Hi Squashthebug,
I am usually being taken to task for giving complex answers. This time I will deviate from my urge to go into higher mathematics to give my two bits worth of wisdom. The comparison of AIM with Buy and Hold is not fair and means nothing. Pay it no heed.
People who claim B/H works are liars. They secretly do something entirely different from what they are assumed to do:
They BUY, then HOLD for a while till the share price is quite high, then they HOLD for some more, and SELL after the share price has dived to below the Buy Price. Then they lick their wounds for a few years en when the stock price is high again they do IT all over again.
AIM outperforms B/H 99,99 % of the time in the real world. The first reason is the one I explained above: Only a very few B/H investors SELL. . .the Heretics they are. . .at the top of the price peaks, and when they do they are no longer B/H investors but Buy Low/Sell High investors, like AIMers are.
The second reason that AIM outperforms the B/H investing technique is that the REAL %-yield on an AIM investment is actually to be calculated by the ROCAR or ROTAI method, which takes into account that on the average far less capital is tied up AS investment. . .this as is demonstrated by the Cash Equity Ratio (CER), which is greater than zero, on the average, and this advantage is quite apart from the fact that the smaller average investment is exposed to less absolute risk per unit profit.
So, there it is. Apart from a higher yield per invested dollar by virtue of the AIM Methods, the AIM investor also runs less risk of suffering a loss, if things go wrong
AIMers have their cake and eat it too!
Bon apatit.
