Return on Investment

Mike believes the most important thing about investing is returns.

  • 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…

  • Return on Investment

    Investing Tips We Can Learn from Imperial Russia

    In my opinion Modern Portfolio Theory is a Potemkin Village. What does that mean? In the 1700s Catherine the Great, ruler of Russia, invited a number of foreign dignitaries to visit Russia. But in viewing the countryside she saw the villages of Russia were unimpressive to say the least. So, she commissioned Field Marshall Griorgi Potemkin to build all new villages to give the impression that the citizens of Russia lived a comparatively good life. It was completely illusionary. A “Potemkin Village” is something made to look elaborate and impressive but has no substance at all. Modern Portfolio Theory sounds like it is new and rational and “modern.” In fact the concept…

  • Return on Investment

    Common Mistakes New Investors Make

    Imagine you are invited to play a game. You are given $20,000, and can bet $1,000, you win based on the flip of a coin. Heads, you would win $1,500; tails, you lose your $1,000 bet. Imagine you agree to the game and bet $1,000. The coin comes up tails. You bet again and the coin comes up tails and you lose another $1,000. Would you continue to play? If you do and the next flip comes up tails, would you continue? You have lost three straight times. Would you stop and walk away with your $17,000? What if you tried one more time and again lost. Would you call…

  • Return on Investment

    Conferences and Comparative Money Making

    Every year, I go to several investor conferences with 2,000 to 3,000 of my closest friends. Each conference has companies who underwrite part of the cost by taking the opportunity to hawk their products at exhibitor booths. I am always attracted to the trading booths with their elaborate displays – multiple computer screens displaying the latest technical analysis of stocks and markets, the latest prices, and charts with all the most sophisticated analytical tools. There are the stochastic charts, the candlestick trend lines, the moving averages, and on and on. Surrounding the screens are the testimonials of who have made money using the tools and programs the vendors are showcasing.…

  • 401ks,  Current Events,  Return on Investment

    Lessons Investment Advisers Need to Learn from Robo-Advisers

    On May 1st, 1975 the government deregulated fixed commissions in the brokerage industry. At the time, I don’t believe many in the industry would have said this would make any great impact on revenues, and history shows most chose to carry on with the status quo. Few stock brokers (that was the title financial advisers used back then) felt there would be much change in their business. One man did see an opportunity, though, and moved to found a firm that charged significantly less in transaction fees. That man, of course was Charles Schwab, who would build a significant and competitive that would capture one-third of portfolios by 1999. I…