Half of Investors Say Market Outlook Is Unchanged by Middle East Turmoil

Posted on July 17, 2014 | AAII Survey

This week’s AAII Sentiment Survey special question asked AAII members what type of impact, if any, the current events in the Middle East are having on their six-month outlook for stock prices. Nearly half of respondents (49%) said the events so far were either not impacting or having a very small impact on their outlook. Slightly more than one out of five respondents (21%) said the events were either causing them to reduce their expectations about how stocks will perform or were a cause for concern. Just 12% said they were more bearish because of the events in the Middle East. Some members noted that their outlooks would change if geopolitical events worsened.

Here is a sampling of the responses:

  • “None. There is always something going on somewhere. I just tune it out.”
  • “I would expect oil and gas prices to go up, creating a slight drag on the economy.”
  • “Currently none, but things can change quickly over there.”
  • “Some concern changing my sentiment on the market from bullish to neutral.”
  • “Major impact due to possibilities of expanded conflicts.”


Sell OF THE WEEK 7/9/2014

Posted on July 16, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Exxon Mobil (XOM) 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





THE JULY 2014 PASSING COMPANY LISTS AND PERFORMANCE DATA IS NOW AVAILABLE ON-LINE

Posted on July 15, 2014 | Stock Screens

YTD Return of Top Performers: Rule #1 Investing 54.5% — ADR Screen 38.1%

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JULY 2014 AAII MODEL PORTFOLIOS UPDATED – An Exhausted Bull Reaches New Highs

Posted on July 15, 2014 | Model Portfolios

On June 24, the S&P 500 index touched a new high of 1968.17. While many bears have been patiently waiting for what they feel is a long-overdue correction, the market pushed into record territory during a bumpy June. Fuel for the upward move was provided by the Federal Reserve, which recently reaffirmed its focus on jobs over financial stability, as well as by improving jobs and consumer confidence data. This move higher lifted all boats, but the Model Shadow Stock Portfolio especially benefited as it invests in more volatile micro- and small-cap stocks. The Model Fund Portfolio trailed the Model Shadow Stock Portfolio as it holds less risky assets, but it still performed well for the month.

The Model Shadow Stock Portfolio gained 7.4% in June, outperforming the Vanguard Small Cap Index fund (NAESX), which gained 5.0%, and the DFA US Micro Cap Index fund (DFSCX), which gained 4.3%. For the year, the Model Shadow Stock Portfolio is now down 0.7%, trailing NAESX, which is up 6.4%, and DFSCX, which is up 1.5%. The Model Shadow Stock Portfolio has a compound annual return of 17.8% from its inception in 1993, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

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BUY OF THE WEEK 7/15/2014

Posted on July 15, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Telecom Argentina (TEO) is his “Buy 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: Buy of the week




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.

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Zweig Screen

Posted on July 14, 2014 | Stock Screens

A strategy incorporating a “shotgun” (screening a large number of companies) and “rifle” (narrowing the list to select companies) approach to finding companies that exhibit strong earnings and sales growth, reasonable price-earnings ratios and strong relative price strength.

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Earnings Season Returns

Posted on July 11, 2014 | Stock Superstars Report

On Wednesday, the Federal Reserve released minutes from its June meeting. The Fed committee announced that if the economy continues its improvement, the Fed bond-purchasing program will end in October. The program has been in place since September 2012; now that there is some clarity regarding its endpoint, investors will turn their attention toward estimating when the Fed will raise interest rates.

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Keeping Things in Perspective

Posted on July 11, 2014 | Dividend Investing

This morning’s headlines proclaimed things like “S&P Suffers Worse Week in Months.” The large-cap index did incur its worst weekly performance since April, but this week’s loss was only 0.9%. A weekly decline of 1% or 2% is pretty normal. It just feels worse because of the market’s upward march.

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AAII Sentiment Survey: Pessimism Jumps to a Two-Month High

Posted on July 10, 2014 | AAII Survey

Pessimism about the short-term direction of stock prices is at its highest level in two months, according to the latest AAII Sentiment Survey. Neutral sentiment is at a four-month low, while optimism is only slightly lower than a week ago.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 0.9 percentage points to 37.6%. Optimism is below its historical average of 39.0% for the 15th time in the past 17 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, plunged 5.4 percentage points to 33.7%. This is the lowest neutral sentiment has been since March 13, 2014. Even with the decline, neutral sentiment remains above its historical average of 30.5% for the 27th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped by 6.3 percentage points to 28.7%. This is the largest amount of pessimism recorded by our survey since May 8, 2014. Even with the rise, bearish sentiment remains below its historical average of 30.5% for the 12th straight week and the 35th out of the last 39 weeks.

Though there was a significant weekly increase in pessimism and a decrease in neutral sentiment, the changes simply moved each measure of sentiment closer to its historical average. The shifts occurred as the S&P 500 fell 1.1 percentage points over two consecutive trading sessions during the survey period and tensions in the Middle East escalated. These two events, combined with concerns about prevailing valuations, likely caused more investors to fret about the potential for a downward market move occurring over the short term.

At the aggregate level, some AAII members are optimistic about sustained economic growth, the market’s upward trend, and the Federal Reserve’s tapering of bond purchases. Others are concerned about the pace of economic growth, prevailing valuations, events in the Middle East and Ukraine, and frustration with Washington politics.

This week’s AAII Sentiment Survey results:

  • Bullish: 37.6%, down 0.9 percentage points
  • Neutral: 33.7%, down 5.4 percentage points
  • Bearish: 28.7%, up 6.3 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: http://www.aaii.com/sentimentsurvey



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