Replies to post #33808 on A.I.M. Users Bulletin Board (AIMUSERS)

[Conrad]

Clive,
Don't confuse asset allocation weightings with individual AIM settings. The choice of asset allocation and weightings to those assets generally accounts for most of overall gains/losses.

I was not referring to asset allocation but to a single investment for which a amount of cash was reserved at the start to have a Reserve for buying more stock as prices declined. The CER would be different for beginners than for the expert, but that difference would not mean that the average best CER would not be 50/50. . .if one considers all the amateurs that generally lose money and the experts that would generally make money, on the average then in the end the best CER to start with could still be 50/50, but allowing that possibility by itself proves nothing. The question is if the 50/50 starting CER WILL be the Best Choice.

I can read what you have said many times on the 50/50 starting CER, but I can not see how you prove that a 50/50 split for starting an AIM must be the best setting.

My example is and optimised run for SPY over 10 years an the optimised CER=72/28 for starting: the ROTAI Yield = 5.8 % Annually and the Profit = $ 8195

Then I adjust the starting CER = 50/50 . . .all other factors remain the same. . . and the ROTAI Yield drops to 1,7% Annually and the Profit = $ 4407.

For that case the difference is large and obviously the CER for the Start @ 72/28 is much better than the CER of 50/50.

Now, I realise that for another stock the optimised starting CER might have been 15/85 but that would mean nothing for proving a point. My point is this:

If you are right and the Best Starting CER is 50/50 on the average for any investment(blind choosing of a stock using a Monkey pulling numbers out of a Hat) then if one does enough testing (with say a 1000 experiments) on historical data then the average of all the optimised SERs should be close 50/50. . . that must be your conclusion if you are right. . .the argument here is that at the starting time all the stocks were driven by market dynamics, just like all the stock we buy today and in the future will have prices driven by market dynamics. There is no escape from that.

I can not as yet accept that the average of 1000 or more optimisations on historical stock prices will give an average Optimum Starting CER of 50/50 without your saying that it will be so. If you sat that will be the experimental result of the optimisations then I will understand what you mean.

In other words, if you say the 50/50 starting CER is the optimum CER value for any investment to start with then it must be concluded that all Portfolio Value optimisations in real investment runs must give an average optimised CER of 50/50 in the limit(doing the optimisations for all the stocks in the world man infinite times).

I would like to see you confirm this or deny it.

Obviously I realise that one OPTIMIZATION RUN for all stocks in the world would not give exactly, an average CER= 50/50 but if you are right and we do the optimisation experiment 1000 times the average of the optimised CERS must be 50.50. . if you are right, and if the result is not 50/50 on the average that would mean that a starting CER of 50/50 is not generally an optimum value.