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Monday, September 15, 2014

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3 Tips for Being Financially Prepared

September is National Preparedness Month, a great time to review whether or not you're prepared should a financial disaster strike, which often accompanies other disasters like floods, storms or accidents. In honor of this month's theme, here are three ways to be prepared to weather any storm in life.

  • Shore up your emergency fund. Experts recommend saving enough to cover at least three months expenses, in a separate savings account, to get you through times of unexpected income loss – you should plan for more if you own your home or if you work in a tight job market. If you're not there yet, keep working to bulk up that fund.
  • Protect yourself from scammers. Even if you know better than to click on suspicious links in emails, there are still scams out there that can get the best of us. Educate yourself on what to look for and how to protect yourself.
  • Review your insurance coverage. As laws and your lifestyle change, it's important to make sure your insurance protection keeps pace.
    • Health insurance: When it comes to health insurance, many people choose high deductible health plans that include an HSA (health savings account). These type of plans carry a lower insurance premium, but if you have a medical emergency, you can very quickly owe a couple thousand dollars – contributing the maximum pre-tax dollars to your HSA can help ease such a burden, but you may want to consider putting away additional savings in another account, just in case. Regardless of your plan, be prepared by knowing how your insurance works and keeping at least enough set aside to cover a trip to the doctor for an unexpected illness or injury.
    • Property insurance: Minimum coverage for your car or your home can work at the beginning, but as soon as you can afford better coverage, consider upgrading, especially if you live or work in an area where your car or home could easily be broken into or damaged. Check your policies to make sure you're also covered for life's little disasters, like fender-benders, storm damage or theft.

A little preparation can go a long way in keeping an incident from turning into a full-fledged disaster. Be prepared!

Visit for more money-saving tools and tips.

                                                          ©2014 American Institute of CPAs

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Friday, September 12, 2014

Seeking Alpha - AAII Sentiment Survey: Optimism Declines, But Stays Above Average

AAII Sentiment Survey: Optimism Declines, But Stays Above Average

Yesterday, 12:31 PM ET | by AAII


  • Investor sentiment shows a reversion to the mean.
  • Optimism declined but still remains above average.
  • Pessimism, however, remains below average.

Optimism among individual investors about the short-term direction of the market declined for a second week in the latest AAII Sentiment Survey. Even with the pullback, bullish sentiment is above average for the fifth consecutive week, the longest such streak since February 13 through March 13, 2014.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.3 percentage points to 40.4%. The historical average is 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.7 percentage points to 33.0%. The historical average is 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose by 2.6 points to 26.6%. Even with the increase, pessimism is below its historical average of 30.5% for the 42nd time in the past 48 weeks.

Bullish sentiment has declined by a cumulative 11.5 percentage points since nearly reaching 52% two weeks ago. The pullback represents a reversion to the mean following the unusually high level of optimism (bullish sentiment has only exceeded 50% four times since February 2011). This week's reading is also likely somewhat influenced by the S&P 500's recent inability to stay above 2,000. It is worth noting that in the backdrop of the recent decline in bullish sentiment, pessimism remains below average.

Keeping many individual investors optimistic about the short-term direction of stock prices is the S&P 500's overall upward momentum, earnings growth, sustained economic expansion and the Federal Reserve's tapering of bond purchases. Causing other AAII members to be pessimistic are prevailing valuations, the failure of the S&P 500 to set new highs, events in the Middle East and Ukraine, the pace of economic growth and Washington politics.

This week's special question asked AAII members how the Federal Reserve's ongoing tapering of bond purchases is impacting their six-month outlook for stock prices. Slightly more than half of all respondents (51%) said the tapering is not having any impact. Several of them (accounting for about 10% of all respondents) believe the market has already priced in the gradual ending of bond purchases by the central bank. About 17% thought the ending of quantitative easing is a negative or could lead to either additional volatility or a correction. An additional 8% said the ending of bond purchases and potential rise in interest rates is causing them to become more cautious or view stocks less favorably. At the other end of the spectrum, six percent of respondents view the tapering as a positive for the stock market.

Here is a sampling of the responses:

· "Old news, it should not affect the stock market."

· "Not at all. I am looking forward to the end of tapering and the gradual increase in interest rates to get us back to a normal state."

· "The ongoing tapering has already been figured in by the market and will have no impact on my forecast whatsoever."

· "Once the reality of higher rates sets in, it will increase volatility and either flatten or lower stock prices."

· "I find it generally encouraging. The economy must be getting better for the Fed to taper."

This week's AAII Sentiment Survey:

  • · Bullish: 40.4%, down 4.3 percentage points
  • · Neutral: 33.0%, up 1.7 percentage points
  • · Bearish: 26.6%, up 2.6 percentage points

Historical averages:

· Bullish: 39.0%

· Neutral: 30.5%

· Bearish: 30.5%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online here.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

  • Sep 11 01:24 PM
    How does this information help us with an investment decision? It doesn't. It has no relevance. 

    What is more important is the current level of risk aversion among investors. And I can quantify that from the price movement of S&P500 and Nasdaq. I do not need a survey.
  • Tollsforthee
    Sep 11 03:55 PM
    I beg to differ. If you're trading options, for instance, this is a telling indicator as to which options will have the most value over the next 4-6 weeks.

    So if you don't like the information, I suggest you simply skip the article and move to the next.
  • pagreen1966
    Sep 12 07:06 AM
    Has a great deal of relevance. It is counter-intuitive. High level of bulls means that folk are fully invested and there are no more buyers around which is worrying.

    The reverse also applies.

    The market is demanding a significant pullback. Whether it happens next month or next year is irrelevant. It WILL happen!
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