Hi John, Yes, Club Med's annual reports always were good for my vision! Actually I have been to several clubs over the years and those too were good for me.
In the ADCT history you can see that when things looked bleak, AIM was guiding me to build the total inventory. Then at other times it lightened up. Given enough market price cycles it will eventually get ahead of Buy & Hold, but two years is not quite enough time. It really needs to get clobbered to the point that it exhausts the Cash Reserve completely a few times. Getting to 100% invested takes a dip of nearly 50% in per share price. It takes a bit of MAALOX to keep buying all the way into a decline of that type!
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Sorry for the confusion about Mr. Lichello. He wrote a book in the late 'seventies about a method of risk management called Automatic Investment Management (AIM). It can be best described as a proportional control algorithm. Sort of like CRUISE CONTROL for your portfolio. If taken strictly "by the book" it's a bit too rigid for most people, but if one takes it as a general business plan for investing, then it works quite nicely.
I use AIM as the basic management tool for literally all of my investing - my personal account, IRA and also the fiduciary accounts that I tend. It's not as tax efficient as Buy & Hold, but not as tedious as ST Trading. In an IRA, however the tax issue goes away.
The main benefit for me is that it deletes the emotional content from my management decisions. I can't tell you how much that has meant to me. I now treat my investing as though I'm managing a warehouse; how emotional can one get about that? Stocks are just so much inventory. When there's good demand for my inventory, I'll ship out a few certificates. When supply is heavy and prices low, I "re-stock" the shelves. Letting AIM do the inventory control frees my time to try and figure out what I should keep in the warehouse in the first place. AIM doesn't tell you what to buy, only what to do with it once you own it.
There's a bunch of us that use AIM at
Subject 12596
should you like to read along.
Best regards, Tom |
