Replies to post #42827 on A.I.M. Users Bulletin Board (AIMUSERS)

[Toofuzzy]

You can either start new Aim programs or have something to live on if retired.

Toofuzzy

[OldAIMGuy]

Welcome TSNH, Re: indexing PC growth........

Thanks for your well worded idea. There are members here who do such things in various ways. Some methods are "automatic" and others are triggered by market and AIM moves/directions.

One could also index PC by inflation possibly. That might help to compensate for that erosive effect. Cash has been a painful asset for most of the New Millennium as it's been an under-performing one relative to inflation. If/When interest rates finally come back to being a market driven level the problems with holding cash will be less severe.

Again, thanks for stopping in......

[SFSecurity]

Hi TSNH, This approach is similar to Jason Kelly's "3% Signal" in which he looked at the long term gain of the market and factored it into his buy/sell algorithm and it certainly makes sense.

If I read you correctly this reduces sales because of the move up of Portfolio Control (PC), right?

But I'm not clear about it reducing down market risk as you say in your last paragraph:

You could consider a weight of say 1/3 historical, 1/3 3-year, & 1/3 1-year performance for the annual rate of return and/or the PE ratio used to adjust the portfolio control. This way, you could benefit from trends in an up market and reduce risk in a down market while keeping the portfolio control at a reasonable value that doesn't lose it's significance over time.

I would think that if you move PC up you also move up the buy at price.

Using the online calculator with:

Portfolio Control 10,000
Number of Shares 1,000
Sell SAFE 10%
Buy SAFE 10%
Min Purchase/Sale % Stock Shares 5%

You get a buy signal at $8.70

Assuming a 9.8% PC growth over the year, or $81.66/month the buy price moves up to $8.77, two months to $8.84, and up to $9.55 after a year.

This is fine in a bull market and even a panda bear market where the drop is less than 10% before heading back up, but where is the protection with a 20% correction or a full on grizzly bear market?