Top Funds Performance

Lessons From Keynes’ Investing Style

Comments posted to “John Maynard Keynes as an Investor: Timeless Lessons and Principles,” by John Wasik, in the March 2014 AAII Journal.

Even after 1928, it does not sound like Keynes was a passive investor, from the perspective that he selected the companies he bought based on a specific set of criteria. That’s quite different from buying an index fund.
— Neil Hoffmann from Pennsylvania

Missing Parameters in “What Works” Screen

Comment posted to “Finding Value and Financial Strength Based on ‘What Works on Wall Street,’” by John Bajkowski, in the March 2014 AAII Journal.

I am surprised at the selection criteria. I have the fourth edition of “What Works on Wall Street.” The AAII article does not have price-to-book-value parameter, which the book does have. Did the developers miss it? It can’t be deliberate.

But the most important elimination is momentum. After all, all the value parameters are sometimes low because they deserve to be low—because of poor fundamentals. Precisely for that reason, value and momentum factors are combined. I quote page 583 of the book: “By marrying the two and buying the 25 stocks from decile 1 of Value Factor Two with the best six-month price appreciation, average annual returns jump to an eye-popping 21.19 percent, turning $10,000 into $69,098,587 between 1964 and 2009.”  
—Madhu Kapadia from New Jersey

Pure ETF Model Portfolio

Comment posted to “Model Fund Portfolio: Replacing a Closed Fund,” by James B. Cloonan, in the March 2014 AAII Journal.

Is the pure ETF portfolio reviewed and changes made if needed, just as the mutual fund portfolio is?
—Bill Dooley from Louisiana

Restrict Bid and Ask Prices

Comment posted to “Panel Advises Against Mandated Spreads for Small-Cap Stocks,” by AAII staff, in the March 2014 AAII Journal.

I would like to see bid prices and ask prices restricted to $0.01 increments. It is not unusual to place a limit order—let’s say a buy order at $10.00—and not have the order filled because someone else placed a buy order at $10.0001 and got the trade. This clearly works against the retail investor.
—Paul Weiss from South Carolina

Rolling Over a 401(k) to an IRA

Comment posted to “Considerations When Rolling Over a 401(k) to an IRA,” by AAII staff, in the March 2014 AAII Journal.

Two additional points:  Your 401(k) may give you access to institutional funds with extremely low expenses that would not be available in an IRA. Also, some 401(k) plans allow a partial rollover, which means that you can keep some of your funds in the plan to take advantage of lower expenses while rolling over the balance for more flexiblility in IRA options.
—Joseph Velson from Illinois