Charles Rotblut will speak at the 2015 AAII Investor Conference this fall; go to www.aaii.com/conference for more details.
The first issue of the AAII Journal was published 35 years ago. On the inaugural cover were simply the words: “The American Association of Individual Investors is an independent nonprofit corporation formed for the purpose of assisting individuals in becoming more effective managers of their own assets through programs of education, information and research.” (The second issue featured a photo of the Chicago Board of Trade. In recognition of the Journal’s start, a more current photo appears on this month’s cover.)
Many magazines have come and gone since the first AAII Journal was published. Much of the credit for the continuation of this journal goes to AAII founder James Cloonan, who is the first recipient of the Cloonan Award for Excellence in Investment Education. (More information about the award can be found here.) My predecessor Maria Crawford Scott also deserves much credit for everything she accomplished during her 25-year tenure as editor.
Much has changed since 1979. As Jason Zweig noted in a November 2013 Wall Street Journal article about Jim Cloonan, brokerage commissions have plunged from over $40 to under $10. Most individual investors only have infrequent conversations with a representative of their brokerage firm, and those conversations are typically about something other than placing a trade. Defined-contribution plans (e.g., 401(k) plans) have largely replaced defined-benefit plans (e.g., pensions) as employer-sponsored retirement plans. Exchange-traded funds, which didn’t even exist until 1993, now control over $1.6 trillion in assets. Information is distributed faster than ever and investors can access data, and instantly react to it, anywhere that Internet connectivity exists. The Dow Jones industrial average was approximately 820 at the start of 1979; as we went to press in late December 2013, the Dow was trading at approximately 16,150.
Some things have not changed. The first feature article in the AAII Journal discussed how to resolve problems with your brokerage firm. Memories of the last two bear markets were still fresh in 1979, as they are at the start of 2014. Uncertainty about the direction of the economy and frustration with the federal government existed then and unfortunately exists now.
Another thing that has not changed is AAII’s mission. The words that appeared on the inaugural issue remain our mission today. Our goal has always been and continues to be to help you become a better and a smarter investor. Whether you have been member for over 30 years or a member for less than a year, we hope you have benefited from all of the resources AAII provides, including the AAII Journal. If so, please tell a friend or a family member. As a nonprofit organization, we are reliant on membership dues to fund operations. Spreading the word about AAII is one of the best ways you can help ensure that we will be around for the decades to come.
As an AAII member, you have access to more than 60 stock screens on AAII.com. These screens are based on the methodologies of many famous investors. I’m a big believer in stock screens since they can not only quickly identify stocks with the traits you desire, but often lead you to good stocks you would have otherwise not looked at. Here, you can find updated performance numbers for all of the screens we track and Joe Lan’s discussion of what common traits the best screens share.
AAII members also have access to the Model Shadow Stock Portfolio, begun by Jim Cloonan. First discussed in a 1992 AAII Journal article, this portfolio continues to follow the philosophy of seeking undervalued, small-cap stocks overlooked by most investors and is still managed by Jim. The latest update to the portfolio—which includes two deletions, one addition and one reinvestment—appears here.
In addition, this month’s issue features great articles about longevity insurance, how small-cap stocks react to economic cycles, trend following and the cash value of life insurance policies. I hope you find the articles useful and interesting.
Wishing you prosperity,
Charles Rotblut, CFA
Editor, AAII Journal