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Hi Ls7550,
You can end up being frozen by over-analysis and/or swayed towards a particular choice due to backtesting.
Then a choice could be to design a portfolio structure that has 'beauty'. Beauty could be symmetry and that would favour P2.
P3 has more cash and that could be ok in the UK. In Euroland the moneymarket and bondmarket have been 'destroyed' and QE will continue for a few more years. So emphasizing the hard cash asset class could be problematic.
Also I like Toofuzzy's idea, the combination or superposition of polarities over the major asset classes:
- large vs small(VOO vs VB)
- domestic vs international(VNQ vs VNQI, VTI vs VEA)
- bonds vs stocks (VTI vs BND)
- Long term vs Short term (TLT/EDV vs SHY)
- Liquid vs illiquid (house vs portfolio)
- US$ vs Euro vs Asia currency(AU$ perhaps)
- Multiple brokers
- Managed by others and self-managed
- Inflation protected vs not protected
- Equal size vs market size
- ...
Value seems to be a monopole, you don't want un-value. This is AIM.
There must be some portfolio that has ultimate beauty. When you see it, you know this is the one.
Best,K
Hi ls7550,
Nice tinyurl.
Noticed that changing tips to SCV improves CAGR and max drawdown somewhat. By rebalancing the 4-blend at AIM transaction-time plus when a certain max. deviation level is exceeded, 'cash' and 'stock' are always well managed. Rebalancing the 4-blend could also be done quarterly, if trades are free.
A max drawdown of 3% is very acceptable, especially when profits are already gained, 3% is just noise then.
Best,K
Hi Ls7550 re: euro 6-blend 'cash'
For the euro area the following ETFs qualify for a 6-blend 'cash'.
VBR - SCV
VGK - LCB
IAU - GLD
IBCI - TIPS(duration 8.7 years)
E20Y - LTT
IBGS - STT
I can trade all these for free, except E20Y. It is best to have E20Y in Frankfurt on the german bourse. E20Y is also available in London, but London has a transaction tax, while Germany doesn't(yet).
VBR could be exchanged for WTES, european smallcap from Wisdomtree also trading in Frankfurt and in stead of VGK the S&P500(VOO or VUSA). VUSA has a dividend leak, but no inheritance tax over 70K while VOO has.
All ETFs could be 16.66666% in size, and the rebalance bands around it for example 13.3333% and 20%. This could be constant ratio rebalancing.
Executing AIM transactions, money can be taken from the 6-blend or put into the 6-blend through IBGS(STT), which could or could not trigger a rebalance event.
Could this be a valid description of the 6-blend?
Best,K
Hi Ls7550 Re:'cash'
SCV is really doing a nice job!
1 - The way I understand the blend:
The components of the blend are
SCV US
TIPS UK
LTT UK
STT UK
Then the blend is used to mainly AIM-Hi the S&P500 and UK smallcap.
Please correct my errors.
2 - Another thing is the TIPS. Assuming it is a TIPS fund with all durations in it, what is the reason to add TIPS? Is it to supplement the LTT and gold parts? Or to get 6 equal parts with a size of 16.6% each?
Best,K
Ecclesiastes 11:2
http://biblehub.com/ecclesiastes/11-2.htm
Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.
Reading the first few lines seems to read as a version of AIM:
The Uncertainties of Life
11 Send your grain across the seas,
and in time, profits will flow back to you.[a]
2 But divide your investments among many places,
for you do not know what risks might lie ahead.
3 When clouds are heavy, the rains come down.
Whether a tree falls north or south, it stays where it falls.
4 Farmers who wait for perfect weather never plant.
If they watch every cloud, they never harvest.
5 Just as you cannot understand the path of the wind or the mystery of a tiny baby growing in its mother’s womb,[c] so you cannot understand the activity of God, who does all things.
6 Plant your seed in the morning and keep busy all afternoon, for you don’t know if profit will come from one activity or another—or maybe both.
Best,K
AIM-HI
Looking at it for a few months, I was not comfortable using a timewise increasing Portfolio Control for my Vanguard dividend fund.
Rereading Lichello's book again, it struck me that AIM-HI could manage this ETF very well. Not wanting to sell too early, but still selling at the top(?) and buying at the bottom and in the meantime enjoying the dividend.
My PC has been reset to the original value, the AIM-HI sell amount has been calculated and the sell order actioned.
Now I have a good AIM-HI feeling:)
Best,K
UBA sell
5% sell in Vanguard Small Cap Value(VBR).
LIFO gain: 106.3%
In 2010 and 2011 there were buys and sells in VBR. Since 2011 only sells. The shares left were all bought when starting this machine.
Best,K
Trading costs,
At this moment I use a broker that charges 50 cents plus 0.01 cent per share per transaction in New York. So the trade of 15 shares at 12.335 could be done. 15 shares would mean a fee of 51 cents, so two ways is one dollar.
So you can have a lot of different individual shares without using LD-AIM.
Also ETFs can be traded for free, so the buy and sell size could be 1 share. Using the parameter settings (10,10,6,5) you basically have a 20% hold zone when trading 1 share per transaction.
This is a Dutch broker, but surely you have equivalent price settings in the US.
Best,K
US smallcap sell
Today a sell in US smallcap (VB)
Best,K
Trend Capture
My US$ vs Euro has a sell signal now. The last sell signal was in June 2010 when the euro hit 1.19/1.20 vs the dollar. Now the euro is at 1.13 vs the dollar or 0.88 dollar vs the euro.
Will move some dollars back to the eurozone.
Nice way to manage dollar exposure.
Best, K
Hi All,
http://seekingalpha.com/article/2810025-the-jobs-report-was-great-but-the-markets-down-lets-analyze-the-dow?source=feed_author_mycroft
'Mycroft' wrote a series of new FCF articles on seeking alpha. This one about the current level of the Dow compared to 2000 and 2009. His conclusion is to have a high percentage of cash, because the level of the Dow is high in terms of historical levels.
Maybe the time for AIMers to execute all these open sell signals, and be careful with new positions?
Best, K
Re: VNQ
What a coincidence!
My 5% VNQ was shipped at the price just above $85.
Best, K
Hi Allen,
SPFF is a US preferred stock index, I assume similar to ishares PFF.
I remember that PFF was a nice buy during the 2008-2009 crash. For a cash proxy I like something stable. (cash, ST bonds etc.).
I assume that when you say: So all ETFs are AIMed separately with parameters (10,0,6,5) (BSafe,SSafe,BMin,SMin) you are using percentages for the Buy & Sell Minimum, correct?
correct: 10% buy safe, 0% sell safe, 6% buy minimum, 5% sell minimum. The minimum percentages are using the stock value, not the Portfolio Control. So Lichello style BTB.
These machines are not LD-AIM but the normal BTB AIM machines, no virtual shares,
Best,K
UBA buy,
Had a 6% buy in EFV today.
Next order loaded straightaway.
Google finance tells me that the PE of EFV is 6.35
Best,K
Hi Allen,
The UBA is an investing construct used by Merriman and has its roots in the Fama-French 3 factor model, which is very well described on the DFA(dimensional fund advisors) website.
Tom is also using a version of this model.
My version:
US - VOO,VTV,VB,VBR
Developed International - VGK,VPL,EFV,VSS,DLS
Emerging markets - VWO,DEM,VSS,DGS
Reit - VNQ,VNQI
Bonds - none
At the time the chart started (10 july 2010) the portfolio was started. Parts of the portfolio I already had in possession, other parts were bought at the time. This is roughly a year after the crash and during the crash I bought all kind of things and it needed a cleanup. Also at the time I needed to pay a rather large bill and decided it was a good time for a total restructure.
So all ETFs are AIMed separately with parameters (10,0,6,5) (BSafe,SSafe,BMin,SMin). So I had a few trades, but you don't see them on the chart.
I use Interactive Brokers, and at the start of the portfolio sold euros and bought dollars. So the portfolio is a dollar portfolio. So I also needed dollars as cash and the interest rate that IB is giving is zero. So using AIM I wanted a higher return for my cash and I could not use a Bank, as I do in the euro area.
So SHY is a candidate to hold cash, because it is stable, and it gives a small return. At the time there was a lot of talk about the permanent portfolio (Clive knows a lot about the PP) and because it is stable it seemed to me usable as a cash proxy, giving a better return. The PP is 25% VTI, 25% IAU, 25% TLT, 25% SHY.
In fact it has done so, and as far as I am concerned it can drop 40% and still be a cash proxy.
This is my UBA story.
chart of US-PP
Best,K
Happy 2015 to all!
2014 was a good AIM year.
The stock side of things was invested in UBA, special risk factors(carry,inflation etc.), specific value stocks.
The cash side of things was first line - cash, second line - SHY, third line - PP.
Looking at my UBA after Interest/Dividend/Tax in dollars and euros:
Best,K
Hi All,
Nice volume in GNAT today, 10 times average volume(3M).
Best,K
Sector etfs
What is the reason that you do not use the Vanguard sector Etfs in this list, they have a lower expense ratio? To me, they seem an obvious choice, but maybe there is something I do not know.
On the buying front: today a buy in DEM.
Also had two more buys in GNAT recently. GNAT is close to a further buy and also very close to its 2009 bottom.
Best,K
Re: Energy Sector.............
Bought some more (6%) GNAT last week.
Best,K
Hi Allen,
It was not me, AIM did it.
AIM bought VGK a month ago and sold VOO today.
So the net effect is kind of a rotation, looking at it from the portfolio level.
Rebalancing is quit often something one does once a year or so.
Aim does it all the time, not in one go, but spread over time.
Best,K
Hi All,
Today a sell in VOO - S&P500 ETF
One month ago a buy in VGK - Europe ETF.
That is similar to a rebalance, at prices determined by AIM, and with an execution delay of one month.
Best,K
Hi Tom,
REIT ETF:
Looking up the numbers for VNQ: total 10 year return is 8.6%
Dividend percentage is 3.9%
So 8.6-3.9 = 4.7%
6 years is 6 times 4.7 compounded = 31.7%
your percentage arithmetically is 11.3+4.1+12.1 = 27.5%
geometrically that could be 31.7%
GROWTH component:
9.66+9.8+18.1+25.1 = 62.6%
over 6 years is 9-10% (i don't know if your growth component has a dividend)
So the total growth is similar to the growth of a continous rising PC for the growth and the income component.
A VHYL picture, the green line is the PC per share. At the start PC is a bit messy, because the machine was started with more than 1 buy. The drop in PC in November 2014 is the effect of combining a AIM machine with a TWINVEST machine into one new AIM machine.
Best K
Value-PC
For VHYL (vanguard worldwide high yield) I changed my AIM spreadsheet to create a Value-Portfolio-Control. Similar to Value Averaging.
On the Vanguard website it says that the 5yr return of VHYL is 9.2% and the dividend is 3.7%, so a growth of 5.5%
This now is also the growth rate of PC, I change the weekly PC to get a yearly gain of 5.5%
PC is now nicely following the price of VHYL. (for example twinvest additions can be made below this line)
At this moment it feels good!
Hi Ls,
All very good reasons.
Vanguard is paying less than other companies for the use of the S&P index in their products. They can always be cheaper.
Buffett kind of owns Standard and Poors, I believe. By promoting VOO, he is also earning a bit:). Don't know if VTI is a licensed index. The money inflow into VOO was unbelievable after Buffett wrote his letter.
Interesting article on what you can feed your AIM machine:
http://www.thornburginvestments.com/pdfs/TH2274_PrePostTax.pdf
Best, K
Hi LS,
Infers that he doesn't perhaps have much faith in BRK following his demise?
Indeed , implicitly he says Vanguards VOO safer than BRK.
Maybe "Berkshire Beyond Buffett" from Lawrence Cunningham will answer this question.
The other thing is why VOO and not VTI?
Best,K
Hi SF,
how many weeks (months?) to put into a No Down AIM as a starting point to wait to get the next buy signal.
Looking at the trend of your AIM-equity you could make the following decisions:
- trend down, use a ND-AIM
- trend horizontal, use a LD-AIM
- trend up, use a classic BTB-AIM
How to size the amount of stock and cash in for example a SP500 AIM.
Go back to 2007, start with a virtual 50-50 AIM and execute all transactions. Then you know what amount of stock and cash you are supposed to have now.
Then look at the stock, how much virtual, how much real? You can look at the probability of it going down. How to determine the probability. You could say PE=15 will mean classical AIM and PE=25 will mean ND-AIM and everything in between will be scaled proportionally. Of course you can do this in many other ways.
Remember Buffett says 90% SP500 10% ST-bonds.
Hope this helps a bit
Best,K
Hi jaiml,
info about the NO-DOWN version of AIM?
this is AIM starting with only virtual shares. for the rest similar to AIM btb.
what did you pick as the start period of your virtual GNAT AIM and based on what
started in Feb 2011 and got a first buy in August 2012.
a second buy in June 2013 and recently the 3rd and 4th buy.
my parameters are (10,0,6,5) (buy safe,sell safe, min buy%, minsell%) and the trading bracket currently is (18.33,22.39)
I am not completely sure about GNAT, so I don't twinvest it. But am willing to buy some at lower prices. It would be interesting to have a dip and then up again. Would be able to sell all shares in that case maybe. The volume of shares traded with nodown aim is higher relatively than aim btb, which could be an enhancement return-wise.
insist on the stock having 3 years of history. Go back to the beginning and start on the day the last sell was executed
that would be a nice way of doing it.
One thing about GNAT, you need to use GTC orders and don't use the monthly buy rule. I lost a buy-sell couple with the monthly buy rule.
(assuming it is not falling apart, which is a possibility with Nickel prices for example very weak)
I think the majority of your investments should be in VTI etc. and GNAT is a much smaller play with natural resource risk.
Best,K
Hi jaiml,
I am on autumn-holidays in Poland now.
Will look at it when back home
Best,K
Hi Allen,
GNAT for me is a combination of dividend + inflation protection.
That is why I like it. But the ETF is micro-size, trade volume miniscule etc. So I use a no down machine and got 2 buys lately.
Before that I had 2 buys, so a total of 4 times 6% buys. I have now 80% more shares after the last 2 buys.
In the meantime the dividend was collected.
In my UBA I use full-down machines, so more or the less classic Lichello.
I like to have other machines for example for dividends. Also started a low-down machine in IYLD(6% dividend). No transactions yet
but each month a dividend.
MXI is used for inflation protection.
In the UBA there is large cap and smallcap, so a midcap dividend payer would be nice, for example DON. I sold that one completely in the upturn after 2008, one of the disadvantages of low-down AIM.
Another one I sold completely is IXG-financial industry.(Masters of the Universe)
So I like to have a set of risk factors for AIMing next to my UBA.
Kind Regards,K
6% buy in VGK today
VDE is looking attractive now
Hi Allen,
Gnat is a small Wisdomtree ETF that survived their last cleanup.
But it is very stable with a nice dividend. Pump and dump schemes (if possible with an ETF) don't worry me, as I am using GTC orders.
A no-down machine is a machine with only virtual shares and when you get a buy order, you buy real shares. So a slow and hopefully cheap way of establishing a machine.
Best,K
Hi Tom,
Already had a buy in GNAT(wisdomtree global mats). Sent in the next buy order without waiting for the 30 days to elapse.
Not yet a buy in MXI.
Maybe it is a good time to start something in VAW and VDE, maybe 2 no-down machines. I can trade these ETFs now without transaction costs here.
Best Regards, K
Hi Bob,
I think it was the AIM REBAL board, but not sure.
His website has a link(at the top-left) to a free shares document.
Best,K
Hi Bob,
Jibes was writing about Freeshares on these forums 10 years ago.
He also had the AIM REBAL forum here on IHUB.
http://jibes0.tripod.com/trend/trendseekers.html
Best Regards,K
Hi Allen,
I had not heard the story about the jailing of the lawyers and judges before. In a sense the jailing could have been beneficial, because the state is rather 'kind' to the citizens (compared to many other countries) and this could be one of the reasons.
In general people 'try' to forget what has happened, it still hurts.
Long time ago that I read Janwillem van de Wetering's Amsterdam Cops series, liked them a lot.
These days we have a TV series, Maastricht cops. (the same city as in the treaty of Maastricht, start of the european union in 1992)
Best Regards,K
Hi Allan,
Looking at the numbers this weekend, it looks as if we should execute our (delayed) sells.
Here a graph of DJSC(DowJones European Small Cap in Euros):
And a graph of VGK(Europe in Dollars):
The fat red line is a 6M exponential average, the thin blue line is a 5 weeks EA and the yellow line a 13 weeks EA. The green line is Portfolio Control divided by # of shares, so PC per share. You see the incremental steps of the green line, that is AIM selling. So AIM was selling up to the top.
You could call both graphs 'top formations'. The blue line breaks the red line from above, then goes back to the red line and the descends again. This is a classic TA sell signal. That was the reason I said, maybe it is the right time to execute any open AIM sells at this moment.
Best,K
Hi Allan,
They never were able to completely subdue them.
My father told them that he wouldn't bow to a painter from Berlin:)
Best,K
Hi All,
Looking at the numbers this weekend, it looks as if we should execute our (delayed) sells.
Especially Europe is weak. VGK within 10% of a buy for me.
Emerging markets also weakish.
Best,K