Adam M. Grossman

Adam M. Grossman

Adam is the founder of Mayport, a fixed-fee wealth management firm. He advocates an evidence-based approach to personal finance. Adam has written more than 350 articles for HumbleDollar.

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Off the Beaten Path

Adam M. Grossman  |  Jul 14, 2024

A NEW TYPE OF MUTUAL fund has captured investors’ attention. Known as buffer funds, they’re so appealing that one industry analyst has referred to them as “candy.” Why? As The Wall Street Journal describes them, buffer funds offer investors “the chance to chase stock returns while also protecting against a potential market slide”—a seemingly ideal combination, especially for those in or near retirement.
But funds like this are complicated—they rely on options strategies.

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Paying the Piper

Adam M. Grossman  |  Jul 7, 2024

FROM THE COLOSSEUM in Rome to the palace at Versailles, look around Europe and you’ll find artifacts of once-great empires. What happened to them?
Each faced its own challenges, but there was also a common theme: They had poor financial management and became overburdened by debt. That’s why a recent analysis in The Wall Street Journal—titled “Will Debt Sink the American Empire?”—is worth our attention.
In 2024, the federal government’s budget deficit will come in at $1.9 trillion.

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Balance Issues

Adam M. Grossman  |  Jun 30, 2024

THE YEAR’S MIDPOINT is here, with the stock market on track for its second consecutive year of above-average gains. This has many investors asking about rebalancing. Below are some commonly asked questions.
What is rebalancing? Let’s say that, to get the right mix of risk and return, you’ve settled on an asset allocation of 50% stocks and 50% bonds. Now, suppose the stock market rises 10%. This would lift stocks to some 52% of your total portfolio,

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Raising the Bar

Adam M. Grossman  |  Jun 23, 2024

BACK IN 1987, Nassim Nicholas Taleb was a trader on Wall Street. But unlike most of his peers, Taleb wasn’t pinning his hopes on a market rally. Instead, he’d positioned himself to benefit from a market meltdown. On Oct. 19, just such an event occurred. For no apparent reason—in the midst of an otherwise strong market—the S&P 500 dropped 23% in a single day. The result: Taleb made a fortune—enough to retire at age 27.

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Missing Out? Maybe Not

Adam M. Grossman  |  Jun 9, 2024

ARE HEDGE FUNDS a good investment? To answer this question, let’s take a look at three well-known funds. The first is Renaissance Technologies.
Renaissance was founded in 1982 by academic James Simons, who’d been chair of the math department at Stony Brook University and, before that, a code-breaker for the U.S. military. Because he didn’t have a background in finance, Simons instead relied on mathematics, developing the first purely computer-driven trading system.
The result: As his biographer put it,

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On the Fence

Adam M. Grossman  |  Jun 2, 2024

BRITISH PHILOSOPHER G.K. Chesterton, in his 1929 book The Thing, introduced an idea now known as “Chesterton’s fence.”
Here’s how he explained it: Imagine two people walking along a road when they discover a fence blocking the way for no apparent reason. As Chesterton tells it, the first person looks at the fence and says, “I don’t see the use of this; let us clear it away.” But the second person disagrees: “If you don’t see the use of it,

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Life’s Potholes

Adam M. Grossman  |  May 29, 2024

PEOPLE DEBATE JUST about everything in personal finance. Among these arguments: how best to measure risk. Partisans on this topic tend to fall into one of two camps.
In the first group are those who believe risk can be distilled down to a single number. For these folks, the most common numerical yardstick is portfolio volatility—that is, the degree to which a portfolio’s price bounces around from year to year. Portfolios exhibiting lower volatility are deemed safer.

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What the Data Say

Adam M. Grossman  |  May 19, 2024

IN THE INVESTMENT world, there’s no shortage of data. But how useful is all that data? To help get to an answer, let’s consider four questions:
1. When the economy is strong, is that good for stocks? The simple answer is “yes.” According to textbook finance, the value of any company should represent the sum total of its future profits. When the economy is strong and profits are higher, that should be good for stocks.

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Not Just Numbers

Adam M. Grossman  |  May 12, 2024

IN THEIR NEW BOOK The Missing Billionaires, Victor Haghani and James White make an interesting argument. Looking at the number of millionaires in the U.S. in 1900 and doing some math, they estimate that there should be many more billionaires today—thousands more, in fact—than there are. The question Haghani and White ask: Where did they go? Or, more specifically, where did their wealth go?
The authors consider possible explanations, including taxes—especially estate taxes—and the 1929 crash.

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What’s Your Plan?

Adam M. Grossman  |  May 5, 2024

MICK JAGGER IS AMONG the most successful entertainers of our time. But despite his wealth, Jagger tells his eight children that they’ll need to make their own way. Similarly, Shaquille O’Neal tells his children that they can earn some of his millions, but it won’t necessarily be given to them. Actor Jeff Goldblum puts it more bluntly: “Row your own boat,” he’s said. Other public figures have echoed a similar theme.
Why do these wealthy folks take such a seemingly uncharitable view?

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No Big Loss

Adam M. Grossman  |  Apr 28, 2024

AMONG THE MORE notable studies published in recent years is a paper by Hendrik Bessembinder titled “Do Stocks Outperform Treasury Bills?” His key finding: Between 1926 and 2016, just 4% of stocks accounted for all of the U.S. market’s net gain. As a group, the other 96% delivered returns that were no better than Treasury bills, which returned just 2% a year over the period.

It was a surprising result. The implication: Diversification is even more important than most investors realized,

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Surprised Again

Adam M. Grossman  |  Apr 21, 2024

“IT’S TOUGH TO MAKE predictions, especially about the future.” That’s one of the more amusing quotes attributed to Yogi Berra, but there’s also a lot of truth to it. When it comes to financial markets, the track record of those making forecasts is not good.
That’s why a rational approach to decision making is to avoid predictions, and instead base choices only on an assessment of where things currently stand. But even that approach can be fraught: Financial trends have a habit of reversing when least expected.

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Almost True

Adam M. Grossman  |  Apr 14, 2024

LAST WEEK, I DISCUSSED a key challenge in personal finance: In an endeavor where we’d expect facts and logic to drive decisions, we instead find that misconceptions and misunderstandings often take hold. In my previous article, I outlined five common financial myths. Below are five more:
1. “When a company’s doing well, its stock should go up.” Benjamin Graham, the father of investment analysis, was famous for the way he explained stock market behavior: “In the short run,

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Stories We Tell

Adam M. Grossman  |  Apr 7, 2024

YALE UNIVERSITY economist Robert Shiller, in his book Narrative Economics, argues that storytelling has more of an impact on economic events than we might imagine. It might seem like the financial world ought to be driven by facts and data, and yet stories often take on a life of their own.
For instance, financial narratives often play a key role in stock market bubbles and busts. More generally, financial myths and misperceptions are widespread,

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Shining Moment

Adam M. Grossman  |  Mar 31, 2024

GOLD REACHED A NEW high last week, climbing above $2,200 for the first time. Year-to-date, gold is up 8% and, since the end of 2021, it’s gained more than 20%, outpacing the S&P 500. This raises two questions: Can we expect the rally to continue? And does gold deserve a place in your portfolio?
To answer these questions, let’s start by looking at the drivers of the recent rally. The first factor is interest rates.

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