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Best wishes for the New Year......
All sells, indicated by AIM, have been executed in December. All AIM actions on all positions taken, adding to cash, and now in AIM wait mode.
Ready for some FED action in the new year...
Rereading Twinvest chapter
"Twinvest will appeal also to investors who are more interested in accumulating stock than buying and selling" ( page 228 )
This is very interesting, kind of escaped me before.
In my own Twinvest program I changed the Twinvest code, now the start price will be corrected for inflation (similar to changing PC in AIM programs) and the Twinvest code will gradually increase.
I did not change Available Monthly investment(no inflation correction, but that could change)
In this way it will also take longer for the Twinvest program to mature.
Hi Clive,
I like your analysis very much, very enjoyable.
The use of the Dow/Gold ratio gives a nice and easy formula:
cash% = 2.5% * D/G
Easy to check.
Using SAFE 0% and MTS $1 seem to be good choices while averaging in. I like the idea of being 100% equity at the bottom and then using B&H afterwards, just taking out your monthly wage. Paradise situation.
Assume you win the Lotto, will you start a new position, a second machine? Or combine the Lotto win with the running B&H and restart the AIM?
Another temptation would be a high D/G, will you stay in equity or move some equity to 'cash'?
Karw
accumulation index AIM
For my son,who is still working, I do a similar AIM:
AIM the world index, with sells replaced by Vealies (add half to PC)
and buys executed in a standard way. The hold zone is 5% and buying starts at this 5% discount.
As an extra I have included inflation protection, by adding the inflation % to PC. This makes the buy threshold moving up faster.
One of the objectives is to move cash into the world index. A monthly wage is not yet needed.
karw
gold for BTC
Somewhere I read about people using BTC for or as part of the Bond part.
PC inflation adjustment
The september month here had 3.4% (annual)inflation according to the ECB, and is rising. It made me change Portfolio Control for total market ETFs, it will add the inflation to it. Also the sell and buy values of the GTC orders were changed.
I stopped adjusting for inflation in March 2020. Between then and now inflation was low and even negative during several months. I had several sells and won't adjust PC over the period from march 2020 to august 2021.
One thing, is it better to adjust PC and use the nominal price or is it better to adjust the price to get the real price and PC is a derative of this real price?
O, Strategy of Strategies
AIM is our base strategy and it captures major volatility (>20%).
There are a lot more approaches/strategies to the investment problem. We can assemble a bundle of strategies to do what we want.
2 examples.
Example 1.
S1 : The buffett portfolio, 90% SP500, 10% treasuries. S1 is a particular form of asset allocation.
S2 : Manage the ratio, 90%/10%, by using Vealies. S2 guarantees a max amount of treasuries and keeps a constant ratio of the assets in a rising market.
S3 : Manage the ratio, 90%/10%, by using Rebalancing. S3 guarantees the constant ratio of the assets plus it captures minor volatity.
S4 : The base strategy, AIM the 90/10.
Example 2.
We have a stock that is nicely appreciating.
S1 : The base strategy, AIM the rising stock.
S2 : Add some extra stock ( buy more), increasing portfolio control and stock value. The average price per unit can increase as well. After a few sells the average price is back to the price before, but PC and stock value are higher.
We have here 2 examples and we can combine them by using the example 2 strategy to handle the example 1 strategy. (We do some extra buys in the 90/10)
There are many strategies and we can combine them to handle a particular investment situation, AIM being our base strategy.
AIM likes you
You like AIM
Could be AIM BtB,
$COIN traded as high as $429/share on its first day of trading before closing at $328. On that day, Wood’s ARK Invest scooped up 692,708 shares, but she was far from done growing her position. By the end of trading on May 7th, ARK Invest had purchased 2,853,871 shares of $COIN. Well over half of these buys were made with $COIN trading above $300. The stock traded as low as $208 on May 19th and has now closed trading for the month of July at $236. The stock has not closed above $255 on any trading day since May 14th. As of the end of July, ARK holds 5,085,493 shares in $COIN which equates to a market value of over $1.2 billion. With the free float outstanding at 139 million shares, ARK owns over 3.6% of these shares making them a major holder in the company, and in all likelihood, the largest current “bag holder.”
https://www.zerohedge.com/markets/cathie-wood-hood-ark-buys-over-3-million-robinhood-shares-following-ipo
at the end of the article is a link to a spreadsheet with recent buy and sells.
Best
Could still be AIM BtB,
Maybe they want to exert a featherlite pressure on the market by splitting their sell sizes and execute the fragments over time.
They can optimize it dependent on the market buy and sell volumes.
It would be interesting to see the spread between their buy price and sell price, to get a impression of safe values used.
Best
ILA
(ILikeAim)
11 years later
One ETF has a Macro-AIM sell signal, several other ETFs are very close to a Macro-AIM sell signal.
Read somewhere that Goldman-Sachs sold roughly 25% of their share portfolio, it seems they are in sync with AIM.
The local tax system will change, how that affects UBA is not clear yet. Some ETFs can be replaced by local ETFs, other ETFs are not available here.
Regards,
AIM likes me
I like AIM
AIM is our money-printer.
AIM likes you
you like AIM
we love AIM!
Ratio aiming.
Nice aiming the ratio with domestic and foreign stocks combo.
I am playing a bit with it.
Normally when using the PP as cash I use classic AIM BtB.
The PP could also be used as part of the ratio.
Other combos I looked at: World index/ Aggregrate bond. Nice buying of the aggregrate bond during the last few months.
The combo World index, LT bond(euro) gave me the most activity and is a nice way of managing the LT bonds. I guess US LT bond will even be better.
Need to get a feel for it, there are more interacting parts.
Also which ratio would be best in theory?
Kind Regards,K
Hi Ls,
There are many things to consider, and different strategies for different situations. Too much to analyse :)
The better behaviour is a nice point. These days there are the Lifestrategy fund series to tackle the behaviour problem.
I like the strategy of AIM buying at the lows and spending all cash. And then take a B&H approach. Especially with broad indices. I have noted with AIM machines that there were times that in hindsight this was very desirable.
Thanks, K
Thanks Adam,
Nice and clear,
K
Doubling the portfolio value
On 20 April 2019 a new AIM machine was started using ING (local bank).
On 20 April 2021 the number of shares was increased with a factor 2.7 compared to the start number. Portfolio Control doubled. The cash value increased with a factor 1.7 compared to starting cash.
The portfolio value increaed a bit over factor 2.
This took 2 years.
During the same time B&H portfolio value for ING would have decreased with 14%.
It is a pleasure to AIM ING, sometimes there is also a dividend.:)
K
Redo:)
When B&H did a buy:
buy N shares
for price P
we get Value = N*P = V(0)
this value grows with a factor g
then after time t the value V(t)= V(0)*(1+g)^t
So the more time the more value, a powerfull concept.
Now we aim:
we buy V(0)*0.5 and have Cash = C(0) = V(0)*0.5, of course Cash could be smaller when using HI AIM.
Let h be the growth of cash.
Now we get:
0.5*V(0)*(1+g)^t + C(0)*(1+h)^t + SUM{transaction gain*(1+g)^(t-txntime)}
Lets stop here and not look at cash and its growth. We see that when the sum of the transaction gains is equal to 0.5*V(t) then towards the future we are equal to B&H. We lose value from t(0) to txntime, but that is a finite value, which we will recover a bit later.
So in general AIM will be better than B&H after we recovered 0.5*V(t). If cash is performing and h is not small, we will get there even sooner.
A transaction gain is roughly 0.05*0.3*V(t)=0.015*V(t).
Then (0.5/0.015) =~ 33.
We need roughly 33 transaction pairs to get equal.
How many years is 33 transaction pairs using the SP500?
Sorry if I made some huge errors :)
K
When B&H did a buy:
buy N shares
for price P
we get Value = N*P = V(0)
this value grows with a factor g
then after time t the value V(t)= V(0)*g*t
So the more time the more value, a powerfull concept.
Now we aim:
we buy V(0)*0.5 and have Cash = C(0) = V(0)*0.5, of course Cash could be smaller when using HI AIM.
Let h be the growth of cash.
Now we get:
0.5*V(0)*g*t + C(0)*h*t + SUM{transaction gain*g*(t-txntime)}
Lets stop here and not look at cash and its growth. We see that when the sum of the transaction gains is equal to 0.5*V(0) then towards the future we are equal to B&H.
We lose value from t(0) to txntime, but that is a finite value, which we will recover a bit later.
So in general AIM will be better than B&H after we recovered 0.5*V(0). If cash is performing and h is not small, we will get there even sooner.
A transaction gain is roughly 0.05*0.3*V(t)=0.015*V(t).
Then 0.5/0.015 = 33. We need roughly 33 transaction pairs to get equal.
Sorry if I made some huge errors :)
K
AIM vs B&H
When is AIM better, when is B&H better?
Some thoughts:
1 when you sell high and rebuy low, you have more shares after a cycle, so AIM wins.
Lucille Tomlinson mentions in her book that in the fifties people went off trading schemes to B&H, because of the growth of the market.
2 when you AIM you have dividend and interest, when B&H you have dividend only. Dividends can be reinvested straightaway or saved to reinvest at desirable prices.
At this moment dividend yield on the SP500 is similar to intermediate treasuries in the US. In europe treasuries pay 0% interest or worse at this moment.
3 when you buy at a market low, can you spend all cash? For example in March 2020 the crash was not deep enough for all cash to exhaust. Personally I did a voluntary injection into the market because the market turned 'early'.
4 when you buy shares you can increase the number of shares held. But you can also buy at a higher level than B&H did originally. So even if you have more shares the value increase could be lower.
There are more parameters to address, but not now(sunny outside)
Temporary conclusion:
- B&H likes growth
- AIM likes frequency/amplitude
- Buy deep value, on AIM signals
- Be carefull with sells, let it run. Sell at the 'top' when the market is ready to go down.
UBA dividend
The 2019 div % on cost was 9.0%
The 2020 div % on cost was 6.3%
Hopefully 2021 will be better
K
Hi Ls,
This week was a good week for gold! Shares and gold now over 25% in my PP, cash and LT bonds below 25%.
Also this week the confusion about interest rates, should they go up(Yellen) or maybe not. Interesting things happening.
Added also a bit of silver to the PP gold, to see if it improves vol. Same thinking about deutsche 0% bunds for vol improvement.
I have a home (without mortgage), so imputed rents are enjoyed. The home is also energy positive. In my UBA are reit funds and seperately the GPR100 index is AIMed.
You explained not having LT bonds. Maybe there is a use for them in the case of a equity-crash.
Looking at the Talmud portfolio, business(stocks), land(home+reits), reserves (PP, bonds, cash), all are there maybe not in the 1:1:1 ratio. There is a feeling that more gold would be good!
K
Hi Ls,
Very nice analysis!
In my research department AIM machines are papertraded with buy safe 20% and sell safe 0%. Every sell is Vealied, so the buy price is moving upwards all the time, roughly 20% below the all time high.
When there is a buy signal, entry can be considered.
You are using the real SP500 for the 20% pullbacks. When the downmove is fast, I guess nominal and real are similar. When the downmove is slow it could maybe even the case that -20% nominal is deeper than real, because nominal moves up through positive inflation? Maybe the 20% pullbacks could also be used with the nominal SP500.
I love your 10%stocks, 10%gold, 80%cash. Low stdev and always ready to enter a new machine, perhaps target 105% of start value.
Using V20A (Lifestrategy 20% Acc) as cash, would improve cagr but increase stdev and max drowdown. Best to enter V20A with papertrade parameters (buysave 4, sellsave 4), or target 110% of start value.
K
Aimsurance
In the low interest climate what are the possibilities to aimsure the equity part of the AIM machine?
Here follow some:
1 cash
2 deposits/bonds
3 bond fund
4 global aggregate bond hedged
5 permanent portfolio
6 lifecycle 20 - this has double the return of global aggr bond for a little bit more risk (efficient frontier)
Do you use other possibilities?
Thanks
Hi ls7550,
Here a picture of my all-world equity etf. It grows approximately 7% per year, adding dividends around 9%. There are AIM opportunities and not much time is needed to manage this.
The all-world equity ETF is very similar to the UBA expressed in euros. (The UBA contained cash up to 2019) The power of AIMing the components of the UBA is not available to me.
World equity may be overvalued, so I take all sells as soon as they are available. At this moment the cash is stored in a global aggregate bond etf.
Regards, Karw
Hi ls7550,
the official PP holds domestic stocks
A possibility is the local country index, however living in a small country, that has an open economy, with a main index which does not include all sectors, maybe a european index(stoxx600)is better, or a euro-based index.
This PP will be used as the 'cash/insurance' component of a global world equity index. So the thought occurred to me to use the same equity for AIM and the PP. This makes trading simpler, equity moves from the PP to AIM and from AIM to the PP, no real transactions are done. Inside the PP rebalancing will take place, using a 20% deviation rebalancing threshold.
For me it was important to view the PP as a blackbox with a blackbox price. The same as any ETF, only this PP is a self-made ETF.
Now inside The PP there are gold ETFs, which are based in London and in the Swiss. For long term bonds are used a euro based 20+ year bond fund and a US 20+ year treasury fund of approximately the same size.
The cash component is the local cash used.
Will it be an efficient engine? I have no answer to this question, but the PP 'blackbox/cash/insurance' will be monitored and if necessary changes will be made. First of all it needs to provide the stability for AIMing purposes.
In case the PP is not stable enough(the PP has the possibilty of growth), also seperately cash is held.
Another seperate component is the world bond fund hedged to euro. In portfolio visualizer i saw that a world bond fund hedged vs the dollar did well from around 2000 till now. So I started to use this as an alternative to the PP and experience how it behaves.
and global currency (gold) diversification
This is also a possibility, use gold as 'insurance' and have no bonds at all. I have thought about it an played a bit with it. At the moment a world PP 'feels' better (highly subjective). (considering 'subjective' signals to have more truth value than a lot of 'objective' signals). If or when runaway inflation will be the norm, gold will become the asset of choice, I guess.
Regards,
Karw
Hi Toofuzzy,
Yes, nice to earn in sync with AIM's trading activity.
I have done it a few times, but not really got into it.
Saw the Jeff Weber video/youtube, but not sure if he is buying and selling call options using the AIM algorithm. Did not read his book.
Also: https://www.reddit.com/r/options/comments/knjn2j/aim_with_leaps/
I am not intending to do this.
Karw
Insurance policy,
The following insurance layers are used:
- cash, bank deposits
- total world bond fund, euro hedged
- permanent portfolio, mixed euro/dollar
There is not a fixed ratio for the layers, but could move in that direction.
The PP has a total world equity fund for the share part. That is easy exchanging whenever the standalone and aimed total world equity fund sells or buys. The cash part of the PP can soak up dividends and be used to pay tax.
Overall I am simplifying at the moment, reducing stocks and ETFs.
Increasing the insurance.
I am ready for the aim buy process to start. I love to increase the portfolio controls!
"insurance policy"
Very nice words, this means protection. I like it. I think Lichello was talking somewhere about "call options". It gives more meaning to "cash".
It trigerred the following thought, maybe use a bit of cash to buy some long term put options on some index. Maybe use some Vealie money for this. Maybe someone already modelled this. Taleb does something like this, he earned a lot of money with his put options in his hedge fund during the march 2020 crash.
A picture is a thousand words :)
47 times book value with a P/E of 1525
For me it feels safer to AIM a value stock.
Here I AIM NN (local insurance stock with 6% dividend)
I bought just above 31 dollar late 2019. In march 2020 the last buy was in the 19 to 20 euro range. I held for a while after march and started selling again in october 2020.
The machine started as a LD-AIM account and after the drop there were enough shares for a classic AIM account. At this moment the gain for this machine is 49.8%. The buy and sell safe is 10% each. The net cost per share is below 19 euro now, while the last price is 36.49 today with a next sell price of 36.66
As I start to AIM a new stock these days, I start with LD-AIM with a buy safe of 0% and a sell safe of 10%. Then I gradually change the machine into classic AIM with buy and sell safes of 10%
green line is portfolio control
purple the net cost per share
dark blue the price
red, yellow and light blue are EMAs
Stay the course...
What an AIM opportunity it was ! If you correct for the number of dollars in the economy, the buying opportunity was even larger. This make me stop thinking about correcting PC for inflation. What is inflation really?
I let it run now, only take out the dividend money at the end of the year.
It's very nice when the Plan comes together.
Having a plan, there is only execution, with maybe some surprises.
How can you execute without plan?
Life here in europe is a bit strange this year, but I guess that also applies to the US with the virus going around.
At portfolio level 2020 is a good year. My UBA is basically on B&H in the US. Not allowed to trade there, one the freedoms that we lost lately.
To setup a european B&H is more difficult, the approriate ETFs are missing or very expensive or thinly traded.
I am now exploring the use of sector indices, using the 10 MSCI world sectors. For each sector I bought the top 25 stocks. For the finance sector the top 50 stocks and for the energy sector the top 10. In total more than 250 stocks and all equal weight. Nice thing is that you have a lot of happy dividend days!
Also I AIM value stocks individually, taken from a european value index, mostly the bigger names.
For ETFS I use the world index, the SP500 index, the world high dividend index. The SP500 could maybe be replaced by the SP50 with stocks held individually. Also have some geographical ETFs.
For reits an ETF is used, but also playing with a portfolio of high dividend individual US reits(NLY etc.)
I intend to AIM the dollar by using a treasury ETF, where I grow the machine by using the vealie concept for sells and buys at AIM buy signals.
2020 was a year of ongoing restructuring(reinvesting) of AIM machines.
It is a bit early but I wish for all AIMers a good finish of 2020 and an excellent 2021, with a lot of happiness AIMwise and outside AIM.
Happy start of the week
Today the week started with a wave of sells.
Last week there were also a lot of sells.
Suddenly everything goes up!
Oil is doing very well since last week. I had sells in my oil stock and also in the energy sector. Finance also rebounding nicely. Only technology stays a bit behind.
All the Lichello buys are now transformed into nice sells and the 2020 dip has completely disappeared.
In my World fund a total of 50% new shares were acquired in March.
First AIM buys and then on March 23, the market went up again. My thinking at the time was an expectation of a deeper downturn. So I got FOMO and decided to increase my buy level to 50%. My cash level was adequate before and after this transaction, so really it was a reinvestment of cash in the buy part of the hold zone. After this was done, I felt regret, but could rationalize it for myself. Now it seems OK, because the market improved a lot more since then. 50% more new shares is also a nice number:)
All my other machines were only having AIM directed orders.
This is one way of handling abundant cash levels. Conrad had an AIM variation with a reset after each buy/sell, if I remember it well.
Adam increases PC. I am experimenting with increasing PC where PC runs parallel to a longer term linear trendline.
Another way to invest the cash is to Twinvest when the price is below the long term trendline or a long term MA, and when the price is above the line, do not execute Twinvest.
There is more here to think about, maybe a cash-size dependent reinvestment algorithm.
and the sell opportunity is gone, next time better
This morning a first ETF sell signal in my emerging markets treasuries ETF. Shall I do the sell or wait a bit more? Each AIM txn advice is very valuable, so executing them is nearly mandatory. Decisions, decisions..
I am also continuing with AIMing. Last friday I got my first sell signals in selected stocks. Interesting to see what the div. rates are now, but too lazy to do a calculation.
No sell signals yet in ETFs.
Market still has downwards momentum, although if all information is already in the price, a turnaround could be swift. I hope things will not detoriate a lot further, at least the central banks buy all paper.
Hi Adam, this morning it seems the sell orders need to be updated :)
Hi Adam, all of my buys are below 10% up till today. Today there were buys over 10% , a few 15% buys and 1 buy of 20% of stock value.
The buy price target is a bit dependent on price moving-down velocity, fear level etc, as input to my guestimates. But remember my stocks are value stocks with dividends above 5%, they don't drop that fast. Also levels of dry powder are sufficient to handle a severe crash. The way I feel about a price target calculated by AIM is important to me, and if it feels good, the order is entered. I am getting closer to the AIM black hole in some positions, what to do when we get close to the huge buy horizon, is still to be determined.
Hi Adam,
Here also a caffeinated and active buy day!
My stocks are all selected from a local LC Value ETF and all triggered buys today. Not as steep as growth stocks, but they all give me a generous dividend.
All ETFs also had a buy.
Thank you Mr Lichello, that we have enough dry powder to manage this descent.
GTC orders loaded for overnight action and early tomorrow. Sharp buying prices.