What's UP? AAII's Shadow Stock Portfolio

by James B. Cloonan

What's UP? AAII's Shadow Stock Portfolio Splash image

The Individual Investor’s Shadow Stock Portfolio has had an extremely good year as of this writing in early December (Table 1). By year end, it will most likely have beaten its best previous year, 1997, when it was up 44%.

Table 1. The Individual Investor’s Shadow Stock Portfolio
  Average Annual Return (%) 1-
Yr
Avg
Risk-
Grade**		 2003
Risk-
Adj
Return***
(%)
1993-2002 2001-2003* 2003*
Individual Investor’s Shadow Stock Portfolio 13.3 32.8 65.1 77 80.9
Vanguard Index 500 Fund (S&P 500) 9 –6.1 22.1 97 22.1
* Through 11/30/2003.

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** A measure of risk—the volatility of a portfolio relative to all stocks worldwide during normal market conditions. For example, a portfolio RiskGrade of 77 implies the portfolio has a risk 77% as high as the average risk of all equities in the world. RiskGrades for any portfolio can be found at the RiskGrades Web site (www.riskgrades.com); the Web site also provides the mathematical details of the approach.

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