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Letters to the Editor

Letters

Members comment on 2023 performance of AAII Stock Screens and offer tips to beginners. Plus, we announce the restarting of our weekly Educated Investor email.

by AAII Staff | February 2024

Note: We recently restarted our weekly Educated Investor email for AAII members. This free benefit highlights relevant content you may have overlooked as well as notable AAII events and discussions that we think may interest you. If you are not receiving this email on Wednesdays, please go to www.aaii.com/email and select AAII Educated Investor from the list of Newsletters and Updates.

Long-Term Planning

Comment on “A One-Page Wealth-Building Plan for Leaving an IRA Inheritance,” by Charles Rotblut, CFA, in the January 2024 AAII Journal:

To achieve any long-term level of success, planning is paramount. The challenge with planning is in the continuous effort needed to balance the product and the process. The one-page format provides a great starting point during reviews.
—N.E. from California

Advice for Beginners

Comments on “Asset Allocation Basics: How to Invest,” by Anine Sus, in the January 2024 AAII Journal:

After being invested for quite some time in stocks, my advice is to put 90% of your investment money into a low-cost S&P 500 index fund and keep 10% in cash or very short-term high-grade bonds. It is boring, but the results are better.
—Dietmar K. from Austria

Any new investor reading this article is demonstrating the first goal of being a successful investor—to obtain knowledge and understanding—and AAII is a wonderful place to obtain that. I have been a member for 15 years and read every AAII Journal over that time. I’ve obtained historical perspective and faith in long-term market trends. For a young investor, putting the time in now to develop that knowledge greatly increases your chance of having the lifestyle you desire in retirement.
—Thomas S. from Oregon

A Year in Review

Comment on “2023 Review of AAII Stock Screens: Outperforming a Narrow Market,” by John Bajkowski, in the January 2024 AAII Journal:

The year 2023 was atypical in many respects. A simple annual review may not tell us much about how the results developed. Discussing performance by quarter enables us to see how different screens react to external forces. Market fates are interconnected to external events more directly than in the past.
—Barry J. from Texas

Shadow Stock History

Comment on “Shadow Stocks Ride the Refreshing “Everything” Rally,” by John Bajkowski, in the January 2024 AAII Journal:

The Model Shadow Stock Portfolio performance appears to be very impressive, but outside of 2000 to 2008 when the portfolio really beat the market, returns have not been significantly better than the S&P 500 or the small-cap index. I don’t see ongoing proof of superior investment returns for the portfolio.
—John L. from New Jersey

Discussion

JOSEPH R from CA posted over 2 years ago:

The Shadow Stock selections originally were predicated on the theory that mutual fund managers and institutional investors would overlook tiny companies in the same business as big successful companies. That was abandoned and some other basis was invented. Used to be stocks new to the list would get a surge with AAII publication. Before the internet, one had Compuserve and few other means of beating USPS. Most members rethought about buying, adopting a buy on what experts dredged up to add to the list. And drop off the list. Troublesome is the pitch that it is outperforming where dates of study omit hasty and weighted downturns of the whole of the market. I believe it turned me off to hyperactive trading. I've lost money on some of those stocks over the years to join my WebVan's and similar losses. But I keep coming back to food stocks close to the farmer and enjoying the dividends. And every once in a while, I put on my futurist hat and buy tech stocks, made a bunch on an outfit that made GPS chips that was gobbled up. Some of the stocks I pick seem to be craved by bigger fish, water purification, refiners of raw materials, and companies that were at the edge of their narrow focus. I buy stocks to save people, Elon Musk for instance, and there are others that fall out of favor where I think I'm throwing a life preserver. Sure, it hasn't worked all the time, but I'm in it for the fun now, survival has been accomplished. I've never been hot about gambling and I really hate insurance companies. YMMV


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