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Investing Know-How

Evaluating the Performance Claims of Investment Approaches

Claims about the performance of different stock investment theories are constantly being thrown about. Sometimes it is in the promotion of an investment letter or mutual fund, sometimes in a research summary of a variety of approaches.

AAII frequently summarizes the leading investment theories, and in Computerized Investing and Stock Investor Pro we provide formulas for different approaches and sample results over various time periods. We track and present the results of different screens twice a year in the AAII Journal [see the AAII Stock Screens area].

While this research can be of value, it is also important to realize its limitations so that you can place the results in the proper perspective.

As an investor, what you really want to know is how a specific investment approach is going to perform in the context of your own portfolio in the future. Obviously, this information is not going to be available. But you can look at performance research and see if it provides any insight into how the strategy...

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The Dividend Yield: Stock Mutual Funds and ETFs That Generate Income

Are you looking for an investment that has the potential to produce a growing income stream and long-term capital appreciation along with reasonable risk? Bond funds won’t suffice; their income is a prisoner of prevailing interest rates, and their capital appreciation in the long term is essentially zero, a combination that is exposed to inflation risk.

REITs (real estate investment trusts) come close, but the dividends from REITs...

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