For Mutual Funds, Competition Doesn’t Mean Lower Fees

Competition is usually associated with lower prices. The exact opposite pattern is occurring within the mutual fund industry. Expense ratios for U.S. domestic equity funds operating in more competitive market segments “charge significantly higher annual expense ratios than funds operating in less competitive market segments.” Among the better-known measures of cost is the expense ratio….

 

Market Tips From an Observer

Covering the stock market as a broadcaster and columnist has given Dick Davis a unique perspective on the market—and investor behavior. Although these insights are over 30 years old, many of them are just as valid today as they were in 1984. Thoughts on How Adverse News Affects Stocks The first day loss may turn…

 

The Role of Leverage and Quality in Dividend Changes

Dividend increases are typically met with a positive reaction from investors, while dividend cuts are typically met with a negative reaction. Whether these changes signal positive or negative information, however, depends on the quality of the company and its leverage. Companies with low-to-moderate levels of leverage—defined as liabilities to total assets—can signal positive information by…

 

Analyzing Money Market Funds: Low Risk Isn’t No Risk

In uncertain times, even relatively low-risk investments come under strict investor scrutiny. And well they should, since they are viewed as a safe haven for hard-earned savings. Money market mutual funds are considered by many to set the standard for low-risk, liquid and convenient investments. As such, they must be able to stand up to…

 

Common Stock Repurchases: A Bane or Boon to Shareholders?

Repurchases of common stock by corporations can be an attractive alternative to dividends. They may also affect share price. But what is their impact—to the corporation; to the shareholder? Many companies have been repurchasing their common stock in recent years and some can involve hundreds of millions or even billions of dollars. Investors who own…

 

The Other Part of the Equation: Assessing a Fund’s Risk

Editor’s Note: While this article is from 1989, and some of the mutual fund names have changed or the funds have merged or closed, the concepts of risk assessment still apply. Often, it is all too tempting to evaluate a mutual fund solely based on its rate of return over some period of time. Typically,…

 

The August 2018 AAII Journal is Now Available Online

Feature Article: The Individual Investor’s Guide to Exchange-Traded Funds 2018 by Jaclyn N. McClellan Our expanded guide covers 542 exchange-traded funds, providing detailed return information and data as well as an update on the ETF industry.       Portfolio Strategies » Observations From Decades of Tracking Investment Newsletters by John Bajkowski , Charles Rotblut,…

 

Analyzing Value: The Internal Growth Rate

Earnings and dividend growth rate assumptions are a primary factor in almost all fundamental models of common stock valuation. The greater the anticipated future growth in firm earnings, the greater the stock valuation will be, assuming risk remains unchanged. But estimating earnings growth potential is difficult. Many subjective factors are considered, including the firm’s management,…

 

Computerized Investing’s New July Content

Important Note: Dear Subscriber, Starting with the September 2018 edition, Computerized Investing will be merging with the AAII Journal. Computerized Investing was originally created when computers, and using a computer to research investments, were a new option for individual investors. In today’s environment, most consider using a computer to analyze investments a necessity. As such,…

 

Defining Yield: A Word of Many Meanings

The term “yield” is thrown about often by the financial press and others. The trouble is that yield has many different meanings and implications for investors. This workshop will try and sort out some of the major differences. It will not, however, attempt to present mathematically all of the possible yield calculations created by institutions…