2024's Most-Read Investor Updates: High Yields and Buying on Dips

Barry J from TX posted over 1 year ago:

“What captured AAII members’ attention?” is always the question of the week. #1 Each week I try to reconstruct answers to this question from the data the Investor Updates and Weekly COIs provide. The standard indicators are the range of opinions on 1) the question of the week, and changes and levels of 2) AAII sentiment and 3) member PF allocations. These 3 sources provide trend data that members can view on site, but no one ever discusses the data. Even the press only focuses on the short-term data. #2 The “most read Investor Updates” added 5 new indicators” 1) High Interest DIVYs, 2) 3 volatility indicators (VIX StDev changes, SPX ST changes, SPX 200D SMA changes; 3) solutions to 5 RT challenges; 4) SPX trends in election cycles; and 5) ways to prepare and assist older relatives. Thus, Charles has provided both longer term and short-term perspectives. Very clever curation. #3 Data on the percentages would have added a desert course for this feast. Of course, the fact that the choice of topics and data are highly curated moderates the ability to construct anything close to a snap shot but a crude mosaic and tempus fugit. I can predict more about Charles’ interests than AAII members. #4 The choices of the archived articles Charles selects provides some pointers into Charles’ purposes and intents. So I conclude: #5 Charles is AAII’s Moses. We can only hope, that like Moses, after we wander in the AAII Negev a few more years, Charles leads us to a “promised land” that has more oil than the one Moses settled for. Maybe 2025 is our salvation. Maybe not. #6 Do you know why Moses was a great leader? He had a great staff. (I love that one.) #7 THUS … I have concluded the obvious, my dear Watson. Professing to be a “long term investor” means creating a portfolio that is more like cooking with a crockpot – 1) throw in a bunch of things that are good for you like fresh vegetables, 2) add some fresh meat like hot stocks, 3) season it to taste with your preferred level of volatility and … 4) set it and 5) forget it, AND … the best part – 6) know you have enough nourishment (aka wealth) to live well, long, and prosper. #8 Unfortunately, I always come away with a distorted picture into the AAII Member Psyche. Assuming that the “II” in AAII indicates that “AAIIers” are individuals who construct opinions independently, their opinions are always the best answer we can get, but more AAII member comments would be useful to expand our Rorschach. #9 My forecast for 2025? 1) Keep your eyes on volatility gauges in the article. 2) Remember our journeys for that promised land and a crockpot feast continues. #10 As an indicator of the “Wisdom of AAII” consider the loci of their most recent estimates of how 2025 will play out. 1) 43.5% of AAIIers opined that Fed decision to cut FFR 0.25% (which reset the “effective interest rates” @ 4.5% only 1% above the current CPI inflation rate @3.5%. This should tamp down recent stampedes toward higher UST10 yields, the best alternative safe fixed income investment. AAIIers acted on this monetary policy move by reducing their FI investments in their PFs by 0.7% to 14.7% for first time in 5 weeks (12/1/24) and holding steady @3.2% higher which than historical allocations @31%. This tracks as a 60%-40% PF tilted 10% to the higher risk side of the yield curve. This could be a reaction to the "Santa Claus Bust." And bullish sentiment in the AII Sentiment Survey was up @35.4% but below its HA @ 37.5% for the 1st time in 5 weeks. #11 The WOAAII curve says: As a crowd, we are repositioning to weather this one out until we see some results from the 119th Congress (a deficit ceiling resolution, FY26 fiscal spending limits, continued tax cuts, changed treaties) and see what kind of new macroeconomic fiscal opportunities/problems DT2’s “Day One" promises bring (deportations? reduced labor pool? high costs of labor? inflation? tariffs?). I am following crude oil inventories and prices as key market futures indicators. Charles, seize your staff and lead us on. Oil Ho! Happy New Year.

John L from NJ posted over 1 year ago:

Yes! Let's build generational wealth starting in 2025. Start with giving up the unrealistic dream of beating the market. Check out SPIVA to see how few professionals beat the market over long periods (6% - 20 years). Take a long drink and admit you have no idea how to pick a financial advisor, mutual fund manager, or newsletter that will beat the market over the next 20 years. So how do you achieve market or near market returns? One way is low cost stock market index funds. Maybe AAII advice. Maybe not. Last check showed the shadow stock portfolio beating the broad market over it's lifetime due to outstanding early results but not recently as in the last 15 years. The rest of the AAII newsletters could be winners but who knows as their historic results haven't been published to my knowledge. But even if their return history was known; we can't know how they will do in the future. In my opinion AAII is only good for the entertainment value. Generational wealth? That pretty much excludes bonds and low interest saving accounts. So 100% low cost equity index funds for a lifetime. Any other approach is like buying lottery tickets - it only works for the lucky.

Mark S from OH posted over 1 year ago:

John, your post made me curious - I went back and looked at the shadow stock portfolio, starting with the year 2000, and compared performance with investing $10,000 in VFINX (Vanguard S&P 500) in the initial year and letting it ride. The first three years were incredibly successful for the shadow stock portfolio. For 2003, you would still be ahead, but the difference was much smaller. Any year after 2003, VFINX has performed better than the shadow stock portfolio.