A Dot-Com Crashes After the NASDAQ Sets a New High

Posted on April 30, 2015 | Investor Update

Investor-Update

It was ironic to see Twitter (TWTR) incur a large price drop so soon after the NASDAQ set its first record high since the dot-com bubble. Shares of the social media company fell by more than 18% on Tuesday and fell further on Wednesday following a leaked earnings announcement, disappointing first-quarter revenues and lowered guidance. It was a sequence of events that supported Mark Twain’s supposed observation of history rhyming.

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AAII Members Describe Shifts in Their Stock Investing Strategies

Posted on April 30, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members how, if at all, they have changed their stock investing strategy recently. More than a quarter of all respondents (27%) said they have not made any change. About 18% are placing a bigger emphasis on targeting large-cap and dividend-paying stocks. Nearly 13% said they have raised their cash allocations. Close to 12% are focusing more on foreign stocks and funds, while 8% are focusing more on small-cap stocks.

Here is a sampling of the responses:

  • “I have moved into all large-cap with a bias towards value.”
  • “U.S. stocks seem priced for perfection, while overseas and emerging markets have been pretty beaten up.”
  • “Small-cap companies are less affected by the stronger dollar.”
  • “I’m taking profits where I have gains, and sitting on cash for an opportunity to buy dividend-paying stocks at a lower price.”
  • “No change. I review and change my portfolio, if needed, once a year.”


AAII Sentiment Survey: Neutral Stays High, Pessimism Falls

Posted on April 30, 2015 | AAII Survey

Neutral sentiment is above 45% for a fourth consecutive week, while pessimism is down to a two-month low in the latest AAII Sentiment Survey. Bullish sentiment declined as well, but stayed within its recent range.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 0.6 percentage points to 30.8%. The decline puts optimism below its historical average of 39.0% for an eighth consecutive week, the longest such streak since June 19, 2014, through August 7, 2014.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.9 percentage points to 47.2%. The increase keeps neutral sentiment at or above 45% for the fourth consecutive week, the longest such streak since December 16, 1988, through January 6, 1989. It also keeps neutral sentiment above its historical average of 30.5% for the 17th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 1.2 percentage points to 22.0%. This is the lowest amount of pessimism registered by our survey since February 26, 2015 (20.3%). It is also the 14th week this year with a bearish sentiment reading below its historical average of 30.5%.

Neutral sentiment continues to be at an unusually high level. Historically, such readings 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 itself in the future, however.

Keeping some AAII members encouraged are 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, recent price volatility, geopolitical events, the pace of economic growth, the impact of the stronger dollar on earnings growth and worries that a notable decline in stock prices could occur.

This week’s AAII Sentiment Survey results:

  • Bullish: 30.8%, down 0.6 percentage points
  • Neutral: 47.2%, up 1.9 percentage points
  • Bearish: 22.0%, down 1.2 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 4/29/2015

Posted on April 29, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Badger Meter, Inc. (BMI) 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





AAII WEEKLY FEATURES 4/28/2015

Posted on April 28, 2015 | Weekly Features

Investor-Update

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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BUY OF THE WEEK 4/28/2015

Posted on April 28, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why MKS Instruments, Inc. (MKSI) 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




Eleven DI Companies Report Quarterly Earnings

Posted on April 24, 2015 | Dividend Investing

The NASDAQ Composite index surpassed its all-time closing high for the first time in 15 years on Thursday, posting a close above the 5,048.62 reached at the height of the dot-com bubble on March 10, 2000.

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Diversification Pays Off

Posted on April 24, 2015 | Stock Superstars Report

It can perhaps get tiring to hear about the importance of proper diversification, but earnings season reemphasizes its importance. While the SSR portfolio posted a nice gain this week, handily beating its benchmark, there were a couple of bumps in the road, so to speak.

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Wealth and Spending Affect the Success of the 4% Rule

Posted on April 23, 2015 | Investor Update

Investor-Update

The success or failure of adhering to the 4% rule depends on a both a retiree’s wealth and consumption. The rule, developed by William Bengen, calls for withdrawing 4% from savings at the start of retirement and then adjusting the amount upward each year in response to inflation. Accounting firm PricewaterhouseCoopers (PwC) says the rule may only work for affluent households.

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AAII Members Weigh In on NASDAQ Rise

Posted on April 23, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members what they thought about the NASDAQ rising above 5,000 for the first time since 2000. About 11% of respondents said it was basically a non-event, with some describing the move as not revealing anything about the market’s current valuation. Nearly 8% said reaching 5,000 was a positive. Six percent thought it was about time the NASDAQ returned to 5,000. Another 6% of said it will either be difficult for the NASDAQ to stay at this level or that reaching 5,000 is otherwise a reason for concern that the market is getting overpriced. A little more than 3% of respondents view valuations as being cheaper now than they were during the technology bubble.

Here is a sampling of the responses:

  • “It’s about time. This time seems much more sustainable than last time.”
  • “I really don’t think it was that significant.”
  • “P/E ratios are realistic now, especially when compared to the rapid ascent to 5,000 in 2000.”
  • “It’s been up for a long time. It’s time for a drop in the market.”
  • “Would like it better if the value of money hadn’t declined over the last 15 years.”
  • “A good thing.”


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