A.I.M. Users Bulletin Board

[SFSecurity]

Hi Toofuzzy, Excellent points and very well stated about socially responsive investing.

About your point,

In terms of picking funds, I want to own the whole market, but I want to own it divided up in different funds so I get the divergence of different sectors.

The problem with owning a broad swath of the market is that you become over diversified and that kills your results. This has been demonstrated time and again. The key is having enough diversity to avoid being trapped in a single sector bear market and having to sit on you investment for who knows how long to recover.

I don't recall which I saw but one position went down a bit more than 80% during the 2007-9 debacle as opposed to a mere 56% down. This is the risk of being under diversified, significantly greater potential for a larger loss. However, looking at money markets, not including their fees, they almost never match the S&P and mostly miss the mark by a significant amount when you look at several years, not just the good ones.

I had an idea that might actually work and not be too onerous. As Twofuzzy suggests, one can use the online calculator's as a hold zone memo. The problem is that the hold zone calculator doesn't care where the position is in its cycle high to low and back.

Okay, what we want is to find those positions with the lowest current price, have enough volatility that you don't just sit in a range bound zone for years at a time, and preferably that have some dividend income to feed future growth. I'd through in a low price, under $30 or so dollars because they seem to have more volatility than those that are pricier.

Netstock, the free stock quote application, has a provision for setting a flag price, both low and high so you could use your calculated hold zone easily. You could set the low price at the price you wanted to buy in at and then only have to take a glance when you are at the computer anyway. I use it to monitor the positions that I inherited from my mother and it has done well by me.

Next, since we want to figure volatility, use the AIM spreadsheet or Newport to put in past prices so we can monitor virtual buys/sells. With either on can create a graph of prices over a period of time. With a little work in Excel one can create a graph that shows prices and dates and then see the extent of the high/low spread and also the length of the cycle.

Overall, I don't think this will take all that much work so I'm going to try it. I'm going to start with the iShares SPY sectors and throw in a few others like them from other ETF providers.

Anybody have suggestions as to good positions they would like to see this tried on?

Best,

Allen