| | | Hi Tom,
I enjoyed reading your post. I've had a lot of experience doing other things in investing, but the AIM methodology is interesting to me. As I have aged, I'm looking for something a little less stressful for my long-term money. I think the one of the hallmarks are a good strategy is the way that AIM takes the emotion out of investing and allows you to follow an algorithm. Some people need that. It's a great idea. I need it ??
It took a look over at the other site. I appreciate you pointing it out. I'm going to spend some time over there looking at some of the posts. I looked at some of the preliminary returns from Joe and his leveraged ETF testing. He chooses a lot of the 3x funds. I would definitely allocate a small portion of my portfolio to those. I'm still back testing some of my own stuff.
The big hurdle for me is that even some of the more tech funds like QQQ that aren't leveraged just don't seem to send many signals to reduce the position as the price goes higher.....Nor does it give as much of an opportunity on the way down either. The leveraged funds do a much better job of creating signals and reducing exposure as the market rises and subsequently reestablishing larger positions as the market goes down. However, I'm still testing the QQQ. I haven't found a good way to automate the testing so I'm doing it by hand.
I would feel more comfortable with less leverage, even a 2x like possibly SSO or QLD. Seems like those give some signals but aren't as crazy movers as the 3X. I don't really know any 1.5x funds. I'd be curious which ones you find interesting.
The 3x leveraged funds like TQQQ and UPRO back-tested pretty well. Each averaging between 18% and 20% CAGR over the last 10 years. Pretty impressive, but they move around. ALOT. You really need to have a strong stomach to sit through the gyrations of those funds. That's not for me anymore. A smaller allocation, yes. My whole portfolio......No Way!!
I really appreciate your dissertation on cash. I agree with your take on it. I like cash. It is an insurance policy. I always have some on hand no matter which account I'm trading or investing in. My only complaint while back testing was that some of the tests showed this cash accumulation that at the end was 70%, or close to it, sometimes even more..... That just seems like a lot of cash to hold. However, these were the leveraged funds like TQQQ and UPRO. Maybe it's a good idea to try to NOT alter that...... After all, it is an insurance policy. And those funds are volatile. Maybe AIM is doing me a favor and generating plenty of insurance for a 3x leveraged fund. ??
I appreciate your time. Looking forward to learning more about AIM.
Thanks Tom,
Dan |
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