Is It Leading or Lagging?
Posted on June 26, 2015 | Dividend Investing
Investors have been looking to recent economic indicators as a means of deciphering where the economy may be headed. Although we don’t particularly consider macroeconomic factors as part of our quantitative model, it is useful to understand what they mean and how investors perceive specific figures.
All Metrics are Not Equal, Plus Changes to the Portfolio
Posted on June 26, 2015 | Stock Superstars Report
The July SSR Monthly Report is now available at the SSR website. There is one new portfolio deletion and one new portfolio addition to announce. Union Pacific Corporation (UNP) in Group 1 is being removed from the portfolio. MEDNAX Inc. (MD) is being added to Group 3.
I’m Creating a New Stock Strategy
Posted on June 25, 2015 | Investor Update
I’ve been working on a new stock strategy. I’m focusing on the screen first—the method for identifying potential candidates—with plans to establish the sell rules afterward. This is the first time I’ve created a new personal strategy, as opposed to revising an existing one, in several years. Though I’m not creating it entirely from scratch, it is a new strategy as opposed to simply a revision. As such, the process is offering insights in and of itself.
A Third of Investors Expect Little to No Impact When Rates Are Raised
Posted on June 25, 2015 | AAII Survey
This week’s special question asked AAII members what impact the first interest rate hike will have on stock prices. Just under 35% of respondents said it will have little to no impact, with many reasoning that the first rate hike is well anticipated. A nearly equal number said there will be a short-term negative reaction, though the majority of these respondents anticipate stocks rebounding fairly quickly. Slightly more than 19% think stocks will fall, with some anticipating a decline of 10% or more. A small group of optimists (7%) expect to stocks react positively.
Here is a sampling of the responses:
- “Very little. I think the anticipation of a rate hike is already priced in.”
- “Minimal effect. It is already baked into the market.”
- “Some investors will freak out and there will be a pullback in stock prices across the board.”
- “A swift 5% drop after the announcement, followed by a recovery 2-3 months later.”
- “A short-term downward blip, but recovering within 30 days.”
- “If the market hasn’t factored a rate hike in all this time, it never will.”
Optimism Surges and Pessimism Plunges
Posted on June 25, 2015 | AAII Survey
Optimism surged to a three-month high as pessimism plunged to a four-month low in the latest AAII Sentiment Survey. Neutral sentiment continues to stay at an unusually high level.
Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 10.1 percentage points to 35.6%. Optimism was last higher on March 26, 2015 (38.4%). Even with the big increase, bullish sentiment remains below its historical average of 39% for the 16th consecutive week—the first such occurrence since a 20-week streak between April 5 and August 16, 2012.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 2.5 percentage points to 42.8%. The rise keeps neutral sentiment above its historical average of 31.0% for the 25th consecutive week and at an unusually high level for a 12th consecutive week.
Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 12.6 percentage points to 21.7%. The drop follows what had been a 10-month high and puts pessimism at its lowest level since February 26, 2015 (20.3%). The historical average is 30%.
The big rebound in optimism and large drop in pessimism comes as the major indexes have bounced off of their recent lows. It also follows a period of seven consecutive weeks with bullish sentiment staying below 30%, the longest such streak since early 2003.
This week’s reading puts pessimism below its historical average for the 20th time this year, or 20 out of the past 26 weeks. Bearish sentiment is near the lower level of its typical range, but is not currently at an unusually low level.
This week’s AAII Sentiment Survey results:
- Bullish: 35.6%, up 10.1 percentage points
- Neutral: 42.8%, up 2.5 percentage points
- Bearish: 21.7%, down 12.6 percentage points
- 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.
Sell OF THE WEEK 6/24/2015
Posted on June 24, 2015 | Podcast
AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Oracle (ORCL) 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 6/23/2015
Posted on June 23, 2015 | Podcast
AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Spirit Airlines (SAVE) 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 FEATURE 6/23/2015
Posted on June 23, 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.
The Federal Reserve Signals a Slow Approach to Raising Interest Rates
Posted on June 19, 2015 | Dividend Investing
This week the Federal Reserve reaffirmed its decision to take a slow approach to raising interest rates, which boosted stocks as bond yields slightly declined. Money managers and market analysts say this go-slow approach could prevent Treasury bond yields from rising significantly.
Regulations, Honesty and Analyst Estimates
Posted on June 19, 2015 | Stock Superstars Report
This week, Bloomberg discussed a study that is pending publication in the CFA Institute’s Financial Analysis Journal (FAJ), ”Did Analyst Forecast Accuracy And Dispersion Improve Following the Increase in Regulation Post 2002?” The study looked at whether analysts’ earnings estimates became more accurate following government regulation over the long term. We have been granted permission by the Financial Analysis Journal to discuss this study in the July AAII Journal, though it won’t be generally available for dissemination until publication in a future issue of the FAJ.