Keeping Track of Your Portfolio – What to Monitor and When


This week’s AAII Weekly Digest highlights these “must-read” AAII articles:


Allocating to Manage Risk: A Case StudyAllocating to Manage Risk: A Case Study

A follow up to analysis AAII published 20 years ago of a fictional couple’s exposure to downside risk that looked to see what would happen to the couple’s portfolio should financial markets suffer a severe drop. More than eight years into the current bull market with interest rates still at historically low levels, an update to the article seemed warranted. The same fictional couple—the Pinkertons—is used, but their portfolio, withdrawal rates and downside risks are updated to the modern day.

For Long-Term Investors, the Focus Should Be on Risk

Paula Hogan

There is a common notion that stocks, at least if held for a long-time, usually outperform other assets, so that stocks should be the cornerstone of any long-term portfolio. However, the thoughtful investor must also wonder: “But what if stocks don’t do well? What happens then to my retirement?” And in this self-query, the more appropriate approach becomes clear: It makes more sense to think first about what risk you are able and willing to bear, and then to think about what potential investment returns you might be able to capture. So, let’s take a step back and before thinking about potential portfolio return, think through the factors that determine a person’s ability and willingness to take investment risk.


How Big Is Longevity Risk?How Big Is Longevity Risk?

In a defined-contribution pension arrangement [e.g., a 401(k) plan], individual retirees are subject to both investment risk (i.e., uncertainty about what their investment returns will be) and longevity risk (uncertainty about how long they will live). This article explores the question: Which of these risks is bigger?


Keeping Track of Your Portfolio: What to Monitor and When

Setting up a reasonable and workable investment plan is one of the most important decisions an investor can make. But once that decision is made, an investor’s work is only half done. An equally important task consists of monitoring the portfolio to make sure it is conforming to your original plan. Presented here is a description of the minimum monitoring needs for the typical long-term buy-and-hold investor.

Our Member Question for this week is:

During a conference call earlier this month Jamie Dimon, the chief executive of JPMorgan Chase & Co., slammed the “dysfunction” in Washington, D.C., calling it an embarrassment to the country. Furthermore, Dimon feels that political gridlock in Washington has undermined growth in the U.S. economy.

In your opinion, what impact does the political climate in Washington, D.C., have on the overall U.S. economy?


Vote to answer this week’s Special Question: What is the one piece of legislation Congress could pass or repeal that would have the
biggest positive impact on the economy and the stock market?

Last Week’s Results:

Poll results are as of 9 a.m. (Central) on Monday. 2,471 respondents.

Majority of Readers Worry About Market Downturn in Coming Months

Pick up a financial newspaper or visit an investing website these days and you will most likely find an article talking about whether the market is overvalued and if a market correction is on the horizon. And for a good reason: Between the close on Tuesday, November 8, 2016, and the close on Friday, July 21, the S&P 500 has seen a price gain of 15.6% (excluding dividends). Tech stocks have fared even better, as the Nasdaq composite has logged a 23% gain over the same period. Our weekly poll asked our readers if they think the market will make a downturn in the next three to six months. Our weekly special question then asked where they think the market and the economy are headed for the rest of 2017.

AAII e-book: Portfolio Building

“Easier said than done” is a common saying that applies well to developing an overall strategy for your investment portfolio. The basic concepts are relatively easy, but they become more complex and less clear-cut when it comes to applying them to real-world situations. This e-book, available exclusively to AAII members, is designed to bridge the gap between theory and practice.

The AAII Weekly Digest is one of the many benefits of AAII membership. To learn more, consider a 30-day Trial AAII Membership to start becoming an effective manager of your own assets.


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