AAII Members Weigh In on NASDAQ Rise
Posted on April 23, 2015 | AAII Survey
This week’s Sentiment Survey special question asked AAII members what they thought about the NASDAQ rising above 5,000 for the first time since 2000. About 11% of respondents said it was basically a non-event, with some describing the move as not revealing anything about the market’s current valuation. Nearly 8% said reaching 5,000 was a positive. Six percent thought it was about time the NASDAQ returned to 5,000. Another 6% of said it will either be difficult for the NASDAQ to stay at this level or that reaching 5,000 is otherwise a reason for concern that the market is getting overpriced. A little more than 3% of respondents view valuations as being cheaper now than they were during the technology bubble.
Here is a sampling of the responses:
- “It’s about time. This time seems much more sustainable than last time.”
- “I really don’t think it was that significant.”
- “P/E ratios are realistic now, especially when compared to the rapid ascent to 5,000 in 2000.”
- “It’s been up for a long time. It’s time for a drop in the market.”
- “Would like it better if the value of money hadn’t declined over the last 15 years.”
- “A good thing.”
Neutral Sentiment Stays Above 45% for a Third Week
Posted on April 23, 2015 | AAII Survey
Neutral sentiment is above 45% for a third consecutive week, the longest such streak since 1989. Optimism declined slightly, while pessimism rose slightly.
Bullish sentiment, expectations that stock prices will rise over the next six months, declined 0.6 percentage points to 31.5%. The modest drop keeps optimism below its historical average of 39.0% for a seventh consecutive week. The last time optimism stayed below average for a longer period of time was an eight-week stretch between June 19, 2014 and August 7, 2014.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, edged up 0.2 percentage points to 45.3%. This week’s rise keeps neutral sentiment above its historical average of 30.5% for the 16th consecutive week.
Bearish sentiment, expectations that stock prices will fall over the next six months, declined 0.4 percentage points to 23.2%. The historical average is 30.5%.
There are two observations to make regarding neutral sentiment. First, this is the longest streak with neutral sentiment at or above 45% since a four-week stretch between December 16, 1988 and January 6, 1989. (Neutral sentiment fluctuated between 46% and 54% over that span.) Second, since the start of 2014, neutral sentiment has been above its historical average of 30.5% on 56 out of 69 weeks.
Historically, unusually high levels of 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 in the future, however.
Keeping some AAII members encouraged are the ongoing bull market, sustained economic expansion, earnings growth and still-accommodative monetary policy. Causing other 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 in earnings growth and worries that a notable decline in stock prices could occur.
This week’s AAII Sentiment Survey results:
- Bullish: 31.5%, down 0.6 percentage points
- Neutral: 45.3%, up 0.2 percentage points
- Bearish: 23.2%, up 0.4 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.
Sell OF THE WEEK 4/22/2015
Posted on April 22, 2015 | Podcast
AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Norfolk Southern (NSC) 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
AAII WEEKLY FEATURES 4/21/2015
Posted on April 21, 2015 | Weekly Features
This week’s AAII Weekly Features has been updated.
View this week’s Top AAII Articles, Featured Stock Screen and Member Question.
BUY OF THE WEEK 4/21/2015
Posted on April 21, 2015 | Podcast
AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why The Goldman Sachs Group (GS) 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
CI Mortgage Refinance Calculator
Posted on April 18, 2015 | Computerized Investing
Nowadays, while interest rates are low, many individuals contemplate refinancing their mortgage. But with refinancing comes costs. Some homeowners are considered “refinance junkies” and continually jump from one low interest rate to the next, but these individuals may not factor refinancing costs into the total benefit associated with a lower interest rate.
There are several different goals when refinancing a mortgage. A majority of homeowners seek to reduce their interest expense, but there are others who appreciate the ability to extend the term of the mortgage, effectively reducing their periodic payment. On the other hand, individuals may seek to lower their loan repayment period if they are in a position to afford a higher periodic payment. Another goal might be to consolidate debt. If you have an initial mortgage as well as a home equity loan, combining the two mortgages into one may level out the payments and simplify the repayment process.
THE APRIL 2015 PASSING COMPANY LISTS AND PERFORMANCE DATA IS NOW AVAILABLE ON-LINE.
Posted on April 18, 2015 | Stock Screens
YTD Return of Top Performers: O’Neil’s CAN SLIM Revised 3rd Edition 23.5% — Graham–Enterprising Investor Screen 20.5%
Unlocking Shareholder Value With Divestitures
Posted on April 17, 2015 | Dividend Investing
There are many reasons that a company may consider a merger or acquisition (M&A). Some make economic sense, and others do not. Anticipated synergies (making the combined company worth more than the two companies operating separately) are the source of many M&A motivations. Usually synergy results from either reducing costs or increasing revenues. Other firms may seek increased growth or market share, access to unique capabilities, tax benefits or diversification.
Breaking Up Is Hard to Do
Posted on April 17, 2015 | Stock Superstars Report
Hedge fund Jana Partners, which has a reputation for being an activist shareholder, recently urged Qualcomm (Group 4: QCOM) to split into two companies in a letter to Qualcomm’s shareholders and board of directors. Hedge funds recommend this kind of action when they believe that the pieces of the company are worth more than the whole.
Buck Conventional Wisdom When Taking Retirement Withdrawals
Posted on April 16, 2015 | Investor Update
You can extend how long your retirement savings last by bucking the conventional wisdom on how to take withdrawals. Even if you are not in retirement yet, you will want to pay attention because the strategy may impact your decisions about what retirement savings accounts to maintain and contribute to.