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And bitcoin will rise to become a stable primary reserve currency with each coin worth trillions whilst the US economy collapses in having lost primary reserve currency status. Or maybe not! I suspect not.
Hi Tom
Hi karw
Fiat money does not have intrinsic value. It has value only because the people who use it as a medium of exchange agree on its value. They trust that it will be accepted by merchants and other people.
Btc pretends to be a commodity money, which it is not, it is just another Fiat currency, not backed by gold, silver, cigarettes, candy, nails ... whatever use value.
Hi Toofuzzy
Year Stock Gold
1972 17.62% 49.02%
1973 -18.18% 72.96%
1974 -27.81% 66.15%
1975 37.82% -24.80%
1976 26.47% -4.10%
1977 -3.36% 22.64%
1978 8.45% 37.01%
1979 24.25% 126.55%
1980 33.15% 15.19%
1981 -4.15% -32.60%
1982 20.50% 14.94%
1983 22.66% -16.31%
1984 2.19% -19.38%
1985 31.27% 6.00%
1986 14.57% 18.96%
1987 2.61% 24.53%
1988 17.32% -15.26%
1989 28.12% -2.84%
1990 -6.08% -3.11%
1991 32.39% -8.56%
1992 9.11% -5.73%
1993 10.62% 17.68%
1994 -0.17% -2.17%
1995 35.79% 0.98%
1996 20.96% -4.59%
1997 30.99% -21.41%
1998 23.26% -0.83%
1999 23.81% 0.85%
2000 -10.57% -5.44%
2001 -10.97% 0.75%
2002 -20.96% 25.57%
2003 31.35% 19.89%
2004 12.52% 4.65%
2005 5.98% 17.76%
2006 15.51% 22.55%
2007 5.49% 30.45%
2008 -37.04% 4.92%
2009 28.70% 24.03%
2010 17.09% 29.27%
2011 0.96% 9.57%
2012 16.25% 6.60%
2013 33.35% -28.33%
2014 12.43% -2.19%
2015 0.29% -10.67%
2016 12.53% 8.03%
2017 21.05% 12.81%
2018 -5.26% -1.94%
2019 30.65% 17.86%
2020 20.87% 24.81%
2021 22.81% -6.57% to end of October
1990 and Netscape market shares was over 90%, 2006 less than 1%
Presently bitcoin has a larger community with more exchanges, more merchants supporting it, more developers participating to the evolution of its source code, more software publishers or more hardware suppliers involved. As did Netscape. As with most open source projects developers initially bond but later start seeing disagreements and fracturing/forks. When scarcity is virtual/synthetic .. that can and will be forked. replication of virtual scarcity .. :)
Betamax was the better technically, VHS ousted it via clever marketing.
One if not the largest global shipping companies had a fail safe IT system, where each of its global hubs backed up all other hubs. Foolproof, until if failed (a flaw in its code was cleverly exploited and penetrated into the core repository from where updates rolled out to across all hubs and wiped them all clean at the same time).
Btc's association to gold is akin to associating gold to any other currency. Hold Yen or Pounds or Euro's as equal hedges against US$, they're all similar in many respects. Gold is however different, isn't fiat based, doesn't involve counter-party risks, is physical/tangible and finite. Yes some might sell some of their gold to buy Euro's/Yen/Btc whatever in anticipation of potential greater returns, at least until someone starts strongly shorting. Distinctly absent in Btc are shorters ... at present.
Of 21 million Btc suggested as the intended cap, 18 million have been mined, Over a million have been stolen in just two thefts alone, 3 to 4 million others have been lost (lose/forget you private key and tough). Around a million are held by just three individuals at the ponzi tree-top.
Dow/Gold as AIM % cash indicator
Appropriate start date % cash makes a considerable difference to SWR outcome so a reasonable indicator is desirable.
Comparing PE based relative valuations indications seemingly wasn't as reliable historically as at times earnings can be distorted/delayed. Better from my observations were to either AIM S&P500 real price and use that AIM's ongoing cash % as the indication of amount of cash to start a new index AIM with, or to use the Dow/Gold ratio.
On digging into that deeper there are a couple of issues. Since the mid 1980's the US changed dividend taxation rules which incited more of earnings being retained, which drove faster price appreciation. Given that gold was pegged for much of history the Dow/Gold was less market driven historically. Pulling that all together I opine that its reasonable to use AIM of S&P500 real price based indication for cash % pre 1985, but now that gold is free floating and given that share prices are being pushed positively biased by more of earnings being retained that the Dow/Gold ratio is the better choice since 1985.
The all time low since 1792 (don't ask) for Dow/Gold was 0.165 and the high was 39.6 so we can use those as our low and high values for a stochastic. Look up the current Dow/Gold ratio at the time of starting a new index AIM, or simply divide the current Dow Index price at that time by the current price of gold and calculate
( current - low ) / ( high - low ) = starting AIM cash %
As that could yield a 1.0 value i.e. when the Dow/Gold was at a new all time high, that would be no good to AIM with (a AIM with 100% cash, 0% stock isn't going to go anywhere). Accordingly we might set a lower limit of 20% stock and apply the stochastic figure to the remainder 80%.
For instance year start 2021 had the Dow/Gold ratio at 16.
( 16 - 0.165 ) / ( 39,6 - 0.165 ) = 0.4 (40% cash indicated)
Which when we assign 20% core stock
20 + ( 80 x ( 1 - 0.4 ) ) = 68% stock indicated (so 32% cash).
So a Jan 2021 new retiree might have started their AIM with 32% cash, 68% stock. SAFE=0%, minimum trade size of 5%, monthly reviews, and in every AIM trade case (both buys and sells) increase PC by half the amount indicated to be traded, but in practice only actually make BUY trades, ignore actually selling shares at AIM indicated SELL trades.
In that particular case that will transform from being 68/32 initial stock/cash to at some point be 100/0 stock/cash, and broadly over that period have averaged 84/16 stock/cash. Whilst potentially having reduced earlier years sequence of returns risk that is otherwise a significant risk to retirees.
100% ultimate stock may feel risky, however historically more often big dips that did occur were just giving back some of gains, other peoples money. 100% stock is also appropriate for younger heirs to inherit. Best if mentally treated a though you'd bought a annuity, spent the money, ignore ongoing capital value. And has the added benefit that the capital value is still available rather than having been lost/spent. Often the likes of 4% SWR will tend to see the actual withdrawals become relatively smaller as a percentage of the ongoing portfolio value, perhaps being just 2%. However in some cases after dives that could be 8% - some comfort is that in historic cases of such situation it did go on to recover or at least sustain the regular inflation adjusted income provision for more years than what the individual had remaining of their lifetime and more often left heirs a very comfortable inheritance.
A benefit of SWR is the regular inflation adjusted income that provides. No worries of investment income volatility. AIM of a broad/major index and that has very low risk of total failure, if the S&P500 fails then that's something pretty major. No worries about how much or when to trade, its all automated by AIM other than having to make the actual physical trades in reflection of its signals, and only up to a point, once all of cash has been deployed then you don't even need AIM anymore, just a case of logging in once/month to sell sufficient shares to generate your monthly 'wage'.
For the transition from accumulation to retirement that does involve lumping-in as per indicated by the above. Buy and hold is no different to the costless selling and repurchasing each and every day. Maybe you were already at 100% stock when you decided to retire in which case you'd sell enough shares to align to the AIM indicated % cash amount as a de-risking of early years SOR risk. Perhaps good/strong/fast stock gains had directed you to a point where you opined it to be appropriate to retire. Or maybe you won the lottery, or received a inheritance, where the above might provide the appropriate means for that to provide a regular income stream in a manner better than a arbitrary choice such as 60/40 (whatever).
Clive
Mad fientist https://www.madfientist.com/safe-withdrawal-rate/ reiterates/highlights how the SWR earlier year SOR risks matters most, and has a nice dial of recent suggested SWR level based on CAPE.
4% SWR -> 5% SWR
I've previously posted outlines of the AIM of S&P500 real (inflation adjusted) price that I periodically update. That provides a indication of appropriate amounts of % cash to hold at any one time.
Combining that with a non standard AIM :
AIM S&P500 accumulation index fund, initially set to the % cash as above.
SAFE=0%
Min Trade Size 5%
Monthly reviews
Follow all buy trades when there is cash to support such
Pull a Vealie for all sell trades (increase PC by half the indicated sell trade value without selling any actual shares).
The Trinity Study that identified the 4% SWR guide (initial amount of portfolio that might be drawn at the start, and where that amount is uplifted by inflation as the amount drawn in subsequent years, where the Trinity Study looked for the money lasting 30 years) in effect identified bad case historic start years. 1969 is one such case. Applying AIM as above to that and ...
you could have increased the 4% SWR to 5% in that bad case outcome.
Fundamentally the driver of a bad case is that of early years sequence of return risk (SORR). A initial 4% withdrawal where stock value soon halves rises to being 8% of the portfolio value. By reducing the bad SORR so SWR is uplifted. A drawdown/decline soon after loading into a investment in effect eats your capital, if a drawdown instead occurs after the portfolio has already made good gains then that's more like just giving back other peoples money.
I've tested that AIM style against other start dates, 1910, 1966, 2000, 2010 ...etc. and generally its worked well. Where it fell short was for the 2010 start date case where all-stock would have seen great gains whilst AIM generated good gains, 15% annualised versus 10% type differences, but good or great gains isn't really a risk for retirees, the real risks lay in drawdowns/poor returns that AIM did a better job of avoiding.
The things to look at are the drawdown chart where you can see that in earlier months AIM endured a considerably lower drawdown than stock; And also look at how cash was injected into stock (third chart counting left to right then down a row) and cross reference that with the portfolio value growth (first) chart. By the time the AIM was at/near all-stock it had already made good gains, such that later drawdowns (second chart) were largely negated/irrelevant. The last chart shows the real portfolio value after 4% SWR withdrawals, all-stock failed after 360 monthly periods (30 years as per the Trinity Study), whilst AIM carried on with providing income when all-stock had otherwise all been spent.
Originally I did have SAFE set to 10%, but setting it to 0% generates more trades more often and in particular more buy trades that otherwise might be relatively infrequent.
Clive.
Hi Jaiml
No in that case it is stock. You can use the stochastic either way, to reflect % cash or % stock. In that Bollinger bands case you want to be more into stock whilst trending and rattling around the upper Bollinger band, out when the price is trending down and the price is rattling around the lower Bollinger. Anti-AIM. For AIM like you reverse that, further down = more-stock, further up less-stock in which case the stochastic would reflect % cash.
Clive.
I think XDEV with AIM is something similar to how I used to use a stochastic based indicator. Identify recent/current channel range such as via Bollinger Bands and once you know the high/low limits use AIM to determine % stock and % cash and when to trade ..etc.
But where I used to use a stochastic measure for that (and manual trade timing).
Generally you want to be more in when the current is rattling around near the top of the Bollinger band/channel, out when its headed to/down at the lower Bollinger band level.
Stochastic = ( current - low ) / ( high - low ) to identify how much % cash (or % stock) to hold.
If for instance the lower Bollinger price level was 80, upper was 110, current was 100 then ( 100 - 80 ) / ( 110 - 80 ) = 0.66 or 67% stock (33% cash).
Where that all varies with time, a week later and the upper Bollinger might be 80, lower 40, current price 40 ... which would have you at 0% stock (100% cash).
That can have you more in when up/rising, more out when down/falling. But where for stochastic you reduce into declines, add into rises, the opposite of AIM, so zigzagging around the Bollinger range 'costs'. Whereas if AIM were applied as I suspect XDEV AIM is doing then zigzagging around the channel can capture trading gains. The stochastic approach can however be flipped to similar effect i.e. if you opine that the price is in a zigzag type motion rather than a trending motion.
Others follow the likes of being in when the price is above the moving average, out when below. Such trading methods can work for a while and then falter, is more speculation than investing. Our brains are wired to seek out patterns such as a face in a cloud.
Clive
Thanks Myst
If I did (no intention yet), I'd probably go with something like this i.e. swap out 10% of gold for BTC with quarterly rebalancing.
Clive
Hi Toofuzzy
Stumbling across this fear and greed index https://money.cnn.com/data/fear-and-greed/ I was reminded of the old iwave days
Awww! The Robert Lichello video youtube link in the intro section now leads to a 'no file found' dead link :(
We have similar here in the UK Tom. A while off for me yet being early 60's but I have considered 'migrating' funds from 'pension' pot to regular tax exempt pot. Imagine SDS is held in your pension pot, SSO in your tax exempt and click the 'Annual Returns' tab in this link. Can 'backfire' over maybe a year or two and see the retirement pot value expanded, but more broadly 'migrates'. Rather than a neutral nominal stance (that likely declines in real terms) you might bias it a little to compensate. Perhaps as a alternative to 'cash' that might otherwise have been held in money market funds/whatever.
Credits on the way in (contributions/credits), potentially tax exempt on the way out :)
To inspect the doubling up of Lichello's settings to 20% SAFE I dragged out UK yearly stock price only and inflation figures since 1800 and ran a yearly AIM against the real share price with the 20% SAFE choice. Now that is only yearly granularity but better than nowt and the indications were that it kept cash reasonably close to between Ben Grahams advocated 25/75 to 75/25 range
First chart should have had the Y axis set to percent so as-is 0.8 = 80% and 0.2 = 20%
Unlike the US that opted to tax dividends more heavily in more recent decades inciting more of earnings to be retained (more share price appreciation, less dividends), the UK has tended to see more of dividends being paid out, less share price appreciation. 4% UK dividends versus 2% US dividends type situation and where US stock prices rise 2% more due to having retained more of earnings. So in the UK case the share price has tended to more broadly be flat (but with considerable zigzagging along the way), most of real gains were paid out via dividends.
Nice to see some confirmation that 20% SAFE for slow/long term AIM's worked out well at keeping close to Ben Grahams suggested range levels both in the US and UK.
Minimum trade size setting is less relevant. All that does is if set to smaller values it trades smaller amounts more often or for larger values trades larger amount less often, broadly the two tend to compare/average out overall. The above chart had MTS set to 10% of # shares, if set to 5% then the number of trades approximately doubled, additional buy or sell dots between those in the above chart.
A comfort of 1910 to 1920 (based on AIM of real S&P500 price with 20% SAFE, 10% of #shares min trade size ongoing) AIM is that drawing a 4% inflation uplifted income still saw the nominal portfolio value remain pretty level, capital would have to some extent still felt intact, but that lost out to rising prices (inflation).
In inflationary terms however the portfolio value near halved, but was less down than either stock or cash (T-Bills) - also with 4% SWR drawn. And if better than both of those AIM was also better than any other combination of stock/cash.
Given the subsequent "Roaring-20's", a 1910 retiree using AIM with 4% of initial portfolio value uplifted by inflation each year (so regular/stable income stream), likely saw full real value portfolio recovery during the 1920's, so 20 years+ into retirement. As AIM did moderately OK during the Wall Street Crash era likely the 1910 retiree saw their money outlive them.
One if not the worst times to have retired investment portfolio wise and AIM did a great job of seeing you through those years. A pretty good outcome given that pretty much nothing did well.
Digging deeper into the 1910 to 1920 inclusive years and pretty much most conventional choices of stock/bond blends with 4% SWR would have ended that period being 55% to 65% down, 45% (cash) to 35% (stock or stock/bond blends) of the inflation adjusted start date amount left after just 11 years, and didn't matter where you tried to hide you got hit. However for AIM by comparison that was down around -45%, 55% of the inflation adjusted value remaining. The subsequent great 1920's "Roaring 20's" gains would relatively quickly seen the losses recouped and more, but then that ran into the Wall Street Crash early 1930's declines, however compared to the 1910 to 1920 period that wasn't anywhere near as bad for AIM, endured shorter dive/recoveries.
Such dive periods are relatively non-issues for accumulators as big dips with new money being added can be a considerable benefit. Predominately such dives are the greatest risk to retirees/drawdown and in that respect AIM did a great job. Unpleasant/uncomfortable times, but superior to many of the alternatives.
Much of the benefit from AIM was down to its dynamic weighting style, started 1910 with relatively high levels of cash reserves. A commonality across bad times, Japan 1989 on, US 1910 on or 1929 on was relatively high prices at the start, prior strong/fast gains pushing prices to unsustainable high levels to then see dives back down to more 'normal' valuations from where it can take decades to recoup those former highs. Since 2010 for instance US stocks have gained five-fold, four-fold in real terms and as such reflect a possible risk of 'too fast' gains that might see a subsequent 'claim-back' dip/dive. If so then AIM will more likely stand you on a good foundations.
Clive.
Just noticed I miss labelled the buy and sell trade counts in the title of that image, should have read 55 sell trades, 34 buy trades.
Even cash (TBills) have endured periods of large declines, approaching 50% loss in real terms, likely more after taxes
That 1871 start date AIM with a 1% SWR applied to every year as a start date had 100% success rate (all start dates still active to the present day) and the worst case to date was a 2000 start date where 107% of the inflation adjusted start date value remains. Across all runs, monthly granularity, the worst intra-period dip was down to 55% of the inflation adjusted start date value. To date the median additional real gain was 1.41% real (in addition to the 1% SWR withdrawals). That's based on real price only and assumes cash paced inflation.
If cash consistently paced inflation then a retiree could draw down 4% SWR with some certainty of the money lasting 25 years, however when cash itself sometimes loses near half its value the prospects are bleaker. If AIM of stock/cash real S&P price only throws off 1% SWR and that is supplemented with stock dividends and of course cash interest, then collectively that's more inclined to see the collective portfolio pace inflation and better positioned to sustain 4% withdrawals for 25 years, see a 65 year old through to age 90. With the worst/bad cases better positioned, more often actual outcomes are better, often significantly better such that not only might 4% SWR be supported but the portfolio value often increases in real terms quite substantially.
A conservative 50/50 type AIM is for some 'good enough'. Better than cash, better than standard 50/50, unlikely to leave as much as if you'd held 100% stock but 100% has other considerable risks, investor for instance often buy into that when prices are high and then later capitulate when prices dive to end up worst off than had they simply held 100% TBills.
AIM directs you towards it advising you how much and when to trade, which can be massively better than if left to emotional based decisions (greed/fear).
Hi Tom
The 20% SAFE and 10% (of shares) settings does slow AIM down and historically better maintained cash reserves to within 20% lower 80% upper levels, somewhat in alignment with Ben Graham's advice to 50/50 but 25/75 to 75/25 according to valuations
Averaged around 1 trade every couple of years (89 trades in 151+ years), but with trades more tending to cluster.
Clive
If you used those AIM signals to go all-in at the fist buy, sell-all at the first sale then you'd have been in the stock for 7.9 years of the 35.6 total years and annualised 20% during the in-time (4% annualised relative to the total time). Excluding cash interest and dividends. (18% ROCAR excluding dividends).
Find other assets that you can enter soon after one exits so that cash is more often deployed :)
Even at a 4% overall reward for that alone however, with just 22% exposure time (78% average cash), and that would have more than offset inflation, leaving cash interest and dividends as being disposable.
Clive
Hi Myst. Re Bitcoin.
Whilst bitcoin price volatility may be great for AIM the issue I have with it as a possible 'investment' is that its based on virtual not real scarcity. A Ponzi/greater-fool asset.
The rich with surplus capital will always buys scarce assets as a means to preserve wealth, when one needs to sell to raise cash so another with surplus cash will buy. Mark Twain once said buy land, they're not making it anymore. A popular dead artist wont see any more of their works being created. Gold formed at the heart of exploding suns is relatively scarce. And as more people have surplus wealth so prices might rise above inflation as demand increases.
Virtual currencies aren't scarce, are easily replicated at the press of a button. Any one of them could vanish in a instant. IMO they should be outlawed for being the Ponzi that they are.
Clive.
Software wise nowadays I mostly just use a modified version of Toofuzzy's calculator i.e. the following saved as a .html file and opened in a web browser.
<html><head><meta http-equiv="Content-Type" content="text/html; charset=windows-1252">
<title>Quick AIM Calculator for AIM</title>
<meta name="KEYWORDS" content="investment newsletter, Lichello, AIM Users Group, A.I.M., Investment Risk Management, investment software, market timing, stocks, funds, Robert Lichello, Automatic Investment Management, Asset Allocation, Newport Programs, Idiot Wave, Risk Management">
<meta name="DESCRIPTION" content="Quick Calculator for Mr. Lichello's AIM. Welcome!">
<script language="javascript">
function figure() {
/* calculate market order */
pc= document.f1.PC.value*1;
ns= document.f1.NS.value*1;
sv= document.f1.SV.value*1;
p= document.f1.P.value*1;
bs= 0.1;
mp= 0.05;
ss= 0.1;
if ( p > 0 ) {
sv = p * ns;
alert("stock value is "+sv);
shareflag = "yes";
}
else
{
shareflag = "no";
}
if (sv >= pc ) {
Y= (sv - pc)-(sv*ss);
if (Y >= (sv * mp)) {
if (shareflag == "yes") {
shares= Math.round(Y*100/p)/100;
sharetext = "Shares to sell " + shares;
}
else
{
sharetext = "";
}
Y=Math.round(Y);
alert("SELL $"+Y+"\n"+sharetext);
}
else
{
alert("no market order");
return;
}
}
else
{
if (pc > sv) {
X = ( pc - sv ) - ( sv * bs );
if (X >= (sv * mp)) {
if (shareflag == "yes") {
shares= Math.round(X*100/p)/100;
sharetext = "Shares to buy " + shares;
}
else
{
sharetext = "";
}
X=Math.round(X);
alert("BUY $"+X+"\n"+sharetext);
}
else
{
alert("no BUY market order");
}
}
}
}
function figure1() {
// calculate hold range
pc= document.f1.PC.value*1;
ns= document.f1.NS.value*1;
ss= 0.1;
bs= 0.1;
mp= 0.05;
i = pc/(1-(mp+ss));
i = Math.round(i);
j = pc/(1+(mp+bs));
j = Math.round(j);
k = i*mp;
k = Math.round(k);
l = j*mp;
l = Math.round(l);
m = i/ns;
m = Math.round(m*100)/100;
n = j/ns;
n = Math.round(n*100)/100;
o = (i*mp)/(i/ns);
o = Math.round(o*100)/100;
q = (j*mp)/(j/ns);
q = Math.round(q*100)/100;
alert("@ Stock Value Above $"+i+"\nMin Sell Order Size $"+k+"\nMin Sell Price $"+m+"\nMin # Shares Sell "+o+"\n\n@ Stock Value Below $"+j+"\nMin Buy Order Size $"+l+"\nMax Buy Price $"+n+"\nMin # Shares Buy "+q );
}
</script>
</head>
<body>
<h2 align="center"><font color="#FF0000">AIM ADVICE CALCULATORS</font></h2>
<form name="f1">
<center>Figure out your "HOLD ZONE"</center>
<h3 align="center"><font color="#0080C0">AIM account HOLD ZONE Calculator</font></h3>
<table cellspacing="0" cellpadding="0" width="50%" align="center" border="2">
<tbody>
<tr valign="center" align="left">
<th>Name</th>
<th>Value</th>
</tr><tr valign="center" align="left">
<td>Portfolio Control </td>
<td><input name="PC"> </td>
</tr><tr valign="center" align="left">
<td>Number of Shares </td>
<td><input name="NS"></td>
</tr>
</tbody></table>
<div align="center"><input onclick="figure1()" type="button" value="Calculate HOLD ZONE">
</div>
<p></p> <p></p>
<center>
Figure out a "MARKET ORDER"<br>
Needs you to have filled out all the info in the above "Hold Zone" form first</center>
<h3 align="center"><font color="#0080C0">AIM MARKET ORDER CALCULATOR</font></h3>
<h4 align="center">Enter Current PRICE, or STOCK VALUE</h4>
<table cellspacing="0" cellpadding="0" width="50%" align="center" border="2">
<tbody>
<tr valign="center" align="left">
<th>Name</th>
<th>Value</th>
</tr><tr valign="center" align="left">
<td>Price
</td>
<td><input name="P"> </td>
</tr><tr valign="center" align="left">
<td>Stock Value </td>
<td><input name="SV"></td></tr></tbody></table>
<div align="center"><input onclick="figure()" type="button" value="Calculate MARKET ORDER">
</div>
</form>
<p><p></p><center>
<hr>
<p></p>
<h3>With Robert Lichello's AIM you :</h3>
</p><p>
Start with an investment portfolio worth $SV = Stock Value ... <br>
and some cash. (The cash is in case AIM says "buy more".)<br>
You maintain a PC = Portfolio Control (which increases with each Buy).<br>
Initially, PC = SV, your initial investment portfolio.<p></p>
Each month you check your SV.<br>
If, subsequently, your SV is $X larger than PC, say X = SV - PC, then you Sell: Y = X - 0.1*SV<br>
(provided Y exceeds a minimum Dollar Amount of 5% of SV).<br>
If your SV is $X smaller than PC, say X = PC - SV, then you Buy: Y = X - 0.1*SV<br>
(provided Y exceeds a minimum Dollar amount of 5% of SV).<br>
Each time you Buy $Y worth of stock, you increase your Portfolio Control by 0.5*Y.<br>
(PC is always left unchanged after you Sell shares)</p></p>
The above calculators simplify having to calculate the values<br>
Basically for each AIM account you just need to record the PC<br>
and number of shares held, and have access to the current share price<p></p>
<hr>
</center><p></p>
</body>
</html>
Hi Tom
Hi Myst
Hi Tom.
Here in the UK Biden has offended many, in effect favoured jumping into bed with Germany and Ireland (EU) and accordingly increasingly focus is turning eastward, looking to break US ties/allegiances in favour of others. Russian investment options for instance are priced to near book-value, 5% historic dividend yields, 7.5% forward dividend yields and PE of less than 10. Politically riskier, however a UK/Russian alliance could go a long way to add greater stability/security.
The TINA US mindset, "there is no alternative" belief that the US Dollar will continue to prevail as the primary reserve currency is perhaps being stretched to near breaking point. There are a number of alternatives, all quite similar, and its not too much a stress of the imagination that TIAA (there is a alternative) could become a more broadly accepted reality, perhaps relatively soon (< 5 years).
For historic reasons the UK serves as the accounting, law and financial hub for many nations around the world, a common wealth body comprised of around a 2.5 billion population that if tied in with the populations of Russia, China ..etc. could quite reasonably see a primary reserve currency migration away from USD.
Something to keep in mind as a possible 'Black Swan' situation. Not sure how American's might hedge that risk however. My guess is that a precursor flag would be forms of constraints on gold and the likes of bitcoins. If/when so then I'd further guess that within a couple of years of that would be the more likely time of implosion.
Clive.
US 1968 retirement start date, yet another bad case situation for a investor (poor stock performance/losses compounded with drawing a income), and AIM indicated a 60% start date cash %. Starting with 40/60 stock/bonds and drawing down bonds using a 4% SWR lasted 24 years before capital exhaustion. 3% SWR ran for 42 years before all being spent.
So in both a Japanese 1990 and US 1968 generally bad for newly retired cases AIM might have aided in better getting a retiree through such times reasonably well.
Frankly I'm impressed, but guess I shouldn't be as AIM does do a decent job of balancing appropriate amounts of stocks and cash (bonds).
Clive.
Japan end of 1989 retirement date, perhaps one of the worst possible times to have retired. I'm guessing that after the great 1980's up-run that AIM might have been indicating 70% cash levels.
Starting a 2 bucket with 70% in bonds, 30% stock, where bonds are spend first using a 4% SWR (4% of start date portfolio value income, where that capital value is uplifted by inflation as the amount drawn at the start of each subsequent year) ... and ...
Bonds (10 year Treasury) sustained withdrawals to just past the end of 2015. 100% stock remaining sustained withdrawals just out to 30 years in total.
The Trinity study SWR approach was I believe based on 30 year periods where the worst case just exhausted all of capital, much the same as above. In the average case, being better, capital remained available, often substantially more in inflation adjusted terms than at the start. A greater risk is the risk of not actually living for 30+ years following retirement.
I haven't run the figures but believe that in many other cases of asset allocation/weightings the 4% SWR approach failed in Japan, in some cases not even extending out to 15 years or less before capital was exhausted.
For those with heirs that they desire to leave a inheritance, dropping to a 3% SWR better covers that. In the above 1990 start date for instance around 40% of the inflation adjusted value remained at the end of 30 years. If instead you passed after 20 years, end of 2010 then they inherited around 60% of the inflation adjusted start date portfolio value still remaining.
Looks to me that basing your initial retirement stock/bond allocation according to AIM could serve you very well if applied to a two bucket approach. I suspect if you continued to AIM, then much of bonds might have been migrated over to stocks and continued to see stock declines that likely would have resulted in earlier exhaustion of capital.
Clive.
PS for a 4% SWR 50/50 non rebalanced spend bonds first all of capital was exhausted after 21 years. If however the investor had opted for 50/50 Japanese/US stock for the 'stock' holdings then that worked out fine, had transitioned to being all-stock after 17 years and after 30 years there was still 45% of the inflation adjusted start date amount still intact (in comparison to AIM as above i.e. 30/70 initial stock/bond had 114% of the start date amount available at the end of 30 years if J/US stock were held as the stock holdings).