Hi,
Thanks for the diligent research.
IMO it isn't possible yet to compute returns on issues such as UOPIX and MSFT since they haven't turned the corner yet. There is no way to calculate the value of the shares that were not purchased because of cash deficit that was caused by too frequent trading since they haven't appreciated yet. I believe that Mr. L. had years like 2000 in mind when he started writing his book. It first appeared in print s short period of time after the '73, 74 debacle. Back then as now there were probably lots of people thinking they would have been better off with CDs. My parents were that way. they had lost some money in the market and had many friends who had done like wise.
Regarding the following: AC, CEI, HR, HRP. These are all stocks that pay very high dividends. They were purchased to provide us with income. AC particularly was purchased late '99 at the price of $25 paying about about 8.5% dividend at the time. It wasn't AIMed at all until August of 2000. It had reached $54 and some change which represented a 118% return not counting the dividend. The dividend had increased to a little over $3.00 but the stock was no longer paying the 8.5% it had been purchased for. It also represented a larger percentage of my portfolio than I was comfortable having in one stock. I sold 30% of my holdings in September '00 which returned to me 75% of my original investment and left me with 40% more invested than I had originally started with.
I also made the decision at that time that even with AIM it was beneficial to have significant dividends reinvested. Since these issues are purchased in my situaion primarily for income I set my safes at Buy=10/Sell=20. IMO one of the trends that makes AIM work profitably is an upwards trend. By reinvesting the dividends one gets an ever increasing number of shares which with only a modest increase in price prompts AIM to get rid of some.
FLC is a horse of a different color. I've owned that since '97. If I remember correctly it was about that time when Tom came up with the Vealie concept. I was pretty excited about Vealies and did them whenever I could, not paying attention to the fact that I was not increasing my Cash reserve as much as I should have been. I also was blinded by the fact that Reading @ Bates was buying Falcon and I was going to get extra shares for FREE.
When the bottom dropped out of the oil market AIM told me to start buying shares of FLC. At the time I was purchasing weekly as Newport recommended. Because of my lack of wisdom in applying Vealies and too frequent purchases, I ran out of cash reserve way to early. To make an already too long story shorter it wasn't until this year that I was able to generate some cash reserve from FLC. AIM saved my butt, but my stupidity in the past made it take a little longer. I can say without doing any research on it that if AIM had been applied BTB the difference in my FLC holdings today would probably be somewheres in the vicinity of 100%-200% richer than they are.
I personally don't use Automatic Investor. Mostly because I started using Newport and PCA before it became available. I bought PCA in order to do histories, but I really prefer doing them with Newport. While they take significantly longer to do, it allows me to better see and understand how AIM works over an extended period of time. It also allows for the application of cash dividends or reinvested dividends.
I quite often read here how with the use of high powered computers that exist today, it is now easy to update prices weekly, or daily, or even three or four times a day. Mr. Lichello didn't have these back when he wrote his book. He also wrote that he didn't worry about dividends because they were too much trouble to track down when it came to tax-time. He also didn't have programs like Quicken or MSMoney which make tracking dividends childs play.
You wrote:Here are the results:
AC daily: 34% weekly: 31% monthly: 19%
CEI: 17% 15% 17%
FLC: 43% 41% 39%
MRK: 22% 17% 14%
HR: 23% 19% 16%
HRP: -1% -3% -4%
XLF: 15% 15% 14%
UOPIX: -68% -58% -51%
Bear with me please. Forget about the first two columns which I think you said represented daily and weekly results.
Add about $3,000 to HR, AC and HRP for dividends.
I think had a pretty damn good year!
AIM works especially in conjunction with diversification.
Sorry for going on so long.
Bernie |
