AAII Journal

The AAII Journal is a prominent investment publication that offers valuable insights and strategies aimed at enhancing your investment performance. What sets us apart from other investment magazines is our commitment to being completely impartial, educational, and free from advertisements. For over 40 years, AAII has consistently released this esteemed financial journal on a monthly basis. Members enjoy complimentary access to the journal and can also tap into a vast library of timeless articles online. This allows them to easily find information and strategies related to past market conditions with just a few clicks.

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Articles

Using Asset Allocation for Protection and Growth

1 week ago | aaii.com | Charles Rotblut

David Darst is a managing director and chief investment strategist of Morgan Stanley Smith Barney. He is also the author of “The Little Book That Saves Your Assets: What the Rich Do to Stay Wealthy in Up and Down Markets” (John Wiley & Sons, 2008). I met David at the CFA Institute Conference in May and spoke with him shortly afterward about asset allocation. —Charles Rotblut, CFA Charles Rotblut (CR): Can you explain why investors need asset allocation?
Growing Wealth While Adjusting for Behavioral Tendencies

1 week ago | aaii.com | Charles Rotblut

The statistics are very clear: Maintaining a large allocation to stocks has allowed investors to build considerable wealth. Behavioral finance is also very clear: The typical human has emotional and cognitive biases that significantly influence their decisions. Few people give investors a framework for navigating this disparity like William “Bill” Bernstein. It is why his books are on many people’s lists of recommended reading for investors.
Yes, You Can Rethink Your Retirement Decisions

2 weeks ago | aaii.com | Charles Rotblut

When it comes to big decisions, it's not unusual for someone to change their mind afterward. Sometimes, they realize the first decision was a mistake. Other times, they realize that option B would have been the better choice. Determining when to file for Social Security benefits is a big decision. File early and you'll leave money on the table for you and/or your spouse if you and/or they live past the break-even age.
It’s a New World for New Investors

2 weeks ago | aaii.com | Charles Rotblut

Massive moves in shares of GameStop Corp. (GME) continue to make financial news headlines. Reddit’s WallStreetBets forum along with Robinhood and individual investors have all been cited for driving the volatility. There is often more to the story than the sound bites imply. In the case of GameStop, there are likely large trading firms engaging on both sides of the trades. Trading firms utilize bots to gauge what’s discussed on social media and the tone of the conversations.
Tech-Related Stocks and Interest Rates Drive Allocation Model Returns

2 weeks ago | aaii.com | Charles Rotblut

A cursory glance at the performance of the individual mutual funds used to track the AAII Asset Allocation Models reveals the story of what happened during the first quarter of 2024. The big drivers of returns were the Magnificent Seven technology-related stocks and falling expectations about the prospects for several interest rate cuts. Concentration within the S&P 500 index—and thereby the Vanguard 500 Index Admiral fund (VFIAX)—increased throughout the quarter.
Don't Mistake MicroStrategy's 10% Preferred Yield for Pure Bitcoin Exposure

2 weeks ago | aaii.com | Charles Rotblut

Large bitcoin holder MicroStrategy Inc. (MSTR) launched its third preferred stock this week. The 10.00% Series A Perpetual Stride Preferred Stock (STRD) offers investors a 10% dividend yield. That 10% yield may sound juicy, but it could leave uninformed investors with a sour taste in their mouth. Let’s start with the basics. MicroStrategy (now called Strategy) provides business analytics software.
Returns for Asset Class Groups: Large-Cap Stocks Rebound Back Into the Lead

2 weeks ago | aaii.com | Charles Rotblut

Last year's rebound is very evident in the updated “heat map” displayed below (Figure 1). This heat map shows the calendar-year returns for the seven asset class groups that comprise the AAII Asset Allocation Models. Each asset class group is ranked by its calendar-year performance in descending order from left to right. The groups are color-coded so you can track their relative performance over time. Figure 1.
Identifying Questionable Accounting Practices

2 weeks ago | aaii.com | Charles Rotblut

Having lived in Houston, Texas, the Enron scandal remains on my mind. My father-in-law held Enron bonds and a friend of mine who worked there lost his job the day the company closed. I interviewed with Enron for a job and—fortunately, in hindsight—I was not extended an offer of employment. While it was the biggest offender, Enron isn’t the only company to have committed accounting fraud or engaged in questionable accounting practices. Accounting issues can call a company’s numbers into question.
Editor's Note

2 weeks ago | aaii.com | Charles Rotblut

You have, no doubt, seen many ads about planning for retirement. Numerous companies and advisors are more than willing to help you build a retirement nest egg. Yet, saving for retirement is just one part of the process. There is also the decision of what to do with your portfolio at retirement. Conventional wisdom says an investor should increase his allocation to bonds when he retires; the assumption being that risk tolerance is lower later in life.
Editor's Note

2 weeks ago | aaii.com | Charles Rotblut

Asset allocation is a focus in this month’s issue, with three articles devoted to the subject. Why the emphasis? Because how you allocate assets in your portfolio directly determines both the likelihood of achieving your financial goals and the financial risk you take. Follow too conservative an allocation and you may run out of money in retirement. Take on too much risk and you may find your portfolio severely damaged during periods of market turbulence.