• AAII Model Portfolios
  • The Model Shadow Stock Portfolio and Micro-Cap Stock Spreads

    by James B. Cloonan

    Even with the pullback in August, it continues to be a very strong year for the Model Shadow Stock Portfolio. The portfolio is up 33.6% year-to-date as of August 31, 2013, compared to a gain of 16.0% for the S&P 500 index as measured by the Vanguard 500 Index fund (VFINX).

    These results, as well as results for longer periods, can be seen in Figure 1 and Table 3. Almost every segment of the stock market seems very strong despite lots of disquieting events. I mentioned last quarter that although some of the economic concerns had lessened, we would probably find a new problem by the time this article was written. Sure enough, we got Syria and the problem of how to respond to their use of chemical weapons.

    While the decision of what to do about Syria will be made before my January column, the budget crisis will be coming back into play over the next three months. So far, the market has taken a little step back with each negative event or prediction and then come bouncing back.

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    Norman Kulczyk from NY posted over 3 years ago:

    Presently, I hold Alamo which has been a winner.
    I also have shares in Ennis, Kimball, and
    Standard. I tend to invest in dividend paying
    companies. Over the years I sold a number of
    shares from the group, and I have shown profits.

    As I recall I only one stock a number of years ago at a small loss. I have been a AAII for a number of years.

    William Voss from OH posted over 3 years ago:

    I am a new member and would like to know the best way to get started, with the 30 stocks suggested in the model shadow stock portfolio is it best to buy a small position in all the suggested positions or is there method of selecting 10 or 12 positions an still be diversified , William Voss

    George Feldman from PA posted over 3 years ago:

    There is some evidence that FU has committed fraud in its accounting. would anyone like to comment

    Charles Rotblut from IL posted over 3 years ago:


    The company says there is misinformation about it being spread. Here is an article in the Pittsburgh Post-Gazette:



    Kirit Shah from CA posted over 3 years ago:

    I would like to know how and when to start
    to buy stock of model portfolios,
    Please guide me.
    Thank you

    Thomas Adams from VA posted over 3 years ago:

    I have been with AAII for over 4 years and couldn't be happier. I buy stocks on perhaps the worst of all possible systems: intuition. I am by nature a scientist, so I know the fallacy of allowing emotional attachment to inform decisions.
    This is why AAII has been so valuable to me. I typically own 4 or 5 of the shadow stocks. With the minor exception of BAM, held too briefly, ALL of the shadows have shown above average profitability. Why only 35% of my portfolio is in AAII stocks reflects my fear of straying too far from so-called "conventional wisdom".
    I cannot help but wonder if other readers/staff have the same fear and maintain a substantial position in large cap blue chip stocks(like Wells Fargo, Walmart, AT&T, etc.)?
    Keep up the good work and thanks for your unselfish attention to the (little guy) individual investor.
    Tom Adams
    Richmond, Va.

    Charles Rotblut from IL posted over 3 years ago:

    Hi Kirit,

    You want to buy stocks that are listed as being "qualified." These are stocks that are held within the portfolio and currently meet the buy rules.

    We suggest dividing the amount of money you are considering allocating to the Shadow Stock portfolio by the number of Shadow Stocks you intend to purchase. For example, if you plan on allocating $20,000 to buy 10 stocks, you would spend $2,000 on each stock.

    If there are fewer than 10 stocks listed as being qualified, buy only those that do qualify and keep the remainder of your money in cash. Then next month, on or after the 15th, check AAII.com to see if any new stocks are listed as being qualified. Continue doing this until you are fully invested.


    Boyd from Washington posted over 3 years ago:

    I would like to do some back testing on some Piotroski High F-Score stocks.

    How can I get, or where can I go to get the Piotroski High F stock picks for 2012?

    R Kraft from NE posted over 3 years ago:

    I have been investing using the Shadow Stock Portfolio for about a year and a half. It has excellent results for that time, but over the long haul also when I look at the charts. I continue to invest in the stocks, realizing if the market goes sharply down, so will these stocks (but so do almost all of them in that situation). Thank you for providing this way of investing. I don't know of a better investment, do you?

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