The October 2017 AAII Journal is Now Available Online


Feature Article » Stock Strategies

Stock Market Retreats and Recoveries

Only six months, on average, have separated the end of one decline and the start of the next one, but recoveries have been quick.

AAII InvestoGraphic »

Stock Market Volatility

Large-company stocks can experience big price swings on a 12-month basis, but become less risky when looked at over longer periods.

Trading Strategies »

Missing the Market’s Worst and Best Months

The market’s best and worst months have been clustered together. A trend-following strategy can help investors avoid extreme volatility.

Portfolio Strategies »

Target Wealth: A Better Bet for Achieving Wealth Goals

Shifting to a conservative allocation once a targeted level of wealth is reached reduces risk without sacrificing financial goals.

Portfolio Strategies »

Strategies for Managing Required Minimum Distributions

Retirees have options when it comes to RMDs, including Roth IRA conversions, trusts, life insurance and emptying the IRA early.

 Stock Screens »

John Neff’s Approach to Finding Value With Growth Potential

The former Vanguard portfolio manager followed a contrarian value approach in seeking stocks with the potential for earnings growth.

AAII Model Portfolios »

Model Shadow Stock Portfolio: Three New Stocks Added

The gains from the latest portfolio deletion were large enough to facilitate adding three new Shadow Stocks.

Departments »

Briefly Noted

Current news items of interest to individual investors.


Investors weigh in on minimizing taxes, when to start RMDs, and the impact of investment costs on portfolio returns.

Editor’s Note:

AAII Journal Editor photoWe’re introducing a new column in this month’s issue: AAII InvestoGraphic. The name, as some of you may quickly surmise, is a play on the word “infographic.” An infographic, as Merriam-Webster defines it, is “a chart, diagram or illustration (as in a book or magazine, or on a website) that uses graphic elements to present information in a visually striking way.”

This new column has been on my to-do list for several months for two primary reasons.

The first is to improve how we convey information. Like it or not, the digital revolution has altered how people consume content. Take text for instance. Various studies of websites have found many people skim content, looking for something interesting as opposed to it reading word for word. The same behavior may be happening with podcasts, with some people listing to them at 1.5 times normal speed or faster.

When it comes to social media, images work well. A good image stands out in a Facebook, Twitter or LinkedIn timeline. Instagram and Pinterest are image driven.

We can complain about the changes or we can adapt. My preference is to adapt. Part of the adaptation is to blur the line between the online and the print world. What works in digital format can work in print format, and vice versa.

The second reason is directly related to our purpose as an organization: to assist individual investors, like you, become effective managers of their own portfolios. Properly done, a good illustration—be it a chart, a sketch, a table or an image—can make it easier to understand a concept. Our goal is to show images that are both interesting and informative.

I’ll openly admit that as someone whose job responsibilities for the past 20+ years have required significant amounts of writing, thinking in graphical terms does not necessarily come naturally to me. Those of you who read my AAII Investor Update newsletter ( know I’ve been working on this. Almost 18 months ago, I started including doodles with my weekly commentary. The inspiration for these came from The New York Times columnist Carl Richards, who is extremely good at distilling investment concepts into simple sketches.

The change in how we use graphics goes well beyond my doodles. Some of you may have noticed a difference in how we display charts, tables and other illustrations in the AAII Journal over the past several months. In some cases, we’ve modified what contributing authors have given us. In other cases, we’ve created something entirely new. If you’ve noticed the changes and like them, direct your praise toward our graphic designer Annie Prada. Her artistic skills are far better than mine.

We’ve made these changes because the formats in which the world consumes content is not limited to text and tables, even though much of the research on investing is produced in formats that are not visually appealing. To better educate individual investors, we have to do more. The InvestoGraphic column is just one start. A new AAII podcast is in the works. Stay tuned.

For the first InvestoGraphic, found here, we focus on the most basic of investing concepts: the notion of risk and reward. Using four charts—all drawn with the same scale—we show how the volatility of holding large-company stocks declines over time, while the odds of realizing positive gains improves. Keep them nearby the next time your emotions have you thinking about getting out of the market.

In this issue, you’ll also find three other articles discussing market volatility. The first quantifies how frequently the market incurs pullbacks, corrections and drops. The second offers a tactical strategy for reducing volatility by using moving averages. The third makes the argument for de-risking once a retirement savings goal has been reached.

The timing of these articles should not be interpreted as us expecting an imminent market drop (as I write this in late September). Rather, they are simply an acknowledgement that stocks do periodically decline in price. How you handle such turbulence has a big impact on your long-term wealth.


Charles Rotblut, CFA
Editor, AAII Journal


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