A.I.M. Users Bulletin Board

[ls7550]

AIM has a broad natural tendency to decrease the number of shares held over time, in effect profit takes to dump the gains into cash. That's amplified further if dividends are also dumped into AIM's cash.

For a retired individual that is drawing income from that cash reserves that tends to balance out if dividends are being reinvested into shares/stock.

For accumulators, AIM's cash will tend to expand. Options include allowing cash to build up and then starting another AIM (further diversify the portfolio); Or to use Vealies where instead of selling shares you just increase the PC by half the value of the shares that would otherwise have been sold by AIM (without actually selling shares). A extension of that is to use the vWave and if your cash reserves are already higher than suggested by the vWave and a AIM sell trade is being indicated then 'pull a vealie' (otherwise sell the number of shares/value as indicated by AIM).

The vwave can also be used to assess whether current AIM cash reserves are too high and if so add to a existing AIM or start a new one.

For backtesting, the vealie is the simplest to 'code', if AIM cash > 50% and AIM is indicating a sell trade then leave the shares as-is and increase PC by half the AIM indicated trade value, otherwise apply the standard AIM rules. But that's not as good as using the Vealie that might be suggesting that perhaps 66% cash might be a reasonable cash reserve level ... or whatever.

Alternatively, depending upon what you 'deposit' (invest) AIM's cash in, then you might be OK with letting the levels of cash rise to relatively high levels. One of https://tinyurl.com/ssmhzk9 for instance as AIM's 'cash' (that third one is like a Harry Browne Permanent Portfolio but where instead of 25% in each of Short Term Treasury and 25% in 20 year Treasury I just lumped 50% into 10 year Treasury). The second is a form of Ray Dalio 'Safe' choice. The first is my personal preference (as a UK investor a third each in GB Pounds Treasuries, US$ stocks, and gold is a form of three way 'currency' diversification. Blend that first one 50/50 with stocks and ... https://tinyurl.com/t8uyf9z

Clive.