DIVIDEND INVESTING ALERT FOR THE WEEK ENDING 1/31/2014

Posted on January 31, 2014 | Dividend Investing

We’ve been noticing a disconnect between how commentators are describing the market’s performance and the how the U.S. market is actually doing.

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AAII Sentiment Survey: Bears Outnumber Bulls for First Time since August

Posted on January 30, 2014 | AAII Survey

Bearish sentiment rose back above its historical average, nearly hitting a four-month high in the latest AAII Sentiment Survey. This increase in pessimism, combined with a drop in optimism, has caused bears to outnumber bulls for the first time since August 22, 2013.

The increase in pessimism and the declines in both bullish and neutral sentiment are an indication of a more cautious outlook for the six-month direction for stock prices.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 5.9 percentage points to 32.2%. This is the lowest level of optimism registered by our survey since August 22, 2013. It is also the third consecutive week that bullish sentiment is below its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, fell 3.1 percentage points to 35.1%. This is the fourth consecutive week with a neutral sentiment reading above the historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, surged upwards by 9.0 percentage points to 32.8%. This is the highest level of pessimism registered by our survey since October 10, 2013. This week’s reading also ends a streak of 15 consecutive weeks with bearish sentiment below its historical average of 30.5%.

January’s volatility continues to cast clouds over individual investors’ short-term outlook for stock prices. Since registering 55.1% on December 26, 2013, bullish sentiment has fallen by a cumulative 22.9 percentage points. In addition to the modest decline in the S&P 500, concerns about the market having reached a short-term top, valuations, the pace of economic growth and Washington politics are dampening investors’ mood. Offsetting these worries is earnings growth, economic growth, the record highs established by the large-cap indexes earlier this month and the Federal Reserve’s tapering of its bond purchases.

This week’s special question asked AAII members if they are currently favoring large-cap, mid-cap, small-cap or micro-cap stocks. Popularity decreased with company size as 45% of respondents prefer large-cap stocks, 26% prefer mid-cap stocks, 19% prefer small-cap stocks and 7% prefer micro-cap stocks. Several respondents picked two of the four categories.

Many respondents said they liked large-cap stocks for their comparative stability, the possibility of the bull market ending sooner than later or because of the payment of dividends. Mid-cap, small-cap and micro-cap stocks were largely favored on the expectation of better price appreciation. Some respondents said they favored large- and mid-cap stocks because of the outperformance small-cap stocks have experienced.

Here is a sampling of the responses:

  • “Large caps, because they have higher yield and better safety in my humble opinion.”
  • “Large-cap stocks paying dividends. Given my bearish tilt, I am generally favoring these kinds of stocks as defensive posturing.”
  • “Large cap; they tend to do well near the end of a bull market.”
  • “Mid cap—I believe they will move more than large caps and are safer than small caps.”
  • “Small cap—they have better prospects of growth in earnings and stock appreciation than other market segments.”

This week’s AAII Sentiment Survey results:

  • Bullish: 32.2%, down 5.9 percentage points
  • Neutral: 35.1%, down 3.1 percentage points
  • Bearish: 32.8%, up 9.0 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



Upcoming Chapter Meeting: AAII New York City

Posted on January 29, 2014 | Local Chapters


Date: Wednesday, February 5, 2014
Topic: Don’t Get Tempted by the 2013 Rally
Speaker: Vahan Janjigian, Ph.D., CFA, Chief Investment Officer, Greenwich Wealth Management LLC

Stocks did exceptionally well in 2013, and Vahan Janjigian believes we can thank the Federal Reserve for that. But that quantitative easing is coming to an end. The Fed has promised that long-term rates will remain low, but that is a promise it may not be able to keep without more easing. Furthermore, while stocks have been helped, the economy has not. This implies the rally may end.

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Sell OF THE WEEK 1/29/2014

Posted on January 29, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Coach (COH) 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



AAII WEEKLY FEATURES 1/28/2014

Posted on January 28, 2014 | Weekly Features

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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BUY OF THE WEEK 1/28/2014

Posted on January 28, 2014 | Podcast

AAII Journal Editor Charles Rotblut Editor explains to Chuck Jaffe of MarketWatch why LMI Aerospace (LMIA) 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 San Diego

Posted on January 24, 2014 | Local Chapters


Date: Saturday, February 1, 2014
Topic: Building a Fed-Resistant Portfolio
Speaker: Dan McSwain, Business Columnist, U-T San Diego

The Federal Reserve of Ben Bernanke and Janet Yellen has been crystal clear on how it plans to wean the economy from history’s largest monetary stimulus in 2014 and beyond. But how the markets will respond is anybody’s guess. U-T San Diego business columnist Dan McSwain shows you how to cut through the punditry and follow the Fed yourself, along with tips on how to build plenty of shock absorbers into your bond and equity portfolios.

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DIVIDEND INVESTING ALERT FOR THE WEEK ENDING 1/24/2014

Posted on January 24, 2014 | Dividend Investing

If we were forced to use one word to sum up our opinion of how fourth-quarter earnings have looked so far, the word would be: “eh.”.

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Upcoming Chapter Meeting: AAII Santa Barbara/Ventura

Posted on January 23, 2014 | Local Chapters


Date: Thursday, January 30, 2014
Topic: Estate Planning and Portability: Is It Ideal for You?
Speaker: Brett A. Bjornson, Brett A. Bjornson, Esq., Professional Law Corporation

As an independent investor, creating wealth and positive cash flow are likely among your goals. Brett Bjornson will discuss how the forms of ownership of assets between a husband and wife will influence and affect your estate and income tax consequences. Proper administration of the typical ABC Trust between husband and wife is the key to establishing your rights and benefits after the death of the first spouse. Bjornson will compare and contrast the ABC Trust arrangement with the 2010 newly created “portability” rules. This is an opportunity to stay current on the legal and estate tax implications of such an important arrangement.

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AAII Sentiment Survey: Neutral Sentiment Stays Above 38% for Second Week

Posted on January 23, 2014 | AAII Survey

Neutral sentiment is above 38% on consecutive weeks for the first time in nearly 11 years, according to the latest AAII Sentiment Survey. Optimism slipped below its historical average, while pessimism remains at low levels.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 0.9 percentage points to 38.1%. This is the first time in nine weeks and just the fourth time in the past 20 weeks that bullish sentiment is below its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, declined 1.4 percentage points to 38.1%. This is the first time neutral sentiment has been above 38% on consecutive weeks since February 6 and February 13, 2003. The historical average is 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 2.3 percentage points to 23.8%. Even with the improvement, this is the 15th consecutive week and the 18th out of the past 20 weeks with pessimism below its historical average of 30.5%.

Regarding this week’s results, the current consecutive streak of below average bearish sentiment readings is the longest since the 28-week period of August 14, 2003 to February 26, 2004. Neutral sentiment is near the upper limit of what we consider to its typical range of normal readings (within one standard deviation of the historical average.) Bullish sentiment and neutral sentiment were last at matching levels on October 11, 2012. Since reaching a short-term peak of 55.1% on December 26, 2013, optimism has fallen by a cumulative 17 percentage points.

The market’s bumpy start to the New Year has curtailed some of the short-term optimism AAII members have had. Nonetheless, many individual investors remain hopeful about the six-month direction of stock prices because of earnings growth, economic growth, the record highs established by the large-cap indexes and the Federal Reserve’s tapering of its bond purchases. Limiting the extent of the optimism are worries about the pace of economic growth, elevated stock valuations and frustration with Washington politics.

This week’s special question asked AAII members which industries or sectors they like right now. Health care was the most popular, named by 30% of respondents. Technology and banking/financial came in second and third, picked by 23% and 22% of respondents, respectively. Energy was fourth, with slightly less than 20% of respondents selecting it. When we asked the same question last June, respondents named (in order of popularity) energy, technology, health care and industrials.

This week’s AAII Sentiment Survey results:

  • Bullish: 38.1%, down 0.9 percentage points
  • Neutral: 38.1%, down 1.4 percentage points
  • Bearish: 23.8%, up 2.3 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



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