In the long run, value stocks perform better because the markets are not perfectly efficient and investors overpay for growth. That is not to say that value always outperforms. The key when it comes to all investment approaches is to have the discipline to see it through periods of underperformance and to be diversified so other strategies may pick up the slack.
AAII’s Model Shadow Stock Portfolio is one of the oldest real-money examples of constructing and managing a two-factor portfolio focused on value and size. The Model Shadow Stock Portfolio was started in January 1993 to show members how a consistent investment approach could be followed and to help them learn how to apply it in their own portfolios.
Using so-called sin stocks and environmental, social and governance (ESG) stocks as examples, we show how to use thematic approaches to identify potentially attractive stocks. Both vice and virtue stocks are screened based on value and growth characteristics to provide examples of how to identify stocks based on a thematic approach.
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 shares in a repurchasing firm are often confused as to why the company is buying back shares and what the import will be on their investment.
Our Member Question for this week is:
Have you ever participated in a stock dividend reinvestment plan (DRP)?
Vote to answer this week’s Special Question: What is your primary reason for participating in a dividend reinvestment plan (DRP)?
Last Week’s Results:
Poll results are as of 9 a.m. (Central) on Monday. 1,224 respondents.
Last week’s survey question asked our readers what their biggest concerns are about retirement. We then followed up with a special question asking what financial steps our readers have taken to try and avoid those same concerns.
One of the biggest difficulties for individuals interested in investing in stocks is getting started. This AAII e-book provides a general outline for analyzing stocks and walks through the process as it is practically applied to specific types of investment approaches. It first describes, in very broad terms, the basic process that is followed in fundamental analysis. It then goes into the various steps in more detail and shows how they can be adapted and practically applied to an individual’s specific approach using commonly found information sources.