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Hi Ray, Actually it is not all that hard to find positions near their 52/104 week low. Netstock, once you populate it, allows you to export data to a spreadsheet and then you just put in a column where you calculate how much above the 52 week low it is. I've been checking the 104 week range as well because of something mentioned here recently.
You can go to
http://etfdb.com/type/sector/all/#
and copy and paste the pages to get the list of ETF/ETNs, or you could drop me a note at 60e20f21@opayq.com and I'll send you a file you can paste into Netstock to track whatever you want. One of the nice things is that Netstock lets you set alerts for prices.
Hope this helps.
Allen
Hi Gang, Inflation adjustments on returns? I was reading AAII's newsletter and it got me to thinking about inflation.
Thanks a bunch Is7550. I did not think of doing that.
Best,
Allen
Great pun, Tom. I wouldn't worry about that volcano as it is below 41 degrees in the Southern Hemisphere and most food production is well above this. Also it is not anywhere near as explosive as Krakatoa was. It is estimated that Krakatoa was roughly equivalent to 13,000 times the atomic bomb dropped on Hiroshima.
To get an idea of the effect of Krakatoa is to look at Mount Pinatubo in the Luzon Volcanic Arc, also a VEI of 6 on June 15th, 1991, where the global temperature fell by 0.4 °C
But Krakatoa was not as big as Mount Tambora located in the Lesser Sunda Islands which had a VEI (Volcanic Explosivity Index) of 7 on April 10th, 1815, and created the "Year Without a Summer" in 1816. Krakatoa had a mere VEI of 6.
Also, the key to the effect on the environment is not just the eruption but how much it stinks! Hydrogen sulfide that gets into the upper atmosphere creates sulfuric acid which makes clouds more reflective and cools the earth. It also causes acid rain.
However, have you seen the list of volcanoes in Chile? Holy guacamole! I had no clue, though I did know there were more than one or two.
https://en.wikipedia.org/wiki/List_of_volcanoes_in_Chile
Amusing tidbit. I was just looking this up and noticed that someone had already updated the last activity date for Calbuco.
If you can read Spanish, Chile's National Mine and Geology Service is at:
http://www.sernageomin.cl/index.php
There is a link near the top of the page to more details about Calbuco.
Best,
Allen
Hi Ray, I forgot to mention one very useful, free bit of software, Netstock. Get it at:
http://www.splitcycle.com/Products/Netstock
He requests a donation and it is well worth it.
I run 9 variations. Some are sector funds, some are things mentioned here and 4 are the portfolios I have - 2 trusts, a beneficial IRA and my personal account. It is quite helpful in looking at a position over time.
Best,
Allen
Hi Toofuzzy, Actually that is a link to the data and such on Archive.net, which is still available. The hot linking function does not work properly here. Just be sure to use the whole link, don't just click on it. Copy and paste the whole line. That is why I put them on lines by themselves so it would be easy.
I know they work as I checked them before I posted the links.
Best,
Allen
Hi Ray, Similar to you I wish I had actually read the book when I bought it back in 2002! Oh, well.
So on with the show. At
investorshub.advfn.com/boards/read_msg.aspx?message_id=88614114
there is a bunch of information to check out. Also at
http://web.archive.org/web/20120609073103id_/http://www.aim-users.com/calculator.htm
there is an online calculator for your buy/sell calculations.
Then at
http://web.archive.org/web/20091024074210/http://geocities.com/lostcowboy5/Spreadsheets/
there are a bunch of spreadsheets and other info about AIM, Syncrovest and Twinvest that are worth spending some time with.
I suggest that you look at Tom's (OldAIMGuy) profile at
investorshub.advfn.com/boards/profilea.aspx?user=10112
Tom has been very generous in helping a number of us who are new/newish since I came on the board last September.
I have found it quite useful to just read old posts to get a handle on a variety of issues/problems as I stumble upon them.
The one thing I'd suggest is that you stick with the basic hand calculations for a bit to get the process drilled into your brain, then check out the variations, LD-AIM, AIM-HI, delayed buys/sells, etc.
Then ask questions as they occur. You'll get lots of help here.
An additional tip is to look at ETFs that pay a dividend as a starting point. I'm finding better overall results happen that way. Mostly I've looked at things by backtesting but of the couple of AIM positions I have the one that has a dividend above historical inflation is doing better than the two which either don't have a dividend or a low dividend.
Time spent backtesting is very worthwhile.
Best,
Allen
Hi Jon, I guess I either misunderstood you or my thinker wasn't working but what I was thinking about was not so much a correction of ~10-20% but a major bull market where things are off more than 25% and maybe even as much as 50-60%. The last correction was 17.6% and the high was about April 25th, 2011 and the low about August 25th.
A 10-20% correction seems likely to me given the sideways market. It has been quite variable. Today of the 1618 ETF/ETNs I've been tracking, 681 were negative, 207 were no change and the rest up. The other day all but 10 were up when I looked and last week about 1400 were down one day.
My guess is that the powers that be would prefer a correction to happen sooner rather than around the election next year, so I'd guess sometime in the next 12 months, and, given history, I'm going to bet somewhere between September 1st and October 31st. Lots of positions took a significant hit right around October 15 last year, but mostly a bit less than 10% so not officially a correction. I think October has a higher probability but who knows? Then there is the old saying about going away in May as nothing much happens over the summer.
Lots of noise and not a lot one can trust among the fear mongers.
Best,
Allen
Thanks Tom. I especially like "a) Broad trends persist. Discover them. They will survive boom and bust." Paying attention to inflation is one of the keys. Just look at the long term DOW and S&P 500 and see how much it has swung into a major upward trend over the last ~35 years regardless of crashes. I'm guessing that at some point this will prove to be a "bubble" and the curve will flatten out. Maybe my daughter will see it happen, in any case most likely long after I will cease to care, but that does not mean we can neglect the possibility as we plan what we are up to today.
In the shorter term it seems wise to pay attention to cycles, after all cycles in all sorts of things such as deer and wolves, coyotes and rabbits as well the cycle in wheat have been known about for a very long time. Wheat cycles have been recorded all the way back to the 1200s. The cycles in wheat also provide an excellent example of an unexpected event, Krakatoa - 1883, where wheat production was down for about 3 years world wide and temperatures did not return to "normal" until 1888.
Best,
Allen
Hi Jon, Given the historical record and where we are in the business/election cycles, I think ~42 months is a bit short for a major down cycle. It has been over 30 years since we've had a trough to peak that short. That was the very short cycle that peaked in November 1982 according to NBER.
My sense is keep your powder dry for the moment and let it go down a bit before buying from the scared as the market cycle has been getting longer in recent years compared the 50's and 60's. See http://www.nber.org/cycles.html
Best,
Allen
Hi Toofuzzy, Actually, even if you could get the sectors figured out in an overall, gross way, you would still need AIM to remove the emotional response to events like Fukishima, Tropical Storm Sandy, ISIS or any other unpredictable event that might trigger our adrenalin! It's amazing what adrenalin does to the way we see ourselves in mirrors.
As Malabre points out, paying attention to cycles, and the indicators that follow the cycles, can be an odds improver. For example, if we seem to be headed into or in a correction it would wise to delay buys so as to not exhaust our cash reserves. This type of tweak, if not done hastily, can improve our returns.
Best,
Allen
Hi Gang, How does one get a negative beta? I stumbled on WPCS and Yahoo says it has a beta of -0.19.
Does a negative beta mean that the position is inversely correlated to the index? If this is true, would a -1 beta be completely inversely correlated with the index? Do inverse ETF/ETNs have a negative beta?
Thanks,
Allen
Hi Gang, The way I figure it there is some correlation between the in/out of favor sectors and the bull/bear market cycle but I don't see any historical data posted like this around, or am I missing something?
The current out of favor sector list is as follows.
I notice that the ranking of the sectors has not changed since last week.Ordered by yearly lest in favor first.
Sector 1 year % Change
performance in past week
Energy -12.0% +2.1%
Telecom -2.5% -1.0%
Materials +4.0% +0.5%
Utilities +4.2% -1.2%
Industrials +5.8% -2.2%
Financials +10.4% -0.5%
Consumer Staples +12.4% -1.1%
Info Tech +17.6% -1.5%
Consumer Disc. +18.1% -1.9%
Health Care +28.7% +2.9%
(According to Bloomberg - 4/20/2015)
Hi Gang, Have you noticed that many, over 2/3s, of the ETFs and even some stocks seem to have reduced dividends over the last couple of years? It seems that way to me, or is it simply selection basis?
The other thing that might be worth thinking about is that "market sentiment" still seems to be bullish, for the most part. Is that a possible indicator of where the market is not headed?
Best,
Allen
Double thanks, Tom and gang. Most helpful as I try to create the rules to trade by and how to apply them.
Best,
Allen
Thanks AIM1979! Yeah, I know it is just an approximation of volatility, but that is all I'm looking for, a way to compare ETF/Ns with stocks.
Best,
Allen
Hi Alton, Given the figures you posted, you got in around $12.80, right? If so did you get a buy in October about $10?
Thanks,
Allen
Hi Toofuzzy, I've noticed that you don't always follow you own advice, so why do you advice such?
Best,
Allen
Hi Tom, Thanks for the tip. I subscribed for a year as my local library and nearby county library do not get it either in paper or electronically, alas. I'd have to drive about 20 miles to get it or figure out some way to renew my San Francisco Public Library card.
In any case, I did not find it all that useful; however, it was partly that I did not have a clear idea of what I was looking for at the time. When I get taxes done for the two trusts and my own I will dig into it some more. Speaking of taxes, all the account got amended 1099s and on has gotten a total of four so far!
At this point I have almost all ETFs and ETNs entered into Netstock so I can find most of the yields and other useful data for those. I plan on sticking to them for the next while for two reasons, one is that I don't feel comfortable with my ability to find the not obvious problems that would make a position not a good choice for me.
BTW, everyone should be aware that Yahoo changed some code and not all stocks/ETFs/ETNs get accurate reports when you look. I'm using http://www.nasdaq.com/ to confirm details.
Best,
Allen
P.S. I won't tell anyone that you know how to use a library and that you have for many, many years. I wouldn't want you to get in trouble for subversive behavior.
Hi Gang, I too had a sale, DBC. Did not make a lot but I have decided that it does not fit my needs. I have decided that regardless of what something is it needs to pay a dividend about equal to or a bit better than inflation to protect against it. It is a hell of a note to make money but inflation has taken a bite out of the return, especially if it is a long time between trades.
As I clean out the stuff the broker foisted off on my mother I'm looking for those that meet that criteria and that they have at least a range over 2 years of 1.5 to 1. I have also decided that it is best to stick to stuff that is less that $35/share. When I look at those that are higher they seem to have less of a range and less volatility. Since most ETFs don't have a beta it is a bit hard to get a handle on volatility.
Does anyone know how to calculate a beta for an ETF?
Thanks,
Allen
Hi Gang, The current out of favor sector list is as follows (Ordered by lest in favor first):
1 year % Change
Sector performance in past week
Energy -10.0% +3.1%
Telecom -0.1% -0.6%
Materials +6.1% +1.5%
Utilities +7.0% +0.2%
Industrials +11.0% +3.3%
Financials +12.6% +0.1%
Consumer Staples +15.4% +0.9%
Info Tech +20.7% +1.9%
Consumer Disc. +21.5% +1.3%
Health Care +31.4% +2.9%
(According to Bloomberg)
Hi Gang, Totally off the wall response to Tom's question:
Hi Gang,
Hi Adam and gang;
Hi Gang, Couple of interesting things. I got a couple of financial porn e-mails and a mailer. ALL of the recommendations are less than 10% away from a 52 week high!
The other tidbit is that of the 99 sector ETFs I have listed only 10 were losers, 3 no change and 86 were up today. This is the most up I've seen in a while.
Best,
Allen
Hi Tom and the Gang, Very interesting chart. Here is what I get out of it just comparing the number of years an area is the top loser or the top winner for the year.
Losing Winning % Win
years years years
TIPS 4 1 25%
STT 6 2 33%
Gold 14 10 71%
LTF 7 6 85%
EAFE 9 10 111%
SCV 5 14 280%
Hi Gang, Heads up - NetStock 1.85 is not reporting earnings correctly at this point. Not every stock or ETF, but a good number. This probably is because Yahoo changed some things recently and Yahoo's site has some issues.
For example, on the Summary for footnotes 1 & 2 instead if the previous day it sometimes says a date in 1969. Also they don't seem to be updating the earnings as promptly as they used to.
Best,
Allen
Hi Gang, Very interesting discussions about real inflation and market returns in various areas. It's good to look at the bigger picture from time to time.
About real inflation, the parallel I see is the way the unemployment rate is reported. In the US U3 is what is used in the media but U6 is actually a better measure and it is typically twice U3. But even U6 probably under reports the real rate because in 1994 long-term discouraged workers were excluded from the calculations. Take a peek at http://www.shadowstats.com/alternate_data/unemployment-charts and http://explistats.com/economic-activities/household-survey/ for some details.
Another point about the inflation index (CPI) is that it assumes that if the price of a element in the market basket they use gets too high, the consumer will switch to something cheaper, i.e. beef to chicken. Well, this is difficult to do for some things such as medical care.
The other problem with the CPI is that some things are excluded from the market basket, typically energy and food price changes, so what is commonly seen in the media probably under estimates real CPI. The inflation rate for seniors, as reported, is typically 0.3%/year more. Compound this and it hits pretty hard on long term retirement.
How much two low is the CPI? Hard to tell, but I use the figure of 25% to 50%, i.e., if they say inflation is 2% I use 2.5% to 3%. This range may well be too much, but it is simple and conservative, which I like.
Using the higher figure when evaluating a possible position is probably a good idea.
Best,
Allen
Hi K., Just shows you there is nothing new under the sun.
Best,
Allen
Hi Jamil, Yep, I was a bit surprised myself at the rapid change. It is rather small for me as well, a bit under 2%. It seems to be hovering at the $2.50 mark for the moment.
In looking at the sector funds, I have 111 in my Netstock listing, over 75% are down today. Yesterday it was over 85% were up.
this seems to be the pattern at the moment, up one day, down the next.
For EGY I'm going to do what Lichello says about taking a dump in a single stock AIM position, stop all future buys, as he says near the bottom of page 185 of the 4th addition. I had a buy at $2.12 and canceled it. Of course I might wind up kicking myself but it was getting close to the maximum %age for a single speculative position. Had it been an ETF I probably would have let it stand.
Speaking of multiple single item AIMs, Lichello strongly suggests, in answering a question on page 183, "A single AIM manages all your stocks. If you will look at any chart in my book, there is a column headed STOCK VALUE. The word "stock" is used in the plural sense. It means the total value of all the shares in of all the stocks in your AIM program."
What does everyone think about this? Are we truly better off if we do this or is keeping them individualized better?
Best,
Allen
Bad typing strikes again. Meant to say $10,000, not $1000 for $50/month at 0.5%.
Allen
This e-mail may, as well as prior ones, and probably does, contain factual errors as well as errors of logic, organization, grammar, and spelling. They are included at no charge, unless, of course, you'd care to make a donation.
Thanks for looking that up Ray. Sounds good.
The reason I selected it was because of the dividend rate. At 0.5% this means that $1000 would earn $50, more than enough to offset trading costs, both selling for another position or for accumulating cash.
Best,
Allen
Hi Is7550, What symbol is SCV? I can't find one listed.
Also, when I tried to download the spreadsheet you referred to all I got was 166 pages of partial sections of a spreadsheet that made no sense. Is there another way to get it?
Thanks,
Allen
Hi Ray, You might look at SPFF. It has a very small 52 week range - 14.35 - 15.15 - and it pays a dividend monthly of 6.7% annually, essentially 0.5%/month. If you keep some in cash for smaller buys and put the bulk in SPFF, the dividend you earn will more than pay for the trading costs.
Best,
Allen
Hi Jamil, I'm not talking about changing the setting - guessing which way the market will go day to day or even month to month - along the way, just a different way to accumulate either buys or sells to reduce trading costs as well as to allow another buy even though history says you are already near the low. Look at the chart for EGY over the last couple of weeks and it seems to have bottomed at $3.03 on the 19th of March. Look at the sector ETFs IYE and it seems to have hit bottom on the 13th, as did XLE.
I know that this doesn't mean that EGY can't go lower or that the sector can't go lower, but it seems reasonable to me that it won't drop another 50% to $1.50. An additional 25% would be ~$2.25. Not totally impossible but given the ~70% drop at this point my guess, mind you strictly a guess, is that it is not all that likely.
As to the amount I have as cash for EGY, I have allocated 20% in the cash reserve for this position, plus I have an additional 5% in a general cash fund. The general cash fund is across all AIM positions and can be used where the 20% set with AIM-HI turns out to have been wrong, sort of a reserve or safety fund in case I should have used a different cash fund than I did.
As to EGY, I'm guessing that the loss in price of about 70% at this point from ~$10 is primarily caused by the massive downturn in the energy sector due to market forces outside the stock market normal churn/business cycle changes. You may well be right about it falling to $2.50, perhaps even lower, but the "normal" business cycle would have it recover at some point during the roughly 6-9 year trough to peak to trough cycle the stock market has had over the last roughly 30 years. Plus, say it falls to $2 and then recovers to the ~10 dollars, or say ~$8, that would be roughly $5 to $7 above where I bought in at. If I wind up with another buy or two it will only make my cost per share lower. Since TDAmeritrade has the option for taxes of selling the highest price first, this reduces the capital gains a bit on the upside.
As Toofuzzy has said many times, select the most out of favor sector to invest in is a good place to start a position. Energy is the one at the moment with a one year performance of -11.3% according to Bloomberg.
Best,
Allen
Hi Gang, About a split minimum stock sale amount, I think I have found a way to do this and tested it using the online calculator. (http://web.archive.org/web/20120609073103id_/http://www.aim-users.com/calculator.htm)
What you do is enter a 0% for sell safe, set the minimum stock value to a percent that allows the gain to run and then enter a negative % for the buy safe such that you buy in closer to where you are at the moment. I bought EGY at $3.1062, and the 52/104 week low is 2.99. While it might go lower than that I suspect at most a few cents, not the $0.50 that AIM suggests with a 25% minimum sale value trade that I set to make the gain run, on the assumption that oil/energy will likely rebound.
If you put buy safe at -20% you get a buy at $2.96, a quite reasonable figure, I think.
Now this is for buying in near the 52/104 week low. If you are buying in at what turns out to be near a high, you can delay buys by using a positive number, say +10%. Assuming the price I bought in turned out to be a high - say because of a market crash - using the same 25% minimum stock value trade and 10% buy safe, buying is delayed until the price is down 25.8% at $2.30. In the 2008/9 downturn this would have been most useful compared to the usual 10/10/5% settings which would have you buy at $2.70. BTW, setting what I understand to be the minimum stock value trade according to the way I understand Lichello, buy safe at 10%, the new buy point would be at $2.59, better than the 5% figure.
So, it seems to me that setting the minimum stock value trade percentage higher and then playing with the buy and sell to get settings for the next buy/sell that fits with your style and where you bought in at is a very viable strategy.
Best,
Allen
Hi Jamil, I was looking at your EGY backtest and found something that might be an error:
You have the next buy at $7.08 and the delayed buy at $7.40.
Wouldn't buying at $7.40 happen before one at $7.08? Shouldn't it be something like $6.76?
Best,
Allen
Hi Gang, Took the plunge and bought 3200 shares of EGY at $3.1062 yesterday, aftermarket, only 3.74% above the 52 week low.
To let the sell side run I'm using 20% minimum stock value sale at $4.14, which is 33.28% above purchase.
Hey, it's oil and mighty slippery. Gas went up here $0.795 in thirteen days and then back down $0.20 in 4 days!
Best,
Allen
Sorry Gang, the images for this post did not display. I'll try again later.
Hi Toofuzzy, the by the book standard for buy and sell safe is 10% and minimum buy or sale of stock is 10% of the stock value on hand, which, for practical purposes is the same as the % of the number of stocks on hand, As Is7550 quoted from the Fourth Edition on page 263