Staying in the Market

Comments on “The Importance of Filtering Out the Urge to Trade,” an interview with Bob Pisani, in the January 2023 AAII Journal:

The big takeaway is: “The one overwhelming thing that professional traders did to protect themselves was to know when to limit losses and walk away.” When the talking heads are saying “bubble,” you know it’s coming, and you have a year to get ready. Talk about recovery is starting, so I have a year to deploy cash. I’m not timing the market—I am timing the behavior of people in the market.
—David P. from Florida

Excellent advice about staying in the market, come what may. We lowly individual stock pickers have an enormous advantage over professional money managers. As long as the company is solid, I can ride out the storm and reap the rewards from its overall long-term gains.
—Robert A. from North Carolina

Level3 Defensive Assets

Comments on “Level3 Withdrawal Strategy Goes Into Defensive Mode,” by Charles Rotblut, CFA, in the January 2023 AAII Journal:

Running the Level3 withdrawal strategy using historical data starting in 1872, I discovered that the portfolio’s survival is improved by reducing defensive assets. In fact, investing in 100% equity leads to the least number of failures historically (retirement portfolio not surviving 30 years). Volatility mitigation (diversification into bonds) is very expensive.
—John L. from New Jersey

John, volatility mitigation is what lets people sleep at night. Turning off the dividend reinvestment of your exchange-traded funds (ETFs) or mutual funds and owning 20% bonds paying 4% can go a long way to having enough income, even in bad years.
—Dave G. from Texas

Inflation Risk

Comments on “Learning to Manage the Myriad Risks in Your Portfolio,” by John Deysher, CFA, in the January 2023 AAII Journal:

Why isn’t inflation a risk for fixed income? The recent inflation spike and the Federal Reserve raising rates has negatively impacted long-term bonds.
—John L. from New Jersey

John Deysher responds:
John, yes, inflation is a risk for fixed income. Typically, higher inflation causes interest rates to rise and fixed-income prices to fall. Conversely, lower inflation normally causes interest rates to fall and fixed-income prices to rise.

AAII Stock Screen Favorites

Comments on “2022 Review of AAII Stock Screens: Outperforming During a Bear Market Year,” by Matt Markowski, in the January 2023 AAII Journal:

I prefer to concentrate only on Foolish Small Cap 8, Foolish Small Cap 8 Revised, O’Shaughnessy Tiny Titans, Graham Enterprising Investor Revised, O’Shaughnessy Growth II and O’Shaughnessy Small Cap Growth & Value.
—Prakash J. from Mumbai