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Hi Allen
Hi Allen
The clue is in that image you posted, the online calculator is using the bulk standard Lichello way - percentage of stock value. Newport uses percentage of Portfolio Control.
i.e in that image
Stock Value above $11236, sell price $112.36 (stock value below $9000, sell $900)
Generally the two different choices (percentage of Portfolio Control (Newport) and percentage of Stock Value (bulk standard Lichello)), work out much same overall. Some interim differences will be apparent, but neither has a overall edge.
Here's a desktop snapshot that includes the spreadsheet formula that I used to set up that 30 Dow Stock AIM's
Simple enough, but if you need guidance then expanding the image will better reveal the actual formulas for each cell. Usually you can enlarge by right clicking on the image and select View and then hit Ctrl and Plus key (Ctrl +) several times to enlarge the image).
https://uk.finance.yahoo.com/q/cp?s=^DJI Price PC #S N = Buy Sell
American Express Company 94.29 5000 53.03 94.29 81.99 110.93
The Boeing Company 131.63 5000 37.99 131.63 114.46 154.86
Caterpillar Inc. 94.23 5000 53.06 94.23 81.94 110.86
Cisco Systems, Inc. 28.35 5000 176.37 28.35 24.65 33.35
Chevron Corporation 113.25 5000 44.15 113.25 98.48 133.24
E. I. du Pont de Nemours and Company 75.13 5000 66.55 75.13 65.33 88.39
The Walt Disney Company 95.03 5000 52.61 95.03 82.63 111.80
General Electric Company 25.78 5000 193.95 25.78 22.42 30.33
The Goldman Sachs Group, Inc. 195.45 5000 25.58 195.45 169.96 229.94
The Home Depot, Inc. 103.75 5000 48.19 103.75 90.22 122.06
International Business Machines Corporation 162.34 5000 30.80 162.34 141.17 190.99
Intel Corporation 37.55 5000 133.16 37.55 32.65 44.18
Johnson & Johnson 105.06 5000 47.59 105.06 91.36 123.60
JPMorgan Chase & Co. 62.55 5000 79.94 62.55 54.39 73.59
The Coca-Cola Company 42.96 5000 116.39 42.96 37.36 50.54
McDonald's Corp. 94.78 5000 52.75 94.78 82.42 111.51
3M Company 166.26 5000 30.07 166.26 144.57 195.60
Merck & Co. Inc. 57.78 5000 86.54 57.78 50.24 67.98
Microsoft Corporation 47.88 5000 104.43 47.88 41.63 56.33
Nike, Inc. 96.83 5000 51.64 96.83 84.20 113.92
Pfizer Inc. 31.65 5000 157.98 31.65 27.52 37.24
The Procter & Gamble Company 93.46 5000 53.50 93.46 81.27 109.95
AT&T, Inc. 34.17 5000 146.33 34.17 29.71 40.20
The Travelers Companies, Inc. 106.7 5000 46.86 106.70 92.78 125.53
UnitedHealth Group Incorporated 102.55 5000 48.76 102.55 89.17 120.65
United Technologies Corporation 117.24 5000 42.65 117.24 101.95 137.93
Visa Inc. 266.62 5000 18.75 266.62 231.84 313.67
Verizon Communications Inc. 47.86 5000 104.47 47.86 41.62 56.31
Wal-Mart Stores Inc. 86.91 5000 57.53 86.91 75.57 102.25
Exxon Mobil Corporation 93.21 5000 53.64 93.21 81.05 109.66
Hi Allen
I just applied the 'ocroft' to the buy side. As indicated in my early posting e.g. when AIM indicates buy then start running a sideline AIM as though the buy had been made, but not in practice, and then once that AIM stops buying revert to the original AIM and see what that's indicating to do at that time and execute that in practice.
As another test I grabbed ^GSPC historical prices back from 1970 and for price only, no dividends, no cash, applied to a 50% initial cash AIM ...etc there was much less clear evidence of one choice over the other. Using ocroft marginally reduced risk (maximum drawdown) averaged a little more cash (less stock exposure) and averaged slightly lower overall annualised gain (reflective of the slightly lower average stock exposure).
So ???
Here are some figures for STKL backtest from June 2006, monthly reviews, 50% initial cash, 5% min trade size, 25% Buy Vealie, 50% sell Vealie
Standard AIM
Min Cash 0%
Max Cash 58%
Avg Cash 36%
MaxDD -79%
Annualised 10%
STKL
MaxDD -92.5%
Annualised 2.75%
With those delayed buy trades
Min Cash 0%
Max Cash 77%
Avg Cash 49%
MaxDD -59.5%
Annualised 16.1%
The Maximum DrawDown was significantly less, whilst the rewards (annualised gain) was significantly better, and that was achieved with a higher amount of average cash.
Hi Toofuzzy : RE delayed trades
Thanks, seen those date problems myself. Busy at present so no time to correct/upload yet just yet, will do so later.
For the Ocroft sheets they're both hard coded (entered), one looked at the first (standard) AIM and just tallied sequential trades and entered the same total $ trade size of all of the accumulated sequential trades in the month where the buying (selling) stopped (so yes Ocroft applied to both buys and sells). The other entered used the same spreadsheet, no reference to the first one and applied trades as/when the same direction trades stopped (i.e. maintained its own PC, #Shares etc. Of the two the former was the better, but that might very well be down to that particular sequence of share price motions being more favourable the first method over the second method. Looking at a plotted 'cash %' chart I see that the former rose to 90%+ and then dropped down to around -30% in one single dip i.e. was fortunate in its 'timing'
Having a model that works well in a dive/rebound is useful in that that model can be diversified with other models, potentially against the same stock, such that you have a portfolio of models better suited to a range of events (share price sequences). i.e. perhaps something like that first Ocroft model 50% weighted and buy and hold 50%
Clive.
Standard AIM = buy (sell) as and when AIM indicates.
Ocroft method is where all sequential AIM indicated trades aren't actually traded but mentally accumulated and then when the next AIM review indicates no AIM trades being apparent then actually place the market order for all of the mentally accumulated trades
So if in January AIM indicates buy $1000 of stock, and then again in February AIM says buy another £1200 of stock, but then in March no AIM trade is indicated then you buy £2200 of stock in March (having 'ignored' trading of the January and February trades).
The idea is that you don't chase down runs, but accumulate all of the buys you would have made and deploy a single larger trade after a bottom reversal.
There are two ways as I see it to record Ocroft trades. Either you maintain a paper AIM and just buy/sell the accumulated trades as above, leaving the paper AIM running as normal (that records each and every trade being placed as soon as indicated). Or you adjust the PC, #Shares etc according to the Ocroft based trades (single larger trades), which induces a different set of #shares held compared to the standard (model) AIM.
Of the two it looks to me as though the former is the more productive. i.e. run a paper AIM as a model and use that model to identify how much to trade and when - and not let the accumulated trades value have any input into the #shares setting of the model AIM.
What I'm broadly seeing with the Ocroft approach is that when single AIM trades occur then often you'll buy at a higher price by delaying the purchase until the following month (assuming no AIM trade is indicated the next month), so it typically relatively loses out for such cases - but typically not by that much. When however there is a sizeable down run and AIM indicates repeated buy trades month after month, then having accumulated all of those trades and deployed after AIM stops buying you not only preserved cash reserves for longer, but 'averaged in' at a much lower 'average' price. A much more significant 'saving' (difference).
Some say AIM has a "Lichello Flaw" where after a buy another buy can be immediately indicated. Lichello was aware of that and described it as being a feature - not deploying too much too soon so-to-speak. Others suggest AIM sells to the greedy, buys from the scared. With Ocroft's approach its more a case of buying from those that have capitulated - but where such capitulation has bottomed and the share price started to reverse back up again. Some call that bottom-fishing - looking to lump a sizeable amount in after the share price looks to have dived deeply, bottomed and started to rise back up again.
Two styles of Ocroft's approach
Simply run AIM as-is on paper and apply all of the sequential trades in a single trade after that sequence has stopped, leaving the original AIM running as-is (worksheet labelled A in the spreadsheet). OR apply all of the sequential trades in a single larger trade once the sequence has stopped, but then use those AIM settings going forward (worksheet labelled B in the spreadsheet).
Leaving AIM running as-is seems to have provided the higher reward in that particular case, and only marginally increased risk (maximum drawdown just a few percentage points higher).
So it looks like the better choice might be to run a standard paper AIM, noting when a buy occurs but not actually trading at that point in time. Review a month later and again defer actually buying if a buy trade is indicated, otherwise actually buy the $ amount of total $ AIM indicate buy amount(s) at that point in time. Leaving the paper AIM running as-is (as though each of the buy trades had been placed as and when each such trade was indicated).
I figured out the bug in the worksheet - needed to use the next months number of shares when calculating the total portfolio value, so added a extra row at the end of the spreadsheet data and populated that F column value with the number of shares, and corrected the Total AIM Value column.
I've changed the choice of data to use SSO (still with VFISX for cash) and added another worksheet that reflects ocroft's style of trading (that's hard coded i.e.accumulate all sequential same direction trades indicated by AIM and execute one single larger trade once that sequence of consecutive AIM trading stops). Similar overall result to trading each and every trade one at a time, but the risk was significantly lower for the data series in the spreadsheet. i.e. plot charts and you'll see that ocroft's approach didn't dip anywhere near as deeply during the 2008/9 financial crisis period
Oh I've used computers - a lot. Come from the generation that was raised within the early evolutions ... ZX Spectrum's upwards. Square ball bouncing around a screen with two flat bats where you could move the bat up/down to return the 'ball'. And then came Elite - kept me entertained for hours that did.
I'm not sure the spreadsheet is 100% as it seems to put out little spikes here and there when you plot progressions, so something may be misaligned somewhere - just can't spot where at present (if at all).
Here's another 'test' spreadsheet - can you see if you can access that directly (without having to log into google)
http://tinyurl.com/kx35oku
Bit of a weird test that one. The concept being that rather than AIM'ing stock value it AIM's cash or rather the cash spread - with actual stock as the 'cash'. i.e. when cash is lagging stocks then the AIMs 'share' price is down and it indicates to buy more - which in practice is to reduce cash and buy more stock. Similarly when AIM stock (cash) is doing relatively well (likely stocks have declined in price) it indicates to sell some 'cash' which in practice means buying more stock.
Vealies are turned off i.e. buy vealie set to 0% and sell vealie set to 100%. The results look reasonable to me - not so much in actual total gain terms but in safety/volatility (risk reduction) terms.
To form the 'Share price' input into AIM I calculated the running VFISX gain (cash) and divided that for each period by the running SPY gain. i.e. broadly you might anticipate the running product of that to be a declining series (as share price gains outpace cash gains over time), such that AIM will tend to do signal more buys than sells. The data to look at is the blue background area over to the right as the actuals.
This requires a google account
Apparently it doesn't. I had a email saying that someone was requesting to access the spreadsheet and that I could set the permissions by following the link included in the email and one of the options was to openly share to anyone who had the spreadsheet link (which I've now activated) - so you don't need a google account :)
Correct that chart isn't inflation adjusted.
I tend to only calculate inflation adjusted values/results point to point. Level the initial value to a index value of 1.0 and calculate the nominal gain-factor progression, say ending at 2.6, and calculate the inflation index change over the same period, so if the inflation index was 1.3 at the start, 1.7 at the end then the real gain = 2.6 * 1.3 / 1.7 = 1.99. I then annualise that. If for instance that 1.99 real gain occurred over 5 years = 1.99^(1/5) = 1.1473 annualised gain factor, which is 14.73% annualised real.
I do sometimes plot running real gains, in which case I have one column of nominal running gain factors and another column with the running inflation index and a third column formed by dividing the respective first column value by the second column value.
Hi Allen Re: Vealie
Remember that a Vealie is simply :
Rather than selling some shares when AIM indicates it is appropriate to do so, and when cash reserves might already be at relatively high levels, instead you increase Portfolio Control by half the trade value amount indicated to be sold by AIM, without actually selling any shares.
For recording keeping actuals I use paper/pencil. I'm not very tidy/organised nor comfortable with maintaining longer term trading activity data on computers, other than a spreadsheet image of paper records that I keep on a USB stick as a off-site record should the house burn down. I use the computer more as a calculator than a data bank.
One way to manage holding a mixture of 2x stock, 1x stock, long dated bonds, short dated bonds portfolio might be to level to average 100% stock exposure for the target choice and allocate 41.7% to each of two AIM's, one for 2x, the other for 1x, using AIM-HI settings (80/20 initial stock/cash (20% initial cash reserve)), and utilise a 40% Vealie rule.
That broadly aligns to holding between 75% and 125% stock exposure, i.e. not too little, not too much.
i.e. if both AIM's have fully exhausted 'cash' then 41.7 in 2x and 41.7 in 1x is equivalent to 125 stock exposure.
if both are hitting vealies of 40% max cash then 41.7 x 0.6 = 25 stock, which with 25 in 2x and 25 in 1x = 75% stock combined.
For bonds - manage that as a barbell of long/short dated, adjusting as you deem appropriate i.e. if AIM of stocks is indicating buy then select whether you think reducing long or short dated to be the more appropriate at the time. You might also revise the long/short dated barbell over time outside of any AIM indicated trades being apparent.
A 'problem' with that however is that average stock exposure tends to steer towards whatever the Vealie level was set to, which in this case is 75% average stock exposure. Revising the Vealie to 20% corrects that. So for 100% average stock exposure you end up with AIM's of
41.7% allocation to 2x stock AIM-HI with 20% Vealie rule
41.7% allocation to 1x stock AIM-HI with 20% Vealie rule
Quarterly reviews, 10% Safe, 5% minimum trade size.
(With that '100% average stock' sorted, you then might decide upon asset allocation you prefer, i.e. for 50/50 you'd allocate half to the above, half to bonds (or whatever). Periodically reviewing/rebalancing as you deemed to be appropriate)
Broadly with cash in shorter term bonds, such a portfolio will tend to provide similar rewards to 100% stock. I haven't personally seen AIM trading tending to add to rewards. Fundamentally it distils down to whether the choice/timing of bonds as to whether that adds (or detracts) value. Which further distils down to whether your bonds beat or lag LIBOR+x% i.e. the cost that the leveraged ETF incurs to provide a leveraged stock ETF.
IF your bonds do well then a third in 3x, two thirds bonds is an appropriate choice as that scales up the benefit of bonds having 'outperformed'. Which is not as easy/simple as it might seem. If for instance you use VFISX (short dated bonds) as a proxy for what leveraged ETF's might be paying to borrow and compare that with VBMFX a broad bond fund
then for much of time there may be little difference (benefit) apparent. Having been through such methods in practice in more recent years, my inclination is towards simplification and cost reduction going forward. Whilst it did work reasonably well for me, much of that might be attributed more to luck than skill. The bond market is larger and more professional than the stock market, an arena in which I'm neither particularly skilled nor have the trading cost efficiencies that the pro's have.
As I've generally been lucky with my investing to date, going forward I'm looking to totally lock down and retire into a more passive asset allocation and have been migrating holdings accordingly. Enough in bonds to cover living expenses for 30 years which likely will see me out. The remainder in stock buy and hold/accumulation/growth to cover longevity/inheritance. Around half in low cost index trackers, half in individual stocks, buy and hold, accumulate dividends across the year and add another stock(s) to the set with those dividends once/year.
Adopting some leveraged etf's, some 1x, some long dated bonds, some shorter dated (and/or corporate bonds etc.) can do OK when managed well. Combined with AIM providing advice as to appropriate times to be adding/reducing and you're less likely to suffer the losses that many private investors endure due to human emotion/error. My family however have little interest in such activity and accordingly I need to structure holdings towards something that is more appropriate for them to inherit come the time I lose my marbles or depart this world. Not that I have any intention of either any time soon, but I'm approaching a age when such factors do need to be considered.
Hi Jaiml
Hi Allen
Hi Jaiml, here are some notes from one of my backtest spreadsheets :
June 2006 - Nov 2014 (8.5 years)
$3333 allocation to 50/50 SSO (2x)/SPY (1x) AIM
i.e. similar to $5000 1x stock exposure initial
10% SAFE, 10% MTS, monthly reviews
9.87% CAGR, -75.2% MaxDD, 30% Average 'Cash' (SPY) - which
implies overall 70% average in 2x, 30% in 1x for 170%
average 1x equivalent against the $3333 allocation
amount, which is similar to $5000 amount being 1.13x
leveraged.
Combined with $5000 VFISX yearly rebalanced back to 50/50
8.54% CAGR, -35.6% MaxDD
Not rebalancing at all 6.83% CAGR, -37% MaxDD
SPY B/H 7.74% CAGR -50.8% MaxDD
50/50 SPY/VFISX AIM 6.7% CAGR -46.5% MaxDD
VFISX for cash throughout, however the not rebalanced
choice could have 'cash' untouched (and locked into
potentially higher rewarding fixed term bonds)
As a alternative to ocroft's delay buys approach, IME moving to quarterly AIM reviews is a reasonable choice IMO. 10% SAFE, 5% Minimum Trade Size settings. Or if you must monthly review then increase Minimum Trade Size to 10%.
Instead of LD-AIM, decide how much leverage you are prepared to take and revise the AIM allocation accordingly. For instance if you don't mind being scaled up to 125% leveraged at times then instead of $10,000 of stock value buy and hold, opt perhaps to allocate $12,500 to that position and AIM-HI (20% ($2500) initial VIRTUAL cash reserve, $10,000 initial stock value).
Ideally the choice being AIM'd will have a 2x leveraged fund available, such that you can ignore 'cash' as that doesn't have to exist. i.e. if you initially held $10,000 of S&P500 and then AIM indicated you needed to buy $1000 more, then sell $1000 of 1x and buy $1000 of 2x with the proceeds. You do however have to keep a record of 'cash' so that you don't over-extend leverage above what your initial policy defined.
If later AIM indicated to sell $1000 of stock value and you held $1000 in 2x, then sell $1000 of 2x and buy $1000 of 1x. If there was no 2x being held then you sell 1x and keep some actual cash available in that account. Using Vealies helps ensure that you don't build up too much cash (too little stock exposure).
When you AIM in such a manner that means that the cash you might otherwise have put aside for the AIM can be invested in longer term bonds (usually more rewarding). Excepting of course any cash that the AIM might have generated - which needs to be on-hand in liquid/shorter term holdings just in case AIM indicates that that needs to be deployed. Quarterly reiews also helps in that sense as you can tie the money up for the 3 months between reviews (90 day accounts rather than instant access).
A more extreme level of leverage might be to use 50/50 AIM (50% initial virtual cash) and allocate $5000 initial actual stock value, holding the $5000 of stock value in 1x but potentially expanding up to 100% in 2x at times. Like LD-AIM your risk is lower as if that AIM blows up you lost $5000 instead of perhaps $10,000.
A potential benefit of leveraged ETF's is that they can drop/rise less/more than the leverage level that they indicate over trends. Whilst on a daily basis leveraged ETF's tend to produce twice the daily move of the stock they track, over a upward trend the fund might provide three times the change or more due to having in effect increased exposure progressively as the price rose. They also can slow declines over downward trends and a 2x fund across a 50% decline over a period of time might be down -75% instead of being down -100% due to having scaled down exposure daily across that trend.
Hi Allen : re yahoo adjusted close prices
As I understand it yahoo adjusted close prices account for all dividends and splits i.e. as though all dividends were reinvested (total return). The other prices reflect just prices only.
In some cases the prices only figures may jump/drop a lot if there is a split - and accounting/adjusting for those and for dividends more directly/individually is awkward so its the easier choice to just use the adjusted close figures when looking at total gains.
When you're looking at total gains you also want to account for what cash might have earned, as you likely wouldn't have 50% cash reserves sitting idle in the account earning nothing. VFISX has reasonably long history on yahoo so is one that I tend to use for simplicity. Another choice might be to uplift cash by a factor of 1.04^(1/12) each month. Multiply the prior months cash reserve by that figure (1.003274) equates to a consistent 4% yearly cash interest rate.
Yet another choice is to use the close prices (and not adjusted close prices), and just leave cash unchanged, which would provide the price only excluding all income (dividends and cash interest) figure - but being mindful of splits that may have occurred. That's a crude form of approximating real returns (IMO) as it might be assumed that the combined portfolio's dividend and cash interest might have been enough to offset inflation. The easiest way to to that in that spreadsheet would be to drop column E values (close prices) into column G (adjusted close prices) and clear out the VFISX columns.
When you've backtested as many AIM holdings as I have over the years, you'll come to see that AIM doesn't mathematically add any value in a broad sense compared to had you held a similar average amount as what AIM averaged (such as 50% cash reserve (50% stock exposure)). Of course there are differences in individual cases. What AIM does however is instil a greater prospect of actually achieving that mathematical average by trading relatively small amounts in a guided (AIM indicated) manner. If for instance AIM averages 50% cash (50% stock) then compared to a buy and hold investor who also averaged 50% cash/50% stock by perhaps rebalancing once yearly what you tend to see in practice is mathematically similar results but where in practice the manual yearly 50/50 account failed to take the appropriate actions at the appropriate times due to fear/greed and as a result having relatively lost out.
In the UK out fiscal years run to April years (Catholic calendar). At the end of March/early April 2009 at the financial crisis lows many were not rebalancing and some even sold/reduced to move to 'safer' alternatives. Following AIM and you'd have been at/near all-in at the lows. Such human/emotion driven drift from policy tends to have a significant impact upon longer term outcomes. Very broadly many investors underperform the mathematical average gain by around 3% annualised. i.e. instead of perhaps a 8% annualised gains over x number of years, they in practice might see 5% annualised after costs and (mis)management. Such failings aren't restricted to private investors alone - many professionally managed funds fall foul of the same human errors (in fairness equally some don't and some manage to exploit opportunities).
As such you don't need to be exact with AIM, its more of a guide that steers you towards being a better portfolio manager where results compare to mathematical averages rather than lagging the mathematical average as what many non-aimers achieve in practice.
Another factor to be wary of is the apparent LIFO gains, where some stock was bought and later sold at perhaps a 30% higher price. There is a counter (dark) side to that as if after adding more shares the price continues to decline you have also scaled up (paper) losses than had you not added more. Increased the losses and increased the risk so-to-speak. The benefits (LIFO) and dark side tend to broadly cancel.
AIM is like having a good financial manager watching over you - who nudges you periodically to say I think you should buy some more of x, or reduce some of y, rather than you being left to your own devices and where often private investors make the complete opposite choices.
Chilly but blue sky Saturday morning here in London, have a good weekend.
Clive.
For a similar period as Jaiml's for OVTI, that spreadsheet is showing figures of
when VFISX is used for cash
If you scan down the trade $ amounts column you'll see the + (buy) and - (sell) trade amounts. Ocroft's idea is to accumulate all AIM buy trades and only actually buy after AIM stops buying. For the sequential buys shown in that spreadsheet you can scan across and see the price that all of that $$$ amount of buy trades would have bought more stock at. Typically when there are sequential buys lumping them all in at the price after the last buy trade was indicated by AIM will average in at a better (overall lower) price. In some cases - typically when just a single buy trade is indicated having waited results in buying at a worse (higher) price. Broadly however it would seem that the cost of buying single trades at often higher prices than had you religiously followed AIM is more than compensated by buying larger amounts (several buy trades in a row) at a lower overall average price when several sequential AIM buy trades occur in a row. That's also less risky as cash is preserved for longer before being deployed.
Hi lrp42
If you have Excel, OpenOffice, Libre, Gnumeric, Softmaker (or other) spreadsheet software, then here's something to play with for AIM backtesting
http://tinyurl.com/l68gq7z
If you go to yahoo finance such as http://finance.yahoo.com/q?uhb=uh3_finance_vert&fr=&type=2button&s=ovti and select the 'historic prices' option, and then check the 'monthly' option for the data, and download that into a spreadsheet, and then select all of the data and sort ascending you'll have some historic price data to apply to the above spreadsheet.
Note that for cash I tend to use a proxy of VFISX and load the corresponding data for that in columns V through column AB
The spreadsheet is set to use the adjusted close prices, which reflects stock total gains, as though dividends were reinvested to buy more shares. So combined that gives you an overall total gain figure.
I've included jaiml's chart in that spreadsheet so you can compare differences.
Should have stated in the spreadsheet before uploading, but my abbreviations for column titles are
PC - Portfolio Control
#S - number of shares (spreadsheet assumes fractional shares can be held whereas in practice that's obviously not the case)
NB - Next buy price
BS - Next sell price
B/H - Buy and Hold
Regards.
Clive.
PS that was a Libre Office spreadsheet that I exported to xls as that's a more popular format, but sometimes the conversion doesn't always work well. I suspect it should be ok as the calculations are simple, and I've opened the xls version using Softmaker and it was fine.
Also it assumes 10% safe, 5% of stock value minimum trade size AIM settings.
decide how much you want stock or virtual. What you use to decide that amount is up to you.
1) Using your worksheet
2) Working forward from a past high
Or
3) Just picking a number that allows enough cash set aside for a certain number of buys.
Pick your poison
Some time back I outlined a Ben Graham type AIM approach where you apply both buy and sell vealies. That steers the AIM to maintaining 50% overall average cash reserves, but historically deviated between 35% and 65% cash.
Double scale that and you end up with 100% average stock exposure, but that at times might decline to 70% and at other times rise to 134% (i.e. perhaps 34% in 2x ETF, 66% in 1x).
5% Minimum Trade Size
10% SAFE
Monthly Reviews
Buy and Sell Vealie both 50%
Sell Vealie = increase Portfolo Control by half the indicated AIM sell trade size amount when cash reserves are already in excess of 50% of the total portfolio value (not actually selling any shares).
Buy Vealie = reduce Portfolio Control by half the indicated AIM buy trade size amount when cash reserves are already less than 50% of the total portfolio value (not actually buying any shares).
Newport hidden characters
If I remember correctly, the hidden characters are nothing more than CR/LF i.e. the last line is a blank line and not EOF immediately at the end of the last line of data.
i.e. in a text file just make sure you hit return at the end of the last line rather than saving without the <return> 'hidden' character(s).
Could be wrong though ???
You'd be surprised, often funds are very heavily weighted in 1 or 2 or 3 stocks
The Hang Seng (a market cap weighted) "broad/market representative" index (HSI) has around 14% weighting to HSBC (bank), 25% weighting to two financials (i.e. HSBC + another), 16% weighting to two mobile telecoms stocks. So around 40%+ in just those four stocks (two sectors). The top 10 largest account for around 60% of the index.
With the other stocks more lightly weighted, its resistant to those stocks making much of a impact upon the whole index.
RE Newport multiple accounts
Hi Allen
See this posting
I only have one instance of DosBox and Win 3.1 installed into that and just invoke that multiple times - but that's under Linux so can't vouch for Windows.
Hi Allen RE : Multiple Newport instances
You can store multiple versions of Newport and records in different directories (its small enough to replicate that way without eating much disk space).
I run Newport under DosBox (using a Slackware based Puppy Linux) with a cut down version of Win 3.1 so Newport is running under its original target architecture and multiple versions of DosBox (and hence Newport) can be run at the same time.
You can even open the same record set and for instance edit notes in one and then save, and open notes in the other and see the new edits.
Haven't tried under WINE (Windows emulator) but suspect its the same.
Clive.
Hi Allen.
That looks like something I was toying around with some time back ... wow! ... 5 years ago apparently http://investorshub.advfn.com/boards/read_msg.aspx?message_id=36965653 to use Excel to create a history file. Follow that thread through and it should shed more light.
Clive.
RE : LIFO and FIFO
In the UK for tax reporting purposes we use average cost, and in some circumstances are permitted to utilise FIFO, but not LIFO.
Generally with LIFO the older shares will be lower priced, so selling later dated shares is a form of deferred tax when you account on a LIFO basis. A form of zero cost 'loan' from the taxman as Buffett likes to describe deferred taxes.
So generally yes, LIFO is better for taxable accounts.
RE: QAC - by hand (calculator)
N = Portfolio Control divided by Number of Shares
For AIM next sell calculate S = 1 - SAFE - Minimum Trade Size %
i.e. 10% safe, 5% Minimum Trade Size S = 1 - 0.1 - 0.05 = 0.85
For AIM next buy calculate B = 1 + SAFE + Minimum Trade Size %
i.e. 10% safe, 5% Minimum Trade Size B = 1 + 0.1 + 0.05 = 1.15
Next Sell Price = N / S
Next Buy Price = N / B
If you tend to use the same AIM settings, perhaps 10% SAFE, 10% minimum trade size for instance, then its simply to remember that S and B are 0.8 and 1.2 respectively, and therefore just a matter of calculating each AIM's PC / #Shares figure and then dividing that by 0.8 and 1.2 for the next sell/buy price trigger levels.
At those trigger price levels, assuming your minimum trade size is 10% then you sell (buy) 10% of the shares (for 5% minimum trade size its 5% of the shares).
Clive.
RE: Dividends
Depends upon your objective jaiml
For instance one of my AIM's is buy and hold with 10% 'discretionary' and where 90% of the stock (index fund) is bought on a buy and hold basis, and AIM is allocated 20% (but only has 10% of the 'portfolio' total value). No cash is held at all (initial AIM settings 50% cash reserve).
When AIM indicates to buy $1000 more stock, sell $1000 of 1x and buy $1000 of 2x leveraged. When AIM indicates sell $500 then sell $500 of 2x and buy $500 of 1x. Pulling a Vealie rather than selling any 1x (so always at least 100% stock, but can expand up to 110% - typically when prices are down (AIM is buying)).
As a total return investment, dividends are just redeployed to buy more stock as soon as the dividend is received (once a year in that particular funds case).
When dividends are reinvested you just update the number of shares held (add on to the existing number of shares the additional number of shares bought using the dividend), nothing else. Typically the share price falls by the dividend amount, so adding the new shares just relifts the total stock value back to where it was pre-dividend (all else being equal).
Regards.
Clive.
40% initial stock, 60% bonds at the start of 30 years, drawing down bonds...
that ends at 100% stocks, 0% bonds, is a overall average of 70% stocks, 30% bonds.