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PRPFX - the permanent portfolio mutual fund according to the spiel on Google finance, "The investment seeks to preserve and increase the purchasing power value of its shares over the long term. The fund invests a fixed target percentage of net assets in the following investment categories: gold, silver, Swiss franc assets such as Swiss franc denominated deposits and bonds of the federal government of Switzerland, stocks of U.S. and foreign real estate and natural resource companies, aggressive growth stocks and dollar assets such as U.S. Treasury securities and short-term corporate bonds. (emphasis added - see below)
Had you started with them in 1984, the long term performance is such:
Though they've appreciated well since 2001, and indeed have now surpassed the 2008-2009 drop, you'll note that their appreciation was somewhat retarded during the Bull market of the late 1990's, as the decline in other assets outweighed the excessive gains in stocks of that period. What they seem to be missing, from the Google description is a significant position in value stocks, which, in the long-term nature this type of fund is supposed to represent, outperform growth stocks, for the most part. I suppose it would take further research to see what their reallocation policy is, especially since they are in a few more asset classes than Harry Browne's very minimalist Permanent Portfolio model, (which I think is what TooFuzzy's referring to).
Not so sure how well AIM would handle this one, but over the long term it looked like Synchrovest or Twinvest would have done a good job with it.
Best,
AIMster
New Pragmatic Investor 3.0 screenshots are now available here.
Lookin' good!
And, Real Soon Now, should be a done deal, right?
We'll stay tuned. Might make me wanna throw a few $$ at individual stocks again - pragmatically speaking, of course!!!
Best,
AIMster
You've found something important to you in PC changing or not as an additional trigger, but I don't quite get the significance. Using the free Excel spreadsheet off of Tom's website, I get buys at 13.13 12.87 and 10.72 using 10% SAFE on each side and no min trans amount.
Changing to 100 min shares or $500 min trade size gives me 1 buy at 10.72, which would seem to be the most cash-conservative option given the data set you supplied.
Care to elaborate before I get as toofuzzy as Toofuzzy? Two Toofuzzys would be too fuzzy much! Thanks!
Best,
AIMster
UNG is indeed a strange beast of an ETF - from their prospectus:
United States Natural Gas Fund, LP, a Delaware limited partnership, is a commodity pool that issues units that may be purchased and sold on the NYSE Arca. United States Natural Gas Fund, LP is referred to as USNG throughout this document. The investment objective of USNG is to have the changes in percentage terms of the units’ net asset value reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire, less USNG’s expenses. This is a best efforts offering. USNG will continuously offer creation baskets consisting of 100,000 units to authorized purchasers through ALPS Distributors, Inc., which is the marketing agent. A list of USNG’s current authorized purchasers is available from the marketing agent. Authorized purchasers will pay a transaction fee of $1,000 for each order placed to create one or more baskets. This is a continuous offering and will not terminate until all of the registered units have been sold. Our units are listed on the NYSE Arca under the symbol ‘‘UNG.’’
Having strayed into those limited partnerships before, even though they look like bona-fide stocks watch out - the ball of confusion that they send you with the K-1 tax forms makes you look like the late Telly Savalas in short order, as in bald, baby, from pulling your hair out to figure it out. Such things have been beyond the scope of the tax prep software - ugh! Never again!!!
portfolio pilot. When I further googled I learned he was associated with PCA aim system. Is his system a twinvest or synchrovest system?
Do you have any information ?
None directly. I think I found the same source you did, a news release dated 10 June (of what year I'm not sure) but it mentioned a "system" called "Portfolio Pilot" as running under Excel for $29.95. Apparently some people were starting to use it and sending positive feedback.
PCA and Automatic Investor are the two main AIM programs that people in the various AIM boards seem to be using the most, though there are some lesser used programs out there as well. There was a site called "incwave" that purportedly offered a similar service, though they went belly-up some time ago. Why pay someone $59/month when you can work the calculations easily enough yourself at minimal cost?
If Mr. McKinley's still with PCA, you might send him an email asking about it - he may be amenable to giving it away these days if it's otherwise "abandonedware." Let us know what you find. Likely he'll want to sell you a copy of PCA... :)
Best,
AIMster
I found a web site with twinvest /synchrovest type software .
the web site is reversedollarcostaverage.com . it is commercial software about $30.
Interesting find! A way to take money out in a variable format for greatest efficiency as a mirror-image to variably putting it in.
The question is do you need the software, or can you discern the algorithm from their samples and then construct the same thing for free in a spreadsheet? Not that $30 is prohibitively expensive, but if you can do it yourself, do you need the jazzed-up interface?
Hi, 2040,
On the main AIM board, Alton recently posted this:
BTW, has anyone ever compared AIMing to Constant Value professed by Pruveen Puri? Constant Value is the way I decided to go for individual stocks and AIM is the way for ETFs and Index Funds representing multiple equities.
to which I responded:
Hi, Alton,
I got Mr. Puri's book a few months ago. Interesting idea you've got there to use both for different investment classes. As long as you're willing to accept individual stock risk, the approach seems reasonable.
As for me I'm working a "fund of funds" if you will, 20 CEF/ETF's across various categories and types. Rather than a constant value, I use instead a constant ratio, i.e., I adjust the balances to keep each of the 20 holdings at 5% of the total value. This by adding additional money or partial selling of those with the furthest value above 5%, reinvesting the proceeds back into the laggards.
Which as a way of background, brings us here and to your post, thus:
I'm interested in aimsters plan of having mr. puri plan put into action. I don't know what question to ask but perhaps for asking about greater details. Do you use aim to make buy and sell decisions on various etf or just a percent rise. how do you deal with new money comning in to your account what would I buy the lowest performer or a new etf? Any examples you offer will be helpfull.
Mr. Puri takes what Toofuzzy would likely call a very slow AIM approach. He buys a stock at a fixed dollar amount, then re-balances to that amount once-a-year, and only if the percentage change is above or below a given rate. Also the slow rebalance rate makes any tax consequences the long-term variety. He's able to save that amount each month, so he'll research and buy a new stock each month, holding off buying new stocks only if he sees he'll need more cash to add to the existing holdings at the year-end. So, he claims in this rather slow fashion to build up a portfolio at a theoretical maximum of 12 stocks per year. He reports that one must do constant due diligence, as one wouldn't want to be holding an Enron.
For me a question is how many stocks do you want to manage this way? Follow this idea and in a decade you could have 120 to manage. Not too excessive, I suppose, but it does seem to me to be a lot of work, even if you are only executing an annual rebalance plan.
Which is where, as I mentioned above, I like my fund-of-funds and keeping the fixed percentage. I suppose I could take the idea of rebalancing to the highest value in the 20, but it seems to me that that over time would favor the most volatile funds, increasing risk, as opposed to trying to keep things more or less on an even keel.
Of course, Clive's suggestion of Harry Browne's permanent portfolio being composed of a mere four elements is about the ultimate in simplicity if you really want something to be a "no-brainer," I find that too micro for my taste and find that such misses whole groups of asset classes.
So, there's quite the range out there. The point is to find a plan that works for your situation and then follow it.
Best,
AIMster
BTW, has anyone ever compared AIMing to Constant Value professed by Pruveen Puri? Constant Value is the way I decided to go for individual stocks and AIM is the way for ETFs and Index Funds representing multiple equities
Hi, Alton,
I got Mr. Puri's book a few months ago. Interesting idea you've got there to use both for different investment classes. As long as you're willing to accept individual stock risk, the approach seems reasonable.
As for me I'm working a "fund of funds" if you will, 20 CEF/ETF's across various categories and types. Rather than a constant value, I use instead a constant ratio, i.e., I adjust the balances to keep each of the 20 holdings at 5% of the total value. This by adding additional money or partial selling of those with the furthest value above 5%, reinvesting the proceeds back into the laggards.
Best,
AIMster
I bought at borders book store the aim book. a month later I bought the synchrovestbook at amazon book. Is there any way the two can be unified.Is there software that does this.
I'm not sure the reason for your emphasis on unifying two algorithms that work pretty well independently of each other. There is no "holy grail," though they come, year after year, system after system, trying to find it.
Any investing system, really, is an attempt to solve the problem of "how do I make money in the stock market?" As you've noticed, there are as many systems as there are people trying to invest, and methinks quite a few who make more of their money by selling newsletters and the like telling you how to invest than they do by actually investing themselves!
With that caveat in place, we can then start to look at options (not investing in stock options, a whole different kettle of fish altogether!).
Elements of the problem are simple enough:
1) we start with x$ in cash to invest
2) we want to get a return on our investment, in theory through riding the efficient frontiers of growth, dividend appreciation and volatility capture.
3) we want to also be mindful of that other more traditional expression of the efficient frontier, i.e., to get the maximum return for the least risk.
4) unless we want to get into the more esoteric realms of selling short, if we're going to take long positions we ideally want to buy low, and sell high.
5) keeping a portion in cash, rather than going all-in in one shot allows us to adjust the position(s) for optimum performance, instead of nervously waiting for the now falling stock to find a bottom, much less move up to paths of glorious return far above our initial entry point.
We can, of course, continue to expand that list, and it may be a good idea to do so if for no other reason as to give us some reminders of what the basic goals are as we look to either directly implement or adapt trading systems from others to a use suitable for our own circumstances.
The advantage we have is that we can draw on the wisdom (or fallacy) of many of the investors who've gone before us, thinking out systems and seeing how close their ideas come to ours and whether we can take these and run with them as they are, or adapt them as a starting point.
Obviously your requirements of being a periodic saver make effective use of an ongoing cash stream a main concern. You don't want to put more in than necessary, only to see the price crater next week - if you'd only waited!
To differentiate:
AIM acts as a closed-loop system, primarily acting on volatility capture to best buy-and-hold. Thus, it needs rather volatile stocks to drive its engine. Synchrovest is a cash-delaying mechanism, allowing you to grow a holding, but optimized to invest more when the price is lower, less when the price is higher.
Another option outside of these is either a constant value plan as Praveen Puri's written of, where one is always taking on new positions, or my own adaptation of same toward a constant ratio plan where one makes periodic investments in the same holdings, usually by adding additional cash to the smallest of the positions and keeping the lot at an even ratio toward each other. In other words, if I had ten holdings I'd keep each at 10% if one wanted to equally distribute the risk. This works better for funds or ETF's as it keeps you from "betting the farm" on a single stock.
I could continue, but you probably get the idea. If you've any more points on this, do feel free to ask!
Best,
AIMster
I noticed that a SynchroVest only costs $ 71,91
The Quicksilver name is at least of the right intent! Some quick silver being a good idea to add to the cash reserve pile.
On the other hand, for about 28 Euros (doubling the domestic postage for international) one can get the original:
http://www.amazon.com/gp/offer-listing/0878630422/ref=dp_olp_used?ie=UTF8&qid=1267548565&sr=8-3&condition=used
Of course, BOTH serve a similar function in wanting to keep your head above water. One in the more literal sense, the other with one's portfolio!
If Mr. Lichello only knew!!! :)
Best,
AIMster
it is my understanding from Praveen Puri blog that his system is based on the constant value plan, otherwise known as the constant dollar plan. I think the main reason he references Mr. Lichello's AIM plan is to draw people to his web site.
I did get his book, for what it's worth. It speaks as much toward investing psychology as it does to an actual investing method. A main point is that he's able to add about $2,000 per month to his account, which allows for fairly continued growth. Nice when you're obviously well paid!
If his site references AIM it's because in a sense he wants his system to be considered as much of an automatic investment management system as is Lichello's AIM, sans the "extra" work of maintaining a portfolio control and other attendant calculations. A simple annual rebalancing back to a target amount of $2k per holding (only if the value's gone above or below a specific % amount, otherwise do nothing 'til next year) and it's about as automatic as one could hope for.
Will it work as well as Lichello's AIM in the long run? Who knows? But he suggests that whilst this very simple version works for him, it can become the basis of developing one's own system. Both he and TooFuzzy are in agreement that one should develop a system, then stick to it.
Best,
AIMster
I bought the aim book 3 months ago and 2 months ago the synchrovest book. Is there a way that combines both as I now do systematic weeky investments. Where can I find software that does both.
Welcome. They are two separate systems, though I think there may be more potential value to Synchrovest than Lichello first realized. Lost Cowboy's done some experimenting with this.
Basically Synchrovest or the later Twinvest is used as a way to save up enough to build up a holding to a large enough value so that it can be transferred to AIM. Or that's been the general suggestion.
If one were to somehow or other devise a way to give a virtual value of stock to your portfolio, say by taking the initial value and dividing it such that you get a starting "share" price of $10/share. Following this, then, as the value of the portfolio changes, recalculate the value of the "shares" and buy proportionally according to Synchrovest. This would give you a virtual program allowing you to allocate the actual investment into whatever part of the portfolio you'd deem appropriate.
Of course, you could do that with a single stock or fund also, which might be less calculation intensive, but how much do you want to put into the single fund versus one of several portfolio holdings?
Each AIM program likes to run as it's own closed-loop system, with additional cash only reluctantly being accepted. Thus a quandry for those of us acting as regular savers.
So I'm not sure there's a way to combine them both that would have practical application, but there's no reason you can't use both to manage different parts of your investments.
Best,
AIMster
I think it should be clear by now that, after everything I have written about it, is that my "beef" about the Residual Buy Signal is not a matter of aesthetics but a matter of the function of the Advice Generator: An Advice(Trade Signal) should be followed up. . . especially in a system that is called Automatic Investment Management.
Hi, Conrad,
Been away for a bit but am back again, having read through this discussion thus far. Nice to see something kicking a bit of life into the board again! :)
I understand your point. It's the difference between a computer system that uses purely binary "yes/no" versus the fuzzy logic of a "maybe" with the residual buy. Fuzzy logic has it's place in giving a relative analog to an otherwise digital environment (of course this is NOT to be confused with our own TooFuzzy)! But if you want a system that purports from the get-go to be Automatic, well, that's what you want the system to deliver. Buy now? Yes or no. Simple and to the point. So any method that corrects this renders the system to act as it should, giving the exact advice with no further interpretation required.
If the stock price is the main factor in making buy/sell decisions, it's not unreasonable to want to have the price to move significantly lower before giving the next buy signal, rather than a Yogi Berra "deja vu all over again!"
Best,
AIMster
I've been testing to see whether one or the other might have an edge as its a very close call between using either, so far AIM has the edge.
Hi, Clive,
Nice chart of idea balloons! In looking it over I suppose another consideration would be how much time you want to dedicate to managing the process. The Quantitative sounds like there's more calculation and possible moves in it, whereas a 15% move in either direction from one of the PP components seems like checking, much less acting upon, would occur less frequently. I guess one would have to factor in the value of one's time in maintenance, versus a possible loss of some reward. Is the balance enough to justify it?
Best,
AIMster
It is difficult to see what is real and what isn't real in this market. One thing that is clear in this 'crisis', is that there is not something like Europe. It is a set of nations, each nation with its own agenda. Everything can happen. It seems that AIM is the right technology for such an environment, where the market behavior is unpredictable. How else to stay in the market?
Point taken.
In terms of countries, if you really want to get down to it, iShares does have country-specific ETF's. Using StockCharts and their Perf chart function and EWJ - Japan, EWC - Canada, EWN - Netherlands, EWU - UK, EZA - South Africa to give a smattering of worldwide representation does show correlation in the macro sense, but animating the display shows that they all have turns at the top or bottom - the volatility aspect AIM exploits. Not that I'm recommending these, per se, but it is one way to get down to international interplay.
Best,
AIMster
Just when we think that we can get more sleep at night by dealing with funds, rather than individual stocks, you'll come across one in an article or something and say, "what the heck," and drop it in to stockcharts to see how AIM might have done with it.
In the case of Adaptec here, read it and weep! Like Charlie Brown when Lucy snaps the football each and every time, AAAAAaaaaaarrrrgh!!!
am not really comfortable with 2x Bear ETFs, on account of the day to day nature of these funds. 2x Bear ETF is not an investment vehicle that one could use to set up an AIM-like account and forget about it for a while. It requires very careful attention.
Are you holding any Bear ETFs right now?
I've been doing very small scale pairing of the FAZ/FAS pair of 3x financial funds and have been doing all right. Started with a minimal $1,000 in each and add when they drop, sell when they go back up, pure core position trading, nothing fancy at all about it. I've only ended up so far selling the added-on shares from the drops - nothing's cleared high enough yet to sell out from the initial purchase or close one or both out. Something I may do when I can since this was more of an experiment rather than something I really wanted to put a lot of money into.
Best,
AIMster
I've already laid out on the high tech expensive stuff - sharp new pencil and paper-pad now at the ready.
I've opted for 50/50 initial stock/cash settings combining Mebane's as the stock and Permanent Portfolio as the cash. Together with some of K's suggestions as to how to run when switched OUT (Mebane timing/stop-loss real/virtual shares etc.) Thanks K.
Monthly reviews and nothing else to do between. So no excuse not to get on with some long overdue redecorating come the spring.
As was the advice in a reading from church this past Sunday:
Simplify, simplify, simplify!!
Sounds like you're on the path to such enlightenment.
AIM of individual stocks is considered by some to be
The World's Worst Trading Strategy .... It is accomplished by taking an initial position and then adding to it in predetermined increments as the position declines in value, and selling those purchases as they increase in value.
Well, certainly as a contrarian strategy you are always going to find AIM to be heresy against the "conventional wisdom." The conventional wisdom being more suited toward the benefit of brokers and their institutions rather than the individual investor. It's the last part of your quote, "...selling those purchases as they increase in value." on which the presumption of future success is laid. That they will again (and hopefully within a reasonable timeframe), increase in value. Otherwise aren't you simply pouring good money after bad?
As far as individual stocks are concerned, AIM may be considered more risky if followed strictly without any objective consideration being added to the understanding of the dynamic of what may be happening to a given company. Enron being the now classic illustration of where one would have gotten, should one have poured money down that particular rat-hole in increasing amounts. But even big companies aren't immune anymore. General Motors, lauded in Lichello's book as a company that would find it's way out of almost anything has instead crashed and burned as well as any of them.
I think that's why you'll find a good number of the users here have drifted away from stocks and are more favored toward mutuals, CEFs and ETFs. Admittedly trading some potential reward for the betterment of a good night's sleep. But that means something with all the funk going on in the world nowadays.
It's also easy to backtest and cherry pick what seem to be stupendous returns if only you'd have done such and such back then. But sans Mr. Peabody and his "Wayback machine" (see the 1960's cartoon "Rocky & Bullwinkle" if that means nothing to you), we can't go back in time to do the coulda, woulda, shouldas that would have made us all multimillionaires by now. Drat.
But we keep trying. And that's what matters.
Best,
AIMster
Permanent Portfolio is a form of AIM (constant value type method) but with its 'Portfolio Control' based upon the average value of all four components (sum of stock + cash + gold + bond values divided by 4). Three components act as one components 'cash' reserve (repeated four times). When any one deviates away from the average of all four it triggers a rebalance event to reduce (or add) to/from that component. The 'Portfolio Control' as such is more dynamic.
Well I do have to admit that this is quite a distillation:
1) pure simplicity as Mr. Lichello advocated.
2) a reaffirmation of the constant value investing method as championed by Praveen Puri (though in a different way than his book suggests, (he advocating multiple stocks rather than four holdings like this)).
3) From somewhere beyond, no doubt Harry Browne is smiling, knowing that his investment ideas are still being considered. Probably sharing a truly heavenly beer with Mr. Lichello.
In rummaging around a bit someone's got a mutual fund to handle this - the Permanent Portfolio Fund, symbol PRPFX. A little more broadly based than Mr. Browne's four holdings, the fund does address my concern of being too simplified such that there are other asset classes (foreign equities, for example) that a broad-based US focused fund like the Vanguard Total Market, symbol VTI would miss out on. Their allocations are as such:
Gold 20%
Silver 5%
Swiss Franc Assets 10%
U.S. and Foreign Real Estate and Natural Resource Stocks 15%
Aggressive Growth Stocks 15%
U.S. Treasury Bills, Bonds and Other Dollar Assets 35%
Of course, whilst owning this fund may be the ultimate in true simplicity, feeding it money now and then, you are deferring the shifts is asset allocations off to someone else rather than at a time of your own choosing, where your decisions of percentages may or may not agree with what the fund manager thinks.
Morningstar says it's good to keep pace with inflation, but that's about all. So I wonder if they're dissing the whole PP idea in the first place? Might be as they've a commercial interest in promoting mutuals, rather than to simply encourage people to simplify.
I am perched somewhere between the horns of simplicity on one side, and an interest in making sure I've a finger in as many investment pies as possible, on the other, (within reason, of course, and constrained by the funds available). I know that some will perform very well, others, not so much, and the rebalancing will serve to level the playing field a bit.
The perennial quest for balance...
Best,
AIMster
Time will tell if I'm a business genius or if chasing fools gold, putting good money after bad, the quintessential argument against AIMing. Looking forward to seeing how this works out:) Who says business decisions are not emotional?
Well, if not entirely emotional, certainly one of a leap of faith and requiring a bit of intestinal fortitude to act in a contrarian manner. Still, one may take some comfort in the knowledge that you're acting correctly as a market speculator, which really doesn't have the negative connotation in economics as it may in conventional usage. In economics the speculator fills the role of providing liquidity to the market, buying shares as some want to sell, selling shares as others want to buy. (Thanks to Praveen Puri for that distillation).
Best,
AIMster
AIM seems to work best when money is not being added and subtracted
I've seen this mentioned more than a few times but have never seen clarification as to why. The number of significant down's isn't that regular. AIM does cater for funds being added/withdrawn Is it that too frequent additions/withdrawals should be avoided?
The reason I believe Lichello gave was that it disrupts the internal mechanism. Say you're in a period of rising prices, as we've been from last March. If you're adding say $500/month, you're raising the average cost by buying more and more in a way contrary to what AIM is trying to do in selling as the prices rise. Poor thing gets all confused. Yes, Lichello did allow for the occasional add, such as a Christmas gift or some such but he left periodic additions more to Twinvest and Synchrovest, AIM is ideally a stand-alone self-regulating mechanism.
Best,
AIMster
I have evolved from an investor to a trader. I believe AIM can be a viable investment strategy, though I think it best for mutual funds or ETFs. If you are AIMing individual stocks, I think you are running counter to most trading experts. That is, you should ride your winners, and sell your losers, AIMers are doing the reverse.
I have noticed in the world of investing that there seems to be a common mindset that one must either be an investor or a trader, that the schools of thought regarding such are mutually exclusive. I would think that one would be better served by being a little of both, make some investments in mutuals or ETF/CEF's using AIM in one form or another, letting that part of the portfolio work for you in that fashion. Then with another part one could trade in the ways that you later describe.
As to the mechanics of AIM relative to the "conventional wisdom" inasmuch as stocks are concerned, one technique I've seen regarding winners is to up your stop-loss level as the security continues to improve. Of course, sooner or later the winner will ride to some point of exhaustion at which time you take it all off the table and try another. Otherwise, at what point do you decide to call it quits? You may take it off the table at one point only to see it go up even higher in another month or so. The old "bird-in-the-hand vs two-in-the-bush" issue.
AIM encourages a longer, multi-cyclic time horizon making more incremental moves rather than more directly in-or-out. A case more akin to the Tortise and the Hare, with AIM being the Tortise, the wily trader the Hare. Though the Hare can win, it's more on edge, more emotional, more nail-biting than the Tortise who plods along with the rhythm of the market in slow and somewhat steady progression.
Anyway, good thoughts toward solving the basic problem we all have of maximizing the return, if invested, traded, or some of each!
Best,
AIMster
An alternative to seeking out elusive low correlations is to mix blends of stock/cash amounts. You might for example hold a collection ranging from one holding 20% stock, 80% cash through to another holding 80% stock, 20% cash. Likely such mixtures will have one-up more/down less than the other and as such have a form of low-correlation.
AIM however decides on appropriate amount of stock/cash blends automatically and dynamically for us, so we don't have to predict/guess
& a Happy New Year to you & your family as well, Clive,
I get your point but one rule of thumb taught over here by retirement counseling types is a gradual shift from stocks to income funds relative to one's age, subtracted from 110. One should then annually favor more and more income, whilst still allowing for some stock exposure until such time as it presumably won't matter any more.
So, someone at various ages would, over their lifetime, play the whole range of ratios:
Age % Stocks %Income
20 90 10
30 80 20
40 70 30
50 60 40
60 50 50
70 40 60
80 30 70
90 20 80
100 10 90
110+ 0 100
I should add that these 20 holdings are in a mix of ETF's and CEF's, rather than individual stocks.
Barring a slight adjustment, the preliminary figure from the brokerage has us climbing out of the ditch of last March with a year ending overall 47.04% gain. Some holdings end 2009 still underwater from where they were in 2007 but those are now quite in the long-term holding category.
So 2009 ends with some less fear and trepidation than 2008 did, however given the last few months of largely "up" some form of correction is not without expectation either. How much and for how long are the still open questions. Still, with business plans of one form or another that are generally AIMed in the right direction, at least we can be assured of fewer emotional gyrations than most. That alone is worth a lot.
Number of Investments for an account.........
The bigger the pie, the greater the number of satisfying slices can be cut.
Right now what I'm working with is a model of 20 slices, keeping each to 5%. I take profit as they move up, use the profit as well as additional income from savings and dividends to bring the laggards back up. Limits each to 5% of the overall, and is broad enough to allow for a range of holdings in income, stocks and commodities without risking too much in any one or becoming so many to become unwieldy.
A little more progressive than TooFuzzy's slow AIM but along that line.
BTW best wishes to all for 2010!
Best,
AIMster
My efforts represent learning AIM during a market meltdown. I bought numerous equities close to the highs of 2008.
Congrats! A good number of mine were in 2007 and some haven't come up for air yet. But I am getting cheaper ones now, so it helps to have a medium-to-longer-term lookout.
Best,
AIMster
There are quite a few people out there that have said winning the Lottery has ruined their life and they have nothing to show for it.
It's a problem I'd like to have to solve, though. <grin>!!! Seriously, I think it depends on how grounded one is before getting such a windfall as well as how much one is desirous of material "things."
Were such to happen to me, after taxes were taken care of I'd do the following:
1) pay off the mortgage - I'd love to do it now, but we're done in 2013 so it's not too far away.
2) set it up so that most of it would be invested (AIMed, of course) in a termvest type fashion.
3) take some to help others/give to charities
4) use some for some necessary expenses (house repairs/bathroom remodeling/touch ups here and there and so on)
5) use some so the Mrs. & I could take that once-in-a-lifetime trip.
6) use some for some goodies - newer computer, and so on.
& that would about do it, at least for things off the top of my head.
Best,
AIMster
OK...so how do we respond when folks tell us AIM is boring?
Then if it's boring, they're doing something right! If they want excitement go to Atlantic City or Vegas and have a good time, and experience, as they used to say on ABC's Wide World of Sports, "the thrill of victory, and the agony of defeat." BUT, if they're serious instead about making a reasonable return with a system that takes the emotional roller coaster away, AIM or similar systems are the best way to do it.
Or have them do as Lichello suggested, use AIM for the bulk of their investments and "take a flyer" with some other "mad money." That way if they score big, fantastic, they'll have bragging rights, if they lose - well, it won't be the baby going with the bathwater!
Best,
AIMster
Opinion on Schwab ETFs. Schwab started a few ETFs with very low expense ratios and no commissions for Schwab clients.
As we've mentioned in the past, the brokerage FOLIOfn, now going under Folio Investing offers non-commission trades as an one way to trade, subject to certain restrictions, but in general I've been happy with them since 2001. You can also trade in fractional shares based on the dollar amount, so if AIM wants you to invest $973.42, you can invest exactly that much!
This applies to a good range of ETF's, individual stocks and many mutual funds as well.
As for the Schwab ETF's themselves - aside from the commission free aspect for their customers, apparently they think there's room in the market for more of these things, but one does have to wonder if it's worth trying to run much against iShares and Vanguard?
Best,
AIMster
* At the next maturity date we buy another 3-year bond.
* etc. etc.
* On January 1 of each year we always have three bonds maturing in 1, 2 and 3 years (with, usually, different yields).
Just for the heck of it I wonder how the same rollover scheme would work with other instruments such as bank CD's? (Certificates of Deposit usually for a fairly high minimum, with penalty if taken out before maturity. Banky-spanky was Lichello's term, I think.)
Curious,
AIMster
Other changes like basing SAFE on PORTFOLIO CONTROL instead of stock value will also have an effect that you should understand before deciding to use.
So which software uses which?
Mark will have to confirm if it's otherwise, but I believe that his Automatic Investor goes by the book and uses the Stock Value. Might be a suggestion for a new mod to offer the option of using PC instead. Probably per portfolio too, as you may want to have some one way, some the other.
Best,
AIMster
Hi Aimster, XXX
How's 3X rated stuff going?
Not so much lately - moving within a range.. Sooner or later though it should get enough to give it another nudge.
Best,
AIMster
Just need more patience.
Hi, Ray,
Better you should have patience than continue to be a patient!!! Or an impatient patient!!
Glad to hear you're making good progress.
Best,
AIMster
I saw on the web Smartstock for the Indian Stock Market. Is there any way to modify it for the American Market?
I've seen that one too and be careful where you download it from! Virus scan the heck out of the thing before you try running it - I found more than one place that was distributing infected copies. I finally found a clean one but it does seem oriented for the Indian market. I suppose you could run a clean copy substituting dollars for rupees and updating manually, but why bother since there are things like Toofuzzy's calculator for free.
Pretty much a "standard" AIM should work for PRWCX as it has a relatively slow cyclic pattern:
PREMX seems to exhibit the same pattern:
So I might suggest if you want to keep with a low beta holding, you might want to find a second holding that's not quite as correlated to the first. Although last Winter/Spring just about everything seemed correlated!
More questions, keep asking!
Best,
AIMster
[OT]
From the wishful thinking department:
In the US it can make a BIG difference in when you have to pay taxes for a gain. If you can sell share you have a loss on then you pay no taxes that year and delay paying them if at all into the future. Also in the US there is a difference in LONG TERM gains and SHORT TERM gains with the dividing line being one year.
In the "ideal" world they'd abolish taxes on capital gains altogether. I mean it's money derived from the sale of something, not income, per se. But then I'd rather see them abolish the whole income tax system altogether and replace it with a simple consumption tax. Hate to put a dent in your Spring income, Toof, but it would save countless hours of paperwork and annual angst, as well as bring a lot of side (i.e., cash only) transactions into the tax stream.
But won't happen in my lifetime I'm sure the status quo is too deeply entrenched. But at least they can't tax the idea, not yet, anyway!
Best,
AIMster
Holey moley! That pic of the kid on the roller coaster real?? Wouldn't take much to take "flying lessons" off that thing instead of a fun ride. Whooo got dizzy looking at it!
Just like I do at the market sometimes. It would take quite a bit of AIM to keep her on track, but then, that's what it's for!
Hi, Ray,
Got a total knee replacement. Quite an experience for this old man. Thank goodness I have a great wife who keeps up with when I am supposed take my next med and tells me when my next doctor appointment is.
Best wishes for a speedy recovery! Put your best foot forward, as it were! I've done the same for my wife when she's had cataract surgery, both eyes done now! Nice to have somebody there for backup and to keep us on course!
I finally broke down and got Praveen Puri's book and have been working the FAS/FAZ 3x pair for a few weeks using his basic idea of constant value investing. Working like a core position system, really as I'm working the additional amounts invested as they go down by selling them when they go back up. Started small with about $1k in each - no point in getting too carried away to start with! Been paying off pretty well, though not much in absolute $ gain, but enough to where I think it might work as a process with this investing idea. Thus one can hold the core part long term and just use the daily "noise" to make the money with. An idea, anyway.
Best,
AIMster
...couple variables(frequency of checking, and minimum buy/sell lot size) using the same SPY data set. Have you done similar analysis? What other variables would you suggest?
Hi, Doug,
I know one other add that's been useful especially in the broad downturns like we've seen is to force a 30 day wait between buys, when checking more often. Thus in the volatile market you might have a calculated buy signal in two successive weeks, but if waiting for 30 days, the second would be overridden by the 30 day rule. This slows the cash burn rate. That's the key to AIM, keeping enough cash to you can keep buying all the way down.
Tom mentioned about SPY not being ideal for AIM and the reason for that is that it moves with the broad market and so the volatility is much slower. Since AIM works as a volatility capture mechanism, that's why, in general, more volatile items will give better performance. For example, sector funds are more likely to be more volatile than the market as a whole.
Best,
AIMster
Anyone care to share their favorite charting signal(s) to determine an entry point for a new portfolio equity position? Now that we're in a downturn how/when do you determine to pull the trigger? Yeah, trying to time my entries but grateful AIM is forgiving:) Alton
I know your pain - nothing worse than thinking you're at a good spot, make the investment - then BAM! the pull the rug out from under you and down it goes! It's like they know when you're ready - or at least it feels that way sometimes!
Still, AIM does offer "course correction" so that's where Lichello decided that "any time" is a good time, but to paraphrase the line from "Animal Farm," some times are better than others!
Best,
AIMster