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!

Past Performance is no guarantee of future results.

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 justified by the specific security selection.

Unlike many, if not most, of my peers in the investment industry, my focus has been on looking for changes in technology, demographics, and lifestyles. In other words, I am trying to look to the future rather than rehashing past data.

Let me give one example:

  • Internal combustion engines (gas and diesel) have 20,000 individual parts. An electric motor has 20
  • The Tesla electric motor is supposedly designed to last 1 million miles.
  • Energy consumption in electric cars is about 25-30% of the energy consumption of the internal combustion engine car
  • About 45% of oil consumption is used by automobiles.
  • About 68% of oil consumption is used in transportation

Think about how electric vehicles will change the largest industry in the world – the petroleum industry. The impact of that change will not only affect that industry, but ancillary industries and geopolitical alliances as well.

That is the reason to look forward rather than basing forward projections on past data. Things that have never happened before happen all the time. Looking backward misses what is changing.

The Incentive Profit Sharing Accounts have essentially tripled in value in ten months, even after a couple dips. The reason? Click on the video link below.

The benefits to you are simple:

  • Customized to you -unique to you and your specific needs and risk tolerance.
  • 15-year track record of high performance on long-market accounts
  • Minimizing Risk
  • Tax Efficient
  • No fee – just profit sharing on the $ 1 million account
  • Classified as a Conservative, not High Risk, Account

Notes:

  1. Adams Financial Concepts (AFC) Incentive Profit Sharing (PS) Accounts results are net of all costs and expenses. The results are net, net, net.
  2. AFC Incentive Profit Sharing Accounts are not appropriate for qualified accounts. The structure of PS accounts requires leverage for both the long and also requires short positions. Neither leverage nor shorting is permitted in qualified accounts.
  3. AFC PS Accounts returns as of February 1, 2020 include all active accounts as well as any closed accounts. As of the date of this note there have been no accounts closed. 
  4. The objective for all AFC PS and Managed Growth Stock Accounts in these tabulations have a common objective: “Beat the S&P 500 over the longer-term (10 years)”.
  5. AFC PS Accounts are concentrated in 8 to 12 securities on the long side and concentrated on the short side as well. Concentration may increase volatility.
  6. AFC PS Accounts include capital gains and losses, both realized and unrealized, but do not include the impact of taxes on capital gains.
  7. Minimum Account Size: Per Washington State Code WAC 460-24A-150 There has to be $1 million USD under management with AFC which can be split between both PS and Growth Accounts. In addition, client must have a net worth of $2.1 million USD excluding home. 
  8. Past performance is no guarantee of future returns.
  9. S&P 500 Index includes dividends reinvested.
  10. This summary does not constitute an offer to sell or a solicitation of an offer to buy any securities or to enter into any investment advisory relationship and may not be relied upon in connection with any offer or sale of securities.
  11. “Luck versus Skill in the Cross-Section of Mutual Fund Returns” published in The Journal of Finance, October 2010 by Eugene Fama and Kenneth French,
  12. Structure of the accounts is based on the book: The Prudent Investor’s Guide to Hedge Funds by James R. Owen, published 2000.

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