STOCK SUPERSTARS ALERT FOR THE WEEK ENDING 6/7/2013
Posted on June 7, 2013 | Stock Superstars Report
Stock Superstars alert for the week ending 6/7/2013 updated.
Upcoming Chapter Meeting: AAII Connecticut
Posted on June 7, 2013 | Local Chapters
Date: Thursday, June 13, 2013
Topic: Economic and Market Outlook With Liz Ann Sonders
Speaker: Liz Ann Sonders, Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.
After another volatile year in 2012, this year started out with a big bang amid rising enthusiasm by the individual investor. Will the markets continue to thrill investors or will Fed policy and the eurozone crisis spoil the party? We’ll take a top-down look at the economy, debt crises, the health of the consumer and the markets; while shining a light on two of the more positive drivers- housing and manufacturing.
Twitter for iOS
Posted on June 6, 2013 | Computerized Investing
The official iOS app from the popular social media service for sending tweets and monitoring your tweeps.
Streaks, Observations and Notes
Posted on June 6, 2013 | Investor Update
I have a few observations and notes to share with you this week. None long enough to warrant their own weekly update, but still worthy of mention.
The first is the streak of winning Tuesdays. Until two days ago, the Dow Jones industrial average rose on 20 consecutive Tuesdays. According to Bespoke Investment Group, this was the longest such streak since at least 1900. It may be the longest such streak ever.
AAII Sentiment Survey: Investor Attitudes Remain Volatile
Posted on June 6, 2013 | AAII Survey
Individual investor’s short-term outlook for stocks remains volatile, as is evident by the latest AAII Sentiment Survey. Bullish sentiment fell 6.5 percentage points and bearish sentiment rose 9.3 percentage points.
Bullish sentiment, expectations that stock prices will rise over the next six months, fell 6.5 percentage points to 29.5%. This is a six-week low. It is also the 12th time in the past 15 weeks that optimism is below its historical average of 39.0%.
Neutral sentiment, expectations that stock prices will stay essentially unchanged, pulled back by 2.8 percentage points to 31.6%. Even with the decrease, neutral sentiment stayed above its historical average of 30.5% for the sixth time in seven weeks and the eighth in the past 11 weeks.
Bearish sentiment, expectations that stock prices will fall over the next six months, surged 9.3 percentage points to 38.9%. This is the highest level of pessimism registered by our survey in seven weeks. It is also the first time in five weeks that bearish sentiment is above its historical average of 30.5%
Individual investor sentiment remains highly volatile. Bullish sentiment is down 19.5 percentage points from two weeks ago and bearish sentiment is up 17.3 points over the same period. Since the start of March, bullish sentiment has fluctuated within a 26.1-point range and bearish sentiment has fluctuated within a 32.9-point range.
The recent speculation about whether the Federal Reserve will reduce its bond purchases sooner rather than later has added to the mixed opinions AAII members have about the short-term direction of stock prices. While individual investors have been encouraged by the length of the current rally, the first quarter’s better-than-expected earnings and signs of continued economic growth, they have also been discouraged by prevailing valuations, the actual pace of economic growth and a lack of progress on key issues by the White House and Congress.
This week’s special question asked AAII members for their perceptions on the housing market. More than 60% of respondents said the housing market was either improving or that the recovery is sustainable. Several described the recovery as gradual or slow, however. Approximately 20% of respondents view housing as either being propped up by low interest rates or susceptible to a slowdown when rates rise. A small percentage (9%) do not believe a housing recovery is actually underway.
Here is a sampling of the responses:
- “My perception is that pent up demand coupled with historically low interest rates and a recovering economy are facilitating the ascent in the housing market.”
- “There seems to be upward movement in housing prices, but with considerable variability within and across markets.”
- “Hopeful, but cautious moving forward. The turnaround is coming from a historic low point in the market.”
- “Sooner or later, the Fed will have to increase interest rates and that will dampen the recovery.”
- “Prices are rising too fast due to low interest rates. Buyers are overpaying, making way for another bubble.”
This week’s AAII Sentiment Survey results:
- Bullish: 29.5%, down 6.5 percentage points
- Neutral: 31.6%, down 2.8 percentage points
- Bearish: 38.9%, up 9.3 percentage points
- Bullish: 39.0%
- Neutral: 30.6%
- Bearish: 30.6%
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
Taking Aim at Your Retirement: A Look at Target Date Mutual Funds
Posted on June 5, 2013 | Investing
There is an appealing simplicity in the concept of target date funds that has a strong attraction for investors: Just pick a year, and lean back—your portfolio management is now on autopilot, with coordinated diversification among the major asset classes that is rebalanced periodically toward your estimated time of arrival, your target date.
But while the concept of the target date fund has a justified appeal to a broad range of investors, making the right choice among the many target date fund offerings and understanding how the funds work is not quite as simple as it appears at first glance.
The Risk/Growth Dilemma
Target date funds are built on the assumption that investors who are farther from their target retirement date should have higher allocations to stocks, and that the stock commitment should decrease as the target date approaches. Thus, funds with an earlier target date will start out with a lower stock allocation than funds with a later target date, but all of the target funds within a family will decrease their commitment to stocks as the target date approaches.
Sell OF THE WEEK 6/5/2013
Posted on June 5, 2013 | Podcast
AAII Journal Editor Charles Rotblut Editor explains to Chuck Jaffe of MarketWatch why Tesla Motors Inc. (TSLA) 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
Upcoming Chapter Meeting: AAII Long Island
Posted on June 5, 2013 | Local Chapters
Date: Wednesday, June 12, 2013
Topic: Ideas Regarding Stock Investing
Speaker: Vahan Janjigian, Chief Investment Officer, Greenwich Wealth Management
Vahan Janjigian will address many stock investing topics of interest. Included will be risk, diversification, value, exchange-traded funds (ETFs) versus stocks and other useful ideas.
BUY OF THE WEEK 6/4/2013
Posted on June 4, 2013 | Podcast
AAII Journal Editor Charles Rotblut Editor explains to Chuck Jaffe of MarketWatch why PNC Financial Group (PNC) 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
May AAII Asset Allocation Survey: Equity Allocations Near an Six-Year High
Posted on June 3, 2013 | AAII Survey
Equity allocations nearly hit an six-year high last month, according to the May AAII Asset Allocation survey. Cash allocations, meanwhile, fell to a level not seen since 2010.
Stock and stock fund allocations rose 3.5 percentage points to 65.2%. This was the largest allocation to equities since September 2007. It was also the fourth time in five months that stock and stock fund allocations were above their historical average of 60%.
Bond and bond fund allocations declined 1.6 percentage points to 18.1%. This was just the second time in the past 13 months with a fixed-income allocation below 19%. Even with the decline, bond and bond fund allocations were above their historical average of 16% for the 47th consecutive month.
Cash allocations fell 1.8 percentage points to 16.7%. Since hitting an 18-month high of 22.8% in March, cash allocations have declined by a cumulative 6.1 percentage points. May’s allocation was the smallest since November 2010. May was the 18th consecutive month with a cash allocation below its historical average of 24%.
Impacting the numbers were new highs in stock price and a decline in bond prices. AAII members expressed a wide variance in their short-term expectations for stock prices throughout the month, though bullish sentiment reached its second-highest level of the year during the seven-day period ended May 22. Frustration with yields and potentially a sense of missing out on further gains in the market may have prompted some individual investors to move money out of cash.
Last month’s special question asked AAII members if they are holding short-, intermediate- or long-term bonds. Just under half of all respondents (47%) said they are holding intermediate-term bonds or bond funds. Concerns about rising interest rates was the primary reason given as to why, though many said intermediate-term bonds offered a good mix of higher relative income and reduced relative risk. Approximately 38% of respondents said they were invested in short-term bonds or bond funds. Concern about rising interesting rates was the biggest reason given as to why, though some respondents cited the increased liquidity that short-term bonds offer. Just 7% of respondents said they held long-term bonds. Respondents who said they held more than one type of maturity (e.g. short- and intermediate-term) were counted twice.
May AAII Asset Allocation Survey results:
- Stocks/Stock Funds: 65.2%, up 3.5 percentage points
- Bonds/Bond Funds: 18.1%, down 1.6 percentage points
- Cash: 16.7%, down 1.8 percentage points
May AAII Asset Allocation Survey details:
- Stocks: 32.4%, up 2.9 percentage points
- Stock Funds: 32.8%, up 0.6 percentage points
- Bonds: 3.9%, up 0.1 percentage points
- Bond Funds: 14.2%, down 1.7 percentage points
- Stocks/Stock Funds: 60%
- Bonds/Bond Funds: 16%
- Cash: 24%
*Due to rounding, the numbers may not add up to 100%.
The AAII Asset Allocation Survey has been conducted monthly since November 1987 and asks AAII members what percentage of their portfolios are allocated to stocks, stock funds, bonds, bond funds and cash. The survey and its results are available online at: http://www.aaii.com/investor-surveys.