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Don’t Be Fooled!!
The rapid recovery of the market in 2020 was exceptional. Don’t count on a repeat during the next big sell off. Instead, plan for a “Margin of Safety” in your portfolio. The bounce back of 2020 is the shortest on record. Most market recoveries take a lot longer. If counted in inflation adjusted terms, the drop that began in 1966 did not recover for 30 years. Stocks hits 1,000 on the DOW in 1966 and then bounced up and down for 16 years before going on to new highs. But inflation roared during that time and devalued the dollar by 70%. It took three times as many dollars on the…
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Following 2020, A Little January Dip
Almost three times the original investment in ten months! Check the graph! 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…
- Adams Financial Concepts, Financial Planning, Mile High View, Return on Investment, The Investment Industry
How We Achieve High Returns
Peter Lynch called them “10 baggers”. Some people call them “home runs”. Some authors describe them as “long tails”. They have been called “high-fliers”. What are they? They are stocks that will grow ten-fold or more. The strategy at Adams Financial Concepts, LLC (AFC) and for Mike Adams, even before founding AFC, has been to search for those companies with the potential to be 10-baggers and to do that in portfolios with a limited number of total holdings. When there are 300 stocks in a portfolio the 10-bagger will make little difference on the total portfolio performance. But in a portfolio of eight to ten stocks, one high flier can…
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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,…
- 401ks, Adams Financial Concepts, COVID-19, Current Events, Financial Planning, Return on Investment, The Investment Industry
Do you know how much money you need to retire?
Will you have enough money to retire and not reduce your quality of life? Big question. Here is a table that gives some idea of what your nest egg would be at retirement if you had saved ten (10) times your earnings. Of course, this table must assume the following: You will only live to age 85, or you will run out of money. You will only need 80% of your income in retirement and that you stay healthy until you die Inflation of 3% or less The accepted wisdom that your nest egg need be only 10 times your current income is based on data collected forty years ago.…
- 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, Financial Planning, Mile High View, Return on Investment, The Investment Industry
Is It Luck or Skill?
Doesn’t it make you feel comfortable to live in an orderly and predictable world? Isn’t that especially true when it comes to investments? Haven’t you heard that the markets do not like uncertainty? But isn’t it also true that the only constant in the world is change? In spite of that, our human brains have evolved to downplay the role of luck in our lives. That is why most investors like a financial plan that lays out the next 20 or 30 or 40 years of our financial lives. There in black and white, or more probably in a rainbow of colors, is the map of our financial future. It…
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Is Your Money Being “Stolen”?
Hypothetically, say you had a brokerage account worth $5 million, and when you got your statement you saw that the financial advisor had taken $3 million out of your account and transferred it to his. How would you feel? Would you just accept it because the financial advisor is so personable and nice, almost like a friend? Would you send in more money? Would you ask for an updated financial plan to see how you could live on $2 million? Then, suppose the financial advisor met with you, said you were right on track to meet your long-term goals, and then he removed another 70%? How would you feel? What…
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Good News – Bad News – Good News
This is a good news-bad news case study. I was a fairly new stock broker in 1987 (that is what they called us before we became “Financial Advisors”). I opened an account or a retired postman who had his pension but had also saved $216,000 for retirement. The client decided to split his $216,000 between me and a broker at another major brokerage house. He had never married and had no children. In the months that followed, I would suggest each time we talked that he consolidate the monies with me. I am pretty certain the other broker was suggesting he be given the total as well. With little traction,…