Return on Investment

Mike believes the most important thing about investing is returns.

  • Mile High View,  Return on Investment

    The Myth of Excellence – Part Two

    I’ve been talking about how companies are seeing their lifespans shrinking – particularly how short the lifecycles of companies in the S&P500 have become. If you’re an investor that favors the buy-and-hold strategy, this is an intimidating prospect. The days of finding that perfect company, buying it, and tucking it away in the proverbial sock drawer are coming to an end. The average lifespan of a company in the S&P500, a study by Yale Professor Richard Foster found, was only 18 years!1 With such a daunting new world for investors to face, I’ve been studying good business practice, and found myself agreeing with some of the points made by Fred…

  • Mile High View,  Return on Investment

    The Myth of Excellence – Part One

    Buy and Hold was (and sometimes still is) a strategy to find great companies: purchase their stock and put it away to hold for decades. I still believe in buy and hold, but the timeline for the holding period has significantly shortened. I recently read a book by Fred Crawford and Ryan Mathews called The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything, and it got me thinking. In the 2010s, the lifespan of a dominating company is shrinking at a rate that CEOs find alarming. Today, the average lifespan of a company in the S&P 500 is only 18 years1. That is an…

  • 401ks,  Return on Investment

    The Value of Compounding

    One of my favorite questions is: If you had a job for 30 days and could choose to either be paid $1000 every day or a penny the first day, doubled every day after, which would you choose? Take a second. Think about it. I think this will help you make up your mind. If you calculate a penny a day doubled for 30 days it grows to over $10 million dollars. I know what I’d pick! A penny doubling every day illustrates the principal of compounding. The bigger the beginning number, and the bigger the percentage at which it is compounded, the larger the final outcome. Take for example,…

  • 401ks,  Return on Investment

    Structured Products

    We’ve talked before about chocolate covered hand grenades – the too-good-to-be-true investment. Time and again, the market has expanded rapidly as investors get caught up in opportunities based on stories and ideas rather than facts. Most of us are familiar with the explosion of Sub Prime Mortgages and how they played a major role in the Great Recession. Another seemingly tasty investment blew up as a result of the Great Recession. Structured products cost numerous investors big time. What are structured products? The term “structured product” is financial industry jargon referring to a product which allows you to participate in the stock market while guaranteeing your principal. How do they work? Originally,…

  • 401ks,  Adams Financial Concepts,  Return on Investment

    Strategic Versus Tactical Investing

    When it comes to investing, one of the biggest questions in my mind is strategic versus tactical management. Before we can discuss the merits of one or the other, I think we should clearly define both. Strategic management focuses a financial portfolio on a group of assets. Tactical management changes the asset classes of a portfolio depending on the economy. So, which is better? In theory, tactical management sounds wonderful. You get in when the market is low and out when it is high. Unfortunately, this does not consistently yield the maximum returns to investors. Correctly guessing the exact moment to jump in and out of the market can have…

  • 401ks,  Current Events,  Return on Investment

    Questions For Your Financial Advisor

    Over the next few months, many investors will sit down with their financial advisor to look over their portfolio. Before the meeting, ask yourself what kind of investor you are. Do you simply want lower risk and higher returns that will beat the rate of inflation? Or do you want to succeed? Do you want to outperform the market? I believe my clients want to win. They want their wealth to grow significantly. If this sounds like you, I encourage you to ask your Financial Advisor the big questions. For me, they are the following: Look At The Real Dollar Terms The first question you have to ask is, how…

  • 401ks,  Return on Investment

    Plan for Long-Term Success

    Take care of the customer and everything else will take care of itself. This simple principle has led to decades of success at Albert Lee Appliance. Albert Lee III, President of Albert Lee Appliance, joined me on About Money last Friday. He said he tells his staff, “I’m not your boss. The customer is your boss.” Albert’s grandfather, the company’s founder, taught him this from the beginning. “He always said, you need to listen to your customer. They’ll tell you what you’re doing right and what you’re doing wrong,” Albert said. Despite the Great Recession, Albert Lee Appliance has expanded, opening new locations to serve additional customers. How was this possible? Long-term planning.…

  • 401ks,  Return on Investment

    Investors Should Keep Their Expectations High

    As an investor, do not lower your expectations. Some such as Charles Ellis, author of Winning the Loser’s Game, think you should. He found that 80 to 90 percent of money managers underperform the market. His conclusion? Investors should lower their expectations. He’s not alone in his findings on under performance. Burton Malkiel, author of A Random Walk Down Wall Street, found over 80 percent of money managers underperform the market. Robert W. Baird & Co also found that over the last 10 years only 370 out of 4,000 money managers beat the Standard and Poor’s 500 (S&P 500) by an average of one percent. Do these success rates, or lack thereof, scare you?…

  • Adams Financial Concepts,  Mile High View,  Return on Investment

    Identifying the Value of a Company

    If you and Alice Canlis were side by side in a small hatchback driving across North Dakota, would she kick you out or would you become best friends by the time you reached Chicago? Mark Canlis, co-owner of Seattle’s renowned Canlis restaurant, believes none of the 90-plus person staff at Canlis would find themselves hitch hiking in his mom’s dust. What does this have to do with financial investing? I’ve talked a lot about the qualities of successful businesses. Through interviews and evaluations, I’ve broken down what I believe are the top two qualities: people and inventiveness. As an investor, you need to look at how a business owner obtains these qualities.…

  • Current Events,  Return on Investment,  Uncategorized

    Flash Trading

    In 2008 very few people had heard of credit default swaps, overnight repos, or collateralized debt obligations (CDOs).   Many of the firms that brought those financial creations to the market have brought dark pools and high frequency trading. Firms doing high frequency trading execute over half the orders in the stock market and probably place over 95% of the orders. Dark pools account for another 25-30% of trades. That leaves less than one out of four trades being done “the old fashioned” way. I believe it is important to understand what is going on and to keep the focus on the longer-term to build wealth and income. I first licensed…