Shadow Stock Portfolio Rewards Investors Who Stayed in Stocks
by James B. Cloonan
Well, we finally made it! As of the end of February the Model Shadow Stock Portfolio is 7% above its pre-crash (June 2007) high.
It is scary to see a portfolio drop 60% and difficult to stay the course and not sell. Many investors reduced their equity holdings (beyond the reduction supplied by the market) near the March 2009 low, and I know several individuals who closed out of equities completely a bit before the low.
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Ideally, we all should have rebalanced and added equities through the bad time. Congratulations to any of you who had the discipline to do this. I didn’t in my personal portfolio and, in fact, while I kept my equity holdings, I did switch a bit into safer, dividend-paying holdings. Consequently, I am not quite back to even.
The lesson for all of us is that if we violated our general strategy because of the market pressure, then we should adjust the riskiness of our overall portfolio downward. We have been averaging a severe downturn about every 10 years, and nobody knows when the next one will be. So keep a long-term view, but get the short-term violence down to where you can stomach it.
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Discussion
Would be interesting to compare returns over time of Investors Business Daily CAN SLIM Select stocks (let's say those with a composite rating of 80 or higher and an Accumulation/Distribution rating of B or higher) with AAII's Shadow Stock portfolio. For IBD's list "group relative strength" could be added to criteria to further refine the list. At the moment I am using IBD and AAII as my "investment advisors". Subscriptions to both (even assuming a lifetime membership to AAII) are a much better deal than shelling out 0.8% to 1.6% of assets under management to a financial advisor (most of whom underperform the market).
posted about 1 year ago by Gareth from Florida
Gareth,
The Shadow Stock Portfolio and the CAN SLIM are two different strategies, and a direct comparison would not be one that is apples-to-apples. With that caveat stated, if you wanted to compare the results, there are two pages on AAII.com that will give numbers to use.
The first is from our Stock Screens section. We have to CAN SLIM screening strategies and their results, along the with the results for all of our other screens, can be found at:
http://www.aaii.com/stock-screens/performance
The second is the performance of the Shadow Stock portfolio itself. This page is located at:
http://www.aaii.com/model-portfolios/stock-annual
I hope this helps,
Charles
posted about 1 year ago by Charles Rotblut from Illinois
Regardless of the rules, Jackson Hewitt should be dropped. Tax preparation is a losing business. Software is taking over. All tax preparers - HR Block, Liberty, JTX - have drastically lowered their pricing, are giving no charge deals or high discounts to get people in the door, etc. Average charge for tax prep has dropped to the $200 range - fed and state combined - from over $300 a few years ago. Impossible to stay in business at that level for a business that only operates 4 months a year. Plus, I can tell you that the tax preparers who worked for these companies are doing the job from their home for $100. And, please note, when was JTX last above $4/sh? Drop it now!
posted about 1 year ago by Tony from Massachusetts
