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.
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.
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.
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.
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
- 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
Investor Sentiment Largely Unaffected by Market Complexity
Posted on July 10, 2014 | AAII Survey
This week’s Sentiment Survey special question asked AAII members how the complexity of the way market orders are processed is affecting their attitude towards investing. The majority of respondents (60%) said the complexity is having no effect. An additional 16% of respondents said the complexity is only having a small or a limited impact. Only 12% of respondents said they felt as if they were at a disadvantage or say their attitudes are adversely affected by the manner in which orders are processed. More than 10% of all respondents clarified their responses by describing themselves as long-term investors, not traders. Another 8% of respondents said they are using limit orders instead of market orders. Here is a sampling of the responses:
- “Since I do very little short-term trading, the complexity of the buy and sell process impacts my attitude towards investing quite minimally.”
- “Not at all. I am a long-term investor and don’t think that the effects of the process are very significant for the long-term results.”
- “Not at all. I know I lose, but not too much each time.”
- “A small effect, but I’ve changed to using limit orders where possible.”
- “It makes me feel as if ‘the deck is stacked’ against small retail investors.”
The 10 Myths of Retirement Planning
Posted on July 9, 2014 | Financial Planning
Retirement planning requires a clear-eyed analysis of future needs and income. Yet many individuals view retirement through rose-colored glasses.
Here are some of the most common myths and how you can bring reality into focus.
Myth #1: You will not need as much money during retirement as you do now.
The general rule of thumb says that you will need approximately 70% of your pre-retirement income in order to maintain a lifestyle similar to that which you currently have. This may be true if you live your current lifestyle. However, when you retire, you will have more free time for travel, leisure activities, hobbies, and other things you might like to do during your retirement years.
Sell OF THE WEEK 7/9/2014
Posted on July 9, 2014 | Podcast
AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Veritiv Corporation (NYSE: VRTV) 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 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.