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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: Zen Dollar Round who wrote (18754)6/26/2022 1:12:25 PM
From: OldAIMGuy2 Recommendations

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Zen Dollar Round

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Hi JF, Re: Long Term Backtests of AIM against B&H and DCA.............................

For accumulation I've backtested Mr. Lichello's Twinvest against Dollar Cost Averaging and long term, Twinvest did a better job of lowering the average share cost. However, DCA did accumulate more shares (ie more risk, more reward). I am currently using Twinvest with my Simple Contributory IRA but started it with an 80/20 ratio instead of Mr. L's 75/25 Equity/Cash ratio. So far, it's working well but I've not compared it to DCA.

For Risk Management of an existing portfolio I've tested the SPY with AIM and Buy/Hold. Given enough time and market cycles AIM wins. But, it takes several market cycles for AIM to pull into the lead and keep it. TIME is the biggest factor as market cycles aren't predictable.

Think of AIM as a Warehouse inventory management tool. It sells inventory when the markets are strong and accumulates more inventory when markets are weak. Buy&Hold on the other hand is like owning a museum whose exhibits never change. They go up in value and down but nothing is done to capitalize on such movements. AIM tends to cap one's total value at risk during long bullish periods and then build out the risk value when prices are down in bearish periods.

There's a fellow who's written some very lengthy reviews of AIM vs B&H and I'll see if I can locate his articles. They're quite interesting. When he tested SPY with AIM and B&H AIM was ahead during downtrends but trailed during uptrends. When he extended the time frame, AIM did better.

I suggested to him that he AIM each of the S&P 500 Index's Sectors individually and compare. the results to the SPY AIM and SPY B&H. He did this as well and the AIM margins improved nicely as the individual sectors were more active than the SPY on its own. "Sector Rotation" helped this cause.

I'll find the links and add them here.

Best wishes,
OAG Tom
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