BUY OF THE WEEK 7/8/2014

Posted on July 8, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Alliance Fiber Optic Products (AFOP) 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

Putting the Numbers to Work: The Magic of Ratios

Posted on July 8, 2014 | Classroom

Ratio analysis relies on financial statements to study the past and develop a feel for a company’s attractiveness.

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Valuation Ratios: The PEG Ratio

Posted on July 8, 2014 | AAII Journal

The PEG ratio factors in a company’s growth into its valuation, allowing investors to compare companies with different rates of growth.

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Editor’s Note

Posted on July 6, 2014 | AAII Journal

John Bogle and Jack Schwager are two names not commonly mentioned in the same sentence. John Bogle started a mutual fund company to offer index funds in 1975 when nobody thought the idea would work. Today, Vanguard is one of the largest fund companies in the world. Jack Schwager interviewed several top traders and wrote about his conversations in 1989. His book, “Market Wizards,” became a bestseller and sits on my bookshelf at home. (Yes, I know John Bogle goes by “Jack,” but to avoid confusion here, I’ll use “John” to refer to him.)

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Common Investor Mistakes and Other Investing Insights

Posted on July 5, 2014 |

In the second part of our interview with John Bogle, he discusses how investors commonly put too much emphasis on past performance. Plus, he offers his views on high-frequency trading.

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New Beginnings

Posted on July 4, 2014 | Computerized Investing

This month marks several changes here at Computerized Investing. We begin by saying goodbye to Joe Lan, who has been accepted to the University of Michigan’s Ross School of Business, where he will start his pursuit of an MBA degree this fall. For nearly the last four years, Joe has been a tremendous asset to Computerized Investing and to AAII. I wish him all the best in his studies and future endeavors.

As Joe starts down a new career path, I am excited to welcome Hareesh Jayanthi to the CI team. Hareesh has a master’s degree in finance and a bachelor’s degree in economics and has experience in the mutual fund and fixed-income arenas. Besides being a contributor to Computerized Investing, Hareesh will be part of the Dividend Investing and Stock Superstars Report advisory committees and will assist in supporting Stock Investor Pro, our fundamental stock screening and research database program, and other AAII publications and products.

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Social Security’s Lump-Sum Payment Option

Posted on July 3, 2014 | Investor Update

The Social Security Administration offers the chance to receive a lump-sum payment of up to six months’ worth of benefits. It’s not a well-known option, but it is available to anyone meeting the basic requirements. There are also caveats to consider.

Retroactive benefits can be claimed by a person who has reached full retirement age (FRA) and is not currently collecting benefits. FRA is currently 66 for those born between 1943 and 1954. It increases in two-month increments for those born between 1955 and 1959. Those born in 1960 or later will not reach full retirement age until they turn 67.

Full retirement age is the year at which a person first becomes eligible for the primary insurance amount. Social Security benefits can be claimed prior to the FRA, but they will be below the primary insurance amount. Conversely, if claiming is postponed, delayed retirement credits increase the benefits until age 70. The increase in benefits is why conventional wisdom calls for delaying the claiming decision until as close as possible to age 70 for those in good health.

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Which IRA Should You Contribute to and When?

Posted on July 3, 2014 | AAII Journal

Contributing to a Roth IRA early in a tax year results in the greatest ending wealth.

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Posted on July 3, 2014 | Weekly Features


This week’s AAII Weekly Features has been updated.
View this week’s Top AAII Articles, Featured Stock Screen and Member Question.

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Individual Investor Optimism Rises to Three-Week High

Posted on July 3, 2014 | AAII Survey

Optimism among individual investors about the short-term direction of stock prices is at a three-week high, according to the latest AAII Sentiment Survey. Pessimism also rose slightly, while neutral sentiment extended its streak of above-average readings.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.3 percentage points to 38.5%. Even with the improvement, optimism remains below its historical average of 39.0% for the 14th time in the past 16 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 2.6 percentage points to 39.1%. This is the 26th consecutive week that neutral sentiment is above its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.3 percentage points to 22.4%. This is the 11th straight week and the 34th out of the last 38 weeks with pessimism below its historical average of 30.5%.

The slight increase in pessimism follows what was a six-month low in bearish sentiment. Neutral sentiment remains at high levels, though it is now just below the upper border of what we would we consider to be an unusually high reading (39.4%). Keeping some AAII members optimistic is sustained economic growth, the market’s upward trend, and the Federal Reserve’s tapering of bond purchases. Discouraging some AAII members is the pace of economic growth, prevailing valuations, events in Iraq and Ukraine, and frustration with Washington politics.

This week’s AAII Sentiment Survey:

  • Bullish: 38.5%, up 1.3 percentage points
  • Neutral: 39.1%, down 2.6 percentage points
  • Bearish: 22.4%, up 1.3 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:

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