Return on Investment

Mike believes the most important thing about investing is returns.

  • 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,  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…

  • 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…

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

    What Is Factor Investing?

    The latest fad in investing is “Factor Investing”, according to the August edition of Financial Adviser Magazine. Like a bad fad diet, these investment methods come around every few years (factor investing dates back to the 1970s[1]) and claim to have found a method for stock picking that will win every time. Factor investing relies on five genuine factors which are, according to academics, Value, Quality, Momentum, Size, and Volatility. When it comes to understanding investment methodologies, I find it helpful to imagine them along a line: I am an active investor. Does this top-down investment methodology work? I don’t think so; as an active investor with a bottoms-up approach,…

  • Adams Financial Concepts,  Return on Investment

    Indices

    Have you heard the story of the Baltimore Stockbroker? It goes… one day, you receive a letter in the mail from a stockbroker, personally addressed to you, predicting that next month a certain stock will go down. You keep an eye on that stock, and it does indeed go down. You receive another personal letter from the stockbroker, predicting that another stock will go up next month. Curious now, you watch that stock over the next month and lo and behold, it does indeed go up! And month after month for ten months, this same stockbroker sends you letters accurately predicting the ups and downs of stocks. At the end,…

  • 401ks,  Adams Financial Concepts,  Current Events,  Return on Investment

    A Shocking New Trend

    Last fall, CNN opened an article with the story of Jeff Regan, who received a phone call informing him that his 94-year-old aunt was being evicted from her home in an assisted living facility. The next day, he received legal notice of the eviction.[1] If the number one fear of most people is outliving their money, this is validation. Studies are showing evictions top the list of assisted living grievances. If you google “assisted living evictions” you will find lists of “How to Evict a Resident” and “How to Write the Letter of Eviction – including templates” and “How to Take the Legal Steps to Evict Residents”. It is becoming…

  • Current Events,  Mile High View,  Return on Investment

    How Long Will This Secular Bull Last?

    John Templeton, one of the great investors, said of secular bull markets, “Bull markets are born in pessimism, grow on skepticism, mature on optimism and die on euphoria.”   Secular bull markets continue for decades: 1941 to 1966 and 1978 to 2000, for example. I believe it is important to know the “mile high” view and not to get lost in the short term swings. There is no shortage of pundits who predict coming crashes. Andrew Roberts of the Royal Bank of Scotland stated, “Think the unthinkable – the market is going off a cliff”. That was in 2010. That is not unlike James Dale Davidson, who predicted there would…

  • Current Events,  Return on Investment

    What do WWII Planes and Investment Strategy have in Common?

    What do missing bullet holes in World War II aircraft and investing in today’s market have in common? Let’s begin by explaining the importance of the “missing” bullet holes. When telling stories of war like World War II it is only natural to think of the action, but there were silent thinkers who also contributed. The Statistical Research Group (SRG) was charged with determining how to armor the aircraft to reduce the number of planes shot down by the enemy. With too much armor, the planes were slower and could more easily be shot down, and with too little, the planes could not survive the bullet hits. The SRG began…

  • Return on Investment

    When To Sell a Stock

    I got my MBA at Carnegie Mellon University back when it was Carnegie Institute of Technology, and the MBA was called a Master of Science in Industrial Administration. Carnegie is located in Pittsburgh Pennsylvania, where the Monongahela and Allegheny Rivers meet to former the Ohio River. In those days, one of the most beautiful sites, in my opinion, was to take the tram up Mt. Washington and look down into the city. Mt Washington is not really a mountain, it’s only a hill, but the vista was so impressive. The smokestacks of Jones and Laughlin Steel spewed tongues of dancing fire streams in hundreds, if not thousands, of colors. It…