I am testing it with a S&P 500 Fund
Hi, Jim,
To continue from the last post...
AIM is a mechanism to capture the volatility of a security (or fund) as the price goes up-and-down over time. It implements the often spoken of, but seldom implemented wisdom in the market maxim to "buy low, and sell high." It does so by emphasizing taking a contrarian trend, i.e., if people are buying, you're selling, they're selling, you're buying. The goal being to profit on future retracements over up-and-down cycles.
Point of all that being that the S&P 500 is not the most volatile of investments and you won't see the benefit from using AI with it as you might other holdings. A sector fund, for example,will still give you the benefit of being in a fund, rather than a single stock but is likely to move around more in price than something as broad-based as the S&P 500.
Using SPY (an S&P 500 ETF) from 1 Jan 2000 through present returns this (from the AI historical testing data the "conservative" configuration setting (under the tools menu):
AUTOMATIC INVESTOR HISTORICAL ANALYSIS FOR SPY
======= PERFORMANCE =======
Current Portfolio Value: $9,577.51 (107 shares owned)
Profit or (Loss): ($422.49)
Simple Return: -4%
Annualized Return: 0%
Buy/Hold Portfolio Value: $7,140.20 (79 shares owned)
Buy/Hold Profit or (Loss): ($2,859.80)
Buy/Hold Simple Return: -29%
Buy/Hold Annualized Return: -4%
Return on Capital at Risk: -6.11%
Average % Capital at Risk: 69.09%
Analysis run on 26-May-09
Daily Price Data Chosen
Using IYE the energy ETF for the same period:
AUTOMATIC INVESTOR HISTORICAL ANALYSIS FOR IYE
======= PERFORMANCE =======
Current Portfolio Value: $16,202.21 (337 shares owned)
Profit or (Loss): $6,202.21
Simple Return: 62%
Annualized Return: 6%
Buy/Hold Portfolio Value: $18,506.07 (641 shares owned)
Buy/Hold Profit or (Loss): $8,506.07
Buy/Hold Simple Return: 85%
Buy/Hold Annualized Return: 7%
Return on Capital at Risk: 125.56%
Average % Capital at Risk: 49.40%
Analysis run on 26-May-09
Daily Price Data Chosen
Note while it didn't seem to do as well as buy-and-hold in terms of dollar amount at the end of the test, it did return what it did with less than 50% of your capital at risk!
Best,
AIMster
AI
