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by CI Staff

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Comment Posted to “Best Practices for Portfolio Rebalancing,” by Francis M. Kinniry Jr. et al, May AAII Journal

If, as the authors admit, risk-adjusted returns are not meaningfully different regardless of rebalancing frequency, one has to question the basic premise of rebalancing.

Sure, rebalancing has a certain intuitive appeal, but when average annual returns are shown to be highest for those portfolios that were never rebalanced (Table 1), a discussion of that finding with associated standard deviation and cost savings considerations would have made for a far more interesting article.

Philip from Colorado

Comments Posted to “Using SEC Filings to Identify Risk Factors,” an interview with Michelle Leder, June 2011 AAII Journal

Very helpful article; I think that I have a newfound respect for SEC filings. I am going to do a bit of research on the companies that I have stock investments in and see just how they stack up.

One other comment, about Krispy Kreme: I had looked at buying their stock, but I just couldn’t see the stock at the price that it was going to in relation to the amount that they were charging for a box of glazed doughnuts. It just didn’t seem that there was enough volume there for me, so I bowed out.

Robert from Virginia

Excellent article. I would have liked to see more specific examples of things to look for in the SEC filings, but after reading this I will read the 10-K more carefully.

Richard from Oregon

Comment Posted to “Picking the Right Stocks Using Charts,” by Michael Kahn, June 2011 AAII Journal

This is a good introductory article on relative strength.

In the past year, correlations have been fairly high (as reported elsewhere). I suggest that when that is the case, an investor might as well put his/her money in the investment that is rising the fastest.

However, one needs to always bear in mind that, just because relative strength is rising, that doesn’t mean the price of an investment is rising. It could be that the investment one is comparing it to is falling much faster. After finding an investment with rising relative strength, one should always look at the price of the investment to make sure it is rising, too. When the market has been losing 30%, an investor should never find it satisfying that he/she outperformed the market by losing only 20%.

This brings me to the one statement in the article that I have a major quibble with, “Bear markets should not deter investment.” There may be long-term investors who want to invest their money and never pay attention to it for 10, 20, or 30 years. The rest of us are doing what we can to avoid bear markets/big losses. If you were one of those rare people who had invested in the 5% of the stocks that rose in price during the bear market that started in late 2007 and carried through early 2009, then you probably don’t need to be reading

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Comment Posted to “Seeking Tax-Free Income From Closed-End Funds,” by John Deysher and Michael Walters, June 2011 AAII Journal

Closed-end funds can be an excellent income-producing vehicle, but you should always take the time to perform your due diligence... remember, you are never married to any fund.

Mark from New York

Comment Posted to “Life Insurance: Managing Premiums and Policy Maturity,” by Peter Katt, June 2011 AAII Journal

My clinic offers physicians a variable universal life policy. I have questioned the salesman about some of the information contained in this and previous articles from Mr. Katt. Despite the salesman’s 3.5% commission, he is unable to do the type of calculations Mr. Katt provides. Know what you buy and the long-term issues. Cash value insurance can be a great financial planning tool or a minefield! Do not buy it and forget.

Steve from Wisconsin

CI Staff .


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