A.I.M. Users Bulletin Board

[ls7550]

I watch the Accumulation/Distribution of IAU over time. It gives good correlation with price change most of the time.

Hi Tom

Thanks. Found this web site https://www.macroaxis.com/forecast/IAU/Accumulation-Distribution

50/25/25 stock/gold/cash has historically worked well as a broad asset allocation

PV

and

PV Monte Carlo

Layering AIM on top, applying 100% of capital to a AIM of stock, 50% to a AIM of gold, and combined that has averaged similar to 50/25/25 stock/gold/cash, but added around 1% to total returns



So if for instance a 4% SWR works OK with the constant weighted 50/25/25, then AIM doing similar but with a 1% higher reward ... supports a 5% SWR (at least conceptually)

For those AIM's monthly reviews, 10% sell SAFE, 0% buy SAFE, 5% of number of shares minimum trade size, applied to price only values, no addition of dividends/cash interest ... which yields a guide % CASH figure. Where that is then applied to actual allocation/exposure (total returns). i.e. if stock AIM indicates 60% cash then 100% of portfolio value applied to that = 40% stock exposure indicated. If AIM of gold indicates 70% cash then 50% of portfolio value applied to that = 15% gold exposure indicated. The history did have some mild leverage being indicated in 2003 (10%, so 5% in 2x stock/gold ETF's for a while).

AIM alone can work well, but the likes of the A/D might be employed as a shorter term potential indicator of when to actually realign actual exposure to AIM indicated exposure levels. A potential to add to overall rewards, similar to cash - where if you can get a bit more extra return from 'cash' than T-Bills so that adds to overall rewards (Toofuzzy for instance I believe periodically Sells Options for the time value benefit at the price/amount of where AIM would trade anyway).

The first two charts have the data ordered for each of stock and gold as the first values as that provides better visualization of how stock and gold weightings varied over time (which is less apparent when stock or gold is the second or third asset in a stacked bar chart). AIM did a good job of scaling up/down stock/gold exposure levels in a appropriate manner over time.

Gold isn't a consistent hedge for stocks, but the total portfolio max drawdowns is indicative that it can work well more generally, nominal drawdowns being relatively mild/modest and relatively short-lived.

Clive