Hi Allen, Re: Cyclical graphic..................
In reference to that chart, one could say that Healthcare and Utilities peaked this summer and have already shown some early weakness. If that's the case, then the cyclical chart is well to the right on the X-axis.
With AIM, it will make sure you're accumulating in each cycle the appropriate business sector as it reaches near its bottom. Further, it will be showing build up of cash at each sector rises to its cyclical peak.
If you'd started your business sector AIMing in ETFs with 33% cash in March of 2009, and managed to buy the exact bottom of the market, you would now be sitting on a small mountain of cash. In theory you would have been better off starting in March of 2009 with zero cash.
Would you have lost money with all that surplus cash in 2009? No. Total return might have been dampened a bit, but no losses would have occurred. At that time 'all ships' were down and the phasing seen in the graphic really wasn't there. The first part of the recovery later in 2009 had 'all ships rising.' Only later did the phasing start to show up again.
The phase diagram is more important to those who do sector rotation than to AIMers. Each AIM engine set up for one major business sector will run at its own speed and be governed accordingly. If you choose "style" based funds that blend the sectors, then you lose this potential. AIM will manage style funds just fine, but there is a difference in activity because of the phase of the various components of a style based fund. They tend to own some of all the sectors so the differentiation is muted.
Hope this helps.
PS: I'm glad to see you are doing your homework. It's been a very long time since I originally posted that cyclical graphic! So, it appears you're doing some serious AIM history mining!
