Picking a Rate of Return to Use for Long-Term Planning

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Searching for Future Stock Market Winners A study of past big winners identified common traits centered around value, earnings growth and price momentum. The process of creating a stock selection strategy based on characteristics that have worked well in the past must take into…

 

Lessons From Black Monday

Thirty years ago today, the Dow Jones industrial average incurred its largest single-day percentage-point drop. The blue-chip average plunged by more than 22%. The losses were not just restricted to stocks either, as the futures market was roiled by traders who incorrectly bet on arbitrage strategies. The massive losses resulted in October 19, 1987, being…

 

For Long-Term Investors, the Focus Should Be on Risk

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Using Reverse Mortgages to Mitigate Periods of Poor Returns A home equity conversion mortgage (HECM) line of credit, aka a reverse mortgage, provides a tool that can be used to mitigate the impacts of sequence of returns risk (the risk of incurring portfolio losses…

 

Weekly Survey: Retail Investors Respond to Rising Market Volatility

After experiencing some all-time-low volatility, it appears the U.S. stock market is seeing an uptick in volatility. On July 26, the CBOE Volatility Index, or VIX, widely considered to be Wall Street’s “fear gauge,” fell to its lowest level on record. Leading up to that, the VIX had steadily fallen to lows not seen in more…

 

Successful Investing Requires Coping With Some Discomfort

“Super investors take pain better than everybody else.” Wesley Gray, CEO and CIO of Alpha Architect, made this observation at last week’s Financial Analysts Seminar, an annual CFA Institute event hosted with CFA Society Chicago. He was referencing the ability of successful investors to stick with a strategy. Gray raised the point as part of…

 

Keeping Track of Your Portfolio – What to Monitor and When

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Allocating to Manage Risk: A Case Study A follow up to analysis AAII published 20 years ago of a fictional couple’s exposure to downside risk that looked to see what would happen to the couple’s portfolio should financial markets suffer a severe drop. More…

 

Don’t Like Volatility? Take a Longer-Term View

“Financial advisers need to show their clients what the distributions of stock returns are over time.” This paraphrased recommendation was given by University of Chicago professor Eugene Fama at a CFA Chicago Society event held last week. The comment was in reference to what happens to returns the longer an investor remains allocated to stocks….

 

Mr. Market Is Distorting Your Tolerance for Risk

When NPR’s update of the day’s headlines mentions the stock market’s lack of volatility, conditions must be extraordinarily calm. Such is the case right now. The Chicago Board Options Exchange’s Volatility Index (the CBOE’s VIX)—an obscure index to those who don’t focus on the financial markets—made the morning news. While most investors prefer calm conditions…

 

AAII Journal May 2017 Issue Now Available

Feature Article: When You Haven’t Saved Enough for Retirement Saving more, working longer, delaying the claiming of Social Security benefits and tapping home equity can all help fund retirement. by Charles Rotblut, CFA In This Issue: Stock Strategies » What Is Your Investing Edge? Many investors focus on trying to gain an information edge, but…

 

Lifestyle Changes: Misconceptions About Life in Retirement

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Managing Cash Flow in Retirement Intelligently planning for cash flow in retirement is critical, as poor planning may result in running out of money long before running out of life. The three elements that most significantly affect planning are the need for real, not…