More ponderings...
The movie Little Buddha dramatizes the story of the reincarnation of a Tibetian Lama. Along the way it gives the story of Siddhartha, who became the Buddha. The interesting part of his journey, and what led to the core of his teachings was that on his quest he took to extremes at first, opulence versus austerity, indulgence versus denial. Whilst meditating he happened to listen to a teacher going by on a boat, with a student with a sitar. If the string is too tight it may break, if the string is too loose, it won't play the right note. But it's when it's not too taut, or too loose it's the middle way that works best.
Which takes us in a roundabout way to my ponderings on AIM. We can visualize a similar tension between Lichello's idea of AIMing the whole portfolio versus individual stocks. The whole portfolio might well be too loose, as it grows in size and possible number of holdings the internal cancellation effect of those moving up versus down will slow the rate of change. One can easily imagine spending a long time in the hold zone, at least in a more settled market than we've got now! On the other end, AIMing individual holdings, without any rebalancing adjustments will eventually have the most volatile become the largest holdings - maybe having too tight an influence, so to speak.
So, what is the "middle way" here? Grouping holdings together to create virtual mini-portfolios, perhaps. These should be more active than the portfolio as a whole, but less so than individual stocks. My point of consideration at this point is grouping logic, i.e, what's the most logical combination? I've got two planes of organization - type and geography. For types I've got equity only, income only and equity/income blend. For geography domestic, foreign and global. Does anyone have a sense that favoring one logical grouping would make any great difference versus the other? Real estate and commodities are two other groupings, though outside the scope of the others mentioned above. Just wanted to mention them as they are a part of the overall portfolio. I'm sort of leaning toward geographic organizaion, but who knows, maybe it's six of one, half dozen of the other any way you go.
Pondering, pondering...
AIMster
