Sell OF THE WEEK 4/15/2015

Posted on April 15, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Tech Data Corp. (TECD) 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





A Spring Bounce

Posted on April 15, 2015 | Model Portfolios

Spring is in the air as temperatures warm up to a tolerable level here in Chicago. The S&P 500 index’s total return was down 1.6% for March, fairly typical of index performance for the month.

The Model Fund Portfolio was flat for the month, declining only 0.1%, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, gained 4.6%.

The Model Shadow Stock Portfolio’s 4.6% increase for March handily beat both of its comparison benchmarks: The Vanguard Small Cap Index fund (NAESX) gained 1.2% and the DFA US Micro Cap Index fund (DFSCX) gained 2.3% in March. Year to date, the Shadow Stock Portfolio has gained 5.5%, while the NAESX is up 4.7% and the DFSCX is up 3.1% over the same time period. Since its inception in 1993, the Model Shadow Stock Portfolio has a compound annual average return of 17.0%, while the Vanguard Total Stock Market Index fund (VTSMX) has gained 9.4% annually over the same period.

The Model Fund Portfolio’s 0.1% decline in March compared to a 1.0% decrease for the Vanguard Total Stock Market Index fund. Since its inception in June of 2003, the Model Fund Portfolio has a compound annual average return of 9.3%, slightly trailing the Vanguard Total Stock Market Index fund over the same time period, which gained 9.5%.

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BUY OF THE WEEK 4/14/2015

Posted on April 14, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Chesapeake Energy Corp. (CHK) 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




Mergers and Acquisitions Hit Record High

Posted on April 10, 2015 | Dividend Investing

We have commented on the fact that companies have shown an increase in cash balances over the last year. In fact, cash and short-term investments in the S&P 500 (ex-financials) settled at a record high at the end of 2014. The majority of companies are using this additional cash to increase share buybacks and dividend payments, which have also hit record levels. So far this year what we are seeing is an increase in mergers and acquisitions (M&A).

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Jumping Merger Activity Snags SSR Holding

Posted on April 10, 2015 | Stock Superstars Report

Mergers and acquisitions (M&A), which are up 25% year over year, grabbed the headlines again this week as several large deals were announced.Seven years removed from the financial crisis, the aftereffects have mostly faded and companies have regained the confidence to make acquisitions

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Members Weigh In on the State of the Average Consumer

Posted on April 9, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members how they think the average consumer is faring relative to one year ago. Responses were mixed. Slightly less than a quarter of all respondents (24%) said the average consumer is doing better, primarily because of lower gasoline prices and an improved labor market. About 19% described the average consumer as faring somewhat/slightly better thanks to lower gasoline prices and improved labor market conditions. Roughly 21% said the average consumer is faring about the same, with the lack of wage growth as the most common reason. Nearly 18% of respondents said the average consumer is faring worse due to higher prices (excluding gasoline) and a lack of wage growth.

Here is a sampling of the responses:

  • “I think consumers are doing better due to more people being employed and the lower cost of gasoline.”
  • “Slightly better because of the improved job market and the reduction in gas prices.”
  • “Less well. Food prices, insurance costs, everything but gasoline is up; wages are flat or are up much less than costs are.”
  • “Not much better with stagnant wages and continued underemployment.”


AAII Sentiment Survey: Neutral Sentiment Spikes to a 12-Year High

Posted on April 9, 2015 | AAII Survey, Investing

Neutral sentiment spiked to a 12-year high in the latest AAII Sentiment Survey. The percentages of individual investors describing themselves either bullish or bearish fell.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 6.7 percentage points to 28.7%. This is a three-week low. The drop puts optimism below its historical average of 39.0% for the fifth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, surged by 14.5 percentage points to 47.2%. Neutral sentiment was last higher on February 6, 2003 (51.4%). This week’s jump puts neutral sentiment above its historical average of 30.5% for the 14th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, pulled back by 7.8 percentage points to 24.1%. The historical average is 30.5%.

Not only is neutral sentiment at an unusually high level, it is at an unusually high level for the third time in five weeks. Historically, unusually high levels of neutral sentiment have been correlated with better-than-average market performance over the following six- and 12-month periods. (See Analyzing the AAII Sentiment Survey Without Hindsight in the June 2014 AAII Journal for more information.) There is no guarantee history will repeat in the future, however.

During the past five weeks, there have been notable swings in all three sentiment indicators. Bullish sentiment has fluctuated within a 10-percentage-point range, neutral sentiment has moved within a 14.5-percentage-point range and bearish sentiment has swung within nearly an eight-percentage-point range. The up and down movements have occurred as stock prices have been more volatile, the odds of an interest rate hike occurring sooner rather than later have increased and projections for first-quarter earnings have been reduced.

Keeping some AAII members encouraged is the ongoing bull market, sustained economic expansion, earnings growth and still-accommodative monetary policy. Causing other AAII members to be cautious or pessimistic are prevailing valuations, disappointing earnings or guidance from certain companies, geopolitical events, the pace of economic growth and worries that an even larger decline in stock prices could occur.

This week’s AAII Sentiment Survey results:

  • Bullish: 28.7%, down 6.7 percentage points
  • Neutral: 47.2%, up 14.5 percentage points
  • Bearish: 24.1%, down 7.8 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.



Sell OF THE WEEK 4/8/2015

Posted on April 8, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Standard Motor Products (SMP) 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





BUY OF THE WEEK 4/7/2015

Posted on April 7, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Paccar (PCAR) 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




Springing into the Second Quarter

Posted on April 3, 2015 | Stock Superstars Report

The first quarter came to a quiet close this week as quarterly earnings trickled in from a small group of early reporters. The first SSR holding to release earnings was Micron Technology (Group 4: MU), which reported earnings on Wednesday.

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