THE AAII JOURNAL NOVEMBER 2019 ISSUE

COVER ARTICLE

How Big of a Concern Is the Inverted Yield Curve and Negative Interest Rates?

Inverted yield curves can precede a recession, and negative interest rates remove a traditional income source for risk-averse investors. Find out if you need to take action.

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Features

in AAII Stock Ideas,Investing Gurus

Adding a Twist to David Dreman’s Contrarian Approach

By John Bajkowski

Combining an earnings revision screen with Dreman’s basic approach highlights out-of-favor stocks with promise.

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in Portfolio Strategies

Benchmarking: The Art of the Science

By Craig Israelsen

There can be a serious disconnect between investors and the indexes they reference—which can lead to a great deal of benchmarking confusion.

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in Exchange-Traded Funds,Dividends

Comparing and Contrasting Dividend-Focused ETFs

By Derek J. Hageman

Deciding which dividend ETF to invest in depends on both the characteristics being sought and the willingness to look closely at the strategy a fund is designed to follow.

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in Stock Strategies

Myths and Truths About Quality

By Rupal Bhansali

To understand quality holistically and correctly, you need variant perceptions and unconventional frameworks that go beyond the typical clichés and checklists.

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in First Cut Stocks,Dividends

S&P 500 Stocks With High Payout Ratios

By Charles Rotblut

The 20 stocks that made this issue’s First Cut are among those with the current highest payout ratios in the S&P 500 index.

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in Retired Investor

Seniors—For Whom Are You Investing?

By Jonathan Pond

Retirees should consider having their investments reflect the age of whom that money is likely to be passed on to.

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in From the Archives

Ten Common Mistakes Made by Mutual Fund Investors

By Gerald W. Perritt

A pioneer in fund tracking explains how simple errors can lead to lower returns in this article from the April 1988 AAII Journal.

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in Asset Allocation,The Big Question,Interest Rates

Low Interest Rates Are Impacting Individual Investors’ Portfolio Allocations

By Charles Rotblut, Matthew Bajkowski, Ryan Reeh

A survey of AAII members brought out a range of opinions on where rates are headed and insights into what they are specifically doing about it.

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Notes & Opinions

in Editor's Note

Zeros Are Busting Out All Over

By Charles Rotblut

Zero commissions are sprouting. Zero fees are multiplying. And a feeling of having zero chance of getting a good yield without taking excessive risk is common.

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in Dispatches

Distinction Among Mutual Funds

By Matthew Bajkowski

Actively managed equity mutual funds with a low degree of portfolio overlap hold higher-returning stocks. This is true even when grouping funds based on investment style and stock category.

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in Dispatches

Financial Benefits From Mergers Are Often Overstated

By AAII Staff

An analysis by S&P Global Ratings found that companies overestimate the level of growth in earnings before interest, tax, depreciation and amortization and reduction in debt following a merger or leveraged buyout.

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in Dispatches

How Investors Should Choose Index Mutual Funds and ETFs

By Anine Sus

Using the lowest expense ratios as a method for choosing between an index mutual fund and an exchange-traded fund (ETF) is a helpful rule of thumb, but it does not always lead to higher returns for individual investors.

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in Dispatches

Older Investors Less Likely to Understand Sophisticated Securities

By AAII Staff

Wealthier households age 80 and older are more than 80% less likely than investors age 60–64 of moderate income to have better financial literacy scores and 82% less likely than younger investors of moderate income to show understanding of basic survey questions.

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in Letters to the Editor

Letters

By AAII Staff

Members comment on exchange-traded fund (ETF) yields and portfolios and how family health influences when to retire.

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in Member News

The Second Annual James B. Cloonan Lecture

By AAII Staff

On Tuesday, October 22, 2019, DePaul University’s department of finance hosted the second annual lecture in honor of AAII’s founder James B. Cloonan, Ph.D.

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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.