A.I.M. Users Bulletin Board

[AIMStudent]

Re: AIM vs Buy/Hold....................

As a follow up to post# 44113: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=153514055

Below are three runs of the broad market (SPY) over the past 5, 10, and ~27 years.

The model represents Lichello's original "vanilla" model (with exceptions noted below):

• Stock-to-cash ratio: 50%
  
• Buy & Sell SAFE %: 10%
  
• Minimum shrs to trade: 1 (Note: In examples in the book, it appears this is 2 minimum)

Exceptions:

• Due to the low interest rate environment that we've experienced, I've set return on cash to 0%.
  
• Buys and sells based on Next Buy and Next Sell Price, rather than evaluated at month end.
  

No allowance for modifiers identified in this forum:

• Higher starting stock-to-cash ratio (Also endorsed by Lichello in subsequent revisions of the book.)
  
• 30-day moratorium between buys
  
• Increase and decrease Buy SAFE % after buys and sells
  
• Minimum buy and sell amounts based on stock value or Portfolio Control
  
• Vealies

As can be seen in a market that has historically gone up, Buy & Hold beats AIM due to:

• Starting with initial portfolio allocation to stock at 50% of total capital
  
• More sells than buys, resulting in large cash build up and a reduced number of shares held

Returns could obviously be made more favorable using modifiers discussed in this forum.

-AIMStudent