A.I.M. Users Bulletin Board

[OldAIMGuy]

Good morning VG, Re: Question #3.........................

#3 - v-Wave interpretation......
The v-Wave was created to help gauge what starting cash reserve and ongoing reserves would be appropriate for the current market risk. The "Short Term" v-Wave data stream is relatively new, starting in mid 2019. It looks at market potential and risk with an 18 month view. While no where as deep a database as the traditional v-Wave it, so far, has seemed to act as a lead indicator for the standard 3-5 year v-Wave view.



#2 - The v-Wave overall is a conservative estimate of how much cash would be appropriate for either individual company stocks or a diversified mutual fund. If it shows 60%, it is indicative of 60% cash being appropriate for current market conditions. Note on the histogram above that at the bottom of the Covid-19 market drop it was suggesting just about 15% starting and ongoing cash. The ST v-Wave was even more aggressive suggesting nearly no cash be held in reserve (almost 100% invested). In that regard, the current reading could be considered somewhat bearish.

#1 - Some use the v-Wave go gauge just the starting cash and let AIM control it afterward. Some use it as a consideration for ongoing cash levels, too. Some factor the v-Wave reading by the BETA of the investment of choice. There's no particular right or wrong, just whatever feels comfortable. The idea was to come up with something more meaningful than just a "one size fits all" cash reserve with traditional AIM.

Best wishes,
OAG Tom