Tax Service Insights

Comments on “The Most Popular Tax Preparation Services Used by AAII Members,” by Ryan Reeh, in the March 2019 AAII Journal:

I have used all of the tax programs listed. FreeTaxUSA is much cheaper and just as good as any of them.
—Charles from Arkansas

AARP provides free volunteer tax services in many communities as an alternative to paid services. There are limits for complex investment options, but most situations can be handled easily by trained IRS certified volunteers.
—Geofrey from Arizona

H&R Block does not figure in state deductions. People born before 1946 can deduct the amount from private pensions or interest and dividends, whichever is greater subject to caps. It doesn’t use the pensions for this calculation.
—Robert from Michigan

Social Security Shortfalls

Comments on “Knowledge of Social Security Spousal Benefits Is Low,” by AAII Staff, in the March 2019 AAII Journal:

The Social Security Office is lax on giving divorced women full information. For example, upon the death of a former spouse, it is my understanding that the divorced wife receives her former husband’s full benefit. However, when I called Social Security to ask about this, I was told it only applies as of his age 65. Does that mean she receives only that paltry sum he received at age 65, even though he lives well into his 80s? No answer from Social Security.
—Suzanne Benton from Connecticut

Social Security is lax on giving information to anyone! My wife tried to obtain information on two different issues. It took several months and repeated calls to receive the information she requested on her benefits or spousal benefits, as well as Medicare enrollment. Since she was not in their system, she could not use their internet service, forcing her to call. Some calls had wait times lasting for hours.
—John Marple from West Virginia

There is one question I have about spousal benefits. My wife is a retired federal employee, receiving annuity pay through the Federal Employee Retirement System. If she receives my Social Security benefit upon my death, is there an offset because of her federal retiree pay?
—Clarence Miller from Virginia

A Different Angle on Shadow Stock Performance

Comments on “The Model Shadow Stock Portfolio’s Drawdowns and Rewards,” by John Bajkowski, in the January 2019 AAII Journal:

With all due respect, I looked at the graphs and drew completely different conclusions from the author’s.

If you superimpose the Model Shadow Stock Portfolio graph from 2007–2018 over the market graph, you see pretty much the same results for that 11-year period. No score for the portfolio.

Stepping back into the recession years, 2007–2012, you see a lot of volatility but pretty much flat for both.

Stepping back again, the portfolio did great from 2002–2007. A five-year win for the portfolio.

In the years before that home run, 1993–1998, both groups had essentially the same start and finish points.

My conclusions: Based on the last 25 years, the portfolio has no intrinsic performance advantage over the market. For five out of the last 25 years it did significantly better, but if you did not own it during those five years, your return would have matched the market.

The compounding effect of those five years, 13 years ago, has produced the graphs in the article that make the portfolio look stellar. Perhaps taking different time frames might reveal different conclusions.
—Gregory M. Shea from Florida

Making “What Works” Work for You

Comments on “Revisiting the ‘What Works on Wall Street’ Screen,” by John Bajkowski, in the March 2019 AAII Journal:

This looks like an excellent system. I was disappointed that it is not covered in the Stock Ideas section on the website, although several other screens based on O’Shaughnessy’s research are provided. Any chance this screen will be added? Thanks.
—Houyhnhnm from New Mexico

AAII Editors respond:
As described in the First Cut article, the “What Works” composite screen relies on the ranking of composite scores that must be done in a spreadsheet. You can download the spreadsheet used to create the list of companies here: www.aaii.com/files/excel/What-Works.xlsx