BUY OF THE WEEK 12/2/2014

Posted on December 2, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Hibbett Sports, Inc. (HIBB) 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




End of QE Makes Little Impact on Member Allocations

Posted on December 2, 2014 | AAII Survey

November’s Asset Allocation Survey special question asked AAII members how the coming end of the Federal Reserve’s bond-buying program influenced their thoughts about allocating to bonds or bond funds. More than half of all respondents (53%) said the announcement had no impact. An additional 14% said they do not own fixed-income investments or are avoiding them. Approximately 7% said they are not adding to their fixed-income allocations or are reducing their allocations. Roughly 6% said they may either buy bonds or bond funds or are prepared to do so if interest rates rise.

Here is a sampling of the responses:

  • “No effect whatsoever. I keep a short five-year ladder of Treasury notes only.”
  • “Not much impact. [The bond-buying program] was unlikely to continue too much longer and I think that the market realized that.”
  • “Will not invest in bonds. Rising interest rates = lower bond prices.”
  • “Expected [the bond-buying program to end] for the last year, so had little effect as I’m already in short- to medium-term funds.”
  • “I will continue to stay light in bonds. Returns are just not that terrific.”
  • “I may take advantage of buying opportunities in the coming years as prices fall and yields rise as I tend to hold to maturity.”


November AAII Asset Allocation Survey: Equity Allocations Rebound

Posted on December 2, 2014 | AAII Survey

Individual investors’ allocations to equities rebounded for the first time in three months, according to the November AAII Asset Allocation Survey. The rise occurred as both fixed-income and cash allocations declined.

Stock and stock fund allocations rose 3.1 percentage points to 67.2%. This is the largest allocation since August 2014 (67.3%). The increase puts stock and stock fund allocations at or above their historical average of 60% for the 20th consecutive month and the 22nd out of the past 23 months.

Bond and bond fund allocations declined 1.2 percentage points to 16.0%. Fixed-income allocations were last lower in May 2014 (15.5%). Last month was the fourth consecutive month with fixed-income allocations above their historical average of 16%.

Cash allocations declined 1.9 percentage points to 16.8%. November was the 36th consecutive month with cash allocations below their historical average of 24%.

The rise in equity allocations occurred as individual investors were optimistic about the short-term direction of stock prices. Bullish sentiment in our weekly sentiment survey was above 50% during three out of the four weeks measured last month. At the same time, large-cap stocks continued to reach new highs. Plus, many AAII members continue to be frustrated by low bond yields and low interest rates on money market accounts.

November AAII Asset Allocation Survey results:

  • Stocks and Stock Funds: 67.2%, up 3.1 percentage points
  • Bonds and Bond Funds: 16.0%, down 1.2 percentage points
  • Cash: 16.8%, down 1.9 percentage points

November AAII Asset Allocation Survey details:

  • Stocks: 31.7%, up 1.5 percentage points
  • Stock Funds: 35.5%, up 1.6 percentage points
  • Bonds: 3.5%, down 0.4 percentage points
  • Bond Funds: 12.5%, down 0.8 percentage points

Historical Averages:

  • Stocks/Stock Funds: 60%
  • Bonds/Bond Funds: 16%
  • Cash: 24%

*The numbers are rounded and may not add up to 100%.

The AAII Asset Allocation Survey has been conducted monthly since November 1987 and asks AAII members what percentage of their portfolios are allocated to stocks, stock funds, bonds, bond funds and cash. The survey and its results are available online at: http://www.aaii.com/investor-surveys.



Sell OF THE WEEK 11/26/2014

Posted on November 26, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Estee Lauder Companies (EL) 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 11/25/2014

Posted on November 25, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Interval Leisure Group, Inc. (IILG) 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




When Will Apple Be Worth $1 Trillion?

Posted on November 21, 2014 | Dividend Investing

Hedge fund executive Steve Einhorn predicted that DI holding Apple Inc. (AAPL) will command a market capitalization of $1 trillion. Einhorn, of Omega Advisors, made the prediction at the Reuters Global Investment Outlook Summit on Monday. He did not give a timeline, however, only saying the stock could “eventually” get there.

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Peking Duck Fuels Pre-Thanksgiving Rally

Posted on November 21, 2014 | Stock Superstars Report

The only true constant in life is change, and we were reminded of that again this morning. We had written up a commentary on how the portfolio was flat for the week but in the middle of the night, the Chinese central bank cut interest rates 25 basis points (0.25%).

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Investors Believe Consumers Faring Better This Year

Posted on November 20, 2014 | AAII Survey

This week’s Sentiment Survey special question asked AAII members how they think the average consumer is faring relative to a year ago. Slightly more than half of respondents (53%) said the average consumer is doing better, though many of them described the consumer as only doing somewhat or a little better. Gas prices were the top reason given as to why, though several respondents mentioned employment and/or economic growth. Roughly the same number of respondents (about 15% each) said the average consumer is faring about the same as last year or is faring worse. Though the decline in gas prices are viewed as a positive, stagnant wage growth and inflation in other areas were cited as headwinds.

Here is a sampling of the responses:

  • “Better. The economy is improving and oil prices are falling.”
  • “Better in part to more employment, falling heating and driving costs and the housing recovery.”
  • “Somewhat better due to lower unemployment, modest wage gains in some areas and lower fuel prices.”
  • “May be helped by lower gasoline prices, but is also facing rising food and housing prices.”
  • “Not much better. Job growth, and, more importantly, income growth has been slow.”


AAII Sentiment Survey: Optimism Drops Below 50%

Posted on November 20, 2014 | AAII Survey

Optimism pulled back from a four-year high, falling below 50% for the first time this month in the latest AAII Sentiment Survey. Neutral sentiment rebounded and pessimism rose for the second consecutive week.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 8.8 percentage points to 49.1%. The drop puts optimism at a five-week low. Nonetheless, bullish sentiment remains above its historical average of 39.0% for the seventh consecutive week and the 14th out of the past 15 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 4.3 percentage points to 27.1%. Even with the increase, neutral sentiment remains below its historical average of 30.5% for the seventh time in the past nine weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 4.5 percentage points to 23.8%. The rise was not large enough, however, to prevent pessimism from being below its historical average of 30.5% for the fifth consecutive week and the 38th week this year.

Seeing a bit of reversion to the mean is not unexpected given how high optimism was last week (57.9%, the 58th-highest reading in the survey’s history) and how low pessimism was on November 6, 2014 (15.1%, a nine-year low). Optimism remains at a very high level this week, however. Bullish sentiment is right at the border between what is typical and what is unusually high. Viewed in another manner, optimism is above 49% and pessimism is below 25% for the fifth consecutive week.

The sustained high level of optimism is occurring as the S&P 500 has risen by 10% since hitting a 2014 closing low on October 15. In addition to the avoidance of a correction and the strong rebound in equity prices, individual investors are also encouraged by falling energy prices, earnings growth, the Federal Reserve’s ending of its bond purchasing program and sustained economic expansion. Some AAII members may also be reacting to the outcome of the midterm elections. Keeping other AAII members cautious are geopolitical events, a sense that prevailing valuations are too high and the pace of economic growth.

This week’s AAII Sentiment Survey results:

  • Bullish: 49.1%, down 8.8 percentage points
  • Neutral: 27.1%, up 4.3 percentage points
  • Bearish: 23.8%, up 4.5 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 11/19/2014

Posted on November 19, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Medtronic (MDT) 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





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