A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi K, Re: AIM Insurance....................

We buy insurance for our other assets, so buying it for our portfolio of investments seems to be a good idea. When our portfolios are 'high' we should have more insurance (cash) for that high value. When prices are 'low' we don't need as much.

So, house, car and "portfolio" insurance all seem to be good things. How we manage our insurance (cash) can be simple (money market funds) or more complex. A more complex method of managing that insurance could, as you mention, include selling some long term put or call options. It could also include a ladder of various bond fund maturities to enhance yield.

In reality, using AIM is really two separate businesses:
1) Running a successful Equity Warehouse and
2) Running a successful Savings and Loan bank

When interest rates were more market sensitive (higher) it was easier to run the Savings and Loan bank. With suppressed interest rates we have to be a bit more creative.

Best wishes,
OAG Tom