Thursday, October 21, 2010 5:27:20 AM
Hi AIMster
Lichello insisted on for AIM is to have half of what's being used in a given program have a constant value. In other words, the stock component can be variable, but for the cash side he wanted, well, cash. So, if you're trying to AIM two variable value items against each other, if they both decline, as has happened with my experimentation in the 3x funds variety then you don't have the ready cash to feed into the "machine" when AIM asks for more
But if you have two underline investments that move in opposite directions, such as the fixed yield long dated bonds versus stocks ???
i.e. as stocks earn more (earnings yield rises), fixed yields (bonds) become less valuable and visa versa.
I believe there are leveraged forms of TLT available. But as LT's are around half as volatile as stocks I guess it might make sense to use 2X LT for each 1X of Stocks. Or perhaps just 1X each of a EDV and Dow pairing.
Best. Clive.
Lichello insisted on for AIM is to have half of what's being used in a given program have a constant value. In other words, the stock component can be variable, but for the cash side he wanted, well, cash. So, if you're trying to AIM two variable value items against each other, if they both decline, as has happened with my experimentation in the 3x funds variety then you don't have the ready cash to feed into the "machine" when AIM asks for more
But if you have two underline investments that move in opposite directions, such as the fixed yield long dated bonds versus stocks ???
i.e. as stocks earn more (earnings yield rises), fixed yields (bonds) become less valuable and visa versa.
I believe there are leveraged forms of TLT available. But as LT's are around half as volatile as stocks I guess it might make sense to use 2X LT for each 1X of Stocks. Or perhaps just 1X each of a EDV and Dow pairing.
Best. Clive.
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