Stepping Into the Quiet Period

Posted on May 29, 2015 | Dividend Investing

This week, Deere & Company (DE) declared a quarterly dividend that was the same as the prior quarter’s payout. In 2014, Deere increased its dividend in May; in 2012 and 2013, the company bumped its payout in February. Whether February or May, the company has failed to increase its payment when expected for 2015. It’s worth noting that Deere will in fact pay a higher annual dividend to its shareholders in 2015 compared to 2014, even if it does not increase its quarterly payment in calendar-year 2015.

Read more »



Health Care and Tech Favored Among Members

Posted on May 28, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members what sectors or industries they are currently favoring. About 35% of respondents favored the health care sector, 20% were optimistic regarding technology, approximately 17% were bullish regarding energy, 10% preferred financials, 6.8% liked consumer staples, 5% favored industrials, 3% were for consumer cyclical and 2.6% were bullish towards basic materials. Within each of the sectors, there was favoritism shown toward biotechnology, pharmaceuticals, oil and gas, real estate, and banks. There were some mentions of emerging markets and European stocks as well.

Here is a sampling of the responses:

  •  “Biotechnology, pharmaceuticals and oil and gas.”
  • “I like consumer discretionary, because those in upper income brackets will spend consistently. I also like manufacturing, as long as the companies are sound.”
  • “Big pharma is my favorite sector right now. The introduction of biosimilars is heating up the competition. Let the winners run.”
  • “Oil has been beaten down quite a bit in the last year. Some snap back is likely, in my opinion.”
  • “Health-related industries. Demand for services and/or medications when needed does not go down with the fluctuations in the overall economy.”


Neutral Sentiment Continues to Hit Record-Setting Levels

Posted on May 28, 2015 | AAII Survey

In this week’s AAII Sentiment Survey, neutral sentiment continued to remain above 45%, in a streak that has now reached its eighth consecutive week. Optimism increased, but remains well below its historical average.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.8 percentage points to 27.0%. The drop keeps optimism below its historical average of 39% for the 12th week in a row.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 1.9 percentage points to 47.9%. Although neutral sentiment declined, it remains above 45% for the eighth consecutive week and above its historical average of 31.0% for the 21st consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.1 percentage points, to 25.1%. This is the 18th week this year where pessimism has been below its historical average of 30%.

Bullish sentiment remains at an unusually low level, while neutral sentiment continues to stay at an unusually high level. Historically, such readings—both unusually high low bullish sentiment and unusually high neutral sentiment—have been correlated with better-than-average market performance over the following six- and 12-month periods. I wrote about this in Analyzing the AAII Sentiment Survey Without Hindsight in the June 2014 AAII Journal and updated the data in AAII’s May 21 Investor Update, Unusually High Neutral Sentiment Often Followed by Good Returns.

Causing some 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. Keeping other AAII members encouraged are the ongoing bull market, sustained economic expansion, earnings growth and still-accommodative monetary policy.

This week’s AAII Sentiment Survey results:

  • Bullish: 27.0%, up 1.8 percentage points
  • Neutral: 47.9%, down 1.9 percentage points
  • Bearish: 25.1%, up 0.1 percentage points

Historical averages:

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

The AAII Sentiment Survey has been conducted weekly since June 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.



Making Buy and Hold Work

Posted on May 28, 2015 | Investor Update

Investor-Update

Now that we are nearing summertime, some of the podcasts I regularly listen to are airing rebroadcasts. In preparation for taking some time off (I’ll be back in the office next week), I took a look at my past Investor Update commentaries to see if there was an old one worthy of a “rebroadcast.” In the process, I came across this one from August 5, 2010, about portfolio diversification that I think remains very valid today (after a few minor updates were made.)

Read more »



AAII WEEKLY FEATURE 5/26/2015

Posted on May 26, 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.

Read more »



Flying into Turbulence

Posted on May 22, 2015 | Stock Superstars Report

Each industry has its own unique concerns. Price wars and excess capacity are the ghosts from Christmases past that have killed profits for the airline industry. Previous price wars and excess capacity have resulted in billions of dollars of losses for the industry. Any mention of either or both of those can send investors fleeing, as we saw this week.

Read more »



Important Dividend Dates You Should Know

Posted on May 22, 2015 | Dividend Investing

There are four dates that are important for dividend investors. The first is the declaration date. The declaration date is the date that the board of directors announces a dividend. The statement typically includes the size of the dividend, the date of record and the payment date (described below). Once the dividend has been declared, the company has a legal responsibility to pay it.

Read more »



Members Split on Whether First-Quarter Results Change Their Outlook

Posted on May 21, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members if first-quarter earnings have influenced their six-month outlook for stocks. About three of out every 10 respondents (31%) said recent earnings announcements have made them more bearish over the next six months. Nineteen percent described themselves as being bullish over the next six months. Close to 50% of respondents said that first-quarter earnings results have not affected their six-month outlook on the stock market.

Here is a sampling of the responses:

  • “Confirming my opinion, market earnings were not as robust as many analyst had expected.”
  • “A diversified portfolio will go up and down in the short term. I intend to maintain my allocations, and the first quarter reports are irrelevant to me.”
  • “First-quarter earnings are prompting me to take a more cautious outlook on stocks and to think about a larger investment in bond funds.”
  • “I am in it for the long run and try to ignore the daily flack. I believe over the long run stocks should be part of my portfolio.”
  • “Affirmed my moderately bullish outlook.”
  • “Not materially, first-quarter 2015 earnings were pretty much as expected for most companies I follow.”


AAII Sentiment Survey: Neutral Sentiment Stays Above 45% for Record Stretch

Posted on May 21, 2015 | AAII Survey

Neutral sentiment set a new record for the longest stretch above 45%, which has now reached its seventh consecutive week. Optimism set a new two-year low for the third consecutive week in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 1.5 percentage points to 25.2%. This is the lowest amount of optimism recorded by our survey since April 11, 2013 (19.3%). The drop keeps optimism below its historical average of 39% for the 11th week in a row. This streak now ties an 11-week below-average stretch between March 20 and May 29, 2014.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.9 percentage points to 49.8%. The increase keeps neutral sentiment above 45% for the seventh consecutive week and above its historical average of 31.0% for the 20th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 1.4 percentage points to 25.0%. This is the 17th week this year where pessimism has been below its historical average of 30%.

Neutral sentiment set a new record for consecutive weeks above 45%, beating a 27-year record. Neutral sentiment stayed above 45% on six consecutive weeks between May 13 and June 17, 1988. The new record of seven weeks above 45% spans from April 9 to May 21, 2015.

Bullish sentiment remains at an unusually low level, while neutral sentiment continues to stay at an unusually high level. Historically, such readings—both unusually high low bullish sentiment and unusually high neutral sentiment—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.

Causing some 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. Keeping other AAII members encouraged are the ongoing bull market, sustained economic expansion, earnings growth and still-accommodative monetary policy.

This week’s AAII Sentiment Survey results:

  • Bullish: 25.2%, down 1.5 percentage points
  • Neutral: 49.8%, up 2.9 percentage points
  • Bearish: 25.0%, down 1.4 percentage points

Historical averages:

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

The AAII Sentiment Survey has been conducted weekly since June 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.



Unusually High Neutral Sentiment Often Followed by Good Returns

Posted on May 21, 2015 | Investor Update

Investor-Update

Last year, I conducted an updated analysis of our weekly Sentiment Survey to determine if the contrarian link between sentiment and market direction still existed if an investor only used the data available at a given point of time. In other words, I wanted to see what the results looked like if the analysis was done without any hindsight.

Read more »



« Newer EntriesOlder Entries »