Replies to post #97 on A.I.M. For Exchange Traded Funds (ETFs)

[OldAIMGuy]

Hi Matt, Well, here's my version of macro-economics! Much of my thinking is based upon the U.S. demographics map for the next decade. Baby boomers are getting closer to retirement. There will be a massive shift of wealth from one generation to the next, Oil and Gas discovery vs consumption will start to plateau and then eventually decline. The Boomers are going to need more and more healthcare as they age. Biotechnology has come into its own with profitable products that fit well with the aging Boomers. As grows the general population, so will there be growth in the cyclical consumer market. Finally, we're not about to turn in our silicon chips to be ground up for beach sand, so general Technology should continue to be a good investment for some time.

So, IYE (energy) seemed to be a good bet for profits with a precious commodity. IYH and IBB (Healthcare and Biotech) both seemed to play well into the "aging boomers" needs. We still like our gadgets and toys, so IYW (technology) should prosper over time. IYG (Financial Services) will be there to help guide the passing of Boomer's wealth to the next generation. IYC (Consumer Cyclical) catches a lot of the rest of the economy and provides some price swings that AIM needs to profitably capture native volatility while providing diversification.

I also included a long term bond fund to create some "new" cash in the form of dividends. Since I have no "earned income", I can't add to my IRA annually. Therefore, the bond fund is there to provide both an account income stream and some counter-cyclical price movements. When cash gets heavy in the bond fund, I'll start a new sector. Possibly IYR (REIT fund) or maybe something more entertaining like an "internet infrastructure" fund.

I'm also watching each of the ten business sectors that make up the S&P500. Technology, Finance, Healthcare, Consumer Cyclicals and Energy are already there. The rest don't seem as interesting right now. I decided to use the IShares products as proxy for these sectors even though they aren't exactly the same as S&P uses.

Let me know if this is what you wanted. Overall, I wanted a broadly diversified group of stocks to be represented without all the annual reports, etc. This seemed a low maintenance way of accomplishing that. I only found a couple of stocks that were in the portfolios of more than one of these. Not like buying Magellan and Constellation Funds, where both own lots of Microsoft, etc. There's almost no cross-over in this portfolio. That was also important to me.

Thanks for the question.

Best regards,
Tom