Replies to post #45248 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Thank you, Clive, for the review from 1982 forward. I'll try to put together the v-Wave's composite for the same years.
Tom

[OldAIMGuy]

Hi Clive, Re: AIM Cash vs v-Wave estimated cash over time............

First I built the history of the v-Wave since the start of 1982 and graphed it against the various indexes. As you can see, the v-Wave seemed to track pretty well with the markets and, if anything was rather cautious during long periods of market expansion.


Note the NASDAQ has only recently risen to a level on par with the other two indexes after the DotCom bubble and crash.

Then, I thought it would be interesting to see how your AIM history of the S&P500 over the same time frame would look. I stretched your image to be about the same width for comparison:



AIM's drawdowns on the Cash Reserve appear to have occurred in close proximity to when the v-Wave also showed reduced risk. At times the delayed response AIM has (having to await a decline of ~20% to 30% before buying plus monthly updates) seems to have kept your AIM simulation heavier in cash even as the v-Wave has started to show reduced risk. This is to be expected, I guess.

The period from the '08-'09 market bottom and even the Pandemic really didn't seem to phase your model as far as cash held in reserve. The v-Wave was mostly zero slope through much of this period with a few exceptional moments.

Note, I've used the v-Wave's "diversified" value since we're discussing the S&P 500 Index. Average cash throughout this study for the v-Wave was 29%. This is a bit more aggressive than the cash level suggested by AIM for this study and is closer to Mr. Lichello's "2nd" AIM model using 33% cash and 67% invested.

I thank you for the effort put forth modeling AIM through such long periods. It's easy to see how well AIM's inventory control and cash management builds strong survivability into a diversified portfolio.

Best wishes,
OAG Tom