SigFig for Android and IOS
Posted on August 8, 2014 | Computerized Investing
SigFig (short for Significant Figures) is an excellent way to manage your investments without being overwhelmed with information. The app allows users to sync their investment accounts and track stocks, funds, 401(k)s and IRAs in real-time. An attractive and easy-to-use dashboard displays all of your account balances in one secure location. Simply put, SigFig allows people to serve as their own financial advisers. Users can view charts to review performance, allocation, risk and more. News and price charts for each stock holding are also provided in a clear and easy-to-read manner.
The Ins and Outs of Bond Yield
Posted on August 8, 2014 | Classroom
The difference between yield and total return for a bond, and how they are calculated.
July 2014 AAII ASSET ALLOCATION MODELS UPDATED
Posted on August 8, 2014 | Asset Allocation
STOCKS – 1 YEAR
Large-Cap Stocks: 24.39%
Mid-Cap Stocks: 24.72%
Small-Cap Stocks: 26.32%
International Stocks: 23.22%
Emerging Markets Stocks: 13.77%
Pessimism Among Individual Investors Surges
Posted on August 7, 2014 | AAII Survey
Pessimism among individual investors jumped to its highest level in nearly a year in the latest AAII Sentiment Survey. The spike in expectations for a short-term drop comes as neutral sentiment fell to levels not seen since January.
Bullish sentiment, expectations that stock prices will rise over the next six months, declined by 0.2 percentage points to 30.9%. During the past three weeks, optimism has fluctuated within a 1.5 percentage-point range. This week’s reading keeps bullish sentiment below its historical average of 39.0% for the eighth consecutive week and the 19th time in the past 21 weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell by 6.9 percentage points to 30.9%. Neutral sentiment was last lower on January 2, 2014 (27.6%). Even with the drop, neutral sentiment remains above its historical average of 30.5% for the 31st consecutive week. This is the third-longest streak of consecutive weekly readings above 30.5% in the survey’s history.
Bearish sentiment, expectations that stock prices will fall over the next six months, spiked by 7.1 percentage points to 38.2%. This is the largest amount of pessimism recorded in our survey since August 22, 2013. It is also the first time since April of this year with a bearish sentiment reading above the historical average of 30.5% for two consecutive weeks.
Bearish sentiment is near, but not at, the upper end of its typical historical range. The spike in pessimism follows the S&P 500′s worst week in nearly two years and suggests some investors believe the market’s upward momentum is being interrupted. Also playing a role in the backdrop are concerns about prevailing valuations, heightened geopolitical tensions, slow economic growth and frustration with Washington politics.
Notably, bullish sentiment is still within its typical historical range. Keeping some AAII members hopeful about the short-term direction of the market is economic growth, the market’s overall upward trend, and the Federal Reserve’s tapering of bond purchases.
This week’s AAII Sentiment Survey results:
- Bullish: 30.9%, down 0.2 percentage points
- Neutral: 30.9%, down 6.9 percentage points
- Bearish: 38.2%, up 7.1 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.
Individual Investors Say U.S. Economic Growth Is Slow
Posted on August 7, 2014 | AAII Survey
This week’s special question asked AAII members for their opinion about the current pace of economic growth. Approximately 20% of respondents described the rate of growth as being slow. An additional 12% said growth is occurring at too slow of a pace. Just under 13% described the rate of expansion as being dismal, anemic or weak. About 10% described the economy as steadily expanding, though many clarified their responses by describing the pace as slow. Nearly 8% thought the economy is getting stronger.
Here is a sampling of the responses:
- “Economic growth is slower than we need, and it is uneven.”
- “I think it is better, but there is still not enough job growth.”
- “It may not be as strong as some people want, but it is steady, with no end in sight.”
- “It is improving after a long struggle. I think it will continue to improve.”
- “Slow, sluggish and subpar for a recovery.”
- “Very tepid and not likely to improve.”
CBOE’s Volatility Index (VIX)
Posted on August 6, 2014 | AAII Journal
An explanation of the so-called “fear gauge” and insight into how it is used.
The VIX is a measure of the implied or expected volatility of S&P 500 options over the next 30 days. Implied volatility is the market’s estimated future volatility and is reflected in the premiums paid for options.
Originally launched in 1993, the VIX underwent a change in calculation in September 2003. The “original” VIX was calculated using at-the-money put and call options on the S&P 100 index OEX. Furthermore, the original VIX was based on prices of only eight at-the-money OEX puts and calls, the most actively traded index options at the time.
By 2003, the S&P 500 index SPX option market was the most actively traded option market, while trading volume in OEX index options had fallen off significantly. Also, portfolio managers were using options more as a means of insuring their portfolios, specifically with out-of-the-money and at-the-money index puts. Therefore, the new VIX calculation includes put and call options with a wide range of strike prices, including those in-the-money, at-the-money and out-of-the-money.
Sell OF THE WEEK 8/6/2014
Posted on August 6, 2014 | Podcast
AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Rent-A-Center (RCII) 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 8/5/2014
Posted on August 5, 2014 | Podcast
AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Jet Blue (JBLU) 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
Model Fund Portfolio: Adjust Risk Based on Personal Factors
Posted on August 5, 2014 | Model Portfolios
Performance figures for the Conservative Portfolio are being dropped because the proper risk exposure is unique to each investor.
The Model Fund Portfolio is up 7.5% and the All-ETF Portfolio is up 7.7% year-to-date. This compares to 7.0% for the S&P 500 index as represented by the Vanguard S&P Index fund (VFINX).
Results for the Model Fund Portfolio over longer periods can be viewed in Figure 1 and Tables 1 and 2. Performance for the All-ETF Portfolio is shown in Table 3. The Vanguard REIT Index (VNQ) exchange-traded fund continues to lead the pack and is making up for the weak period a year ago. The iShares MSCI Frontier 100 (FM) exchange-traded fund, up 9.9% year-to-date, is still outperforming the Vanguard Emerging Markets Stock Index (VWO) exchange-traded fund, which is up 7.1% year-to-date.
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Equity Allocations Among AAII Members Reach a 2014 High
Posted on August 4, 2014 | AAII Survey
Allocations to stocks and stock funds reached their highest level of the year in July, according to the latest AAII Asset Allocation Survey. Bond and bond fund allocations rebounded to levels not seen since last January, while cash allocation fell to a 14-year low.
Stock and stock fund allocations rose 0.5 percentage points to 67.5%. This is the largest allocation to equities since December 2013 (68.3%). It is also the 16th consecutive month and the 18th out of the past 19 months with equity allocations above their historical average of 60%.
Bond and bond fund allocations rose 0.7 percentage points to 16.7%, the largest allocation since January 2014. The historical average is 16%.
Cash allocations declined 1.3 percentage points to 15.8%. The drop puts cash allocations at their lowest level since March 2000 (15%). July was the 32nd month with cash allocations below their historical average of 24%.
Since hitting what was then an eight-month high in May 2014 (19.2%), cash allocations have declined by a cumulative 3.4 percentage points. Over the same period, equity allocations have risen by a cumulative 2.2 percentage points and fixed-income allocations have risen by a cumulative 1.2 percentage points. Thus, while we have not seen a big shift, there has been a rotation out of cash. Notably, yields on the five-year and 10-year Treasury bonds have risen slightly over this period. Plus, optimism about the short-term direction of stock prices has stayed below average in our weekly Sentiment Survey. Nonetheless, with yields staying near historically low levels, cash looks unattractive except to those investors who require cash reserves or expect prevailing market conditions to worsen.
July Asset Allocation Survey results:
- Stocks and Stock Funds: 67.5%, up 0.5 percentage points
- Bonds and Bond Funds: 16.7%, up 0.7 percentage points
- Cash: 15.8%, down 1.3 percentage points
July Asset Allocation Survey details:
- Stock Funds: 34.2%, up 1.8 percentage points
- Stocks: 33.3%, down 1.3 percentage points
- Bond Funds: 13.5%, up 0.7 percentage points
- Bonds: 3.2%, unchanged
- 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: http://www.aaii.com/investor-surveys.