Tips for Using Academic Research About Investing

There is a constant stream of new academic research about investing. Some of the papers attempt to explain the key drivers of returns. Some are more focused on investor behavior. Many papers are focused on realizing higher returns (“delivering alpha”). For an investor seeking new ideas, these papers can range along a spectrum from being…

 

April AAII Asset Allocation Survey: Highest Fixed-Income Allocations Since Last Summer

Fixed-income investments account for the largest percentage of individual investors’ portfolios since last summer, according to the April AAII Asset Allocation Survey. Also, last month equity allocations pulled back from their recent high, while cash balances rebounded. Stock and stock fund allocations fell 2.3 percentage points to 65.3%. The decline follows what had been a…

 

AAII’s Best of the Web – Portfolio Tracking, Analysis & Optimization

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Model Shadow Stock Portfolio: Handling Major Financial Statement Revisions Major revisions to financial statements have been rare among Shadow Stocks; their mere occurrence is not reason alone for a stock’s removal. Jim Cloonan offers his latest quarterly review of the AAII Model Shadow Stock…

 

Too Much Complexity Isn’t a Good Thing

A year ago, I began including doodles with my weekly commentary. The first one was a sketch discussing the impact of changes in earnings forecasts on stock prices. The purpose was to visually highlight and graphically explain one of the points I was making. Being a writer who thinks in terms of communicating by text…

 

A Rules-Based Approach to Managing a Portfolio

A prelude to this week’s commentary: BlackRock made financial news headlines by announcing a change in how some of its active mutual funds will be managed. Rather than rely on human stock picking, the company is shifting to a heavy reliance on quantitative strategies. Commentary about the change was quick to use the word “robots”…

 

AAII Journal April 2017 Issue Now Available

Feature Article: Portfolio Strategies » Factors Allow Investors to Think Differently About Diversification Tilting a portfolio to a small number of factors, including value and size, can increase returns while at the same time reducing risk. In This Issue: Portfolio Strategies » Asset Allocation, RMDs and Portfolio Survival A diversified portfolio not only increases return…

 

Picking Good Investments, Not Good Stories

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Rebalancing Update: How Frequently Allocations Should Be Adjusted There was a reward for investors who stuck with their long-term portfolio strategies last year: positive returns. Despite the stock market’s dip, the drop and then rise in bond yields, and a panoply of surprising headlines,…

 

Building a Balanced Portfolio: An Unconventional Allocation

It is easy to make money when the stock market is soaring. You really don’t need to read this article to prosper during those favorable environments. However, as experienced investors know, the key to long-term financial success is to survive the troughs. How does your portfolio perform during severe downturns? How vulnerable is it to…

 

Record Highs Don’t Shake Allocations for Over Half of Surveyed Investors

Last month’s Asset Allocation Survey special question asked AAII members why or why not record highs (such as the Dow’s rise above 20,000) influence their asset allocation decisions. Slightly more than half of all respondents (53%) said that they do not alter their allocations in reaction to record highs, though their reasons varied. Several said…