2012 Year-End Screens Review: Investors Caught in Political Cliffhanger

by Wayne A. Thorp, CFA

2012 Year End Screens Review: Investors Caught In
Political Cliffhanger Splash image

Politics played a key role in the markets this year. First, there was the presidential campaign and election. Then, political gridlock reigned on Capitol Hill, as the country faced a possible year-end fiscal cliff of expiring tax cuts and automatic budget cuts.

By the time you read this article, we will know whether Congress and the president were able to come to an agreement regarding taxes and spending cuts or if the Budget Control Act of 2011 will go into full effect. If the latter happens, taxes will go up for many Americans, while massive spending cuts in the federal budget will be automatically triggered by Congress’ sequestration rules. Serving as a backdrop to the political drama at home is a global economy that is still in the fragile stages of a recovery.

If you didn’t know any better, you may think that this gloom and doom would have wreaked havoc on the markets and portfolios alike. However, the markets roared out of the gates to start the year, as the S&P 500 index gained almost 13% through April 2, 2012. The index subsequently gave up nearly 10% before finding a bottom on June 1, 2012, and rebounded 14.7% by September 14, 2012. The end of summer and the final stretch of the presidential campaign saw the S&P 500 lose nearly 8%. But once the dust settled and the market digested the election results, the index gained a modest 4.8% between November 15 and December 7, 2012. Year-to-date, through December 7, 2012, the S&P 500 is up 12.8% on a simple price-change basis, excluding dividends. For an election year, investors should be more than pleased with these results. According to Ned David Research Inc., the S&P 500 has averaged a 7.5% gain during an election year since 1900.

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Wayne A. Thorp, CFA is a vice president and senior financial analyst at AAII and editor of Computerized Investing. Follow him on Twitter at @AAII_CI.


R Dombrowski from New York posted about 1 year ago:

Printable as a PDF doesn't work when there's an embedded excel file that must be scrolled.

Wm Schauweker from Massachusetts posted about 1 year ago:

I've seen variations on the following several times in AAII pubs: "It is important to take your list of passing companies and, at a minimum, perform some cursory qualitative analysis to decide whether or not they are right for your stock portfolio."

Can you point to some more specific recommendations?

Jean Henrich from Illinois posted about 1 year ago:

R - the "Download Printable PDF" link brings up the Journal pages as laid out in the hard-copy print version that is sent in the mail, so the embedded excel files are not a factor. It's only the "printer-friendly" version that will not show the entire excel tables.

Wm - for guidance on analyzing a stock, see the Investor Classroom area of the website at Scroll down to "How to Choose a Stock" for a simple worksheet and "Digging for Gold: What the Financial Statements Reveal About a Firm" for an explanation of stock data and how to use it.

--Jean at AAII

Robert Koch from Missouri posted about 1 year ago:

Under "Winning Characteristics," there appears, "Low multiples (price-earnings, price-to-book value, etc.), on a relative rather than an absolute basis." My question is, Relative to what--the general market, a specific industry, historic multiples? Or doesn't it matter?

Everett Senter from Hawaii posted about 1 year ago:

I'm considering investing in this portfolio, but it might be best to wait until the rebalancing since the last year has been so good. That is, with a lot of gain there would normally be more potential for loss than right after a re-balancing. When is the next re-balance scheduled?

Juan Ortega from Texas posted about 1 year ago:

Thanks for the good wook . Today is a buyes market.

Eliza Westbrook from California posted about 1 year ago:

"The month-to-month closing price is used to calculate the return, with equal investments in each stock at the beginning of each month assumed."

So does this mean a fixed investment amount (say $5000) in each passing stock OR is a fixed portfolio amount (say $50,000) divided equally among all passing stocks that month?

Wayne Thorp from Illinois posted about 1 year ago:

@Eliza, both scenarios are the same. In both instances, you are investing an equal amount of money in each of the passing companies. Wayne A. Thorp, CFA, Senior Financial Analyst, AAII

Robert Sturgis from Texas posted 4 months ago:

Does anyone have data that expands understanding of the turnover for the screens for each month over the last 10 years or so? In other words, for each screen, what were the actual tickers selected each month for some duration?

Charles Rotblut from Illinois posted 4 months ago:

Hi Robert,

At the start of each month, we create an equally-weighted hypothetical portfolio consisting of all the stocks passing a given screen. This portfolio is held for one month. The portfolio is then terminated and a new portfolio is created using the same process.

Keep in mind that the return figures do not factor in any transaction costs.


Vernon Roberts from Florida posted 3 months ago:

I reject all referrals to twitter and facebook certificates, which I assume is why
the excell charts do not load in this article.
I hate frames, videos waste 30 min of time that could be read in 2 min, and "web pictures" in 2 point type that are blurry and can't be read. I guess I'm just an old man that doesn't want my bank accounts, stock accounts etc passed around to anyone that wants to use them. I'm still text based (hey, I know how to read) and guess I'm going to have to give up web access.
Ok, I've vented, you can delete this now. sorry.

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