THE AAII JOURNAL OCTOBER 2018 ISSUE

COVER ARTICLE

Getting the Same Return With Less Risk: The Power of Factors

By Charles Rotblut, Larry Swedroe

Using factors to diversify a portfolio can pull in extreme annual returns without lowering long-term expected returns.

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Features

in First Cut Stocks

Companies Surpassing Industry Norms

By John Bajkowski

These 15 stocks are cheaper than their peers, yet are more profitable and have lower levels of proportionate debt.

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in Behavioral Finance,From the Archives

Learning From the Mistakes Made by Legendary Investors

By Michael Batnick

Most of the errors made by the best-known investors are attributable to behavioral follies, including 10 common mistakes highlighted here.

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in Small Cap Value Investing,AAII Model Portfolios

Model Shadow Stock Portfolio: Why Quarterly Reviews Still Make Sense

By John Bajkowski

The higher costs associated with the purchase and sale of less actively traded stocks make it more profitable to transact less frequently.

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in Portfolio Strategies

Simplified Expectations for Normal Investors

By Brian Portnoy

Focusing on four foundational elements—growth, pain, fit and flexibility—can help to establish reasonable expectations about potential outcomes.

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in AAII InvestoGraphic

Stock Order Types

By AAII Staff

A key to understanding the options to choose from when placing an order to buy or sell a stock or an ETF.

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in Financial Planning,Estate Planning

Using Beneficiary-Directed Trusts to Protect Your Heirs

By John Horn, Dera Johnsen-Tracy

These trusts can protect a beneficiary from losing inherited trust assets to creditors, claimants and divorcing spouses.

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in Financial Planning

Well-Built 529 Plans Can Be a Great Option for College Savings

By Karen Wallace

529 plans allow investment earnings to compound and withdrawals to be taken for qualified college expenses on a tax-free basis.

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Notes & Opinions

in Editor's Note

Two articles this month tackle the issue of how to manage a portfolio from very different angles—one uses factors in the context of a diversified portfolio and the second takes a bigger picture approach.

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in Dispatches,Active Investing

Diverging Opinions on Active Management

A review of the academic research on active management found that conventional wisdom is too negative on the value created by fund manager decisions.

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in Dispatches

Five-Cent Spread Program on Small-Cap Stocks Ends

The SEC terminated its small-cap stock pilot program mandating minimum quotations and trading increments for stocks of certain smaller companies.

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in Dispatches

Matching Contributions May Be Used for Student Loans

The IRS approved one company's request to amend its 401(k) program to offer a student loan benefit program.

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in Dispatches

Mutual Funds Show Bias Toward Previous Winners

Whether a stock was sold for a gain or a loss has a significant impact on an active mutual fund manager’s decision to repurchase the stock.

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in Letters to the Editor

Letters

By AAII Staff

Members comment on vice and virtue stocks, ETFs vs. mutual funds, choosing an adviser and more.

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Expand to Read More

The AAII Journal, a leading investment publication, provides readers with a continuing stream of insights and ideas that focus on how you can improve your investment results. Unlike many investment magazines, ours is completely unbiased, educational and contains no advertising.

AAII has published this prestigious financial journal every month for more than 40 years. Members receive it for free and have access to thousands of evergreen articles online so they can reference information and strategies for previous market situations with a few clicks of the mouse.

Our stock journal helps individual investors manage their portfolios, build sound investment strategies and navigate all types of financial conditions. Articles range from optimizing target-date fund portfolios to retirement account withdrawal strategies and analysis on robo-advisor performance.

The magazine also has recurring features our members find invaluable. Every quarter, we dissect our model stock portfolio and provide updates to its holdings and performance. This analysis helps individual investors manage small-cap value investments.

We also offer an annual tax guide in our financial magazine. This detailed investment magazine issue covers many details that individual investors need to consider when filing their taxes. It keeps readers updated on any recent changes to tax laws and provisions and provides a handy guide to tax implications of personal investments to cut through any tax filing confusion.

Another annual feature covers ETFs (exchange-traded funds) and mutual funds. This edition helps individual investors understand what to look for when investing in funds. Online, we accompany those articles with sortable tables so that members have an interactive component to their investment research. This helps individual investors plan their portfolios and invest with confidence.

Other regular features in the AAII Journal include financial planning, stock ideas and investor professor. Financial planning articles walk investors through the process and difficulties of crafting strategies for creating wealth regardless of age. They also cover difficult situations, such as estate planning, and helpful advice for getting kids and grandchildren interested in investing.

Stock ideas, as the name implies, give readers a peek at new screens and the stocks that pass them. This part of our investing magazine helps readers identify new opportunities in the markets, flagged by a mix of quantitative and qualitative analysis. Because we all, as investors, need ideas, this remains one of the most popular categories.

Investor professor helps readers invest with knowledge and confidence. It deals with contingencies, such as “What happens to your investment if a company goes bankrupt?” and gives actionable advice on what resources you should use when considering a new broker. Our readers enjoy this section because of its practicality and enduring tips.

Frequent internal contributors include president John Bajkowski; AAII Journal editor and vice president Charles Rotblut; Stock Superstars Report lead analyst Wayne A. Thorp; and Dividend Investing editor Derek Hageman. Together, these internal contributors have nearly a century of market wisdom and research, which they share with clear and concise prose to help individual investors improve their knowledge and portfolios.

The AAII Journal also includes frequent guest contributions from the financial and economic space. Articles from outside industry experts differentiate our financial magazine from others and provide additional points of view for our readers. Previous guest authors have included John C. Bogle, founder of Vanguard; Jay Clayton, chairman of the U.S. Securities and Exchange Commission; Charles Schwab; and Nobel laureate and Yale professor Robert Shiller.

We hope you’ll enjoy our articles and, if you’re not a member, consider joining the Association so you can get our prestigious magazine sent to your door every month.