Fidelity SPDR Advertisement
Home > Boards > Free Zone > A.I.M. > A.I.M. Users Bulletin Board (AIMUSERS)

Is AIM better than alternatives such as yearly

Public Reply | Private Reply | Keep | Last ReadPost New MsgReplies (1) | Next 10 | Previous | Next
ls7550 Member Profile
Followed By 10
Posts 2,140
Boards Moderated 2
Alias Born 01/05/04
160x600 placeholder
U.S. Stocks Skid; Manufacturing Slows Down
U.S. stock investors continued their selling ways this week, pushing prices lower in early trading. Wednesday's slide stemmed from upbeat employment and manufacturing data for September, which although points to positive momentum for the U.S. economy, continued to fuel worries that the Federal Reserve may raise interest rates sooner than later.
Top Equities Stories Of The Day
JAL Customer Data Target of Cyber Attack
J.P. Morgan Expects $869 Million Credit for Mortgage Actions
IPO Scorecard: Update on Selected Initial Stock Offerings
Intel Invests in Chinese Chip Maker -- Update
Bank Branches in U.S. Decline to Lowest Level Since 2005
Private Payrolls Increased by 213,000 Jobs in September
Starboard Pushes For Potential Yahoo-AOL Tie-Up -- 5th Update
Correction to Dow Index Overseers Correction
ls7550   Wednesday, 05/02/12 08:15:44 AM
Re: AdamHelberg post# 35446
Post # of 38316 
Is AIM better than alternatives such as yearly rebalancing back to target weightings?

Overall my guess is they're much the same. A big difference however is that you're more likely to actually rebalance under AIM than you are if you're left to manually manage the holdings. With manual management you have the added risk that you'll find reasons not to reduce something that has been winning or add to something that has relatively lagged/declined.

AIM is also 60-40 or 50-50 or 75-25 stock/cash based, which can achieve similar rewards to 100% all in. With 100% all in you run the risk that whatever price you paid for that stock will reflect the longer term rewards achieved from holding that stock. If you paid a high price then long term rewards can be dismal. Buy at the right time and rewards can be great. With 50-50 or whatever, if you overpaid initially likely you'll buy some more later at a lower price and cost average down the average cost of stock. If you bought in at a bargain then likely you'll sell some (profit take) and some of those gains might help counter another holding that was bought at a relatively high price.

If there's 50-50 chance of overpaying or buying cheaply a single stock/holding, you might hold one that achieves a 10% real (after inflation) gain and another that achieves a 0% real gain. For a combined average of a 5% real gain (assuming similar amounts invested in both). In contrast with AIM you're more likely to cost average both stocks towards a 5% midway overall average real gain.

Whilst leveraged funds might not be great investments and hide other risks (counter party swap risk etc.), I suspect that if used wisely then can help with cost-averaging by reducing downside risk, improving upside potential when compared like for like with 1x (such as holding 25% in a 2x instead of 50% in a 1x).

Public Reply | Private Reply | Keep | Last ReadPost New MsgReplies (1) | Next 10 | Previous | Next
Follow Board Follow Board Keyboard Shortcuts Report TOS Violation
Current Price
Detailed Quote - Discussion Board
Intraday Chart
+/- to Watchlist