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Stock Strategies Articles

Weight by Fundamentals, Not by Price

October 2014 by Charles Rotblut
Weighting stocks in a portfolio based on their fundamentals prevents the systematic overweighting of the overvalued and underweighting of the undervalued. Read more »

How I Analyze Net-Nets: Stocks Trading at Deep Discounts

June 2014 by Jeroen Bos
Stocks hitting 52-week lows of companies with strong balance sheets and past profitability can offer big upside returns. Read more »

Selecting a Valuation Method to Determine a Stock’s Worth

April 2014 by Robert R. Johnson
Guidance on when it makes sense to compare a stock’s price to fundamental factors or other companies and when a stock’s absolute value should be calculated instead. Read more »

Crowdfund Investing: An Exciting New Alternative for Individual Investors

April 2014 by Louis C. Gerken
Individual investors may soon get the opportunity to participate in crowdfunded investments. The keys to analyzing platforms and investments. Read more »

Exploiting the Relative Outperformance of Small-Cap Stocks

January 2014 by John Davenport
Small-cap stocks outperform large-cap stocks during periods of economic expansion and can deliver excess returns when a sector rotation strategy is used. Read more »

“What Works”: Key New Findings on Stock Selection

October 2013 by James O'Shaughnessy
Better and more consistent returns are realized when several factors, such as valuation, financial strength and earnings quality, are used. Read more »

Investing’s Odd Couple: Value and Momentum

July 2013 by Kevin Truitt
Combining both value and momentum characteristics can improve portfolio returns and reduce volatility. Read more »

The Art of Value Investing

July 2013 by John Heins
A compilation of renown value investors sharing their insights on investing in turnarounds, deciding when to sell and avoiding overconfidence. Read more »

Using Seasonal and Cyclical Stock Market Patterns

June 2013 by Jeffrey Hirsch
Presidential terms, the calendar month and a basket of January indicators give insight into market direction. Read more »

Valuations, Inflation and Real Returns

June 2013 by Charles Rotblut
The Yale economics professor explains why he looks at 10 years of earnings and the importance of factoring in inflation when valuing assets. Read more »

Insights on Warren Buffett From His Friend and Editor

May 2013 by Charles Rotblut
The pro-bono editor of Buffett’s annual shareholder letter speaks about his investing and management process. Read more »

The Liquidity Style: Finding Bargains by Seeking Less Popular Stocks

April 2013 by Roger Ibbotson
Stocks that are less liquid, meaning their shares trade with less volume, offer the potential for higher returns. Read more »

Making Sense of Master Limited Partnership Tax Rules

November 2012 by Mary Lyman
The unique structure of MLPs gives them tax advantages, but also makes them more complex. Find out how distributions and gains are taxed. Read more »

Traits to Look for in Growth Stocks

October 2012 by Robert Bartolo
Earnings per share growth of at least 10% is key, but revenue growth also matters, according to the manager of the oldest growth stock mutual fund. Read more »

Uncovering Opportunities in a Tumultuous Market

September 2012 by Christine Benz
Opportunities exist for investors willing to seek out stocks with discounted valuations and wide business moats. Read more »

The “New” Edge: Characteristics of Winning Stocks

September 2012 by Christina Wise
Strong-performing stocks often have new products, new management or lead a new industry. These companies have strong growth and high ROE. Read more »

Using Quantitative Strategies to Pick Winning Mid-Cap Stocks

September 2012 by Charles Rotblut
The co-manager of a top-performing mid-cap mutual fund explains how a quantitative process leads to better stock selection and portfolio management. Read more »

An Insider’s Look at Brokerage Research

July 2012 by Mike Mayo
Executives pressure analysts to publish positive commentary, but there are warning signs individual investors can identify. Read more »

Valuing Young Growth Companies

December 2011 by Aswath Damodaran
Valuations for growth companies with limited histories can be performed with this six-step method, but it requires making assumptions about the future. Read more »

Master Limited Partnerships: Income From a Unique Structure and Industry

November 2011 by Kenny Feng
MLPs are pass-through entities and have been able to pay consistent distributions due to steady demand and federally regulated prices. Read more »

Investing in Asia for Dividend Income

October 2011 by Jesper Madsen
Going overseas for income can give exposure to stronger dividend growth. This fund manager explains what to look for when analyzing Asian stocks. Read more »

Historical Performance and Future Stock Market Return Uncertainties

September 2011 by Ed Easterling
The long-term large-cap return of nearly 10% is inflated by the low valuations that existed in 1926, requiring investors to adjust their future expectations. Read more »

A Cautionary Note About Robert Shiller’s CAPE

September 2011 by Stephen E. Wilcox
Stocks may be less expensive than the CAPE (cyclically adjusted price-earnings ratio) suggests because of the length of the average business cycle and troublesome historical comparisons. Read more »

Chasing Dividend Yield for Income: Three Reasons to Be Wary

July 2011 by Rod Greenshields
Declines in overall yields may result in dividend strategies failing to provide adequate levels of income for retirees. Read more »

Using SEC Filings to Identify Risk Factors

June 2011 by Michelle Leder
Potential problems in companies can be identified before they wreck havoc with your portfolio by looking at SEC filings. Read more »

How Your Buy and Sell Orders Get Filled

May 2011 by Chris Nagy
The type, size and timing of an order to buy or sell a security impacts if, when and at what price your transaction gets filled. Read more »

Four Fundamental Tests Every Stock Investor Should Use

April 2011 by Michael C. Thomsett
Four indicators are key to stock analysis and can help evaluate a company relative to both its past and its peers. Read more »

Is the Stock Market Efficient?

November 2010 by Prem C. Jain
Warren Buffet does not say beating the market is easy, but his writings have provided tips for achieving above-average returns. Read more »

What You Can Learn From Shareholder Letters

October 2010 by Eric R. Heyman
What You Can Learn From Shareholder Letters. Shareholder letters and other related communication can provide a method for evaluating a company’s management. Find out what to look for. Read more »

The Importance of Book Value

July 2010 by Charles Rotblut
Why the price-to-book ratio is the most effective measure of valuation. Read more »

Quantitative Strategies for Selecting Stocks

May 2010 by Richard Tortoriello
The results of more than 1,200 backtests found seven basic favorable factors from which Tortoriello gleaned four quantitative strategies for beating the market. Read more »

Risky Business: How to Pick Winning Property & Casualty Insurer Stocks

August 2009 by John Deysher
Many great fortunes have been built by smart insurance operators. A good example is Berkshire Hathaway, which has interests in several insurers and reinsurers covering a variety of property and casualty risks. At its heart, the P&C insurance business is one of shared risk--and proper pricing of that risk. How to spot opportunities in the risk business. Read more »

Lowering Your Costs: How to Take Advantage of Direct Purchase Plans

June 2009 by Maria Crawford Scott
A simple, low-cost and low-minimum way to start investing in individual stocks is to go straight to the company source. Direct purchase plans allow you to buy shares directly from the company without a broker. A look at how the plans work and how to find them. Read more »

How to Set and Revise Realistic Price Targets for Your Stocks

May 2009 by Donald Cassidy
Stocks go where they want to, despite what investors might wish would happen. How to develop a realistic sales-price target--and when it should be revised. Read more »

Don't Fight the Fed: Interest Rates and their Impact on the Stock Market

May 2009 by Sam Stovall
What is the one thing an investor should monitor in order to gauge the health of the economy and the direction of the stock market? Interest rates. A look at how they affect stock prices. Read more »

The Sell Decision: What to Do After a Severe Market Meltdown

November 2008 by Donald Cassidy
For current investors, the focus now should be on what to do in and after a severe bear market if you are investing your own portfolio of individual stocks. Read more »

Measuring Managers' Mettle: A Revealing Investment Gauge

August 2008 by Stephen T. McClellan
A critical part of the investment evaluation process is gauging management effectiveness, quality, and character. Surprisingly, this is often disregarded by Wall Street. What to look for to determine whether management can be trusted. Read more »

How to Nail Down Your Profits: 20 Questions for a Disciplined Approach

August 2008 by Donald Cassidy
Much attention is given to studying what to buy, but inadequate energy is devoted to the hold/sell decision. This is backward, since dollars already invested are at more risk than cash not yet invested. How you can implement a disciplined approach to your decisions on whether and when to sell. Read more »

Money in the Bank: How to Find Opportunities in a Fallen Sector

July 2008 by John Deysher
In the past year or so, bank stock prices have fallen sharply. But declining stock prices yield opportunity. Many good banks have been tarred with the same brush as the troubled banks. How do you analyze a bank? A brief look. Read more »

Direct Purchase Plans: The Foreign Option

June 2008 by Jon Harris
With current growth rates overseas outpacing U.S. stocks' growth, many investors are casting a longing look at the foreign markets. One approach is to purchase ADRs, certificates that trade on a U.S. exchange but represent foreign firms. And now, several banks have set up direct purchase plans for their ADR firms. Read more »

The Stock Market and the Media: Turn It on, But Tune It Out

May 2008 by Dick Davis
Many investors believe that keeping abreast of the news is one key to investment success. But Dick Davis believes one of the worst things that can happen to long-term investors is to be instantly and totally informed about their stocks. Here's why. Read more »

The Role of Diversification in an Individual Stock Portfolio

April 2008 by Vitaliy N. Katsenelson
A large number of holdings makes it impossible for investors to know their companies well. At the other extreme, holding just a handful of stocks can subject you to unnecessary risk and also impairs your ability to make rational decisions under pressure. Managing these emotional realities is one of the more subjective aspects of risk management through diversification. Read more »

Finding Growth Stock Winners: Focus on 8 Fundamental Factors

January 2008 by Louis Navellier
There is no one magic-bullet variable that is most important in picking winning stocks. Instead, you should focus on eight fundamental variables. Read more »

Cheaper by the Dozen: 12 Wall Street Classics for 2008

January 2008 by John Deysher
Recommended reading for stock investors on a variety of investment topics. Read more »

LBOs: Winners and Losers in the Buyout Game

August 2007 by Robert Benjamin
The LBO boom shows no signs of abating, producing winners and losers among investors. A look at how some portfolio managers have been coping--and what it means to investors in general. Read more »

Investing in BDCs: Private Equity for Public Shareholders

June 2007 by John Deysher
Private equity is a term we're hearing a lot about these days, with many companies large and small going private. How can you get in on a piece of the action? A look at Business Development Companies. Read more »

The Hybrid Advantage: Why Preferreds Are Preferred

May 2007 by John Deysher
The last few years have been tough for yield-oriented investors. But there is one income vehicle that can augment holdings in low-yielding common stocks. A closer look at the preferred stock advantage. Read more »

Is the Historic Small-Cap Cycle Coming to an End?

An analysis by T. Rowe Price suggests that the best days of the small caps may be behind us. Read more »

The Secrets of Picking Great Growth Stocks

April 2007 by Fred Kobrick
Investing is simply common sense, along with a focus on the key factors that drive the greatest stocks. A look at the four factors that seem to be common, identifying traits of the greatest companies and stocks. Read more »

12 Key Lessons Learned About Technology Investing

January 2007 by Bob Turner
The technology sector may not be all that it used to be, but it still offers some compelling investment opportunities. Burnt-fingered investors, scorched by tech stock losses, may want to take heed of some useful lessons about investing in the sector. Read more »

Investment Quality Control: The Importance of Risk Management

January 2007 by Chris Orndorff
Modern quantitative risk measures can provide investors with a more accurate way of assessing the risk level of their portfolios and ensuring that their portfolio is performing as was originally intended. Read more »

Earnings Drive Businesses, But Expectations Drive Stock Prices

November 2006 by Brian Luster
Investors commonly confuse a good business with a good investment. Many good businesses have high expectations embedded in their stock prices. As an investor, you face the task of recognizing whether current expectations are overly optimistic or overly pessimistic. Changes in expectations - not earnings growth - move stock prices. Read more »

The Yield Curve: A Route to Better Investment Decisions

November 2006 by Deborah Weir
Looking for an easy-to-use tool to help you identify major changes in the economy that could change a company’s fortunes? Fortunately for individual investors, such a tool does indeed exist: the U.S. Treasury yield curve. Read more »

Parting Company: 4 Rules for When to Sell

September 2006 by John Deysher
Selling is one of the toughest parts of investing. Doing it well can make you multiples, but doing it poorly can cost you dearly. A look at four basic rules for how to know when to let go. Read more »

"Predicting the Markets of Tomorrow": The James O'Shaughnessy Approach

August 2006 by Cara Scatizzi
Can past trends indicate future trends? James O'Shaughnessy believes they can. In his newest book, O'Shaughnessy examines stock market history and develops a stock selection approach for individual investors that attempts to take maximum advantage of current trends. Read more »

5 Memorable Mistakes and the Lessons I Learned

July 2006 by John Deysher
Winning in the stock market is often about not losing, and one of the ways to avoid losses is to learn from your mistakes. Read more »

A Growth Investor's Guide to Evaluating Earnings

June 2006 by Paul Quinn
Earnings are the single most important determinant of a stock’s price. But how do you evaluate a firm’s earnings? A step-by-step approach for evaluating earnings from the perspective of an investor seeking reasonably priced growth. Read more »

Bypassing the Broker: AAII's 2006 Guide to Direct Purchase Plans

June 2006 by Cara Scatizzi
Buying stock with little or no commission is the major attraction of direct purchase plans. This year’s annual guide lists 460 dividend reinvestment plan companies that will sell their initial shares directly to the public. Read more »

15 Short-Cuts and Biases That Lead to Bad Investment Decisions

May 2006 by Paul S. Szczygiel
Mental short-cuts simplify our complex world and help individuals form rules of thumb that work for many decisions. But they don’t work perfectly and can give rise to misperceptions that lead to decision-making errors. Worse, most people are unaware these biases exist. Fifteen common mental mistakes that lead to money-losing investment decisions. Read more »

Foreign Investing: Keeping It Simple

April 2006 by Ron Muhlenkamp
In the early 1990s, popular wisdom was pushing foreign investments. But you can't extrapolate the past to arrive at the future. Instead, you have to have some measure of value. When investing overseas, you must take into consideration not only the markets, but also the value of the dollar. A look at the value of the dollar and when it does well. Read more »

Your Brokerage Account: Protection Beyond SIPC

April 2006 by John Deysher
If a brokerage firm goes belly-up, how protected are customer accounts from creditors and other parties? While brokerage busts have been rare in recent years, it's a question worth pondering. A look at where you stand in the event of a problem. Read more »

The Best Day of the Year to Invest in the Market

February 2006 by Robert Muksian
The timing of investments is always a dilemma for the individual investor. Looking backward, it is easy to find comprehensive analyses showing the best days to have invested. But looking forward, the probability of timing those most opportune investment opportunities is essentially zero. However, there is one day of the year that comes close to being the best day of any year. Read more »

Going Dark: The Harsh Reality of Voluntary Deregistration

January 2006 by John Deysher
A growing number of small companies are "going dark"--voluntarily deregistering with the SEC and delisting their shares. The result is often a falling share price and investors left in the dark about the firm's finances and prospects. What it all means, and what you should do if you are left in the dark with one of your holdings. Read more »

The IPO Prospectus: How to Read the Fine Print

November 2005 by John Deysher
With hundreds of IPOs to choose from, how do you sort among the rubble to find the gems? Start with the prospectus, which covers most of the important areas you need to focus on. What to look for in an IPO prospectus. Read more »

Evaluating IPOs in Today's Saner Market Environment

November 2005 by Robert Bridges
Many investors swore off IPOs after so many collapsed in the 2000–2002 bear market. But the last two years have seen a resurgence of IPO offerings. How can individual investors take a sober look at IPOs in today’s saner environment? As with all investing, caveat emptor rules. How to evaluate an IPO. Read more »

When to Sell Stocks to Cut Your Losses

September 2005 by William J. O'Neil
Success in the stock market is as much about limiting losses as it is about riding winning stocks. How can you cut your losses? By following a rule-based selling strategy. How to sell when a stock doesn't pan out. Read more »

The Folly of Crowd-Following: Popular Stocks=Unpopular Returns

August 2005 by Edwin D. Everett
The evidence is in: Investors would be far better off leaving the hottest stocks out of their portfolios and focusing on business fundamentals and valuations. Read more »

Large-Cap Growth: Can It Regain the Market Leadership?

July 2005 by Steve Norwitz
Since the great Market Bubble burst in 2000, large-cap growth stocks have been perennial laggards, trailing small caps and value in each of the past five years. Can these stocks regain their market leadership? Reasons for optimism—and casues for concern. Read more »

Stock Investing ABCs: How to Read an Annual Report

July 2005 by John Deysher
Annual reports are like chapters in a company's life, giving a detailed account of the year past and the outlook for the future. While the financial numbers reveal part of the story, you can tell a lot just by reading the text. How to get the most out of an annual report. Read more »

Low-Cost Investing: A Guide to Dividend Reinvestment Plans

Buying stock with little or no commission is the major attraction of dividend reinvestment plans. This year's annual guide lists over 300 companies that will sell their initial shares directly to the public. Read more »

Margin Accounts: A Double-Edged Sword

May 2005 by John Gannon
A margin account allows you to borrow money from your broker to buy securities. This magnifies returns, both on the upside and downside. The risks of trading on margin, and what you need to know about margin accounts, how they operate, and the reasons for margin calls. Read more »

Basic Ratios for Building a Dividend-Based Stock Portfolio

May 2005 by Don Schreiber
Stock prices rise and fall. But there is one constant in stock investing, and that is dividends, which arrive every quarter. How do you build a portfolio of solid dividend-paying stocks? The building blocks you need to get started. Read more »

The Proxy Edge: Exercising Your Shareholder Rights

April 2005 by John Deysher
Stock Strategies: Many investors receive the annual proxy statement and simply throw it in the trash. But that is throwing away a vote, and the right to keep management's interest in line with your own. How to get the most out of a proxy statement. Read more »

From Lemons to Lemonade: Post-Bankruptcy Investing

January 2005 by John Deysher
Stock Strategies: Tremendous bargains are sometimes hidden under clouds of public financial disgrace, offering unique investment opportunities to investors willing to consider firms that have recently emerged from bankruptcy. Read more »

Stock Return Outlook: Not-So-Great Expectations

January 2005 by Steve Norwitz
Stock Strategies: Given current valuation levels and reasonable expectations for earnings and dividend growth, investors should moderate their stock expectations to mid-to-high-single-digit return levels over the next several years. Read more »

Managing Risk: The Dividend Payoff

November 2004 by John Buckingham
Stock Strategies: Recent history suggests that an investment strategy focused on dividend-paying large-cap and mid-cap stocks can offer a perfect blend of maximum returns at a below-market level of risk. Read more »

Do Elections Sway the Markets? Watch the Fed Instead

The 2004 presidential election is over, but the outcome may not matter—at least to the markets. Two new studies suggest that you should instead focus on Fed policy for clues on which way the markets may be heading. Read more »

Navigating Through EDGAR: What to Look for on the SEC Web Site

September 2004 by John Deysher
Stock Strategies: One of the most useful Web sites for investors is the SEC's EDGAR, which contains required filings and forms of public corporations, with detailed financial disclosures. A guide to the the key filings. Read more »

The Basics: What Is the Over-the-Counter Market?

August 2004 by John Deysher
Stock Strategies: "Over the counter" loosely applies to securities not traded on an organized exchange. Although they encompass Nasdaq stocks, they also include the less-regulated OTC Bulletin Board and the unregulated Pink Sheets. Read more »

Investing in DRPs: A Guide to Dividend Reinvestment Plans 2004

Stock Strategies: Buying a stock with little or no commission is the major attraction of dividend reinvestment plans. This year's annual guide lists nearly 300 companies that will sell their initial shares directly to the public. Read more »

To Find Small Caps, Don't Neglect the Large: Spin-offs for Fun and Profit

May 2004 by John Deysher
Stock Strategies: Spin-offs can offer unique investment opportunities in good markets and bad. However, not all spin-offs are created equal--you must do your homework to separate the attractive from the mediocre. Read more »

Your Order Please: A Guide to the Different Ways to Buy and Sell Securities

April 2004 by John Deysher
There are many ways to give buy and sell instructions to a broker--and just as many ways to get burned if you mess up. A rundown of the most common orders. Read more »

The Importance of Dividends in a Low-Return Environment

April 2004 by John Snare
Many analysts believe stock returns over the next several years will be well below the historical average. What strategies worked in previous low-return environments? A look at the last flat market--1965 to 1982. Read more »

How Conference Calls Can Help Investors Read the Tea Leaves

January 2004 by John Deysher
Today, nearly all corporate conference calls are open to the public, and you can obtain the same unfiltered information as the institutions. How to tune in. Read more »

When to Sell and Nail Down Your Profits--While You Still Have Them

January 2004 by William J. O'Neil
When you go through a complete market cycle, your real objective is to nail down as much of the profits you've built as possible. Proven sell rules to follow so you can keep your profits. Read more »

An Investor's Guide to Corporate Insider Trading Activity

November 2003 by John Deysher
Insider buying is much more significant than insider selling. Insiders may sell their shares for a variety of reasons. But typically insiders buy their shares on the open market for one reason--the stock is cheap! Read more »

Investing in DRPs: A Guide to Dividend Reinvestment Plans

A major attraction of a dividend reinvestment plan is the opportunity to buy shares with little or no commissions levied. Many companies sell initial shares directly to investors so that no purchases need to be made through a broker. Read more »

The Predictive Power of Price-Earnings and Price-Sales Ratios

February 2003 by Richard Goedde
Both price-earnings and price-sales ratios are significant factors in predicting future stock price performance over the next year. Read more »

Shareholder Letter Revelations: Can You Trust the Leadership?

September 2002 by Laura J. Rittenhouse
The quality of management, particularly the CEO, is an important indicator when evaluating a company. Astute investors will look for evidence of the CEO's qualities in the shareholder letter. Read more »

Bill Provides a New Framework for Accounting & Corporate Governance

September 2002 by John Markese
A summary of the Public Company Accounting Reform and Investor Protection Act of 2002. Read more »

How to Take Your Emotions Out of the Sell Decision

August 2002 by Jim Norris
When you decide to sell a stock, you are changing your mind about the stock's prospects. But changing one's mind is easier said than done, particularly in the investment world where uncertainty and emotions run high. Read more »

Individual Investor's Guide to Dividend Reinvestment Plans 2002

The major attraction of a dividend reinvestment plan is the opportunity to buy shares with little or no commissions levied. Over a third of the DRP companies will sell the initial shares directly to the public. Read more »

What Steps You Should Take When Your Stock's Price Falls

November 2001 by Wayne A. Thorp
There are no simple rules that will tell you when to sell a stock, but an in-depth understanding of what economic, industry, and firm fundamentals drive the price will better equip you for making decisions. Read more »

Shadow Stock Rookies: Firms That Are New to the 1998 Listing

February 1998 by John Bajkowski
Stock Analysis Workshop: A closer look at the 105 stocks new to AAII´s 1998 Shadow Stock list. Read more »

Investment Characteristics of Stock Market Winners

September 1989 by Marc Reinganum
What investment attributes characterize successful stocks? A study of 222 stock market "winners" turns up some surprising results. Read more »