Replies to post #36276 on A.I.M. Users Bulletin Board (AIMUSERS)

[lostcowboy]

Hi Daisy, about cash targets. Have you looked at the cash burn page?
cash burn page

That page uses starting ratios of 50:50, 67:33, and 80:20, and see's how long your cash lasts as the stock price drops. I would see how far your index funds dropped percentage wise in the last bull/bear cycle and using the cash burn page to get a good idea of what your cash/stock ratio needs to be for your Vealies.

[OldAIMGuy]

Hi D42, Re: Cash buildup in AIM managed accounts.......

The "vealie" is a way to interface cash targets and cash
management in an AIM account. As long as the cash target is a
rational one based upon long term trends and risk measurement,
then using a cash management strategy like the 'vealie' seems to
work just fine.

However, it is dangerous to let the cash target be a fickle and
emotionally driven item. There such a technique as the 'vealie'
can make investing even with AIM less than effective.

Whether you use a fixed or moving upper cash ceiling, make sure
it's going to cover the Chicken Little, Lame Duck and even Black
Swan events if you can. :-)

'vealies' can help to keep AIM investing working well during long
uptrends in the market and inflation. However, I'd suggest that
you also implement a 30 day delay to sequential buys when
using 'vealies' since you're limiting the % buildup of cash. That
way the leaner cash reserves will last a bit longer in a
downturn.

Best regards,