Our New Data Feed and Its Impact on Your Investments

This week, we switched from using financial data provider LSEG Data & Analytics (formerly known as Refinitiv) to using S&P Global Market Intelligence for the stock data on our websites. This enhancement will improve the comparability, reliability and overall consistency of the financial data available to you. Financial statement data, fundamental stock data and consensus earnings estimates, and the stock screen results you see on AAII.com will be affected by this change.

Given the scope of this change, I want to share with you some of the observations I’ve made while working with the new data feed. In the November AAII JournalWayne Thorp will explain in more depth how the change to S&P Global data impacts you and helps you better analyze stocks.

For those of you who prefer a spoiler alert, here it is: The data changes for most companies I’ve looked at during our testing have not been significant. However, the extent of any data change does vary by company. I have noticed changes in ratios, valuations and even earnings. Stock screen results are also affected, with some formerly passing companies dropped and new ones added.

Here are some of the key differences I’ve noticed:

Dividend Yields and Growth Rates: S&P Global assigns a dividend to a particular quarter based on its declaration date. LSEG assigned a dividend to a given quarter based on its payment date. S&P Global’s approach avoids situations where two dividends are attributed to the same quarter. Since the timing of when dividends are attributed has changed, so will dividend increase rates and/or yields for certain stocks based on when you look at them.

Dividend Yields: Yields for some stocks are higher due to another change. S&P Global includes both common dividends and special dividends when calculating dividend yields if special dividends are regularly paid. LSEG calculated the dividend yield for EOG Resources Inc. (EEA)—a holding in the AAII Dividend Investing (DI) model portfolio—as 3.0% on Tuesday morning. This only reflected the common quarterly dividend. S&P Global puts EOG Resources’ yield at 4.2% because it includes the stock’s special dividend. Since the shareholder yield encompasses both the dividend and buyback yields, it too will be impacted.

Financial Statement Data, Earnings and Financial Ratios: All data providers use a framework to adjust financial statement data to make it easier for investors to compare different companies. Since S&P Global uses a different framework than LSEG, the presentation of financial statement data and financial ratios resulting from that data will be altered. If I were to pinpoint one area where this has an impact, it would be the treatment of nonrecurring and extraordinary items. How CEOs want to report such items can be different than how the data providers and analysts want to account for them.

Sector and Industry Classifications: There is no universal industry classification system that the various data providers agree to use. The Global Industry Classification Standard (GICS) system, jointly developed by MSCI and S&P Dow Jones Indices, may be the most widely used in the investing community. It is the system we are now using. Previously, we used LSEG’s The Reference data Business Classification (TRBC). Several sectors you formerly saw on our websites and others Stock Investor ProAAII’s fundamental stock screening and research database, have been replaced by similar-sounding ones (eg, consumer discretionary instead of consumer cyclicals). The communication services sector was added while the small academic and educational services sector was eliminated. There are also now fewer industry groups (74 versus 154). This change eliminates very small industries and improves comparisons within industries.

At a high level, there are big areas of change you may notice. Financial and valuation ratios for some companies have changed with this data switch. Again, the changes are small for many companies—such as one-tenth of a decimal point in a ratio. Comparisons figures for sectors and industry groups have been altered by the implementation of GICS. Combined, these have led to changes in which stocks pass a given stock screen. They also have altered A+ Investor Grades for some stocks. These are one-time, across-the-board changes that will smooth out going forward as we continue to use the new data feed.

As you use the data going forward, I hope you find this change to be helpful.

Bullish sentiment among individual investors about the short-term outlook for stocks decreased in the latest AAII Sentiment Survey. Meanwhile, both neutral sentiment and pessimism increased.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 4.2 percentage points to 45.5%. Bullish sentiment is above its historical average of 37.5% for the 47th time in 48 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 0.6 percentage points to 27.3%. Neutral sentiment is below its historical average of 31.5% for the 13th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased 3.6 percentage points to 27.3%. Bearish sentiment is below its historical average of 31.0% for the seventh time in eight weeks.

The bull-bear spread (bullish minus bearish sentiment) decreased 7.8 percentage points to 18.2%. The bull-bear spread is above its historical average of 6.5% for the 21st time in 22 weeks.

This week’s special question asked AAII members how the November elections are currently affecting their expectations for the stock market.

Here is how they responded:

Making me more cautious: 52.2%

No impact: 32.9%

Making me more optimistic: 11.1%

Other: 3.4%

Individual investors’ allocations to stocks decreased while bond allocations rose slightly in the September Asset Allocation Survey.

Stock and stock fund allocations decreased 0.1 percentage points to 68.7%. Stock and stock fund allocations are above their historical average of 61.5% for the 52nd consecutive month.

Bond and bond fund allocations were essentially unchanged at 14.4%. Bond and bond fund allocations are below their historical average of 16.0% for the eighth consecutive month.

Cash allocations were also unchanged at 16.8%. Cash allocations are below their historical average of 22.5% for the 22nd consecutive month. The last time cash allocations remained the same month to month was from March 2021 to April 2021 (14.7%).