Shadow Stock Gains Limited by Pause in Small-Cap Stocks

by James B. Cloonan

Shadow Stock Gains Limited By Pause In Small Cap Stocks Splash image

The Model Shadow Stock Portfolio is up 2.0% since our April column and up 4.7% for the year as of the end of May.

This lags the S&P 500 as represented by the Vanguard 500 Index fund (VFINX), which is up 7.8% year-to-date. It appears small-cap stocks are taking a breather after a very strong run, but they are still positive.

As I write this in early June, the entire market is dropping on unemployment figures and negative economic forecasts throughout the world. Next quarter’s earnings reports will soon be in the mix, and it won’t be long before political commentary ramps up for the primaries and the election. Despite the bad economic news and the growing civil unrest abroad, the stock market is still positive, but it is well behind the 20% return of a typical pre-election year.

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James B. Cloonan is founder and chairman of AAII.


Discussion

George from Michigan posted over 2 years ago:

Is there any type of info available on HQS (HQ Sustainable Maritime) I have place a sell order @ $2.00 should it begin trading again. Thoughts???
Thank you.


Dave from Virginia posted over 2 years ago:

During the quarterly updates, you often say why you sold a stock. Can you also explain why you chose the stocks to invest in each quarter? I make my own quarterly investment decisions based on your passing companies list, and it would be useful to understand your rationale, and compare it to my own. Thanks!


Charles Rotblut from Illinois posted over 2 years ago:

I use the following factors in selecting from qualifying stocks:


1) The number of qualifying stocks I show in my articles is less than the number that comes from the selection criteria of SI Pro because I use a primary liquidity screen requiring an average daily trading volume of $150,000. Members with smaller portfolios may not need this screen.


2) I look back at older data and news to see if there is reason to be concerned about the stock. Such things have included "just barely qualifying" , any legal or reporting concerns, recently Chinese stocks, and finally similarity to stocks already in portfolio. Remember IISSP is a real portfolio and there can only be purchases if there are sales so my only reason for not buying a stock may be that I don't have cash.


3) If I get several stocks that look fine in all the ways mentioned above I generally decide on the tightness of the bid/ask spread.

--James Cloonan


Vincent from Massachusetts posted over 2 years ago:

I find it shocking that you would hold a stock into bankruptcy and watch it become worthless. It is irresponsible and diminishes your value to the organization. I think you owe us an explanation as to how this happened and what steps you intend to take to make sure it does not happen again.

Shame on you.


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