A.I.M. Users Bulletin Board

[ls7550]

Perfect time to start a new classic 50/50 AIM

There's a rather unique situation occurring at around present Dow price levels that anyone who is encountering difficulties in deciding how much to invest into stocks for the first time might like to consider.

From http://www.indexarb.com/dividendYieldSorteddj.html Recent Dow Yield = 4.56%

From http://en.wikipedia.org/wiki/Dividend_yield general Dow High/Low price values considered to occur at 3.2% and 8% dividend yield levels respectively. Also from that same page Maximum historical yield = 15% (1932) and minimum = 1.4% (2000).

A 4.56% yield on a 7000 Dow = $319 indicated dividend value

Which implies price ranges of Dow=2126 for 15% yield, 22800 for 1.4% yield, 3987 for 8% yield and 9968 for 3.2% yield.

If we stochastic either the 3987 to 9968 price range or the 2126 to 22800 price range against the current 7000 Dow price level then both result in around a 25% value being indicated.

If we use a proportional ladder on those both of those price ranges then both indicate around 50% stock exposure being indicated.

As the stochastic measure doesn't proportion very well the proportional ladder is generally the better choice of indicator. Which implies that a new AIM account started with the original classic AIM settings of 50/50 stock/cash will likely serve well in the forward time direction.

For reference here's the Ladder for the larger 15% yield down to 1.4% yield price range, which has been set to a $100,000 assumed available investment fund amount.

 
 Dow        Indicated Stock 
            $ amount 
  
 22800      0 
 21518.1021 2500 
 20308.2771 5000 
 19166.4728	7500 
 18088.8649 10000 
 17071.8439	12500 
 16112.0035	15000 
 15206.1288	17500 
 14351.1856	20000 
 13544.3104	22500 
 12782.8007	25000 
 12064.1057	27500 
 11385.8183	30000 
 10745.6667	32500 
 10141.5067	35000 
 9571.3148	37500 
 9033.1811	40000 
 8525.3032	42500 
 8045.9800  45000 
 7593.6062	47500 
 7166.6663	50000 
 6763.7306	52500 
 6383.4494	55000 
 6024.5489	57500 
 5685.8271	60000 
 5366.1495	62500 
 5064.4453	65000 
 4779.704	67500 
 4510.9719	70000 
 4257.3488	72500 
 4017.9854	75000 
 3792.0798	77500 
 3578.8755	80000 
 3377.6582	82500 
 3187.7542	85000 
 3008.5272	87500 
 2839.377	90000 
 2679.737	92500 
 2529.0726	95000 
 2386.879	97500 
 2252.6801	100000 
 

The above Ladder has a 2500 Level Amount per step, and a proportional 5.957% interval between each step.

Clive.