A.I.M. Users Bulletin Board

[LemonHead]

Re-Balancing:
As I have matured with AIM I have struggled with the concept of when to re balance or not. I know that Lichello and other's probably covered this with the "Basket" concepts but as usual I missed the ultimate value some how. Here is what I have observed.

Several times now I have seen my wife's IRA hit a peak or low and no buys or sells were generated by the individual equities that make up her IRA. This just can't be the best management in the long run.

While driving down the road the other day it dawned on me that in "Newport" I could make up a stock symbol (EVEIR) to represent my wife's IRA account and track it weekly just like any other equity. I guess it would be just like tracking NAV (net asset value). The idea is that AIM would eventually ask for sells or purchases and this action would force me to re balance with in the basket at that time.

The first question was is the timing right? Right now her IRA is at the mid point of peak/low value. So yes, with the proper Buy/Sell settings, AIM will ask for action at the previous peak/low values. I also plan to start one symbol each once the peak or low has been re balanced so that I will have three models to review (mid, low & high point).

The second question was what denominator to use for share quantity and what is the minimum dollar amount for trading 10% of those shares? In her case I settled on 5000 shares. I looked at average price per share in her Ira and tried to come up with a count that worked well with trading 10% around the core or NAV. I also wanted the dollar amount to trigger a meaningful re balance based on the buy/sell flags generated by AIM.

The third question was what method should I use to determine which equities to buy/sell for the re balance. This I think will be drivin by asset allocation and is work in process for my "LemonHead". All thoughts are welcome!

I also realized that I will be using the "Add/Delete" cash option monthly mainly due to the dividends and income checks. Any new equity buy/sells will also have to have proper addition or deletion.

Finally I concluded that if this works as my vision revealed, that at some point this may be the only aspect of AIM that I really have to track on a weekly basis freeing up more time for me.

Here's a pic of my notes in Newport...



Discussion?

Keith
PS - On the lighter side of life. My wife's Strawberry patch is putting smiles on my face every night. I've also had to up grade my fishing tackle cause my bass are 5 to 7lbs now. {smile}