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Hi Sfsecurity,
Nice lists!
Had a look at the different stocks. Could buy Apple(AAPL) at this moment, but not one of the others. Maybe this is not the right time to start a machine, rather wait till everything is a bit cheaper.
Best, K
Hi Ls,
That is a nice portfolio!
In the "What to feed your money machine" chapter of Lichello's book he advocates keeping your Bluechip stocks equally weighted.
That is correct.
In the 4th revised edition, in Questions and Answers, page 191:
Q:How do we keep the dollar amounts equally invested when we have more than one stock?
A:It really isn't important, Although I may have suggested somewhere in the book... etc.
Best Regards,K
Hi Sfsecurity,
I am not looking at bookvalue, but the discounted values of the cashflow.
Then you calculate a value and you compare the stock price versus that value. If you use 0.4 then use 1 slot, if 0.3 use 2.5 slot etc.
This is an example, you could scale differently.
Currently i am not using equal weight, but do it the way Lichello described it in the book. When you have a buy, you can buy any stock, Lichello tries to buy a new stock. The Kelly idea can help to determine how much to buy of stock A and how much of stock B.
Best Regards,K
Hi SFsecurity,
When the price of the stock is lower compared to the value of the stock you buy more. If you have a portfolio of stocks and you use equal weighting than each slot has the same size. With Kelly weighting you increase the size of that slot when you expect more gains.
I kind of use this: when a stock has a price of 0.45*value I use a weighting of zero. When 0.40*value the weigthing is 0.10 times a function of the slot size. When 0.30*value the weighting is 0.25 etc.
So when buying something you have a feel for the size.
Lichello will tell you that you have a buy and Kelly can help with sizing. Lichello is a hard formula and Kelly is more intuitive for me.
Best Regard,K
Hi All,
This holiday I read "Value - the four cornerstones of finance" by McKinsey & Company Inc. - Tim Koller & Richard Dobbs & Bill Huyett.
From the book:
Internalizing the four cornerstones of finance, understanding how they relate to the real economy and the public stock markets (or private-owner expectations), and having the courage to apply them across the enterprise have significant upside and little downside. At least, the four cornerstones can prevent executives from making strategic, financial, and business decisions that undermine value creation. At best, the cornerstones can encourage a more constructive, value-oriented dialogue among executives, boards, investors, bankers, and the press—resulting in courageous and even unpopular decisions that build lasting corporate value.
The 4 cornerstones(axioms)
1 - the core of value
The first and guiding cornerstone is that companies create value by investing capital from investors to generate future cash flows at rates of return exceeding the cost of that capital. In short, the combination of growth and return on invested capital (ROIC) drives value and value creation.
2 - the conservation of value
Value is created for shareholders when companies generate higher cash flows, not by rearranging investors’ claims on those cash flows
3 - the expectations treadmill
a company's performance in the stock market is driven by changes in the stock market's expectations, not just the company's actual performance (growth, ROIC, and resulting cash flow)
4 - the best owner
the value of a business depends on who is managing it and what strategy they pursue
Hi Ls,
I know of 3 different approaches to Index building:
1 - capital based
2 - equal weight
3 - Kelly weighted
https://en.wikipedia.org/wiki/Kelly_criterion
Best Regards,K
Hi Tom,
Was looking at FVL Valueline timeliness #1 ranking.
Holdings of FVL:
http://www.ftportfolios.com/Retail/Etf/EtfHoldings.aspx?Ticker=FVL
Also found FVI for timeliness #1 or #2 ranking.
http://www.ftportfolios.com/Retail/Etf/EtfHoldings.aspx?Ticker=FVI
Looking for Valueline High growth I could not found a list of holdings, but there is VALSX(Valueline Premier Growth fund) and VALIX(valueline Income and Growth fund).
Also saw FVD, valueline dividend fund, here are the holdings.
http://www.ftportfolios.com/Retail/Etf/EtfHoldings.aspx?Ticker=FVD
For me dividend paying stocks are ok, no tax penalties because I can reclaim the dividend tax.
Best Regards,K
Hi ls,
Simply because they benchmark to a net total return version of the S&P index, but in some cases they don't actually incur those taxes/costs.
These costs could be the sum of dividend tax, trading costs, brokerage costs, other taxes,other costs. Then the expense ratio could have costs like: computer/office/salaries/carfleet overhead etc.
The question is if 0.5% is a reasonable number?
Diversify by either style or industry using index funds, not individual stocks.
5 core sectors, 5 stocks per sector, all equally weighted.
It would be interesting to construct such an index for AIMers on this board.
Lately I compared the SP500 ranking order(capital value) vs the ranking order of the year before. I was surprised to see the number of changes and came to the conclusion that the economy(or at least the SP500) is very dynamic. An AIM index should accomodate this dynamism somehow?
Best Regards,K
Hi Ls,
Cost averaging can also be used to feed back dividends into the stock.
Re taxes on ETFs. You have taxes on 3 levels: what the ETF receives is taxed, the ETF itself is taxed and the dividends are taxed.
An ETF based in Ireland will for example receive dividends from a US company, this will be taxed. Ireland will also tax 15%. Then the dividend that is paid to you will be taxed as well.
The same ETF based in the US, will not be taxed on the received dividends and also the ETF will not be taxed by US government. The dividend paid to you will be taxed, 30% or 15% depending.
My conclusion is when I use ETFs, they should be based in the US, not in Europe. The tax situation is that much better. As soon as an equivalent fund will trade in the US, I will move my VHYL to the US.
The best of course is shares itself. Buying in several sectors based on Value seems nice to me.
Btw, your mexican stock will pay a dividend soon.
Best Regards,K
Hi all,
Got a 5% sale in my share portfolio.
Sold all my MRKs.
Bought them 2 years 4 months ago.
Profit on MRK was 69.3% including dividends.
I calculated MRK to be 80% of value, but Lichello told me to sell something, and the selling department decided it would be MRK.
Best Regards,K
Hi SFsecurity,
Twinvest is described in the book, while Synchrovest is described in another, earlier book. Lost cowboy has a Synchrovest spreadsheet.
The results of Synchrovest can be really spectular as shown by Lostcowboy using the 30% increase for selling.
With both systems you invest at regular intervals, for example monthly. Synchrovest also sells, while twinvest only accumulates.
When your twinvest machine is large enough you can switch to AIM.
Synchrovest can run indefinitely.
I use Twinvest now for accumulation while also AIMing the same ETF.
AIM sells can then be used to buy shares for Twinvest, so you don't have transaction costs. When the two machines are large enough they could be combined into one AIM machine. I will see how it all will happen in the future, not sure at this moment.
Best,K
Hi SFsecurity,
VNQ - vanguard REIT ETF
UBA - ultimate buy and AIM :)
(UBH is ultimate buy and hold, promoted by merriman)
http://www.merriman.com/
UBA portfolio is a set of ETFS with smallcap and value exposure. This idea is promoted by Mr Merriman and also by Dimensional Fund Advisors.
Best,K
Hi Adam,
I understand your thinking, but stopped tinkering with my UBA.
VNQ parameters are now (10,0,6,5)
Here you see a chart of VNQ, I was a bit lucky buying it in February 2009. I experimented a bit with the parameter settings, and am happy now with the current settings. In all my UBA machines this setting is used.
I have another dividend machine, VHYL(currently around 3.5% div) , Vanguard high yield fund, a world wide dividend ETF with 1000+ stocks in it. That one I have in a combined AIM and TWINVEST machine. The AIM sells are then bought by the TWINVEST partner. In this way selling is avoided as well.
Best,K
VNQ sell in my UBA
Today I had a sell in VNQ with a LIFO gain of 19.3%.
The previous buy in VNQ was in June, 2013.
The nice thing with AIM is that I now have more cash than before the buy in 2013 and also more shares!
Also dividends were collected each quarter.
Best Regards,K
Hi Tom,
I also took a 10% Sell order in my stock portfolio.
In this case I sold some IBM shares for a small profit.
This stock was not really moving, so I decreased the position.
I remember when buying this stock I followed Buffett a bit, that won't happen again. It was not a screaming buy at the time, but closer to fair value.
Nice to see a better alignment of Portfolio Control and Portfolio Value.
Best Regards,K
Hi All,
Today the value per share increased by 50% since the start of UBA(10July2010).
This is the net value increase after taxes and interest.
Taxes are 1.2% per year so before tax, the value increase would be around 55%.
This quarter there were sells in VGK and EFV.
Cash is at 26.6%.
I would love to see some PC increases.
Best Regards,K
Hi All,
This article is very interesting:
http://news.morningstar.com/articlenet/article.aspx?id=644994
I wonder if the ishares USA Quality factor fund (QUAL) is close to these new factors. Would be maybe a candidate to add to the UBA.
Also the enhanced series of ishares funds could be UBA candidates.
Best Regards,K
6 months
Hi Tom
For me emerging markets (DEM,DGS and VWO) are weak.
VNQI as well.(reits int)
VPL seem to have topped and penetrated the 6MEA from above.
VNQ has topped a while ago, but doesn't get weaker lately.
The other UBA ETFs are still above their 6MEA.
For IAU etc. it could be that AIMing them (1/N) is a bit better than PP-ing them. At least that is what I observe for 4.5 years now.
Best Regards,K
Hi All,
Loaded all GTC buy orders this weekend.
Have a sea of cash, so hope that we will see -50% :)
Best,K
Hi Tom,
UniSig, Very nice graph.
I reviewed all portfolios on the signal website, they all look very nice. I am not completely sure if I understand gross and net, gross is without costs and net with costs subtracted? For Sig10 the gross and net lines look interchanged, I am not sure.
Interesting use of IAU. Its volatility could produce rich cashflow. I also bought more IAU not long ago.
Most etfs seem to go up, except utilities, materials and natural resources which are kind of stable. Gold had a big drawdown and is definitely in buy territory. Long term bond ETFs are mixed, US down/stable, but long term bond ETFs in peripheral europe are moving up these days.
Cash flow is nice, definitely as a cash smoother. It could be an interesting idea to determine the cash percentage that can be taken out of the portfolio in a safe and well managed manner. It seems to me that baby-boomers would like that.
Best,K
Hi Tom,
Congrats with the PBE machine!
Also liked the image with the Global Signal Composite graph.
Very very similar to my UBA graph. Checked your signal website and saw that the signal asset allocation is sector based for the US and geographic outside the US. Different asset allocation but similar machine behavior as Value and Size tilting. Thanks for that graph.
Also did empty my IXG machine(global financial sector). This was a ND-AIM machine started somewhere in 2011 and last sell recently.
Best Regards,K
Hi All,
In addition to the DJSC sell also a 5% sell in DLS(both european smallcap, DLS international).
Best Regards,K
Hi Grabber,
As an extra point, when I have an AIM buy(s) for an equity that is tanking, then that buy is accounted for on the aggregate level as a non-aim buy. Same applies for sells. These transactions will affect the cost price per share.
Only AIM transactions on the aggregrate level are applied as regular AIM transactions following standard AIM rules.
That is how I do it now, of course things can change in the future, having better insight in this whole process. At this moment I only do it for 3.5 years.
Best Regards,K
Hi all,
Yesterday sold all of my DJSC - Dow Jones euro small cap.
This was a ND-AIM machine started in the euro crisis 2011/2012.
Got 5 sells and now it is empty. Hope the market reverses a bit so the buying can start again.
Best Regards,K
Hi Firebird400,
Hi Grabber,
Hi Grabber,
Does the Value per Share number represent the overall value of the UBA (Share count constant)?
Yes, this is the case.
Value per share is the value at this moment using the current price of the underlying ETFs.
Cost per share is the value when the shares were bought, using the price when the ETFs were bought.
Hope this explains it.
Best Regards,K
Happy 2014 to all,
Here is the graph of my UBA(Ultimate Buy & AIM)updated up-to today.
This is a portfolio of ETFs. AIM parameters (10,0,6,5), each ETF AIMed separately.
Taxes have been paid for 2013.(That explains part of the price dip at the right side of the graph, the other part was the lower share prices this week). The cash percentage is 25.5%. Cash interest percentage was taken to be zero percent for 2013.
The Value per share is still nicely above the 40 period MA and still going strong. Emerging markets and VNQ show some weakness lately.
Also here a graph of my share portfolio. They are AIMed as one machine with parameters (10,10,5,5). Cash percentage is 18.5% and cash interest percentage was taken to be zero percent for 2013. This machine has been in evolution over the last 3 years to get my hands around it.
All taxes have been paid for 2013(dip at the right side of the graph), so the result is net.
Best Regards,K
Hi Tom,
Yesterday a 5% Sell in VB(US smallcap).
Did enter the next Sell order for VB but didn't enter the next Buy order, the next Buy price seems so high.
Several others are close to a Sell.
Best Regards,K
Hi all,
Just the other day I saw that Wisdomtree introduced some new ETFs.
Like DGRS WisdomTree U.S. SmallCap Dividend Growth Fund.
Dividends are paid monthly and expense ratios are a bit lower than we are used to from Wisdomtree.
Best,K
Hi Toofuzzy,
Interesting that you use LDAIM for individual stocks in new accounts and write options.
At this moment I have a few individual stocks which are AIMed as a total package, the Lichello way. Stocks are strictly selected on free cash flow basis and moat.
I use LDAIM or NDAIM whenever I have an 'idea' or when the circumstances seem fruitful. Like in the european crisis of 2011, I took positions in several euro-etfs via NDAIM.
Also LDAIM/NDAIM for 'theme' investing.
Stocks in the financial sector are difficult to value(at least for me), so I LDAIM IXG.
For example basic materials, LDAIM GNAT.
Or maybe NDAIM IAU to buy some cheap gold.
Or buy for example small cap growth which is not in the UBA(where I use AIM classic). Or Midcap, or a nice sector, or EDV.
To get exposure to some risk factors.
Best, K
Hi Toofuzzy,
Had a sale in europe: europe small cap. ND/LD-AIM account and have one sale left.
And a sale in the US: VXUS. NDAIM account and sold out.
In a market like this you really see the drawback of LDAIM, you loose all your shares!
Best, K
Hi All,
2 sells in the european ETF space:
Europe eurostoxx 50(previous sell was in May this year)
and
Europe large cap value(previous sell was exactly one month ago in September)
Both machines were started as NoDown AIMs, then they became LowDown AIMs and now they nearly sold off completely.
My UBA is in the USA, I am also trying to create something similar in Europe. Here in Europe we don't have all the nice ETFs that are available in the USA. Hopes are high now because Vanguard ETFs are also traded on my local market(Amsterdam).
Best Regards,K
Hi Alton,
Thanks for the Fibonacci info!
Very interesting!
Best Regards,K
Hi Toofuzzy,
When you trade in a tight range, say 10%. %5 up sell, 5% down buy.
You do a few round trips with some parameter set for tight range trading.
Now a crash happens. You do not want to use the tight range parameter set. You want to extend the buy parameter. You could do that by using a Fibonacci series as Alton is doing. On a few stable funds I used the series 0,2,5 etc. After a sell the series is reset one level. In this way you can trade in a tight range while also accomodating a crash.
Imagine using the parameter set 10,0,6,5. Say you start with 0,0,6,5 and later it can become 2,0,6,5 and then 5,0,6,5 and then 10,0,6,5. In a tight scenario you get a few more roundtrips. In a crash secenario you have a few more trades. When using it on higher dividend products/low volatility those extra buys are maybe less damaging.
I am not using this extensively only a little bit as an experiment.
Hope this ends the confusion:)
Best Regards,K
Hi Grabber,
Especially when you trade within a tight range, a move downwards could be huge on the parameters. A Fibonacci series could possibly facilitate the buying in a more friendly(postponed) way.
Best Regards,K
Hi Alton,
Fibonacci: 0,1,1,2,3,5,8,13,21,34...
I have used the series: 0,2,5,10,15,20
At this point you can decide to stay at 20 or continue with 25 etc.
Best Regards,K