AI
Monday, June 03, 2002 2:27:11 PM
Hi TwoMC,
Here's what the pictures look like:
This shows AIM strictly By The Book with 10% SAFE.
This shows your modification using 5% of Portf. Value as SAFE.
The main difference that is evident right away is the deeper utilization of the available cash reserves in each cycle. Nearly depleted in each case, it would afford a better total investment at the bottom of the cycles.
It is no surprise then that the more fully invested 2MC method wins on total return. However, many times when we fiddle with these things the Return On Capital At Risk isn't as good. This means that we've only gained on total return at the sacrifice of increasing the portfolio's general risk exposure.
The surprise here is that even with the deeper buying on each cycle, the average value at risk only rises slightly. BTB AIM averages 66.67% invested for the 90 periods where 2MC is 68.77% invested. So, for a nominal increase in the average amount at risk, 2MC's method gives a 32% better total return and a 28.5% greater ROCAR.
Nice work TwoMC!!! Thanks for sharing it with us.
Best regards, Tom
Here's what the pictures look like:
This shows AIM strictly By The Book with 10% SAFE.
This shows your modification using 5% of Portf. Value as SAFE.
The main difference that is evident right away is the deeper utilization of the available cash reserves in each cycle. Nearly depleted in each case, it would afford a better total investment at the bottom of the cycles.
It is no surprise then that the more fully invested 2MC method wins on total return. However, many times when we fiddle with these things the Return On Capital At Risk isn't as good. This means that we've only gained on total return at the sacrifice of increasing the portfolio's general risk exposure.
The surprise here is that even with the deeper buying on each cycle, the average value at risk only rises slightly. BTB AIM averages 66.67% invested for the 90 periods where 2MC is 68.77% invested. So, for a nominal increase in the average amount at risk, 2MC's method gives a 32% better total return and a 28.5% greater ROCAR.
Nice work TwoMC!!! Thanks for sharing it with us.
Best regards, Tom
Port Washington, WI 53074
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