Timing Matters When Analyzing Investment Returns

Posted on August 13, 2015 | Investor Update

Investor-Update

The last 30-year Treasury bonds issued with 10% coupons are maturing this week, according to Reuters. These bonds were issued in the summer of 1985, just a few weeks after Coca-Cola gave into public anger over New Coke and reintroduced the original formula (aka, Coca-Cola classic).

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Sell OF THE WEEK 8/12/2015

Posted on August 12, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Micron Technology (MU) 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 8/11/2015

Posted on August 11, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Lam Research Corporation (LRCX) 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





AAII WEEKLY FEATURES 8/11/2015

Posted on August 11, 2015 | Weekly Features

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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Three Stocks Out and Two Stocks In

Posted on August 7, 2015 | Dividend Investing

This is why we roll our eyes when we hear or see “news” alerts about the Dow Jones industrial average being down by “triple-digits.” While a 100-point move may sound big, it’s less than a one percentage point change. Reacting to every headline and alert is not only senseless but will also rack up large amounts of trading and tax costs. While a disciplined strategy may stumble from time to time, the long-term returns from sticking with a good strategy will be far higher than those from being reactive to Mr. Market’s whims ever will be.

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Second-Quarter Earnings Highlights

Posted on August 7, 2015 | Stock Superstars Report

As we move out of earnings season and the end of summer beckons, let’s take a moment for a quick look back at the nearly completed second-quarter earnings season. The numbers offer a mixed picture for investors.

According to Thomson Reuters, using data as of August 7, 70% of the 440 S&P 500 companies reporting had earnings above the mean estimate. Thirty-two of the 36 SSR portfolio companies have reported second-quarter results, and of these 69% beat their I/B/E/S consensus earnings estimates.

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Lack of Market Breadth Concerns AAII Members

Posted on August 6, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members about how concerned they are about a small number of stocks driving this year’s gains in the S&P 500 and the NASDAQ. Nearly 44% of respondents said they either concerned or very concerned about the lack of market breadth. Several viewed it as a negative signal about the market’s future direction. Slightly more than 15% said they were somewhat concerned about the lack of market breadth. Nearly a third of all respondents (32%) said they are not concerned or are only slightly concerned. Several of these members said they are either more focused on the performance of their portfolios or that they follow a long-term approach.

Here is a sampling of the responses:

  • “I believe it’s very concerning. It’s not a very good sign.”
  • “This concerns me very much. It looks like a top to the current market high.”
  • “It is a concern because it skews the results. Hard to tell what is happening elsewhere.”
  • “None at all. I focus on individual stocks and each company’s performance.”
  • “Not much breadth to the market, but being a long-term investor, I am not as concerned with short-term gyrations.”


AAII Sentiment Survey: Neutral Sentiment Rebounds as Pessimism Drops

Posted on August 6, 2015 | AAII Survey

The proportion of individual investors describing their short-term market expectations as neutral rebounded back above 40% in the latest AAII Sentiment Survey. The change occurred as pessimism pulled back after nearly hitting a two-year high last week.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 3.2% percentage points to 24.3%. The increase follows what had been a seven-week low. It is not large enough, however, to prevent optimism from being below its historical average of 39.0% for a 22nd consecutive week, the longest such streak since a 29-week stretch in 1993.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped 5.8 percentage points to 44.0%. The increase keeps neutral sentiment above its historical average of 31.0% for a 31st consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, pulled back by 9.0 percentage points to 31.7%. The drop follows last week’s large upward spike. Even with the decrease, pessimism is above its historical average of 30.0% for a second consecutive week and the fifth time in the past nine weeks.

Bullish sentiment is at an unusually low level (below 28.5%) for the fourth time in six weeks. Neutral sentiment, conversely, is back at an unusually high level (above 39.6%) for the 17th time in 18 weeks. Both unusually low optimism and unusually high neutral sentiment have been correlated with above-median returns for the S&P 500. (There is no guarantee that history will repeat.)

Though there have been notable swings in bullish and bearish sentiment over the past two months, pessimism has generally been higher relative to the levels registered over the preceding 12 months. A bigger constant has been neutral sentiment, which is now just shy of matching the record for the most consecutive weeks of above-average readings (32 weeks).

Giving AAII members reasons for caution are concerns about the possibility of a sizeable decline in stock prices occurring, the pace of economic growth, the lack of wage growth, valuations, the impact of the stronger dollar on earnings and geopolitical events. As this week’s special question indicates, the lack of market breadth is a factor for some individual investors as well. Keeping other AAII members optimistic is the Federal Reserve’s still-accommodative monetary policy, the ongoing bull market, sustained economic expansion and earnings growth.

This week’s AAII Sentiment Survey results:

  • Bullish: 24.3%, up 3.2 percentage points
  • Neutral: 44.0%, up 5.8 percentage points
  • Bearish: 31.7%, down 9.0 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 31.0%
  • Bearish: 30.0%

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.



Using Debt to Find Attractive Small-Cap Stocks

Posted on August 6, 2015 | Investor Update

Investor-Update

One potential way to find stocks of smaller companies with a greater potential for capital appreciation is to look at long-term debt. A reduction in long-term debt along with a low valuation and an improvement in asset turnover are linked to better stock price performance.

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Sell OF THE WEEK 8/5/2015

Posted on August 5, 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





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