As some of you have already heard, AAII founder James Cloonan died in late November 2020. He was 89.

Jim’s influence on individual investors cannot be overstated. Since he started AAII in 1978, the organization has helped over two million people. At the time, he observed how difficult it was for individual investors to find unbiased information. We’re republishing an interview with him where he describes the situation then.

He was an early adopter of what the industry now refers to as “factor investing.” The Model Shadow Stock Portfolio was based on the concepts presented in Eugene Fama and Kenneth French’s seminal paper, “Common Risk Factors in the Returns on Stocks and Bonds” (Journal of Economics, February 1993). Shadow stocks are those whose valuations rank in the approximate cheapest decile and whose size ranks in the approximate smallest decile of all U.S. exchange-listed stocks. Portfolios of low-valuation and small-size stocks have been shown to outperform over the long term. (More about the portfolio, including its latest additions and rule changes can be found here.)

Another notable characteristic of Cloonan was his perception of risk. He eschewed the traditional practice of defining risk as price volatility. Rather, he defined risk as the likelihood of having a portfolio of lower value than one could reasonably expect based on their investment strategy. Under this definition, volatility only has a limited relationship to chance of loss in the long run, as Cloonan explained in his final book, “Investing at Level3” (AAII, 2016).

I asked AAII president John Bajkowski to write a remembrance of Jim. It appears on page 4. We’d also like to hear your memories. You can share them on the special tribute page we created for Cloonan at www.aaii.com/jimcloonan.

A special tribute webinar is scheduled for January 6. Registration and replays of the webinar (for those of you who missed it or are reading this note after the event) can be found at www.aaii.com/webinars.

Over the years, Cloonan was not afraid to evolve the organization, adapt to a changing environment and revise the way AAII fulfilled its mission of empowering individual investors. During his approximate four decades of involvement, AAII was early to embrace the use of computers and the internet for researching and analyzing investments. Seminars turned into conferences. New premium newsletters and services were launched so AAII could keep the cost of membership low while offering more to those who desired it. Model portfolio rules were revised as new research and information became available. All along, the primary goal of teaching individual investors to become better managers of their own assets never changed.

We will continue to fulfill Cloonan’s mission through programs of education, information and research. And, like Jim, we will continue to adapt and evolve AAII.

One of the changes we made last year involved how we connect with members. When the coronavirus pandemic canceled in-person events, we went virtual. We set up video cameras and started hosting live, interactive webinars. To learn about upcoming events and to see replays of past ones, go to www.aaii.com/webinars.

We’re also using video to convey key concepts and provide additional narrative. Last year, we added a new Learn & Plan section to our website. On it, you will find challenges—with accompanying videos—walking you through our new five-step Individual Investor Wealth-Building Process. You can find them at www.aaii.com/learnandplan. (I go into greater detail about why we made clearly defining your goals the first step here.)

There’s more. Many AAII members are taking advantage of our My Portfolio tool (built by individual investors for individual investors). We’ve rolled out new fund tools, including the ability to compare mutual funds and compare ETFs. Our new clubs just launched. These Facebook groups allow AAII members with similar interests to connect with each other regardless of where they live. (Look here to learn more about them.)

We’ve made the AAII Journal more mobile-friendly, so you can access it on the device of your preference. For those of you holding the printed magazine in your hands, I’ll point out that you don’t have to wait on the postal service to deliver the latest issue. The AAII Journal is updated approximately the first of every month at www.aaii.com/journal.

Suffice it to say, if you are not among the large number of individual investors visiting AAII.com each month, you’re missing out on many of the key benefits of AAII membership. So come visit us online! I think you’ll be glad that you did.

Wishing you prosperity and a happy new year,