Hi Kevin, Thanks, I didn't post that data this month. I've been thinking of adding another column showing risk adjusted return. I call it Return On Capital At Risk, or ROCAR. I use the average percent at risk for the time frame and divide the total return by that number.
Let's say I had a 50% total return and the account averaged for the 12 months 75% invested. I divide 50 by 0.75 which gives me 62.5% ROCAR.
All in all last year pleased me with both the total return and ROCAR values. The Cash Reserve grew throughout the year and so did the account. I haven't done any of my Schedule D preparations yet, but most years the "inventory turns" were very low compared to when I used to "trade" on a short term basis (pre-AIM). In an average year my inventory turns are about 25% to 30% of the portfolio. This gives the growth wonderful "tax efficiency" relative to what I did prior to AIM.
Now that the US government has seen fit to give me a bonus for Long Term capital gains over short term, the low inventory turnover goes straight to the bottom line. I like that!!
Maybe for my History page in the section where I have the 1990 to 1999 yearly returns I should add ROCAR and Inventory Turns as well. That would go a long way towards showing why AIM is a rational alternative to other risk management methods.
For me, the main "savings" in using AIM compared to my Pre-AIM days is the time. With a competent staff running my Equity Warehouse, I can sit here in my walnut paneled office on the top floor of the Gantner-Norman Insurance Building overlooking beautiful Port Washington, WI and Lake Michigan and just wait for my young, charming, intelligent, (shapely) secretary to bring me reports on how things are going. No more Ticker Addiction! Time for my family, my hobbies, my newsletter and BRAGGING here on SI!!! That's where AIM's been great. It's my Purchasing Agent and my Sales Dept. that do all the work! Shipping and Receiving are busy, but they don't complain, we have a great profit sharing plan! :-)
Thanks for the thought of including risk adjusted returns.
Best regards, Tom |
