The March 2019 AAII Journal is Now Available Online

 

 COVER ARTICLE: To Beat the Market, Invest Differently Than the Market By Charles Rotblut, James O’Shaughnessy Decisions based on less than five years of performance returns are mostly based on noise. Many strategies look good over shorter periods, but fare much worse over longer periods.   IN THIS ISSUE:   Revisiting the “What Works on…

Half of Investors Not Changing Their Bond Allocation During Pause in Rate Hikes

 

 Last month’s Asset Allocation Survey special question asked AAII members how the Federal Reserve’s pause in raising interest rates is influencing what income-producing investments they buy. Slightly less than half of respondents (44%) say the decision to postpone future hikes for now is either not having any influence or has not caused them to make…

February AAII Asset Allocation Survey: Equity Allocations Rise

 

 Exposure to equities among individual investors continued to rebound in February, reaching a four-month high. The February AAII Asset Allocation Survey also shows lower fixed-income and bond allocations.   Stock and stock fund allocations rose 4.1 percentage points to 67.3%. Equity allocations were last higher in October 2018 (69.5%). The increase keeps equity allocations above…

AAII Survey: Why Retail Investors Sell Mutual Funds

 

 Mutual fund turnover typically measures the replacement of holdings in a mutual fund and is commonly presented to investors as a percentage over a one year period. If a fund has 100% turnover, the fund replaces all of its holdings over a 12-month period. However, you may discover that your mutual fund turnover rate is much higher than you expected. The typical managed…

Warren Buffett Deemphasizes Book Value as a Key Metric

 

  Warren Buffett made a notable change in his annual Berkshire Hathaway Inc. (BRK.B) shareholder letter: He deemphasized the change in the book value of the company’s shares. To those who are long-time readers of his letters—and I suggest reading Buffett’s letters for the investing insights he shares—the change marks a definitive shift. Starting in…

Investors’ Opinions Split on Level of Current Dividend Yields

 

 This week’s Sentiment Survey special question asked AAII members for their opinion of the dividend yield that stocks currently trade at. Responses were mixed. About 23% of respondents view current yields as being too low. Conversely, nearly 22% describe yields as being fair or reasonable and 14% think they are good. About 7% say stock…

AAII Sentiment Survey: Pessimism Falls to An Unusually Low Level

 

 Pessimism about the short-term direction of stocks among individual investors fell to its lowest level in more than a year. The latest AAII Sentiment Survey also shows increases in optimism and neutral sentiment. Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.3 percentage points to 41.6%. Optimism was last…

A Do-It-Yourself Approach to Target Date Retirement Investing

 

 This week’s AAII Weekly Digest highlights these “must-read” AAII articles: How Much Should You Have in Equities Until Retirement? For many retirees, running out of money is their biggest worry during their retirement years, ranking above terminal illness or even death. Unfortunately, many of the popular asset allocation strategies suggest going overly conservative once you…

AAII Survey: Retail Investors’ Taste for Fixed Income

 

 In general, investing in debt instruments (bonds, bond funds, etc.) is safer than investing in stocks. That’s because debtholders have priority over shareholders–if a company goes bankrupt, debtholders (creditors) are ahead of shareholders in the line to be paid. In this worst-case scenario, the creditors usually get at least some of their money back, while shareholders often lose their…

Avoiding Overconfidence by Knowing What Type of Investor You Are

 

  Among the many unintended consequences of the internet is an unrealistic sense of overconfidence. Researchers are finding people who believe they possess a level of skill or expertise after watching instructional YouTube videos. For example, some people believe that they can impersonate Michael Jackson’s moonwalk dance by merely watching a video about it, according…