AIM UK

[ls7550]

Indicated Cash reserves 39% (RV in Low Risk).

I've changed the iBox table to be percentage based rather than showing capital amounts. I've also modified the table to be based on Level Cost, Proportional Step Ladder rather than Linear Step Ladder.

The bottom price now reflects a 5682 FT100 mean at 4% dividend yield as being the present date fair value which was identified using a regression series that dated back to 1918. Based on that regression the Ladder TOP and BOTTOM should be incremented at 5.6% p.a.

An exceptional rise to a 8% market yield would reflect a halving of fair value and that was set as the Ladder bottom. I then determined the Ladder top by using 5682 (the mean) as the current price and tweaked the top until the Ladder indicated 50% cash reserve.

Rarely has the dividend yield spiked to 8%, it has however during the 1970's spiked as high as 12%, so the Ladder would be fully loaded into stocks at around such a 8% yield level and miss a further 50% decline should the yield continue on up to 12% levels. Such extremes however are typically very short lived and subsequent 100% gains arise within a short timescale, bringing the price back into the realms of the Ladders range.

The iBox Ladder is therefore very conservative and for a more aggressive stance you could divide the indicated cash reserve by 1.5.