Hello AAII Members,
I hope you've had a chance to read John Bajkowski's article in the July 2024 AAII Journal: Summer Portfolio Refresher: Swapping Five Shadow Stocks. This quarter's review of the Model Shadow Stock Portfolio led to five deletions and five additions. The article dives deep into the changes and the rationale behind them, making it a must-read for anyone invested in small-cap stocks.
Here's some context for our discussion:
When the quarterly review of the Model Shadow Stock Portfolio results in deletions and additions, how do you typically react to these changes? Do you immediately adjust your own portfolio to reflect these changes, or do you take a more wait-and-see approach?
A few other questions I had include: Do you employ similar strategies, such as quarterly reviews and specific selection criteria (e.g., price-to-book ratio, market cap), in managing your own investments? How do these practices compare with your personal investment strategy and objectives?
For example, in my own investment strategy, I conduct regular quarterly reviews similar to the Model Shadow Stock Portfolio. However, I also incorporate additional metrics such as debt-to-equity ratio and dividend yield that pertain specifically to my personal goals, time horizon and risk tolerance. I tend to monitor to see how new additions perform over a couple of days before making any changes to my own portfolio, but sometimes I have all the information I need and I jump right in. This has helped me manage risk while still benefiting from the potential upside of small-cap stocks and being able to accurately follow the model portfolio.
I'd love to hear your thoughts and experiences on how you handle such portfolio adjustments as well as how (or if...) you closely follow the Model Shadow Stock Portfolio's additions and deletions.
Click here to read the full article.
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Jenna Brashear
AAII Community Manager
Chicago, IL
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