Replies to post #45549 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

The idea was to come up with something more meaningful than just a "one size fits all" cash reserve with traditional AIM.

I see it as there is no reliable single consistent choice, each asset/asset-allocation have their good and bad spells. 60/40 is often considered as the better 'fits-all' case as a broad average. Much however is subject to the choice of start date and using a dynamic/variable tends to be better than a fixed choice ... and the vWave is one such measure/indicator.

Whether you just use that at the start and let it run as-is, or periodically 're-start' tends to matter less, as often AIM will tend to indicate/carry similar dynamics as vWave anyway.

Early 1980's when Dow/Gold was down at near 1.0 levels and vWave indicated it to be appropriate to be heavy into stocks. Late 1990's highs and low stock was suggested. 2003 and 2009 lows and again high stock weightings were suggested ...etc. If you get the initial loading right then the longer term rewards tend to be satisfactory. Get it wrong and a peak to trough investment period can yield rewards comparable to or even less than just cash deposits.

Buy and hold is nothing other than costless lumping all-in each and every day, a running AIM will have the dynamics that reflect reasonable relative valuations, that supplemented with having started out with reasonable allocations has you set on a path were the rewards tend to be satisfactory.

Clive.

[vivekgujrati80]

Thank you Mr. Tom for detailed explanation.

It will be really helpful to design my plan of action. Presently, in EMs market volatility is very high and AIM may do wonder. However, if I'll see 2000 and 2008 crash, the Bluechip stocks also crashed up to 70-80% in indian market.

We are witnessing huge volatility in Individual stocks here in india which is clear indicator of huge speculative activity is under way. I believe this phenomenon is there in most of EMs and developed market as well.

The other fundamental/ statistical indicators which i used (combination of 3 indicators P/E, 12 month high/ low and small cap to large cap ratio) to understand the mood of the market, all indicators are showing there is clear bubble in the market. How long this bubble will go is practically not possible to predict. Further, US is mother of all market hence Vwave will definitely good tool to understand the mood of the market.

Hence keeping in mind all above aspect, I am planning to start my AIM account with 70% cash.

Thank you once again for sharing the knowledge and creating this platform.

Regards,

Vivek

[Toofuzzy]

If you are using the v wave to tell you how much cash to hold you are using the v wave and not AIMing.

The v wave was developed to give an idea of how much cash to start with at market highs or lows and answer the question " is now a good time to start a new Aim account.

Toofuzzy