Investors Believe Consumers Faring Better This Year

Posted on November 20, 2014 | Uncategorized

This week’s Sentiment Survey special question asked AAII members how they think the average consumer is faring relative to a year ago. Slightly more than half of respondents (53%) said the average consumer is doing better, though many of them described the consumer as only doing somewhat or a little better. Gas prices were the top reason given as to why, though several respondents mentioned employment and/or economic growth. Roughly the same number of respondents (about 15% each) said the average consumer is faring about the same as last year or is faring worse. Though the decline in gas prices are viewed as a positive, stagnant wage growth and inflation in other areas were cited as headwinds.

Here is a sampling of the responses:

  • “Better. The economy is improving and oil prices are falling.”
  • “Better in part to more employment, falling heating and driving costs and the housing recovery.”
  • “Somewhat better due to lower unemployment, modest wage gains in some areas and lower fuel prices.”
  • “May be helped by lower gasoline prices, but is also facing rising food and housing prices.”
  • “Not much better. Job growth, and, more importantly, income growth has been slow.”


AAII Sentiment Survey: Optimism Drops Below 50%

Posted on November 20, 2014 | Uncategorized

Optimism pulled back from a four-year high, falling below 50% for the first time this month in the latest AAII Sentiment Survey. Neutral sentiment rebounded and pessimism rose for the second consecutive week.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 8.8 percentage points to 49.1%. The drop puts optimism at a five-week low. Nonetheless, bullish sentiment remains above its historical average of 39.0% for the seventh consecutive week and the 14th out of the past 15 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 4.3 percentage points to 27.1%. Even with the increase, neutral sentiment remains below its historical average of 30.5% for the seventh time in the past nine weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 4.5 percentage points to 23.8%. The rise was not large enough, however, to prevent pessimism from being below its historical average of 30.5% for the fifth consecutive week and the 38th week this year.

Seeing a bit of reversion to the mean is not unexpected given how high optimism was last week (57.9%, the 58th-highest reading in the survey’s history) and how low pessimism was on November 6, 2014 (15.1%, a nine-year low). Optimism remains at a very high level this week, however. Bullish sentiment is right at the border between what is typical and what is unusually high. Viewed in another manner, optimism is above 49% and pessimism is below 25% for the fifth consecutive week.

The sustained high level of optimism is occurring as the S&P 500 has risen by 10% since hitting a 2014 closing low on October 15. In addition to the avoidance of a correction and the strong rebound in equity prices, individual investors are also encouraged by falling energy prices, earnings growth, the Federal Reserve’s ending of its bond purchasing program and sustained economic expansion. Some AAII members may also be reacting to the outcome of the midterm elections. Keeping other AAII members cautious are geopolitical events, a sense that prevailing valuations are too high and the pace of economic growth.

This week’s AAII Sentiment Survey results:

  • Bullish: 49.1%, down 8.8 percentage points
  • Neutral: 27.1%, up 4.3 percentage points
  • Bearish: 23.8%, up 4.5 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 30.5%
  • Bearish: 30.5%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey.



BUY OF THE WEEK 11/18/2014

Posted on November 18, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Stamps.com Inc. (STMP) is his “Buy of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Buy of the week




Online Resources for Getting the Most from SI Pro

Posted on November 13, 2014 | Stock Investor Pro

Stock Investor Pro is AAII’s powerful fundamental screening system providing rich company and industry data. You can screen for stocks based on their financial qualities using 60 predefined strategies or by creating your own screens. The Windows-based program offers fundamental data supplied by Thomson Reuters and earnings estimates supplied by I/B/E/S. For individual investors, it offers the power of a fundamental stock screening tool at their fingertips for a reasonable price, whereas other similar tools cost a thousand dollars or more.

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AAII WEEKLY FEATURES 11/11/2014

Posted on November 13, 2014 | Weekly Features

Investor-Update

This week’s AAII Weekly Features has been updated.
View this week’s Top AAII Articles, Featured Stock Screen and Member Question.

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Global Events Having Mixed Effects on Investor Outlook

Posted on November 13, 2014 | AAII Survey

This week’s Sentiment Survey special question asked AAII members what, if any, global events are influencing their six-month outlook for stocks. Responses varied, with several members listing more than one event. Russia’s intervention with Ukraine was cited by 17% of respondents. About 14% of respondents said events in the Middle East, particularly those involving the Islamic State group, were influencing their outlook. An equal number say both global and U.S. monetary policy, including stimulus programs in Japan and in Europe, are impacting their outlook. The midterm elections and the forthcoming change in Senate leadership was listed by 12% of respondents. About 11% mentioned the U.S. economy, either in terms of its recovery or its relative strength compared to the rest of the world. A similar percentage said they were encouraged by the drop in oil prices, though some said they would be concerned if prices fell too low. Just 6% of respondents discussed Ebola, with some seeing progress in containing it and others expressing concern about the outbreak spreading.



AAII Sentiment Survey: Optimism Keeps Rising, Hits 4-Year High

Posted on November 13, 2014 | AAII Survey

Optimism about the short-term direction of the stock market spiked to a four-year high in the latest AAII Sentiment Survey. Pessimism rebounded off of last week’s nine-year low, while neutral sentiment plunged.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 5.2 percentage points to 57.9%. This is the largest amount of optimism registered by our survey since December 23, 2010 (63.3%). It is also the sixth consecutive week and the 13th out of the past 14 weeks with bullish sentiment above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, plunged 9.5 percentage points to 22.8%. Neutral sentiment was last lower on March 14, 2013 (22.6%). The historical average is 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 4.3 percentage points to 19.3%. This is the fourth consecutive week and the 37th week this year with pessimism below its historical average of 30.5%.

Optimism has only been higher on 57 occasions during the nearly 28-year history of our survey. The six-month return for the S&P 500 following those readings was an average of 0.0% and a median of 0.5%. This is not surprising given that unusually high levels of bullish sentiment and unusually low levels of bearish sentiment (pessimism more than one standard deviation below its historical average for the second consecutive week) have tended to be followed by below-average six- and 12-month gains, as I explained in the June 2014 AAII Journal.

Individual investors continue to react positively to the market’s rebound from its mid-October lows. Also contributing to the level of optimism are earnings growth, the Federal Reserve’s ending of its bond purchasing program, falling energy prices and sustained economic expansion. Some AAII members may also be reacting to the outcome of the midterm elections. Keeping other AAII members cautious are geopolitical events, a sense that prevailing valuations are too high, the pace of economic growth and worries that a larger drop in stock prices is forthcoming. It is unclear what, if any, impact the midterm elections had on investor sentiment.

This week’s AAII Sentiment Survey results:

  • Bullish: 57.9%, up 5.2 percentage points
  • Neutral: 22.8%, down 9.5 percentage points
  • Bearish: 19.3%, up 4.3 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 30.5%
  • Bearish: 30.5%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey.



Sell OF THE WEEK 11/12/2014

Posted on November 12, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Tenneco Inc. (TEN) is his “Sell of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Sell of the week





BUY OF THE WEEK 11/11/2014

Posted on November 11, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Cablevision Corp. (CVC) is his “Buy of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Buy of the week




New Portfolio Changes and the November Monthly Report

Posted on November 7, 2014 | Dividend Investing

More details about the Dividend Investing portfolio changes, including our rationale for the moves, are given in the November monthly report, which is now on the Dividend Investing website.

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