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Hi Aim Hier
....This is in keeping with the oft seen advice to buy strength and sell weakness. Legendary traders were saying this one hundred years ago and the song is the same today. How to square this with the AIM strategy of buying weakness and selling strength. I got the answer in Ben Stein's book, 'Yes, you can time the market'. When I looked at one year returns, buying stocks below the moving average earned slightly better than above. When I looked at two year returns, buying below the average did much better than above. I suspect the difference would grow as I lengthened the time horizon.....
Buying strength is timing founded on a positive swing trade, catching a rising trend. Buying weakness is timing founded on reversals, buying relatively cheaper priced stock in anticipation of a reversal of a falling trend. Each have their pro's and con's. Of the two AIM in buying weakness likely has the added edge that the downside is less when the timing proves to be wrong, in having bought in at a relatively low price level than that of having bought in at a relatively high (strength) price.
Typically Relative Strength type metrics are shorter term out-performers, buying weakness has a longer term outlook. Often stocks that have out-performed over the last 3 to 5 years go on to be under-performers over the subsequent 3 to 5 years and visa-versa.
Buying weakness, selling strength and visa-versa are two opposing strategies, but both however commonly share the 'timing' concept. How each timing method compares with that of random but comparable sized (average amount of stock and cash) timing measure, when measured over the same time period in question, provides a clue as to whether each particular selective timing approach works or not. Both could equally add financial benefits.
In message 22156 I tried to outline how comparing like-for-like might better highlight timing benefits (or lack). The example I chose showed a 0.8% better result, before trading costs, between an AIM'd holding and a comparable average stock holding/cash blend across a three year period.
A ROCAR comparison to the fully loaded index doesn't provide such relative measures. The ROCAR comparison along the lines in which I suggested would be a start, but by no means is adequate, needing considerable additional refinement (such as averaging of averaging etc.)
An alternative to timing or possible further enhancement is that of money management. Typically its money management that adds the greater benefit compared to that of timing. Here AIM has greater risks in that it adds to losing positions whilst often Relative Strength based positions run with trailing stop losses that limit losses or in some cases get the investor out of terminal price reversals.
Regards. Clive.
Thanks for the reply Tom.
I guess I could add a column to the retirement page showing what the same account with the same average Equity/Cash ratio would have done over the same time. However, that Equity/Cash ratio would be just the average, not variable as in my actual account. Here we would see the advantage of the gain AIM has contributed.
Don't break you back on this one Tom ;>) I proposed the concept purely for discussion purposes rather than actual practical application.
If you were inclined to follow it through however, perhaps a time varying comparison of both might be more informative. Along the lines of AIM's ROCAR between days A and B versus a comparable stock/cash blend with the same average equity exposure over that same period as x1, ROCAR for AIM and stock/cash blend comparison between days A and C .... for x2 ... and so on.
I'm personally moving to a new investment strategy and away from my current primarily leveraged based buy and hold approach. As you know I've been aware of AIM for decades and was considering it as the replacement, but instead I've opted for another route.
Leverage is fine during primarily rising markets and having secured fixed rate low cost debt it was the most appropriate choice for me personally. I'm now of the opinion however that most of the potential longer term surplus from stocks has been outed and accordingly I expect average stock returns to likely be less over the next few decades than that of the previous few decades. Unless of course a large decline forces me to review the situation (wishful thinking).
My opinion for what its worth is that stocks were relatively underpriced prior to the 1980's but have subsequently become increasingly much more widely popular and therefore have tended to rise at an above (longer term) average rate as they've progressively become more fairly priced. I believe that bubble is near peaking.
My intention now therefore is to simply hold a 50:50 combination of a buy-and-hold High Yield type holding and a yearly based 10% stop loss (buy stock, if a 10% decline occurs then sell and stay in cash for the remainder of the year long period - reviewed yearly) blend. A 10% stop on average occurs in 35% or so of cases, and overall results in around 85% average equity exposure over time. The blend therefore averages around 92.5% equity and 7.5% cash exposure over time and thereby benefits by almost as much as 100% buy-and-hold, but has the additional feature that in the event of a large decline half of the funds are stopped out at a 10% loss (5% loss compared to the total overall funds value) - which in turn the combined total funds dividends and/or cash benefits largely offsets.
If or rather when prices dip deeply, half of the funds will effectively remain relatively intact for buying up stock at discount prices. The other half is left as is and simply rides the dip. I'm of the opinion that overall this strategy will generally pace the market average during average/mild periods, but periodically pull ahead as a result of the benefits from the greater downside protection during those less frequent significant dips.
Regards. Clive.
While I don't attempt to beat any particular index, it is fair to equate what we're doing to some form of index as a benchmark
I didn't intend to discuss the comparison of the ETF's funds relative performance compared to the S&P Tom. But instead to consider the comparison of like-for-like type measures.
If the ROCAR shows 50.8%, but a comparable simple blend of stocks and cash held constantly at the same level as the average stock exposure using AIM shows a ROCAR of 46.8% then isn't that a more indicative figure of how well AIM's trading and or iWave timing elements have performed?
today's my first day back in the office since surgery
Desperate to get away from all the pampering at home? Glad to hear you're recovering so well and quickly.
Regards. Clive.
The illusion of ROCAR?
Consider the current report for Tom's retirement ETF fund http://www.aim-users.com/etfunds.htm
September 2002 to December 2005 S&P gained 40.6%, Tom's account gained 33.5%. ROCAR return 50.8%. Initially this appears impressive. Inferring that on average 66% of funds were invested in stocks over that period e.g. 33.5 / 0.66 = 50.8, such that if scaled to 100% of the risk of having being fully loaded then a 10.2% additional gain would have been made, 50.8% instead of the S&P's 40.6%
But now consider if we just bought and held the S&P using 66% of funds and deposited the remainder in a cash deposit. 0.66 * 40.6% of the gain that the S&P made = 26.8%. Assume that the 34% in cash earned 4% p.a. over that period, which equates to 1.36% p.a. benefit as a proportion of the total funds and over 3 years amounts to 4.1%.
Adding the 26.8% from the 66% of funds in the S&P holdings with the 4.1% benefit from cash = 30.9%
Comparing the AIM's 33.5% versus the buy-and-hold (66% stocks and 34% cash blend) amounts to a 2.6% overall difference across the three years, or around 0.86% p.a. average. This might narrow further after trading costs etc. are considered. And bear in mind that we've just used the wider S&P as the benchmark comparison. So all of the sector rotations, iWave timing et al might have yielded a 0.5% p.a. or possibly lower overall benefit. On a time/effort/reward basis that's likely to be around minimum wage levels of benefit.
Another view is that had cash earned 6.2% p.a. then a 66% in S&P and 34% in cash would have paced Tom's retirement ETF AIM fund.
Wouldn't a fairer measure of relative performance of AIM be made by calculating the average equity exposures over the period being measured and compare that to the relative performance of a comparable Index fund and cash blend?
You could grab the weekly data from yahoo e.g.
http://finance.yahoo.com/q/hp?s=%5EIXIC&a=00&b=1&c=2006&d=00&e=1&f=2007&...
and download it into a spreadsheet?
In less than three weeks time Tom's Silicon Investors AIM Users message board will be a decade old!
http://www.siliconinvestor.com/subject.aspx?subjectid=12596&LastNum=40&NumMsgs=40
Hi AIMster.
Perhaps a reason not to fully AIM all holdings, but instead hold a proportion, say 10%, in a low cost index fund that you can add to or deplete over time so as to keep overall exposure aligned with iWave.
That said, Tom has previously outlined how his holdings generally tend to mimic iWave anyway, so the Index Fund approach would only be required if you found that your own holdings tended to deviate.
Regards. Clive.
Hi AIMster.
We might consider a cash/stock blend as a form of insurance.
Assume a 10% return from stocks and 5% from cash.
A blend of 75% stocks and 25% cash reserve averages ( 0.75 . 10 ) + ( 0.25 . 5 ) = 8.75% p.a. 1.25% p.a. less than the buy-and-hold 100% stocks holding.
If a 5% loss occurs, then a 75% loaded position loses 3.75%, 1.25% less than B&H's 5% loss.
Generally we might have a case of a stop loss of 5% or more being triggered 66% of the time within a single year (a 10% loss occurs around 43% of the time and a 20% loss occurs 19% of the time..etc). All highly subjective and variable across time of course.
In 100% of cases you pay an effective 1.25% insurance cost.
In 66% of the time stocks lose 5%.
Of those 43% go on to lose 10%;
Of those 20% go on to lose 20%;
Across these we have approximations of 23% lose 5% (=1.15%); 23% lose 10% (=2.3%); 20% loses 20% (=4%). A total average of a 7.45% loss in 66% of cases = 4.92% overall.
So here we'd avoid an average 4.92% loss for a cost of 1.25%. An overall positive outcome expectancy, an improved reward to risk ratio (or ROCAR), provided of course we also picked up on the discounts at the appropriate times.
Accurate calculations and timing are far from simple, requiring consideration of the likes of inflation, reversal sizes (e.g. 50% loss requires a 100% gain to recover), market trend etc. The bottom line however is to hold the amount of cash that meets with your probability estimates for prices over time.
Achieving the optimal level of blend across time would achieve the maximum gains. That optimal level will no doubt involve being 100% in cash at some times and 0% at others. The closer the iWave fits with the actual stock price movements the better the benefits from following it. In a similar manner to how if we could accurately predict prices over time we could achieve maximum potential gains.
iWave isn't just a starting point indicator, but an ongoing indicator that you should attempt to keep your actual holdings aligned with.
Ahhh! The TomInAIMtors back! And so soon.
What powerful recuperation you have. Just like in the movie. Bash him, cut him to bits and he just pulls himself together again in no time. Or is it you've been jumping through time again.
Great to see all went well and you're home so soon Tom.
Best Regards. Clive.
Hi Tom.
The logic of EY - SR appears reasonable. That is as earnings yield approaches or becomes less than short rates (effectively the risk-free rate), then the expectations for earnings are relatively, possibly exceptionally high. If the actual subsequent earnings matched the expectations then prices more or less stay static. If actuals exceed expectations then only a modest advance in prices would occur as most of the effect would have already been priced in. If the actuals fell short of expectations then the downside price reversal would likely be much more significant. Overall a more negatively biased position.
Tom,
Have you seen this paper by Pu Shen before?
Rather than using Elaine Garzarelli's ( PE + short ) they use ( 1/PE - short ) and whenever the current level is in the lower 10th percentile of historical level region that signifies high risk.
As 1/PE = Earnings Yield, its simply the earnings yield less the short interest rate (3 month T-Bill) as the base. Where PE is the total of all SP500 constitutes earnings for last 4 quarters and price is the current months average price.
http://www.kansascityfed.org/Publicat/Reswkpap/PDF/RWP02-01.pdf
Regards.
Clive.
A couple of Value Averaging pointers
http://money.cnn.com/2003/09/12/pf/expert/ask_expert/index.htm
http://www.gummy-stuff.org/Value_Averaging.htm
Hi AIMster
From http://www.geocities.com/Colosseum/Sideline/9500/valueaveraging.htm
In comparing dollar cost averaging with value averaging, it didn't take into account the "cash-drag" that value averaging suffers when it invests less in a period than dollar cost averaging does. It also doesn't take into account the cost of credit when value averaging invests more in a period than dollar cost averaging does. Unfortunately, when these two effects are taken into account, Value Averaging loses much of its luster (as it also loses much, or all of its supposed advantage over dollar cost averaging).
I had tried a few times and each time the connection hung.
Other sites were OK.
A reboot of the PC, hub and router however resolved the problem.
Sorry.
www.aim-users.com appears to be down Tom. At least it is from my location.
Hi Capitalist.
I think my bottom line in a nutshell is that there is no inherent advantage to holding back part of your total portfolio in cash because the reduction in risk is completely offset by the loss in potential rewards
Let me restate that by saying that if the reward/risk ratio is FAVORABLE on an investment, then holding back a portion of your portfolio in cash will cause the loss in potential rewards to be greater than the reduction in risk, thus giving you a less favorable ratio.
I agree that generally timing, as in holding a proportion in cash, tends to cost more in under-performance relatively during the out-time waiting period than the subsequent out-performance benefits achieved from having waited. Under AIM however in retaining some cash you open up the potential to benefit from volatility capture that is not available under fully loaded buy and hold conditions whilst also having lower risks overall.
Take a 200% leveraged index fund as an example, say SSO (ProShares Ultra SP500 http://www.proshares.com/funds/sso/2671606.html) and run AIM with 50% Cash and 50% assigned to SSO then in general that's somewhat comparable to being 100% long on the SP500.
Yet the downside protection is greater in that should something drastic occur overnight and the markets all tanked downwards by say 70%, the AIM loss would be limited to 50% of the original investment (assuming no AIM buy or sell signals had readjusted the levels).
In practice when you AIM'd this cash/SSO blend, I would expect that with a bit of tuning (SAFE levels, iWave etc.) better performance than the SP500 would be achieved due to the volatility capture benefits over time.
Studies of market timing newsletters has indicated that an above average number, more than can be explained by chance, achieve higher risk-adjusted benefits. Its just that most of the time the reduction in exposure to less than 100% average equity holdings results in below average (as in comparison to the Index) overall returns.
Regards.
Clive.
Cash has zero risk? Debatable.
Over the longer term cash often under-performs inflation, more so on a net basis. In contrast stocks generally tend to pace inflation and provide a dividend income that also grows with inflation over the longer term.
So in real terms cash might be considered as having a greater risk over the longer term than stocks. Or perhaps long term stock investing might be seen as having negative risk and therefore we shouldn't hold any cash.
I must admit I don't fully understand the intricacies of the likes of CAPM when risk is considered as being time variable.
I'm sure there's some much more complex mathematical description for outlining reward/risk - you're more of a mathematician than myself Capitalist - any offers?
Regards.
Clive.
Hi Nappen.
Much of investing is centred on attempting to achieve a higher or the same reward for less risk.
Consider the simple case of putting half of ones investment in cash and the other half in equities. Let's assume equities return 10% and cash returns 5%. With no further action (AIM trades), the combination yields a 7.5% benefit. In contrast a 100% equity position yields 10%.
But what if stocks fall 50%, well then the 50:50 blend loses only half of that. The risk is half that of the fully loaded position which loses the full 50%.
Commonly measuring reward to risk is made by dividing the average benefit by the standard deviation, standard deviation being the risk measure. The risk figures actually used don't matter that much as they just provide a relative measure. For example we could say that the 100% equity position had a risk factor of 1 and the 50:50 blend had a risk factor of 0.5.
Dividing the 100% positions average return of 10% by 1 = 10. Dividing the 50:50 blends average return of 7.5% by 0.5 = 15. We see from the higher result that the blend gives a better reward to risk factor - more bang for the buck. For example if we scaled the 50:50 approach to the same level of risk as the 100% position, the return would be higher. So you could in principle choose 2 stocks that were inversely correlated - in other words as one indicated a AIM buy the other signalled a sell, and holding 100% across both of these would produce above average results.
Also consider that AIM'ing is much like holding a 50:50 position (or whatever blend you choose) coupled with a timing strategy. Stocks on average have something like a 66% chance of falling 5% or more within a year of the initial purchase, or a 33% chance of falling more than 10%. There's a reasonably chance therefore of being able to time trades in and out of holdings in a profitable manner. Where that timing adds benefit then the 7.5% example figure used above might be improved upon, potentially to in excess of the 10% levels achieved by the 100% fully loaded holding.
There's also around a 33% chance of any year being a down-year. Typically the Index doesn't advance at a constant progressive rate such as 5% p.a. but more along the lines of two years with 15% gains and one year with a 15% decline - still the same 5% average overall, but achieved in a more volatile way. AIM therefore has a 33% chance of beating 100% in any one year (in practice the actual figures vary over time).
AIM also generally increases opportunities for profits. Generally investors seek to profit from capital gain (price rises), dividend income and/or volatility. Unlike buy and hold however, AIM can benefit from all three.
There's no assured way to consistently beat the index as generally the index is the best mechanical investment strategy currently known. If there was an alternative, then that would likely become the index measure. What AIM generally provides is the prospect of achieving near comparable returns to the index but with lower risk. With a degree of success in stock selections, allocations (AIM settings etc.) and timing however, then AIM investors can achieve index beating benefits. But then again 'Index Beating' is highly subjective, for example after perhaps 5 years a general significant downward price decline might place AIM well ahead of the index at that time, but a few months later and the situation could reverse again.
Regards.
Clive.
Or maybe the TerminAIMtor
I'm going to have the remainder of the disk at L5-S1 removed and replaced with a shiny new titanium cage. That cage will get packed and injected with a "recombinant DNA generated human bone growth hormone"
'Gentlemen, with a Six Million Dollar AIM we can rebuild him. We have the technology. We have the capability to build the world's first bionic man. Tom Veale will be that man. Better than he was before. Better, stronger, faster.'
Good luck Tom, my thoughts and prayers are with you.
Clive.
Hi aim heir
I shy away from bond funds as there is no growth of income intrinsic to the underlying investments as there is to equity ownership of successful businesses
There is if you use something along the lines of Scott Burns' Couch Potato - that is rebalance yearly to 50:50 levels, as the stock side generally feeds the bond side over time. But I agree that there are better options than bonds. At the end of the day its the total benefit that counts, as Buffett says Stocks are just like variable coupon rate bonds. We each have to allocate assets in a manner that meets our own specific risk/reward requirements.
Nevertheless, for retirees and investors near retirement, ownership of financially strong growing companies paying dividends can be investment nirvana. If you live on the dividend stream, market movements become of no import, and you will have a steadily growing income stream.
Exactly the stance I take on a 100% buy and hold basis. I compliment that
with leverage however, using fixed rate debt secured during periods of low interest rates. Previously the leverage was also held on a B&H basis, but more recently with a view of using timing based on Tom's iWave.
Regards. Clive.
Me three!
Perhaps as an ebook (PDF's/MP3's).
The publisher of the works appears to be AIM Inc. which I assume was Robert L's own rather than any specific publisher?
Clive.
(OT) Chinese Empire 221 BC - 1912
Could be a case of The Empire Strikes Back! - and I am more weighted to "resource" stocks. looks to be a wise choice Dave.
http://www.chinesecomputing.com/os/win2000.html might come in handy.
Clive.
(OT) Hi Dave,
One thing I really appreciate with the UK is the National Health Service. All the perscribed drugs and treatment for my father not costing a penny. But then again we do tend to contribute quite heavily during our lifetime. 6% of all working income goes towards the Health Service. Add on 20% basic rate/40% higher rate tax, and then VAT of 17.5% ontop of that (tax on already taxed) and that's effectively around a 50%+ tax rating.
Gas/Petrol - we pay nearly $7 a gallon. Average wage around $50K, average cost of a home $400,000 (nationally).
When it comes to entering a care home the value of your home/savings are used to offset the significant costs, but free once those funds are expired. Should there be any surplus left over when the time comes to meet your maker then your children inherit 100% of the first $500,000 and 60% of anything above that.
I have no idea what its like over in the US. I suspect that your medical arrangements are based more on ability to individually pay. I also get the impression that the US government have opted to address monetary issues by putting the dollar print press into overdrive such that the deficit appears to be high and rising, but then again I thought I read somewhere that after inflation is considered the deficit is relative constant to that compared to historic levels.
Not having payed much attention during history lessons at skool I have no ideer how long the average empire lasts, oopps - on second thoughts Wikipedia to the rescue http://en.wikipedia.org/wiki/Empire#Modern_empires - gives us some clues - wow! Mexican Empire (1822 - 1823, 1864 - 1867) - rather short lived!. Aztec Empire (1375 - 1521), Incan Empire (1438 - 1533), Soviet Empire (1922 - 1991), American Empire - USA (1898 - ?) - hmmm! maybe time for you guys to start internationally diversifying.
Clive.
Another thing about an aging population is that more medicines are needed. I'm personally all too aware of the extent of this due to my fathers recent ill health and seeing during my regular visits to the chemists the shopping bagfulls of medications being carried out.
Currently IBB (BioTech) appears to have performed relatively poorly over the last 1, 2 and 5 years
http://finance.yahoo.com/q/bc?s=IBB&t=1y&l=off&z=l&q=l&c=iyw,iye,iyg,chy,piv,%5E...
Often stocks that have under-performed over the last 5 years go on to out-perform over the subsequent few years whilst those that out-performed over the last 5 years go on to under-perform.
I'd be warry of a Value (high dividend yielders) bubble forming AIMster.
Comparing Value and Growth over recent years :-
http://moneycentral.msn.com/investor/charts/chartdl.aspx?D5=0&D2=0&D3=0&showchartbt=Redr...
if we were AIM'ing the Value and Growth pair then AIM would be suggesting distributing Value holdings and accumulating Growth holdings.
Above average dividend yielding stocks can be emulated with a bond/growth blend pairing along the lines of Tom's Retirement AIM set in a manner that still exhibits dividend paying stocks are the least volatile ones to own in your portfolio type qualities.
My thoughts are that with the aging population and the 60's baby-boomers entering retirement years there's been an increasing swing from growth seeking to income seeking such that current high yielders are relatively poor value. As high yielders are less likely to price decline, excepting should dividends be cut (which most companies attempt to avoid), then more likely the gap would be narrowed by growth type stocks relatively outperforming.
Regards. Clive.
Hi Aimster.
For the following, I simply pulled the historical data for two randomly selected dates, namely between 18th Dec 2000 and Sept 2006
Over that period the Dow's Market Value fell from 8857
to 2049 Billion (UKP) the Index rose from 10645 to 11464.
German DAX30 market value went from 685 Bn to 719 Bn,
the Index fell from 932 to 728.
UK's FT100 market value rose 1419 Bn to 1460 Bn,
the Index fell from 6246 to 5986.
Respective change factors in market value and index are
Mkt Cap, Index
0.23, 1.077
1.0496, 0.78
0.958, 1.029
We effectively see that at times the market value can outpace the index whilst at other times the index can outpace the market value.
Simply if you were to rebalance holdings equally over some periods, then you would under-perform the index whilst over other periods rebalancing outpaces the index.
Or put another way, sometimes its the few individual strong gainers that lifts the overall index, whilst over other times that is not the case, but rather a combined uplift effort. Buy and hold can at times be better than rebalancing, even though that may involve one or a few stocks becoming excessively overweight in value compared to the remainder - or selling off winners and rebalancing along the lines of what might occur when AIM'ing individually can be a bad thing. Equally (or maybe not), rebalancing in such a manner might be a good thing.
As ever however, we are unlikely to be able to accurately predict which of the two is going to be the better choice over forward looking periods.
At times therefore, individually AIM'ing stocks will be better than AIM'ing a collective set, whilst over other periods AIM'ing the set as a whole would be the better choice.
I guess you could always AIM the market value versus index and attempt to time which approach to apply over time and maybe achieve better overall longer term returns depending upon the degree of success, but in absence of so doing simply sticking with one or the other is likely to counter-balance each other over the very long term.
My personal opinion is that trading larger amounts less frequently is likely to achieve comparable gross results to that of smaller but more frequent amounts, but the larger trades approach is likely to be better overall on a net after trading costs/tax etc basis.
As to additional inflows of cash over time, my thoughts are that individual
AIM accounts would be the better choice, especially when used with the iWave as the cash injection into equities would simply involve adding a new stock holding to the set so as to be somewhat consistent with the level indicated by the iWave.
Bear in mind however that generally investment success and amount of trading are inversely correlated. I'm aware of a few individuals who have invested on a buy and hold basis over very long periods of time on a buy and forget type basis, typically widows who inherited portfolios and simply lived off the dividend income and never even new how to trade stocks. Generally in such cases you'll find that after decades their average gains are in excess of the market average. In contrast those who frequently churn perhaps 100% of their stock holdings yearly, as do many professionally managed funds, typically under-perform the market average over the longer term.
Regards. Clive.
Quattro Pro 2 for DOS (the version I use) is still available for download
http://www.dossolutions.pwp.blueyonder.co.uk/download.htm
All in image file format though, so you have to rawrite (or is it raread?) the stuff to floppy before an install can be made. Another approach is that there are image extractors around.
For the likes of Tom's graphs, you simply use the Graph | Customize | Interior Labels and define the spreadsheet column with all the + or - buy/sell markers. All the other graph content is pretty well straightforward e.g. stacked bar for the cash/equity bar chart, or can be added by using the graph annotate option that brings up a draw tool for text, arrows etc.
QP 2 takes a bit of getting used to though as the menu option is engaged using the / key.
Regards. Clive.
I don't believe the error is with the online quick calculator Toofuzzy, but in the jar program instead.
Personally I've never used Newport, although I did at one time consider giving it a try only to find that it was no longer available.
My portfolio management setup simply consists of sub-directories, one each for each held or monitored stock/index/fund, containing relevant graphs and spreadsheets, notes etc., together with a html page for pulling in latest news/graphs off the web.
I still use Quatro Pro DOS based spreadsheet primarily because I like its ability to quickly annotate graphs.
Seeing the COCAIM (Windows and Mac AIM calculator) Java based program on Tom's http://www.aim-users.com/aimware.htm webpage (AIM Software), I thought I'd give it a quick once-over only to find that it appears to generate different results for the hold range to that of the web page based AIM calculator located on http://www.aim-users.com/calculator.htm
Might be my error in usage, but thought I'd mention it just in case anyone is running it with real funds.
Regards.
Clive.
Gold mining might be an alternative TooFuzzy. Sits there in the ground at zero cost until prices rise and its worth digging up a bit more.
Here's one co. that's currently paying around 2.1% dividends (they're also into diamonds, coal .. etc)
http://uk.finance.yahoo.com/q?s=aal&m=L&d=
Merry Xmas.
Regards.
Clive.
Hi Tom. Re iWave raw data.
I did drop you an Email some time back in response to your previous message in this thread but maybe its a dead account now?
From approximate measures that I've taken from your iWave history charts going back to 1982, it strikes me that if you'd adopted a strategy of buy and hold of the NASDAQ, but increased exposure to 150% levels each time that the iWave cut down through the low risk 30 level by selling 50% of the non-leveraged holding and buying something like ProShares Ultra QQQ with the proceeds (200% leveraged NASDAQ), and then closed out that position and reverted to 100% non-leveraged again upon the iWave next encountering the high risk 50 level, over the last 25 years that would have added around 5% p.a. benefit to the straight non-leveraged buy and hold NASDAQ position.
Or in other words around a 11.3% p.a. benefit was apparent over the entire 25 year period from timing using the iWave. Proportioned to actual exposure time and the figure would be even higher. Effectively the entire upward price rise benefit of the index was matched by the iWave timing whilst only being equity exposed for around 40% of the time.
Now AIM is somewhat comparable to holding 50% in buy and hold and 50% in a timing based approach. As such we might have expected 6% p.a. (proportioned) benefit from the BH and 5% from the timing say, effectively nearly pacing the underline 100% BH approach, but with around 70% overall average exposure time instead. To me this vindicates that the iWave component is the more beneficial than that of the zig-zag trading benefits.
Of course zig-zag's rotations add benefit, but additional risk is taken on namely that the stocks selected are generally more volatile. In comparison to an Index that wont go broke however the relative small benefits from zig zag trading as a proportion of the total funds allocated and the targeting of volatile stocks to achieve that benefit is not an attractive reward to risk profile.
The conclusions I personally draw are that 1. ETF/sector or wider market holdings are likely the better overall choice of holdings for AIM. 2. Don't worry too much about tuning to zig-zag's as likely subsequent volatility levels will change anyway. 3. AIM has a good chance of nearly pacing the underline but with lower risk. 4. If you want to beat the market, then the iWave is the key.
Merry Xmas to all.
Regards,
Clive.
but what laws of physics changed to where they could go from supporting only 2,400 baud to the sorts of speeds you're seeing now - on the same physical wires?
I believe it uses the copper wire as a wave guide, effectively pushing digital radio signals through that guide, so you have to have an splitter at both ends. The bandwidth is shared also, so if everyone down your street is using it at the same time speeds will drop.
I usually use yahoo's finance, but Google's financial info chart shows some high/low and news links on the graphs which is a new one for me.
Stretch to default short term chart to the 1 year chart and you'll see the alpha labels and the associated news related articles to the left.
http://finance.google.com/finance?q=GLW
Regards. Clive.
BOOM and spreads.
On reading Aimster's posting of BOOM, when I looked up the current stock price at 1pm this afternoon GMT (9am New York), the bid/ask quotes were 27.5/30.0 - a whopping 9% market makers spread range!
Let's assume I invest in 2000 stocks, $120,000 total invested, $60,000 of stock, and have a 10/0 SAFE plus 5% min trade size for a 20% round trip range. 5% of stock rotated - or $3000 worth for a 20% range, less market makers spread = 11% net benefit or a $330 gain. Discount perhaps 2 lots of $10 broker fees and the overall net benefit is $310 on a $120,000 account = 0.25% benefit compared to the total account.
I realise the figures are exact, but the gain per zig-zag/up-down type motion appears pretty small as a percentage of the overall account size.
Generally, that is not just specific to BOOM, is AIM's principle benefits being derived from buying more stock at cheaper price levels following price fallbacks rather than round-robin/zip-zag type price motions, that is the larger benefit in general arising from variable period dollar cost averaging type trades rather than range trading?
Ultimately what I'm attempting to establish is whether AIM is better than buy and hold generally on the basis that I principally invest for dividend income that grows over time and therefore care much less about price over that of whether dividend income is maintained/grows over the longer term.
Tom, have you ever encountered Triple Momentum before?
http://www.phptr.com/content/images/0131479024/samplechapter/0131479024_ch03.pdf
Might be worthy of incorporating into iWave?
Regards. Clive.
Aimster in message 21431 pointed to a Stockchart.com example Robert.
I believe Wall Street Analyzer also includes a zigzag graphing option if you're looking for a free offline version.
Regards. Clive.
With the GBP/USD approaching 0.5/2.0 levels and being UK based I'm tempted to move funds towards USD based holdings.
Tom, you've once mentioned that you've used the same money market fund for some time, would you mind sharing some further details?
Or any other suggestions for a modest/low risk income type buck home that's available to non-residents?
Regards. Clive.