AAII: The American Association of Individual Investors

AAII Model Portfolio

AAII's approach to building and maintaining our members-only Shadow Stock Portfolio is described in detail below. It's a real money, real-world portfolio that has outpaced the overall market by nearly 2-to-1 over the past 10 years. Read on to learn more about the AAII approach or, better yet, sign up for our FREE REPORT on the right of this page.

The Advantages Micro-Cap Stocks Hold for Individual Investors

As an individual investor, you may sometimes feel like the deck is stacked against you. Well-funded mutual funds, pension funds and hedge funds have teams of analysts pouring over company reports, performing industry analysis and talking to management to create models to identify the “true value” of a company.

Figure 1. AAII Model Shadow Stock Portfolio
Performance vs the S&P 500

However, what if we told you there was a segment of the stock market where you have the advantage over Wall Street. That there are stocks out there that, historically, have significantly outperformed the overall market yet professional money managers and high-frequency traders cannot buy and sell. Where a patient investor who is willing to commit the time and effort to follow a disciplined approach can succeed. The market segment? Micro-cap value.

Here at AAII, it's a segment we've studied extensively and it represents the backbone of our Model Shadow Stock Portfolio. See Figure 1.

Small Caps

One of the most hotly contested topics in finance academia is that of the "small-firm effect." For over 40 years, a mountain of research has been published trying to both prove and debunk the notion that investing in smaller companies will generate superior returns compared to investing in larger stocks, given the same level of risk.


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How to Win With a Small Cap/Value Approach
Let AAII show you the selection techniques we use to find and invest in Shadow Stock Companies.

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With the right education and information, individual investors are fully capable of becoming effective managers of their own assets.

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Explore the Many Benefits of AAII Membership...

The AAII Journal
The AAII Journal provides you with investment ideas, insights and direction that are designed to make you a smarter and more successful investor. Click here to get a free copy.
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AAII Model Portfolios
With a long history of beating the market, our portfolios give you proven, practical, real-world investment guidance and instruction. We offer Fund, ETF and Stock models free to all members.
Guide to the Top Mutual Funds
Providing data and insights on over 700 promising mutual funds, this guide will help direct you to the funds that are worthy of both your time and your money.
Stock Reports and Research
Through our long standing relationship with Standard & Poor's, members receive in-depth reports for a number of indexes and corporations.
Lists of Winning Stocks
AAII Stock Screens provide the investment philosophies and passing company lists from some of the most promising professionals and academics. Warren Buffet, Peter Lynch, John Neff and over 50 others are covered.
Local Chapter Membership
You get free enrollment to your choice of over 50 local AAII chapters plus numerous special interest groups around the country.