Retirement Income: Repairing the Damage to Assure the Flow

Posted on April 4, 2014 | Financial Planning

Having suffered severe losses in their retirement nest eggs last year, many retirees living off of their savings are reviewing their investment and spending plans, searching for new plans of action to ensure their savings can sustain them throughout their lifetime.

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Snow Lizard SLXtreme 5 for iPhone 5/5S

Posted on April 4, 2014 | Computerized Investing


Even since I got my first iPhone a few years ago, it’s been protected by a case. Part of this stems from losing my last non-iPhone to a catastrophic drop. However, recently I’ve been using a battery case that pulls double duty—protecting my investment and extending its battery life. Currently, I’m using the mophie PowerSkin for iPhone 5, but I have just finished testing out a brick house of a case from Snow Lizard: the SLXtreme 5. This case can literally withstand pretty much anything you throw at it—it’s waterproof and has military-grade ruggedness, and its built-in battery is solar-powered. However, its size and price tag narrows its usefulness.

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Know Thyself: How Your Needs Will Steer Your Decisions

Posted on April 4, 2014 | Classroom

There are four basic aspects that compose your personal investment profile:

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Reduce Stock Exposure in Retirement, or Gradually Increase It?

Posted on April 4, 2014 | AAII Journal

For the past 20 years—due to the growing research on safe withdrawal rates, the adoption of Monte Carlo analysis (a method of considering many simulations), and just a difficult period of market returns—there has been an increasing awareness of the importance and impact of market volatility on a retiree’s portfolio.

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AAII Sentiment Survey: Neutral Sentiment above Average for 13th Week

Posted on April 3, 2014 | AAII Survey

The proportion of individual investors expecting stock prices to be essentially unchanged over the next six months continues to be above the historical average, according to the latest AAII Sentiment Survey. Optimism increased, while pessimism declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 4.2 percentage points to 35.4%. Even with the increase, optimism remains below its historical average of 39.0% for the third consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 2.4 percentage points to 37.9%. Neutral sentiment is now above its historical average of 30.5% for the 13th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.8 percentage points to 26.8%. This is the fourth time in five weeks that pessimism has stayed within a 0.7 percentage-point range. It is also the eighth consecutive week and the 26th time in 30 weeks with a bearish sentiment reading below the historical average of 30.5%.

The current streak of consecutive weeks with above-average neutral sentiment is the longest since 1999. Neutral sentiment stayed above its historical average for 15 consecutive weeks between July 29, 1999 and November 4, 1999.

All three indicators are within their typical ranges. Keeping some AAII members encouraged is the about the short-term outlook for equities is the overall upward momentum of stock prices, earnings growth, economic expansion, the Federal Reserve’s tapering of bond purchases and low interest rates. Other AAII members are fretting about elevated stock valuations, the pace of revenue growth, the slow rate of economic expansion and Washington politics.

This week’s special question asked AAII members what they considered to be the most important characteristic for judging a stock’s potential upside. Responses varied, though profits were cited by the largest number of respondents (37%). These members not only wanted to see earnings, but expressed a preference for earnings growth and earnings exceeding expectations. Valuation was the second most popular characteristic, named by 10% of respondents. Good management and positive cash flow tied for third with each named by 7% of respondents.

This week’s AAII Sentiment Survey results:

  • Bullish: 35.4%, up 4.2 percentage points
  • Neutral: 37.9%, down 2.4 percentage points
  • Bearish: 26.8%, down 1.8 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:

Upcoming Chapter Meeting: AAII Long Island

Posted on April 2, 2014 | Local Chapters

Date: Wednesday, April 9, 2014
Topic: Risk and the Global Capital Markets
Speakers: Brian Luster, Principal and Portfolio Manager, The Abernathy Group II; Steve Abernathy, Manager Member and Portfolio Manager, The Abernathy Group II

Federal Reserve policy has caused investors to move further along the risk spectrum away from short-term income-producing investments into longer-term, more speculative investments. Convinced that Bernanke’s “Fed put” will not prevent further negative systemic macroeconomic events from transpiring, Brian Luster will discuss his firm’s cautious outlook for the U.S. and global equity and credit markets. Steve Abernathy will then offer a general perspective on risk management in the portfolio allocation process, and some outside-the-box ways of thinking about risk management that differ significantly from the perspective offered by modern portfolio theory.

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March AAII Asset Allocation Survey: Bond Allocations Fall Below 16%

Posted on April 2, 2014 | AAII Survey

Individual investors’ fixed-income allocations fell below their historical average of 16% for just the second time in the past five years. The March AAII Allocation Survey bonds and bond funds reading of 15.7% is the second lowest since May 2009. Stock and cash allocations rose slightly last month.

Stock and stock fund allocations rose 0.3 percentage points to 67.2%. This is the third largest allocation to equities since June 2007 (68.6%), trailing only September 2007 (68.1%) and December 2013 (68.3%). March 2014 was also the 12th consecutive month and the 14th out of the past 15 with equity allocations above their historical average of 60%.

Bond and bond fund allocations declined 0.5 percentage points to 15.7%. As noted above, this is just the second time since 2009 that fixed-income allocations are below their historical average of 16%.

Cash allocations increased by 0.2 percentage points to 17.1%. The increase was not large enough to prevent March from being the 28th consecutive month with cash allocations below their historical average of 24%.

It is important to consider the magnitude of the shifts in portfolio allocations when looking at these latest survey results. Across all three asset categories, the changes were modest. Though the low level of fixed-income exposure is notable—especially when compared against the levels of the past several years—the March results signal a continuation of a longer-term trend. Since last staying above 20% in January 2013, bond and bond fund allocations have decreased by a cumulative 4.5 percentage points. The decline reflects both the expectation that interest rates have bottomed as well as a reaction to ongoing bull market in stocks.

This week’s special question asked AAII members what primarily caused their portfolio allocations to change over the past month. Slightly less than half (44%) of all respondents said buying and selling altered their allocations. A variety of reasons for transacting were given, including rebalancing, taking profits in stocks, raising cash and buying stocks. About 24% said their allocation did not change last month, while 23% attributed the changes in their allocations to market fluctuations. A small group (4%) said they increased their cash positions because of fear or the anticipation of a forthcoming market pullback.

March Asset Allocation Survey results:

  • Stocks and stock funds: 67.2%, up 0.3 percentage points
  • Bonds and bond funds: 15.7%, down 0.5 percentage points
  • Cash: 17.13%, up 0.2 percentage points

March Asset Allocation Survey details:

  • Stocks: 31.0%, down 4.0 percentage points
  • Stock Funds: 36.1%, up 4.2 percentage points
  • Bond Funds: 12.5%, up 0.2 percentage points
  • Bonds: 3.2%, down 0. 7 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:

Sell OF THE WEEK 4/2/2014

Posted on April 2, 2014 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Zions Bancorp (ZION) 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

Upcoming Chapter Meeting: AAII Southeast Florida

Posted on April 1, 2014 | Local Chapters

Date: Tuesday, April 8, 2014 aand Wednesday, April 9, 2014
Topic: Global Multi-Asset Investing in a Volatile Interest Rate Environment
Speaker: Jeffrey A. Oberg, Managing Director, Windhaven Investment Management Inc.

Interest rates have been declining for over 30 years, but with increased volatility as of late, this environment could be coming to an end. Please join Jeffrey Oberg, managing director at Windhaven, for a discussion about the opportunities and risks that exist globally in a volatile interest rate environment, as well as the firm’s economic outlook.

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Posted on April 1, 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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