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Neff Screen

Performance

  Neff S&P 500
YTD Return: 2.4% 11.9%
Five Year Return: 18.5% 13.5%
Ten Year Return: 10.1% 5.8%
Inception: 18.7% 4.6%
Data as of 11/28/2014
The Neff Screen represents AAII's interpretation of the investment approach and is not determined by the original strategist. The list of passing companies represents a hypothetical portfolio, which is used to track the screen’s performance on a chart.

Passing Companies

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Screening Criteria

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Chart

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Growth stocks, including hot-to-the-touch Internet firms, helped fuel the stampeding bull market that charged through the 1990s. The majority of these dot-com stocks—still rampaging today—possess sky-high price-earnings ratios, post zero or negative earnings, and yet support towering stock prices based only on future potential growth prospects.

These prices are built up by investors following a herd mentality—investing in such companies simply because others are doing so. Too many fashion-conscious investors ignore the fundamentals and concentrate on a stock or an industry's "coolness" rating. These followers add dot-com stocks to their portfolios because they are trendy and the hot topic; Internet stocks simply make one's portfolio look more glamorous. But over time, tastes change and fads fade. Equally, the markets adjust and bad investments become hideous reminders of poor judgment, looking as square as that polyester leisure suit hanging in the back of your upstairs closet.

As today's market sentiment continues to shift and investors begin to question the fundamentals of many growth stocks, the principles of value investing are being embraced once again, and contrarian thinking appears to be returning to investor consciousness—an opportune time to visit the investment approach of value investor and noted contrarian, John Neff.

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