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Worrying, do I buy too much?
And now, now it is up again, why :)
what a week
EM dividend ETF(in euro) was down last week, but recovered nicely. Had a look this morning and prepared to see GTC buys, but it is in recoovery mode...
Interesting to see how it develops.
Corona V form
The Corona virus created a V form in the price of my transport sector share. Now I have 11% more shares.
Without AIM this would be much more difficult to manage.
Of course this could be only the beginning of this disaster.
Hi all - UBA
Reporting from Acquitania, terra pulchra, in Gallia :)
(Having a few months vacation here)
UBA had a nice second half of 2019. I saved the total dividend for 2019 and paid the 2019 capital taxes from it. What was left was exported from UBA and imported into other machines.
By exporting the dividend the Cost per share can be decreased a bit further.
Hope you all have an excellent 2020!
30% swing
(Sorry for the calculations, trying to address the price difference between buying and selling using percentages)
with safe = 10% and minimum transaction size 5%, PCpershare is PC divided by the number of shares:
the next buy price is PCpershare / 1.15
the next sell price is PCpershare /0.85
the difference between sell and buy price is
PCpershare * ( 1/0.85 - 1/1.15 ) = PCpershare * ( 1.1765-0.8696 ) =
PCpershare * ( 0.307 )
So with 10,10,5,5 we have price difference of 0.307 * PCpershare between the sell and buy prices
I guess this is the 30% swing
Looking at it from the sell price : (PCpershare*0.307) / (PCpershare /0.85) = 0.307*0.85 = 26%
Looking at it from the buy price : (PCpersahre*0.307) /(PCpershare / 1.15) = 0.307*1.15 = 35%
Hope the calculations are corretc, but the idea is clear, I guess.
Best, Karel
Hi SFSecurity,
Nice to see you again :)
- AIM BtB (By the Book)
- 3rd edition : not using 10% minimum transaction size. Using what Lichello wrote at the top of page 54 in the third revised edition.
(I don't ignore sell or purchase orders, see page 54)
- 1/N, N is the number of ETFs. All equal size.
- congratulations with the 50% cost decrease. It is so nice to have costs slashed.
Best, Karel
Hi Tom,
Step 2 has been completed. Step 3 is now in focus, deciding what factors to add and looking at the availibilty, cost and suitability of some ETFs.
The AIM parameters have been set, together with start PC, which is the same for all components.
So the universe is set and prepared in a proto form. I will use a twinvest like method to inflate it, by adding monthly to the components with the most negative deviation from the average, while respecting the AIM settings and signals. Cash will be injected when needed and normally not taken out, except for tax reasons.
I hope it will be strong enough to last the next ten years!
Best, Karel
Hi Tom,
For the migration of my US UBA / formation of an EU UBA, the following steps could be taken:
1 allocate the LB etfs. I was thinking about taking a 1/N approach and using the EU Vanguard series of ETFs: North America, Europe, Asia Pacific, Japan, Emerging markets.
2 add value/dividend ETFs. Could use Wisdomtree ETFs, Ishares ,Vanguard. Like to get distributing ETFs and not accumulating ETFs, I need to pay tax. (I have a problem with SPDR, read somewhere that they were convicted when moving money from New York to London and looking at their ETFs I find the dividend payout lowish and suspect)
3 add other risk factors like reits, emerging markets treasury funds etc. Spread over as many risk factors as possible. (UBA was mainly size and value)
I intend to start everything 1/N. From there-on AIM will be the arbiter.
That would keep me busy for a while. :)
Step 1 has already been completed.
Best regards, Karel
Hi Firebird,
Free trading is the best!
Shares, Bonds, Turbos, funds, ETFs, CFDs all free :)
No other costs related to services or whatever.
Only the 15% dividend tax, which we get back anyway. That is the only cost. The spread is a bit wider, but not noticable, and for AIMers that use limit orders not important.
Borrowing still 3.33%, but when the negative rates really kick in that could still go lower. The adage is : don't save, spend and borrow :)
Best, Karel
Thank you Tom,
I will make sure to report more often. :)
Currently you need to be a 'professional trader' to trade US ETFs. I read a few documents you need to sign with a lot of legal talk in it and decided it is not for me. So 2 options are open:
1 - move the ETFs to europe. This is possible for the wisdomtree ETFs, they have the same ETFs available on european markets. It is also possible for the SP500, but not for all ETFs , because in the US it is US and foreign, and that split is not made here in that way.
All in all, it is possible but not 100%.
2 - leave everything in the US, but now it is Buy & Hold. That is what I am doing. Take out the dividend, pay the taxes and decrease the average price in this way. Not perfect, but I leave it like this until I make up my mind how to handle it.
So I use european ETFs now and structure them in several configurations, where each part is AIMed. This is an ongoing project, I am not finished with this reconfiguration yet. Slow, slow, slow :)
I am aware that the dollar is highish vs the euro, so maybe it is time to move things back.
Hope I answered your question
(UBA in euros got to +100% in april this year for the first time)
Best regards, Karel
Hey all,
Long time no see, I went through a tumulteous (volatile) period, but continued AIMing!
- All my AIM machines are stocks/ETFs.
- AIM BtB 3rd edition style.
- It seems that interest rates here(Euroland) will drop below zero very soon. Cash needs a bank with at least a zero % rate. Bonds have all negative interest rates here.
- on the plus side, trading costs are zero for stocks, ETFs, bonds etc.
- my UBA is in buy&hold mode. to trade US etfs you need to be a professional trader, they told me.
I hope your AIMing is great!
Lucile T. and AIM
It is very interesting to read Practical Formulas for Successful Investing and I can see why you say that Lichello knew this book.
If you look at AIM, the sell side, it looks like a Constant Dollar Plan. If you look at Portfolio Control per share and how it changes, then it is Median Line management. (which it also does at AIMs buy side)
Early 2016 the emerging markets went down a lot and I spend all AIMs cash and still got buy signals. I used iAIM to handle those signals and was able to get a few more smaller buys. I now see that that mechanism was Constant Stock Bond ratio or equalizing, the second method from L.T.s book. Maybe easier to implement than iAIM.
It is interesting to see how all these things are somehow connected.
Kind Regards, K
Hi Adam,
Had a buy in VNQ today.
Could have gone through yesterday, but I moved the buy price a bit lower, not too much because I like the 4.25% yield. The other UBA components are still closer to their sell prices.
Best,K
Hi Toofuzzy,
Thanks for your explanation
Best,K
Hi Toofuzzy,
I don't AIM leveraged funds, so I have no experience with the hold zones for these funds.
Some people seem to increase their hold zones, that is why a beta dependent hold zone could be feasible? Not sure. Less bigger trades vs more smaller trades?
In what way are the leveraged funds an alternative for LD AIM? You have less core and that is good for leveraged funds? You only want to trade them?
Best, K
Hi Allen,
Maybe we could make the size of the hold zone dependent on the beta of the trading vehicle. If beta=1 for example a hold zone of 20%, then a 2x means 40% and a 3x 60%. A value stock with a beta of 0.5 could have 10%.
Best, K
Hi Lostcowboy,
After years looking for this book, today I was able to read Practical Formulas for Successful Investing by Lucile Tomlinson.
Found it here:
https://babel.hathitrust.org/cgi/pt?id=mdp.35128000268084;view=1up;seq=102
I can read it here but not download it.
Best,K
Top?
Maybe it is a good idea to have a look at all the machines in the inventory and see if there is a need to eliminate a machine for some reason.
I had a machine that I did not really like and yesterday everything felt like at a top, so I sinned and sold(exited) the position.
Best, K
Hi Tom,
Did a quick and dirty spreadsheet using reset-AIM:
75 shares at $100, $2500 cash
A
3 consecutive buys each for around $833
first buy around $81
second buy around $75
third buy around $71
So a 30% drawdown is covered.
B
3 consecutive sells each for around 0.33*cash
first sell around $124 with reset
second sell around $155 with reset
third sell around $200 with reset
It seems to me that Vealie-AIM has more granularity of sells/vealies on the sell side? You are probably the best to judge that and compare these sell sequences.
Best,K
each and every sale
My solution (and I'm open to constructive comments) has been to limit my cash portfolio to 1/3 of the highest investment control, and to limit transactions to 1/3 of the highest achieved cash portfolio. That gives one three buys on the way down, widely separated, till cash is exhausted.
The way I understand it is that a reset happens if cash> 0.33*PC
Best,K
Hi Clive,
Just noticed that Invesco Powershares has for some funds KIIDs in the dutch language. So I assume we can trade Invesco products here.
As an aside, we have referendums here, and around 2002 we voted against being part of the EU( I think they called it the Lisbon treaty), and the politicians went ahead anyway. Now the politicians want to abolish the referendum law, so we can't do it a second time.
Best, K
Hi Tom,
Yes, the iSkip is a combination of a vealie and Twinvest/Synchrovest cash contribution.
Best,K
Accumulation.
Seagate (STX) is one of my AIM machines, nice dividend and it can move a lot. Yesterday I read that STX bought 2-4% of Ripple in 2015.
Now I rather accumulate STX and not sell it using AIM.
The same feeling I have with BRK, just accumulate it and not sell it using AIM.
For accumulation twinvest or synchrovest are nice vehicles but they are calendar dependent. Now for accumulation I use iAIM with iSkip technology, where cash is not bought(shares not sold) but rather skipped indefinitely or until some condition triggers a transaction.
Of course parameters are updated to facilitate 'light' buying and increased accumulation.
Best,K
UBA,
Possibly the last UBA update in its current form, because it may become impossible to buy US ETFs here, only hold and sell them.
All taxes have been paid (also taxes for 2017), so results are after tax.
Dividends have been added.
Interests have not been added.
All AIM BtB with parameters 10,0,6,5.
Interesting to see is that the average growth expressed in euros is one linear line, while in dollars growth is more time dependent.
Best, K
Hi Clive,
Congratulations with your superb 2017 results!
as of 2nd Jan 2018 access to US funds are being stamped on by EU regulations
same here. The argument used here is not MIFID, but that to protect investors the necessary documents have to be in the language of the country where the ETF is marketed.
This argument can not be used in the UK?
The situation is not totally clear yet, some brokers still allow you to buy US ETFs, other brokers have implemented a buy lock on those ETFs.
We have to see how it will develop. Indeed a position in BRK is now more attractive; BRK is not a packaged product like an ETF according to the rules.
Best,K
13 Week Treasury Coupon Rate finally broke through 1.3% per year
Hi Tom,
Did a new calculation using the information of VOO(S&P500) and the 1.3% interest rate. Maybe at this moment we have a 70% equity 30% cash portfolio, that could average over 10 years to 85%/15%, one of the advantages of AIM. 10 years seems to be an accepted time frame, I noticed Bogle uses 10 years. The growth%, dividend % and P/E are taken from Vanguard using the VOO information. Elaine Garzarelli's formula is used with P/E plus int% equals 20. One AIM transaction per year for VOO seems reasonable, could be a bit higher maybe.
The CAGR is 9.23%, which is not bad. It may mean that we should have all GTC buy orders loaded, to take advantage of attractive price levels. Yesterday I had a VB sell and also loaded a new GTC buy order with a buy price similar to the market price a year ago(a year ago VB was selling).
Best,K
Hi Tom,
Doing a rough calculation using the modified equation:
Lets view a period of 5 years, using a portfolio with 70% equity and 30% cash:
1 - earnings growth 8%, P/E constant so price will grow 8% per year. So 5 years give 46.9% growth.
2 - dividend % 2%, after 5 years 10.4% growth.
3 - P/E change. Assuming T bills are at 0.5 % and using the Relative valuation formula, P/E should be at 20.5% max. P/E's currently are at 25-26, so we have a 20% draw down threat minimum.
4 - Volatility capture at 20% gains from a buy to a sell, returns 1% to the portfolio. Assuming 1 capture per year, we have 5 captures = 5% volatility capture.
5 - Interest on cash is 0.5%, over 5 years is 2.5%
So equity returns are (46.9+10.4-20+5)*0.7 = 29.6% plus 2.5%*0.3= 0.75%.
Total is 29.6+0.75 = 30.35% over 5 years, yearly 5.4% return max.
More draw down could diminish the yearly return.
Best,K
Gordon equation
The Gordon equation:
Total return = Income plus Capital gain = CapGain% + Div%
https://en.wikipedia.org/wiki/Gordon_equation
Then when the P/E changes this will be added to the formula:
Total return factors: CG% + Div% + P/E change%.
This formula is used to indicate that current expected market returns will be low because P/E will return to the mean.
For Aimers we need to add cash and a volatility %:
AIM Total return factors: CG% + Div% + P/Echange% + Interest% + Vol%
AIM results depend on earnings growth, dividend yield, interest rates, P/E change and Volatility.
It is interesting that P/E change depends on Interest% and they cancel each other out a bit.
All the factors are not linear independent.
Best,K
AI Powered Equity ETF (AIEQ)
http://www.equbotetf.com/about-aieq/
Would this ETF be AIMable?
Hi Allen,
"what am I going to do with my large cash reserves"
That is a big problem, even more so because we are constantly selling, this week sells: VNQI, VGK, DLS, VPL. (cash level 27.9%)
Cash could go into short term government bond funds, for example I like VGSH.
An old idea was to use the permanent portfolio as a cash substitute, because of its price stability and reasonable growth.
Because I have AIM machines in euros and in US dollars I would need 2 permanent portfolios. Another thing is the relative movements of the euro and dollar which need to be AIMed as well. Lately the thought came to me to create a combined 2 part permanent portfolio of 8 asset classes: in the US: VTI,IAU,VGLT,VGSH and in the euro zone VGK,IAU,IBGL/IS05,cash(these ETFs are used because of free trades at my broker). This 8 part portfolio can be rebalanced at times to 12.5% for each part, rebalancing economic climates plus euro/dollar volatility.
Currently a project under development.
Best,K
Hi Allen,
for putting it into my brain.
Not completely sure what I did put there :)
PSCE looks nice, I had a look at Stockcharts and saw that from 2014 to 2016 it went down from 140% to -50%. Do you AIM PSCE?
I had not thought of AIMing the SP600 sectors, it seems an interesting idea, with a lot of sector movement.
Best, K
UBA update
1- This week 3 US ETFs did sell. VOO,VTV and VBR. Last week VB sold as well, so the US part of the UBA has to wait a bit for new sells!
2- Because of these sells, the cash part of the UBA is now at an all time high, and the cash drawdown is 0%.
3- EFV, international large cap value, has an expense ratio of 0.4%. I could not find the turnover rate. VYMI has an expense ratio of 0.32% and a turnover rate of 5.9% which adds 0.059% to the expense ratio roughly.So it seems that replacing EFV with VYMI is a good move.
Best,K
UBA Drawdowns
Your cash reserves are now about where they were before the 2016 drop-off.
I calculate the drawdowns per share for cash, equity and equity plus cash from their highest value ever reached:
The cash reserves are close now to their max level, which was reached in 2015.UBA share Drawdown percentage
equity + cash 0%
equity 0.45%
cash 3.64%
UBA update
Since the 1st of January 2016, UBA sells and buys:
In September 2017 sells in VSS,DGS and EFVETF No of Sells and Buys
VOO 2
VTV 3
VB 3
VBR 3 and 1 buy in Jan 2016
VGK 2 and 3 buys in Jan/Feb/Jun 2016
VPL 3 and 2 buys in Jan/Feb 2016
EFV 3 and 3 buys in Jan/Feb/Jun 2016
VSS 3 and 1 buy in Jan 2016
DLS 3
VWO 4 and 1 buy in Jan 2016
DEM 4 and 1 buy in Jan 2016
DGS 6 and 1 buy in Jan 2016
VNQ 1
VNQI 2 and 1 buy in Jan 2016
Hi Tom,
Grats with the sells!
Also had a DGS sale above $50 this week (a GTC sell order during my holiday in France).
Next week, when home, I will update my spreadsheet and enter a new set of GTC orders for DGS. Will report more detail next week.
Best,K
Hi Allen,
Thanks for your message!
You are right:
10% buy safe
0% sell safe
6% minimum buy amount calculated using stock value
5% minimum sell amount using stock value
total distance between buy price and sell price is roughly 20%
18% looking down, calculated from the sell price
22% looking up, calculated from the buy price
18+22=40 divided by 2 is roughly 20% for the distance from the buy price to the sell price.
20% is a nice number for ETFs to get some transactions.
Best, K