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Mighty Minis: Tiny Titans Stand Tall in 2018 January 2019 Nearly duplicating last year’s turnaround, this year’s top-performing AAII screening strategy ranked near the bottom in 2017.
Momentum Investing the Richard Driehaus Way November 2018 Based on the concepts espoused by the “father” of momentum investing, this strategy seeks outperforming smaller-cap stocks.
Stock Market Retreats and Recoveries October 2017 Only six months, on average, have separated the end of one decline and the start of the next one, but recoveries have been quick.
Three Value-Investing Benchmarks July 2017 The valuation models espoused by John Burr Williams, Robert Shiller and John Bogle can be used to assess the market’s likelihood of gains.
Piotroski Price-to-Book Screen June 2017 The ranking system’s highest scores work well for high price-to-book stocks, but F-Scores of 6 to 7 work better for low price-to-book stocks.
What Is Your Investing Edge? May 2017 Many investors focus on trying to gain an information edge, but the bigger advantage comes from taking a longer-term view.
Deep Value Investing Has Not Gone Out of Style January 2017 An updated version of Benjamin Graham’s Deep Value screen identified nine stocks in 2012; the portfolio has outperformed since then with no losing positions.
Analyzing a Stock by Its Dividend and Shareholder Yield August 2016 Both dividends and stock buybacks can be used to assess a stock’s attractiveness; higher relative shareholder yields have historically led to better stock returns.
Using the Z-Score to Assess the Risk of Bankruptcy July 2016 The Z-Score predicts the likelihood of bankruptcy or financial distress. A discussion with its creator reveals how to use the model and new variations on it.
Going From Stock Screen to a Real Portfolio July 2016 When investing based on a screen, have preset rules regarding diversification, choosing stocks, selling and tax management.
Momentum's Role as a Driver of Stock Prices May 2016 Stocks with high levels of relative strength tend to continue outperforming, but can lead to greater portfolio turnover.
Being Wrong and Still Making Money January 2016 An analysis of nearly 31,000 trades found that successful professional investors all adopted the same habits of execution.
Using Rational Value to Judge a Stock’s Worth October 2015 The range valuations a stock has traded at over the past several years can be used to determine if the current price is high or low.
Revising the MAGNET Screens June 2015 A focus on strong sales growth remains, but the addition of new criteria and changes to existing criteria enable the screens to find more stocks.
Dividends Are Still Valuable May 2015 Not only have dividend-paying stocks realized higher long-term returns, they also tend to rise prior to and after an interest rate increase.
How to Analyze Financial Companies May 2015 The manager of the T. Rowe Price Financial Services fund explains how the analysis of banks, insurance companies and investment banking firms differs from companies in other sectors.
Simple Methods to Improve the Piotroski F-Score May 2015 Altering the profitability variables, adjusting for net equity issuance and seeking operational momentum can improve this value strategy.
Follow the Fed, but Be Smart About It April 2015 Small-cap stocks thrive during periods of expansive monetary policy, while returns for large- and small-cap stocks are lower during restrictive periods.
AAII Stock Screens 2014 Review: Active Strategies Lag January 2015 Though the Dow and the S&P 500 set record highs, mid-cap and small-cap stocks lagged, contributing to disappointing returns for active strategies.
Investment Wisdom From Wall Street’s Legends November 2014 Successful investors seek out undervalued stocks, and often ones that have negative sentiment, reflect special situations or are covered by few analysts.
Weight by Fundamentals, Not by Price October 2014 Weighting stocks in a portfolio based on their fundamentals prevents the systematic overweighting of the overvalued and underweighting of the undervalued.
Five Common Traits of Successful Value Screens July 2014 Though investing gurus differ in what they look for in a stock, there are five common traits we see across the AAII value-oriented screens.
Selecting a Valuation Method to Determine a Stock’s Worth April 2014 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.
“What Works”: Key New Findings on Stock Selection October 2013 Better and more consistent returns are realized when several factors, such as valuation, financial strength and earnings quality, are used.
The Art of Value Investing July 2013 A compilation of renown value investors sharing their insights on investing in turnarounds, deciding when to sell and avoiding overconfidence.
Valuations, Inflation and Real Returns June 2013 The Yale economics professor explains why he looks at 10 years of earnings and the importance of factoring in inflation when valuing assets.
Lowell Miller’s Best Dividend Screen June 2013 Portfolio manager Lowell Miller says the best dividend stocks combine growth, reasonable valuations, financial strength and price momentum.
Combining Quality Growth With Value and Momentum April 2013 Quality growth, or a high ratio of gross profit to total assets, is a better predictor of future success and works well when combined with value and momentum indicators.
Constructing Winning Stock Screens December 2012 By combining primary and secondary criteria, a stock screen can be created to identify companies matching an individual’s investing objective and style.
Traits to Look for in Growth Stocks October 2012 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.
The “New” Edge: Characteristics of Winning Stocks September 2012 Strong-performing stocks often have new products, new management or lead a new industry. These companies have strong growth and high ROE.
An Insider’s Look at Brokerage Research July 2012 Executives pressure analysts to publish positive commentary, but there are warning signs individual investors can identify.
Screening for Stocks With Strong Secular Growth May 2012 Secular growth companies increase earnings in both good and bad economic cycles. This screen is designed to identify such companies.
Valuing Young Growth Companies December 2011 Valuations for growth companies with limited histories can be performed with this six-step method, but it requires making assumptions about the future.
Investing in Asia for Dividend Income October 2011 Going overseas for income can give exposure to stronger dividend growth. This fund manager explains what to look for when analyzing Asian stocks.
A Cautionary Note About Robert Shiller’s CAPE September 2011 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.
The Matras Increasing Earnings Approach July 2011 This strategy identifies companies that have increased earnings for six consecutive quarters and are forecast to continue growing.
Using SEC Filings to Identify Risk Factors June 2011 Potential problems in companies can be identified before they wreck havoc with your portfolio by looking at SEC filings.
How Your Buy and Sell Orders Get Filled May 2011 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.
Tweedy, Browne: “What Has Worked in Investing” April 2011 Mutual fund company Tweedy, Browne takes a Benjamin Graham approach by looking for smaller companies trading at low valuations.
Tweedy, Browne: “What Has Worked in Investing” April 2011 Mutual fund company Tweedy, Browne takes a Benjamin Graham approach by looking for smaller companies trading at low valuations.
How I Find Lower Risk/Higher Reward Stocks December 2010 Charles details his stock screen, which helps identify stocks based on four key attributes: valuation, financials, business model and diversification.
Is the Stock Market Efficient? November 2010 Warren Buffet does not say beating the market is easy, but his writings have provided tips for achieving above-average returns.
What You Can Learn From Shareholder Letters October 2010 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.
Graham's Last Will & Testament May 2010 Benjamin Graham and James Rea's three-criterion system for identifying potential investment candidates is translated into a screen.
Quantitative Strategies for Selecting Stocks May 2010 The results of more than 1,200 backtests found seven basic favorable factors from which Tortoriello gleaned four quantitative strategies for beating the market.
2009 Year-End Screening Review: The Bulls Stage a Rally January 2010 The stock screens on AAII.com took advantage of the rebounding markets to post strong gains. It was a relative newcomer, however, that delivered the best performance.
Hagstrom's Buffett Approach to Analyzing a Stock as a Business December 2009 Whether you are looking to buy a company, or just purchase shares for your portfolio, a fundamental approach begins with an understanding of the value of a business--the Warren Buffett approach. In his book, "The Essential Buffett," Robert Hagstrom argues that it is possible to duplicate Buffett's approach. A look at screening for stocks using Hagstrom's Buffett approach.
Using Triggers to Beat the Market: The Charles Kirkpatrick "Relative" Approach November 2009 Despite the stock market’s recent wild ride, many still believe that stocks are the best investment vehicle available--including Charles Kirkpatrick, president of Kirkpatrick & Co., a technical research firm, and publisher of the Kirkpatrick Market Strategist. A focus on Kirkpatrick’s "relative" investment philosophy.
Finding Value Among the "Lows": The Walter J. Schloss Approach October 2009 The name Walter J. Schloss means little to the average investor. But this Benjamin Graham disciple learned his lessons well: From 1956 to 2000, his investment fund earned 15.7% versus the market’s 11.2%, and Warren Buffett has called him a "super" investor. A focus on the elements that drive the Schloss investment philosophy.
Value Investing Using the Fundamental Rule of Thumb September 2009 Earnings yield, dividend yield, and the ratio of earnings retained to book value are well-known value factors that are often used by value investors. The Fundamental Rule of Thumb approach combines all three, and allows you to calculate a trade-off score that may help uncover stocks meriting further analysis. How to screen using the Fundamental Rule of Thumb approach
Risky Business: How to Pick Winning Property & Casualty Insurer Stocks August 2009 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.
Attracting Winning Stocks: The MAGNET Stock Selection Process August 2009 Jordan Kimmel takes a three-pronged approach to stock selection, combining value, growth, and momentum investing approaches into a singular investing model that he terms The MAGNET Stock Selection Process. A look at the MAGNET philosophy and approach.
2009 Mid-Year Stock Screen Review: Is a Market Rebound in Progress? July 2009 Only time will tell whether we are experiencing a true turnaround, but the typical exchange-listed stock is up over 27% for the year, and many of the AAII stock screens have turned in performances that dwarf the broader market.
Lowering Your Costs: How to Take Advantage of Direct Purchase Plans June 2009 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.
Investing in Stocks With DRPs: Adding Yield to Your Returns June 2009 A value approach to screening for the stocks of companies that offer dividend reinvestment plans (DRPs). The AAII screen tracks companies from both DRP and non-DRP universes
Graham's Defensive Investor Screens: An Intrinsic Approach for Stormy Times May 2009 Benjamin Graham's approach to investing focused on a concept of intrinsic value that would prevent an investor from being misled during extreme market conditions. For those seeking an approach to guide them through today’' stormy markets, the Graham Defensive Investor screens are worth a closer look.
Market Expectations vs. Results: Tracking Analyst Earnings Revisions April 2009 Changes in earnings expectations, no matter how slight, can have a significant impact on a stock's price. Tracking these expectations and their changes is an important component of stock analysis, and tracking significant revisions can be turned into a rewarding investment strategy. Developing a screen for analyst revisions.
Finding a Stock's "True Value" Using The Price-Earnings Relative Screen February 2009 While the price-earnings ratio is a popular measure of value, ratios are not across-the-board comparable. How do you judge a company's price-earnings ratio? One approach is to look at price-earnings relative ratios.
2008 AAII Stock Screen Roundup: Piotroski Strategy Defeats the Bear January 2009 For many investors, 2008 cannot end soon enough, with the S&P 500 index down 40.3% for the year (through early December). During periods like this, very few long-only stock selection strategies generate gains, including AAII’s stock screens. However, one screen proved to be the exception--the low price-to-book-value strategy developed by Joseph Piotroski gained 32.6% through December 5.
David Dreman's Contrarian Strategy: Profiting From the Market's "Mistakes" November 2008 David Dreman is a renowned contrarian investor who sees stocks and markets driven by emotions that often push prices from their intrinsic or "fair" value. A look at how to screen stocks based on the David Dreman approach.
The Philip Fisher Approach to Screening Common Stocks for Uncommon Profits October 2008 Philip Fisher was one of the first money managers to focus on qualitative factors. But he was first and foremost a growth stock investor, and he provided enough detail to establish some basic quantitative screens. A look at AAII's Philip Fisher screen, which seeks to highlight stocks with good growth potential.
The Warren Buffett Way of Finding Excellent Firms at Attractive Prices September 2008 The legend of Warren Buffett and his investment prowess is well-documented. Buffett first seeks to identify an excellent business and then invests in it only if the price is right. A look at how to screen for firms using the Warren Buffett approach, based on the book “Buffettology” by Mary Buffett and David Clark.
Measuring Managers' Mettle: A Revealing Investment Gauge August 2008 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.
How to Nail Down Your Profits: 20 Questions for a Disciplined Approach August 2008 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.
Sorting Out the Winners in the Low Price-to-Book Stock Universe August 2008 A mountain of research points to the long-term success of value-based stock selection, and University of Chicago accounting professor Joseph Piotroski further refines the approach, using basic financial criteria to help separate the winners from the losers. A look at our stock screen based on the Piotroski approach.
Money in the Bank: How to Find Opportunities in a Fallen Sector July 2008 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.
The Election-Year Effect: For Now, 2008 Stock Market Bucks the Trend July 2008 So far this year, the market has been unable to overcome a series of obstacles, and as of the first week of June, the S&P 500 was down 7.3% This has carried over to the AAII stock screens: of the 56 screens tracked at AAII.com, only 20 are up for the year, although 43 are outperforming the S&P 500.
Direct Purchase Plans: The Foreign Option June 2008 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.
The Stock Market and the Media: Turn It on, But Tune It Out May 2008 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.
Martin Zweig's Winning Approach to Investing in Long-Term Growth Stocks May 2008 Investors looking for growth prospects seek firms that are leading the pack, but that will also maintain that lead in the years ahead. This is the approach advocated by Martin Zweig. A look at AAII's screen that follows the Martin Zweig approach.
The Role of Diversification in an Individual Stock Portfolio April 2008 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.
Ralph Wanger's Survival Guide to Investing in Small-Cap Stocks April 2008 Ralph Wanger's investing style of holding small companies with financial strength, entrepreneurial managers, and understandable businesses allowed him to generate enviable returns while managing the Acorn Fund between 1970 and 2003. A look at AAII's screen that follows the Ralph Wanger approach.
Investing in Proven Growth Using CAN SLIM Revised February 2008 William O’Neil’s original CAN SLIM approach was based on analyzing the biggest stock market winners from 1953 to 1993. But the analysis was extended to 2001 and the criteria revised. A look at how our screen based on this revised approach has fared.
Master Strategists for 2007: AAII's Top Stock Screens January 2008 The fiercest battle in 2007 was not among the strategists, but against the market itself. Nonetheless, the top strategist's win was decisive: The O'Shaughnessy Small Cap Growth and Value methodology closed the year up 43.9%.
The Foolish Approach to Small-Cap Stock Investing November 2007 The Foolish Small Cap 8 screen attempts to isolate profitable, rapidly growing small-cap firms using an approach originally developed by the The Motley Fool Web site.
The Rule #1 Approach to Finding Wonderful Companies October 2007 Warren Buffett’s #1 rule of investing is: Don't lose money And how do you accomplish that small feat? By investing in wonderful companies at attracive prices, according to Phil Town, author of a new book that outlines his approach. A look at AAII's new stock screen based on Town's methodology.
Style Diversification Using the James O'Shaughnessy Approach September 2007 While stock investors have been debating the merits of growth versus value strategies for decades, James O'Shaughnessy has shown that both approaches work--but on different kinds of stocks. How to screen for growth and value using the O'Shaughnessy approach.
Developing an Intuitive Feel for the Mechanics of Growth September 2007 Major investment and planning decisions require judgments concerning growth. But most investors don't understand growth mechanics, particularly over long time periods. How to develop an intuitive feel for growth figures--without using a financial calculator.
LBOs: Winners and Losers in the Buyout Game August 2007 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.
A Top-Line Approach: The Price-to-Sales Ratio Screen August 2007 Price-to-sales ratios came into their own during the dot-com era, when earnings-based valuation models proved useless. Several years after the bursting of the Internet bubble, price-to-sales ratios continue to be a useful stock selection methodology. A look at one approach
Strong Market Performance Powers First-Half 2007 Results July 2007 Most AAII stock screens are outperforming the broad market indexes. The Benjamin Graham Defensive Non-Utility screen is at the top of the first-half performance list, with a year-to-date gain of 35.4%. The O'Shaughnessy Tiny Titans screen tops the long-term list, with a cumulative gain of 3,290.9% since the start of 1998.
Investing in BDCs: Private Equity for Public Shareholders June 2007 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.
The Hybrid Advantage: Why Preferreds Are Preferred May 2007 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.
The Secrets of Picking Great Growth Stocks April 2007 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.
Dow Dogs Make Their Mark With Pure Mechanical Approach April 2007 The Dow Dogs methodology emphasizes out-of-favor Dow stocks that are possibly underpriced relative to others, as indicated by high dividend yields. It is a mechanical approach that forces strict discipline, and requires no investment decision-making expertise--a highly appealing strategy to many individual investors, particularly market neophytes.
Over There: Screening for Reasonably Priced ADRs February 2007 Direct investment in foreign-traded stocks is difficult and costly for the individual investor, but an excellent route overseas is to purchase shares of international companies in the form of ADRs. How do you screen for these kinds of stocks? A look at one approach.
12 Key Lessons Learned About Technology Investing January 2007 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.
Investment Quality Control: The Importance of Risk Management January 2007 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.
Earnings Drive Businesses, But Expectations Drive Stock Prices November 2006 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.
Valuation Evaluation Using Price-Earnings Relatives November 2006 The price-earnings ratio is one of the most popular measures of company value. But P/Es are not across-the-board comparable. The relative price-earnings ratio approach looks back at the relationship of the price-earnings ratio of a stock either to the price-earnings ratio of the overall market or to that of the company’s industry. How to screen for stocks using P/E relatives.
The Yield Curve: A Route to Better Investment Decisions November 2006 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.
The Lakonishok Approach to Value Investing: A Payoff for Patience October 2006 Can academic theory be put to practice? A University of Illinois finance professor formed an investment management firm using quantitative models to find value companies. A look at the contrarian Lakonishok screen and how it has fared.
Parting Company: 4 Rules for When to Sell September 2006 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.
Small-Company Investing Using the "Oberweis Octagon" August 2006 AAII's screen patterned after the Oberweis Octagon focuses on rapidly growing companies that are attractively priced. A look at how the screen has performed, and its current holdings.
"Predicting the Markets of Tomorrow": The James O'Shaughnessy Approach August 2006 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.
Small Caps & Value Lead at the Mid-Point of 2006 July 2006 A mid-year review of the screens tracked on AAII.com shows a reversal of last year’s trend, with value strategies topping growth approaches, and small-cap screens outperforming mid- and large-cap strategies.
A Growth Investor's Guide to Evaluating Earnings June 2006 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.
Bypassing the Broker: AAII's 2006 Guide to Direct Purchase Plans June 2006 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.
A High-Yield Approach to Value Investing June 2006 Dividend-paying stocks can provide a beneficial diversification component to aggressive, high-growth stock portfolios. How should you screen dividend reinvestment plan stocks? A conservative high-yield approach.
Bypassing the Broker: AAII's 2006 Guide to Direct Purchase Plans June 2006 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.
15 Short-Cuts and Biases That Lead to Bad Investment Decisions May 2006 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.
The Muhlenkamp Approach: Screening for High ROEs at a Reasonable Price May 2006 Ronald Muhlenkamp, lead manager of the Muhlenkamp Fund, takes a total return approach to investing, using a bottom-up strategy to select stocks, but adjusting benchmarks based upon the broad economic environment. AAII’s screen using the Muhlenkamp approach was one of the top-performing growth and value screens for 2005.
Foreign Investing: Keeping It Simple April 2006 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.
Your Brokerage Account: Protection Beyond SIPC April 2006 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.
Screening for the Future Stock Market Winners February 2006 What does it take to become a winner? In 1989, Marc Reinganum examined the common characteristics of a group of winning stocks. Based on that research, AAII developed the Stock Market Winners screen, a growth and value approach that last year was one of the top performers.
The Best Day of the Year to Invest in the Market February 2006 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.
Going Dark: The Harsh Reality of Voluntary Deregistration January 2006 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.
From Peak to Valley: The Stock Strategy Landscape in 2005 January 2006 It was a rocky start, but the market, as well as most strategies, finally found their footing in 2005, with 43 of the 54 strategies AAII tracks turning in a positive performance for the year. For the second year in a row, the Michael Murphy value-priced technology screen led the way, while the growth-and-value Zweig approach held its long-term standing.
Evaluating IPOs in Today's Saner Market Environment November 2005 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.
The IPO Prospectus: How to Read the Fine Print November 2005 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.
The King of Value: Screening for Low Price-to-Free-Cash-Flow October 2005 For many investors, cash is 'king' when it comes to selecting stocks, since growth in sales, earnings and asset values is ultimately fueled by a company's cash-generating ability. And now cash may be king when it comes to stock screening as well--AAII's free cash flow screen (low price-to-free-cash-flow) is one of the top-performing value strategies tracked by AAII. A look at the low price-to-free-cash-flow screen.
The Revised Foolish 8 Screen: Not-So-Foolish Results September 2005 Small stocks entice investors with the potential for large returns. But how do you select among the thousands of firms? The Motley Fool Web site originally developed a filter to look for profitable, rapidly growing small companies with strong price momentum. A revised version adds valuation and management criteria.
When to Sell Stocks to Cut Your Losses September 2005 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.
How to Profit From Revisions in Analysts' Earnings Estimates August 2005 While actual earnings growth is key over the long term, even small changes in expectations can have a big impact on a stock's price. How tracking revisions in earnings estimates can be turned into a rewarding investment strategy.
Large-Cap Growth: Can It Regain the Market Leadership? July 2005 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.
Stock Investing ABCs: How to Read an Annual Report July 2005 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.
Mid-Cap and Growth Pull Ahead in Mid-Year Review July 2005 The year has been rough for value-oriented strategies relative to growth approaches, while strategies investing in smaller-cap companies have outperformed strategies that focus on larger firms.
Low-Cost Investing: A Guide to Dividend Reinvestment Plans June 2005 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.
Margin Accounts: A Double-Edged Sword May 2005 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.
Basic Ratios for Building a Dividend-Based Stock Portfolio May 2005 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.
John Neff's Approach to Contrarian Investing May 2005 Searching for stocks with low-price-earnings ratios, solid earnings growth and increasing dividend yields, using the successful approach of the former manager of the Vanguard Windsor Fund.
The Peter Lynch Approach: Investing in "Understandable" Stocks April 2005 AAII Stock Screens: Searching for attractively valued growth stocks that haven't yet captured the attention of Wall Street? The Lynch approach emphasizes a thorough understanding of the company and whether the stock can be purchased at a reasonable price.
The Proxy Edge: Exercising Your Shareholder Rights April 2005 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.
Taking the Spin Out of Earnings Announcements April 2005 Public companies always want to put the best face on their quarterly financial results. But investors should not be distracted by excessive 'spin.' Tips to keep in mind when reviewing earnings announcements.
The Proxy Edge: Exercising Your Shareholder Rights April 2005 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.
The IBD Stable 70: Screening for Long-Term Growth and Stability February 2005 AAII Stock Screens: Searching for "recession-proof" stocks? The IBD Stable 70 screen attempts to identify companies that have strong and stable long-term earnings growth—characteristics that have allowed firms to weather downturns in the past.
Stock Strategy Winners From the 2004 Performance Derby January 2005 AAII Stock Screens: It was a mixed field on a changing track during the 2004 stock strategy performance derby. The top performer for the year was the only strategy during 2003 to show a loss. But the Zweig approach maintained its long-term lead.
From Lemons to Lemonade: Post-Bankruptcy Investing January 2005 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.
Stock Return Outlook: Not-So-Great Expectations January 2005 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.
Screening for Value Using the Fundamental Rule of Thumb November 2004 AAII Stock Screens: The Fundamental Rule of Thumb screen combines earnings yield, dividend yield, and the ratio of earnings retained to book value to produce a score that can help indicate if a stock merits further analysis.
Managing Risk: The Dividend Payoff November 2004 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.
Do Elections Sway the Markets? Watch the Fed Instead November 2004 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.
Do Elections Sway the Markets? Watch the Fed Instead November 2004 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.
Screening for Triggers: Revised Earnings Estimates October 2004 AAII Stock Screens: Positive earnings surprises and upward revisions are event triggers that can change the market's collective mind about stocks that are out of favor. A review of the Dreman With Estimate Revisions screen.
The Best of Both Worlds: Value on the Move Screens September 2004 AAII Stock Screens: Most buyers want value for their money, but many stock investors also seek growth. How to combine value and growth measures to identify potential attractively priced companies that are also experiencing growth.
Navigating Through EDGAR: What to Look for on the SEC Web Site September 2004 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.
Navigating Through EDGAR: What to Look for on the SEC Web Site September 2004 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.
Tracking the Smart Money: Screening for Insider Activity August 2004 AAII Stock Screens: Who else better knows the future prospects of a company than the insiders? While it would be foolish to base buy and sell decisions solely on insider data, it is useful to know what the smart money is up to. AAII's insider buys screen.
The Basics: What Is the Over-the-Counter Market? August 2004 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.
How Many Stocks Do You Need to Be Diversified? July 2004 Stock Strategies: It has become conventional wisdom that diversification beyond 10 or 20 securities is unnecessary. But a fresh look at the research indicates you will need many more stocks to be truly diversified.
Strategies End Mid-Year on Upside of a See-Saw Market July 2004 AAII Stock Screens: Thirty-four of the 54 strategies tracked on AAII.com showed positive gains for the first half of 2004. A look at the year-to-date winners.
How Many Stocks Do You Need to Be Diversified? July 2004 Stock Strategies: It has become conventional wisdom that diversification beyond 10 or 20 securities is unnecessary. But a fresh look at the research indicates you will need many more stocks to be truly diversified.
Keep the Dividends Flowing: Screening for DRPs June 2004 AAII Stock Screens: Selecting from a universe consisting only of firms offering dividend reinvestment plans can result in a concentrated portfolio. But DRPs can provide a beneficial diversification component to aggressive, high-growth stock portfolios.
Investing in DRPs: A Guide to Dividend Reinvestment Plans 2004 June 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.
To Find Small Caps, Don't Neglect the Large: Spin-offs for Fun and Profit May 2004 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.
Overseas Investing at Home: Screening for Reasonably Priced ADRs May 2004 AAII Stock Screens: One way to invest in individual international stocks is through American depositary receipts (ADRs). AAII's screen for ADRs looks for firms trading with a low PEG ratio that show strong recent price momentum.
The Importance of Dividends in a Low-Return Environment April 2004 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.
The Zweig Approach: Growth Stocks That Can Keep Pace February 2004 A closer look at our top-performing screen over the long term, based on Martin Zweig's approach to identifying stocks that have strong earnings growth and price action, and selling at reasonable price-earnings ratios.
When to Sell and Nail Down Your Profits--While You Still Have Them January 2004 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.
Winners and Losers in the 2003 Performance Race January 2004 The Piotroski small-cap value approach and the Zweig growth and value strategy are the two big winners in AAII's annual comparison of major stock screenig strategies tracked on AAII.com.
An Investor's Guide to Corporate Insider Trading Activity November 2003 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!
Keeping a Pulse on Expectations: Screening for Earnings Revisions November 2003 Slight changes in expectations for future earnings or the earnings growth rate can strongly impact a stock's price. Tracking these expectations and their changes can be a rewarding stock strategy.
An Investor's Guide to Corporate Insider Trading Activity November 2003 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!
Four Basic Steps to Gauging a Firm's True Financial Position October 2003 A basic understanding of a company's "true" financial position can be gleaned by starting with a company's cash flow statement. Four initial steps you can use to analyze a firm's financial statements.
IBD Stable 70: Surviving Downturns With Long-Term Earnings Growth October 2003 The IBD Stable 70 screen has easily outperformed the small-, mid- and large-cap indexes over the last five years. It looks for firms equipped to withstand downturns by isolating those with strong & stable long-term earnings growth.
AAII's Low Price-to-Sales Screen: Strong Performer in Mixed Market September 2003 Screening provides a disciplined aproach to selecting stocks that match up with one's investment philosophy. However, it's a first step in the stock selection process and should be followed up with in-dpeth company analysis.
How the Strategies Have Fared: A Mid-Year Performance Review August 2003 The Foolish Small Cap 8 strategy shot past all of the other strategies in the first half of 2003, while the long-term leader in the growth category continues to be the O'Neil CAN SLIM approach.
Searching for the Upcoming Stock Market Winners July 2003 The original rules developed by Marc Reinganum to identify stock market "winners" produced returns that were significantly higher than the market.
Implementing a High-Yield Screen to Invest in Stocks With DRPs June 2003 Many individuals are attracted to companies with DRPs as a low-cost way to buy shares. But limiting investment to only DRPs tends to exclude certain sectors from your portfolio, including higher-growth stocks.
Investing in DRPs: A Guide to Dividend Reinvestment Plans June 2003 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.
The Muhlenkamp Stock Screen: High ROEs at a Reasonable Price May 2003 Muhlenkamp uses a bottom-up approach to selecting stocks, but adjusts his benchmarks based upon the broad economic environment, using prevailing inflation and interest rates to help establish his investment hurdles.
How to Use the CAN SLIM Approach to Screen for Growth Stocks April 2003 AAII's interpretation of the CAN SLIM approach has been one of the most consistent and strongest-performing screens during both bull and bear markets. An update on the CAN SLIM strategy.
Out of Wall Street's Spotlights: AAII's 2003 Shadow Stock Listing February 2003 This year's list consists of 159 companies, including 44 newcomers. Detailed financial data for all 159 Shadow Stocks is available in spreadsheet form in the Download Library area under Files from AAII.
Shadow Stock Rookies: What the Newcomers Look Like February 2003 The price-earnings ratios for the Shadow Stock rookies range from 3.2 for freight carrier B&H Ocean Carriers, to 102.6 for OYO Geospace Corp., a maker of seismic data instruments.
Stock Strategy Performance: Winners and Losers in 2002 January 2003 The Graham Enterprising Investor screen led the pack in 2002 in total gains. This value approach looks for dividend-paying stocks with low price-earnings ratios.
Dividends Count: Screening for Undervalued Stocks With Lower Risk October 2002 If a stock's price rises faster than its dividend, the dividend yield will fall, indicating the price may have been bid up too far. Conversely, if the yield rises to a high level, the stock may be poised for an increase.
Shareholder Letter Revelations: Can You Trust the Leadership? September 2002 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.
Building a Screen for Reasonably Priced ADRs September 2002 Performance of an ADR will closely monitor that of the underlying stock traded on a foreign exchange. And for U.S.-based investors, ADRs are subject to the same currency risk as the underlying stock.
Shareholder Letter Revelations: Can You Trust the Leadership? September 2002 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.
How to Take Your Emotions Out of the Sell Decision August 2002 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.
Which Stock Strategies Did Best? A Mid-Year Performance Review July 2002 So far the top-performing screens during 2002 were also the leading strategies during 2001: The Piotroski value screen, the Philip Fisher growth & value screen, and O'Neil's CANSLIM growth screen.
Individual Investor's Guide to Dividend Reinvestment Plans 2002 June 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.
DRP Stock Characteristics and How to Implement a High-Yield Screen June 2002 During bear markets, dividend-paying value stocks tend to outperform growth-oriented issues. This is echoed by the price-earnings ratios of the DRP and non-DRP universes, 19.6 and 18.9 respectively.
Evaluating the Performance Claims of Investment Approaches May 2002 While all honest research helps to shed light on successful approaches, there are weaknesses in research methods that you need to take into account. In some cases, flawed research may be used to intentionally lead you astray.
Analyzing a Stock as a Business: The Buffett Approach to Screening May 2002 Warren Buffett's strategy is easy to understand, but its successful implementation requires a considerable amount of time, effort, and judgment. You need to thoroughly analyze the business and quality of management.
An Aggressive Value Approach for Small-Company Investing April 2002 The Oberweis Octagon is a set of rules outlining an approach that seeks to identify rapidly growing companies with prospects for continued future growth, but with stock market valuations that are reasonable given their levels of growth.
Shadow Stocks 2002: Small Caps Out of Wall Street's Spotlights February 2002 Stock Screening: By operating out of the spotlight of Wall Street, Shadow Stocks may offer unique opportunities for individual investors. This year, 186 stocks passed the Shadow Stock screens.
What Steps You Should Take When Your Stock's Price Falls November 2001 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.
What Steps You Should Take When Your Stock's Price Falls November 2001 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.
