Hi Toofuzzy (and OldAimGuy),
So, from Tom’s latest view, SAFE should/could be set and kept at 10 on the buy side and zero on the sell side, with Vealies used when cash exceeds the desired level. That keeps it simple.
I understand that lower SAFE settings for less volatile securities will lead to more trades – but smaller and less profitable ones, so as you say, is there a lot of point?
“I own the whole market (large, small, foreign, REIT, BOND) and I ALWAYS want to own them.”
I’m interested to know how you decide what proportion each should be in your portfolio. Large, small, foreign and REIT will be positively correlated, and bonds negatively (usually, and government, not high yield).
Regarding the use of moving averages with AIM, allowing you to do one big sell at the top and one big buy at the bottom - I suspect very often things won’t behave as neatly and as cooperatively as that, but it’s an interesting idea. It seems to be trying to combine contrarian investing with trend-following. I’ve had a quick look at what the difference would have been with my gold miners fund over just over a year. Just a small, limited comparison, but it seems that in this case pure AIM would have ended up with having purchased more additional shares at a slightly lower average price than using a 13/30 SMA overlay. Fairly obviously the moving average modification requires the price to recover a bit before a buy is permitted (and the reverse at the top), and this did cause a lower priced buying opportunity to be missed in this particular case. This case is not yet concluded of course! AIM is currently indicating another buy, which I will execute if it’s still there at the end of this week when the 30 days since the last buy are up.
It could be an interesting week, following the Cyprus bail-out debacle!
Daisy.
