Replies to post #39399 on A.I.M. Users Bulletin Board (AIMUSERS)

[Toofuzzy]

Diversify by either style or industry

Decide what you want to own and buy one at a time as each Aim account should be started with a minimum of $20,000, $10,000 stock, $10,000 cash.

Use exchange traded funds as they can not go to zero like individual stocks can.

Follow standard Aim.

Not always
Toofuzzy

[SFSecurity]

Hi Ray, Similar to you I wish I had actually read the book when I bought it back in 2002! Oh, well.

So on with the show. At

investorshub.advfn.com/boards/read_msg.aspx?message_id=88614114

there is a bunch of information to check out. Also at

http://web.archive.org/web/20120609073103id_/http://www.aim-users.com/calculator.htm

there is an online calculator for your buy/sell calculations.

Then at

http://web.archive.org/web/20091024074210/http://geocities.com/lostcowboy5/Spreadsheets/

there are a bunch of spreadsheets and other info about AIM, Syncrovest and Twinvest that are worth spending some time with.

I suggest that you look at Tom's (OldAIMGuy) profile at

investorshub.advfn.com/boards/profilea.aspx?user=10112

Tom has been very generous in helping a number of us who are new/newish since I came on the board last September.

I have found it quite useful to just read old posts to get a handle on a variety of issues/problems as I stumble upon them.

The one thing I'd suggest is that you stick with the basic hand calculations for a bit to get the process drilled into your brain, then check out the variations, LD-AIM, AIM-HI, delayed buys/sells, etc.

Then ask questions as they occur. You'll get lots of help here.

An additional tip is to look at ETFs that pay a dividend as a starting point. I'm finding better overall results happen that way. Mostly I've looked at things by backtesting but of the couple of AIM positions I have the one that has a dividend above historical inflation is doing better than the two which either don't have a dividend or a low dividend.

Time spent backtesting is very worthwhile.



Best,

Allen

[OldAIMGuy]

Good morning Ray, Re: expanded Q&A for AIM users.................

This page has a lot of pragmatic questions answered:
http://investorshub.advfn.com/AIM-%22In-Depth%22-Q&A-992/

From there you'll probably have more as you peer deeper into the rabbit hole.

[SFSecurity]

Hi Ray, I forgot to mention one very useful, free bit of software, Netstock. Get it at:

http://www.splitcycle.com/Products/Netstock

He requests a donation and it is well worth it.

I run 9 variations. Some are sector funds, some are things mentioned here and 4 are the portfolios I have - 2 trusts, a beneficial IRA and my personal account. It is quite helpful in looking at a position over time.

Best,

Allen

[ls7550]

Is there any advice anyone can give to someone starting out?

Start simple. AIM is a behavioural tool. Many investors underperform the 'average' (index) due to emotional decisions. AIM steers you towards adding-low, reducing-high.

50/50 stock/bond can broadly compare to 100% stock. For instance http://tinyurl.com/oajojqk

AIM will steer you towards a overall average stock/bond blend over time that is generally appropriate. One tip/trick is to start AIM with slightly less stock i.e. 40/60 stock/bond as that reduces the initial lump sum in at a single point in time risk - but over time will tend to converge on the same overall average stock/bond weightings (similar longer term reward as starting AIM with 50/50).

Initially start with a single 'portfolio' AIM, review once monthly at most, but no less than quarterly and I'd suggest using 10% of stock value as a minimum trade size.

Cost and taxes matter, so strive to keep such costs/taxes to a minimum. For instance for me, being UK, its more cost/tax efficient to hold leveraged ETF's for US stock exposure than it is to hold non leveraged. Whilst 3USL (that provides 3 times the US Russell 1000 index exposure) as a example has apparently relatively high fees (0.75% expense ratio) holding a third of the amount that otherwise would have been invested (two thirds in bonds) generally tracks stocks and works out at a more reasonable 0.25% weighted cost. The lower dividend (none) means that I side step paying 15% US withholding tax on 2 to 3% dividends (0.3% to 0.45% 'saving'). It also means that I'm (or rather heirs) aren't exposed to US estate taxes (as is the case if more than around $60,000 of US assets are held) i.e. my contract is with the Dublin based firm. You do need to rebalance back to a third in 3x, two thirds in bonds periodically (6 monthly to yearly) in order to minimise tracking drift, but that's a relatively small expense - possibly zero if paired in with when AIM trades.

Go figure ... 50/50 stock/bond where the 50 stock is held via a third in 3x, two thirds bonds. = 17% stock (83% bonds). Accordingly I tend to focus a lot more on bonds than I do on stocks. If I achieve several percentage point outperformance on the bond side then that helps overall portfolio gains. I personally find that to be easier than attempts at picking stocks that relatively outperform.

The other benefit that using leveraged ETF's provides for me is that bond liquidity is much less of a concern. If recent stock exposure is say $100,000 that perhaps is being held as $33,333 in a 2x stock (that when combined with $33,333 bonds generally tracks the equivalent of $66,666 invested in stocks) and another £11,111 is held in a 3x stock ETF (together with £22,222 bonds - that in combination tracks the equivalent of $33,333 stock exposure) then if AIM indicates that stock exposure should be increased to $110,000 I can simply sell some 2x holdings and add the proceeds to 3x holdings to increase the overall equivalent stock exposure without having sold any bonds - and generally illiquid bonds earn more than liquid bonds.

In other cases it may be appropriate to sell a bond that had spiked upwards in price as stocks had declined in price.

In yet other cases its appropriate to trade losses paired with gains in order to reduce capital gains.

Generally (but not always) its appropriate to review the entire portfolio as and when AIM indicates a trade which helps to keep costs down.

AIM can be as simple (single portfolio wide AIM, once per quarter reviewed) or as complicated (multiple AIM's, bond/tax harvesting etc.) according to whichever better suits your needs/desires. AIM will advise you of how much to hold and when to trade, and steer you to trade in a more appropriate manner. Even if AIM just achieves comparable rewards to the index, more often that will be better than a lot of other investors (who typically buy after recent strong gains (relatively high) and capitulate after losses (sell-low) and end up underperforming the 'average' (index)).