A.I.M. Users Bulletin Board

[ls7550]

Hi Tom

I see that GBTC, basically a stock/fund whose value is mostly comprised of bitcoins such that the share price changes somewhat reasonably reflects Bitcoin price changes, for 2016 to recent had a 28% CAGR. In contrast AIM of GBTC, monthly reviews with classic AIM settings, yielded a 32% XIRR.

As you know XIRR is like CAGR but where it accommodates irregular cash flows - as is the case for AIM, basically reflects the annualized gain achieved relative to the actual amount of $$$ invested (that varies over time due to AIM trades). If you had another AIM that bought as one sold, and vice versa then the weighted XIRR's might reasonably reflect your actual gains.

For gold since 1968, weekly reviews classic settings the XIRR was 20%, whilst gold just bought and held yielded a 8% CAGR. Add in yet other assets/stocks such that your cash tends to remain continually fully deployed and XIRR measures will tend to reflect your actual overall portfolio CAGR.

I don't know the actual correlations of Bitcoin to other assets, but there is a prospect that in some cases AIM of bitcoin might be buying when another AIM is selling and vice-versa.

IIRC Steve (Grabber) used to pretty much run his AIM's that way, as one sold look to deploy the cash sale proceeds into another AIM that was signalling a buy. In effect running many AIM's on paper, not real money, alongside real AIM's where real money was actually invested. AIM tends to do a pretty decent job of achieving reasonable XIRR rates of returns.

Somewhat Buffett style, where he considers his main role to be a asset allocator i.e. find appropriate places into which cash thrown off by other parts of the business/portfolio can be deployed. Like AIM'ers, he too also tends to not deploy all of cash reserves, primarily because his business model (insurance) might have sudden unexpected call upon large amounts of cash. For others with less need to have instant/large cash reserves there may be little need to hold much/any cash. The hardest part is finding appropriate investments with inverse correlations. If everything is down and AIM is flagging 'buy, buy, buy' and nothing is selling, then you can't actually take advantage of those opportunities. Also as part of that as a asset allocator you also have to consider the limits of how much capital you might deploy into any one asset such as Bitcoin. For Bitcoin IMO it would be unwise to invest any more than a relatively small amount, perhaps no more than 5% of your total portfolio value at most.

PV

I'm not really a smart phone user, more a laptop'er, nor do I use MS, but its nice to see a AIM app for those that do.

Clive