Make Your Investment Expenses Count

Posted on February 27, 2014 | Investor Update


Over the years, various surveys have shown that investors aren’t aware of what expenses their portfolios are incurring. Compounding matters, I’ve observed situations throughout my career where investors are focused on comparatively small costs without giving much consideration to the potential benefits that can be realized from incurring them. It’s important to be aware of both.

I’m bringing this subject up because in our March Stock Superstars Report, which will be published tomorrow, we discuss the costs of tender offers, offers to purchase some or all of shareholders’ stock in a company. If asked, I doubt many investors could articulate them. Yet, Helen of Troy (HELE) shareholders could be looking at a double-whammy of selling at a price below the current market value and incurring higher commissions. (Fidelity charges $38 for participating in a tender offer versus $7.95 for a traditional, open market trade). Granted, tender offers are not frequently made, but they do provide a good example of why it is important to pay attention to costs.

A far more commonly incurred cost is fund fees. Within the large-cap category of our 2014 mutual fund guide, one of the cheapest funds is Vanguard Total Stock Index (VTSMX). This fund has an annual expense ratio of 0.17%. In contrast, Marsico Flexible Capital (MFCFX) ranks among the most expensive funds with an annual expense ratio of 1.44%. This 1.27% difference equates to $127 extra per year for every $10,000 invested with MFCFX instead of VTSMX. That amount adds up. On a $100,000 investment, an investor will pay Marsico $1,270 per year more than he would pay Vanguard.

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AAII Sentiment Survey: Neutral Sentiment Hits a Six-Week High

Posted on February 27, 2014 | AAII Survey

Neutral sentiment rose to a six-week high in the latest AAII Sentiment Survey. Optimism stayed above its historical average, while pessimism declined to a nine-week low.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 2.5 percentage points to 39.7%. This is the third consecutive week with optimism above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, rose 4.2 percentage points to 39.2%. This is the highest reading since January 16, 2014, and just the third time since 2005 that neutral sentiment is above 39.0%. It is also the eighth consecutive week with a neutral sentiment reading above its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.6 percentage points to 21.1%. This is the lowest level of pessimism recorded by our survey since December 26, 2013. It is also the 21st time in the past 25 weeks that bearish sentiment is below its historical average of 30.5%.

Since jumping to 36.4% near the start of this month, bearish sentiment has fallen by a cumulative 15.3 percentage points. Pessimism is now close to the bottom of its typical range of readings. Conversely, neutral sentiment is right at the border of typical and unusually high readings.

Some individual investors are likely watching the S&P 500’s current attempt to break out into new record high territory. An upward move past current levels would encourage those investors who are otherwise optimistic about sustained earnings and economic growth and the Federal Reserve’s tapering of bond purchases. A failure by the market to move higher could renew fears about stock prices having established a short-term top and that a correction could be forthcoming. Some AAII members are also fretting about elevated stock valuations, the pace of revenue growth and Washington politics.

This week’s AAII Sentiment Survey:

  • Bullish: 39.7%, down 2.5 percentage points
  • Neutral: 39.2%, up 4.2 percentage points
  • Bearish: 21.1%, down 1.6 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:

Upcoming Chapter Meeting: AAII New York City

Posted on February 26, 2014 | Local Chapters

Date: Wednesday, March 5, 2014
Topic: With Market at Fair Value, Dividends Rule in 2014

Speaker: Harry D. Cohen, Co-Chief Investment Officer, ClearBridge Investments

Our speaker, Harry D. “Hersh” Cohen, believes that stocks have had extraordinary capital appreciation despite only moderate growth in earnings. He attributes this to the Fed’s quantitative easing policy and their ultra-low interest rates. Yields on stocks were greater than those on investment-grade bonds, driving investors to take more risk by investing in dividend-paying equities. Cohen cautions against expectations of further appreciation and emphasizes continued dividend growth.

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Posted on February 26, 2014 | Asset Allocation


Large-Cap Stocks: 21.31%
Mid-Cap Stocks: 15.33%
Small-Cap Stocks: 26.73%
International Stocks: 11.24%
Emerging Markets Stocks: -12.31%

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Balancing Your Return Ideals With the Realities of Risk

Posted on February 26, 2014 | Classroom

Every builder starts with a foundation. If you are new to investing, you are building an investment portfolio, and you need to start with an investment foundation. That foundation consists of the basic investment principles.

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The Dividend Yield: Stock Mutual Funds and ETFs That Generate Income

Posted on February 26, 2014 | Investing

Are you looking for an investment that has the potential to produce a growing income stream and long-term capital appreciation along with reasonable risk? Bond funds won’t suffice; their income is a prisoner of prevailing interest rates, and their capital appreciation in the long term is essentially zero, a combination that is exposed to inflation risk.

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Advanced Custom Screens

Posted on February 26, 2014 | Stock Investor Pro

Used Stock Investor Pro’s advanced screening functions to make your screen more powerful

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Posted on February 26, 2014 | Stock Superstars Report

Stock Superstars alert for the week ending February 21, 2014 updated.

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Sell OF THE WEEK 2/26/2014

Posted on February 26, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why FLIR Systems (FLIR) 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


Posted on February 25, 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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