So far this year this section has reviewed a book and a newsletter. To add variety I’ve decided to add a website review this month. The website is the Association of American Investors (www.aaii.com).
AAII is probably most known for its Sentiment Survey. AAII polls its over 160,000 members on a weekly basis via e-mail. Members are asked if they are bullish, neutral or bearish on the market. Extreme readings may have some contrarian predictability. An article titled “Is the AAII Sentiment Survey a Contrarian Indicator?” can be found here: http://goo.gl/JpGGbX
The website contains quite a lot of information along with numerous articles on investing, financial planning, technical analysis, stocks, bonds, funds, and other related subjects. These are written by a great variety of authors including professors and market practitioners.
Possibly the most valuable feature is the stock screens area. Here a member can read about 74 different screens. The screens are run every month and members have access to the list of companies that pass. More importantly, readers can read some background information about the screens themselves. Historical performance on each screen is also shown including year-to-date, 1-year, 5-year, and 10-year. In others words if you don’t have access to a more sophisticated screen and can’t be bothered or have the time to run various screens then this is a very good solution as AAII does all the work for you. Remember the Piotroski screen displayed in last month’s letter? Well according to AAII it was the best performing screen over 3-years and 5-years! Personally I do not use this so I cannot comment on its accuracy, however at $29 a year, it looks like a steal. My advice to anyone who decides to use the screens would be to understand what the screen is doing and make sure the output is based on correct data (eg. If low P/E is a criterion then a company with abnormal income may pop up on a screen when it shouldn’t). So if you see abnormal income then perhaps the quantitative screen made a mistake… Garbage in, garbage out…
