Life Insurance and Estate Gifting

Posted on May 21, 2012 | AAII Journal

Potential changes in the tax law next year make it a smart estate-planning strategy to give as a large of a gift now as possible.

Clueless: What Graduates Need to Know About Making Financial Decisions

Posted on May 17, 2012 | AAII Journal

Today’s college graduates are usually enthusiastic and well-trained in their discipline.But they are often clueless about financial matters.

Unfortunately, the fallback position is typically to do nothing. But these early-year “non-decisions” can have a detrimental effect on their financial well being throughout their working lives, and especially in retirement. If only they had known how important it is to make good decisions in these early-year financial matters!

Valuing Young Growth Companies

Posted on May 16, 2012 | AAII Journal

In May 2011, LinkedIn (LNKD), a social media company that allows individuals to create professional and business networks, went public to great fanfare, with the stock price doubling on the offering date.

While Linkedin reported only $20 million in operating income on revenues of $243 million in 2010, the market capitalization of the firm was $10 billion on the date of the initial public offering (IPO). The reaction from investors and analysts fell along predictable lines. Value investors and fundamentalists argued that the market capitalization was absurd, pointing to the sky-high price-earnings ratio (in excess of 1,000). In reaction, investors who were bullish about the company countered that traditional valuation metrics and approaches don’t work for young growth companies.

Investments That Concern Financial Industry Regulatory Authority (FINRA)

Posted on May 15, 2012 | AAII Journal

The Financial Industry Regulatory Authority (FINRA) recently announced its 2012 regulatory and examination priorities. The regulator listed several types of investments with heightened conduct and suitability issues. Among those investments were…

The Covered Call: An Income-Generating Options Strategy

Posted on May 14, 2012 | AAII Journal

The covered call provides extra income to a buy-and-hold strategy. In exchange for this income, there is a risk of lost opportunity. If the stock’s price rises well above the fixed strike price of the call, you have your 100 shares of stock called away below current market value. For some investors, this is an unacceptable risk; for others, it is gladly accepted given the potential extra returns from writing covered calls.

Dreman With Est Revisions Screen

Posted on May 7, 2012 | AAII Journal

This screen, based on David Dreman’s philospohy, looks for companies with a low price-earnings ratio that have had recent upward earnings revisions.

The Psychology Behind Common Investor Mistakes

Posted on May 4, 2012 | AAII Journal

An understanding of the psychological basis for common errors may help you avoid them and improve your results. (PDF Format)

15 Short-Cuts and Biases That Lead to Bad Decisions

Posted on May 3, 2012 | AAII Journal

15 common biases identified by Harvard Business School Professor Max Bazerman that often lead to money-losing decisions.

The Income Statement: From Net Revenue to Net Income

Posted on May 2, 2012 | AAII Journal

The income statement shows a company’s sales, expenses and profits. Learn how to analyze the income statement and spot important trends.

The May 2012 issue of the AAII Journal is now available on-line.

Posted on May 1, 2012 | AAII Journal

Featured Article: Notes on the Current State of the Muni Bond Market
Featured Article: The Diversity of Municipal Bonds and What You Need to Know About Risks

Portfolio Rebalancing: Diversification, Risk Control and Withdrawals

Posted on April 30, 2012 | AAII Journal

Rebalancing maintains the benefits of diversification, provides a hedge against behavioral mistakes and works with annual withdrawals.

Steps To Take When A Stock’s Price Falls

Posted on April 27, 2012 | AAII Journal

By identifying why the price is falling, you are far better equipped to decide if it is time to sell or purchase additional shares.

Current Conditions Alter Future Expectations

Posted on April 26, 2012 | AAII Journal

Expectations for future events are influenced by current conditions as individuals alter their forecast based on prevailing data.

Think Twice, Even Thrice, Before Trading

Posted on April 24, 2012 | AAII Journal

A study of newsletter advisers found that most would have achieved better returns if they reduced the number of buy and sell transactions.

Model Mutual Fund and ETF Portfolios

Posted on April 23, 2012 | AAII Journal

Value stocks and small-cap stocks have superior long-term performance but hurt the portfolios’ returns last year.

The Top Funds Over Five Years: Bond Funds Take the Lead

Posted on April 20, 2012 | AAII Journal

Out of the 10 top-ranking mutual fund categories, nine are in the bond arena, thanks to falling interest rates and weak five-year returns for stocks.

Investments That Concern FINRA

Posted on April 17, 2012 | AAII Journal

The Financial Industry Regulatory Authority (FINRA) recently listed several types of investments with heightened conduct and suitability issues.

Figuring Taxes on Social Security Benefits

Posted on April 13, 2012 | AAII Journal

Investment decisions can impact how much of your Social Security benefits will be taxed.

The Basics of Portfolio Allocation