Thank you Clive for a thorough investigation of the Buy and hold strategy.
It appears I was wrong. Markets spend a lot more time in corrections and crashes more often than I thought. This fact alone makes it more logical to not use the Buy and hold strategy. Because it's more probable that I would not pick favorable entry and exit points. AIM strategy makes a lot more sense now.
I too would have picked the Portfolio #2. The end result is very similar to portfolio #1, but the draw downs are a lot smaller.