Replies to post #9041 on A.I.M. Users Bulletin Board (AIMUSERS)

[PDAH]

Hi AIMster

I will try and answer that one for ya.

You have fund A = 4300 , fund B = 4600 and fund C = 7000

this averages to 5300 per fund. So here goes

subtract 1700 from fund C portfolio control.
add 1000 to fund A portfolio control.
add 700 to fund B portfolio control.

This re-balances the three funds and adjusts the pc according to the activity that took place in each fund.

This is of course assuming that you sold 1700 of fund C
bought 1000 of fund A and bought 700 of fund B.

Pete

[bernieg]

Hi,
You wrote:Fund A is worth $4300, fund B $4600 and fund C $7000. Say I want to rebalance so that the funds are all equal in value as I think fund C is overweighted.
$4,300 plus $4,600 plus $7,000 equals $15,900.
if you started AIMing those today in combination as one AIM program(fund) your stock value would be 15900 which would make your Portfolio Control 15900.
If you want them all to be equal at the start, simply divide 15900 by 3 (5,300). Add 1000 to fund A, Add 700 to fund B take 1700 from fund C. After doing this you will have 5,3000 invested in each fund. The PC remains the same since you haven't changed the amount of funds invested on day one.
Bernie

[jibes]

Though this won't ans AIMster question direct it brings up a subject I have been thinking about lately and one that was talked about before this I'm sure. When doing long term studies (like 10 years) on blue chip stocks like those in the DOW 30 I have noticed that AIM did quite bad on most issues compared to buy and hold. Very bad indeed!
why?
As I thought about it, it popped into my head that the reason why was because the SHARE-to-CASH balance had become way out of whack. Of course these were tests usually done during the last 10 years when a big bull move was in effect.
toms "velie" takes care of this problem on a temp basis but it could make you a "buy and holder" with a small stake which may or may not be a good thing.
But for the long run a better way might be to do a re-balance every 1 or 2 years or when ever your STOCK VALUE--to -CASH ratio gets way out of whack. So, perhapes JJ's yearly reseting of STOCK to CASH ratio is the right thing to do, esp on the blues.

Jibes
TrendSeekers at:
http://jibes0.tripod.com/trendseeker.html

[Toofuzzy]

Hi AIMster

I see you wrote in a following post that you figured it out but your post has two concepts mixed up which no one addressed.

you wrote:
>>>Say I have three funds working along in one AIM account. Fund A is worth $4300, fund B $4600 and fund C $7000. Say I want to rebalance so that the funds are all equal in value as I think fund C is overweighted. I understand stocks can be bought-and-sold as long as the value is maintained. What, in this instance happens to the Portfolio Control amounts? Does one increase PC for funds A & B by the 100 % of the amount derived from the partial sale of fund C? (This seems right as doing so keeps the same perspective of PC vs actual value that the funds had before the new purchase. But what happens to the PC value of fund C? Is it left alone to whatever the original purchase value was or is it decreased to the value remaining after the sale?<<<<<

If you are truely AIMing all three funds in one AIM account, then as long as you keep the stock amount the same, PORTFOLIO CONTROL does not change. You can sell ALL three funds ($15,900)and as long as you bought lets say $15,900 of IBM the PORTFOLIO CONTROL would not change.

OK another senereo. Lets say you want to split the accounts into three seperate accounts for greater volitility (personally I do not think you have enough funds for that). You could put $5,300 in each account in stock, divide your cash reserve by three, and divide the existing portfolio by control by three and you would be good to go.

To answer what I think your orriginal question was.... you want to own $5,300 of each fund. You will buy or sell whatever it takes to get you there and PORTFOLIO CONTROL will not change because there is no change in stock value (unless you are really AIMing each fund seperately)

If you are really AIMing each fund seperately than you should PROBABLY let AIM take care of what your allocation is in each fund (buying what is going down and selling what is going up).

Hopefully the funds are in different sectors or are different "styles"

Toofuzzy

[Qarel]

Hi AIMster, on rebalancing you have had replies on the lines of:
- in one account, PC doesn't change;
- in a split account, reset all PC's to the share value; or:
- add/subtract 100% of the added/subtracted share value to each PC.

Since you mentioned PC's (plural), I assume you are talking about a split account (each fund its own PC). Now when you have AIMed these funds for a while, share value and portfolio control will differ. Resetting the PC’s, or adding/subtracting 100% of the added/subtracted share value, will change the relation (ratio!) between PC and share value. Those two options still are a good idea, but a third option is to change PC by (New fund value - Old fund value) * PC. For the first fund (4300 > 5300) this would mean multiplying its PC by about 1.23. This would keep your next buys or sells in about the same place, relative to the current price of each fund. For what it's worth!

Regards,

Karel