AAII's Mastering Stock Investing to Build Wealth

In this optional class introduction, you will learn about the various lesson topics, primary components, resources, assignments and testing requirements to complete this class.   

Led by Raymond A Rondeau, AAII's Investment Analyst, this class focuses on the foundational principles of building long-term wealth through investing. This is brought to life through the inspiring true story of Shane—a father and MIT graduate who set an ambitious goal to leave a one-million-dollar legacy for his son's retirement. Remarkably, Shane aimed to achieve this without requiring additional money, lifestyle changes or sacrifices.

Your first lesson begins with a true and compelling story about Shane, a father and graduating MIT student who aimed to leave a one-million-dollar legacy at his son's retirement—all without requiring additional money, lifestyle changes, or sacrifices. This detailed step-by-step approach can be used effectively by anyone seeking financial freedom through investing.

The lesson underscores how investment knowledge, supported by unbiased research and the power of long-term, evidence-based trading and investment strategies, can significantly improve one's financial quality of life.

This lesson focuses on some of the challenges and intricacies that investors must face while looking to build wealth through investing. It explores critical factors such as commissions, slippage, bid-ask spreads, fees, taxes, and inflation—all of which can significantly erode investment returns over time. This lesson provides tools and strategies, including order types, fee management, and active investing approaches, to mitigate, reduce and, at times, eliminate these challenges altogether.

This component contains concluding information and the Words of Wisdom segment for the "Building Wealth with Limited Resources" class.

In this optional class introduction, you will learn about the various lesson topics, primary components, resources, assignments and testing requirements to complete this class.   

Led by Raymond A. Rondeau, AAII's Investment Analyst, this class will expand on the previous class' lessons, Building Wealth with Limited Resources.

This class highlights 7 foundational investing principles and insights that successful investors use to maximize stock market returns. These insights, or "revelations," are drawn from the collective wisdom of a group of advanced investors, professional traders and investment educators. This group, which convened each month at MIT in Boston, brought together over 600 years of combined investment experience.

Revelation 1 emphasizes that successful investors rely on a well-defined plan to stay focused on their objectives, and they don't make emotional or impulsive decisions.

Featured in this lesson is a study by Dalbar showing that most investors underperform the market due to a lack of planning, leading to emotional and impulsive decisions. The lesson concludes with evidence-backed strategies for optimizing the periodic timing of fund purchases to improve investment outcomes.

Investors must accept market uncertainties and that no plan is perfect.

Revelation 3 emphasizes that there is no universal "best" investment plan or strategy that fits everyone. Successful investing hinges on tailoring strategies to each individual's unique circumstances.

In this lesson, we will explore seven key factors that all investors should consider when creating a personalized investment plan and selecting appropriate strategies. To further assist, several worksheets have been provided in the resources section of this lesson, designed to guide you through this critical process of self-assessment and strategy selection.

Revelation 4 explores why the most successful investors are adaptable and remain open to alternate investment approaches, strategies and investment types. 

In this lesson, you will learn how Shane used alternate techniques to generate the funds to invest with no additional effort or lifestyle changes. Here, you will see how Shane took advantage of a system that was designed to take advantage of him, allowing him to create a realistic plan to pursue all his goals and objectives. 

Revelation 5 emphasizes that discipline is crucial for investment success, more so than strategy sophistication or investment selection.

In this lesson, we explore various studies, including the return performance of different asset classes in the Callan Periodic Table, to demonstrate that most investors' failures result from not sticking to their chosen strategies rather than the strategies themselves.

Revelation 6 highlights the significant advantages small investors hold over large institutions and how to use them effectively.

Areas of focus in this lesson include access to a broader range of investment options, greater portfolio flexibility, fewer regulatory constraints, cost and execution efficiency, and opportunities for tax optimization through strategies like tax-loss harvesting.

The lesson reinforces that with proper education, discipline and a strategic approach, individual investors can outperform many mutual funds and achieve long-term success.

Revelation 7, the final foundational revelation in this section, highlights the benefits, rationale and effectiveness of simple investing approaches.

Featured examples in this lesson include key technical patterns and signals, the principle of diminishing returns, and the self-fulfilling nature of widely recognized market readings and how to follow them.

This brief "lesson" provides essential information to support the completion of the remaining educational sections of the course, passing the final exam and attaining the course's Certificate of Completion.

This component contains concluding information and the Words of Wisdom segment for the "Foundational Elements for Building Wealth by Investing in Stocks" class.

In this optional class introduction, you will learn about the various lesson topics, primary components, resources, assignments and testing requirements to complete this class.   

In the final class of the Building Wealth series, we explore 13 strategy-based investing principles and techniques that successful investors use to maximize stock market returns. These insights, or “revelations,” are drawn from the collective wisdom of a group of advanced investors, professional traders and educators who convened each month at MIT in Boston.

Revelation 8 highlights the value of research-driven, evidence-backed intellectual investment approaches, showcasing examples that reinforce AAII's evidence-based methodologies and strategies for achieving long-term investing success.

This lesson explores various strategies, including seasonal cycles, that emphasize the importance of historical trends and data, revealing consistent results across markets and time periods. Additional coverage includes Nobel Prize-winning research that highlights how specific fundamental factors can predict performance and significantly enhance investment outcomes.

Revelation 9 underscores the importance of embracing technology to gain a competitive edge in investing. The lesson showcases AAII's advanced tools, including technical-based Active Investing systems for position monitoring and execution guidance, as well as fundamental-based stock screens (included with this course) for idea generation.

This lesson highlights the power of backtesting in crafting tools and refining strategies for better performance. Additionally, it offers a 50-page guide with detailed reports on using the RSI indicator, complete with insights and practical applications.

Revelation 10 highlights the benefits of cultivating a skeptical viewpoint, a trait often developed by experienced investors. This lesson emphasizes the importance of conducting independent research to verify the accuracy and motives behind investment information. It underscores the need to critically evaluate sources and recognize potential biases, such as promotional agendas in markets.

The lesson includes examples of price action scenarios, where behavior contradicts sentiment, reinforcing the significance of watching price action and market trends. To support this viewpoint, AAII has included detailed third-party certified performance reports in an upcoming lesson so investors can assess the validity and suitability of their strategies for individual investor's needs.

Revelation 11 emphasizes that investing strategies and positions are based on probabilities, not guarantees. Even with thorough research, good investors understand that all strategies can fail. As a result, they manage position sizes relative to their risk tolerance and incorporate clear, simple plans for handling uncertainty.

This lesson covers two specific techniques: the "portion proposition," which helps manage losing positions, and the "profit proposition," which secures profits while reducing the emotional bias to sell too early.

Revelation 12 highlights that experienced investors are always prepared for the possibility of abnormal market events. In this lesson, we will look at evidence showing that black swan events—unexpected, high-impact occurrences—happen more frequently than most market participants anticipate or acknowledge.

Specific examples covered in this lesson include Treasury bill yields turning negative, oil prices plunging to an intraday negative price and the VIX (Volatility Index) approaching a level of 90.

Revelation 13 explores the importance of prioritizing risk when investing. It highlights how good investors avoid large losses through disciplined, risk-aware practices, leveraging tools like diversification, position sizing and advanced risk management techniques to navigate market uncertainties effectively.

This lesson introduces two AAII Active Investing tools included with the course that are designed to enhance risk management. The Security Evaluator helps investors detect red flags, such as high volatility, low liquidity or high transaction costs, before committing to investments. PROVE answers the question of how many shares one should purchase. PROVE does this by calculating position sizes based on risk-adjusted metrics, ensuring balanced exposure across all of a portfolio's assets. It also facilitates rebalancing, anticipates potential losses, and supports advanced strategies like hedging and market-neutral approaches.

Revelation 14 emphasizes the profound impact of compound interest and how small differences in return rates can lead to dramatically different outcomes. The material underscores the importance of understanding compounding effects, risk-return trade-offs, and the need to tailor investment strategies to individual time horizons and financial objectives.

The lesson delves into critical compounding relationships and strategies for leveraging them to an investor's advantage. It covers classic financial principles, such as the correlation between return and perceived risk, alongside the lesser-known but absolutely vital concept of how changes in return rates yield nonlinear effects on performance. The content of this revelation will equip investors with a deeper understanding of security selections and how to maximize the benefits of compounding over time.

Revelation 15 addresses the critical role of two key factors in leveraging the compounding effect: starting early and increasing the compounding frequency to maximize investment growth.

Using Shane's example, this lesson provides several tables and examples illustrating the importance of duration and how it factors into substantial long-term gains, with the majority of profits accumulating in later years due to the compounding effect. Additionally, it emphasizes how the compounding frequency can significantly benefit or hurt investors in the financial world and with their investments.

Revelation 16 emphasizes the importance of continuous learning, allowing investors to adapt to the evolving market landscape. It reinforces the AAII principle that no single investment strategy outperforms in every scenario and highlights the need for a balanced, open-minded approach to investing.

This lesson showcases several real-world scenarios demonstrating how astute investors successfully navigated challenging market environments, including those involving CDs, Treasurys and dividend-paying stocks, showcasing the "when", "why" and "how" of their strategic decisions.

Revelation 17 emphasizes the importance of synergizing various investment techniques to improve performance. Central to this discussion is the integration of fundamental analysis for identifying stock selections and technical analysis for optimizing timing and pricing decisions. By combining these approaches, investors can maximize potential returns while effectively managing risks.

This lesson touches on a method to improve the classic "Sell in May and Go Away" strategy with an advanced technique using a spread arbitrage with ETFs. Third-party verified results from AAII's Kinetic Conviction (KC) strategy, a strategy with an 81% hit rate and 3.7 profit factor, are also covered.

Revelation 18 emphasizes the advantages of an active investing approach, illustrating how educated and proactive decisions can provide investors with an edge in today's markets. The discussion underscores the importance of understanding market trends, herd behavior and price momentum, creating opportunities for savvy investors looking to capitalize.

This lesson begins with a fictional story to illustrate how everyday financial decisions—such as timing purchases of commodities, refinancing a mortgage or making portfolio adjustments—align with the principles of active investing. The lesson then transitions to real-world examples, showcasing how investors who respond to anticipated Federal Reserve rate hikes or adapt their fixed-income strategies to market conditions can achieve significant advantages by utilizing an active investing approach.

Revelation 18 emphasizes the advantages of an active investing approach, illustrating how educated and proactive decisions can provide investors with an edge in today's markets. The discussion underscores the importance of understanding market trends, herd behavior and price momentum, creating opportunities for savvy investors looking to capitalize.

This lesson begins with a fictional story to illustrate how everyday financial decisions—such as timing purchases of commodities, refinancing a mortgage or making portfolio adjustments—align with the principles of active investing. The lesson then transitions to real-world examples, showcasing how investors who respond to anticipated Federal Reserve rate hikes or adapt their fixed-income strategies to market conditions can achieve significant advantages by utilizing an active investing approach. 

Revelation 20 marks the culmination of the class, emphasizing that most individuals have the potential to successfully build wealth through investing. It unites the course's central themes, encouraging participants to continue their education, embrace effective strategies and approach wealth-building with confidence and determination.

The lesson answers the class' remaining open questions, shows how Shane achieved his 7% risk-free return and provides a final update on Shane's situation. Collectively, it ties together the course's core messages, empowering participants to embrace learning, adopt effective investment strategies and confidently work toward building wealth through investing goals.

This component contains concluding information and the Words of Wisdom segment for the "Strategy Components for Building Wealth by Investing in Stocks" class.

In this optional class introduction, you will receive an overview of the various lesson topics, primary components, resources assignments and testing requirements to complete this class.   

Led by Wayne Thorp, CFA, AAII's Senior Fundamental Stock Analyst, this class will guide you through essential concepts, elements and techniques to become a successful stock investor.

Topics include where and how to invest, capital gains, stock dividends, valuation methods, shorting stocks, common and preferred stock, dividend reinvestment plans (DRIPs), initial public offerings (IPOs), American depositary receipts (ADRs), and many more areas. 

This opening educational lesson explores what stocks are and highlights the benefits of making them a key and necessary component for creating a diversified investment portfolio and building wealth through investing.    

In this lesson, we dive into the fundamentals of stocks and their role as an investment. We explore how purchasing a company's stock means owning a share of the business, giving you the potential to profit from its growth. Whether you're looking to grow your wealth or understand stock market dynamics, this lesson provides key insights into the basics of stock investing.

This lesson examines the two primary methods companies use to raise capital for business growth: debt financing and equity financing. It provides detailed examples of both processes, highlights the advantages and disadvantages of each approach, and explains the significance of various metrics, including the debt-to-equity ratio.

This lesson emphasizes the critical concept of risk, covering its definition, measurement and inverse relationship with return. It also explores strategies for managing risk from an investor's perspective, including the role of risk-free investments.

In this lesson, you will learn the two primary types of risk all investors must consider: systematic and unsystematic risk. Each type is clearly defined, along with the associated components in each area. Additional coverage includes the key traits that each individual investor should evaluate when conducting a comprehensive risk assessment.

This lesson examines diversification and its role in reducing risk. It delves into the three key components of a diversified approach and provides detailed guidance on interpreting and applying correlation readings ranging from 1.0 to –1.0.

In this lesson, Wayne Thorp explores eight key aspects of investing in common and preferred stocks. He provides a detailed analysis of the advantages and disadvantages of each, debunking the myth that preferred stock is always the better investment.

This lesson explores the rationale behind different share classes, their types, and the common benefits and restrictions associated with each. To illustrate these concepts, a detailed example of Google's share class structure is provided.

This lesson defines and examines the reasons a company transitions from private to public. Key topics include the IPO listing process, underwriting requirements, unicorn status, and the overall benefits and drawbacks of an IPO from both the company's and the public's perspectives. Additionally, the lesson explores how this transition impacts shareholder equity.

In this lesson, you will learn about Special Purpose Acquisition Companies (SPACs). The lesson covers the entities involved and their reasons for creating a SPAC, the formation process through an IPO, the targeting process as a 'blank check company,' and the rights and concerns of investors prior to the official listing.

This lesson explains what the stock market and its subset, stock exchanges, are and how they play a critical role for investors. It identifies the top exchanges around the world and highlights the importance of their electronic linkage for improved transparency, efficiency and greater liquidity.

This lesson explains over-the-counter (OTC) stocks and exchanges, such as the OTCBB. It primarily focuses on why OTC stocks are considered riskier investments due to their smaller, in-development nature and the fact that they don't need to meet the stricter requirements of major exchanges.

This lesson explains how stock prices are determined through an auction process on stock exchanges, where buyers and sellers place bids and offers. It covers how computerized trading systems have replaced manual matching, increasing efficiency and lowering costs. The lesson also discusses the role of stockbrokers as intermediaries, helping individuals access these exchanges for trading.

In this lesson, you will learn the role of brokers as intermediaries between investors and securities exchanges. It explains the different types of brokers, including discount and full-service brokers, and their respective services. The lesson also highlights the importance of verifying the legitimacy of brokers and advisers through regulatory bodies like FINRA and the SEC, providing tools such as BrokerCheck and the Investment Adviser Public Disclosure database to help investors make informed decisions.

This lesson explains Dividend Reinvestment Plans (DRIPs) and Direct Investment Plans (DIPs) as alternatives to investing through brokers. It details how DRIPs allow investors to reinvest dividends into additional shares of a company, often without a brokerage account, while benefiting from dollar-cost averaging and reduced or no commissions. The lesson highlights the advantages of DRIPs, including discounted shares, lower cost basis, and the potential for long-term investment retention for both investors and companies.

This lesson introduces fractional shares as an option for investors who want to diversify their portfolio without needing large amounts of capital. It explains how fractional shares allow investors to purchase a portion of a stock based on a dollar amount, making expensive stocks more accessible. The lesson also highlights the flexibility of fractional shares, allowing for investments as small as $5, and the differences in how brokers offer these shares.

In this lesson, you will learn about dollar-cost averaging (DCA), an investment strategy where an investor divides their total investment amount into smaller, regular purchases of a target asset, regardless of its price. DCA helps reduce the impact of market volatility by spreading out the investment over time. The lesson highlights its use in retirement plans like 401(k)s, where regular contributions are automatically invested, regardless of market fluctuations, and also discusses how it can be applied to mutual or index funds outside of such plans.

This lesson focuses on one of the two necessary actions for making money in stocks: selling at the right time. While the purchase price influences profit, selling at the right price ensures realizing that profit. Because many investors struggle with selling due to emotions like greed or fear of selling too early or at a loss, Wayne Thorp focuses on the three primary reasons to consider selling a stock.

This lesson focuses on short selling, which is an advanced investment strategy where traders and investors speculate on the decline in the price of a stock or other security. Here, you will learn the overall process and responsibilities of those involved in a short sale. A primary focus of this lesson is many of the perils associated with this practice, such as account requirements, issue limitations, borrowing fees, dividends you may have to pay and the risk of theoretically unlimited losses.

In this lesson, you will learn several methods for measuring investment performance, including Return on Investment (ROI) and Total Return. Here, Wayne Thorp discusses how ROI can help investors assess the success of an investment by comparing its return to its cost and how Total Return provides a more comprehensive picture by accounting for price changes, dividends and interest over a specific period. Additionally, the lesson explains the factors that impact investment returns, including the purchase price, fees, dividends and the sale price of assets.

This lesson covers the primary components and the crucial differences between cash and stock dividends. Here, Wayne Thorp will show you the advantages and disadvantages of both types of dividends across multiple categories, including tax implications and eligibility requirements. With this knowledge, you can strategically target the dividend types and amounts that are best for your personal situation.

In this lesson, you will learn about stock splits and reverse stock splits, including the common reasons why companies implement them and the motivations behind these actions. The lesson covers how stock splits work, how they can affect investors, and the potential risks involved. You will also explore the steps investors should consider taking to protect or optimize their investments when a stock splits.

This lesson focuses on benchmarks, including their importance and how investors can use them effectively as a performance-measuring standard and as a diversifying assets base for fund-related investments. Coverage includes background and usage recommendations on many of the common indexes, along with some of their benefits and limitations. Alternate areas, such as sectors and industries, dividend, fixed income and commodity indexes, are also explored.

In our final lesson, we examine the meaning and concepts behind the famous Wall Street saying, "Bulls make money, bears make money, pigs get slaughtered." Wayne Thorp explores the issues caused by extreme investor behavior driven by greed during bull markets, where optimism and rising stock prices create a false sense of security, and fear during bear markets, where pessimism and declining stock prices lead to poor decision-making. This segment concludes the series on how to invest in stocks, emphasizing the importance of understanding market conditions and avoiding the temptation of greed to maximize returns.

In this lesson, you will learn about buybacks, also known as share repurchases. The lesson covers the five primary reasons and benefits for a company to engage in a buyback, including how it impacts stock value and investor confidence. Additionally, you will learn how to evaluate and interpret a buyback announcement, as well as the appropriate actions an investor should take when a buyback occurs.

This component contains concluding information and the Words of Wisdom segment for the "A Comprehensive Guide on How to Invest in Stocks" class.

In this optional class introduction, you will receive an overview of the various lesson topics, primary components, resources, assignments and testing requirements to complete this class.   

Led by Derek Hagman, former head of AAII's Dividend Investing, this class will teach you the essential concepts, strategies and techniques needed to become a successful stock investor.

Topics include the advantages and disadvantages of dividend investing, dividend myths, how dividends work, different types of dividends, key dates, payment options, analysis and valuation techniques, sustainability metrics, when to sell, and various strategies to maximize risk-adjusted returns.

In this opening lesson, we will explore the essential fundamental elements that every investor should understand when investing in dividend-paying securities. You will gain the key insights and knowledge needed to make informed decisions and become a successful dividend investor.

In this lesson, we will explore the primary benefits of dividend investing, including its ability to generate a reliable stream of passive income. You’ll also learn how dividend-paying stocks can act as a cushion during times of market volatility, helping to protect your portfolio from sharp declines in stock prices. Additionally, we’ll discuss how dividends can provide stability, reinvestment opportunities and long-term growth, even in uncertain market environments.

In this lesson, we will explore various dividend investing strategies, with a special focus on a comprehensive comparison between the two primary approaches: high-yield and high-dividend-growth investing. You’ll learn the key differences between these strategies and how to evaluate which one aligns best with your investment goals.

In this lesson, we will explore the different types of dividend payment options and how to select the most appropriate methods based on your individual needs. We’ll consider various scenarios, including dividend reinvestment strategies and generating a reliable stream of portfolio income on a regular basis.

In this important lesson, we introduced a framework for identifying and evaluating high dividend growth stocks, focusing on three key pillars: valuation, growth trends and financial strength/quality. You will learn how to evaluate each of these areas effectively, ensuring that you can make informed decisions when selecting reliable and high-quality dividend-paying stocks.

In this final lesson, we explore the key considerations for deciding when to remove a dividend-paying stock from a portfolio. We cover critical areas such as dividend cuts, lack of sufficient growth relative to inflation, weakened fundamentals, excessive payout ratios and the availability of better dividend growth opportunities.

This component contains concluding information and the Words of Wisdom segment for the "Maximizing Stock Dividend Risk-Adjusted Income" class.

In this optional class introduction, we will look at the various lesson topics, primary components, resources, assignments and testing requirements to complete this class.   

Led by Wayne Thorp, CFA, this class explores the foundational aspects of fundamental stock investing and provides guidance on how to use or create your own stock screens.

Topics include what fundamental analysis is, its benefits and limitations, stock screening techniques, fundamental-based factor characteristics, and the key factors that have historically proven important for selecting stocks.

In this opening preface, AAII senior financial analyst Wayne Thorp leverages his 25+ years of experience guiding investors in selecting winning stocks. He discusses the use of fundamental stock screening combined with independent analysis to uncover high-potential investments beyond mainstream choices, emphasizing how this strategy can result in significant returns.

In this first lesson, you will learn about stock screening, a systematic method for identifying companies using financial metrics such as net profit margin, the debt-to-equity ratio and the price-to-book ratio. Additionally, you will understand how to align these screens with your investment objectives, risk tolerance and time horizon for effective decision-making.

In this lesson, you'll explore the benefits of stock screening, such as saving time, adding discipline, identifying stocks with strong growth, solid financials and reasonable valuations, and uncovering high-potential, overlooked opportunities. You'll also examine its limitations, including reliance on quantitative data and the necessity of further analysis to determine suitability. Understanding screening biases and performing post-screening evaluations are crucial for making informed investment decisions.

In this class's primary lesson, you'll start by learning about factors along with seven essential considerations to determine whether a measurement qualifies as a valid factor. Then, you will learn the steps to build a basic stock screen. First, you'll learn how to define your goals and then decide on the types of companies to invest in. Next, you'll learn how to align your screen with your investment philosophy, time horizon and risk tolerance. Once you have a clear understanding of these elements, you will learn how to select the primary and secondary factors and filters to create an efficient stock screen for your situation. After your stock screen is complete, you will learn about the importance of screening biases and performing post-screening evaluations, which are crucial for making informed investment decisions.

This lesson delves into the key factors that form the foundation of fundamental-based investment strategies and stock screens. It covers 12 important and recognized factors, including one so influential that its creators won a Nobel Prize for their groundbreaking research. Additionally, the lesson examines specific investment strategies—growth investing, momentum investing and quality investing—and explains how these strategies, along with the various factors, interact to enhance long-term portfolio performance.

This lesson explores eight important relationships that all investors should know between stock performance and earnings estimates, releases, surprises and revisions. It covers how expectations, particularly regarding reported and future earnings, can significantly impact stock prices, causing P/E ratios to expand or contract. The lesson also provides guidance on what investors should do when these events occur.

This ending section provides a quick summary and the five key takeaways from the previous lessons. Additionally, Wayne Thorp reiterates the one critical aspect that all investors must understand in order to use stock screens effectively.

This component contains concluding information and the Words of Wisdom segment for the "Fundamental-Based Stock Strategies" class.

The final lecture provides details on exclusive benefits available to students who complete the course. These rewards include a free basic membership to the American Association of Individual Investors (AAII), access to valuable investing tools and complimentary premium product offerings from AAII. These resources are designed to enhance students' investing knowledge and provide ongoing support for their financial journey.