I have read about two other approaches which have some resemblances to AIM: Constant Value Investing and Core Position Trading.
In the description of Constant Value Investing that I read, an investment is allowed to rise or fall by 10%, then it is rebalanced back to the original cash value by either selling some and adding to the cash reserve or buying more from a cash reserve. AIM on the other hand (as I understand it) only rebalances back to the margin of the 10% band, and also increases the Portfolio Control when buying (by half the purchase value). When compared with Constant Value Investing, AIM would appear to (a) increase future buying because the Control figure is increased, but on the other hand (b) reduce buying because rebalancing is only back to the bottom of the 10% band, and (c) reduce selling by only rebalancing back to the top of the 10% band.
In the version of Core Position Trading that I read about, every time an investment falls by 10%, 10% more is bought, and every time it rises by 10%, 10% is sold, without reference to current and starting values. AIM and Constant Value Investing on the other hand do not sell until the original value (or increased Portfolio Control figure in the case of AIM) has been regained and exceeded by 10%.
I wonder if the is any theoretical and/or experimental work comparing the outcome of these approaches.
