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Hi All,
My Ultimate Buy and Hold portfolio
US part-VV,VTV,VB,VBR,
Developed world part-VEU,IAPD,IDVY,VSS,DLS,
Emerging market-VWO,DEM,VSS,DGS,
REIT -VNQ,IASP,IPRP
is now divided into shares. When money is added, shares are bought, when money is removed, shares are sold.
So now i can report on how it is going.
This portfolio was 'stable' from 10-07-2010, so that is my startdate.
Each AIM machine was roughly the same size when started, AIM will determine the size going forward.
Total value is 'AIM shares+cash'.
The cost per share is not stable, because a share contains euros and dollars.
There was a sell transaction in VSS during this period, that is not shown here.
A few machines are really close to selling, maybe today.
Kind Regards, K
Cash
I have now run two PP's for a year and have two progress charts for an US and EU PP, both are already taxed, so both are net value. The question is can they be used as AIM cash?
This is a chart for the percentage gain of the US PP including a lineair trendline:
This is a chart for the percentage gain of the EU PP including a lineair trendline:
Both PP's show lineair growth. When the value is below the trendline one could add money to the PP, and when the value is above the trendline one could take money out. (Kind of AIMing the PP). This buffer of money could also be used to AIM for example an UB&H complex.
So my feeling at the moment is to have other cash between the PP and AIM machines and this is also what i am doing.
Kind Regards, K
Hi Clive,
PC/share is PC divided by number of shares. It kind of tells you where the midpoint is of your AIM machine.
When you have a sell, you have less shares and PC is the same. So PC /share is going up following the price.
When you have a buy, you have more shares and PC is up with a factor 0.5, so PC/share is down following the price.
So PC/share is a midpoint and you can add or substract the deviation for buys and sells (sometimes called the Lichello bands here).
You can chart the Lichello bands as well on a excel chart. It graphically shows you where the buying and selling starts.
Lichello in his book compared PC to the inertial guidance system in a nuclear submarine. For a portolio PC and portfolio value go together. For one stock, the price per share goes together with PC/share.
We had a discussion about this many years ago. I forgot it was there, but somehow i keep it in my charts.
Hope this explains it a bit more
Kind regards,K
Hi Ls & Firebird,
It is Portfolio Control per share.
Also it is average price per share.
All the info on the chart is per share.
Hope that helps.
Kind Regards, K
Hi Grabber,
decided to jump in with COCO after fundamental analysis.
Using discounted cash (following Joe Ponzio's thinking) based on the 2009 and TTM(trailing 12 month) numbers from Morningstar the intrinsic value of COCO is around $40-$50.
So any AIM buy at $5 is marvellous.
The red flag with COCO is the 2007-2008 numbers. It is not a stable company with negative free cash flow during these years. If the source of instability is not important then the blowout of the 2009 and current numbers could be followed with a price explosion.
Kind Regards,K
Be prepared to build into a position over time should it continue to fall.
http://seekingalpha.com/article/218229-the-point-of-maximum-pessimism?source=feed
Didn't know that Sir John Templeton was aiming.
Kind Regards, K
15/35
Hi Clive,
The UK PP with 15/35 is clearly better than yearly rebalance or no-rebalance.
I find 35 a bit high and get a bit nervous above 30.
Do you have a graph for 20/30 (or 15/30) as well?
I am thinking of rebalancing using 27.5 or 28. The buy number would be lower than 22.5 I guess. Let's say 20/28.
Correspondence to AIM seems closer to me in terms of transaction size when you get lower than 30, for the selling asset.
Kind Regards, K
Hi Ls,
Zero ER is the best! Although if a tracker is derivatives based, that is not the real thing.
The tax situation is indeed important when switching ETFs. I have rebalanced and sold some Gold position and that was for me the opportunity to switch from GLD to IAU. There was no 28% tax collected for me, as you know we have only the capital tax, all transactions are tax-free.
Kind Regards, K
Gold - ER changes
The minimum ER of gold ETFs has changed:
in US : IAU - now 0.25% (GLD 0.50%)
in EU : new RBS ETF with 0.29%, PHAU has 0.39%
Kind Regards,K
OT
The final will be between euro-zone members, there were some economists that calculated that a place in the final would be a 0.5% GDP improvement, so winning the final would be even better!?
So I hope for these reasons that Spain will win the final, they could use the stimulus more than Holland, and indirectly the stimulus will be felt throughout the euro-zone.
Kind Regards, K
Hi All,
'this is what happens at the tail end of secular bear markets: stocks get cheap, then cheaper, and then dirt cheap before a generational bottom can be hit.'
http://seekingalpha.com/article/212745-2010-a-time-when-stocks-got-cheap-then-cheaper-then-dirt-cheap?source=feed
I have started executing AIM buy orders. Using the once-a-month buying rule to limit buying-frequency.
Buying back things that still were in the portfolio a few month ago, but at lower prices now and at AIM-buy points. Hopefully a double advantage.
I am happy to move the wall of money into the market.
Not afraid to buy yet, so this can't be the bottom.
Kind Regards,K
Most Lazy AIM Portfolio
http://madmoneymachine.com/2010/05/29/lazy-portfolios-thru-may-2010/
Nice overview of several lazy portfolios.
It seems to me that AIM-ers want to be at the right top side of the effcient frontier and that Dilbert's portfolio seems best.
It also is the most simple portfolio : Whole world plus Short term bond, so for AIMers VT and BSV or VGSH.
Kind Regards,K
It's shopping time!
First buy of 10% packet of VSS went through at just below $72.
6 weeks ago they were sold at a bit above $91.
All other ETF's have buy orders loaded and ready for execution.
Guestimate is a Dow of $6000 and a Gold price of $2000 to get back to the same epic low of the late seventies, early eighties.
We have bank runs in Southern Europe and also in Germany now. The blip in the Euro of last week was the Swiss central bank, because the Germans are transferring their money to Switzerland, and it became 'disorderly'.
Grats to all buying!
Kind Regards,K
Hi Ls,
I run two PP's from Sept 14 2009 till now.
The euro PP started with 1 Euro. (imaginary amount to make the calculations easy)
The US PP started with 1 US$.
The exchange rate was 1.46 at Sept 14, so the quotient of the Euro PP value and the US PP value is 1.46
Now fast forward to May 8 2010.
The exchange rate is 1.27
When I divide the Euro PP value by the US PP value we get 1.29
Observations:
1 - When we look at all the values, it seems that the the Euro PP value divided by the US PP value is close to the exchange rate.
2 - The sum of the euro PP and the US PP is nearly constant.( we started with US$ 2.46)
euro/dollar euro PP value euro PP value
divided by plus
US PP value US PP value
14-Sep-09 1.4594 1.4503 2.4594
19-Sep-09 1.4705 1.4527 2.4831
26-Sep-09 1.467 1.4486 2.4657
03-Oct-09 1.4537 1.4339 2.4550
10-Oct-09 1.475 1.4580 2.5157
17-Oct-09 1.4869 1.4632 2.5293
24-Oct-09 1.502 1.4757 2.5340
31-Oct-09 1.48 1.4568 2.4872
07-Nov-09 1.4862 1.4608 2.5265
14-Nov-09 1.4868 1.4643 2.5632
21-Nov-09 1.4815 1.4483 2.5740
28-Nov-09 1.4918 1.4655 2.6149
05-Dec-09 1.5068 1.5064 2.6334
12-Dec-09 1.4757 1.4747 2.5652
19-Dec-09 1.4337 1.4341 2.5260
26-Dec-09 1.4398 1.4567 2.5342
01-Jan-10 1.4406 1.4664 2.5297
09-Jan-10 1.4273 1.4305 2.5356
16-Jan-10 1.4374 1.4365 2.5454
23-Jan-10 1.4135 1.4176 2.4859
30-Jan-10 1.3966 1.4045 2.4553
06-Feb-10 1.3691 1.3816 2.4183
13-Feb-10 1.3572 1.3764 2.4242
20-Feb-10 1.3519 1.3776 2.4541
27-Feb-10 1.357 1.3726 2.4611
06-Mar-10 1.3582 1.3863 2.4957
13-Mar-10 1.3765 1.3976 2.4979
20-Mar-10 1.3548 1.3767 2.4869
27-Mar-10 1.3353 1.3727 2.4714
3-Apr-10 1.3468 1.3901 2.5067
10-Apr-10 1.3384 1.3781 2.5257
17-Apr-10 1.3535 1.3852 2.5261
24-Apr-10 1.3311 1.3595 2.5268
1-May-10 1.3315 1.3442 2.5206
8-May-10 1.2746 1.2904 2.4562
Hi Grabber,
some of the success was likely due to the market's recovery
I think you had the courage to do it and implement LD-AIM!
You got showered with profits which was in your design.
LD-AIM has been running now for a few cycles and your success is obvious as we all see in your monthly reports.
Congratulations, K
Hi Ls,
Looking at my virtual AIM buy orders in the US$, the last one was in March 2008 and since then waiting for an AIM buy order in the Euro.
March 2008 is just a bit before the start date of your graph comparing UK vs US. We see some divergence in September 2008.
Is it possible that the divergence was getting bigger going back from September 2008?
Kind Regards,K
Hi Ls,
You'll generally get around what you would have done from investing in a domestic PP than what you get from investing in a foreign PP. The currency changes sort of balances it all out.
Is that true? The graph for the UK PP vs the US PP does support it.
Could it be that the Pound and the dollar are very correlated?
But the US PP is a 9% grower and the EU PP is also a 9% grower, both on the average.
However the US$ vs the Euro goes from 0.84$ to 1.6$
Would the arbritage opportunity be similar to the UK/US one?
During the time the Euro went from US$ 1.5 to US$ 1.25 both PP's grew 5-10%.
The tax situation of course is very important. That is less so for a Dutch investor, because we pay 1.2% of capital per year, and it doesn't matter where you invest, and also no tax on transactions or capital gains tax or dividend tax.
Kind Regards,K
AIMster avant la lettre
I wondered is she would have bought the Greek bonds
Hetty Green(1834-1916).
Unsurprisingly, Hetty was a value investor. As she said, "There is no secret in fortune making. All you have to do is buy cheap and sell dear, act with thrift and shrewdness and be persistent." She invested in a variety of assets, including stocks, bonds, railroads, and mortgages, but her specialty was buying when everyone else was panicking. After all, this was a time when the stock market was not nearly as regulated as it is now. Margin requirements were minimal -- people could get huge amounts of leverage by buying stocks almost entirely with borrowed money.
So, when the markets fell, there were great opportunities. Hetty did not borrow, she maintained significant liquid assets, and she knew the value of stocks and bonds. As a result, she had both the means and knowledge to profit when a crisis arose. For instance, days after the end of the Civil War, she bought Civil War bonds that everyone thought were worthless, soon doubling her net worth. Later, during the Panic of 1907, when a string of banks failed and the stock market crashed, Hetty was buying with both hands.
Hetty liked real assets, and was neither speculative, nor ultra-conservative.
www.fool.com/investing/value/2005/06/14/the-witch-of-wall-street.aspx
Hi Ls,
My portfolio uses AIM to determine when to buy or sell currencies.
For example with an Euro based PP and an US based PP, they could be AIMed vs one another. The PP's separately would be growing 9% each and AIM could determine their relative value, so enhancing their overall performance.
On top of the PP, one could build an UBHP(as a VP) which could utilize the PP as cash.
As a separate stream I am looking at for example the S&P aristocrats/europe aristocrats/asia aristocrats to create an income stream. For example for the US, SDY could be used. SDY has a 0.35% ER, there are 43 equities in the index currently, so one could also pick the ones that are the best according to some criteria and improve the yield to 4%.
This stream could be fed into the PP. The PP could be emptied at the right moment determined by AIM and added to UBHP.
Kind Regards, K
Hey Grabber,
How will the ECB's decision yesterday effect your strategy?
No change, only the AIM parameters could be changed, which i am not doing now.
Kind Regards,K
Hey Conrad,
It seems like a good time for Americans to buy Euro's now!
My first AIM buy will be at Euro/US$ 1.19 or US$/Euro 0.84
(Interesting to see that 1.19 was also the introduction price.)
Not sure if that Buy will be implemented at that price, it depends on the volatility of the price movements. At this moment I have a core inside the Euro, with the greater part in the US$ and a down-under currency. The down-under currency gives a clear AIM buy signal for the Euro, and I must consider that trade the coming weeks.
All in all, there are buy signals, but I like to see the volatility diminish first.
Kind Regards,K
iShares
The MER on many of the popular iShares exchange-traded funds (ETFs) will be going up due to a 5% increase in management fees.
http://michaeljamesmoney.blogspot.com/2010/05/blackrock-raises-ishares-management.html
Could not find any information on www.ishares.com
However here is another one:
http://www.canadiancapitalist.com/ishares-etfs-becoming-more-expensive/
My feeling is to move from iShares to Vanguard, which i have done already partially. Some iShares funds are not in the Vanguard product set, so I still need Wisdomtree and SPDR. My plan is to get rid of all iShares. (was really happy to move from EEM to VWO)
Kind Regards, K
27 US stocks trading on the NYSE with market capitalization of over $10B and dividend yields greater than 4%:
http://topforeignstocks.com/category/dividend-stocks/
Hi All,
In probability theory, the Kelly criterion, or Kelly strategy or Kelly formula, or Kelly bet, is a formula used to determine the optimal size of a series of bets.
http://en.wikipedia.org/wiki/Kelly_criterion
Looking at this formula, it seems that it is very AIM-like.
Only when your chance of losing is greater we don't go short, but we certainly could write options.
This Kelly formula is also in line with the Vwave concept, where we increase our bets at lower Vwave values and decrease our bets at higher Vwave values.
Kind Regards,K
Hi AIMster,
That certainly is one way to do it!
You have the asset class, that has PC and all the other AIM goodies.
This asset class is measured by something liquid, cash.
The 'problem' here is that both classes are money.
I think for cash we should take the 'money' of the biggest economy, or where the amount of money is the biggest. Then the lighter economy would be the asset class. So US$ as cash and AU$ as asset class.
When we have 3 classes we want to AIM, take the liquid large asset class as money and then AIM the other 2 classes with it, with Lichello's portfolio model or with separate machines with combined or not combined cash.
Kind Regards, K
Hi LS,
Greece was downgraded this afternoon to junk status.
Interesting to see if the Germans still want to contribute or they force the Greeks out of the Euro(if that is possible).
Portugal also got a downgrade.
Some countries are still lucky.
That said a case could be made to split the Gilt/Cash also in three parts: USD, EURO, YEN.
USD could be exchanged for the CAN$
EURO for the Swiss Franc/ Norway sovereign
YEN for AU$, NZ$ etc (NZ$ is parabolic and in sell territory, lots of Yuans(Renminbi) are escaping China and landing in that part of the world), I would ladder any downunder currency if possible.
The Pound currency is vulnerable now, and if you are not using gold, you need more diversification. In case of a total world blow up...
Also a consideration is to start a virtual ladder with SCV and emerging markets (China breaking down, 10% now this year), maybe use the sequential virtual buy method discussed here lately for volatility capture.
I found a restructuring of the portfolio painful, I still yearn for my old ETF's and stocks. It takes time to be happy again with your new portfolio, so your restructuring effort needs to be as bulletproof as possible.
Kind Regards,K
Hi LS,
Interesting gold chart going back to 1800! One thing that could happen is a blow-out of the gold price to $2000, maybe even higher.
Your Gilt/Cash strategy is nice, would it not be easy to use AIM(letting the dividends go into cash) or use a ladder with the initial Gilt % determined by your log scaling (18% - 2%)?.
Another to add to this mix could be IUKD.(div % 3.89% currently)
Lately my thoughts were to use IUKD to add to IDVY. Both seen as large value building blocks.
Apart from my real machines, several virtual machines were maintained for building blocks needed for diversification. These virtual machines will give me entry prices when to add 10% real to virtual shares. At the moment it seems to be un-wise to start a new machine, although Lichello said you can always do it.
Kind Regards, K
Hi Grabber,
Confidence is back !
Kind Regards,K
Hi Jack,
Not sure why you would say that Gold is cheap?
The chart is very interesting especially from March '08 till March '09. First is goes down till July '08 and then up, 400%, till March '09 and then it went to the next constant level around $14.
The first drop is the oil spike, was that GS or Lehman pushing that oil price so high? I hear rumors that oil tankers are waiting on sea for more than a year, and dependent on the oil price they will unload their cargo here in Rotterdam.
Interesting to see that the instability in the GOLD/OIL ratio predated the crash. Maybe understandable, when money flows into Energy, the economy will slow down somewhat, and then afterwards money flows into gold and Treasuries for safety.
Do you have a machine fully targeted on oil or energy?
In the past I had IXC.
Kind Regards,K
Hi All,
My 10% VB shipped early in the session.
Also shipped 10% IAPD today, this is an Asia/Pac dividend fund.
Kind regards,K
Hi LS,
My guess is that they'll be a transition to three main reserves, one each in America, Euro and Asia with each being held in around equal amounts as reserve/trade currencies
How would we AIM three currencies?
For example, our home currency is the USD. Then we would have two machines, one USD-Euro and one USD-Asia. How do we get the sizes of these 2 machines right?
AIMing three-way is still out of my grasp, although there is a solution here if one takes gold as currency and AIM the three currencies versus gold, effectively using gold as the base currency or as the Bancor (or SDR).
Kind Regards,K
Hi All,
In the meantime, IMF data shows that China and emerging markets have accumulated $4.8 trillion (£3.1bn) in foreign reserves
http://seekingalpha.com/article/200630-the-greek-debt-crisis-lehman-2-0?source=feed
Somewhere I read that the total amount of gold is a cube with each side being 18m. Let's take 20m, that makes it a volume of 8000 cubic meters. The density of gold is 19300 kg per cubic meter, so we have 19300*8000 = 154400000 kg gold. Let us say that 1kg = 37000 US$ then we have 154400000*37000 = 5.7 Trillion US$.
That is the value of all the gold in the whole world.
It is easily seen that all money in the whole world is not covered by all gold in the whole world.
The UK alone could have a debt in the order of 2 Trillion pound.
http://www.guardian.co.uk/news/datablog/2010/apr/25/tax-receipts-1963
It seems to me that GLD is a good candidate for an AIM-(HI?) machine.
Kind Regards,K
Hi Alton,
Grats with the trinity!
Had a sell in VBR on Friday, shipped 10%. This is the second sell since February, when they were acquired.
Hope to see a VB shipment on Monday, also 10%.
Using 10% trade sizes with buy safe of 10% and sell safe of 0 %.
My plan is to increase the sell safe slowly maybe first 2% and see how it feels.
Happy AIMing!
Kind Regards, K
Hey Jack,
If Greece goes down, a lot of banks and pension funds will also have problems.
I read about one pension fund that got rid of all its Greek bonds. If all these banks and funds have dumped these bonds then at 7% these bonds could be a nice opportunity ?!
Kind Regards,K
Hi Toofuzzy,
Was just reading about the P/E10:
http://greenbackd.com/2010/04/09/grahams-pe10-ratio/
It says that any stock investment now would have 1.7% annualized return over 10 years.
Kind regards, K
Hey Grabber,
Just saw that yesterday 10% VSS was shipped.
I am using the AIM-HI-lite parameter set as in most of Tom's retirement holdings.
Kind Regards,K
April starting well.
First sell in Japan ETF ! Japan is looking good!
Further a sell in Asian property.
All sell GTC orders loaded and updated to 2010-10-01. Can go on holiday now.
Kind Regards,K
Hi Tom,
Once a good mix of long term investments is reached
Thinking of moving completely from Ishares, because they lend shares and take 50% of the profits.
The move would be to Vanguard or SPDR's because they don't lend or the profits are for the investor.
Still like the Wisdomtree concept, but i would like them to stabilize their product set a bit and become more cost effective.
The portfolio layout will still change a bit, but it will be micro changes.
Then, forwards in time, AIM will take care of it.
Kind Regards, K
Hi Tom,
After the buying-extravaganza in 2008/2009, 60 ETF's/stocks were populating my machines. Somewhere in Janaury 2010 the capital value was roughly similar to November 2007, after taking out 25% in 2008/2009 and also adding some(not sure how much).
In January 2010 roughly 25% was taken out to pay a bill. To do this several machines needed to be ended and sold. Made a decision at that time to do some more cleanup, not sure if that was wise or not-wise. Afterwards one feels sad, all those equities that left. My advice to myself is to only execute AIM signals.
So my move was into the direction of a Lazy Portfolio and moving more euro's into dollars. It is all up in price, but my bookkeeping is not up to standard, so don't know how much etc. When more time is available I will have a look if I can produce a report. Also the portfolio needs to stabilize a bit, when buying I like to buy new stuff, that was another reason to go the Lazy way.
So current AIM machines:
US: VTV, VB, VBR
Non-US: IJPN, VWO, VSS, IAPD, IDVY
REIT: VNQ, IASP, IPRP
Also 2 PP's which are for my education.
US: VTI, GLD, TLT, SHY
EU: VGK, PHAUP, IBGL
The US cash is held in SHY.
My cash level is a bit high at the moment, but still reasonable and a bit higher than the Vwave.
My major target is to find a collection of ETF's/stocks that can be AIMed long term. I hope the current selection is helping me on this road.
Kind regards,K