Replies to post #35522 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi D42, Re: SynchroVest vs TwinVest...............

Something I tinkered with back when looking at Twinvest was the idea that every once in a while the Twinvest should be restarted. This would help it work better in extended bull markets of many years duration.

In my notes at the aim-users.com web site there is some discussion about this and some comments from Mr. L's book, too. Mr. L thought a new Twinvest account should be started when the investment's NAV had tripled from the start. I noted in that synthetic history the cash reserve had risen to about 50% of total when the account had tripled. The time frame was nearly pure "bull market."

So, it might make sense to restart the Twinvest additions with a new investment at that magic "triple" mark or maybe when cash hits 50%. In the example, I chose to just restart with the same mutual fund, but recalculate the Twinvest Code based on the NAV at that time.

Knowing what we know now, those 1999 values for the example would have taken quite a hit in the next decade. There were also some tremendous dividend distributions along the way. It appears that Mr. Lichello assumed we'd have the distributions reinvested automatically. After all, Twinvest was designed as an accumulation method for us to add new money on a regular basis, so cash is rarely a problem.

Whether we used the 3X or the 50% Cash as a trigger to restart/revitalize a Twinvest program, it appears that it should work. While I've read "Synchrovest" I've never actually done any modeling and never used it for actual money. I did, however, use Twinvest for $$$ we saved for our kids' educations. It worked very well and was very easy. Starting a "birth to first tuition" Twinvest for a child or grandchild has a reasonable time frame, too.

Best regards,

[Adam]

Hi D, I've used the Twinvest to accumulate a position before turning it into an AIM program. When I looked at the arithmetic of it I came to the realization that it's a form of dollar cost averaging to the second power. Here's what I mean.

In the traditional dollar cost averaging the number of shares you buy is inversely proportional to the share price. In Twinvest the number of shares you buy each time is proportional to the inverse of the share price squared. In other words is an exaggerated form of dollar cost averaging.

Adam

[lostcowboy]

Hi Daisy, if I was you I would run the test for ten years. I have some spreadsheets you can use for testing. Just click on the link in my signature and at the bottom of the header you come to a link to the spreadsheets.

[infooverload]

Hi Daisy 42

The value of synchrovest is in the downcycle of investing money to reduce the cost per share. In running the program of synchrovest and in preventing negative bank balances and shares owned. Were one to run it over multiple cycles of 10-15-5-10. One would find synchrovest returns increasing more rapidly. One has to pick a sell out point that matches the stocks own performance criteria. Lichello recommended 100% for his 10-8-5-4 etc. However that might not be appropiate for this series.

You might add a synchrovest type tweak to twinvest in when the vale is less than the twinvest value of eg.$750. (10*.75*100) you take the extra e.g. price is now $8. and buy ((10/8)-1)times cash reserve in addition to the regular contribution.

When price is high at your own determination sell the surplus and add it to the cash reserve. Not necessarily complete liquidation.
You now have hybrid twinvest-synchrovest investment machine.

Good Luck.