As founder of AAII, James Cloonan has had a regular voice in the AAII Journal, starting with Volume I Issue 1 in 1978. Beginning in March of 1980, his thoughts ran in a regular column called A Matter of Opinion (MOO for short in-house).

Here, Jim highlights and comments on significant past columns, as well as articles written in the AAII Journal by others that were groundbreaking for their time.

1979

“The Position of the Individual Investor”

The March/April issue contained the first article describing the advantages and disadvantages of the individual investor versus the institutional investor. Things have changed since then (lower commissions, lower bid/ask spreads) and given the individual even more advantage.

1980

“A Look at Put Options”

In December, I wrote an extensive review of stock option strategies, establishing the relationship of stocks to calls and puts in the equation S = C – P (stock is equal to being long a call and short a put with equal exercise price and expiration date). Problems with transaction costs were emphasized.

1981

“A Lifetime Strategy for Investing in Common Stocks”

The famous one-day collapse on January 7 occurred, but the market recovered quickly and the 1981 Tax Relief Act brought the most dramatic tax reduction in a long time.

In the November and December AAII Journals, a new two-part series introduced a strategic plan for individual investors to use in the management of a common stock portfolio. It later became a continuously updated booklet as “A Lifetime Strategy for Investing” and is still sent to new members today.

In the December issue, we thanked and listed our then 180 lifetime members.

1982

“Points of View: Rex Sinquefield”

In the September AAII Journal, an article by Rex A. Sinquefield presented evidence of market inefficiency that showed the superiority of small-cap stocks. Sinquefeld was the co-author of the original “Stocks, Bonds, Bills and Inflation” performance report.

1983

A Matter of Opinion: “When Things Get Tough”

In the January issue, I emphasized my belief that what we did in booming markets had a more significant impact on long-term success than what we did in down markets. When we don’t pay attention and still make 20%, we don’t worry about the 28% we could have made.

A Matter of Opinion: “Shadow Stocks…”

In February, we started our long-term emphasis on small value stocks and coined the term “shadow stocks” to signify stocks that are relatively small and not well researched by professional analysts—out of the Wall Street spotlight.

“Survey of Investment Attitudes and Practices: A Preliminary Summary of Results”

In the April AAII Journal, we reported on our first survey of member’s market views and holdings.

“A New Psychological Perspective on Investor Decision Making” by Harvey Pines

In the September issue of the AAII Journal, psychology professor Harvey Pines discussed behavioral finance and the groundbreaking work of Daniel Kahneman & Amos Tversky. This was before behavioral finance had become well-known.

1984

“Price-Sales Ratios: A New Tool for Measuring Stock Popularity” by Kenneth L. Fisher

In the June issue, Ken Fisher introduced the price-to-sales ratio and its importance in stock selection.

A Matter of Opinion: “Executive Compensation: A Prize in the Corporate Race”

In the September issue, I provided a partial justification for the moderate overpayment to corporate executives. Since then, the overpayment has become ridiculous and is getting worse.

1985

“An Individual Investor’s Guide to Choosing a Discount Broker” by Mark D. Coler

In the January issue, we began evaluating discount brokers and their commissions. By this time, discount brokers were charging about one-third as much as full-service brokers, and commissions were dropping.

“Shadow Stocks and Low P/E Screens: How We Did It” by John Markese

We also began providing a list of stocks that met our current definition of Shadow Stock in the January issue. There were 440 stocks qualifying at the time and we began listing these stocks and looking at all their characteristics on a regular basis.

“Points of View: Peter Lynch”

In the September AAII Journal, Fidelity Magellan portfolio manager Peter Lynch described his approach to stock selection and discussed the problems of managing a $2.8 billion fund.

1986

A Matter of Opinion: “Make Hay While It’s Sunny”

In the March AAII Journal, I revisited my emphasis on paying extra attention in bull markets. My motto is “Make hay while the sun shines,” as opposed to “When things get tough the tough get going.”

1987

“Points of View: John C. Bogle”

In January, John Bogle first detailed for AAII his philosophy on index funds.

A Matter of Opinion: “If You Want to Do It Yourself” and “The Guidelines for the Practical Portfolio”

In February and March, I began discussion of various strategies for choosing Shadow Stocks and various screens that might be used.

On Monday, October 19, we had the 1987 crash followed by investigations, research and changes in regulations.

1988

A Matter of Opinion: “Individual Investors Win a Few, Lose a Few, Tie a Few”

In August, I reviewed the volatility limits imposed by the NYSE and Chicago Mercantile Exchange that would trigger market closings.

Matter of Opinion: “Do Investors Really Need the New ‘Wrap’ Accounts?” and “Some Thoughts on the Brokerage Industry”

In September and November, I discussed the possibility of imposing a fiduciary rule on brokers and how this would lead to what I coined as “wrap fees,” which included advice or management and commissions. The idea would put the broker and client objectives on the same track. However, initial experiments were looking for a fee of 2½% to 3%, which would ensure poor returns. It is interesting that we are currently facing this scenario again because regulations, previously avoided by extensive lobbying, came from a different source and are only related to retirement accounts. Wrap fees are being discussed at 1% to 1½%, which is lower but still too high.

1989

A Matter of Opinion: “Reflections on the Journal’s 10th Anniversary”

In January, we celebrated the 10th anniversary issue of the AAII Journal with a look back and a look forward.

A Matter of Opinion: “Reflections on Reaching the Market’s Pre-Crash High”

In September, the S&P 500 index closed above its pre-crash high. It had gone from 340 down to 230 and was now back to 354. I discussed the necessity of a long-term view in the October AAII Journal.

1990

A Matter of Opinion: “Settlement System Changes and the Impact on Individuals”

Settlement time for stock transactions was changed from five days to three days and the industry changed from stock certificates to book-entry ownership. I discussed the impact on individuals in the November issue. Now, we have two-day settlement.

1991

A Matter of Opinion: “Electronic Shares and Roll-Ups: Some Past Opinions Revisited”

In the January issue, I condemned the practice of “roll ups,” where managing partners of real estate partnerships would con limited partners into approving mergers where the managing partners would establish a better position for themselves.

A Matter of Opinion: “‘Payment for Order Flow’ Is No Deal for Individual Investors”

In the March issue, I discussed “payment for order flow,” whereby brokers would pay to get customer orders placed through them. While it didn’t necessarily hurt individual investors, it could hurt and there was no indication that it could help.

A Matter of Opinion: “The ‘Investors’ Bill of Rights’ Is a Good Reminder to All”

In the May issue, I discussed how AAII worked with the National Futures Association to develop an “Investors’ Bill of Rights.”

A Matter of Opinion: “Reflections on the Soviet Collapse: The Failure of Socialism”

In the October issue, I discussed the ongoing collapse of the USSR and the differences among economic systems and political systems.

1992

“Equity vs. Fixed-Income Return Patterns Since 1802” by Jeremy J. Siegel

In the June Journal, Jeremy Siegel shared his research findings that two years later would become his popular book “Stocks for the Long Run.” It showed the superiority of stocks all the way back to 1802.

A Matter of Opinion: “Individual Investors and Direct Stock Ownership”

In the August issue, I discussed The Economist’s prediction that by 2003 there would be no equities owned by individual investors. I thought the notion that all equities would be held by institutions, with individuals holding only mutual funds, was ridiculous.

A Matter of Opinion: “The Bad News Is Beta; the Good News Is Book Value, Size”

In the September issue, I covered the extraordinary work by professors Eugene Fama and Kenneth French showing how small-capitalization stocks and low price-to-book stocks excelled even after adjusting for risk.

A Matter of Opinion: “Goodbye Gold: It’s Now Just Another Commodity”

In the October issue, I took the position that gold had become just another commodity and no longer would be an alternative currency.

1993

“An Individual Investor’s Guide to Discount Brokerage Firms” by the AAII Staff

AAII formalized regular coverage of discount brokers’ fees and services with our first annual guide in January. Commissions continue to drop and now average less than $50 a transaction.

A Matter of Opinion: “Thinly Traded Stocks: Putting a Practical Approach to the Test” and “Practical Considerations for a Special Small-Cap Portfolio”

Also in the January issue, I introduced what was then called the Beginner’s Portfolio and later came to be called the Individual Investor’s Shadow Stock Portfolio (now the Model Shadow Stock Portfolio). It became a real portfolio with specific rules governing transactions.

The complete rules for choosing stocks and managing the portfolio were formalized in the March issue.

1994

A Matter of Opinion: “The Beginner’s Portfolio: A Performance Review”

Regular coverage of The Beginner’s Portfolio results began in March. The portfolio had a total return of 32.3% for its first year.

1995

A Matter of Opinion: “A Closer Look at the Beginner’s Portfolio: Interesting Side Benefits”

In July, the impact of taxes on the Beginner’s Portfolio was discussed. The portfolio rules will lead to almost all gains being long term.

A Matter of Opinion: “A Friendly Reminder From the Experts: Don’t Try to Time the Market”

In the September issue, market timing was discussed and it was concluded that there was little evidence that any effort to time the market has been successful over the long run. The negative impact of getting out of the market too soon when predicting a downturn was noted as becoming a serious threat to long-term portfolio success.

1996

A Matter of Opinion: “A Question of Style: Categorizing the Various Investment Approaches,” “A Look at Style: The Characteristics of Quantitative Approaches” and “Quantitative Measures and What Really Works Within a Stock Portfolio”

In the September, October and November issues, I reviewed the basic styles of investment and the quantitative approaches used within the various styles.

1997

A Matter of Opinion: “Neglected Stocks and Small Caps Still Make Sense for Individuals”

In the April issue, I examined the various criticisms of the small-cap/value approach and found that the criticisms were not backed up by historical results.

A Matter of Opinion: “The Advantages of the Do-It-Yourself Approach to Investing in Stocks”

In the May issue, I summarized the reasons I believe the disciplined investor can outperform most mutual funds and the market.

A Matter of Opinion: “Why Investors Tend to Trade Too Much—And What to Do About It”

In the July issue, I discussed the evidence that individuals trade too much. When making portfolio changes it appears the stocks they sell do better than the replacements. There is a tendency to sell winners and hold losers, which in addition to being a poor investment approach creates the worst aftertax results.

1998

A Matter of Opinion: “Some Words of Caution for Investors in High-Tech Speculative Stocks”

In the July issue, I suggested extreme caution with technology stocks that were not as yet producing positive earnings.

A Matter of Opinion: “Increasing Chance of Success Based on Election-Year Cycle”

In the November issue, I examined the election cycle with the average returns in each year of the cycle.

1999

A Matter of Opinion: “The AAII Beginner’s Portfolio—1999 Review”

In the July issue, I indicated that the Beginner’s Portfolio had fallen behind the S&P 500 index cumulatively for the first time and was falling behind even more in early 1999. I pointed out that four years was as long as large stocks had ever outperformed small caps and that this could indicate a small-cap re-emergence in late 1999.

2000

A Matter of Opinion: “The Election Cycle and Next Year’s Stock Market”

In January issue, I presented some additional material on the election cycle, providing some insights into the effects on the fourth year of the presidential election cycle.

2001

A Matter of Opinion: “The AAII Beginner’s Portfolio: An Annual Performance Review”

In the August issue, I discussed the impact that switching to the decimal system for stock pricing might have on investment returns for the individual investor.

2002

A Matter of Opinion: “Evaluating the Research on Historical Performance”

In the May issue, I discussed the factors that will influence the accuracy of historical research in estimating the future and provided a process for evaluating historical research.

A Matter of Opinion: “Introducing Our New Service: AAII’s Stock Superstars Report”

In the August issue of the AAII Journal, I introduced AAII’s complete portfolio management system for stock investing, called SSR for short.

2003

A Matter of Opinion: “New From AAII: Specific Guidance on Stock and Fund Selection”

In the September AAII Journal, I introduced the Mutual Fund Portfolio. It offered an approach for individual investors who didn’t want to use individual stocks for all or a part of their portfolios.

After 2003, Jim’s column was dedicated to coverage of the Model Shadow Stock and Model Fund Portfolios and took the name Model Portfolios. Many of these columns are also significant, as he continued to discuss the issues that come up for the do-it-yourself investor over the years.

Complete AAII Journal archives going back to 1996 are available online. Go the AAII Journal page, and select the issue date from the Past Journal Issues dropdown box.