Last month, I participated in a panel discussion about meme stocks and the ethics of retail investing. One of the questions asked during the panel was whether investors should be held accountable for their own investment decisions.

My short answer was yes, they should be. The purpose of the financial markets is to provide price discovery and a mechanism for buying and selling. It is not designed to protect investors against losses.

(A fellow panelist pointed out fraud as an exception. I agree with her. Even with the various rules, regulations and laws in place, bad actors continue to rip off many people. Whenever possible, do your due diligence. If you feel pressured to act, grip your wallet tightly and walk away or abruptly hang up. Use an SIPC-member broker—see https://www.sipc.org/list-of-members—and ask as many questions as you need to feel comfortable.)

One thing no regulations will do, nor should they, is stop investors from making bad investment decisions. The investors who jumped on shares of GameStop Corp. (GME) and other meme stocks in late 2020 and early 2021 are responsible for their own actions. They heard the buzz, saw the stock price rising and hit the buy button without doing their homework. Did some get lucky and walk away with nice profits? Yes. Did far more incur losses they could have easily avoided? Absolutely.

Lost on most of these investors was the simple fact that they could have easily found a different sandbox to play in. There are over 5,000 U.S. exchange-listed stocks. The stocks receiving less attention are also those more likely to be mispriced. The long-term success of AAII’s Model Shadow Stock Portfolio comes from seeking profitable, cheaply valued stocks in sandboxes located away from the crowds. It is also strongly due to following a disciplined, rules-based approach. You can see John Bajkowski’s latest Shadow Stock update—and the new additions to the portfolio—here.

As far as meme stocks are concerned, The Wall Street Journal’s Spencer Jakab and I discuss the mania that occurred last year. We not only talk about some of the people and entities involved, but also about the contributing factors. And because our focus here at AAII is educating investors, I asked Jakab to share lessons investors should learn from the mania.

Speaking of learning, April is Financial Capability Month. While financial capability quizzes often touch on topics like compound interest and diversification, I’m focusing on another important topic: the decisions we Americans must make between the ages of 50 and 72.

I’ve long had concerns about people not being aware of the key dates they’ll cross during these years. There are several. The rewards for making the right decisions and the penalties for getting them wrong can have a lasting impact through the remainder of each person’s and their spouse’s lives.

Consider Medicare: Miss the seven-month window surrounding when you turn 65 for applying for Part B and a penalty will be assessed. Quoting directly from Medicare, “in most cases, you’ll have to pay this penalty each time you pay your premiums, for as long as you have Part B.” (Before signing up, I suggest you read Steve Vernon’s article “Health Insurance in Retirement: Medicare and Beyond” in the April 2019 AAII Journal. It provides a good overview of the options.)

When I sat down to write an article about the key retirement dates to be aware of, I counted 11. Those deadlines include being able to make additional catch-up contributions to retirement savings accounts (age 50), being eligible for full Social Security retirement benefits (age 66–67, depending on your birth date) and taking your first required minimum distribution (age 72, though the first RMD can be delayed until April 1 of the calendar year after you turn 72). 

Finally, an update on the paper market. Just as we were making our final edits to this issue, our printer sent an email saying, “paper suppliers have notified us they are implementing pricing surcharges in an effort to combat their rising costs of production.” We’re continuing to discuss options with our printer. One thing you can do to help is to switch from print to digital delivery by contacting Member Services either at members@aaii.com or 312-676-4307. Alternatively, you can go to My Account, scroll down to My Subscriptions and click “Opt Out” by AAII Journal to take advantage of digital delivery.

Wishing you prosperity,