Replies to post #38344 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

Hi Jaiml RE LETF's

How would one go AIM'ing such a portfolio?

Just paper AIM S&P500 (SPY) as your would normally, but adjust the 50/50 2x/bonds to whatever AIM stock value was being indicated. $8000 SPY stock value, $2000 cash, initially held as $4000 SSO, $6000 bonds.

Later if AIM was suggesting selling down from $10,000 SPY value to $9000 then adjust SSO to $4500 value. That has the effect of realigning back to 50/50 weightings in SSO such that its more likely to track the 1x more closely. You should consider periodically rebalancing SSO back to half the AIM SPY stock value (half as much in SSO as AIM SPY stock value amount) - perhaps once a year if AIM hadn't indicated any trades at all that year.

Regards.

Clive.

[SFSecurity]

Belt and suspenders here, before I go off half cocked...

If I read this correctly:

...assuming one's desired fixed income / equity asset allocation is 20/80....

then we would have 20% in a good/better than US Treasury bond, maybe an A+ corporate bond, 40% on SSO or equivalent, and 40% in TIPS or maybe something like HSBC with a maturity of April 2015 paying 2.79% at a price of 100.046. - I selected that as I hate paying more than par for bonds. Is this correct or does the HSBC belong in the 20% allocation and something different in the 40%?

My understanding of TIPS is that their rate depends on what underlying inflation is and that they always pay par at end of life. Do I have that correct?

When my mother was alive we managed to get an odd lot of some bonds at 85% of par from an estate. They were sold at par or slightly above earlier this year. Not huge amounts of money but nice. The broker who now is getting greedy turned us on to them. I might not have started looking at handling the estate myself had I not noticed signs of greed.

Thanks,

Allen