For MLK Day the markets are closed and there isn't much market news out there so I thought I would share the latest AAII update regarding their Shadow Stock Portfolio, which was published on Saturday. You're all well aware that the AAII has maintained this paper portfolio for years and I even recall that, when we had our study group years ago, a few of you had compared the portfolio to others of its kind and found it somewhat lacking. Anyway, for your edification (or amusement), here is the latest.  

AAII: January Model Shadow Stock Portfolio Update

Dear Member, The January 2024 Model Shadow Stock Portfolio Update is now available online.

The Model Shadow Stock Portfolio gained 11.1% during December, boosting its full-year 2023 return to 20.8%. It was a welcome bounce back from the 19.7% loss experienced in 2022, but the Model Shadow Stock Portfolio underperformed the S&P 500 index's 2023 gain of 26.1% as measured by the Vanguard 500 Index fund (VFINX). The S&P 500 gained 4.5% during December with smaller, valued-focused companies outperforming larger growth companies during the year-end rally. Holding Period Performance The relative performance of small-cap stocks to large-cap stocks often runs in streaks. Small-company stocks have outperformed large-company stocks over the long term, but as we have seen they do not outperform large-cap stocks every year, and they tend to exhibit flashes of outperformance followed by periods underperformance.

Over its 31-year existence, the Model Shadow Stock Portfolio outperformed the Vanguard 500 Index fund in 17 of the 31 calendar years, or 55%.

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