Replies to post #30668 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

Hi AIMster

Keeping the original three as you have, I've added five more for a total of eight holdings (nine if you count cash separately).

The additionals however can upset the low correlation balance



Taking the start to the vertical line in the above chart as an example, 6 of the 8 were down around 60%, 2 were up around 10%, an overall average of -42.5% across the set assuming equal weightings.

Add in a 9th cash component at 0% gain and that declines to -37.8%

The PP four set had in contrast gold and bonds both up by around 10%, stocks down -60% and assuming 0% for cash = -10% across the set over that same period.

Being down -37.8% compared to -10% requires a 44% outperformance of the larger down to close the gap back to the less down.

As in Post # 30667, its difficult to find cases where PP was down more than -10%. When the individual PP components are AIM'd that reduces draw-downs even further.

Being UK based has the advantage that gold can be held in USD (IAU), LT Bonds in Euro's (iShares IBGL) and stocks in domestic market UKP (cash can be a floater - deposited in surplus countries currency).