Hi Allen : re yahoo adjusted close prices
As I understand it yahoo adjusted close prices account for all dividends and splits i.e. as though all dividends were reinvested (total return). The other prices reflect just prices only.
In some cases the prices only figures may jump/drop a lot if there is a split - and accounting/adjusting for those and for dividends more directly/individually is awkward so its the easier choice to just use the adjusted close figures when looking at total gains.
When you're looking at total gains you also want to account for what cash might have earned, as you likely wouldn't have 50% cash reserves sitting idle in the account earning nothing. VFISX has reasonably long history on yahoo so is one that I tend to use for simplicity. Another choice might be to uplift cash by a factor of 1.04^(1/12) each month. Multiply the prior months cash reserve by that figure (1.003274) equates to a consistent 4% yearly cash interest rate.
Yet another choice is to use the close prices (and not adjusted close prices), and just leave cash unchanged, which would provide the price only excluding all income (dividends and cash interest) figure - but being mindful of splits that may have occurred. That's a crude form of approximating real returns (IMO) as it might be assumed that the combined portfolio's dividend and cash interest might have been enough to offset inflation. The easiest way to to that in that spreadsheet would be to drop column E values (close prices) into column G (adjusted close prices) and clear out the VFISX columns.
When you've backtested as many AIM holdings as I have over the years, you'll come to see that AIM doesn't mathematically add any value in a broad sense compared to had you held a similar average amount as what AIM averaged (such as 50% cash reserve (50% stock exposure)). Of course there are differences in individual cases. What AIM does however is instil a greater prospect of actually achieving that mathematical average by trading relatively small amounts in a guided (AIM indicated) manner. If for instance AIM averages 50% cash (50% stock) then compared to a buy and hold investor who also averaged 50% cash/50% stock by perhaps rebalancing once yearly what you tend to see in practice is mathematically similar results but where in practice the manual yearly 50/50 account failed to take the appropriate actions at the appropriate times due to fear/greed and as a result having relatively lost out.
In the UK out fiscal years run to April years (Catholic calendar). At the end of March/early April 2009 at the financial crisis lows many were not rebalancing and some even sold/reduced to move to 'safer' alternatives. Following AIM and you'd have been at/near all-in at the lows. Such human/emotion driven drift from policy tends to have a significant impact upon longer term outcomes. Very broadly many investors underperform the mathematical average gain by around 3% annualised. i.e. instead of perhaps a 8% annualised gains over x number of years, they in practice might see 5% annualised after costs and (mis)management. Such failings aren't restricted to private investors alone - many professionally managed funds fall foul of the same human errors (in fairness equally some don't and some manage to exploit opportunities).
As such you don't need to be exact with AIM, its more of a guide that steers you towards being a better portfolio manager where results compare to mathematical averages rather than lagging the mathematical average as what many non-aimers achieve in practice.
Another factor to be wary of is the apparent LIFO gains, where some stock was bought and later sold at perhaps a 30% higher price. There is a counter (dark) side to that as if after adding more shares the price continues to decline you have also scaled up (paper) losses than had you not added more. Increased the losses and increased the risk so-to-speak. The benefits (LIFO) and dark side tend to broadly cancel.
AIM is like having a good financial manager watching over you - who nudges you periodically to say I think you should buy some more of x, or reduce some of y, rather than you being left to your own devices and where often private investors make the complete opposite choices.
Chilly but blue sky Saturday morning here in London, have a good weekend.
Clive.
News 
Market Data 
Discover 
