Friday, June 12, 2020 4:42:09 PM
Starting a retirement period at the likes of 1980's/1990's Bull phase and typically rewards were good/great, didn't really matter if you were 50/50 or 100/0 (stock heavy would have seen more gains, but if rewards are 'enough' either way = success).
Starting in the 1970's or even from 2000 is a different matter. The sequence of returns were harsh for some (stock heavy).
AIM of S&P500, price only, no dividends or cash interest considered, and in real (after inflation) terms that rose by around 33% since 2000. Over those years cash as 10 year Treasury Bond, along with S&P dividends, combined 50/50 averaged 3.2%. The AIM started and ended with around 50% cash, i.e. AIM identified that as the 'optimal' choice over those years. Which is nice outcome, as a 50/50 stock/10yrT investor by luck also hit that appropriate choice. Looking at how AIM, 50/50 constant weighted (yearly rebalanced), and all stock performed since 2000, with a similar 3.2% inflation adjusted income being drawn, and ...
All-stock down from $10,000 start date value down to $3000 at the 2009 financial crisis lows ... Ouch! Some, confident in seeing the 1980's/1990's great gains/rewards, ten years into retirement 2000 retirement, panicked and capitulated to 'save what little was left' (30% left of their original retirement pot).
The 'by luck' constant weighted 50/50 investor did much better. And at the end of September 2019 date was seeing their portfolio up nearly 20% in inflation adjusted terms relative to the January 2000 start date level. AIM in contrast was up over 33% :)
So even when a near optimal constant weighted (50/50 yearly rebalanced) investor by chance had selected the appropriate 50/50 choice, AIM still bettered them. AIM in being variable/dynamic weighted adjusted the weightings appropriately over time, 50/50 wasn't always the best choice and AIM revised things accordingly, to good effect.
Robert Lichello expressly stated that with AIM, safety is paramount.
Clive
PS AIM did run out of cash at the 2009 lows, didn't have cash enough to fulfil AIM buy suggestions and the above AIM includes not having enough cash, i.e. didn't buy more shares than what it had the cash to buy shares with. If surplus cash could have been found/used - then the AIM result would have been even better.
Starting in the 1970's or even from 2000 is a different matter. The sequence of returns were harsh for some (stock heavy).
AIM of S&P500, price only, no dividends or cash interest considered, and in real (after inflation) terms that rose by around 33% since 2000. Over those years cash as 10 year Treasury Bond, along with S&P dividends, combined 50/50 averaged 3.2%. The AIM started and ended with around 50% cash, i.e. AIM identified that as the 'optimal' choice over those years. Which is nice outcome, as a 50/50 stock/10yrT investor by luck also hit that appropriate choice. Looking at how AIM, 50/50 constant weighted (yearly rebalanced), and all stock performed since 2000, with a similar 3.2% inflation adjusted income being drawn, and ...
All-stock down from $10,000 start date value down to $3000 at the 2009 financial crisis lows ... Ouch! Some, confident in seeing the 1980's/1990's great gains/rewards, ten years into retirement 2000 retirement, panicked and capitulated to 'save what little was left' (30% left of their original retirement pot).
The 'by luck' constant weighted 50/50 investor did much better. And at the end of September 2019 date was seeing their portfolio up nearly 20% in inflation adjusted terms relative to the January 2000 start date level. AIM in contrast was up over 33% :)
So even when a near optimal constant weighted (50/50 yearly rebalanced) investor by chance had selected the appropriate 50/50 choice, AIM still bettered them. AIM in being variable/dynamic weighted adjusted the weightings appropriately over time, 50/50 wasn't always the best choice and AIM revised things accordingly, to good effect.
Robert Lichello expressly stated that with AIM, safety is paramount.
Clive
PS AIM did run out of cash at the 2009 lows, didn't have cash enough to fulfil AIM buy suggestions and the above AIM includes not having enough cash, i.e. didn't buy more shares than what it had the cash to buy shares with. If surplus cash could have been found/used - then the AIM result would have been even better.
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