A.I.M. Users Bulletin Board

[SFSecurity]

Hi Gang, at the http://jfholdings.hol.es/jfholdings/ Examples page are two long term charts comparing AIM and B&H.

The difference between the two is interesting. Over 13 years from market top in 1999, and including the two bear markets of 2000-2, and 2008-9, AIM does 4.84%/year while B&H was 3.45%, significant as an an account of $100,000 with AIM would get a total of $184,863.50 while B&H would get $155,416.25, a difference of $29,447.24, not chump change.

However, the 10 year period starting at the bottom in 2003, and including the 2008-9 bear market, AIM would get $248,729.54 versus $247,144.63 for B&H, a difference of only $1,584.91, quite small.

What this shows that timing is a critical element no matter which approach one takes. Combining market volatility and AIM clearly is important no matter when you enter the market. It also explains why Lichello's AIM results on page 64-71 (4th edition) is so successful. With the almost twice a year from market top to market bottom and back again, AIM captures the volatility, but, since he does not include the typical long term inflation of the market of almost 3%/year, he makes B&H come out worse than the reality would be as shown by JF Holdings examples.

It also explains why various people here have reported the backtesting SPY comes out with trivial differences over the last 5 or so years, with sometimes B&H coming out ahead.

So, going forward, we need to figure out the best combination of actions for all of us, especially people like me who've only been at it for less than 5 years.

Best,

Allen