• Adams Financial Concepts,  COVID-19,  Current Events,  Return on Investment,  The Investment Industry

    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,…

  • 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…

  • Adams Financial Concepts,  COVID-19,  Current Events,  Mile High View

    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…

  • Adams Financial Concepts,  COVID-19,  Current Events,  The Investment Industry

    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…

  • Adams Financial Concepts,  Financial Planning,  Return on Investment,  The Investment Industry

    Cutting Your Taxes In Half or More

    Choosing the right portfolio structure can reduce your taxes by 50% or more. That is a hidden benefit of building tax efficient portfolios. My passion is to create and maintain wealth for our clients, and one way to do so is pick superior stocks to get superior returns. In addition to that, at AFC our focus is to build wealth in ways which also keep taxes low. Ordinary income rates are almost twice of what long-term capital gain rates are for those in the higher tax brackets. A portfolio that moves in and out of stocks over a shorter-term time frame will generate short-term gains which result in marginal tax…

  • Adams Financial Concepts,  COVID-19,  Current Events,  The Investment Industry

    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

    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.…

  • Adams Financial Concepts,  COVID-19,  Current Events,  Financial Planning,  Return on Investment

    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…

  • Adams Financial Concepts,  Financial Planning,  Return on Investment,  The Investment Industry

    The Amazing Power of Compound Interest

    Albert Einstein called it the Eighth Wonder of the World. He elaborated saying: “He who understands it, earns it; he who doesn’t, pays it.” Einstein was referring to compound interest. A little bit makes a big difference. You wouldn’t think the difference between 5% and 10% over 25 years would be that much, but if you invest $100,000 at 5% for 25 years you will have a nice, tidy sum of $ 338,635. Doesn’t that sound pretty nice? Most financial plans are geared for that type of return. But what would it be if that $100,000 grew at 10% over those 25 years? Before you read on, take a guess…

  • Adams Financial Concepts,  COVID-19,  Current Events,  Mile High View

    Oil 2020

    What would you say if someone offered to pay you $37,000 to just take one single contract for 1,000 barrels of oil? All you had to do is find a place to store it. That actually happened a week ago. All you had to do was figure out where to put ten tanker trucks of oil until the market got better, and you would have been paid to take custody of the oil. It doesn’t take a rocket scientist to know that demand for oil fell off a cliff. Airlines were cancelling flights and leaving their planes on the ground. People were being ordered to stay home and shelter, and…