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Anyone Out There a Member of the American Association of Individual Investors (AAII)?

By JLP | March 28, 2007

I’m curious – are any of you a member of the American Association of Individual Investors (or AAII as it is called)? If so, what has been your experience? Is it worth the membership fee? I have received numberous offers from AAII over the years but have never joined. The letter I received today had a rather interesting opening:

If You Want to Be a Successful Individual Investor, You Should Know

  • Why you shouldn’t buy any stock in the S&P 500 Index!
  • Why the asset allocation rules you read about are nonsense!
  • Why you should avoid the majority of mutual funds!
  • Why international diversification doesn’t work!
  • Why “risky” stocks are often not risky!

If that doesn’t pique your interest, I don’t know what would.

Anyway, if you are a member of AAII, I want to hear from you.

Topics: Investing | 21 Comments »


21 Responses to “Anyone Out There a Member of the American Association of Individual Investors (AAII)?”

  1. J.D. @ Get Rich Slowly Says:
    March 28th, 2007 at 1:31 pm

    I get the same mailings, and I’ve always wondered the same thing. It sounds intriguing, but who knows…

  2. Adam Says:
    March 28th, 2007 at 1:49 pm

    The folks at AAII have been providing unbiased investment education for something like 30 years. I am a member and have been extreamly pleased with their monthly magazine and web site.

    They offer two free model portfolios that have outpaced the overall market for many many years (see link
    http://www.aaii.com/aaiiportfolios/ ) and the cost to belong is only $29!

  3. JMG Says:
    March 28th, 2007 at 2:10 pm

    I am a member. Just like anything else, you need to apply your own beliefs and knowledge when reading their material. I look at it as yet another point of view (just like I look at personal finance blogs and websites such as this).

    Personally, I am a Burton Malkiel fan, so I tend not to pay too much attention to their individual stock analysis, other than out of my own curiosity and willingness to hear other’s ideas. The stuff I have found valuable:

    – Their mutual fund analysis and screening. Re-iterates the usual “low fees, avoid active management, diversify” themes you’ll find from people who understand real (aka fee adjusted) returns over the long run

    – Their “Investing Basics” is a good series for those who would like to know more about fundamental stock analysis, how the bond markets work, etc.

    – Their monthly journal articles will sometimes talk about broader personal finance topics, like estate planning and insurance. One of their contributors on the insurance front, Peter Katt, has contributed some decent articles (IMO).

    – Their year-end tax guide is a nice summary of what to pay attention to when filling your tax statements

    I think of the fees the same way I think of buying personal finance books or an issue of the WSJ; I’m doing three things:

    – Increasing my knowledge base from which to make more informed decisions for myself; decisions that have large potential positive/negative impact on my financial well-being

    – Spending a fraction of the money I’ve saved by doing this myself rather than paying someone else to do it for me (like a financial planner)

    – Entertaining myself, because I really do like this stuff (as most of you do, or are at least starting to).

    For me, the cost has been worth the benefit. Attention grabbing marketing aside ;-)

  4. Don Says:
    March 28th, 2007 at 2:18 pm

    I’m afraid that teaser doesn’t catch my attention. Too sensational.

    * Why you shouldn’t buy any stock in the S&P 500 Index!
    * Why the asset allocation rules you read about are nonsense!
    * Why you should avoid the majority of mutual funds!
    * Why international diversification doesn’t work!
    * Why “risky” stocks are often not risky!

    What a joke. Surely Warren Buffett owns plenty of S&P 500 stocks and he is pretty successful. Perhaps one could argue that you’re already covered because your mutual funds are almost certainly heavy in those stocks already. But that’s a far cry from considering them bad investments.

    I’ve read the asset allocation arguments pretty carefully, as a mathematician reading the work of other mathematicians. The arguments for are stronger than the arguments against in my opinion. Now, I will grant that people often miss the important points about allocation and don’t get the benefit out of it that they should. The key is rebalancing. If you don’t do that appropriately, you aren’t winning.

    Avoiding the majority of mutual funds is a no-brainer. Their fees are too high. Any dolt can tell you that. I’ll tell you that for free.

    The international diversification comment isn’t that deep either. International markets are correlated, but it isn’t 100%, so you can still benefit by diversifying that way, just not as much as you might have thought you would.

    Finally, not risky “risky” stocks sounds like the promise of secret knowledge. I’ve got secret knowledge and I’ll share it with you if you give me $100. Whatever. Sounds like crap to me.

    There’s a multibillion dollar industry around selling investment services, advice, and research. This just sounds like another sales pitch.

  5. JLP Says:
    March 28th, 2007 at 2:27 pm

    Don,

    Thanks for the thoughtful response. I wasn’t trying to imply that I actually thought their points made sense. I just thought that they were attention-grabbers, which I still think they are, whether they are right or not.

  6. Dylan Says:
    March 28th, 2007 at 4:40 pm

    Most of the information accessible to members can be found all over the internet for free. The main thing you pay for is access to their portfolios which use past performance as one of the fund selection criteria (bad idea). They use a bit of smoke and mirrors to tout the portfolio’s performance by comparing it to the S&P 500 (AAII’s portfolios benefited from a size and value tilt over the last 10 years making the S&P 500 an inappropriate benchmark. Also, there no evidence that either of those effects will persist).

    Investing does not need to be that complicated. Diversify, minimize fees, and get out of your own way. AAII and similar organizations interfere with that last one.

    Last week I read -The Wall Street Self Defense Manual-, by Henry Blodget, and highly recommend it. The book’s companion site, http://www.wallstreetselfdefense.com/, has a couple of free chapters.

  7. Shadox Says:
    March 28th, 2007 at 7:34 pm

    So, I’m with the majority of commenters. Too sensational, probably useless information. I would pass.

  8. Evan Says:
    March 28th, 2007 at 8:10 pm

    I have been a member of AAII for over 20 years (ouch!). It offers one of the few sources of investing info that does not try to sell you a newsletter, fund, annuity or what-have-you. It is an educational non-profit.

    I am also a member of the Board of the LA Chapter. This has been the biggest payoff for me. We meet once a month and present two top-notch speakers on topics ranging from China to REITS to “standard” SP500 investing. And I have actually taken some of the ideas presented and made money.

    Needless to say, but I’ll say it anyway, I believe that it is worth joining. Try it for a year.

    Evan

  9. Harald Says:
    March 28th, 2007 at 11:23 pm

    On a different but related topic…
    Can anyone comment on their experiences with the various stock picking services?

    They range from the gimmicky GorillaTrades (http://www.gorillatrades.com/) to the plain-jane NorthStar StockCompass (http://northstarstrategic.com).

  10. Harald Says:
    March 28th, 2007 at 11:26 pm

    On a different but related topic…
    Can anyone comment on their experiences with the various stock picking services?

    They range from the gimmicky GorillaTrades (www.gorillatrades.com/) to the plain-jane NorthStar StockCompass (northstarstrategic.com).

    [sorry -- trying to correct link format]

  11. Harald Says:
    March 28th, 2007 at 11:36 pm

    http://www.gorillatrades.com
    northstarstrategic.com

    [last try!]

  12. Harald Says:
    March 28th, 2007 at 11:37 pm

    http://www.gorillatrades.com
    http://www.northstarstrategic.com

    [finally got it!]

  13. plonkee Says:
    March 29th, 2007 at 2:12 am

    I see that list and use the catchphrase “if it looks too good to be true, it probably is”, with the thinking that if it were that easy, everyone would be doing it.

  14. Jack Says:
    March 29th, 2007 at 10:47 am

    I’ve been a Lifetime Member for many years and would recommend it to any serious long term investor. Take a look at their web site and decide.
    http://www.aaii.com/index.cfm

  15. zen Says:
    March 30th, 2007 at 7:28 am

    Let me (us?) know if you decide to join – it looks… interesting but it’s definitely not something I can justify right now.

  16. Jerry Says:
    March 30th, 2007 at 10:22 am

    I subscribed to the newsletter once, and even attended a seminar. This about 6 yrs. ago, when I began to shift from working to retirement. Found it dull, technical, chartist, and of no value.

  17. Dave Says:
    September 24th, 2008 at 12:00 am

    I appreciate everyones input in the value of AA11. I receive offers about once every 3 months. I am considering buying it for a trial period. As mentioned in the publication, have nothing to lose, if am not pleased with it they will refund the fee, which is only $29.00

  18. Barry Says:
    November 20th, 2008 at 4:07 pm

    There are so very many investment services, advisors, magazines, books, and websites out there…just as there are so many gamblers’ newspapers and “tip sheets” available if you go to the racetrack to bet the ponies. Years ago, when I asked my old Uncle Harry if the tip sheets were worth buying, he responded in his best Brooklynese: “If da guys who write ‘em really knew the secrets to winnin’, they wouldn’t be writin’ the tip sheets, dey’d be bettin’ for demselves.”
    My point, of course, is that all the investment advice is great if it works out, but as John Bogle, former Vanguard CEO, put it: “Nobody Knows Nothin'”

  19. ed6 Says:
    January 11th, 2009 at 11:35 pm

    I believe you should just visit their web site. They show results for portfolios based on quite a number of different methods from 1998 to present

  20. James McRitchie Says:
    July 17th, 2009 at 7:09 pm

    I’ve seen more potential that actual benefit. Like Investors Business Daily, there is too much emphasis on charting and technical analysis — not enough on business strategy and governance.

    I would love to see them shift at least a bit more from being shareholders to being shareowners. In the many publications I’ve received as a member and the meetings I’ve attended there has been virtually nothing on proxy voting, filing resolutions or anything address the rights of shareowners.

  21. Richard Says:
    March 21st, 2010 at 8:38 pm

    I am an AAII and a BetterInvesting member. I find both organizations to be well worth the small annual fee.

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