A.I.M. Users Bulletin Board

[ls7550]

Here's a backtest that may be of some interest.

AIM-HI SPY (S&P500) price only, ignoring dividends and cash interest

Allocate $125,000 to that AIM, starting June 1996 and running to March 2013 (chose that end date as it ended with 20% cash reserve i.e. the same as at the start).

10% SAFE, 10% MTS, 20% Vealie, monthly reviews

$100K initial stock value ($25,000 initial cash)
1490 initial #shares

6 sell, 5 buy trades

Started with 20% cash, ended with 20% cash, 18% average case across all periods.

Cash reserve fluctuation :



Ended with 1507 shares
Ended with $58,820 cash

Compared to $100,000 initial buy and hold stock purchase at the end AIM had :

17 more shares than buy and hold
$33,820 more cash than buy and hold

i.e. a AIM centred around a $100K initial stock value amount. Whilst AIM at times had to borrow to buy more shares, at other times it had more cash reserves than buy and hold. i.e. around the 20% cash reserve level in the above chart there were times when AIM had surplus cash (above 20% line level) and other times when it had to borrow cash to buy more shares (below 20% line level). By eye around equal amounts of both such that cash interest when above the 20% line level might have offset the cost of borrowing when below the 20% line level. i.e. at times AIM had surplus cash that might have earned some interest, at other times would have had to pay (interest) in order to 'borrow'.

Broadly started and ended with a similar number of shares as buy and hold, and on average held a similar amount of exposure as buy and hold, but generated £34K more cash than buy and hold by the end date. Relative to $100K initial stock value that's 34% additional benefit over 16.8 years = a 1.76% higher annualised benefit than buy and hold.

A casual glance at AIM however might instil a "tut - same overall reward" type response i.e. "both AIM and Buy and Hold excluding dividends and cash interest ended with a similar number of shares being held". Less apparent from a more casual glance however is that AIM trading had similar numbers of buy and sell trades and those trades collectively generated $34K of profits (cash).