The Cloud of Interest Rate Uncertainty

Posted on June 20, 2013 | Investor Update

Uncertainty over interest rates remains a short-term problem for the financial markets.

Yesterday’s Federal Open Market Committee (FOMC) statement failed to calm the nerves of traders. Though traders were looking for more clarity, the June meeting statement only contained two notable changes from the May meeting statement. The committee altered its assessment of economic and labor market downside risks to “having diminished,” from continuing to see those risks. The second change was the dissension of St. Louis Fed president James Bullard. Bullard thought a stronger defense of the committee’s willingness to defend its inflation target was needed.

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AAII Sentiment Survey: Optimism Rebounds for the 2nd Week

Posted on June 20, 2013 | AAII Survey

Optimism rose for the second consecutive week, while pessimism declined in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.5 percentage points to 37.5. Even with the increase, optimism is below its historical average of 39.0% for the fourth consecutive week and the 14th out of the last 17 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, increased by a modest 0.2 percentage points to 32.6%. This is the fourth consecutive week and the 10th in the past 13 weeks that neutral sentiment is above its historical average of 30.5%

Bearish sentiment, expectations that stock prices will fall over the next six months, dropped by 4.6 percentage points 30.0%. The historical average is 30.5%.

The changes in bullish and bearish sentiment over the most recent three weeks are nearly mirror images of each other. Bullish sentiment is up by a cumulative 8.0 percentage points, while bearish sentiment is down by a cumulative 8.9 percentage points. The swap reflects the ongoing volatility we have seen in the survey results since the start of March.

Since the survey period runs from Thursday through Wednesday, any reaction to yesterday’s Federal Open Market Committee’s meeting statement and Federal Reserve Chairman Ben Bernanke’s press conference would have had only a small impact on the results. Rather, this week’s results reflect the tug of war between concerns about prevailing valuations, the slow pace of economic growth, interest rate uncertainty, and a lack of progress on key issues by Washington politicians and optimism about the length of the current rally and signs of continued economic growth.

This week’s special question asked AAII members which sectors and industries they like right now. Energy was the most popular, named by 31% of respondents. Technology came in second, picked by 25% of respondents. Health care and industrials came in third and fourth, listed by 19% and 10% of respondents, respectively. When we asked the same question in early April, respondents named energy, health care and technology as their favorite industries and sectors.

This week’s AAII Sentiment Survey results:

  • Bullish: 37.5%, up 4.5 percentage points
  • Neutral: 32.6%, up 0.2 percentage points
  • Bearish: 30.0%, down 4.6 percentage points

Historical averages:

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

A new historical analysis of the AAII Sentiment Survey found that a correlation between low levels of optimism and good stock market performance over the following six- and 12-month periods exists. The analysis (Is the AAII Sentiment Survey a Contrarian Indicator?) is published in the June 2013 AAII Journal.

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 6/12/2013

Posted on June 19, 2013 | Podcast

AAII Journal Editor Charles Rotblut Editor explains to Chuck Jaffe of MarketWatch why Quicksilver (ZQK) 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





Investing Basics: The First Steps

Posted on June 18, 2013 | Classroom

How to get your investment program off the ground if you are starting from scratch with little savings.

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BUY OF THE WEEK 6/18/2013

Posted on June 18, 2013 | Podcast

AAII Journal Editor Charles Rotblut Editor explains to Chuck Jaffe of MarketWatch why Putnam Municipal Opportunities Trust (PMO) 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





Upcoming Chapter Meeting: AAII Austin

Posted on June 17, 2013 | Local Chapters

Date: Monday, June 24, 2013
Topic: Using Pivot-Based Analysis for Long-Term Gains
Speaker: Frank Ochoa, PivotBoss, LLC and Ochoa Capital Management, LLC

Frank Ochoa, also known as “The Pivot Boss,” will teach you how to identify some of the best long-term trading opportunities the market has to offer using pivot-based analysis. These concepts offer a road map to engaging any instrument for high-probability gains, including stocks, ETFs, futures, mutual funds and more. Bring your own computers for an interactive hands-on session with Frank.

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Upcoming Chapter Meeting: AAII Washington D.C. Metro

Posted on June 16, 2013 | Local Chapters

Date: Monday, June 24, 2013
Topic: Finding a Stock Winner: First Step Screening
Speaker: John Bajkowski, President, AAII

While successful money managers may differ in their investing philosophy, a disciplined approach to selecting and pruning investments is a common characteristic. John Bajkowski, president of AAII, will show how computerized stock screening systems can be used to reduce a large universe of stocks into a manageable group of prospects that match your investment style. He will walk through the process of developing and implementing both a value and a growth screen and highlight which screening filters work and those that do not help to select winning stocks.

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June 2013 AAII Model Portfolios Updated

Posted on June 15, 2013 | Model Portfolios

1-Year Returns as of 5/31/13: AAII Fund Portfolio 27.2% — AAII Shadow Stock Portfolio 62.2%

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DIVIDEND INVESTING ALERT FOR THE WEEK ENDING 06/14/2013

Posted on June 14, 2013 | Dividend Investing

So far in June, it seems the market has similar ideas, as the “June Chop” is in full swing.

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STOCK SUPERSTARS ALERT FOR THE WEEK ENDING 6/14/2013

Posted on June 14, 2013 | Stock Superstars Report

Stock Superstars alert for the week ending 6/14/2013 updated.

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