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UBA
In early 2019 it became impossible to AIM my UBA, from 2010 it was AIMed and from 2019 B&H.
I haved waited 5 years, but rules and regulations did not get rolled back.
Now the time has come to move things to a, for me, more AIM friendly environment.
This will be the last UBA overview post.
The value of a share now is $24.83 while the cost is $4.21. All taxes have been paid so the gains are fully realized.
It was not me that stopped this, it was the world.
Kind regards,K
TIME to provide its benefits
This AIM machine (stock=ING) started 5 years ago in April 2019.
price appreciation
The stock was bought at €12.02 and the last AIM sell was at €16.42. Roughly a price appreciation of 7% per year.
dividend
The dividend is estimated to be around 5% per year.
AIM management
For AIM management two numbers:
a Increase of the number of shares: 2.2 times as many shares at the end versus the number at the start.
b Cost price at the start was 12.02, cost price at the end was €-0.44 per share.
blue line : price green line : PC purple line : cost
Income portfolio - 3 buys on weekly basis
A world hidiv ETF(euro price only) aimed with a gold ETF(euro price) had buys the last 3 weeks.
In terms of gold, hidiv went down a lot which resulted in 3 buys.
With fiat money in stead of gold there were no buys.
The div% is around 3.5%, that could be added to the portfolio picture, over 14 quarters approx. 8% could be added.
A country with a sovereign wealth fund could energize their gold holdings with such a portfolio ?
Kind Regards, K
Better pictures for AIM(world:gold)
Also of interest are other combinations, maybe using a high dividend etf acc, or 2 shares.
If you have a portfolio of 4 assets, for example a PP, you have A1 stock, A2 gold, A3 LTB, A4 cash.
Then you can AIM [(A1:A2):(A3:A4)] or for example {[A1:A2]:A3}:A4. These two AIMs don't seem to be the same.
My interest in AIM(WorldAcc:Gold) increased a bit, because there are no dividends. At the moment local Tax changes are envisaged where dividend will be taxed(they
are not taxed currently) and the growth of a portfolio will be taxed yearly. Tax is an important shaper of portfolios.
Kind Regards, K
Cash versus gold
I could not change my previous post.
In my machine with regular cash I did not see a higher top in July.
If interest is calculated which could be around 3% in one and half year, the difference is smaller, dependent also on the cash size.
Kind Regards,K
Ratio (world:gold)
This test machine of the ratio (world-acc:gold) since Oct 2020, has 10 sells followed by 5 buys.
The machine is evaluated on a weekly basis, 10% for each safe, and a minimum transaction size of 1% with no cap on the maximum txn size.
I also like to see the picture in €€€:
Interesting to see that July 2023 is higher than the top in late 2021. A sign of a strong 'cash' element. In my machine with regular cash I did not see a higher top in July.
Kind regards, K
Macro-AIM and Micro-AIM.
Hi Steve,
Are those 1% Sells of sufficient size?
1. 1% transactions are small, but you get more of them, so they add up. Because there are more transactions you have to enter more limit orders. Normally I have one 1% limit order, and when the selling starts, I enter more and have for example five 1% orders loaded. You could have a sell every 10 cents, so then all together they get to a certain size. The density of the sells increases, so total size is density times price interval. Hopefully you get more total sell activity, because of the higher granularity.
2. You have more transactions, so you have more transaction costs. I do small transactions at low fee brokers. Nowadays you have brokers that transact for free. I think in the US you have M1 or Robin Hood? Otherwise add the cost to the sell price indicated by AIM to recover the costs. Then the sell price moves a bit higher.
3.All this to make better use of the price movements. When I look at certain spreadsheets I notice higher returns when you do more transactions than when you use a standard, for example 5%, minimum size. Hopefully you catch more opportunities.
Best,K
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
(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
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 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
Hi John,
adjust your initial AIM program size as well?
Using a kind of 'Risk Parity' approach? That would be nice in a 'equilibrium' type of situation.
Quite often I use the following approach: try to determine something of quality that is going down. Take a small real or virtual machine size and use AIM's buying to buildup the machine, using a situation where all equilibrium is gone. The size of the eventual machine will then be determined by the market dislocation and AIM's buying.
Hope to have answered your question.
Kind Regards, K
Hi Toofuzzy,
My buy activity was in the finance sector this time and only one day or so.
I had 4 buys that had a transaction size of 12% and 1 buy of 6%.
Safe values were 10%.
I guess a nice strategy could be:
stocks with beta > 1.5 , buy transaction size 12%
stocks with beta = 1 , buy transaction size 6%
stocks with beta < 0.5, safe <10% and safe + transaction size smaller than 10%+6%
Kind Regards, K
Climate change
The selling climate of January/February changed suddenly to a buying climate in March.
All buy settings were reviewed, and because the first buy should have a nice gap from the last sell, I copied Tom in setting the buy percentages to 12%. The save settings stay at 10%. One buy was executed, others are getting close. For my airline stock I have set the first buy percentage to 16%.
No activities in the ETF department yet.
Kind Regards, K
Favorite Chapter,
"The Reliefer Who Made a Fortune in the Stock Market" is my favorite chapter. It is a bit sad, but it has a lot of wisdom in it.
I like the answer to this question:
"Mr. S.", I said, remembering my assignment, "what is the mistake most investors make in the stock market?"
"The answer is ignorance. Buy only stocks in things which are necessary, and buy only the leaders: AT&T, General Motors, United Steel, and so forth. They will always win in the end .......
This whole chapter is so good and there is so much wisdom in it.
Thanks, Mr Lichello
Classic AIM is a good choice.
Indeed the managability of AIM and the easy execution of orders, when you are not looking, is very comfortable. I assume that the cash withdrawal in your example is taken from cash, so the equity is only touched by AIM, a natural thing to do. The time/attention spent on AIM is minimal.
The 0.5% increase of the SWR is nice,
Best K
Airline taking off
My airline stock (lufthansa) is selling again and the machine is currently at +10%.
The stock-entry was at 15 euro, we are now a bit over 7 euro, so it's nice to sell again (thank you Mr Lichello). B&H would be still down over 50%.
Best K
“Progress is cumulative in science and engineering, but cyclical in finance.”
Looking at my World ETF (World Blend), it(the linear trend line) grows at around 8% per year and the ETF price oscillates around that trendline:
The price has two components: growth and oscillation. Using AIM we typically buy when the price is below the trendline and sell when the price is above the trendline.
A buy is subsequently growing above 8%.
A sell is selling something that grows less than 8%.
B&Hers dont want to sell because the price goes up at 8% and subsequent buys could be above some of the previous sell prices. The thing with AIM is that it typically buys at over 8% growth and it also buys more shares than it sells, acquiring more and more shares. A deep dive as in march 2020 creates a quantum jump in AIM's value and shares on an increased value growth path while B&H will simply return to its previous static growth path.
Finance could also be cumulative while experiencing cyclical quantum jumps in value.
Best,K
When you learned of Mr. Lichello's AIM, what was your first thought of why it might be useful to you?
During the second half of the nineties I visited the American Book Center in Amsterdam.
(10% discount for students, teachers and members)
Browsing through the investment-book section there was this small book "How to make $1,000,000 in the stock market automatically". I opened the book and read a bit. The first thought was: "mesmerization".
I was a Long-suffering investor, who sorely needs a "Money Machine"
Best, K
Worldwide high dividend fund
March 2020 was enormously beneficial for this dividend fund.
At this moment dividend percentages are (interest on cash is neglected, for now):
My AIM rulebook :
Rule 1 : Stay as close as possible to Lichello's Original AIM.
Rule 2 : Normally don't Buy/Sell above Buy/Sell Advice
Stay Happy, K
Hi Toofuzzy,
Zero cash in the machine, the cash is in a central cash reserve. If you have a buy, import the cash into the machine and do the buy. The central cash reserve is shared by all machines. It makes the spreadsheet a bit easier for me and cash is not linked to a particular machine. I know when a machine has used a lot of cash, the buys get exponential in that case, time for a Bear Buy or a super Bear buy as Jeff Weber is doing. There are other ways to limit the use of cash.
Zero real shares, there are virtual shares ( you can also start with some real shares).
If you have a sale then sell the virtual shares or exercise a Vealie. I would like to have zero real shares with a machine that is going down or starting to go down.
When I am not sure about a stock I like to start with zero (or not too many) real shares
Best,K
Greetings Old John,
The virtual machine is set up with the same values as Lichello uses, see page 56 in the fourth edition. Safe is 10%, no minimum buy or sell. The size of the virtual machine is your choice. The virtual machine develops from ZERO-AIM to LD-AIM to Classic-Full-AIM.
I try to have all stock-machines of roughly similar size. If you anticipate a drawdown of 50%, then you need cash for that drawdown similar to the average machine size. Let Lichello invest the cash and when you do the final conversion to Classic-Full-AIM you can spend all cash that was still left.
An important criterium for me is that I should feel happy with this process, happiness tuned by Lichello's philosophy. Whenever I used termvest or synchrovest and did a buy on a somewhat higher level, I did not feel happy, and needed a few days to shed that feeling. If you are doing what is right(buy low), you feel happy immediately.
Your series of planned purchases is another possibility to do the buying. Always also look at the virtual machine buy advice, make sure that your real purchases are not above Lichello's buy advice. To spread your real buys, look at transaction costs to determine your optimal buying sequence.
I don't think you are overly cautious, I think you are prudent especially in the current climate. Just a few minutes ago I saw that september inflation is over 17% here.
Hope I have answered your question a bit.
Best, K
Cash management,
Cash management for AIM machines is for me not the same for each machine.
Existing ETF machines have their own cash level. Shares are bought and sold and the cash level goes up and down. Cash is allocated to each machine.
In my UBA I can't buy new shares, so I receive the dividends and export the cash from the UBA machines and the cash typically goes into 'free cash'. I made a few changes to the spreadsheet for this. Once a week I look at the 'free cash' level.
In the 'individual share' machines I had cash allocated to each machine. However I liked the UBA cash management and started using that: import cash when a machine flashes a buy and export cash when a machine flashes a sell or received a dividend. This simplifies things, the cash level is always zero. Of course you need to have enough cash in the 'central cash facility'.
Also the environment of individual shares is more dynamic, you sell a stock completely or buy a new stock. It is now maybe a good time to start an AIM-zero machine (a virtual machine with no stock, and the buys are real buys). Having cash at zero level in the machine makes management a bit easier for me. So that is why I calculate cost (what did I pay for the shares) and market(what can I get for the shares).
Best , K
Happy birthday to OAG !
Not a lot of buys yet...........
As you see in the UBA picture, a lot of buys in the dollar UBA. However the euro is down vs the dollar and so no buys yet in dollar assets denominated in the euro. That is strange when the assets go down, but your currency is down as well.
At least I have a lot of buys in one of my stocks and this week a 10% buy in my airline. My other stocks are still in their hold zone.
I do not see Kapitulation yet, still have a sea of cash that needs to be utilized by AIM. I have patience and am waiting till the non-aimers are closer by.
Nice to see Grabber is back!
Best,K
AIM buys, day before ex-dividend day
Just this week one of my stocks went ex dividend. I had the AIM buy MTS on 10%. This hurdle was too high to execute a buy. By decreasing the MTS I was able to add 2.5% more shares. That guarantees the dividend on these new shares, it was all within the AIM parameter set.
Today the stock went up and added 2 times the dividend in capital appreciation.
These things make me so happy :)
AIM likes U
U like AIM
UBA
The UBA is still there, cannot AIM it, only sell. This is according to the rules, that I cannot invest in US ETFs.
In US dollars it looks as if it has topped and coming down. Even a bit under the linear regression line, starting to represent 'Value'.
In euros it is better, thanks to the euro deteriorating vs the dollar (euro has around 10% inflation and a -0.5 interest rate)
Considering to change the UBA a bit, but no strong convictions what to do.
Best,K
There's still some dry powder left in case this mess continues
Somewhere I read that looking at the average US bear market since 1880 or so, that would mean that the current bear market would bottom in October this year and that the SP500 index would have a value of 3000.
With the SP500 at 4000 now, that would mean an extra 25% lower.
Best, K
Some activity in the share department
There were some buys during the Q1 volatile months followed by some sells.
Now buying is starting again.
Here is an picture of the individual shares portfolio. The cost is how much was paid for the individual shares and market is the market value of the individual shares. I calculate a price for the portfolio as if it is an ETF or something like that. Cash is not used in these calculations, it is administered in its own central cash facility. The latest buying seems to have been synchronous with Buffetts buying, however I did not buy new stocks only added to and sold part of existing positions.
AIM likes you
You like AIM
1 gallon is 3.8 liter
1 liter gas costs here 2.25-2.5 euro, that is roughly 2.5-2.75 dollar.
So a gallon gas costs here 9.5 to 10.5 dollar.
Best,K
Hi LS
Indeed owning a home and collecting imputed rent, which can be twinvested or synchrovested to increase this benefit, is a very nice thing.
The total 'cash' set for me: hard cash(some tax benefits), soft cash, gold, bond funds, PP. Each item in this set will be AIMed by default or rebalanced. When needing cash to add to an equity position take some from somewhere in the set, maybe executing a rebalance as well. No percentages for each item in the 'cash' set currently, the PP is the largest part. There is still work to do for me in relation to cash. I find the definition of equity easier somehow. The risk in relation to equity is handled by AIM. Utilize the cash when equity goes doen. When the market drops, the government will step in to protect the pensionfunds etc. At this moment Brussels want to issue Europe bonds for Energy and Defense.
So there seems to be a level of protection there. Somehow AIM's signals seem to get more 'valuable' and turnarounds seem to be faster, compared to for example 2008/2009 when the QE technology was not fully developed yet. Lately we go from crisis to crisis, where the previous crisis is not yet closed, a kind of crisis acceleration. That could be good for gold.
Best,K
Airlines.........
This is my airline: deutsche lufthansa.
A very damped vibration, a lot of buying, some selling.
What I noticed is that the german government also AIMs, they buy when the price goes down and sell on recoveries. There was also an equity restructuring, where you could buy stock for 3.58 euro, which i did, otherwise you received cash.
I entered a bit under 15, now at 6.30 and there is a -7% vs average cost.
The skies are opening again and there is good hope that these companies will do better from now on.
Best, Karl
Hi Tom,
This is my latest PP incarnation, started in March 2020, with some parts already bought, so the start was 0.93 vs a cost of 1.00. Some additions were made and the cost increased to 1.01, and now market is 1.09.
The current end-philosophy is that everywhere where cash or bonds are specified, this PP will be used. I am not there yet and will force nothing, let it evolve gradually.
Best, Karl
Toofuzzy,
PP=Permanent Portfolio
We have had discussions about the PP in the past, 25%stock, 25%gold, 25% Long term bonds and 25% cash(Clive is the PP expert). It is a very stable portfolio and is part of my AIM cash. The interest rates are very low here, 0.01% or zero or negative at the major banks, that you will be looking at something that earns a bit more. My PP is running at around 5.2% on a yearly basis(over the last 2 years) and the volatility is very low. Up till now it was a good stable part of AIM cash.
Best Regards, K
Cash.........
Buying stocks when prices are moving down rapidly as they did last week at least here in Europe, always makes me a bit nervous. I need Lichello's method to execute the buys, otherwise I would be lost.
But seeing the cash disappear into these 'black holes' can feel like a little loss. But this weekend updating the spreadsheets I got a pleasant surprise: I had more cash at the end of the week than at the start of the week. It was the PP, which is part of my 'cash', which had a + 3.1% week, mainly because of the gold, that increased the amount of cash, so the AIM buys were 'free'.
This is one of the portfolio effects that I had not explicitly envisaged. I knew that the PP would be cash that would grow, but the actual experience of such portfolio events is always very enlightening. You have to execute the strategy and feel it.
Next week I assume we will see a lot more buying. Need to have a look at other attractive stocks to own.
Best,K