Know When to Sell Before You Have To


Save the Date! Our 2017 Investor Conference will be held at Loews Royal Pacific Resort in Orlando, Florida, from November 3 through November 5. More information will be coming soon.

If one were to create a list of good advice for life, I would suggest including a simple rule: “Always know where the exits are.” It’s guidance that works in a variety of situations. For example, while I was traveling this past weekend, I looked to see where the doors were located on the planes I boarded. On Black Friday last November, taking the back way out of an outlet shopping center allowed me to avoid having to wait in a mile-long line of cars heading for the highway.

In investing, having a predetermined exit strategy will boost your returns. Clear, established sell rules provide the needed guidance to determine whether you should hold or fold. Without such rules in place, you (and me) will be left to our emotions and our cognitive biases—never a good thing. The best time to determine when to sell is before the decision needs to be made.

Exit strategies work well at the portfolio level. Preset rules alert you to when it is time to trim an allocation to stocks, bonds or another asset class for those who use rebalancing to keep their allocations within a targeted range. Similarly, an exit strategy can help you maintain a bucket strategy (e.g., one to five years of living expenses held in cash, three to seven years of expenses held in bonds and high-quality dividend-paying stocks, and the remainder in stocks.) The sell rules would be a prompt to replenish the shorter-term buckets. You could also use preset rules to keep a specific position from becoming too large. Continue Reading »

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Highlights from this month’s AAII Journal

The Week Ahead

The Internal Revenue Service will start accepting tax returns on Monday. Procrastinators have until April 18. Filing as early as you can can help deter identity thieves, though I realize many of you are still waiting on tax forms, such as 1099s, to arrive.

Fourth-quarter earnings season picks up steam with 106 members of the S&P 500 scheduled to report. Included in this group are 12 Dow Jones industrial components: McDonald’s Corp. (MCD) on Monday; 3M (MMM), Du Pont (DD), Johnson & Johnson (JNJ), Travelers Companies (TRV) and Verizon Corp. (VZ) on Tuesday; Boeing (BA) and United Technologies Corp. (UTX) on Wednesday; Caterpillar (CAT), Intel Corp. (INTC) and Microsoft Corp. (MSFT) on Thursday; and Chevron Corp. (CVX) on Friday.

The week’s first economic reports will be the January purchasing managers’ manufacturing index flash and December existing home sales, both of which will be released on Tuesday. Thursday will feature December international trade and December new home sales. December durable goods orders, the initial estimate of fourth-quarter gross domestic product (GDP) and the University of Michigan’s final January consumer sentiment survey will be released on Friday.

The Treasury Department will auction $26 billion of two-year notes on Tuesday, $15 billion of two-year floating rate notes and $34 billion of five-year notes on Wednesday and $28 billion of seven-year notes on Thursday.

What’s Trending on AAII

  1. Deep Value Investing Has Not Gone Out of Style
  2. Vanguard’s Dynamic Spending Strategy for Retirees
  3. Using ETFs in a Tough, Sideways-to-Bear Market

AAII Sentiment Survey

Optimism fell to its lowest level since the election, ending a streak of nine consecutive weeks with bullish sentiment above 40%. More about this week’s results.


This week’s Sentiment Survey results:
  • Bullish: 37.0%, down 6.6 points
  • Neutral: 30.3%, up 0.9 points
  • Bearish: 32.7%, up 5.7 points
Historical averages:
  • Bullish: 38.5%
  • Neutral: 31.0%
  • Bearish: 30.5%

Take the Sentiment Survey.

Local Chapter Meetings

AAII Local Chapter Meetings offer you a variety of presentations from expert speakers who will give you their view on the world of investing. A bonus of attending a Chapter Meeting near you is the opportunity to meet other AAII members who share your interest and enthusiasm for investing. You can even share the Chapter experience with your family and friends by inviting them to attend Chapter Meetings with you! Upcoming Meetings »


January 12, 2017 A Simple Solution to Offering an Active ETF
January 5, 2017 Is Now a Good Time to Invest in Stocks?
December 29, 2016 17 Investing Resolutions for 2017
December 22, 2016 Dow 20,000 Shows How Bad We Are at Analyzing Numbers

This month, AAII is publishing our popular year-end stock screen review and if you join AAII today, I’d be pleased to pass along a copy for your review.

The data in this special report is pulled from the popular Stock Screens area on and if you’re not familiar with this free members-only service, you’d be amazed at the investment ideas it can generate.

In a nutshell, AAII Stock Screens allow you to tap into the investment philosophies of promising investment professionals as well as see the resulting stock picks. With Stock Screens, you can choose one of our more than 60 screening approaches to build a list of winning stocks. The stock screens and investment ideas are virtually endless and the resulting performance is top-notch. In fact, over the last 18 years, more than 90% of our stock screens outpaced the overall market.

Here’s a quick peek at some of our more popular screens and their impressive 2016 returns:

Est. Rev: Lowest 30 Down screen up 44.6%…
O’Shaughnessy: All Cap screen up 41.2%…
Price-to-Sales screen up 37.8%… MAGNET Simple screen up 37.7%…
Oberweis Octagon screen up 37.1%… T. Rowe Price screen up 30.8%…
Return data as of 11/30/2016.

Join AAII Now and you’ll receive our year-end overview of the AAII Stock Screens, plus gain full access to the Stock Screens Area on


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