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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: rgammon who wrote (11248)	5/25/2000 3:36:00 PM
From: rgammon	Read Replies (1) \| Respond to of 18929

Inverse Correlation pt 3 Well, I bit the bullet and started this AIM with 'perfect' inverse correlation instruments. This IS aggressive, and I started with slightly over 50% cash. SAFE is 20% on both buy and sell, furthur conservatism. SAFE was adjusted because the volatility of the instrument is extraordinary, 5:1 swings over 2-3 months is not uncommon. I'll shutup about this topic for the time being. In 3 months, we'll see what has happened. Robert - Mr AIM Aggressive

To: rgammon who wrote (11248)	5/25/2000 5:12:00 PM
From: OldAIMGuy	Respond to of 18929

Hi RG, The Value of each share of "cash" never changes in the standard practice of using a money market fund. Rising Market (Equity Side) In your theoretical AIM account, the value of each share of the "cash" component would be decreasing while the "equity" side is increasing. It would be compensated in a fashion by sales of the "equity" side. You would have more shares of "cash" but each would be worth less than previously. Falling Market Like a magical event, just as the "equity" side of the portfolio peaks and starts to decline, the "cash" side, with no further selling of the "equity' side, would start to rise in total value and on a "per share" basis as well. On the surface I don't see any reason why such an arrangement would make the AIM account more or less likely to run out of cash. The biggest problem I see is with taxable accounts in that you would be paying capital gains on "both" sides of the account. I'll spend some time pondering this some more. Best regards, Tom