Hi CindyH, Re: 2x Funds - both bear and bull funds......
These funds tend to have relatively high internal costs. Also, they are built to match the changes in an index on a daily basis, not necessarily consistent with yearly efforts.
There are three things that an investor can look at as goals. They're not mutually exclusive, either.
1) Price Appreciation over time
2) Dividend Capture ofer time
3) Profitable Volatility Capture over time
AIM is a method of #3 but will work with either #1 or #2. One's Total Return usually will be some combination of the three. In the case of AIM users we can improve our total return through methodical capture of the markets' price movements over time. This can be with positively correlated or negatively correlated investments.
The very short list of things we can control as investors includes our own costs and also, through selection the annual costs of the funds we choose (assuming we're not looking at individual company stocks). So, selecting for low cost investments helps our total return as does keeping our trading costs as low as practical.
AIM doesn't necessarily need #1 as is shown in Mr. Lichello's study. We can do well with cyclical stocks and industries even if we don't see "higher new highs" even over years. As long at there's reasonable percent change between annual highs and lows, AIM should be able to trade profitably.
Hope this helps,
Tom
Port Washington, WI 53074
