concepts, COVID-19, Current Events, Financial Planning, Return on Investment, The Investment Industry
Are You Ready?
Did you know the standard railroad gauge in the U.S. is 4 feet 8 ½ inches? Do you know why it is such an odd measure? Railroads in the United States were built by British expatriates who designed them the same way that rail lines were built in England. Engineers in Britain based the width of their railroads on the spacing of tramways which had preceded railroads. They built the trams with the same jigs and tools used for building wagons. The wagons were built to that width so they would fit the road ruts in medieval England which were based on road ruts in Imperial Rome, which were in…