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Where AIM helps is that its a good record management method. Trade management record for 30 stocks (AIM's) of something like one line for each showing Portfolio Control, # Shares, Cash, together with a separate more detailed record of individual holdings, trades, values etc, makes managing such a portfolio easy.
For main portfolio records, this general (not AIM specific) spreadsheet is quite handy (Excel spreadsheet)
http://www.jfholdings.pwp.blueyonder.co.uk/jfh/PortfolioTracker.zip
On the trade worksheet for each row you enter the stock and whatever action occurred, bought, sold, dividend received etc. as and when those events occur, and then on the Current worksheet you just enter the stock (EPIC) that corresponds to the EPIC used in the Trade worksheet for whichever stock(s) you want to inspect, enter the current share price in the Current Price column and that summarises all of the buys, sells, dividends, gains etc.
Don't forget to make backup's or keep a duplicate paper version - just in case your PC dies.
For AIM trades just keep paper records of PC, #Shares, Cash reserve on a single sheet of paper/card that's kept in your wallet.
There are other spreadsheets such as http://www.financialwebring.org/gummy-stuff/download-stock-prices.htm that can assist with downloading share prices for multiple stocks. Alternatively load that previous Portfolio.xls spreadsheet into googledocs and that supports populating share prices directly into the spreadsheet using something like
=googlefinance("LON:ISF","price")
that imports the current price for London Stock Exchange ISF Fund (FTSE100 index tracker).
I've also previously run quite extensive tests of multiple AIM's i.e. such as against the Permanent Portfolio choice of assets (stocks, gold, long dated treasury and cash), as well as virtual index - 30 stocks individually AIM'd. Generally seeing similar results to alternative choices of periodic rebalancing - such as the Permanent Portfolio rebalancing at 40% bands (<15%, >35% weighting, rebalance all four back to 25% weightings).
Where AIM helps is that its a good record management method. Trade management record for 30 stocks (AIM's) of something like one line for each showing Portfolio Control, # Shares, Cash, together with a separate more detailed record of individual holdings, trades, values etc, makes managing such a portfolio easy.
More important is that you're more likely to actually follow those trades in practice. Relatively small amounts traded periodically as and when AIM indicates is more likely to actually be implemented in practice compared to trading large amounts less frequently. Many investors work against themselves and will at some point fail to have traded in an appropriate manner at the appropriate time. Often after a sizeable dip has been encountered (fear of further 'losses'). The overhead of that is large. I forget the exact figure but its something like 90% of investors fail to keep up with a Index Fund - primarily due to emotions (greed/fear) and costs. IIRC its something like a 3% under-performance on average. With AIM, you're more likely to minimise that lag/drag factor (a few extra trades compared to less trade intensive approaches is a relatively small costs compared to other risk factors). Even close alternatives such as constant weighting has trade costs risks. If the portfolio is comprised of 30 stocks for instance at a rebalance/review date do you make 30 trades to rebalance all back to their target weighting, or just top slice (reduce) out of the best performers to add to the worst performers or ... whatever? With AIM you are given clear guidance as to which to top slice and which to add to, and not just at a single time point, but in an appropriate manner at appropriate times.
As an example, read around other investment boards and over 2008/9 you might see some that totally sold out (at near the lows) to never return. Others might be patting themselves on the back for not having sold out and held through as-is and have subsequently seen a recovery. Few will have added more into stocks during the decline. In contrast, here on the AIM board you'll see more a case of AIM'ers having run out of cash buying into the 2008/9 dip. That one event/period alone will make a substantial difference to longer term results.
Clive.
Hi Doug
Download Robert Shiller's monthly S&P Composite monthly price, dividend and 10 year interest rate (proxy for cash) data
http://www.econ.yale.edu/~shiller/data/ie_data.xls
from http://www.econ.yale.edu/~shiller/data.htm
and create a AIM backtest for total return since 1871, and you'll have a reasonable source to compare to other strategies (constant weighting yearly rebalanced etc.). [20 year rolling annualised real results etc.).
Here's a version of mine (messy) http://www.jfholdings.pwp.blueyonder.co.uk/doug.zip
Once you start looking/comparing on a total returns basis, you'll see how XIRR (or ROCAR) of stock value can be a misleading indicator of 'performance' - excepting when comparing like-for-like.
Clive.
Hi Doug.
Beautifully presented research.
Type of ETF - Most Significant
% initial equity investment - Significant
Frequency of Assessment - insignificant
Seems Lon-AIM stands for Alternative Investment Market...submarket of the London Stock Exchange
Indeed. Mostly a market for new upstarts to raise some capital with less hassle/bureaucracy/costs involved compared to getting a listing in the major markets.
In contrast LD deals in lead whilst AIM deals in aircraft instrumentation. Nice inverse correlation (one sinks, the other flies :)
but basically I'm investing on the theme that U.S. economy will lag the rest of the world for quite some time, and the dollar will underperform as well. Thus, other than some natural resource stocks, I'm invested in international equities only, with just a very small amount in international bonds.
As long as the U.S. continues to print money, and increase its national debt to truly stupendous levels, I see no way for the economy to grow. GDP figures show small growth, but virtually every month, the figures are revised downwards. There is no growth.
Hi Alton RE : Stocks and Gold up
Not sure why gold and silver stocks jumped on a big equity day but I'll take an 8 and 9 percent move up any day
Hi Toofuzzy
Am I Aiming the TLT or the gold? Am I using the gold as CASH?
With AIM Hi AIMing STKL my guess is that you would have run out of cash to buy more stock with
Hi Toofuzzy
TLT is a 20 + year US Treasury Exchange Traded Fund
It tends to have spikes in value at times like 2003 and 2009 when stocks are going down.
I would not own it now as I expect it to drop 40% in value at some point when interest rates peak.
Hi Daisy42.
With the exception of Sharpe Ratio, I've made some quick changes to reflect those suggestions. Thanks.
Generally AIM-HI does seem to broadly compare to 100% buy and hold for reward, but gets there with some cash in the bank rather than being in stock. Which is a bit like the interest on that cash deposit being comparable to the stocks gain - but obviously achieving such with less risk.
In some cases however AIM might do better than buy and hold, typically if the share price tends to zigzag or decline. In other cases AIM might fall short of buy and hold, typically when the share price trends upwards. AIM-HI in having greater stock exposure than classic AIM tends to more closely track an upward trending share price.
Clive.
Hi Toofuzzy
Regarding not buying more if something goes down a lot. I have done very well with STKL as it went from 6 to 15, back to 5 and is now just under 10
Trivia
I've just updated the aim web pages at http://jfholdings.co.uk to include a trivia fact of :
For all days for the S&P500 Index from January 1950 up to September 2013, on average if you bought at the open each day, then you could have instead bought at some point later for 81% of that price (19% cheaper). And that's in nominal (non inflation adjusted) terms. Given such a near 20% lower price average potential, it seems only reasonable in reflection of those odds to hold back 20% in cash with which to buy additional shares if/when prices are relatively lower.
I wonder if the small cap value premium is a consequence of the cost of rebuilding after a storm. With large caps they have to clear out the dead wood after a lightning strike, renovate and only then deploy effort into expansion. With small cap value comprised of 1000 companies, after a storm the failures are left for dead and new candidates jump in fresh and ready. ???
Hi Tom
Looking at the graph, it would appear that the Tech Bubble was very much influenced by Capitalization. The large cap part of the bubble really was hurt the most while the smaller cap end of the market didn't seem to be as badly stricken.
30-70 vs 50-50
Using Simba's backtest spreadsheet/data, this is what 30/70 small cap value and (synthetic) TIPS compared to 50-50 Total Stock Market/Total Bond Market looked like since 1972
If via AIM of the 30% SCV and then using 3x leveraged ETF's to reduce average 'stock' exposure down to 10% levels can achieve anywhere near a similar result, and you apply that 10/90 against your total wealth (including home), a 4% or 5% real (after inflation) reward against total wealth could be comparable to another investors 8% to 10% real relative to a 50% liquid asset investment amount (50% home value amount).
So it wasn't an AIM'ed result I guess.
I misunderstood.
Too bad. Would be cool if it was.
RE : Retirement AIM
Just like as is advised on this Forum the Equity allocation should be on the high side . . .between 60 and 95 %, depending on the market condition. This is a very individual thing and is related to the skill of the investor in regards to thinking what is going to happen;
RE : SLW/TLT (with EGY/KMP)
In a similar manner to using KMP as AIM EGY cash, you might perform similar for SLW. Instead of perhaps short term treasury SHY, if you substitute in long dated treasury TLT as SLW AIM's 'cash' that can enhance rewards. i.e. TLT and PM's can have a degree of low/inverse correlation. For July 2005 onwards AIM of SLW for instance I'm seeing a total gain of 22% annualised from SLW with TLT as cash, compared to 19% if SHY was used as cash.
Gold is a bit like a undated zero coupon inflation bond. TLT is a long dated conventional bond. The short dated versions of that are inflation bonds and conventional bonds and a barbell of those two is generally better than holding either alone (one rises/declines relative to changes in real interest rates, the other rises/falls relative to changes in nominal interest rates). Shorter dated bonds tend to have low price volatility (near maturity), high yield volatility, longer dated tend to have high price volatility, low yield volatility. AIM works best with price volatility (so longer dated holdings tend to be better).
Blend a PM AIM and long dated treasury (as AIM cash) with another AIM comprised of volatile stock (EGY) and cash (KMP) and there is some (distant) resemblance to a Permanent Portfolio asset allocation. Up the start of 2013 (from July 2005) those two AIM's initially equally weighted (classic AIM settings) collectively annualised 23.2% total gains. Year to date however has seen a pull back down to a 18.6% annualised (-16.3% year to date). That's assuming a rebalance was made between the two AIM's at the end of 2009 as the EGY AIM was less than 30% of the total portfolio value (down from 50% initial weighting) to reset both AIM's back to 50-50 weightings (scale down one AIM, scale up the other AIM with the proceeds).
The 2008 dip was relatively fast and short lived, diving -20% from prior highs over a couple of months, to recoup that over the next couple of months. In contrast the year to date -16.3% decline has been a more gradual decline. It will be interesting to see if that is the start of an overall downward trend, or whether we're at/around a lower point of a "V" motion (the US Permanent Portfolio I believe is also flat/down over more recent times).
Clive.
Hi Alton RE : EGY
For classic AIM, it appears that there's been a more recent swing low(er) up to recent times. I'm eyeballing four prior swings up to around 9 or 10 and back down again to 4 or 5
The AIM total portfolio value drawdowns since 2003 have been relatively low. Whilst there were much bigger dips in late 1990's and early 2000's, the painful bit is the down-swing part - which occurred relatively quickly, the other side of that, the subsequent recovery back up again were also relatively quick - even if the recovery back to former prior highest value wasn't a complete one before another dip occurs, that's a less uncomfortable condition/period to ride through (as AIM value is generally rising).
Energy and energy exploration are volatile - moving through periods of "we think we've found something" and then later "sorry no" type events that drive that volatility. Some of each of energy providers (hard assets in the ground in free (natural) storage that can be extracted and sold at will), some exploration (highly volatile at times) and some energy partners (rental from pipelines (transportation) etc), each can provide reasonable longer term rewards alone and when combined can help smooth out the overall volatility.
KMP energy partner for instance has had relatively stable share price motions, using that as EGY AIM's "cash"
Clive.
Next we'll be asking, "Where, Where??"
Much like the Fugowie Tribe. They lived on a grassy plain with grass that was around 5 feet tall. The Fugowie Tribe averaged less than 4 feet tall. Hence they were always shouting:
Whereda Fugowie??
RE AIM HI retirement
As a comparison to that earlier AIM I posted :
50-50 Growth and Income funds
Vanguard LifeStrategy Income Fund (VASIX)
Vanguard LifeStrategy Growth Fund (VASGX)
reviewed monthly and reset to 50-50 if <45% or >55% weighting
... as AIM stock and VFISX for AIM cash
applied to AIM-HI (80-20), monthly reviews, 10% min trade size (and 10% SAFE)
In the 4th Revised Edition
A problem for me however is that US withholding taxes take a sizeable chunk out of US dividends
A benefit of TIPS is that many countries don't impose withholding taxes on their treasury issued inflation bonds. Australia did up until 2009, but removed that to 'be in keeping' with others.
In concept FX interest rate parity will also apply to inflation as often inflation and interest rates go hand-in-hand. So if you buy say an Icelandic 4% real return bond, the sum of their FX, inflation and inflation bond real yield should by much the same as if you held a domestic 4% real return bond. But will have the added risk of currency/interest rate parity differentials/drift over some periods even though that may all wash over the longer term.
So whilst previously I've held just UK inflation bonds, I've more recently set up a radar/watchlist for a global range of inflation bond. Whilst buying into such will induce more risk/volatility, that needn't be a bad thing :) A more global set will also provide additional risk diversification/reduction (such as a better hedge against a GBP collapse/decline relative to others).
For drawdown/retired, Zvi Bodie and Nassim Taleb both prefer securing income via safe assets i.e. TIPS and only investing the surplus into spicier stocks. Perhaps 10% spicier investments, 90% safe TIPS for instance.
Larry Swedroe prefers using 30% more volatile (more rewarding) stocks such as Small Cap Value (SCV) in lieu of a greater allocation to less spicier stocks. SCV for instance might provide a 8% real whilst total stock market might provide a 6% real, so rather than 40% total stock market you might hold 30% SCV to equal effect.
Taking Larry's approach a step further, a 30% allocation to AIM SCV with 25% cash might achieve a similar result as 30% SCV buy and hold. i.e. 22.5% of total funds in AIM SCV stock value.
Extending that another step you might hold half as much in a 2x leveraged SCV fund (such as UVT 2x leveraged Russell 2000 Value) as you might have held of 1x (non leverage - such as IWN (Russell 2000 Value ETF)) = 11.25% 2x SCV in total.
Whilst ETF replay doesn't have UVT (2x Russell 2000 Value) ETF data, it does have SSO (2x SPY) data. Compare 50% SSO, 50% TIP with that of a benchmark of SPY in ETFreplay and for any one single year long period the two track relatively closely.
Given long enough that close tracking of each other will fade, so you have to periodically rebalance back to 50-50 weightings in order to maintain the tracking (rebalancing perhaps once every 6 months or once each year maybe). i.e. after a period of trending the prior 50-50 allocations will have moved onto some other proportions, maybe 70-30 for instance such that subsequent tracking is less likely. There's some indication of that in the above chart/image, where towards the later date end of the date range the 2x/cash combination didn't track 100% in the 1x as well as it might had the weightings been 50-50 2x/cash.
I do like Tom's approach of holding perhaps 40% in bonds yielding 10% for income, the rest in growth (UB&H candidates). A problem for me however is that US withholding taxes take a sizeable chunk out of US dividends which detracts from the appeal. Accordingly I prefer the mostly TIPS (UK/global versions), a little spicier stocks route as that's more tax/costs efficient.
Try for instance a 33% UGLD (3x gold ETF), 67% TIP combination benchmarked to GLD (gold) in etfreplay and you'll see a similar tracking.
Obviously if your actual allocation to TIPS achieves a > TIP reward, then that adds further value. The approach I'm taking is looking to buy/roll TIPS when real yields are 2%+, buying longer dated holdings when that occurs (i.e. perhaps 20 year bonds so that real yield is locked into for a good number of years). If/when real yields rise even higher, then extend out the term further (perhaps moving from 20 year to 30 year versions). A good aspect of TIPS is that inflation/deflation risk is entirely eliminated.
Hi Steve.
Is this your latest version of the extended Excel sheet?
I was using the "classic AIM" settings which are Lichello's original parameters from 1977. I see if I use more aggressive settings results improve.
Hi Tom.
It's hear hear, an abbreviation of hear him, hear him - a form of Parliament member applause as it's forbidden to applaud in Parliament, excepting occasional exceptional circumstances.
It amazes me that the 1969 - 1974 market collapse shows clearly on your graphs yet it is rarely discussed or used as an example of what "bear markets" can look like
Hi balbrec2 RE: AIM vs buy and hold
I'm sure you already know this, but for the benefit of the uninitiated (and in simplified terms) - given an average and a standard deviation, then that indicates a probability that you'd have achieved the average +/- 1 standard deviation in 68% of cases, or the average +/- 2 standard deviations in 95% of cases
Another version of that data that I posted earlier that goes back a little further (to Jan 1993)
indicates AIM as having had a 6.4% average with a 1.9% standard deviation for all ten year periods. Which implies that in 68% of cases returns might have been expected to range from 6.4% - 1.9% = 4.5% up to 6.4 + 1.9 = 8.3%
In 95% of cases the ten year gains might have been expected to range from 6.4 - ( 2 x 1.9 ) = 2.6% up to 6.4 + ( 2 x 1.9 ) = 10.2%
For instance look at the red bars and you'll see that the lowest (worst) red bar was around that 2.6% (2 standard deviation) value.
For SPY 100% (buy and hold) that had a 5.6% average with 4.3% standard deviation, one standard deviation range = 1.3% up to 9.9% and 2 standard deviation range = -3% up to 14.2%
If you were given those average and standard deviations at the start of a ten year investment period, the better choice is to go with the AIM values as you're more likely to achieve a OK result. With SPY you could do better (higher reward), or you could do worse - a more certain reward is generally better than a maybe you'll do well, maybe you'll do badly (riskier) outcome.
A simple ball-park guide is to divide the average by the standard deviation and pick whichever provides the higher/greater value i.e. for SPY = 5.6 / 4.3 = 1.3 whilst for AIM = 6.4 / 1.9 = 3.37 - which being higher indicates the better risk-adjusted choice.
Over that date range, AIM more consistently provided OK rewards, no matter which choice of ten year start date you chose within that total period.
For completeness, here's the AIM chart for that AIM
What this data essentially is telling me is, AIM gives very nearly the return of being fully invested with less than half the risk of being fully invested.
Steve, I know we lightly discussed, somewhat jovially, AIM'ing GIEW a while back when you were thinking about implementing some kind of stop loss approach into your method (that I believe you've had on a back burner).
My guess is that over the last 12 months you've had a couple of AIM's that have grown 155% (MU) to 175% (OSTK) and another that is down -30% (CWTR). And others that are up around 50% - 75% (C, BX, YHOO).
It might be worth considering re-levelling some of your holdings. IIRC you have 20% of total weighting in SNDK alone. Perhaps setting 15 AIM's (or whatever) each to around 6.7% each would help de-risk the overall portfolio. That might be achieved by including the trades within normal AIM trades i.e. whenever a overweight holding issues a sell trade then sell down more of the stock, looking to move those funds into a underweight AIM when it encounters a buy trade (and oversize the buy trade amount).
I guess it might be possible to simply just scale down (or up) each AIM by a percentage factor. For example if one AIM is 100K and comprised of 60% stock, 40% cash, then reducing that down to perhaps 50K might mean just taking 30% of stock value, 20% of cash and moving those funds to another AIM (and setting each of Portfolio Control and # Stock held to 0.6 of former values)).
Which would be a form of AIM of GIEW (add-low, reduce-high) ???
40% 12 month !!! (that's a fair chunk of the 100% life (since 2003) total).
Nice going Steve.
I'm personally more into the capital preservation stage of life. 53, no other sources of income other than from investment income etc.
When I looked at historic longer term stock rewards, whilst the gains over some periods were good, at other times they were less so.
A 100+ year average of 5% real from stocks is good, but if 20 or 30 year periods within that aren't so good then you could suffer - and most of us might consider 30 years to be an investment lifetime.
UK stocks capital (price) only rewards have periodically endured relatively poor results. 5% real isn't a consistent outcome and instead you might endure a longer term 2% over some 20 or 30 year periods, 8% over others.
As indicated in the first of the charts below, stock price only gains after inflation have at times just paced inflation (1.0 to 1.0 values). At other times they have declined relative to inflation (peak to trough), at yet other times outpaced inflation (trough to peak).
Add on an assumed constant 4% dividend yield and things are better, with a generally upward sloping line as per the second chart.
Blending 25% stocks with 75% inflation bonds that provide 0% real would have helped smooth down volatility relative to stock price only gains as per the third chart.
If inflation bonds earn 2% real and stocks provide a 4% dividend yield then the progression is more like the last chart.
For me the appeal of a 2.8% real and smoother progression offered by a 25% stock (earning 4% dividend yield), 75% bond (inflation bonds earning 2% real) is more attractive than a 4% real from 100% stocks that pay a 4% dividend and share price that broadly, but in a volatile manner, tracks inflation. 2% real yields on longer dated (20+ year) treasury inflation bonds occur with sufficient frequency to enable rolling such bonds i.e. buy a 20+ year inflation bond that pays a 2% real and look to roll that into another 20+ year inflation bond at a later stage as and when such yields are apparent (extend out the term for which a 2% real yield is more or less 100% guaranteed).
Whilst I could get by with just holding treasury inflation bonds alone, adding some stock to an otherwise all-bond portfolio adds benefit similar to adding some bonds to an otherwise all-stock portfolio. With some trading and other alpha add benefits uplifting 2.8% potential real yield closer to or in excess of 4% real isn't that difficult. I apply an asset allocation along these lines mentally accounting that against total wealth value - including homes values (which I consider to be a form of inflation bond). 4% against total wealth could be the equivalent of a 8% to 12% real return for an investor who opted to mentally account liquid asset wealth only (their home perhaps being 50% to 66% of their total wealth).
I first came across Robert Lichello's book back in my early/mid 20's, buying a second hand copy from a book store on the way to the airport as in-flight reading during my trip back from Disney Florida. I still have that copy in my library, together with a later edition (newly bought). Whilst I've never really followed AIM as religiously as others around here, I have always applied its add-low/reduce-high principle which has stood me in good stead. Without Robert's teaching I fear I would have been much more inclined to the more common sell-low/add-high doctrine that seems to more commonly prevail.
If an investor had $2M and was looking to perhaps hold a 30% stock, 70% bonds (cash) asset allocation, and their preference was to hold 10% in each of BRK, VISVX and VEIEX for their stock holdings, and assuming they were content to possibly see stock holdings expand up to 40% weighting (60% cash), then that might be initiated as three AIM's each allocated $266,667 total and initial $200,000 stock value ($66,667 cash) i.e. 75/25 initial stock/cash weightings.
Subsequently AIM will provide a clear indication of the exact share price and how much $ to trade (buy (add) or sell (reduce)) purely driven by the share price(s) alone. You could for instance leave good-till-cancelled limit orders in the market for those trades. When one of those limit orders were triggered, you recalculate and update the limit orders for the next AIM indicated trades...etc.
25% initial cash, 5% minimum trade size, 10% SAFE AIM settings
Started in May 1998 and run as-is up to the current date (monthly reviews) and generally that compares to another investor who started with 30-70 (stock/cash) and rebalanced back to 30-70 equal weightings once each year (reset to 10% in each of BRK, VISVX and VEIEX and 70% in cash (VFISX)). The two portfolio's tracked each other closely. At the end date however, AIM holds just 24.2% in total stock value whilst the constant weighting (yearly rebalanced) holds 32%. So AIM got to the same destination but did so with less in stock (risk). Counting the average stock % weighting over all periods (each month) constant weighting averaged 30.3% compared to AIM's 27.3% (i.e. calculate the total stock value each month and determine the % of total portfolio that represents and then average all of those monthly values for an overall value). AIM beat cash by around 2% each year and as such having more in AIM would have uplifted total rewards (but by only a very small amount).
On the negative side, AIM provided the same result but did so by trading a lot more. Constant weighting typically requires two buys and two sell trades once each year (rebalance). AIM traded 109 times over the same 15.4 years. With two trades for each individual AIM trade (one to add/reduce 'cash', another to reduce/add 'stock') and assuming each trade cost $10 = 218 x $10 costs ($2180 total), compared to constant weighting trading 4 x 15.4 x 10 = $616. So AIM on average spend $100 each year more on trading than would have constant weighting (yearly rebalanced).
On a like-for-like basis, real world application, generally IMO AIM doesn't work any particular magic provided the alternative(s) actually implement their model/strategy religiously. A risk with the alternatives is however deviation from mantra. Rebalancing once each calendar year for instance might have had a once yearly rebalance investor extremely hesitant about rebalancing in December 2008/January 2009 and if they failed to rebalance that could have made a significant difference in overall outcome (failed to add-low due to emotional fear after having already seen sizeable declines in share prices). The emotional tendency is to start thinking that prices will decline lower still and better buy opportunities might arise later - but that later event comes and goes and the investor looks back and sees they missed the opportunity entirely. Managing AIM and automated trading (adjusting limit orders) in contrast is a lot more likely to have you trade the correct amounts at the correct times.
Other stat's
Total gain including dividends/interest
Max drawdown
AIM -9.4%
CW -13.3%
(100% SPY -50.8%)
Annualised
AIM 6%
CW 5.9%
(100% SPY 4.6%)
CPI 4.23%
Clive.
That's total return right? What about ROCAR%?
A stock /security can move in one of five directions.
1) UP
2) DOWN
3) UP and then DOWN
4) DOWN and then UP
5) Basically stay flat within the HOLD ZONE
In four out of five cases AIM will do as well or better
For that last chart in the previous posting, AIM beat buy-and-hold in 73% of all 5 year periods (109 five year periods out of 149 total five year periods)
Whoops! Just seen that credit for the original spreadsheet goes to Bill (Reideman)
http://web.archive.org/web/20120623150522id_/http://www.aim-users.com/aimware.htm
Thanks Steve.
When backtesting, don't be tempted to just look at a single start to end point. Instead compare over a range of periods.
This SPY AIM chart (VFISX for cash as SHY doesn't go back that far) from 1996 (5% min trade size, 50% initial cash, 10% SAFE) has a chart for all 5 year annualised total gains shown at the bottom
The indications are that AIM provided more consistent gains over all 5 year periods whilst SPY buy and hold was more sporadic. So even though SPY buy and hold beat AIM across the total period (7.1% versus 6.5% for AIM), it doesn't necessarily mean that AIM is 'no-good'.
Re: Software
See Post 36676 http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88302443 for my adaptation of Steve's original AIM Excel spreadsheet
I use the download sheet to load SHY (cash) data from yahoo and cut/paste that into column AM values on the 'AIM' worksheet. And then do the same for the stock being AIM'd cut/pasting the adjusted close prices into column B on the 'AIM' worksheet. And then copy/paste down the AC to AL rows (AIM calculations) cells to fill in all the rows that have column B data
There may be bugs/errors so use with caution.