THE AAII JOURNAL JULY 2019 ISSUE

COVER ARTICLE

Why Contrarian Investors Should Treat Falling Knives With Skepticism

There are two key traits that every contrarian needs: skepticism and patience. Here’s what to consider before you rush to invest in companies that have fallen from grace.

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Features

in Financial Planning,Fraud

Avoid Becoming a Victim of Investment Schemes

By H. Kent Baker, Vesa Puttonen

The creative imaginations of con artists permit almost limitless ways to swindle investors. Your best line of defense is education and awareness.

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in Asset Allocation,From the Archives

Basic Truths About Asset Allocation: A Consensus View Among the Experts

By William Reichenstein

This classic article from the October 1996 AAII Journal offers up general asset allocation guidelines for a “typical” investor.

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in Bonds,Interest Rates

Challenge Your Perspective on Bonds

By Hildy Richelson, Stan Richelson

A look at an unconventional bond strategy that focuses on cash flow and is designed to reduce risk, taxes, fees and bad timing.

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in Small Cap Value Investing,AAII Model Portfolios

May’s Volatility Leads to More Choices for Shadow Stock Portfolio

By John Bajkowski

After conducting the quarterly review of the Model Shadow Stock Portfolio in early June, two stocks were removed from the portfolio and one new stock was purchased.

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in Technical Analysis

Moving Average Convergence/Divergence (MACD): A Combo Indicator

By Wayne A. Thorp

The MACD technical indicator shows the relationship between two moving averages and can help identify when declining momentum may be signaling an upcoming price reversal.

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Notes & Opinions

in Editor's Note,Fraud

I Have Personally Been a Victim of Fraud

By Charles Rotblut

This month’s issue discusses investment scams; the timing is ironic because recently my credit card’s information was stolen.

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in Dispatches,Earnings

Earnings Surprise Studies Show Historical Outperformance

By AAII Staff

A survey of research on the anomaly called post-earnings announcement drift (PEAD) shows that strategies based on earnings surprises have provided abnormally high returns.

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in Dispatches

Combating Medicare Advantage Plan Overpayments

By Anine Sus

A study looking at the difference in spending between those who switch to Medicare Advantage plans and those who stay in traditional Medicare plans found that those who switched spent less than those who did not.

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in Dispatches

Liquidity and Size Determine Dividend Policy

By AAII Staff

A firm’s size and liquidity were seen as the only characteristics that impact dividend policy, according to a study.

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in Dispatches

Shareholders Vote More When Their Ownership Stake Is Higher

By AAII Staff

The higher their ownership stake is in a firm, the more likely it is that shareholders will participate in proxy votes.

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in Letters to the Editor

Letters

By AAII Staff

Members chime in on RESA concerns, Social Security and health care when retiring early, the value of Level3 investing, and stock buybacks from a long-term investor perspective.

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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.