Computerized Investing > Third Quarter 2013

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Using an Adviser vs. Investing in Funds

My wife’s grandmother was recently widowed at 75 with no knowledge of finances. We visited a couple of advisers who recommended certain asset allocation strategies. My thought is that I would take their advice and do this investing for her. Though I have little experience with investing during retirement, I figured out what she will need for living expenses. I have chosen a 35%/55%/10% asset allocation for stock/bond/cash. What is the best way for me to invest? Do I call a large firm, like T. Rowe Price, Vanguard, etc., and invest the majority in their retirement accounts? I am not looking to actively manage these investments more than semiannually.

—JK4 via Web inquiry

CI Editor’s Response:

There are several ways that you can approach your situation, and there are advantages and disadvantages to each. If you do not want to manage the investments yourself, it is a smart choice to go with a full-service brokerage firm or a financial adviser with a firm like Vanguard or T. Rowe Price. Of course, the cost will be much higher than if you managed the investments yourself using a discount broker. Additionally, you should not expect out-performance of the market even though a higher fee is charged. Realistically, you are paying for the peace of mind that someone is watching over your investments and working toward achieving your financial goals (which is not a guarantee).

Alternatively, you can try to invest the money yourself in some large mutual funds or exchange-traded funds (these are less tedious and time-consuming to invest in than individual stocks). Make sure that you are well-diversified and not taking on too much risk. If you have an asset allocation picked out, it is not too difficult to choose a few funds that will meet your asset allocation goals. You will not incur advisory fees and your performance may be just as good. However, you need to keep an eye on your investments, which takes time and energy.

Model Shadow Stock Portfolio Purchase Criteria

AAII recently posted a list of stocks passing their requirements for purchase in the Model Shadow Stock Portfolio. The rules state “market capitalization must be between $17 million and $200 million.” Two stocks on the Passing Companies list appear to exceed the upper limit. The rules also state “no foreign stocks will be purchased because of different accounting and/or withholding tax on dividends”; however, several stocks on the list are headquartered in China. How do any of these stocks end up on the acceptable purchases list?

—Richardo via Web inquiry

CI Editor’s Response:

The Model Shadow Stock Portfolio purchase rule for market capitalization was recently tweaked due to the overall market appreciation. The upper limit was raised and the portfolio now accepts stocks under $240 million instead of $200 million. The sell rules have also been revised and companies are not sold until they have appreciated to a market capitalization of $720 million.

As far as international stocks go, the Model Shadow Stock screen does not automatically filter these stocks out. However, when our chairman, James Cloonan, selects stocks for the Model Shadow Stock Portfolio, he manually excludes foreign stocks. He makes mention of this fact in his quarterly Model Shadow Stock Portfolio commentaries. Please see for more explanation and ongoing commentary on this model portfolio.

Apple Products for Investing and Finance?

Currently, I do not use Apple products, but I have noticed that a lot of marketing on TV seems to always display Apple laptops. Is Apple a better product for financial programs or market observation? What are the advantages of using Apple or Mac? Does using an Apple product provide me with the best option for investment research?

—Joe Dobson via Email inquiry

CI Editor’s Response:

There has been a long, passionate debate among computer users on the merits of Apple products versus PCs. For most people, it really comes down to your personal preference. Apple products are quality products and very well made. However, they typically are more expensive. Spend the same amount on a PC, and the PC will also be of very high quality.

For investment purposes, more programs are made specifically for PCs. If you use a Mac, you may find that many finance- and investing-related programs do not work on the Mac operating system, whereas almost all of these types of programs work on the Windows operating system. This is the main downside to using a Mac for investment purposes and something you should be aware of before purchasing a Mac mainly for investment research.


Steve Schuster from MD posted over 4 years ago:

The response to Joe Dobson's question about Apple products neglects to point out that Apple laptops and desktops can run the Windows operating system, and thereby, any Windows application. That's surely cheaper than purchasing both an Apple computer *and* a Windows computer! It's discouraging that the tech guru's at AAII are unaware of this feature of Apple computers.

Wayne Thorp from IL posted over 4 years ago:


I use Stock Investor Pro (AAII's Windows-based stock screening and research database program) on a Mac running Windows on Parallels all the time. I am aware of this solution. However, many Mac users are as equally dispassionate about Windows as their are passionate about their Macs, so they don't consider running Windows on a Mac a viable solution.

Wayne A. Thorp, CFA
Editor, Computerized Investing

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