Five Common Traits of Successful Value Screens

Posted on August 1, 2014 | AAII Journal

Though investing gurus differ in what they look for in a stock, there are five common traits we see across the AAII value-oriented screens.

Wouldn’t you love to get Benjamin Graham’s thoughts on whether a stock you are considering is priced attractively?

Or how about getting a warning message from David Dreman before you fall for a common emotional trap after a beloved company just missed its earnings target? Who wouldn’t want some tips from Warren Buffett on how to identify if a company has a competitive advantage?

We have adapted the works of the best investing minds on Wall Street and created simple stock selection rules that individuals can use to find attractive investments. AAII members can learn more about stock market gurus and their strategies and even see which stocks currently match each approach on the Stock Screens segment of or in AAII’s stock screening and analysis tool Stock Investor Pro.

If you look at the approaches of these gurus and stock market experts, you will quickly notice that successful approaches within a given investment style tend to have similar elements. Sure, the Dreman approach on may emphasize the price-earnings ratio to locate value companies while the Piotroski strategy uses the price-to-book-value ratio, but every successful value-oriented approach not only looks for a low price-related multiple, but also some measure of expected growth or financial strength.

Read more »

Money Funds and the Regulators

Posted on July 31, 2014 | AAII Journal

Following the 2008 financial crisis, there has been debate about how much regulatory change is needed, including whether floating net asset values should be required.

Read more »

July Letters to the Editor – Members comment on John Bogle’s advice, the PEG ratio, covered calls and estate planning

Posted on July 30, 2014 | AAII Journal

Mr. Bogle has a very sound knowledge about investing. I am very fortunate to have my 401(k) plan through Vanguard. My plan offers both index funds and active funds as options. Although my investments are mostly in index funds, I also use a couple of active funds to balance out my portfolio. Although the index funds have lower expenses, the two active funds I use have expense ratios of approximately 0.35% to 0.45%, which is still very inexpensive. I feel that a mix of index and active funds will give me a greater chance for investment success. Of course, other fund companies charge much more than Vanguard and that could make a major difference in returns!
—Jerry Durham from Tennessee

A really great article. How can I save it for my grandchildren?

Shortly after I retired 11 years ago, I did a long calculation on my 43 years of stock market performance and I just matched the Dow Jones industrial average. I could have saved eight to 10 hours a week with an index fund (22,360 hours by 2003). The moral of the story is that unless you are in the market more for kicks than profits, you should be in index funds.
—Homer Milford from New Mexico

Charles Rotblut responds:

Near the top of every Journal article, on the left-hand side, is a section labeled “Share this article.” Below it are options to email a link to the article or to share it on social media websites such as Facebook. If you want to save a copy of the article, click on “Download printable PDF” just above under the heading “Print this article.”

Read more »

Supreme Court: No Bankruptcy Protection for Inherited IRAs

Posted on July 29, 2014 | AAII Journal

Inherited IRAs do not qualify for the same protections under the bankruptcy code as other types of IRAs do.

Read more »

The Role of Luck and Skill in Investing

Posted on July 25, 2014 | AAII Journal

Since luck plays a bigger role than skill in influencing investment returns, investors need to focus on their portfolio management process.

Read more »

“Market Wizards” Advice: Doing the Uncomfortable Thing

Posted on July 24, 2014 | AAII Journal

Basing trading decisions on what feels emotionally satisfying often leads to the worst portfolio performance.

Read more »

Five Common Traits of Successful Value Screens

Posted on July 22, 2014 | AAII Journal

Though investing gurus differ in what they look for in a stock, there are five common traits we see across the AAII value-oriented screens.

Read more »

The Right Type of Life Insurance for Your Estate Planning Needs

Posted on July 15, 2014 | AAII Journal

Life insurance works well for estate planning because of when benefits are paid and the ability to create wealth for heirs outside of the estate.

Read more »

Valuation Ratios: The PEG Ratio

Posted on July 8, 2014 | AAII Journal

The PEG ratio factors in a company’s growth into its valuation, allowing investors to compare companies with different rates of growth.

Read more »

Editor’s Note

Posted on July 6, 2014 | AAII Journal

John Bogle and Jack Schwager are two names not commonly mentioned in the same sentence. John Bogle started a mutual fund company to offer index funds in 1975 when nobody thought the idea would work. Today, Vanguard is one of the largest fund companies in the world. Jack Schwager interviewed several top traders and wrote about his conversations in 1989. His book, “Market Wizards,” became a bestseller and sits on my bookshelf at home. (Yes, I know John Bogle goes by “Jack,” but to avoid confusion here, I’ll use “John” to refer to him.)

Read more »

« Newer EntriesOlder Entries »