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Hi Will,
So far the Equity/Cash ratio has averaged 78/22 when I exclude the first few entries. Back at the start each growth fund buy (or lack of one) was a pretty big change, so it showed investment to be lower than the approximate 80/20 mix. After the account had some substance, the ratio stabilized. (the fund is pretty high priced at over $200/share)
With the market decline in 2022 the ratio shifted to being above 80% invested for the last 12 months. So far this has worked out well.
Decades ago I'd set up Twinvest accounts for my kids' college $$$. Those were traditional Twinvest accounts (I'd not thought of making it more aggressive). Those did well but became cash rich over the '90s.
Best wishes,
OAG Tom
I like the idea of being more aggressive initially, I guess cash will increase over time natrually.
Thanks.
Will
Hi Steve,
A sell transaction size of 1%(micro), used together with a safe of 10%.
At the buy side I also use a safe of 10%, and the buy transaction sizes mostly(not always) are bigger than 1%. I try to have 12% for the first buy after a sell.
When you have a string of 1% sells, the LIFO gains tend to get larger for each successive sell.
Best Regards,K
Nice Gains K
What are 'Microsells'?
Here's April's U.S. Sector Review numbers:
S&P 500 GIC sectors Price Change % Chg % YTD Chg
Communication Services 198.35 1.06 0.54 24.46
Consumer Discretionary 1152.42 -0.43 -0.04 14.61
Consumer Staples 807.20 3.89 0.48 3.60
Energy 655.20 9.52 1.47 -2.55
Financials 551.42 6.47 1.19 -3.22
Health Care 1555.39 12.59 0.82 -1.90
Industrials 846.11 7.74 0.92 1.77
Information Technology 2649.95 28.17 1.07 22.00
Materials 507.06 5.67 1.13 3.58
Real Estate 236.74 2.71 1.16 1.88
Utilities 350.26 -0.68 -0.19 -2.29
Good morning Will, Re: Twinvest model changes for my contributory IRA........
I decided to dial up the aggressiveness of the Twinvest formula a bit. Instead of the Code being based upon the periodic addition being divided by 4 (creates an initial 75%/25% ratio of invested $$ vs cash $$) I divided by 5. That makes the initial invested side = 80% with cash being just 20%. Not as much reserve and a bit more aggressive.
Now that cash is starting to throw off some yield, the cash side will start to contribute a bit to the overall performance. That wasn't true when I started this thrift account.
With the Twinvest Code being a bit more aggressive, I figured there was a better chance in a market decline of tapping the cash being held and a greater chance of becoming fully invested. That's not happened yet, but nobody's sure what the Big Bad Bear will do next.
Current overall investment ratio is 83% Stock Fund, 17% Cash Reserve.
Hope this helps,
OAG Twinvest Tom
Hi Tom,
What is your modification to the twinvest method. I'll be using it in a similar situation as you. Currently I've moved from DCA to twinvest.
Thanks.
Will
(World index Acc/ PP) ratio
1. The PP has shares, where each share is around 1 euro.
So the graph is very similar to the (World/cash) ratio graph.
2. Also on visual examination it seems that the weekly volatility when AIMed with a PP is lower than when AIMed with cash.
AIMing anything with the PP could be possible where the PP could be a common cash store.
Maybe one could reset the share price to one euro on a yearly basis to make sure it stays more cash like.
Best, K
Thanks Jon, Re: v-Wave is back at Median 3.- 5 Years.............
One would never guess "Median Risk" from the financial news headlines these days. I also note this week that Value Line's Dividend is back at its Median value of 2.3%/yr right now. By comparison the 13 Week Treasury Coupon Rate was 5.216%/yr as of last Friday's close. So, the "risk free" rate of return is double the VL median dividend. (note that the Treasury rate is also still about 1.5% below the current inflation rate)
Best wishes,
OAG Tom
Wave 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of May 5th
_________________________
Short Term (18 Months)
Individual Stocks: 50% (Down 2 from previous week)
Diversified Mutual Funds or Portfolio: 33% (Down 2 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 43% (Down 2 from previous week)
Diversified Mutual Funds
or Portfolio: 29% (Down 1 from previous week)
Oscillator: -.58 (Down 1.35 from previous week)
*See posts #44585 and #4458
Hi Steve,
This week:
One sell on UNA, 23% Lifo gain. (lower beta stock)
Four microsells on FTK, Lifo gains: 46%,48%,43% and 45%.(higher beta stock)
Best Regards, K
Hi Steve, Re: Activity...............
One 'vealie' with Badger Meter (BMI) as cash is still plenty high in that AIM engine.
One Buy in GNRC when it dipped to around $97. There's a fairly high Short Interest on GNRC at around 8% of float which might make things interesting in the future.
Both companies are Wisconsin based, BTW. Holy Cheese!!!
Best wishes,
OAG Tom
2 Sells on AMZN this week and 1 on JAKK
GIEW had an AIM directed Sell on AMZN on Monday as it had been 'creeping up' over the last few weeks in anticipation of their Q1 release on Thursday (yesterday). Then they released after the close and shot straight up triggering my next Sell! Realized 16% and 20% Lifo gains respectively.
JAKK got a nice 25% Lifo gain yesterday as well.
Well certainly the numbing. But the nitrous helps one relax a little more. Especially if dentists freak you out. Not my issue, but some people need to go totally under. Like Wisdom Teeth removal. Both of our kids had that as teens, and they had to go under. Funny when they come out of it though.
Hi Steve, Re: Gold and Pandemic..................
That was my 'read' on it, too.
Best wishes,
OAG
Hi Toofuzzy
Hi Steve
Hi Tom.
Looks like that intense accumulation and peak in 2020 was likely due to the pandemic.
Lots of fear from March onward.
discomfort from that he's been in a dentist chair this afternoon for two hours having a main molar crown prepared
Do they use Nitrous Oxide (laughing gas) in the UK?
Takes the edge off if the prep work includes a root canal!
Hi Toof, Re: Comparing Closed End to ETFs.......................
Here's RQI, VNQ and ICF. Stretch the X-axis back to 2005 to see the differences.
https://stockcharts.com/freecharts/perf.php?RQI,ICF,VNQ&n=3512&O=011000
Best wishes,
OAG
Hi Toof, Re: Closed End Funds vs Open End.
I've used closed end funds off and on with AIM over the years. The extra push of "premium" and "discount" that occurs with closed end funds actually gives them some extra price amplitude compared to funds that trade at their Net Asset Value (traditional mutual funds and ETFs). This can improve AIM's ability to get effective trades.
Mostly I used income oriented Closed End Funds in the past. Like other income funds, they don't trade very often, but can work with AIM for the long haul. During times of poor bond performance almost all income funds suffer. CEFs usually get an extra push downward during such times and can trade at significant discounts to NAV. Going the other direction, during times of stock market distress, income funds tend to do well as flight-to-safety dollars head toward income oriented investments. This can drive AIM sales department and capture some trading profits.
Thanks for bringing this up,
OAG Tom
Hi Clive
What is SWR ?
ALSO physical gold has a very high trading cost. I would own a miner over a depository like IAU . In my case I like streaming companies specifically WPM which has done much better than the underlying gold / silver.
Toofuzzy
Hi Clive
I was going to comment that that sounds like the investment advice of the Talmud !
Wonder where Bitcoin fits in ?
Toofuzzy
That is interesting
I have been about 25% WPM for a few years now.
If I didn't have calls written I would be selling some now.
Toofuzzy
Hi Clive
Looks like rebalancing between gold and stock would work.
Toofuzzy
Hi Tom
AIM would work well for a closed end funds.
Besides not fighting redemptions it could sell more shares at a premium and buy shares back at a discount.
Pick one stock in each sector that you felt was safest and AIM it.
Toofuzzy
I wonder if closed end funds do much better as they are not forced to sell and can offer to sell more shares when at a premium and buy back their shares at a discount ?
RQI total return vs ICF ? Same manager
Toofuzzy
I neglected to post my various portfolios activity through the end of March. Here they are:
9 International ETFs (Style)
My Sandbox 10 common stock portfolio
U.S. Sector ETF portfolio
Contributory IRA account
(Using a modified Twinvest formula for monthly additions)
Most of these were in "Hover" mode for March.
Best wishes,
OAG Tom
Wave 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of April 28th
_________________________
Short Term (18 Months)
Individual Stocks: 52% (Up 7 from previous week)
Diversified Mutual Funds or Portfolio: 35% (Up 5 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 45% (Up 2 from previous week)
Diversified Mutual Funds
or Portfolio: 30% (Up 1 from previous week)
Oscillator: .77 (Up 1.33 from previous week)
*See posts #44585 and #4458
Hi Adam
Hi Tom
AIM S&P500 real price since 1871
Started 2023 with 75% cash being indicated !!! I suspect that high level is somewhat a reflection of US taxation policy changes in the mid 1980's to incite more of earnings being retained rather than paid in dividends - somewhat accelerating price appreciation ??? Or maybe a wise AIM decision :) When it seems quite popular at present for some to be loading heavily into TIPS/iBonds ladders that are yielding positive real yields following large declines in bond prices in 2022
Clive
About cash. My SWVXX Schwab money market fund is now yielding 4.67% which is a marked difference from before. Before, cash was deadwood bringing performance down, but now it makes much more sense to follow the vWave and hold the recommendation in cash. I think AIM works much better in times of moderate interest rates like today, than when the interest rate is zero.
Hi Clive, I forgot to mention that in my version of the Talmud portfolio it's actually 30/30/30/10 with the last 10% being a cash reserve. We've been letting the dividends collect in the Cash column and have been able to rebalance using the reserve in most instances. That helps defeat the "All Ships Rising At Different Rates" problem that Rebalance can have.
Rebalance is less stressful when there's cash available. There may be no need to sell something just because there's a need to buy in another sleeve. It appears that this is going to work out well over the long haul.
I should start a histogram of this and track it over time.
Best wishes,
OAG Tom
.....More on IAU Accumulation and Distribution of Shares...................
Since the end of around 2018 both the price/share and the Accum/Distr patterns have been more dicey. Also, total trade volume has been higher than most of the previous decade+.
Thanks for the Gold/Stock/Cash AIM blend info. I helped a friend build a Gold/Stock/REIT Rebalance blend that has been working well since April of 2021.
Best wishes,
OAG
Lumping in/out
Elsewhere on another board, yet another periodically highlighted how ...
Hi Clive, Re: Gold..............
I watch the Accumulation/Distribution of IAU over time. It gives good correlation with price change most of the time.
Thanks,
OAG Tom
Hi Clive, Re: Human Nature and investment returns......
Thanks for the article link. Norman Fosback built a sizable data base which confirmed similar things. Mutual funds need to chase upward moves with the influx of new money just when the markets are getting fatigued. Then, when markets turn down, they are forced to sell inventory to raise $$$$ to cover "redemptions" of investors fleeing with their money. Fosback found mutual funds had the lowest reserves near market tops and the highest at market bottoms.
His "Mutual Fund Forecaster" publication had its basis in this phenomenon. He came up with a base level of cash that MFs held of about 3.2 percent, added to that a factor representing interest rates and came up with a normal cash level. That value was subtracted from current actual MF cash to come up with his Fosback Index value.
Excess above normal showed extra cash held while a value below normal meant Funds were light on cash. History showed heavy cash coincided nicely with market bottoms while market tops were shown to be light on cash. His book, "Stock Market Logic," (pardon the oxymoron) was and is a great primer on the study of "Econometrics." I based my Divergence Index on his "High/Low Logic Index" and include it weekly as one of four components in my Market Risk Indicator.
Best wishes,
OAG Tom
InvestorsHub web site was previously just about tolerable, but in more recent form (not sure as from when as I don't visit that often nowadays) its almost beyond usable for the ageing eyes/laptop visitor that employ larger fonts.
A top of page video detaches to place itself across the bottom/middle screen region when you scroll down on nearly every page/click. Header section takes up most of the top half of screen. And where things simply don't scale well when a non micro-text default is being used.
I guess maybe OK on a desktop/larger screen, but I mostly use a laptop of just modest screen size.
Apologies if I don't respond to posts, not intending to be rude/ignoring, rather its just a case of (dis)comfort of usage.
Clive
Want to Beat the Stock Market? Avoid the Cost of ‘Being Human’
https://www.wsj.com/articles/active-vs-passive-index-fund-beat-the-stock-market-58e8bd83?st=0v7d1rmgtuwozx0&reflink=desktopwebshare_permalink
Wave 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of April 21st
_________________________
Short Term (18 Months)
Individual Stocks: 45% (Down 5 from previous week)
Diversified Mutual Funds
or Portfolio: 30% (Down 3 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 43% (Down 2 from previous week)
Diversified Mutual Funds
or Portfolio: 29% (Down 1 from previous week)
Oscillator: -56 (Down 1.35 from previous week)
*See posts #44585 and #4458
I finally listened to AIM and sold some SCCO.
It is nice to be raising cash in a nervous market
Hi Clive
At one point I realized that S+P 500 and gold were the same price and thought of putting 50% into each and rebalancing once per year or so.
Not sure how that would have turned out since I don't remember when I thought of it.
Was gold a good hedge 2008 to 2009 and Spring of 2020 ?
Toofuzzy
Hi Clive,
Trying to understand the AIM of stock/gold ratio.
I noticed that AIMCASH(%gold) seems to get lower in time, probably reflecting gold's strength.
Is there a need to emphasize conservation of gold?
I played a bit with the World Index/ Gold(only data for the last 2 years) and saw the importance of starting cash.
Here is the same data, now the ratio is (World Index/Cash)
And another time : ratio is (World Index/ Global Hedged Bond Fund)
Kind Regards,K
Applying the same to US data, VISVX / gold ratio, and levelling the AIM %cash (gold) to the same as the UK version at the start date ...
... worked well
The mid section third (cash) chart would have dropped closer to 0% has a 5% MTS been used instead of the 10% MTS I set (fewer/larger 'trade' frequency).
Clive.
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Here's a handy "Quick AIM Calculator" for finding the next AIM directed Buy and Sell prices for your portfolio holdings:
A.I.M. Users Bulletin Board (AIMUSERS): Thanks LC, Now they can use the "calculator" again! (advfn.com)
While the AIM book is no longer being reprinted, it is available from Amazon for their Kindle for $5.99.
http://www.amazon.com/How-Make-Stock-Market-Automatically-ebook/dp/B002VKJ1EI/ref=sr_1_1?s=books&ie=UTF8&qid=1395757939&sr=1-1&keywords=lichello
Mr. Lichello wrote the book on AIM in 1977. In the mid-'80s he put an infomercial on AIM on late night TV and attempted to sell his workbook and audio tapes.
(1) How To Make $1Million In The Stockmarket Infomercial - 1985 - YouTube
It's a reasonable review of the AIM method for those who are unfamiliar.
Run A Successful Equity Warehouse
Welcome to the AIM Users Bulletin Board. This is the thread to post your thoughts, questions and comments on the use of Robert Lichello's Automatic Investment Management for handling the risk of being involved in the Equities markets.
The AIM strategy gives the user LIFO gains of 20% minimum if the method is followed "by the book." It is ideally suited to those seeking long term investment growth while managing the risk of being invested.
Thoughts on being a successful Individual Investor
I wrote this book review a long time ago. It's a trader's interpretation of
Sun Tzu's "Art Of War." I related it to AIM as best I could.
------------------------------------------------------------------------
Mr. Lundell says, "Today's financial markets are the last bastion of unabashed conflict.....
To participate, you must be your own general, devising a strategy, gathering information, executing your plan, and adapting to the situation."
How can we use AIM and the v-Wave for strategic and tactical planning to carry out Mr. Lundell’s requirements to participate in the Equity Markets?
"Be your own general"
You are in charge. You are responsible. When you win, you benefit. When you lose, only you are to blame.
a) Broad trends persist. Discover them. They will survive boom and bust.
b) Don't contemplate engaging in war while beholden to another. They could become your ruler!
To me this means "Stay away from Margin Buying unless you are certain of victory."
c) Establish and maintain a "Baseline of Survival" for your command.
This is the "income" side of my overall portfolio.
d) Know that reality is governed by Darwinism; Long Term Survival belongs to the fittest.
"Devise a Strategy"
Our strategy is to sell inventory into market strength and to buy into market weakness. Robert Lichello's AIM algorithm provides us with a systematic approach to follow that employs this strategy.
a) Sell quality merchandise to all those willing to pay.
b) Buy quality merchandise when the price offers reasonable hope to resell at a profit.
c) Let the allocation of resources and inventory be governed by the course of the market and AIM's guidance.
"Gather Information"
Today there is no excuse for not being informed.
a) Differentiate between information VOLUME and QUALITY.
b) Differentiate between FACTS and OPINION.
c) Find good sources of judgement where you cannot act as judge.
d) Information is trusted only when provided by those proved trustworthy.
"Adapt to the Situation at Hand"
The v-Wave measures general U.S. Market Risk (and may be sensitive to world market risk) from low to average to high. This helps you gauge the situation by:
a) Gauging your initial cash reserve requirements on new investments
b) Gauging your on-going cash reserve requirements on established investments
c) Judging whether to establish a bias for accumulation or distribution
d) Possibly starting no new AIM accounts when the v-Wave is showing High Risk
e) Possibly ignoring all AIM Buy Signals during v-Wave High Risk events.
f) Following all AIM buy and sell signals during v-Wave Average Risk events
g) Possibly ignoring all AIM Sell signals during v-Wave Low Risk events
h) Re-assessing your "Baseline For Survival" at times when AIM has your account heavily in Cash
i) Always attempting to beat measured inflation by 5 basis points minimum after all taxes and living expenses are paid. If you do this consistently, in good and bad markets, you will be winning long term
j) Possibly using "vealies" when your positions are cash rich relative to the v-Wave. Limiting supply helps to keep Momentum player’s Demand high.
"Execute your Plan"
Set the plan in motion; know that it takes time for realization. Follow the plan without hesitation allowing the goals to be realized. The strategy is sound so execution is all that is required.
a) Buy when the plan says
b) Sell when the plan says
c) Be very patient when no buy or sell signals are being generated
Reading Mr. Lundell's interpretation of Sun Tzu's work will help you focus on your own plan. It will arm you with knowledge of what others not using AIM are doing in the market. Understanding Short Term Trader's strategy and tactics is like having a spy in the enemy's camp. AIM users can profit by knowing just how these people think and act. AIM acts as almost a mirror image of what goes on in a trader's mind.
-------------------------------------------------------------------------------------------------------------
The v-Wave........
Mr. Lichello used fixed cash starting levels; first it was 50/50 then 67/33 and in the last edition of his book 80/20 for the Equity/Cash ratio. This "one size fits all" approach is like a broken watch that shows the correct time twice a day but is wrong the rest of the time!
Minstrlman, a regular contributor here, helped gather data from Value Line and formed a highly capable risk-cash indicator for our use. Since then, J Derb continued his work each week. As an adjunct to the AIM methodology we now have a Cash Indicator which helps guide our starting and ongoing Cash Reserve level of AIM relative to measured market risk. It can be used as a general market barometer or specifically with the AIM method. The v-Wave (or VW) is derived from the Value Line "Appreciation Potential - Next 3-5 Years" (VLAP) indicator shown weekly in their Summary and Index Section for their 1700 stock edition. Looking back through V/L's history we find the peak Appreciation Potential occurred 12/23/1974 at +234%. Our continuous database starts January of 1982 and we scaled our "zero cash" to the market risk low point of early that year. We take the VLAP and manipulate it to get an indication of how much cash should be reserved for diversified mutual fund AIM accounts. It should be multiplied by your stock or portfolio's BETA to get the cash reserve level of less diversified or more aggressive holdings.
v-Wave Weekly Cash Reserve Indicator For AIM Users
Current years of the v-Wave:
For diversified portfolios the Median value for the v-Wave is 29.5%. High Risk is 34% cash or higher for individual company stocks. Low Risk is 24% cash or lower.
To get a more proper cash level for individual company stocks multiply the current "Diversified" value by 1.5. This gives us 51% as the high risk threshold and 36% for the low risk boundary.
Looking at the cumulative risk of the v-Wave gives another perspective:
Cumulative v-Wave is calculated by taking each week's v-Wave Stock value, subtracting the median value from it and adding it to the previous total.
Significant historical events are shown nicely here and the v-Wave's response at those times.
v-Wave Calculations can be found at #30219. The data are a work-in-progress for now.
TooFuzzy provided us with a handy "Quick AIM Calculator" Here's a link to that page:
A.I.M. Users Bulletin Board (AIMUSERS): Thanks LC, Now they can use the "calculator" again! (advfn.com)
(follow the link on the above page)
AIM has a predictable pattern of "cash burn" in a declining market. Depending upon the SAFE settings AIM will generate new buy orders sequentially as share prices decline. It can be helpful to know in advance about how deeply AIM is going to draw down one's cash reserves. This link is to the "Cash Burn" AIM page. It shows various end points based upon the starting cash reserve level. Here's a link to that page:
"" rel="nofollow noopener noreferrer ugc" target="_blank">http://www.aim-users.com/cashburn.htm"; rel="nofollow noopener noreferrer ugc">A.I.M. Cash Burn Rate (archive.org)
Best wishes,
Old AIM Guy
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