Push From the Election, or Not

 It's strange how some portfolios go with what the market is doing and others really just don't.  I think that especially happens when you have smaller numbers of stocks in the different portfolios.  When Donald Trump was elected president, the markets loved it.  The general market went way up - especially in the few days after the election, but has been positive overall since.  My 'Dogs' account seems to be bucking this trend, for whatever reason.  I actually had a 'Buy' request from the formula in the last month or so.  That means the account is a ways down, relative to the 'Portfolio Control,' which is a number that basically says where the account standard level should be, and doesn't move much.  Only when stocks are bought at the bottom of the range of the particular portfolio is the PC added to.  It's all in the book. (I put a blurb about what this is all referring to in the last entry - I'm going to try to remember to repeat that once a year in the fall entry.)

When the market is making overall slow advances, as it has been in recent years, I believe this kind of thing can happen with different portfolios.  Recently I have had both Buy and Sell signals with different accounts.  One is going with the general market and the other is going the other way.  It does concern me a little what would happen to the account that is already down should the general market decide to have a sudden down period. These things have a tendency to happen very suddenly to the down side.  I still have a good supply of cash to purchase more stock should this happen.  When following the rules outlined in the book, there should always be plenty of cash to buy when the market goes down.  I keep track of the percentage of cash versus stock portfolio, and if it gets too far away from 50%, I know I need to make adjustments one way or another.

It will be very interesting to see what this next four years brings, but for now I want to wish everyone a happy Holiday Season and hope everything is going well.  See you in the spring! 

A Bit More Flexible

 Lately I've been paying more attention to the times some of the stocks in each account is suffering, and some of the other ones are doing much better.  AIM is designed, mostly, to take advantage of volatility of the market itself - having different stocks in each account just puts more of a safety feature on it. Often, especially when the market is going one direction for an extended amount of time (as it is now), some stocks, for different reasons, do poorly while others can do especially well. I've decided to play with the accounts and, as long as the distressed stock doesn't seem to be in actual trouble...in other words if it still is a fundamentally good company, then I have been taking from the rich stocks and investing in the poor ones.  There really is no rule against this in the AIM book - the author says it's fine to trade out stocks, and I figure that includes trading between them.  I haven't been doing this very much - only in more extreme cases, and I try to err (if I am erring) on the side of safety.  Most of the time, so far, it is working beautifully.  Most of the time when a stock goes way up, it doesn't stay there; and the same can be said for a stock that gets very depressed when the rest of the market is stable. Eventually, they tend to correct themselves.

I also have been bending the rule about doing updates only at the set time in the month.  I usually monitor the accounts and if something happens where the account gets pushed way up or down suddenly, and it is pushed into the buy or sell area, I'll go ahead and do a transaction then.  Now, I am diligent about waiting at least a whole month before doing any more, regardless of what the account does after that.  Especially if the account dips suddenly for one reason or another.  I've had a bad experience doing multiple transactions too close in time together.  The market can go against you and suddenly there is no money to do anything.  The month waiting period gives everything a chance to straighten back out.  Sometimes it's hard to have to wait before doing another transaction, but it works for the better in the long run.  Example:  2008 into 2009 - I think I talked about that experience in some of the earlier entries.

One of the other areas I have become a little more flexible in is when I am trading out a stock in my AIM For Dogs account.  Now, I don't do this very often, but once in awhile I notice a well-known stock that is way below what I would have thought it would have been. If I have a stock in my account that has just raced up and I think it is out of gas, I'll trade it for one of these that seem low.  For example, recently MMM (which I bought when it seemed low) ran up in price.  I noticed it because I was looking at the list of Dogs of the Dow and it came up as a 'Small Dog.'  That surprised me, because I never would have thought MMM would be low enough in price to be a 'Small Dog.'  So I bought it, and a relatively short time later, it wasn't even in the DOTD list, because it had gone back up in price and their dividend yield was no longer that great.  So, I was looking through the stocks on the Dow list and noticed Nike under $100 - like, in the eighties!  That surprised me, so I traded the MMM for the same dollar amount of Nike, even though I hadn't even owned the MMM for a year.  Now, this rarely happens, and though Nike wasn't (and still isn't) a Dog of the Dow, neither was MMM, so I figured it was ok.  I know Nike will eventually get back up to it's normal levels - I figured I'd ride it back up! 

It's a good feeling to do some of these extra curricular stunts with these stocks within the accounts, as long as the main, general rules of AIM are followed.  I don't veer to far outside the rules, and I figure it doesn't matter too much, as long as it makes sense, and even if it went bad, the AIM way will generally protect things from really going south.

The reference to AIM is a book by Robert Lichello, How to Make $1,000,000 in the Stock Market, Automatically.  The basic plan is to start with an amount of money, split it in half, use one for a pool of stocks or an equity mutual fund, and the other keep in cash.  The same amount as each half should be kept track of, called the Portfolio Control, which keeps track of how the stock fund is doing, and is part of the formula.  When the stock fund gets either below or above the Portfolio Control, or PC, by a set amount (the author suggests $100), a buy or sell signal is produced.  Buy if it is down, sell if it is up. Also included is what is referred to as a 'Safe,' which is suggested to be 10% of the fund amount.  This amount must be also overcome on either side to actually make a transaction.  The Safe creates more safety in the strategy so as not to be trading too much.  The PC is never adjusted, except when doing a purchase, which is an increase of 50% of the purchase amount.  Also, the account should be updated no more than once a month.  I have set up a spread sheet with these criteria and updated it every month since 2008.

Main account performance since 2008:  +352.8%

More Yield from Cash

 I did something to generate more yield out of the cash side of things, since the AIM program dictates that all positions have an equal amount (at least at the beginning) of cash.  I had bought a high-yield bond mutual fund in my wife's and my account, and that has generated a decent amount, piling the return within itself, creating a compounding scenario.  

I found an ETF that sounds like it's the perfect way to create more from the cash still in the accounts.  That includes Sheldon's and Ben's, since there is really no minimum initial investment amount.  The EFT mirrors the Nasdaq 100 Buy-write index, supposedly.  But it does covered calls on at least some of the investments, which would explain why it really doesn't keep up with the Nasdaq 100 Buy-write index when it is moving heavily upward.  The ETF doesn't have much volatility, but it does yield a hefty 11.6%!  It has in the past moved up and down (mostly down) a bit, which is why I put it on its own AIM deal, but like VWEHX, which is the mutual fund, will very rarely have actual buy and sell activity. I figure if the principal ever does go down far enough to generate a 'buy' signal, it will have more than generated enough additional cash to pay for the purchase.  

I maintained the 'half-and-half' cash versus stock rule with this, keeping enough free cash for whatever purchases I would need for the actual stock part of the accounts.  If anything disastrous happened in the market, I could always sell some to get more cash.  I can do that with either the mutual fund or this ETF.  ETFs just have less rules about buying and selling.  They literally like just buying or selling a stock.

So now, at least in the two accounts, I have three 'cash' investments, meaning, if push came to shove, I could use any of them to replenish the cash if it ever got used up.  The SLV ETF is more of an almost 'end of the world' part of it, meaning if the dollar got taken from being the world currency and really lost value, silver would likely go way up.  Silver is just a good long-term AIM investment, because it is always going up and down, but will never go away.

As far as the stock part of all this, nothing much has changed since last post.  The election is just getting closer, which seems to be affecting the market even less than usual, according to an article I just saw.  Everything in the last post still applies.  There is some volatility in the tech sector because of AI stuff, but other than that, things are just rolling along still.

Lagging Behind

 Welcome, Spring, 2024!  Strangely, I am sitting inside with several inches of snow on the ground today.  Typical Colorado weather, which is, this time of year, usually anything but typical.  

The stock market has been hitting some record highs as of late.  Unfortunately, the accounts I am managing are not showing that same success.  When the markets go down, these stocks, as a bunch, go way down, too.  But, when the market recovers and makes new highs, it seems these stock go up, but not as wildly as the major markets do.  It makes for an overall picture of these accounts lagging behind everything else.

I'm not worried about it - it's just a commentary on what's going on right now.  My main hope is that the stocks I have, as a whole, will go up and down with the market.  They do, but are matching the market more on the down side, which hasn't happened much lately.  The major markets have been tending to shrug off bad news, and then continue to slowly climb on all the daily news that, while not being fantastic, seems to be cruising along in general.  It still feels like the market is waiting for something to happen.  Could be the elections happening this year.

Obviously, I am talking more about what is going on in the general market than what is happening with my accounts and the AIM part of it.  That's mostly because there has been very little happening with these particular stocks, generally.  Nothing particular positive or negative.  It's been over a year since I've made any transactions stemming from AIM movement.  I've made some decisions to change some stocks out, just because of the general price and movement of certain ones and whether they still do the whole particular account any good or not.  Like, I sold the PAYX out of Sheldon's account because the price had been over $120 a share for a while and not moving very much.  I replaced it with PFE, because I saw that it's price seemed low (under $30) and the potential for it to rise on a larger percentage basis is, IMO, much higher.  Smaller priced stocks, in smaller accounts, also make it easier to do adjustments when they come along.  Allows for more options, since the amounts to be changed usually aren't that much.

I have been doing some more things to generate cash in the cash side of the larger accounts.  Doing a monthly naked put-selling thing in my account (also called writing naked puts) gives me more cash output than just the regular yield, which in trading accounts is usually next to nothing.  Since there is now more than 100 shares of LEVI in my wife's account, I have been doing a monthly covered call on that one.  With one exception of a couple months ago, it hasn't moved fast enough on the upside to make that a bad strategy.